Leading Practices
GLOBAL INDUSTRIAL GROUP ATLAS COPCO IS USING ITS WORLD-WIDE EXPERTISE IN CSR TO INTRODUCE INNOVATIVE SOCIAL WELFARE INITIATIVES IN CHINA. THE COMPANY SHARES ITS EFFORTS TO BRING LEADING GLOBAL PRACTICES TO CHINA, AND TO EXPAND ITS CREATIVE CHINA-BASED PROGRAMMES GLOBALLY.
By Laurie Underwood
"The tragedy in Sichuan Province highlights the reasons behind this new project: the need for clean drinking water. We were working on it before the earthquake, but it is doubly important now."
Mr Magnus Gyllo, Atlas Copco (China) Vice President, is speaking to a task force of seven employees in the conference room of the company's Shanghai offices. Their mission: to bring the company's Water for All CSR project to China before the Beijing Olympics. This initiative, underway since 1994, has so far provided 1 million people with access to clean drinking water - mainly in poor, dry regions of India, Africa, and Afghanistan. This year, the project extended into Tibet and now the company wants
to extend China-wide.
"Projects like this work best when they are straightforward," continues Gyllo, explaining that the programme identifies areas needing drinking water, then supplies drilling rigs and other equipment for locating and drawing water. The operations are funded through donations made voluntarily by Atlas Copco employees worldwide, with matching funds supplied by the company.
Here in Shanghai, the first order of discussion for the employee group launching the project domestically, is how to find the right local NGO to use as a partner. The team, which includes employees from China, Sweden, Germany and South Africa, is debating the merits of using a strictly non-governmental association versus one with government ties. For foreign companies in China that are embarking on social welfare projects, choosing the right local partner can make or break the project.
The team has selected three potential candidates, each located in poverty stricken, arid areas outside of Shanghai. The first is eventually discarded because the group focuses more on water conservation than drinking water supply. The other two, based in Beijing and Yunan Province, respectively, seem more suitable. The Yunan-based group appears more active - it has issued a special credit-card for fundraising and has attracted support from MNCs - but it seems to have government connections. The Atlas Copco task force is split on whether this concern is a deal-breaker.
"We don't want to say 'no' to all government-run organizations," argues Atlas Copco Environmental Advisor Andrew Grieve. In China, Grieve explains, many NGOs are actually linked to government. For example the Red Cross, China's largest and most effective social welfare entity, operates privately around the world but is government-linked here. Thus, he casts his vote with the Yunan based entity, explaining: "GONGOs (government organized NGOs) could actually be okay for this project."
ADAPTING TO CHINA
"We have to adapt to China," agrees Gyllo, advising that the team research both possible partner entities before next week's meeting. As the meeting ends, the task force takes on work for the coming week: Three members will research how the two possible partner groups work, what projects they have undertaken, and which MNCs have supported them. Another team member will contact counterparts in Europe to ask how the programme has been launched in other developing nations, while others will work on promoting the programme to employees and establishing direct payments from salaries.
Seeking government approval, finding an effective local partner, selling the programme to employees (many of whom may not have supported social welfare programmes at previous employers) - such are the real-world issues faced when foreign companies launch a CSR programme in China. Despite the obstacles, however, Mr. Gyllo says launching Water for All and other programmes domestically is especially rewarding. "It is nothing new for Atlas Copco to be engaged in society - that is the group's vision and mission, and China is no different from other places where we operate in terms of our commitment," he says, "But I would also say that we are fortunate to enter the China market, where there are even more opportunities for companies to really get engaged in CSR." While many social welfare efforts are well developed in the US and Europe, China is "a changing society" in which companies can make a significant impact by pioneering into CSR. Says Mr. Gyllo: "China is constantly confronted with new challenges, and this allows companies like ours to invent solutions. The Chinese environment offers many opportunities to be inventive and to offer leading practices, setting a good example for other companies here."
LEADING PRACTICES
One example of a "leading practice" initiated by Atlas Copco in China is the work the company undertook following the Sichuan Earthquake. Within 48 hours of the quake, the company had sent construction equipment to the epicenter, including compressors used for life support machines and earthmovers used to help rescue people. The company also sent substantial funds collected from headquarters and from individual employee donations.
DELIVERING AID -- Within 48 hours after the Sichuan Earthquake struck, Atlas Copco had sent construction and medical equipment to the epicenter, including life support machines and earthmovers, as well as substantial funds.
The clearest example of Atlas Copco pioneering into new CSR areas in China is an initiative begun long before the Sichuan disaster. Three years ago, the company began researching improvements to employee welfare.
