Learning, Practice, Results. In Good Company
Corporate Citizenship Around
the World
How local flavor seasons the global practice
in association with
Corporate Citizenship Around the World
Contents
1
3
4
Preface – A New Role for Business: Global Citizen The Global Education Research Network
Introduction – Trends in Corporate Citizenship – Global Versus Local Forces
Chapter 1: Europe
11 Germany
25 United Kingdom
Chapter 2: Asia
31 China
43 The Philippines
Chapter 3: Africa and the Middle East
58 South Africa
80 United Arab Emirates
Chapter 4: The Americas
88 Brazil
94 Chile
102United States
Chapter 5
114 A Global Scan of Corporate Citizenship
Front cover photo: © Arvind Balaraman
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
A New Role for Business: Global Citizen
Leading scholars, the media, policy makers, business leaders and working people
around the world agree the age of corporate citizenship has arrived. Whether the
term in use is corporate citizenship, social responsibility, CSR, sustainability or
some combination thereof, it is making its way forward on the agenda of most
companies and countries.
Today, business around the world recognizes obligations not only to stockholders,
but also to multiple stakeholders; and sees that alongside its traditional role as
a wealth creator, it also has social and environmental responsibilities. Popular
publications such as The Economist and The Wall Street Journal, which once
scoffed at such notions, now feature stories, studies and even special issues on
the many facets of citizenship.
One sign of the growing interest in, and importance of, this movement has
been the creation and expansion of education-and-research centers focused on
corporate citizenship by its various names. Based in universities, associations and
free-standing organizations, members of the Global Education Research Network
representing centers from different parts of the globe have joined hands to share
knowledge about local practices and gain a global perspective on the field.
GERN members have agreed that corporate citizenship is not only a trend in
the industrialized United States and Europe, but has a presence in almost every
economy worldwide. The globalization of commerce has spread the concept and
the need for greater corporate citizenship to all corners of the planet. But it also
has indigenous origins and specific manifestations in different countries and
regions. This publication seeks to advance the discussion of corporate citizenship
as both a global and a local phenomenon.
Any examination of global corporate citizenship starts with the search for an
accurate definition. On the one hand, there are a number of forces driving
citizenship toward a common definition and practice platform. These include the
growth of multinational corporations, the adoption of global codes of conduct
and accountability, the global reach of media (especially the Internet) and
www.BCCorporateCitizenship.org
Global Education Research Network
1
Corporate Citizenship Around the World
the regular exchange of knowledge, ideas, and practices among and between
business people, educators and researchers around the world.
On the other hand, the respective roles of business, government and civil
organizations differ around the world and the history, culture and social
norms that influence corporate activities remain local. While stakeholders are
increasingly becoming global (international NGOs, multinational bodies, etc.)
the primary stakeholders of most companies – their employees, customers and
communities – are closer to home. Because of the many variances in corporate
citizenship from country to country, it’s hard to dispute a recent statement made
by The Economist, that “a one-size-fits-all approach to CSR may not work.”
What began with a stimulating conversation has led to an analysis of the
differences and similarities in the field of corporate citizenship across nine
nations. This report is a compilation of voices from around the globe in
recognition of how local perspectives shape concepts of corporate citizenship and
how it operates in practice. Indeed, just as being a citizen has a different meaning
from nation to nation, so does being a corporate citizen.
GERN members hope this information serves as a valuable guide to the business
strategist or corporate citizenship director with an interest in global markets,
and helps in navigating the landscape of diverse expectations around the globe.
Academics and students interested in the topic of globalization and corporate
citizenship will also find a good deal of new information and insight that can
inform current and future work in this field.
2
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
The Global Education Research Network
The Global Education Research Network (GERN) is a network of eight institutions focused on responsible business working together to advance research and
education that will build the capacity of businesses worldwide to maximize their
benefit to society.
The current international corporate citizenship landscape demands global perspectives on the defining characteristics of corporate citizenship across regions
and sectors. The Global Education Research Network connects academics and
researchers who take specific interest in application of corporate citizenship principles, and can offer perspectives from developing and developed economies on
issues related to responsible business practice. Its goal is to deconstruct and unpack everyday questions on the role of business in society in a manner that can
result in practical application.
Members of the network are:
AIM-Ramon V. del Rosario, Sr. Center for Corporate Responsibility at the Asian
Institute for Management (Manila, Philippines)
Boston College Center for Corporate Citizenship, (Boston, United States)
Business in the Community (London, United Kingdom) UniEthos, Ethos Institute (São Paulo, Brazil)
Center for Corporate Citizenship Deutschland (Berlin, Germany) Center for Corporate Citizenship South Africa, University of South Africa
(Pretoria, South Africa) European Academy for Business and Society -- EABIS (Brussels, Belgium)
Vincular, Center for Corporate Social Responsibility at Catholic University of
Valparaiso (Valparaiso, Chile)
Also contributing:
Dubai Chamber Centre for Responsible Business (Dubai, United Arab Emirates)
www.BCCorporateCitizenship.org
Global Education Research Network
3
Corporate Citizenship Around the World
Trends in Corporate Citizenship –
Global Versus Local Forces
By Sylvia Kinnicutt and Philip Mirvis, The Boston College Center for Corporate Citizenship
Corporate citizenship is both a global and local phenomenon. The perspectives of authors
from the nine countries profiled here present
key similarities and some important differences in the understanding of and approach
to corporate citizenship around the world.
Here are some of the factors that help explain
the global and local dimensions of corporate
citizenship.
The concept and practice of corporate citizenship is influenced by a nation’s history and
the social contract that develops between private enterprise and the public. But while the
social contract varies from nation to nation,
a common thread appears with the spread of
market capitalism, calls among the world’s
populace for business to assume broader social and environmental responsibilities, and
widespread questioning of the role of business in society.
Corporate citizenship is in a state of transformation. Most countries are experiencing
a shift from a traditional view of corporate
citizenship as providing jobs, earning profits,
and paying taxes while “giving back” through
philanthropy. The new view takes a more encompassing look at the impact of business on
society. In turn, companies are taking steps
to move citizenship from the margins to the
mainstream of their business management.
But the position on these spectrums varies
from country to country as well as from company to company.
4
Global Education Research Network
Large corporate multinationals are a driving force behind corporate citizenship today
around the globe. But their motivations for
doing so and the influence of other actors
vary significantly depending on the regional
context.
The environment and concerns about global
climate change now top the list of corporate
citizenship issues in all nations. Countries
share concern over a number of other issues,
such as product safety and working conditions, but the priority given to other issues
varies depending on geography.
National history and the changing social
contract
The societal obligations of corporations have
become a topic of increasing interest in recent
years. The United States has gone through
waves of change in its social contract as business operated on a laissez-faire basis throughout the late 19th century until it was reigned
in by trust busting, regulation and reform
from 1900 to 1915. Then came the “Roaring
’20s” of booming business and stock market
speculation followed by the Great Depression,
which led to strong intervention by the federal
government, and the establishment of a social
safety net that continued to expand through
human resource management by business
and the Great Society programs of the 1960s
and early ’70s. Since the 1980s, business has
grown and its shareholders prospered while
the federal government has receded in its reg-
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
ulatory role. In turn, social costs have spread
through widespread corporate downsizing
and off-shoring and a gap has grown between
the heightened earnings of a “fortunate fifth”
of the work force and the stagnant wages of
the rest of the nation. As the report on corporate citizenship in the United States states,
change seems to be in the air in the early 21st
century as most business leaders acknowledge the social contract is broken, and a conversation is beginning on how to fix it.
In Western Europe, where the state assumed
primary responsibility for social welfare after
World War II through the latter half of the
20th century, business was more or less expected to attend to job creation, worker safety
and the quality of goods and services. Then
deregulation, privatization and the shareholder rights movement swept into the United
Kingdom and later the continent. This freed
competitive energies, displaced workers and
birthed something of an anti-corporate movement in its wake. As the U.K. report explains,
an interest in expanding the role of business
in the social sphere today has led to the creation of ministry-level support for corporate
responsibility, a cottage industry of consultancies and academics proffering advice and
training, and significant corporate engagement in social issues and affairs, domestically
and internationally. “The British brand of corporate responsibility is seen as the gold standard,” claims Julia Cleverdon chief executive
of Business in the Community in the United
Kingdom.
Similar movement in the state/business relationship is under way in Scandinavia, France
and other parts of Southern Europe, but the
pace seems slower in Germany. Germans primarily expect their companies to do the basics
www.BCCorporateCitizenship.org
– pay taxes, comply with laws, provide jobs
– but are now considering larger responsibilities such as environmental management and
community engagement. As the Center for
Corporate Citizenship Deutschland (CCCD)
reports, “While the rights and responsibilities
of government and civil society have constantly been negotiated and readjusted during the
last 30 years, the public debate about the role
of business in society has only just begun.”
Companies based in developing countries
or operating in emerging markets have to
negotiate somewhat different challenges. In
China, for instance, market-based commerce
operates under the dominion and direction
of a state that must balance aspirations for
economic growth against environmental degradation and social divisions. Concerns also
mount about China’s performance in global
supply chains. As the report on CSR in China
reveals, awareness of businesses’ responsibilities to society is growing fast among government officials, business leaders and the public
at large.
In the Philippines, where segments of society
lack in basic needs, there has long been an expectation that corporations will first-and-foremost contribute to economic development.
Still, as the report on CSR in the Philippines
explains, a tradition of family-owned enterprise means that many companies take care
to treat their employees well and contribute
to community development. Today a broader
approach is being formalized in leading firms
and nascent business-NGO networks.
Pressure on corporations to “do more” is also
growing in developing countries where the
ability of the government to mitigate social
concerns is weak. Reports from the United
Global Education Research Network
5
Corporate Citizenship Around the World
Arab Emirates, South Africa, Brazil and Chile
all indicate corporations are expected to address social concerns when the government
cannot. Still there are distinct origins and
expressions of citizenship in each of these locales as their respective centers report. In the
U.A.E., for example, companies are most concerned with economic efficiency, compliance
and charity. There is neither a tradition of, nor
advocacy for, stakeholder engagement and
the state lacks institutional capacity to regulate and monitor enterprise in this sphere. In South Africa, the end of colonialism and
apartheid sparked corporate involvement in
societal reparation, aggressive legislation to
shape the impact of business on society, and
nationwide interest in sustainable development. Interestingly, South Africans rate
companies as more socially responsible than
in any other nation. It may be, however, that
a poorly developed legal infrastructure has
created an environment where a company’s
engagement in philanthropy and community
development is of primary importance to its
citizens.
Citizenship in Brazil and Chile reflects commonalities and contrasts. Citizens in both nations express high interest in CSR and comparatively high hopes that corporations can
deliver social good. As the chapters report,
the state and NGOs have steered corporate
conduct in Brazil far more extensively than in
Chile. With the exception of select multinationals, Brazilian companies are far less likely
than those in Chile to look to global standards
for setting their citizenship priorities and
agenda. A diminishing role of the state is not a phenomenon experienced only in developing
6
Global Education Research Network
countries. The United States and Europe are
also facing local and global challenges that
have become too burdensome for the state
to address. Klaus Schwab, president of the
World Economic Forum, notes in his report
on “Global Corporate Citizenship” that as the
sphere of influence of business has widened
everywhere, so have expectations that business behave responsibly.
Advancing the state of corporate
citizenship
From its roots in company towns and employee-centered practices to longstanding traditions of charitable giving and volunteerism,
the U.S. version of corporate citizenship has
emphasized ideals of being a good employer
and neighbor. Today a range of developments
— from financial scandals and human rights
issues in global supply chains to the emergence of social and environmental issues as
strategic considerations — have helped generate new definitions and approaches to corporate citizenship. Each of the country reports indicates a common phenomenon, a transformation from
corporate citizenship as philanthropy to a
broader role of societal engagement. As the
role of business in society broadens, corporate citizenship is taken more seriously as an
integral part of basic business operations and
strategy. Some countries are farther ahead
on this road than others, but the finding that
corporate citizenship is no longer characterized by arms-length philanthropy indicates a
worldwide shift.
The Boston College Center for Corporate
Citizenship released a report in 2006 titled,
“Stages of Corporate Citizenship: A Devel-
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
opmental Framework” which describes how
companies move from beginning to advanced
corporate citizenship practices. Beginning
practices are largely focused on legal compliance. As a company advances, more consideration is applied to philanthropy and obtaining
a “license to operate” in the community. More
advanced companies take a broader view of
citizenship and adopt business practices such
as measurement and reporting of citizenship
performance, stakeholder management and
governance reform. At the leading edge are
firms that align their many functions responsible for corporate citizenship and aim their
business, philanthropically and commercially,
at core economic, social, and environmental
needs. The reports from the nine countries profiled
reveal a worldwide interest and movement
forward on citizenship measurement and
reporting. The lowest rates of reporting on
corporate citizenship are found in Asia and
the Middle East, where issues of transparency
and accountability are neither codified in law
nor an accepted business practice. The report
from the Center for Responsible Business in
Dubai claims that in the U.A.E., the concept
of corporate social responsibility is “still in
its infancy,” focused on legal compliance and
charity. By contrast, European companies
have shown to be the most advanced in terms
of reporting. A recent analysis conducted
by the Ethical Investment Research Service
(EIRIS) found that European companies have
“well developed responsible business practices across a broad range of issues due to a
sophisticated responsible investment market,
NGO pressure and a strong regulatory environment.” Yet the CCCD reports that “German companies are still looking for the “business case” while at the same time they hardly
www.BCCorporateCitizenship.org
measure and evaluate their corporate citizenship practices.”
On the social front, most nations report a
long tradition of community giving, which
preceded the modern view of corporate citizenship. This tradition has religious and cultural origins that infuse precepts of capitalism
in Asia, the Middle East, and Latin America.
It has made companies doing business in
these regions more sensitive and responsive
to the ideas of working with nonfinancial
stakeholders and getting involved in community affairs. Among the countries profiled,
Germany is the only one with a weak tradition
of community engagement. This is largely
the result of a welfare state that limited the
need for direct investment in communities
from the private sector. However, Germans
have cultivated a strong respect for the environment over the past few decades that has
shaped the discussion around corporate citizenship in that nation and put German companies ahead of many others in this area.
Many scholars have pointed to the state of development of the economy as a determining
variable of the advancement of corporate citizenship. Overall, they have found corporate
citizenship is less integrated into business
strategy and less formally managed in developing nations than in most high- income
countries. But there is considerable evidence
developing and emerging markets are catching up quickly. Jeremy Baskin, for example,
reported in the Journal of Corporate Citizenship that 12.4 percent of firms registered with
the Global Reporting Initiative (GRI) are from
emerging markets and more than two-thirds
of emerging market companies in a recent
study show some corporate citizenship activ-
Global Education Research Network
7
Corporate Citizenship Around the World
ity. Vincular, the Center for Corporate Social
Responsibility at Catholic University of Valparaiso, Chile, also reports that more than 50
Chilean companies are reporting under the
GRI and many are actively involved in the
ISO 26000 process.
The country reports in this publication provide a detailed picture of the unique stage of
development each country is experiencing
today. As all move toward a wider view of the
responsibilities of the private sector to society,
the degree to which citizenship is being integrated into core policies, practices, and business functions is increasing. No country has a
defining tradition whereby business incorporates citizenship considerations into products and services, market entry and growth
strategies, and operational management and
controls. On these counts, the role of multinationals is moving citizenship forward globally. Multinationals drive the agenda forward
While the political system, national culture,
and state of economic development clearly
play a role in how corporate citizenship is
viewed around the world, there is no discounting the role that multinational companies play in shaping public opinion and business practices. Of course, it can be argued
that big corporations have been a primary
cause of some of the world’s most pressing
environmental and social ills. One poll finds
that less than half of the world’s populace in
a 20 country sample trusts global companies.
Another poll shows that only one-in-five people in 25 countries sampled agree that “most
companies are socially responsible.” This
may account for why large numbers of business leaders worldwide are placing a new emphasis on responsible business conduct.
8
Global Education Research Network
Each of the country reports indicates that
multinational companies are a driving force
behind the advancement of corporate citizenship. In Germany, for example, multinational
companies are responsible for broadening the
definitions of how business can and should
contribute to society. In South Africa, the authors describe how the mining sector has led
the way in incorporating community involvement and human rights into the agenda of
the private sector more broadly.
Examining why companies are motivated
to engage with stakeholders and communities on social issues reveals some nuances in
regional corporate citizenship. Companies
in the Philippines, for example, are primarily motivated by their own employees, and
secondarily by government regulations and
pressure from NGOs. In Chile, a “demanding society” is driving companies as well as an
increasingly clear business case for achieving
a competitive advantage through corporate
citizenship. In China, there is little pressure from local NGOs, but a growing pressure from foreign investors and international
NGOs to adopt more responsible practices.
By comparison, Western countries are more
motivated by the market and consumers
than those in developing markets. The 2007
Trust Barometer of the Edelman global public relations firm revealed that actions taken
toward distrusted companies are greatest in
North America and the European Union, and
somewhat lower in Latin America and Asia,
explaining the differences in market pressure.
Additionally, when the Economist Intelligence
Unit polled companies on the groups that
would have the greatest impact on their sustainability strategy over the next five years, the
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
global aggregate gave a tie to consumers and
government policy makers. However, North
American companies listed competitors in
first place and government third, European
firms voted overwhelmingly for customers,
and Asian companies listed the government
as the most influential driver of citizenship.
While companies themselves seem to be at
the forefront of innovation around corporate
citizenship, in many countries the civil society
sector and the government have significant
roles. The public (government) sector seems
to play an important role in Asian and Western European nations. European countries
tend to have more regulations in place around
corporate citizenship issues. This is true in
Germany where companies face more regulations on environment issues in particular, and
the state plays an important role as a legislator and enabler/networking agent influencing corporations to adopt corporate citizenship. Other nations such as South Africa have
reported a “flurry of new legislation” around
corporate citizenship, particularly on issues
related to the Black Economic Empowerment
initiative. In contrast, the government plays
a far lesser role in the United States, where
companies favor a voluntary approach.
The civil society sector has grown in size and
influence worldwide. The Johns Hopkins
Comparative Nonprofit Sector Project finds
that a “global associational revolution” appears to be under way, characterized by a massive upsurge of organized private, voluntary
activity worldwide. Its influence on the development of corporate citizenship is also visible
everywhere, although perhaps the most so in
Latin America. We report here that in Chile,
civil society exercises growing scrutiny over
www.BCCorporateCitizenship.org
companies and is able to exert its demands
toward the State to implement corporate citizenship policies and regulate and control the
private sector. Social campaigners have also
left a mark on industry in the United Kingdom. By contrast, civil society groups are less
involved in corporate citizenship in Germany,
China, the United Arab Emirates and South
Africa.
Finally, other groups have been reported as
having a strong influence on companies and
on the field as a whole. Investors, particularly
socially responsible investment (SRI) firms,
are becoming a greater driver in South Africa
as well as in Europe and the United States.
Global standards and frameworks, such as the
GRI, Global Compact and ISO formulations
have had a decided impact on corporate practice in Europe, a moderate impact on South
African and South American businesses and
the least impact in the United States. Key issues – Global and local
In all countries, the environment and climate change has moved to the top of the list
of corporate citizenship issues. A McKinsey
Quarterly survey discovered that 53 percent of
European executives, 45 percent of Chinese
executives, 41 percent of North American executives and 34 percent of Indian executives
selected the natural environment as the top
issue likely to have the most impact on shareholder value over the next five years. Each nation reporting here also indicates that environment is a significant part of the corporate
citizenship agenda.
Environmental preservation and climate
change can be considered issues of “global
concern.” These are unique social challenges
Global Education Research Network
9
Corporate Citizenship Around the World
that are shared by everyone on this planet
while also affecting individuals in their local
environments. In an era of quickly progressing globalization, many previously local issues are also becoming global concerns. This
is reflected here in that the countries profiled
share other common issues of concern such
as human rights, health and labor practices.
Countries place these issues in different orders of priority, depending on their needs, local conditions and recent events. For example,
corporate governance is a priority issue today
in Germany after a wave of corporate scandals.
Other researchers have found that many corporate citizenship policies are based on localized issues and cultural tradition at a countrylevel. One study found that Asian companies
were very likely to have policies for labor conditions and supply chains, while North American and Australian companies were most
likely to have policies addressing indigenous
populations, a unique consideration in those
countries. There are also differences in definitions of what defines a good corporate citizen
around the world.
Klaus Schwab, President of the World Economic Forum, recently made this statement:
“The sum of acts of local citizenship does not
make a globally involved citizen. Global issues
must be addressed on a global scale.” This
publication shows that select corporate citizenship issues are beginning to converge on
the corporate-and-global calculus. The extent
that multi-business and multi-sectoral partnerships are coming together to address these
global issues will be seen in this report and
10
Global Education Research Network
subsequent research by GERN members.
Resources:
Baskin, Jeremy. Corporate Responsibility in
Emerging Markets. Journal of Corporate Citizenship, 2006
Bertelsmann-Stiftung, The CSR Navigator:
Public Policies in Africa, the Americas, Asia,
and Europe
The Economist, CSR Special Section in the
Economist, January 17, 2008
Edelman, The 2007 Edelman Trust Barometer
Ethical Investment and Research Service
(EIRIS), The State of Responsible Business
2007
Global Civil Society: An Overview. The Johns
Hopkins Comparative Nonprofit Sector Project
McKinsey Quarterly Survey: Assessing the
Impact of Societal issues, 2007
Schwab, Klaus. “Global Corporate Citizenship” Foreign Affairs. January/February
2008.
Welford, Richard. Corporate Social Responsibility in Europe, North America, and Asia:
2004 Survey results. The Journal of Corporate
Citizenship
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
© istock.com
German Corporate Citizenship Summary
Berlin, Germany
Cultural context and social contract
Corporate citizenship in Germany is characterized by strong traditions in environment and workplace/health and safety, and a weak culture of community involvement.
Trust in business is very low in Germany, with the Center for Corporate Citizenship
Deutschland (CCCD) reporting that only 7 percent of German citizens trust multinational corporations. The traditional social contract in Germany includes the expectation that businesses pay taxes, comply with laws, and provide jobs, while the statecentered social system takes care of the rest. This system is beginning to change.
As corporate citizenship has emerged this century, public debate around the role of
business and society has begun. While wider responsibilities are being considered, the
German public values good corporate governance and job creation first and foremost.
www.BCCorporateCitizenship.org
Global Education Research Network
11
Corporate Citizenship Around the World
Current state and transformation of citizenship
More commonly known as corporate social responsibility (CSR), the approaches German business takes to address social and environmental impacts vary. German companies are leaders in environmental sustainability and laggards in community involvement, with transnational companies ahead of the curve on both. Multiple forces are
at play in Germany today, from an increase in ethics scandals, to the rise of a “new
consumerism.” In the absence of strong demands from society and government, most
German businesses still consider citizenship a part of corporate culture, and not an
area of strategic business importance requiring metrics, investments and bottom line
benefits.
Driving forces and motivations
•
•
•
•
Multinational corporations leading the way
International standards are widely accepted and integrated into company policy
The state plays a large role as legislator and enabler/networking agent
Business relationships with stakeholders are influenced by the state; little collaboration between business and civil society
Issues of prominence
• Climate change/environment
• Corporate governance
• Education
Center for Corporate Citizenship Deutschland
The Center for Corporate Citizenship Deutschland
(CCCD) is a nonprofit organization at the interface between business, academia and politics. In cooperation
with leading companies, academic institutions and civil society organizations, CCCD
acts as a think place and competence center, providing a platform for dialogue and capacity building..
The CCCD arranges forums for exchange between corporate citizens, business, academia, politics and civil society; supplies and carries out applied research, facilitates
learning processes through debate and skilling opportunities; and supports collaboration between businesses and partners from civil society, academia, and/or politics.
Using workshops, publications and public events, CCCD also acts as a driving force for
the corporate citizenship debate in Germany and for the practical efforts by businesses
taking an active role in society.
12
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
German Perspectives on Corporate Citizenship
By Susanne Lang, Frank Heuberger and Anja Schwerk,
Center for Corporate Citizenship Deutschland
Preface
Corporate citizenship has finally arrived in
Germany – both in public discourse and in
business practice. Yet, there is non-simultaneous development. While both workplace
and environmental issues have strong traditions and high standards in Germany, the
civil society-focused approach of community
involvement has arrived with a 10-year delay.
For years, the landscape has been determined
by occasional philanthropy on the one hand
(mainly in small and medium-sized companies which represent approximately 70
percent of the German economy); and comparatively strong performance on issues of environment/sustainability and workplace/occupational health and safety on the other hand.
Today, Germany goes through a phase of at
least showing (off) good corporate citizenship: CSR reports, conferences, handbooks,
guidelines, awards etc. are mushrooming. It
is hard to tell yet, though, whether there is
substantial, systemic change or rather a relabeling of old practices. However, there is reason to believe that driving forces, such as the
changing social contract and the decreasing
trust in business, are strong enough to have
powerful and sustainable impact on business
practices.
Corporate citizenship in Germany –
What does it mean?
The English term corporate citizenship is
actually used in Germany, usually in the
www.BCCorporateCitizenship.org
narrow meaning of corporate community
involvement, while the comprehensive concept that also includes business practices and
environmental issues is mostly called CSR
(sometimes without the “S”). Academics and
consultants like to refer to Archie B. Carroll’s
pyramid of corporate responsibility (Carroll
1979). And still we find more than one CSR
practitioner explaining that the colleagues responsible for corporate citizenship would be
those who spend the money, while the CSR
managers influence the way the company
makes money.
For the discourse among practitioners, the
semantic experience is best described by Brad
Googins’ essay “Lost in Translation” (Googins
2007). In a small, non-representative survey CCCD conducted among CSR managers
on the job description, skills and qualifications of a corporate citizenship professional
in Germany (sample restricted to companies
that are above average up to high performers
in integrated citizenship), we found that all
names are being used and that along with the
different wording, different issues are focused
on in a company’s practice (Schwalbach/
Schwerk/Lang, i.E.). For some, corporate citizenship is primarily about sustainable products and/or production, others concentrate
on community involvement, a third category
emphasizes transparency and corporate governance. Systematic coherence is to be found
neither in corporate practice nor in academic
discourse.
Global Education Research Network
13
Corporate Citizenship Around the World
Interestingly, there is no common German
translation for either CSR or corporate citizenship, while there is a broadly used German word for sustainability (“nachhaltigkeit”). Language here tells us something
about the (non-)rootedness of the respective
concepts in the German (business) culture:
both corporate citizenship and C(S)R remain
Anglicisms that have found their way into
German discourse and practices only slowly.
Sustainability and related issues, on the other
hand, have formed part of public discourse
and business practice for a long time.
In the meantime, there has been a lively academic debate on corporate citizenship, but
under different names and largely detached
from the discourse among practitioners. Corporate practice including the practitioners’
discourse on the one hand and academic research on the other hand, remain more or less
separated. Economic research does not reflect
the practical questions in companies; vice
versa corporate practice takes little interest in
academic debates on corporate citizenship.
The academic debate on corporate
citizenship/CSR in Germany
The Anglo-Saxon terms corporate citizenship
and CSR have made their way into German
academic language just recently, and the academic discourse is still dominated by ethical approaches to corporate responsibility,
with a both highly theoretical and normative
background. Historically, many mainstream
economists refuse the right of existence for
business ethics as a subdivision of economics. Mainstream economists have been arguing that the economic activity was embedded in practical constraints. Specifically, the
14
Global Education Research Network
neoclassical economic model only dealt with
the functional logic of the market system and
claimed to be a value-free theory. It was for
many years common sense that moral and
ethical responsibilities have their relevance in
private and family life but not as a scientific
object in economic theory.
Formal models on the basis of narrow economic assumptions like the solely self-interested homo oeconomicus or opportunism
were much more popular in economics than
the non-formal and normative assumptions of
business ethics. Nevertheless, some partially competing German views have emerged.
The best-known is the “Economic Theory of
Morale” by Karl Homann and colleagues. Homann tries to combine the economic concepts
of incentives and dilemma situations with
ethical questions. Josef Wieland proceeds in
a similar way in his “Theory of Governance
Ethics.” Horst Steinmann and Alfred Löhr
and more recently Andreas Georg Scherer
establish their “Corrective Business Ethics”
on the basis of discourse ethics in the tradition of Habermas. They basically agree with
the profit maximization principle, but only as
long as it will not come in conflict with ethical
concerns. But if peace in society is in danger,
consensual procedures should be used to find
peaceful solutions for conflicts with internal
or external stakeholders. Peter Ullrich from
the University of St. Gallen is another popular representative in the German-speaking
landscape with his approach of “Integrative
Economic Ethics.” Ulrich challenges the economic paradigm that market solutions are in
principle ethically right. Instead, he demands
a critical reflection on the normative foundation of the economic way of thinking.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
More recently, researchers in the field of business ethics and CSR try to avoid the controversial and mainly just theoretical discussion of the economic paradigm. Instead they
choose a more interdisciplinary approach
with insights from political sciences, sociology and/or law. Yet, a current study of relevant
German journals between 2000 and 2004
provides valuable insights into the state of the
art of the German academic debate on CSR
(Hansen/Schrader 2005). The results show
that only one of 50 articles in the three most
renowned German economic journals is dealing with corporate responsibility or similar
topics. Half of those articles were written by
research assistants or interested business
practitioners without the participation of a
German professor. The results show that the
topic is still not very prevalent in the mainstream German scientific landscape.
The outsider position of corporate citizenship
is mirrored in the academic curricula. According to a survey done by Humboldt University,
Robert Bosch Foundation and CCCD among
economic departments of universities, colleges (“fachhochschulen”) and business schools
in Germany, 60 percent of the universities
and almost 50 percent of colleges offer courses on corporate citizenship-related issues. Yet,
51 percent of these courses are about business
ethics, and another 24 percent about environmental management. The rest, 25 percent, is
held on sustainability management (8 percent), (explicit) corporate citizenship or CSR
(9 percent) and another 8 percent on miscellaneous related topics (Schwalbach/Schwerk/
Lang i.E.).
www.BCCorporateCitizenship.org
Corporate citizenship and the social
contract in Germany
At the beginning of the 21st century, corporate citizenship (both in the narrow meaning
of community involvement and in the broad
sense synonymous with CR) has finally arrived in Germany, probably here to stay for
good, but with a unique rhythm. While being
among the leaders in terms of environment,
Germany is to be found among the laggards
in corporate community involvement, and
is certainly behind in terms of business-led
networks or organizations of corporate citizenship. This inconsistency deserves a closer
look. The lagging no less than the leading has
to do with the institutional arrangements in
the still state-centered social contract in Germany, with the role of government and the
role of civil society.
As regards the comparatively strong performance of German companies in environmental issues, there were companies, particularly
small and medium enterprises (SMEs) that
saw and still see the business opportunity in
environmentally friendly technologies.1 Yet,
the majority of businesses only reacted to government regulation, which initially was motivated by civic action. The history dates back to
the early 1970s, when the so-called new social
movements pushed environmental issues on
the political agenda. The then social-liberal
government responded with an early environmental program and subsequent legislation.
For the important role of green technology for German industry
and export cf. e.g. a recent study published by the German Federal
Ministry of the Environment: environmental technology holds a 4
percent share of Germany’s overall industrial production in 2007,
with sector specific growth rates up to 30 percent and world market shares between 5 percent (sustainable water production) and
30 percent (energy production); Bundesministerium für Umwelt,
Naturschutz und Reaktorsicherheit 2007.
1
Global Education Research Network
15
Corporate Citizenship Around the World
With the founding of the Green Party in 1979,
Germany was among the first countries to
institutionalize the environmentalist movement, and environmental issues have played
an important role in public consciousness
and values as well as in politics and legislation ever since. Ironically, even though the
business community strongly emphasizes the
voluntary character of corporate citizenship,
the leadership position of German companies
in environmental standards is due rather to
compliance to legal obligations than to voluntary business action.
The lagging behind in terms of community
involvement also has its reason in the role
and responsibilities of a traditionally strong
government. Germany, like other European
countries, has distinctive welfare state traditions, meaning that social welfare, health
care, education and community infrastructure etc. as well as the redistribution of wealth
would be taken care of by government; including the funding of civil society organizations.2
Business was expected to obey the laws, pay
taxes and contribute their share to the social
security system. Companies had direct social
responsibilities only for vocational training
(the so-called “dual system”) and the employment of people with disabilities (both responsibilities being regulated by law); moreover,
they could get tax deductions for donations to
charities. Other than that, the political and social responsibility of business was channeled
through the employers’ federations. Today, at
least at the level of the federations, business
2
According to the international Civicus Civil Society Index, nonprofit organizations in Germany are primarily financed by public
authorities (64.3 %). The rate of 64.3 % is not untypical for Europe, but it is high above the international average of 42 % and
more than twice as much as the US rate of 31 %; cf. Reimer 2005
and www.civicus.org.
16
Global Education Research Network
rather fears being used as a substitute for the
welfare state instead of actively promoting
corporate community involvement and its opportunities for business.
