GoldenBee Insights

GoldenBee Research on CSR Reports of Central Enterprises in China 2014

source:Sino-Swedish Corporate Social Responsibility Websi    date:2015-10-23 11:41:05

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Central enterprises are the state-owned enterprises under the direct supervision of the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council. According to the information on the website of the SASAC, there were 112 central enterprises supervised by the SASAC by the end of November 2014. As the important pillars of China's national economy for a long time, they have played a key role in maintaining stable and rapid economic development. Since 2003, they have kept their proportion of around 10% in the total of GDP with steady asset growth and year-on-year increase of operating income. In 2013, they achieved the total assets of 35 trillion yuan and the total operating income of 24.4 trillion yuan with net profit of 1.3 trillion yuan.

Central enterprises proactively fulfill their social responsibility. Most of them has reshaped their corporate mission, vision and values in accordance with the requirements of social responsibility and formed their own concept of social responsibility that reflects their development strategy, business and cultural characteristics. They have integrated social responsibility into their strategy, decisions, governance structure and each link of daily operation and strengthened the combination of social responsibility and their current reform and development in their operation and management model to improve their social responsibility management and its system. While establishing and improving the mechanism for disclosure of daily social responsibility information, setting up CSR column and forming the system for releasing social responsibility reports, they have organized and participated in CSR seminars, exchanges and training activities, and established a strong responsibility information exchange platform.

As of October 15, 2014, we collected 66 copies of CSR reports released by central enterprises through their submission, downloading from their website, network searching and other channels. We evaluated them in accordance with GoldenBee CSR Report Evaluation System 2014. Besides, we gave a general description of these reports, comparing, analyzing and evaluating their overall quality and summarizing their characteristics on the basis of reporting parameters and in connection with our experience in preparing and consulting of CSR reports. On this basis, we made relevant recommendation.

The overview of CSR reports of central enterprises in 2014

§  66 copies of CSR reports

As of October 15, 2014, we collected 66 copies of CSR reports of central enterprises, an increase of 6.1% over the previous year.

§  Timeliness of these reports needs to be strengthened.

A total of 22 CSR reports were released within 4 months from the last day of fiscal year, only accounting for 30.3% in the total number of reports.

§  Over 50% of them released CSR reports for 5 times or above.

Central enterprises are early compilers and publishers of CSR reports. By 2014, 54.5% of them released CSR reports for five times or above. Among them, State Grid Corporation, China Aluminum Corporation and China National Offshore Oil Corporation released their ninth CSR reports.

§  Nearly 90% of CSR reports with more than 50 pages.

The CSR reports of central enterprises were generally in longer length. 87.9% of them were more than 51 pages in length, but 3% of them were less than 30 pages.

§  Over 90% of leading enterprises.

60 leading enterprises released their CSR reports, accounting for 90.9% in the total number.

§  Diversified report compilation principles

More than 90% of reports were prepared in accordance with several standards, of which the SASAC’s guidelines held a leading position, accounting for 81.8%. Besides, GRI’s Sustainability Reporting Guidelines (G3.1 and G4), Guidelines on Corporate Social Responsibility Reporting for Chinese Enterprises issued by CSR Research Center of CASS and ISO 26000 International Social Responsibility Standard are also important reference basis for CSR reports. 

§  Nearly 40% of English-language reports

With more attention to the internationalization, a growing number of central enterprises published English-language CSR reports, which accounted for 36.4%, nearly 6 times of the total percentage of English reports released by Chinese enterprises.

§  Over 10% of verified reports.

8 copies of CSR reports of central enterprises were verified by the third-party professional organizations, accounting for 12.1% in the total number of reports.

§  Nearly one third of manufacturing enterprises.

Manufacturing enterprises released 18 copies of CSR reports, accounting for 27.6% in the total number of reports.

Main findings

Finding I: They have gradually changed from the passive response to policies to the proactive compilation of CSR reports.

Since the SASAC issued Guidelines for Central Enterprises to Fulfill Social Responsibility in 2008, a growing number of central enterprises have released their social responsibility reports. The number of reports increased from 21 copies in 2008 to 105 copies in 2013, with an average growth rate of 66.7%. By 2014, 54.5% of them released CSR reports for 5 times at least and three of them released their ninth report. Most of them have proactively released their CSR reports and taken it as an important tool to communicate with stakeholders and gain their identity, recognition and support.

Finding II: They have gained the lead in the quality of reports

Central enterprises achieved the average scoring rate of 77.1% for their CSR reports, 1.4 times of the total scoring rate (55.0%). As a whole, their reports stood at the good level with 28.8% of excellent reports. 6 of top 10 with the highest score were central enterprises with the average score of 91.8. In terms of six reporting dimensions, their reports had much higher scoring rate than the overall level, more than 2.5 times in the readability and creativity of reports and over 1.5 times in the credibility and comparability of reports.

Finding III: They have showed stronger materiality with in-depth disclosure of responsibility to stakeholders.

Central enterprises have kept the same concern of all stakeholders as all of Chinese enterprises. However, they have put much higher attention to the responsibility to their stakeholders, especially to the government, communities, employees, environment and suppliers. The average coverage of stakeholders and issues are much higher than the overall level, to be exact, the number of reports covering stakeholders, issues and ecosystem protection was 1.5 times, 1 times and 3.7 times respectively higher than the overall level.

