Corporate Citizenship Around the World

Learning, Practice, Results. In Good Company

Corporate Citizenship Around the WorldHow local flavor seasons the global practice

in association with

www.BCCorporateCitizenship.org

Corporate Citizenship Around the World

Global Education Research Network

Contents1 Preface–ANewRoleforBusiness:

GlobalCitizen3 The Global Education Research Network4 Introduction–TrendsinCorporate

Citizenship–GlobalVersusLocalForces

Chapter 1: Europe11 Germany25 UnitedKingdom

Chapter 2: Asia31 China43 ThePhilippines

Chapter 3: Africa and the Middle East 58 SouthAfrica80 UnitedArabEmirates

Chapter 4: The Americas88 Brazil94 Chile102UnitedStates

Chapter 5114 AGlobalScanofCorporateCitizenship

Frontcoverphoto:©ArvindBalaraman


How local flavor seasons the global practice

Global Education Research Network 1

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



2 Global Education Research Network

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.




The Global Education Research NetworkThe Global Education Research Network (GERN) is a network of eight institu-tions 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 per-spectives 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 prin-ciples, and can offer perspectives from developing and developed economies on issues related to responsible business practice. Its goal is to deconstruct and un-pack 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)




Corporatecitizenshipisbothaglobalandlo-calphenomenon.Theperspectivesofauthorsfromtheninecountriesprofiledherepresentkeysimilaritiesandsomeimportantdiffer-encesintheunderstandingofandapproachtocorporatecitizenshiparoundtheworld.Herearesomeofthefactorsthathelpexplaintheglobalandlocaldimensionsofcorporatecitizenship.

Theconceptandpracticeofcorporatecitizen-shipisinfluencedbyanation’shistoryandthesocialcontractthatdevelopsbetweenpri-vateenterpriseandthepublic.Butwhilethesocialcontractvariesfromnationtonation,acommonthreadappearswiththespreadofmarketcapitalism,callsamongtheworld’spopulaceforbusinesstoassumebroaderso-cialandenvironmentalresponsibilities,andwidespreadquestioningoftheroleofbusi-nessinsociety.

Corporatecitizenshipisinastateoftrans-formation.Mostcountriesareexperiencingashiftfromatraditionalviewofcorporatecitizenshipasprovidingjobs,earningprofits,andpayingtaxeswhile“givingback”throughphilanthropy.Thenewviewtakesamoreen-compassinglookattheimpactofbusinessonsociety.Inturn,companiesaretakingstepstomovecitizenshipfromthemarginstothemainstreamoftheirbusinessmanagement.Butthepositiononthesespectrumsvariesfromcountrytocountryaswellasfromcom-panytocompany.

Largecorporatemultinationalsareadriv-ingforcebehindcorporatecitizenshiptodayaroundtheglobe.Buttheirmotivationsfordoingsoandtheinfluenceofotheractorsvarysignificantlydependingontheregionalcontext.

Theenvironmentandconcernsaboutglobalclimatechangenowtopthelistofcorporatecitizenshipissuesinallnations.Countriesshareconcernoveranumberofotherissues,suchasproductsafetyandworkingcondi-tions,buttheprioritygiventootherissuesvariesdependingongeography.

National history and the changing social

contractThesocietalobligationsofcorporationshavebecomeatopicofincreasinginterestinrecentyears.TheUnitedStateshasgonethroughwavesofchangeinitssocialcontractasbusi-nessoperatedonalaissez-fairebasisthrough-outthelate19thcenturyuntilitwasreignedinbytrustbusting,regulationandreformfrom1900to1915.Thencamethe“Roaring’20s”ofboomingbusinessandstockmarketspeculationfollowedbytheGreatDepression,whichledtostronginterventionbythefederalgovernment,andtheestablishmentofasocialsafetynetthatcontinuedtoexpandthroughhumanresourcemanagementbybusinessandtheGreatSocietyprogramsofthe1960sandearly’70s.Sincethe1980s,businesshasgrownanditsshareholdersprosperedwhilethefederalgovernmenthasrecededinitsreg-