While the rights and responsibilities of government and civil society have constantly
been negotiated and readjusted during the
last 30 years, the public debate about the role
of business in society has only just begun.
A closer look: The state of corporate
citizenship
With some exceptions, the current German
debate on corporate citizenship is dominated by programs, best practice presentations
and CSR reports of the major players and
transnational companies. Their representatives dominate the stage at chat rounds and
roundtables, award ceremonies and public
debates, conferences and interviews. There
are still occasional references to German traditions dating back to the 19th century, when
medium-sized enterprises did lasting service,
and factory owners felt the moral obligation
to cope with the worst consequences of poverty. But the established socio-ethical motivation of “do good, but don’t talk about it”, while
shunning media-effective public appearances
in the puritan manner, is beginning to fade.
The success story of the German welfare state
and social market economy (“soziale Marktwirtschaft”) are cited increasingly less often.
In other words: the social contract in Germany is changing, the traditional, post World
War II role of business in society that defined
corporate responsibility is changing, and both
business and society need to elaborate an upto-date understanding of the role of business
in society, integrating German traditions of
corporate citizenship (or whatever is left of
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
them) with the new opportunities and challenges of global corporate citizenship.
It would, however, be wrong to assume the
majority of international businesses or the
big U.S. companies in Germany express their
social commitment at the level of sophisticated corporate citizenship strategies. We find
a broad range, from more or less occasional
philanthropy up to an integrated strategy of
corporate citizenship and how to implement
it into business operations in order “to make
the world a better place”. And we find a broad
range of goals, from mere philanthropy to
various strategic motives (CCCD 2007).
Data of the CCCD survey on corporate citizenship in Germany3 also show how types
and tools of corporate citizenship are distributed among German companies: corporate
giving (91 percent, corporate volunteering (61
percent), services free of charge (54 percent),
and cooperation with non-profit partners (47
percent).
International guidelines and standards are
widely accepted and integrated into company
policy. But this is not the whole picture. In
recent years, a genuine partnership between
businesses and non-profit organizations has
emerged, with some pioneers of ethical corporate management. On the whole, German
companies are still looking for the “business
case” while at the same time they hardly measure and evaluate their citizenship practices.
Unique about corporate citizenship in Ger3
The CCCD survey on corporate citizenship in Germany is a representative Survey conducted among 501 German companies (small,
medium-sized and large businesses) by means of telephone poll.
www.BCCorporateCitizenship.org
many, and with some variations in Europe, is
the role played by governmental framework
legislation and political influence. Major U.S.
companies in particular have always been accustomed to providing a range of services,
which in a German context would be called
“welfare” services and are used to negotiate
stakeholder groups’ demands and expectations in direct dialogue, without input from
the state. In Europe, especially in Germany,
the situation is different. Here the state is
acting both as legislator and moderator, or
enabler or networking agent, and is therefore
not an insignificant partner for industry’s
CSR policies. Apart from providing businessfriendly taxation policy, the state is expected
to set up mediation and support structures
for corporate citizenship, to fund research on
the issue or to establish a recognition culture
for committed companies, which is effective
from a publicity point of view.
In Germany, the relationship with stakeholders is strongly influenced by the state for the
simple reason that third sector activists and
NGOs are publicly funded to the tune of 60
percent or more. The shape of the future relationship between industry and the nonprofit sector depends on growing mutual trust
and mutual learning, but even more on what
amounts to future state financial support.
Some challenges ahead
While more than three businesses out of four
claim that corporate citizenship forms part of
their corporate culture and their self-conception, still the majority of German businesses
have not chosen to be corporate citizens on
their own initiative. Fewer than 40 percent of
the companies questioned in the CCCD survey are actively searching for areas in which to
Global Education Research Network
17
Corporate Citizenship Around the World
become active and engaged, while the others
just react. Even fewer businesses set measurable targets. Most German companies, particularly small and medium-sized enterprises,
are far removed from an inclusive concept
which would make corporate citizenship an
integral part of the corporate strategy, incorporated into the companies’ core business
and competencies.
Moreover, CCCD’s comparative findings
show that, unlike American companies, the
majority of German businesses are not convinced that corporate citizenship can make
any measurable contribution to their economic success. In Germany, only 40 percent
of businesses, irrespective of company size,
expect their commitment to yield any positive
economic result. In the U.S., 63 percent of all
18
Global Education Research Network
enterprises, and 84 percent of large enterprises, are convinced that their civic involvement
will have an immediate and positive effect
on their business activities (Boston College
Center for Corporate Citizenship, 2007). The
findings suggest that in Germany, the business case for corporate citizenship will still
have to be created.
Speaking of the future, a majority (more than
70 percent) of all the companies which replied to the CCCD survey have reported that
their future CSR investment will stay roughly
at current levels. This assessment refers to
both cash gifts and donations in kind and the
use of own staff for community commitment.
While just 10 percent of businesses begin to
limit their financial commitment, twice as
many expect to raise their budget for civic
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
involvement. A large number of small and
medium-sized businesses expect to increase
their funds for civic involvement in the future. Large-scale businesses, by contrast, tend
to focus more on using gifts in kind for their
commitment efforts. Development potential
for corporate volunteering is recognized predominantly, though with few genuine differences, by medium-sized enterprises.
Players and drivers of corporate
citizenship
It is hard to clearly and unambiguously identify who or what drives corporate citizenship
www.BCCorporateCitizenship.org
in Germany today. Here are some “candidates”:
Government:
Government is certainly among the important
drivers, particularly with regard to environmental legislation, yet has played an undetermined role up to now in how to deal with
corporate citizenship. There were interesting
moves in the late ’90s, when high-level government representatives of the Schroeder government up to chancellor Gerhard Schroeder
himself addressed the issue, and there was
input from a parliamentary study commission
on “the future of civic engagement”, address-
Global Education Research Network
19
Corporate Citizenship Around the World
ing the role of business in society from a civil
society standpoint. But none of these incidents has ever been embedded in a bigger initiative to promote corporate citizenship; rather there was some reservation also on the side
of the government protagonists themselves:
could it actually be their business to define
the business of business? (After the International Year of Volunteers in 2001, members of
the business community confessed that they
had expected to be exposed to far more public
and government pressure than they actually
were.)
During the current legislation period, government has kept quiet until the summer of
2007. Chancellor Merkel addressed the issue
at the G8 meeting that year, but her success
in including a commitment to responsible
business practices in the final declaration of
the G8 summit in 2007 has not led to practical consequences so far. Worth mentioning is
a recently launched initiative for civic engagement that addresses the business community
to promote corporate citizenship. The initiative is too young to tell its impact, but up to
now the feedback from the business community is encouraging.
The EU commission also plays an interesting
part, having declared CSR as one of the pillars
of the European strategy for competitiveness.
Scandals, crises, lack of trust
There have been major crises of corporate
governance in leading companies (corruption
scandals at Volkswagen and Siemens, lawsuits against management and supervisory
boards) which have further lowered trust and
confidence in business. And the year 2008
added a new shock to an already uneasy au-
20
Global Education Research Network
dience. When Nokia announced in January
2008 the closing of their German factory the
news hit like a bolt out of the blue. The factory yielded decent returns, the workers had
been asked to provide extra shifts over Christmas time, and production was competitive
even in terms of unit labor costs. The public
wondered why the company would want to
move the manufacturing to Romania, particularly a company like Nokia who was commonly regarded as responsible and reliable. The
publicly shared and discussed experience that
companies close down even profitable, competitive business units leads to a new quality
of distrust and insecurity about business.
Only 7 percent of German citizens trust multinational corporations – which makes the
MNC’s the end of a list, lead by local companies (51 percent), NGO’s (44 percent), and the
United Nations (34 percent). At the lower end
we find trade unions (23 percent), the media
(14 percent), and governments (13 percent)
(Tochtermann 2007:13). Interestingly, the
trade unions range far below local companies (23 percent vs. 51 percent). We may take
this as an indicator that the crisis of corporate
governance has affected the trade unions, too.
Moreover, there is an ongoing debate about
adequate salaries for C-level managers, which
have even been taken up by government recently. The complementary debate is on living
wages and minimum wage, also debated with
considerable political passion. The ongoing
argument about manager salaries at the top
end, minimum wage at the bottom end of the
remuneration scale indicates clearly that the
former consensus about the distribution of
wealth has come undone. Business and government will have to find a way to re-establish
a legitimate system.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
c) The capital market, rating and rankings
Even if in Germany the capital market does
not have the same significance as in the Anglo-Saxon countries, ratings are nevertheless
as important. Because many of the German
MNCs are traded internationally they have to
focus on performing well in ratings, which
holds true not only for purely financial but
also for ratings with additional ethical criteria.
Meanwhile, for most top executives of German MNCs it is important that their company is listed in the Dow Jones Sustainability
Index or the FTSE4Good. Some of the most
popular German business magazines (“Manager Magazin” or “Wirtschaftswoche”) feature
annual rankings of companies’ CSR performance. It is important for CSR departments
to come out on top of these rankings to justify
their existence.
Consumers and the public
Consumer awareness and activity in Germany and beyond is controversial. While some
experts diagnose a “new consumerism,” others criticize German consumers for being
much “milder” than in other countries (Arbeitskreis Bürgergesellschaft and Aktivierender
Staat, 2006). The truth is likely to be found
in between the two extremes. Even though
we strongly distrust various pieces of market
research claiming to prove what consumers
would do to reward social and ecological responsibility4, there is increasing evidence that
4
There have been all sorts of studies claiming that x percent of consumers would even accept higher prices for the value-add of good
corporate citizenship, e.g. CSR Europe/Mori (2000), who found a
European average of 44 percent who supposedly would pay more;
Puls (2006) claim that no less than 78 percent of Germans would
reward social responsibility this way; Wenzel/Kierig/Rauch (2007:
98f.) quote a whole list of surveys with this message. We suspect a
biased research design – after all, in a hypothetical decision, situated
in a context of responsible consumption, who would not agree to being ready to pay more.
www.BCCorporateCitizenship.org
corporate citizenship matters to consumers.
For example, according to a recent survey on
consumer behavior, more than half of the interviewees said that they had boycotted certain
food brands or food retailers because of their
corporate policy (Tochtermann, 2007).
The public, consumers and (potential) employees in Germany expect companies to:
• Provide jobs creating and/or maintaining
jobs. This is to be found on top ranks of
any poll of expectations toward businesses
(cf. e.g. Lunau/Wettstein 2004: 149; Puls
2006: 5 and 6).
• Show good corporate governance (regular
accounting, no corruption, etc.). We have
anecdotal evidence from companies who
run international programs that to German
audiences, good corporate governance is
much more important than community involvement
These expectations are in maximum accordance with the traditional social contract of
paying taxes, complying with laws and providing jobs, which is clearly shown by the finding that the majority of 1,000 interviewees
agreed with the statement: “A company’s
foremost task is to provide good products
and services, jobs and to pay taxes. Companies should not be requested to do more” (54
percent yes, 45 percent no) (Lunau/Wettstein
2004: 138).
Then again, there are a growing number of
LOHAS (Lifestyles of Health and Sustainability) consumers seriously concerned about
social and environmental standards and basing their purchase decision on good corporate
Global Education Research Network
21
Corporate Citizenship Around the World
citizenship. Organic food is moving from the
corners to the center shelves of grocery stores,
fair-trade products are gaining ground (e.g.
Wenzel/Kierig/Rauch, 2007), and civil society
research is debating a new “consumerism”
(Forschungsjournal Neue Soziale Bewegungen, 2005). Even if we are not too optimistic
about consumer behavior at the point of sale
as opposed to attitudes in the polling situation, there certainly is a significant market
share to be gained or lost through responsible
business practice, and at least marketing and
advertising have discovered the opportunities.
Multinational corporations
With a few exceptions (like the case of the
pharmaceutical company Betapharm), the
companies that lead the way to good corporate
citizenship are the multinationals (their leadership ironically leads to the challenge that
it takes all sorts of guidelines and communiqués to avoid the impression that corporate
citizenship is only for MNCs; SMEs are likely
to perceive corporate citizenship as a large enterprise only-issue). It is hard to tell whether
the leadership role of the transnational companies derives from the actual quality of their
programs or rather from their communication strategies – they are the ones who do
good and talk and report about it, while others remain quiet. But either way, by making
public commitments and providing publicly
accessible reports, the international corporations make corporate citizenship and related
issues visible, and enable stakeholders to
judge and challenge the consistency and the
credibility of a company’s citizenship.
Important corporate citizenship issues
The issue of the day is certainly climate
change and related environmental challenges.
22
Global Education Research Network
The “mega trend” of climate change goes in
line with the traditional German environmental awareness. The second big issue is corporate governance – with the recent scandals at
Volkswagen and Siemens (two flagships of
the German model of corporate responsibility), with the delegitimization of the German
model of co-determination between workers
councils and management at the corporate
level, the social partnership between trade
unions and employers’ federations at a society
level, the balancing of interests between business and society has become a challenge. A
third issue, one of the evergreens on the corporate citizenship agenda, is education, at all
levels, from kindergarten through school up
to university.
Last but not least, there are practical issues of
corporate citizenship management that the
executives CCCD is working with have put on
their (and our) agenda:
• Corporate citizenship management. There
is continuous increase of professionalism
entailing all sorts of management issues
such as mainstreaming corporate citizenship, integration and coordination, evaluation and measurement, etc.
• Corporate volunteering. A big issue in Germany due to the fact that companies have
only just begun to play a role in the lively
culture of volunteerism in Germany.
Summary
Finally, the editor has asked for three pieces of
advice that we would give to an international
business leader looking to invest in Germany
about corporate citizenship here.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
The good news is: there are leadership opportunities for corporate community involvement and cross-sector partnership, including
the opportunity to participate in the development of a new social contract between business, government, and civil society. However,
it will take some effort to convince both the
company’s management and employees in
Germany as well as the external stakeholders.
There will be challenges for the company’s
credibility as a good corporate citizen. And
there will be few community partners ready
to partner with a company. Since interaction
between society and business has been channeled through government, there is still little
to no tradition of direct collaboration between
civil society and business.
CCCD – www.cccdeutschland.org
The German business and civic culture are
not keen to experiment. Instead of welcoming
out-of-the-box thinking, a corporate citizen
will rather be asked for his license to operate.
German audiences will ask for manuals. So
be ready for German engineering.
Boston College Center for Corporate Citizenship 2005: The State of Corporate Citizenship
in the U.S. Boston.
Foreign companies will find important partners in government. Any company is well advised to look for dialogue and collaboration with the local authorities and the municipal council at its location. Fears with the
settlement of companies can be solved from
the start by not ignoring the local political
structure.
Corporate citizenship organizations in
Germany:
BBE – Bundesnetzwerk Bürgerschaftliches
Engagement – www.b-b-e.de
Bertelsmann Stiftung – www.bertelsmann-stiftung.de/CSR
www.BCCorporateCitizenship.org
Econsense – www.econsense.de
References
Arbeitskreis Bürgergesellschaft und Aktivierender Staat 2006: Bürgerschaftliches Engagement und Verbraucherpolitik. Schwerpunktthema I, in: Protokoll der 22. Sitzung am 23.
Juni 2006. URL: http://www.fes.de/buergergesellschaft/debatten/ProtokolleTagesordnungen/22_Protokoll_060623.pdf
Bertelsmann Stiftung/GTZ 2007: The CSR
Navigator. Public Policies in Africa, the Americas, Asia and Europe. Gütersloh – Eschborn:
Bertelsmann Stiftung/GTZ.
Bundesministerium für Umwelt, Naturschutz
und Reaktorsicherheit 2007: GreenTech
made in Germany. München: Franz-VahlenVerlag. URL for German summary: http://
www.bmu.bund.de/files/pdfs/allgemein/application/pdf/umwelttechnikatlas_zsf.pdf, loaded
January 10, 2008.
CCCD 2007: Corporate Citizenship in Germany and a Transatlantic Comparison with
the USA. Results of a CCCD Survey. Berlin:
CCCD. URL: http://www.cccdeutschland.org/
pics/medien/1_1202286165/CCCD_Survey_
engl.pdf.
Carroll, Archie B. 1979: A Three-dimensional
Conceptual Model of Corporate Social Performance, in: Academy of Management Review,
Vol. 4, p. 497-505.
Global Education Research Network
23
Corporate Citizenship Around the World
Forschungsjournal Neue Soziale Bewegungen 2005: Unterschätzte Verbrauchermacht.
Potenziale und Perspektiven der neuen Verbraucherbewegung. Vol. 18, 4.
GoodBrand 2006: Gutes tun und davon profitieren? Ethisches Verbraucherverhalten und
Cause Related Marketing in Deutschland.
Bremen: GoodBrand & Co.
Googins, Brad 2007: Lost in Translation. URL: http://www.bcccc.
net/index.cfm?fuseaction=Page.
ViewPage&PageID=1709, loaded January 10,
2008.
Lunau, York/Wettstein, Florian 2004: Die
soziale Verantwortung der Wirtschaft. Was
Bürger von Unternehmen erwarten. St. Galler
Beiträge zur Wirtschaftsethik, Bd. 35. Berlin Stuttgart – Wien: Haupt.
Schwalbach, Joachim/Schwerk, Anja/Lang,
Susanne i.E.: Corporate Responsibility in der akademischen Lehre Systematische
Bestandsaufnahme und Handlungsempfehlungen für ein Curriculum. Berlin - Stuttgart: CCCD, Humboldt Universität zu Berlin,
Robert Bosch Stiftung.
Tochtermann, Thomas 2007: Business and
Society - Strategy beyond CSR. Presentation
given at the Jahrestagung des Deutschen
Markenverbandes. http://www.markenverband.
de//_Rainbow/documents/0709_Strategy%20
beyond%20CSR-JahrestagungMV07.pdf, loaded January 10, 2008.
Wenzel, Eike/Kierig, Anja/Rauch, Christian
2007: Zielgruppe LOHAS – wie der grüne
Lifestyle die Märkte erobert. Kelkheim: Zukunftsinstitut GmbH, Februar 2007.
Puls 2006: Moralbarometer Deutschland
2006 – Ergebnisse einer repräsentativen Marktforschungsstudie. Schwaig: Puls
GmbH. URL: http://www.puls-navigation.de/
files/studien/moralbarometer.pdf.
Reimer, Sabine 2005: Civil Society – a New
Solution beyond State and Market? Civicus
Civil Society Index Report for Germany. ULR:
http://www.civicus.org/new/media/CSI_Germany_Country_Report_English.pdf, loaded January 10, 2008.
24
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
© gary718
United Kingdom Corporate Citizenship Summary
London, England
Cultural context and social contract
In the United Kingdom, the need for companies to manage in a responsible manner
across the various sectors of their activity is generally, if not universally, understood.
Generally business’ role in society is understood by the most common term, corporate
social responsibility or CSR.
Current state and transformation of citizenship
Many of the larger companies in the United Kingdom have well articulated CSR strategies and codes of practice. Most, although not all, large companies have moved on
from philanthropy to a more comprehensive approach to how they manage in a responsible manner. However, smaller companies continue to limit their approach to
CSR to philanthropy. Business-NGO partnerships have become common and increasingly beneficial for both sectors. The industries that can be said to lead in the field of
CSR include technology, financial and legal services and retail.
www.BCCorporateCitizenship.org
Global Education Research Network
25
Corporate Citizenship Around the World
Driving forces and motivations:
• NGO pressures and partnerships
Issues of prominence:
•
•
•
•
Climate change
Employability
Poverty reduction
Education
Business in the community
Business in the Community mobilizes business for good. It is
one of The Prince’s Charities and inspires, engages, supports
and challenges companies on responsible business, working
through four areas: Community, Environment, Marketplace and
Workplace. With more than 850 companies in membership,
Business in the Community represents one in five of the United
Kingdom private sector work force and convenes a network of global partners.
Business in the Community inspires, engages, supports and challenges companies
to continually improve the impact they have on society and the environment through
their responsible business program, sometimes referred to as corporate social
responsibility.
26
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
CSR in the United Kingdom
By David Halley, Business in the Community
The concept of corporate citizenship in the
United Kingdom has its origins in the ethical
approach to business of a number of prominent, originally family-owned firms, such as
Cadbury, Lever Brothers (later Unilever) and
Marks and Spencer, which ran their business
in an ethical manner, in particular looking
to the welfare of their employees - ensuring
primary education for children and decent
housing as at Bournville (Cadbury) and Port
Sunlight (Lever Bros.). This philanthropic
approach to commerce laid the foundations
for the situation today in the U.K. where the
need for companies to manage in a responsible manner across the various sectors of their
activity is generally, if not universally, understood.
The term which is in most common usage in
the U.K. is corporate social responsibility, or
CSR. At Business in the Community (BitC)
we see this label as overrestrictive and open to
misinterpretation, and where possible prefer
to use the term “responsible business practice.” However, the CSR label is very widely
accepted and is the one used generally in the
U.K. It is interesting to note that in countries
speaking Romance languages, CSR has been
translated directly - as in Responsabilite Social
de l’Entreprise or Responsibilidad Social de la
Empresa - and a new acronym, RSE, has become the standard.
Many of the larger companies in the U.K. will
by now have generally well articulated CSR
strategies and codes of practice, demonstrating that they have moved on from philanthro-
www.BCCorporateCitizenship.org
py to a more comprehensive approach to how
they manage in a responsible manner. However, this is not universal, and particularly at
the mid-sized level, there is still a perception
that this is about philanthropy. It is part of the
mission of organizations like BitC to change
this behavior over time.
A multisector approach
Since the deregulation of the finance industry
and the privatization of public utilities in the
early ’80s, business has not tended to look to
government to set the framework for responsible business practice, beyond existing legal
requirements. However, government has appointed a minister for CSR, and his role is to
provide guidance and to support best practice in the marketplace. The expectations are
therefore on business to lead and to engage
in best practice, and are the same for locally owned companies as well as for foreignowned companies. Indeed, many overseas
companies have demonstrated excellent practice across the key areas of CSR, receiving significant U.K. awards, including Toyota, BHP
Billiton and Deutsche Bank.
The position of the NGO or registered charity
sector vis-à-vis business is interesting. While
the larger NGOs have traditionally held the
corporate sector up to scrutiny, and often with
effective results (e.g. Shell and Greenpeace,
or Nike and Save the Children), we have also
seen a strengthening of the links between
business and charities over recent years. As
the management of charities has become necessarily more professional, business has been
Global Education Research Network
27
Corporate Citizenship Around the World
encouraged to play a positive and supportive
role – as volunteers, mentors, and donors of
products and services, providing NGOs with
access to technology, premises, publicity and
training. For the business, benefits of these
relationships include better employee recruitment and retention, enhanced reputation,
improved insights into the marketplace and
better relations with government.
NGOs most active in the U.K. will include
Friends of the Earth, Oxfam, Age Concern,
Save the Children, Greenpeace, Scope and
Liberty. NGOs active abroad, but based in the
U.K., include CARE, Action Aid and World
Vision.
One of the key activities for BITC through its
regional offices is to deliver workshops for
NGOs and charities on how better to work
with business. These events proved popular
in the U.K. BITC has also successfully exported them to countries as diverse as Czech
Republic, Poland, Hong Kong, Chile and New
Zealand.
The academic community has seized the opportunities offered by the emergence of CSR
as well. An excellent example is the CSR Department at the Nottingham University Business School, under the leaderships of Director
Professor Jeremy Moon. The department undertakes a wide range of research and offers
CSR related courses up to and including at
the MBA level.
Another development which may be unique
in Europe is Business in the Community
(BitC). Founded in 1982 as a response by
business to serious inner-city riots, BitC aims
to inspire, challenge, engage and support
28
Global Education Research Network
business in continually improving its positive impact on society. It does this by focusing
its activity on specific issue-based campaigns
across the four impact areas of Workplace,
Environment, Marketplace and Community,
and in building local delivery partnerships
that extend its reach and impact.
Its members commit to action and to the
continual improvement of their company’s
impact on society. A community impact team
has as its mission to develop innovative solutions and to evaluate the real impact achieved
through engaging business in the community. The community impact team has a clear
focus to engage companies in tackling priority
community issues through partnerships with
the government and a wide range of community orientated organizations. Business in the
Community has over many years developed
and implemented many successful, innovative programs involving thousands of employee volunteers and business leadership
collaboration. The following lessons from this
period provide a useful intelligence in moving
community impact forward:
• The need to focus on less priority community issues and make a significant impact
on each
• The need to be leading edge and innovative
• The importance of delivery partners in order to extend our capacity as an alternative
to doing everything ourselves
• The importance of evidence-based evaluation to measure real impact both in the
community and in companies
• The need for greater engagement of small
and medium enterprises (SMEs) at the local level
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
• The importance of providing expertise on
community impact on a European platform to meet the needs of those companies
which operate across Europe
A new initiative which BitC has been engaged in is the Business Action on Health
Campaign which draws together employers’
perspectives on promoting health at work. It
is working to improve the impact companies
have on employees’ health and well-being.
Through research, events and awards the
campaign aims to support, challenge and engage companies. It looks at both physical and
mental health, and refers to all the measures
that a company can influence in and through
the work environment, accepting the basic
premise that improving and maximizing good
health promotes productivity and employee
retention.
In order to support member companies in
the management and sustainable improvement of their responsible business practice,
we have developed, very much with our members’ assistance, a Corporate Responsibility
Index which companies complete annually.
The Index provides companies with a set of
process indicators and a set of impact indicators across the four key areas. Both sets of indicators are set across three levels of increasing sophistication, to reflect the journey from
beginner to developed practitioner which the
company will be on.
Among the major players in the field in the
U.K., in addition to BitC, must be cited The
Corporate Citizenship Company, AccountAbility, the Ethical Corporation, Transparency
International, the World Business Council
for Sustainable Development (WBCSD), and
Smart Company.
www.BCCorporateCitizenship.org
Business moving the needle of innovation
There are many examples of innovative company programs and processes aimed at improving impact in the workplace, the marketplace, the environment or the community.
The industries which can be said to lead in
the field of CSR include technology, financial
and legal services and retail. Sectors catching
up include manufacturing and the extractive
industries.
An excellent example is Marks and Spencer
(M&S), a major retail chain and a founding
company of BitC. As mentioned above, they
have traditionally been concerned for their
employees and for the communities where
they do business. Over the last five years
they have developed a program of support
to homeless young people, called Marks and
Start. The program makes six-week work experience placements available to the young
homeless through the chain of 400 stores
across the U.K. In this way, the participants
get experience of the work environment, learn
appropriate social and work skills, and complete the six weeks with a recommendation
from M&S to potential future employers.
An example of how companies are increasingly working collaboratively to address social
or environmental problems is the ENGAGE
program which brings together Citibank,
IBM, Allen and Overy, Freshfields, Linklaters,
KPMG, Nokia, DLA Piuper and others. The
objective of ENGAGE is to expand employee
community engagement through collaborative action between companies and their work
with local community partners. ENGAGE
works in building capacity within and between companies, building capacity of community partners, and through EU awareness
Global Education Research Network
29
Corporate Citizenship Around the World
and policy work. This network has successfully implemented collaborative initiatives in key
European cities, including Bratislava, Frankfurt, Madrid, Paris, Prague and Milan. The
launch of ENGAGE in Istanbul in November
at the Koc Museum counted with the presence of HRH The Prince of Wales, President
of BitC.
The ENGAGE Leadership Team has established a fruitful dialogue with the European
Commission and Parliament. The European
Commission passed the CSR Alliance Communication in March 2006. ENGAGE reacted
passionately to the omission of employee
community engagement in this communication. As a result of ENGAGE’s letters, and
meetings and work with the European Parliament’s rapporteur, Richard Howitt, the February 2007 Parliament response underlines
the importance of the EU-budget line for pilot
projects such as those involving employee
community engagement, and points out that
social and environmental responsibility applies to governmental and non-governmental
organizations as much as it does to business.
The Parliament also called on the Commission to fulfill its commitment to publish an
annual report on the social and environmental impact of its own direct activities, as well
as developing policies to encourage the staff
of EU institutions to undertake voluntary
community engagement.
At the moment the ENGAGE network is actively working on demonstrating how employee community engagement can help Europe
meet the 2010 Lisbon Goals. ENGAGE is
facilitating a research project to highlight that
Employee Community Engagement is an effective tool to develop employability skills not
just in the employees involved but in many
30
Global Education Research Network
different groups in the communities, e.g.
homelessness (BitC Ready for Work scheme)
or school students in deprived areas of Frankfurt (ENGAGE in Frankfurt project).
Moving forward in partnership
Today, the U.K. faces many challenges for
business, government and NGOs to address
together. The key issues in the U.K. at this
time include climate change, employability,
poverty reduction and education. Together
with business and with government BitC has
identified the following key priorities for action:
• Raising the achievement of young people;
demonstrating how business can improve
the opportunities for young people in the
area of basic skills and employability;
• Employability – removing barriers to work;
to help disadvantaged individuals and
groups to find employment by providing
training, work placement and employment
opportunities;
• Deprived areas – engaging business to
work with key partners to tackle serious issues in areas of poverty and disadvantage.
Our advice to an international business leader
looking to invest in the country would of
course be to become a member of BitC. In addition, we would advise them to seek appropriate partnerships, whether with NGOs, educational establishments or local authorities,
and to ensure the appropriate resource is put
in place to develop the strategy and practice.
The business leader would need to be familiar
with the key NGOs, as above, with the Department for Trade and Industry and the Home
Office, and to form links with the Confederation for British Industry.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
© Claudio Zaccherini
Chinese Corporate Citizenship Summary
Shanghai Pudong, China
Cultural context and social contract
Today in China companies are increasingly accepting accountability for their economic,
social and environmental impacts. Corporate citizenship has become closely aligned
with the government policies of creating a “harmonious society” and the formation
of a “new socialist countryside.” The government has increasingly worked to engage
companies in tackling its daunting social and environmental challenges.
Current state and transformation of citizenship
At this time most Chinese companies are learning about corporate citizenship. They
are supported by organizations that promote corporate citizenship in China as well
as by their government. As a result, many companies are beginning to recognize that
corporate citizenship can offer a competitive advantage and benefits for branding and
reputation building on an international scale. This progress is beginning to drive a
more pragmatic approach toward social responsibility that extends beyond philanthropy. After a crisis such as the earthquake in May 2008, there is a clear sign companies
www.BCCorporateCitizenship.org
Global Education Research Network
31
Corporate Citizenship Around the World
are moving corporate citizenship beyond aspirations and rhetoric to actions that have
impact and bring about systemic change.
Driving forces and motivations:
• Opportunity for competitive advantage domestically and internationally
• Government policies
• National disaster (spring 2008 earthquake)
Issues of prominence:
• Environment (water, pollution, and urbanization)
• Rising income inequality
• Education
32
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
China’s CSR Campaign - Harmonious society
By Kwang Ryu, Boston College Center for Corporate Citizenship and William Valentino, Bayer China
Introduction
The purpose of this report is to provide the
reader with the latest background and trends
on corporate citizenship, known as corporate
social responsibility (CSR) and also sometimes referred to as sustainable development,
in China. The report is not intended to forecast where China’s CSR will be in the future. Rather, it is structured around the current
CSR practices of foreign corporations in China and motivation for domestic Chinese companies to adopt CSR.
We are at the brink of witnessing the latest
transformation of China’s dramatic socio-economic growth. This phase of transformation
is called internalization. With a growing number of foreign companies investing in China,
and local companies going global, improved
quality and higher standards are becoming
requirements for success in the Chinese market. In some industries, for the first time,
the mainland China market offers substantial
competition and collaboration between Chinese and foreign companies to promote and
adopt higher standards of business practices
around the world. While big ideas like “harmonious society”
have united leaders from government, in
boardrooms, and main streets all over the
country to carefully examine the growing
importance of environment and social challenges to China’s future, China’s rapid development and socio-economic transformation
have birthed new social challenges such as
mass migration to cities, increasing demand
www.BCCorporateCitizenship.org
for clean water, uncontrollable environmental
degradation, etc. It’s time for policy makers to
rethink their approaches to all these problems
and for corporations to rapidly embrace corporate social responsibility as corporate strategy and management.
The emergence of CSR in China
In China today, CSR is moving rapidly from
conceptual study into implementation and
the evaluation of CSR initiatives at individual companies. Government ministries and
agencies, their affiliated research institutions,
economic organizations, and other groups
are publishing theoretical research on CSR,
case studies of CSR initiatives, and guidelines
for evaluating CSR. Examples include “The
Recommended CSR Standards for Chinese
Corporations” and the “Compilation of Best
Practices” published by the China Enterprise
Confederation and the China Business Council for Sustainable Development (CBCSD), as
well as the Ministry of Commerce’s guidelines for the preparation of CSR reports. CSR
theorizing and dialoging are going on at all
levels of government, civil society, as well as
in the Chinese business sector itself. This is
accompanied by myriad conferences, award
ceremonies, events and meetings.
