CORPORATE SOCIAL RESPONSIBILITY
AS A STRUCTURAL ELEMENT OF SUSTAINABLE DEVELOPMENT
INTRODUCTION
In recent years, in Italy, the issue of social responsibility has been widely discussed in the business community and has also attracted the attention of political institutions. The aim of this paper is to contribute to a train of thought that has been developing for several years in this country and to reflect on the good practices initiated by some Italian companies, which in certain cases, have achieved international recognition. This paper will therefore contribute to the national and European debate in order to add to the value already created.
CORPORATE SOCIAL RESPONSIBILIY AS A DISTINCTIVE FEATURE OF THE EUROPEAN MODEL OF DEVELOPMENT
The importance of socially responsible business enterprise for the European Community arises from and is consolidated by two key elements: the affirmation that the European system is a viable competitive alternative to the American Liberal Capitalism model, based as it is on the principles of social cohesion and of the knowledge (Delors 1993) and political conviction that corporate social responsibility is “intrinsically linked to the concept of sustainable development”[1], a concept that the European Community means to embrace in making its political and administrative decisions (Charter of Fundamental Rights of the European Union, 2000). A socially responsible business takes account of the interests of all its stakeholders when defining its corporate strategy, setting out its policies and in its day to day management practices, in addition to taking account of the economic, social and environmental impact of these activities.
It is already evident that in the European Community there exists a genuine tradition of socially responsible corporate practice: companies of all sizes are capable of striking a strategic balance between economic interests, social expectations and environmental needs (Likanenn). This is the framework in which corporate social responsibility will be promoted.
The European Commission itself emphasises the way in which social responsibility is not an optional add-on to business core activities, but rather it is an essential function of the management model of the particular business.[2]
Corporate social responsibility is a fundamental component of the model of sustainable economic development that is based on an awareness of environmental issues and of the need to pursue the objective of ever greater social cohesion.
These are the guiding principles embraced by the countries of the European Union in defining their future direction.
The adoption of socially responsible business practices implies adhesion to a set of values that is necessarily shared both at local and global community levels, drawing on such international conventions as: The International Labour Organisation Tripartite Declaration, the Declaration of Human Rights and the UN Convention on the Rights of the Child.
The issue of social responsibility therefore, goes beyond individual codes of ethics, it is rather an integral part of economic planning that contributes to the promotion of sustainable development and it is conceptually more coherent with international guidelines and with the existing European conception of the role of business in society.
FURTHER REQUISITIES FOR CORPORATE SOCIAL RESPONSIBILITY POLICIES AND DEVELOPMENT PROGAMMES
The concept of social responsibility is based on certain presuppositions which must be shared both by the promoters of specific publicly-stated policies and by those inside the organisations that have opted for this approach to their decision-making and management processes:
The business operates in an environment, an environment that is populated by various stakeholders and whose dominant ethic governs its values and decisions (Beck and Cowan). The sustainability over time of a business depends significantly on its ability to adopt and express these ethical values.
The way in which the economic value of a business is produced, depends increasingly on factors extraneous to the product itself, but which are connected with the reputation of the business and the social pact, based on trust, established between the organisation and its principle partners.
New patterns of consumption have an ever-increasing tendency to transform actions of acquisition into actions of access to services and renting, thus the trust placed in the producer/provider becomes a key element in choice (Rifkin) .
These presuppositions motivate and support the adoption of socially responsible policies which are thus defined in terms of an inclusive global route which requires:
the adoption of a set of values shared by the whole organisation as the principles guiding strategic and management choices;
the reconciliation of the interests of a particular business with the interests of its stakeholders in defining corporate enterprise policy;
within their own operating procedures, a business pays due attention to the economic, social and environmental impact of its actions, “integrating social and environmental concerns in its business operations and in its interaction with its stakeholders”[3];
adding value to the relationship with the local community by creating partnerships with public authorities and civil society in addition to promoting a networking model aimed at on-going evaluation and improvement;
the adoption of comprehensive and transparent communication channels, which ensure that stakeholders receive all the information necessary for informed and critical evaluation.
The first three elements above concern the methods by which value is produced, creating the necessary conditions for social responsibility, where the existing conditions are unsatisfactory.
The fourth and fifth elements, in contrast, become the key elements for ensuring that the business is competitive in a market that demands an ever-greater response to the new criteria for informed client choice, whether these are individual, group or public sector clients.
These competitive elements must, by definition, be voluntary.
CORPORATE SOCIAL RESPONSIBILITY AS A COMMITMENT AND A ROUTE TO FOLLOW RATHER THAN THE RECOGNITION OF ISOLATED ACTIONS
What does social responsibility mean both in corporate and in more general terms, when applied to the whole field of economics?
“Social responsibility is the voluntary integration of social and environmental concerns and vision by businesses into their activities and into their relationships with interested parties (stakeholders)”.
