CHINCA: Developing the Guide on Social Responsibility for Chinese International Contractors
On 20 December 2010, CHINCA officially released the Guide on Social Responsibility for Chinese International Contractors on their Sixth Members’ Assembly in Beijing. Founded in 1988, the China International Contractors Association (CHINCA) is a Chinese trade association with more than 1,400 member companies, of which 800 are engaged in international project contracting and investment. CHINCA’s member companies are active in over 180 countries representing around 90% of the total turnover of the Chinese international contractors industry. Their business scope covers a wide range, the most important being construction, water conservancy and power engineering, transportation, petrochemical, electro-communication, water supply and drainage, mining, and environment protection.
The Guide provides a clear definition and outlines basic principles of social responsibility, illustrates how to manage social responsibility, and which core issues need to be taken into consideration for the international contractors industry. It is structured along seven core sustainability issues and defines 100 sustainability indicators. Moreover, it provides a self-assessment form in the annex for companies to evaluate their CSR performance.
The Chinese international project contracting business has witnessed rapid growth in recent years. Fifty-four Chinese contractors are currently listed in the ENR’s “250 Largest International Contractors 2014 List”. Many of those companies are also listed in the Forbes Fortune 500 List. Africa is an important region for Chinese contractors. Between 2001 and 2012, the value of newly-signed contracts of Chinese international contractors in Africa rose from 2,5 billion to 64 billion USD.
This strong growth has exposed Chinese contracting companies increasingly to international scrutiny and, as an effect of globalization over the last decade, also brought along new demands on China’s contracting enterprises coming from a variety of stakeholders. Issues that CHINCA member companies are increasingly facing include abiding by international conventions and the corresponding codes of conduct in their business operations, handling increasingly complex stakeholder relationships (business partners, local citizens, non-governmental organizations etc.) in an appropriate way, and coping with differences between environmental protection concepts, languages and cultures – to name just a few.
CHINCA became increasingly convinced that they needed to do something to support companies fulfilling their social responsibility, not only to their own benefit through improved competitiveness, but also in order to improve the performance and reputation of the Chinese international contracting industry as a whole. A survey conducted by CHINCA in May 2010 yielded that even though most Chinese international project contracting enterprises were aware of the benefits of CSR, many hesitated to take concrete action in the absence of an industry-specific CSR guide which would provide a level playing field. It is against this background that CHINCA decided to seek support from the Sino-German CSR Project in order to step up its efforts in systematically promoting CSR among its member companies.
Supported by GIZ, CHINCA decided to develop a “Guide on Social Responsibility for Chinese International Contractors” and set up a structure to support companies with implementing the guide in three phases:
- Phase 1: Development of a comprehensive CSR road map
- Phase 2: Development of the Guide on Social Responsibility for Chinese International Contractors
- Phase 3: Support implementation of the Guide
The Guide development process took six months from July to December 2010. It was designed in a manner ensuring that both process and content were maximally aligned with international best practices. Another key principle was to take the specific needs of the Chinese contracting industry into consideration.
GIZ advised CHINCA to place strong emphasis on referring to and applying voluntary sustainability standards in the Guide development process that are considered to be international good practice, most importantly ISO 26000. A drafting team composed of national and international CSR experts benchmarked each indicator against existing international standards and domestic laws and regulations. Senior management staff from the international contractors industry advised the drafting team, providing a valuable reality check.
By referring to ISEAL’s Standard-setting Code, international best practice principles of standard development were considered, thus giving CHINCA’s Guide a stronger degree of legitimacy. Three expert seminars were organized over the course of the Guide development process to ensure that the outline, structure and text of the Guide have fully taken the views of stakeholders into consideration. The draft guide was published on CHINCA’s website for a one-month public review in both the Chinese and the English version.
CHINCA undertook a number of activities to support the implementation of the Guide: conducting a performance survey, conducting performance monitoring and evaluation of pilot companies, developing trainings on selected topics from the Guide, as well as carrying out supplementary capacity development and network building activities.
Initially, 29 CHINCA member companies volunteered to pilot implementing the Guide. The pilot companies represented a combined turnover of 24 billion USD in 2010. Currently, at least 42 companies pilot the implementation of the Guide.
In the beginning, a self-assessment was carried out among the pilot companies. The survey results indicated that companies perceived themselves as performing poorly in the areas of social responsibility management, supply chain management, environmental protection, community engagement and development. CHINCA designed its support services, including capacity building, around these issues. Furthermore, CHINCA developed and disseminated two CSR Best Practice Collections and issued biannual CHINCA CSR Progress Reports.
In 2012, CHINCA conducted a CSR Performance Evaluation in 49 companies. Survey results showed that:
- Over 80% of the companies set-up a CSR management system
- 8% have built regular worker-management communication channels
- 2% use environmentally-friendly materials and processes
- 6% passed environmental certification
- 8% set-up responsible purchasing/ sub-contracting policy
- 7% support community development
As a result of their CSR activities, companies reported direct benefits, including:
- Retained talented human resources and decreased staff turnover rates
- Increased economic, environmental and social benefits
- Improved brand image in project countries
- More contracts have been awarded
As a result, CHINCA has gradually established a reputation as a pioneer business association by actively promoting CSR among its member companies in China. CHINCA has created a new tab on CSR on its website to enable more companies and the wider public to learn about their CSR work.