Trends in Corporate Citizenship – Global Versus Local ForcesBy Sylvia Kinnicutt and Philip Mirvis, The Boston College Center for Corporate Citizenship




ulatoryrole.Inturn,socialcostshavespreadthroughwidespreadcorporatedownsizingandoff-shoringandagaphasgrownbetweentheheightenedearningsofa“fortunatefifth”oftheworkforceandthestagnantwagesoftherestofthenation.Asthereportoncorpo-ratecitizenshipintheUnitedStatesstates,changeseemstobeintheairintheearly21stcenturyasmostbusinessleadersacknowl-edgethesocialcontractisbroken,andacon-versationisbeginningonhowtofixit.

InWesternEurope,wherethestateassumedprimaryresponsibilityforsocialwelfareafterWorldWarIIthroughthelatterhalfofthe20thcentury,businesswasmoreorlessex-pectedtoattendtojobcreation,workersafetyandthequalityofgoodsandservices.Thenderegulation,privatizationandthesharehold-errightsmovementsweptintotheUnitedKingdomandlaterthecontinent.Thisfreedcompetitiveenergies,displacedworkersandbirthedsomethingofananti-corporatemove-mentinitswake.AstheU.K.reportexplains,aninterestinexpandingtheroleofbusinessinthesocialspheretodayhasledtothecre-ationofministry-levelsupportforcorporateresponsibility,acottageindustryofconsul-tanciesandacademicsprofferingadviceandtraining,andsignificantcorporateengage-mentinsocialissuesandaffairs,domesticallyandinternationally.“TheBritishbrandofcor-porateresponsibilityisseenasthegoldstan-dard,”claimsJuliaCleverdonchiefexecutiveofBusinessintheCommunityintheUnitedKingdom.

Similarmovementinthestate/businessrela-tionshipisunderwayinScandinavia,FranceandotherpartsofSouthernEurope,butthepaceseemsslowerinGermany.Germanspri-marilyexpecttheircompaniestodothebasics

–paytaxes,complywithlaws,providejobs–butarenowconsideringlargerresponsibili-tiessuchasenvironmentalmanagementandcommunityengagement.AstheCenterforCorporateCitizenshipDeutschland(CCCD)reports,“Whiletherightsandresponsibilitiesofgovernmentandcivilsocietyhaveconstant-lybeennegotiatedandreadjustedduringthelast30years,thepublicdebateabouttheroleofbusinessinsocietyhasonlyjustbegun.”

Companiesbasedindevelopingcountriesoroperatinginemergingmarketshavetonegotiatesomewhatdifferentchallenges.InChina,forinstance,market-basedcommerceoperatesunderthedominionanddirectionofastatethatmustbalanceaspirationsforeconomicgrowthagainstenvironmentaldeg-radationandsocialdivisions.ConcernsalsomountaboutChina’sperformanceinglobalsupplychains.AsthereportonCSRinChinareveals,awarenessofbusinesses’responsibili-tiestosocietyisgrowingfastamonggovern-mentofficials,businessleadersandthepublicatlarge.

InthePhilippines,wheresegmentsofsocietylackinbasicneeds,therehaslongbeenanex-pectationthatcorporationswillfirst-and-fore-mostcontributetoeconomicdevelopment.Still,asthereportonCSRinthePhilippinesexplains,atraditionoffamily-ownedenter-prisemeansthatmanycompaniestakecaretotreattheiremployeeswellandcontributetocommunitydevelopment.Todayabroaderapproachisbeingformalizedinleadingfirmsandnascentbusiness-NGOnetworks.

