3000 respondents were polled and two industries were covered for the first annual edition of this ‘CSR Index’, Fast Moving Consumer Goods (FMCG) and the automobile industry. These were not only obviously examined because of the traffic and volume each sector currently encompasses, but mostly because these two sectors came under very close scrutiny in China over the past few years: recent product safety and quality scandals (i.e. the melamine in milk scandal in 2008) sparked public outrage and profoundly affected China’s FMCG industry, while China’s auto industry became the leading automobile market in the world.

Here is a snapshot of the most interesting findings from the CSR Index:

• Product quality is the primary concern of Chinese consumers, followed by environmental protection (2^nd), management integrity (3^rd), philanthropy (4^th), and also intellectual property issues, fair competition, and least of all, employee rights and interests.

Given the recent food safety scandals in China, consumers are demanding healthy and safe products, first and foremost. While the presence of environmental protection in second position denotes greater environmental awareness, it also shows that Chinese consumers value products’ green credentials as guarantee of good quality and safety, the same way that management integrity appears obviously as a sub-set of quality, safety, and environmental concern. Overall, the weaker position of philanthropy or other non-product related issues such as employee rights, demonstrates the importance of the ‘me’ factor (consumers will mostly care about what can directly affect themselves and their own families), and that donations are clearly not enough, companies are expected to offer products that can be trusted.

• As Chinese consumers are calling for a trustable market environment, there is growing connection between the perceived CSR performance of companies and the purchase decisions of consumers, while the Index also confirms that the more educated a target market segment is, the more concern there is for CSR.

• Chinese corporations are widely seen as faring less well than foreign enterprises, which is according to Prof. Zhao Shuguang, head of the Tsinghua Media Survey Lab, due to foreign companies perceived advantages over domestic companies in terms of management, technology, capital and resource allocation. This again demonstrates that CSR in China should be incorporated into core  business practices in order to win consumers’ trust, rather than used as simple add-ons or donations/marketing campaigns.

Overall, some interesting findings, which show again that addressing local stakeholder concerns is of paramount importance when fine-tuning the local implementation of global CSR policies and strategies.

* I have been very quiet over the past month or so, due to a very busy workload, recent changes to my professional life, and in between, some nice holidays back home. I am now slowly getting back to blogging, and micro-blogging. I have missed it! Stay tuned.

With no tangible COP15 outcome in sight, many eyes have turned to look at China, whose position on climate change got widely debated. But often, as many other commentators noted (here and here), much of this debate has been based on misinterpretations of the domestic drivers behind the climate change issue in China.

Therefore, with my colleagues at Edelman Shanghai, we developed an Insights Paper on China’s position on climate change (that you can download here) with the aim of providing a more “holistic” picture of what the issues are on the ground in China, how these are influencing China’s climate change diplomacy, and how, from a communications perspective, better engaging Chinese stakeholders (government, consumers, companies) on this issue by actually re-framing the debate (and the terms of the debate, for a deeper analysis, check this out).

I don’t usually publish agency or client-related content on Sustainability Conversations, but the aim of this blog is to take part to existing conversations and share insights, and COP15 is for sure part of this. Of course, please let me, and my colleague @ilsevs, know your comments and thoughts on this paper.

Thanks again to all the people who contributed time and insights to this project (here, here, here and there) and furthered (I hope!) our understanding of a critical, yet extremely complex issue.

To download the Insights Paper, please click on the picture above or here.

Few days ago, the Wall Street Journal reported that a Chinese netizen, Guo Baofeng, put together an open-source Google map that locates major pollution sites around china. As it went publicly-launched, the map attracted a lot of interest on Chinese Bulletin Board Systems (BBS) and forums: the number of views more than doubled to about 5,000 compared to a week earlier, when it first came online.

This is a very interesting case for many reasons:

• This is not China’s first pollution map. For example, the Institute of Public and Environmental Affairs, a Beijing-based environmental NGO, published a “name-and-shame” corporate water pollution map in 2007. The web has been used as a tool to publicly denounce corporate misbehaviors early on by, in this case, naming thousands of alleged pollution makers, including many multinational companies.

• However, Gua Baofeng’s Google map is the first one that enables other users to contribute themselves: netizens can mark spots associated with high levels of pollution or incidents of contamination, based on publicly available information (often media reports). Here, bloggers can now re-expose the polluters publicly, and their misbehaviors might potentially live forever in search and be accessible to a much larger audience, etc…

• When looking at the map as it is now, many ‘pollution spots’ are around the Yangtze River Delta and Pearl River Delta – China’s highly industrialized manufacturing hubs. But some other pollutions sites on the map show much more sensitive areas, i.e. locations where multiple lead contaminations cases got highly controversial, etc… Bloggers’s interest in this map is likely to grow (if the map remains accessible in the future) as public awareness of such pollution issues is high: such issues are extremely local and linked to what people care the most about, i.e. their health, safety and their families’ welfare.

