Fair Wealth Annual Report 2019 [1st ed.] 9789811577888, 9789811577895

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Fair Wealth Project Group

Fair Wealth Annual Report 2019

Fair Wealth Annual Report 2019

Fair Wealth Project Group

Fair Wealth Annual Report 2019

123

Fair Wealth Project Group School of Management Fudan University Shanghai, China

ISBN 978-981-15-7788-8 ISBN 978-981-15-7789-5 https://doi.org/10.1007/978-981-15-7789-5

(eBook)

Jointly published with Fudan University Press The print edition is not for sale in China (Mainland). Customers from China (Mainland) please order the print book from: Fudan University Press. © Fudan University Press 2021 This work is subject to copyright. All rights are reserved by the Publishers, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publishers, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publishers nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publishers remain neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Preface

This book is the 2019 Fair Wealth Annual Report, the second consecutive publication in the Fair Wealth Annual Report series. Fair wealth advocates the belief that ‘a man attains his monetary aspirations through honorable means, uses it with virtue, and passes it with sincerity’. It recognizes and encourages enterprises to pursue and accumulate wealth, but puts greater emphasis on the belief that enterprises should abide by the rule of ‘attaining monetary aspirations through honorable means and then using it with virtue’. At the same time, fair wealth also appeals to the society to respect the wealth and wealth owners who have complied with the above rules and to let them enjoy the rights of wealth inheritance and accumulation with sincerity and without breaking rules. Enterprises are the main carriers of innovation in contemporary society. The development and governance quality of enterprises in a region demonstrates its economic development, innovation ability and prosperity, as well as reflects the region’s emphasis on business ethics, legal environment and environmental protection. These two aspects complement each other. Up to now, the 19th National Congress of the Communist Party of China has put forward the concept of high-quality economic development and the G20 Summit in 2018 included both fair development and sustainable development as the theme of the conference. In such context, enterprises should think about how to create social value while generating economic wealth, which coincides with the concept of fair wealth. The advocacy of fair wealth can urge enterprises to take social responsibility, enhance their competitiveness and sustainability, and promote the society to create more fair wealth. In August 2015, the Institute of Sustainable Innovation and Growth (iSIG) at School of Management of Fudan University invited experts, scholars and enterprise representatives from various fields to deeply discuss ‘fair wealth and corporate social responsibility’, in the theme of ‘Ideal China’. In September 2016, iSIG released the inaugural ‘Fair Wealth Ranking’, for the top 50 fair wealth holders from the Mainland China. In October 2017, iSIG released its first Fair Wealth Evaluation Report on all A-Share companies listed on the main boards of Shanghai Stock Exchange and the Shenzhen Stock Exchange. In August 2018, the Fair v

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Wealth Evaluation Report was released for the second year, and its scope was extended to companies listed on the Small and Medium Enterprise Board (SME Board) in Mainland China as well as Chinese companies listed on U.S. stock exchanges. The 2018 Fair Wealth Annual Report was officially published by Fudan University Press. The Fair Wealth Evaluation Report was released for the third consecutive year in August 2019 and fair wealth data center was officially launched in November 2019. This report reviews the development of fair wealth project in 2019. The book consists of eight chapters in three sections. The first section, introduces the development of the fair wealth project; the organizations involved in fair wealth project and the fair wealth project team, including the expert committee, methodology committee and execution group that contribute to the development of the fair wealth project. As the second section, which includes Chaps. 2–5, reviews the progress of fair wealth project in 2019. To be more specific, Chap. 2 analyzes the fair wealth annual theme in this year. Chapter 3 presents the fair wealth rating results in 2019, followed by the analysis on the fair wealth evaluation as well as case studies on outstanding enterprises in Chap. 4. Chapter 5 introduces other projects with the theme of fair wealth, including fair wealth investment, fair wealth data center and fair wealth evaluation for non-listed companies. As the third section, Chap. 6 explains the theories and methods of fair wealth evaluation. Shanghai, China

Fair Wealth Project Group

Acknowledgements The year of 2019 marked the fourth year of the fair wealth project. In this year, in addition to annually releasing the results of fair wealth evaluation and promoting fair wealth investment, we officially launched the fair wealth data center. Here we would like to express our sincere gratitude to all individuals and organizations that have participated in and supported the fair wealth project.

Contents

1 Introduction of Fair Wealth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Fair Development Chronicle . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.1 Sheshan Symposium (July 2013) . . . . . . . . . . . . . . . . . 1.1.2 iSIG Enterprise Sustainable Innovation and Growth Shenzhen Forum (December 2013) . . . . . . . . . . . . . . . . 1.1.3 The Publication of the Bubble Theory (November 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.4 The “Fair Development” Symposium (June 2014) . . . . . 1.1.5 The Formal Introduction of Fair Wealth Theory (March 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.6 Ideal China Forum—Fair Wealth and CSR (August 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.7 The Release of the 2016 Fair Wealth Ranking (September 2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.8 The Publication of Fair Development in China (December 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.9 The Release of the 2017 Fair Wealth Evaluation (September 2017) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.10 Fair Wealth Ranking Renamed to Fair Wealth Persons of the Year (January 2018) . . . . . . . . . . . . . . . . . . . . . . 1.1.11 Formal Operation of the First Private Fund Based on Fair Wealth Evaluation Results (July 2018) . . . . . . . . . . . . . 1.1.12 The First Fair Wealth Evaluation for Unlisted Enterprises (July 2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Institutions Involved in Fair Wealth Project . . . . . . . . . . . . . . . 1.2.1 Institute for Sustainable Innovation and Growth (iSIG) at School of Management, Fudan University . . . . . . . . . 1.2.2 Institute on Poverty Research at Peking University . . . . 1.2.3 Institute for Nation(al) Branding Strategy at East China Normal University . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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1.2.4 House of Enlightened Needs (H.E.N.) . . 1.3 Fair Wealth Project Team . . . . . . . . . . . . . . . . 1.3.1 The Expert Committee of Fair Wealth . 1.3.2 The Method Committee on Fair Wealth 1.3.3 Execution Team . . . . . . . . . . . . . . . . .

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Annual Theme of Fair Wealth . . . . . . . . . . . . . . . . High-Quality Development . . . . . . . . . . . . . . . . . . . Fair Development . . . . . . . . . . . . . . . . . . . . . . . . . . The Fair Connotation of High-Quality Development . High-Quality Development and Fair Wealth . . . . . . .

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3 Results of Fair Wealth Evaluation . . . . . . . . . . . . . . . . . . . . 3.1 List of Honorary Star Enterprises—One-Star Enterprises . . 3.2 List of Honorary Star Enterprises—Two-Star Enterprises . 3.3 List of Honorary Star Enterprises—Three-Star Enterprises 3.4 List of Honorary Star Enterprises—Four-Star Enterprises . 3.5 List of Honorary Star Enterprises—Five-Star Enterprises . 3.6 List of Enterprises with Negative Issues . . . . . . . . . . . . . . 3.7 Data Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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4 Analyses of Fair Wealth Evaluation Results . . . . . . . . . . . . . . . . 4.1 Analysis of the Results of Fair Wealth Evaluation . . . . . . . . . 4.1.1 Summary of the Evaluation and Analysis . . . . . . . . . . 4.1.2 Analysis by the Locations of Enterprises . . . . . . . . . . . 4.1.3 Analysis by GICS Industry Sectors . . . . . . . . . . . . . . . 4.1.4 Analysis by the Ownership of Enterprises . . . . . . . . . . 4.1.5 Analysis on the Time of Listing . . . . . . . . . . . . . . . . . 4.1.6 Three-Year Review on the Results of Fair Wealth Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Selected Cases of Excellent Enterprises . . . . . . . . . . . . . . . . . 4.2.1 Universal Scientific Industrial (Shanghai) Co., Ltd. . . . 4.2.2 Shanghai Fosun Pharmaceutical (Group) Co., Ltd. . . . . 4.2.3 BOE Technology Group Co., Ltd. . . . . . . . . . . . . . . . 4.2.4 TCL Technology Group Corporation . . . . . . . . . . . . . 4.2.5 BYD Company Limited . . . . . . . . . . . . . . . . . . . . . . . 4.2.6 Chengdu Kanghong Pharmaceutical Group Co., Ltd. . . 4.2.7 Zhengzhou Coal Mining Machinery (Group) Co., Ltd. . 4.2.8 Guangzhou Automobile Group Co., Ltd. . . . . . . . . . . . 4.2.9 CSSC Offshore & Marine Engineering (Group) Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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5 Other Projects of Fair Wealth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Fair Wealth Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.1 Concept of Fair Wealth Investment . . . . . . . . . . . . . . . . . .

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5.1.2 Fair Wealth Index . . . . . . . . . . . . . 5.1.3 Applications of Fair Wealth Index . 5.2 Fair Wealth Data Information Center . . . . . 5.3 Unlisted Enterprise Fair Wealth Evaluation

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6 Fair Wealth Theory and Methodology . . . . . . . . . . . . . . . 6.1 Theoretical Foundation . . . . . . . . . . . . . . . . . . . . . . . . 6.1.1 Enlightened Needs . . . . . . . . . . . . . . . . . . . . . . 6.1.2 Fair Development . . . . . . . . . . . . . . . . . . . . . . 6.1.3 Core Elements . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.4 Fair Wealth . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.5 Six Dimensions . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Fair Wealth Assessment Framework . . . . . . . . . . . . . . 6.3 Fair Wealth Evaluation System of Enterprises . . . . . . . 6.3.1 Fair Wealth Evaluation Framework . . . . . . . . . . 6.3.2 An Overview of Fair Wealth Evaluation System 6.3.3 Dimensions . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.4 Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.5 Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.6 Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.7 Fair Wealth Score . . . . . . . . . . . . . . . . . . . . . . 6.4 Fair Wealth Rating for Enterprises . . . . . . . . . . . . . . . . 6.4.1 Rating System . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.2 Eligibility and Screening Criteria for Fair Wealth Rating . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.3 Rating Standards . . . . . . . . . . . . . . . . . . . . . . . 6.5 Fair Wealth Evaluation for Non-listed Enterprises . . . . 6.6 Evaluation Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Appendix A: Revisions of Fair Wealth Theory and Method . . . . . . . . . . 117 Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant Academic References . . . . . . . . . . . . . . . . . . . . . 119 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

Chapter 1

Introduction of Fair Wealth

1.1 Fair Development Chronicle 1.1.1 Sheshan Symposium (July 2013) On July 19 and 20, 2013, the Institute of Sustainable Innovation & Growth (iSIG) of Fudan University held the first “iSIG Sustainable Innovation and Growth Symposium” in Sheshan of Shanghai, China. The symposium discussed the measures to achieve sustainable development and innovations in China, and finally reached the consensuses among sustainable development scholars, known as the “Nine Common Themes of Sheshan”.

1.1.2 iSIG Enterprise Sustainable Innovation and Growth Shenzhen Forum (December 2013) More than 20 successful private entrepreneurs and some government officials gathered at the iSIG Enterprise Sustainable Innovation and Growth Shenzhen Forum to discuss how Chinese enterprises, especially private enterprises, should grasp the global business opportunity of fair development. The forum witnessed the initial proposal of 11 dimensions of fair development in China (now consolidated to nine dimensions), which received a warm response at the forum.

1.1.3 The Publication of the Bubble Theory (November 2013) The Bubble Theory: Towards a Framework of Enlightened needs and Fair Development (Chinese and English edition) starts with enlightened needs and systematically © Fudan University Press 2021 Fair Wealth Project Group, Fair Wealth Annual Report 2019, https://doi.org/10.1007/978-981-15-7789-5_1

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Fig. 1.1 Book cover of The Bubble Theory (English and Chinese versions)

explains the formation and prospect of the fair development theory. For the first time, the book proposes the theoretical framework of fair development, as a new Human Development Principle (HDP) (Fig. 1.1). Publications Ding, Min. (2013). The Bubble Theory: Towards a Framework of Enlightened Needs and Fair Development. New York: Springer. Ding, Min. (2013). The Bubble Theory: Towards a Framework of Enlightened Needs and Fair Development (S. Gu, Trans.). Shanghai: Fudan University Press.

1.1.4 The “Fair Development” Symposium (June 2014) On June 21 and 22 2014, scholars from various universities participating in the symposium made wonderful and original speeches on the theme of fair development (Fig. 1.2).

1.1 Fair Development Chronicle

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Fig. 1.2 Group photo of participants of the “Fair Development” symposium

1.1.5 The Formal Introduction of Fair Wealth Theory (March 2015) As an application of fair development theory in commercial field, fair wealth was formally defined and published in the journal of Customer Needs and Solutions (Fig. 1.3). Fig. 1.3 The journal cover of Customer Needs and Solutions

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Fig. 1.4 The release of the 2016 Fair Wealth Ranking

1.1.6 Ideal China Forum—Fair Wealth and CSR (August 2015) The 2015 Ideal China Forum was successfully held at the School of Management, Fudan University on August 8, 2015. Present at the forum were experts, scholars, entrepreneurs and government officials in relevant fields. All the participants gave wonderful speeches concerning the question of how to create wealth in a fair way centered on the annual theme of fair wealth and corporate social responsibilities in the current social context and market environment, and had profound exchanges of views and discussions. This forum drew wide attention of the society.

1.1.7 The Release of the 2016 Fair Wealth Ranking (September 2016) In order to further promote the implementation of the concept of fair wealth, the iSIG released the 2016 Fair Wealth Ranking in Mainland China on September 21, 2016. Through this ranking, the institute hoped to promote the concept of fair wealth in the business field of mainland China and make efforts to reshape the business environment in China (Fig. 1.4).

1.1.8 The Publication of Fair Development in China (December 2012) The book Fair Development in China was contributed by experts and scholars from different fields of discipline, including management, marketing, politics, public administration and environment. By focusing on fair development, the book explores a wide range of hot topics in China, which are related to government, social development, public policy and other fields (Fig. 1.5).

1.1 Fair Development Chronicle

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Fig. 1.5 The book cover of Fair Development in China

1.1.9 The Release of the 2017 Fair Wealth Evaluation (September 2017) In 2017, the iSIG released its first fair wealth evaluation report on all listed enterprises in Shanghai and Shenzhen Stock Exchanges. From the perspective of fair wealth, the report assessed the performance of enterprises on the three themes of transparency, progress and pioneering. Based on the evaluation results, the well-performing enterprises were rated as one-star, two-star, three-star, four-star and five-star honorary enterprises respectively (Fig. 1.6).

1.1.10 Fair Wealth Ranking Renamed to Fair Wealth Persons of the Year (January 2018) In January 2018, Fair Wealth Ranking was officially renamed to Fair Wealth Person of the Year and the result for 2018 was released. This was to encourage richest Chinese people to engage in self-reflection on their perceptions of wealth.

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Fig. 1.6 The cover page of 2017 Fair Wealth Honorary Star Enterprise List Report

1.1.11 Formal Operation of the First Private Fund Based on Fair Wealth Evaluation Results (July 2018) In July 2018, the first private fund based on fair wealth evaluation results officially began its operation. This private fund selects stocks based on the fair index. While enabling investors to obtain higher return on investment, it makes investors’ investment more in line with personal values and produces fairer social benefits, which thus promotes fair development of society.

1.1.12 The First Fair Wealth Evaluation for Unlisted Enterprises (July 2018) In July 2018, the iSIG completed the first fair wealth evaluation for unlisted enterprises based on the same fair wealth evaluation system, through collecting survey data and conducting interviews to obtain rich information and in-depth understanding of the enterprise. Such an evaluation can help and drive enterprises to move in the direction of fair wealth, to make continuous progress and even grow into the global leading fair enterprises.

1.2 Institutions Involved in Fair Wealth Project

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1.2 Institutions Involved in Fair Wealth Project There are three organizing institutions of fair wealth project, which are iSIG at School of Management of Fudan University, Institute on Poverty Research at Peking University, Institute for Nation(al) Branding Strategy at East China Normal University, as well as the execution organization for fair wealth project, House of Enlightened Needs.

1.2.1 Institute for Sustainable Innovation and Growth (iSIG) at School of Management, Fudan University The Institute for Sustainable Innovation and Growth (iSIG) at School of Management, Fudan University has a mission to create, disseminate and help practice original knowledge that is important to the current and future development of individuals, enterprises, non-profit organizations and government agencies. At present, the institute has five themes (also as major directions): Mind Exploration (Minimind Decision Making, Scientific Mindreading and Artificial Empathy), Logical Creative Thinking, Fair Development, Hualish Society and Enlightened Future.

1.2.2 Institute on Poverty Research at Peking University The Institute on Poverty Research at Peking University is a university-level research institution of Peking University, established on November 6, 2005 with the proposal from the famous economist Professor Yining Li, and with financial support from Deutsche Bank. The establishment of this institute received great support from the United Front Work Department of CPC Central Committee, the National Committee of the Chinese People’s Political Consultative Conference, the Central Committee of the Chinese Democratic League, Beijing Municipal People’s Government, China Enterprises Investment Association and several schools and departments of Peking University. The policy research in this institute has the basic idea and fundamental starting point of balancing urban and rural development, balancing regional development, balancing socio-economic development, balancing the harmonious development with human beings and the nature, and balancing domestic development and opening up. The institute carries out comprehensive research on sustainable development and poverty reduction in poor areas, hoping to make its own contribution to China’s anti-poverty cause.

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1.2.3 Institute for Nation(al) Branding Strategy at East China Normal University The Institute for Nation(al) Branding Strategy is a research institute as the key think tank approved to establish by East China Normal University. Its predecessor was the Brand Science Research Center established in 2007. Relying on the first level doctor program of business administration, the institute has identified two main research directions: The first is the strategic research on Chinese brands and their globalization at the national level (National Branding Strategy); the second is the strategic research on China as a national brand (Nation Branding Strategy). Its representative work is the book National Branding Strategy—From the Perspective of Businesses published by Peking University Press in November 2017. At present, the academic committee of the institute has 11 members from nine top universities in China. In addition, there are first batch of nine international visiting scholars from six countries (i.e., the United States, Canada, United Kingdom, France, Spain and Italy) and the first batch of 10 domestic visiting researchers from various sectors such as enterprises, governments, and consulting firms.

1.2.4 House of Enlightened Needs (H.E.N.) The House of Enlightened Needs (H.E.N.), founded in May 2016, is a social enterprise integrating research, practice and teaching. It aims to facilitate social progress by researching, screening and realizing the enlightened needs that contribute to an ideal future. With a cutting-edge business model, H.E.N. uses 100% of the surplus to support the concept promotion and independent operation of this cause. Its mission and vision are to identify key social challenges that need to be addressed urgently, and to unite government, business and society to promote their improvement. It has received the support and participation of many scholars from 30 universities across China, as well as the joint promotion from enterprises and public sector.

1.3 Fair Wealth Project Team Fair wealth project team was formed by various organizations based on fair wealth.

1.3.1 The Expert Committee of Fair Wealth The expert committee, composed of experts who participated in the establishment of fair wealth theory, guides the establishment and operation of the fair wealth evaluation

1.3 Fair Wealth Project Team

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system. It is the decision-making body for the operation of fair wealth evaluation, mainly consisting of the following members: (in reverse order of surnames) • Yihong Yu, Professor, Department of Industrial Economics, School of Management, Fudan University • Siqing Peng, Professor, Department of Marketing, Guanghua School of Management, Peking University • Ming Lei, Professor, Department of Management Science, Guanghua School of Management, Peking University • Jiaxun He, Professor, Faculty of Economics and Management, East China Normal University • Min Ding, Bard Professor of Marketing, Smeal College of Business, The Pennsylvania State University, and Advisory Professor, School of Management, Fudan University. Other key experts involved in establishing fair wealth theory are: • Guijun Zhuang, Professor, Department of Marketing, School of Management, Xi’an Jiaotong University • Hong Zhu, Professor, Department of Marketing and E-commerce, School of Business, Nanjing University • Zheng Zheng, Professor, Department of Environmental Science and Engineering, Fudan University • Xiaoding Wu, Professor, Department of Marketing, Business School, Jilin University • Kemin Wang, Professor, Department of Finance, School of Management, Fudan University • Chenting Su, Professor, Department of Marketing, College of Business, City University of Hong Kong • Kaiyan Shen, Director, Institute of Economics, Shanghai Academy of Social Sciences • Lan Li, Deputy Director, Institute of Public Administration and Human Resources, Development Research Center of the State Council • Fengjie Jing, Professor, School of Business, East China University of Science and Technology • Qingyun Jiang, Professor, Department of Marketing, School of Management, Fudan University • Xiucheng Fan, Professor, Department of Marketing, School of Management, Fudan University • Jie Chen, Professor, Department of Marketing, Antai College of Economics and Management, Shanghai Jiao Tong University. In addition, nearly 500 professors from elite universities in the Project 985 provided weights in the evaluation system and key indicators for deciding three-star and four-star enterprises.

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1.3.2 The Method Committee on Fair Wealth The method committee on fair wealth is the academic and methodological guiding identity to the fair wealth evaluation system. Its members are: • Qi Sun, Associate Professor, College of Business, Shanghai University of Finance and Economics • Li Xiao, Associate Professor, School of Management, Fudan University • Fang Wu, Associate Professor, College of Business, Shanghai University of Finance and Economics • Yinghui Zhou, Assistant Professor, School of Management, Shenzhen University.

