What is CSR?
Today, businesses are called to operate in volatile frameworks and to enhance their efforts for ensuring their sustainability.
Now, more than ever, stakeholders such as employees, local communities, non-governmental organizations and others, are demanding that corporations operate in a responsible and transparent way, while the need for profit and economic robustness remains equally a priority. At an increasing rate, businesses -regardless of their size- recognize the growing significance of their reputation and the risks that affect it, while they acknowledge the importance of, and the benefits that come with the application of responsible business practices. In other words, they accept the fact that the implementation of their responsibility, including their relations to their employees and the community, has become increasingly important with time. A growing number of corporations take into account a new way for conducting business operations much more than simply responding to legal frameworks and customer pressures. This new way goes a lot further than the philanthropy, donations and sponsorships of the past and includes environmental responsibility, the implementation of improved workplace practices, care for local communities and the recognition that their success does not rely solely on the quality or price of their products, but also on how they co-exist and interact with their stakeholders, as living cells of a larger organism.
The concept of Corporate Social Responsibility (CSR) is a constantly evolving dynamic term. The European Commission published a renewed strategy regarding CSR in 2011, in which it defines the term as “the responsibility of enterprises for their impacts on society.” Ten years prior to that, in 2001, the Green Book on CSR, constituting the first Communication ever made by the European Commission regarding CSR, offered a more detailed definition of the term, as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” In those 10 years, as well as those that have followed, there have been major changes regarding both the economic and social conditions we live in, resulting in subsequent modifications in the views and perceptions of businesses and society. In the relevant literature we can find a plethora of different definitions of CSR, since different regions of the world have different cultures, different levels of development, have taken different historical paths while businesses also operate in different sectors.
Regardless of the definitions’ origin, CSR embodies certain basic characteristics:
- Voluntary commitment of businesses themselves
- Longevity and continuity in its implementation
- Links to social, environmental and economic issues
- Inclusion of both the internal and external environment of the corporation
- Μutual feeding with the strategic business model
- Linkages to the sustainable development of the business in a responsible way
The concept of CSR encompasses every business’ and organization’s responsibility towards the stakeholders that it either affects or is affected by, through their business operations.
Corporate Social Responsibility is everyone’s concern, as it reflects the basic principles of the society we would like to live in.
Big or small, that can improve their economic, environmental and social efficiency, both short- and long-term, by doing business responsibly.
For this purpose, they ought to detect the groups or individuals that are impacted by their activity, to build relationships of mutual trust, to consult with them and to balance out their demands for the creation of mutually beneficial actions.
It ensures a creative and productive work environment. In this framework, businesses are called to implement a series of strategic activities and policies in order to be preferable employers. Some of these actions are:
- Continuous and systematic development of the skills and abilities of their human resources aiming at their professional and personal progression
- Recognition of diversity and provision of equal opportunities regardless of sex, race, ethnicity etc. and the non-discriminate treatment of employees
- Assurance and continuous improvement of health and safety conditions
- Creation of a pleasant work environment where open, honest and reciprocal communication between management and employees takes place
- Setting a good work-life balance and the implementation of flexible work hours and the possibility of working from home etc.
There is an ever-growing interest in the social and environmental credentials of the products and services that they purchase. Customers-consumers often act as a powerful pressure lever for businesses to implement CSR initiatives. Product labels and conditions of production and distribution play a significant role in, and are a factor affecting the product choice of consumers. Market transparency is a principal factor that encourages customers- consumers to contribute to the sustainable development of businesses and society. This can be achieved by:
- Assuring access to reliable information regarding products, production methods etc.
- Undertaking activities that will explain to customers-consumers how they should act within a sustainable development framework
- Production, distribution and promotion of products and services in an efficient, ethical and environmentally-friendly way
- Response to the wants and needs of customers by providing safe products and services of excellent quality, that do not contain dangerous substances, are reliable and provide customer service support after their purchase.
- Fair pricing while at the same time offering support to the entirety of the manufacturing and supply chain that contribute to the production of the product or service
- Responsible promotion and application of ethical rules to marketing and advertisement strategies, aiming at the safeguarding of consumer rights
- Continuous consultation and exchange of opinions with customers, striving for improvement
Particularly those who belong to our value chain.
Socially and environmentally responsible businesses encourage suppliers and other business partners to apply basic rules of social and environmental responsibility to their activities too. Additionally, they choose to cooperate with those who adhere to broadly accepted standards regarding matters such as human rights, the health and safety of their employees, the protection of the environment, and others. In this way, relevant knowledge and experience is transferred and responsible business activities are spread on a local level.
