Chinese companies can now use the country’s first cross-industry corporate responsibility benchmark.
The benchmark, unveiled at a United Nations Global Compact summit in
Shanghai, is intended to make it easier for Chinese companies to assess
social, environmental and ethical risks in their business and compare
their performance against their peers.
RepuTex, the Australian rating agency that developed the benchmark,
which is branded the RepuTex Framework: China, believes it will also be
useful for investors in the Chinese market.
The benchmark lists four key areas for evaluation – corporate
governance, environmental impact, social impact and workplace
practices. Each category is assigned specific indicators, including the
presence of environmental management and customer care systems,
employee training, community support and workplace safety programmes.
The indicators build on a global rating model developed by RepuTex
during the past five years. However, they generally monitor companies’
compliance with Chinese law rather than internationally recognized
standards. As a result, businesses are not benchmarked, for instance,
on a general requirement to allow freedom of association but on
national legislation that recognizes only the Communist Party-backed
trade unions.
The benchmark was developed in conjunction with the internationally
renowned Fudan University in Shanghai and the Beijing-based Centre for
Corporate Governance. About 150 businesses, community and government
organizations in China were consulted.
It has been financed with a grant from the International Finance
Corporation, the World Bank’s private sector arm, and will be run on a
commercial basis by RepuTex , with revenue earned from research and
training courses in China.
‘FTSE4Good and the other main indexes don’t as yet cover emerging
markets such as China, which has led to an information gap on social
and environmental issues,’ said Dan Siddy, head of the IFC’s
sustainable financial markets facility. ‘This will help close that gap.’
