COSCO Group: The Concept and Practice of Social Responsibility 2009-05-13 16:23  CSR in China, China WTO Tribune China Ocean Shipping (Group) Company (hereinafter referred to as COSCO Group) has grown since its establishment 45 years ago into a global company specializing in water transport, ship and floating device manufacturing and repair, logistics and transport-related supporting services. Currently, COSCO Group owns and operates a modern merchant shipping fleet of more than 700 vessels, with a capacity of up to 45 million DWT and annual traffic volume of more than 300 million tons. COSCO Group has more than 600 branches throughout the world spreading across more than 50 countries and regions and global ocean routes covering over 1,500 ports in more than 160 Countries. It has the largest fleet in China and the second largest fleet in the world. With sales income of over RMB100 billion, COSCO Group ranked 488th in the Fortune Global 500 in 2006. Profits have exceeded RMB10 billion for the past three years, which ranks COSCO Group at the forefront of large state-owned companies. COSCO Group has thus created a miracle of rapid progress in the competitive environment of shipping and thereby established a Chinese national brand in the shipping industry recognized throughout the world. The concept of Social Responsibility globalization of COSCO Group COSCO Group concentrates on the scientific development view advocated by the Chinese government with its emphasis on four key elements: human-orientation, comprehensiveness, coordination and sustainability. It is on this basis that COSCO Group develops its business aiming to save resources, achieve a sustainable approach and encourage management innovation. COSCO Group has recognized that in the era of globalization, especially with regards to social responsibility, competition among multinational corporations has moved on from technology and hardware, to software, the concept of corporate social responsibility (CSR) and social ethics. Companies are starting to use their CSR strategies to demonstrate their competitive advantage. In January 2005, COSCO Group became a member of the UN’s Global Compact. In February 2006, COSCO Group joined the World Business Council for Sustainable Development (WBCSD). In taking part in both these organisation’s activities COSCO Group has demonstrated the co-operative spirit of an international company, as well as strengthening its own company management system for sustainable development. It has implemented its social responsibilities in an all-round way, with particular respect to the principles and concepts of human rights, labour standards, environment, and anti-corruption, and so on. COSCO Group is using the slogan “World Thinking, International Vision” to promote its business strategy transformation, as well as change its way of management and reengineer its business processes. This has a great effect on growth at COSCO and led to stronger international competitiveness. Specifically COSCO Group has been improving its management systems for a number of years with the introduction of scientific methods into the operating system, a reform of the company structure and an upgrading of the management platform. All these have led to COSCO becoming a creator of certification methods for an advanced management system. COSCO Group branches in countries and regions all over the world are following “World Thinking, International Vision” to implement the Global Compact across the board, to promote social responsibility together with local stakeholders, and thereby contribute to creating a harmonious world. Globalization of social responsibility within COSCO Group COSCO Group is convinced that corporate social responsibility means a company in a market economy actively assumes the responsibilities for stakeholders with specific targets and plans, aiming at achieving the goals of harmonious and sustainable development of both company and society. Therefore, COSCO Group has implemented the following innovative measures: Start from the strategy, set the goals of sustainable development, and implement assessment COSCO Group started from a strategy, set long, medium and short-term goals of sustainable development, integrated these goals into the “11th Five-Year” plan and annual plan, and implemented an assessment process to ensure the achievement of these sustainable development goals. The mission of COSCO Group is to gradually establish and develop the leading position in shipping and logistics services, to maintain trustworthy relationships with our customers, employees and partners, and yield the best returns for shareholders, environment and society. The values of COSCO Group can be expressed as “Harmonious Development, Benefiting Humans.” COSCO Group agencies at home and abroad have integrated the Global Compact and social responsibility into their corporate strategic planning and implemented them in their day-to-day operations. The COSCO agencies set a three-year implementation schedule in accordance with the risk levels of sustainable development, have completed in three years (2006-2008) a leap from the pilot operation of the COSCO and COSCO Container Lines (COSCON) to the pilot operation of a shipping company, logistics and ship repairing and overseas, British, company, and realized 80 percent of the core business covering all the sub-companies, shipping company, logistics company, shipbuilding and