The Three 'P's' of Competitiveness
Aug 10, 2013

The annual awards for corporate social responsibility identify companies with the traits that sustain competitiveness. This year's poll found that the frontrunners not only value "profit," but also "people" and the "planet."

In 2013, CommonWealth Magazine's Corporate Citizenship Awards, Taiwan's most authoritative corporate social responsibility (CSR) barometer, were more competitive than ever.

A total of 221 companies competed for top honors, up from 166 a year earlier, not only reflecting the growing importance of CSR in Taiwan, but also creating greater value for the "Corporate Citizenship Awards" platform.

CSR More than a Matter of Size

Also reflecting the increasingly competitive CSR environment was the major shake-up among top-ranked enterprises, with a third of last year's top 50 corporate citizens knocked out of the elite grouping.

The top 50 corporate citizens are assessed according to three categories: the top 30 large-scale enterprises, the top 10 medium-sized enterprises, and the top 10 foreign enterprises.

Several enterprises made it back into the elite club this year after falling short in previous surveys. They are Quanta Computer (13th), China Steel Corp. (14th), Far Eastern New Century Corp. (15th), CTCI Corp. (16th), Inventec Corp. (22nd), Siliconware Precision Industries Co. (23rd), Cheng Loong Corp. (26th); and in the foreign company division, IBM (5th) and Epson (10th).

Many companies also made their survey debuts, including WPG Holdings Ltd. (27th) and LCY Chemical Corp. (30th) in the big company division; Aver Information Inc. (6th), Trade-Van Information Services Co. (7th) and President Securities Corp. (9th) in the medium-sized enterprise division; and BASF Taiwan Ltd. (8th) in the foreign company division.

Particularly worth noting is that 101 medium-sized enterprises, or 46 percent of the total number of entrants, participated in the survey on which the corporate citizenship evaluations were based, dispelling the common misperception that "CSR is something that only big companies can do."

Though smaller enterprises are generally perceived as lacking resources, acting as a responsible corporate citizen is not necessarily as difficult as may be imagined.

For example, Aten International Co., which vaulted to third in the medium-sized enterprise category in this year's survey, has found that corporate culture can be a potent CSR component. The company, which specializes in making a wide variety of small volume, niche market electronic products, has a relatively international workforce, with its 1,700 employees originating from 21 countries. For this melting pot to work cohesively and develop competitive capabilities, "aside from professional skills, (workers) must recognize the company's core values," says Aten chairman and president Kevin Chen.

Many companies embrace "integrity" and "caring" – core values espoused by Aten. One example is Merry Electronics Co., which rose three notches from eighth last year to fifth this year in the medium-sized enterprise rankings, and declares its belief that "companies are instruments of public service." These companies demonstrate that steadfastly adhering to core values represents the first step in launching one's CSR journey.

Chemicals Can Also Be Eco-friendly

Perhaps among the surprises in this year's Top 50 was that two companies from the chemical industry, LCY Chemical and BASF Taiwan, were among the newcomers in the large-scale enterprise and foreign enterprise categories, respectively.

Known as a straight-shooter, LCY Chemical chairman Bowei Lee doesn't mince words when describing the chemical sector's checkered environmental record. "This industry's social perception needs to improve."

Taiwanese society has long harbored a deep skepticism of the country's petrochemical businesses, with the result that when companies in the sector plan large-scale investments, they often encounter fierce opposition.

For that reason, Lee has tried to steer away from the industry's usual practice of engaging in damage control only after problems occur, by making CSR a core corporate practice. In 2004, LCY Chemical launched a greenhouse gas inventory system, and between 2010 and 2012, the company's spending on reducing its facilities' air and water pollution rose by nearly NT$100 million.

LCY Chemical's ranking of 30th suggests that it still has room for improvement, and the company is now working hard to follow the path taken by the German chemical industry in the past.

Germany, which singlemindedly pursued economic development after World War II, also experienced a period when the environment was neglected. "At the time, the Rhine was surrounded by chemical plants. If you fell into the river and then climbed out, it was a sure thing that your entire body would be covered with a blue dye," says Eng Leong Goh, managing director of BASF Taiwan, with a chuckle.

Today, German chemical giants Bayer and BASF still drive global trends, and the Rhine continues to be one of continental Europe's most important waterways, but it has been cleansed of its reputation as the "sewer of Europe."

Once companies launch CSR programs, there is no turning back, but the question facing LCY Chemical is whether or not it can sustain its rise to greater heights and even drive CSR practices in Taiwan's domestic chemical industry.

Social Responsibility Investment

Even now, many people misperceive CSR as simply part of a company's internal practices that does not have any broader implications.

But, in fact, investors around the world are being increasingly encouraged to "vote with their money" in support of companies that pursue sustainability, theoretically helping their own portfolios and the environment at the same time.

Since 2012, CommonWealth Magazine has extended CSR to SRI (social responsibility investment), teaming up with Yuanta Securities Investment Trust (Yuanta Funds) to create a "CommonWealth CSR Index" with the corporate citizenship award winners.

In its first year, the CSR index not only outperformed the Taiwan stock exchange's benchmark index, the Taiex, it also grew faster than the Dow Jones Sustainability Index.

"This is an important reference in measuring shareholder equity," says Yin-hua Yeh, a professor at National Chiao Tung University's Graduate Institute of Finance.

CommonWealth Magazine's 2013 Corporate Citizenship Award winners have performed just as impressively.

Since the beginning of the year, the updated Commonwealth CSR Index has gained 17.6 percent, far exceeding the 4.7 percent gains posted by the Taiex and the 8.18 percent rise in the Dow Jones Sustainability Index. (See Table1,Table2, Table3, Table4)

The result is not a coincidence, argues Menghsia Lee, a fund manager with Yuanta Funds.

"The numbers prove that the companies in Taiwan that value corporate social responsibility perform outstandingly and have earned the recognition of investors."

By Ting-feng Wu