It has been about ten years since a discussion about the Corporate Social Responsibility (CSR) started during the Lisbon Summit. Indeed, this differs depending on the country, cultural, economic and social environment. It is more part of the discussions and new requirements in Europe, than in the Asia for example. Nevertheless, even within Europe, there is a diversity due to the number of countries, governments and cultures.
CSR is still an opened discussion and far from being achieved. The result of one research shows that there are even differences in understanding what CSR is, some link it to business ethics, others to "going green" and care of the natural environment. The same applies to sustainability which is not always seen in a large view, but is understood and limited to the environment. Therefore it is probable that this analysis is also going to be influenced by my cultural point of view. Considering that I grew up in Slovakia and have been living in France since six years, my statements will be therefore strongly influenced by my observations of the practices in these countries.
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The CSR concerns all the companies in all sectors. Every sector has its own issues and therefore it is difficult to generalize about the CSR. I wish to name briefly the main problems we may observe in our daily lives with different companies and then to analyze a few issues that I consider as critical for all the companies and the society, such as wages, taxes or presence of women in the company.
Sometimes I might have tough purposes, but I wish to question the practices of the companies, be critical, ask questions I don't have answers to.
Corporate Social Responsibility:
Can the companies be trusted?
Companies as part of the society
If we want to describe the CSR's role briefly, we could say that it requires that the companies take into consideration the consequences of their activities, consequences on natural, but also social environment. It is really necessary to understand that they are not only part of the market, but also part of the society. Additionally it is even in their interest that the society goes well, that people are well trained, educated and skilled, that there are no social revolts and strikes that make the businesses and the economy lose money. If that is not the case, people do not consume and the companies' production and business goes down with it too. The companies can't ignore the environment they are part of and they have to also respond and face different challenges that the society is concerned about.
As a university professor Michel Capron (2009) says, the companies have to anticipate risks that their activities may have on the environment and/or the humanity; not just to repair the damages. Indeed, it is too late then. The companies have a significant role in creating the sustainability for the world. The issue is that currently it depends on their good will, there is still a lack of legislation in this respect. The questions are: Do we live in a society where we can trust the companies and leave the CSR on the voluntary basis? Are the companies and society mature enough to take good care of collective goods even without legislation constraints?
CSR report as communication tool.
In France, the NRE law obliges the companies to be more transparent and publish reports about their CSR and governance. Nevertheless, there is no framework for this and every company is free to discuss the topics it wishes. Topics that are more sensitive, for example the impact on the environment for Total or EDF, will be only shortly mentioned and covered by the efforts about the training of employees for example. Or even worse, when the activity is reduced because of the current financial crisis for example, then there is less pollution done by the company and it would be presented as the efforts of the latter. There is often a lack of the solution proposals for the future in these reports - objectives and tools in order to be able to compare and evaluate the efforts and progress from year to year.
Always on Time
Marked to Standard
Indeed, the reports about the governance are used as a tool of the communication. There is a great difference between what is said and what is done. In France for example, in 2008 France Télécom was on the 2nd place for the quality of its social and environmental reporting. The report was complete comparing to other companies. But we may ask ourselves how is this possible when the social management has been such a problem within this company? There was an incredibly high number of suicides in a short period of time, people are unhappy, depressed etc. But the report was perfectly written! Where is the truth then? Unfortunately, France Télécom is far from being an exception, many employees in other companies are not treated well and instead of personal development and fulfillment, they feel depressed.
But the legislation is only a part of the solution. It is the first level of intervention. The other level is corporate governance relative to the market - encourage via taxes certain productions etc, and finally it is necessary to realize that there is necessary work on a level of population, we as employees but also citizens. There has to be a change in education, awareness and consciousness rising, we all have to have more "sustainable" way of life.
Every sector has its own issues.
As mentioned, there are some general issues that concern everyone, but there are also some that are proper to some sectors and where the companies show difficulties to find solutions to. I wish to address a few issues that are critical in different sectors to think of in order to assure the sustainability for the society:
Pollution: The environmental responsibility as the main issue. Renewable energies would require a change in a production for the companies like EDF, Total, Suez etc. which is difficult and costly. We may ask ourselves what are the priorities and the values of the companies when they spend more money for advertising about how "green" they are rather than for the R&D of these issues.
Energies: The oil reserves are reaching the end, the fossil fuels that are not renewable, all these issues force the carmakers to find new solutions, such as electric cars. And even thus a progress has been done in this respect, there is still a long way to go.
Finance: Transparency, debts, remuneration, taxation are only a few examples of the problems that actually are problems of many sectors and therefore it will be discussed more in detail in the following part.
Retailers: The treatment of the suppliers often from the emerging countries; the retailers should have more policy about the "proximity" supply, often they sell the products from foreign countries even thus there is a possibility to get local products that would allow less transportation and support local economy.
