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Corporate Social Responsibility Survey of Hang Seng Index Constituent Companies PDF

41 Pages·2008·0.86 MB·English
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Corporate Social Responsibility Survey of  Hang Seng Index Constituent Companies Published by Oxfam Hong Kong December 2008  Oxfam Hong Kong Address: 17/F., China United Centre, 28 Marble Road, North Point, Hong Kong.  Tel: (852) 25202525   Fax: (852) 25276202   Website: www.oxfam.org.hk  Oxfam Hong Kong is an international development and relief agency working to reduce poverty and injustice around the  world. Oxfam Hong Kong recognises that much poverty is caused by injustice and that poverty alleviation requires  economic,  social  and structural  change. Oxfam Hong  Kong works  with  people  facing  poverty  and with  partner  organisations on development, humanitarian, policy advocacy and public education programmes.  This paper is based on a survey undertaken by CSR Asia, with Professor Richard Welford and Ms. Jacqui Dixon as the  principal researchers. CSR Asia is a social enterprise that strives to be the leading provider of information about  Corporate Social Responsibility in the Asia­Pacific region. CSR Asia builds capacity in companies and their supply chains  to promote awareness of CSR in order to advance sustainable development across the region.  The text may be used free of charge for the purposes of advocacy, campaigning, education, and research, provided that  the source is acknowledged in full. Oxfam Hong Kong requests that all such use be registered with them for impact  assessment purposes.  Oxfam Hong Kong staff Ms. Kalina Tsang is the coordinator of this research project.  For further information on the issues  raised in this paper please e­mail [email protected] . The report is freely available on Oxfam Hong Kong’s website at  www.oxfam.org.hk and www.maketradefair.org.hk CSR Survey of HSI Constituent Companies 1. Oxfam’s Concern with Corporate Social Responsibility With current issues of global concern such as Over the last few years, CSR has been an financial instability and corporate governance, important point of discussion in Hong Kong the economic crisis and soaring food prices, across all business sectors. However, to date, labour abuses and supply chain issues, there has been no synthesised information continuing scandals over product safety and about CSR policies and standards of the widespread corruption, climate change and largest locally-listed companies and the extent increasing natural disasters, which hit the of their current CSR initiatives. Much of the poor first and hardest, Oxfam Hong Kong information remains scattered; and there is a believes there is a need for business to take need to collect and consolidate this the lead in developing improved corporate information in order to provide the public and social responsibility strategies. The potential companies with a reference point for their and need for the private sector to contribute to CSR activities. Oxfam Hong Kong, therefore, closing the gap between the rich and the poor commissioned CSR Asia to conduct this new has never been more apparent. survey to provide a snapshot representation of how companies listed on the Hang Seng Oxfam Hong Kong has long been active in Index are practising their CSR policies, promoting corporate social responsibility initiatives as well as measurement systems. (CSR). Our engagements with companies are International voluntary CSR driven by a fundamental belief that standards/charters were applied whenever businesses play a critical role in poverty possible to compare the relative strength and reduction and sustainable development. Since weakness of the companies’ initiatives such 2004, we have released the research report as the United Nations Global Compact, the Turning the Garment Industry Inside Out – Global Reporting Initiative, the Equator Purchasing Practices and Workers’ Lives and Principles and so on. we have advocated for changes in purchasing practices as well as for improved practices in To date, companies listed on the Hang Seng CSR by garment companies. We believe that Index represent roughly sixty-five percent of these changes could benefit poor workers and total capitalisation in the Hong Kong Stock contribute to the goal of reducing poverty. In Exchange. They collectively have an 2006, we launched the Transparency Report enormous impact on the Hong Kong economy, calling on Hong Kong’s top garment retailers and thus, on social and environmental issues to provide consumers and investors with too. It is thus crucial