The main points of reference for a socially responsible business are:
human resources in general and those of its own workforce
stock and shareholders, the financial community
clients/users
suppliers
partners
the state, local authorities and public bodies in general
the community in its entirety.
All those referred to above are stakeholders in the business and, as a group, they represent those partners that are the essential players in determining the social responsibility of the business. It is not therefore possible to define the social responsibility of a business in terms of single members of that group.
How is social responsibility expressed?
Clearly this is a complex issue and as such must be seen as route to follow that is partly linked to a specific set of rules but, more generally, it is a route chosen voluntarily which businesses may follow in order to act in a socially responsible way.
The voluntary nature of the decision to follow this socially responsible route requires the business to adopt an approach that is not purely self-referential, which means that it is necessary to involve all the interested actors and use recognised methods that have been tested and that can be reproduced.
TRANSPARENCY AND OPENNESS AS THE MINIMUM CONDITIONS
It is therefore necessary to define and to recognise the instruments required to achieve social responsibility. In order to work efficiently, these instruments must be credible and transparent.
This means that it is desirable to make a comparative analysis of how the existing instruments, their methods of application and the working experience already gained measure up to the objectives set out by the European Union.
There must be a common objective to recognise how these instruments and their methods of application are convergent with European standards and are thus able to afford the business effective international recognition, not only of the social, but also of the economically competitive value of their own social responsibility.
Is social responsibility therefore a social or moral duty or obligation?
Clearly, each individual is motivated by subjective ethical values, but in the current competitive climate social responsibility must also find its reward in the financial community and in public acceptance of its policies.
While a commitment to action in the social sphere is a desirable and important aspect of a business, this is not the same as social responsibility which must be seen to follow the principles outlined above and already adhered to in the international sphere, particularly in that of the European Community.
CIVIL SOCIETY AS A KEY ACTOR IN THE PROCESS
In this context civil society comes into the picture both in terms of its sovereign status in defining the regulatory framework, and as the body that increasingly claims the right to direct action, being conscious of is own role in this action.
Thus, in adopting the instruments of control and management on a voluntary basis, it is necessary that these instruments allow for external controls, as the logical consequence of transparency.
These are the two key elements that allow civil society to exercise its right to choose a particular company, based on the minimum criteria for social responsibility established by the community. Today, consumers have the right to vote and, in order to express that right, they need full and accurate information and a credible “election platform”.
CSR AND LOCAL AGENDA 21
Public authorities and in particular local authorities, are leading actors in the promotion of corporate social responsibility.
The role of these authorities, is not purely regulatory by nature, but should act as a catalyst in the community for the development and strategic planning required to achieve the sustainable development objectives set out at both local and international level.
Effective community leadership and programmed support are based on processes which are able to guarantee dialogue and transparency in both the decision-making process but also in terms of the likely effects. This is because public authorities have only these social and environmental effects, in addition to the economic ones, to work on in proposing effective ways and means to exercise their appropriate institutional power to choose and to plan.
Basing the interpretation of social responsibility on these principles, allows public authorities to reach agreements with the various actors in order to decide on the best course of action, taking into account the likely social, as opposed to the merely economic, effects.
There is therefore, a close and innovative relationship between local sustainable development and CSR (Corporate Social Responsibility): public authorities, adhering to the principles of good governance and of sustainable development with all its social and environmental repercussions, have to devise specific training programmes to promote a clear understanding of CSR.
In particular, authorities that have implemented the Agenda 21, Chapter 28 processes of social and environmental accountability, as set out in the Aalborg Charter, originating from the UN Rio di Janeiro, Summit and reaffirmed by the declarations of national governments at the 2002 Johannesburg Summit, are committed to disseminate the culture of dialogue and transparency and the conditions for social responsibility in order that these may be recognised, promoted and guaranteed by all concerned.
This inevitably involves the promotion of local programmes designed to align production systems with the guiding principles of CSR, and the uptake of the management instruments for sustainable development and good governance.
Thus, the commitment to and promotion of CSR programmes becomes another way of combating poverty, exclusion and environmental degradation on a more global scale.
CONCLUSIONS
Thus, the fundamental elements for the development of social responsibility are:
comparative analysis based on a clear interpretation of social responsibility that conforms to the principles laid out above;
shared understanding of the instruments necessary to allow independent, third party verification of the quality of the essential requirements for social responsibility, the only guarantee of transparency and credibility;
the activation of a network in civil society which will be both an actor in and a promoter of this process, as a key instrument for maximising the economic value of these business activities;
the establishment of links between business and public authorities, in normal business spheres, allowing public authorities to contribute to the attainment of real sustainable development, which is the ultimate goal of the promotion of the form of social responsibility that goes beyond the scope of individual ethics.
[1]COM (2002) 347
[2]COM (2002) 347
[3]European Commission Green Paper (2001)