• Given that peer-to-peer conversations or conversations with a “person like me” are among the most trusted sources of information, this Google map can have significant ramifications for corporate reputation as Internet users are able to scrutinize corporate activities to an unprecedented degree, while providing to companies an important barometer of the issues that matter to the public at a very local level.

To be followed then, if the map is allowed to last online in China…

• Water pollution is seen as a top environmental priority in China, exceeding climate change

This does not come as a surprise. China is witnessing an acute water crisis: two thirds of China’s approximately 660 cities have less than they need and 110 of them suffer severe shortages.

Why “Exceeding climate change”? Because water is perceived as a more local issue, with immediate threats in daily life and drastic health impacts. Growing public awareness, accompanied by greater official and media attention to the problem, have for instance prompted rising complaints and protests about water pollution all across the country, with high frequency.

• Government considered most responsible for providing clean water, but companies are also on the radar!

Whether domestic or foreign, companies operating in China are increasingly held accountable with regards to water issues, by local residents and grassroots NGOs (see this name-and-shame corporate water pollution map here), by the government at both local and central levels (see this recent “blacklisting” of water polluters here), the media, and of course, the netizens themselves.

CSR and community outreach are among the most effective ways to pre-empt any risk-related issue and maintain its license to operate in China by 1) operating in an environmentally-sound manner and exceeding standards, 2) engaging key stakeholders by leveraging diverse communications channels.

• Chinese respondents do not feel empowered to address water problems

Chinese consumers and citizens are the first victims of water pollution and scarcity, and while they are increasingly voicing their concerns online and offline, they are also willing to help improve conditions on the ground, and most especially to BE part of the solution.

This is definitely THE area where companies and NGOs can add great value, by empowering consumers, employees or the larger public as agents of change, giving them a greater purpose, furthering engagement and dialogue, and therefore trust.

• China is not alone. Water Also Tops Climate Change Worldwide

The China poll is part of a comprehensive international study which surveyed 1,000 people in 15 countries, and probed 500 in each of the following countries on specific questions: Canada, India, Mexico, Russia, the United Kingdom, the United States (and  China).

The survey also finds that people around the world view water issues as as the most important facet of the world’s environmental crisis, greater than air pollution, depletion of natural resources, loss of habitat and climate change.

When communicating about climate change, we often recommend to talk directly to people’s concerns and needs, i.e. energy-saving and costs, but why not also talking about water issues as they aredirectly linked  to climate change (i.e. scarcity, pricing, etc.) and to people’s top environmental concern? What do you think?

Full survey results, including, pictures, interactive maps, and detail for each of the seven featured countries, are available here. A webcast of the survey launch is available online here.

Clownfish

Some trends are more of a very long-term evolution that goes much beyond 2010, i.e. energy efficiency, legal requirements , etc.. as there are still holes in the system such as weak law enforcement, economic performance/environmental protection dilemma, etc…

However it is a pretty comprehensive list and Clownfish points out to some trends that will largely impact the way businesses will effectively communicate (or are already communicating) their sustainability performance, and how they will have to engage with their stakeholders. It includes:

• From greenwashing to green identification

Chinese consumers may soon become aware of the concept of greenwash – the deceptive use of green marketing. In Taiwan, 23% of the public already believe that claims about sustainability are just a new marketing technique (cyberone.tw 2008).

Some Chinese furniture companies have made ‘green’ claims and plastered unverified green labels all over their packaging. Yet officials have revealed that many items are actually a health hazard – far from the environmentally and socially responsible image that their advertisements would have you believe.

One way or another, companies that turn themselves ‘green’ overnight or simply use ‘green’ iconography will soon have to face the consequences. Consumers expect companies’ sustainability to be real and transparent, not a manipulative tool. At Clownfish, we believe that it is about creating compelling communications, underpinned by fact, with a clear call to action for consumers.

• From offline to online

Brands can no longer hide behind their TV ads or billboard posters because of the power of online search. Consumers can find information about anything, anytime, and they are actively seeking information about the brands with which they interact. In 2009, it is going to be increasingly important for brand image to match company behaviour. Blogs such as Tianya and Sohu, where people have open discussions about anything, anytime, often have more influence on consumers buying habits than a company’s advertising.

