Industry Agenda Emerging Best Practices of Chinese Globalizers The Corporate Global Citizenship Challenge In collaboration with The Boston Consulting Group © World Economic Forum 2012 - All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system. Contents Preface 3 Preface The 42nd Annual Meeting of the World Economic Forum was held under the theme The Great Transformation: Shaping New Models 5 Executive Summary in January 2012. Leaders from business, government, international organizations and non-governmental organizations (NGOs) expressed 7 Part I The Economic Contribution of their aspirations and exchanged innovative ideas on how we can Chinese Globalizers and Early Challenges create new global models needed for the inevitable transformation upon us. Given that China has been going through major changes 10 Part II The Development of Corporate in the past three decades, this journey is one that is already rather Global Citizenship among Chinese familiar. In every corner of this vast nation, transformations have Companies over the Past Decade time and again improved people’s lives, from remote rural regions to 10 2001-2005: Re-introduction after modern urban cities, from traditional media to social networks, from joining WTO private companies to state-owned enterprises. 11 2006-2007: Evolution of the Robert Greenhill China’s impact on the world economy is increasing constantly, corporate citizenship concept Managing Director through a greater global presence of Chinese companies in international markets. At the domestic level, the concept of corporate and Chief Business 11 2008-present: Accelerated responsibility is often well understood. However, at the global level, development Officer, World the notion of corporate global citizenship has yet to become a part Economic Forum of mainstream corporate thinking. Nevertheless, we found solid 13 Part III Current Corporate Global evidence of progress and emerging best practices on corporate Citizenship Efforts of Chinese Globalizers global citizenship among some Chinese Globalizers. The extensive research outlined in this report highlights best practices that not only 13 Corporate governance and span geographies – across the continents of Asia, Africa, Europe and practices Latin America – but also encompass a range of fields such as supply chain management, green technology, community engagement 15 Corporate philanthropy and peer cooperation. This is a positive and encouraging discovery. 15 Social responsibility To our knowledge, this is the first such comprehensive analysis of China’s Globalizers undertaken to date. 17 Social entrepreneurship The process of internationalization is a challenging journey for 19 Corporate global citizenship Chinese companies, or any company for that matter. To bridge cultural and societal differences requires concerted effort. As such, 20 Part IV Areas for Improvement and we hope that this report will help companies on this journey first and Current Challenges foremost by exposing Chinese chief executive officers (CEOs) and Li Zhang government officials to the concept of Corporate Global Citizenship. Director, Head of 20 Corporate governance and Second, we aspire to help cultivate this concept within the culture and practices: better transparency Membership and mindset of businesses so that it becomes embedded into business Partnership, Greater strategies. Third, we hope to encourage broader disclosure and 21 Corporate philanthropy: greater China, World reporting practices and greater transparency, so that companies encouragement and guidance Economic Forum share information not only with the domestic audience but also the global community. Last, this report aims to spur further learning 21 Social responsibility: dedicated and experience sharing with the goal of making the best practices talent and resources of some companies today the standard practice of many Chinese 21 Social entrepreneurship: wider corporations in the near future, thus developing more global leaders, recognition in the interests of improving the state of the world. 21 Corporate global citizenship: more Becoming a corporate global citizen strengthens and supports innovation the core business of a company. As this report shows, it is indeed possible to grow while at the same time being responsible to multiple 22 Part V Recommendations for Current and stakeholders across the globe. The transformation into a corporate Potential Chinese Globalizers global citizen is a continuous process rather than an ultimate goal. Likewise, this report marks the beginning, rather than the end of 22 Recommendations for Chinese this path. Clearly, like in any part of the world, performance can be companies inconsistent, even in the best organizations. Rather than focusing on shortcomings and unsatisfactory actions, we choose to concentrate 24 Support needed from the Chinese on the emerging best practices with the aim of promoting them to government common practices which can be widely adopted and applied by the majority of Chinese Globalizers, if not all. Nevertheless, we do 25 Conclusion recognize the obstacles and challenges and have identified in this report several opportunities for further development. 26 Appendix 1: Methodology and Selection of Case Studies In this regard, we look forward to working with a greater number 27 Appendix 2: List of Exhibits of companies in the future by providing a necessary platform and additional support to enhance their learning and spur the exchange 28 Appendix 3: List of Chinese Companies of experience to facilitate their progression towards Corporate Global Cited in the Report Citizenship. 29 Appendix 4: Acknowledgements Last but not least, we would like to thank the project advisory team for their tremendous insights and global perspective, the project 31 Appendix 5: Contributors core team for their tireless work and the more than 100 executives, government officials and experts for their contributions to this report. The Corporate Global Citizenship Challenge 3 Project Advisory Panel Project Leads Alicia Barcena, Executive Secretary, United Nations Economic Ted Chan, Partner and Managing Director, The Boston Consulting Commission for Latin America and the Caribbean, USA Group, Hong Kong SAR Hans-Paul Bürkner, Global Chief Executive Officer and President, The David Michael, Senior Partner and Managing Director, Global Leader Boston Consulting Group, Germany of Global Advantage Practice Area, The Boston Consulting Group, Martyn Davies, Chief Executive Officer, Frontier Advisory, South Africa People’s Republic of China Elizabeth Economy, C. V. Starr Senior Fellow and Director, Asian Li Zhang, Director, Head of Membership and Partnership Greater Studies, Council on Foreign Relations, USA China, World Economic Forum Robert Greenhill, Managing Director and Chief Business Officer, World Economic Forum Core Team Rosabeth Kanter, Arbuckle Professor of Business Administration, Richard Huang, Partner and Managing Director, The Boston Harvard Business School, USA Consulting Group Georg Kell, Executive Director, Global Compact Office, United Jeremy Jurgens, Senior Director, World Economic Forum Nations, USA Rachel Lee, Partner and Managing Director, The Boston Consulting Ernst Ligteringen, Chief Executive, Global Reporting Initiative (GRI), Group Netherlands Olivier Schwab, Executive Director, World Economic Forum Beijing Peng Huagang, Director-General, State-owned Assets Supervision and Administration Commission (SASAC), People’s Republic of China Jessie Yan, Associate Director, World Economic Forum Katherine Xin, Professor of Management, China Europe International Jason Zhang, Project Manager, World Economic Forum (Seconded Business School (CEIBS), People’s Republic of China from The Boston Consulting Group) 4 Emerging Best Practices of Chinese Globalizers Executive Summary The past decade has seen an increasing focus on corporate citizenship among corporations. As the business world becomes more connected – within both the private and public sectors – there is a growing sense that no company can operate in a vacuum, and no company can limit its interests to growth and profits at the expense of all other considerations. In this context, many companies have taken a more enlightened view of their role in the global economy, seeking to minimize the negative impact of their operations or even to improve conditions for various stakeholders, including customers, shareholders, suppliers, employees and citizens in the communities where the companies operate. These efforts fall into a continuum of activities that comprises the full span of corporate behaviour (exhibit 1). Exhibit 1 – CorporateExhibit Global 1 – CitizenshipCorporate Framework Global Citizenship Framework Corporate global citizenship Positively shaping global society in multiple aspects Corporate Corporate Social Social governance philanthropy responsibility entrepreneurship practices Following Committed and Recognizing and Business business consistent giving acting in the best innovation which practices which to social interest of profitably advance integrity organizations diverse addresses social and make ethical stakeholders needs use of resources Economic contributions Creation of tangible benefits such as employment, GDP/tax contribution, etc. Source: “Corporate global citizenship” by Professor Schwab; BCG analysis Source: "Corporate global citizenship" by Professor