Yin Gefei: Chinese path to modernization and CSR
2023-07-09GoldenBeeGoldenBee0
What opportunities and challenges will the Chinese path to modernization bring to enterprises efforts on CSR and sustainable development?
On June 8-9, 2023, at the 18th International CSR Forum with the theme of "Responsible Competitiveness in the Chinese Path to Modernization", Yin Gefei, Founder and Chief Expert of GoldenBee ThinkTank, shared in his keynote speech that the five characteristics of Chinese modernization will promote a series of new features of CSR (as shown below). The following are the main contents of his speech.
On June 8-9, 2023, at the 18th International CSR Forum with the theme of "Responsible Competitiveness in the Chinese Path to Modernization", Yin Gefei, Founder and Chief Expert of GoldenBee ThinkTank, shared in his keynote speech that the five characteristics of Chinese modernization will promote a series of new features of CSR (as shown below). The following are the main contents of his speech.
The report to the 20th National Congress of the Communist Party of China (CPC) pointed out that Chinese path to modernization is the modernization with a huge population, of common prosperity for all, of material and cultural-ethical advancement, of harmony between humanity and nature and of peaceful development. ESG is highly compatible with these five characteristics of Chinese path to modernization
These five characteristics of Chinese modernization have put forward new requirements and directions for enterprises to fulfill their social responsibilities.
01The modernization with a huge population
Enterprises should pay more attention to the inclusivity of industries and services, and to the engagement in rural revitalization
The huge size of the population in China has brought both challenges and advantages to modernization.
To realize modernization with a huge population, enterprises must first fulfill their responsibilities to their customers, and serve the huge consumer market with high-quality products and services. They must also create shared value and provide more inclusive products, sharing the benefits of modernization with all people.
Enterprises in utility industry such as water supply, power supply, railroads, aviation, energy, food, etc. pay attention to a balanced access to basic services. For example, for the water supply sector, the Guidance on Guaranteeing Rural Water Supply (2021) states that by 2025, the nationwide rural piped-water penetration rate will reach 88%, and that by 2035, China will generally achieve modernization of its rural water supply.
It is also significant to enable the access to inclusive products and services for more than 85 million people with disabilities. Some Internet enterprises have been making the internet more accessible for people with hearing and visual impairments. For example, Meituan launched a voice-to-order feature to help the blind and visually impaired people to order food online, Tencent QQ launched a chat accessible reading version in 2010.
Meanwhile, we need to realize that the most challenging task in building a modern socialist country in an all-round way still lies in the rural areas. Efforts should be made to push forward urban-rural integration and coordinated regional development. This requires enterprises to leverage resources of industries, talents, culture, ecology and organizations to construct rural areas, while fulfilling their social responsibilities.
02 The odernization with common prosperity for all
Enterprises should pay more attention to the foundational role of expected responsibility to advocate the China’s three-tier income distribution system.
* China’s income distribution system is divided into three sections: primary, secondary and tertiary distribution. Primary and secondary distributions highlight the efforts of the market and government in promoting overall income equality, while the tertiary distribution, which officially became part of the system in 2019, indicates having citizens help increase the income of the poor by activities such as donations, charity and voluntary work, the official Study Times newspaper reported. (Source: China Stocks.net)
CSR has three major responsibilities: obligatory responsibility, expected responsibility, and discretional responsibility, which corresponds to the three-tier distributions. Improving the three-tier distributions is also the basic path to the common prosperity of all.
◆Obligatory responsibility–rooted in expected responsibility to contribute to the three-tiers distributions
To fulfill the obligatory responsibility, enterprises should pay taxes according to the regulations. The contribution of an enterprise to the government's tax revenue can be measured by the degree of taxation.