repairing. Extend focus to all stakeholders and fully implement social responsibility The modern company management system of COSCO Group guarantees the implementation of social responsibility in the day-to-day decision-making process. This takes into account stakeholder expectations as well as the goals for sustainable development. COSCO Group recognizes that the first aim of running a business is to benefit people, and the implementation of social responsibilities is the basis for an environmentally-friendly company as well as the secret of a sustainable business. Social responsibility and sustainable development should be integrated into strategies and implemented in company activities. As a company implementing social responsibility in China, COSCO Group is welcomed by governments and all sectors of society. COSCO liners has started a direct service to the Port of Boston and has a successful cooperation with the Harbor Bureau of the State of Massachusetts, providing 9,000 jobs. This has saved the local economy, enhanced the influence of Chinese companies in the United States as well as achieving a mutually beneficial win-win situation between China and the United States. COSCO has become the first Chinese shipping company be invited to invest by the U.S. government with such enthusiasm. As a result of the remarkable contribution COSCO has made to Massachusetts in employment, capital investment and social stability, the Massachusetts Alliance for Economic Development awarded its Massachusetts Team Economic Influence and Economic Booster Award to Wei Jiafu, President of COSCO Group. As a member of the Global Compact, COSCO also carries the responsibility of creating jobs for local workers, and this is the win-win situation. President Wei attended the 5-year Anniversary Celebration of COSCO's Calling at Port Boston in 2007 at the Massachusetts State House, and received the “Job Opportunity Creation Award” presented by the International Longshoreman Association, a significant award for an employer from a trades union. COSCO Group’s overseas terminal investment projects have created employment opportunities and driven local economic prosperity, which has been welcomed by local governments and port authorities. In recognition of COSCO Group’s investment in the Antwerp Port, the King of Belgium has paid a special visit to Hong Kong to offer an honorable award to President Wei. While visiting many countries of Europe, Asia and Latin America, President Wei has met with state leaders who hope to expand their cooperation with COSCO Group and welcome COSCO Group’s overseas investment. COSCO Group’s overseas investment in terminal projects have made direct contributions to local economic development, productivity improvement and a rise in employment. COSCO Group was given “the Korea-China Economic Exchange Award” in 2007, after nomination by such organizations as the Korean Embassy and Korean Trade Promotion Committee, thereby demonstrating COSCO's business development activitiesin Korea have been fully reecognised. COSCO Investment (Singapore) Ltd. won “the Best Performance Award of the 1000 Global Chinese Corporation”. COSCO Investment (Singapore) Ltd. is the only Singapore-based corporation to be so awarded. As a result, the brand of “COSCO” has become one of the most important intangible assets of COSCO Group. Ships and containers marked with the “COSCO” logo are moving in and out of 1,500 ports around the world. The operational achievements and social responsibility performance of COSCO Group have global recognition. For example, COSCO Group cooperated with Long Beach Harbor Commission to reduce port pollution, by reducing the speed of ships to 12 knots within 20 nautical miles of the terminal. And COSCO has been instrumental in the implementation of Long Beach Port’s environmental protection plan, Green Port Initiative, in 2005. COSCON was awarded the first Green Flag Award of environmental protection in 2005 and granted the Award for the following three consecutive years. In recognition of COSCO’s excellent environmental protection performance, the Mayor of Long Beach City presented the Green Port Flag to President Wei in 2007. COSCO Americas Inc.actively responded to COSCO Group’s demand on CSR and global corporate citizenship, by adopting a series of measures to implement the environmental proposition of New Jersey State Government, and promoting office social responsibility. COSCO Americas Inc. won “the Gold Award of Best Workplace” in New Jersey State. COSCO Group amongst others has been elected as a Class A member of the International Maritime Organization (IMO) for many years. COSCO Group is the member of Executive Committee of the Baltic and International Maritime Council (BIMCO), a Council member and Director in China of the International Association of Dry Cargo Shipowners (INTERCARGO), the member and Director of the International Transport Intermediaries Club (ITIC), the member of the International Container Ship Operator Association (BOX CLUB), the member of Stability Pact of 12 international routes, the Council member of the Bo’ao Forum for Asia, the chairman unit of China Shipowners Association, the chairman unit of China Shipping Agents Association. The senior leadership of COSCO Group has taken advantage of leadership in these associations to actively promote social responsibility within the supply chain, vigorously publicize the Global Compact, and