THE LIFEWORTH REVIEW OF 2008

The Rise of Responsible Enterprise Initiatives within Asia

The contemporary era of research, practice, and education on matters of corporate responsibility has been dominated by the West. Transnational Corporations (TNCs), Non-Governmental Organisations, (NGOs), consulting firms and academic institutions from Europe and North America have led the agenda, amidst strong domestic drivers for voluntary corporate responses to societal issues, including consumer awareness, independent media, active civil society and an ambivalence towards government intervention.30 Changes are afoot. In the past years not only Asian responsible enterprise challenges have grown, but also Asian responsible enterprise initiatives, according to a report for the UN Conference on Trade and Development in November 2008, by the ethical investment research organisation EIRIS.31

In 2008, there were dozens of conferences on corporate responsibility across the region, indicating at least an enthusiasm for discussing the topic. The IBM study of CEOs found that Asian respondents placed higher importance on their social responsibilities than those from other regions (See Movement East). Corporate responsibility reporting is another indicator. At the CSR Asia Summit in Bangkok, Leontien Plugge, of the Global Reporting Initiative (GRI), highlighted that Asia is now the second largest reporting region, with an exceptionally high rate of sustainability reporting in Japan. Our analysis of Asian companies reporting in accordance with GRI guidelines since 1999, is shown in Figure 3. It shows that of the twenty Asian countries with companies reporting to GRI standards, twelve began reporting in the last four years (Cambodia, Indonesia, Israel, Jordan, Pakistan, Palestine, Philippines, Saudi Arabia, Singapore, Thailand, Turkey and UAE). Reporting levels in Asia in 2008 were up 133% on the previous year. A full list of the companies reporting in 2008 is provided in Appendix 1. As some Asian governments and stock exchanges announced last year that they will introduce requirements to report on corporate sustainability and responsibility, reporting rates are set to increase further (see From CSR in Asia to Asian CSR).

Governments have been key to this increase in reporting. In general, the Eastern Turn in responsible enterprise is being encouraged by government policies. In 2008, Asian governments regularly announced new policies and regulations to promote change, from a new environmental tax in China,32 to a new child labour free product label in India.33

The relative distribution of environmental management system certifications around the world is another indicator of the pursuit of responsible enterprise in different countries. By the end of 2007 there were 71,458 ISO14001 certifications in the Far East (Figure 4). That was 46% of certifications worldwide, up from 42% in 2005 and making it the leading region for total certifications. The number of certifications in the Far East was up from 46,844 in 2005, which is an increase of 52%, compared to an average increase worldwide of 39% on 2005 figures. This indicates the comparatively rapid uptake of ISO14001 in Asia in recent years. The country with the most certifications in 2007 was China with 30,489, up by 240% percent on 2005, indicating a massive uptake of environmental management systems in China during the last few years. Japan and South Korea are also in the top 10 countries for ISO 14001 certifications (Figure 5).34

A plethora of responsible enterprise institutes have emerged across Asia. Qatar CSR and CSR ASEAN were born in 2008, following the previous year when CSR Centre Bangladesh, CSR Kuwait and CSR Bahrain were established. CSR ASEAN is important given its international reach and connection with government. Established by the ASEAN Foundation, it brings together ten ASEAN countries.35 A sample of Asia-based CSR initiatives and advisory services are listed in Figure 6, showing the majority have been created in the last few years.

There was also progress in responsible investment during 2008. Symbolically important, but also practically useful given the economic shifts discussed in this report, The UN Principles for Responsible Investment held its 2008 annual meeting in South Korea. The UNPRI is the largest responsible investment initiative in the world, and the number of its Asian signatories have been growing rapidly in the past year.36 Given the growth of interest in responsible investment in that country, UK-based EIRIS has partnered with KO-CSR of Korea to research Korean companies.

The emergence of a variety of responsible enterprise institutes and initiatives across the region could lead to a new wave of ideas and practices with the potential to influence international agendas. One example of innovation from the region is the new management and reporting tool “imPACT”. This approach brings together dynamic stakeholder engagement with a new approach to communication. Developed jointly by Edelman and CSR Asia, the imPACT philosophy is based on the understanding that many companies face critical societal challenges which they can play a role in addressing through outcome-oriented partnerships. Thus, CSR actions can be mobilised around issues such as climate change, water, human rights, poverty alleviation or health, so that companies become partners in addressing public need, rather than making minor improvements on a diverse set of issues aimed to benefit corporate reputation. Emphasis is placed on shared responsibility and joint accountability with the other organisations and sectors with which a company engages (see From CSR in Asia to Asian CSR).

ImPACT arises due to a recognition of the nature of responsible enterprise challenges in Asia. The diverse cultural traditions of the region are also likely to give rise to more novel approaches. Today more Chinese leaders are speaking either overtly or implicitly about traditional Confucian and Taoist values. Some socially responsible entrepreneurs are even described as Confucian entrepreneurs (see Foreign direct corruption). The potential for philosophical traditions of Asia to encourage innovations in responsible enterprise and finance is something we return to in concluding our introduction.