The recent claims made about harmful substances in Jonhson’s baby products have escalated, with some people even claiming adverse effects after using the products. Although the Chinese government has cleared Johnson’s name after careful investigations in March, the active bloggers of the world have spread the incident across the internet, damaging the brand’s reputation considerably.

So brands must use clear, genuine, and authentic messages that promote transparency. As this research hows there is a positive correlation between transparency and trust – It’s about being tangible.

• From external claims to internal change

The health and safety standards of products have always been a concern for the Chinese public and this concern is not going away anytime soon. In reaction to this, many companies have adopted marketing strategies to emphasise that their products are ‘natural’.

Clownfish predicts that this emphasis on nature will soon become intertwined with greater environmental and social impacts, that go beyond health and safety, such as carbon emissions, waste production or water usage. As the awareness around these issues grows, business models will start to change – not only for the good of the world, but also because they offer real business opportunities. Clownfish suggests that those companies that get ahead of the game and address their environmental and social impacts now will be the successful companies of the future.

• From company claims to external verification

Consumers no longer passively accept news and product information thrown at them by marketers, ads, or their peers. 64% of consumers want third-party verification of green claims according to the GfK-Roper’s 2007 report. Some partnerships are already developing between NGO’s and large organisations, for example Lenovo and five Chinese NGOs, McDonald’s and Greenpeace, and Coca-Cola and WWF. As this trend continues in 2009, there needs to be a balance between credibility and values for both the company and the NGO. This will help to retain the trust of consumers.

When it comes to comes to the increasing role and impact of NGOs in China (that Clownfish sees as “From NGO criticisms to active involvement”), I would be much more cautious as many NGOs (non-GONGOs) in China are still operating in grey areas where clear regulations are still lacking, and where trust and credibility with the public (consumers, media) is still a major issue.

Furthermore, it is also important to look at the Chinese government’s agenda for the years to come in order to define whether green will be a top priority for business willing to secure their license to operate (and profit) in China, or whether other issues might come first, such as access to healthcare, poverty alleviation, education, etc..

To be followed!

For those more interested in global trends, Clownfish as also published a set of trends for business in more developed market, here.

Original source: Cleaner Greener China

Credit Image: Michael Turek

***

No week goes by in China without a new Sustainability/CSR conference being held or a new Corporate Sustainability (CS) initiative being launched.

Despite the economic crisis, the field of Corporate Sustainability has kept on growing and expanding. However, as CS is getting more mature, it is also getting more complex, so that a few basic, but nonetheless important, market-specific principles should be kept in mind when launching CS initiatives in China.

Corporate sustainability is no longer a ‘nice-to-have’, but a must have

Not so long ago, foreign companies operating in China could literally buy a ‘good reputation’ through a well-placed donation to a leading politician’s favorite charity or a disaster relief fund.

However today, CS strategies based solely on philanthropy are insufficient and companies that are making increasing profits in China are expected to “give back to the society” and do their fair share through a more hands-on role.

Sustainability efforts do not have to be exclusively green!

It is critical that foreign companies align their Corporate Sustainability efforts with the Chinese political agenda and priorities, since the government’s support, and even endorsement, is necessary to secure market access and credibility with other stakeholders (e.g. government-controlled media) in China.

However, today, being good and responsible does not automatically mean being green. As a result of the economic crisis, the environment has become less of a priority for the government. Limiting further layoffs, improving access to and quality of social services (particularly health and education), and encouraging local innovation are now top national concerns, and therefore ‘hot issues’ to potentially engage with.

Authenticity is key…otherwise beware of word-of-mouth!

Beyond government and media, employees and consumers are also key audiences of CS programs. They have increasing expectations towards companies, and will value CS as a relevant proof of companies’ and/or brands’ transparency and trustworthiness.

However, as multinational corporations in China are traditionally held to higher standards than their domestic counterparts, authenticity is key when engaging consumers or employees. Any ‘greenwashing’ type of accusation or corporate misconduct can be voiced and amplified online by more than 300 millions netizens, which are seen as the most trusted source of information in China. Some examples of past online crises in China show how careful companies and brands have to be when they market their CS initiatives online.

Corporate Sustainability plays an increasing role in driving corporate and brand reputation in China, perhaps more than any other country. Foreign companies are implementing CS programs in China as never before, yet those programs need to be relevant the local context and issues. To do this effectively, it is imperative to have two-way communications platforms in place in order to effectively understand what stakeholders expect., and how to move things forward.

Today everybody is indeed trying to understand how domestic consumption is unfolding in China as consumer demand in the West is shrinking and exports in China are suffering due to the world economic crisis.

