No need for Asia to be woke - Responsible Capitalism through an Asian lens

LARRY Fink's 2018 proclamation that every company must show "how it makes a positive contribution to society" ostensibly woke American CEOs to the need for companies to fulfil a societal purpose beyond profit maximisation. The American Business Roundtable's 2019 commitment that a business should no longer be run purely for profit is cited as another woke moment for American CEOs to the new reality that corporate purpose matters. However, just as the sun rises first in Asia, there is no need for Asia's CEOs to be woke to the reality that corporate purpose matters.

Two decades ago, in Asia's largest economy, the inaugural 2002 Chinese Corporate Governance Code (CCGC) encouraged listed companies to "be concerned with the welfare, environmental protection, and public interests of the community" and to "pay attention to the company's social responsibilities". The 2006 Chinese Company Law required companies to "undertake social responsibility". The 2018 CCGC goes even further by encouraging listed companies to "actively implement the concept of green development, integrate ecological and environmental protection requirements into the development strategy and corporate governance process, actively participate in the construction of ecological civilization, and play an exemplary role in pollution prevention, resource conservation, and ecological protection". As if that was not purposeful enough, it encourages listed companies to assist "poverty-stricken counties or villages, and actively connect with and earnestly support poverty-stricken areas to develop local industries, train talents, and promote employment". The newly issued draft of the revised PRC Company Law is also all about purpose; it states that "companies should fully consider the interests of the company's employees, consumers and other stakeholders, as well as ecological and environmental protection and other social public interests, to assume social responsibility. The State encourages companies to participate in social welfare activities and publish social responsibility reports".

China was clearly awake to corporate purpose long before Fink's proclamation; on paper, it is as purposeful as can be. What is less clear, is whether Chinese companies can fulfil these lofty purposes. Another question that looms large is: Can Chinese companies stay on their world-changing trajectory in an economy where the Chinese Communist Party appears to be ratcheting up its control over which purposes companies may serve? Fewer purposes and a narrower focus on maximising shareholder value may be exactly what is required in China at this moment - the opposite of what America's awakening prescribes.