In the Chinese setting the concept of CSR
is both emerging and evolving. At this time
most Chinese companies are just getting
started with a learning process predominantly
focused on what CSR is. Different organizations are promoting CSR without sufficient
coordination among themselves, but there is
Global Education Research Network
33
Corporate Citizenship Around the World
no doubt that CSR is becoming increasingly
important in China, as the initiatives undertaken by the government, economic organizations, and companies continue to gain momentum.
Once considered a trade barrier, the negative
viewpoint toward CSR has disappeared and
CSR has burst into the collective consciousness of an entire nation, largely by policy
thinking supported at the highest levels of
government. It has become closely aligned
with the government policies of creating a
“harmonious society,” and the formation of
a “new socialist countryside.” It represents a
revival of Confucian thought where the focus
has always been on creating harmony in human society.
Chinese companies, normally driven by the
desire to maximize profits, are beginning to
recognize that CSR can offer a soft competitive advantage in a hyper-competitive business environment. They are also discovering
that there are benefits for branding and reputation building on an international scale and
this is beginning to drive a more pragmatic
approach by domestic enterprises toward social responsibility.
The publication of CSR, or sustainable development, reports by key Chinese corporations
such as State Grid, Sinopec, Cosco, China Mobile, China HuaNeng, China Life, and China
Southern Airlines are only the tip of the iceberg of how Chinese companies are beginning to become responsive to CSR. China Mobile explains that the emphasis of its report in
2007 was placed on fulfilling the “concept of
corporate social responsibility and realizing
harmonious growth between enterprise and
34
Global Education Research Network
industry, and society and the natural environment, by implementing the four major principles of countryside, life, culture and green.”
A state-led approach
The Chinese government’s pursuit of economic prosperity and social reform over the
past two and a half decades has resulted in
prosperity for many Chinese citizens. But
this rapid development has come at a price.
The negative consequences are real and require an actionable response: the widening
gap between rich and poor, the income gap
between interior areas and coastal regions as
well as between urban and rural populations,
unemployment, poverty, corruption, poor
labor conditions, an inadequate health-care
system, and pollution and extensive environmental deterioration.
The result of tackling these issues has been a
new policy approach focused on a harmonious society that merges policy with the various issues and concepts of CSR and sustainable development. It calls for the integration
of social and environmental concerns with
continued rapid growth and development
aimed at maintaining sustainability and an
acceptable level of social equity.
At the government level there is a considerable interest in international standards, such
as the United Nations Global Compact, Social
Accountability (SA) 8000, and the International Standard Organization (ISO) Social
Responsibility standards. International symposia and seminars are being held frequently
throughout the country, along with international institutions and European and American organizations. There are also strong indications that the Chinese government and
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
economic organizations are seeking to establish China’s own standards and accreditation
criteria.
The publication of CSR guidelines by SASAC
(State-owned Assets Supervision and Administration Commission of the State Council) in
January 2008, the active involvement of other
high level government organizations such as
the National Development and Reform Commission (NDRC), the Ministry of Commerce,
the Ministry of Science and Technology, and
Chinese academic institutions and government think-tanks have placed CSR high on
China’s policy agenda.
A key topic regarding CSR in China today
is the development of a robust civil society
where a legal system has not yet been developed to properly accommodate NGOs. This
makes it difficult to select suitable partners
and methods of collaboration. The government remains generally wary of public activism and has long maintained tight restrictions on nongovernmental groups. Faced with
the potential for a grave humanitarian crisis,
the government for the moment has loosened
its grip on NGOs and is allowing them to play
a minor but still important role of identifying
local needs and advising on implementing
initiatives to match those needs. Some analysts see this as a key step for China and the
spring 2008 earthquake might prove to be a
defining moment that will place pressure on
China to allow more space for civil society in
the future.
Chinese CSR - Reality, relevance and
responsiveness
The rapid emergence and evolution of CSR in
China and globally has created a new mindset
www.BCCorporateCitizenship.org
where companies are increasingly accepting
accountability for their economic, social and
environmental impacts. After a crisis such as
the earthquake in May 2008, there is a clear
sign that companies are already moving CSR
beyond just aspirations and rhetoric to actions
that have impact and bring about systemic
change. In the case of the earthquake, there
has been a gradual but clear shift from the
immediate short-term rescue and relief efforts
to more long-term thinking about rebuilding,
rehabilitation and social development of the
affected areas. This is where the real picture
and definition of CSR is emerging and evolving in China, going far beyond the immediate
philanthropic responses to implementing a
longer-term view of redevelopment and rebuilding lives and livelihoods.
To understand the reality, relevance and responsiveness of CSR in China, a basic understanding of CSR is necessary. To understand
CSR better in the context of China it is critical
to examine how foreign companies and Chinese enterprises are driving it from their own
perspectives and needs. This will ultimately
help to grasp the importance of CSR for companies in China today and where it might be
going in the future.
For multinationals the reality of CSR today is
that ignoring it is no longer a choice. Viewed
on a global scale but implemented locally in
China, businesses are being forced to take a
larger view of their responsibilities in a world
overseen by cross-border compacts, such as
the Kyoto Protocol or the U.N. Global Compact. These and other conventions have codified and promulgated CSR ideas addressing
issues from global warming to labor, human
and environmental rights. Social audits, eth-
Global Education Research Network
35
Corporate Citizenship Around the World
ics audits, codes of conduct, stakeholder mapping, social capital and environmental impact
studies and corporate sustainable development or CSR reports have now also become
an important part of the corporate landscape.
CSR becomes real for companies in China as
they include CSR in their business strategies
to build and win the trust of their stakeholders and to create competitive advantage. This
ties CSR very closely to corporate branding
and image. It is here that CSR creates the
alignment between a company’s explicit intention to define its values and its role in society by addressing environmental, social and
sustainability issues. (Table 1 below highlights
the key business risks and CSR-related issues
in China by industry.) Integrating sustainability into business strategy and integrating the
expectations of stakeholders through responsive best practices means taking a value-added
approach. This is based on the premise that
a sustainable corporation is one that creates
profit for shareholders while protecting the
environment and improving the lives of those
with whom the company interacts. Key industry specific CSR-related
challenges in China
IT, Electronics, Telecommunications
• Digital divide: The gap that still exists in
China between those with and without
digital connectivity, Internet access, and
the proper technical skills and training to
operate machinery. This is particularly true
in rural areas and among migrant labor
communities.
36
Global Education Research Network
• Training, attracting, and retaining talent:
The great investment of companies in this
sector in education, scholarships, teacher
training, research and teaching materials
(mostly electronic-based) signals their business priority to attract and retain top tech
talent in China. Although several programs
instilled by these companies seek to creatively engage young talent, in such a competitive atmosphere, it seems these companies would have difficulty retaining much
of the talent they have invested in. There is
also very little mention of how companies
measure the success of the programs they
have founded and continue to support, as
it relates to their bottom line.
• Emerging as leaders in competitive market:
Because the IT sector is one of the most
advanced in promoting innovation and
networking solutions to development challenges in China, it has become very challenging for companies to emerge as leaders in “sustainability” and “innovation” in
China which is increasingly important for
brand management, government relationships, and market expansion in China.
Pharmaceuticals, health and beauty
products
• Limited access to medical goods and services: Many of the potential stakeholders
who are in most need of these companies’
goods and services cannot access them
because of situations of poverty or geographical isolation. Many of the CSR programs listed within this industry, therefore,
seek to address the needs of these people
through special community access facilitation.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
• Lack of doctors, medical talent, and proper
remuneration: China suffers from a lack of
qualified health care workers, specifically
in community-level hospitals and clinics.
This is due to insufficient medical education and also market incentives that have
made jobs in the medical field less remunerative than other fields that can attract
top talent with top pay packages. At the
end of 2005, there were a total of 542,700
health professionals in public health organizations. Among them, 490,400 (about
90 percent) worked in public hospitals.
This leaves a ratio of civilian to health professionals in China of 25:1 with a much
less favorable ratio in rural areas. Health
professionals amount to 17 percent of the
total employees in service units of China,
only less than the education sector.
• Lack of health and hygiene education:
Limited education in health and hygiene,
especially in remote areas, exacerbates this
challenge as it produces greater demand
for health services and cases of preventable
illness. This is particularly emphasized in
regard to HIV/AIDS and early childhood
care education.
Agriculture, food and beverage, chemicals,
life sciences
• Infrastructural underdevelopment: As many
of the companies working in this industry
have core operations in China’s rural areas
they face challenges posed by China’s infrastructural underdevelopment – often in
the form of poor roads leading to difficult
transportation.
www.BCCorporateCitizenship.org
• Urban migration: In industries that depend
on the retention of talent in rural areas,
urban migration as a result of China’s
rapid development can be harmful to its
operations. A counterargument can also be
made, however, that urban migration and
the rise in monetary wealth among consumers who have more disposable income
is necessary for the growth of these companies in China.
• Insufficient talent in sciences: Especially in
rural areas, China suffers from a lack of adequate talent development in the sciences.
Utilities and energy
• Environmental degradation and brand management: The severity of environmental
grievances throughout China and the role
of fossil fuel use in exacerbating this problem have put pressure on energy companies to use their expertise and resources
in finding viable alternative energy source
and energy efficiency solutions. This has
become necessary for companies operating
in this sector to remain competitive and
develop positive government relations in
China.
• Lack of environmental health and safety
awareness and enforcement: Energy and
Utility companies that work with extensive
suppliers in China face the risk of working
with partners who lack proper EHS training and do not uphold essential environmental and safety standards. This serves
as a large liability for companies where the
ramifications of harm to the environment
and personal health and safety can be quite
severe.
Global Education Research Network
37
Corporate Citizenship Around the World
Manufacturing (clothing, apparel, housewares)
• Responsible supply chain management:
With the new labor law that has gone into
effect at the beginning of 2008, and problems with suppliers accused of committing
labor abuses, manufacturing companies
have to have full awareness over all links
in their production chain. A problem some
companies face, however, is the conflict of
demanding low-price goods as well as high
quality factory conditions.
• Consumer growth and irresponsibility: As
China’s economy develops rapidly and people are emerging out of poverty, Chinese
consumers are gaining purchasing power
for a much wider variety of goods than ever
before. The new scale of waste generated
from packaged goods and caustic effects of
their production has serious environmental implications. This places great responsibility on manufacturing companies to
make their products less environmentally
caustic in production, consumption, and
disposal. It also poses the need for greater
education on responsible consumer habits
in China and cooperation with the government to create market incentives for more
responsible consumption. Professional services
• Unethical, fraudulent, and illegal activity
(white collar crime): Financial services are
known globally for being particularly susceptible to cases of white-collar crime. Considering the problems with corruption and
proper law enforcement in China, as well
as the new development of the financial
services industry in country, the chances
for fraudulent activity in China are significant.
38
Global Education Research Network
• Talent attraction, development and
retention: In the financial services sector,
employees are a company’s greatest assets. Considering the shortage of adequate
managerial skills in China, talent management is an especially significant challenge
for companies in this industry.
Shipping, transportation, and automotive
industry
• Environmental degradation: Auto use is one
of the prime contributing factors of global
warming, air pollution and climate change.
In Beijing, the second-most polluted city
in the world, automobiles account for the
largest amount of carbon dioxide in the
atmosphere. For the health and wellbeing
of Chinese customers and therefore competitiveness moving forward, car companies are expected to increase fuel efficiency
and develop cars with alternative energy
sources. Similarly, shipping agencies are
expected to use increasingly fuel efficient
and green transportation methods.
Focus of “real CSR”
“Real CSR” is characterized by a focus on
topics such as stakeholders, business ethics,
social contract, corporate citizenship, public
policy and best practices. This includes CSR
as a driver for brand reputation, competitive
advantage and as an important key to attracting and retaining the best employees in the
constant battle for talent and new staff. This
framework is enhanced by a growing network of business-supported organizations
present in China who sponsor annual conferences, seminars and workshops, conduct
training, research and consultancy services
for companies signaling their commitment
to higher ethical, social and environmental
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
performance alongside their traditional business results. Best company lists, awards and
rankings, singling out firms who’s social or
environmental performances stand out have
become a specific focus for the media.
CSR initiatives by foreign companies in China have initially focused on legal and regulatory compliance, risk management and
philanthropic activities. What began as precautionary measures have dramatically shifted
toward the objective of increasing corporate
value in the marketplace through strategic
CSR. European and American companies in
China are taking a proactive approach by establishing CSR committees at their chambers
of commerce. They support CSR committee
activities with both human and financial resources and work to form organizational and
strategic ties with government authorities, the
Chinese media, European, American and Chinese NGOs, and other stakeholders. These actions enable them to identify the needs of the
local communities and align their CSR initiatives with those needs and their core businesses and values. In reporting about their efforts to stakeholders, companies highlight the
benefits reaped from CSR that are manifested
in good reputation, branding, public recognition and competitive advantage, forming the
basics of a business case for CSR.
Development impacts CSR in China
In 2007 a survey of China’s business climate conducted by McKinsey, more than 80
percent of global executives surveyed said
that China should respond to the social, economic and environmental threats to its future growth. However, only 60 percent of the
same respondents were somewhat optimistic
about China’s ability to sufficiently address
those same threats.
www.BCCorporateCitizenship.org
The survey also identified the following top issues as the greatest threat to China’s continued growth and development:
• Environmental: water, pollution and urbanization.
• Social: rising income inequality and education.
China’s environmental challenges
China’s environmental challenges take four
forms; water, rapid urbanization and clean energy. First, the most serious challenge China
is facing relative to the size of its population
is access to clean water. There is a growing demand for clean water to sustain current population and economic activity levels. From an
economic sense, China is losing up to us$36
billion in industrial output due to a lack of
clean water to run factories. Today, two-thirds
of China’s fast growing 650 cities do not have
access to adequate water supply.
Rising energy needs as hundreds of millions
of people migrate from country to city pose a
great risk to China. About 600 million Chinese already live in cities, but that represents
only 45 percent of the population. McKinsey
(2005) predicts that another 350 million will
migrate to cities by 2025. This influx of population to cities will likely double the current
demand of energy in urban areas. Demand
for water will also increase by 70-100 percent.
China is committed to improving the total use
of renewable energy to 15 percent of its primary energy mix by 2020 (from 7.7 percent
in 2005). To reach its renewable energy goals
by year 2020, China said it needs two trillion
Yuan (us$265 billion) of investment. At a recent renewable energy conference hosted by
Global Education Research Network
39
Corporate Citizenship Around the World
International Cooperation Center (ICC) and
the NDRC, Chen Deming, China’s top energy
officer, said that the bulk of the investment –
more than 80 percent – will come from both
Chinese and multinational enterprises.
Growing income gap
Since 1980, China’s new world policy has
pulled more than 400 million Chinese out
of extreme poverty and a predominantly rural society to urbanization and industrialization. An additional 60 million to 70 million
people are expected to join China’s economic
reform and leave the impoverished countryside. While a growing number of the migrant Chinese population pulled more than
120 million people out of extreme poverty in
the past decade alone, this phenomenon has
also increased the urban-rural income ratio.
Today, the top 20 percent of the highest-earning population in China is earning 4.9 times
more than people in rural China. This growing income inequality results in more than a
difference in lifestyle. A majority of rural Chinese citizens do not have access to adequate
education, health care, or an adequate social
welfare system.
Lack of access to education and societal
impacts
Most children in the rural areas of China have
limited to no access to even basic education
and thus are condemned to a subsistence existence. Persistent disparities in income and
gender preference have deepened the problem of access to education for rural Chinese
children.
As a result, many children in rural areas
of China are traded as a labor commodity. Compounding this situation is China’s rapid
40
Global Education Research Network
economic growth, which is increasing the demand for unskilled workers in manufacturing
and service industries. This trend, coupled
with a lack of opportunity for an education, is
resulting in young female workers entering
the dark world of child labor and sex trafficking. The lack of a protective environment in
rural China for children often results in violence, abuse and exploitation. A natural disaster impacts CSR in China
The May 12, 2008, 7.9 magnitude earthquake
struck with devastating results in western Sichuan Province but it also rocked the corporate sector, not just in China but around the
world.
In the aftermath of the earthquake, China’s
corporate sector mobilized immediately along
with many foreign multinationals. The outpouring of monetary and in-kind donations by
both Chinese and multinational corporations
operating in China, along with the social activism on the part of many individual employees, was swift and massive. The groundswell
of compassion represented by the responses
amplified national pride and enthusiasm, but
also clearly framed corporate action in this
crisis as corporate social responsibility based
on the deep Chinese tradition that when disaster strikes, help comes from all sides.
The public response has grown exponentially via the Internet with millions of Chinese
citizens clearly expressing their growing expectations that those with the means to help
should contribute more while connecting this
specifically to corporate social responsibility.
Several online communities in China have
been lauding companies and individuals who
have emerged with the most generous dona-
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
tions in the aftermath of the earthquake in
Wenchuan county. Internet communication
has emerged in the form of blogs, ranking
lists, articles and even boycotts and protests
against companies that have been seen as too
“stingy” in their aid efforts. This is causing
many local companies, even high profile Chinese and many foreign firms, to come under
severe criticism. This cynical analysis is the
result of CSR being defined solely in terms of
snapshot and headline-grabbing philanthropic giving.
In contrast to foreign companies, state-owned
enterprises (SOEs) in China have earned a
particularly bright spotlight and significant
reputation benefits from the unanimous
generosity in responding to the earthquake.
Within a week of the quake, 128 SOEs under
direct administration of the central government donated 1.16 billion yuan (us$166 million). The generosity and the show of support
are expected to go a long way in easing the
contempt with which a section of the Chinese
public views the large SOEs and their monopoly status.
Viewed as pure philanthropy, this response
is seen as an essential effort to immediately
speed relief and help to the most-affected areas of the earthquake zone. In the context of
rankings, the amount of money donated becomes the focus, somewhat a public relations
tool that overshadows the actual impact and
intent of a company’s CSR efforts. This event
has begun to fuel competition among companies vying to be perceived as the most socially
responsible.
Framed as philanthropy for the time being
With numerous enterprises based or investing in China providing unprecedented support, the perception of the role of the private
sector has begun to frame CSR more as philanthropy. The recent earthquake was a test
of the benevolence and responsibility of every
Chinese citizen but above all the key responsibility of corporate citizens who were expected
to do their share and contribute to the relief
efforts.
Placed in the mindset of philanthropy, the
public and corporate reactions became a natural outpouring of grief and desire to help, fueled by unprecedented media coverage that
clearly signaled that those with wealth and resources had a responsibility to give back. The
public outpouring has been dramatic. But the
media reporting was successful in educating,
sensitizing and mobilizing an increasingly
wealthy urban Chinese society, who now have
the means to donate, to the reality of China’s
widening gap between rich and poor, between
interior areas such as Sichuan and coastal regions, as well as between the urban and rural
populations of China.
Over the past two years the government has
been actively pursuing a concept of CSR with
Chinese characteristics, based on the policy
guidelines of “People First” and “Harmonious
Society.” But this natural disaster proved to
be a defining moment that unleashed public
opinion regarding what people expect the role
of business in society to be. It was also a loud
wake-up call for businesses in China that CSR
has become a new imperative.
CSR is a diverse topic with many definitions
and represented by many terms. It covers
www.BCCorporateCitizenship.org
Global Education Research Network
41
Corporate Citizenship Around the World
diverse fields such as, environment, health,
poverty reduction, social development, education, labor standards, human rights and
supply chains. This also includes strategic
philanthropy, which especially at times of
natural disaster and crisis such as the Sichuan earthquake, basically defines how the
majority perceives CSR in China. But CSR is
not just philanthropy, and the current context
of the earthquake does not define CSR in the
bigger picture and nor is it indicative of how
it is evolving in China today. It is only indicative of the stage that CSR is in at the moment
in China as it moves to becoming a more strategic part of doing business on an everyday
basis, not just when a crisis strikes.
CSR has become the catalyst for companies
to act, prosper and contribute to the solutions
of some of society’s biggest problems. In the
bigger picture it represents an environment
where businesses do not stand apart but are
an integral piece of a total community. This is
a core concept that is critical for understanding the business and society relationship,
which defines CSR not only in China, but everywhere.
Reflections on reality, relevance and
responsiveness of CSR in China
Googins, B., Mirvis, P. and Rochlin, S. (2007). Beyond Good Company: Next Generation
Corporate Citizenship, New York: Palgrave
MacMillan.
CSR is both emerging and evolving in China
against the backdrop of rapid economic, political, social and global change. Foreign companies are evolving and adapting while Chinese
companies are embracing and adapting CSR
to local needs. Both are acting in tandem with
government and civil society to create mutual
benefit based on the underlying concepts of
sustainable development. They are realizing
that it is more feasible and productive to create the future than it is to just predict it. Legal and regulatory compliance and risk
management will always remain essential elements of CSR for all companies. They are the
foundation for CSR and will continue to be
so. The real challenge for companies, however, is to understand how to become be more
strategic in managing CSR, to ensure that
their initiatives result in increased corporate
value and improved corporate image.
42
Global Education Research Network
References
Boston College, Center for Corporate Citizenship. (2007). “The State of Corporate Citizenship, 2007,” Chestnut Hill, Ma: BC CCC,
December.
McKinsey & Co. (2007). “Checking China’s
vital signs: The social challenges” Online at
McKinsey.com.
McKinsey & Co. (2007). “Doing business in
China: A McKinsey Survey of executives in
Asia” Online at McKinsey.com.
Woetzel, Jonathan and Janamitra Devan.
(2008) “Growing Pains” The Wall Street Journal, April 14, 2008.
Economy, Elizabeth and Kenneth Lieberthal
(2007) “Scorched Earth: Will Environmental
Risk in China Overwhelm Its Opportunities?”
Harvard Business Review, June 1, 2007.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
© istock.com
Philippine Corporate Citizenship Summary
Makati City, Philippines
Cultural context and social contract
The concept of corporate citizenship in the Philippines is highly influenced by Asian
culture, characterized by a tradition of high ethical standards and concern for society,
and the importance of the family unit. Philippine companies have a long tradition of
gift giving and volunteering. In Asia, responsible corporations are perceived as those
concerned and active in community welfare, that offer top-quality products/services
and stand behind their products/services if something goes wrong. Today, Philippine
businesses are facing increasing expectations and high obligations to assist in social
and economic development. Companies in the Philippines are very involved in improving access to basic services, education, credit and the development of new skills for
the work force.
Current state and transformation of citizenship
In the Philippines, Corporate Social Responsibility (CSR) is the term most often used
in discussing the role of business in society. The concept has evolved from a focus on
www.BCCorporateCitizenship.org
Global Education Research Network
43
Corporate Citizenship Around the World
philanthropy and public relations to a new developing focus on strategic stakeholder
relationships. Yet, in practice, CSR is still primarily charity-based, and advanced management of CSR – such as reporting and internal management – is uncommon and
limited to large international companies. Awareness of CSR is still low in the country.
Driving forces and motivations:
•
•
•
•
•
Societal pressures to contribute to development
Inability of the government to completely satisfy society’s basic needs
Cross-sector partnerships
Government laws and regulations, incentives and guidance
Family corporations and employee values
Issues of prominence:
•
•
•
•
•
•
•
Poverty
Education
Health, disaster relief
Environmental management
Community livelihood
Indigenous populations
Corporate governance
AIM-Ramon V. del Rosario, Sr. Center for Corporate Responsibility at the Asian
Institute for Management
The Ramon V. del Rosario, Sr. AIM Center for Corporate
Responsibility (RVR Center) is a research and program
center within the Asian Institute of Management. Its
main task is the management of corporate citizenship relative to the competitiveness
of firms and its impact on society. The center is engaged in case writing and research,
program development and executive education and training. A lecture series and an
annual conference on corporate responsibility are programmed every year.
The center also provides consultancy services in a range of corporate responsibility
areas as an integral part of its mission. These services are available to corporations
throughout Asia.
The Center is named after Ambassador Ramon V. del Rosario, Sr., founding trustee of
the Asian Institute of Management and founder and Chairman of The PHINMA Group
in the Philippines. It is committed to making a difference in sustaining the growth of
Asian societies by developing professional, entrepreneurial, and socially responsible
leaders and managers.
44
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
CSR in the Philippines
By Prof. Felipe B. Alfonso, Executive Director and Rosemary Anne F. Quiambao, Director Asian
Institute of Management Amb. Ramon V. del Rosario, Sr. Center for Corporate Responsibility
Corporate Social Responsibility (CSR) in
the Philippines has evolved over the last 50
years—from philanthropy and public relations to developing strategic shareholder
relationships—partly because corporations
today must meet increasing expectations from
multiple stakeholders, from employees to
communities, from suppliers to government
corporations.
Philippine CSR practices are highly diverse
– donations, volunteerism, marketing campaigns, and other special projects. For decades, the primary beneficiaries were, and still
are, the education and health sectors. Lately,
corporations have targeted other sectors such
as disaster relief, environment management,
community livelihood projects and even uplifting of indigenous people.
CSR in the Philippines is rooted in our culture. In the 1960s, it started as gift giving
and went through a process of transformation toward corporate citizenship. Then, individual gift giving, volunteerism in churches
or school and the “bayanihan” culture or the
concept of mutual aid to neighbors, brothers
or fellowmen, were prominent. Nowadays,
both for-profit corporations and nonprofit organizations are institutionalizing and continuously improving the practice of CSR, regardless of the economic cycles and social issues
facing the country.
Successful CSR programs begin with identifying the social issues that best match the
company’s available skills and resources.
The challenge therefore is to find the correct
match among these factors to create value to
all stakeholders. Today, companies educate
and provide training to their employees, use
innovative technology and expertise to develop unconventional services and products that
are within the reach of every Filipino. Thus in
the process, companies address issues such
as poverty, lack of education, poor health, etc.
The greatest challenge for Philippine companies today is determining how best to use
CSR as a strategic business model.
The roots of CSR in the Philippines are evident in the perception that corporations have
obligations, not only to their employees but
also to the environment, and to communities
in need. This perception is shared across all
areas, by sector, class, gender and age group.
Societal pressures and the inability of the public/government sector to completely satisfy
society’s basic needs has also served to transform and expand the role that firms need to
play from simply making money to assisting
in social and economic development.
www.BCCorporateCitizenship.org
Optimizing the collaborative efforts or convergence is a critical path to successfully
implementing CSR. Based on the Philippine
experience, implementing CSR is better executed through partnerships. Government
and corporation partnerships in education,
environment, and health have proved fruitful.
However, relatively few partnerships have advanced to a more integrative level where there
is collective action and organizational integra-
Global Education Research Network
45
Corporate Citizenship Around the World
tion. The key factor for success is the development of mutual trust among stakeholders and
the sense of duty to serve the community, and
in particular the society at large. At the macro
level the government initiates and provides
appropriate policies and practices. Local government units in turn are being challenged
to efficiently develop CSR partnerships and
practices as the activities of many companies
go beyond the boundaries of the firm.
A strong commitment from business leaders is another key success factor for CSR in
the Philippines. Corporate leaders recognize
they have a role in community development.
Although CSR in the country is institutionalized, individual leadership is a major influencer within the organization to demonstrate
commitment and to ensure continuity of CSR
programs and practices. Evolution of CSR in the Philippines
In the Philippines, CSR appears to have
evolved over the last four decades mainly as
a response to the country’s worsening socioeconomic conditions, as shown in the table
on page 47.
In developing countries like the Philippines,
where at least a third of the population live
below the poverty line, individual and corporate philanthropy are critical in complementing the limited budget of government in addressing the basic needs of the disadvantaged. Philanthropic activities are necessities in the
fight for social justice, for true equality, and
for social and economic development. As a
result, CSR has become a strategic management tool that all companies must learn to
integrate into their operations if they are to
develop a sustainable model of “trust” with
the many communities they serve.5
The network of multisectoral groups in the
Philippines
The expansion and implementation of CSR
involves business networking with other sectors, including the government, civil society
organizations (CSOs) or NPOs, and other private organizations.
The Philippine government developed
its corporate citizenship program “to encourage companies to start their own CSR
programs.”6 To encourage CSR, the government has the responsibility to draw up regulations, grant incentives and provide a friendly
political climate, and also to steer business
toward areas where help is needed and search
for partners in developmental programs.
Business networking with local government
units (LGUs) is highly encouraged for CSR.
The skills, expertise and resources of LGUs
complement those of business; in turn, networking exposes the LGUs to effective corporate practices. In the Philippines, there are Non Profit Organizations (NPOs) for whom advocacy and lobbying are distinct functions. CSOs in particular include nonstate, nonprofit organizations
and groups, socio-civic organizations, academia, media, religious groups, cooperatives
and people’s organizations. They were originally watchdogs of government performance.
5
Jaime Augusto Zobel de Ayala II, Feature April-May 2003
downloaded from http://www.synergos.org/globalgivingmatters/
features/0305zobeldeayala.htm
6http://www.undp.org.ph/environment.htm downloaded June
2005
46
Global Education Research Network
www.BCCorporateCitizenship.org
Evolution of Networks of CSR in the Philippines
ACTIONS
DEVELOPMENT OF NETWORKS
The Decade of Donations (1960s)
Social inequity was high, in the mid-to-late
1960s, matched by political unrest expressed in
mass demonstrations. Companies eased economic and social problems by giving donations
in cash and in kind, usually indirectly to charitable institutions, or directly as individual gifts by
the firm’s senior management—as “PR. (public
relations)”
The CSR network was based on donations
given by companies to both the end-users and
charitable, not-for-profit entities. The activities
of these networks were uncoordinated and sporadic, and the impact tended to be limited and
selective.
The Decade of Organizations (1970s)
Not-for-profit organizations dealing with the
business community grew to prominence in
this decade. Associations such as the Bishops
Businessmen’s Conference of the Philippines
(BBCP), the Associations Foundations (AF),
and the Philippine Business for Social Progress (PBSP). These NPOs again helped in the
improvement of economic conditions in the
country.
After the 1960s, companies realized that a
weak network of CSR reduced both the impact
and efficiency of their philanthropy. Companies
strengthened their CSR networks by seeking
new intermediaries or creating their own foundations to undertake CSR. This effort might be
regarded as the first step in coordinating CSR
programs.
Decade of Citizenship (1980s)
The Philippine economy continued to deteriorate with the assassination of Benigno Aquino,
Jr., archrival to ruling dictator, Ferdinand Marcos. Many companies responded by providing regular and comprehensive services to the
communities in their localities. From this form
of assistance emerged the movement and institutionalization of community relations or
COMREL.
Taking into consideration the interest of the
community further strengthened the CSR network by incorporating the end-users in the design and implementation of the CSR programs.
The COMREL network as CSR increased the
range of company-to-community activities and
services, and the financial amounts as well.
Decade of Continuous Improvement (1990s)
From COMREL arose the notion of corporate
citizenship. Contributions to society’s wellbeing became a “must” and not simply a “PR”
effort. As a concern, CSR was raised to the
highest corporate levels —management and
the board itself.
The CSR network was strengthened further as
the business sector acknowledged its role in
developing society through good “corporate
citizenship,” exemplified by the company’s capability to internalize CSR programs in policy
formulation.
The Decade of Engagement (2000s)
Social organizations persisted in their quest to
help the poor by using management frameworks. For example, PBSP pushed for the
participation of corporate citizens in improving access to basic services, education, credit,
and the development of new skills for the work
force to help them improve their lives.
www.BCCorporateCitizenship.org
A trend appears to be developing whereby the
CSR network may be characterized by integration of values, goals, resources, and skills between business and other sectors—including
not just the families of employees or the community, but a broader community of direct and
indirect stakeholders.
Global Education Research Network
47
Corporate Citizenship Around the World
Today, they are involved in the delivery of various public services like health and education
as well as micro-enterprises and cooperatives
development.
There are private consortiums that promote
corporate citizenship in the business community and provide venues for sharing the experiences of companies and opening opportunities for joint practices and resource sharing.
These private organizations include the AIMAmb. Ramon V. del Rosario Sr. Center for
Corporate Responsibility, the Philippine Business for Social Progress (PBSP), the League
of Corporate Foundations and the Corporate
Network for Disaster Response (CNDR).
Country
ideal relationships among its citizens. The
role of this group is the propagator of the corporate culture among its members as well as
its protector; it is where the individual member receives his training and values where he
is socialized. In Asia, the fundamental thinking is that the family runs in the heart of the
modern rationality. Thus, this represents the
social side of the Asian business enterprise.9
The family corporation is the prevalent form
of business in Asia. The dominance of family corporations or businesses separates Asia
from the rest of the world. Two thirds of listed
companies, and substantially all private companies, are family run. Family Groupings
% listed Assets
% of GDP
15
15
15
61.7
55.4
34.4
21.5
46.7
84.2
Indonesia
Philippines
Hong Kong
Source: The Morality of Corporate Governance: Issues of Quality and Quantity, Ismail Adams, September 2003
The Asian culture and CSR
CSR goes beyond compliance with laws and
regulations,7 and has long been part and parcel of the Asian culture.8 The Chinese culture,
which is commonly present in the Asian region, is essentially about the family culture.