◆Expected responsibility-empowering employees’ development and productivity improvement
The expected responsibility of enterprises is to ensure all people to get paid for their work. This may be the fundamental task when contributing to the primary distribution and achieving common prosperity for all. It should also be the focus of CSR. In the primary distribution, the most important task of enterprises is to empower their employees, improve their skills and productivity to create more wealth. It is also very important to balance the interests between enterprises, suppliers, customers and partners. This balance is a key to achieve the goal of common wealth, as enterprises’ revenue is linked to the income distribution of employees of the suppliers and partners, as well as customers.
◆ Discretional responsibility- giving attention to key workers and essential job values
Key workers play essential role in our society. The society should recognize their roles and values in the daily functioning of economies. Enterprises should also show more responsible care to them.
Key workers can be found in eight main occupational groups covering health, food systems, retail, security, cleaning and sanitation, transport, manual, and technical and clerical occupations.
According to a report of International Labour Organization (ILO), 29% of key workers worldwide are low-paid (i.e. wages below two-thirds of the median hourly wage). On average, key workers earn 26% less than other employees. In low-income countries, more than 46% of key employees work long hours, and nearly 60% of key workers lack a certain form of social protection.
Enterprises can fulfill the discretional responsibility and contribute to the third distribution through charitable and benevolent activities. For example, in September 2021, Alibaba Group launched "Ten Actions to Promote Common Prosperity" in which it committed to invest a total of 100 billion yuan by 2025 to contribute to the country's common prosperity. Ten actions will be carried out in five aspects which are scientific and technological innovation, economic development, high-quality employment, assistance for vulnerable groups and the development of Common Prosperity Development Fund.
03 The modernization of coordinating material and cultural-ethical advancement
Enterprises should pay more attention to the comprehensive shaping of the responsibility spirit, systems, materials, and behavioral culture.
One major drawback of modernization in some countries in the past is the excessive expansion of materialism. Having a strong material foundation and abundant material resources is certainly an essential aspect of modernization. However, if people only pursue material enjoyment without a healthy spiritual pursuit and rich spiritual life, becoming the kind of "one-dimensional man" described by sociologists, where diverse human nature transforms into a single material desire, it will be a tragedy for humanity. This is not what we pursue in the Chinese modernization. We pursue both material abundance and spiritual richness, aiming for comprehensive human development.
In terms of fulfilling social responsibilities, it is necessary for enterprises to create wealth responsibly and create a civilization responsibly, or a civilization of responsibility. This civilization of responsibility can be manifested in the construction of a culture of responsibility, including a spiritual culture of responsibility, an institutional culture of responsibility, a material culture of responsibility, and a behavioral culture of responsibility.
◆ Spiritual culture of responsibility
The spiritual culture of responsibility focuses on company’s purpose and vision. In the process of fulfilling social responsibilities, central state-owned enterprises (SOEs) integrate the concept of responsibility into their core culture.
For example, Sinopec has changed its corporate mission to "better energy for better living", transforming its fundamental value from simply providing fueling services to contributing to a better life. This mission not only includes the purpose of Sinopec's existence, but also its business practices.
China State Construction has changed its corporate mission to "expand a happy living environment". As the world's largest construction company, China State Construction associates this space of happiness with stakeholders such as employees, customers, environment, community, and government, and defines specific spaces for them to promote responsible and sustainable operations throughout the company.
◆ Institutional culture of responsibility
The fulfillment of CSR requires the formation of institutional culture. It is not just a concept, but also needs to be incorporated into strategies and implemented in institutional documents. This includes the rules of supplier management, anti-corruption and anti-bribery rules, rules for business ethics training, etc., forming a new culture of responsibility system.
◆ Material culture of responsibility
Enterprises will also form corresponding material culture of responsibility in their daily production and operation.
These five characteristics of Chinese modernization have put forward new requirements and directions for enterprises to fulfill their social responsibilities.
01The modernization with a huge population
Enterprises should pay more attention to the inclusivity of industries and services, and to the engagement in rural revitalization
The huge size of the population in China has brought both challenges and advantages to modernization.
To realize modernization with a huge population, enterprises must first fulfill their responsibilities to their customers, and serve the huge consumer market with high-quality products and services. They must also create shared value and provide more inclusive products, sharing the benefits of modernization with all people.