contribute their experience in developing “green” shipping. The Bo’ao Forum for Asia is a non-official and non-profit international organization, which meets regularly and has become a high-level dialogue platform on important issues in Asia and the world for governments, businesses and academic leaders. As China's largest ocean transport multinational corporation group, COSCO Group is inextricably tied up with national development and is committed to “Serving Diplomatism, Serving Foreign Trade.” COSCO Group was a key supporter in launching the Bo’ao Forum for Asia, successfully co-organized the forum many times, and became the permanent sponsor of the forum in 2005, promoting regional sustainable development in Asia. COSCO Group’s investment ensured completion of three projects on the permanent site of the Boao Forum for Asia. The Group’s subsidiary COSCO Property Ltd. was also fully involved in the development and construction of the Boao projects in April 2000 with a total investment sum of over RMB 2 billion to April 2003. Wei Jiafu said that although the Boao Forum for Asia is part of the “Onshore Strategy” of COSCO Group, the Group is also thinking of the wider social benefits. It is an honour for a company with a sense of social responsibility to be able to provide the permanent meeting place for the Asia Non-Governmental Organization (NGO) Forum as advocated by the former leaders of many countries. “Since then China has won a permanent meeting venue of Asians, where people from political, academic and business circles of more than 20 Asian forum members will gather here annually to discuss the cooperation, development and win-win issues in Asia. The social value of COSCO Group’s investment on Boao will be recognized by the Asian community. ” For many years, COSCO Group has been actively engaged in public welfare and charity activities, providing assistance to people in difficulty and poverty, which the group has taken as an important mission. In December 2005, COSCO Group collected RMB100 million to set up the COSCO Charity Foundation, the first company-initiated charity foundation in Mainland China. Following the establishment of the foundation, the group has expanded the scope of charity projects, enhanced project management, improved management and work efficiency, and made progress in system resource integration, project development and management. It was awarded “the 2007 China Charity Award” sponsored by the Ministry of Civil Affairs. COSCO Group and COSCO Group Charity Foundation have the trust of the majority of stakeholders in the supply chain, and partners, communities and customers, who have made donations in order to promote social responsibility. COSCO Group Charity Foundation has become the platform that brings together the strength of the whole supply chain in charitable donations. German ER Holdings Inc.-COSCO Group’s partner of many years, COSCO partners in Iran and the United Arab Emirates, and Mr. Deling Zhang-a COSCO Pacific customer have all made donations to the earthquake-stricken area. Management system innovation: establish social responsibility and sustainable development management system based on the framework of ISO9000 quality management standard COSCO Group fully recognizes that corporate social responsibility should not only be a business attitude but should incorporate the building and dissemination of corporate culture. Only when a company integrates its concern for society and the environment into day-to-day operations will sustainable development and corporate social responsibility become an indispensable part of all operating activities. Only then will the company become a good corporate citizen. In this respect, COSCO Group has established a sustainable development and social responsibility management system as a long-term mechanism. COSCO Group has integrated the requirements of comprehensive risk management and the Global Compact into its management decision-making and business procedures based on the Global Compact Social Liability Management System Guidelines, GRI Sustainability Reporting Guideline, and Guidelines for National Companies on Comprehensive Risk Management. It has built up the Procedures for Social Reliability and Harmonious Company Management and Procedures for Sustainable Development Report, and risk management procedures for key processes. These standards apply to the performance of every COSCO employee. Using ISO9000 Quality Standard as a benchmark, COSCO Group has established the Global Compact social responsibility management system and sustainable development report system, and set up the information management platform of sustainable development. COSCO subsidiaries have also established their own sustainable development management systems and customized the information management system platform. Overseas companies within the COSCO Group have achieved recognition for their activities in these areas and most notably, COSCO (H.K.) Shipping Co., Ltd became the first shipping company in Hong Kong to get DOC/ISO9001/ISO14001/OHSAS18001 certification, with a total of 45 ships being given the Quality Shipping for the 21st Century certificate (QUALSHIP 21)1, accounting for about 50 per cent of the company’s fleet. This record is ahead of all others in the shipping industry. COSCO Investment won the “Best Transparency Award” of listed companies in Singapore selected by the Securities Investors Association (Singapore) in 