The family, which is the basic unit of society,
provides a prototype of a community. The
family is not an abstract organization but always a concrete family composed of concrete
individuals. It represents the prototype of the
2005 AFCSR Survey 63% of the respondent said that CSR is beyond compliance of rules and regulations
CSR is a natural extension of the family corporation, as business in Asia is somehow attached to the identity of the family. Business
transactions are an extension of the honor of
the family and its name, and a failure of the
corporation is seen as a failure of the family.
Ethical values and concern for the society are
also a large part of the religious belief and
traditional norms of countries such as Thailand, Indonesia, Hong Kong, Japan and the
Philippines. These countries possess specific
cultural traditions that are consistent with the
concept of CSR. 7
8CSR in the APEC Region. APEC December 2005
48
Global Education Research Network
Silos, Leonardo. “Management and the Tao: Organization as
Community.” Asian Institute of Management. 1998.
9
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
The Asian way is different
Although the core values embodied in CSR
are intrinsically good, it is naïve to believe that
CSR in the West is the same elsewhere. CSR
in Asia is different. Asian leaders practice
their own form of CSR because:
1. Asian capitalism is different. Since smaller
companies possess fewer of the advantages available elsewhere, Asian companies compete on costs in order to survive. Thus they face problems with respect to
social safety nets, environmental and other
related issues. Asian companies practice
their own version of CSR (i.e. focusing
on treating staff members as part of an
extended family). Moreover, Asian firms’
CSR practices generally continue in the
form of charities, providing tokens to heed
environmental issues and offset pressures
from the market.10
2. Social problems in Asia are different. Asia
is considered one of the most important
components of the world economy11:
The region represents 56 percent of the total world population.
The achievement of Asian economies has
largely contributed to global economic
development and 25 percent of the world
GDP and world’s trade in the last two decades.
Chandran Nair. “Practice and Perception of CSR in Asia.” Leading Perspectives. Global Institute for Tomorrow. Fall 2005 page 4
and 15
10
11
Jin, Liquin. Poverty and Security in Asia. Asian Development
Bank. 30 March 2004
www.BCCorporateCitizenship.org
3. Asia faces a number of challenges12:
Even though there has been a significant
reduction in poverty incidences, 13 poverty
remains as a serious challenge. In addition, almost all developing economies in
Asia are faced with the problem of corruption. Asia’s most urgent task is institutionbuilding. Proper economic infrastructures
should be supported by reasonable political
apparatus. The work is disheartening but
will definitely test the true colors of Asian
leaders.
Additional challenges:
• Asia houses two thirds of the world’s poor;
• The development gap between regions is
enlarging;
• Regional conflicts and unstable political
situations;
• The region is still in the early stages of nationhood, and the impact of colonialism
remains;14
• Poor public and corporate governance
Asia does not report CSR practices
Disclosure is one way of promoting CSR. It
is essential for businesses to actively communicate their concerns for society, and to
sincerely listen to the stakeholders’ views and
recommendations. Corporations (especially
multinational corporations) must understand
local perspectives and respect the culture and
individuality of each country/region. However, in Asia, businesses tend to establish a vis-
ibid Jin
12
poverty incidence drop by 32 percent in 1990, and 22 percent in
2000
13
Chan, Ronnie. Asia’s Future in a Globalized World. 23 November
1999 (the article was originally published in the German journal
Internationale Politik)
14
Global Education Research Network
49
Corporate Citizenship Around the World
CSR in Asia: A seven country study of CSR web site reporting
Penetration
Extent of CSR reporting
Country
% of CSR Co.
Minimal (%)
Medium (%)
Extensive (%)
India
South Korea
Thailand
Singapore
Malaysia
Philippines
Indonesia
Mean
(7 Counties)
United Kingdom
Japan
72
52
42
38
32
30
24
41
98%
96%
16.7
27.0
23.8
42.1
25
28.6
72.7
28.5
47.2
46.0
61.9
42.1
50.0
35.7
9.1
44.4
36.1
27
14.3
15.8
25.0
35.7
18.2
27.1
Source: Chambers, Eleanor; Chapple, Wendy; Moon, Jeremy; Sullivan, Michael. “ CSR in Asia: A Seven Country Study of CSR Web site Reporting”
International Center for Corporate Responsibility, Nottingham University
Business School 2005
Note: Minimal–one to two pages/ Medium–three to 10 pages / Extensive–over 10 pages
ible relationship with the stakeholders based
on direct dialogues (i.e. treating staff members like an extended family, thus there is no
need to report such practices). A study on CSR in a web site reporting noted
that the percentage of companies that report
their CSR activities is extensively very low
(with the exclusion of Japan).15 This conclusion is based on the top 50 companies with
corporate web sites in seven Asian countries.
Some of the conclusions from this study state
that:
• There are proportionately fewer CSR companies (companies implementing CSR
Chambers, Eleanor; Chapple, Wendy; Moon, Jeremy; Sullivan,
Michael. “CSR in Asia: A Seven Country Study of CSR web site
Reporting” International Center for Corporate Responsibility, Nottingham University Business School 2005
15
50
Global Education Research Network
projects) in the seven selected countries
than in the United Kingdom.
• There is great variation in the penetration
of CSR among the selected countries (as
determined by the number of companies
practicing CSR, the amount budgeted for
CSR projects and surveys of business and
public awareness of CSR).
• In no country did a majority of CSR companies report CSR extensively (only in India and the Philippines do more than 30
percent of companies report CSR).
These findings are similar to the 2005 APEC
study which found that although there is
plenty of evidence of CSR in Asia, awareness
and reporting is low and limited. Although
the CSR concept is practiced, the CSR terminology is unpopular in Asia. More often, the
practice of CSR is not labeled as such. For
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
example, in the Philippines, although corporations practiced some form of CSR through
programs or projects as early as the 1970s, the
awareness of CSR to this date is low. A Philippine Business for Social Progress (PBSP) survey showed that only one out of 10 Filipinos
know the meaning of the CSR terminology.
However, businesses in the region are slowly
recognizing the need for external social reporting. As Globe Telecom’s Jeffrery Tarayao
has said, “CSR is really about business advocating social development causes. There
are too many, but by communicating it to the
general public, we are helping identify the
most important issues.”16
Driving forces for CSR in Asia
The practice of CSR is generally influenced
by the country or the region’s distinct features. In an opinion survey17 on the practices
and motivations of Asian companies on CSR
programs conducted during the 2005 Asian
Forum on Corporate Social Responsibility in
Jakarta, Indonesia, the values of the employees and the organizations as a whole play an
essential role in motivating CSR practices.
Another driving force in formalizing CSR
practices in businesses are the laws and regulations, corporate governance and other compliance programs imposed by the government
(see Table below). As a result, CSR is becoming a corporate policy in Asia and Asian executives and officers have begun bringing their
management expertise to bear on CSR plans
and programs.18
One example of a government mandated
CSR policy can be found for the minerals industry. In the Philippines, the minerals industry is believed to play a significant
Motivations of Asian companies on CSR
Driving Forces
Company’s and its people’ values (Individual behavior)
Corporate governance, regulations and compliance program
Competitive strategy and benchmarking (strategy of organizations)
Change of attitudes among people toward being more critical against
companies and caring for business ethics and social responsible investments (societal demands)
Implicit manner of doing business (operation)
Profitability and sustainability (market forces)
% Rank =1
28
20
17
17
10
10
Source: RVR Center for Corporate Responsibility, 2005
16
Quote from Globe Telecom’s Jeffrery Tarayao. From article by
Damazo, Jet. “Companies Want the Public to Know They’re Socially Responsible,” 02 August 2007 downloaded from http://www.
newsbreak.com.ph/index.php?option=com_content&task=view&id
=3551&Itemid=88889053
2005 AFCSR Executive Survey
18
From the actual number of AFCSR participants of 384, around 60
CSR executives and practitioners (15.63 percent) answered the survey. The margin of error is +11.64 percent.
17
www.BCCorporateCitizenship.org
Global Education Research Network
51
Corporate Citizenship Around the World
role in the development of its economy. In
2003 alone, the industry registered us$758.37
Million (or PhP41.9 Billion) in production,
us$519M in export earnings and paid us$38
M (or PhP2.1B) in taxes and fees. The industry employed 112,000 workers and provided
us$72.4-90.5M (or PhP4-PhP5B) in wages
and benefits.
In 2004, Executive Order (E.O.) No. 270 was
amended to provide for the revitalization of
the industry through the promotion of responsible mining that adheres to the principles of sustainable development: economic
and form, thus the motivation to implement
programs also varies. For some industries a
company’s safety reputation (such as in the
mining industry) can impact heavily on the
demands for its products and the level of its
share price.
Asian practitioners of CSR believe that community trust and reputation are the most important motives for CSR, followed by internal customer satisfaction, sustainability and
customer loyalty19. This finding is similar to
the 2005 AFCSR Opinion Survey wherein it
stated that CSR programs in Asia are con-
AFCSR survey of Asian CSR practitioners
Value of CSR
In Asia, CSR is an initiative to enhance a company’s reputation
In Asia, CSR is a noble act of charity or an endeavor of corporate
philanthropy
In Asia, CSR is a philanthropy deeply ingrained in the corporation’s
strategies.
% of Base
40 %
26.7 %
28.3 %
Source: RVR Center for Corporate Responsibility, 2005
growth, environmental protection and social
equity. It included a Minerals Action Plan
(MAP) that will implement the provisions of
the E.O. The plan also promotes the development of downstream industries to maximize
the benefits or value-added from mining.
The plan provides for the completion of the
minerals value chain through regular information on mineral products and markets,
joint research and development and capacitybuilding programs for local engineers and
researchers on downstream industries, and
promotion of investments.
CSR issues and challenges also vary in degree
52
Global Education Research Network
ducted as a means to enhance a company’s
reputation, according to 40 percent of the respondents.
In Asia, CSR is practiced because internal
and external stakeholders put pressure on
companies to address society’s concerns. One
main argument for developing countries in
their implementation of CSR is that business
could not thrive in an environment where the
majority of the populace is poor. As noted in
CSR in the APEC Region. APEC December 2005
19
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
Thailand20 and the Philippines, the corporations helped because there was a need to
help. On the other hand, the main factor that
pushes countries like Japan, Singapore, Hong
Kong and Taiwan is mainly compliance to international standards and competition.
Most CSR practitioners are large corporations or businesses that have export dealings/
transactions. For example, Singapore MNCs
brought values and practices of head offices
such as corporate philanthropy and volunteerism. The SMCs (electoral divisions) in Singapore are generally faced with the challenge of
competition (within) and do not pay attention
to CSR. Companies therefore who are engaged in international business are required
to integrate CSR in their operations. This
observation is similar to a U.K. study which
found that increased CSR is a function of internationalization of businesses. Firms operating internationally are more likely to engage
in CSR and to institutionalize it through company codes.
These observations are seconded by a 2007
Newsbreak21 survey. From July to early October, Newsbreak sent 104 surveys to local
and multinational companies with annual
revenues of at least P60 million, and with
employees ranging from 24 to 32,000. The
goal was to determine if CSR is embedded in
the company in terms of structure and leadership, funding and logistics, and reporting and
assessment. The objective was to distinguish
companies with genuine CSR programs. The
survey asked questions on the CSR in their
ibid APEC
corporate structure, budgets, activities, initiators and enforcers of CSR, reporting and measurement tools, CSR policies, and organizational structure for CSR.
Out of this, 54 companies responded. The key
findings were as follows:
• In most of the companies, the CEO initiates CSR programs.
• The entry point for CSR practice has been
concentrated on two aspects: community
work and PR.
• Getting the other functional groups involved in embedding the CSR strategy into
the way the company plans and implements products and services is rare.
• Most companies leave the CSR implementation to the corporate foundation, while
half say they let the public relations or
corporate communications group take the
lead.
• Next to the community, the employees are
the stakeholders that the companies target
for their CSR. Investors are low priority.
About 57 percent of the companies cited the
importance of meeting communities’ expectations and interests. Also, 53 percent said employee satisfaction is a key measure in their
CSR success. The low priority given to stakeholders other than community and employees
shows that the reward and punishment approach typical in Western countries as well as
in more progressive Asian countries is hardly
present here. Most of the survey respondents
cater to the local economy, where pressure
points—either from investors or consumers—are not yet as established.
20
An online publication owned by the Public Trust Media Group,
Inc.
21
www.BCCorporateCitizenship.org
Global Education Research Network
53
Corporate Citizenship Around the World
CSR is mostly addressed through
philanthropic modes but has taken
different forms
In Asia, responsible corporations are perceived as those concerned and active in
community welfare, that offer top-quality
products/services and stand behind their
products/services if something goes wrong.
People are generally more concerned about
the social aspect of the corporation. Therefore, external CSR practices are focused on
the environment and social community issues such as education and health whereas
internal CSR are directed on the employees
or workplace improvement. A study of the
number of nominated projects and programs
received by the AIM-RVR Center from the
inception of the Asian CSR Awards in 2003
as compared to the latest entries in 2006,
concluded that external CSR is practiced more
often than internal CSR.
Asian companies generally respond to situations in four levels: resource transfer (corporate giving and philanthropy), community
relations (direct involvement in communitybased projects), business/industry practices
(CSR through codes of conduct; value chain
management), and business strategy (market
solution to public needs/problems). CSR is still practiced through gift giving, donations, and volunteerism throughout the
regions. In some cases, even though the CSR
concept is evident at the individual level because of the Asian “charitable” culture, practices may not actually translate at the corporate level in all types of businesses, as is the
case in Hong Kong. When corporations do
give, it is literally just giving cash to charities rather than definite social responsibility
54
Global Education Research Network
practices22. Thus, corporations in Asia that
are generally engaged in community development and employee responsibility issues,
mostly address these issues through the philanthropic mode.
For example, 57 percent of companies in Indonesia practice CSR, with MNCs having a
higher level of recognition. However, it is recognized that there is still a lack of understanding on how it should be practiced. CSR is
perceived merely as giving for social activities.
The Indonesian economy reported that Indonesian companies practicing CSR are in the
compliance stage23 where they adopt policybased compliance as a cost of doing business.
However, countries such as India and the
Philippines exhibit extra-philanthropic modes
through community partnerships, products
and employee relation codes, and foundations.24 The major finding of the Newsbreak
survey noted that about 60 percent of the respondents say they leave the CSR implementation to the corporate foundation, while 50
percent say they let the public relations or corporate communications group take the lead.
Furthermore, the entry point for CSR practice in the Philippines has been concentrated
on community work and public relations.
An overwhelming 90 percent of the respondents say the community where they operate
a business is their main or one of their target
stakeholders. This was apparent in companies
from the following industries: manufacturing, food and beverage, telecommunications,
CSR in the APEC Region. APEC December 2005
22
23
Based on Simon Zadek’s model “The Five Stages of Organizational
Learning” for companies developing a sense of corporate responsibility.
ICCSR Study
24
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
banking and finance, education, energy and
power, automotive, health and pharmaceutical
companies.
The success of CSR activities requires
partnerships between business, civil
society, and the government
There are key organizations in each country
that help encourage CSR practices. These private organizations facilitate the activities and
collaborations of key actors in CSR efforts in
each country. Companies should coordinate
and collaborate on CSR efforts with government and other private organizations in order
for progress to be achieved. These two key
groups share the task of promulgating CSR
in Asia. Based on the graphic below, partnerships with NGOs, LGUs or any external orga-
nization tend to make CSR programs more
credible (74 percent).
In some cases, the more active groups may be
more aggressive than the others. For example,
the government propagates assertively in Chinese Taipei and Vietnam compared to Thailand, the Philippines, Singapore and Hong
Kong, where the private corporations, specifically the MNCs, are taking the lead on CSR.
CSR goals can be achieved by fostering better
understanding among nongovernmental organization (NGO) partners. Studies, however,
show that such partnerships or collaboration
are not practiced in all Asian countries. Pockets of CSR development in Asian countries or
CSR promulgation are still highly dependent
on the key players in each economy.
NGOs and Active Groups are responsible for the CSR drivers
Source: RVR Center for Corporate Responsibility, 2005
www.BCCorporateCitizenship.org
Global Education Research Network
55
Corporate Citizenship Around the World
Companies are beginning to integrate CSR
into their core business and strategy
There are also some practices that show that
CSR concepts are already aligned to other
good business practices such as green production, Environmental Management Systems
(EMS), and other codes of conduct. Asian
businesses are realizing that local initiatives
actually make businesses sustainable as it fosters deep long-term community relationships
and investments. Addressing social issues is
becoming central to a business’ strategy.
As the Management Association of the Philippines (MAP) reported, despite the rising
prices of oil and basic commodities companies continue to spend on community projects where they operate. Philippine companies cannot afford not to practice CSR. For
example, the Philippine National Oil Co-Energy Development Corp. (PNOC-EDC), largest producer of geothermal energy, spends
an average of 167 million for CSR activities.
“If we do not do CSR, which connotes for us
security and continuing operations, we would
Emerging Business Models
Business Model
Core Issue Addressed
Collective
Accountability
Problems with collection, pilferage
Livelihood
Partnership
Brands lacks
positive equity,
cultural divisions
can separate interests of consumers
and producers
Scalable,
Embedded
Distribution
Traditional delivery
too costly relative
to purchase size,
density of
consumers
Community Based
Relevant
Intervention
Industries
Small groups
monitor usage,
promote compliance, provide
social insurance
Business offers
additional services
around core product/service that
promote primary
demand while
providing training or cooperative
business programs
to community
Utilities
Finance
Low-cost, community based distribution points employ
key workers in low
income areas
Fast-moving and/or
low value
consumer
goods
Telephone
Services
Utilities
Agriculture
Telecom
Source: A grassroots approach to emerging-market consumers. The Mckinsey Report 2006 number 4
56
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
stop and that would mean a loss of P100 million a day,” the president of PNOC-EDC Mr.
Paul Aquino said.25
MAP launched a campaign to award some
of its 900 individual members who led their
respective companies in making CSR part
of their respective corporate strategies. This
meant including CSR in the board agenda
and allocated budget for its implementation.
Conclusion
CSR is an evolving process– in its definition
and practice. There is no single definition of
CSR. Companies define the CSR concept in
terms of how a company conducts itself in relation to its internal and external constituencies. The common perception is that companies cannot do CSR activities without profit.
However, when a company practices CSR
because it is perceived to be profitable to do
so, profit in this sense is good. No company
can give what it does not have, profit making
therefore makes sense.
CSR has become a competitive tool as companies fuse their core business practices with
CSR programs. The basic challenge therefore
is how to maximize the resources while promoting socio-economic development26.
25
Estopace, Dennis. “CSR Spending Remains Flat.” Business Mirror.
28 May 2008
Senen Bacani, chairman and president of La Frutera, Inc
26
www.BCCorporateCitizenship.org
Global Education Research Network
57
Corporate Citizenship Around the World
© istock.com
South Africa Corporate Citizenship Summary
Pretoria, South Africa
Cultural context and social contract
The development of corporate citizenship in South Africa was heavily influenced by the
county’s experience with apartheid. While this period saw business implicated in the
exploitation of black labor, as well as low occupational health, safety, and environmental standards, it also gave rise to early manifestations of voluntary business initiatives
to contribute to government policy changes and social development. Today, philanthropy is an expected norm and a poorly developed legal infrastructure has created an
environment where a company’s legal responsibilities have become less important to
the public than its philanthropic activities.
Current state and transformation of citizenship
In the past Corporate citizenship in South Africa was largely limited to corporate social investment (CSI), interpreted as strategic philanthropy focused on education and
health projects. Today it is moving toward a more integrated approach focused on sus-
58
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
tainable development and linked to collaborative governance initiatives and partnerships. “Sustainable development” has become the popular term of this century, the
cornerstone of which is environment, health and safety. Management practices have
been heavily influenced by government regulation. Companies today are required to report at least annually on their social, ethical, safety, health and environmental management.
Driving forces and motivations:
• Government regulation, particularly “Black Economic Empowerment” (BEE) policies and the ‘King 2 Code’ on corporate governance
• Reputation, as determined by performance assessments and external rankings
• Influence of international stock exchanges (particularly on companies listed in the
United Kingdom)
• Growing awareness of socially responsible investment in South Africa
• International initiatives (e.g. Global Compact, Global Reporting Initiative)
Issues of prominence:
• Climate change
• Human rights
• Community development
Center for Corporate Citizenship South Africa
The Center for Corporate Citizenship South Africa is located within the College of Economic and Management
Sciences at the University of South Africa. It was established to be a global leader in building individual and institutional capacity for sustainable business and social unity. The strategic objectives of the center are to provide
training and education, conduct research and create a platform for information sharing
and professional advice. The center also assists organizations in transforming and integrating corporate citizenship into their management practices. CCC provides unique opportunities to improve corporate citizenship practice and introduce innovative ways of doing business or pursuing “business unusual” based on
South Africa’s unique history, current legislative and policy frameworks. Some of the
big business groups in South Africa also subscribe to international frameworks such
as the Global Compact, Global Reporting Initiative and Assurance standards.
www.BCCorporateCitizenship.org
Global Education Research Network
59
Corporate Citizenship Around the World
The Meaning and Nature of Corporate Citizenship
in South Africa
By René Carapinha, Boston College Center for Corporate Citizenship
and Derick De Jongh, Center for Corporate Citizenship South Africa
Abstract
To understand the meaning and nature of
corporate citizenship in South Africa it is
necessary to review the historical and contemporary relationship between business and its
stakeholders. This paper reviews the development of this relationship by focusing on the
mediating effects of the socio-political and
economic realities in the country, and various
means of corporate regulation. Through an
assessment of these contextual realities a historical progression from non-involvement, to
corporate social investment to sustainability
and partnership is observed. As before, business in South Africa is navigating challenges
and opportunities posed by contextual socioeconomic issues and regulation. The goal of
corporate citizenship is to attain a balance
between short-term and long-term goals, and
economic and social goals. It is recommended
to foreign companies to strategize corporate
citizenship from a pluralist and social development perspective, to be mindful of regulation and market drivers, and to integrate these
traditional barriers to enterprise creatively
into the business by engaging in initiatives toward collaborative governance.
Introduction
The meaning and status of corporate citizenship (CC) in South Africa has been influenced
by the country’s history of inequality and
injustice. In the broadest sense, CC refers to
the role of business in society, and it entails
60
Global Education Research Network
the contribution of business to sustainable
development. In South Africa, corporate citizenship is also called corporate social responsibility (CSR) and corporate social investment
(CSI). Though various names are associated
with different approaches and practices, CC,
CSR and CSI are often used interchangeably in South Africa. This reflects the changing nature of CC in South Africa. Today, the
ideal role of business in South Africa is to
use its capabilities to constructively contribute to the country’s socioeconomic development through reciprocal engagement with
stakeholders. However, historically CC has
not always been conceptualized in this way.
In addition, the current meaning and status
of CC is impacted by systemic issues undermining sustainable development. Companies
have to deal with domestic challenges such
as the need for affirmative action and black
economic empowerment, spiraling economic
crimes such as fraud and money laundering, as well as the reality of AIDS and poverty on the continent. (Rossouw, van der Watt
& Malan, 2002, p. 301). The purpose of this
paper is to describe the meaning, nature and
mediators of CC in South Africa by presenting an assessment of the historical and contemporary role of business in society and the
implication hereof for the nature of CC; and
an assessment of current contextual challenges, and the associated drivers that shape the
unique form of CC. This assessment relies
for a number of its sources and arguments
on Hamann (2008). Based on these assess-
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
ments recommendations for strategizing CC
in South African operations will be made.
The progression of corporate citizenship:
From exclusive to mutual development
In South Africa the development and transformation for corporate citizenship is closely
related to the country’s socio-political and
economic history. This contextual history has
influenced the relationship between business,
societal stakeholders, and the government.
One might argue that corporate responsibility
has developed in various other nation states
in a similar juxtaposition of business in relation to stakeholders. However, in South Africa
the relationship between business and its
non-financial stakeholders (all stakeholders
except investors) has varied from non-involvement to a contemporary relationship characterized by purposeful engagement for mutual
gain. This relationship has been mediated by
the legacy of colonialism and apartheid as big
businesses were implicated in that history
– hypocritically both as co-conspirator and
beneficiary of apartheid, and as critical agent
against apartheid. The relationship analogy
is therefore useful to understand the role of
business in South Africa, and how corporate
citizenship has evolved. Table 1 provides an
illustration of the progression of the relationship between business and its non-financial
stakeholders and the consequent focus of corporate citizenship.
This developmental typology highlights the
relational dynamics between business and
non-financial stakeholders and how it has
determined the meaning and practice of corporate citizenship. In the following section
this typology will be explained by focusing on
the nature of the relationship between busi-
www.BCCorporateCitizenship.org
ness and its stakeholders; socio-political and
economic factors and how the relationship
evolved over time.
Non-involvement: Early industrialization
and the rise of apartheid
Retrospectively, it is hard to imagine that
there was a time that there was little interaction between business and its non-financial stakeholders. However, South Africa’s
business sector was developed on the Anglo Saxon business principle of maximizing
shareholder value with the expectation that
this would benefit society as a whole (i.e. the
hidden hand effect of the market). This liberal
economic doctrine catapulted South Africa’s
early economy from subsistence agriculture
and small industry into a world-class natural
resource extraction and export economy. The
big mining companies which were mainly
owned and operated by British colonialists
needed cheap, relatively unskilled labor for
the mining of deep, low-grade ores (Moodie
& Ndatshe in Hamann, 2008). This requirement perpetuated the state’s racist policies,
including taxation of rural blacks in order to
force them into wage labor and the establishment of a rigorous system of migrant labor
(Hamann, 2008). The role of business in
apartheid is contentious as some argue that
business had introduced the migrant labor
system, single-sex hostels, workplace segregation, the racial division of labor and racially
discriminatory salaries (Fig, 2005, p. 599).
The oppressive and discriminating strategies
initiated particularly by mining companies
benefited only the white minority. It was acknowledged by the Truth and Reconciliation
Commission (TRC, 2003, p. 150) that these
exclusionary practices instituted by businesses ultimately informed the nationalist state’s
Global Education Research Network
61
Corporate Citizenship Around the World
Table 1: The typology of business-nonfinancial stakeholder relations in South Africa
Colonialism - 1940
Timeline
1
1960
1970
1980
Institutionalization
Sanctions (1964/late 1970s)
of Apartheid (1948)
1990
2000
2007
Sullivan Principles
Release of political prisoners (1990)
First Democratic Election (1994)
Nature of
relationship
with non-financial stakeholders 1
Relationship
characteristics
Noninvolvement
Ad hocinvolvement
Systematic
involvement
Pre-systemic
involvement
Systemic involvement
Mutualism
The business
of business is
business
Paternalistic relationship with no
boundaries
Paternalistic
but with defined boundaries
Consultation,
but decisions
are made
solely by
business
Collaboration
that leads
to mutual
benefits and
progress
Focus of corporate citizenship
Industrial
relations or
unionism
Collective
private sector
efforts (i.e.
Urban Foundation, Sullivan code)
and philanthropy
Social responsibility
and strategic
philanthropy
Social
investment
Consultation
and engagement that
leads to mutual decision
making
Empowerment of
non-financial
stakeholders
Partnership
or
collaborative
governance
The relationship characteristics was adapted from on an study of the level of business community involvement (O’Brien, 2000)
apartheid policies. As these policies remained
relatively unchanged during the 20th century,
rural South Africa was progressively impoverished, the society was racially segregated,
and dissent and discontent with the apartheid
government grew.
62
Global Education Research Network
Ad-hoc involvement: Business’ role in the
liberalization movement
On the contrary, toward the late 1970s and
early 1980s business started to take a lead
role in lobbying against apartheid policies
mostly because business was operating under pressure due to increased political tension, violence and economic sanctions. Some
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
big South African companies such as Anglo
America and Rembrandt started to adopt an
ad-hoc social responsibility. Hereby, business tried to ameliorate some of the worst
elements of the apartheid state through various initiatives. The Urban Foundation was
a collective business effort aimed at stabilizing conditions in the urban black townships by providing private sector support to
urban development issues (Hamann, 2008).
Individually some business leaders in South
Africa lobbied for a faster pace by government in programs aimed at improving black
housing, education, and job training. Others
were advocating for the removal of laws that
discriminated against nonwhites in the cities
where they work. Against this background
it is argued that business was instrumental
in the downfall of apartheid (Fig, 2005). The
type of relationship with nonfinancial stakeholders was therefore clearly informed and
driven by business interests, emotions and
“doing-good” (O’Brien 2000:24) in a context of socio-political and economic injustice.
However, the relationship between business
and society did not develop beyond this paternalism. Assumptions were made about what
was the best for non-financial stakeholders as
any intervention at that stage was perceived as
better than nothing. Hypocrisy, business enlightened self-interest and associated feelings
of doing good prevailed because a contribution was made to a good cause – negating the
damaging effects of apartheid policy, whilst
business and trade partners benefited from
apartheid policy.
At the height of the political tribulations in
the late 1970’s the five biggest investors in
the South Africa economy were Great Britain
(40 percent), the United States (20 percent),
www.BCCorporateCitizenship.org
West Germany (10 percent), Switzerland and
France (each 5 percent). In 1979 the United States sold $1.5 billion worth of goods to
South Africa, and imported $1.9 billion worth
of South African products mostly minerals
that were vital to U.S. military and industrial
needs. On the other hand, South Africa was
dependent on industrialized countries for
capital flows and high technology – computers, scientific instruments, nuclear energy,
etc. (Phyllis, 1982). Though economic sanctions were debated since the 1960s they were
never mandatory. It was only in the late 1970s
that trade sanctions were formalized. Because
of the dependency on trade relations and foreign capital flows the trade sanctions placed
the business sector under enormous pressure
to push toward the elimination of apartheid.
U.S. companies with the biggest investments
in South Africa included Ford, General Motors, Mobil and Caltex Oil. These American
firms in addition to smaller operations and
other international corporations came under
attack from consumers and investors in home
countries to disinvest in South Africa and or
not to follow business practices under apartheid norms. These early examples of consumer and investor activism were instrumental
in the development of the Sullivan Principals
that provided guidance to American corporate operations in South Africa (Waddock &
Bodwell, 2007). The Sullivan Principles was
a statement of fair employment practices that
included: equal pay for equal work for blacks
and whites; nonsegregation in the workplace;
training programs to advance blacks; improved housing, transportation, schools and
health care (Mangaliso, 1997). Through the
Sullivan Principles corporate responsibility
in South Africa was formalized and operated
as efforts to improve social standards within
Global Education Research Network
63
Corporate Citizenship Around the World
core business activities and by “constructive
engagement” (Marzullo, 1987) with civil society and state interests. Alperson (1995: 5)
describes the Sullivan Principles as a “turning point” in the “vocabulary” of corporate responsibility in South Africa. Yet, the Sullivan
Principles were also met with considerable resistance or criticism, which emphasized that
only a few corporations effectively adopted the
principles (Mangaliso, 1997). A prominent
concern was that the principles were meant
to accommodate the mounting pressures to
disinvest (Orkin, 1989), thus preventing more
significant pressure being exerted on the
apartheid government (Bezuidenhout, Fig,
Hamann, & Omar, 2007). Though the Sullivan Principles made an impact in the employment practices during apartheid, it only
affected the black employees who were employed in American corporations, which represented just 1 percent of the economically active black population (Mangaliso, 1997). They
failed to address central problems of apartheid such as universal suffrage. The impact of
both local and international business’ advocacy against apartheid must therefore be seen as
complementary to civil society liberalization
movements. Hereby the anti-apartheid movement represents one of the biggest and most
successful business–civil society partnerships.
As a result of these developments, businesses’ relationships and involvement in society
ranged from ad-hoc to regular, orderly and
coordinated intervention. Irrespective of the
paternalistic nature of the relationship, the
involvement proved valuable because a great
degree of monetary (through philanthropy)
and moral support was generated. However,
this type of relationship was threatened by the
continuous need for giving and engagement
64
Global Education Research Network
due to the bottomless pit of social demands,
needs, and political challenges. The feelings
of well-being associated with giving and engagement were soon replaced with resentment – and this resulted in a mixture of frustration and anger or the desire to withdraw to
the point of non-involvement.
Systematic involvement: Strategizing the
role of business in the new South Africa
Toward the end of apartheid and during the
early years of transition the business community realized it could not be everything to everyone. In addition, business was also critically aware that there were very few guarantees
about the post-apartheid government’s policy
on the nature of the market economy (Rossouw et al., 2002). “Business was somewhat
nervous of any substantial or radical economic change. It realized that it had to accommodate new priorities, but there was some
uncertainty as to how far it would need to
transform” (Fig, 2005, p. 600). From the late
1980s onward organized business delegations
were in negotiations with African National
Congress (ANC) leadership in exile, in order
to establish common ground. After democratization, business was satisfied by the continuity of fiscal and financial governance (Fig,
2005). As a result, the relationship between
business and society became more purposeful
with clearer parameters. A much more systematic and strategic approach to stakeholder
relationships was developing. Philanthropic
initiatives were facilitated through planning,
budgeting, and screening of applications. The
systematic nature of the relationship presented a turning point in corporate responsibility, because the ad-hoc, hit and miss approach
was being replaced with strategic philanthropy (O’Brien 2000). Business was at ease
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
with this relationship because it was in the
position to make clear and rational decisions
that were usually closely related to corporate
interests such as social investments in education and community development (Alperson,
1995).