Pressureoncorporationsto“domore”isalsogrowingindevelopingcountrieswheretheabilityofthegovernmenttomitigatesocialconcernsisweak.ReportsfromtheUnited




ArabEmirates,SouthAfrica,BrazilandChileallindicatecorporationsareexpectedtoad-dresssocialconcernswhenthegovernmentcannot.Stilltherearedistinctoriginsandexpressionsofcitizenshipineachoftheselo-calesastheirrespectivecentersreport.IntheU.A.E.,forexample,companiesaremostcon-cernedwitheconomicefficiency,complianceandcharity.Thereisneitheratraditionof,noradvocacyfor,stakeholderengagementandthestatelacksinstitutionalcapacitytoregu-lateandmonitorenterpriseinthissphere.InSouthAfrica,theendofcolonialismandapartheidsparkedcorporateinvolvementinsocietalreparation,aggressivelegislationtoshapetheimpactofbusinessonsociety,andnationwideinterestinsustainabledevel-opment.Interestingly,SouthAfricansratecompaniesasmoresociallyresponsiblethaninanyothernation.Itmaybe,however,thatapoorlydevelopedlegalinfrastructurehascreatedanenvironmentwhereacompany’sengagementinphilanthropyandcommunitydevelopmentisofprimaryimportancetoitscitizens.

CitizenshipinBrazilandChilereflectscom-monalitiesandcontrasts.Citizensinbothna-tionsexpresshighinterestinCSRandcom-parativelyhighhopesthatcorporationscandeliversocialgood.Asthechaptersreport,thestateandNGOshavesteeredcorporateconductinBrazilfarmoreextensivelythaninChile.Withtheexceptionofselectmultina-tionals,BraziliancompaniesarefarlesslikelythanthoseinChiletolooktoglobalstandardsforsettingtheircitizenshipprioritiesandagenda.

Adiminishingroleofthestateisnotaphe-nomenonexperiencedonlyindeveloping

countries.TheUnitedStatesandEuropearealsofacinglocalandglobalchallengesthathavebecometooburdensomeforthestatetoaddress.KlausSchwab,presidentoftheWorldEconomicForum,notesinhisreporton“GlobalCorporateCitizenship”thatasthesphereofinfluenceofbusinesshaswidenedeverywhere,sohaveexpectationsthatbusi-nessbehaveresponsibly.

Advancing the state of corporate

citizenshipFromitsrootsincompanytownsandemploy-ee-centeredpracticestolongstandingtradi-tionsofcharitablegivingandvolunteerism,theU.S.versionofcorporatecitizenshiphasemphasizedidealsofbeingagoodemployerandneighbor.Todayarangeofdevelopments—fromfinancialscandalsandhumanrightsissuesinglobalsupplychainstotheemer-genceofsocialandenvironmentalissuesasstrategicconsiderations—havehelpedgener-atenewdefinitionsandapproachestocorpo-ratecitizenship.

Eachofthecountryreportsindicatesacom-monphenomenon,atransformationfromcorporatecitizenshipasphilanthropytoabroaderroleofsocietalengagement.Astheroleofbusinessinsocietybroadens,corpo-ratecitizenshipistakenmoreseriouslyasanintegralpartofbasicbusinessoperationsandstrategy.Somecountriesarefartheraheadonthisroadthanothers,butthefindingthatcorporatecitizenshipisnolongercharacter-izedbyarms-lengthphilanthropyindicatesaworldwideshift.

TheBostonCollegeCenterforCorporateCitizenshipreleasedareportin2006titled,“StagesofCorporateCitizenship:ADevel-




opmentalFramework”whichdescribeshowcompaniesmovefrombeginningtoadvancedcorporatecitizenshippractices.Beginningpracticesarelargelyfocusedonlegalcompli-ance.Asacompanyadvances,moreconsider-ationisappliedtophilanthropyandobtaininga“licensetooperate”inthecommunity.Moreadvancedcompaniestakeabroaderviewofcitizenshipandadoptbusinesspracticessuchasmeasurementandreportingofcitizenshipperformance,stakeholdermanagementandgovernancereform.Attheleadingedgearefirmsthataligntheirmanyfunctionsrespon-sibleforcorporatecitizenshipandaimtheirbusiness,philanthropicallyandcommercially,atcoreeconomic,social,andenvironmentalneeds.

