Earlier this month, PolyU and the Hong Kong Productivity Council jointly released initial findings of the “Hong Kong SME CSR CARE Index”, the first ever Corporate Social Responsibility (CSR) benchmarking index for Hong Kong’s small and medium enterprises (SMEs).

In this issue, Project Leader of this newly launched index, Prof. Carlos Lo Wing-hung from PolyU’s Department of Management and Marketing, shares his views on the importance of CSR in the business community.

Q : What does CSR refer to?

Lo : CSR refers to the responsibilities of businesses owed to the society in the engagement of profit-making activities. It rests on the belief that organizations must go beyond financial consideration to be responsible to a variety of stakeholder groups other than focusing exclusively on investors.

This requires organizations to go beyond legal obligations and compliance, and to integrate voluntarily social and environmental concerns in their business strategy and operation for the long-term benefits of people, communities and the environment.

Q : Why has it become a strategic component for many multinational corporations in the West?

Lo : CSR has been increasingly considered as crucial for businesses to achieve corporate sustainability (CS). It is regarded more as a strategic component than a public relations strategy for businesses in the West, as its potential to serve as competitive advantage is increasingly recognized.

Q : What are the benefits for organizations to integrate CSR into their corporate strategy?

Lo : It will help to build brand image, enhance employee commitment to CSR, reduce ecological footprint, improve the capacity for managing corporate risk, and enhance social acceptability.

Q : What is the impact of the recent economic turmoil on CSR?

Lo : The financial tsunami was widely considered to be caused by the lack of CSR among businesses in their pursuit of profits. This has strengthened the belief that there should be a change in business paradigm from the traditional “profit as the only business of businesses” to CSR as the proper business model. It is only through the practice of CSR can organizations regain the trust of their stakeholders.

Q : What is the current level of recognition of CSR in HK and the Chinese mainland?

Lo : Hong Kong and the mainland are indeed late comers in CSR when compared with Western countries. Although some business firms are practising and reporting CSR in Hong Kong and the mainland, CSR is largely taken as public relations initiative serving for business interests. This lack of strategic recognition is evidenced by the general practice of appointing public relations or communications offices to take charge of CSR. In the absence of a high level setup for its management, CSR remains a communications means rather than a business end.

In short, the concept of CSR has not been properly understood and its inherent value has not been fully recognized in both the local and mainland business community.

Under the growing influence of the global CSR movement, it is important for businesses to adopt a proper business model which integrates CSR practices for sustainable development. This would in turn improve the competitiveness of businesses in Hong Kong and the Chinese mainland.

Q : How can the newly launched index be used to build awareness of CSR?

Lo : This index helps to build awareness of CSR in several ways:

• it provides a CSR performance standard for local SMEs to benchmark with;
• sets a higher CSR standard for SMEs to follow;
• draws attention to the possible benefits of CSR practices;
• introduces a portfolio concept of CSR practices;
• indicates the CSR path from learner to leader.

Most importantly, the index itself has firmly established the relevance of CSR in SMEs operations, and the compilation of this index is a continuous effort instead of a one-off exercise.

Q : Apart from introducing the index to build awareness of CSR, what other related initiatives are being planned?

Lo : We’d like to introduce this SME CSR index to different cities on the Chinese mainland, particularly those in the Pearl River Delta Region like Shenzhen and Guangzhou.

We are also conducting a territory-wide CSR survey of SMEs in Hong Kong which will provide a solid empirical basis for an in-depth understanding of CSR practices among SMEs and for providing proper support for them to integrate CSR into their business operation.

Another major effort under way is to rate the CSR/CS of Hong Kong-based listed companies in the Hang Seng Index.

We also have a few other plans which are subject to availability of research funds.

Q : How important is the role of academia in the drive to promote CSR in the region?

Lo : Academia (like PolyU) should play a leading role in the drive to promote CSR in the region, particularly, at this critical stage of enlightenment and development.

In terms of research, it should conduct studies for advancing the knowledge of CSR/CS. In terms of practical assistance, it should provide advice and support to the industry to adopt CSR business model. In terms of teaching, it should train graduates with a proper CSR mindset to become responsible business executives.

It is only through this holistic approach can academia play a key part in cultivating a socially responsible business community.