2007. COSCO Investment was honored with the champion of Best Transparency Award 2007. This is the first foreign listed company in Singapore to win the award, which, once again, shows that COSCO Investment has established a good corporate image and reputation in the eyes of international investors. Promulgate sustainable development report and accept the supervision of all stakeholders As a pilot unit within the Global Compact Promotion Office of China Company Confederation, COSCO has reengineered its business processes in accordance with sustainable development requirements, and built up an information system to ensure the authenticity, integrity, and quality of the annual report in line with global compact principles and implementation requirements. COSCO Group is convinced that the social responsibility and sustainable development report should accurately reflect the process and results of CSR implementation in the company’s production operation and management decision-making. The report should be the communication tool between the company and stakeholders, and the means by which the company is supervised by society. The reliability of the sustainable development report determines the level of trust of stakeholders, and affects the company's international status and reputation. COSCO Group compiled its 2007 Sustainable Development Report for 2005 by following strictly the Guidelines of the Global Reporting Initiative (GRI). At the same time, Global Compact Promotion Office of China Company Confederation and the Det Norske Veritas (DNV) conducted a third-party audit on COSCO's sustainable development management system and the sustainable development report for 2005 from November 7 to November 10, 2006 in a bid to ensure the report's creditability. At the audit meeting on COSCO Group’s management system and sustainable development report, experts of the audit team awarded five features of the report as “No.1”. * The first large state-owned company that compiled a sustainable development report according to GRI reports; * The first company in the world that compiled its report according to GRI 2006 report; * The first Chinese company that implemented Global Compact and established the management system on sustainable development, and be certificated; * The first Chinese company that has its sustainable development report audited; * The first company in Asia that applied the VeriSustain approval standards of Det Norske Veritas (NDV) to the audit of its sustainable development report. The achievements and perspectives of COSCO Group social responsibility implementation on a global scale In this letter to COSCO President Wei on Jan. 22, 2007, Mr. Georg Kell, Head of the United Nations Global Compact Office, highly praised COSCO’s important contribution to global development as a member of the Global Compact and extended his congratulations on the achievement of COSCO’s sustainable development report being held up a model report, and included in the list of Notable Communications on Progress of the United Nations Global Compact Office. The inclusion of COSCO’s Sustainable Development Report for 2005 into the model list was a double first, that is, first the Chinese company and first shipping company in the world included on the model list. In July 2007, United Nations Secretary General Ban Ki-Moon personally invited President Wei to deliver a keynote speech on behalf of China at the United Nations Global Compact Leaders Summit – a recognition by the UN for COSCO’s achievements and efforts within the Global Compact. There have been both social and economic benefits to this recognition. COSCO’s listed companies have performed extremely well in the stock market, with share prices going up despite the downturn. The frozen capital for subscribing the A shares of China COSCO amounted to RMB1.629 trillion, accounting for about 10 per cent of national deposits. The recognition of China COSCO was higher than that of other shipping companies and the subscription for shares of China COSCO exceeded that of such institutions as banks, recording a new height for China IPOs at that time. About the Author: Ma Xinying, Director of Sustainable Development & Total Risk Management Office, COSCO Group. About the Company: Founded on April 27, 1961 as the pioneer of international shipping carrier in China, together with the reconstruction of national transportation resources on February 16, 1993, China Ocean Shipping (Group) Company (COSCO) has grown into a $17 billion corporation by clearly focusing on the goal of enabling commerce around the globe. It is an international giant, specializing in shipping and modern logistics, serving as a shipping agency and providing with services in freight forwarding, shipbuilding, shiprepairing, terminal operation, trade, financing, real estate and IT industry as well with an aim at taking one of the leading roles in these areas. Today, followed by more than 40 years of arduous efforts, COSCO has successfully molded itself into a global company with one of the most recognized and admired brand name in the world. As far as the fleet capacity is concerned, we now own and operate a variety of merchant fleet of some 600 vessels with total carrying capacity of up to 35 million DWT, which help make a hit with achieving annual traffic volume of more than 300 million tons. (CSR in China, China WTO Tribune)

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