Corporate Social Responsibility and Environmental Management

Corp. Soc. Responsib. Environ. Mgmt. (2012)

Published online in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/csr.1276

Corporate Social Responsibility Reporting in China:

An Overview and Comparison with Major Trends
Carlos Noronha,* Si Tou, M.I. Cynthia and Jenny J. Guan
University of Macau, Faculty of Business Administration, Macau, Macao

ABSTRACT
Given the scant literature of corporate social responsibility (CSR) reporting on mainland China,
especially in the Western academia, the present paper aims at providing an overview of the CSR
reporting requirements in that country. A comparison with major reporting trends such as
the adoption of GRI-G3 is made to further understand the development of CSR in China. A
literature review of prior studies is also conducted concerning CSR in China, especially those
which are available only in the Chinese language. In summary, the overview indicates that
CSR reporting in China is at a very preliminary stage and more empirical research in this area
is urgently called for. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.

Received 30 June 2011; revised 8 November 2011; accepted 22 November 2011

Keywords: corporate social responsibility; China; CSR reporting; sustainability reporting; environmental reporting

Introduction

I
N RECENT YEARS, THERE HAVE BEEN A NUMBER OF SERIOUS CORPORATE SCANDALS ON MAINLAND CHINA. ONE IN PARTICULAR
has attracted global attention: the 2008 milk scandal of the Sanlu Group. In order to boost the protein content
of the formula milk powder, the company added melamine. Infants who had taken this formula milk could
develop kidney stones and if affected seriously, the consequences could be fatal. As a result of this scandal,
Sanlu Group did not simply go bankrupt; it has also destroyed consumers’ confidence in the entire dairy industry
and affected the image of products made in China. In addition, there is an estimate of 300 000 infants (Branigan,
2008) who are victims of the scandal and this will cause considerable pressure on the public medical system in the
longer run. Moreover, the redistribution of the laid-off workers to the local labor market requires government
intervention. As a result, the whole society has to bear the high social cost as a result of the scandal.
This case has prompted the questions: What is the current status of CSR reporting requirements in mainland
China and how do these requirements differ from those in the West. As pointed out by Belal and Owen (2007)
and Belal and Momin (2009), most prior studies on CSR were based on developed countries and articles
concentrating on CSR practices in China are almost non-existent. In order to contribute to the literature in this area,
the present paper aims to introduce to the English-speaking academia and review the current CSR reporting require-
ments and guidelines in China. In the next section some prior studies conducted in mainland China concerning CSR
reporting are discussed. Finally a critique of the current situation is presented and a future research agenda proposed
along with a conclusion.

*Correspondence to: Carlos Noronha, University of Macau - Faculty of Business Administration, Ave Tomas Pereira, Taipa, Macau, Macao.
E-mail: [email protected]

Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment
 C. Noronha et al.

Global Trend of CSR Reporting

Crowther (2000) defined social accounting as ‘an approach to reporting a company’s activities which stresses the
need for the identification of socially relevant behavior, the determination of those to whom the company is account-
able for its social performance and the development of appropriate measures and reporting techniques’. Therefore,
social accounting promotes socially responsible activities of the business and is a vehicle to report on CSR and
communicate with interested groups. Social reporting or non-financial reporting can be used by companies as a tool
to demonstrate how social responsibility issues have been integrated into their operations. Non-financial reporting
can be prepared either separately from the annual report or in a section inside the annual report or in other forms
tailored for a wider group of stakeholders.
There has been a global upward trend in social reporting. Within the G250 companies, the prominent reporting type
has also changed from environment, health, and safety (EHS) reporting (73%) (KPMG, 2002) to sustainability reporting
(68%) (KPMG, 2005). In terms of reporting guidelines, 77% of the G250 companies claimed to have followed the
Global Reporting Initiative (GRI) guidelines (KPMG. 2008. KPMG International Survey of Corporate Responsibility
Reporting 2008. Amsterdam: KPMG). In addition, the increase in the use of external assurance indicates that the in-
formation in the CSR reports is becoming more relevant, reliable, and credible. The evaluation process is also more
systematic and evidence-based. According to the 2008 KPMG report, about 40% of G250 companies utilized formal
assurance (KPMG. 2008. KPMG International Survey of Corporate Responsibility Reporting 2008. Amsterdam:
KPMG), compared to 30% in the 2005 report (KPMG, 2005).
Non-financial CSR reporting is usually prepared on a voluntary basis; however, some countries have issued regula-
tions to make mandatory disclosures on CSR issues. Indeed, if the market of a country cannot provide sufficient
incentives for companies to report on their social and environmental impacts on a voluntary basis, the local government
can legally mandate reporting requirements through company law, stock listing regulations, pension fund regulations,
or compulsory disclosure laws. The laws can set precise standards for corporate reporting including the lists of metrics,
formats for reporting, and frequency of reporting. Governments can also add new provisions to existing tax laws, labor
standards, and environmental regulations to cope with such disclosures. For example, tax incentives can be granted to
companies to provide sufficient disclosure. Other incentives like support for environmentally friendly investments,
the prevention of labor discrimination, assurance of occupational and health safety, and honoring working hours
agreements all require provisions in labor and environmental laws and regulations. Consequently, the information
disclosed can be evaluated by government agencies or through third party verification and assurance. Furthermore,
governments can also mandate sanctions for non-disclosure or failure to report accurate CSR data. A number of
countries are now strengthening and expanding reporting requirements to include more stringent disclosures on social
and environmental information. According to a review of mandatory and voluntary sustainability reporting standards
and legislations in 30 countries (UNEP, United Nations Environment Programme, KPMG, GRI, Global Reporting
Initiative and Unit for Corporate Governance in Africa, 2010), both international and national standards, codes and
guidelines as well as legislation for sustainability reporting have been evolving strongly. The report showed a total of
142 standards and laws with some form of sustainability-related reporting requirements or guidelines. Furthermore,
approximately 65% of these standards can be classified as mandatory and 35% as voluntary in nature. In addition, there
are 16 standards recognized at global and regional level as well as 14 assurance standards for reporting verification.
Some developed countries provide a wide range of incentives to disclose non-financial information through the
due process of law, change in the regulatory regime, naming and shaming, and the encouragement of voluntary
adherence to norms. Local governments and stock exchanges have issued the relevant legislations and standards
to require more mandatory disclosures on CSR issues. For example, the UK Companies Act (2006) mandates a
publicly listed company to include in the Director’s Report information about any policies of the company in relation
to environmental, employee, and social and community issues (Article 417). Moreover, the Carbon Reduction Com-
mitment law came into force in 2010 and affects about 5000 large companies in the UK. According to Oxfam Hong
Kong (2010), some European countries like Sweden, Denmark, and Germany have required CSR disclosures on
listed companies. Sweden introduced a requirement in 2008 that state-owned companies should use the GRI
framework with third party assurance. Denmark has passed a new law on CSR reporting in 2010 requiring the
1100 largest companies including private and state-owned companies and institutional investors to include CSR
information in their annual financial reports. Moreover, corporations in Denmark are now required to describe their

Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment Corp. Soc. Responsib. Environ. Mgmt. (2012)
DOI: 10.1002/csr
Corporate social responsibility reporting in China

CSR or socially responsible investment (SRI) policies, implementation, and results. In Germany, listed companies
are required to report non-financial indicators with significant impact within their annual reports. In France,
companies with more than 300 employees are required to file a social audit for reporting the 134 labor-related
indicators. Additionally, the 2001 New Economic Regulations Act further requires listed companies to disclose data
on 40 social and environmental criteria in their annual reports.
Besides the developed countries, there is an increasing trend from Asian governments toward regulating CSR
disclosure issues. Stock exchanges can play an essential role in encouraging CSR reporting and other initiatives since
there is growing political and economic prominence in terms of climate change, the commitment to a lower-carbon
future, and concern about labor rights and standards, product safety, and poverty reduction. Oxfam Hong Kong
(2010) reported that the Malaysian stock exchanges require listed companies to prepare a sustainability report at least
annually. In addition, Malaysian companies are required to provide a description of their CSR activities and practices in
their annual reports or a statement to this effect if there is no CSR activity. This requirement is also incorporated into
Bursa Malaysia’s listing rules. In Korea, the stock exchange launched the Korean SRI Index in 2009. The index was
designed to measure the companies’ policies, performance and reporting in relation to three areas namely, environ-
ment, society and governance. Governments generally also play an important role in promoting CSR. Lu and Castka
(2009) pointed out that many aspects of CSR – for example, environment quality, anti-corruption, human rights – have
been incorporated in Malaysian Legislation. Lee (2011) echoed that the Ministry of Korea has published the Environ-
mental Cost Accounting Guidelines in 2004.
Gonella et al. (1998) and Owen et al. (2000) suggested that companies need more standards and guidelines to
achieve uniformity in CSR reporting. Belal and Lubinin (2008) advised that social reporting is still underdeveloped
and it is necessary to further enhance sustainability reporting in comparison with traditional economic and environ-
mental reporting. Thus, there is a need for companies to publish their non-financial information in a more system-
atic and standardized format. The need for comparability of social reporting led to the promulgation of a number of
standards and guidelines in the late 1990s. Various standards and guidelines covering a range of CSR issues such as
GRI, SA8000, ISO26000 and AA1000 have already been widely promoted at a global level.

Laws, Regulations and Guidelines on CSR Practices for Chinese Enterprises

China has been undergoing more than three decades of economic reform since the launch of the ‘Open Door’ policy
in 1978. The result of shifting away from agriculture to manufacturing as the dominant source of gross domestic
product (GDP) has positioned China in a new stage of economic development. Through economic reform, China
has built up a socialist market economy, where the market plays a primary role in allocating resources under the
government’s macro-regulation. China’s GDP has increased by nearly 100 times from 1978 to 2008 while per capita
GDP has increased by nearly 60 times during the same period. (National Bureau of Statistics of China, 2008).
According to Goldman Sachs Group (2003), China’s economy is projected to be larger than that of Japan’s by
2016 and will supersede the USA by 2041. China is now in a period of economic restructuring and enjoys the
fruit of economic prosperity. At the same time, concerns for environmental protection, labor rights, business
philanthropy, and the shouldering of obligations for stakeholders have become the global trend among enterprises.
For China, it is not only important to have further economic development and to sustain its profit-making
continuously, but also to promote continual awareness of social responsibility. As CSR is closely related to public policy,
it does not merely require moral motivations, but also institutional guidance and support from the concerted efforts of
the government. CSR has captured the Chinese government’s imagination and concern and the government-led
concept of Harmonious Society (Wang and Juslin, 2011) is not just to achieve economic prosperity, but also to ensure
that society’s resources are distributed in a reasonable, balanced, and sustainable way.
The Chinese government, China’s stock exchanges, government agencies and even non-governmental organiza-
tions (NGOs) such as the Golden Bee Social Responsibility Education Center and SynTao Sustainability Solutions
are pushing the idea of CSR to become more acknowledged by Chinese enterprises. A number of new rules and
regulations have been introduced to create incentives for improving CSR practices and to promote more standardiza-
tion of corporate information among listed companies in China. Various regulatory bodies have formulated a series of
standards and guidelines to emphasize CSR and encourage sustainability reporting in Chinese enterprises in either a

Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment Corp. Soc. Responsib. Environ. Mgmt. (2012)
DOI: 10.1002/csr
 C. Noronha et al.

voluntary or mandatory basis. Table 1 summarizes the dominant guidelines and regulations from accounting law,
company law, financial services or securities law, environmental law, social and employment law, and so on.
The Shenzhen Stock Exchange (SZSE) was the earliest to encourage the issuance of voluntary CSR reports by
its listed enterprises. The Shenzhen Stock Exchange Social Responsibility Instructions to Listed Companies guidelines
were launched in September 2006 with the intention of encouraging listed companies to produce a CSR report
along with their annual report. These guidelines require them to fulfill CSR in six areas (Table 2) calling for the
protection of the rights and interests of various stakeholder groups. Under each area there are detailed articles
on how to adhere to these standards. For example, there are details regarding environmental protection and
sustainable development in articles 27 to 30 of the guidelines, which outline the procedures to encourage
companies to use resources with the lowest discharge of pollutants. Public relations and social welfare activities
included in articles 32 to 34 of the guidelines encourage companies to establish community programs for
poverty relief, education, and community development. According to article 13 of Notice for Better Preparing
2008 Annual Reports of SME Board Listed Companies, the small and medium listed enterprises are encouraged
to issue CSR reports. At the same time, article 11 of the same guidelines proposes that the companies listed
in the Shenzhen 100 Index should disclose CSR reports. Moreover, the SZSE has issued the Revised SZSE
Guidelines on Good Faith for Small and Medium Enterprises in November 2009. With reference to article 20 of
the guidelines, small and medium enterprises (SMEs) are advised to take up social responsibility in order to
protect the interests of different stakeholders.
On the other hand, the Shanghai Stock Exchange (SSE) has arranged two guidelines requesting the listed enterprises
to disclose CSR issues. The guidelines namely, Notice on Strengthening Listed Companies’ Assumption of Social Responsi-
bility (Shanghai CSR Notice) and Guidelines on Listed Companies’ Environmental Information Disclosure (Shanghai
Environmental Disclosure Guidelines) were issued in May 2008 (Table 3). The critical ideas of these guidelines are
summarized in five perspectives:
(1) Listed companies are encouraged to disclose non-financial information in CSR reports.
(2) Non-financial information should be based on the triple bottom line namely, economic, social and environmen-
tal information.
(3) CSR reports should be endorsed by the Board of Directors and the Audit Committee.
(4) Areas and circumstances in which listed companies should compulsorily disclose environmental information
are indicated.
(5) A new concept of social contribution value per share (SCVPS), a ratio used to measure the listed companies’
‘value creation’ on CSR, is developed.
Different companies may have different calculation methods of this ratio, but generally it is equal to the total social
contribution divided by the total number of shares. The former includes the tax revenues paid to the government;
salaries paid to employees, loan interests paid to all creditors, community investments and environmental investments,
minus any social costs that arise from environmental pollution and other negative factors. Whilst the computation of
this measure is highly subjective and obviously challenging, this ratio is currently unique in the world.
In order to encourage the listed companies to voluntarily disclose social responsibility information, the SSE offers
incentives to listed companies such as giving priority to be selected into the SSE Corporate Governance Sector or
providing simplified verification process for companies in temporary announcements. According to the SSE
guidelines Notice for Better Preparing 2008 Annual Reports, three types of listed companies are mandated to prepare
CSR reports. They include those companies listed in the SSE Corporate Governance Sector, those having shares
listed abroad, and financial companies. The CSR report should be published alongside the annual report. Moreover,
the SSE also encourages listed companies other than those mandated to voluntarily issue CSR reports.
After surveying the above information from various sources, it appears that systematic rules and regulations on CSR
reporting in China do exist. Compared with standards generated in developed countries, the coverage of CSR issues
may not be as comprehensive or as detailed. Nevertheless, the CSR reporting requirement in China does have a
presence and a uniqueness. The SCVPS is a very good example. Now that the standards and regulations are out there,
it is a question of whether companies in China follow them or not. A review of some prior studies, especially those con-
ducted locally in the Chinese language, on CSR reporting practices of Chinese enterprises may provide a preliminary
idea on the quantity and quality of their reporting.

Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment Corp. Soc. Responsib. Environ. Mgmt. (2012)
DOI: 10.1002/csr
 Year of Effective Name of standards Issued by regulatory bodies General description Mandatory (M)
/guidelines or other organizations / Voluntary
(V)

2001 Chapter 6 – China Securities Regulatory Call on companies to take into M

Stakeholders under Commission, State Economic account all stakeholders’
‘Code of Corporate and Trade Commission interests and attend to the
Governance for Listed welfare, environmental protection
Companies in China’ and public interests of the community
in which it resides, and shall pay
attention to the company’s social
responsibilities
2005 CSC9000T Management Responsible Supply Chain Improve the CSR practices in textile and V
System – China Social Association (RSCA) apparel industry and raise the overall
Compliance for Textile quality of management in the industry
& Apparel Industry– an
organization affiliated

Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment
with China National
Textile and Apparel
Corporate social responsibility reporting in China

Council (CNTAC)
2006 Article 5 and Article 17 Chinese government– adopted at Article 5– requires companies to
of Chapter 1 under the 18th session of the Standing comply with social morality and
‘Company Law of the Committee of the Tenth National business morality and bear social
People’s Republic of People’s Congress of the People’s responsibilities
China (revised in 2005)’ Republic of China on
October 27, 2005
Article 17– requires companies to M
protect the lawful rights and
interests of its employees including
employment contract, labor insurance
and in service training and so on.
2006 Accounting Standards for The China Accounting Standards Require to disclose relevant information M
Enterprises No. 5 – Committee under the Ministry of for recognition and measurement of
Biological Assets Finance biological assets related to the
agricultural production,
employee compensation, government
subsidies and exploitation of petroleum
and natural gas and so on
Accounting Standards for
Enterprises No. 9–
Employee Compensation

Table 1 (continues)

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Corp. Soc. Responsib. Environ. Mgmt. (2012)
 Year of Effective Name of standards Issued by regulatory bodies General description Mandatory (M)
/guidelines or other organizations / Voluntary
(V)

Accounting Standards for

Enterprises No. 16–
Government Subsidies
Accounting Standards for
Enterprises No. 27–
Exploitation of Petroleum
and Natural Gas
2006 Shenzhen Stock Exchange Shenzhen Stock Exchange Encourage listed companies to V
Social Responsibility establish social responsibility
Instructions to Listed mechanism and prepare social
Companies responsibility reports on a
regular basis

Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment
2006 China Corporate Social China Business Council for Provide CSR key issues and best V
Responsibility Sustainable Development practice CSR companies as reference
to local Chinese
companies in order to promote CSR
practices in China
Recommended Standard (CBCSD)
and Best Practice
2007 Notice of the General China Banking Regulatory Encourage banking financial institutions V
Office of China Banking Commission (CBRC) to work for the best interest of
Regulatory Commission on stakeholders under the concept of
strengthening the banking social responsibility
financial institutions on
views of social responsibility
2008 Environmental Information The State Environmental Require to disclose environmental M
Disclosure Act 2007 Protection Administration information
of China
2008 Guidelines on Environmental Shanghai Stock Exchange Require to disclose environmental M
Information Disclosure information and CSR strategy in
by Companies Listed on format either part of CSR report
the Shanghai Stock Exchange or separate report
2008 Notification on Issuance of The State–owned Assets Supervision Require to establish CSR fulfillment M
the Guideline on Fulfilling and Administration Commission of mechanisms and CSR information
Social Responsibility by the State Council (SASAC) reporting systems for
Central Enterprises Central State-owned Enterprises
(CSOEs)
C. Noronha et al.

DOI: 10.1002/csr
Corp. Soc. Responsib. Environ. Mgmt. (2012)
Table 1 (continues)
 Year of Effective Name of standards Issued by regulatory bodies General description Mandatory (M)
/guidelines or other organizations / Voluntary
(V)

2008 Shanghai Municipal Local Shanghai Municipal Bureau of Encourage enterprises regularly to V
Standards on Corporate Quality and Technical report to community and employees
Social Responsibility Supervision for addressing
four moral and ethical responsibilities
like equity issues, environmental issues,
integrity issues and harmonious issues
2008 China Sustainability China National Textile and Provide guidelines with comprehensive V
Reporting Guidelines Apparel Council (CNTAC) and quantifiable indicators to enterprises
for Apparel and Textile to publish CSR reports
Enterprises
(CSR–GATEs)
2008 Draft Guidelines on Ministry of Commerce (MOC) Encourage foreign companies to V

Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment
Corporate Social commit CSR practices in economic,
Responsibility Compliance social and environmental aspects of
Corporate social responsibility reporting in China

by Foreign Invested the Chinese society

Enterprises
2008 Guidelines on Social 11 national industrial federations Encourage all industrial companies and V
Responsibility for and associations engaged in iron, industrial federations of China to establish
Industrial Corporations steel, oil, chemicals, light industry, a CSR system with CSR reporting and
and Federations textiles, building materials, performance indicators
non-ferrous metals, electric power
and mining industries.
2008 China Sustainability China National Textile and Provide the measuring principles and V
Reporting Verification Apparel Council verification procedure for the quality of the
Rules and Instructions CSR reports of the textile and apparel
enterprises
(CSR–VRAI)
2009 Guidelines on Corporate China Banking Association (CBA). Advise all banks to produce a CSR report V
Social Responsibility to address economic, social and
for Banking Financial environmental responsibilities and
Institutions in China submit it to CBA annually
2009 China Corporate Social The State-owned Assets Supervision Provide instructions and performance V
Responsibility Reporting and Administration Commission indicators to guide different industries
Guidelines (CASS- of the State Council (SASAC) to report CSR issues in China
CSR1.0)

Table 1. Summary of key mandatory and voluntary standards/guidelines on corporate social responsibility issues in China.