A lot of these reports point out to the rise of green consumption, across all types of consumers in China. However, do we really understand what this is all about, what the Chinese consumer sees as ‘green’ and why eco-friendly attributes of a product or services would be a decisive purchase criteria?

:: Defining green consumption is not as easy as it seems

When researchers ask consumers whether they would prefer to buy environmentally-friendly products , they invariably answer in the affirmative as it makes them feel more virtuous and gives them a certain ‘good feeling’ . However such stated intents rarely aligns with actual behaviors in reality, for many reasons:

• Chinese consumers are still highly cost-sensitive and the premium put on being green is not as high as in Western markets. Beyond cost and price, brand name and image is also a key purchase criteria as it is often seen as a proof of quality and safety, as well as a ’social status symbol’.

• Chinese consumers are not as concerned about climate change and a deteriorating environment as their Westerners counterparts are as their level of awareness and education on these issues is not as high, even though there has been relatively some progress. At the moment environmental concerns directly affect the purchasing decisions of only a small proportion of Chinese consumers: “the wealthy, the ones living in the main cities, the better educated”

• The information needed to make the environmentally-sound or socially-responsible purchase decision is therefore not always easy to find, or to understand (and therefore to trust).

What is key to understand is the fundamental difference between Chinese and Western views on what green or eco-friendly means. For Chinese consumers, it means ‘honest and trustworthy’, ‘innovative’, ‘modern and developed’, ‘well-organized and well-planned’, ‘high quality product and services’, ’safe & healthy’ which is very different from the Western ‘back to nature’ perceptions (for some more takeaways, please check this study published in 2008 here).

Two key takeaways:

• When fine-tuning green marketing strategies and messages, it is therefore key to associate and link ‘green’ with ‘personal health’ and health-related product safety, rather than a much broader ’save the world’ type of messages. Messages have to be ‘audience-specific’ and talk directly to your consumers’ concerns or needs in a human, simple and compelling way (i.e. it is all about ME, rather than a broader US).

• The way Chinese consumers value ‘green’ goes beyond product attributes to relate directly to a company’s reputation.

Product safety & quality issues remain at the top of Chinese consumers’ concerns (i.e., recent melamine-milk crisis), which created some of sort of ‘presumption of guilt of corporations’. Brands and companies can therefore leverage the green credentials of their products and better communicate with their customers to ease tensions and doubts caused by asymmetry of information.

However, it is important to remember that this is a doulbe-edge sword that can potentially destroy brand and reputation: any ‘greenwashing’ type of accusations can be voiced and channeled not only by activists and NGOs, but also by millions of consumers online.

This report sucessfully shows how companies are progressing along five developmental stages of CSR, both from the outside in and the inside out.

Not surprisingly, effective stakeholder engagement is key to progress along the different stages. In order to succesfully link CSR with their business strategy, companies must indeed understand what are their stakeholders’ expectations on the ground, and what are the key issues to address. Such approach then enables companies to be proactive (instead of merely reactive) and to change the relationships with some stakeholders from adversaries to partners.

I am even more interested in the fifth stage that they call ‘transformative’: I belive this is when companies are becoming powerful agents of change themselves and when CSR or Sustainability is at the core of their brand or corporate DNA. At this stage companies fully CONNECT and PARTNER with their key audiences (e.g., consumers) to effect positive change. I am also persuaded that this is at this stage that the ROI is the most compelling (i.e. if consumer-oriented initiative, ROI is about brand involvement, brand differentiation, with positive side effects on corporate reputation, etc.).

In China, most of CSR is still at a Compliant stage or Engaged Stage, with a predominance of charity and philanthropic initiatives, which do not offer a very compelling ROI, especially in terms of corporate reputation and stakeholder relationships. What is needed to move foward? Understanding stakeholders expectations and key local issues to strategize locally-relevant and business-aligned initiatives, and this is what makes CSR work in China very interesting and also very challenging.

If you are interested in CSR, I highly recommend you to have a quick read of this report.

Well, the other day I came across a very interesting marketing research “China Youth Trends and Business Implications” published by China Youthology (青年志) – an innovative agency which works on brand-youth connection in the China market – and I found great insights on deep-rooted changes in Chinese youth’s values and lifestyles, and how it affects the ways companies in China should approach and leverage their Sustainability/CSR programs to better engage and ‘connect’ with the Chinese Youth. ‘Sustainability’ and ‘CSR’ are the social currency that the young generation will identify themselves and build relationships with others in their communities.