Thereportsfromtheninecountriesprofiledrevealaworldwideinterestandmovementforwardoncitizenshipmeasurementandreporting.ThelowestratesofreportingoncorporatecitizenshiparefoundinAsiaandtheMiddleEast,whereissuesoftransparencyandaccountabilityareneithercodifiedinlawnoranacceptedbusinesspractice.ThereportfromtheCenterforResponsibleBusinessinDubaiclaimsthatintheU.A.E.,theconceptofcorporatesocialresponsibilityis“stillinitsinfancy,”focusedonlegalcomplianceandcharity.Bycontrast,Europeancompanieshaveshowntobethemostadvancedintermsofreporting.ArecentanalysisconductedbytheEthicalInvestmentResearchService(EIRIS)foundthatEuropeancompanieshave“welldevelopedresponsiblebusinessprac-ticesacrossabroadrangeofissuesduetoasophisticatedresponsibleinvestmentmarket,NGOpressureandastrongregulatoryenvi-ronment.”YettheCCCDreportsthat“Ger-mancompaniesarestilllookingforthe“busi-nesscase”whileatthesametimetheyhardly

measureandevaluatetheircorporatecitizen-shippractices.”

Onthesocialfront,mostnationsreportalongtraditionofcommunitygiving,whichprecededthemodernviewofcorporateciti-zenship.Thistraditionhasreligiousandcul-turaloriginsthatinfusepreceptsofcapitalisminAsia,theMiddleEast,andLatinAmerica.Ithasmadecompaniesdoingbusinessintheseregionsmoresensitiveandresponsivetotheideasofworkingwithnonfinancialstakeholdersandgettinginvolvedincommu-nityaffairs.Amongthecountriesprofiled,Germanyistheonlyonewithaweaktraditionofcommunityengagement.Thisislargelytheresultofawelfarestatethatlimitedtheneedfordirectinvestmentincommunitiesfromtheprivatesector.However,Germanshavecultivatedastrongrespectfortheenvi-ronmentoverthepastfewdecadesthathasshapedthediscussionaroundcorporateciti-zenshipinthatnationandputGermancom-paniesaheadofmanyothersinthisarea.

Manyscholarshavepointedtothestateofde-velopmentoftheeconomyasadeterminingvariableoftheadvancementofcorporateciti-zenship.Overall,theyhavefoundcorporatecitizenshipislessintegratedintobusinessstrategyandlessformallymanagedinde-velopingnationsthaninmosthigh-incomecountries.Butthereisconsiderableevidencedevelopingandemergingmarketsarecatch-ingupquickly.JeremyBaskin,forexample,reportedintheJournalofCorporateCitizen-shipthat12.4percentoffirmsregisteredwiththeGlobalReportingInitiative(GRI)arefromemergingmarketsandmorethantwo-thirdsofemergingmarketcompaniesinarecentstudyshowsomecorporatecitizenshipactiv-




Eachofthecountryreportsindicatesthatmultinationalcompaniesareadrivingforcebehindtheadvancementofcorporatecitizen-ship.InGermany,forexample,multinationalcompaniesareresponsibleforbroadeningthedefinitionsofhowbusinesscanandshouldcontributetosociety.InSouthAfrica,theau-thorsdescribehowtheminingsectorhasledthewayinincorporatingcommunityinvolve-mentandhumanrightsintotheagendaoftheprivatesectormorebroadly.

Examiningwhycompaniesaremotivatedtoengagewithstakeholdersandcommuni-tiesonsocialissuesrevealssomenuancesinregionalcorporatecitizenship.CompaniesinthePhilippines,forexample,areprimar-ilymotivatedbytheirownemployees,andsecondarilybygovernmentregulationsandpressurefromNGOs.InChile,a“demand-ingsociety”isdrivingcompaniesaswellasanincreasinglyclearbusinesscaseforachievingacompetitiveadvantagethroughcorporatecitizenship.InChina,thereislittlepres-surefromlocalNGOs,butagrowingpres-surefromforeigninvestorsandinternationalNGOstoadoptmoreresponsiblepractices.

