The State of Sustainability in China

Abstract

China has experienced remarkable economic growth since the reforms of Deng Xiaoping in the late 1970s. This growth has come at a significant environmental and social cost, raising the question of whether the country needs to focus more on sustainable development than on economic growth for its own sake.Moreover, there is growing recognition in China that more attention needs to be paid to achieving environmental and social as well as economic goals. This recognition has come in the form of changes in public policy, in pronouncements by Party leaders, and in the research and writings of academics, think tanks, and industry associations.As the authors also point out, sustainable development on a global scale is now as dependent on the actions of large corporations as on government policies. And one way of assessing China's commitment to sustainability is to compare the behavior of its largest 100 companies to that of the largest 100 corporations in the United States. In making this comparison, the authors use two, admittedly imperfect, indicators of sustainability that suggest that the extent of the commitment to sustainability is roughly comparable in both countries.The first of the two indicators is membership in the UN Global Compact. On that score, the authors report that exactly 15 of the top 100 companies in both China and the U.S. have formally endorsed its ten principles regarding human rights, labor, the environment, and anticorruption. The second indicator is the percentage of the largest 100 companies that produce a sustainability report based on the guidelines of the Global Reporting Initiative. Using that measure, the authors report that about half of China's largest companies produce a sustainability report based on the GRI guidelines. Although that percentage is smaller than the two‐thirds of U.S. companies that now provide such reports, the authors are encouraged by the trend, and by the pattern of adoption in which larger companies are clearly leading way.