Taiwan Today

A new catchphrase is reverberating within Taiwan's business community--corporate social responsibility (CSR). Corporations around the world are realizing they have a responsibility to be good citizens, and Taiwan companies are taking heed. As vital links in the global supply chain, many Taiwan companies are facing scrutiny from overseas customers and market regulators. As a result, an increasing number of Taiwan enterprises are implementing CSR programs to become better global citizens. Some companies are already discovering they can do well by doing good.

The CSR movement began in the United States and Europe in response to questionable practices by corporations in the pursuit of profits. High-profile scandals in recent years brought calls for corporations to focus more on business ethics, environmental protection, labor rights, product safety, and community involvement. In addition to making profits, critics say, corporations must bear a responsibility to society.

In 2002 the Taiwan government began promoting CSR to educate Taiwan businesses. In its push to become a member of the Organization for Economic Cooperation and Development (OECD), the government translated the OECD Guidelines on Multinationals into Chinese. "In the guidelines the initials 'CSR' do not appear, but many of the concepts are the same. We felt we should familiarize Taiwan enterprises with these concepts in a way businesses could accept, so we began to promote CSR," says Hsu Yao-hung, executive officer of the Department of Investment Services (DOIS) of Taiwan's Ministry of Economic Affairs.

Initial reaction to the CSR promotion was indifference at best. "We held a conference and participants felt that CSR was an ethics issue, and that companies would lack sincerity. They thought it was too high-minded," says Hsu. "But soon after, Enron and Taiwan's Procomp scandals occurred, and companies started to acknowledge the importance of our efforts."

Since then the DOIS has continued to hold seminars as well as assist a local magazine in establishing an annual CSR awards program. Earlier this year the DOIS also published a book, Responsibility and Profit, which spotlights nine Taiwan enterprises that exemplify the socially responsible corporation. Coming from both traditional and high-tech industries, most of the nine enterprises were doing good deeds before they had heard of CSR. "The focus of each of the nine companies is different. TSMC's emphasis is on good corporate governance, while Nienhsing Textiles is on employee relations. Other companies focus on the environment, product safety, or community work," says Hsu.

For Delta Electronics, Inc., environmental protection is an integral part of its corporate culture. The world's number one producer of switching power supplies, Delta instituted lead-free manufacturing in 2000. It was a case of doing well by doing good. "No one was doing lead-free manufacturing and we ended up gaining a lot of business," says R.T. Tsai, general manager of business development.

Delta Electronics began a full-fledged CSR program three years ago. A CSR committee was formed by top management, including the chairman, the CEO, and the COO of the company. "Our program started from the top down, and today we have a lot of them, including plant site committees for energy saving. We've also recently completed Taiwan's first 'green' factory," says Tsai.

Wonderland Nurserygoods Co., Ltd. is giving back to society through the Children's Hearing Foundation, which the company established in 1996. Over the past 10 years the foundation has helped over 2,000 deaf children learn to listen and speak. The company is a manufacturer of nursery goods for customers that have major market shares in North America and Europe.

In addition to the foundation, Wonderland has an environmental protection program that focuses on recycling and energy conservation. "Our policy is to reduce anything that causes pollution in the production process," says Morris Chen, public affairs vice president. The company also provides a good working environment for employees. "Our manufacturing base is in China where we have many employees. No matter if it's working hours or wages, we are good providers," Chen says.

The motivation for a CSR program can come from within the company or from outside. Top managers may opt to dedicate the company to a particular issue because of a personal interest. And customers may apply external pressure through audits that require meeting certain standards.

Delta's chairman and founder, Bruce Cheng, was enthusiastic about initiating a CSR program since he has long favored energy-saving and environmentally-friendly technologies. "Energy-saving has always been part of Delta's corporate mission, and Bruce is taking us into new fields such as renewable energy," says Tsai.

Customers were also beginning to inquire about Delta's CSR policies. Tsai says, "Many companies are asking all of their suppliers, not just Delta, about CSR issues. Some have third parties perform audits, and it does influence their willingness to do business with you."

Wonderland's motivation for setting up the Children's Hearing Foundation came from the company's chairman, Kenny Cheng, and his wife. Their daughter became deaf because of illness, and they took her overseas to receive a cochlear implant. They were concerned about others in Taiwan that don't have the resources to go overseas, so they brought cochlear implants to Taiwan and established the foundation.

For other aspects of their CSR program, customers have played an important role. "Disney and Walmart have both come to do detailed social audits. They are not just checklists, they support and assist you in meeting the audit. Our customers have helped us greatly," says Chen.

CSR is rapidly permeating global business. There are many Taiwan companies that manufacture products sold by major European, US and Japanese brands. The major brands are held to account by the media, stockholders and customers, and the responsibility flows downstream. "The outside world pressures brand companies, and the brand companies pressure Taiwan companies," says the DOIS's Hsu. The global supply chain is in fact a social responsibility chain. "Customers and end-users require that we are a responsible supplier and we require the same from our suppliers," says Wonderland's Chen.

At the end of the supply chain is the consumer, who wields the greatest power by deciding what to buy. "You need to provide safe products that are environmentally friendly, or you lose a business opportunity. This is 'doing well by doing good,' and is the way many European and American companies work," says Chen.

As companies in the Fortune 500 have discovered, implementing a CSR program and becoming known as a socially responsible company has its rewards. CSR improves a company's image and customers prefer to do business with good companies. Investors pay a premium for shares of companies with a good reputation. Employees would rather work for companies with good employment policies--they're happier and more productive. It's also easier to hire new employees. "When we talk about our community work, some people want to become part of it, and this is an advantage for us," Chen says.

Delta's Tsai points out that CSR promotes integrity. "The business model we try to achieve is crystal clear. Everything, including financial data, is transparent. I think this is very good for the company both internally and externally."

In Taiwan awareness of CSR is just beginning, and there are still only a few companies that are actually putting together a program. However, it is a trend that local companies can't ignore. "Taiwan's business is already global business. You can't ask if Taiwan companies are willing to cooperate. The world situation has already progressed past that," Chen says.

Delta's Tsai says: "It is an external business force and no matter how difficult or how long it takes, all Taiwanese enterprises will eventually be focused on a CSR program."

How should a Taiwan company go about putting a CSR program into place?

Tsai advises that every company has its own strengths and should focus on fields related to its core business. Delta focuses on energy-saving and the environment, but there is a wide range of CSR activities to choose from. "One company can't do everything. If everyone joins together, we can do better CSR programs and contribute a lot to society," he says.

Hsu Yao-hung says that a company needs to make CSR a priority undertaking that must be managed from the top of the organization. The CEO must be involved and there has to be a budget. Ideally, a CSR department is established with a manager, and all business activities take CSR into consideration. "Employees should identify with the company's CSR program. This is good for customers, it protects the environment, and takes care of the enterprise," says Hsu.

Taiwan companies may take longer to get involved with CSR because most are small and medium-sized enterprises with limited resources. Many companies are reluctant to invest because they are not sure how long they will be in business. Morris Chen encourages companies to be confident. "You need to take the long-term view. This is an investment that you will earn back, and you will also gain benefits that you don't expect."

CSR is a global trend that promises to raise the quality of people's lives, whether it is via a cleaner, greener environment, or via better working conditions. Businesses are adept at creating profits and wealth. If just a fraction of their attention is brought to bear on CSR issues, the world would be a better place. As Delta's Tsai says, "CSR is not only good for business firms, it is good for society, because we are part of a global family."
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Butler Waugh is the director of Asia
IQ Consulting, based in Taipei.

Copyright © 2006 by Butler Waugh.