Bycomparison,Westerncountriesaremoremotivatedbythemarketandconsumersthanthoseindevelopingmarkets.The2007TrustBarometeroftheEdelmanglobalpub-licrelationsfirmrevealedthatactionstakentowarddistrustedcompaniesaregreatestinNorthAmericaandtheEuropeanUnion,andsomewhatlowerinLatinAmericaandAsia,explainingthedifferencesinmarketpressure.Additionally,whentheEconomistIntelligenceUnitpolledcompaniesonthegroupsthatwouldhavethegreatestimpactontheirsus-tainabilitystrategyoverthenextfiveyears,the

ity.Vincular,theCenterforCorporateSocialResponsibilityatCatholicUniversityofVal-paraiso,Chile,alsoreportsthatmorethan50ChileancompaniesarereportingundertheGRIandmanyareactivelyinvolvedintheISO26000process.

Thecountryreportsinthispublicationpro-videadetailedpictureoftheuniquestageofdevelopmenteachcountryisexperiencingtoday.Asallmovetowardawiderviewoftheresponsibilitiesoftheprivatesectortosociety,thedegreetowhichcitizenshipisbeinginte-gratedintocorepolicies,practices,andbusi-nessfunctionsisincreasing.Nocountryhasadefiningtraditionwherebybusinessincorpo-ratescitizenshipconsiderationsintoprod-uctsandservices,marketentryandgrowthstrategies,andoperationalmanagementandcontrols.Onthesecounts,theroleofmultina-tionalsismovingcitizenshipforwardglobally.

Multinationals drive the agenda forward Whilethepoliticalsystem,nationalculture,andstateofeconomicdevelopmentclearlyplayaroleinhowcorporatecitizenshipisviewedaroundtheworld,thereisnodis-countingtherolethatmultinationalcompa-niesplayinshapingpublicopinionandbusi-nesspractices.Ofcourse,itcanbearguedthatbigcorporationshavebeenaprimarycauseofsomeoftheworld’smostpressingenvironmentalandsocialills.Onepollfindsthatlessthanhalfoftheworld’spopulaceina20countrysampletrustsglobalcompanies.Anotherpollshowsthatonlyone-in-fivepeo-plein25countriessampledagreethat“mostcompaniesaresociallyresponsible.”Thismayaccountforwhylargenumbersofbusi-nessleadersworldwideareplacinganewem-phasisonresponsiblebusinessconduct.




globalaggregategaveatietoconsumersandgovernmentpolicymakers.However,NorthAmericancompanieslistedcompetitorsinfirstplaceandgovernmentthird,Europeanfirmsvotedoverwhelminglyforcustomers,andAsiancompanieslistedthegovernmentasthemostinfluentialdriverofcitizenship.

Whilecompaniesthemselvesseemtobeattheforefrontofinnovationaroundcorporatecitizenship,inmanycountriesthecivilsocietysectorandthegovernmenthavesignificantroles.Thepublic(government)sectorseemstoplayanimportantroleinAsianandWest-ernEuropeannations.Europeancountriestendtohavemoreregulationsinplacearoundcorporatecitizenshipissues.ThisistrueinGermanywherecompaniesfacemoreregula-tionsonenvironmentissuesinparticular,andthestateplaysanimportantroleasalegisla-torandenabler/networkingagentinfluenc-ingcorporationstoadoptcorporatecitizen-ship.OthernationssuchasSouthAfricahavereporteda“flurryofnewlegislation”aroundcorporatecitizenship,particularlyonissuesrelatedtotheBlackEconomicEmpowermentinitiative.Incontrast,thegovernmentplaysafarlesserroleintheUnitedStates,wherecompaniesfavoravoluntaryapproach.