1.3.3 Execution Team The execution team is the actual operation team of the fair wealth evaluation system, which is responsible for collecting, arranging and analyzing basic data. The leaders of the executive team are: • Ming Ji, Director of Fair Wealth Project • Yanqi Xu, Assistant of Fair Wealth Project. Key team members for the 2019 evaluation were: Qingwen Deng, Yifan Fu, Minyan Jin, Jiaqi Ning, Mingzhou Shi, Meng Sun, Jia Tian, Lan Wang, Mi Wang, Yihan Wang, Lin Xia, Wenlin Xu, Chenxi Zhang, Kunkun Zhang, Qilin Zhang, Wuyin Zhang, Key members for the 2018 evaluation were Liyuan Zhen, Shuang Zhao, Bifan Zhao, Yubing Yang, Qianqian Xu, Lingzhou Xiang, Yilin Wang, Xinghui Wang, Yujie Li, Yingshan Li, Yihan Huang, Xian Gao, Yifan Fu, Qingwen Deng, and Siwen Chen. Key members for the 2017 evaluation were Ke Zhu, Bin Xin, Lingzhou Xiang, Anqi Xie, Xian Gao, Jiani Jiang, Jin Liu, and Huaxue Cui. Key members for the 2016 evaluation were Yuqing Yang, Pu Ke, Qianli Cheng, Xiaotong Liu, Yuxin Tian, Xiaodi Wang, Peiye He, and Jia Liang. The following groups are also involved in the project to varying degrees: • Members of the Institute for Sustainable Innovation and Growth (iSIG), Fudan University: Chaobin Fan, Fulin Zhang, Jie Xu, Yi Wang, and Lixian Qian • Some alumni of School of Management of Fudan University • Some alumni of China Europe International Business School (CEIBS).

Chapter 2

The Annual Theme of Fair Wealth

The 19th National Congress of the Communist Party of China (CPC) pointed out that China’s economy has shifted from the phase of high-speed growth to the phase of high-quality development. Up to now, it has been two years since this change of development phases was proposed. High-quality development is the inevitable choice for China’s economy to overcome structural problems and resource and environment constraints after over 30 years’ rapid growth. Through in-depth analyses of the implications and internal requirements of such a new development phase, the fair wealth project team believes that high-quality development has a profound and rich connection and consistency with the fair wealth and the underlying concept of fair development. Therefore, we set the fair connotation of high-quality development as the annual theme of fair wealth project in 2019, aiming to further promote the research and development of the two concepts through in-depth analyses and discussions.

2.1 High-Quality Development High-quality development is a new expression first put forward at the 19th CPC National Congress in 2017. The report submitted to the 19th CPC National Congress pointed out that ‘China’s economy has shifted from the phase of high-speed growth to the phase of high-quality development’. The new expression of high-quality development has exerted broad and profound impacts on various fields across the national economy and life. The Study Outline of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era (Propaganda Department of the CPC Central Committee 2019) states that: China’s economic development has entered a new normal. As an objective state, new normal is a state that will inevitably emerge when China enters certain stage of economic development. At present, the environment, conditions, tasks and requirements of China’s economic development have undergone new changes. These changes are the necessary process for © Fudan University Press 2021 Fair Wealth Project Group, Fair Wealth Annual Report 2019, https://doi.org/10.1007/978-981-15-7789-5_2

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12

2 The Annual Theme of Fair Wealth China’s economy to evolve to a stage with the more advanced form, the more optimized division of labor, and the more reasonable structure. High-quality development is the development that can well meet the growing needs of the people for a better life. It is the development that reflects the new development concept. It is the development in which innovation stands as the first driving force, coordination becomes an endogenous feature, green development becomes a universal form, opening-up becomes the inevitable way, and sharing becomes the fundamental goal.

Since the introduction of high-quality development two years ago, both its goals and definitions, as well as the ways and means to promote high-quality development, have been more sufficiently studied and expanded. It is not difficult to see that high-quality development will be an important thought to guide China’s social development for a long time in the future.

2.2 Fair Development In November 2013, the book of The Bubble theory: Towards a Framework of Enlightened Needs and Fair Development (Ding 2013) was published in both English and Chinese versions. This book systematically elaborates the journey and prospect of fair development theory from enlightened needs (ENs) as a starting point, and develops the theoretical framework for fair development as a new human development principle (HDP) for the first time. By definition, fair development is the development that does not favor one side or another. Specifically, it is human development that strives to ensure distributive, procedural, and restorative fairness related to the opportunities, resources, and outputs of human development to the extent they are compatible in any particular application, between a benchmark entity and X, where X is a well-defined entity that either exists now or will exist Y years from now (Ding 2013, p. 35). The core of the fair development concept lies in guiding development with the fairness concept, so it is crucial to accurately define and correctly understand the concept of fairness. The word “fairness” comes from the word “fair” in English, and the concept of fair development relies on the definition of fairness in the MerriamWebster Dictionary: “lack of favoritism towards one side or another”. For the public, fairness can be confused with other words such as equality and justice. From a rigorous perspective, the theory of fair development defines and elaborates these related concepts by constructing a clear framework. Fair development defines three forms of distribution, based on equality, needs and equity respectively. Equality-based distribution means that all people receive the same share of development opportunities, resources and outputs. Needs-based distribution is the allocation of resources, opportunities and outputs based on needs. Equity-based distribution means that resources and opportunities are equally distributed among people but outputs are distributed based on their contributions. These three forms of distribution can reasonably exist under different social environment and conditions. Fairness refers to the final choice (either one or a proportional combination of two or three

2.2 Fair Development

13

forms) of these three forms of distribution based on conditions and circumstances as well as the common will of the participants. Therefore, fairness is a higher-level concept that is positioned above these three forms of distribution and incorporates the value judgment and choice of participants. Using this framework, we distinguish the concept of fair development from other common concepts such as equalitarianism and distribution according to work.

2.3 The Fair Connotation of High-Quality Development Based on the above interpretation of high quality development and fair development, the two concepts are consistent and relevant at all levels. At the macro level, the first core question of high-quality development is: what kind of development has high quality? In other words, how to judge high-quality development? Importantly, fairness and fair development are the important elements of answering this key question. High-quality development means that the focus of economic development is shifting from whether there is development or not to how good the development is. The question about whether there is development or not is easy to answer, but when it becomes about how good it is, the judgment will be more complicated with richer connotation, and thus inevitably requires more detailed requirements and standards. In the report submitted to the 19th CPC National Congress, the CPC General Secretary Xi Jinping pointed out that, “the principal contradiction in Chinese society has been transformed into one between the people’s ever-growing needs for a better life and the unbalanced and inadequate development”. At the same time, President Xi Jinping also pointed out, “promoting high-quality development is the inevitable requirement to adapt to the change in the principal contradiction in our society”. From these two statements on the transformation of social contradiction and highquality development, it is not difficult to see that whether the development is balanced becomes one of the most important criteria for good development. Fairness or fair development well addresses the contradiction related to the unbalanced development. The development following the concept and the principle of fair development will inevitably be balanced, which will help improve the principal contradiction of the society and help promote high-quality social development. In addition, President Xi Jinping pointed out in his report that it is necessary to “continuously meet the people’s growing needs for a better life, continuously promote social equity and justice, form effective social governance and good social order, and make the people’s sense of gain, happiness and security more substantial, more secure and more sustainable”. Based on long-term theoretical research and social practice, for the lives of ordinary people, sense of gain and happiness is not only related to the level of development, but also directly related to whether the development is fair. Therefore, from the perspective of the public, high-quality development is necessarily the fair development.

14

2 The Annual Theme of Fair Wealth

The second core question of high-quality development is how to promote and achieve high-quality development. The concepts of fairness and fair development can also play an indispensable role in this process. One of the keys to high-quality development is efficiency reform. From the perspective of efficiency, the concept of fair development can correct inefficient production, compared with the traditional concept of market economy. In the classic market economy as mainstream economics predicts, enterprises with low efficiency receive no additional penalty except that they will be squeezed out of the market due to the market competition mechanism. However, from the requirements of fair development, in the context of species integration becoming the dominant trend, inefficient production means a waste of various production resources. Therefore, enterprises that fail to achieve the minimum operating efficiency are likely to be regulated by the government and be penalized by customers. Such requirements help drive the improvement of total factor productivity, and thus promote high-quality development. At the same time, in addition to correcting the inefficient production, the concepts of fairness and fair development help better realize the integration of three forms of distribution based on equality, needs and equity, through the resource distribution among different development identities based on the framework and requirements of fair development, and thus better promote the high-quality development. In addition to the macro level, high-quality development and fair development also have a high degree of consistency in specific social and economic goals. Both concepts have highly consistent concerns and requirements on pollution prevention and control, climate change, poverty alleviation and human capital quality. Furthermore, in view of these goals, fair development can also provide effective reference and mechanism for promoting high-quality development with the indicator system, policy system, standard system, statistical system, performance evaluation, and performance appraisal. Taking climate change as an example: fair development not only conforms to the goal of high-quality development regarding greenhouse gas emissions, energy use, and water use to further drive energy saving and emission reduction, but also can provide credible and feasible conceptual guidance on how to allocate emission targets and how to set energy saving targets. That is, setting relevant requirements with fairness as the standard will help achieve better results in the process of promoting and implementing these goals. High-quality development is an important concept of development in China for a long period at present and in the future, and the measurement and promotion of its achievements are highly related to the concepts of fairness and fair development. We believe that fair development importantly extends the connotation of and drives forward high-quality development.

2.4 High-Quality Development and Fair Wealth Business is an important part of social development. Understanding and analyzing the performance of business is crucial for promoting high-quality development of

2.4 High-Quality Development and Fair Wealth

15

4 3.5 3 2.5 2 1.5 1 0.5 0 2017

2018

2019

Environmental Friendly

Technology Evolution

Equal Opportunities

Training and Education

Fig. 2.1 The performance of the four most relevant indicators for 2017–2019

enterprises and even the whole society. As an application of fair development concept in the business field, fair wealth evaluates the performance of enterprises in all aspects from the perspective of fairness. Through the analysis of data in the fair wealth evaluation results, we can better evaluate the high-quality development of enterprises and even the high-quality development status of the whole society. Based on the previous analysis, we selected the four most relevant indicators from the fair wealth evaluation system: environmental friendly, technology evolution, equal opportunities, and training and education, and then analyzed the score changes over the past three years. As shown in Fig. 2.1, significant progress has been made in the two aspects of environmental friendly and technology evolution in the past three years, which is also consistent with the background of China’s emphasis on technological innovation and the impact of enterprises on the ecological environment in recent two years. In this context, enterprises have paid increasing attention to technological innovation, resource use and pollution emission, which contributes to their growth on the corresponding aspects of fair wealth. Compared with these two aspects, the performance of enterprises in equal opportunities and training and education has not improved significantly, indicating that most enterprises have not paid enough attention to these two aspects. In the long run, enterprises should pay more attention to human equality and the cultivation of human capital, so as to achieve higher quality growth and fuller employment. Yihong Yu Expert Committee on Fair Wealth Project

Chapter 3

Results of Fair Wealth Evaluation

This chapter presents the detailed results of fair wealth evaluation in 2019, the third year of fair wealth evaluation. In 2019, fair wealth evaluation covered A-share enterprises listed on main boards of the Shanghai and Shenzhen Stock Exchanges, enterprises listed on the SME board in Mainland China as well as Chinese companies listed on U.S. stock exchanges. Fair wealth evaluation evaluated a total of 2501 listed companies in 2019, of which 265 enterprises passes the initial screening. In the 2019 evaluation, based on the information disclosed by the enterprises in 2018, we collected and analyzed data for non-financial indicators on six dimensions: Cherished Commons, Welcomed Strangers, Essential Ethics, Well-rounded Adults, Protected Weak and Upward Mobility. Following the three major themes of transparency, progress and guidance in the evaluation, we finally selected 233 honorary star enterprises, including 122 one-star ones, 102 two-star ones and 9 three-star ones (Table 3.1).

3.1 List of Honorary Star Enterprises—One-Star Enterprises

000009.SZ China Baoan Group Co., Ltd.  600429.SH

Beijing Sanyuan Foods Co., Ltd.



000021.SZ Shenzhen Kaifa Technology Co., Ltd.

 600433 SH

Guangdong Guanhao High-Tech Co, Ltd



000027.SZ Shenzhen Energy Group Co., Ltd.

 600435 SH

North Navigation Control Technology Co., Ltd.



000338.SZ Weichai Power Co., Ltd.

 600459.SH

Sino-Platinum Metals Co., Ltd.



Fujian Funeng Co., Ltd.



000401.SZ Tangshan Jidong Cement Co.,  600483.SH Ltd. © Fudan University Press 2021 Fair Wealth Project Group, Fair Wealth Annual Report 2019, https://doi.org/10.1007/978-981-15-7789-5_3

(continued) 17

18

3 Results of Fair Wealth Evaluation

(continued) 000547.SZ Addsino Co., Ltd.

 600489.SH

Zhongjin Gold Corp., Ltd

000559.SZ Wanxiang Qianchao Co., Ltd.  600501. SH Aerosun Corporation

 

000635.SZ Ningxia Younglight Chemicals Co., Ltd.

 600508 SH

Shanghai Datun Energy Resources Co., Ltd.



000652.SZ Tianjin TEDA Co., Ltd.

 600511 SH

China National Medicines Corporation Ltd



000680.SZ Shantui Construction Machinery Co., Ltd.

 600523.SH

Guizhou Guihang Automotive  Components Co., Ltd.

000726.SZ Lu Thai Textile Co., Ltd.

 600531.SH

Henan Yuguang Gold&Lead Co., Ltd.



000756.SZ Shandong Xinhua Pharmaceutical Company Limited

 600548 SH

Shenzhen Expressway Company Limited



DIMA HOLDINGS Co., Ltd.



000758.SZ China Nonferrous Metal  600565.SH Industry’s Foreign Engineering and Construction Co., Ltd. 000778.SZ Xinxing Ductile Iron Pipes Co., Ltd.

 600569.SH

AnYang Iron & Steel Inc



000792.SZ Qinghai Salt Lake Industry Co., Ltd.

 600578.SH

Beijing Jingneng Power Co., Ltd.



000807.SZ Yunnan Aluminium Co., Ltd.

 600585.SH

Anhui Conch Cement Company Limited Fujian



000815.SZ Mcc Meili Cloud Computing Industry Investment Co., Ltd.

 600592.SH

Fujian Longxi Bearing(Group)  Co., Ltd.

000860.SZ Beijing Shunxin Agriculture Co, Ltd

 600600.SH

Tsingtao Brewery Company Limited

000895.SZ Henan Shuanghui Investment & Development Co., Ltd.

 600628.SH

Shanghai New World Co., Ltd. 

000921.SZ Hisense Home Appliances Group Co., Ltd.

 600635.SH

Shanghai Dazhong Public Utilities (Group) Co., Ltd.

000960.SZ Yunnan Tin Co., Ltd.

 600637.SH

Oriental Pearl Group Co., Ltd. 

000983.SZ Shanxi Xishan Coal and Electricity Power Co., Ltd.

 600639.SH

Shanghai Jinqiao Export  Processing Zone Development Co,.Ltd

002054.SZ Dymatic Chemicals, Inc

 600655.SH

SHANGHAI YUYUAN TOURIST MART (GROUP) Co., Ltd.



002142.SZ Bank of Ningbo Co., Ltd.

 600660.SH

Fuyao Glass Industry Group Co., Ltd.



002233.SZ Guangdong Tapai Group Co.,  600684.SH Ltd.

Guangzhou Pearl River Industrial Development Co., Ltd.







(continued)

3.1 List of Honorary Star Enterprises—One-Star Enterprises

19

(continued) 002241.SZ Goertek Inc

 600726.SH

002250.SZ Lianhe Chemical Technology  600750.SH Co., Ltd.

Huadian Energy Company Limited



Jiangzhong Pharmaceutical Co., Ltd.



002287.SZ Tibet Cheezheng Tibetan Medicine Co., Ltd.

 600760.SH

AVIC SHENYANG AIRCRAFT COMPANY LIMITED



002300.SZ Fujian Nanping Sun Cable Co., Ltd.

 600763.SH

TOPCHOICE MEDICAL CORPORATION



002304.SZ Jiangsu Yanghe Brewery Joint—Stock Co., Ltd.

 600787.SH

CMST Development Co., Ltd. 

002415.SZ Hangzhou Hikvision Digital Technology Co., Ltd.

 600801.SH

Huaxin Cement Co., Ltd.



002419.SZ Rainbow Department Store Co., Ltd.

 600808.SH

Maanshan Iron & Steel Company Limited



002468.SZ STO Express Co., Ltd.

 600888.SH

Xinjiang Joinworld Co., Ltd.



002544.SZ Gci Science & Technology Co., Ltd.

 600995.SH

Yunnan Wenshan Electric Power Co., Ltd.



002597.SZ Anhui Jinhe Industrial Co., Ltd.

 600999.SH

China Merchants Securities Co., Ltd.



600010.SH Inner Mongolia Baotou Steel Union Co., Ltd.

 601101.SH

Beijing Haohua Energy Resource Co., Ltd.



600021.SH SHANGHAI ELECTRIC POWER CO., LTD

 601107.SH

Sichuan Expressway Company Limited



600022.SH Shandong Iron and Steel Company Ltd

 601111.SH

Air China Limited



600026.SH COSCO SHIPPING Energy Transportation Co., Ltd.

 601139.SH

Shenzhen Gas Corporation Ltd 

600029.SH China Southern Airlines Company Limited

 601158.SH

Chongqing Water Group Co., Ltd.



600030.SH CITIC Securities Company Limited

 601199.SH

Jiangsu Jiangnan Water Co., Ltd.



600036.SH China Merchants Bank Co., Ltd.

 601211.SH

Guotai Junan Securities Co., Ltd.



600055 SH Beijing Wandong Medical Technology Co., Ltd.

 601225.SH

Shaanxi Coal Industry Company Limited



600089.SH TBEA Co., Ltd.

 601328.SH

Bank of Communications Co.,  Ltd.

600103.SH Fujian Qingshan Paper Industry Co., Ltd.

 601333.SH

Guangshen Railway Company  Limited

600115.SH China Eastern Airlines Corporation Limited

 601336.SH

New China Life Insurance Company Ltd



600125.SH China Railway Tielong Container Logistics Co., Ltd.

 601339.SH

Bros Eastern Co., Ltd.

 (continued)

20

3 Results of Fair Wealth Evaluation

(continued) 600141.SH Hubei Xingfa Chemicals Group Co., Ltd.

 601369.SH

Xi’An Shaangu Power Co., Ltd.



600160.SH Zhejiang Juhua Co., Ltd.

 601607.SH

Shanghai Pharmaceuticals Holding Co., Ltd.



Great Wall Motor Company Limited



Shanxi Lu’an Environmental EnergyDev. Co., Ltd.



600170.SH Shanghai Construction Group  601633.SH Co., Ltd.  601699.SH

600176.SH China Jushi Co., Ltd.

600183.SH Shengyi Technology Co., Ltd.  601766.SH

CRRC Corporation Limited



600197.SH Xinjiang Yilite Industry Co., Ltd.

 601811.SH

Xinhua Winshare Publishing and Media Co., Ltd.



600227.SH GUIZHOU SALVAGE PHARMACEUTICAL CO., LTD.

 601866.SH

Cosco Shipping Development Company Limited



600256.SH Guanghui Energy Co. Ltd.

 601918.SH

China Coal Xinji Energy Co., Ltd.



600298.SH Angel Yeast Co., Ltd.

 601933.SH

Yonghui Superstores Co., Ltd. 

600315.SH Shanghai Jahwa United Co., Ltd.

 601985.SH

China National Nuclear Power  Co., Ltd.

600323.SH Grandblue Environment Co., Ltd.

 601988.SH

Bank of China Limited

600329.SH Tianjin Zhongxin Pharmaceutical Group Corporation Limited

 603018.SH

China Desiqn Group Co., Ltd. 

600389.SH Nantong Jiangshan Agrochemioal&Chemicals Co., Ltd.

 603188.SH

Jiangsu Yabang Dyestuff., Ltd 

600428.SH COSCO SHIPPING  BABA.N Specialized Carriers Co., Ltd.





Alibaba Group

3.2 List of Honorary Star Enterprises—Two-Star Enterprises

000002.SZ

China Vanke Co., Ltd.

 600380.SH

Joincare Pharmaceutical Group Industry Co., Ltd.



000035.SZ

China Tianying Inc

 600420.SH

Shanghai Shyndec Pharmaceutical Co. Ltd.



000039.SZ

China International Marine Containers (Group) Co., Ltd.

 600497.SH

Yunnan Chihong Zinc&Germanium Co., Ltd.



(continued)

3.2 List of Honorary Star Enterprises—Two-Star Enterprises

21

(continued) 000050.SZ

Tianma Microelectronics Co., Ltd.

 600500.SH

Sinochem International Corporation



000423.SZ

Dong-E-E-Jiao Co., Ltd.

 600547.SH

Shandong Gold Mining Co., Ltd.



000425.SZ

XCMG Construction Machinery Co., Ltd.

 600618.SH

Shanghai Chlor—Alkali Chemical Co., Ltd.



