1. Next Generation – What our Future Leaders Should Know Prof. Stephen Cheung Department of Economics and Finance City University of Hong Kong

2. Contents What is corporate social responsibility (CSR)? CSR in the world CSR in Hong Kong Drivers for Organizations Role of Government Guidelines for CSR Obstacles in running socially responsible businesses

3. What our Future Leaders Should Know? Old ideas of doing business –Profit maximization –Concern on shareholders interest Today’s new standard –NOT only pay tax and comply with national regulations –Sustainable development –Consider interest of all stakeholders and are expected to take greater responsibilities in running a business –Corporate social responsibilities (CSR)

4. What is Corporate Social Responsibility (CSR)? Major trends in international business in recent years Business’s contribution to sustainable development Related to basic business activities Impacts on stakeholders: –Social; –Economic; and –Environmental Create additional value and strategic advantage

5. How to Measure? Four possible indicators Dow Jones Sustainability Index (DJSI) Global Reporting Initiative (GRI) Carbon Disclosure Project (CDP) ISO 14001 Certifications

6. CSR in the World Developed Markets ≠ The Best Emerging Markets ≠ The Worst CSR can also be found in the developing markets –South Africa and Brazil are among the global leaders –Among Asian countries, India and Malaysia seems to be the most active

7. Percentage of Companies on DJSI by Country Category Source: Dow Jones Sustainability Index, September 2004

8. Growth in ISO 14001 Certification Worldwide

9. Extent of Reported Corporate Social Investment (CSI) Source: Annual Report on the OECD Guidelines for Multinational Enterprises, 2005

10. Findings Small gap between emerging market and developed market companies Emerging market companies also consider corporate social responsibility Some emerging market companies (such as those in South Africa and Brazil) are global leaders

11. CSR in Hong Kong Corporate Governance Scorecard Project Survey results based on publicly available information HSI, HSHKCI, HSCCI, and HSCEI constituent stocks 2002: 168 companies are covered 2005: 174 companies are covered Section/ Year2005 Mean2002 Mean Role of Stakeholders in Corporate Governance 40.2154.32

12. Drivers for Organizations Enhance image and reputation Increase shareholders value Reduce business risk Legislative requirements Customer loyalty Employee loyalty Improve business operation Control of legal risks

13. Guidelines for CSR The UN Global Compact The OECD Guidelines for Multinational Enterprises

14. Obstacles in Running Socially Responsible Businesses Management practice Increasing cost? Monitoring and enforcement Sustainable development

15. Role of Government Enforcement strategies and legal and regulatory risk management Tax initiatives Contribution to compliance expertise Moral suasion

16. Incentives CSR index –Brand name CSR investment fund –Investment communities Education → 發財立品

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