These are the representatives of Civil Society that consult with businesses in order to devise shared practices and work towards mutual goals. The creation of collaborations with transparency and regular communication represents an investment in reliability and mutual trust and cultivates the prerequisites for finding solutions beneficial to all.
They want to know that they co-exist with businesses and share the same values and concerns.
Contributions to these communities can be accomplished with actions such as:
- Economic development through the creation of new job positions
- Improvements to the quality of life by way of projects regarding education and healthcare
- Active employee engagement in local, voluntary programs
- Purchase of products by local suppliers etc.
Shareholders and Investors
They want to safeguard their investments on a medium- to long-term basis and they believe that responsible business behavior can lead in that direction.
No matter where they live, people expect that companies based in Europe will act according to European values and principles wherever they operate around the world.
Our children and future generations
Have the right to live in a sustainable environment.
One of the largest issues that arise concerning the understanding of CSR is that each business interprets the term in a different way. In this context, three basic levels of understanding are distinguished:
At a first level, some businesses associate CSR with the provision of job positions, the creation of new ones or the payment of taxes, while the idea of responsibility is associated to respecting the rule of law of the country where business is being conducted.
At a somewhat higher level, CSR is associated with philanthropy. Subsequently, in relation to its business function, social responsibility is linked to ‘negative impact’, in other words a responsible company is one that ‘does no harm’, meaning that it does not pollute the environment, it does not use unrenewable natural resources, it does not produce harmful products etc.
At the highest level, social responsibility is associated with ‘positive actions’, meaning that businesses can integrate social and environmental issues into their structure and dynamic, for example by incorporating an environmental management system into their operations, employing individuals from disadvantaged social groups or initiating deliberations with stakeholders.
On a 1st level, businesses produce a moral code or a guide of good practice, where they describe their intentions regarding society and the environment.
On a 2nd level, businesses implement a specific action plan e.g. the adoption of a system of environmental management or consultation with a supplier in a country of the developing world regarding the labor conditions of their workers. In these situations, the business may be active in the sphere of CSR, but it does so independently and without cooperating with other bodies. The business sets its own goals, implements its chosen program and may proceed to corrective measures if necessary. The activities it takes on may have a direct relationship to its core business operations.
On a 3rd level, businesses decide to adopt a system for putting in place approaches concerning CSR-related matters. Such systems could apply to all businesses, businesses that operate in specific geographical areas (e.g. the EU, US etc.) or exclusively to businesses that are alike and operate in the same sector. The system’s application can be monitored by the business itself, by using a diagnostic tool, or in cooperation with a specialized third party.
On a 4th level, businesses incorporate CSR into their everyday business activities in the framework of a complete management system. On this level, CSR becomes an integral part of all business functions and is taken into consideration during decision-making.
On a 5th level, businesses acknowledge their stakeholders and take initiatives to communicate with them, aiming to understand their expectations, explain the company’s goals, find ways to cooperate, and identify communication gaps in order to eliminate them. This stage, in which the business, through CSR, creates shared value for all stakeholders, is characterized by intense creativity and innovation both by the business itself and the different stakeholders.
It is not:
- Simply abiding by the law. Compliance with the law and regulatory provisions are prerequisites for the legal operation of a corporation. The spectrum of CSR extends to actions that are not covered by the rule of law.
- Philanthropy and commercial sponsorship. CSR no longer supports philanthropic activities and it definitely does not cover commercial sponsorships, through which businesses display their logos or products.
- Public relations. The boundaries between some CSR actions and public relations may sometimes overlap but it is certain that a company would not adopt CSR for the sole purpose of developing public relations.
- Contradictory to the main corporate goal of wealth creation. The main purpose of a company’s existence is the production of profit for its shareholders or owners. However, that needs to be accompanied by actions that protect the environment and show social sensitivity.
- Just words, but actions and projects. All stakeholders expect businesses to provide tangible results and not just grand statements.
- A platform for social dialogue, as a result of an investment in reliability and trust that is created between stakeholders and the business after transparent, equal and continuous communication.
- Creation of mutual trust and respect, providing a framework of opportunities for collaborations and continuous improvements, where the understanding of every stakeholder’s needs is necessary for the implementation of any activity.
- Investment with medium-long term results. The impact of CSR’s implementation cannot be measured directly but it is visible in everyone’s everyday life.
- Source of innovation that facilitates the discovery of solutions that can result in competitive advantages if utilized. It provides solutions to real problems that a business, a geographic area, a sector or society faces, such as combatting social exclusion, reducing carbon dioxide emissions, and others.