Enterprises in utility industry such as water supply, power supply, railroads, aviation, energy, food, etc. pay attention to a balanced access to basic services. For example, for the water supply sector, the Guidance on Guaranteeing Rural Water Supply (2021) states that by 2025, the nationwide rural piped-water penetration rate will reach 88%, and that by 2035, China will generally achieve modernization of its rural water supply.
It is also significant to enable the access to inclusive products and services for more than 85 million people with disabilities. Some Internet enterprises have been making the internet more accessible for people with hearing and visual impairments. For example, Meituan launched a voice-to-order feature to help the blind and visually impaired people to order food online, Tencent QQ launched a chat accessible reading version in 2010.
Meanwhile, we need to realize that the most challenging task in building a modern socialist country in an all-round way still lies in the rural areas. Efforts should be made to push forward urban-rural integration and coordinated regional development. This requires enterprises to leverage resources of industries, talents, culture, ecology and organizations to construct rural areas, while fulfilling their social responsibilities.
02 The odernization with common prosperity for all
Enterprises should pay more attention to the foundational role of expected responsibility to advocate the China’s three-tier income distribution system.
* China’s income distribution system is divided into three sections: primary, secondary and tertiary distribution. Primary and secondary distributions highlight the efforts of the market and government in promoting overall income equality, while the tertiary distribution, which officially became part of the system in 2019, indicates having citizens help increase the income of the poor by activities such as donations, charity and voluntary work, the official Study Times newspaper reported. (Source: China Stocks.net)
CSR has three major responsibilities: obligatory responsibility, expected responsibility, and discretional responsibility, which corresponds to the three-tier distributions. Improving the three-tier distributions is also the basic path to the common prosperity of all.
◆Obligatory responsibility–rooted in expected responsibility to contribute to the three-tiers distributions
To fulfill the obligatory responsibility, enterprises should pay taxes according to the regulations. The contribution of an enterprise to the government's tax revenue can be measured by the degree of taxation.
◆Expected responsibility-empowering employees’ development and productivity improvement
The expected responsibility of enterprises is to ensure all people to get paid for their work. This may be the fundamental task when contributing to the primary distribution and achieving common prosperity for all. It should also be the focus of CSR. In the primary distribution, the most important task of enterprises is to empower their employees, improve their skills and productivity to create more wealth. It is also very important to balance the interests between enterprises, suppliers, customers and partners. This balance is a key to achieve the goal of common wealth, as enterprises’ revenue is linked to the income distribution of employees of the suppliers and partners, as well as customers.
◆ Discretional responsibility- giving attention to key workers and essential job values
Key workers play essential role in our society. The society should recognize their roles and values in the daily functioning of economies. Enterprises should also show more responsible care to them.
Key workers can be found in eight main occupational groups covering health, food systems, retail, security, cleaning and sanitation, transport, manual, and technical and clerical occupations.
According to a report of International Labour Organization (ILO), 29% of key workers worldwide are low-paid (i.e. wages below two-thirds of the median hourly wage). On average, key workers earn 26% less than other employees. In low-income countries, more than 46% of key employees work long hours, and nearly 60% of key workers lack a certain form of social protection.
Enterprises can fulfill the discretional responsibility and contribute to the third distribution through charitable and benevolent activities. For example, in September 2021, Alibaba Group launched "Ten Actions to Promote Common Prosperity" in which it committed to invest a total of 100 billion yuan by 2025 to contribute to the country's common prosperity. Ten actions will be carried out in five aspects which are scientific and technological innovation, economic development, high-quality employment, assistance for vulnerable groups and the development of Common Prosperity Development Fund.
03 The modernization of coordinating material and cultural-ethical advancement
Enterprises should pay more attention to the comprehensive shaping of the responsibility spirit, systems, materials, and behavioral culture.
