The LeidenAsiaCentre conducts a research on how Chinese companies respond to the corporate social responsibility (CSR) demands of different actors in international supply chains. In order to yield more concrete insights, the project investigates the cobalt supply of Chinese battery manufacturers that produce for the European market as a case study. Based on a study of academic literature, primary source material and academic interviews, this research aims to improve the understanding of European society of the CSR approaches by Chinese companies in international supply chains.
CSR is an important topic in Chinese society. As a result of various forces, including the Chinese public and government, both foreign and Chinese companies operating in China have begun to actively improve their CSR in areas such as product safety, labour conditions and environmental impact. As Chinese companies are increasingly operating abroad, they also face more and more international CSR demands. However, the ways in which Chinese companies operating in international supply chains respond to CSR pressure from a wide variety of actors, and where potential challenges within this process are located, is not sufficiently understood nor researched in Europe.
The cobalt supply of Chinese battery manufacturers is of specific societal relevance for several reasons. First of all, batteries are at the center of current economic, environmental and technological developments, and the importance of this industry will only grow. It is therefore important to increase the understanding of how cobalt, a crucial mineral for the production of popular battery forms, can be mined and processes more sustainable. Secondly, there are serious and well-documented CSR challenges in the cobalt mining industries of the Democratic Republic of Congo (DRC), which is dominated by Chinese companies and the source of 60% of the global cobalt supply, including problematic labour conditions and environmental hazards. Thirdly, European companies face increasing demands from regulators and their own customers to address CSR issues in the supply chain of their batteries. This adds to a complex and understudied mix of CSR demands that Chinese companies are facing, including from local African communities, China’s government, Chinese society, international and local NGOs, Chinese stock markets, and African governmental organizations. This also includes initiatives set up to find alternatives to cobalt-based batteries. Finally, Dutch businesses indicate that they lack the capacity and funds to live up to official requirements for supply chain responsibility with regard to cobalt-based batteries, due to the complexities of cobalt mining within the DRC itself. Mapping and analyzing how Chinese companies respond to different forms of CSR pressure from a variety actors can help the Dutch government and businesses to improve their strategies.
Through a combination of a secondary literature study, primary source analysis and interviews with involved actors on all sides (including Chinese companies, local communities and European customers), the project aims to answer the following research questions:
- How do Chinese companies respond to demands for higher CSR standards in international supply chains from different directions, including local, domestic and international actors?
- What are the CSR complexities within the Chinese cobalt supply chain?
- How and to what extent can European companies address CSR challenges in this supply chain?
This research project will result in a publicly available research report, as well as a presentation in September 2021.