Finding IV: They are desired to disclose more negative information to increase credibility of their reports.

In term of credibility, central enterprises achieved the average scoring rate of 47.7%, lower than 70% of creativity, the second lowest scoring rate of six reporting dimensions. Only 60.1% of reports disclosed negative information, which was obviously inadequate. No adequate negative information relevant to investors was provided in the report. Only 36.4% of them gave an explicit statement that no legal dispute occurred in the enterprises and only 7.5% disclosed the legal disputes.

Finding V: They have focused on the issues of community and customers and needed to pay more attention to the utilization and compensation of community resources and the protection of customers’ information and privacy.

Central enterprises disclosed higher percentage of community issues in their reports. Over 85% of reports covered the issues like the promotion of local infrastructure construction, the development of local economy, listening to community proposals, the improvement of community environment, the elimination of poverty, and the respect of local culture and 98.5% described charity donation to communities and volunteering services. However, only 19.7% disclosed the utilization and compensation of community resources, which needs to be further improved.

In the disclosure of customer information, central enterprises achieved the average coverage of 41.8%. The number of reports covering product and service and their information was 5.2 and 3.2 times as many as those covering the protection of customer information and privacy.

Finding VI: They have complied with international trends and paid more attention to the internationalization.

Central enterprise not only complied with the guidelines of the SASAC and other domestic standards, but also paid more attention to GRI’s Sustainability Reporting Guidelines (G3.1 and G4), ISO 26000 Guidance on Social Responsibility and other international standards. Nearly half of them adopted these two international standards and some of them adopted the latest G4 standard to prepare their reports. 36.4% of them published English-language reports, much higher than the proportion of enterprises that published English-version reports.

Main recommendations

Recommendation I: Taking into account the six principles to create higher quality of reports.

§  Give more completeness — to disclose more information about the analysis of risks and its countermeasures and if possible, provide related information for each chapter in the main body of the report.

§  Keep stronger balance — to face up to the negative information; give an objective disclosure of the cause of negative information and the willingness and measures to improve them and their effect; and strengthen the third-party assurance and label the sources of information to extend readability and increase the traceability of report content. 

§  Bring higher readability — to enhance the reading experience from the perspective of stakeholders and make the report more accessible and understandable in concise language and with rich and clear logic diagrams.

§  Provide wider comparability — to establish a sound social responsibility performance system to strengthen the disclosure of performance data; follow the latest international trend; and learn the advanced tools and methods to collect performance indicators

§  Show more creativity — to bring distinct characteristics to the report and make it more recognizable in connection with management characteristics, corporate culture, innovative social responsibility concept, and reporting structure and form.

§  Highlight more materiality — to have a further understanding of stakeholders and their demands by questionnaires and give an in-depth disclosure of responsibility information; disclose more information about the utilization and compensation of community resources and the protection of customers’ information and privacy; establish a normal mechanism for communication with communities and take advantage of professional advantages to provide more compensation for community resources; carry out trainings on the protection of customers’ information and privacy to enhance capability in this respect; establish the system for access, use and protection of customers’ information to institutionalize its management; and offer customers the contact information of person in charge of the protection of their information so that they can feedback their unfair treatment while enterprises can trace the sources and make further improvement in this regard.

Recommendation II: Playing an exemplary role and leading information disclosure

§  Leading the new direction in the development of report — Actively participate in CSR-related seminars, exchanges and training activities organized by domestic and international social responsibility organizations and research institutions; comprehend and grasp the frontier knowledge and the up-to-date trend in the field of social responsibility to disclose the latest CSR issues in their reports and lead the latest direction of CSR reporting in China.

§  Playing the exemplary role — Play the exemplary role of central enterprises in promoting the overall quality of social responsibility reports; make the public understand these reports by means of prize and other ways and recommend these excellent reports to the society in a long term so that the other enterprises can read their reports, communicate with them and learn from their excellent CSR reporting experience.

Recommendation III: Wringing more communicating value out of reports and establishing a responsible image

Central enterprises should establish a social responsibility information disclosure system to release their excellent social responsibility reports and their best social responsibility management and practices in a normalized and institutionalized way. They should take social responsibility reports as the window of stakeholders to understand them and apply WeChat, micro-blog and other new media to the publication of reports such as simple version, stakeholders’ version and other innovative forms. With the wide use of mobile Internet terminals, they should build social responsibility management information system and its communication platform to increase the transparency and influence of their reports. They should also build a good image to reflect their affinity and expectation of common progress with stakeholders.

Recommendation IV: Deepening the management value of reports and strengthening the engagement of stakeholders

§  The mechanism for participating in the compilation of reports —— provide stakeholders with more channels to involve in the company's operation and management; establish the mechanism for stakeholders’ involvement in the compilation of CSR reports; promote integration of social responsibility into their operation and management; and improve management while enhancing the quality of reports.

§  The mechanism for involving in the corporate management —— encourage and support the participation of stakeholders in the compilation of reports and make concerted efforts to comprehensively enhance the quality of reports; motivate the enthusiasm of stakeholders in the communication with organizations and the organizational management through joint preparation of reports and jointly improve operation and management; and form a virtuous circle including the involvement of stakeholders in CSR reporting, the enhancement of reporting quality, the integration of social responsibility into management, the improvement of corporate governance and further improvement of reporting quality.