China Sustainability Tribune: Qian Xiaojun: Upgrading China's business ethics practices with sustainable development

Business corporations should and could play important roles in responding to the challenges of sustainable development for all mankind. Exercising this role is an important ethical responsibility for modern businesses. Professor Qian Xiaojun of the Tsinghua University School of Economics and Management (SEM) published her observations about this topic in China Sustainability Tribune. The full text follows.

More than a decade ago, I began teaching business ethics to MBA students at Tsinghua SEM. Naturally, I started to pay attention to corporate social responsibility and then sustainable development. I learned much from teaching and delving deeper in the field of sustainability practices in enterprises. For China's enterprises and society, it was a journey of continuous enrichment of understanding the connotation of "business ethics."

With the world still battling the COVID-19 pandemic, China has made its commitment to cap its carbon dioxide emissions by 2030 and achieve carbon neutrality before 2060, adopts the domestic and international "dual circulation" development pattern for its economic development, and is transitioning its focus from poverty alleviation to countryside revitalization. Given all of these, the practice of business ethics is inseparable from sustainable development, which is a global trend and national guiding strategy.  

If we look into the history of business ethics, it could become clearer why sustainable development is an inevitable trend of China's business ethics practice. 

Self-requiring: initial understanding and the practice of business ethics

In the first 20 years following China's reform and opening up which started around the 1980s, many people were desperate to seek their fortune. Many enterprises grew and developed in an "unruly" way. It was not long before society began to call for business ethics and mourn the loss of traditional Chinese business culture, which believed "being good-natured is a source of wealth" and "a gentleman makes money in a right way". The public clamored for integrity in business.

Adhering to modern business ethics involves far more than just being honest, obeying the law and following regulations. By the late 1990s, numerous Chinese companies, as the suppliers of foreign enterprises, were asked to raise their employees' wages and improve their working conditions. It was a wake-up call for many Chinese companies and they started to realize that their ignorance of business ethics would damage their business reputation and hinder future development. 

As a result, some leading companies strove to build a more positive corporate culture in terms of ethical requirements. Chinese business ethics started to expand in definition to include treating employees well, creating a favorable work environment and contracting with environment-friendly vendors and green suppliers. This marked the beginning of corporate social responsibility in China.

In my opinion, the basic requirement of business ethics and integrity management is for a business to be self-disciplinary and self-demanded. Adherence to commercial morality is really fundamental for business enterprises. This basic understanding and practice has laid the foundations for an enrichment and deepening of business ethics.

Giving back to the community: expansion and evolution in a new era 

With the premise of self-requiring and self-demanding, the advancement of business ethics in China becomes obvious. 

As the Chinese economy rapidly developed, Chinese companies gradually extended their social responsibilities from employees' treatment and integrity management to less-advantaged groups and environment. Charity and environmental protection efforts became heavy parts in social responsibility reports during this period.

As the further development of Chinese economy, particularly, with the implementation of the Road and Belt Initiative, more and more Chinese enterprises started to go abroad and seek opportunities in the international market. They started to realize that they needed to get familiar with the international norms and hence, fulfilling social responsibilities in a more comprehensive sense became an important way for them to gain international recognition and competitiveness in a complicated and volatile world where environmental wellbeing was widely valued.

In their learning and adapting to the new situation, more and more companies have realized that they need to communicate with stakeholders more effectively and well balance their political and economic relationships in order to gain social legitimacy for their business operations. As corporate citizens, companies shoulder dual-duties, i.e., be responsible for their behaviors and decisions as they utilize natural and social resources for their business operations, while help the community grow in a healthy way through fulfilling their corporate responsibilities.

The Chinese government responded actively and committed to the United Nations' 2030 sustainable development goals (SDGs), especially made a pledge to alleviate poverty comprehensively by 2020. In the process of achieving this goal, Chinese companies well utilized their resources and expertise, and have made tremendous contributions in this regard, which are reflected in every social responsibility report. 

With the prevail of the CSR (Corporate Social Responsibility) concept throughout China, the focus of China's business ethics has extended from inside to outside: charity, public welfare, aid for less-advantaged group, community development, environmental protection, so on and so forth. China's enterprises are giving back to the community.

However, I am more willing to view this relationship as a two-way nurturing. As enterprises fulfill their social responsibilities, promote social welfare and build a better community, they are recognized by their consumers and the society at large. A well-run society will provide a better market for the products and services the enterprises provide.

Sharing fate with the motherland and the earth: business ethics today and tomorrow

The connotation of business ethics in China has been evolving with the country's social evolvement and development.

At present, sustainable development is an unprecedented challenge for all mankind. The ecological footprint of human beings has exceeded the capacity of the earth, and that is a problem which all nations must collaborate to solve. China has shown its responsibility by announcing in September 2020 a goal to cap carbon emissions by 2030 and achieve carbon neutrality before 2060.

What can an enterprise do to leverage its strengths and resources to help solve this sustainable development problem?

I believe that Chinese enterprises should go a step further. They need to not only contribute to more than keeping the bottom line of business ethics and caring about less-advantaged groups and social development, but also proactively shoulder pivotal responsibilities in the course of meeting our country's strategic sustainability goals.

It may not be easy for companies to achieve this, but it could be done. Many enterprises have set examples. L'Oréal Group achieved its "zero carbon" goal in 2019. China Southern Airlines proposed and is implementing need-based aerial catering and "green flights" to reduce food waste. The State Grid Nanjing Power Supply Company sped up its 5G network construction with innovative "shared base stations" practice. These cases showed how enterprises can innovatively and proactively reduce their carbon footprint and promote sustainable development.

Business is one of the important driving forces for social advancement. All state-owned, private-owned and foreign-invested companies should follow our nation's strategy and rise with the tide of history to embrace sustainable development as part of their business ethics and social responsibility. They must, and certainly can, play significant roles in combatting against the world's shared challenges. This is the core content of modern business ethics.

There remains a long way to go. With this article, I wish that all of us could work together to realize a lasting prosperity of mankind and build a beautiful global community. 

Professor Profile

Qian Xiaojun

Qian Xiaojun is a professor in the Department of Leadership and Organization Management, School of Economics and Management, Tsinghua University. She is also Associate Dean of Schwarzman College at Tsinghua University and a member of the 12th CPPCC Beijing Municipal Committee. She played various administrative roles at SEM, including director of MBA Programs, director of the Planning and Quality Assurance Office and assistant dean of academic degrees. She received her PhD in mathematics from Purdue University, Indiana, USA, and her bachelor of science in applied mathematics from Tsinghua University. Her research interests and teaching include managerial communication, business ethics, corporate social responsibility and sustainability.

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Editors: Ren Zhongxi, Derrick Sobodash