Thecivilsocietysectorhasgrowninsizeandinfluenceworldwide.TheJohnsHopkinsComparativeNonprofitSectorProjectfindsthata“globalassociationalrevolution”ap-pearstobeunderway,characterizedbyamas-siveupsurgeoforganizedprivate,voluntaryactivityworldwide.Itsinfluenceonthedevel-opmentofcorporatecitizenshipisalsovisibleeverywhere,althoughperhapsthemostsoinLatinAmerica.WereportherethatinChile,civilsocietyexercisesgrowingscrutinyover

companiesandisabletoexertitsdemandstowardtheStatetoimplementcorporateciti-zenshippoliciesandregulateandcontroltheprivatesector.SocialcampaignershavealsoleftamarkonindustryintheUnitedKing-dom.Bycontrast,civilsocietygroupsarelessinvolvedincorporatecitizenshipinGermany,China,theUnitedArabEmiratesandSouthAfrica.

Finally,othergroupshavebeenreportedashavingastronginfluenceoncompaniesandonthefieldasawhole.Investors,particularlysociallyresponsibleinvestment(SRI)firms,arebecomingagreaterdriverinSouthAfricaaswellasinEuropeandtheUnitedStates.Globalstandardsandframeworks,suchastheGRI,GlobalCompactandISOformulationshavehadadecidedimpactoncorporateprac-ticeinEurope,amoderateimpactonSouthAfricanandSouthAmericanbusinessesandtheleastimpactintheUnitedStates.

Key issues – Global and localInallcountries,theenvironmentandcli-matechangehasmovedtothetopofthelistofcorporatecitizenshipissues.AMcKinseyQuarterlysurveydiscoveredthat53percentofEuropeanexecutives,45percentofChineseexecutives,41percentofNorthAmericanex-ecutivesand34percentofIndianexecutivesselectedthenaturalenvironmentasthetopissuelikelytohavethemostimpactonshare-holdervalueoverthenextfiveyears.Eachna-tionreportingherealsoindicatesthatenvi-ronmentisasignificantpartofthecorporatecitizenshipagenda.

Environmentalpreservationandclimatechangecanbeconsideredissuesof“globalconcern.”Theseareuniquesocialchallenges




thataresharedbyeveryoneonthisplanetwhilealsoaffectingindividualsintheirlocalenvironments.Inaneraofquicklyprogress-ingglobalization,manypreviouslylocalis-suesarealsobecomingglobalconcerns.Thisisreflectedhereinthatthecountriesprofiledshareothercommonissuesofconcernsuchashumanrights,healthandlaborpractices.Countriesplacetheseissuesindifferentor-dersofpriority,dependingontheirneeds,lo-calconditionsandrecentevents.Forexample,corporategovernanceisapriorityissuetodayinGermanyafterawaveofcorporatescan-dals.

Otherresearchershavefoundthatmanycor-poratecitizenshippoliciesarebasedonlocal-izedissuesandculturaltraditionatacountry-level.OnestudyfoundthatAsiancompanieswereverylikelytohavepoliciesforlaborcon-ditionsandsupplychains,whileNorthAmer-icanandAustraliancompaniesweremostlikelytohavepoliciesaddressingindigenouspopulations,auniqueconsiderationinthosecountries.Therearealsodifferencesindefini-tionsofwhatdefinesagoodcorporatecitizenaroundtheworld.

KlausSchwab,PresidentoftheWorldEco-nomicForum,recentlymadethisstatement:“Thesumofactsoflocalcitizenshipdoesnotmakeagloballyinvolvedcitizen.Globalissuesmustbeaddressedonaglobalscale.”Thispublicationshowsthatselectcorporateciti-zenshipissuesarebeginningtoconvergeonthecorporate-and-globalcalculus.Theextentthatmulti-businessandmulti-sectoralpart-nershipsarecomingtogethertoaddresstheseglobalissueswillbeseeninthisreportand

subsequentresearchbyGERNmembers.

