Chinese enterprises' obligations abroad

China guides its enterprises toward fulfilling their social responsibilities when investing abroad

Chinese companies are gaining recognition around the world for their attention to social responsibility in the host nations in which they invest, and new government initiatives are about to set the bar even higher.

University of South Carolina's West Quad Living and Learning Center, built by China State Construction Engineering Corp, received the silver-level certification of Leadership in Energy and Environmental Design (LEED) from the US Green Building Council. The LEED rating system sets and measures international standards for green buildings. In 2011, China National Petroleum Corp's PK project in Kazakhstan received two government award - the Enterprise of Sustainable Development Prize and the Presidential 2011 Gold Paryz Award of Corporate Social Contribution - for its contribution to economic and social development in the country.

But not all Chinese investment abroad has been acknowledged by the host nations for social responsibility. Copper mines developed by Chinese enterprises in Chile are often interrupted by local protestors who claim the projects are harming the environment. Some investment projects in Africa are often rejected by governments for fear that they may have adverse impact the local environment and harm wild animals.

On Feb 28, the Ministry of Commerce (MOFCOM) and the Ministry of Environmental Protection (MEP) jointly released the Guidelines on Environmental Protection in Overseas Investment and Cooperation, the first of its kind for Chinese enterprises.

"When investing abroad, most Chinese enterprises understand the need to protect the environment, obey the laws of the host nations and actively fulfill social responsibility. However, some enterprises are not experienced in the work of environmental protection and need the guidance of the Chinese government," said Yao Jian, a spokesman of the MOFCOM in a press release on the guidelines.

According to the guidelines, Chinese enterprises are required to fulfill their social responsibility for environmental protection, respect religions and customs of host nations, protect the legitimate rights and interests of laborers and understand the "win-win" result of profits and protecting the environment. The guidelines also encourage enterprises to learn from the standards and practices of international organizations, such as the United Nations Principles for Responsible Investment, the Organization for Economic Cooperation and Development Guidelines for Multinational Enterprises, the guiding principles of the World Bank and International Financial Corp as well as UN Global Compact.

Chen Lin, commercial counselor with the Department of Outward Investment and Economic Cooperation with the MOFCOM, says by formulating the guidelines, the Chinese government aims to instruct Chinese outbound enterprises to be responsible corporate citizens.

Being responsible

Corporate social responsibility has become a worldwide trend. Countries and international organizations are stressing the protection of natural resources and the harmony between humans and nature. The international community is improving standards for corporate social responsibility and requiring companies to fulfill their obligations. Some transnational companies have required their suppliers to produce a certificate proving their social responsibility before placing any orders.

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