CSR gets on govt agenda in China and India

Two recent reports indicate that India and China may have started viewing corporate social responsibility a bit more seriously.

Last December, India's corporate affairs ministry issued voluntary CSR guidelines for companies. The ministry has also urged all companies to create a separate fund for their CSR activities. Separately, the ministry also issued a voluntary guideline on corporate governance last year.

The corporate affairs minister Salman Khurshid has even suggested issuing social credits, on the lines of carbon credits, to companies which engage in corporate social responsibility programmes. He says that if needed his ministry will consider making CSR mandatory for companies.

In China,the Ministry of Commerce says it is using CSR indicators like environmental protection and employee welfare to appraise exporters - including domestic- and overseas-funded enterprises - to ensure they meet international standards.

Shanghai Bureau of Quality and Technical Supervision, a government department, introduced Shanghai Municipal Local Standards on CSR in January 2009. The guidelines though voluntary promise a number of incentives to those companies which adopt CSR.

A string of scandals in the recent couple of years ranging from child slavery and product safety to more recent incidents of worker suicides in Foxonn, an electronics manufacturer for Apple and other global brands, has tarnished the image of China-based businesses.

The government understands that a poor corporate responsibility image can dent the competitiveness of Chinese companies in the international markets. More importantly, bad corporate responsibility reputation will increase opposition to Chinese companies' takeover bids to acquire western companies.