000513.SZ

Livzon Pharmaceutical Group Inc

 600619.SH

Shanghai Highly (Group) Co., Ltd.



000528.SZ

Guangxi Liugong Machinery Co., Ltd.

 600648.SH

Shanghai Waigaoqiao Free Trade Zone Group Co., Ltd.



000598.SZ

Chengdu Xingrong Environment Co., Ltd.

 600663.SH

Shanghai Lujiazui Finance &  Trade Zone Development Co., Ltd.

000629.SZ

Pangang Group Vanadium Titanium & Resources Co., Ltd.

 600688.SH

Sinopec Shanghai Petrochemical Company Limited



000776.SZ

GF Securities Co„ Ltd

 600741.SH

HUAYU Automotive Systems Company Limited



000825.SZ

Shanxi Taigang Stainless Steel Co., Ltd.

 600775.SH

Nanjing Panda Electronics Company Limited



000858.SZ

Wuliangye Yibin Co., Ltd.

 600792.SH

Yunnan Coal & Energy Co., Ltd.



000876.SZ

New Hope Liuhe Co., Ltd.

 600795.SH

GD Power Development Co. Ltd.



000878.SZ

Yunnan Copper Co., Ltd.

 600820.SH

Shanghai Tunnel Engineering  Co., Ltd.

000898.SZ

Angang Steel Company Limited

 600850.SH

Shanghai East-China Computer Co., Ltd.



000937.SZ

Jizhong Energy Resources Co. Ltd.

 600887.SH

Inner Mongolia Yili Industrial Group Co., Ltd.



000963.SZ

Huadong Medicine Co., Ltd.

 600893.SH

Aecc Aviation Power Co, Ltd 

000999.SZ

China Resources Sanjiu Medical & Pharmaceutical Co., Ltd.

 600900.SH

China Yangtze Power Co., Ltd.



002064.SZ

Zhejiang Huafon Spandex Co., Ltd.

 600958.SH

Orient Securities Company Limited



002067.SZ

Zhejiang Jingxing Paper Joint Stock Co., Ltd.

 600998.SH

Jointown Pharmaceutical Group Co., Ltd.



002110.SZ

Sansteel Minguang Co., Ltd.. Fujian

 601003.SH

Liuzhou Iron & Steel Co., Ltd.



002202.SZ

Xinjiang Goldwind Science&Technology Co., Ltd.

 601012.SH

Longi Green Energy Technology Co., Ltd.



(continued)

22

3 Results of Fair Wealth Evaluation

(continued) China Shenhua Energy Company Limited



SICHUAN NITROCELL  601117.SH CO., LTD.

China National Chemical Engineering Co., Ltd.



GEM Co., Ltd.

 601166.SH

Industrial Bank Co., Ltd.



002422.SZ

Sichuan Kelun Pharmaceutical Co., Ltd.

 601168.SH

Western Mining Co., Ltd.



002460.SZ

Ganfeng Lithium Co., Ltd.

 601177 SH

Hangzhou Advance Gearbox Group Co., Ltd.



002601.SZ

Lomon Billions Group Co., Ltd.

 601186.SH

China Railway Construction Corporation Limited



002672.SZ

Dongjiang Environmental  601318.SH Company Limited

Ping An Insurance (Group) Company of China, Ltd



600008.SH

Beijing Capital Co., Ltd.

 601390.SH

China Railway Group Limited



600012.SH

Anhui Expressway Company Limited

 601398.SH

Industrial and Commercial Bank of China Limited



600019.SH

Baoshan Iron & Steel Co., Ltd.

 601588.SH

Beijing North Star Company Limited



600027.SH

Huadian Power  601600.SH International Corporation Limited

Aluminum Corporation of China Limited



600028.SH

China Petroleum & Chemical Corporation

China Pacific Insurance (Group) Co., Ltd.



600050.SH

China United Network  601618.SH Communications Limited

Metallurgical Corporation of China Ltd,



600062.SH

China Resources Double—Crane Pharmaceutical Co., Ltd.

 601628.SH

China Life Insurance Company Limited



600068.SH

China Gezhouba Group Company Limited

 601668.SH

China State Construction Engineering Corporation Limited



600098.SH

Guangzhou Development  601800.SH Group Incorporated

China Communications Construction Company Limited



600109.SH

Sinolink Securities Co., Ltd.

 601808.SH

China Oilfield Services Limited



600123.SH

Shanxi Lanhua Sci-Tech Venture Co., Ltd.

 601818.SH

China Everbright Bank Company Limited



600171.SH

Shanghai Belling Corp., Ltd

 601857.SH

Petrochina Company Limited 

002229.SZ

Hongbo Co„ Ltd

002246.SZ 002340.SZ

600188. SH Yanzhou Coal Mining Company Limited

 601088.SH

 601601.SH

 601898. SH China Coal Energy Company  Limited (continued)

3.2 List of Honorary Star Enterprises—Two-Star Enterprises

23

(continued) 600210.SH

Shanghai Zijiang Enterprise Group Co., Ltd.

 601899.SH

Zijin Mining Group Company Limited



600216.SH

Zhejiang Medicine Co. Ltd.

 601919.SH

COSCO SHIPPING Holdings  Co., Ltd.

600267.SH

Zhejiang Hisun Pharmaceutical Co., Ltd.

 601939.SH

China Construction Bank Corporation



600282.SH

Nanjing Iron & Steel Co.,  601991.SH Ltd.

Datang International Power Generation



600284.SH

Shanghai Pudong Road & Bridge Construction Co., Ltd.

 601992.SH

BBMG Corporation



600332.SH

Guangzhou Baiyushan Pharmaceutical Holdings Company Limited

 601998.SH

China CITIC Bank Corporation Limited



600351.SH

Yabao Pharmaceutical Group Co., Ltd.

 603799.SH

Zhejiang Huayou Cobalt Co.,  Ltd.

600377.SH

Jiangsu Expressway Company Limited

 603993.SH

China Molybdenum Co., Ltd. 

3.3 List of Honorary Star Enterprises—Three-Star Enterprises

000100.SZ

TCL Technology Group Corporation



000725.SZ

BOE Technology Group Co., Ltd.



002594.SZ

BYD Company Limited



002773.SZ

Chengdu Kanghong Pharmaceutical Group Co., Ltd.



601717.SH

Zhengzhou Coal Mining Machinery Group Co., Ltd.



600196.SH

Shanghai Fosun Pharmaceutical (Group) Co., Ltd.



600685.SH

CSSC Offshore & Marine Engineering (Group) Company Limited



601231.SH

Universal Scientific lndustrial(Shanghai) Co., Ltd.



601238.SH

Guangzhou Automobile Group Co., Ltd.



24

3 Results of Fair Wealth Evaluation

Table 3.1 Fair wealth results for 2017–2019 2019

2018

2017

Range of definition

2501

2330

1776

Main business being stable or being listed for at least two years and the listing has not been suspended

265

193

157

Maintaining financial health, up-to-standard information disclosure & no negative behaviors during the report period

One-star enterprise

122

102

85

Qualified enterprises

Two-star enterprise

102

64

22

Enterprises deserve to take precedence

Three-star enterprise

9

4

4

Enterprises deserve to choose with extra cost

Four-star enterprise

0

0

0

Enterprises deserve to help their success for free

Five-star enterprise

0

0

0

Leaders of the times

Selected enterprise

Short-listed enterprise

Star enterprise

3.4 List of Honorary Star Enterprises—Four-Star Enterprises No company was selected.

3.5 List of Honorary Star Enterprises—Five-Star Enterprises No company was selected.

3.6 List of Enterprises with Negative Issues In 2019, no enterprises were excluded for evaluation due to negative issues. If the enterprises meet the requirements of fair wealth evaluation but are not included in the list of honorary star enterprises due to major negative issues, the cases will be explained here. The enterprises with negative issues are voted by the expert committee to determine whether they can be included in the list, regardless of

3.6 List of Enterprises with Negative Issues

25

their performance on fair wealth indicators. For the identification of negative events, please refer to fair wealth evaluation theory and methods in Sect. 6.4 of Chap. 6.

3.7 Data Declaration Based on the principle of transparency and fairness, the data used in the fair wealth evaluation were all collected from public channels, which refers to the data channels available to the public, including but not limited to annual reports, corporate social responsibility reports and official websites. Fair wealth evaluation was executed based on these data. To enhance data reliability, we have tried our best to guarantee the accuracy of the data in the evaluation process. However, fair wealth project does not further examine, verify, or analyze the authenticity of the original data. If the defects or problems in the raw data would affect the evaluation results, we would adjust the evaluation results based on the actual situation, but it should not affect the validity and authenticity of the fair wealth evaluation.

Chapter 4

Analyses of Fair Wealth Evaluation Results

During the process of fair wealth evaluation, we collected and accumulated a large amount of corporate data. In this chapter, we analyze these data in the hope that we can understand the status quo of fair wealth in the entire society, compare the differences and characteristics of fair wealth in different industries and regions, and identify the development trends over the past three years. Moreover, we share the cases of nine outstanding enterprises.

4.1 Analysis of the Results of Fair Wealth Evaluation 4.1.1 Summary of the Evaluation and Analysis Overall, the operation of enterprises is relatively stable in 2019. On the premise that the total number of enterprises involved in the evaluation remained stable, the number of Star Enterprises has increased from 170 in 2018 to 233 in 2019. The proportion of Star Enterprises in the participating enterprises has increased in all industries, and the overall score of Star Enterprises has been held steady with an increase compared with that in the previous year. It shows that during the past year, more and more enterprises have reached the standard of good performance. Regrettably, however, there are still no four-star or five-star enterprises in this round of evaluation. In addition, there is still a large gap between domestic enterprises and those leading international enterprises, and the domestic ones have not reached the top level in the industry. Regarding the distribution of star enterprises, the proportions of two-star and threestar enterprises has increased from 37.65% and 2.35% respectively in 2018 to 41.63% and 6% in 2019. In addition, the star enterprises have been more widely distributed across industrial sectors. Specifically, among the 11 industry categories, two-star enterprises have appeared in all sectors and three-star enterprises have appeared in eight sectors. In the previous round of fair wealth evaluation, three-star enterprises © Fudan University Press 2021 Fair Wealth Project Group, Fair Wealth Annual Report 2019, https://doi.org/10.1007/978-981-15-7789-5_4

27

28

4 Analyses of Fair Wealth Evaluation Results

only appeared in industrials, health care and information technology (IT) sectors. It implies that domestic leading companies in various sectors have made up for their shortcomings on the basis of expanding their own advantages in the past year. Especially in the three dimensions of Cherished Commons, Protected Weak, and Upward Mobility, significantly more enterprises have been rated two stars or higher in various sectors, which shows that enterprises have attached great importance to these aspects, and further improved their own performance. In terms of the nature of the firm, state-owned enterprises are still the vanguard of the development of various industrial sectors. Eight out of the 14 three-star enterprises are state-owned. There are also many private enterprises emerging as a new force, as the number of three-star private enterprises has increased than that of last year. In this evaluation analysis, we first classify enterprises based on a number of criteria, such as their location, industry, time of listing on the stock market, and ownership. Then we analyze the number of different types of enterprises, distribution of star enterprises, and scores of each attribute, as well as the changes in these aspects compared with those in the previous year. In this chapter, we focus on four primary classification elements, and select the corresponding secondary classification elements and analysis targets (see Table 4.1). At the end, we review the fair wealth evaluation over the past three years. Table 4.1 Classification elements and analysis targets

Primary classification elements

Secondary classification elements

Analysis targets

Location

Yearly

Number of enterprises Number and proportion of star enterprises Attribute scores

Industry sector

Yearly

Number of enterprises Number and proportion of star enterprises Attribute scores

Ownership

Yearly

Number of enterprises Number and proportion of star enterprises

Time of listing

Yearly

Number of enterprises Number and proportion of star enterprises

4.1 Analysis of the Results of Fair Wealth Evaluation Chart 4.1 Proportion of listed enterprises in Beijing, Shanghai, Guangdong, Jiangsu, and Zhejiang

29

Proportion of Listed Enterprises in Beijing, Shanghai, Guangdong, Jiangsu, and Zhejiang

48.9%

51.1%

Beijing, Shanghai, Guangdong, Jiangsu, and Zhejiang Other provinces and cities

4.1.2 Analysis by the Locations of Enterprises 4.1.2.1

Basic Information of Sampled Enterprises by Location

In terms of the number of listed companies by provinces and province-level municipalities, Beijing, Shanghai, Guangdong, Jiangsu, and Zhejiang take the leading positions with 51.07% of the total number of listed companies (see Chart 4.1). However, the ranking changed slightly within the first group, as Jiangsu surpassed Beijing and ranked among the top three locations in 2019 (see Chart 4.2).

4.1.2.2

Regional Features of Fair Wealth

The standard score is a method that shows the relative position of a score in the distribution, and thus can truly reflect the relative standard distance between a score and the average. The higher the positive standard score, the higher its relative position in this score distribution. The standard score of every province, province-level municipal or autonomous region is shown in Chart 4.6. The greener the color is, the higher the standard score; otherwise, the standard score is lower (Charts 4.3, 4.4 and 4.5). • Beijing, Shanghai, Guangdong: Stable Development As to regional distribution of listed enterprises, Beijing, Shanghai, Guangdong are still in the first tier in terms of the total number of enterprises with the most star enterprises in China (38 in Beijing, 36 in Guangdong, and 33 in Shanghai). Compared with in 2018, the numbers of star enterprises in Beijing, Shanghai and Guangdong have all increased in 2019. Specifically, the number of star enterprises in

30

4 Analyses of Fair Wealth Evaluation Results Proportions of Listed Enterprises in Every Province, Province-level Municipals and Autonomous Regions

Guangdong Zhejiang Jiangsu Shanghai Beijing Shandong Fujian Sichuan Anhui Hubei Hunan Henan Liaoning Xinjiang Hebei Chongqing Tianjin Jilin Shaanxi Guangxi Heilongjiang Shanxi Jiangxi Yunnan Gansu Hainan Inner Mongolia Guizhou Tibet Ningxia Qinghai 0.00%

14.06% 13.99% 11.07% 10.69% 9.92% 9.27% 8.03% 8.11% 7.99%

9.36%

5.90% 5.79% 3.77% 3.61% 3.44% 3.35% 3.20% 3.26% 3.03% 3.00% 2.70% 2.79% 2.58% 2.62% 2.38% 2.45% 1.84% 1.67% 1.64% 1.67% 1.56% 1.50% 1.56% 1.50% 1.52% 1.59% 1.52% 1.50% 1.43% 1.50% 1.39% 1.37% 1.35% 1.46% 1.35% 1.37% 1.19% 1.24% 1.11% 1.12% 1.11% 1.07% 0.90% 0.94% 0.90% 0.82% 0.57% 0.47% 0.49% 0.47% 0.49% 0.43%

2.00%

4.00%

6.00% 2019

8.00%

10.00%

12.00%

14.00%

16.00%

2018

Chart 4.2 Proportions of listed enterprises in every province, province-level municipals and autonomous regions

Shanghai has grown significantly, from 22 in 2018 to 33 in 2019, and the proportion of star enterprises in Shanghai has increased from 12 to 16.8%, ranking among the top three in China, right after Yunnan and Beijing. Besides, although the total number of listed enterprises in Beijing has decreased, the number of star enterprises in Beijing is still higher than other provinces and municipals. The reason of fewer Beijing-based enterprises in this round of evaluation is that there is a reduction of U.S.-listed enterprises and most of them were based in Beijing according to our last round of evaluation. In terms of the standard scores of various indicators, 80% of the scores are positive in Beijing, Shanghai and Guangdong, higher than the national average. It manifests a certain improvement from the previous year, but is still lower than the level in 2017. Although these three regions have improved their average scores on the aspects of

4.1 Analysis of the Results of Fair Wealth Evaluation

31

Numbers and Proportions of Star Enterprises in Every Province, Province-level Municipal and Autonomous Region

40 35

30% 25%

30 20%

25 20

15%

15

10%

10 5%

5

0% Beijing Guangdong Shanghai Zhejiang Shandong Fujian Jiangsu Sichuan Yunnan Henan Shanxi Tianjin Xinjiang Hubei Anhui Shaanxi Hebei Liaoning Ningxia Qinghai Inner Mongolia Guizhou Jiangxi Guangxi Chongqing Tibet Heilongjiang Hunan Jilin Gansu Hainan

0

Number of Star Enterprises in 2019

Number of Star Enterprises in 2018

Proportion of Star Enterprises in 2019

Proportion of Star Enterprises in 2018

Chart 4.3 Numbers and proportions of star enterprises in every province, province-level municipal and autonomous region

Distribution of Star Enterprises in the Top Ten Provinces, Province-level Municipals and Autonomous Regions According to the Proportion of Star Enterprises Xinjiang Sichuan Fujian Tianjin Shanxi Ningxia Qinghai Shanghai Beijing Yunnan

0%

5%

10% one-star

15% two-star

20%

25%

30%

three-star

Chart 4.4 Distribution of star enterprises in the top ten provinces, province-level municipals and autonomous regions according to the proportion of star

Technology Evolution, Environmental Friendly, and Sufficient Education compared with in 2018 (see Chart 4.7), the enterprises in Beijing, Shanghai, and Guangdong are not sufficiently outstanding on Technology Evolution when compared with enterprises in other regions. Overall, the development of enterprises in the three regions is relatively stable.

32

4 Analyses of Fair Wealth Evaluation Results Distribution of Star Enterprises in the Top Ten Provinces, Province-level Municipals and Autonomous Regions According to the Number of Star Enterprises

Henan Yunnan Sichuan Fujian Jiangsu Shandong Zhejiang Shanghai Guangdong Beijing

0

5

10 one-star

15

20 two-star

25

30

35

40

three-star

Chart 4.5 Distribution of star enterprises in the top ten provinces, province-level municipals and autonomous regions according to the number of star enterprises

• Central and Western Regions of China: Large Regional Differences The provinces and province-level municipal in central and western regions of China demonstrates quite diverse performance. On the one hand, six out of the top ten provinces, province-level municipalities and autonomous regions regarding the proportion of star enterprises are in the central or western regions, namely Yunnan, Qinghai, Ningxia, Shanxi, Sichuan and Xinjiang. On the other hand, Hunan, Guizhou and other regions are the opposite, with relatively poor performance, where no enterprise has been awarded stars enterprises in fair wealth evaluation. Specifically, although there are not a large number of star enterprises in Yunnan, Qinghai, and Ningxia Hui Autonomous Region (7 in Yunnan, 2 in Qinghai, and 2 in Ningxia), due to the limited numbers of listed enterprises in these regions, the proportions of star enterprises in these regions are ranked among the top five nationwide. Among them, Yunnan Province ranks first among all provinces, province-level municipalities and autonomous regions in China with 24% of listed enterprises being awarded star enterprises. The star enterprises in these three regions are all run by the central or local government. Taking advantage of local natural resources, these enterprises engage in the exploitation of mineral resources or the production of raw materials, and have fulfilled their social responsibilities as an important pillar of local industry. In addition, there are five star enterprises newly included in Sichuan, which becomes one of the provinces with the fastest growth in the number of star enterprises. Although there is no great improvement in the number of star enterprises in Henan, the emergence of a three-star enterprise makes Henan the only central-western province with three-star enterprises. In terms of the standard scores, Sichuan, Inner Mongolia, and Tibet have the outstanding performance, with more than 60% of the aspect scores higher than the national average. Enterprises in Sichuan Province have balanced performance in all aspects, with fairly excellent performance in two aspects of Charity and Philanthropy and Training and Education. In Inner Mongolia, enterprises are excellent in

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15 years 5-10 years 10-15 years 15 years

10-15 years

5-10 years

15 years 5-10 years 80) in internal rating while no supplier is below 60 (Chart 4.25). It is worth mentioning that BOE also stresses various indicators such as employee localization (its TTL average localization rate reaches 83%), proportion of women in management and employees, parental leave, gender ratio on basic salary and remuneration, which fully reflect its attention to gender equality (Charts 4.26 and 4.27).