See the slide share presentation below that gives a great overview of China Youthology’s findings (or download the full-report here).

I have liked this research report so much that I have also extracted some of the sustainability-relevant parts of it, Enjoy!! no matter how long it is

1. The emergence of a ‘New Citizen’

The young generation grew up with Chinese economic reform and open-door policy. As the single child generation, they have been coined as ‘little emperors’ and labeled as selfish, irresponsible, and rejecting of traditional values. In 2008, when youth spoke up during the Tibetan unrest, showed concern during the Sichuan earthquake, and great pride at the Beijing Olympics, it caught many people by surprise. This generation is now known as the ‘bird nest generation’. Issues of social justice and equality have become relevant and visible to common people. And the Internet has empowered youth as a tool to express their opinions, exchange ideas, form communities, and make a difference.

• Marketing/Communications implications?

- Corporate Social Responsibility under scrutiny: CSR is no longer a ‘nice to have’, but a must-have quality of corporations.

- Stop talking, Prove it (Walk the talk and talk the walk): Empty slogans are transparent and out of date. Even donation and charity campaigns now risk the perception of trading money’ for media attention. Young people respect sincere and long-term efforts.

- Get it Louder through Communities: The long-term, down-to-earth efforts need to be connected with the local communities through which young enthusiasts are taking small actions. Only by this means will efforts become ‘social currency’ for young people to talk about.

2. New Life: From indulgence to sustainability; pains of modernity and risks awareness

While the youth enjoy the ‘fruits’ of modern life, they’ve also started to feel the ‘pains of modernity’ at the same time: the polluted environment, the growing incidence of diseases in younger age, the severe issues of food safety (melamine crisis), and now the economic crisis. They have realized and experienced the many risks in the society and in their life, and they aspire a life and world that is more sustainable.

• Marketing/Communications implications:

- Knowledge marketing: The trend of sustainability has been seen in the developed markets for years. However what’s different (and more challenging) in the China market is the presumption of guilt of corporations. When news (true and false ones) about product safety/ quality breaks, they spread dramatically and usually devastate the brands. Aside from reacting to the crisis responsively (by various ways of conventional crisis PR), companies still need to learn better ways to constantly communicate with their customers to ease the tension and concerns caused by asymmetry of information.

- Sustainable products: Safe is not good enough. The increasing needs for environmental friendly, natural, and healthy products has become inevitable. Concerns about health issues have become big barrier for many brands in the categories of food, skincare, home furnishing, and others. And it marks the precursor for innovation towards higher sustainability for many brands.

Sure, this kid is living in one of the world cities where environmental issues and concerns are most pressing, and visible in the everyday life.

But this conversation made me think about the importance to engage children as key audience / stakeholder in green or sustainability communications (or marketing) campaign since they can be powerful agents of change for sustainability. Why?

• Children are incredibly optimistic that they can effect change and help contribute to a better world. They can be more involved and more passionate about environmentalism than their parents.

• Youngsters can channel their power in a positive way to ‘green-evangelize’ people around them like parents, other relatives and even teachers, thus helping to change environmental awareness and behaviors (i.e. influencing their parents’ buying or recycling habits)
  

According to Edelman’s goodpurpose global study of consumer attitudes, 61% of people globally say they have taken action because they were asked by their own or other people’s children!

And finally, youngsters are also incredibly active on social networking sites such as Facebook, which can contribute to affect change on a much larger scale and in an interactive way.

However, this is not an audience to underestimate. Engaging kids requires a certain level of understanding and ‘sophistication’:

• Do not adopt a ‘doom and gloom’ approach, in which children are confronted by images of drowning polar bears, choking smog and urban slums. Rather, chose a transformative approach that values, encourages and empowers children to be problem-seekers, problem-solvers and action-takers in their own environments.
• Don’t ever talk down to them, but rather treat them like intelligent participants with legitimate ideas, perspectives and creative responses—in authentic exchange and action around meaningful environmental and social issues

In China, some NGOs are actively engaging children and young adultsaround environment conservation / energy / recycling issues:

• Through the eco-office evaluation program, Shanghai Roots & Shoots sends high school and college students to assess companies’ ecological footprints. Such programs provides an entire new perspective to environmental education as it actively involves young students in a meaningful way to educate office employees (and also relatives and friends) about sustainable environmental practices at the workplace.
• JUCCCE will distribute more than 10 million CFLs to Shanghai residents over the next seven years, as part of is “China Green Lights for All” program. The CFLs will be distributed through students on campuses and in community centers to help educate and enable the generation most likely to make a long lasting lighting behavior change