Worldwide, CSR reporting practices in China have a short history, but are drawing rapidly growing attention. To evaluate Chinese enterprises’ CSR reports in a comprehensive, objective and scientific manner and encourage more enterprises to prepare and release high-quality CSR reports and promote sound development of Chinese CSR reporting practices, Development Center for Chinese CSR of China WTO Tribune has developed Golden Bee CSR Report Assessment System 2009 (“GBEE-CRAS2009”) to position and categorize CSR reports with respect to 18 parameters including structural, technical and object parameters and systematically evaluate and study CSR reports from six perspectives which are structural integrity, reliability of the report, materiality of the content, comparability of performance, report reliability, readability and innovative level of the report.
Commencing from March 2009, the Development Center for Chinese CSR of China WTO Tribune spent eight months on tabulating, categorizing, archiving, assessing and validating CSR reports released from 2001 to 2009 in China, the most comprehensive and systematic inventorying of Chinese CSR reports ever undertaken in the country, which resulted in the Reporting Research (2001-2009).
The Reporting Research is intended to build a professional platform for all interested people worldwide to understand the overall situation of Chinese CSR reporting practices and learn the best CSR reporting practices, to give full play to the professional advantages of CSR research and consulting institutions and help Chinese enterprises improve their capabilities in preparing and publishing CSR reports, and to promote effective communication between enterprises and their stakeholders and realize continuous improvements to the CSR performance of Chinese enterprises.
Finding 1: Rapid growth
Chinese CSR reports are drawing unprecedented attention as evidenced by the fact that 582 CSR reports in various forms were released in 2009, 3.44 times that of 2008 (169 reports), an exploding growth. This figure is expected to account for about 15% of global total in 2009, as opposed to 5% in 2008.
The rapid development of Chinese CSR reporting practices is mainly attributed to the following:
1. Examples of leading enterprises. In recent years, China saw a large number of leading, active corporate players in CSR field, the forerunners and pioneers who drive rapid development of China’s CSR reporting practices.
2. Strong guidance of government policy. The Chinese government pays much attention to implementation of corporate social responsibility by enacting a series of policy documents in recent years encouraging enterprises to publish their CSR reports, which have been well echoed by numerous enterprises.
3. Active promotion of social actors. Shanghai Stock Exchange, Shenzhen Stock Exchange, China Federation of Industrial Economics, China National Textile and Apparel Council and China Banking Association, among others, encourage enterprises to release CSR reports by promulgating guidelines.
4. Raised awareness of enterprises. As enterprises develop a deeper understanding of social responsibility and become more willing to actively implement social responsibility, effective communication with stakeholders through publication of CSR reports has become a first choice for more and more Chinese enterprises.
Finding 2: Starting stage
The overall performance of CSR reporting practices in China is low as about half of reports are still at the starting stage and characterized by inadequate disclosure in depth and breadth, low coverage and internationalization level of reported indicators and a certain gap in responding to stakeholder requirements and expectation and embodying the corporate value.
1. About half of reports are still at the starting stage. Of the 541 reports received in 2009, about half are found structurally deficient and very limited in information disclosure, whether in terms of depth or breadth, leading to quite limited communication with stakeholders.
2. Information disclosure is inadequate in both depth and breadth. Disclosure of social performance is relatively good, while disclosure of environmental performance is rather weak, with disclosure of economic performance standing somewhere in between.
3. Low coverage of reported indicators. Most of enterprises give little consideration to the level of information disclosure (must-be-reported, should-be-reported information and to-be-reported voluntarily), with much attention given to disclosure of should-be-reported information and less attention to must-be-reported information and voluntary information disclosure.
4. Chinese CSR reports are below the level of international practice. Only 2.2% of CSR reports under research were prepared in both Chinese and English, 7.8% made reference to Global Reporting Initiative “Sustainability Reporting Guideline “(GRI G3), and 6.1% were verified by independent third-party auditing organizations.
Finding 3: Significant difference
Chinese CSR reports show significant difference whether in terms of distribution of disclosing enterprises or quality of reporting.
1. Quality of reports varies significantly
Level of CSR reporting practice is considerably positively correlated with company size as leading enterprises outperform average companies in CSR reporting practices.
Central state-owned enterprises enjoy a much higher reporting performance than the average level of Chinese CSR reporting practices.
Reporting performance varies significantly from industry to another, with extraction, financial and insurance and power industries holding the leading position.
Growing enterprises and private enterprises indeed published a number of high-quality reports, but most of CSR reports from them await further improvement.
2. A remarkably uneven distribution of reporting enterprises
373 reports were released by enterprises in East China, a figure well above the sum in Central and West China.
377 reports were released by State-owned enterprises (SOEs) or state-holding enterprises, which is 70% of the total reports.
272 reports were released by manufacturing enterprises, a figure exceeding the sum of reports published by all other industrial sectors.
465 reports, or 85.9% of the total, were released by listed companies. And only 14.1% were released by non-listed companies.
Finding 4: Huge potential
Chinese CSR Reporting has a huge potential of development and the number of reports to be published in the next years will rise dramatically, so will the quality of reports, to a level where the value of reports will be fully exploited and reflected.
1. The number of reports will continue rising. In the next years, as Chinese enterprises become more aware of the importance of social responsibility, more and more enterprises will actively release CSR reports.
2. The reporting quality will significantly improve. As the enterprises grow mature, the overall CSR performance of Chinese enterprises will be driven continuously. Enterprises’ ability of writing CSR report will be enhanced and the number of enterprises publishing high-quality CSR reports is expected to rise significantly in the next years.
3. The value of reports will be fully reflected. The important role of CSR report as a channel of communication between enterprises and their stakeholders will be appreciated by more and more enterprises. They will also notice the function of CSR report as a business language and be aware of use CSR reports as an important tool to enhance their management and competitiveness.