DOI: 10.1002/csr
Corp. Soc. Responsib. Environ. Mgmt. (2012)
 C. Noronha et al.

SZSE - Social Responsibility Instructions to Listed Companies (September 2006):

Protection of the interests of shareholders and creditors
Protection of employee interests
Protection of the interests of suppliers, customers and consumers
Environmental protection and sustainable development
Public relations and social welfare services
Justification on not following the guidelines and the evaluation process for CSR issues
SZSE - Notice for Better Preparing 2008 Annual Reports of Listed Companies (December 2008):
Belonging to listed enterprises of SZSE 100 index constituent stocks (Yes/No)
If yes-should prepare CSR report along with annual report
If no-voluntary CSR report
Protection of the interests of shareholders and creditors
Protection of employee interests
Protection of the interests of suppliers, customers and consumers
Environmental protection and sustainable development
Public relations and social welfare services
Strategic planning on CSR activities

Table 2. Guidelines on CSR reporting content for listed enterprises at the Shenzhen Stock Exchange (SZSE).

SSE - Guidelines on Listed Companies’ Environmental Information Disclosure (May 2008):

● Social contribution value per share (SCVPS)
● Social sustainability: Protection of employees’ health and safety; protection of and support to the community; provision of
safe and quality products, etc.
● Environment sustainability: Environmental protection; reduction of environmental pollution, etc.
● Economic sustainability: Creation of value in products and service to satisfy customers, provision of better job opportunities
for employees; provision of rewards to shareholders, etc.
SSE – Notice for better preparing 2008 annual report of listed enterprises (December 2008):
● Companies belonging to either one of these three types must prepare CSR report:
1) listed on the SSE Corporate Governance Section;
2) issued foreign capital stocks listed abroad;
3) listed companies in financial sectors
SSE - Working Memorandum No. 1 for year 2008 annual report- Guideline on preparation of the CSR report (January 2009):
● The title of the CSR report should be ‘social responsibility report’, ‘sustainability report’, ‘environmental responsibility
report’, ‘corporate citizenship report’ and so on.
● Social contribution value per share (SCVPS)
● Social sustainability: Protection of employees’ health and safety; protection of and support to the community; provision of safe
and quality products, etc.
● Environment sustainability: Environmental protection; reduction of environmental pollution, etc.
● Economic sustainability: Creation of value in products and service to satisfy customers, provision of better job opportunities
for employees; provision of rewards to shareholders, etc.
● Social contribution value per share (SCVPS)
● Third party assurance service for CSR information and report

Table 3. Guidelines on CSR reporting content for listed enterprises at the Shanghai Stock Exchange (SSE).

Prior Studies of CSR Reporting in China

Li and Xiang (2007) studied a total of 642 companies listed on the SSE in 2003 for CSR disclosure practices, excluding
those in the financial sector. The study found scattered CSR disclosures within the annual reports and many did not

Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment Corp. Soc. Responsib. Environ. Mgmt. (2012)
DOI: 10.1002/csr
Corporate social responsibility reporting in China