Upward Mobility

Cherished Commons 6 5 4 3 2 1 0

Protected Weak

Welcomed Strangers

Essential Ethics

Well-rounded Adults 2019

Chart 4.24 Scores on different dimensions of BOE

2018

52

4 Analyses of Fair Wealth Evaluation Results

Perspective

2018 customer satisfaction rate

Product quality

91%

Customer problems Abrupt quality problem

Improvement measures Set up specific groups to quickly

analyze

the

problems and ensure that it is fixed before mass production Technique and innovation

92%

Some

new

products

quality are not stable at

Research for improvement of techniques

the beginning of mass production Service idea

95%

/

/

Price and supply

91%

Some products delivery

Improve internal quality

are affected by internal

and

quality test results

customers in advance

/

/

Hazardous materials

96%

Average satisfaction rate

contact

with

93%

Chart 4.25 BOE customer satisfaction distribution and supplier environmental impact evaluation

Beijing Hefei

Suzhou

Gu’an

Chengdu Chongqing Erdos Kunming Mianyang Shanghai Shenzhen Wuhan Fuqing Heyuan

Chart 4.26 BOE employee geographical distribution

TW

HK

Overseas

4.2 Selected Cases of Excellent Enterprises parental leave

Male

Female

Parental leave number

2018

1792

1291

Resumption number

1610

1105

Resumption rate

89.84%

85.59%

53

Chart 4.27 BOE 2018 parental leave and resumption rate

4.2.4 TCL Technology Group Corporation Compared with last year, TCL Technology Group Corporation (TCL hereafter) has made remarkable progress in all dimensions except Welcomed Strangers, rising from two-star to three-star this year (Charts 4.28). Having transformed from a home appliance company to a technology company, TCL pays much attention to the protection of intellectual property as well as scientific and technological innovations. In 2018, TCL established an intellectual property operation company to help the group and other Chinese enterprises cope with international risks related to intellectual property, which received the support from the Shenzhen municipal government. With regard to talent reserve and training, TCL actively recruit the talents directly from domestic and overseas universities. It has started Eagle Eye Plan since May 2018, which focuses on overseas university recruitment and training. TCL also carries out industry-university cooperation to build high-tech talent training bases. Related to environmental protection and energy saving, TCL has undertaken the responsibility of recycling home appliances, by establishing a recycling company for Cherished Commons 6 5 4 Upward Mobility

3

Welcomed Strangers

2 1 0

Essential Ethics

Protected Weak

Well-rounded Adults

Chart 4.28 Scores on different dimensions of TCL

2019

2018

54

4 Analyses of Fair Wealth Evaluation Results

waste home appliances. It also created a unique circular economy model. In 2018, TCL started to explore the Internet + recycling business model called “Shifendaojia” (Arrive at your door in 10 min), utilizing its after-sale service networks in the whole country to recycle digital products via online booking services and it turned out to work well.

4.2.5 BYD Company Limited BYD Company Limited (BYD hereafter) has also made major improvements in all dimensions this year, with its evaluation raised from two-star to three-star (Chart 4.29). As an automobile company that has shown excellent performance in the field of new energy vehicles in recent years, BYD is now positioning itself as a high-tech enterprise. Referring to BYD’s CSR report, compliance, intellectual property protection, anti-corruption and integrity education have been the most important contents at the beginning of report; it also introduced extensively efforts about green operation, green production and green products. These all reflect BYD’s CSR strategy. It is also noteworthy that education is the most essential theme in BYD’s various activities about charity and poverty alleviation. BYD has a program called “Fulfill Your Dream Action” which was started in 2011, aiming to help poor senior high school students to achieve proper education. In 2018 the program has elevated to a more comprehensive system including 3 sectors: funding more poor students, improving teaching facilities (like one person one desk) and scholarship (Zhongnan University Scholarship, SUSTECH Scholarship and Gejiu High School Scholarship). In 2018, BYD has invested 10.3723 million RMB in educational poverty alleviation. Apart from the “Fulfill Your Dream Action” mentioned above, BYD also starts Cherished Commons 5 4 Upward Mobility

3

Welcomed Strangers

2 1 0

Protected Weak

Essential Ethics

2019 Well-rounded Adults

Chart 4.29 Scores on different dimensions of BYD

2018

4.2 Selected Cases of Excellent Enterprises

55

different educational programs in different districts and invites students from distant areas to experience BYD factories and technologies.

4.2.6 Chengdu Kanghong Pharmaceutical Group Co., Ltd. Chengdu Kanghong Pharmaceutical Group Co., Ltd (Kanghong Pharmaceutical in short) released its first CSR report this year, and it becomes a three-star enterprise with excellent performance. It exhibits advantages in dimensions of Cherished Commons, Upward Mobility and Welcomed Strangers, but the company has an apparent weakness in the dimension of Essential Ethics (Chart 4.30). Quality control is essential for a pharmaceutical company. With reference to the international advanced quality management system, Kanghong Pharmaceutical has developed a quality system higher than China’s requirements. Assuming quality responsibility, it carried out specific and rigorous specifications throughout the processes of research and development, production and logistics, and piloted the Marketing Authorization Holder (MAH) system. For the investments in safety and environmental protection, Kanghong Pharmaceutical also specifies the proportions of different subsidiaries’ investment (Chart 4.31). Regarding charity engagement, Kanghong Pharmaceutical organized a number of charity activities with its own characteristics, such as free clinic of eye examination, knowledge sharing and medicine donations, which gives full play to its advantages in the healthcare industry. Cherished Commons 5 4 Upward Mobility

3

Welcomed Strangers

2 1 0

Protected Weak

Essential Ethics

Well-rounded Adults

Chart 4.30 Scores on different dimensions of Kanghong Pharmaceutical

37.37 58.63

Safety expenditure

Environmental protection

350.45

52.75

Kanghong Bio

137.13

81.32

Jishengtang

208.46

33.18

Hongda Pharma

Chart 4.31 Kanghong Pharmaceutical expenditure in workplace safety and environmental protection

expenditure

Kanghong Pharma

˄unit: ¥10000)

21.44

0.17

Kanghong Zhiyao

56 4 Analyses of Fair Wealth Evaluation Results

4.2 Selected Cases of Excellent Enterprises

57

4.2.7 Zhengzhou Coal Mining Machinery (Group) Co., Ltd. Zhengzhou Coal Mining Machinery (Group) Co., Ltd. (ZMJ hereafter) has balanced scores, with improvements in all dimensions except Essential Ethics compared to in the last year. Therefore, its evaluation is upgraded from two-star to three-star this year. However, it is worth noting that ZMJ shows poorer performance in the aspect of Protected Weak than other star enterprises (Chart 4.32). Regarding the specific indicators, ZMJ has good disclosure on quality control, pollution emission, energy-saving production, career development and safety and health education. All of its main subsidiaries have achieved the OHSAS19001 accreditation on the occupational safety and health management system (Chart 4.33). Cherished Commons 5 4 Upward Mobility

3

Welcomed Strangers

2 1 0

Protected Weak

Essential Ethics

Well-rounded Adults 2019

2018

Chart 4.32 Scores on different dimensions of ZMJ

Energy

2018

2017

Total energy consumption (MWh)

256092.32

217608.38

Electricity

185998.37

174011.20

Natural gas

66595.12

41520.36

Diesel fuel & gasoline

3498.84

2076.82

Million income energy consumption (MWh/ million RMB)

21.34

29.01

Chart 4.33 ZMJ 2017–2018 detailed disclosure on environmental and energy issues

58

4 Analyses of Fair Wealth Evaluation Results Cherished Commons 5 4 Upward Mobility

3

Welcomed Strangers

2 1 0

Protected Weak

Essential Ethics

Well-rounded Adults 2019

2018

Chart 4.34 Scores on different dimensions of GAC

4.2.8 Guangzhou Automobile Group Co., Ltd. Guangzhou Automobile Group Co., Ltd. (GAC hereafter) has upgraded from no star to three-star this year, with obvious improvements in the three dimensions of Upward Mobility, Cherished Commons and Protected Weak while being backward in Well-rounded Adults. GAC has slightly improved its performance in the other two dimensions, but still fails to reach the average level of star enterprises in the aspect of Essential Ethics (Chart 4.34). In terms of specific indicators, GAC has good disclosure for targeted poverty alleviation, patent authorization, pollutant discharge, resource use and employee training. For example, as for gender difference, 82.45% of male workers received training while 17.55% of female workers received training in 2018, but both trained male and female workers achieved same average training time of 40.75 h per person. As for position level difference, normal workers received more training than management and professional staff (Chart 4.35).

4.2.9 CSSC Offshore & Marine Engineering (Group) Co., Ltd. CSSC Offshore & Marine Engineering (Group) Co. Ltd. (COMEC hereafter) also upgrades from two-star last year to three-star this year. In spite of the improvements

4.2 Selected Cases of Excellent Enterprises

59

New authorized patents

New applied patents

Invention patent

155

395

Utility patent

440

552

Design patent

218

265

Chart 4.35 GAC 2018 patent authorization

in most aspects, COMEC has slipped back considerably in the dimension of Essential Ethics (Chart 4.36). As a state-owned shipbuilding enterprise with heavy assets and a long operational cycle, COMEC attaches the greatest importance to business stability. Therefore, COMEC dedicates a substantial part of its CSR report to describing quality control, production safety management and risk control. There was no serious production accidents in 2018 and light injury rate dropped 35.29% compared with 2017. For environmental responsibility, COMEC also provides basic information on emissions and disposal measures of GHG, waste gases, waste water and waste materials (Chart 4.37).

Upward Mobility

Cherished Commons 5 4 3 2 1 0

Protected Weak

Welcomed Strangers

Essential Ethics

Well-rounded Adults

Chart 4.36 Scores on different dimensions of COMEC

2019

2018

60

4 Analyses of Fair Wealth Evaluation Results

COMEC

Solid waste

Liquid waste

2016

2017

2018

Producted

Recycled

Producted

Recycled

Producted

Hazardous

503.96

17.2

368.978

10.65

1890.36

0

Non-hazardous

57205

34243

45780

33400

37725

12787

Hazardous

702.4

496.85

402.884

54

1593.23

201.48

Chart 4.37 COMEC 2016–2018 waste disposal measures (unit: ton)

Recycled

Chapter 5

Other Projects of Fair Wealth

This chapter introduces other projects derived from the fair wealth evaluation system.

5.1 Fair Wealth Investment 5.1.1 Concept of Fair Wealth Investment Fair wealth investment is an investment concept, which uses the performance of enterprises based on fair wealth evaluation system as an important reference for investments.

5.1.1.1

Significance of Fair Wealth Investment

• Fair wealth investment can achieve higher investment returns for investors. For following two reasons, fair wealth investment can enable investors to earn higher return on investment. • Enterprises selected for fair wealth investment have lower investment risks (with respect to laws and regulations, environment, resources, etc.). • Enterprises selected for fair wealth investment have higher development potential. • Fair wealth investments are better aligned with individual values (fairness). Through fair wealth investment, investments are better aligned with investors’ values, and thus can bring spiritual fulfilment in addition to investment returns. • Fair wealth investment can create more fair social benefits and values, and promote fair development of the society.

© Fudan University Press 2021 Fair Wealth Project Group, Fair Wealth Annual Report 2019, https://doi.org/10.1007/978-981-15-7789-5_5

61

62

5 Other Projects of Fair Wealth

Guided by fair wealth investment, well-performed enterprises will be able to attract investments more easily, thereby driving other enterprises to pay attention to the fair wealth as well, and ultimately promoting the social development.

5.1.1.2

Specific Forms of Fair Wealth Investment

We present four specific investment forms based on fair wealth investment: (1) taking fair wealth results as an investment reference factor; (2) using fair wealth results as a mandatory investment criterion; (3) investing according to fair wealth results; and (4) investing with fair wealth index. (1) Investment Reference Investors use fair wealth evaluation data as one of their reference factors when investing. For example: • Refer to the star performance of the enterprises when investing. • Take into account specific performance of the enterprise on one or several dimensions and aspects, along with industry characteristics. (2) Mandatory Investment Criterion Investors use fair wealth evaluation data as a mandatory screening criterion, and the companies not meeting such criterion will not be considered as an investment target. For example: • By setting up the absolute score criteria of aspects/dimensions/total points, any enterprises with a score lower than the criteria will be excluded for investment consideration. • By setting up the relative pass criteria of aspects/dimensions/total points, only enterprises that reach the top few percentages will be invested. (3) Evaluation Results Investment Investment targets focus only on honorary star companies selected by fair wealth evaluation, and investors make investments on that basis. For example: • Select certain star industry/industries to invest based on the fair wealth evaluation results. • Select investment targets among all star enterprises, based on their own investment strategies. (4) Index Investing Investors make index-linked investments based entirely on the fair wealth index.

5.1 Fair Wealth Investment

63

5.1.2 Fair Wealth Index Based on the concept of fair wealth investment, we launch the fair wealth index, hoping that investors and the society can devote attention to and invest in these enterprises with good performance in fair wealth. Through the fair wealth index, the financial market can shift attention to the enterprises that meet the fair wealth evaluation criteria, and promote the overall emphasis on fair development. Also, the index can not only raise public awareness of fair wealth but also guide enterprises to get involved in the process of the fair wealth evaluation and to regulate their own operations and correct the development directions with the concept of fair wealth. In this section, we introduce in detail the compiling method of fair wealth index.

5.1.2.1

Index Base Date and Base Point

The base date of fair wealth index is May 1, 2017, when the fair wealth evaluation was first completed theoretically, and the base index is 1000 points.

5.1.2.2

Sample Selection Method

• Sample frame All companied listed on the main boards as well as the SME board of Shanghai and Shenzhen Stock Exchanges. • Sampling method The stocks in the sample were rated according to fair wealth performance of the corresponding companies in the most recent year, and all honorary star enterprises were selected into the index sample.

5.1.2.3

Periodical Audit of the Index

In principle, the fair wealth index is reviewed once a year, and the sample stocks of the index are adjusted based on the review results. • Audit time In March of each year, the fair wealth project team reviews the sample stocks included in fair wealth index, and the adjustment of sample stock is implemented on the first trading day of May each year. • Audit reference basis When reviewing sample stocks in March every year, the major reference basis is the fair wealth performance of corresponding companies in the previous year.

64

5 Other Projects of Fair Wealth

5.1.2.4

Index Calculation

• Grading To reflect the variation of stock prices of the real float shares in the market, the fair wealth index excludes non-tradable shares in the share capitals of the listed companies as well as the restricted shares and non-free floating shares due to strategic holdings or other reasons from the total shares of listed companies. The remaining shares available for trading shall be deemed as free-float shares. The calculation of fair wealth index uses the category-weighted method adopted from China Securities Index Co. Ltd. (CSI hereafter), in which the index grants certain weighting proportion to the total shares of every stock based on its proportion of free float shares in total shares of the constituent (i.e. free-float ratio), to ensure the index stability. The category-weighted proportions are defined in the table below from CSI: Free-float ratio (%)

≤15

(15, 20]

(20, 30]

(30 40]

(40, 50]

(50, 60]

(60, 70]

(70, 80]

>80

Weighting proportion (%)

To the most adjacent integer

20

30

40

50

60

70

80

100

Free-Float Ratio =

Free Float Total Shares of Constituent

Adjusted Shares = Total Shares of Constituent × Weighting Proportion • Index calculation The fair wealth index is measured in “points” to the second decimal points. Reporting period index = (The adjusted market value of the sample stocks during the reporting period/divisor) * 1000, where the adjusted market value = (share price × adjusted shares). • Index correction In the event of a change in sampled company list, a capital change in the index constituents or constituents’ market value fluctuation due to non-trading factors, fair wealth index is adjusted to ensure continuity. Specifically, the fair wealth index adopts the “Divisor Adjustment Methodology” to adjust the old divisor. • Adjustment formula Adjusted market value before adjustment Adjusted market value after adjustment = old divisor new divisor

5.1 Fair Wealth Investment

65

where: adjusted market value after adjustment = adjusted market value before adjustment + adjust market value increased or decreased. The new divisor from this formula shall be used for the future index calculation. • Circumstances for index adjustment (1) Between two rounds of fair wealth evaluation, fair wealth evaluation adjusts the eligibility of the sample enterprises. (2) Corporate events of sample enterprises that may affect stock price changes or cause stock share changes, such as stock dividend, rationed shares, additional issue etc. The performance of fair wealth index Chart 5.1 shows the index performance for 610 days between May 2, 2017 and October 31, 2019: Line

Index

Change rate (%)

Blue line

Fair wealth index

18.46

Orange line

CSI 300 index

13.00

As shown in the figure above, during the time frame, fair wealth index was still higher than the CSI 300 index, without any crossover or overlap. Compared with CSI Fair wealth index performance 1400 1300 1200 1100 1000 900 800

Fair Wealth

Chart 5.1. Fair wealth index performance

CSI 300

66

5 Other Projects of Fair Wealth

300, fair wealth index has a more stable performance, which proves that enterprises investing in line with the concept of fair wealth can better hedge the risk for investors and enhance investment returns.

5.1.3 Applications of Fair Wealth Index Currently, the main applications of fair wealth index are as follows: Index listing publicly

List fair wealth index in China Securities Index Co., Ltd.

Private equity

Establish a private equity fund based on fair wealth evaluation results

Publicly offered funds

Establish public offering funds that either are based on fair wealth evaluation results or fully track the fair wealth index

5.2 Fair Wealth Data Information Center The fair wealth data information center was officially launched this year. It owns a large amount of data and results of fair wealth evaluation for the past years. All data are available to all enterprises and the public through the database and website (Fig. 5.1). From the perspective of fair wealth and by focusing on listed companies, the data center has built the first database with the theme of fair development of enterprises in China. The data center can play a proactive role in helping enterprises move towards fair wealth, and thus promote fair development and high-quality development in China. Target users of the fair wealth database include:

Fig. 5.1 The home page of fair wealth data information center

5.2 Fair Wealth Data Information Center

67

• Investors: The data can help investors develop their investment decision-making. It can also guide the investments to support the better development of the wellperformed enterprises, which in turn encourages all listed companies to focus on their own behavior and achieve fair development. • Government: The database can help government to have a clearer understanding of the present status, challenges and opportunities of fair development and highquality development, providing strong support and data basis for governmental policy-making and decision-making. • Academic institutions: The database can provide support to academic research that develop fair and high-quality research outcomes. • Employees or job applicants: The database can assist them to select better ssemployers. Similar to investors, job applicants guided by the fair wealth database will give impetus to the development of outstanding enterprises, which in turn promotes the fair and high-quality development of enterprises in the whole society. • Public: It provides a centralized data center that breaks down the barriers of collecting and utilizing such data, helping the public understand every aspect of data other than the financial performance of enterprises. The whole data center encompasses tens of thousands of records for more than 500 listed enterprises accumulated by the fair wealth project in the past four years, as well as the fair wealth evaluation performance of the enterprises, including the evaluation results, scores, data and corporate-related news. It contains the full range of information showing the performance of the enterprises from the perspective of fair wealth. In addition, the website provides a channel and a platform for publishing enterprise information and collecting first-hand information, such as user comments. The whole website is mainly composed of three main pages: search page, enterprise result page and system result page: • Search page: The search page has a standard search engine where users can search for enterprise information by typing the company name, stock code, corporate executives in the search bar. Users can also search non-financial information, as well as the dimensions, aspects and indicators in the fair wealth evaluation system.

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Choose dimensions, aspects, indicators： Essential ethics Well-rounded adult Protected weak Upward mobility

Right: The distribution of the company’s score in all Short-listed Enterprise Fig. 5.2 Enterprise results page

• Enterprise results page: On the results page, there are basic enterprise information, enterprise fair wealth performance and data of enterprises in the fair wealth system. By clicking on the evaluation system, users can see the performance of each dimension, aspect and indicator each year, disclosed figures, corresponding scores, score distribution and news related to the corresponding enterprise and fair wealth system. Furthermore, corresponding enterprise may issue press release through this page, and ordinary users can comment on enterprise performance (Fig. 5.2).

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Cherished Commons Upward Mobility

8 6 4 2 0

Protected Weak

Welcome d… Essential Ethics

Wellrounde…

Left：the company’s Fair Wealth Rating Result for 2019 2018 2017 Right：the company’s performance in each aspect

Dimensions

Aspects

Ranking in the same industry (%)

Rankings in all star-rated companies (%)

Cherished commons

Technological evolution

Top 1

Top 1

Environmental friendly

Top 1

Top 1

Employee protection

Top 1

Top 3

Decent benefits

Top 10

Top 3

Customer first

Top 1

Top 1

Responsible cooperation

Top 5

Top 5

Welcomed strangers

Essential ethics

Local betterment

Top 30

Top 30

Law compliance

Top 15

Top 30 (continued)

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(continued) Dimensions

Aspects

Ranking in the same industry (%)

Rankings in all star-rated companies (%)

Business ethics

Top 20

Top 15

Well-rounded adult

Sufficient education

Top 30

Top 45

Lead into society

Bottom 75

Top 75

Charity and philanthropy

Top 1

Top 5

Equal opportunities

Top 20

Top 20

Room to grow

Top 20

Top 15

Training and education

Top 1

Top 3

Protected weak

Upward mobility

• System results page The system result page explains the dimensions, aspects and indicators of the fair wealth evaluation system, and shows the evaluation performance in recent years, including: average score, enterprises with better information disclosure, frequently disclosed data and relevant news (Fig. 5.3). In the future, the fair wealth data center will continue its development and growth along with the fair wealth project. The center will launch an English version in 2020, so that not only relevant performance and data of Chinese enterprises can be exposed to global audience, but also Chinese enterprises can learn from outstanding global businesses to further improve their own performance. Simultaneously, although it is named fair wealth data information center, it will take full advantage of its platform attributes by integrating third-party data in addition to fair wealth data collection, so that it can become the center of integration, exchange and communication for non-financial data of Chinese enterprises (related to sustainable development, ESG and CSR).