Pharmaceutical industry: The main goal should be an improvement of the health, but these companies are also public companies and the financial results count to shareholders. The emerging countries have a right to have prices adapted on the country's purchasing power or in case of emergency, they can produce the necessary medicine. But the survey of 14 NGOs states that the emerging countries don't profit from this right because they are under pressure from the companies having patents. The companies also invest very little in the R&D to find the medicine for the disease that we find almost exclusively in the emerging countries, such as malaria. The reason is probably that the people suffering by these diseases do not have enough money to pay for this. "Médecins sans frontières" put more pressure on the partnerships in order to develop medicine for these type of diseases. (source: Claire Cotentin. "Le cercle non vertueux des big pharma". 2009)
Transport: We may observe new efforts of the airplanes producers because of the pressure from the EU. It seems new regulations will be in favor of the technology progress. The issues concern not only the environment, but also the transparency of the prices and lack of competition (e.g. SNCF).
To trust - them? or Wages and taxes.
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It's going to be almost 3 years since the beginning of the crisis. We are all impacted by the financial crisis we have heard so much about. One of the biggest controversies was also the irresponsible remuneration of the managers and the CEOs. So many of them managed badly the company, so many led the company and the society to the crisis and they have received for this bonuses, stock-options, golden-parachutes, advantages for retirement and many others. Just to mention a few French heads of the companies - Arnaud Lagardère (Lagardère group) with over â‚¬13 million in 2008, Chris Viehbacher (Sanofi-Aventis) with over â‚¬9 million salary or Henri De Castris (Axa Group) who had wage increase of 124% in 2009, therefore over â‚¬7 million etc.
The big companies can't pretend to be socially responsible when their CEOs have such wages. It gives an impression they are paid because they have found out how to avoid paying taxes for the company thanks to fiscal paradises where so many of them are implanted. Some of them, e.g. BNP, made an engagement to stop being present in these countries from the OECD's gray-list. How long will it take them, we do not know.
It is really questionable why only 4 from CAC40 companies paid between 2006 and 2008 corporate tax that corresponds to the one in France (33.3% of the corporate benefit). How is it possible the group Lagardère paid in average 12% only, BNP 23% but also many other banks like Dexia, Crédit Agricoleâ€¦ Sanofi-Aventis (considered by the way number 1 in reporting!) paid to the state 15% and Unibail-Rodamco 1% of the corporate benefit only! (source: Guillaume Duval, 2009)
And if the corporate bodies like these do not pay taxes, who does? Indeed, the state has to find money for financing its activities somewhere else, therefore it rises taxes to people. In other words, somebody has to pay for this luxury of the companies.
Diversity or What about the women - is that a cultural issue?
The diversity is another issue that is more and more involved in the company policy, at least on the paper. The diversity refers to fostering a difference in the company - people of different age, gender, race, religion, education, experience, health, nationality, cultureâ€¦ All these aspects can be indeed a significant competitive advantage, great resource of knowledge and a force of the company. Nevertheless, many people, because exactly these differences, get at certain stage to so called "glass-ceiling" and the next level is impossible to achieve for them even thus they have necessary experience, age, education etc. One of these "obstacles" can be being a woman. Even thus women have often better results at school, better diplomas and are real hard workers, they are still under-represented in management positions. Of course, being a woman is never going to be an official reason, because it is illegal, but this invisible barrier is quite real.
According to the statistics of the European Commission, France is quite behind other developed countries in respect of having women in strategic management or CEOs positions. As we may observe it in the Appendix nÂ°1, France is situated closer to southern countries like Portugal or Spain, rather than Scandinavian countries with the best rate of the women in the board of directors. Why is that so? Is it the question of the cultures? Well, partially it could be.
Except the stereotype we imagine when we think of these southern European countries, the "macho" culture, there might be other cultural aspects that make that the presence of women is so weak. Geert Hofstede, the Dutch specialist in cultures, defines a few basic factors that are strongly present in our cultures and therefore behavior, actions, and points where we are all different.
If we refer ourselves to his research, then France as well as Spain or Portugal would be considered as the countries with a rather average degree (42 for France) of masculinity values, such as success, performance, achievement, to have power and show it. France is quite questionable about its values, situated somewhere between the masculine and feminine values dominating the culture. From my point of view, more feminine values are more present in the personal life of people, but the business environment is dominated by the desire to be the best, to have success and to have it quickly without failing. This is linked to individualism that is, on my opinion, also strongly present within the companies. We may observe it by the problems of individuals to work in a team. According to Hofstede's research, France has a rather high degree of individualism with rating 71.
The individualistic cultures (in this case in corporate culture) have more short-term thinking, want the results fast and perform fast, which are more so called masculine values. Here we may understand why there are so many problems in finding the solutions that assure companies' and society's sustainability: masculine values are linked to short-term view, mechanical and sequential thinking (Fons Trompenaars).
