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【Analysis】China-Africa Corporate Social Responsibility: A macroeconomic approach

Corporate Social Responsibility (CSR) of companies is never black and white, it is a multifaceted topic that has been discussed across disciplines and is ever evolving in definition and impact. CSR has become of increasing concern to the business world and this has resulted in growing interaction between governments, businesses and society as a whole. In the past, businesses primarily concerned themselves with the economic results of their decisions but CSR calls companies to do more for the wellbeing of others than they are required in accounting in order to make a profit and also above what they are legally obligated to fulfill. In today's environment of a globalized value chain of production, employees and customers place a high value on working for and spending their money with businesses that prioritize corporate social responsibility (CSR).

CSR as an evolving business practice incorporates sustainable development into a company's business model. It has a positive impact on social, economic and environmental factors. There are different types of CSR (in no particular order):

  • Environmental CSR: focuses on eco-issues such as climate change because businesses, regardless of size, have large carbon footprints. Any steps they can take to reduce those footprints are considered good for both the company and society.

  • Community based CSR: businesses work with other organizations to improve the quality of life of the people in the local community.

  •  HR based CSR: projects that improve the wellbeing of the staff mostly in the form of ethical labor practices.

  • Philanthropy based CSR:businesses donate money to a good cause, usually through a charity partner, these can also be described as philanthropy/public benefit efforts.

Corporate social responsibility (CSR) is the concept that enterprises can and should meet "triple bottom lines" (6) of economic growth, environmental soundness and social progress. Chinese civil society and government have pushed for the business community to take their legal and moral responsibilities more seriously as they intensify investments efforts into Africa in alignment with theWin-Win Cooperation mindset of the Sino-Africa relations.

Beijing has brought in a perspective to not just to approach CSR from a micro economic stance (1 firm into 1 community) but to see it as a macroeconomic endeavor implemented from the highest level of governance, law and policy making. There are two significant regulatory documents that are milestones in the CSR movement in China. The Corporation Law of China, which was implemented in January 2006, provides the legal foundation of CSR stating that corporations are obliged to take social responsibility activities. There are also the Guidelines for Central State-Owned-Enterprises (SOEs) regarding Implementation of Corporate Social Responsibility (issued in January 2008) which requires SOEs to establish the necessary mechanisms to fulfill CSR so as to "be human-oriented, stick to scientific development, and be responsible to stakeholders and environment, so as to achieve the harmony between enterprises' growth, society and environment".Separate from governmental regulations, there are pressures from Chinese companies’ business partners, investors and local concerns that have been critical in pushing forward Chinese business to incorporate CSR into business strategy. Media in China and grassroots movements led by local environmental NGOs have gained increased momentum and become more vocal and influential in support of CSR. Back in 2009, the Shanghai Stock Exchange announced its CSR Index; in 2011 in partnership with China Business News, the China Industrial Bank launched an Index for Socially Responsible Investment. A group of Chinese business leaders has also set up an Entrepreneurs Club (Zhongguo Qiyejia Julebu) whose primary objective is to build "Green Companies.

The delicate balance of CSR with the economic performance of companies is not a challenge for just Chinese companies but all multinationals as they operate in different regions and jurisdictions. The underlying success of CRS is not in just the companies but in the structures that support them, that is, the governance, the legislative structures and the organization of the civil community in which the companies operate in and from. The aim of CSR is not to place the companies in bankruptcy but to promote a development of the livelihood of the people who are employed by the firms and the communities they are in and in return drive positive accounting and economic returns. Beijing in particular has made many commitments to the positive change of not just Africa but all its key developing nation trade partners through the Belt and Road Initiative, FOCAC commitments and other similar agreements.

Multilateral relations between China andAfrican date back to 1956 with Algeria, Egypt, Guinea, Somalia, Morocco and Sudan signing trade agreements and establishing diplomatic relations. To date, 53 of Africa’s 55 countries have diplomatic relations with China – the most recent countries relation established in 2018 (Burkina Faso). The positive impact of these relations are undeniable and tangible for example the construction of a high-speed railway line in Kenya built by the Chinese government linking Nairobi and Mombasa, the refurbishment of power and water reticulation systems in Zimbabwe, installation of railway systems inEthiopia and Djibouti, construction several dams in the sub-Saharan region to make hydro power plants which have been instrumental in generating power for local industries and for citizens' consumption. Bridges, roads, shopping malls, hospitals and clinics and even sports stadiums have also been constructed by Chinese companies all over the region. All these projects have assisted in creating employment for African people and the construction of Chinese factories currently operating in many parts of sub-Saharan Africa and this reason a quite welcome development in the continent.

The African governments are in turn tasked with an equal responsibility to also push toward CSR in their investment seeking mandates. In an ideal case, all African countries should have legislative measures written into their agreements with investor companies; have measurable tools of evaluation not just for local revenue, personnel skill empowerment, training and infrastructure development but also CSR policies and activities. It is vital for governments to be upfront on CSR expectations and requirements because the truth is, no company from anywhere in the world bases its investment decisions on the probability of social responsibility impact. These are profit driven entities that are seeking a return on investment and that is the long and short of it. The resulting impact they can and will make can be controlled and monitored to the benefit of the community as is enabled and required by both the host and sending nation.

It is one thing for the government of the company’s origin to be advocating for CSR, like in the case if China, but it is another to have African nation governments lobbying for the same; it is the synergy of both that will result in greater benefits all around. Investment ought to be synonymous with responsibility to the community because then, organizations like China-Africa Business Council (CABC) will aid in presenting a holistic picture of investment in the continent. Companies investing in countries where environmental and social regulations are rather loose may reduce compliance costs, but may increase business risks in the long run. It is therefore important for governing bodies and investors alike to align efforts with leading companies in certain developed regions or sectors in order to set standards and shape the development landscape through legislation, peer collaborations and media influence. The days of playing the blame game are past; accountability and measurability are the order of this era.



Sources:

http://www.chinacsr.com/en/

https://www.ictsd.org/bridges-news/trade-negotiations-insights/news/social-responsibility-of-chinese-investment-in-africa

https://www.bsr.org/reports/BSR_China_Rising_Influence_in_Africa.pdf

https://iveybusinessjournal.com/publication/chinese-state-owned-enterprises-in-africa-myths-and-reali

http://www.chinadaily.com.cn/world/2014-05/19/content_17518074.htm ties/

http://www.csrinpractice.com/what-is-csr/

http://www.globaltimes.cn/content/1133238.shtml

http://www.china.org.cn/opinion/2019-06/25/content_74903850.htm

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