5.3 Unlisted Enterprise Fair Wealth Evaluation The listed companies are a vital part of China’s business environment, comprising 71.18% of China’s GDP in 2017 according to the data from the World Bank. However, the creation and operation of social wealth cannot succeed without various unlisted enterprises. Different from the listed companies, unlisted enterprises may have characteristics such as chaotic management, unclear allocation of departmental duties, poor communication inside the enterprise, low information transparency, and lack of information

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Choose dimension, aspects, indicators: Cherished Commons technological evolution environmental friendly

Welcomed strangers Essential ethics Well-rounded adult Protected weak Upward mobility

Right:

Fosun Pharma score 7.26

Average score of the Chosen dimensions, aspects or indicators Top ten Company of the Chosen dimensions, aspects or indicators： Fig. 5.3 System results page

disclosure. Based on these characteristics, fair wealth evaluation for unlisted enterprises collects data through training, questionnaires and interviews, and then analyzes data to provide targeted assessment reports for enterprises. With the fair wealth evaluation report, enterprises can examine their current operation, management and enterprise structure from an alternative perspective, to promote and help enterprises in the direction of fair wealth, so that they can make continuous progress and even grow into global leading enterprises. Also, fair wealth evaluation of unlisted enterprises can supplement the fair wealth project with richer data and information to understand the present status of fair wealth of Chinese enterprises other than listed ones. At present, the evaluation is mainly implemented by selecting and inviting representative companies from various industries to participate. Along with the growing influence of the fair wealth project as well as the human resource expansion of our project team, there will be open channels for enterprises to actively apply for the evaluation.

Chapter 6

Fair Wealth Theory and Methodology

The core basis of fair wealth is the fair wealth evaluation system for enterprises. Compared with other similar evaluation systems, such as Dow Jones Sustainability Index—DJSI Corporate Sustainability Assessment, a distinctive feature of fair wealth evaluation is its clear and unique theoretical foundation, which emerges from individuals’ intraperson games and needs, then moves gradually towards the societal level and is implemented in the commercial field finally. This theoretical system involves four interrelated but independent parts: enlightened needs (ENs), fair development, fair wealth and its six dimensions. This chapter introduces the relevant theory and methods for fair wealth evaluation system and its projects.

6.1 Theoretical Foundation 6.1.1 Enlightened Needs Enlightened needs (ENs), which are called “bubbles” in The Bubble Theory (Ding 2013), refer to human-specific needs that go beyond survival and procreation, such as supporting children education in poor areas and attending to the world and equality. Different from the primitive needs presented in other animals, ENs originate from human desires for knowledge and the understanding of their own roles in the world. With the growth of knowledge, the change of the environment and the dissemination of information, humans perceive different needs and develop the ability to consider issues beyond survival and procreation. In such an “enlightening” process, there are more and more ENs with increasingly bigger scope and higher importance, which can be visualized as a bubbling up process. For example, individuals only care about their own safety at the initial stage, but driven by the enlightening process, individuals will gradually pay attention to their family and friends with the hope that they will live in a life with the same quality. Gradually, humans may pay attention to other people, such as helping people we have never met and hoping African children to © Fudan University Press 2021 Fair Wealth Project Group, Fair Wealth Annual Report 2019, https://doi.org/10.1007/978-981-15-7789-5_6

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grow up as healthily as their own ones. Humans may have ENs at the more macro level, by focusing on the continuity and development of all human beings, such as hoping for world peace. ENs are heterogeneous, as each individual can have different kinds of ENs and allocate resources according to their own needs. It is a neutral concept, which can either be the needs that are not beneficial to the social environment, such as treating guests using high-priced shark fin to show respect, or be socially beneficial needs, such as putting an end to eating shark fin, and reducing the killing of sharks and the waste of resources. No matter what kind of nature they have, ENs will determine the behavior of a person, a group or the society, and thus these “bubbles” should not be ignored. They can reflect changes in needs and the transition of the society, and they would influence the future trend as well. ENs can be divided into two categories. The first category is individual wishes, which refer to the ENs of individuals or a small number of people, such as vegetarianism; the second one is related to the public morality, which refers to ENs shared by most people in society. The former can be transformed into the latter. Take dining etiquette as an example, as a way of hospitality, people used to order as many dishes as possible for quite a long time in the past. At that time, the habit of frugality that a limited number of people had was only one of the wish-type ENs. But now, actions against extravagance and waste have become a social custom, which demonstrates that the wish-type of ENs in the fringe has been transformed into the public morality type of ENs in the mainstream.

6.1.2 Fair Development ENs are extensive and heterogeneous. When a large number of individuals have similar and strong ENs, these ENs will converge into human development principals (HDPs), such as sustainable development and fair development. Fair development is a concept of human development based on ENs of many individuals, and it is similar to but different from the concept of sustainable development. Fair development is one of the most suitable HDPs at the current stage. Taking fairness as the core development element, this theory is people-centered and encourages different groups and countries to adopt the internal and external definition of fairness appropriate for themselves, on which they can establish specific development plans. If the development is fair, it will also be sustainable. Fair development is defined as human development that strives to ensure distributive, procedural, and restorative fairness related to opportunities, resources, and outputs, for any entity X that either exists now or will exist Y years from now (Ding 2013).

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6.1.3 Core Elements • Human development • Non-living environment • Non-human life Among them, non-living environment and non-human life are two pillars of fair development, with human development sitting on top of them as not only the core object of fair development but also the overarching reason for the existence of the two pillars. Although human development is inseparable from the other two pillars, we should not care about them from the ethical and moral perspective. Fair development advocates responsible use of resources, rather than simply emphasizing environment protection only.

6.1.3.1

The Substance of Fairness

• Opportunities • Resources • Output Opportunities, resources and outputs are the intuitive and clear substance of fairness. It is worth noting that the fairness on opportunities and resources should be considered not only among people with different identities, but also among people in different periods. In fact, this intergenerational fairness can also be understood as the embodiment of sustainable development, where sustainable development is one aspect of fair development.

6.1.3.2

Types of Fairness

• Equality-based • Equity-based • Needs-based Equality means that development opportunities, resources and outputs are equally distributed among X. Equity is when resources and opportunities are equally distributed while the outputs are distributed based on the contribution of X. The least used type of fairness is needs-based, when the resources, opportunities, and outputs are allocated based on the needs of X. These three types of fairness are clear, and they are often used jointly in practice. For example, for employee training, the company will generally not only consider the employee’s contribution as well as the needs of future career development, but also ensure that every employee will receive basic training.

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6.1.3.3

Forms of Fairness

• Distributive fairness • Procedural fairness • Restorative fairness. Distributive fairness means that any X should receive a fair share of the opportunities, resources and output of human development. Procedural fairness refers to the fact that opportunities, resources and outputs of human development are allocated to any X using an unbiased method. Restorative fairness means that any X should hold responsibilities to restore the damage it has caused to the world during its development.

6.1.3.4

Fair Choice

Fair development has different options in the object, type and form of fairness. In this regard, a very important principle of fair development is that different entities should be allowed to decide what kind of fair development should be, by making their own choices according to their own situation and the problems to be solved. For example, the optimal solution for the fair development of Chinese society will not necessarily be the same as that of the United States. This reflects not only the fact that the development of fairness is formed by the convergence of the ENs from different individuals, but also the requirement of the fairness concept.

6.1.4 Fair Wealth A man attains his monetary aspirations through honorable means, uses it with virtue and passes it with sincerity.

As a HDP, fair development should be applied in all fields of human society. The application of fair development in the business field leads to the concept and principle of fair wealth. Fair wealth is defined as wealth created by commercial activities that are perceived to be fair to all entities: humans, animals and the environment in general (Ding 2015). As an application of fair development in the commercial field, “fairness” in the definition of fair wealth inherits the diversity of the objects, types and forms of fairness in the fairness development. Therefore, the principle of fair choice is also applicable in the concept of fair wealth. This means that the specific evaluation criteria for enterprises to obtain fair wealth must match the social environment where they

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are as well as their degree of development, and thus the criteria are jointly determined by the whole society involved in the operation of the enterprises. The concept of fair wealth can be summarized as: A man attains his monetary aspirations through honorable means, uses it with virtue and passes it with sincerity. The concept above contains three layers of connotation. First, this concept reflects the attitude of fair wealth theory towards wealth. There is nothing wrong for humans to “attain their monetary aspirations”, and fair wealth encourages and affirms the pursuit of wealth. The pursuit of wealth is the core mission of any enterprise, which is not only responsible to investors, but also the main way for enterprises to realize their own value. Commercial society is composed of enterprises, and the wealth of enterprises is also the wealth of society. Second, human pursuit of wealth should not be wanton or blind, but should meet the two requirements of (obtaining wealth) “through honorable means” and “using it with virtue”. How to obtain and use wealth is the core of measuring the fair wealth of enterprises. The common bottom line of these two aspects is compliance with laws and regulations. Legality is the basic requirement of “means” and “virtue”, and is a necessary condition for enterprises to obtain fair wealth. On this basis, obtaining wealth “through honorable means” encourages enterprises to follow the right path and be responsible to others, society and the environment, rather than being just concerned about the private gains and losses. “Using it with virtue” requires enterprises to take into account the social morality and responsibility when using wealth. Finally, “pass(ing) it with sincerity” embodies the realm of “doing whatever you want without breaking the rule”. On one hand, it advocates the realm that can be achieved by fair wealth owners in the distribution and inheritance of wealth; on the other hand, it emphasizes that the society should respect fair wealth and its owners and Emphasizes that they hold inviolable rights in wealth inheritance and accumulation. After nearly 40 years of rapid development since the reform and opening up, China’s economic and social development has reached a new height. Facing the future, social, cultural, institutional and other aspects are facing major transformation, among which the economic transformation has a key impact and the transformation of commercial society and enterprises is of the core significance. In the current situation, if enterprises want to achieve everlasting business, they need to enhance the realm of pursuing wealth, take fair development as a higher goal, and realize the enterprise value by pursuing fair wealth, so that they can promote social progress and implement the ultimate mission of entrepreneurs and enterprise development.

6.1.5 Six Dimensions Fair wealth has rich connotation and denotation. Based on the principle of fair development and its complete embodiment in the commercial field, and the relevant theories in management, economics, and sociology, this report defines six dimensions to demonstrate the fairness of corporate wealth.

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Furthermore, the development of the six dimensions of fair wealth is based on extensive and in-depth research. The research includes not only in-depth access to primary data (interviews, questionnaires, group discussions, etc.), but also a wide range of secondary data (books, news, social media, etc.). Based on these data, we adopted grounded theory (Glaser and Strauss 1967) method for data extraction and summary, and finally derived six dimensions: Cherished Commons, Welcomed Strangers, Essential Ethics, Well-rounded Adults, Protected Weak, and Upward Mobility. Different from the traditional theories of sustainable development and CSR, which are developed based on three dimensions of economy, society and environment, the development of basic dimensions of fair wealth can reflect the public’s understanding of fair development and their own ENs in a more direct way. Compared with the traditional concepts, these six dimensions put more emphasis on human beings and the pursuit of fairness. As the core and basis of fair wealth assessment, these six dimensions provide a profound perspective for fair wealth assessment, and are the direct embodiment of the two principles of “(obtaining wealth) through honorable means” and “using it with virtue” in the concept of fair wealth. They also reflect the different choices and value judgments for fairness in the society. Different societies, at different levels of development and environments, have different understandings and choices for fairness, and this process is reflected in the six dimensions of fair wealth. The definitions and contents of the six dimensions are described in detail in Sect. 6.3.3.

6.2 Fair Wealth Assessment Framework Fair wealth evaluation mainly includes two items, which are fair wealth rating for enterprises and fair wealth evaluation for non-listed enterprises, based on the same set of evaluation system. Following this system, the fair wealth score of the enterprise is obtained by evaluating the collected enterprise information (from public or non-public channels). With the score, enterprises are rated based on the established rating standard and then the rating results are released to the public. The fair wealth evaluation for non-listed enterprises carries on analyses based on the score, generates analysis report, and provides enterprises comments and suggestions on the direction towards fair wealth (Chart 6.1).

6.3 Fair Wealth Evaluation System of Enterprises This section further elaborates the fair wealth evaluation system, and the process and methods of transforming enterprise disclosure information into enterprise fair wealth score.

6.3 Fair Wealth Evaluation System of Enterprises

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Chart 6.1. Fair wealth assessment framework

6.3.1 Fair Wealth Evaluation Framework Fair wealth is the application of fair development in the commercial field, and advocates the concept that “a man attains his monetary aspirations through honorable means, uses it with virtue and passes it with sincerity”. The fair wealth evaluation system is not only the implementation of this wealth concept in the actual operation of the enterprise, but also the demonstration of different ways of achieving fairness. Compared with sustainable development, the fair wealth evaluation system pays attention to intra-generational fairness as well as the intergenerational fairness (Table 6.1).

80 Table 6.1 Fair wealth evaluation framework

6 Fair Wealth Theory and Methodology Philosophy

Dimensions

Aspects

君子爱财

Financially healthy

取之有道

Essential ethics Compliance and integrity

Form of fairness

Procedural

Business ethics Procedural Cherished commons

Welcomed strangers

用之以德

Well-rounded adults

Upward mobility

Environment friendly

Distributive

Technology evolution

Restorative

Employee protection

Distributive

Decent benefits

Distributive

Customer first

Distributive

Responsible cooperation

Distributive

Local betterment

Distributive

Sufficient education

Procedural

Lead into society

Procedural

Room to grow

Procedural

Education and training

Distributive

Protected weak Charity and Philanthropy Equal opportunities

Distributive Procedural

6.3.2 An Overview of Fair Wealth Evaluation System The fair wealth evaluation system evaluates enterprises through a four-layer framework, including the framework itself, dimension, the aspects, indicators and the items, based on which the final score of each enterprise is obtained (Table 6.2). The dimension layer is the outcome of combining the fair wealth theory with Chinese social practice (see Sect. 6.3.3 for the details of “six dimensions”). Below the dimension layer is the layer of aspects. The aspect layer is the combination of all aspects of enterprise operation and the fair wealth theory, and is also the concrete implementation of the six dimensions from the perspective of enterprise operation.

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Table 6.2 Overview of fair wealth evaluation system Layer

Definition

Formation method

Six dimensions

Each of the six dimensions is determined by the aspects below

Formative

Aspects

The score of aspects is determined by each indicator

Formative

Indicators

Indicators can be supported by one or more items

Formative

Items

Specific items related to indicators disclosed by enterprises

Reflective

Next to the aspect layer is the indicator layer, which measures the specific performance of the enterprise in a certain aspect. Finally, as the underlying architecture of the evaluation system, specific items are located at the item layer. These items are the specific information disclosed by enterprises related to the indicators. The following subsections introduce the meaning of each layer, i.e., dimensions, aspects, indicators and items from top to bottom order, and then the calculation of fair wealth score.

6.3.3 Dimensions The six dimensions at the dimension layer are defined as follows:

6.3.3.1

Cherished Commons: Assume Responsibility for Environment and Resources and Promote Technological Progress

The dimension of Cherished Commons requires enterprises to keep the world in mind. Enterprises should hold necessary responsibilities to the society to promote the development of the society. If enterprises only take care of their own interests, they will cause excessive consumption or damage to the environment and society. However, if enterprises take the cherished commons, they can effectively drive for win-win and value creation situation, and change a zero-sum game relationship to a cooperative win-win relationship. This dimension contains two aspects: environmental friendly and technological evolution.

6.3.3.2

Welcomed Strangers: Achieving Win–Win Among All Stakeholders

The dimension of Welcomed Strangers requires enterprises to treat all stakeholders involved in the enterprise operation as if they were “relatives” of the enterprises.

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Enterprises should not impose on others what they do not desire by themselves. They should not be shortsighted in their own interests by harming the interests of their stakeholders. This dimension consists of five aspects: employee protection, decent benefits, customer first, responsible cooperation, and local betterment.

6.3.3.3

Essential Ethics: Abiding by the Bottom Line of the Law

The dimension of Essential Ethics requires enterprises to comply with the law and be proud of their compliance. They should be able to differentiate honor and disgrace, and have the bottom line of behavior. Laws and regulations are the rigid constraints of business operation, and business ethics is the bottom line for doing business. Enterprises should adopt a zero-tolerance attitude towards the behavior that breaks the law and/or violates business ethics. This dimension consists of two aspects: law compliance and business ethics.

6.3.3.4

Well-Rounded Adults: Supporting Education to Help Self-reliance

This dimension of Well-rounded Adults has a strong social feature, but from the perspective of CSR, it should also be accounted for in fair wealth. “Well-rounded Adults” requires individuals should have full opportunities to receive education, cultivate their own ability and explore their own potential before they reach an adult age. In adulthood, they should be able to support themselves and become an independent social entity. Although enterprises are not always involved in this process directly, all enterprises have responsibilities to strive to create conditions for developing this dimension. This dimension consists of two aspects: sufficient education and lead into society.

6.3.3.5

Protected Weak: Respecting for and Helping Vulnerable Groups Without Discrimination

Protected Weak has two requirements. First, it requires all people to live in dignity, and their basic material and spiritual needs should be met, with examples of eliminating poverty and bridging the digital divide. Second, Protected Weak also requires the elimination of weaknesses in addition to those determined by birth. In other words, individuals with inherent disadvantages should not be treated unfairly in their non-vulnerable areas. For example, enterprises should not reduce the mental work opportunities for employees with the physical disability. This dimension includes two aspects: charity and philanthropy and equal opportunities.

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6.3.3.6

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Upward Mobility: Enabling Employee Career Development

The dimension of Upward Mobility means that enterprises should try their best to provide personal development opportunities for their employees, so that each of them has a chance to be successful in their careers. Under the premise of impartiality, fairness and openness, enterprises should not intentionally restrict the personal development of employees. In addition, this dimension should not be understood as upward mobility within the enterprise only. Instead, the enterprises should stand on a higher level for the employee growth, to help and support the life and career planning of their employees. This dimension includes two aspects: room to grow, and training and education.

6.3.4 Aspects This layer lies between the dimension layer and the indicator layer, with a total of 15 aspects, which are described as follows.

6.3.4.1

Cherished Commons—Technological Evolution

The aspect of technological evolution mainly measures the contribution of enterprises to the technological evolution of human society and science. Although the motivation of this contribution mainly comes from the potentially huge commercial benefits, technological evolution actually is one of the core driving factors of social development. Therefore, enterprises should take sufficient responsibility and make their contributions.

6.3.4.2

Cherished Commons—Environmental Friendly

The aspect of environmental friendly mainly consists of a series of indicators closely related to the environment, covering resource consumption, pollution emission, regulation violation, investment and so on.

6.3.4.3

Welcomed Strangers—Employee Protection

The aspect of employee protection mainly measures the performance of enterprises in protecting the basic rights and interests of employees, related to health, safety and so on. It should be noted that this aspect does not include compensation and benefits. Compensation and benefits, as the remuneration paid by enterprises to employees, is measured solely in the next aspect.

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6 Fair Wealth Theory and Methodology

Welcomed Strangers—Decent Benefits

The aspect of decent benefits not only includes the guarantee of the minimum salary and the timely payment of salary, but also takes into account the relative fairness of the salary distribution among employees at different levels in the same enterprise.

6.3.4.5

Welcomed Strangers—Customer First

Customers are one of the most important stakeholders of the enterprises. Enterprises should not only manage their customer relations from the perspective of making profits from customers, but also enhance the enterprise values by creating values for customers. If the customers are downstream enterprises, managing customer relationship should also reflect the concept of win-win cooperation.

6.3.4.6

Welcomed Strangers—Responsible Cooperation

In today’s society, any enterprise is part of a complex value chain, and thus the enterprises should have the courage to take their own responsibilities in such a value chain. They should maintain a win-win goal with their suppliers and make shared contributions to the whole society.

6.3.4.7

Welcomed Strangers—Local Betterment

The aspect of local betterment reflects the enterprise contributions to the community and society where the enterprise is located. Such contributions can be either direct (such as job creation) or indirect (such as business opportunities for suppliers). These contributions can also be on both purely economic and non-economic (such as the training of local management personnel) sides.

6.3.4.8

Essential Ethics—Law Compliance

Law compliance refers to the enterprise’s compliance with all existing laws and regulations.

6.3.4.9

Essential Ethics—Business Ethics

Business ethics considers the integrity and trustworthiness of the enterprise in cooperation with various stakeholders.

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6.3.4.10

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Well-Rounded Adult—Sufficient Education

The aspect of sufficient education pays attention to whether the enterprise has fulfilled its responsibility to ensure minors to receive necessary and adequate education.

6.3.4.11

Well-Rounded Adult—Lead into Society

The aspect of leading into society refers to the conditions created by enterprises for the growth and self-reliance of adolescents and particularly the support for young adults.

6.3.4.12

Protected Weak—Charity and Philanthropy

This aspect of Protected Weak refers to the behavior of enterprises to use part of their income for charity and philanthropy to improve the situation of vulnerable groups in the whole society.

6.3.4.13

Protected Weak—Equal Opportunities

The other aspect of Protected Weak is to give equal opportunities to the vulnerable groups. Equal opportunities can eventually eliminate the vulnerable groups caused by human beings.

6.3.4.14

Upward Mobility—Room to Grow

Room to grow is the space that the enterprise can give for employees to grow. Enterprises should not discriminate on various factors (such as age and education) to restrict the growth of talents.

6.3.4.15

Upward Mobility—Training and Education

Education and training provided to employees in various ways is an important driving force for the growth of employees. Education and training should include not only the trainings within the enterprise, but also the third-party trainings sponsored by the enterprise for its employees.

