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The concept and applications of Corporate Social Responsibility
A very challenging task...
Corporate Social Responsibility refers to how companies, both private and public, gain additional roles besides their primary one, that, of providing specific goods and services and acquiring wealth.
What does it mean for a company?
Companies are taking on responsibilities, traditionally carried out by national, regional and local governments or even civil society actors;
caring for the greater wellbeing of people (sometimes being employees, customers or non-customers), addressing environmental concerns and even leading fights for great social causes
A buzzword of our times
corporate conscience, corporate citizenship, social performance, or sustainable responsible business the Canadian (Montreal school of CSR), the Continental European and the Anglo-Saxon approaches
CSR activities can range from an ad hoc philanthropy (i.e. donating money to a poor community) to a holistic, strategic approach of “doing business”
CSR is a complex interaction between government, business and civil society
CSR as an opportunity
Civil society actors, including grassroots and international non-governmental organizations, have traditionally struggled to make links with the donor society whereas now, that CSR found a place in business practise, companies themselves are motivated to pursuit partnerships with citizens‟ organizations. A great opportunity for NSOs and MOs! One should not be however over-optimistic...
The modern organization
Player in an increasingly competitive, global environment Has to satisfy all stakeholders (primary and secondary)
Shareholders (owners) Employees Customers Business partners Communities Future generations The natural environment
Government (local, national) Regulatory bodies Civic institutions and groups Special Interest groups Trade and industry groups Media Competitors
Contextualizing CSR in Europe
The interaction between business and society in Europe is shaped by the diversity of economic, political and cultural landscapes across the continent.
The development of CSR in Europe
In general, the development of CSR in Europe has been driven by
proactive strategies adopted by pioneering businesses European institutions and National governments, as well as by external pressures from other stakeholders such as civil society and the investor community, among others.
CSR in the context of Western Europe
In Western Europe, the development of the welfare state system during the second half of the 20th century emphasized the role of the state as the primary provider of welfare, while companies were expected to fulfill their societal obligations mainly by complying with laws, paying taxes, and providing employment. For a company to act outside the “making profit” business was unthinkable
Recent changes in this context
Over the recent decades, economic and sociopolitical factors in many Western European countries have led to a partial redefinition of the boundaries between the public and the private sector as well as their respective roles in the society. Growing attention is paid to the voluntary actions that companies take as part of their CSR strategies to manage their economic, social and environmental impacts and to contribute to wider societal development.
CSR in the Central and Eastern Europe context
In the post-communist Central and Eastern Europe, environmental and social concerns have tended to receive less attention than the significant economic challenges associated with the transition to market economy.
Recent changes in this context
CSR awareness and implementation in the Central and Eastern European region are advancing rapidly. In contrast to Western Europe, it is mainly companies themselves – often multinational corporations – that are the main agents of change, whereas external pressure from civil society, media and public authorities has so far been fairly low.
Who has led the CSR movement so far?
In Europe, as well as in other parts of the world, the CSR movement has traditionally been led by large companies. However… SMEs are increasingly starting to recognize the strategic success factors of CSR!
Who is now leading the CSR?
There are some 23 million SMEs in the European Union, providing around 75 million jobs and accounting for 99% of all enterprises. Thus, SMEs represent the foundation for the further development of responsible corporate management. Today increasing attention is being paid to the implementation of a more structured CSR approach in European SMEs.
CSR in Europe vs. other regions in the world
As a relatively wealthy, stable region with a developed economic and societal structure, the current CSR issues and challenges in Europe naturally differ to some extent from those faced by the less developed regions in the world. Many social and environmental responsibilities, which may fall under companies‟ voluntary CSR engagement elsewhere, are in Europe legally defined.
Factors that push forward the CSR agenda
The increasing interest in business opportunities associated with innovative CSR approaches The growing stakeholder expectations for corporate accountability and responsible business practices both within and outside Europe.
CSR re-establishes public trust
As a result of the financial and economic crisis, the level of public trust in business has fallen in many European countries. In this context, it is crucial for companies of all sizes to contribute to rebuilding trust in business and shaping a more responsible and sustainable economy in Europe and globally.
The active citizen-consumer
Consumers increasingly want companies and brands to engage socially. The majority of consumers believe that too much money is invested into advertising and marketing and request that it is spent for good purposes instead. For example, according to a survey, two out of three persons would be willing to switch brands if another product with comparable quality is additionally associated with social commitment.
The reflective (future) employee
For an average of more than half of globally surveyed students and job starters, the climate and environmental policies of an enterprise (58%) play a key role for their decision in favor of an employer.
CSR practices don‟t happen in a vacuum. They are encouraged by various legal frameworks on the national and the EU level, two of which are
The UN Global Compact The European Commission‟s renewed EU strategy 201114 for Corporate Social Responsibility
The Global Compact
The UN Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of
Human rights, Labour standards, the Environment and Anti-corruption
1: Businesses should support and respect the protection of internationally proclaimed human rights and 2: make sure that they are not complicit in human rights abuses.
3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; 4: the elimination of all forms of forced and compulsory labour; 5: the effective abolition of child labour; and 6: the elimination of discrimination in respect of employment and occupation.
7: Businesses should support a precautionary approach to environmental challenges; 8: undertake initiatives to promote greater environmental responsibility; and 9: encourage the development and diffusion of environmentally friendly technologies.
10: Businesses should work against corruption in all its forms, including extortion and bribery.
European Commission‟s new strategy
Brussels, 25.10.2011 A renewed EU strategy 2011-14 for Corporate Social Responsibility Affirm both successes and limitations of the previous strategies Further strengthens the argument of CSR
Addressing corporate social responsibility is in the interests of enterprises…
A strategic approach to CSR is increasingly important to the competitiveness of enterprises. It can bring benefits in terms of risk management, cost savings, access to capital, customer relationships, human resource management, and innovation capacity.
Because CSR requires engagement with internal and external stakeholders, it enables enterprises to better anticipate and take advantage of fast changing societal expectations and operating conditions. It can therefore drive the development of new markets and create opportunities for growth.
By addressing their social responsibility enterprises can build long-term employee, consumer and citizen trust as a basis for sustainable business models. Higher levels of trust in turn help to create an environment in which enterprises can innovate and grow.
…and in the interests of society as a whole
Through CSR, enterprises can significantly contribute to the European Union‟s treaty objectives of sustainable development and a highly competitive social market economy. CSR underpins the objectives of the Europe 2020 strategy for smart, sustainable and inclusive growth, including the 75% employment target.
Responsible business conduct is especially important when private sector operators provide public services. Helping to mitigate the social effects of the current economic crisis, including job losses, is part of the social responsibility of enterprises. CSR offers a set of values on which to build a more cohesive society and on which to base the transition to a sustainable economic system.
Critics to CSR schemes and applications
Global companies just use CSR as a way to get themselves out of the glare of public scrutiny. They want to be seen as „leaders‟ when in fact many are unethical in their business practices. Do voluntary codes of conduct actually work? Is CSR simply a very clever way to increase corporate power and global domination and sidestepping regulation? Will CSR fall victim to the marketing people who are smart enough to see CSR as a great opportunity for a public relations campaign?
Do you think you could manage with all the pressures and dilemmas modern organisations are facing? How could you balance your position and keep all stakeholders happy?