Researchers are urging society to rethink standards for good
companies as the world moves from a traditional industrial economy
to a knowledge-based one.
Jin Zhouying, a researcher on enterprise innovation with the
Chinese Academy of Social Sciences, has been crying out for
change.
"It is high time for us to have second thoughts about what makes
a good employer," said Jin, who is trying to introduce a new system
to assess enterprises in China.
Jin even challenges such widely accepted enterprise-ranking
systems as the Fortune Global 500 and China Top 500,
complaining that evaluating organizations only look at economic
performance.
"They don't give much consideration to social responsibility,"
said Jin.
She believes that today's companies serve not just shareholders,
but an increasing array of stakeholders -- employees, customers,
communities, activists and others who feel they have a stake in the
actions of a company.
"So making profits and being responsible to stakeholders and the
environment should be basic norms for friendly enterprises." Jin
and her team are trying to introduce into China the norms of the
Future 500, an enterprise evaluation system formulated in the
United States and Japan.
"My team should spare no effort in this endeavor, because it is
essential for the country's sustainable development and humanity's
well-being," said Jin.
At present, China National Petroleum Corp. (CNPC) is in first
place on the list of China's Top 500 enterprises, compiled by the
China Enterprise Confederation (CEC.) Its turnover of US$45.8
billion in 2002 earned it that spot. But last year, a gas leak in
one of its branches in southwest China's Chongqing Municipality
killed more than 200 local residents.
"Is it still qualified to be on the list? We may need to rethink
this," said Jin.
Jin stressed that good enterprises on the Future 500 will pay
more attention to labor standards and environmental
responsibility.
"We have strict labor standards by which enterprises are judged
for work conditions, treatment of workers by management, discipline
and compensation," said Jin. She added that the traditional economy
is based on natural resources, while knowledge-based industries
should rely on human resources.
The requirements include prevention of child labor. Enterprises
must also provide a safe and healthy work environment, take steps
to prevent injuries and offer regular health and safety training.
Systems to detect threats to safety, as well as access to bathrooms
and potable water are also essential.
"All the requirements are either mandated by or in line with
China's laws and regulations, but I'm afraid it is difficult for
many of China's enterprises to translate them into concrete
action."
Professor Chang Kai of Renmin University of China said that
Chinese enterprises should take tangible and practical steps to
adopt enhanced labor standards. He warned, however, that care
should be taken to prevent abuse of or bias in application of the
standards.
Chang asserts that China should take an active role in shaping
the standards of enterprise responsibility, which are still being
tested and improved on the way to become a set of international
norms.
"And the standards should be localized," he said. "We cannot
expect China, a developing country with such a big population, to
afford the same high-level labor standards as more developed
economies."
Extended responsibilities of enterprises to protect their
environments are also included in the Future 500 evaluation system.
Enterprise targets should be set at zero emissions, no matter
whether harmful or not.
"The trend is correct but we need to cater to China's real
situation," said Zhang Jianyu, a public policy researcher at
Tsinghua University. "For Chinese enterprises, the priority is to
make profit, which Chinese laws and regulations allow. Then they
can go further to take on extended responsibilities."
Zhang said that the concept of extended responsibility requires
an enterprise to be responsible for the social and environmental
effects caused by its products beyond the production process.
The idea has been suggested and practiced for quite some time in
European industrialized countries, such as in the automobile and
battery sectors and in the US electronics sector.
Zhang, also head of the Beijing office for the US-based,
nongovernmental organization Environmental Defense, said there is
no doubt that environmental requirements will get stricter in the
future and a forward-looking approach will eventually benefit
companies.
However, environmental protection also comes with costs and it
is not practical for an enterprise to take an approach that is much
beyond current environmental requirements.
"The demanding task is how to make environmental laws and
regulations enforceable," said Zhang, adding that defining the
appropriate range of responsibilities is still a matter of
debate.
(China Daily August 24, 2004)