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6.3.5 Indicators This section details 86 indicators used in the fair wealth evaluation system. Name of the Indicator: the name and the code of the indicator Indicator Explanation: the definition of the indicator, items possibly included in the indicator, and the value and importance of the indicator for the fair wealth The Indicator Without the First-level Item: Some indicators don’t have specific first-level items (see Sect. 6.3.6 for the definition of first-level item). If they are divided into sub-indicators, there may be countless sub-indicators. Selected sub-indicators may not fully cover the indicator or be inapplicable at all, due to the differences across industries. Therefore, when an indicator does not have the first-level item, but has items at the second and third levels, we use the symbol ▲ to indicate such case in this subsection.

6.3.5.1

Cherished Commons (CC)

• Technology Evolution (TC) R&D investment—capital (CC.TC.1) Indicator explanation Together with CC.TC.2, this indicator can reveal the importance and investment that the enterprise puts into R&D. The item under this indicator is usually the ratio of the total R&D investment to the revenue. Generally, the higher the number, the better the indicator

R&D investment—personnel (CC.TC.2) Indicator explanation

The proportion of R&D personnel can show the attention that the enterprise pays to R&D directly. The typical item under this indicator is the ratio of the number of R&D personnel to that of total employees. Generally, the higher the number, the better the indicator

Number of patents (CC.TC.3) Indicator explanation Patents can directly show the technological capabilities of an enterprise, despite disputes around the patent mechanism. Thus, the number of patents is the most important indicator to evaluate the technological capabilities of an enterprise. The items under this indicator can be the cumulative number of patents obtained by the enterprise, or the incremental number of patents in the current reporting period. Generally, the higher the number, the better the indicator

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Number of high-level technical talents (CC.TC.4) Indicator explanation As the supplement of the proportion of R&D personnel, this indicator can show the quality of R&D personnel more directly, which in an alternative way reveals the attention that the enterprise pays to R&D. The item under this indicator is usually the ratio of the number of high-level technical talents to that of total personnel. The high-level technical talents can either be employees with the doctoral degree, or those who have the top-level titles such as the academicians of the Chinese Academy of Science or Chinese Academy of Engineering. Generally, the higher the number, the better the indicator

• Environmental Friendly (EN) Energy efficiency (CC.EN.1) Indicator explanation This indicator measures the total energy usage of an enterprise. The items of this indicator can be either the ratio of the total energy consumption to the total revenue, or the energy consumption per unit of products. The energy consumption can be either the converted amount of standard coal, or the actual energy consumption of electricity, natural gas or coal. Generally, the lower the number, the better the indicator

Utilization efficiency of water resource (CC.EN.2) Indicator explanation Water resource has been increasingly important. This indicator measures the water utilization of an enterprise. The item under this indicator is the ratio of the total amount of water consumption to the total revenue. The total amount of water consumption should include all of the external water sources, such as surface water, underground water and tap water, but exclude the reused water within the enterprise. Alternatively, the item under this indicator can be the water consumption volume per unit of product. Generally, the lower the number, the better the indicator

Circular utilization of water resource (CC.EN.3) Indicator explanation This indicator measures the water recycling in the production process of an enterprise. The item under this indicator is the ratio of the amount of circularly utilized water by the enterprise to its total amount of water consumption. Generally, the higher the number, the better the indicator

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Discharge of water pollution (CC.EN.4) Indicator explanation This indicator reflects the influence of an enterprise to the local environment, especially the water environment, with regard to the total amount of discharged sewage as well as the specific pollutants and the impacts. It entails the discharge efficiencies of sewage as well as various water pollutants such as ammonia nitride compounds, chemical oxygen demand, and biochemical oxygen demand. The typical item under this indicator is the ratio of the discharged amount of pollutants to the total revenue. Generally, the lower the number, the better the indicator

Material consumption (CC.EN.5) Indicator explanation Tracking the material consumption of the main products of an enterprise can effectively drive the enterprise to enhance its resource utilization efficiency. The typical item under this indicator is the ratio of the consumption of various materials to the revenue, where the name and unit of measure of the main materials should be disclosed by the enterprise. Generally, the lower the number, the better the indicator

Waste discharge efficiency (CC.EN.6) Indicator explanation This indicator focuses on the influence of an enterprise to its local environment. This indicator can be divided into two sub-indicators: the efficiency of ordinary waste discharge and the efficiency of hazardous waste discharge. The item under this indicator is usually the total amount of waste discharge to the revenue. Generally, the lower the number, the better the indicator

Comprehensive utilization of wastes (CC.EN.7) Indicator explanation This indicator focuses on the waste reuse of an enterprise. The higher reuse rate can not only increase its efficiency of material utilization of an enterprise, but also reduce the environment pollution. The item under this indicator is usually the ratio of the amount of reused part and recycled part (excluding recycled energy) in the waste, to the amount of collected waste. Generally, the higher the number, the better the indicator

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Emission of greenhouse gases (CC.EN.8) Indicator explanation

Greenhouse gases (GHGs) are the main reason of the global climate change, and some of the GHGs are air pollutants as well, which should gain wide attention. The item under this indicator is usually the ratio of the amount of GHG emission to the revenue. The amount of GHG emission is defined as the direct emission amount (CO2 equivalent per unit) of GHGs, following the Kyoto Protocol of the United Nations and the GHG Protocol Corporate Accounting and Reporting Standard from World Resource Institute (WRI_ and the World Business Council for Sustainable Development (WBCSD). Generally, the lower the number, the better the indicator

Air pollution emission (CC.EN.9) Indicator explanation As air pollution such as the haze becomes more and more severe, this indicator focuses on the air pollution emission of an enterprise during its production process. The item under this indicator is usually the ratio of the emission amount of various air pollutants of an enterprise to its revenue. Generally, the lower the number, the better the indicator

Utilization of clean energies (CC.EN.10) Indicator explanation The usage of renewable energies can effectively reduce the reliance on fossil fuels and save exhaustible resources. In the environmental perspective, the use of renewable energies is better than fossil fuels regarding their pollution to the environment. The item under this indicator is usually the ratio of renewable energies to the total amount of energy consumption of the enterprise. Generally, the higher the number, the better the indicator

Green products (CC.EN.11) Indicator explanation The green products reveal the attention that an enterprise pays to the environment as well as to consumers. The item under this indicator can be the ratio of green products that the enterprise sells to the total number of products. Generally, the higher the number, the better the indicator

Confirmed violation of environmental laws and regulations (CC.EN.12) Indicator explanation This indicator measures the intensity (including willingness and ability) of an enterprise’s management related to environment, which reflects its concern to the environment. The item under this indicator is usually the ratio of the total amount of penalties (including administrative penalties) due to violating environment-related laws and regulations to the revenue. Generally, the lower the number, the better the indicator

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Soil pollution caused by the enterprise (CC.EN.13) Indicator explanation This indicator measures the soil pollution of an enterprise during its operation, which reflects the attention that the enterprise pays to the soil environment in its production process. The item under this indicator is usually the level and the area size of the soil pollution caused by the enterprise. Generally, the lower the number, the better the indicator

Investment in environmental protection (CC.EN.14) Indicator explanation Within this indicator, the expenditure is mainly the treatment cost for reduce environmental impacts caused by various pollutions such as sewage, waste and pollutants. The investment mainly refers to the fund used to improve the future performance and efficiency of the treatments related to the environment in the preventive perspective. Together with CC.EN.13, this indicator can better show the environmental performance of an enterprise. The item under this indicator is the ratio of the expenditure and investment of the enterprise to its total revenue. Generally, the higher the number, the better the indicator

6.3.5.2

Welcomed Strangers (WS)

• Employee Protection (EP) Average number of working hours per week (WS.EP.1) Indicator explanation Reasonable working intensity is the premise and the basic condition for employees to balance their work and life. The item under this indicator is usually the average of working hours per week among the total personnel. Generally, the lower the number, the better the indicator

Annual paid leave (WS.EP.2) Indicator explanation The annual paid leave should at least conform to the leave regulation of the State Council of China. Going beyond that bottom line is an important way to show the humane operation of an enterprise. The item under this indicator is usually the average of annual paid leave days of the enterprise personnel. Generally, the higher the number, the better the indicator

Employees’ regular physical examination (WS.EP.3) Indicator explanation Regular physical examination is beneficial for employees to improve their health conditions. It not only helps employees to prevent occupational diseases more effectively, but also enables them to manage their health status better. The item under this indicator is usually the coverage rate of annual physical examination and health records for full-time employees. Generally, the higher the number, the better the indicator

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The shortest notice time to inform employees about the major operational changes (WS.EP.4) Indicator explanation This indicator reveals the protection toward employees’ right to be informed about major operational changes of an enterprise. It also reflects the willingness of the enterprise to reduce the impacts of such changes on employees. The item under this indicator is usually the shortest time (in the number of either days or weeks) that the enterprise has publicly promised to inform employees in advance for the major operational changes. Generally, the higher the number, the better the indicator

Production safety (WS.EP.5) Indicator explanation Safe production environment is the protection of employees’ basic rights. The item under this indicator is usually the ratio of the total number of production safety accidents to the number of employees. These accidents can be classified into ordinary, large, major, extraordinary ones according to the national standard, or into the number of recordable accidents and that of the employee-injury accidents. Generally, the lower the number, the better the indicator

Work-related injuries (WS.EP.6) Indicator explanation Safe production environment is the guarantee to employees’ basic rights. The item under this indicator is usually the ratio of the number of work-related injuries to the total amount of the personnel’s working time, which can be calculated as the number of employees multiplied by their average working time. Generally, the lower the number, the better the indicator

Work-related deaths (WS.EP.7) Indicator explanation Safe manufacturing and working environment is the guarantee to employees’ basic rights. The item under this indicator is usually the number of work-related deaths, or the ratio of the number of such deaths to the total amount of the personnel’s working time. Generally, the lower the number, the better the indicator

Control of occupational diseases (WS.EP.8) Indicator explanation

The control of occupational diseases reflects the willingness and ability of managing working environment and caring employees of an enterprise. The item under this indicator is the ratio of the number of occupational diseases to the total amount of the personnel’s working time. Generally, the lower the number, the better the indicator

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Absent working days due to work-related accidents (WS.EP.9) Indicator explanation This indicator measures the severity and the consequences of accidents by using the number of absent working days, which well complements the single frequency indicator of the accident rate. The item under this indicator is usually the ratio of the number of absent working days due to various accidents to the number of working hours. Generally, the lower the number, the better the indicator

Employee turnover (WS.EP.10) Indicator explanation

The employee turnover rate reveals the turnover situation of employees. The item under this indicator is usually the ratio of the number of resigned employees to that of the total personnel. Generally, the lower the number, the better the indicator

Employee satisfaction (WS.EP.11) Indicator explanation This indicator directly reveals employees’ satisfaction with an enterprise. The item under this indicator can be the average rate of employee satisfaction or the points of employee satisfaction. Generally, the higher the number, the better the indicator

Expenditure on production safety (WS.EP.12) Indicator explanation This indicator measures the financial investment of an enterprise in production safety and employee health, including the expenditure of prevention and training. This indicator can reflect the initiative of the enterprise toward dealing with such kind of issues. The item under this indicator is usually the ratio of various expenditure in production safety to the revenue. Generally, the higher the number, the better the indicator

Expenditure on employee subsidy (WS.EP.13) Indicator explanation

This indicator directly reflects the intensity of financial support that an enterprise provides to its employees. The item under this indicator is usually the ratio of the amount of employee subsidy to the revenue. The subsidy can be the subsidy to employees with difficulties, summer and winter allowance, scholarships to employees’ offspring, and so on, but should exclude the money donated by some employees and then distributed to others. Generally, the higher the number, the better the indicator

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• Decent Benefits (BE) Minimum wage guarantee (WS.BE.1) Indicator explanation The ratio of minimum wage guarantee can well reflect the level of protection to compensation and benefits of an enterprise. The item under this indicator is usually the ratio of employees’ minimum wage to the local minimum wage. Enterprise minimum wage is the lowest level of the actual wages that the enterprise pay to its employees offering normal labor during legal working hours. The local minimum wage is regulated by the governments of the corresponding province, autonomous region or province-level municipality. If the enterprise has multiple operating bases, it should disclose the lowest ratio of minimum wage guarantee. Generally, the higher the number, the better the indicator

Distribution of managerial compensation (WS.BE.2) Indicator Explanation This indicator measures the compensation distribution among different levels of employees. The item under this indicator is usually the ratio of the compensation of management personnel to the average wage of the enterprise. The scope of management personnel can be defined by the enterprise itself. Generally, the lower the number, the better the indicator

Distribution of employee compensation (WS.BE.3) Indicator explanation This indicator measures the overall level and the distribution of an enterprise’s compensation and benefits. The item under this indicator is either the Gini Coefficient of the enterprise wage, or the ratio of the average wage to the median wage. The closer to 0 the Gini Coefficient is, or the closer to 1 the ratio of average-to-median wage is, the better

Extra benefits for employees (WS.BE.4) ▲ Indicator explanation

This indicator measures the additional benefits that an enterprise provides for employees apart from basic compensation. The item under this indicator is usually the ratio of the number of employees enjoying extra benefits to that of the total employees. These benefits include various insurances and other benefits except the social security contributions from the enterprise. Generally, the higher the number, the better the indicator

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Delayed payment of wage (WS.BE.5) Indicator explanation Delaying payment of wages severely violates the fairness. This indicator requires the enterprise to prudently deal with the delayed payment of wages. The item under this indicator is usually the ratio of the amount of delayed wage multiplied by the length of delayed period to that of the total wages. Generally, the lower the number, the better the indicator

• Customer First (CS) Customer satisfaction (WS.CS.1) Indicator explanation The customer satisfaction is a direct measure on the level of an enterprise satisfying its customers’ needs. The item under this indicator is usually the results of customer satisfaction survey released by the enterprise. The survey can be conducted by either the enterprise itself or the third party. Generally, the higher the number, the better the indicator

Confirmed incidents of violating laws and regulations concerning products and services (WS.CS.2) Indicator explanation This indicator estimates whether an enterprise operates honestly and promotes their products and services fairly. The item under this indicator is usually the total number of incidents of violating laws and regulations concerning products and services, such as advertisement, promotions, sponsorship. Generally, the lower the number, the better the indicator

Penalty for violating laws and regulations concerning products and services (WS.CS.3) Indicator explanation As a quantifiable figure, the penalty reflects the negative situation of products and services provided by an enterprise, which can better reveal its performance in offering value to customers combined with WS.CS.2. The item under this indicator is usually the ratio of the amount of penalties for violating laws and regulations concerning products and services to the revenue. Generally, the lower the number, the better the indicator

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Confirmed incidents of violating laws and regulations to affect customer health and safety (WS.CS.4) Indicator explanation The health and safety of customers are one of the basic responsibilities of an enterprise, and the failure of fulfilling its responsibility on this aspect would reflect the incompleteness or inefficiency of the enterprise’s internal management system. It is even an unfair and unacceptable behavior if the enterprise intentionally ignores this responsibility for the sake of interests. The item under this indicator is usually the total number of incidents that the enterprise violates relevant laws and regulations to affect the health and safety of customers. The relevant laws and regulations include standards of various industries, safety certificate, and so on. The scope of such incidents is the administrative or legal punishments. Generally, the lower the number, the better the indicator

Total affected number of customer privacy leaking (WS.CS.5) Indicator explanation The client privacy has been an important issue with the development of informatization. The protection of customer privacy is an inevitable duty of the enterprise. The item under this indicator is usually the total number of affected customers in the confirmed customer privacy leaking incidents, which can be found either by other organizations or by the government and its regulatory organizations. Such incidents should be acknowledged and confirmed by the enterprise itself. Generally, the lower the number, the better the indicator

Product recalls due to safety and health reasons (WS.CS.6) Indicator explanation Product recalls are of complicated significance. On the one hand, product recalls reveal serious defects in product quality, which suggest the insufficient managerial ability of an enterprise. On the other hand, the recalls reflect the responsibility that the enterprise takes. The item under this indicator is usually the ratio of the total value of the recalled products due to safety and health reasons to the revenue. If there are multiple recalled products, the enterprise should disclose the recall information of each product. Generally, the lower the number, the better the indicator

Customer complaints (WS.CS.7) Indicator explanation The customer complaint directly reflects the quality of products and services provided by an enterprise. The item under this indicator can be either the ratio of the number of customer complaints to the total number of customers, or ratio of the number of complaints to the number of customer communications. Generally, the lower the number, the better the indicator

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Product and service quality (WS.CS.8) Indicator explanation

This indicator measures the efforts and achievements that an enterprise has made in improving the product and service quality. The item under this indicator should be disclosed by the enterprise according to its industry. For example, the enterprise in the airline industry should disclose the flight punctuality rate, while the enterprise in logistic industry can disclose the cargo accuracy rate. Generally, the higher the number, the better the indicator

Product safety (WS.CS.9) Indicator explanation The health and safety of the customers are one of the basic responsibilities of an enterprise. Corresponding with the total number of incidents affecting the health and safety of customers due to violating relevant laws and regulations, this indicator shows the efforts and achievements that the enterprise has in product safety. Noticeably, the “safety” here includes not only the personal safety of the customers, but also their property safety. The item under this indicator is disclosed by the enterprise according to the industry. For example, the enterprise in banking industry can use the amount that it helps customers to avoid loss, while the enterprise in pipeline transportation can measure the number of on-site inspection. Generally, the higher the number, the better the indicator

• Responsible Cooperation (RC) Long-term management mechanism of suppliers (WS.RC.1) Indicator explanation An enterprise should establish long-term mechanism of supplier audit. For example, by deciding the frequency and depth of the auditing based on the degree of associated interest, the enterprise can not only greatly improve suppliers’ awareness of responsibilities, but also demonstrate its own responsibility. The item under this indicator is usually the rate of the number of suppliers included in the enterprise’s long-term auditing mechanism to the total number of suppliers of the enterprise. Generally, the higher the number, the better the indicator

Long-term management mechanism of distributors and franchisees (WS.RC.2) Indicator explanation Consistent with WS.RC.1, the long-term management mechanism for distributors or franchisees can better improve distributors’ awareness of responsibility. Together with WS.RC.1, this indicator helps an enterprise manage the upstream and downstream actors of its supply chain. The item under this indicator is usually the ratio of the number of distributors or franchisees included in the enterprise’s long-term auditing mechanism to the total number of distributors or franchisees. Generally, the higher the number, the better the indicator

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On-site supplier audit (WS.RC.3) Indicator explanation On-site audit is one of the most effective ways for an enterprise to conduct auditing. Although the on-site audit requires a lot of human and material resources, necessary on-site audits should be conducted by the enterprise according to various factors such as risk, associated interest. The item under this indicator is usually the ratio of the number of on-site supplier audits that the enterprise has conducted in the past year to the total procurement value of the enterprise. Generally, the higher the ratio is, the better the indicator

Supplier compliance (WS.RC.4) Indicator explanation The supplier compliance is an importance standard for an enterprise to select responsible cooperators. The item under this indicator is usually the ratio of the number of penalized suppliers due to their violations of laws and regulations to the total procurement value of the enterprise. Here the scope of suppliers can come from the supplier directory composed by the enterprise itself, or be those with whom the enterprise has done business in the past year. Generally, the lower the number, the better the indicator

Compliance of distributors/franchisees (WS.RC.5) Indicator explanation The compliance of distributors or franchisees is another important standard for the enterprise to select responsible partners. The item under this indicator is usually the ratio of the number of penalized distributors or franchisees due to their violations of laws and regulations to the total number of distributors or franchisees. Generally, the lower the number, the better the indicator

Supplier satisfaction (WS.RC.6) Indicator explanation To demonstrate the win-win concept, an enterprise should pay sufficient attention to the satisfaction of its suppliers. In addition, supplier satisfaction can reveal the ability of an enterprise to manage its stakeholders. The item under this indicator is usually the score of supplier satisfaction, which can be the data either from the third party or collected by the enterprise itself. Generally, the higher the number, the better the indicator

Training for business partners (WS.RC.7) Indicator explanation Training for business partners not only shows the win-win relationship between an enterprise and its partners, but also the management of its business partners. The item under this indicator is usually the ratio of the total number of training sessions for all partners to of the total number of business partners. Generally, the higher the number, the better the indicator

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• Local Betterment (LB) Local procurement (WS.LB.1) Indicator explanation Local procurement of an enterprise can further promote the economic development of the place where it is located. Although this is an indirect process, it can bring a snowball effect. Such kind of localization should certainly conform to the basic requirement of fairness. The item under this indicator is usually the ratio of the value of localized procurement to the total procurement value. The enterprise can define the level of localization by itself, which can be at the national, provincial or the municipal level. Generally, the higher the number, the better the indicator

Employees localization (WS.LB.2) Indicator explanation Employing local people can effectively promote local prosperity and stability. At the same time, it should also avoid local protectionism to employ local people only. The item under this indicator is usually the ratio of the number of local employees to the total size of employees. The enterprise can define the level of localization by itself, which can be at the national, provincial or the municipal level, and the calculation should be based on the locations of respective operating entities within the enterprise. Generally, the higher the number, the better the indicator

Management team localization (WS.LB.3) Indicator explanation The localization of the management team is an important aspect for an enterprise to demonstrate its the connection with the place where it is located, as well as a way of fostering and promoting local senior management talents. An appropriate proportion of management localization can show the enterprise’ social responsibility, but local protectionism should be cautioned against. The item under this indicator is usually the proportion of the local management team, whose definition and range can be decided by the enterprise itself. The enterprise can define the level of localization by itself, which can be at the national, provincial or the municipal level. Generally, the higher the number, the better the indicator