to raise general sufficient information they needed to make awareness of their CSR policies and initiatives ethical buying and investment choices. In in the areas of corporate governance, CSR 2007-08, we organised the first-ever garment strategy, stakeholder engagement, supply roundtable with companies that featured in the chain policy, workplace, environmental Transparency Report and the Sustainable standards and community investment. Oxfam Reporting Seminar for the Apparel and Hong Kong hopes that this exercise would set Footwear Industry, both to engage companies an initial benchmark and a platform for on CSR and enhance learning among dialogue with companies on improvement of stakeholders. their CSR policies and related performance targets in the long run. 1 CSR Survey of HSI Constituent Companies same company may have faced from media We are aware of the limitations of this survey. and civil society groups such as labour, While this survey aims to gain an overview of environment and consumer organisations, we companies’ CSR polices and related do hope that this research will facilitate measuring systems via verified self-reporting comprehensive dialogue on both positive and questionnaires, it does not seek to assess negative issues regarding corporate impacts and to make judgements on whether responsibility. We wish to draw companies’ the impact of each CSR initiative is sufficient attention to increased global awareness on or inadequate, particularly on issues involving corporate accountability, transparency and the environment or labour rights. Although we international best practices. did not survey and evaluate criticisms that the 2. Methodology 2.1 Data Collection Understanding the methodology utilised in this CSR Asia’s model on CSR and internationally project requires familiarity with the meaning of recognised sustainability indexes and corporate social responsibility as defined by guidelines, namely the FTSE4 Good both Oxfam Hong Kong and CSR Asia. Oxfam sustainability index and the Global Reporting Hong Kong states that: “CSR refers to the Initiative guidelines. commitment demonstrated by a company to operate in an economically, socially and In May 2008, questionnaires (Appendix A) environmentally sustainable manner, were sent out to all forty-three Hang Seng upholding ethical business conduct. To Index constituent companies. Sixteen demonstrate their commitment, companies responses were received - a response rate of actively manage the impacts of their activities thirty-seven percent. Questionnaires were while trying to balance the needs of diverse sent to the Chairperson of the company and stakeholders.” CSR Asia’s CSR model also to key contacts within the combines seven core areas: corporate Communications and CSR/Sustainability governance, strategy, environment, workplace, departments. In cases where no contact could supply chain, community investment and be found, they were sent to the Chairperson marketplace. Within these core areas, and the Investor Relations department. The businesses should develop policies, questionnaires were accompanied by a cover objectives and procedures to pursue letter stating the intent of the survey and the sustainability while ensuring the interests of possibility of the findings being made public. different stakeholders. Companies were given one month to respond. Companies that did not reply to initial requests Specific criteria from all areas of CSR were for the survey were contacted on two to three considered when creating the questionnaire additional occasions by both telephone and e- that was sent to companies. The survey mail. CSR Asia allotted extra time for questions were based on a combination of completion of the questionnaire and continued 2 CSR Survey of HSI Constituent Companies to accept responses six weeks past the initial company websites (both English and deadline. For those companies that ultimately Chinese), namely 2007 annual reports and in did not respond, CSR Asia gathered a few cases separate 2007 CSR reports and information from public documents on CSR sections of company websites. 