have a separate section to report CSR issues. As to the preference of reporting CSR issues, most listed enterprises would
disclose employee issues, product quality issues, and philanthropic donations. Environmental protection issues and
community support issues were not widely disclosed by most listed enterprises.
On the other hand, Zhang (2007) studied 168 companies listed on the SSE in 2005. The finding showed that 155
of them have made CSR disclosures within their annual reports. The study also revealed that 68% and 48% of the
surveyed companies disclosed CSR issues on community support and the environment, respectively. On the other
hand, only 28% disclosed employee issues and 34% disclosed product quality issues. Moreover, most companies
located the CSR information under the section ‘Notes to the Accounts’. Zhang’s study has indicated that the key
CSR issues addressed by Chinese listed enterprises have changed from product quality and employee issues to
community support and environmental issues.
Ma and Zhao (2007) studied 458 companies listed on the SZSE in 2005. The study, in contrast to Zhang (2007),
suggested that product quality issues and employee issues were the prominent CSR disclosure items, which were
reported by 45% and 15%, respectively, of the surveyed companies. For environment and community support issues,
only 7% and 1% of the companies disclosed these issues within their annual reports, respectively. These prior
studies have shown differing trends on key CSR issues addressed by the Chinese enterprises listed in different
stock exchanges within a similar period of time. Nevertheless, these studies were conducted before the SSE
and SZSE issued their CSR reporting guidelines. For the purpose of comparison, content analysis of the annual
reports and CSR reports issued by Chinese-listed enterprises after pronouncements by the two stock exchanges is
urgently needed.
According to a study published online (www.csr9001.com) up to 31 October 2009 in China, 364 Chinese listed
companies had disclosed CSR reports in 2009, which constituted 23.4% of the listed companies in both the Shenzhen
and Shanghai A-share markets. In other words, over 76% of the listed companies in China still do not disclose any CSR
information. However, there has been an increasing trend of CSR disclosure. In 2007, only 47 listed companies have
issued CSR reports. In 2008, there were 132. The study also indicated that the social responsibility system and reporting
framework in China is still at a very preliminary stage. Following the issuance of the SZSE voluntary guidelines on CSR
reporting in September 2006, 21 SZSE listed companies disclosed social responsibility information in their annual
reports in 2007. In 2008, the number increased to 24. Also, 151 standalone CSR reports were published by SZSE listed
companies in 2008. On the other hand, the SSE has issued both voluntary and mandatory instructions on CSR
reporting for Chinese listed enterprises since 2008. According to the SSE data (www.caihuanet.com) 290 listed
companies released CSR related information in their 2008 annual reports, constituting 34% of the companies listed
on the SSE. Moreover, 281 companies issued standalone reports under the name ‘Corporate Social Responsibility
Report’, eight under the name ‘Sustainable Development Report’ and one under the name of ‘Corporate Citizen
Report’. Furthermore, 258 companies issued CSR reports under the mandatory requirement from SSE and only 32
listed companies voluntarily disclosed their CSR reports. As to the new concept of SCVPS explained earlier, 76 listed
companies disclosed their SCVPS and the average value per share was RMB1.97. The SCVPS varied from the highest
RMB8.42 per share to the lowest RMB0.15 per share. The average SCVPS of 100 sampled stocks listed on the SSE
Social Responsibility Index was RMB2.42.
Generally speaking, notwithstanding the quality of the reported contents, there has been an increasing trend of CSR
disclosure in Chinese listed enterprises. This has been confirmed from both academic studies and online surveys
reviewed above although one might have reservations about the methodology and design of these surveys, especially
the latter. A natural development would be a comprehensive, systematic, and reliable study in the near future.
In October 2009, the Economics Department of the Chinese Academy of Social Science (Chinese Academy of
Social Science, 2009.) released the 2009 Blue Book on Chinese Corporate Social Responsibility. It has investigated
the Chinese CSR management and information disclosure level of 100 selected companies in China, making ref-
erence to the 2008 annual reports and the CSR reports as well as the corporate websites. The study has provided a
CSR index in four fields namely, responsibility management, market responsibility, social responsibility, and environ-
mental responsibility. The Blue Book indicated that the CSR disclosure level of enterprises in China was still very low.
Only 15% of the enterprises were categorized as leaders in CSR reporting, 21% were defined as followers, over 20%
were classified as beginners, and over 40% were grouped as observers. Under the category of observers, there is no
CSR information disclosure at all. The CASS study has been widely criticized in the media, claiming that the result
was not relevant since the majority of the sampled companies, namely 80%, came from stated-owned enterprises, thus

Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment Corp. Soc. Responsib. Environ. Mgmt. (2012)
DOI: 10.1002/csr
 C. Noronha et al.

ignoring private enterprises as well as foreign invested enterprises (Xinhua, 2009). It appears that high quality and re-
liable local studies on CSR reporting in China is still awaited.
Though scarce, there have been a few studies which might be categorized as CSR disclosure practices in China
conducted by international entities or organizations. Most of these studies are comparative studies which included
China as one of the research objects. So far, in-depth studies of CSR reporting practices of Chinese enterprises are
still unseen outside the country.
According to KPMG (2005), there was not enough CSR reporting in China. It was suggested that the insufficiency of
CSR disclosures will eventually change due to external pressures from the expansion of foreign trade, local enterprises
seeking overseas listings, and the increasing product sourcing from Chinese suppliers by many multinational
companies or the imposition of supply chain requirements on local manufacturers.
The United Nations (2007) studied a random sample of 80 companies listed on the CSI 300 index (Hu Shen
300) in order to understand the trend of CSR practices. Based on the International Standards of Accounting and
Reporting (ISAR) benchmark of 53 disclosure items, the China data were compared with those of 105 enterprises
from 70 economies around the world which were included in the 2006 United Nations Conference on Trade
and Development (UNCTAD). The findings showed that the average level of CSR reporting was relatively lower for
Chinese enterprises than all UNCTAD enterprises. The study provided some observations regarding the low level of
CSR disclosure in China. For instance, Chinese enterprises were seldom concerned with policies on environmental
protection and social responsibility or even the code of ethics of employees when compared to high-income or low-
and middle-income countries. Moreover, many Chinese enterprises did not adopt formal corporate responsibility
management programs or specific mechanisms such as a whistleblower protection policy. However, the study
suggested that the regulators in China and other institutional bodies will place a greater emphasis on CSR issues in
a foreseeable future. Therefore, this might help to improve the low level of CSR disclosure currently being observed.
A study conducted by Kuo et al. (2011) has recently contributed to awareness of Chinese CSR reporting in the
Western academia. Employing content analysis, they studied 529 CSR reports of mainland Chinese companies and
found that over 41% of the sampled companies failed to provide any information on the 42 CSR dimensions as referred
to in the study. This research is probably the earliest in terms of CSR disclosure in mainland Chinese companies
published in the West. Nevertheless, the study only examined the CSR reports of one single year (2010) and did not
include other communication media such as company annual reports and corporate websites. Also, the study mostly
focused on environmental concerns and used an indigenous CSR dimension list (the expert assessment system for
CSR China honor roll) instead of an international dimension list such as GRI. More comprehensive research using
multi-year reports looking into the evolution of CSR reporting in China is to be welcomed.

