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Friday, December 1, 2017

CEIBS Releases Index on Chinese Listed Companies’ CSR

December 1, 2017. Shanghai – The first ever index that grades Chinese A share companies on their ability to do good was released today during the CEIBS Global Impact Investing Forum held at the school’s Shanghai Campus. The 2017 Corporate Social Responsibility Index for Chinese Listed Companies was topped by ZTE, with TCL, Chinese State Construction Engineering Corporation Ltd (CSCEC), Shanghai International Port (Group) Co. Ltd and China Unicom rounding out the Top 5. The others from six to ten are Grandblue Environment, SAIC Motor, BOE Technology Group, Weichai Power Co. Ltd and Shanghai Fosun Pharmaceutical.

The index ranks companies based on their CSR efforts as well as the impact they have had, providing an important tool for investors who need both financial and non-financial information when analysing and evaluating listed companies. It is also useful for corporate benchmarking, and improving the efficiency of resource allocation in the capital market, which will ultimately benefit economic restructuring and social welfare across China.

As indicated during today’s forum there are varying views on how to assess the impact of social enterprises, so the index is timely in that it provides an easy to understand ranking of Chinese companies. The index was released by Director of the CEIBS Center for Wealth Management, Professor of Finance & Accounting Oliver Rui who explained that it was a collaborative effort between his centre and Shanghai University of Finance and Economics’ Centre for Accounting and Financial Big Data Research. It is based on data from CSR reports for 2016 that were published by A share companies between January and May in 2017.

Some additional findings from the data:
* While the manufacturing industry produces the largest number of CSR reports, the financial industry has the highest level of disclosure.
* More companies have been making their CSR reports public and providing more detailed information but the overall numbers of those going public with reports are still low.
* SOEs led the pack in publishing CSR reports but the number of private companies and foreign-funded companies are on the rise.
* Most of the companies that published reports are from East China, with Beijing, Guangdong and Shanghai topping the list.

The Index included an analysis of indicators such as social responsibility management, company operation and management, product quality and innovation, responsibility to employees, diversification and equal opportunities, environmental responsibility, as well as social contribution and charity. Its launch is part of CEIBS’ overall emphasis on CSR, as outlined by CEIBS President Li Mingjun in his remarks when declaring the CEIBS Global Impact Investing Forum open. “Recently the nature of enterprises in China has been enriched, with a lot taking the lead to be more sustainable. Impact investing is a new format, a different approach from traditional methods. It is an effective way to push forward sustainable development and growth, providing innovative ways for enterprises to show their social responsibility, and releasing more capital to effectively solve a wider range of society’s problems,” he said. “Today CEIBS is working with United Nations SDG Impact Finance (UNSIF) to provide a platform through which we can share ideas and insights from different parts of the world and enhance exchange.”

He added: “CEIBS’ mission is the development of the next generation of business executives and leaders. From our inception we have always attached great importance to social responsibility. Our goal is to educate and groom entrepreneurs with China Depth and Global Breadth, as well as a high level of social responsibility.”

Forum participants explored topics including impact investing across the globe; the social impact investing ecosystem, the role that blockchain can play in achieving sustainable development goals, JD.com’s innovations in impact investing, and how China Foundation of Poverty Alleviation functions as a social enterprise.

UNSIF Chief Impact Officer David Galipeau told the audience that by 2030, the target for meeting sustainable development goals (SDGs), the world will be a very different place from the one we know today. It is imperative, he said, for us to rethink the way we build businesses, and the way we invest. “The population will be somewhere between 4 and 12 billion; there will be at least 3 global level disruptions (political, economic or humanitarian); employment, living and consumer patterns will be totally disrupted,” he said. “It is increasingly important to achieve SDGs.”

The day’s presenters were largely united in the view that the private sector, not the state, needs to be the driving force in meeting these goals. Julia Balandina Jaquier, author of Impact Investing, spoke of the $2.5 trillion a year gap in the funding need to meet SDGs, saying this role will fall to private capital and businesses – especially family businesses as they make up 66% of all the companies in the world and create between 50 and 80 percent of the jobs. “They are the ones who can make fast decisions. They think long-term, in terms of generations, they can take pioneering risks and they can add strategic value,” she said. She noted that family business are increasingly engaged in impact investing, citing examples such as eBay founder Pierre Omidyar and others from across the globe. China, she noted, has great potential to shape the area of impact investing as it has 1.9 million high net worth individuals and 27 of the world’s 500 largest family businesses are Chinese. “It’s not just about wealth, there’s also the entrepreneurial culture, a tradition of frugal innovation and a vast internal market,” she said. “Chinese family businesses can and should become global leaders in impact investing.”

The day’s event ended with the signing of an agreement between CEIBS and UNSIF which will see both sides working together not only in the area of academic research, but also in the area of SDG impact investing, drawing insights and resources from the powerful CEIBS alumni network.

Charmaine N. Clarke