Corporate tax (WS.LB.4) Indicator explanation Corporate tax is a dominant way for an enterprise to contribute to the local economy as well as the most fundamental and specific indicator to measure such contribution. The item under this indicator is usually the ratio of the total amount of tax that the enterprise pays to the local and national finances to the revenue. Generally, the higher the number, the better the indicator

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Government subsidy (WS.LB.5) Indicator explanation The enterprise should obtain revenues by relying more on itself than on the government subsidies. Moreover, reducing governmental subsidies on enterprises can help the government invest more into local development. The item under this indicator is usually the ratio of the amount of government subsidies to the revenue. Generally, the lower the number, the better the indicator

Investment in projects with high social values (WS.LB.6) Indicator explanation As the name implies, high social value projects are the projects with extremely high values in social attributes. Although an enterprise can gain profits from these projects, such projects can benefit the social progress and development. The item under this indicator is usually the ratio of the amount of investments in various high social value projects to the enterprise revenue. These projects generally refer to ones related to education, community services, healthcare, etc. Generally, the higher the number, the better the indicator

6.3.5.3

Essential Ethics (EE)

• Law Compliance (CL) The number of confirmed corruption and commercial bribery cases (EE.CL.1) Indicator explanation

The disclosure of the involved cases of corruption and commercial bribery demonstrates an enterprise’s ability and willingness to keep fairness and law compliance. Furthermore, since corruption and bribery are related to at least another party outside of the enterprise, corruption and bribery also mirror the overall situation of the whole society. Therefore, the efforts of the enterprise on this aspect can improve the business eco-system in the society. The item under this indicator is usually the total number of corruption and commercial bribery cases, based on the verdicts from the judiciaries. Generally, the lower the number, the better the indicator

The number of confirmed cases of infringing intellectual property rights (EE.CL.2) Indicator explanation Protecting intellectual property is an important way to maintain the societal innovation ability. An enterprise should strictly obey to laws and regulations related to intellectual property. The item under this indicator is usually the total number of cases of infringing Intellectual Property including patents, works and copyrights etc., based on the confirmed cases by the judiciaries. Generally, the lower the item is, the better the indicator

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Penalty for violating laws and regulations (EE.CL.3) Indicator explanation The value of penalties, along with the quantities of legal cases, can reflect the severity of violating various laws and regulations of an enterprise. The item under this indicator is usually the ratio of the total value of the penalties due to violating various laws and regulations to the revenue. The penalties consist of administrative penalties and compensation of various legal cases. Generally, the lower the number, the better the indicator

The number of confirmed cases of violating anti-trust law or unfair competition (EE.CL.4) Indicator explanation Monopoly violates the market principles and consumers’ rights of fair transactions and choices. An enterprise should obey relative laws strictly. The item under this indicator is usually the total value of penalties due to violating the anti-trust law and having unfair competition, based on the confirmation from the judiciaries. Generally, the lower the number, the better the indicator

• Business Ethics (EI) Coverage rate of employees to sign the compliance terms (EE.EI.1) Indicator explanation Legal compliance awareness of employees is not only an effective way for an enterprise to implement legal compliance, but also an effective approach to improve the quality of employees. By signing the compliance terms, employees can strengthen their awareness and understanding about the compliance details, such as commercial bribery, sexual harassment and unfair competition. The item under this indicator is usually the coverage rate of employees who signed to agree with the compliance terms of the enterprise. The compliance terms usually consist of employee’s code of conduct, business operation principles and general enterprise principles. Generally, the higher the number, the better the indicator

Anti-corruption (anti-commercial bribery) preventive measures for employees (EE.EI.2) Indicator explanation Corresponding with EE.CL.1, this indicator mainly reflects the efforts of an enterprise on anti-corruption that anti-commercial bribery. The item under this indicator can be the ratio of the number of employees participating in anti-corruption training to the total number of employees. Generally, the higher the number, the better the indicator

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Contract execution rate (EE.EI.3) Indicator explanation Contract execution reflects not only the integrity of an enterprise, but also its execution and management abilities. The item under this indicator is usually the execution rate of the enterprise’s economic contracts. Contract execution should be defined based on the agreement made in the contract signed by both parties. Generally, the higher the number, the better the indicator

Preventive measures for employee compliance (EE.EI.4) Indicator explanation Employee compliance is an effective way for an enterprise to implement legal compliance. Corresponding with EE.CL.3, this indicator shows the efforts of the enterprise to drive employees to comply with the laws and regulations. The item under this indicator can be the ratio of the number of employees participating in compliance training to the total number of employees. Generally, the higher the number, the better the indicator

6.3.5.4

Well-Rounded Adults (WA)

• Sufficient Education (SE) Percentage of employees completing compulsory education (WA.SE.1) Indicator explanation By focusing on the percentage of employees without completing the nine-year compulsory education and reducing the willingness of an enterprise to recruit these employees, we can decrease minors’ motivation to drop out from the school on the demand side. The item under this indicator is usually the percentage that employees completing compulsory education to the total number of employees in an enterprise. Generally, the higher the number, the better the indicator

Percentage of employees with bachelor or higher degrees (WA.SE.2) Indicator explanation

By focusing on the percentage of employees with bachelor or higher degrees and raising the willingness of an enterprise to recruit these employees, we can enhance minors’ study motivations on the demand side. The item under this indicator is the ratio of employees with bachelor or higher degrees to the total number of employees. Generally, the higher the number, the better the indicator

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Percentage of education-related donation (WA.SE.3) Indicator explanation Donation for education-related projects is the most direct support from an enterprise to education. The item under this indicator is usually the ratio of the value of education-related donations from an enterprise to its revenue. Generally, the higher the number, the better the indicator

• Lead into Society (LS) Recruitment of fresh graduates (WA.LS.1) Indicator explanation Recruiting a certain proportion of fresh graduates can demonstrate not only the management of an enterprise, but also the responsibility of the enterprise to guide and help graduates who just step into the society. The item under this indicator is usually the ratio of the number of recruited fresh graduates in one year to the total number of recruited employees in the same year. Generally, the higher the number, the better the indicator

Employment size (WA.LS.2) Indicator explanation Employment is one of the most important aspects for an enterprise to create job opportunities for the society and facilitate individual independence. The item under this indicator is usually the total employment size of an enterprise. The enterprise can use the employment size either at the end of each year or at a specific time point decided by the enterprise itself. Generally, the higher the number, the better the indicator

Provision of internship opportunities (WA.LS.3) Indicator explanation

6.3.5.5

Providing internship opportunities is an important way for an enterprise to help students prepare for entering the society. The item under this indicator is usually the total remuneration for interns in the reporting period of an enterprise. Generally, the higher the number, the better the indicator

Protected Weak (PW)

• Charity and Philanthropy (CP) Enterprise donation for charity (PW.CP.1) Indicator explanation This indicator reflects the enthusiasm of an enterprise on the financial aspect for charity. The item under this indicator is usually the ratio of the total amount of an enterprise’s social donation to its revenue. Generally, the higher the number, the better the indicator

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Individual donation for charity from enterprise management team members (PW.CP.2) Indicator explanation Apart from the donation for charity from the enterprise, the individual donation from the management team members also reflects the attention that the corporate culture pays to charity. The item under this indicator is usually the ratio of the total amount of individual donation for charity from the management team members of an enterprise to its revenue. Generally, the higher the number, the better the indicator

Enterprise expenditure on alleviating poverty (PW.CP.3) Indicator explanation

The donation for poverty alleviation may not make direction contributions to the local region, but it can certainly contribute to the economic development of poor regions. The item under this indicator is usually the ratio of enterprise donation for poverty alleviation to its revenue. Generally, the higher the number, the better the indicator

Employee involvement in charity and voluntary activities (PW.CP.4) Indicator explanation In addition to the financial resource, another vital social resource of an enterprise is to a large number of employees with professional skills and knowledge. To allow or encourage employees to contribute their abilities to the society for free is an essential way to support charity. The item under this indicator is usually the ratio of the number of total times that an enterprise’s employees voluntarily or are organized to participate in various voluntary and charity activities to the total number of employees. Generally, the higher the number, the better the indicator

• Equal Opportunities (EO) Gender equality for employment (PW.EO.1) Indicator explanation An appropriate proportion of female employees is the main reflection of gender equality. The item under this indicator is the ratio of the number of female employees to the total number of employees. Generally, the closer to 50% the item is, the better

Gender equality for income (PW.EO.2) Indicator explanation

Based on sufficient number of employees in an enterprise, the statistical comparison of average salary between male and female employees can show the distribution of job functions and levels by gender within an enterprise. The item under this indicator is usually the ratio of female employees’ average salary to that of the male employees. Generally, the closer to 1 the item is, the better

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Proportion of females in management team (PW.EO.3) Indicator explanation An appropriate proportion of females in the management team can reveal the upward mobility space that an enterprise provides for female employees. The item under this indicator is usually the proportion of female members in the management team. The definition of management team can be decided by the enterprise independently. Generally, the closer to 50% the item is, the better

Employment of disabled people (PW.EO.4) Indicator Explanation This indicator reveals the employment and income of disabled people in the enterprise. The item under this indicator can be either the ratio of the average salary of disabled employees and that of all employees in the same enterprise, or the ratio of the number of disabled employees and the total number of employees of an enterprise. Generally, the higher the number, the better the indicator

6.3.5.6

Upward Mobility (UM)

• Room to Grow (RG) Average age of management team members (UM.RG.1) Indicator explanation Reasonable age of management team members not only reflects their experiences, but also reveals how an enterprise allows its talents to exert their abilities. The item under this indicator is usually the average age of the management team members, where the definition of management team can be decided by the enterprise independently. Generally, the lower the number, the better the indicator

Percentage of internal promotion in the management team (UM.RG.2) Indicator explanation The internal development and promotion for a reasonable percentage of management team members can best demonstrate the upward mobility space in an enterprise. The item under this indicator is usually the percentage of management team members promoted within the company. Here the definition of management team members can be decided by the enterprise independently, and the promotion within the company means that the promoted employee should have worked in the same company before being promoted to the management team. Generally, the higher the number, the better the indicator

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Periodical employee performance and career development review (UM.RG.3) Indicator explanation The review of employees’ performance and revision of their future career development plan can effectively help their growth. Such activities can not only enable them to better understand themselves and clear obstacles for their further growth, but also help the enterprise know more about the capabilities and willingness of employees. The assessment of performance and career development should be bilateral, in which employees can be fully involved and benefit rather than being given simple scores. The item under this indicator is usually the proportion of employees who can participate into the periodical assessment of performance and career development. The assessment frequency can be once or twice a year, but the gap between two assessments should not be longer than one year. Generally, the higher the number, the better the indicator

• Education and Training (ET) Annual employee training hours (UM.ET.1) Indicator explanation

This indicator measures the intensity of employee training that an enterprise provides. The item under this indicator is usually the average number of training hours for all employees. Generally, the higher the number, the better the indicator

Coverage of annual employee training (UM.ET.2) Indicator explanation This indicator measures the scope of employee training that an enterprise provides. The item under this indicator is usually the rate of employees that received training to the total number of employees. Generally, the higher the number, the better the indicator

Annual expenditure on employee training (UM.ET.3) Indicator explanation This indicator measures the quality of employee training that an enterprise provides. The item under this indicator is usually the total cost for employee training divided by the number of employees. The cost should take into account the direct training expense as well as other associated costs, such as the cost of occupying the working hours of top management members to offer employee training. Generally, the higher the number, the better the indicator

6.3.6 Items According to the explanatory power of the item to the indicator, the items are divided into three levels, which are items at the first level, second level and third level. The

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smaller the level, the higher correlation the item has with the indicator, and the stronger explanatory power it has. The detailed data in all items come from public sources. Furthermore, in order to ensure the reliability of data sources, the data obtained through public channels will be sent to the enterprise in the form of an inquiry letter before being finally used, and the enterprise will be required to confirm the data accuracy. If there is no reply from the enterprise, it is considered equivalent to the enterprise’s confirmation on the relevant data.

6.3.6.1

Items at the First Level

The first level includes comprehensive items, which have relatively complete and accurate explanatory power on the corresponding indicator. In principle, first-level items should be benchmarked with items in important international evaluation systems (such as GRI, DJSI, etc.). Example: taking the energy efficiency indicator as an example, its first-level items can be the energy consumption per unit of the enterprise output value, the energy consumption per unit of the enterprise operating income, the total energy consumption of the enterprise and so on.

6.3.6.2

Items at the Second Level

Items at the second level are an important part of either the indicator or the first-level items, and thus they have quite strong explanatory power on the indicator. Example: taking the energy efficiency indicator as an example, the second-level items can be diesel consumption per unit of the enterprise output value, natural gas consumption per unit of the enterprise output value, total fuel consumption of the enterprise, energy consumption of the headquarters, and so on.

6.3.6.3

Items at the Third Level

Items at the third level are related to the indicators, but their associations are much weaker or data cannot show the overall situation of the enterprise. If there are no exact numbers, the qualitative descriptions are also classified into the third-level items. Example: taking the energy efficiency indicator as an example, the third-level items can be the energy saving rate of the enterprise, the energy consumption of a factory within an enterprise, the energy consumption of a specific product of an enterprise, and so on.

6.3 Fair Wealth Evaluation System of Enterprises

107

Table 6.3 Specific scoring criteria Items

Class 1

Class 2

Class 3

Class 4

1st level

Published

Published for 2 consecutive years

Published for 2 consecutive years, with improvement over the previous year

Voluntarily publish plans for the item; commit and announce the current progress

2nd level

Published

Published for 2 consecutive years

Published for 2 consecutive years, with improvement over the previous year

Voluntarily publish plans for the item; commit and announce the current progress

3rd level

Published

Not applicable

Not applicable

Not applicable

80

90

100

Conversion ratio 70 (%) Corresponding theme

Transparency

Progress

6.3.7 Fair Wealth Score 6.3.7.1

Scoring

Focusing on the two major themes of transparency and progress, the scoring on items evaluates whether the enterprise’s disclosure of the item is stable and coherent, and whether the enterprise has made progress on the item. The specific criteria are summarized in Table 6.3.

6.3.7.2

Calculation for Indicator Score

The indicator score is calculated using the equation below, SI =

NL1  i

D1 ∗ Pi +

N L2  i

D2 ∗ Pi +

N L3 

D3 ∗ Pi

i

where S I is the score of indicator I, N L 1 , N L 2 and N L 3 are the numbers of the firstlevel, second-level and third-level items respectively, D1 , D2 and D3 are the scores of first-level, second-level and third-level items respectively, and Pi is the conversion ratio for the corresponding item. Therefore, the indicator score is jointly determined by the score of every item and their distribution across different levels. For each indicator, the score calculation takes into account no more than one first-level item with six points per item, up to four second-level items with 1.5 points per item, and up to two third-level items with 0.5 point per item.

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6 Fair Wealth Theory and Methodology

Table 6.4 The example of the calculation for indicator score Indicator

Level

Item

Unit

Performance of this year

Performance of last year

Item score

The efficiency of ordinary waste discharge

L1

The efficiency of ordinary waste discharge

Ton every ¥10,000

0.002429

1

L2

The efficiency of household garbage discharge

Ton every ¥10,000

0.000341

1

L2

The efficiency of non-hazardous production waste discharge

Ton every ¥10,000

0.002088

1

When the data published by enterprises exceeds the item number at that level, the average score of the items at that level is calculated using the average score of the items with higher scores. When an indicator has sub-indicators, the score of the indicator is the average of all its sub-indicators. When an indicator has no first-level items, the calculation method of the indicator score remains unchanged. After the initial calculation, the result is normalized based on the full score in the best case. The contribution of each level of items to the indicator (sub-indicator) score is the product of item score at that level and the corresponding conversion ratio. Finally, the scores of items at all levels are summed up to obtain the indicator score. In the best case, the full score is 12.7 points. (1 * 6 * 100% + 4 * 1.5 * 100% + 0.5 * 2 * 70% = 12.7). Example: The score of the indicator: 1 * 6 * 0.7 + 2 * 1.5 * 0.7 = 6.3 points (Table 6.4).

6.3.7.3

Weight

The decision on weights is a vital part of any evaluation system. The decision on the weights in fair wealth evaluation system pays attention to foresight and guidance, on the basis of ensuring fairness and wide coverage. • Weighting mechanism. The dimension is at the first layer, where there are six dimensions, with a total weight of 100% distributed among the six dimensions.

6.3 Fair Wealth Evaluation System of Enterprises

109

Second, at the aspect layer, each dimension contains several aspects, with a total weight of 100% allocated among all aspects under the same dimension. There is no weighting relationship between aspects under different dimensions. The final layer is the indicator layer. There are several specific indicators under each aspect, and the weights are averagely distributed among the indicators under the same aspect. In the rating framework, the weights are introduced from top to bottom layer. Given that the indicator layer has the average distribution weights, there is no need to collect weight opinions for indicators. Meanwhile, for the weights at aspect and dimension layers, the distribution of weights is determined by expert survey. The collection of expert opinions on weights was implemented by following the measurement approach of conjoint analysis (Rao 2014). • Data for weighting The data of weight was collected by using a questionnaire, which was designed based on conjoint analysis, from experts and scholars in all disciplines from elite universities included in the Project 9851 in mainland China. Their responses were used to determine the weights at the dimension and aspects layers. Before sending out the questionnaire, the project team pre-tested the questionnaire among hundreds of academic and business people, with the help of Mary Kay Company. We sent out a total of 32,337 copies of formal questionnaire, and received 495 valid responses, which were used to determine the final weight distribution. For more information on weights for dimensions and aspects, please see Chart 6.2.

6.3.7.4

Calculation of the Enterprise’s Fair Wealth Score

To calculate the fair wealth score of an enterprise, the following formula is used: FW S =

I  i=1

(αid ∗ βida ∗

xi ) n ida

where FWS stands for fair wealth score, αid is the weight of indicator i in dimension d, βida is the weight of indicator i in aspect a of indicator i (in the dimension d to which the aspect belongs), xi is the score of indicator i, n ida is the number of indicators under the aspect to which indicator i belongs, and I is the total number of all indicators. The formula means that the fair wealth score of an enterprise is the weighted average of the scores on different dimensions, the score of each dimension is the

1 Project

985 was a constructive project for founding world-class universities in the 21st century conducted by the Chinese government. On May 4, 1998, the former President Zemin Jiang declared that “China must have a number of first-rate universities of international advanced level”, so Project 985 was launched. In the initial phase, nine universities were included in the project. The second phase, launched in 2004, expanded the program until it reached almost 40 universities.

110

6 Fair Wealth Theory and Methodology

Chart 6.2 Weight of dimensions and aspects

weighted average of different aspects on this dimension, and the score of each aspect is the simple average of all indicators on this aspect.

6.4 Fair Wealth Rating for Enterprises Based on the fair wealth evaluation system, fair wealth rating establishes rating standards. It then classifies the excellent enterprises as one-star, two-star, three-star, fourstar or five-star enterprises respectively, by evaluating the enterprise performance on three main themes of transparency, progress and pioneering (Chart 6.3).

111

Chart 6.3 Fair wealth evaluation system

6.4 Fair Wealth Rating for Enterprises

112

6 Fair Wealth Theory and Methodology

Table 6.5 Fair wealth rating system Score

Definition

Evaluation standard Total points

★

Qualified enterprises

★★

Enterprises deserve to take precedence

★★★

Enterprises deserve to choose with extra cost

★★★★

Enterprises deserve to help their success for free

★★★★★

Leaders of the times

√

Points of Six dimensions

Key indicators

Enterprise spirit

√

√

√

√

√

√

√

√

√

√

√

Satisfying the standard for four-star enterprises and having prominent behavior that conform to the fair wealth concept and changes industry rules or business paradigms

6.4.1 Rating System Fair wealth rating divides excellent enterprises into five classes. The more stars an enterprise is awarded, the better performance it has (Table 6.5).

6.4.2 Eligibility and Screening Criteria for Fair Wealth Rating 6.4.2.1

Eligibility Criteria for Fair Wealth Rating

The basic eligibility criteria for the enterprise to be selected for fair wealth rating are as follows: the company’s main business has been sustained for at least 2 years (including being listed for 2 years or longer) and the listing has not been suspended during the rating period.

6.4.2.2

Screening Criteria

Before the enterprise rating, we conducted a basic screening of enterprises, mainly including: • There were no major negative events during the reporting period.

6.4 Fair Wealth Rating for Enterprises

113

• The proportion of disclosure on indicators is not less than 25%. • healthy financial operations. Specifically, the major negative events refer to: • • • •

Major environmental pollution incidents. Major production safety accidents. Major product quality events. Serious employee discrimination (on gender, age, region, etc.).

Healthy financial operations are measured using F-score (Piotroski Fink score). It is a scoring mechanism with nine indicators in three principles of profitability, financial strength and operating efficiency, to inspect and examine enterprises’ financial health based on the historical data of individual financial statements. If each factor passes the threshold, it will be given 1 point and 0 otherwise. The F-Score of enterprises ranges from 0 to 9. The higher the score, the better and healthier their financial performance is, and vice versa. Due to industry variation, enterprises need to meet the requirements on F-score performance for two consecutive years to pass the screening.