Pre-systemic involvement: The role of business in nation building
Post-apartheid policy mandated business participation in nation building and the reconstruction and development of the new South
Africa. The philosophical approach underpinning post apartheid policy of social development entailed integrated economic and social
policies and pluralism (Pretorius, 2002).
This meant that business as a distinct sector
in society, together with civil society organizations and government was encouraged
and mandated to contribute to the country’s
development (Pretorius, 2002). The emerging relationship between business and nonfinancial stakeholders was referred to as
corporate social investment (CSI). It became
the dominant interpretation of corporate social responsibility in South Africa (Hamann,
2008) and it served as a foundation for public
relations, marketing and advertising (O’Brien,
2000). Emphasis was placed on nation building, education and health projects (Alperson,
1995) either nationally or in the communities
surrounding companies’ operations. Business
recognized and legitimized this responsibility as a good investment. CSI necessitated a
“win-win scenario in which returns could be
identified whilst meeting community needs”
(O’Brien, 2002, p. 25). “But, the problem was
that there was no measure of what the social
return would be, because it was not an integral part of the business” (Moshoeshoe in
Bezuidenhout et al., 2007: 37). This is evident
www.BCCorporateCitizenship.org
in the fact there is little comparable accountability of CSI expenditures among companies
(Hamann, 2008). Nonetheless, the CSI movement represented an extension of businesses’
responsibility of compliance to the law, paying
tax and providing employment by investing in
the community and the future of South Africa. Hereby, South African business reoriented
the traditional CSR definition in terms of the
well-known corporate responsibility pyramid
model of Carroll (Hamann, 2008). Hamann
(2008) explains:
According to Carroll, CSR encompasses the
economic, legal, ethical, and discretionary –
or philanthropic – expectations that society
has of organizations, and the economic and
legal responsibilities are described in terms
of what is required, the ethical ones as what
is expected, and the philanthropic ones as
what is desired (Carroll, 2004). Visser argues
that Carroll’s model requires substantial revision if adapted to the (South) African context,
suggesting that the dominant interpretation
of CSR in terms of philanthropic activities
means that discretionary aspects of CSR are
often more important even than the legal and
ethical ones. This, he argues, is because the
socioeconomic development needs in many
parts of Africa are “so great that philanthropy
is an expected norm,” and also because CSR
in general “is still in an early stage of maturity.” In contrast, legal responsibilities are seen
to represent “far less of a pressure for good
conduct,” because the legal infrastructure is
often poorly developed and “many African
countries are also behind the developed world
in terms of incorporating human rights and
other issues relevant to CSR into their legislation” (Visser, in Hamann, 2008).
Global Education Research Network
65
Corporate Citizenship Around the World
Systemic involvement: Integrating corporate responsibility toward achieving mutualism
Today, 14 years after democratization, the CSI
relationship is increasingly perceived as limited as it lacks integrity and participation that
leads to empowerment (a fundamental principle of democracy). Differentiation between
what is important to the corporation and the
real needs of the community are often very
vague. And, even though CSI initiatives have
no doubt been making important development contributions, they are not integrated or
aligned to core business.
In addressing the lack of integrity and participation, businesses committed to corporate citizenship in South Africa are increasingly realizing that a systemic approach to
business’ role and position in society helps
them to better actualize their responsibilities
to both financial and nonfinancial stakeholders. A systemic approach implies that business and society is mutually interdependent
(Kleinhans, 1994; Van den Heever & Hugo,
1990; O’Brien, 2000). Business is defined in
relation to its stakeholders and hereby the corporation is seen as an integrated part of and
stakeholder in society. This type of involvement is distinguished by a level of interaction
and participation that is characterized by engagement. And, it is based upon the inclusive
stakeholder approach to corporate governance
(see section on market drivers). As this relationship is emerging the ability to share decision making and nonfinancial stakeholders’
influence on business strategy is very limited.
Consequently, the trust that is developing
through engagement is progressively being
threatened. Unfortunately, various nonfinancial stakeholders are either withdrawing from
66
Global Education Research Network
consultations with business as their inputs
are ignored, or stakeholders only provide input and feedback that are favorably received
by business.
Few businesses are slowly overcoming this
paternalistic tendency of unilateral decision making by constructively engaging with
stakeholders and upholding mutual decision
making that results in empowerment and
advancement of all parties involved (O’Brien,
2000). Hamann and De Jongh (2008) describe this as a shift from social investment
to sustainable development and collaborative governance. This relationship is typically directed at development (O’Brien, 2000,
Pretorius, 2002). Emphasis is on shared aims
and the process of engagement, of which the
benefits are sometimes more enduring than
specific outcomes (O’Brien, 2000; Pretorius, 2002). This type of involvement is very
similar to systemic involvement however it is
characterized by distinct collaboration. Skills
are transferred through collaboration and
knowledge exchange brings about knowledge
generation and empowerment. The ultimate
move away form paternalism is to be able to
think of “empowering people as equals within
the business environment and for all to realize their interdependencies and common
membership of the community” (O’Brien,
2000, p.26). Hereby, “the scale of analysis
and engagement has increased from the level
of the individual company to the value chain
and the broader governance framework. This
has required a different mode of engagement, whereby proactive companies seek to
support collaborative governance initiatives
that entail a shift in responsibility for policymaking, implementation, and the provision of
social goods and services from government to
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
a more diffuse constellation of social actors,
with a special role for business” (Hamann,
2008). The consequence of this integrated
leadership and ownership process is growth
and development of all the parties involved.
Other benefits are greater development impact particularly in sectors related to business
interest, such as education and employment
generation (Ashman, 2001). Also, goals of
organizational capacity are more likely to be
achieved. It is also becoming evident that “civil society organizations (CSOs) and businesses reap mutual benefits from collaboration”,
although CSOs still tend to shoulder more of
the costs (Ashman, 2001, p. 1097).
In summary, the meaning and nature of corporate citizenship has evolved against the
background of the country’s socio-political
and economic realities. The role and position of business within this context could
be described as a “double-edged sword: the
philanthropic gestures and political maneuvers characteristic of the Urban Foundation,
though contributing no doubt to social development and perhaps a softening of the harshest elements of the apartheid government’s
policies, occurred side by side with continued
exploitation of black labor, as well as low occupational health, safety, and environmental
standards” (Hamann, 2008). Today, in postapartheid South Africa the role of business
is defined from a pluralist approach within a
social developmental policy framework. Business is seen as an important stakeholder in
society, and in addition to philanthropic social
investment activities, business should in collaboration with government and civil society
work together toward the country’s social and
economic development.
www.BCCorporateCitizenship.org
The contemporary socioeconomic drivers
of corporate citizenship in South Africa
Though it is important to understand how
corporate citizenship has developed in South
Africa, it is also necessary to recognize the
current socioeconomic realities and how
these impact business operations. For example, the state facilitates corporate citizenship
through various government-led interventions
to address these socioeconomic challenges
(See Hamann, 2008 for a summary of national legislation of pertinence to corporate citizenship in South Africa). By recognizing the
contextual challenges, the need for empowerment and collaborative corporate citizenship
becomes much clearer.
The most influential socioeconomic and
environmental issues affecting business in
post-apartheid South Africa are: the HIV and
AIDS pandemic; the need for transformation
and redress of past imbalances; skills shortage and job creation; crime; and environmental concerns relating in particular to energy efficiency. Table 2 summarizes these issues and
other as it relates to corporate citizenship.
The social nature of the majority of these
issues is closely related to poverty eradication and the country’s need for sustainable
socioeconomic development - conceptualized
as social development. Social development
refers to the economic, social and political
well-being of all people, groups, communities
and societies. Well-being is conceptualized in
broad terms, contrary to the traditional notions of welfare, which is indicative of psychosocial well-being only. The aim of social development is to achieve economic and social
goals, preferable through integrative policy
means (Midgely, 1995). From a social develop-
Global Education Research Network
67
Table 2: Selection of Corporate Citizenship issues in South Africa
HIV and Aids – prevalence testing, prevention measures, clinical and medical support, business risk and impact assessment;
Employee skills development – job-specific, vocational and broad-based training; mentorship
and career development programs, Skills Development Act
Employment equity – equitable, non-discriminatory recruitment and employment practices;
set employment equity targets and measure progress; - Employment Equity Act
Employee relations and support – progressive HR policies, fair labor practices and workplace
conditions, freedom of association, collective bargaining and a rejection of child and forced
labor;
Black ownership control – meaningful equity ownership and genuine participation by black
partners (South Africa specific); Broad Based Black Economic Empowerment Act
Preferential procurement and enterprise support – financial and nonfinancial support for
emerging businesses by procuring services from them (in South Africa the focus is on businesses owned by previously disadvantaged people);
Health and safety – workplace conditions that ensure employees’ safety, health, welfare and
satisfaction;
Supply chain compliance – extent to which the company ensures that supply chain partners
are themselves responsible corporate citizens;
Product development – products and services that address the needs of society, especially
previously underserved sectors or individuals;
Marketplace stewardship – responsible advertising and brand management, monitoring and
mitigating the impact of company’s products and services;
Corporate Social Investment (CSI) – investing in communities around operations and in
broader society; The Johannesburg Securities Exchange Socially Responsible Investment Index ( JSE SRI Index)
Environmental impact of operations – protecting the environment, monitoring and mitigating
operational impacts beyond legislative compliance;
Climate change – The change in global weather patterns attributed to rising levels of atmospheric carbon dioxide. The scientific consensus view currently is human activities (such
as fossil fuel burning) are contributing significantly to this. The Carbon Disclosure Project
(2007)
Corporate governance and ethics – appropriate board composition and committees; ethical
practices and risk management for financial and nonfinancial issues – KING II Code of Corporate Governance
68
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
ment perspective collaboration is more than
just a means to an end; it is an end in itself
because of the inherent social and human
capital benefits (Pretorius, 2000). Partnership
or collaboration between sectors (i.e. publicprivate partnerships) is therefore used more
frequently as a strategy to achieve integrative
goals (Pretorius, 2000). Social development
issues in South Africa are interrelated and impact the economy and business directly and
indirectly. The remainder of this section briefly illustrates the scope of the socioeconomic
challenges, the impact on business, and the
role of business.
HIV and AIDS
South Africa is currently at the epicenter of
the AIDS pandemic and the disease is affecting all aspects of South African society. Prevalence rates have increased from 0.7 percent
in 1990 to 27.9 percent in 2003 (Department
of Health 2004). Poverty is regarded as an
important co-factor in the likelihood of infection because of resulting behavioral and biological factors (Marks 2002, Nattrass, 2004).
The response of corporate South Africa to
HIV/AIDS has been slow, partial and erratic
(Dickinson 2004). Frequently, the response
of companies to HIV/AIDS has been driven
from “below” by middle and low-level managers rather than as a strategic issue by top
management (Dickinson & Stevens 2004;
Dickinson, Draft Document). It is widely acknowledged that the HIV/AIDS epidemic will
significantly impact South African business
in terms of markets, investor confidence and
work forces and the skills they embody (Whiteside & Sunter, 2000). It goes without saying
that in addition to responding to how HIV/
AIDS could affect operations and profitability,
the disease has become an important area and
driver of CC.
www.BCCorporateCitizenship.org
Skills development and job creation
Job creation and skills development is a major national development objective to address
poverty and to develop the economy. However, up till the late 1990s enterprise training
was at historic lows. This was hampering the
social development goals of government and
straining economic growth. The Skills Development Levies Act of 1999 sought to correct
this by creating a national levy system applicable to all enterprises based on taxing 1 percent of payroll expenditure. Important to note
in this regard is the fact that, while government now levied 1 percent of payroll, the King
Commission’s recommendations on Corporate Governance in South Africa suggested
that enterprises invest 4 percent of payroll
expenditure on training (IOD, 2002). In this
context, government’s levy can in fact be
considered as crowding out enterprise’s own
training initiatives. The logic here though is
that public provision of these services is necessary to correct the market failures associated with historically poor levels of investment
by enterprises in personnel training (Daniels,
2006). The high priority of skills development has been a significant driver of most CC
practices.
Crime
Crime impacts business both directly and
indirectly. Directly by the theft of property
and money, and corruption, and indirectly
through reduced business confidence, loss of
investment, immigration and the steady erosion of the foundations upon which the economy is built (BAC, 2008). Businesses mostly
seek to support government’s efforts by complementing its resources with entrepreneurial,
managerial and technological skills. Businesses
also collaborate with civil society in various
Global Education Research Network
69
Corporate Citizenship Around the World
initiatives to combat crime. Though businesses participation is voluntary, crime prevention
efforts by business are numerous and internationally acclaimed (BAC, 2008).
Transformation and black economic empowerment
The need for transformation and reconciliation of past imbalances in society are mainly
facilitated through employment equity, affirmative action and Broad Based Black Economic Empowerment (BBBEE). Of the three
initiatives BBBEE is most comprehensive as
it also entails employment equity and affirmative action. Government encourages black
economic empowerment (BEE) transactions
as the main vehicle through which the aims
of BBBEE should be achieved. The purpose
of BBBEE is the empowerment of excluded
groups such as women, workers, youth, people with disabilities and people living in rural
areas, through the adoption of diverse but integrated socioeconomic strategies. In this way
“real” empowerment needs to be promoted.
The extent to which BBBEE empowers the
broader community is still of key concern. In
a recent investigation of the extent of community empowerment through BBBEE transactions it was concluded that:
While BEE has the potential to contribute to
the deracialization of ownership of the South
African economy, the analysis of the BEE
deals concluded from 2004 to 2006 only
marginally included those who are disempowered and excluded from full economic
and social participation in the society. The
two groups who gained the greatest access to
the deals were employees and women. These
groups are not homogenous and it is more
than likely that managers and women-owned
70
Global Education Research Network
companies benefited more than lower level
workers and poor, rural women and women
with disabilities including those in low-paid
employment. People with disabilities and
youth also benefited to a lesser extent. In this
respect the deals fell short of the intentions of
the BBBEE legislation. (Patel & Graham, unpublished report).
In BEE transactions the emphasis is mainly
placed on increasing corporate ownership by
the black majority population that was excluded from economic gains during apartheid. BEE transactions are private placements of
equity with black empowerment groups by
firms primarily owned by white South Africans. Most foreign investors are concerned
about the market performance of these BEE
transactions. However, in a recent study it was
found “that on average, the announcement of
a BEE transaction is associated with a significant positive increase of almost two percent
in the market value of equity of the announcing firm … [Secondly], the positive abnormal
returns associate with BEE transactions are
significantly positively correlated with the
proportion of the firm’s equity acquired by the
BEE group….Additionally [it was found that]
the average BEE transaction is completed at
a significant discount (of almost ten percent)
from the market price of equity for the participating firm” (Jackson, Alessandri & Black,
2005, p 20 -21).
Debates and negotiations between the government, business and other role-players has
been ongoing for some time, however it was
only recently that it was more conclusively defined by the means of a “balanced scorecard”
(DTI, 2007), as summarized in Table 3. This
scorecard defines the parameters and requirements of BBBEE.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
Table 3: Broad-Based Black Economic Empowerment Scorecard
Scorecard
Focus areas
component
Ownership
(20 percent)
Management
control
(10 percent)
Employment equity
(10 percent)
Skills
development
(20 percent)
Preferential
procurement
(20 percent)
Enterprise
Development
(10 percent)
Socio–economic
Development
initiatives
(10 percent)
This includes consideration (among other things) of the following issues:
• The nature of the exercisable voting rights in the hands of black people
• The nature of the economic interest of black people in the enterprise
• The level of involvement of black people in ownership of the enterprise through
employee ownership schemes, broad-based ownership schemes, and cooperatives
This includes consideration (among other things) of the following issues:
• The nature of the exercisable voting rights of black Board members
• The number of Black Executive Directors
• The level of representation of blacks in senior top management
• The number of black independent nonexecutive directors
• This includes consideration (among other things) of the following issues:
• The level of representation of black employees in senior, middle and junior
management
• The number of black disabled employees as a percentage of all employees
This includes consideration (among other things) of the following issues:
• The level of skills development expenditure on specified learning programs for black
employees
• The number of black employees participating in defined learnerships as a percentage
of total employees
This includes consideration (among other things) of the following issues:
• The level of BBBEE procurement spend from all recognized BBBEE suppliers as a
percentage of total procurement spend
•T
he level of BBBEE procurement spend on suppliers that are 50 percent black-owned
and suppliers that are 30 percent black women owned as a percentage of total
procurement spend
This includes consideration of the following issue:
• The level of the average annual value of all enterprise development contributions and
sector specific programs made by the enterprise as a percentage of a defined target relating to profit and turnover
This includes consideration of the following issue:
• The level of the average annual value of all socioeconomic development contributions
made by the enterprise as a percentage of a defined target relating to profit and turnover
Adopted from Hamann (2008)
www.BCCorporateCitizenship.org
Global Education Research Network
71
Corporate Citizenship Around the World
Against the background of empirical evidence BBBEE transactions are associated with
significant positive abnormal returns for the
shareholders of the announcing firms. To
date valid and reliable empirical evidence is
still lacking to illustrate the BBBEE benefits to
nonfinancial stakeholders (i.e. employees and
the previously disadvantaged community).
Thus, Jackson et al. (2005) argues that in the
case of a typical BBBEE transaction the price
of corporate social responsibility is smaller
that the benefit.
Through pro-social responsibility legislation
(such as BBBEE) the new democratic regime
has facilitated the integration of social justice
into core business activities. Issues relating
to employment equity, affirmative action,
and skills training are governed by the state
through legislation and business is expected
to comply with these requirements. Through
sector Charters and the recent Black Economic Empowerment Act (2003) and publication
of the subsequent balanced scorecard (DTI,
2007) issues relating to business ownership,
management control, employment equity,
skills development, procurement, enterprise
development and socioeconomic initiatives
are also directed by the state. Hamann and
de Jongh (2008) argue that this makes the
corporate citizenship function in South Africa
unique as corporate citizenship “cannot be
purely defined as voluntary initiatives, and arguably there are no clear distinctions or divisions between voluntary business actions and
state-led interventions.” It is therefore crucial
for foreign investors to take note of the relevant legislation and integrate it accordingly
within their business. Various collective business initiatives have been established to facilitate dialogue and innovation around these is-
72
Global Education Research Network
sues and relevant regulation and standards in
order to avoid situations where conformance
to regulations and standards constrain management and enterprise. These initiatives are
summarized in Table 3.
The business culture in South Africa
and other market drivers of corporate
citizenship
The development of formal corporate governance guidelines happened against the
backdrop of democratization in South Africa
in 1994. These were uncertain times, as it
was not yet clear if the transition to democracy would evolve peacefully. The first report
on good corporate governance was developed
by the King Committee during these uncertain social, political and economic times. It
is for these reasons that the King Committee recognized that “a proper balance needs
to be achieved between freedom to manage,
accountability and the interests of the different stakeholders” (IOD, 1994, p. 3). The
integrated approach (later referred to as an
inclusive approach to corporate governance
in the revised code published in 2002) was
adopted in the first King report in 1994. According to Richard Wilkinson, chief executive
officer of the Institute for Directors in South
Africa, “the King Report was the first report
on corporate governance that embraced the
concepts of stakeholder engagement, ethics
and environmental management and actively
encouraged an inclusive approach to these
issues” (in Rossouw et al., 2002, p.300).
This pioneering work was further elaborated
through a review of issues relating to nonfinancial reporting. Guidelines for social and
ethical accounting, auditing and reporting
(increasingly referred to as social accounting)
as well as on Safety, Health and Environmen-
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
tal (SHE) issues were provided (Rossouw et
al., 2002, p. 300). Some argue that the adoption of the inclusive approach was illustrative
of the predominantly white-owned business
community’s commitment or enlightened
self-interest to transformation and cooperation in nation building and development in
South Africa. But it was also necessary to construct a unique character for the new South
African economy, preferably different from its
historic Eurocentric and Anglo-Saxon orientations. Great confidence was placed in the entrenchment of African values into the codes
such as Ubuntu27. Rossouw et al. (2002,
p.300) argued that the integration of values
fundamental to African culture was seen as “a
means to promote and uphold the standards
of good corporate governance” and not as a
means to obstruct the traditional ways of a
corporation.
The inclusive approach that transpires from
this governance code recognizes that corporations are connected networks of stakeholder
interests, and as a result recognized stakeholders will be considered when developing
corporate strategies. Engagement, however,
is restricted on the basis that the business
relationship with stakeholders must be “mutually beneficial” (IOD, 2002, p.8). If future
value (profitability) is to be generated then
it is necessary to achieve a balance between
conformance (to standards and regulations of
corporate responsibility) and enterprise (performance characterized by profitability). The
King II advocates that: “it will be potentially
irreparable, and have far-reaching conse-
Ubuntu - an African ethic or humanist philosophy often summarized as humanity towards others. Self-development or improvement is encouraged but only when it benefits others simultaneously.
27
www.BCCorporateCitizenship.org
quences; both for the enterprise and the societies and environment within which the corporation operates if balances are not struck”
(IOD, 2002, p. 91). Such a balance therefore
also entails that an enterprise must balance
the need for long-term viability and prosperity – of the enterprise itself and the societies
and environment upon which it relies for its
ability to generate economic value – with the
requirement for short-term competitiveness
and financial gain. This balance ultimately
represents sustainable development in the
corporate context. Sustainable development is
also characterized “as development that meets
the needs of the present without compromising the ability of future generations to meet
their own needs” (IOD, 2002, p. 91). The
compromising of future value creation for
achieving short-term benefit is thus counterproductive. Therefore sustainability can be
seen to focus on those “non-financial aspects
of corporate practice that, in turn influence
the enterprise’s ability to survive and prosper
in the communities within which it operates,
and so ensure future value creation” (IOD,
2002, p. 91). Also more specifically, sustainable development is the achievement of positive synergy between the economic, social,
environmental and institutional dimensions
between the corporation and society. Commitment to achieve such a balance and contribute
to society at large is called corporate citizenship (Commonwealth Business Council in
IOD, 2002, p. 91).
The King II also makes explicit reference to
the Global Reporting Initiative (GRI) guidelines and it requires that “every company
should report at least annually on the nature and extent of its social, transformation
[including black economic empowerment],
Global Education Research Network
73
Corporate Citizenship Around the World
ethical, safety, health, and environmental
management policies and practices” (p. 35).
It is noted that while its recommendations
are not mandatory, conformance is “in the
enlightened self-interest of every enterprise”
and “can be encouraged in various ways” (p.
19). Indeed, the Johannesburg Securities Exchange (JSE) now requires listed companies
to demonstrate compliance with parts of the
King II Code, and this represents a powerful
market based institutional driver for CC.
In addition to good corporate governance,
investors are increasingly playing a role in
pushing the CC agenda. Although this movement is still emerging (Sonneberg & Hamann, 2006) it only represents one percent
of investments under management. To provide a benchmark for SRI investors, as well
as an impetus for CC more generally, the JSE
launched a sustainability index in 2004 called
the JSE Socially Responsible Investment (SRI)
Index. The Index is centered on a set of about
70 criteria or indicators, grouped in terms of
the four overarching categories of corporate
governance, society, environment and economy. The original criteria were based on the
FTSE4Good model but were tailored to suit
the South African context, and they are continuously modified. With regard to the impact
of the Index in South Africa, Sonnenberg and
Hamann (2006: 316) conclude as follows:
There is no doubt that the Index has increased awareness of corporate citizenship
among JSE listed companies. Its most significant effect has arguably been on those
companies that otherwise would have had
limited exposure to sustainability issues…
For those companies unfamiliar with the
triple bottom line, the Index has provided
74
Global Education Research Network
them with a deeper understanding of a
range of sustainability issues… A further
important contribution, both for companies and the broader stakeholder community has been that the Index has for the first
time provided a set of criteria that defines
the priorities for corporate citizenship in the
South African context… However, despite
the media coverage of the Index, as well as
the interest expressed by a range of listed
companies, the anticipated increase in the
number of companies participating in the
second round of the Index did not materialize. The reasons include questionnaire
fatigue and uncertainty as to the benefits of
participating in the Index.
Other multilateral and multi-stakeholder initiatives that have varied influence on CC in
South Africa is the United Nations Global
Compact; the Global Reporting Initiative; The
Carbon Disclosure Project; ISO 14000 series;
ISO 26000, OECD Guidelines on Multinational Enterprises; the Forest Stewardship
Council; the Kimberly Process Certification
Principles; the Principles for Responsible
Investment; the Human Rights Compliance
Assessment; the Extractive Industries transparency Initiative; and increasing emphasis
on fair trade and related certification systems
(see Hanks, Hamann & Sayers, 2007 for a
detailed report of the status of these standards
and principles in South Africa).
Rankings and awards through performance
appraisals do play an important role in fostering awareness and peer pressure among companies in relation to corporate citizenship.
The two more prominent rankings in South
Africa are the SRI (as discussed earlier) and
the UNISA Centre for Corporate Citizenship
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
research project that entails the ranking of the
top 52 companies on the JSE on the basis of
an established methodology called Accountability Rating TM. Companies are rated in
relation to their performance in the following
areas (Hamann, 2008):
• Strategic intent – That is, the extent to
which sustainability issues are reflected in
company strategy;
• Governance – Including issues such as
board oversight and responsibility for sustainability issues;
• Performance management – The degree to
which sustainability objectives are institutionalized in day-to-day management;
• Stakeholder engagement – The manner
and extent to which stakeholders are engaged in setting objectives and their implementation;
• Public disclosure – With emphasis on the
quality and content of sustainability reporting;
• Assurance – The extent and manner in
which companies’ public disclosure on
sustainability issues is audited or verified
by independent assessors.
Distrust in ratings in South Africa is however prevalent (Hamann and de Jongh, 2008).
The main concern is low reliability of data,
low validity of measurement constructs, and a
lack of comparability between methodologies
(Chatterjie & Levine, in Hamann, 2008). In
addition, the interactions between companies
and their socioeconomic and natural environ-
www.BCCorporateCitizenship.org
ments are approached superficially. Hamann
and de Jongh (2008) conclude “that there is
a need for more context-specific assessments
that take into consideration the complexities
of sustainable development at the local level.”
Taken into account the collaborative direction
in which CC is evolving in South Africa, these
ratings and assessments would need to consider the extent to which CC is integrated into
business practices and the nature and impact
of sustainable collaboration. Through participatory research assessments, stakeholders
could play a more fundamental role in structuring assessment tools and participating in
impact assessment.
Conclusion: Challenges and opportunities
for the expansion of corporate citizenship
in South Africa
The socioeconomic and political history of
South Africa has informed the dynamic nature of corporate citizenship. It is critical that
the current meaning and status of corporate
citizenship is understood against this historical background. Of similar importance is the
recognition of current systemic challenges
that threaten sustainable business development. The impact of history and contextual
issues informs the role of business in South
Africa and the extent to which the government facilitates corporate citizenship through
legislation.
Main market drivers of CC are the inclusive
corporate governance that presents a culturally relevant framework for operating CC in
South Africa; SRI; rankings and awards; and
multilateral and international standards and
principles. These drivers are shaping the response of business to CC. Currently the understanding of corporate citizenship is shift-
Global Education Research Network
75
Corporate Citizenship Around the World
ing away from CSI toward more collaborative
and reciprocal engagement with nonfinancial
stakeholders. Alignment of corporate citizenship to core business functions is mostly
facilitated by civil regulation, multilateral
regulations and multistakeholder agreements.
It is against this background that it is difficult to describe CC in South Africa as voluntary. Though conformance can be seen as an
obstacle to enterprise, business is benefiting
from the relationship together with nonfinancial stakeholders. Reaching this balance is
still a main challenge in corporate citizenship
practice.
Furthermore, the emerging collaborative characteristic of corporate citizenship presents an
opportunity for innovation, business expansion and effective social development. Social
development is defined as integrative economic and social policy that aims to achieve
social and economic goals simultaneously.
South Africa’s policy environment thereby
provides opportunity to integrate corporate
citizenship into core business.
Currently there is a need for regional and
national performance appraisals of corporate
citizenship. Business social and economic
impact must be illustrated. A participatory
or collaborative effort between business and
its stakeholders to estimate performance and
impact will be advantageous, as most performance appraisals are removed from the reality. Though this is a challenge, opportunity
exists for local and multi-national corporations to contribute effectively and efficiently
to development.
The expansion of corporate citizenship must
be in harmony with the business culture
76
Global Education Research Network
of inclusive corporate governance which is
aligned to the values of Ubuntu. Hereby, corporate citizenship practice will make business practice culturally relevant and appropriate both nationally and in the region. This is
particularly important as foreign businesses
often use South Africa as a gateway into the
rest of Africa.
Bibliography
Alperson, M., 1995. Foundations for a New
Democracy: Corporate Social Investment in
South Africa. Johannesburg: Ravan.
Ashman, D. 2001. Civil Society Collaboration
with Business: Bringing Empowerment Back
in. World Development. Vol. 29 (7): 1097 1113
Bezuidenhout, A., Fig, D., Hamann, R. and
Omar, R., 2007. “A political economy of corporate social and environmental responsibility in South Africa” in D. Fig (ed.), Staking
their claim: corporate social and environmental responsibility in South Africa. Pietermaritzburg: University of KwaZulu-Natal Press.
Business Against Crime (BAC). About Us.
Retrieved July 18, 2008 from, http://www.bac.
org.za/
Carroll, A.B, 2004. Managing ethically with
global stakeholders: A present and future
challenge. Academy of Management Executive, 18, 2: 114-120.
Daniels, R.C. 2006. Skill Shortages in South
Africa: A literature review. Development
Policy Research Unit. Working Paper 07/121
May 2007
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
Department of Health. 2004. Report: National HIV and Syphilis Antenatal Sero-Prevalance Survey in South Africa 2003.
Dickinson, D. & M. Stevens. 2004. Understanding the Response of Large South African
Companies to HIV/AIDS. Paper presented to
HIV/AIDS in the Workplace Research Symposium, Wits University, 29/30 June.
Dickinson, D. (ND). Corporate Social Responsibility (From Below) In The Era Of AIDS.
Draft Research Paper
Hanks, J., Hamann, R. and Sayers, V., 2007.
Corporate Social Responsibility in South Africa: A description of the CSR landscape, a
review of the challenges and some recommendations for the U.N. Global Compact.
Unpublished report.
Institute of Directors (IOD). 2002. King Report on Corporate Governance for South Africa 2002. Johannesburg: Institute of Directors.
Dickinson, D. 2004. Corporate South Africa’s
Response to HIV/AIDS: Why So Slow? Journal of Southern African Studies. Vol 30, No. 3.
Jackson, W. E., Alessandri, T.M., & Black, S.S.
2005. The Price of Corporate Social Responsibility: The Case of Black Economic Empowerment Transactions in South Africa. Federal Reserve Bank of Atlanta. Working Paper
2005-29. December 2005
DTI (Department of Trade & Industry), 2007.
General Notice 112 of 2007 Codes of Good
Practice on Black Economic Empowerment
Act (9 February 2007)
JSE, 2003. JSE SRI Index: Background and
Selection Criteria. Johannesburg: JSE Securities Exchange. Retrieved July, 18 2008 from,
http://www.jse.co.za/sri/criteria.jsp
Fig, D. 2005. Manufacturing Amnesia. Corporate Social Responsibility in South Africa.
International Affairs. Vol. 81(3): 599-617
Kleinhans, C.A. 1994. Samewerkingsraamwerk op Sosialebetrokkenheidsgebied tussen
’n Besigheidorganisasie in die Visbedryf en
die Gemeenskappe waarin die besigheid gesetel is. Skripsie (Magister in Besigheidbestuur
en -administrasie), Universiteit van Stellenbosch
Hamann, R., 2008. ‘CSR in South Africa: On
the role of history, the government, and local
context’, in S.O. Idowu and W.L. Filho (eds)
Global Practices of Corporate Social Responsibility. Berlin: Springer.
Hamann, R., 2004. Corporate social responsibility, partnerships, and institutional change:
The case of mining companies in South Africa. Natural Resources Forum, 28(4): 278290.
www.BCCorporateCitizenship.org
Madihlaba, T., 2002. The Fox in the Henhouse: The Environmental Impact of Mining
on Communities in South Africa. In D. McDonald (ed.), Environmental Justice in South
Africa. Cape Town: University of Cape Town
Press.
Global Education Research Network
77
Corporate Citizenship Around the World
Mangaliso, M.P. 1997. South Africa: Corporate Social Responsibility and the Sullivan Principles. Journal of Black Studies. Vol.
28(2): 219 - 238
Marks, S. 2002. An Epidemic Waiting to
Happen? The Spread of HIV/AIDS in South
Africa in Social and Historical Perspective. African Studies. Vol.61(1).