2.2 Scoring The scoring of the survey was based on both as the company referenced the relevant the company’s basic answers (yes, no, don’t information, which was confirmed by the know) and the amount and quality of evidence researcher. provided to support affirmative responses. Providing evidence of CSR policies and A series of bonus points existed within the initiatives became crucial to attaining higher survey without the knowledge of the scores. A chart describing the scoring process companies. Examples of these points was provided to every company in the included having a CSR committee that reports instructions section of the survey. That chart to the board of directors or including additional outlining the scoring process is shown below: specifications for supplier conduct. These points were added to points from other questions to create the total score for the company. The inclusion of bonus points Score Level of adoption / implementation allowed those companies doing more on CSR None - Nothing in place and only sporadic or ad hoc activity takes place, than generally expected to shine through. 0 if any. Or company does not know More specific analysis of bonus points and about their activities. their impact is given in the main findings Partial or efforts - Objectives / systems are in place, but do not meet section of this report. the level of generally acceptable CSR 1 practices; or evidence exists that regular / systematic efforts are being In addition to evaluating CSR practices, the made to set objectives / implement a scoring system inadvertently became a system measure of transparency. For those Full / Complete - Objectives / systems are in place and are reported on, fully companies that did respond, evidence often 2 meeting the level of generally included references to public information on acceptable CSR practices company websites. Leading companies Exceeding - Objectives / systems are 3 in place exceeding the level of referenced these kinds of public sources generally acceptable CSR practices frequently, displaying not only the breadth of their practices but also their commitment to CSR reporting. Many companies, however, Not every question has a possible high of were unable to include information beyond a three. Many had a maximum of two, and general level. This allowed us to draw several had a maximum of one. The scoring conclusions about the level of transparency of each question differed, depending on its among Hang Seng Index constituent importance. Highest marks for each question companies. were given for an answer that provided the highest quality of evidence and/or examples There is a strong correlation between having of practices. References to public website the most comprehensive CSR policies and links counted as providing evidence, as long 3 CSR Survey of HSI Constituent Companies having the best public reporting. Among the either in their annual reports or on their companies that did not respond, transparency websites. The issue of transparency was became an even more critical issue because reflected clearly for certain criteria such as the information used to complete their surveys workplace health and safety, where many came exclusively from public sources. Of the companies received poor scores. The majority twenty-seven companies that did not respond, of those companies probably do have health only five have separate CSR reports, while and safety policies; but this is not evident from several more report through CSR sections their public reporting. 2.3 Issue of Subjectivity Any survey process risks an element of score on that particular question reflected this subjectivity that depends on the methodology presumption. An element of subjectivity chosen, questions asked and the scoring existed in the scoring process, as it was up to framework. In the face of such a challenge, the researcher to determine if the information transparency is essential; thus the scoring for a given answer provided enough detail to process that would be followed was clearly warrant a higher score. The dilemma of outlined in the questionnaire. personal viewpoint could not be avoided; but all answers were evaluated in a consistent There was an assumption that the survey manner to ensure fairness within the system. responses were completed by those persons The scores given for each company are an most knowledgeable about company policies accurate portrayal of their commitment to and procedures. If details for affirmative CSR policies and initiatives. responses were not provided, the researcher had to presume that the company has no available evidence for its practices and the 3. Findings 3.1 Scores of Companies listed on the Hang Seng Index The findings of the survey outlined below among companies listed on the Hang Seng focuses on the overall scores achieved by Index. Table 1 below displays the overall each company and a comparison of the survey results, documenting total score survey responses in general. By looking for percentage, total score, and individual section major overlaps among the group as a whole, it scores for all companies listed on the Hang will be easier to understand