One major drawback of modernization in some countries in the past is the excessive expansion of materialism. Having a strong material foundation and abundant material resources is certainly an essential aspect of modernization. However, if people only pursue material enjoyment without a healthy spiritual pursuit and rich spiritual life, becoming the kind of "one-dimensional man" described by sociologists, where diverse human nature transforms into a single material desire, it will be a tragedy for humanity. This is not what we pursue in the Chinese modernization. We pursue both material abundance and spiritual richness, aiming for comprehensive human development.
In terms of fulfilling social responsibilities, it is necessary for enterprises to create wealth responsibly and create a civilization responsibly, or a civilization of responsibility. This civilization of responsibility can be manifested in the construction of a culture of responsibility, including a spiritual culture of responsibility, an institutional culture of responsibility, a material culture of responsibility, and a behavioral culture of responsibility.
◆ Spiritual culture of responsibility
The spiritual culture of responsibility focuses on company’s purpose and vision. In the process of fulfilling social responsibilities, central state-owned enterprises (SOEs) integrate the concept of responsibility into their core culture.
For example, Sinopec has changed its corporate mission to "better energy for better living", transforming its fundamental value from simply providing fueling services to contributing to a better life. This mission not only includes the purpose of Sinopec's existence, but also its business practices.
China State Construction has changed its corporate mission to "expand a happy living environment". As the world's largest construction company, China State Construction associates this space of happiness with stakeholders such as employees, customers, environment, community, and government, and defines specific spaces for them to promote responsible and sustainable operations throughout the company.
◆ Institutional culture of responsibility
The fulfillment of CSR requires the formation of institutional culture. It is not just a concept, but also needs to be incorporated into strategies and implemented in institutional documents. This includes the rules of supplier management, anti-corruption and anti-bribery rules, rules for business ethics training, etc., forming a new culture of responsibility system.
◆ Material culture of responsibility
Enterprises will also form corresponding material culture of responsibility in their daily production and operation.
For example, Sprite bottles have changed from green to transparent because the original green bottles were not easily reusable. Coca-Cola deeply integrates environmental concepts with new transparent packaging, and also links the purchase of new packaging products with supporting environmental protection, so that consumers consider buying new packaging products as more environmentally friendly and a way to support environmental protection.
◆ Behavioral culture of responsibility
McDonald's turned its iconic golden arches upside down to form the letter "W" for women on International Women's Day, symbolizing the celebration of women's omnipresence and the recognition of their achievements. McDonald's is taking responsibility by emphasizing the value and role of women in society through this gesture.
During the pandemic, the original "M" was split into two separate "n" letters with a certain distance between them, urging everyone to maintain a safe distance during the pandemic. This also reflects a culture of responsibility.
04 The modernization of harmony between humanity and nature
Enterprises should pay more attention to their social responsibility towards lives
In the modernization process of harmonious coexistence between humans and nature, emphasis is placed on human responsibility towards the community of all life. After President Xi Jinping first proposed the concept of "community of life" at the Third Plenary Session of the 18th Central Committee of the Communist Party of China (CPC）, the report of the 19th CPC National Congress further emphasized that "Man and nature form a community of life; we, as human beings, must respect nature, follow its ways, and protect it." The report of the 20th CPC National Congress pointed out that "Nature provides the basic conditions for human survival and development. Respecting, adapting to, and protecting nature is essential for building China into a modern socialist country in all respects."
The community of all life is not only about environmental protection and pollution control, but more importantly, it is about taking responsibility for life. We need to emphasize that humans need life partners, and animals and plants are our life partners. Our pollution of the environment and our use of resources are all related to our relationship with other life partners.
In the construction of the community of life on the Earth, enterprises should realize that the concept of a community of life is conducive to strengthening their noble responsibility awareness of being partners in human life. Enterprises should pay attention to their social responsibility for life, deepen their understanding of the current social environment, and adhere to the way of fulfilling their responsibilities.
