False belief

Some firms are reluctant to invest in environmental protection in the false belief that costs are too high. Chen countered that argument, giving this example:

In 2004, the area between Hunan Province, Guizhou Province and Chongqing Municipality became almost uninhabitable area due to many factories' illegal manganese mining there.

Factories piled up the residues without proper treatment, thus the manganese seriously polluted the land and water. The originally clean river turned black.

The poisoned water was not only undrinkable and toxic for fish and shrimps, but it leached into the soil, reducing grain production. Strange ailments were reported by residents in the area.

Meanwhile, the low extraction costs enabled the factories to sell the manganese at an extremely low price on the global market, seriously disrupting development of the whole industry.

Identifying the problem, the central government took three years to standardize the manganese production and residue treatment as well as to restore the environment. The outcome turned out to be promising: the environment improved, pollution was reduced and the GDP of manganese-related industries in the area tripled.

Indeed, enterprises need to be monitored and encouraged to do good.

The Shanghai Stock Exchange has created a social responsibility index this year. Only 100 stocks that disclose their social responsibility reports and rank high in their social contribution per share will be included in the index, said Zhou Qinye from the exchange.

The calculation of social contribution per share is a company's net profits plus bank loan interests paid, taxes paid, donation to communities, employees' salaries paid and minus the cost of environmental pollution the company made.

Hopefully, encouraging more disclosure on companies' CSR fulfillment will put more pressure on them, driving them to do better.