The idea of doing business in China attracts an increasing number of Swedes. Photo: Nicho Södling

Corporate social responsibility (CSR) is one of today’s buzz phrases. The term describes practices, guidelines and goals adopted by companies in areas such as the environment, working conditions and transparency for which there are no specific legal requirements.

The term CSR emerged in the 1970s and has gained an increasingly high profile since the 1990s, as firms shift production to countries where standards on workers' rights, environmental protection and other issues tend to be less entrenched than in the West.

One country that has attracted fierce criticism on workers’ rights and the environment is China. Powerhouses of Swedish industry such as ABB, Electrolux, Ericsson, H&M, Ikea, Scania and Volvo are expanding in China, as are small and medium-sized enterprises. Some 400 Swedish firms currently operate in China, and this number continues to grow rapidly. In 2006, an average of one Swedish company a week set up operations there.

Sweden’s “shining” example

London and US-based think tank AccountAbility recently released a report praising Sweden as the world's most “responsibly competitive” nation.

AccountAbility chief executive Simon Zadek says: “There needn’t be a conflict between compassion and competitiveness. Sweden is a shining example of this.”

Who hasn’t worn something with a “Made in China” label in it? Swedish H&M hopes to be able to contribute to improved workers’ rights in China. Photo: Hasse Holmberg 

CSR reports are now a regular feature in a growing number of companies’ annual reports. Swedish fashion retailer H&M introduced a code of conduct for CSR issues in 1997. The company’s code, which applies to all of its around 700 suppliers and subcontractors in Asia and Europe, is based on the UN’s Convention on the Rights of the Child, as well as the International Labour Organization's Declaration on Fundamental Principles and Rights at Work.

Slow progress

H&M spokeswoman Karolina Dubowicz says the company is aware of the risk of workers' rights being infringed and environmental legislation not always being complied with in the manufacture of its products, but maintains that as a buyer, H&M can help improve conditions.

“Considerable progress has been made toward a better working environment and improved fire safety. Pay, overtime remuneration and acceptable working hours are other areas that have improved,” Dubowicz says, and acknowledges that “work toward truly sustainable improvements, where workers' rights are fully respected, is difficult and will take time.”

Swedish telecommunications giant Ericsson has increased its presence in China in recent years – announcing a USD 1 billion (SEK 6.9 billion) investment in 2005 — and claims to have well-defined CSR policies.

Ericsson spokeswoman Malin Gerentz says: “Ericsson was one of the first companies to support the United Nations Global Compact and has implemented its own code of conduct globally in order to protect human rights, promote freedom of association, ensure responsible management of environmental issues and prevent corruption.”

Gerentz adds the Ericsson code is valid for all employees around the world, as well as for suppliers and their subcontractors.

Low prices, shaky ethics?

Iconic Swedish furniture chain Ikea, which employs some 200,000 people in China, has introduced a raft of CSR goals. While the company often brags about its low prices, Ikea also stresses that keeping prices in stores competitive “does not come at any price.”

The company’s approach to the issue is included in its code of conduct for responsible trading, “The Ikea Way on Purchasing Home Furnishing Products” (IWAY).

IWAY includes specific policies dealing with child labor. In a statement published on its website Ikea also acknowledges the complexity of the issue, where in some countries children are keen to work to earn money for their families.

“Ikea respects different cultures and values in countries where Ikea operates and sources its products, however does not compromise on the basic requirements regarding the rights of the child.”

Long-term gradual improvements

The growing number of Swedish companies investing in China as both a production center and a market in its own right suggests trade with China is set to expand.

Fears over workers’ rights, the environment and other issues are likely to remain, but through commitment to CSR, Swedish companies appear well positioned to encourage improvements in these areas.

H&M’s Dubowicz describes the gradual nature of making responsible trading the norm in China: “Our commitment is long-term, and we are convinced that by being present in China we are able to slowly but surely influence and improve the situation.”

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As a former employee of Swedish retailer Gant — which has its own code of conduct for its products — Nicholas Chipperfield has experience with CSR issues. Currently a journalist at Radio Sweden International, he writes this article in an independent capacity.

The author alone is responsible for the opinions expressed in this article.

Classification: A214EN