On January 9th, the 2020 CRO Global Summit was held in Shanghai by SnyTao, an independent Chinese consultancy promoting corporate social responsibility (CSR). During the summit Guo Peiyuan, the director of board and co-founder of SyncTao, listed what in his view are the ten major trends of CRS in 2020. We have summarized them below.
Trend 1
A new starting point: winning the “three tough battles” and preparing for the 14th Five-Year Plan
Year 2020 is the starting point for much important work; for example, waste-sorting rules will be implemented in 46 cities of Mainland China; the state requires the development of a zero-waste city construction index system; an ESG (Environmental, Social, Governance) report guidance will be published by the Hong Kong Stock Exchange and implemented in the fiscal year after July 1; the domestic capital market is expected to make the disclosure of environmental information mandatory for A-share listed companies.
Internationally, the Paris agreement has reached a critical point where members should set their 2030 emission reduction targets by the end of the year.
The corporate sector will be involved in the implementation and realization of the above-mentioned work, therefore it is critical for it to embrace the policies with open thinking and an advanced vision.
Trend 2
A new image: telling Chinese stories within the SDGs framework
In the fifth year of the United Nations Sustainable Development Goals (SDGs), the focus will be shifted from popularizing the concept and promoting awareness to practice and experience-sharing. China’s experience in poverty alleviation and environmental governance is also of great significance to developing countries.
The 2022 Winter Olympics will be held in Beijing. By the end of 2019, the Winter Olympic Organizing Committee will obtain its certification for having a sustainable management system, which will become a new element within the SDGs’ “China story”. The upcoming conference of the United Nations Convention on biological diversity in Yunnan at the end of 2020 also provides new opportunities for China.
In 2019, China had more companies in the Fortune Global 500 list than the US. Being the largest group on the list, sharing Chinese stories that align with the SDGs or other international standards would be meaningful and impactful for the growth of business and the communications with the world.
Trend 3
New rural areas: establishing a long-term mechanism to solve relative poverty
With the achievement of the goal of building a moderately prosperous society in an all-round way in 2020, China plans to eliminate absolute poverty under the current standard. However, relative poverty is expected to continue to exist for a long time.
The establishment of an industrial chain is the key to the establishment of a long-term mechanism. All kinds of enterprises can make great achievements by combining their main business with a sustainable development strategy, improving agricultural innovation, competitiveness and total productivity, and enhancing the competitiveness of their own industrial chain.
Trend 4
New fashion: from waste-sorting to zero waste cities
Waste-sorting is becoming a new fashion in cities. Shanghai took the lead in implementing mandatory waste-sorting in 2019, which served as a demonstration for the rest of the cities in China. In 2020, more than 40 cities across the country will put in place a classified treatment of domestic waste. On December 27, 2019, members of the Standing Committee of the National People’s congress proposed to further standardize the relevant content of domestic waste-sorting, which means that the legal process for waste-sorting will be accelerated.
Businesses that generate a huge quantity of waste should focus on tackling the waste issue because, according to the 2019 China Sustainability Report published by SynTao, “waste-sorting” and “recycling” are the most frequent sustainable-related terms mentioned by Chinese consumers. Consumer demand will push corporates to reconsider their waste management system along the supply chain.
Trend 5
New wave: a new wave to combat climate change
In 2020, many multinational companies in China, especially European companies, will begin to take measures for carbon emission reduction and carbon compensation at the request of their headquarters. The Chinese market, as the most important production and sales market outside of the headquarters, is heavily entrusted. China’s leading enterprises in some industries are expected to launch voluntary carbon emission reduction commitments in 2020.
Trend 6
New disclosure: ESG report emphasizes the quantifications of carbon emissions
On December 18, 2019, the newly revised ESG reporting guidelines of the HKEx were released as scheduled, becoming the third version of the guidelines since 2012. The new guidance of the Hong Kong Stock Exchange requires corporations to disclose their policies in responding to the major climate related issues that have and may have an impact on the issuer. The issuer is also required to disclose its greenhouse gas emissions in scope 1 (mainly from its own facilities) and scope 2 (mainly from electricity consumption). Listed companies should establish a more efficient ESG information management system to collect and manage carbon emissions, energy consumption, water consumption, waste reduction and other data related to their businesses.
Trend 7
New benchmark: ESG rating promotes corporate governance
For listed companies, the ESG rating provides a new benchmark different from financial indicators, which measure the company value from the perspective of corporate governance, pollution emissions, energy efficiency, labor relations, community relations and other non-financial indicators. The combination of financial indicators and ESG can undoubtedly help assess the sustainable operation abilities of the company more comprehensively. Therefore, ESG ratings will objectively promote the governance level of listed companies, especially in environmental and societal aspects.
Trend 8
New communication: the communication of stakeholders in the 5G era
2020 is the first year to realize large-scale 5G commercialization. The popularity of 5G mobile terminals will promote the rapid development of vlogs, VR and AR applications. 5G has the technical characteristics of wide bandwidth, low latency and wide connections, which will bring new information and content changes, expanding CSR communications in terms of content, ways of interaction and other aspects.
Trend 9
New boundary: the extension of responsibility of the value chains and value networks
Corporate social responsibility is extending along the supply chains and the value chains. The boundary of corporate performance is increasingly separated from the boundary of the legal entity, which is defined by the expectation of core stakeholders. In 2020, the extension of responsibility will be strengthened. In the digital age, the isolated value chain has expanded into a value network. A value network is an ecosystem formed by a value chain and stakeholders. Enterprises are the key to the value network.
Trend 10
New risks: ethical challenges to the application of new technologies
In 2020, data security and privacy protection will be the key topics in the technology industry, especially the Internet industry. Regulators are expected to continue to crack down on the trading of personal data, information and privacy. Enterprises will face high legal risks if they fail to protect the privacy of their clients, including the improper collection of personal information, the lack of privacy agreements or the unclear description of the scope of collection.
