According to the 2011 Grant Thornton International Business Report, cost management and recruitment/ staff retention are key corporate social responsibility drivers towards more ethical business practices for privately held businesses in Hong Kong and mainland China. The survey also found that not many Hong Kong and mainland Chinese companies report their CSR activities and there is therefore an opportunity for business to raise awareness in their activities in this area.
Just 36 percent of businesses globally are motivated to adopt more ethical business practices by a desire to "save the planet", down from 40 percent in 2008. On the other hand, businesses remain focused on the merits of CSR in terms of brand building, securing key staff and winning future contracts. Globally, 56 percent of businesses cite public attitudes/brand building and recruitment/retention of staff as the key drivers (alongside cost management) this year.
Key CSR Drivers
The report identifies several drivers towards more ethical business practices, among which cost management has been cited by interviewees as the most important for businesses in Hong Kong (66 percent) and mainland China (77 percent), though the overall percentage of global businesses citing it as a key driver drops from 63 percent in 2008 to 56 percent in 2011. The second important driver for Hong Kong businesses is "recruitment/retention of staff" (59 percent), which is also the only driver that rises compared to 2008 results, and "public attitudes/building brand" (49 percent). These areas rank much higher than other factors such as "investor relations" (29 percent), "saving the planet" (27 percent), "tax relief" (27 percent) and "government pressure" (18 percent).
"The figures show that cost management and retention of staff are the major concerns for Hong Kong businesses, especially now that the market is getting more competitive. In the report released by us in March, 88 percent of the Hong Kong businesses and 64 percent of Mainland businesses surveyed had plans to increase employee pay in the next 12 months because they were competing for talents. From our point of view, remuneration packages are no longer enough to attract and retain staff. Businesses should recognise the need to invest greater efforts in brand building through adopting more CSR initiatives," says Daniel Lin, managing partner of Grant Thornton Jingdu Tianhua.
Active in Donation
Regarding CSR initiatives, Hong Kong businesses are spending most efforts on "donating to community casues/charities" (69 percent), "improving energy efficiency" (67 percent) and "improving waste management" (66 percent) while mainland Chinese companies see "actively promoting workforce health and well being" (84 percent), "providing interships/apprenticeships/work experience" (78 percent) and "changing products/services to reduce their environmental or social impact" (75 percent) as most important.
"Most Hong Kong businesses choose donation as a way to fulfill their social responsibilties," comments Lin. "Hong Kong businesses are generous and the focus on donation here is higher than gloabl average. Companies in Hong Kong focus more on financial and environmental impacts but pay relatively less attention to the well being of staff. However, this area is key to staff recruitment and retention, and taking a proactive approach helps employers stand out in the marketplace."
Hong Kong businesses do undertake a wide range of CSR initiatives. However, they are not very active in reporting their CSR efforts. Only 24 percent of Hong Kong businesses and 42 percent of mainland Chinese businesses interviewed in the survey report their CSR activities.
Greater Corporate Governance
"In April 2011, the Hong Kong Stock Exchange published public responses to the proposed changes to its Code on Corporate Governance Practices, which called for improving corporate governance standards and disclosure of listed companies. This is a step forward to move Hong Kong towards international standards of corporate governance and increase the overall risk management standards of listed companies. We hope that improvements in corporate governance of listed companies will have a positive impact on privately held businesses," adds Lin.
"All businesses should look closely at the potential commercial benefits of reporting their CSR activity. A competitive advantage exists for those businesses which can demonstrate leadership in implementing socially responsible and transparent practices and seize the opportunity to attract and retain skilled workers, build brand value and secure future contracts with multinationals who frequently adopt strict CSR guidelines in selecting their suppliers."
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