Pressing Research Needs

After a review of the global CSR movement and the development of CSR reporting in China, some potential issues
emerge which are in urgent need of attention. There are two main causes of problems which can be highlighted.
First, China is currently a follower of the global trend, thus its regulatory system on CSR issues is underdeveloped.
Secondly, Chinese enterprises lack initiatives and standards for CSR reporting.
The practice of CSR reporting in China started quite recently while the core of competition among overseas compa-
nies has switched already from ‘hardware’, like having the most advanced plant and equipment to CSR-oriented
‘software’. To catch up with the global trend, SZSE and SSE as key role players in regulating CSR disclosure issues have
generated several guidelines to encourage Chinese enterprises to report on CSR issues. However, these guidelines
are mainly on a voluntary basis without any legal enforceability as mentioned in preceding sections. It is difficult to
establish a complete CSR regulatory system which is applicable to all types of industry players due to the various states
of development among different industries. However, it should be possible to make laws or mandatory standards which
meet international criteria for listed companies, giving consideration to the particularity of each industry. Before taking
this step, research on CSR reporting in China is urgently needed to identify unambiguously the weaknesses and
deficiencies of the current situation. Government authorities can then make a pointed reference to the research
findings for the establishment of a supervisory system for CSR reporting.

Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment Corp. Soc. Responsib. Environ. Mgmt. (2012)
DOI: 10.1002/csr
Corporate social responsibility reporting in China

Although the increase in the number of listed companies and the growth of foreign trade might have driven some
improvements in CSR disclosure, the remarkable increase in the number of CSR reports issued was seen only after the
introduction of reporting guidelines by the SSE and SZSE. This actually reveals that the majority of Chinese enterprises
lack a proactive attitude toward CSR disclosure; they respond only if it is mandated. A collection of CSR reports is
available online (www.csr9001.com). Reviewing the list of CSR reports, it is not difficult to observe that most of the
companies which have issued CSR reports in recent years are mainly those with good business performance or high
level of internationalization. On the other hand, companies with less competitive operating results have much less
incentive to disclose CSR information. Even for those published reports, the quality and reliability of the disclosed
information are hard to verify since external assurance of CSR disclosure is rare in China.
In April 2010, CASS published the Chinese CSR Report Rating Standards (the standards), China’s first social
responsibility report evaluation criteria. Researchers of Chinese CSR practitioners and industry experts were invited
to supervise the rating report. Basically, the criteria were formulated according to the Chinese CSR Report Preparation
Guide, China’s first CSR report preparation guidebook published in November 2009. The quality of a CSR report is
rated based on six indicators: completeness, substantiality, balance, comparability, readability, and creativity which
accounted for 25%, 30%, 10%, 10%, 20%, and 5% of the overall rating, respectively. The standards include seven classes
of CSR report ranking which are summarized in Table 4.
As mentioned in the official website of CASS (www.cass-csr.org), after the publication of the standards, several
Chinese enterprises submitted requests for report rating to CASS. Up to the end of June 2010, ten report rating
results had been released and are available online. The results are shown in Table 5.
From the rating results, it can be seen that these companies have some common characteristics. All of them are
listed companies. Nine of them are national enterprises and are in high-profile1 industries. Out of ten reports, seven
were rated as excellent, two were rated as leading, and one was rated as good. In considering that CASS is an
academic research institution directly under the State Council, its independence on assurance services for national
and state-owned enterprises is questionable. Therefore, this kind of report rating can easily become more like a
promotional tool of business image rather than an objective assessment of the CSR disclosure. This situation of
using CSR as a marketing tool is becoming increasingly common among Chinese enterprises. This points to the
urgent need for an independent examination of annual reports and CSR reports issued after 2006 in order to have
an unbiased view on the CSR disclosure level of Chinese listed enterprises.
Furthermore, another preoccupation is the approach and attitude which domestic enterprises in China take toward
the various international CSR reporting standards and guidelines. For instance, according to the GRI, completeness is
one of the major criteria of CSR reporting. It requires that information disclosed in the CSR report should cover
material topics and indicators sufficient to reflect the significant economic, environmental, and social impacts. How-
ever, many Chinese enterprises have misunderstood this meaning. They just blindly disclose as much CSR informa-
tion as possible without emphasizing key issues. Results of prior studies have reflected this problem. For example,
Li and Xiang (2007) and Zhang (2007) found that the emphasis of CSR disclosure in China has changed from product
quality and employee-related issues to community support and environmental issues. In terms of the completeness of
CSR reporting, this can be viewed as an improvement since a broader range of CSR topics have been covered. However,
from the perspective of materiality, we can see it as a kind of regression. The rationale for this criticism is that the CSR
reports prepared by entities with different characteristics are expected to place different weight on the key reporting
areas. For instance, besides disclosing information related to human rights, community support, and so on, companies
from the chemical industry are expected to put more effort into the disclosure of environmental impact caused by their
operating activities. For corporations in the food and beverage industry, product quality and safety should be the key
reporting topic. In January 2008, the State-owned Assets Supervision and Administration Commission of the State
Council (SASAC) issued guidelines on the fulfillment of CSR by national enterprises. The guidelines mentioned that
CSR information disclosed should be material to the operations of the enterprise and should focus on key social aspects
related to their activities. Therefore, besides completeness, the main emphasis of CSR disclosure should be placed on

1
High-profile industry generally refers to an industry that obtains a focus from society because its operating activities have a wider importance.
Generally speaking, the society is more sensitive to high-profile companies because they often neglect the safety of their production process
and the result can bring about a fatal effect to the society (Mirfazli, 2008).

Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment Corp. Soc. Responsib. Environ. Mgmt. (2012)
DOI: 10.1002/csr
 C. Noronha et al.

Rating result Symbolic form Type of position Range of rating

Five stars ????? Outstanding 90-100

Four and a half stars ????? Leading 80-89
Four stars ???? Excellent 70-79
Three and a half stars ???? Good 60-69
Three stars ??? Pursuing 50-59
Two stars ?? Developing 30-49
One Star ? Starting Below 30

Table 4. Rating system of Chinese CSR Report.

Release date Company name Business type Industry Rating

(d/m/y)

4/4/2010 China Petroleum and National enterprise Oil & gas extraction ????
Chemical Corporation and processing
5/4/2010 Sinopec Group National enterprise Oil & gas extraction ????
and processing
6/4/2010 China Huadian Corporation National enterprise Power generation ????
7/4/2010 China Huaneng Group National enterprise Power generation ????
14/4/2010 China Minsheng Banking Corp., Ltd. Private enterprise Banking ????
9/5/2010 Masteel Corporation National enterprise Smelting and processing ????
10/5/2010 China Southern Power Grid National enterprise Power supply ?????
22/6/2010 China Datang Corporation National enterprise Power generation ????
22/6/2010 Sinosteel Corporation National enterprise Smelting and processing ????
22/6/2010 Anshan Iron and Steel National enterprise Smelting and processing ?????
Group Corporation

Table 5. Chinese CSR Reports Rating List (until June 2010).

the important topics according to the characteristics of the company’s operation in order to enable stakeholders to
assess the reporting entity’s performance.
While many companies report a lot of CSR information on many topics without having any major emphasis and
direction, some companies pay too much attention to the key dimensions related to their business operations and touch
on other CSR topics very lightly. For instance, in the CSR report of China Southern Power Grid for 2008, the snow
disasters which took place in Southern China during the beginning of the year were magnified a thousand-fold and
occupied most of the contents with nothing else being mentioned. The reporting entity did not realize that ensuring
the normal operation and function of power supply during snow disasters should be one, but not the only issue to
be disclosed. This cherry-picking example reflects a pressing issue that Chinese enterprises do not grasp the essence
of the CSR reporting guidelines. It is hoped that the situation will be improved after the publication of the CASS
guidebook in 2009 which includes detailed explanations and instructions for Chinese enterprises on CSR reporting.
However, further studies are necessary to assess the extent or existence of improvement in their reporting approach
and examples of good practice will also take this issue forward.

Conclusion
Driven by globalization, there has been a growing awareness at an international level of CSR, especially in terms of
reporting. In addition to voluntary standards, many developed countries have issued legislation and regulations to

Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment Corp. Soc. Responsib. Environ. Mgmt. (2012)
DOI: 10.1002/csr
Corporate social responsibility reporting in China

require more mandatory disclosure on CSR issues. Additionally, external assurance of non-financial reporting has
become accepted as an important and effective way to enhance credibility. This trend is now reaching the developing
world also. In recent years, many CSR initiatives have emerged in China. During the process of CSR building, the
Chinese government has played an important role. The leading example is that, according to article 5 of the 2006
Chinese Company Law, companies are required to undertake social responsibility in their business operations.
Another important state-led measure is the guidelines issued by the Shenzhen and Shanghai Stock Exchanges on
CSR reporting for Chinese listed enterprises. Many industry-specific initiatives are growing as well, such as the
China Sustainability Reporting Guidelines for Apparel and Textile Enterprises, Guidelines on Corporate Social
Responsibility for Banking Financial Institutions in China, and so on. This remarkable growth of CSR initiatives
in China has galvanized many Chinese enterprises into action which is reflected by the increasing number of
CSR reports published in recent years.
On the other hand, doubts have been cast on the real purpose and effectiveness of these initiatives. Are these CSR
guidelines and regulations simply window dressing, through which China means to improve its international image?
This question is prompted by the overall quality of CSR reports after the successive CSR initiatives since 2006, in
particular when the substantiality and reliability of the information disclosed have not been verified as currently
there is no external assurance requirement in China. Recently, more doubts have arisen after CASS, a national
academic research institution, gave high ratings to those CSR reports issued by state-owned enterprises. Therefore,
an objective evaluation of the CSR reporting level of Chinese enterprises using content analysis of annual reports
and CSR reports issued after 2006 is certainly and urgently needed. Furthermore, government agencies need to
continue to strengthen the legal enforceability of CSR regulations. More education of CSR reporting should be
disseminated to public companies so as to better grasp the spirit of information disclosure as required in the
guidelines. All in all, CSR reporting in China is still at a preliminary and exploratory stage and there is substantial
room for improvement through the concerted efforts of the government, enterprises, and CSR researchers.

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Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment Corp. Soc. Responsib. Environ. Mgmt. (2012)
DOI: 10.1002/csr