ABSTRACT
In recent years, corporate social responsibility (CSR) in the host country has become an unavoidable topic for outbound direct investments of Chinese companies. In particular, risk in association with CSR considerations is seen to be increasing. Identifying those factors and understanding their dynamics would help companies prepare for unforeseen events and enhance decision making through risk-management tools. A corresponding evaluation system is thus developed incorporating available indicators and indices from not only traditional risk areas but also environmental, social and governance (ESG) related areas. Based on original research and a large index pool constructed by the collaborative team from Tsinghua University School of Economics and Management and SynTao Ltd., the Country Responsibility Risk Index for Chinese Overseas Investment shows the latent structure of the index space where ESG dimensions stand out. Preliminary empirical evidence from the study has supported the effectiveness of the index. The index is aimed to keep track of ESG dimensions as well as the general operating environment of countries that attract Chinese investment. It shows the trend in CSR considerations in those countries and provides a benchmark for risk analysis.