05 The Modernization of peaceful development
Enterprises should pay more attention to fulfilling their global responsibility of sustainability
The report of the 20th CPC National Congress pointed out that “Chinese modernization is the modernization of peaceful development. In pursuing modernization, China will not tread the old path of war, colonization, and plunder taken by some countries. That brutal and blood-stained path of enrichment at the expense of others caused great suffering for the people of developing countries. We will stand firmly on the right side of history and on the side of human progress. Dedicated to peace, development, cooperation, and mutual benefit, we will strive to safeguard world peace and development as we pursue our own development, and we will make greater contributions to world peace and development through our own development.” This prompts companies to have a sense of responsibility and to be important messengers of China's path of peaceful development. Whether each company responsibly operates and whether it forms a harmonious and symbiotic development path with the local community during its overseas operations may affect the local people's perception of whether our country is truly on the path of peaceful development.
Therefore, Chinese enterprises must also ensure that the above responsibilities are equally fulfilled in their overseas operations, including benefiting more people, valuing life, and creating spiritual wealth, etc.
According to a survey, Chinese companies are relatively well recognized domestically, but they are not sufficiently involved in global issues abroad. This indicates that Chinese companies need to pay more attention to global sustainable development issues overseas in order to gain recognition and acceptance from local stakeholders.
This article is based on Yin Gefei’s speech at the 18th International CSR Forum.
During the pandemic, the original "M" was split into two separate "n" letters with a certain distance between them, urging everyone to maintain a safe distance during the pandemic. This also reflects a culture of responsibility.
04 The modernization of harmony between humanity and nature
Enterprises should pay more attention to their social responsibility towards lives
In the modernization process of harmonious coexistence between humans and nature, emphasis is placed on human responsibility towards the community of all life. After President Xi Jinping first proposed the concept of "community of life" at the Third Plenary Session of the 18th Central Committee of the Communist Party of China (CPC）, the report of the 19th CPC National Congress further emphasized that "Man and nature form a community of life; we, as human beings, must respect nature, follow its ways, and protect it." The report of the 20th CPC National Congress pointed out that "Nature provides the basic conditions for human survival and development. Respecting, adapting to, and protecting nature is essential for building China into a modern socialist country in all respects."
The community of all life is not only about environmental protection and pollution control, but more importantly, it is about taking responsibility for life. We need to emphasize that humans need life partners, and animals and plants are our life partners. Our pollution of the environment and our use of resources are all related to our relationship with other life partners.
In the construction of the community of life on the Earth, enterprises should realize that the concept of a community of life is conducive to strengthening their noble responsibility awareness of being partners in human life. Enterprises should pay attention to their social responsibility for life, deepen their understanding of the current social environment, and adhere to the way of fulfilling their responsibilities.
05 The Modernization of peaceful development
Enterprises should pay more attention to fulfilling their global responsibility of sustainability
The report of the 20th CPC National Congress pointed out that “Chinese modernization is the modernization of peaceful development. In pursuing modernization, China will not tread the old path of war, colonization, and plunder taken by some countries. That brutal and blood-stained path of enrichment at the expense of others caused great suffering for the people of developing countries. We will stand firmly on the right side of history and on the side of human progress. Dedicated to peace, development, cooperation, and mutual benefit, we will strive to safeguard world peace and development as we pursue our own development, and we will make greater contributions to world peace and development through our own development.” This prompts companies to have a sense of responsibility and to be important messengers of China's path of peaceful development. Whether each company responsibly operates and whether it forms a harmonious and symbiotic development path with the local community during its overseas operations may affect the local people's perception of whether our country is truly on the path of peaceful development.
Therefore, Chinese enterprises must also ensure that the above responsibilities are equally fulfilled in their overseas operations, including benefiting more people, valuing life, and creating spiritual wealth, etc.
According to a survey, Chinese companies are relatively well recognized domestically, but they are not sufficiently involved in global issues abroad. This indicates that Chinese companies need to pay more attention to global sustainable development issues overseas in order to gain recognition and acceptance from local stakeholders.
This article is based on Yin Gefei’s speech at the 18th International CSR Forum.
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