As for the Scandinavian countries, they are considered by Hofstede as cultures with more feminine values. The presence of women within the company is for them more valued. The women bring different point of view, bring more dialogue to the company, foster more exchange of ideas and give more values to the relationships. Fons Trompenaars, another Dutch specialist in cultures, would consider these countries as the ones with larger view and long-term thinking.
France being situated between south and north, we may observe that it is often ambiguous in its values and actions too.
The diversity could be a topic by itself, therefore I wished to address especially a few questions regarding the discrimination and a role of women in the company which has been an issue since a long time. I have not mentioned the question of salaries, but it goes hand in hand with this discrimination, women are often less paid for the same work, even thus it changes slowly, very slowly.
What could be the solution? Should the Europe impose quotas, foster positive discrimination like in the USA for example?
On the other hand, I wish to bring another point of view that defends a little bit the companies: The women are also more eager to do their career in the sectors they enjoy and find attractive, such as beauty, and there are not too many who are going to be interested in the heavy industry for example. We may observe in the Appendix 2 that women are more present in the beauty, bank or pharmaceutical sectors and much less (or none) in the steel, construction or aeronautical industries. Is it just the discrimination from the side of the companies, or is there also a lack of interest from the side of the women?
One company and different practices or Ambiguity of Europe
Finally I would like to point out the incoherence of the CSR even within the EU.
The companies' behavior depends on sociological, economic but also cultural environment and factors. Europe is also quite ambiguous in this respect, especially since the extended boarders of the Europe in 2004. Where is the CSR of the Western countries' companies when they come to do business in central and east Europe? The law does not bring any boundaries to them, it even supports them to go against the CSR policies valid in their countries of origin.
These new countries are attractive thanks to the skilled and cheap labor. Even thus the wages rise, they are still under the EU average level in general (in Slovakia average wage is 741â‚¬/month). In Slovakia for example, many foreign investors that came in the past now move the business to other, cheaper countries, such as Poland or Romania. And as the foreign investment is significant for growing economy, Slovak, but also other central and eastern European legislations brings a lot of advantages to the investors (not domestic ones though), such as low taxation of corporate benefits or even the tax holidays for first few years, the government grants them a possibility to buy a low cost land and many others.
What are then the consequences on the national economies? What is the right and where do the responsibility and ethics start?
Is it ethic for the western European companies to put pressure and be interested in these markets only thanks to all these advantages, knowing that these countries do it because they desperately need the investment? And is it ethic from the EU to support this? To what extent can it be used to avoid the obligations in the country of origin? Is this possible that the companies can take all advantages from the regulatory system of these countries without that it has any impact on their reputation?
The "responsible consumption" is also not a wide-spread term in the central and eastern European countries. People seek cheap and "good enough" product. The consumer takes more care of the price (because of lower purchasing power, income, economic situation), added to the low transparency of the offer, the result is that the responsible consumption is limited.
Another issue concerning the CSR is that as it is more less voluntary, it is a lot dependant on the pressure from the stake-holders - consumers' and trade associations, NGOs, labor unions etc; but in the central and eastern Europe, there is a significant lack of this type of organizations and therefore there is no pressure on the companies, not considering bribery and corruption problems.
The EU has a diversity that causes ambiguity that is not resolved.
The businesses have to remain aware of the values of different cultures and adapt also their CSR to the expectations but also to the needs of the society where they establish their businesses. They should contribute to the society, but also to drive a good image and reputation of the company, to assure customer loyalty and employees commitment. In the East Asia, the CSR practices will be highly valued as it is not taken for granted and there are no specified expectations in this respect like in the EU or the USA for example. That could be a strong point for the companies.
In conclusion, it is maybe naÃ¯ve to think, but I believe that sincere and clear CSR policies and actions could be profitable for everyone, as much for the company as for the society in general, because when the companies do their contributions (and not only financial) to the society, the society contributes to them, consumes, innovates, supports and makes the companies prosper.
I remain convinced that there should be more transparency assured in all aspects, the competition shouldn't be measured only on financial basis, but also on social, environmental and fiscal responsibility criteria.
Innovation should be more fostered and supported also by the state, innovation for bringing new sustainable solutions for society, companies and environment.
But I will always believe that everything is a question of education. It is necessary to train the managers and teach the students how to learn and listen, how to question the practices of the companies, how to dare to change them, how to be more innovative in finding new sustainable solutions, find new tools. Business schools have to teach also that there is a different value than just financial performance of the company, that the company has to be responsible and support projects that are on a long run profitable and useful for everyone - company, society and environment. The way we learn has to change, we have to definitely get larger view on things.
As for the presence of women in companies and in particular some "masculine" sectors, the companies from the technology and industry sectors could participate on forums and conferences for students, make these sectors more attractive, because I know there is a room for the women too.