Phyllis, M. 1982. American Business in South
Africa: Instructors Guide and Study Materials.
Constitutional Rights Foundation: California
Plan Associates, 2001. Greater Rustenburg
Informal Housing Strategy (compiled for the
Housing Strategy Forum). Unpublished document.
Marzullo, S.G., 1987. American Business in
South Africa: The Hard Choices. In S.P. Sethi and C.M. Falbe (eds.), Business and Society: Dimensions of Conflict and Cooperation. Massachusetts: Lexington.
Pretorius, R. 2002. Maatskaplike OntwikkelingsVennootskappe tussen the Korporatiewe
sektor, die Staat en Nie-Winsgemende Orgnaisasies. Tesis (Magister in Maatskaplike
Werk, Welsynsprogrambestuur), Universiteit
van Stellenbosch
Midgley, J. 1995. Social Development: The
developmental perspective in social welfare.
Thousand Oaks, CA: Sage Publications.
Rossouw, G.J. Van der Watt, A., & Malan, D.P.
2002. Corporate Governance in South Africa,
Journal of Business Ethics. Vol.37: 289 - 302
Moodie, T.D. with Ndatshe, V., 1994. Going
for Gold: Men, Mines, and Migration. Johannesburg: Witwatersrand University Press.
Rossouw, G.J., 2005. Business ethics and corporate governance in Africa. Business & Society, 44(1): 94-106.
Natrass, N. 2004. The Moral Economy of
AIDS in South Africa. Cambridge University
Press, Cambridge, UK.
Sethi, S.P. and Falbe, C.M. (eds.), 1987. Business and Society. Dimensions of Conflict and
Cooperation. Massachusetts: Lexington.
O’Brien, R. 2000. Corporate community
policy: Phases and characteristics of interventions in South-Africa. People Dynamics, 18(1):
22- 25.
Sonnenberg, D. and Hamann, R., 2006. The
JSE Socially Responsible Investment Index
and the state of sustainability reporting in
South Africa. Development Southern Africa,
23(2): 305-320.
Orkin, M. (ed.), 1989. Sanctions against
Apartheid. Cape Town: David Philip.
Patel, L & Graham, L (forthcoming 2008).
Who benefits from Broad Based Black Economic Empowerment? Johannesburg: CSDA
Report
78
Global Education Research Network
Truth and Reconciliation Commission of
South Africa, 2003. Truth and Reconciliation Commission of South Africa Report, 21
March 2003. Retrieved July, 22 2008, from
http://www.gov.za/reports/2003/trc/index.
html
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
Turrell, R.V., 1987. Capital and Labour on the
Kimberley Diamond Fields, 1871-1890. Cambridge: Cambridge University Press.
Van den Heever, C.M. & Hugo, E.A.K. 1990.
Maatskaplike verantwoordelikheidsprogramme: ’n Werkgewer se bydrae tot individuele en gemeenskapstabiliteit. Pretoria: Raad
vir Geesteswetenskaplike Navorsing
Visser, W., 2006. “Revisiting Carroll’s CSR
Pyramid: An African perspective,” in E.R.
Pedersen and M. Huniche (eds.) Corporate
Citizenship in Developing Countries. Copenhagen: Copenhagen Business School.
Waddock, S. & Bodwell, C. 2007. Total Responsibility Management: The Manual . Sheffield: Greenleaf Publishing.
WBCSD (World Business Council for Sustainable Development), 2005. Business for
development: Business solutions in support
of the Millennium Development Goals. Geneva: World Business Council for Sustainable
Development.
Whiteside, A. & C. Sunter. 2000. AIDS: The
Challenge for South Africa, Cape Town: Human & Rousseau Tafelberg.
www.BCCorporateCitizenship.org
Global Education Research Network
79
Corporate Citizenship Around the World
© Tom Cummings
United Arab Emirates Corporate Citizenship Summary
Dubai, United Arab Emirates
Cultural context and social contract
The concept of corporate citizenship in the United Arab Emirates is based on a tradition and culture of charity and collectivism. Islamic values encourage the individual
and corporations to donate for charity and social equality. Companies are expected to
contribute in this way, and comply with laws and to have safe working environments,
but at this stage little else is required from society.
Current state and transformation of citizenship
In the U.A.E. corporate citizenship is still in infancy. Business leaders are beginning to
embrace corporate social responsibility, but the majority of companies display a conventional understanding of the concept of corporate social responsibility. In the U.A.E.,
it is characterized by a narrow focus on economic efficiency, legal compliance and
charity and does not extend into broader stakeholder engagement. U.A.E. companies’
view of corporate citizenship is limited to regulatory compliance, business growth and
worker health and safety.
80
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
Driving forces and motivations:
• Islamic culture
• International businesses
Issues of prominence:
•
•
•
•
Unequal welfare distribution
Population growth
Environmental damage
Poor labor practices (low wages)
Dubai Chamber Center for Responsible Business
The Dubai Chamber Center for Responsible Business
was established by the Dubai Chamber of Commerce &
Industry to foster corporate integrity and to promote the
Emirate of Dubai as the region’s gateway for global commerce by offering its global business partners an environment of transparency and rule
of law. The Center for Responsible Business’ vision is to be the leading center of expertise in business ethics and corporate social responsibility in Dubai, positively impacting Dubai Chamber members and stakeholders through the provision of knowledge
resource and value-added services that enable them to develop global business standards of integrity. The center’s mission is “to raise the level of awareness, and encourage standards of good practice in organizational ethics, corporate responsibility and
governance through the provision of research, training and advisory work for Dubai
Chamber members and stakeholders.
www.BCCorporateCitizenship.org
Global Education Research Network
81
Corporate Citizenship Around the World
Corporate Social Responsibility in the U.A.E.
By Anis Ben Brik, Dubai Chamber Centre for Responsible Business
Contextual background
Located in the Arabian Peninsula, the United Arab Emirates (U.A.E.) was created when
the British withdrew from the Gulf in 1971.
The country is comprised of seven sovereign
Emirates: Abu Dhabi (which is the federal
capital and the largest city), Dubai, Sharjah,
Ras Al Khaimah, Ajman, Fujairah and Umm
Al Qaiwain. The U.A.E. is governed by hereditary rule, namely by the supreme council of
rulers, which is made up of the rulers of each
Emirate, along with the Crown Princes and
deputies of each ruler. They are responsible
for general policy matters and ratifying federal laws. The U.A.E. is one of the six members of the Gulf Corporate Council (GCC). All
six countries are major oil exporters. In fact,
45 percent of the world’s oil reserves are estimated to be in this region. The U.A.E. is also
a member of the United Nations (U.N.), International Monetary Fund (IMF), Oil Product
Exporting Countries (OPEC) and the World
Trade Organization (WTO). The rulers have
made strong efforts to ensure that the country
is stable throughout its rapid development.
Modern and impressive high-rise buildings,
well-equipped hospitals, dependable electricity and water supplies, educational establishments and modern transportation networks
are some examples of how the rulers have
transformed the U.A.E.. Dubai in particular is a well-known global commercial center
and business capital of the Middle East, partly
due to its tax-free status and position as a key
trading route between the East and the West.
Key income generating activities of the U.A.E.
include manufacturing, re-exporting, bank-
ing, financial services, tourism, retailing and
distribution.
The state of social responsibility activities
in the U.A.E.
Socially responsible actions are not new to the
U.A.E., which has a well-established tradition
of solidarity and charity. In fact, the paternalist and collectivist characteristics of the U.A.E.
culture, together with its religiosity (Islamic
values related to Zakat -donations), seem to
be the underlying root motivating charity and
social assistance, the most common forms of
aid in this region.
While charitable donations and voluntary social initiatives are deeply rooted in the social
tradition, awareness and practices of corporate social responsibility (CSR) are still the
infancy stage. The development of a CSR
debate, which is barely starting in the U.A.E.,
can be attributed to the efforts of some businesses and political leaders, a recent increase
in media coverage, and the launch of several initiatives to promote CSR in the U.A.E.
(which include the Centre for Responsible
Business (CRB) at the Dubai Chamber28, the
Centre for Corporate Value (DCCV)29, and
Masdar30 – the world’s first attempt to create
a zero-carbon zero-waste city). However, according to a recent survey (Rettab & BenBrik,
See www.dubai-ethics.ae
28
www.dccv.ae
29
www.masdarU.A.E..com
30
82
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
The Meaning of Corporate Social Responsibility
% of respondents
Being as profitable
as possible
7.1%
36.0%
Doing what the
law expects
62.9%
Providing voluntary assistance to charities
and community organzaitons
18.2%
7.9%
Agree
1.4%
Strongly Agree
Doing what is expected
morally and ethically
49.6%
0
10
20
30
40
6.4%
50
60
70
80
Source: Rettab & Ben Brik (2008)
2008), CSR still does not appear as strong
in Dubai as in other Western countries. Although business leaders in Dubai accept, and
are beginning to embrace, corporate social responsibility, the majority of companies show a
limited understanding of the concept of CSR.
Few companies have responded by developing practices for managing the risks and the
opportunities associated with CSR. Instead,
corporations in Dubai seem narrowly focused
on economic efficiency, legal compliance and
charitable activities, and much less so on
meeting other stakeholders’ expectations.
www.BCCorporateCitizenship.org
One reason some companies are on the fence
with regard to corporate social responsibility may be confusion and indecision over its
strategic value. There is a high level of skepticism about CSR and many managers view it
as yet another fad that will ultimately go out
of fashion and that has little utility for their
organizations, and may even harm firms’ organizational performance. As such, firms in
the U.A.E. do not recognize the value of communicating CSR practices to their stakeholders. To date, very few corporations—less than
Global Education Research Network
83
Corporate Citizenship Around the World
10—in the U.A.E. publicize their environmental and social reports.
This perspective could be due to several factors31:
• The monopoly position of many companies which results in lesser pressure to be
accountable to their stakeholders;
• A lack of awareness among stakeholders of
the value of CSR;
• A lack of a comprehensive framework to
help managers identify appropriate CSR
actions relevant to their business and
stakeholders;
• A dearth of communication platforms to
disseminate information about CSR activities;
• A lack of social solidarity affected by growing cultural diversity and social stratification, as well as high turnover among managers and employees due to turbulent labor
market. 32
How CSR is defined in the U.A.E.
According to a 2007 Dubai Chamber CSR
survey (see figure), the majority of companies
(70.8 percent) are more likely to see corporate
These factors are based on an extensive discussion with practitioners in Dubai through CSR stakeholders workshops and discussion forums organized by the centre of responsible business at the
chamber of commerce and attended by the authors.
31
32
The U.A.E. business environment consists of over 120 nationalities from a wide range of cultural, religious and ethnics backgrounds. The majority of workers, according to the U.A.E. Ministry
of Planning (2003), come from the Indian subcontinent (51.3
percent), Arab region (37.4 percent), and Eastern and Western Europe, North America, Australia and New Zealand (2.2 percent)
84
Global Education Research Network
social responsibility as the narrow conventional view of their role in society, to comply
with laws and regulations.
Only 20 percent (19.6 percent) of companies
believe that corporate social responsibility
includes voluntary engagement in activities
or programs to promote human welfare and
goodwill, and to assist charities and community organizations. The survey also reveals
that more than a half (56 percent) of companies in the U.A.E. recognize corporate social
responsibility to be broader including moral
and ethical standards, norms, or expectations
that reflect a concern for what stakeholders
(e.g., consumers, employees, shareholders)
regard as fair and just. Most companies agree
that regulatory compliance, business growth
and workplace health and safety are the top
roles companies play in society, demonstrating their ”narrow” understanding of the private sector’s role in helping solve social and
environmental issues. Corporate social responsibility issues in
the U.A.E.
As mentioned above, Dubai has sustained a
period of rapid growth during the last three
decades. The city-state moved from an obscure semi-nomadic Emirate to a global financial and commercial hub with significant
competitive advantages. This fast economic
growth, generated by huge factor inputs, has
also had unintended harmful side effects
such as an unequal welfare distribution, enormous environmental damage, and high incentives for opportunistic business behavior.
This rapid growth has also increased the demand for manpower at levels higher than the
annual GDP growth rate. As a result, the cur-
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
rent working age population is made up of an
increasingly young age group and the country
is growing more and more reliant upon an expatriate work force. These factors have caused
a remarkable decline in labor productivity
rates. The high degree of temporary migration (exceeding 80 percent of the work force)
and high turnover rate among managers and
employees in this turbulent market has also
resulted in poor labor practices (primarily low
wages). Although the government has introduced a number of laws to regulate corporate
conduct, much hinges on the institutional capacity (or lack thereof) to monitor and enforce
these regulations.
According to a recent study33, the U.A.E. has
the highest population growth rates in the
world, estimated at 5.6 percent. The estimated
population in 2005 was around 5 million, of
which 45 percent are under 15 years of age.
This demographic situation has serious impacts on the education, training, and capacity
building needed to develop the future labor
supply. The business community has an important stake in ensuring the stability and
quality of the future labor supply.
The factors addressed above provide a good
indication of the various social, environmental and economic issues and challenges businesses in the U.A.E. will face in the next few
years. The issues highlight the need for a
corporate social responsibility agenda focusing on workplace, community and human
resource development, and reducing environmental impact.
See for example U.A.E. HR report, 2005, www.tanmia.ae
33
www.BCCorporateCitizenship.org
The role of stakeholders in CSR
development
The slow development of CSR in the U.A.E.
can be largely attributed to an unfavorable
institutional framework and lack of pressure
from stakeholders. Without standards and appeals systems, businesses can freely and independently choose whether or not they wish to
engage in CSR activities. Further, there is no
coercive pressure to adopt CSR. Local bodies
and government agencies championing CSR
do not have sufficient power to coerce firms
to engage in responsible business practices
and or dictate which practices are more desirable. The decision to adopt or reject CSR
rests, to a very large extent, with the management of the firm. However, a recent survey on
CSR reveals that companies in the U.A.E. are
beginning to step up to the plate to take more
direct action on social and environmental issues. Most industry sectors report positive
views toward CSR.
However, industries are behind in community development, employee volunteering
and ethical marketing practices (see Attitudes
toward CSR in UAE by industry on page 86).
The majority of industry sectors were less
likely for example to engage with the community and to maintain a clear policy/strategy to
improve community conditions. Likewise, an
even lower share of companies across these
industries support employee volunteering.
CSR challenges in the U.A.E.
The U.A.E. has a fast-growing economy. It is
rapidly diversifying into areas such as banking and finance, tourism, manufacturing,
and logistics to name a few. The city-state of
Dubai has particularly lofty plans for growth
in the coming years. Yet, achieving such rapid
Global Education Research Network
85
Corporate Citizenship Around the World
Industry:
Attitudes toward CSR in UAE by industry
Likelihood
companies
will engage
with
Positive view
communities
toward CSR
Manufacturing
Trading
Education
Real Estate
Finance and Banking
Hospitality
69%
68%
67%
64%
64%
66%
growth in a sustainable manner is more difficult that it used to be. Growth for Dubai
can mean not only increased revenues, but
also an improved ability to sustain a fair and
equitable distribution of rights and responsibilities that define the role of each citizen and
organization in society.
Globalization, regional political crises, and
the changing demographics of the work force
will all have a strong impact on Dubai’s ability to compete globally. Industry consolidation
and new competition from nontraditional and
global sources have made it difficult to stand
out, forcing government and businesses to
redouble their efforts to define and deliver
such “growth” value. By doing more to address environmental and social challenges,
businesses in the region can enhance their
competitiveness through CSR activities from
supply chain practices, to education, health
and safety, community development, and environmental protection.
The CSR agenda for the U.A.E. will be based
86
Global Education Research Network
6.6%
5.9%
14%
7.1%
Companies in
support of employee
volunteering
3.3%
5.9%
3.6%
9.3%
on social dialogue and partnership (inter-sector and private-public partnerships in particular). The challenge for businesses in the
U.A.E. is to move beyond a narrow focus on
the legal, reputational or economic logic, and
accept the rights and responsibilities connected to the impact it has on all stakeholders. This change will require a revision of the
role of business in society. The challenges
facing businesses today also clearly point to
the need to invest in deep internal change and
improvements, to redesign the value chain
and to optimize business’ positive footprint.
From the way resources are allocated to the
way people are hired and motivated, and from
the procurement of resources to the marketing and sales of products and services, each
functional activity should be adapted to fully
embed a consideration of its potential social
and environmental impact.
The role of public institutions in the U.A.E.
should be to recognize good practice in corporate social responsibility and make it meaningful, as well as to enable simpler access
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
both to business services and social/environmental services for business. The challenge
for policymakers is to develop regulations and
policies to promote transparency and accountability, anti-fraud and corruption, occupational health and safety, human and labor rights
protection, socially responsible investment,
and green supply chain initiatives. More emphasis directed to consumers’ awareness of
responsible consumption would also benefit
the advancement of CSR in the U.A.E..
Recommendations for international
businesses
Despite the premature stage of the CSR
agenda in Dubai, businesses have an excellent point of departure for moving forward.
International business leaders can contribute
to the economic growth of the U.A.E. in a responsible manner through “green” technology
transfer, green building, green purchasing,
the use of renewable energy resources, capacity building and human capital development.
These international business leaders who are
committed to socially responsible practices
can have an even greater impact. They will
have the opportunity to reinforce the policies
and laws of the U.A.E., contribute to environmental sustainability and promote core labor,
environmental, and supply chain standards
and human rights in the U.A.E.
www.BCCorporateCitizenship.org
References
IMF. 2005. United Arab Emirates: Selected
Issues and Statistical Appendix. Washington.
Washington, DC.: IMF.
NBD. 2004. Emiratization Efforts in the
U.A.E.: Impediments to a Serious Vision. Economic Report: A Quarterly Publication of the
National Bank of Dubai, 8(4): 2–3.
Rettab, B., & BenBrik, A. 2008. The State
of Corporate Social Responsibility in Dubai:
Changing together. U.A.E. Dubai: Dubai
Chamber, Centre for Responsible Business.
Tanmia. 2005. Human Resources Report. .
Abu Dhabi: U.A.E.: National Human Resource Development and Employment Authority (Tanmia).
U.A.E.. 2005. United Arab Emirates Yearbook
2005. Dubai: Trident Publishing.
Global Education Research Network
87
Corporate Citizenship Around the World
© Celso Pupo
Brazil Corporate Citizenship Summary
Sao Paulo,Brazil
Cultural context and social contract
Brazilian society expects companies to meet the demands for consumption of goods
and services while contributing to the construction of a national sustainable development model. The idea of social responsibility has a shorter history in Brazil – having
come onto the scene in the 1990s. Brazil has experienced a retreat of the state and
growth in the size and power of the private sector familiar in other parts of the world.
Brazilians are especially attuned to their society’s needs in social inclusion and sustainable development, and expect the private sector to play a significant although voluntary role.
Current state and transformation of citizenship
In Brazil, understanding of the term “corporate citizenship” is limited to corporate volunteering and community programs, only a portion of the whole picture – described as
a company’s social responsibility or “RSE.” RSE is focused more on changes in the way
companies do business, to promote a sustainable development model. However, there
88
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
still is a misunderstanding between philanthropy, social actions and social responsibility. Some Brazilian companies are ahead of the curve, engaging in cross-sector partnerships and industry groups to promote RSE and sustainable development.
Driving forces and motivations:
• Dialogue with external and internal stakeholders
• Pressure from society and NGOs
• Rankings such as the São Paulo Stock Market Corporate Sustainability Index
Issues of prominence:
• Environment (with a focus on the Amazon)
• Corruption fighting
• Workplace conditions
Ethos Institute – Business and Social Responsibility
Ethos Institute – Business and Social Responsibility is a nongovernmental organization created with the mission of mobilizing, sensitizing and helping companies to manage their businesses in a socially responsible manner, making them partners
in the construction of a fair, sustainable society. Its 907 members comprise companies
of different segments and sizes, which account for annual revenues of approximately
30 percent of the Brazilian GDP and employ roughly 1.2 million people. Their main
characteristic is their interest in establishing ethical patterns for the relationship with
employees, customers, suppliers, community, shareholders, public power and the environment.
Conceived by businessmen and executives from the private sector, Ethos Institute is a
center for mobilization, organization of knowledge, exchange of experiences and development of tools that can help companies to analyze their management practices
and deepen their commitment with corporate responsibility. It is today an international
reference in the issue and develops projects in partnership with several bodies worldwide.
www.BCCorporateCitizenship.org
Global Education Research Network
89
Corporate Citizenship Around the World
Brazil Applies Originality to Corporate Citizenship
Instituto Ethos de Empresas e Responsabilidade Social [Ethos Institute of Companies and Social
Responsibility], Ricardo Young - President
In Brazil, the term “corporate citizenship” is
used as a synonym for corporate volunteering, or for the employees’ participation in the
company’s community programs so “corporate citizenship” represents a small part of a
company’s activities related to social responsibility. The term social responsibility started
to be used in companies, universities, and in
society in general in 1998, when the Instituto
Ethos de Empresas e Responsabilidade Social
(RSE or CSR) was founded. In the 10 years
since, the RSE movement has grown in companies and in society and developed an international reputation, through Ethos’ Social
Responsibility indicators, for showing how
companies can be a catalyst for social transformations. This Brazilian originality made a
major contribution to the international movement of corporate responsibility.
In our country, society still expects the market
(companies) to produce social welfare and is
putting increasing pressure on companies to
do so. Companies are expected to meet the
demands for a certain level of individual consumption of goods and services while promoting changes in business administration
to contribute to the construction of a sustainable development model. Therefore, in Brazil,
the challenges of corporate social responsibility incorporate “moral” dilemmas in the
construction of a new society by changing the
way business is conducted.
In Brazil, the social responsibility movement
gained power starting in 1990, stimulated by
90
Global Education Research Network
the quality movement, which permeated the
1980s and promoted a revolution in company
management systems in the country. In the
1990s, the retreat of the state and the advance
of the market made the companies entrusted
with people’s well-being and social justice expectations.
The principles and values of socially responsible management have contributed to companies meeting some of these expectations,
making them real agents of social transformation while not forgetting the need for good
financial performance. Actually, what was noticed in our country is that in order to have a
favorable environment for business, people’s
quality of life needed to improve. Business, as
one of the most organized sectors of society,
plays an important role. Therefore, corporate
social responsibility in Brazil faces more complex challenges and puts companies in the
unprecedented position of changing society
by changing the way they do business.
How is this change being made in business?
Through dialogue with the people involved
in the activities of the company: suppliers,
insiders, environmental activists, local communities, government and society in general,
as well as the shareholders. When these segments’ demands are integrated in strategic
planning, as equal aspects of the company,
environmental concerns, suppliers’ standards
and community partnerships, among others,
ethical consideration of their concerns is a
central part of doing business.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
Founded in 1998, Instituto Ethos de Empresas e Responsabilidade Social has contributed to the development of the RSE in Brazil,
orientated by the view that the incorporation
of the country’s social and environmental
objectives to the companies’ economic goals
is primordial to building a society with social
justice and sustainable development. Therefore, it has been carrying out, with the active
participation of its associates and companies
in general, a cross-party and multi-sector articulation of social responsibility practices of
companies with federal, state and municipal
government public policies oriented to social
inclusion, poverty and hunger eradication,
corruption fighting and environmental development. Among the examples: the National
Pact for slave labor eradication, articulated by
Ethos Institute, International Labor Organization and Reporter Brazil NGO with representatives from big companies who have
agreed to monitor their supply chains and
adopt commercial sanctions against suppliers who benefit from slave work conditions.
Companies such as Walmart, Petrobras, C&A
and financial institutions such as Banco Itau
and ABN Real do not buy or offer credit to
companies and businessmen accused of such
practices.
Another innovation, the Pact for Integrity and
Against Corruption – articulated by the Ethos
Institute, Unodc, Patri Relacões Governamentais & Politicas Publicas, the World Economic
Forum and Global Pact Brazilian Committee, with Brazilian Association of Advertisement Agencies and Fundação Ford support,
contains a series of guidelines and procedures
that the signing companies agreed to adopt in
its relationship with public authorities. Today
www.BCCorporateCitizenship.org
there are more than 500 signatories and actions effectively adopted by them and also by
supply chains have begun to change organizational culture. These actions and the media
campaign to publicize it across the country
can be viewed at the web site www.empresalimpa.org.br.
The “future agenda” for the RSE Brazilian
movement and for Instituto Ethos is huge and
urgent. The effects of global warming make it
more important to search for a new model of
civilization, based on sustainable production
and consumption, with social inclusion and
environmental balance. In order to contribute
with this search, Instituto Ethos and the RSE
movement in Brazil must deepen dialogues
among sectors and encourage the mobilization in two interdependent ways: 1. Create
consumer products, processes and services
that reduce or eliminate economic activity
that negatively affects the environment while
including developing nations; and 2. Accelerate, with other social actors, the establishment
of new legal milestones which guarantee social inclusion and environmental balance.
Within the responsible management scope,
Instituto Ethos has been playing, since its
foundation in 1998, the role of pioneer bringing enlightenment to society. From Instituto
Ethos, sprang Instituto Akatu for the Conscientious Consumption, dedicated to educating and mobilizing people for conscientious
consumption; and Nossa São Paulo and Rio
Como Vamos movements, dedicated to committing society and government to addressing essential areas such as education, health,
safety, housing, work, leisure, culture and
transportation and services.
Global Education Research Network
91
Corporate Citizenship Around the World
There are various entities from other sectors
throughout the country working on several issues and making a difference. Their influence
will tend to grow as people become aware that
changing this reality only depends on them
and they have to participate more actively in
the decisions that affect everybody’s life. I
believe that a comparison with Europe does
not apply. In Europe, the state is still a regulatory body and RSE advances because there are
laws for this. In Brazil and Latin America, we
consider the entities’ volunteer commitment
to responsible business and a sustainable society important. As from these good practices,
we pressure the government for new legal
milestones.
Although there is no company or group of
companies that can be identified as “socially
responsible” there are those whose practices
are in a more advanced stage. These are the
ones I consider “ahead of the curve”. In this
case, I indicate the companies listed in the
Corporate Sustainability Index of the Stock
Market of São Paulo. There are 33 companies
selected by social, environmental and economic criteria whose profitability is increasing and constant. At the same level, there
are companies that are part of the so-called
“ethical funds,” specifically Ethical, from ABN
Real and Itaú Social from Itaú Bank, whose
profitability is also very attractive. These are
public companies. Where to search for indicators for the private ones? One place is some of
the “rankings” developed by consulting agencies and published in the media as the “best
companies to work in” and “the best practices
of sustainability.” These classifications are
interesting because they allow comparison between the performance of public and private
92
Global Education Research Network
companies related to some responsible management indicators.
In Brazil, considering the advances previously mentioned in this article, there still is a
misunderstanding between philanthropy, social actions and social responsibility. The first
two refer especially to the companies’ activities oriented to a specific group of people: the
community. RSE (corporate social responsibility) is focused more on changes in the
way companies do business. There are three
key issues where social concerns and business management must come together: the
environment, with a focus on the Amazon;
corruption fighting and workplace conditions.
Instituto Ethos has been working to help
companies advance on this agenda. Regarding
the Amazon issue, the Forum Amazonia Sustentável will bring together several social sectors to discuss a set of sustainability criteria
to guide the investments and governmental
policies for the region. Concerning corruption
fighting, it has been promoting exemplary
company practices that can be adopted by other companies. Regarding workplace issues, it
has been pressuring organizations to make
the OIT agenda in supply chains effective.
Next I would like to discuss the impact of
climate change on business. Outside Brazil
and Latin America, it seems that the debate
is restricted to the environmental effects to
this or that region of the world. If there is not
a complete transformation in civilization, in
the sense of social inclusion of millions of
poor people in the job market, health, education and also consumption, there will be no
environmental solution. In fact, there will be
no solution.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
I will state a hypothetical example to illustrate
my concern. Pakistan is one of the poorest
and most populated countries in the world
with almost no industry and very low consumption from its population. Its carbon
emission is also minimal. Due to a geographical irony, its territory is located below sea
level. Therefore, any increase in the volume
of the sea water can literally sink the country.
It’s likely that, if this hypothetical flood occurs, millions of people will have to be moved
to other regions of the globe. They will need
houses, education, and work (even if in small
amounts). Who will pay this bill? The answer
to this question presents ethical dilemmas we
have been trying to escape for more than two
centuries of industrialization and waste. We
cannot ignore this anymore. We must start a
sustainable cycle of production and consumption that is environmentally balanced and socially inclusive or else.
ever, they are responsible for a great deal of
growth and transformation in the RSE field
and deserve to be mentioned:
In Brazil, we recommend to international
business executives, who wish to invest in the
country, to search for companies that have
products or services that guarantee social inclusion, environmental balance and good dividends for shareholders. Brazil already offers
many of these alternatives; they just need to
be supported.
• Media: Magazine Page 22, Revista Plurale,
Agencia Envolverde (web site), Mercado
Ético (web site), Iniciativa Planeta Sustentável (publisher Abril), Revista Época Negócios, Revista Razão Social (Jornal O Globo
newspaper), Empresas e Comunidades
(Jornal Valor Econômico newspaper), Cidades e Soluções ( TV program);
There are several relevant initiatives and organizations, in various sectors, that would
be a reference for those who want to know
the corporate social responsibility evolution
process in Brazil. It would be interesting to
divide them in some way, but because they
have distinct natures and reach different types
of people comparisons would be unfair. How-
• Events: Ethos International Conference
www.BCCorporateCitizenship.org
• NGOs: Instituto Akatu (conscious consumption and RSE research); GIFE (includes corporate foundations and institutes
not always focused on the management
process but on private social investment).
• Federation of industries: state of Paraná
and Minas Gerai;
• Activities: Global Pact Brazilian Committee, norm ISO 26000 work group coordinated by Instituto Ethos
• Universities: Although various courses are
being offered, some universities stand out
with their courses related to RSE, as: FGV
Paraná and Fundação Dom Cabral;
Global Education Research Network
93
Corporate Citizenship Around the World
© Happy Alex
Chile Corporate Citizenship Summary
Santiago, Chile
Cultural context and social contract
Chilean business has been traditionally concerned with social topics due to the strong
influence of the Catholic religion in the country. Today, businesses are expected to provide healthy and safe products in accordance with legislation and environmental protection, follow good labor practices, ensure a good quality of life in the work place, and
show concern for the environment.
Current state and transformation of citizenship
Since the late 1990s corporate citizenship, or corporate social responsibility (CSR), has
been understood more as a business vision than a personal philanthropic exercise, encompassing broader issues from the environment to human development and social
capital. While consumer familiarity with corporate citizenship is growing, its adoption
by companies is not yet widespread. However, some companies that are leading in
this area have taken up corporate citizenship models and world initiatives such as the
Global Reporting Initiative and Global Compact. Those that are engaged have followed
94
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
an approach focused on common investment, cause marketing or the technical-productive quality norms fulfillment, such as the ISO 9000 and 14000. The government
has not played a very active role in corporate citizenship, but is under growing pressure from the NGO sector to implement corporate citizenship policies and regulations.
Driving forces and motivations:
• Commerce and globalization,
multinational companies
• History of philanthropy
• “A demanding society”
• Strong NGO sector
• Opportunity for competitive advantage
Issues of prominence:
•
•
•
•
Environment
Supply chain
Workplace/labor
Community engagement
Vincular, Center for Corporate Social Responsibility at Catholic University of
Valparaiso
Vincular is a center specializing in corporate social responsibility, located in Chile, with branches in Valparaiso, Santiago
and Antofagasta. Vincular was established in 2001 by the
Pontifical Catholic University of Valparaiso and supported by
numerous Chilean business associations, the IDB (Inter-American Development Bank)
and the Chilean government (R&D grants). Vincular has partners in 13 Latin American
countries. Vincular aims to improve the competitiveness of corporations and generate
favorable conditions for future investments; incorporate into business strategies the
establishment of beneficial relationships with stakeholders; promote corporate social
responsibility so as to generate benefits for the corporations, its employees and the society as a whole; and to study the tendencies, perceptions and good practices of CSR.
It is an active member in the development of the future ISO 26000 for social responsibility, active collaborator of the GRI and local focal point for the Asia-Pacific Economic
Cooperation forum on CSR
www.BCCorporateCitizenship.org
Global Education Research Network
95
Corporate Citizenship Around the World
Chile - CSR starts at home
By Dante Pesce, VINCULAR Responsabilidad Social Empresaria Pontificia Universidad Católica de
Valparaíso [Center for Corporate Social Responsibility at Catholic University of Valparaiso
Many investigations about trends, perceptions, and good practices of corporate social
responsibility have demonstrated that this
topic in Latin America, and particularly in
Chile, is making huge strides. The key drivers
include commerce and globalization, including multinational corporations acting locally,
but also many local ones, in particular smalland medium-size enterprises (SMEs). Issues
addressed through CSR are primarily related
to good labor practices, environmental management and community engagement and
supply chain development (for large companies).