the similarities Seng Index. and differences in CSR policies and initiatives 4 CSR Survey of HSI Constituent Companies Table 1 Overall results of companies, by total score percentage Rank Company Total Score Total Score Corporate Strategy Stakeholder Supply Workplace Environment Community Percentage Governance Engagement Chain [max score: 147] [max score: 10] [max score: 52] [max score: 5] [max score: 11] [max score: 34] [max score: 22] [max score: 13] Leader 1 HSBC Holdings 93% 137 9 47 5 11 32 22 11 2 CLP Holdings 84% 123 10 43 5 11 27 19 8 3 China Mobile 82% 120 8 41 5 11 22 21 12 4 Swire Pacific 76% 112 6 41 4 9 26 18 8 5 MTR Corporation 75% 110 9 35 5 7 26 19 9 6 Sino Land 74% 109 7 41 5 6 21 20 9 7 Foxconn International 71% 105 5 29 5 11 30 16 9 Holdings 8 Cathay Pacific Airways 69% 101 6 32 4 11 19 20 9 9 China Resources 65% 96 5 38 4 11 16 14 8 Enterprise 10 Hang Seng Bank 62% 91 8 27 4 6 23 14 9 11 HKEx 61% 90 9 33 4 4 26 6 8 Mainstream 12 China Shenhua 59% 86 8 38 3 0 19 10 8 tied-13 Esprit Holdings 58% 85 5 34 5 7 20 6 8 tied-13 HK & China Gas 58% 85 4 29 4 3 17 20 8 15 CNOOC 54% 80 5 33 4 2 14 13 9 16 Bank of 52% 76 7 36 4 3 17 0 9 Communications 17 Aluminum Corporation 50% 74 4 37 3 4 11 10 5 of China 18 PetroChina 48% 71 8 29 4 3 14 4 9 Laggard 19 Sinopec Corporation 37% 55 3 21 4 0 10 12 5 20 Hongkong Electric 35% 52 5 17 4 0 6 13 7 21 China Construction 35% 52 7 20 4 0 12 1 8 Bank 22 Industrial and 34% 50 7 18 3 0 11 3 8 Commercial Bank of China 23 Bank of East Asia 33% 49 3 17 4 0 5 10 10 24 Bank of China 30% 44 5 15 4 0 6 8 6 25 Hutchison Whampoa 22% 33 5 14 2 1 3 1 7 26 Yue Yuen Industrial 22% 32 3 11 0 3 5 3 7 (Holdings) 27 Ping An Insurance 21% 31 5 11 2 1 5 2 5 tied-28 Bank of China (Hong 20% 30 3 13 4 0 3 0 7 Kong) tied-28 China Overseas Land 20% 29 2 10 4 0 3 4 6 & Investment 30 New World 17% 25 3 13 0 0 0 2 7 Development tied-31 CITIC Pacific 16% 24 4 9 3 0 4 0 4 tied-31 China Merchants 16% 23 2 9 3 0 0 3 6 Holdings (International) 33 Li & Fung 14% 20 5 8 2 5 0 0 0 34 Hang Lung Properties 12% 17 5 3 0 0 0 4 5 35 China Life Insurance 10% 14 4 5 3 0 0 0 2 36 Sun Hung Kai 9% 13 3 0 0 0 3 2 5 Properties 37 Cheung Kong 8% 12 4 3 0 0 0 3 2 (Holdings) tied-38 China Unicom 7% 11 4 0 0 0 2 0 5 tied-38 China Netcom 7% 11 3 2 4 0 2 0 0 tied-38 COSCO Pacific 7% 10 3 0 0 0 2 1 4 tied-41 Tencent Holdings 5% 7 2 0 0 0 0 0 5 tied-41 Henderson Land 5% 7 5 0 0 0 0 0 2 Development 43 Wharf (Holdings) 1% 2 2 0 0 0 0 0 0 5 CSR Survey of HSI Constituent Companies The total percentages reflect total scores out score listed for each company is a complete of a possible full score of 147 points. reflection of its record on the 134 normal Companies have been divided into three points and the 13 bonus points integrated categories based on their individual score: within the survey. For the leading companies, leaders, mainstream, and laggards. Leaders bonus points proved to be a great separator. received a score of 60 percent or higher. Before adding bonus points, second place Mainstream companies received between 40 CLP Holdings scored 86 percent, and fourth percent and 60 percent. Laggards scored place Sino Land and Development scored 81 lower than 40 percent. Of the companies that percent. After adding the bonus points, of did not respond to the survey, only two made which CLP scored eight bonus points out of a it out of the laggards’ category: Hong Kong & possible thirteen, CLP scored 84 percent China Gas (Towngas) and PetroChina. while Sino Land, which received only one Towngas came in a tie for thirteenth position bonus point, dropped to 74 percent. Initially, and PetroChina also made it into the MTR Corporation had been trailing Sino Land; mainstream category in eighteenth position but after receiving five bonus points, MTR with an overall acceptable CSR performance. moved ahead to take fourth position. These The scores in italic reflect the highest scores changes display the purpose of including achieved in each category. It is interesting to bonus points into the survey, which is to allow note that HSBC achieved the highest scores those companies going above and beyond for strategy, workplace, and environment expectations to receive due credit for their while CLP was strongest on corporate efforts. governance and China Mobile achieved the highest for community. The stakeholder Among the laggard companies, their scores engagement and supply chain categories had are much closer. Four multiple-company ties multiple companies receiving full marks. in scoring occurred. Bank of China (Hong HSBC, CLP Holdings, China Mobile, and Kong) tied with China Overseas; and CITIC Foxconn each received maximum scores on Pacific tied with China Merchant. China both categories. China Resources Enterprise Unicom tied with China Netcom and COSCO and Cathay Pacific received maximum scores Pacific. Tencent tied with Henderson Land on the supply chain section. Development. For the last couple of ties, the companies received so few points, however, The maximum score for each individual that their similarities are quite irrelevant. The category in this survey is a combination of chart below depicts overall company scores in regular points and bonus points. The total order of company ranking. 