CSR - Current - Study: Corporate Social Responsibility (CSR) between market and politics

17.12.2008

Study: Corporate Social Responsibility (CSR) between market and politics

Summary of the Study by PLEON and IFOK:

Since the 1990s, the role of companies in society has attracted increasing public attention in Germany. "Corporate Social Responsibility" (CSR) has become a buzzword in the debate. The protagonists in the debate are not only companies, but also, alongside academia and the civil society, the public sector ¿ each with its own logic and expectations.  In companies, CSR management  is not only motivated by philanthropic and communication issues but is increasingly determined also by strategic considerations on minimizing social risk due to the company's business activity. The State and society in their turn hope that companies with CSR policies use their resources to contribute to sustainable, partnership-based solutions to meet social challenges. Thus, CSR becomes a promising but insufficiently defined field of action for modern governance and an important instrument complementing sustainability policy.

Within the German Government, the Federal Ministry of Labour and Social Affairs (BMAS) has the responsibility for shaping CSR as a cross-departmental policy field and the Ministry has announced that a national CSR strategy will be developed. In this context, the consulting firms PLEON and IFOK were asked to carry out a study (see: www.csr-in-deutschland.de). With the announcement of a national CSR strategy the Federal Government has created high expectations and is confronted with a threefold challenge:

·          First, CSR policy is a non-traditional policy field where quite a number of possibilities for support exist but where an established set of policy instruments is not available.

·         Second, it lies in the nature of a national strategy that it should  bring together existing policies designed by different government departments or at least provide a common framework for discussion.

·         And third, a national CSR strategy tries to address a societal issue that, like few others, cannot be captured in a national framework of reference.  

To meet these challenges the authors of the study suggest a concept to support existing CSR stakeholders and structures in an activating and complementary manner.

Objectives of a national CSR-strategy

In supporting corporate engagement by a national CSR strategy, the Federal Government must first of all be guided by existing practices. It is noticeable that corporate responsibility is an issue for a large number of companies in Germany but that CSR as a deliberate management practice with market relevance is established only in relatively few of them. Also in the public at large there is mostly a rather vague understanding of CSR, and companies show strongly differing levels of development in terms of CSR concepts and CSR management. This lack of homogeneity in CSR development in Germany makes it difficult to engage in a CSR debate on the basis of common priorities and role concepts.

Therefore, the national CSR strategy should primarily aim at creating a broader understanding of CSR concepts and their implementation in practice and at motivating more companies to use CSR as management concept. The objective should not be to establish minimum levels of CSR but to promote a competitive environment in which both large companies and small and medium-sized enterprises (SME) find practical and credible corporate responsibility rewarded by the market. 

The Organisational Framework

CSR policy is a horizontal policy which should have supporting and supplementary functions. This applies both to existing specialised and departmental strategies within the Federal Government and to national and international strategies and standards of public and private stakeholders.

As far as coordinating functions are concerned, the study recommends the following distribution of responsibilities taking account of the relevant stakeholders and constellation of interests:  

·         The Federal Ministry of Labour and Social Affairs will have the leadership in the development of the strategy; it will systematically involve the stakeholders ¿ for example, by setting up an advisory body ¿ but reserves the right to decide on the key elements of the strategy.

·         In addition, the BMAS should exercise a coordinating function within the public sector. The aim should be that public institutions think of themselves as corporations with social responsibility. The BMAS should play the role of an initiator for the public sector's model function.

·         Hosting a sustainable societal dialogue on CSR should not be the function of one Ministry alone. The dialogue process should be multisectoral and should be organised as a process of critical exchange and learning. For example, the profile of the German Council for Sustainable Development, which is an independent institution acting as advisory body for the Federal Government, could be expanded accordingly.

Fields of action in the context of a national CSR-Strategy

The following principles have been defined as a basis for developing possible fields of action as part of a national CSR strategy.

·         On the basis of voluntary corporate engagement CSR strategy should play an activating role (with the aim of greater dissemination of CSR) and a supplementary role (in relation to existing instruments and market mechanisms) and thus contribute to a competitive environment in which CSR benefits both companies and society.  

·         There is a need for development in the respective field of action which is not met by mechanisms and institutions put in place by the CSR community.   

·         Among a great number of CSR stakeholders there is a demand for government instruments to promote CSR in the respective field of action.  

Field of action 1: The public sector as a role model

A field of action that fulfils the three criteria mentioned above are the CSR activities of the public sector itself. As an employer and client with more than 4 million employees and a share of 17 per cent in GDP the public sector plays a significant entrepreneurial role. In this field of action important elements are:

·         Recognition of the responsibility of the "public sector company" so that the public sector is perceived as a credible and accepted stakeholder in the CSR arena.

·         Participation in dialogue and learning fora on an equal footing with (other) companies;

·         Offering an award for entrepreneurial responsibility in the public sector in order to create an awareness among employees and managers in the public sector that they can contribute to their "company" acting in a responsible manner.

·         A further reform of public procurement on the basis of the cabinet decision concerning the draft bill modernising public procurement law of May 2008.

Field of action 2: International competitive conditions for German companies

In the framework of Germany's partnership-based social market system German companies implement a variety of activities which in countries with fewer regulatory requirements would have to be regarded as substantial CSR activities. These efforts, which have traditionally and commonly been undertaken by German companies, are not specifically communicated nor are they recognised as "explicit CSR" by international CSR stakeholders. The following measures could be taken:

·         Intensified commitment of the Federal Government to the creation of international standards to ensure an international level playing field.

·         International communication activities by the Federal Government highlighting in particular the social responsibility profile and traditional engagement of German business.

·         Development of a standard-based certificate to specifically use CSR as competitive factor for German business.

Field of action 3: Science and education

In particular, the interdisciplinary nature of CSR makes it difficult to ensure its adequate presence in university teaching. In many study courses addressing future managers CSR has not so far found its place in the curriculum. The objective must be

·         To promote CSR as an interdisciplinary focus in teaching to meet companies' demand for well-trained workers and to take account of the need for CSR to become common practice in all company departments in the long run.

·         To integrate CSR in dual training courses to strengthen the understanding of corporate responsibility at all levels of company hierarchy.

·         To include CSR in executive education to also engage long-time employees and enhance CSR expertise through in-service training.

·         to make the topic of "CSR in a Social Market Economy" a priority for research because research projects have not so far addressed CSR against the background of the social market economy and new social challenges.

Field of action 4: Raising CSR awareness among SME and the public at large

In particular SME do not usually understand the social responsibility they practice in their companies as an explicit CSR policy, and in the media CSR initiatives are often conveyed as marketing strategies in disguise. In communicating CSR to SME in particular, equivalent German terms should be used. Where companies' core business is concerned CSR could be communicated as "entrepreneurial responsibility" while for activities extending beyond core business the term "entrepreneurial engagement" could be used. For awareness raising the following instruments would be appropriate:

·         Communication and dialogue campaigns illustrating the entire range of good practices in social responsibility with the aim of enhancing the credibility and effectiveness of communication with companies.  

·         Support for social entrepreneurs in order to overcome the still existing division between profit-oriented and non-profit civil society organisations,

·         Dialogue with journalists and media to sensitize this important group of multipliers to the recognition of CSR projects and their positive effect on society and their value added for companies, thus contributing to generally more precise media coverage.

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