Hong Kong lags behind Singapore and India in terms of companies practising corporate social responsibility (CSR). The recently launched 4th Hong Kong SME Business Sustainability Index shows a growing acceptance for CSR, a broad term referring to socially conscious business practices. The overall indicator climbed to 66.02 (out of 100 points), an increase of 3.2 per cent from the previous survey and 13.2 per cent from the initial report in 2012. But the latest index signalled a large gap between top and bottom performers.

“That may not be a healthy phenomenon,” said Professor Carlos Lo, director of the Sustainability Management Research Centre at the Hong Kong Polytechnic University, which oversees the survey. “My worry is that the same group of companies are winning the CSR awards.” Dunwell Enviro-Tech, which operates the largest independent waste-oil treatment and disposal plant in Asia, has earned special mention in each of the four surveys. Meanwhile, Baby Kingdom and Richform Holdings have been singled out in three of them.

In a bid to level the playing field last year, Hong Kong Exchanges and Clearing, which previously called on companies to voluntarily report on sustainability policies related to issues like labour standards, supply-chain management, community involvement and environmental impacts, now asks them to “comply or explain” and report on such activities, or lack thereof.

To encourage community involvement, Singapore companies get a 250 per cent tax deduction on the costs of having employees volunteer for certain organisations, a policy that will continue until at least 2018. The concept of CSR has been popular in business circles for years, but there is still a lack of common understanding about what it actually means. To many, it’s mistakenly thought of as just writing cheques for charity or raising awareness for good causes. Corporate activist David Webb said such thinking was short-sighted. “If they were to write a bigger check to the government just because it’s the so-called ‘right thing to do’, then they actually have to pay [because] they will be diminishing what they can return to their shareholders,” he said.

CSR programmes should instead be strategically designed to tap into an organisation’s core competencies and create mutually beneficial situations that deliver long-term benefits to the underlying business and society. Leaving out either part of that equation risks alienating a company’s workforce. When it comes to CSR in Asia, Hong Kong companies are getting left behind. Lenovo was the only locally listed company to appear in the top 20 of the Channel NewsAsia Sustainability Ranking last year. By contrast, India, South Korea, Taiwan and Japan all had at least three companies.

India signed CSR into law in 2013, mandating that companies meeting certain financial thresholds must create a CSR committee and have spent at least 2 per cent of average net profits over the past three years on social programmes. Industry observers question whether this might be CSR in name only, however, as the allowed activities mostly include stopgap services like eradicating extreme hunger, promoting gender equality and reducing child mortality.

Source: SCMP