17/07/2008 2:36 pmSpurred on by public opinion, more and more companies are adopting Corporate Social Responsibility (CSR). This notion is supposed to be an alternative to the ultra-liberal economic model. It is a personal initiative to adopt better social and environmental practices and account for one’s activities. Such an evolution can turn out to be very advantageous for companies, especially for their image.
Corporate Social Responsibility (CSR), which is also called Corporate Social Performance, is an expression of companies' voluntary self-regulation, in accordance with a global ethic. The European Commission defines it as "a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with stakeholders on a voluntary basis" (1). It involves the company implementing prevention steps assessed through a diagnosis of society performances based on the pillars of sustainable development: the environment, the economy, social factors, participative democracy. Moreover, in most countries, public opinion expects countries to spend more on protecting the environment. Sustainable development and environmental problems are now perceived more as opportunities rather than constraints.
In 2007, according toCorporateRegister.com, 4 147 companies in the world published a report and 1 750 of these followed the principles of the Global Reporting Initiative (three times more than in 2005). The UN announced that 4 600 companies and other stakeholders took part in the Global Compact. The World Business Council for Sustainable Development (WBCSD) brings together about 200 companies, mainly in Europe, North America, Mexico, Japan, Korea and CSR Europe brings together 70 big European companies on different CSR and ISR themes. [Debate]
In 1992, the Rio conference on the environment and development highlighted the role companies play in putting sustainable development into practise. Since 2001, the European Union has published a Green Book on corporal social responsibility, and encourages companies to integrate social and environmental considerations into their commercial activities as well as their relationship with their various partners. A handful of European countries, including the Netherlands and France, force their companies to make their energy consumption public. In France, the principle of polluter-payer is established in article L. 110-1 of the environmental code, and the law on new economic regulations of 2001 makes it obligatory for the companies of the CAC 40 to publish data on the social and environmental consequences of their activity each year. This obligation came into force in Great Britain in 2005. In the United States, reports on environmental measures are optional, but companies must declare their toxic waste.
A personal initiative
For a company, adopting CSR means going beyond social and environmental legislation. This determines its levels of constraint and its aim, and makes it possible to back it up with certification that vouches that its commitments have been verified. Corporate responsibility rating agencies provide the most precise grading. Several dozen criteria grouped together under different categories are studied to evaluate the company's social and environmental behaviour: governance, relationship with the employees (union freedom in particular), impact on the environment, relationship with customers, ethic (attitude towards corruption in particular) and the company's controversial activities. If the company's motivations are varied, the matter of their perimeter of responsibility remains unresolved – is it limited to the head office or does it extend to subsidiaries and subcontractors? – as does the matter of defining the criteria for good behaviour – what is understood as a "good" product or a "good" company?
Other initiatives involve recommending global courses of action – this is the case of the Global Reporting Initiative, as part of a progressive action programme set up by NGOs and multinationals – or labelling precise products: the FSC (2) label for wood, the Max Havelaar label on certain agricultural raw materials, etc.
The main trends
- Adherence to international or national guidelines: eco-audits, ecolabels, United Nations Global Compact… These guidelines conceived by the authorities, are often quite credible. In the environmental field, the two most developed certification guidelines are the European EMAS standards on Environmental Management Systems and international ISO standards and they are not spread equally: 21.700 ISO 14001 certificates in Japan by first January 2007 compared to 223 in Russia.
- Commitments negotiated directly with the authorities or private partners: defining aims in figures on the companies' performances, labelling (fair trade, ecolabels …), international framework agreements with union organisations. For example: the agreement between the European Automobile Manufacturers Association for a 25% reduction of CO2 for new cars between 1995 and 2008.
- A company's unilateral commitment: it fixes its own aims and the money it allocates to reaching them and decides to call in an external controller to establish the credibility of the steps it has taken.
- Social audits are "delocalised": the company asks an auditor (specialised company, NGO) to check how the subcontractors apply local work legislation as well as codes of conduct, to safeguard their reputation.
- The relationship with stakeholders: the company manages its activities not only in its shareholders' interests but also in the interest of all social and economic entities, direct or indirect, such as employees, customers, suppliers, non-governmental organisations and territorial collectivities.
Between pressures and motivations
The point of a company adopting CSR is to limit its exposure to risk, anticipate future constraints and take advantage of opportunities. It is motivated to do so for several reasons:
- More severe environmental demands due as much to new laws and regulations as to pressure from consumers, NGOs and certain shareholders who want more transparency as a bare minimum. NGOs played an important part in raising international awareness, for example, through their campaigns against corruption or deforestation.
- The competitiveness of human capital to preserve and develop performance.
- The decrease of costs of production, for example, by taking steps to save resources (water, energy...).
- The need to be more attractive than the competition, by conceiving simpler products that consume less, for example.
- Reputation which constitutes an important part of the company's immaterial capital. [Debate]
See also :
- Regards sur la terre, Les presses de Sciences Po, Institut du développement durable et des relations internationales
- Geneviève Besse - A qui profite la RSE? - Revue de Droit Social 2005 p. 991