6 CSR Survey of HSI Constituent Companies Chart 1 Overall company score percentage 0% 20% 40% 60% 80% 100% HSBC Holdings 93% CLP Holdings 84% China Mobile 82% Swire Pacific 76% MTR Corporation 75% Sino Land 74% Foxconn International Holdings 71% Cathay Pacific Airways 69% China Resources Enterprise 65% Hang Seng Bank 62% HKEx 61% China Shenhua 59% Esprit Holdings 58% HK & China Gas 58% CNOOC 54% Bank of Communications 52% Aluminum Corporation of China 50% PetroChina 48% Sinopec Corporation 37% Hongkong Electric 35% China Construction Bank 35% Industrial and Commercial Bank of China 34% Bank of East Asia 33% Bank of China 30% Hutchison Whampoa 22% Yue Yuen Industrial (Holdings) 22% Ping An Insurance 21% Bank of China (Hong Kong) 20% China Overseas Land & Investment 20% New World Development 17% CITIC Pacific 16% China Merchants Holdings (International) 16% Li & Fung 14% Hang Lung Properties 12% China Life Insurance 10% Sun Hung Kai Properties 9% Cheung Kong (Holdings) 8% China Unicom 7% China Netcom 7% COSCO Pacific 7% Tencent Holdings 5% Henderson Land Development 5% Wharf (Holdings) 1% HSBC ranked first out of all Hang Seng Index and 8 companies scored below 10 percent, constituent companies with a total score of 93 which rated the poorest. They were Sun Hung percent, followed by CLP Holdings (84 Kai (9 percent), Cheung Kong Holdings (8 percent) and China Mobile (82 percent). percent), China Unicom (7 percent), China However, 26 companies (60 percent of the Netcom (7 percent), COSCO Pacific (7 total companies) scored less than 50 percent percent), Tencent (5 percent), Henderson 7 CSR Survey of HSI Constituent Companies Land Development (5 percent) and Wharf practices of a given company became critical Holdings (1 percent), primarily due to the lack to their score. In other words, more of public disclosure on their CSR activities. information usually produced a higher score. Of the eighteen companies listed in the Within the results, there was a strong leaders and mainstream categories, sixteen correlation between companies responding to represent companies that replied to the the survey and their placing in the leaders and survey. Table 2 below displays the rankings mainstream categories. As previously stated, and scores of the companies that responded. the amount of information on the CSR Table 2 Scores of companies that responded to the survey Rank Company Total Score Percentage Total Score [max score: 147] Leader 1 HSBC Holdings 93% 137 2 CLP Holdings 84% 123 3 China Mobile 82% 120 4 Swire Pacific 76% 112 5 MTR Corporation 75% 110 6 Sino Land 74% 109 7 Foxconn International Holdings 71% 105 8 Cathay Pacific Airways 69% 101 9 China Resources Enterprise 65% 96 10 Hang Seng Bank 62% 91 11 HKEx 61% 90 Mainstream 12 China Shenhua 59% 86 tied-13 Esprit Holdings 58% 85 15 CNOOC 54% 80 16 Bank of Communications 52% 76 17 Aluminum Corporation of China 50% 74 3.2 Detailed Analysis of Companies’ Polices and Initiatives in Seven Core Areas of CSR The following sections highlight the practices environment and workplace. Table 3 shows of the leaders, mainstream and laggards that 32 companies (74 percent of the total across the seven category areas including companies) scored less than 50 percent in corporate governance, strategy, stakeholder supply chain areas and 22 companies (51 engagement, supply chain, workplace, percent of the total companies) scored zero. environment and community. The areas In the areas of environment and workplace, where the companies were strongest in their 29 companies (67 percent of the total CSR initiatives were corporate governance, companies) scored less than 50 percent; and strategy, stakeholder engagement and 10 and 9 companies (over 20 percent of the community investment. The areas where total companies) scored zero, respectively. many companies struggled were supply chain, 8

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Most books are stored in the elastic cloud where traffic is expensive. For this reason, we have a limit on daily download.