Laurie Underwood

"If CSR practices were profitable, every company would be already be using them. In fact, only well established multinationals are doing so. It's better to acknowledge that CSR is expensive in the short run.... Companies should pursue CSR because it is the right thing to do, not because it is profitable."

"Corporate social performance and profits are positively correlated. Ultimately, it pays to follow socially responsible practices. Corporations such as Nike and McDonalds are simultaneously improving their margins and strengthening their public image by using practices that benefit society and the environment."

So ran both sides of a debate between MBA students from CEIBS and the Cheung Kong Graduate School of Business (CKGSB), in a May 23 event entitled "Corporate Social Responsibility: Friends or Foes?" The day-long forum, sponsored by the Consulate of the Kingdom of the Netherlands in Shanghai, brought together students from CEIBS, CKGSB, Jiaotong, Tongji, and Fudan universities to present issues facing business and corporate social responsibility.

Throughout the event, the students' arguments were assessed by a panel of China-based business leaders who shared their real-life experiences in balancing CSR and profitability: Frank Braeken, group vice president, Unilever China; Stefan Sommer, advisor to the Managing Board, DSM, China; Frank Chen, vice president and chief marketing officer, Philips Electronics, Greater China; Tim Jeanne, director of operations, DHV Engineering, China; Aidan Metcalfe, general manager, International Paints (Shanghai) Co.

The forum began with a timed debate between CKGSB and CEIBS, in which CKGSB students argued that socially responsible policies enhance profitability, while the CEIBS team argued the opposing view. Following the debate, the audience voted on whether CSR practices do boost profitability (most said "yes"), and on which team spoke more persuasively (most named the home team, CEIBS).

Commenting on the debate, the panel of business experts largely agreed that CSR or sustainability practices are "friends." Stefan Sommer pointed out that while sustainable business practices are often costlier in the short-term, they tend to benefit the bottom line long-term. Companies that reduce polluting emissions, for example, improve their public image. This good image, in turn, attracts better employees - which in turn brings increased profitability. Tim Jeanne stressed that companies seeking to survive over the long-term must ultimately either achieve sustainability or fail. "If we don't behave in a responsible way," he said, "we won't be around in 10 years time."

Consumers are beginning to value companies that follow sustainable business practices, added Frank Chen. He said Philips seeks to create a "win win win" scenario in which socially responsible practices cut costs, attract customers, and strengthen the corporate culture. Agreeing that CSR projects can help keep key personnel loyal, Frank Braeken stated: "The top talent will work for a company that let's them sleep well at night."

Ensuring responsible policies in your own company is tough enough, but what about enforcing such standards throughout your China-wide supplier network? This was the challenge addressed by Jiaotung students in presenting a case study on Wal-Mart China. The retail giant is striving to guarantee standards in working conditions throughout its supply chain - an undertaking that is proving difficult and expensive. Presenters asked the business panelists to share their insights on how best to tackle such a project.

Frank Braeken said companies can "do business while doing good" by taking a global view rather than a local view of CSR policies. In the case of Wal-Mart, he said, the CSR policy may increase costs locally "but globally, it makes good sense for the company because it improves their reputation." Aidan Metcalf also advised China buyers to work with their suppliers to help them develop sustainable practices.

In the final presentation, students from Tongji University spoke on the challenge of implementing environmentally friendly business practices. The panelists stressed that one key challenge in China is that, while environmental protection laws have been passed, they are not yet well enforced. This creates an uneven playing field because not all companies follow the laws. Frank Braeken reassured that this situation will likely improve over time, promising that "Chinese companies will become increasingly interested in protecting the environment."

In closing Dutch Consul General in Shanghai Eric Verwaal reminded the audience that business goals must extend beyond profit-making. "The problem with the rat race," he said, "is that even if you win, you are still a rat." He predicted that, 15 years later, on the 50th anniversary of Sino-Dutch relations, many of the MBA students who had presented at the forum would be sitting in the CEOs panel and sharing their insights into successful CSR policies for China.