The evolution of CSR in Chile
Evidence of corporate social responsibility
(CSR – the most common term used in Chile)
can be found among a series of philanthropic actions as far back as 1920. At the beginning, these initiatives were mainly driven by
businessmen’s personal values, and were not
integrated into business strategies. However,
economic globalization, market liberalization and an increasingly demanding society
(mostly still outside the country), began to
shift the paradigms toward a greater commitment to society and to a new reality where
government, the private sector and civil society interact more deeply. Since the late 1990s,
CSR has been understood more as a business
vision than a personal philanthropic exercise,
encompassing broader issues from the environment to human development and social
capital. The topic has also generated growing
96
Global Education Research Network
interest among business sectors, government
and civil society.
Today this theme has advanced from an incipient subject and has begun to develop more
profoundly and academically. Representatives
of each sector of society have begun to understand that they are not independent from one
another but that each must behave responsibly with every group they interact with and
participate equally in the social development
of the country. This change is also correlated with an increased understanding of CSR
among society, and more and more Chilean
companies adopting responsible corporate
policies (such as employee personal development, environmental care, closer relations
with communities, and supply chain responsibility). Progress has been further encouraged by industry associations, the government
and SMEs.
Citizenship: For a better working
environment
The concept of CSR is well known and demanded by today’s consumers in developed
countries, but it also has extended to Chile.
Chileans are becoming more familiar with
CSR and they value the practices related to
it. However, they realize that the adoption of
CSR is not yet widespread, as many businesses in Chile still follow a short term profit-driven strategy.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
These views are supported by survey research.
The international study by MORI (2005),
“Responsabilidad Social Corporativa,” measured the perception and value that Chilean
consumers have of the socially responsible
behavior of companies. The study found that
companies are concerned about the impact of
their operations on society, and where there
is a management approach to address their
sustainability impacts by aligning their objectives with the requirements of their stakeholders, they actually get recognition by national
public opinion, which results in a competitive
advantage for the company. According to the
study, around 90 percent of consumers hope
that big companies provide them with healthy
and safe products in accordance with legislation and environmental protection. Employee
treatment and labor practices were listed in
second place. When asked about the conditions necessary to consider a company socially
responsible, respondents cited the quality of
life in the workplace (92 percent), and concern for the environment (79 percent).
Based on these perceptions, it is important for
companies to consider stakeholder opinions
when formulating business strategies, put
CSR into practice, and incorporate its governing principles in a cross-functional way
throughout their management strategy.
In Chile the number of consumers who are
becoming familiar with this concept and who
factor it into their purchasing decisions is
increasing. As evidence, 55 percent of consumers believe that a company sells more
products if it is socially responsible. In other
words, CSR is definitely on Chileans’ minds,
if not yet guiding their purchasing behavior.
www.BCCorporateCitizenship.org
The state: Reorienting its role
The state perceives CSR as a developed
country concept as opposed to a developing
one, and it still has not been able to decide
how much of an active role it should play in
this matter. Research on eight public organizations’ views, approaches, and initiatives
related to CSR concepts and practices (Red
Puentes Chile and the Programa De Accion
De Mujeres (PROSAM), 2004) support this
view. This research gives mixed signals about
the role the state must take in the context of
CSR. Some of these organizations believe that
“the government must assume an active role,
calling on the companies to include policies
and practices of social responsibility,” while
others believe that the lack of government
policies to coordinate the private initiatives in
this area and promote it through incentives
“would leave the topic circumscribed only to
the social compromise and the philanthropy
of the businessmen, denying its global strategic character.”
In our view, the government must at least
promote the legal norms for worker protection, educate society about CSR, and educate
the business world about the social practices
demanded by the free trade treaty agreements
signed between Chile and other developed nations. As the economist and researcher of the
Centro de Estudios Alternativos (CENDA),
Jacobo Schatán, stated, “the weakening of the
protective role of the state has changed from
a defense vision of the common welfare, of
the protection of the national sovereignty and
of the population’s disadvantaged groups, to
the predominance of an ideology and a neoliberal economic model in which the market
prevails.” As a result, the Chilean state must
centralize its efforts and assume a more active
Global Education Research Network
97
Corporate Citizenship Around the World
role in the application of CSR (Agenda Ciudadana. Red Puentes, 2005).
The government has featured a few CSR initiatives under its approach to competitiveness.
The National Scientific and Technological Research Council, through the Fund for Scientific and Technological Development, and the
Economic Development Agency, have supported a series of pioneering projects at the
regional level. These have been aimed at developing concrete instruments of CSR management and improving the competitiveness
of companies, including small businesses,
through the adoption of CSR. This initiative
has established relationships with business
associations to reach a consensus, particularly
on environmental matters and support for
the community, aimed at raising awareness
of CSR and responding to the international
demands. The Acuerdo de Producción Limpia (Clean Production Agreement) (APL) and
the program of Buenas Prácticas Agrícolas
(Good Agricultural Practices Protocol) (BPA),
are examples of these initiatives. Additionally,
there are other emblematic initiatives, born
out from the coordinated effort between organized industrial firms and the government.
An example is the creation of the mutual system of labor safety in 1958 that later became
Republic Law, ensuring that all workers in
Chile are entitled to receive health benefits
from their employers.
During December 2007 the definition of excellence for the national quality award was
modified as excellence for sustainability,
including most aspects of CSR. The governmental agency for economic development
(which provides financial support for SMEs)
is also adjusting its instruments to formal-
98
Global Education Research Network
ly address sustainability and CSR practices,
providing incentives for the adoption of best
practices. These developments are recent, but
very promising for the eventual scalability of
CSR.
The businessmen: Increased adoption
of CSR
The concern for sensitive social topics is traditional behavior from the Chilean business
world; it has its origins in a strong Catholic
religion influence. This wealthy social activity,
related to philanthropy, offers a response and
a more systematic commitment to the company’s different stakeholders. “To legitimize
CSR as an integrative component of all business management, is an objective that is to be
accomplished: CSR is definitively a fundamental topic in the country today,” states the
president of the Confederación de la Producción y del Comercio (Production and Trade
Confederation’s) CSR commission.
The various CSR initiatives developed by the
Chilean business world are examples of the
relevance that this topic now enjoys in the
country. Chilean companies have increasingly
taken up CSR models and world initiatives.
More than 50 companies are now reporting
under Global Reporting Initiative specifications (a large increase from 13 in 2005), including 13 SMEs. The Global Compact is also
active in the Chilean business community,
but most of the attention is being directed to
the ISO 26,000 for Social Responsibility process, which has involved most business associations and over 40 companies.
On the other hand, many companies are
subscribing to the APL – the Agreement for
Clean Production. According to the National
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
Clean Production Council, 1,671 companies
from some of the country’s main productive
sectors have signed this agreement. Meanwhile, 1,200 companies have adopted BPA
(Good Agricultural Practices Protocol) programs, according to the Fruit Development
Foundation (FDF).
Another important sign of progress is the
9,535 companies (85 percent of which are
SMEs) involved in private-public partnerships. The National Worker’s Union (CUT)
opened a Labor Observatory in September
2005, with the goal of increasing collective
bargaining and negotiation capacity and influence, greater union cooperation within companies, and increased dialogue among actors,
to promote respect for workers’ rights, a fundamental element of company and country
competitiveness. These trends indicate that businessmen are
indeed becoming aware of the benefits of
CSR initiatives and their incorporation in the
internal management of a company. Business
leaders have shown an increasing interest in
this subject, and because of that, the business
focus, traditionally centered on shareholders’
satisfaction, is staring to broaden and include
a wider group of stakeholders.
Civil Society: Promoting a culture
of support
Civil society, represented mainly by not-forprofit organizations and foundations, NGOs
and academia, exercises a growing scrutiny
over companies in Chile today. These groups
envisage CSR as a potential mechanism for
overcoming barriers of underdevelopment,
through improvements in the quality of life
and the improvement of the country’s image,
www.BCCorporateCitizenship.org
while also improving economic competitiveness.
This sector associates CSR mainly with the
environmental issue, employee conditions
and community engagement. Thus, their role
has been to promote a collaborative culture
that unites all stakeholders by common values.
These groups can exert demands and constant influence toward the state to implement CSR policies and regulate and control,
through the participation of public policy decision processes, in this matter. This is done
so that companies can contribute permanently to the social, labor and environmental resolution of problems at the local, national and
international levels, guaranteeing transparency, effectiveness, and democratic participation
of the stakeholders and joint initiatives. Inside this segment, academia also plays a
unique role in developing CSR-related participation initiatives. For example, the Pontificia
Universidad Católica de Chile is member of
the red Social Enterprise Knowledge Network
(SEKN); the Pontificia Universidad Católica
de Valparaíso (PUCV) created VINCULAR
Center for CSR in 2001, the first Chilean university initiative dedicated to the development
of consultancy, training and applied research
in CSR; and thirteen universities make up
the network Universidad Construye País, a
program of university social responsibility
sponsored by Fundación Avina. These noticeable groups argue that there is a clear need
of synergy with other actors such as local and
national governments, among others, to generate the necessary cultural change to advance
this concept. Global Education Research Network
99
Corporate Citizenship Around the World
Benefits and opportunities
The incorporation of CSR can enhance businesses’ ability to retain clients (still mostly out
of Chile) and gain legitimacy with its employees and shareholders. These business benefits
apply to multiple stakeholder groups and help
maintain a harmonious climate between business and society. At the productive sector level, CSR is becoming an opportunity to obtain competitive advantages, as it differentiates businesses from
the mainstream competition, increases their
competitiveness in a market where products
are becoming increasingly homogeneous,
improves quality of life in the workplace,
improves company reputation and attracts
foreign investment. Thus, CSR offers another
possibility for overcoming the barriers to development. It also generates opportunities for
entry into developed countries through fulfillment of standards and international certifications. Proof of this is that companies which
have incorporated good practices, in general,
are advancing the use of ISO certifications. The new Definition of Excellence, the ISO
26,000 process and soon to come changes in
public policy incentives for CSR will surely reinforce this trend.
Businesses’ acknowledgement of these benefits and opportunities is producing a multiplier effect that contributes to further social
development. Organizations in Chile will be
increasingly encouraged to adopt or to increase CSR efforts and their positive impacts. Challenges
Business practices that have integrated CSR
principles are undoubtedly a potential distinguishing element in a globalized market.
100
Global Education Research Network
Many of the companies that promote or are
identified with CSR, undertake it from the
field of the common investment, cause marketing or the technical-productive quality
norms fulfillment, such as the ISO 9000 and
14000. These kinds of factors indicate that, in
this country, there is a notable development of
the concept of CSR, which has been integrated into the most important business organizations.
Additionally, there are institutions solely focused on this issue, which have advanced the
inclusion and development of CSR projects in
small and medium-sized enterprises. These
institutions are pioneering projects at regional and national levels, implying an enormous
challenge given the importance of these companies as generators of wealth, employment
and social cohesion. Chile has had a prominent participation in
the development process of the ISO 26000
Social Responsibility norm, because unlike
any other developing country, the “Mirror
Committee” made up of 80-plus representative organizations from all the sectors requested by ISO, places the country in a leading
position at a continental level. In September
2008 the plenary of this process will take
place in Chile, which should allow CSR to
gain significant momentum in the country. However, the process is just beginning and it
is necessary to maintain and increase stakeholder participation. As CSR implies a cultural change, it is necessary to educate at all
levels. Awareness, the sharing of best practices and executive training is fundamental
to a wider adoption of CSR among Chilean
companies.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
Reflections
Chile’s entrance onto the world market and
the proliferation of international norms that
require greater commitment to sustainable
development, has led to a change in the vision
of how companies interact with the environment and society. As a result, the incorporation of CSR into business goals has become
an essential factor for success. Thus, “the approach to the topic has evolved from a charitable social action – linked with philanthropic
businessman, motivated by personal reasons
– toward an answer and more systematic
commitment of business, assuming a social
role in the community. The notion of the
company as an entity that, as a single body,
acts in the generation of wealth as well as in
social ethical behavior has also emerged with
force.” (www.empresa.org)
Though Chile is in a more incipient phase,
compared with the level reached in the developed world, governments and diverse civil
society organizations and also some companies have been united to reach agreements
on the voluntary adoption of CSR regulations,
especially in environmental topics and for
community support. In parallel, organizations
have been constituted to promote and to position the concept such as AcciónRSE, Fundación PROhumana, Sofofa Responsabilidad
Social, Unión Social de Empresarios y Ejecutivos Cristianos (USEC) and Vincular Center
for CSR at Catholic University of Valparaíso.
There are numerous experiences and practical best practice cases of CSR by well-known
Chilean companies that have the power to
generate a multiplier effect. Nevertheless,
there is still a long way to go to incorporate
this concept as a norm of doing business.
Among the initiatives that mark tendency in
the development of the CSR, are the APL,
BPA, the CSR policies aimed at improving the
work environment and the implementation of
concrete CSR actions in technical and higher
education institutions (dual formation). Besides, academia has begun to incorporate CSR
into its curriculum plan of diverse university
courses. But the internalization of the CSR is
not spontaneous. Work and incentives by civic
organizations, businesses and government
are required. In these environments the task
to strengthen and promote CSR is increasing in intensity. This task should be shared
among all the actors involved.
www.BCCorporateCitizenship.org
Global Education Research Network
101
Corporate Citizenship Around the World
© Donald R. Swartz
United States Corporate Citizenship Summary
New York, United States
Cultural context and social contract
Corporate citizenship in the United States is an extension of a historical tradition in
philanthropic giving. The need for business intervention in social and environmental
issues has grown as government provision of social services has decreased over time.
Many Americans today believe the social contract is broken and look to businesses to
take on a greater role. Operating ethically and treating employees well are considered
the most important aspects of a company’s role in society today. Businesses are also
expected to contribute through philanthropy. However, the public’s expectations of
business’ role in society still exceeds the level of responsibility American businesses
acknowledge of themselves.
Current state and transformation of citizenship
Corporate citizenship in the United States (which is also often described as corporate
social responsibility or sustainability) is characterized by a distinct and strong corporate culture, a preference for voluntary standards, a renewed focus on stakeholder en-
102
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
gagement and cautious progress on transparency and reporting. Community involvement and volunteering have become ingrained in corporate cultures, and aspects of
citizenship are slowly becoming more integrated into business strategy. In some large
companies, senior executives have been hired to lead this function. Today the idea of
corporate citizenship is not yet fully ingrained in the culture and consciousness of the
American people, but it is in a pre-paradigmatic phase, under gradual development.
Driving forces and motivations:
•
•
•
•
•
•
Corporate traditions and values
Risk management
Employees and consumers
Opportunity for profits through differentiation
Nonprofit pressure and partnerships
Expectation of future regulations
Issues of prominence:
•
•
•
•
Education
Caring for workers (and retirees)
Health care
Environment
The Boston College Center for Corporate Citizenship
The Boston College Center for Corporate Citizenship is
a membership-based research organization that works
with global corporations to help them define, plan and
operationalize their corporate citizenship. For more than 20 years the center has provided research, executive education and convenings on corporate citizenship topics.
Because of its affiliation with Boston College’s Carroll School of Management, the center functions as an educational institution, a think tank and an information resource.
The center’s goal is to help business leverage its social, economic and human assets
to ensure both its success and a more just and sustainable world.
www.BCCorporateCitizenship.org
Global Education Research Network
103
Corporate Citizenship Around the World
Corporate Citizenship in the United States
By Sylvia Kinnicutt, The Boston College Center for Corporate Citizenship
The evolution of corporate citizenship in the
United States is reflected in the changes that
have occurred at the Boston College Center for Corporate Citizenship. In the United
States corporate citizenship was built on a
long tradition in philanthropic giving. When
the Center was founded in 1983 under the
name, The Center for Corporate Community
Relations, its focus was to inspire and guide
companies in their efforts to create strong
ties to local community for the purpose of
establishing a license to operate. This often
involved helping companies become more
strategic in how they were giving back to their
local communities.
These events, combined with a shift away
from government provision of social services and the increasing threats from climate
change, emerging health challenges, and an
aging society, have created a new social contract that American businesses are beginning to grasp. In this environment, corporate
citizenship is in constant flux. The American
context of corporate citizenship is centered
around a wide range of interpretations, which
are commonly based on elements of a distinct
and strong corporate culture, a preference for
voluntary standards, renewed focus on stakeholder engagement and cautious progress on
transparency and reporting.
Over the years, the world and the needs of
society have changed. As companies began
to experience pressure from all angles to do
more than give philanthropy dollars, the center saw its role change as well. Now under the
identity of the Center for Corporate Citizenship, it provides the knowledge and training
today’s companies need to readjust to a new
and more complex role in society. Several
dynamics have necessitated the emergence
of this new role, including: the number of
governance scandals that have tarnished the
reputation of business in America; the human rights issues the globalization of supply
chains has uncovered; the networked world
that moves information at the speed of light;
and the heightened concern of nearly all
Americans about the environment and their
country’s overdependence on foreign sources
of energy.
The historical roots of corporate
citizenship in the U.S.
104
Global Education Research Network
The argument is ongoing over when corporate citizenship began. Some claim it took root
in the 1990s, others point to beginnings in
the 1960s. But the United States has an even
longer history of the themes engendered in
corporate citizenship. These are rooted in corporate and private philanthropy, which dates
back to the first major enterprises in American history. Entrepreneurs who amassed great
fortunes from creating the first railways and
energy sources, names such as Carnegie and
Rockefeller, are the same individuals who provided funding for some of the finest universities, hospitals, and arts centers in the United
States. As new issues were raised over time,
private enterprises slowly adapted their concepts of corporate citizenship.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
For example, once the industrial revolution
and widespread economic development was
well under way, issues such as product safety
and workers’ rights surfaced and became
highly political after the turn of the 20th century. Environmental concerns were the next
topic in the debate about businesses’ wider
responsibility. Books such as Rachel Carson’s “Silent Spring” stirred public outrage in
the 1960s over environmental degradation,
prompting businesses to reconsider their wider impact. In response to these concerns, the
U.S. government stepped in with new regulations making businesses responsible for the
environmental effects of their operations.
At this time the U.S. saw the emergence of
innovative new businesses with a social conscious such as Ben & Jerry’s. Companies such
as these felt they needed to exceed required
regulation, and saw a business opportunity
in voluntarily being a good corporate citizen.
The period of the 1980s and 1990s, however,
saw a decline in regulation and renewed emphasis on a free-market economy. While the
economy grew, labor and environmental issues bubbled under the surface. In response,
civil society groups began to grow in size,
number and influence, as they have around
the world. The private sector began to face
increasing pressure from a range of activist
groups.
Proponents of the view that corporate citizenship really began to take hold in the 1990s
point to the scandals related to abuse of workers in developing countries that awakened
the American consciousness. While several
companies were caught in human rights
controversies linked to globalized business
practices, other corporate powerhouses began
www.BCCorporateCitizenship.org
to topple from irresponsible corporate governance. These scandals not only ruined companies such as Enron, WorldCom and Tyco,
they severely damaged corporate reputations
across the board and shrank public trust in
business to all-time lows. The resulting federal legislation, Sarbanes-Oxley, was a critical
sign of change in the relationship between
business and government. Soon after this crisis, another groundswell began to erupt. More
and more Americans heard the message of Al
Gore and are now beginning to worry if they
have ignored the “inconvenient truth” about
the environment.
Throughout the 1990s the nonprofit community strengthened and enhanced its pressure
on companies to adopt responsible business
strategies beyond what is required by regulation. The development of technology and increasing availability of information strengthened the power of these organizations. In an
effort to improve reputations, some companies began to ingrain corporate citizenship
into their business, cleverly applying their
best skills to social causes. IBM’s Reinventing
Education became one of the most successful
signature programs to address a real national problem. Some companies also found the
link between social benefit and profits. For
example, Cisco began training and technology
education to ensure a pool of future workers, and GE launched a new business line of
energy-conserving products that is expected
to produce revenue upward of $20 billion by
201034.
GE ecomagination web site: http://ge.ecomagination.com/site/index.html#vision/commitments
34
Global Education Research Network
105
Corporate Citizenship Around the World
Ethical Corporation columnist Mallen Baker
wrote at the close of 2007, that it “was the
year that there could no longer be any doubt
that corporate social responsibility arrived
as a strategic issue for business.” Worldwide
events have made this statement true on a
global scale, but it’s particularly true for the
United States. The past year has provided
considerable evidence of Baker’s claim. One
of the most interesting is the rise of the “corporate citizenship executive.” Everyday there
are more senior executives being named to
lead this function in some of the largest companies. While not all companies are engaging these issues yet, surveys have proved that
a significant majority of business leaders are
at least aware of the changes their businesses need to make. In response, a market for
corporate citizenship is beginning to develop. Major management consulting, PR, and
communications agencies see business opportunity in providing corporate citizenship
strategy and advice and are now in a position
to respond. The American press is beginning to take these stories more seriously, as
the amount of corporate citizenship news has
risen sharply. Another promising sign for the
future can be found at American business
schools. MBA programs are responding to the
swelling demand among students to include
corporate citizenship in their curriculums.
These trends indicate that while the idea of
corporate citizenship is not yet ingrained
deeply in the culture and consciousness of
the American people, a movement is indeed
a foot.
A pre-paradigmatic stage
As practitioners and observers of this field
have pointed out, perhaps with frustration,
there are a wide variety of definitions of cor-
106
Global Education Research Network
porate citizenship and the terminology used
to describe it is ever expanding. Bradley Googins, Philip Mirvis, and Steven Rochlin describe the field as “pre-paradigmatic” in their
book, “Beyond Good Company: Next Generation Corporate Citizenship.” While the Boston
College Center focuses on the term corporate
citizenship, viewing it as a natural progression from the previous focus on corporate
community involvement, the terms corporate
social responsibility (CSR) and its many variations (corporate responsibility, social responsibility, etc.) join other terminology including
the “triple bottom line,” and sustainability. In
this pre-paradigmatic phase, American businesses have adopted whatever form – and corresponding term – they felt fit best with their
business and approach to social and environmental issues.
In addition to the confusion over terms, there
is strong difference on their meanings. For
some, all of this amounts to philanthropy and
community relations. Others in the U.S., particularly those using the term “sustainability,”
have limited their focus to the impact on the
environment. Some drop the ”social” from
corporate social responsibility, not wanting
to be limited to certain issues. Others, have a
distaste for the word ”responsibility,” contending it should be a voluntary initiative.
Corporate citizenship, in fact, can encompass
a great variety of issues, ranging from community giving to employee well-being, environmental management, human rights, product safety and social innovation. Despite this,
most American companies still have a view
that is largely limited to questions of ethics
and work force. The Boston College Center’s
2007 State of Corporate Citizenship survey,
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
which explored senior executives’ attitudes,
aspirations, and actions regarding the role of
business in society, revealed that while companies did value other elements of corporate
citizenship, aspects considered “critical” were
limited.
and volunteer activities — to serve as surrogates for citizenship. The current global challenges of transparency, stakeholder expectations, accountability, trust and reputation
require a strategic approach endorsed at the
highest levels of the company and integrated
and aligned throughout the business operation.
The Center contends that corporate citizenship in the 21st century is driving a major
transition from a model that allowed unconnected activities — such as compliance with
governance and ethical laws, endorsing global
standards, promoting strong philanthropic
The U.S. social contract
Americans agree that the social contract is
broken. The 2007 State of Corporate Citizenship report revealed that 60 percent of
The Role of Business in Society
Question asked: “Corporate citizenship means different things to different companies.
In your opinion, how important is each of the following to your company’s role in society?”
The 5-point scale ranged from “not at all important” to “critical.”
Critical
Very
Important
Total
27%
87%
88%
84%
88%
Small Co. Medium Co. Large Co.
Operating with ethical business practices
60%
Valuing employees and treating them well
43%
38%
81%
83%
80%
78%
Managing and reporting company finances
accurately
Marketing and advertising products and
services responsibly
45%
31%
76%
74%
76%
84%
28%
40%
68%
69%
64%
70%
Maximizing long-run profits for owners
29%
32%
61%
59%
62%
66%
Providing employee benefits
20%
40%
60%
53%
71%
69%
Protecting consumers
27%
33%
60%
57%
59%
70%
Improving conditions in your community
19%
36%
55%
53%
55%
59%
Working with suppliers/vendors to ensure
they operate ethically
22%
32%
54%
52%
48%
62%
Providing good paying jobs
13%
39%
52%
50%
51%
61%
Protecting the environment
17%
32%
49%
50%
46%
53%
Building employee diversity within your
business
Responding to community/interest groups
regarding issues they care about
17%
32%
49%
43%
51%
65%
14%
32%
46%
45%
46%
51%
45%
42%
42%
54%
Supporting employee volunteerism
16%
29%
*Note: Percentages may not add up to 100% due to rounding
www.BCCorporateCitizenship.org
Global Education Research Network
107
Corporate Citizenship Around the World
executives believe the existing social contract
either has some serious structural flaws or
needs a fundamental overhaul. In the United
States, the government does not provide for
all needed social services. Additionally, much
of what is covered by federal tax revenue –
from health care to the security of diplomats
overseas – is often carried out by private contractors. This system is partly due to the individualistic capitalist system Americans have
adopted, which differs greatly from the more
socialist style governments in Europe. While
Americans have a general distaste for government control, they are beginning to recognize
that the limitations of the state have contributed to problems such as a weakened education system, a lack of adequate health care
coverage, and environmental degradation.
These areas are no longer the purview of the
state, and their continued aggravation is the
fault of all three sectors – business, society
and government.
Despite these flaws, in the United States the
social contract is not yet a high political priority. Blame continues to rest on the shoulders
of government, as witnessed in 2005 when
Hurricane Katrina ravaged the United States’
Gulf Coast. When adequate aid and support
failed to reach the flood victims of that area
promptly, the Federal Emergency Management Agency was battered relentlessly in
the media and by the public. Interestingly,
business stepped up to fill the void as companies such as Walmart and UPS applied their
logistical expertise to get immediate aid to
victims. Corporate America was lauded for
its role in Katrina, something that was greatly
appreciated although not expected. After this
108
Global Education Research Network
experience, the recognition of a shifting social
contract has grown. Katrina, and the larger
climate phenomenon, global warming, have
revealed a systemic crisis. With no political
consensus on a solution, American businesses are realizing they need to stand up and intervene for their own survival.
American society now expects business to do
more, but there is still a wide gap between the
perceptions of society vs. the views of business itself. For example, just 42 percent of senior executives polled for the State of Corporate Citizenship believe corporations should
be responsible for improving education and
skills in their communities in the Unites
States, while 61 percent of the American public expects them to. More than 75 percent of
Americans surveyed by Fleishman-Hillard
and the National Consumers League said U.S.
companies have poor records on corporate social responsibility, and a large majority would
support a government-led approach to ensure
companies are addressing social issues. This
could signal a significant change in the social
contact if not addressed.
Some initiatives are under way that may serve
to narrow the gap between the expectations
of the public and business. The United States
Climate Action Partnership (USCAP) is one
such effort that has united business leaders
along with some environmental groups to
push the U.S. government toward a stronger
climate change policy. Businesses are also
looking to their former adversaries, nonprofit
organizations, as partners in addressing social
issues.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
Areas of Community Support
Question asked: “Based on the amount of resources invested in community support activities (e.g., money, time,
product and service donations), which are the top three areas your company supported in the past year?”
Education
% of Total Mentions
Overall
53%
Health care, including nutrition and physical fitness
35%
Job training
Arts and culture
Economic development
Small Co.
Medium Co. Large Co.
56%
47%
47%
35%
34%
38%
32%
25%
45%
38%
26%
29%
23%
19%
19%
13%
27%
19%
Environmental issues
19%
19%
14%
26%
Community safety
15%
14%
13%
21%
Sports
14%
15%
14%
14%
Affordable housing
12%
11%
14%
12%
Child care
11%
10%
14%
9%
Literacy
10%
8%
10%
15%
Don’t know / no answer
2%
2%
3%
1%
The state of corporate citizenship
in the U.S.
Bertelsman Stiftung has named the United States, the “birthplace of CSR.”35 While
this claim is open to debate, the U.S. clearly
leads in some areas of corporate citizenship
but lags in others. Comparatively, community giving remains the greatest strength of
American business in this area. Community
involvement and volunteering have become
ingrained in corporate cultures and are widely
accepted elements of a successful business
strategy. The State of Corporate Citizenship
survey reported that two-thirds of companies
provide philanthropic support to communities. The issues at the top of the list to support
are those that have proved most material to
business. They currently include education,
Bertelsman Stiftung, (2007) “The CSR Navigator: Public Policies
in Africa, the Americas, Asia, and Europe.”
35
www.BCCorporateCitizenship.org
caring for workers (and retirees), health care,
and the environment (relative to preservation,
climate change and energy independence).
These issues are the top areas of community
support reported by the State of Corporate
Citizenship.36
The U.S. also has pockets of promising social
innovation, a practice seen as a new generation of philanthropy. Examples include GE’s
investment in environmentally-friendly technologies, IBM’s efforts to apply technology
to “reinvent education,” and the creation of a
$100 laptop for low-income markets by AMD
and its partners.
An important area where American com-
36
The Boston College Center for Corporate Citizenship, (2007)
“State of Corporate Citizenship 2007: Time to Get Real: Closing the
Gap Between Rhetoric and Reality.”
Global Education Research Network
109
Corporate Citizenship Around the World
panies lag is reporting. Only 21 percent of
companies report to the public on corporate
citizenship issues37 and just five U.S. companies are listed among the top 50 leaders of
sustainability reporting.38 While the activity of social reporting has multiplied greatly
among American companies, they still are
behind Europeans due to a concern on the
part of many companies that they may report
too much. Deciding what and how much to
say publicly has become a major challenge of
corporate communications and public relations executives. The socially responsible investment field, while not as influential as in
Europe, does serve to drive companies toward
of increased transparency, as few companies
want to be excluded from such public listings.
Acceptance of international initiatives has also been slow. The GRI database contains 229
reports from U.S. businesses, but many more
companies are producing social reports that
do not follow GRI criteria. When it comes to managing corporate citizenship as an integrated element of business
strategy American business leaders suffer
from a rhetoric-reality gap. The State of Corporate Citizenship report revealed that 60
percent of executives say corporate citizenship
is part of their business strategy to a large or
very large extent. But only 28 percent have
policies related to corporate citizenship and
only 25 percent have an individual or team
responsible for managing these issues. This
mismatch of corporate talk and action is compounded by a constantly shifting environment
that may put a company up on a pedestal one
day and toss it in the mud the next. Some industries have given greater attention to corporate citizenship than others, but this is largely
the effect of crises, which have rocked the
pharmaceutical, consumer product, energy
and food and beverage sectors disproportionately. Even these companies have been cautious to step too far ahead, afraid of media or
consumer backlash.
Primary corporate citizenship drivers
While government regulation has been an
underlying driver of the corporate citizenship
movement in Europe, in the United States
this momentum has largely come from the
private sector. Major players in the market,
employees and consumers, have forced the
private sector to take these issues into account, but impetus for change is also coming
from inside corporate offices. Private businesses in the U.S. are fundamentally driven
to engage in corporate citizenship by the following:
Traditions and values
The State of Corporate Citizenship survey
found that traditions and values are the No. 1
motivation for engaging in corporate citizenship.39 While many motivations are cited by
companies – such as improving employee
morale and retention, enhanced reputation,
reduced risk, and opportunity for competi-
37
The Boston College Center for Corporate Citizenship, (2007)
“State of Corporate Citizenship 2007: Time to Get Real: Closing the
Gap Between Rhetoric and Reality.”
Bertelsman Stiftung, (2007) “The CSR Navigator: Public Policies
in Africa, the Americas, Asia, and Europe.”
38
110
Global Education Research Network
39
The Boston College Center for Corporate Citizenship, (2007)
“State of Corporate Citizenship 2007: Time to Get Real: Closing the
Gap Between Rhetoric and Reality.”
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
For U.S. companies, corporate citizenship
is also starting to become a risk management tool. Human rights statements, codes
of conduct, and now climate change strategies are necessary tools to prevent the types of
scandals that rocked companies in the 1990s.
However, American companies still struggle to employ corporate citizenship as a risk
mitigator, for in some instances, taking these
steps can increase risk (or perceived risk).
Taking a stand on an issue attracts public attention and raises expectations.
Companies in the U.S. have faced an increase
in pressure from civil society, but they are
also now feeling pressure from the market,
primarily their employees and consumers.
American companies are increasingly influenced by consumers and clients, whether they
are a direct to consumer or a b-to-b business.
Clearly, consumer products companies such
as Nike and Mattel face the greatest pressure
from consumers, but management consulting companies for example, are also facing
pressure from their clients to disclose social/
environmental indicators in requests for proposals. There is now more and more evidence
that corporate citizenship matters to today’s
employees. A Cone Communications poll
revealed that 65 percent of the under-30 generation says their employer’s social/environmental activities make them feel loyal to their
company.40 Companies that must compete for
the brightest graduates need to consider this
statistic.