Focusing on policies, partnerships, management systems and reports, as well as activities using the label “corporate social responsibility”, as indicators of positive contributions from business in society, can be misleading. Instead, the actual business activity is more revealing of the contribution to society. It is in this way that some Asian companies are in the vanguard of a fair and sustainable economy, through technological and business-process innovation.

Social enterprise – innovative commercial activity that seeks to solve social problems – has been growing in Asia. The level of activity was reflected in 2008, with the first Asia Social Entrepreneurs Summit (ASES) held in South Korea37 and Singapore’s Social Innovation Park organising their first Global Social Innovation Forum.38 One of the longest running initiatives to promote social enterprise is the Ashoka Foundation. Each year they select and fund Ashoka Fellows, as social entrepreneurs who “have innovative solutions to social problems and the potential to change patterns across society.”39 Asia is the region that has produced the most Ashoka Fellows (Figure 7).

The potential for Asia to bring social enterprise to the world is illustrated by Nobel peace prize winner Mohammed Yunus and the Grameen Bank. Created thirty years ago to provide micro loans to groups of women in Bangladesh to help them achieve economic self reliance, the bank now has 7.34 million active borrowers, 97% of whom are women. Since its inception, the bank has distributed about USD 6.55 billion in loans with a 98 percent recovery rate.40 One unusual feature of the Grameen Bank is that it is owned by the poor borrowers of the bank, most of whom are women. Of the total equity of the bank, the borrowers own 94%, and the remaining 6% is owned by the Government of Bangladesh.41 In 2008 the bank began making micro finance loans in the United States, and has already lent about US$1.5 million to more than 600 people in Queens, New York. Yunus explains “we’re not a ‘third world’ bank but a good bank coming to America.”42

One area requiring sustainable innovation is personal transportation. In 2008, Newsweek reported that the largest electric car company in the world is Reva Electric Car Company from Bangalore, India, which produces the G-Wiz.43 It now faces competition from BYD Auto, a Chinese automobile manufacturer based in Shenzhen, China.44 It is part of the BYD Company Limited, which makes 65% of the world’s nickel-cadmium batteries and 30% of the world’s lithium-ion mobile phone batteries. With this experience and capacity, BYD Auto has been making strides in the provision of electric and dual-fuel automobiles. On December 15th 2008, BYD launched their new mid size F6 sedan, which uses iron-phosphate based battery, and can be recharged to 70 percent of capacity in 10 minutes at special stations, and in a number of hours through normal electric plugs. The cost effective manufacturing capacities in Shenzhen mean that unlike other car companies BYD can produce most of the components in its cars itself, such as the air-conditioning, lights, seatbelts, and electronics.45 Consequently it can offer its electric cars for US$22,000 – far less than the electric cars being made in the West. The company seeks to become the top car company in the world, and attracted interest from Warren Buffett, who in 2008 bought a 10% share of the company for US$230 million. Far on the other side of Asia, an Israeli company is innovating solutions to the infrastructure problem which holds back the uptake of electric vehicles. Better Place is building a huge network of charging points and battery swapping systems in a number of countries, including Israel and Australia, to enable existing car companies to offer electric models that are compatible with the system. They are innovating a new business model where consumers will pay for the mileage they drive, and thus car producers will earn revenues from the amount of charging their customers use. This parallels the business models of manufacturers of mobile phones and computer printers.46 As car companies in the US struggle and require government support, the dawn of a new era of transportation is appearing in the East.

Nevertheless, sustainable innovation within Asia often involves Western enterprise and finance. Both Better Place and BYD have drawn upon western capital and technologies. The cover of this review shows windmills in Bangui village in Ilocos Norte province, northern Philippines. In 2008, the power company NorthWind added five new turbines, raising the wind farm’s capacity to 33 MW, enabling the company to provide half the province’s power needs. NorthWind is the result of Danish engineering, with support from the Danish International Development Agency (Danida), the Philippines’s almost infinite coastline, and the World Bank’s Prototype Carbon Fund (PCF), which enables NorthWind to sell “carbon emission reduction credits” under the Clean Development Mechanism (CDM) of the Kyoto Protocol.47 Sustainable innovations in Asia will continue to benefit from East-West exchange. That is important, as the evidence from just these two areas of mobility and banking-the-poor highlight how the world can benefit from the rise of Asian responsible enterprise.

» The Eastern Turn in Academe

Figure 3: Asian Company GRI Reports Since 1999
Figure 4: Total ISO 14001 certifications in the Far East from December 2005 to December 2007.
Figure 5: Top Countries for ISO 14001 certifications in December 2007.
Figure 6: A selection of Asia-based CSR Institutes
Figure 7: Regional Distribution of Ashoka Fellows
Appendix 1 – Asian Companies Reporting to GRI Guidelines in 2008

These figures, appendix and all references are available in the pdf download and hard copy versions of this annual review, available from Lifeworth’s bookstore.

This section can be referenced as:

Bendell, J., and C Ng, ‘Introduction’, in J. Bendell, N. Alam, S. Lin, C. Ng, L. Rimando, C. Veuthey, B. Wettstein (2009) The Eastern Turn in Responsible Enterprise: A Yearly Review of Corporate Responsibility from Lifeworth, Lifeworth: Manila, Philippines. (Page numbers for this section are available in the pdf download and hardcopy.)

Share your views or news on this subject