"We studied the existing situation in detail and found that China's mandatory retirement system has its limitations," says Mr. Gyllo. At the time, the Chinese government was introducing an 'enterprise annuity' system that allows approved companies to offer a pension fund for their employees. Atlas Copco became China's first Swedish firm, and one of the first multinational companies in China, to receive approval and launch such a programme. Since then, the company has contributed a percentage of each employee's salary into a retirement fund. "We view this not as a benefit and compensation perk but as a way to show our employees and the outside world how a company can contribute more to the well-being of employees in their old age," says Mr. Gyllo.
He hopes this is one corporate social responsibility initiative that will be quickly noted and copied by both international and domestic companies in China - even competitors. "If other companies start doing this," Mr. Gyllo states, "the well-being of the elderly in China would be improved."
BORN FROM THE BGRC
One of the newest China-based CSR projects for Atlas Copco was born directly from CEIBS 2007 Being Globally Responsible Conference. Last year's event attracted then graduate student Andrew Grieve, who was studying for an International Relations graduate degree from Fudan University. Impressed by Atlas Copco's presentation at the BGRC, Grieve struck up a conversation with Mr. Gyllo during lunch. That talk led first to an offer for Grieve to serve as an intern and eventually as Environmental Advisor to Atlas Copco.
During his year with the company, Grieve's primary project has been to launch a full CSR Audit at each of Atlas Copco's 11 China-based factories. The project involved Grieve and fellow Fudan undergraduate student Sherry Lee assessing each of the factories for construction equipment around the nation. The pair measured a range of factors including energy efficiency, recycling effectiveness, waste water treatment, and employee understanding of and support for CSR principles.
"The goal was to look at our existing factories and determine what we are doing right and wrong in terms of design, technology, and operating processes compared to new standards," explains Grieve. He and Lee spent two months visiting Atlas Copco facilities in Shanghai, Nanjing, Beijing, Guangzhou, and Shenyang. After finding a wide divergence in CSR measures across different facilities, the pair drafted a detailed internal report covering "everything that could be improved" in order to create state-of-the- art factories in China.
When the report was released, an unexpected reaction took place at Group Center in Sweden. "The Global CSR Manager thought it was so good that she decided to use that report as the basis for guiding our group on how to build sustainable facilities worldwide," says Gyllo. "That coffee-shop meeting at CEIBS led to a study across China and to interest in the study throughout the world."
For Grieve, the project also proved highly beneficial. After the internship and a flight to Sweden to present his CSR Audit results, he was offered a job as the company's Environmental Advisor in Shanghai.
This summer and fall, Grieve is focusing on testing and implementing his new "best practice" solutions in China. After feasible models are developed, the CSR improvements begun in China will be rolled out to corporate factories worldwide. One of the main initiatives now is to increase understanding and enthusiasm for the project among employees. "If you have a team that doesn't understand or doesn't really care, you can install the latest solar panels and waterless toilets, but you won't be effective," says Grieve. "Now I understand that educating people is the most important step."
Meanwhile, Mr. Gyllo points to the project as a prime example of "leading practices" in China. He stresses that CSR in China is not only matching global standards but actually setting new standards. Then too, the success of the CSR Audit project is an endorsement of the worthwhile networking that takes place at CEIBS' annual Being Globally Responsible Conference.
WATER FOR ALL-- Atlas Copco has provided clean drinking water to 1 million persons previously lacking access around the world since 1994. Beginning in Sweden as "Vatten at Alla", the now-global campaign starts this summer in China.
COMPANY PROFILE
Business focus: Atlas Copco is a leading provider of industrial productivity solutions. Key products and services include compressed air and gas equipment, generators, construction and mining equipment, industrial tools and assembly systems, aftermarket and rental services.
Global business performance: In 2007, Atlas Copco achieved total global revenue of EUR6.7 billion . With opera tions in over 160 markets and 33,000 employees worldwide, the 135-year-old Swedish company saw strong demand in all geographical regions, with 25 percent growth or more in all continents last year.
China operations: Atlas Copco products were sold in China for the first time during the 1920s. In early 1980s, Atlas Copco established a company in Hong Kong with representative offices in Beijing, Shanghai and Guangzhou. Launching joint ventures in China since 1993, the company now operates 16 companies (including 11 factories) manned by around 4,000 employees in 120 field offices nationwide. At present, China accounts for almost 10 percent of Atlas Copco's global business, and growing.
Primary goals in China: The company is currently focused on four dimensions of sustainability: Profit (economic sustain-ability), Planet (environmental sustainability), People (social sustainability) and Pride (supporting the Group's values).