Competitive and Market Pressure
Opportunity for Innovation
tive advantage – corporate citizenship often
doesn’t amount to much unless it is “part of
the DNA” of an American company. Companies with a long history of philanthropy and
ethical values have found it easier to ingrain
broader visions of corporate citizenship into
the company than companies without such
histories.
Risk Management
The competitive nature of American business
has helped corporate citizenship to spread relatively quickly, as businesses strive to “keep up
with the Joneses” on this issue. While much
of corporate citizenship is still focused around
philanthropy, American businesses in recent
years have adopted corporate citizenship as a
strategic element of their business but this is
a slow process. When the Boston College Center asked a number of companies to describe
their approach to innovation in corporate
citizenship, most agreed with the statement
that they are a “thoughtful adopter” only once
ideas have taken root in their industry.
Finally, American companies are recognizing
corporate citizenship can provide an opportunity for profits. These can come through an
improved reputation and brand recognition,
differentiation from competitors, cost savings (from energy use to employee productivity), and new products and customers. For
example, Nike now applies the “ROI squared”
principle, mandating that every initiative
must have a positive impact on the world and
a positive impact for the company’s bottom
line. In this way, the firm challenges its creative design team to develop innovative shoes
with both cutting edge function and sustain-
40
Cone, Inc. (2006) “The 2006 Cone Millennial Cause Study.”
<www.coneinc.com>
www.BCCorporateCitizenship.org
Global Education Research Network
111
Corporate Citizenship Around the World
ability. Other companies are expanding their
product lines through acquisition to include
“green” and socially beneficial products. Clorox, a company well-known for chemically
based bleach products has recently acquired
Burt’s Bees, an all natural producer of beauty
and hygiene products. IBM has committed to
seeking out “social innovation that matters”
wherever it can, and has instituted opensourced “innovation jams” to mine valuable
ideas. Benefits from social innovation are becoming a prime target for these companies.
Second among corporate citizenship drivers
are the United States’ numerous “nonprofits.”
Nonprofits have played an important catalyst
role in the development of corporate citizenship in its early stages. Long-time adversaries
of business, these organizations have capitalized on the information age to expose irresponsible business practices. Businesses’
relationships with NGOs have to date largely been limited to financial support (many
American businesses funnel their charitable
giving dollars through organizations such as
the United Way), or avoidance. In the U.S.
as in other countries, these relationships are
changing. While hands-off giving remains the
standard, the nonprofit-business relationship
is becoming more collaborative in nature. As
nonprofits are dropping their combative strategy in favor of collaboration, strong alliances
have formed to the benefit of both sectors.
Nonprofits in the U.S. serve as surrogates for
the public’s interests, especially when the government does not properly represent them.
Finally, the third sector –government – is last
among corporate citizenship drivers in the
United States. The U.S. General Accounting
Office (GAO) indicates that while the govern-
112
Global Education Research Network
ment plays a minor role as an endorser and
facilitator of corporate citizenship, in the U.S.
there is no clear leadership on this issue from
government.41 While there is no visible contact person or coordination point at the federal level, some departments are engaging in
various ways. First among these departments
is the Environmental Protection Agency
which works to control pollution through voluntary programs with corporations and is taking an increasingly strong stand. Additionally,
the U.S. Agency for International Development’s Global Development Alliance (GDA)
has begun to leverage resources from the
private sector to achieve development goals.
Other departments such as the U.S. Chamber
of Commerce, primarily through the Business Civic Leadership Center (BCLC), provide
training on rule of law, human rights, and
corporate stewardship for commercial service
employees so they can provide this information to companies. Despite some activity, it is
not clear that corporate citizenship is a high
priority for the U.S. government. Events such
as 9/11, and a focus on enhancing competitiveness and development, may have reset priorities away from corporate citizenship.42
While the government has traditionally acted
in support of business and private sector interests, recent events suggest an increase in
regulatory control may be imminent. According to former Republican U.S. Sen. Jim Talent
of Missouri, “The generally lukewarm perception of U.S. corporations on social responsibility, along with the prevailing belief that
United States Government Accountability Office, (2005) “Globalization: Numerous Federal Activities Complement U.S. Business’s
Global Corporate Social Responsibility Efforts.”
41
42
Bertelsman Stiftung, (2007) “The CSR Navigator: Public Policies
in Africa, the Americas, Asia, and Europe.”
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
Congress may need to get involved, could lead
to increased oversight of the private sector
on Capitol Hill.”43 We have already seen the
public sector respond to corporate governance
scandals with tough regulation. Areas such as
the environment and human rights are also
gaining importance in Washington.
The nonprofit community, along with some
businesses, is pushing for a stronger government hand. It is yet to be determined whether
the government will respond with more punitive and compliance-focused legislation such
as Sarbanes Oxley, or favor a system based
on self-regulation. Many think regulation on
disclosure requirements and environmental standards are soon to come. The nation’s
automakers were already hit with regulation
on fuel efficiency standards late last year. On
the state-level there has been an increase in
regulation, particularly around environmental standards, indicating growing demand for
state control. The 2008 presidential election
also presents uncertainties for business on
what role the government will assume after
the change in administration.
To understand the context of corporate citizenship in the United States today it is important to understand the philanthropy context.
While this represents an early and limited
state of corporate citizenship, all businesses
are still expected to contribute. Constantly
changing consumer and market forces should
also be closely monitored for new expectations from customers, employees and society
at large. Business leaders approaching the
U.S. from abroad must keep abreast with regulations such as Sarbanes-Oxley and prepare
for new legislation in this area and others.
Businesses must look to the leaders in their
industry; or risk being left in the dust.
Summary
Corporate citizenship in the United States is
a process in a constant state of flux. Business
today cannot afford to ignore these issues.
The drivers of corporate citizenship within
the private sector – corporate values, market pressure, risk and opportunity – will only
strengthen in coming years requiring new
thinking on the social contract and traditional
business strategy.
Fleishman-Hillard, (2007) “Expert Panel to Discuss Political
Implications of 2007 Survey on Corporate Social Responsibility
at Georgetown University,” <http://www.fleishman.com/point-ofview/News/pr050907.html>
43
www.BCCorporateCitizenship.org
Global Education Research Network
113
Corporate Citizenship Around the World
114
Global Education Research Network
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
A global scan of corporate citizenship
By Philip H. Mirvis, Boston College Center for Corporate Citizenship
These reports from members of the Global Education Research Network (GERN) on the state
of corporate citizenship around the world emphasize its global dimensions and local features.
The Boston College Center for Corporate Citizenship has also tracked the global studies of
respected pollsters such as GlobeScan and the
Reputation Institute, plus its own research to get
a handle on this subject.1 In addition, research
from the Society of Human Resource Management, McKinsey & Co., the research arm of the
Economist and others helps to round out the
picture.
www.BCCorporateCitizenship.org
Here observations from GERN members are
combined with survey data to provide a scan of
corporate citizenship around the world.
The responsibilities of business
What does the public see as the responsibilities of business? A GlobeScan poll asked people
around the world whether or not companies
were “not at all” or “somewhat” or “completely” responsible for various aspects of business
operations and their impact on society. In 2007,
the pollsters found that large majorities in twen-
Global Education Research Network
115
Corporate Citizenship Around the World
ty-five countries hold companies completely
responsible for the safety of their products, fair
treatment of employees, responsible management of their supply chain and for not harming
the environment. These are, of course, operational aspects of firms and well within their
control. But, in addition, a significant number
held them completely responsible for improving
education and skills in communities, responding
to public concerns, increasing global economic
stability, reducing human rights abuses and reducing the rich poor gap. Add in the category
of partially responsible, and business is responsible, in the public’s eye, not only for minding
its own store but also for addressing myriad of
the world’s ills.
Which nations have the highest expectations of
large companies on corporate social responsibility? GlobeScan finds that, among the countries
they’ve surveyed, more than 80 percent of Brazilians hold business responsible for its performance in 10 dimensions of corporate citizenship. This dips to 59 percent of the public in
Great Britain, 57 percent in the United States
and 53 percent in India. Interestingly, some 46
percent of Chinese now hold business responsible for citizenship — double the number compared to six years ago.
Reports from researchers in the GERN reinforce
the idea that business is moving from a philanthropic conception of citizenship to a broader
view. But the thrust and priorities of corporate
citizenship seems to vary from country to country. On this point, GlobeScan asked the public: What is the most important thing a company can do to be seen as socially responsible?
Its 2005 study found some notable differences
in top citizenship priorities around the globe:
The public in the U.S., Canada and Brazil, for
116
Global Education Research Network
example, puts prime emphasis on community
involvement; in Australia, the United Kingdom,
and much of Europe on protecting the environment; and in Mexico and China on the quality and safety of products. The most important
criterion across the range of countries sampled:
treating employees well.
To an extent, this reflects the public’s traditional conceptions of company responsibilities to
employees and the commonweal and heightened concerns about products and service in
nations embarking on consumerism and global
trade. Country reports affirm that businesses
are taking these responsibilities on in advancing their citizenship agenda. In addition, there
seems to be growing interest in environmental
sustainability among both the public and business executives worldwide. McKinsey & Co.,
for instance, finds that more than 50 percent of
consumers and business leaders in more than 10
countries sampled rate “environmental issues,
including climate change” as the most important
issues facing business. The study also found
that more than 90 percent are personally worried about global warming.2
Ratings of corporate citizenship around
the world
How is business doing overall on its responsibility scorecard? A multiyear look at public
opinion worldwide by GlobeScan shows public expectations of companies have been rising and that ratings of their social responsibility have been dropping (see Figure 2). Recent
data from the Reputation Institute documents
that in 25 countries studied, an average of
just 1-in-5 people agree that “most companies
are socially responsible.” Roughly 16 percent
of Americans see it this way—fewer than in
Mexico (35 percent) and Canada (26 percent)
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
but more than in the U.K. (11 percent) and Japan (9 percent).
Plainly there are gaps between public expectations and corporate performance in this
arena. To investigate these, the Center’s 2007
State of Corporate Citizenship survey of U.S.
business compared executive’s views on corporate responsibilities with the GlobeScan
consumer data (see Figure 2). Interestingly,
there was some alignment between executive
and consumer ratings on business’ responsibility to provide equal treatment of employees and support for charities and community
projects. But there were some gaps in opin-
www.BCCorporateCitizenship.org
ions about management. For instance, the
public (85 percent) more so than business
leaders (74 percent) believes that corporations should apply the same high standards
everywhere they operate in the world. And
the gap grows when it comes to ensuring that
products have been produced in a socially and
environmentally responsible way. The biggest
gaps, however, center on expectations that
business should reduce human rights abuses
in world and help bridge the gap between rich
and poor.3
In turn, McKinsey & Co. documents a gap
between public and corporate views in parts
Global Education Research Network
117
Corporate Citizenship Around the World
Top three responsibilities of large companies according to:
100
90%
83%
88%
85%
75%
80
74%
60
40
Public
Executives
20
0
treat all
employees
fairly
ensure P&S apply same
don’t harm standards
environment globally
of Western Europe, as well as Japan, India
and China. In 2005-06 polling, the public put
far more importance than did business leaders on environmental issues, pensions and
retirement benefits, and health care benefits.4
No wonder these are labeled as key risks facing business in the years ahead. Still, there
is movement afoot: A follow-up survey finds
that today business leaders rate environmental issues every bit as important as consumers do, a 20 percent increase from 2006 to
2007.5
Globally, some 68 percent of executives say
large corporations make a positive contribution to the public good to at least some extent.
Yet only 48 percent of the public agree. This
gap is greatest in North America where 3-outof-4 executives say corporations contribute
to the public good versus 40 percent of the
118
Global Education Research Network
public. It is also substantial in Europe and
much of the Asia-Pacific. By comparison, the
public in China and India give large corporations better marks than do business leaders.
This may have something to do with their unrivaled success at job creation and delivery in
the consumer market. A notable factor related to these gaps is the
diminished role of government in the United
States and a continuing loss of trust and confidence in public officials. But this is also a
worldwide phenomenon. Majorities mistrust
their national government in polls around
the world. As the GERN members report, the
public everywhere is turning to business, particularly big business, to do more for society
and to take better care of the natural environment. A key question, then, is what motivates
business to do so.
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
Roots of corporate citizenship
The GERN country reports highlight some
of the distinct socio-cultural motivations for
corporate citizenship around the world. These
include:
• Religious and moral sentiments. These motives are cited for corporate philanthropy and responsible employment practices
in the U.S., Europe, and Latin America (Judeo-Christian roots), in Asia (Buddhism, Catholicism) and in the Middle
East (the Islamic value of Zakat—donations). • Cultural and corporate values. Differences
were also noted to the extent nations were
inclined to a more individualistic versus
collective culture with the former more
inclined to laissez-faire business practices
and voluntary corporate initiatives and the
latter more prone to state and industry
influence over corporate conduct and the
direction of corporate social responsibility.
This may also apply to adoption of instruments such as the Global Reporting Initiative and involvement in multi-national
groups such as the U.N. Global Compact.
• Market structure and economy. The relative prevalence of family-owned enterprise
seems to emphasize corporate responsibility to the commonweal more so than public
ownership. This extends to the treatment
of employees as “part of the family” in
some cultures as opposed to more impersonal relationships without familial obligations. Moreover, the countries represented
in GERN include those associated with Anglo-Saxon capitalism in the U.S. and U.K.,
a market economy surrounded by a welfare
www.BCCorporateCitizenship.org
state in much of Europe, a market economy subject to command in China and
to royal decree in the United Arab Emirates, and the mixed model socio-economy
of Brazil, South Africa and to some extent
Chile.
No database or set of surveys is sufficient to
parse out the relative importance of these factors for corporate interest in, and practices of,
citizenship in different parts of the world. The
GERN authors, however, note that globalization and the spread of multinational companies have shaped the citizenship agenda in
each of their countries. To this point, McKinsey & Co.’s 2006 survey of more than 4,000
executives in 116 countries found that just 16
percent adopted the view that business should
“focus solely on providing highest possible returns to investors while obeying all laws and
regulations.”6 The other 84 percent agreed
with the statement that business should “generate high returns to investors but balance
that with contributing to the broader public
good.”
The relative importance of corporate
citizenship around the world
Some hunches about the relevance of these
socio-cultural and more market-based drivers
of citizenship can be developed by looking at
the relevance of citizenship around the world.
For instance, researchers from the Reputation
Institute have studied the reputations of more
than 600 companies based on 30,000 online
interviews with consumers in 25 countries.
In response to a general question, between
50 and 80 percent of the respondents (depending on the country) agree that citizenship programs have a strong effect on the
reputations of companies. This perception is
Global Education Research Network
119
Corporate Citizenship Around the World
tion overall, at least in the public’s eyes, as the
combined ratings of a company’s products
and services, innovativeness, financial performance and leadership.
strongest in countries such as South Africa,
Brazil, China and Mexico where, the researchers argue, companies play a more important
role in societal development. Still, more than
53 percent of the public in the United States.
sees a strong link between citizenship and
reputation. On a country by country basis, there are decided differences in relative importance of
the three “citizenship” factors. Working with
the Reputation Institute, the Boston College
Center analyzed the import of each of the
three factors associated with citizenship in the
countries sampled (see Table 4).
Digging deeper into the database, the Reputation Institute’s researchers have analyzed
the relationship between different aspects of
a firm and its overall reputation.7 The top predictor of corporate reputation globally is what
they term the “heartbeat” factor — the public’s overall respect for, and trust in, a company. In its 2008 global survey, the combined
ratings of a company’s governance, social
responsibility and workplace practices made
nearly as much of a contribution to its reputa-
In the case of governance, for example, the
importance placed on behaving ethically and
being open and transparent is highest in several countries in emerging markets (Chile,
Mexico, India) and, interestingly, the most
advanced countries with Anglo-Saxon capital-
Responsibilities of large companies according to:
100
80
60
79%
56%
62%
61%
53%
49%
41%
40
32%
31%
21%
20
0
120
Public
products
made
responsibly
reduce
improve
human rights education
abuses
& skills
Global Education Research Network
increase
economic
stability
Executives
reduce gap
b/n rich &
poor
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
Importance to Corporate Reputation of “Citizenship”Factors
National Publics Giving Highest Importance to …
Corporate
Social/Environment
Governance Performance
Workplace and
Employee Practices
1. Chile
1. Finland
1.Finland
2. South Korea
2. Norway
2. Portugal
3. Australia
3. Netherlands
3. Denmark
4. Canada
4. Denmark
4. Canada
5. India
5. Sweden
5. France
6. United States
6. Portugal
6. Brazil
7. Italy
7. France
7. Switzerland
8. Mexico
8. Russia
8. Netherlands
9. United Kingdom
9. Poland
9. Poland
ism (Australia, Canada, the United States and
United Kingdom). This may have something
to do with the strength of the regulatory environment in these nations versus, say, Northern European countries. It may also reflect
the public’s reactions to corporate misdeeds,
prominent in the U.S., the U.K., Australia and
Canada, as well as in South Korea which also
makes the list.
When it comes to the relative importance assigned to corporate citizenship, supporting
good causes and not harming the environment, the Europeans in general put greater
weight on these factors in judging a company’s reputation. They also factor workplace
www.BCCorporateCitizenship.org
conditions and how companies treat their
people into the reputation calculus more so
than in other countries. This doesn’t mean
that the workplace is unimportant in ratings
of corporations elsewhere. Rather, it means
that other factors are simply more important
in the public’s judgment of companies.
On this count, the Reputation Institute finds
that, on average, 75 to 80 percent of those
polled in some 25 countries would “prefer to
work for a company that is known for its social responsibility.” It also shows that the appeal of corporate citizenship to employees is
by no means limited to the U.S. or developed
economies with their comparatively prosper-
Global Education Research Network
121
Corporate Citizenship Around the World
ous and well-educated work forces. On the
contrary, while the Reputation Institute ranks
social responsibility as a significant driver in
attracting employees in the U.S. (more than
62 percent say it is important to them), it is
even more important in Chile (69 percent),
India (69 percent), South Africa (77 percent),
and China (79 percent). Interestingly, it appears less of a driver in the United Kingdom
(46 percent say it is important) and Japan (49
percent).
Summing this up, the Reputation Institute
reports, for instance, that citizenship is very
important to the Chinese. It is a major factor
in their ratings of a company’s reputation,
and very relevant in employee and consumer
choices. But note that this relationship works
in two ways: Good corporate citizens are acclaimed and those that perform badly as citizens are devalued and avoided in China. This
same relational trend is found in India, Mexico, Brazil, Chile and other emerging markets
where the public is interested in corporate
citizenship and companies are seen as critical
to economic and social development.
By comparison, citizenship is not much of a
discriminator in reputational rankings in Russia. Why not? One theory is that because the
great majority of Russians don’t trust corporations, they don’t give credence to the idea that
firms can be good corporate citizens. This
negative view of corporate practices and intentions also dampens the relevance of citizenship in the United Kingdom and to a lesser
extent France and Germany. Some of this can be explained by the stage of
economic development in countries, the role
historically assumed by companies versus the
122
Global Education Research Network
state, and the particulars of national culture.
Take, for example, the question of whether
or not multinational companies are good for
society. In the U.S., a strong market capitalist country where corporations are neither
damned nor praised, public opinion splits
roughly 50/50 as to whether or not global
companies operate in the best interests of
society. In Europe, by comparison, only 1-in-3
trust companies in this regard. Commercial motivations for citizenship
A new book, “Beyond Good Company: Next
Generation Corporate Citizenship,” documents how firms enact citizenship through
the distinct lenses of 1) compliance with laws
and industry standards, 2) voluntary contributions to society, 3) risk management and 4)
game changing, by addressing social issues
as opportunities to improve the business and
society.8 The GERN research team estimates
that while most companies in each region
studied see citizenship in these first two dimensions, increasing numbers attend to risk
and their license to operate, and a vanguard
is using citizenship to secure a competitive
advantage.
Surveys of executives globally paint a similar picture. As an example, a survey by the
Economist Intelligence Unit of executives in
Europe, the Asia-Pacific and North America finds that some 45 percent of the sample
concur they “explicitly consider the views and
impact of external stakeholders” in decision
making. But there is a split in the rationale
for citizenship: Just over half see corporate
responsibility as a “necessary cost of doing
business” and as many say it gives the firm “a
distinctive position in the market.”9
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
There seems to be a global consensus among
business executives that society has higher
expectations for corporate responsibility compared to five years ago. Looking toward the
next five years, some 55 percent of executives
in the Americas, 62 percent in Europe, and
64 percent in the rest of the world think these
expectations will continue to increase.10 The
GERN global reports concur that expectations for corporate citizenship mount in every
country studied. But how companies perceive
and act on these expectations seem to differ
by company, industry and region.
As the GERN report documents, social issues of relevance to business differ around
the world. The public, too, has somewhat
different priorities and needs regarding the
corporate role in society. One study took a
systematic look at the relevance of different
stakeholders in different regions of the world.
In Western Europe, for example, customers
and government policy makers seem far more
influential in shaping corporate sustainability strategies than in the United States. U.S.
companies, by comparison, are more influenced by the actions of competitors. And in
the Asia-Pacific, the key influencer is government. It is also notable that developing world
customers are seen as influential in 15 percent
of the companies sampled — a force likely
rated as more significant in global businesses.
Management of citizenship
Surveys have only scratched the surface as to
how citizenship is managed in companies. The Boston College Center’s 2007 survey of
U.S. industry for example, found that while
the majority (60 percent) said it was part of
their business strategy, far fewer incorporated
it into their business plans (39 percent), con-
www.BCCorporateCitizenship.org
sulted with external stakeholders (29 percent),
or had an individual or team responsible for
citizenship issues (25 percent).
On a global scale, and among a select sample
of companies, McKinsey & Co.’s 2007 survey of companies participating in the Global
Compact found that 90 percent of CEOs are
doing more than they did five years ago to
incorporate environmental, social and governance issues into strategy and operations.
But gaps are notable: 72 percent of CEOs
agree that corporate responsibility should be
embedded into strategy and operations, but
only 50 percent think their firms do so. And
6-in-10 say corporate responsibility should be
infused into global supply chains, but only 27
percent say they are doing so.11
Each of the GERN reports emphasized “performance gaps” in citizenship: between public
expectations and business responsiveness and
between executives’ rhetoric and corporate action. McKinsey & Co. points to several barriers that keep companies from implementing
an integrated and strategic approach to citizenship. Chief ones cited include competing
corporate priorities (noted by 43 percent), the
complexity of implementing strategy across
business functions (39 percent), lack of recognition from financial markets (25 percent)
and different definitions of corporate social
responsibility/corporate citizenship across regions and cultures (22 percent). What then do
we know about how corporate citizenship is
managed in different parts of the world?
An Ethical Investment Research Service
(EIRIS) study of corporate involvement with
sustainability found that European companies
are generally ahead of those in the U.S. when
Global Education Research Network
123
Corporate Citizenship Around the World
it comes to responsible business practices.
12
With respect to managing environmental
impacts, for example, European and Japanese
companies are clear leaders. More than 90
percent of high impact companies in Europe
and Japan have developed basic or advanced
policies, compared with 75 percent in Australia/New Zealand, 67 percent in the U.S.
and 15 percent in Asia excluding Japan. And
nearly 75 percent of European companies
operating in high-risk countries have developed a basic or advanced human rights policy
compared with less than 40 percent of North
American companies and about a sixth of
Asian firms. By comparison, community involvement is enacted in every region studied.
The Society for Human Resource Management provides an in-depth look at the management of citizenship in the U.S., Australia,
China, Canada, Mexico and Brazil.13 Interestingly, Brazil leads the group in corporate
involvement in citizenship. Brazilian companies are most likely to have citizenship policies, missions and goals, and to take account
of corporate social responsibility in business
decisions. Mexican firms and operations also
score high in these regards and like Brazil are
most apt to have active boards of directors engaged in citizenship matters. Recall that citizenship is a key priority of the public in these
countries. One hypothesis is that corporate
involvement in citizenship secures a license
to operate and gains market approbation.
In China and India, by comparison, large
firms do comparatively well on their overall profile but mid-size and smaller ones lag
behind developing country practices. Companies in both countries lack a strong employee
volunteer tradition, but large numbers in both
124
Global Education Research Network
collected monies or donated in response to
natural disasters. Interestingly, they also saw
globalization as a key driver of corporate social responsibility and were more likely than
those in other nations to view citizenship as a
key source of competitive advantage. In the SHRM study, the U.S. leads in employee volunteering and donations to charity
— traditional areas of engagement strength.
Interestingly, the U.S. executives score lowest
on formal corporate citizenship policies and
don’t particularly emphasize broader social
goals in their agenda. Australian and Canadian companies, by comparison, score highly
on policies and taking steps to move citizenship into their corporate governance. This
same path is being followed by European
businesses.
Toward next generation corporate
citizenship
The movement toward “next generation corporate citizenship” takes firms beyond traditional measures of compliance and community contributions to integrating citizenship into
the organization and operations and to factoring it into products and services. Surveys
show the public supports this trend. Polls find
that the public all over the world says that the
best way for companies to make a positive
contribution to society is by working to solve a
specific social problem, rather than donating
monies to charity (although both rank below
their primary contribution of developing safer
and healthier products and services). What’s
involved in next generation citizenship? Global citizenship. First, it extends citizenship
to a global scale. This means applying worldclass standards to operations and dealings
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
in developing and emerging markets. It also
means taking account of social and environmental needs around the world and tailoring
actions to local needs and culture and conditions. This is very much in keeping with the
trajectory identified by the GERN country
studies. What actions are needed on a global
scale? A recent survey by GlobeScan of more
than 300 experts in the field, found that just
30 percent rated strategic corporate philanthropy as effective in achieving the United
Nations’ millennium development goals. By
comparison, nearly 75 percent credited new
business models and innovations as either
somewhat or very effective. ety’s needs must be considered in the context of tensions in the United States over the
role of business and government. The Boston
College Center’s surveys found nearly all
business leaders adamant that corporate responsibility should be a voluntary option of
companies, not legislated or regulated by the
government. The American public’s view on
this is markedly different. The 2007 Fleishman-Hillard/National Consumer’s League
survey found that 4-of-5 consumers believe
that it is “extremely” or “very” important for
Congress to ensure corporations address issues such as energy, the environment and
health care. Multisector partnerships. The next generation movement also involves multisector
partnering to address society’s needs. The
public certainly approves of this. On a global
scale, NGOs earn far more trust than global
companies in both the Northern (68 percent
versus 38 percent are trusted) and the Southern hemispheres (63 percent versus 46 percent); and in both they are more trusted than
national governments, domestic companies,
trade unions and the media.14 Who is most
trusted to do what’s right? In the U.S., where
trust in business in this regard has been relatively constant since 2001, trust in NGOs
has increased dramatically, from 36 percent
in 2001 to 54 percent in 2006, moving well
ahead of business. NGOs are now the most
trusted institution in every country except
Japan and Brazil. This push for multisector
solutions to the world’s most pressing problems is today being advanced by the World
Economic Forum and United Nations Global
Compact.
On a global scale, there is not near as much
preference for “free market” solutions to social problems. Majorities in countries including Indonesia, Italy, Argentina and France
agree the free market works best when it is
strongly regulated. Furthermore, on the important matter of business emissions, onethird of consumers sampled around the globe
respond favorably to the idea of increased
regulation. More broadly, a study by Bertelsmann-Stiftung argues that nations with
strong states and a tradition of legislation in
the social arena (e.g., Poland, France, China)
are more apt to turn to mandate aspects of
corporate social responsibility, whereas nations good at managing change with traditions of transparency (the U.K, Sweden and
Germany) are more apt to rely on voluntary
measures and partnerships to steer corporate
conduct.15 Business versus government roles. The stress
on multisector partnering in meeting soci-
www.BCCorporateCitizenship.org
The ‘glocal’ solution. Overall the GERN reports and survey data point to a two-dimensional evolution in corporate citizenship
around the world. Global standards for social
Global Education Research Network
125
Corporate Citizenship Around the World
and environmental performance, criteria for
listings on international stock exchanges,
rankings such as the DJSI and FTS4good, and
the press for transparency and reporting all
impinge on large corporations whatever their
origins and wherever they operate. In a sense,
global corporations are being pushed toward
adoption of common features of corporate
conduct and disclosure.
At the same time, the data show that local
traditions, needs and circumstances also factor into corporate conduct. That the public
in Brazil has high expectations of corporate
conduct, as an example, necessarily shapes
the conduct of Brazilian firms and global
companies with operations in the nation.
The SHRM study documents the impact on
citizenship policies and its role as a source of
competitive advantage. This same scenario
plays throughout Latin America. In Asia, by
comparison, interest is high but policy and
practices are not near as advanced and the
brand of citizenship deployed in Japan versus
Korea, China, the Philippines and Southeast
Asia is diverse.
At this point, the evidence suggests that corporations based in Europe seem to be ahead
of the U.S. when it comes to integration and
reporting. Many European countries, for example, regulate corporate conduct more so
than in the U.S. and set guidelines for firms
in several citizenship arenas. Moreover, the
European Union has hosted multiple convenings on corporate social responsibility and
sustainability; established working groups
between leaders in business, government,
and NGOs on select issues; and issued position papers aimed at companies. One impact
is evident: European firms are far more likely
126
Global Education Research Network
than American firms to issue social-and-environmental reports and to have them verified
by external auditors. Another feature of next generation citizenship, just beginning to emerge in select corporations, connects it to the very purpose and
operating strategies of a business. In several
of the next generation companies profiled in
“Beyond Good Company,” the strategic intent
of the firm is not simply to go about its business responsibly and sustainably, it is to make
a responsible and sustainable business out
of addressing the world’s social and environmental needs. All of this means that, as the
GERN report spells out, companies are devising global and local corporate citizenship
thrusts, or as it might be put, “glocal” solutions. Moreover, it is evident that new definitions of citizenship and its centrality to business are being devised by global businesses
and by local entrepreneurs.
(Endnotes)
The major polls cited throughout this paper
are from a consortium of researchers around
the world, the Reputation Institute, RepTrak
Pulse 2006: Social Responsibility Report at
http://www.reputationinstitute.com; GlobeScan, Corporate Social Responsibility Monitor
(2001-2006), http://www.GlobeScan.com; and
GolinHarris, Doing Well by Doing Good: The
Trajectory of Corporate Citizenship in American business, http://www.golinharris.com. The
Center’s surveys of business leaders include
The State of Corporate Citizenship in the U.S.:
A view from inside 2003-2004. The State of
Corporate Citizenship in the U.S.: Business
Perspectives in 2005. (Boston: BCCCC, 2004;
2006).
1
www.BCCorporateCitizenship.org
How local flavor seasons the global practice
2
The McKinsey Quarterly. “How Companies
think about Climate Change.” (2007);
12
The State of Corporate Citizenship in the U.S.
2007. “Time to Get Real: Closing the Gap between Rhetoric and Reality.” (Boston: BCCCC,
2007).
Society for Human Resource Management,
2007 Corporate Social Responsibility.
3
Scott Beardsley, Sheila Bonini, Lenny Mendonca and Jeremy Oppenheim. “A new era for
business,” Stanford Innovation Review, (Summer, 2007); Sheila Bonini, Kerrin McKillop,
and Lenny Mendonca, “The trust gap between
consumers and the corporations,” The McKinsey
Quarterly.
EIRIS, The State of Responsible Business,
2007
13
See GlobeScan, “Report on Issues and Reputation,” (2005).
14
4
Bertelsmann-Stiftung. The CSR Navigator:
Public policies in Africa, the Americas, Asia
and Europe
15
Sheila Bonini, Greg Hintz, and Lenny Mendonca, “Addressing consumer concerns about
climate change.” The McKinsey Quarterly.
5
The McKinsey Quarterly. “Global Survey of
Business Executives.” (January, 2006). Online
edition at McKinsey.com. Cited throughout this
paper.
6
See Antonio Márquez and Charles J. Fombrun,
“Measuring Corporate Social Responsibility.”
Corporate Reputation Review, 7, 4, (January,
2005): 304-308.
7
Beyond Good Company
8
Economist Intelligence Unit
9
Debby Bielak, Sheila Bonini, and Jerry Oppenheim, “CEO’s on strategy and social issues,”
The McKinsey Quarterly.
10
McKinsey & Co., “Shaping the New Rules of
Competition: UN Global Compact Participant
Mirror.” (July, 2007). Online at McKinsey.com.
11
www.BCCorporateCitizenship.org
Global Education Research Network
127
Corporate Citizenship Around the World
“The sum of acts of local citizenship does not make a globally
involved citizen. Global issues must be addressed on a global scale.”
- Klaus Schwab, President of the World Economic Forum
128
Global Education Research Network
www.BCCorporateCitizenship.org
This report funded by the UPS Foundation
Members of the Global Education Research Network
and contributors to this report:
Boston College Center for Corporate Citizenship 55 Lee Road, Chestnut Hill, MA 02467
Phone 617-552-4545 Fax 617-552-8499 Email [email protected] web site www.BCCorporateCitizenship.org