The social and environmental impacts of the natural resource sectors -- oil, gas, mining, hydropower and forestry – are huge. These projects can alter entire landscapes and ecosystems, and generate pollution. Dams displace up to tens of thousands of people. Significant portions of these natural resources are in the Asia Pacific region, and Asian companies manage a lot of this business.
So, how well are these companies demonstrating responsible business practices with respect to their western counterparts? On things like corporate disclosure, participation in the Global Compact, membership in “responsible” industry associations and management of ESG risks, they aren’t far behind.
A bigger gap appears with investors, who still have a higher tolerance for ESG risks than western banks. The final challenge is whether the Asian context gives companies strong enough incentives to increase social responsibility and how to take this further.
Social Responsibility Among Asian Companies
One indicator of corporate responsibility is participation in voluntary sustainability initiatives, such as the UN Global Compact, which has been relatively effective in capturing the attention of Asian companies.
According to the Global Compact’s 2011 Implementation Survey, across all sectors, nearly three times as many Asian businesses have signed on as their North American counterparts, but only about a third
The countries with the strongest participation are Japan, China, India and Korea, where participation among natural resources companies is on par with the U.K. and Canada. In both western and Asian markets, a number of oil and gas companies have signed on. But it’s also strong in Korea and Indonesia and Thailand, where the number of oil, gas, mining and forestry companies is still greater than or equal to participants from the U.S.
Of course, there are big disparities across the region, with generally stronger participation from the oil and gas and forestry than from mining. In fact, participation is noticeably weak in key mining countries like China, the Russian Federation and Kazakhstan considering the size of the sector there.
CSR Reporting In Asia Growing
There is a lot of buzz in Asia about ISO 26000, the standard for social responsibility.
Its non-certifiable nature makes it difficult to measure implementation or compare it to other regions, but it must be noted that Thailand and China have prepared local language versions of the standard, and sponsored inexpensive training for companies to raise awareness and provide guidance on how business can be socially responsible.
In terms of public disclosure, the number of CSR reports written by companies in the sector shows that Asia is only slightly behind North America, though both regions are lagging significantly behind Europe.
According to the GRI Sustainability Disclosure Database, Asian energy, mining, forestry and paper companies have published a total of 294 reports. North American companies have prepared 319, only a handful more, while European companies have prepared 612.