6.4.3 Rating Standards The fair wealth rating standards consist of total score performance, dimensional performance and R&D performance. The total score performance requires that the fair wealth total score of an enterprise should not be lower than a certain points. Dimensional performance consists of positive performance and negative performance. Positive performance requires the enterprise to have at least several wellperformed dimensions, while negative performance requires the enterprise not to have any dimension that has not disclosure any information. R&D performance requires that the annual R&D investment of the enterprise reaches a certain standard (Table 6.6).

6.5 Fair Wealth Evaluation for Non-listed Enterprises Compared with the fair wealth rating, fair wealth evaluation of non-listed enterprises has the following similarities and: As can be seen from Table 6.7, the differences between fair wealth evaluation for non-listed companies and fair wealth rating are as follows. First, fair wealth evaluation for non-listed enterprises collects data from not only public channel, but also non-public channels such as interviews and surveys. Second, fair wealth evaluation can help non-listed companies to identify stakeholders and substantive

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6 Fair Wealth Theory and Methodology

Table 6.6 Fair wealth rating standards Score

Total score performance

Dimensional performance Positive

R&D performance

Negative

★

No less than 1.05

No 0 score in any dimension

/

★★

No less than 1.50

Among 6 No 0 score in any dimensions: (1) there dimension is at least 1 dimension in which on average every indicator has 2 L2 items with best quality; (2) there are at least 2 dimensions in which on average every indicator has 1 L2 item with best quality

/

★★★

No less than 2.00

Among 6 dimensions: (1) there is at least 1 dimension in which on average every indicator has 1 L1 item with best quality; (2) there are at least 2 dimensions in which on average every indicator has 2 L2 items with best quality; (3) there are at least 3 dimensions in which on average every indicator has 1 L2 item with best quality

Among 6 R&D investment is dimensions there is no less than 1.5% at most 1 dimension in which on average every indicator has 1 L3 item; No 0 score in any dimension

★★★★

/

/

/

/

★★★★★

/

/

/

/

issues. Third, the ultimate result of fair wealth evaluation for non-listed firms is the evaluation report rather than simple rating outcomes.

6.6 Evaluation Cycle The fair wealth project is on an annual basis, and the timing is aligned with the disclosure time of the enterprises’ reports. At the beginning of each year, the evaluation

6.6 Evaluation Cycle

115

Table 6.7 The difference between fair wealth rating and fair wealth evaluation for non-listed enterprises Fair wealth rating

Fair wealth evaluation for non-listed enterprises

Rating system

Fair wealth rating system

Fair wealth rating system

Sources of data

Public channels

Public channels; Non-public channels (e.g. Interviews and surveys)

Calculation of the enterprise’s score

Fair wealth score

Fair wealth score

Rating process

Collecting and checking public data, calculating the score

Collecting data by conducting questionnaire surveys/interviews/field trips

Identification of substantive issues

Supposing that listed enterprises have completed the identification of substantive issues

Help enterprise with the identification of substantive issues and chart making

Results

Horizontally comparable rating results

Rating reports including qualitative descriptions and suggestions

Chart 6.4 Fair wealth evaluation cycle

project adjusts and optimizes the entire fair wealth evaluation system, followed by the fair wealth rating. After the completion of the rating, we conduct the follow-up analysis based on the rating. Finally, we release the annual fair wealth white paper at the end of each year to summarize the progress of fair wealth throughout the year (Chart 6.4).

Appendix A

Revisions of Fair Wealth Theory and Method

February 2019: Theory and Method of Fair Wealth Evaluation in 2019 The evaluation system, structure and indicators were not revised in 2019. However, data sources were improved for the enterprises that are also listed in Hong Kong Stock Exchange, in order to obtain more comprehensive and accurate data. October 2018: Theory and Method of Fair Wealth Evaluation in 2018 Based on expert opinions, the theory and method of Fair Wealth Evaluation in 2018 were revised as follows: • • • •

Clarified the conceptual structure of the fair wealth evaluation system. Updated the indicators without the first-level item. Used the more progressive measurements for some indicators. Under the dimension of Essential Ethics, divided the aspect of Compliance and Integrity into Law Compliance and Business Ethics. • Adjusted the evaluation scope. • Made some indicator adjustments, including: added or deleted indicators, adjusted the aspect that the indicator belongs to, moved the positions of indicators, and modified the names of indicators. February 2018: Theory and Method of Fair Wealth Evaluation in 2017 According to the first fair wealth evaluation in 2017 and the 2017 Fair Wealth Person of The Year, the theory and method of fair wealth evaluation were revised as follows: • Improved fair wealth evaluation system according to the 2017 fair wealth evaluation. • Added the fair wealth evaluation system and its measurements • Added measurements for the Fair Wealth Person of The Year

© Fudan University Press 2021 Fair Wealth Project Group, Fair Wealth Annual Report 2019, https://doi.org/10.1007/978-981-15-7789-5

117

118

Appendix A: Revisions of Fair Wealth Theory and Method

September 2016: the Initial Theory and Method of Fair Wealth Evaluation September 2016: The Simultaneous Releasing of both the Theory and Method of Fair Wealth Evaluation and the First Fair Wealth Ranking.

Appendix B

Comparison Between Fair Wealth and GRI, DJSI as well as Relevant Academic References

© Fudan University Press 2021 Fair Wealth Project Group, Fair Wealth Annual Report 2019, https://doi.org/10.1007/978-981-15-7789-5

119

Technology Evolution (TC)

Cherished Commons (CC)

Environmental Friendly (EN)

Aspect

Dimension

CC.EN.2

CC.EN.3

CC.EN.4 CC.EN.5

Circular Utilization of Water Resource

Discharge of Water Pollution Material Consumption

CC.TC.4

Number of High-level Technical Talents

Utilization Efficiency of Water Resource

CC.TC.3

Number of Patents

CC.EN.1

CC.TC.2

R&D Investment—Personnel

Energy Efficiency

CC.TC.1

Indicator code

R&D Investment—Capital

Indicator

301-1 materials used by weight or volume; 301-2 recycled input materials used

306-3 significant spills

303-3 water recycled and reused

303-1 water withdrawal by source

302-3 energy intensity

GRI

Reference

Environmental Dimension Product Stewardship Renewable Raw Materials

Environmental Dimension Operational Eco-Efficiency EP-Water consumption

Environmental Dimension Operational Eco-Efficiency EP-Water

(continued)

Al-Tuwaijri et al. (2004)

Eccles et al. (2014)

Environmental Eccles et al. (2014) Dimension Operational Eco-Efficiency EP-Energy consumption

Economic Dimension Innovation Management R&D Spending

Economic Dimension Innovation Management R&D Spending

DJSI

120 Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant …

Dimension

(continued)

Aspect

Indicator code CC.EN.6

CC.EN.7

CC.EN.8

Indicator Waste Discharge Efficiency

Comprehensive Utilization of Wastes

Emission of Greenhouse Gases

GRI

305-4 GHG emissions intensity

306-2 waste by type and disposal method

306-4 transport of hazardous waste

306-2 waste by type and disposal method

DJSI

Reference

Dingwerth and Eichinger (2010)

Environmental Dimension Operational Eco-Efficiency 4.2.2 EP-Indirect greenhouse gas emission

(continued)

Gillingham et al. (2009)

Al-Tuwaijri et al. (2004)

Hopkins (2005)

Al-Tuwaijri et al. (2004)

Eccles et al. (2014)

Hopkins (2005)

Li et al. (2017)

Environmental Dimension Operational Eco-Efficiency EP-Direct greenhouse gas emissions

Environmental Dimension Operational Eco-Efficiency EP—Waste

Environmental Dimension Operational Eco-Efficiency EP—Waste

Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant … 121

Dimension

(continued)

Aspect

CC.EN.10

CC.EN.11

Utilization of Clean Energies

Green Products

Confirmed Violation of CC.EN.12 Environmental Laws and Regulations

Indicator code CC.EN.9

Indicator Air Pollution Emission

GRI

DJSI

Environmental Dimension Product Stewardship Product Benefits

Environmental Dimension Resource Conservation and Resource Efficiency Renewable Energy Consumption

Environmental Dimension Operational Eco-Efficiency EP—Dust Emissions

Environmental Dimension Operational Eco-Efficiency EP—NOx Emissions

Environmental Dimension Operational Eco-Efficiency EP—SOx Emissions

307-1 non-compliance Environmental with environmental laws Dimension and regulations Environmental Policy & Management Systems Environmental Violations

301-3 reclaimed products and their packaging materials

305-7 nitrogen oxides (NOx ), sulfur oxides (SOx ), and other significant air emissions

(continued)

Al-Tuwaijri et al. (2004)

Hopkins (2005)

Reference

122 Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant …

WS.EP.2

WS.EP.3

WS.EP.4

Annual Paid Leave

Employees’ Regular Physical Examination

The Shortest Notice Time to Inform Employees about the Major Operational Changes

Employee Protection (EP) Average Number of WS.EP.1 Working Hours Per Week

CC.EN.14

Investment in Environmental Protection

Welcome Strangers (WS)

Indicator code CC.EN.13

Indicator Soil Pollution Caused by the Enterprise

Aspect

Dimension

(continued)

402-1 minimum notice periods regarding operational changes

401-2 benefits provided to full-time employees that are not provided to temporary or part-time employees

401-2 benefits provided to full-time employees that are not provided to temporary or part-time employees

GRI

Occupational Health and Safety Health, Safety & Well-being

Environmental Dimension Environmental Policy & Management Systems Return on Environmental Investments

DJSI

Wood (1991)

(continued)

Eccles et al. (2014)

Wood (1991)

Eccles et al. (2014)

Gao (2009)

Reference

Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant … 123

Dimension

(continued)

Aspect

Indicator code WS.EP.5 WS.EP.6

WS.EP.7

WS.EP.8

Indicator Production Safety Work-related Injuries

Work-related Deaths

Control of Occupational Diseases

403-2 types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities; 403-3 workers with high incidence or high risk of diseases related to their occupation

403-2 types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities

403-2 types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities

GRI

Reference Hopkins (2005)

Social Dimension Wood (1991) Occupational Health and Safety Occupational Diseases

Social Dimension Occupational Health and Safety Total Recordable Injury Frequency Rate (TRIFR)—Employees

(continued)

Social Dimension Hopkins (2005) Occupational Health and Eccles et al. (2014) Safety Total Recordable Injury Frequency Rate (TRIFR)—Employees

DJSI

124 Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant …

Dimension

(continued)

Decent Benefits (BE)

Aspect

WS.EP.11

WS.EP.12

WS.EP.13

Employee Satisfaction

Expenditure on Production Safety Expenditure on Employee Subsidy WS.BE.1

WS.EP.10

Employee Turnover

Minimum Wage Guarantee

Indicator code WS.EP.9

Indicator Absent Working Days due to Work-related Accidents

GRI

202-1 ratios of standard entry level wage by gender compared to local minimum wage

410-1 security personnel trained in human rights policies or procedures

401-1 new employee hires and employee turnover

403-2 types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities

DJSI

Obeidat (2016)

Reference

Gao (2009)

(continued)

Eccles et al. (2014)

Hopkins (2005)

Eccles et al. (2014)

Hopkins (2005)

Social Dimension Talent Farooq et al. (2014) Attraction & Retention Obeidat (2016) Trend of Employee Engagement

Social Dimension Occupational Health and Safety Lost-Time Injuries Frequency Rate (LTIFR)—Employees

Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant … 125

Dimension

(continued)

Customer First (CS)

Aspect

GRI

WS.CS.2

Confirmed Incidents of Violating Laws and Regulations Concerning Products and Services

417-2 incidents of non-compliance concerning product and service information and labeling

WS.BE.5

Delayed Payment of Wage WS.CS.1

401-2 benefits provided to full-time employees that are not provided to temporary or part-time employees

WS.BE.4

Extra Benefits for Employees

Customer Satisfaction

201-1 direct economic value generated and distributed

102-38 annual total compensation ratio

Distribution of Employee WS.BE.3 Compensation

Indicator code WS.BE.2

Indicator Distribution of Managerial Compensation

DJSI

Economic Dimension Anti-crime Policy & Measures Crime Prevention: Transaction Monitoring

Economic Dimension Customer Relationship Management Satisfaction Measurement

Economic Dimension Corporate Governance Disclosure of median or mean compensation of all employees & CEO compensation

Reference

(continued)

Hopkins (2005)

McWilliams and Siegel (2000)

Gao (2009)

Gao (2009)

126 Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant …

Dimension

(continued)

Aspect

WS.CS.5

WS.CS.6

WS.CS.7 WS.CS.8

Total Affected Number of Customer Privacy Leaking

Products Recalls Due to Safety and Health Reasons Customer Complaints Product and Service Quality

418-1 substantiated complaints concerning breaches of customer privacy and losses of customer data

416-2 incidents of non-compliance concerning the health and safety impacts of products and services

WS.CS.4

GRI

Confirmed Incidents of Violating Laws and Regulations to Affect Customer Health and Safety

Indicator code 417-2 incidents of non-compliance concerning product and service information and labeling

Indicator Penalty for Violating WS.CS.3 Laws and Regulations Concerning Products and Services

DJSI

Economic Dimension Product Quality and Recall Management Product Recalls

Economic Dimension Customer Relationship Management Customer Data Security & Data Privacy

Economic Dimension Product Quality and Recall Management Compliance to Regulatory Standards

Economic Dimension Anti-crime Policy & Measures Crime Prevention: Transaction Monitoring

Reference

(continued)

Eccles et al. (2014)

Eccles et al. (2014)

Roy (2009)

Hopkins (2005)

Eccles et al. (2014)

Roy (2009)

Hopkins (2005)

Hopkins (2005)

Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant … 127

Dimension

(continued)

Responsible Cooperation (RC)

Aspect

WS.RC.1

WS.RC.2

WS.RC.3 WS.RC.4

WS.RC.5 WS.RC.6

Long-term Management Mechanism of Suppliers

Long-term Management Mechanism of Distributors and Franchisees On-site Supplier Audit Supplier Compliance

Compliance of Distributors/Franchisees Supplier Satisfaction

Indicator code WS.CS.9

Indicator Product Safety

GRI

DJSI Environmental Dimension Product Stewardship Product design criteria

Economic Dimension Supply Chain Management Supplier Code of Conduct

414-1 New suppliers that Economic Dimension were screened using Supply chain social criteria management Transparency & Reporting

416-1 assessment of the health and safety impacts of product and service categories

Reference

(continued)

A˘gan et al. (2016)

Eccles et al. (2014)

Hsueh (2012)

Hsueh (2012)

Eccles et al. (2014)

Gao (2009)

128 Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant …

Dimension

(continued)

Local Betterment (LB)

Aspect

WS.LB.1

WS.LB.2

WS.LB.3

WS.LB.4

WS.LB.5

Local Procurement

Employee Localization

Management Team Localization

Corporate Tax

Government Subsidy

Indicator code WS.RC.7

Indicator Training for Business Partners

201-4 financial assistance received from government

201-1 economic performance

202-2 proportion of senior management hired from the local community

204-1 proportion of spending on local suppliers

GRI

Reference A˘gan et al. (2016)

Hsueh (2012)

Economic Dimension Tax Strategy Tax Reporting

Gao (2009)

(continued)

Lauring and Thomsen (2009)

Social Dimension Social Lauring and Thomsen Impacts on (2009) Communities Local Gao (2009) Employment Eccles et al. (2014)

Social Dimension Local Impact of Business Operations Local Suppliers

DJSI

Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant … 129

Law Compliance (CL)

Essential Ethics (EE)

Business Ethics (EI)

Aspect

Dimension

(continued)

EE.CL.3

EE.CL.4

Penalty for Violating Laws and Regulations

The Number of Confirmed Cases of Violating Anti-trust Law or Unfair Competition EE.EI.1

EE.CL.2

The Number of Confirmed Cases of Infringing Intellectual Property Rights

Coverage Rate of Employees to Sign the Compliance Terms

EE.CL.1

The Number of Confirmed Corruption and Commercial Bribery Cases

Indicator code WS.LB.6

Indicator Investment in Projects with High Social Values

GRI

102-41 collective bargaining agreements

206-1 legal actions for anti-competitive behavior, anti-trust, and monopoly practices

419-1 non-compliance with laws and regulations in the social and economic area

205-3 Confirmed incidents of corruption and actions taken

413-2 operations with significant actual and potential negative impacts on local communities

DJSI

Economic Dimension Codes of Business Conduct Coverage

Economic Dimension Codes of Business Conduct Anti-Competitive Practices

Economic Dimension Anti-crime Policy & Measures Crime Prevention: Business Policy/Procedures

Economic Dimension Codes of Business Conduct Corruption & Bribery cases

Economic Dimension Impact Measurement & Valuation Business Programs for Social Needs Impact Measurement & Valuation Disclosure

(continued)

Eccles et al. (2014)

Hopkins (2005)

Gao (2009)

Hopkins (2005)

Reference

130 Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant …

Sufficient Education (SE)

Well-rounded Adults (WA)

Lead into Society (LS)

Aspect

Dimension

(continued)

EE.EI.3 EE.EI.4

Contract Execution Rate Preventive Measures for Employee Compliance

Recruitment of Fresh Graduates

Percentage of Education-related Donation WA.LS.1

WA.SE.3

Percentage of Employees WA.SE.2 with Bachelor or Higher Degrees

Percentage of Employees WA.SE.1 Completing Compulsory Education

Indicator code EE.EI.2

Indicator Anti-corruption (Anti-Commercial Bribery) Preventive Measures for Employees

GRI

401-1 new employee hires and employee turnover

102-16 values, principles, standards, and norms of behavior; 102-17 mechanisms for advice and concerns about ethics

205-2 communication and training about anti-corruption policies and procedures Economic Dimension Codes of Business Conduct Systems/Procedures

DJSI

Reference

Gao (2009)

Gao (2009)

Gao (2009)

Gao (2009)

(continued)

Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant … 131

Aspect

PW.CP.2

PW.CP.3 PW.CP.4

Individual Donation for Charity from Enterprise Management Team Members Enterprise Expenditure on Alleviating Poverty Employee Involvement in Charity and Voluntary Activities PW.EO.1

PW.CP.1

WA.LS.3

Provision of Internship Opportunities Enterprise Donation for Charity

Indicator code WA.LS.2

Indicator Employment Size

Equal Opportunities (EO) Gender Equality for Employment

Protected Weak (PW) Charity and Philanthropy (CP)

Dimension

(continued) GRI

102-8 information on employees and other workers & 405-1 diversity of governance bodies and employees

401-1 new employee hires and employee turnover; 102-7 scale of the organization

Economic Dimension Corporate Governance Gender Diversity

Social Dimension Corporate Citizenship and Philanthropy Input

Social Dimension Corporate Citizenship and Philanthropy Input

DJSI

Reference

(continued)

Eccles et al. (2014)

Hildebrand et al. (2017)

Gao (2009)

Obeidat (2016)

Hildebrand et al. (2017)

Gao (2009)

Gao (2009)

Gao (2009)

Wood (1991)

Hopkins (2005)

Gao (2009)

132 Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant …

Aspect

Room to Grow (RG)

Dimension

Upward Mobility (UM)

(continued)

PW.EO.3

Proportion of Females in Management Team

UM.RG.1

UM.RG.2

UM.RG.3

Average Age of Management Team Members Percentage of Internal Promotion in the Management Team Periodical Employee Performance and Career Development Review

Employment of Disabled PW.EO.4 People

Indicator code PW.EO.2

Indicator Gender Equality for Income

GRI

404-3 percentage of employees receiving regular performance and career development reviews; 102-28 evaluating the highest governance body’s performance

405-1 diversity of governance bodies and employees

405-1 diversity of governance bodies and employees

405-2 ratio of basic salary and remuneration of women to men

DJSI

Reference

Eccles et al. (2014)

Hopkins (2005)

Gao (2009)

(continued)

Social Dimension Talent Farooq et al. (2014) Attraction & Retention Type of Individual Performance Appraisal

Eccles et al. (2014)

Social Dimension Labor Gao (2009) Practice Indicators and Hopkins (2005) Human Rights Labor Eccles et al. (2014) KPIs—Equal Remuneration

Economic Dimension Corporate Governance Board Structure

Social Dimension Labor Gao (2009) Practice Indicators and Hopkins (2005) Human Rights Labor KPIs—Equal Remuneration

Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant … 133

Dimension

(continued)

UM.ET.2

UM.ET.3

Coverage of Annual Employee Training

Annual Expenditure on Employee Training

Indicator code UM.ET.1

Indicator Annual Employee Training Hours

Aspect

Education and Training (ET)

GRI

assistance programs

404-3 percentage of employees receiving regular performance and career development reviews

404-1 average hours of training per year per employee; 404-2 programs for upgrading employee skills and transition assistance programs

DJSI

Social Dimension Human Capital Development Training & Development Inputs

Social Dimension Human Capital Development Training & Development Inputs

Social Dimension Human Capital Development Training & Development Inputs

Hsueh (2012)

Reference

134 Appendix B: Comparison Between Fair Wealth and GRI, DJSI as well as Relevant …

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