Daniel Calleja Crespo, Director-General for Enterprise and Industry and Special Envoy for SMEs at the European Commission, talks to The New European about the role of Corporate Social Responsibility in fostering economic growth.
Could you briefly define Corporate Social Responsibility (CSR) and explain its importance to companies?
The European Commission defined CSR in 2011 as the responsibility of enterprises for their impacts on society. All enterprises have an impact on society. Predominantly, this impact is positive: enterprises play an essential role in the functioning of our societies by providing jobs, paying taxes etc. But potentially, it can also be negative: we believe that companies have a responsibility to mitigate such impacts.
We believe that a company can meet its responsibility in two ways: firstly, by complying with the law. This goes without saying: one cannot talk of a socially responsible business if it does not abide by the law. And secondly, by setting up a process whereby it integrates social, environmental, ethical, human rights and consumer concerns into its business operations and core strategy in close collaboration with its stakeholders.
This second aspect is essential, because we believe that CSR can only be successful if it is in accordance with a company’s business strategy.
What are the differences between big and small companies in their approach and implementation of CSR?
It is difficult to generalise what the difference between a big or small company is in terms of their approach to CSR. A company’s approach is very individual and should be aligned with its overall business strategy and operations. Hence, the CSR approach differs from company to company, notwithstanding their size.
Generally speaking, one could however say that big companies tend to be more conscious of their CSR performance and have dedicated functions. Smaller companies, on the other hand, are often very good CSR performers, due to their linkages to local communities, but tend to be less aware and less strategic about it because of limited resources.
It is also difficult to pinpoint what kind of company would have the biggest impacts on society. What would be more important is that companies work together across their value chains, as many challenges require concerted action, in particular with regard to responsible supply chain management. This is why the Commission supports the launch of three CSR multi-stakeholder platforms in the Fruit Juice, Machine tools and Social Housing sectors, which we hope will serve as model projects for other sectors.
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Do you have specific data on the implementation of CSR among European enterprises?
In March 2013, the Commission published a first monitoring report regarding the commitments of a sample of 200 large, randomly selected European enterprises to internationally recognised guidelines and principles. The study showed that 68% of the sample companies made reference to “corporate social responsibility” or an equivalent term, and that 40% referred at least to one internationally recognised CSR instrument (UN Global Compact, UN Guiding Principles on Business and Human Rights, ILO Tripartite Declaration, the ISO 26000 guidance or the OECD Guidelines for Multinational Enterprises).
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Since CSR requires additional costs, it might be regarded as a burden, especially on SMEs. How can SMEs stay competitive when implementing good practices?
Nowadays, CSR should be part of a company’s business strategy and inherent to risk, reputation, supply chain, customer relationships and human resources management. CSR is about everyday work in today and tomorrow’s world: society, stakeholders, consumers and partners require more transparency, also from SMEs.
If CSR is integrated into a business strategy, this can enhance the strategic positioning of a company – and this does not have to mean an added burden. While there might be an upfront investment, if managed well, CSR has the potential to enhance a company’s innovation capacity, save money and contribute to a sound risk management.
Can economic growth and CSR co-exist and could it even be used as an instrument to stimulate the European economy in the long run?
The 2009 Commission’s Competitiveness Report confirmed that economic growth and CSR are not exclusive, but rather mutually reinforcing. In particular, the Commission has seen two trends in the past years. Firstly, CSR enhances the competitiveness of a company: self-imposed business strategies integrating social, environmental, ethical and human rights concerns lead to efficiencies that help to produce more competitive products and services. European enterprises have much to gain and little to fear from integrating CSR into their business strategies.
Furthermore, CSR makes a company more sustainable. Indeed, a socially responsible company is usually more sustainable: it is better prepared for potential risks, such as environmental damages or social issues, and this makes it more interesting for long-term investors. The market for sustainable and responsible investment is steadily increasing and access to these funds will allow companies to make more efficient long-term decisions.