Resources:Baskin,Jeremy.CorporateResponsibilityinEmergingMarkets.JournalofCorporateCiti-zenship,2006

Bertelsmann-Stiftung,TheCSRNavigator:PublicPoliciesinAfrica,theAmericas,Asia,andEurope

TheEconomist,CSRSpecialSectionintheEconomist,January17,2008

Edelman,The2007EdelmanTrustBarom-eter

EthicalInvestmentandResearchService(EIRIS),TheStateofResponsibleBusiness2007

GlobalCivilSociety:AnOverview.TheJohnsHopkinsComparativeNonprofitSectorProj-ect

McKinseyQuarterlySurvey:AssessingtheImpactofSocietalissues,2007

Schwab,Klaus.“GlobalCorporateCitizen-ship”Foreign Affairs.January/February2008.

Welford,Richard.CorporateSocialRespon-sibilityinEurope,NorthAmerica,andAsia:2004Surveyresults.TheJournalofCorporateCitizenship




Cultural context and social contractCorporate citizenship in Germany is characterized by strong traditions in environ-ment 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 multina-tional corporations. The traditional social contract in Germany includes the expecta-tion that businesses pay taxes, comply with laws, and provide jobs, while the state-centered 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.

German Corporate Citizenship Summary

Berlin, Germany

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Current state and transformation of citizenshipMore commonly known as corporate social responsibility (CSR), the approaches Ger-man business takes to address social and environmental impacts vary. German com-panies are leaders in environmental sustainability and laggards in community involve-ment, 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 collabora-

tion between business and civil society

Issues of prominence• Climate change/environment• Corporate governance• Education

Center for Corporate Citizenship DeutschlandThe Center for Corporate Citizenship Deutschland (CCCD) is a nonprofit organization at the interface be-tween 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 ca-pacity building..

The CCCD arranges forums for exchange between corporate citizens, business, aca-demia, politics and civil society; supplies and carries out applied research, facilitates learning processes through debate and skilling opportunities; and supports collabo-ration 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.




PrefaceCorporatecitizenshiphasfinallyarrivedinGermany–bothinpublicdiscourseandinbusinesspractice.Yet,thereisnon-simulta-neousdevelopment.Whilebothworkplaceandenvironmentalissueshavestrongtradi-tionsandhighstandardsinGermany,thecivilsociety-focusedapproachofcommunityinvolvementhasarrivedwitha10-yeardelay.Foryears,thelandscapehasbeendeterminedbyoccasionalphilanthropyontheonehand(mainlyinsmallandmedium-sizedcom-panieswhichrepresentapproximately70percentoftheGermaneconomy);andcom-parativelystrongperformanceonissuesofen-vironment/sustainabilityandworkplace/occu-pationalhealthandsafetyontheotherhand.

Today,Germanygoesthroughaphaseofatleastshowing(off)goodcorporatecitizen-ship:CSRreports,conferences,handbooks,guidelines,awardsetc.aremushrooming.Itishardtotellyet,though,whetherthereissubstantial,systemicchangeorratherarela-belingofoldpractices.However,thereisrea-sontobelievethatdrivingforces,suchasthechangingsocialcontractandthedecreasingtrustinbusiness,arestrongenoughtohavepowerfulandsustainableimpactonbusinesspractices.

Corporate citizenship in Germany –

What does it mean?TheEnglishtermcorporatecitizenshipisactuallyusedinGermany,usuallyinthe

narrowmeaningofcorporatecommunityinvolvement,whilethecomprehensivecon-ceptthatalsoincludesbusinesspracticesandenvironmentalissuesismostlycalledCSR(sometimeswithoutthe“S”).AcademicsandconsultantsliketorefertoArchieB.Carroll’spyramidofcorporateresponsibility(Carroll1979).AndstillwefindmorethanoneCSRpractitionerexplainingthatthecolleaguesre-sponsibleforcorporatecitizenshipwouldbethosewhospendthemoney,whiletheCSRmanagersinfluencethewaythecompanymakesmoney.

Forthediscourseamongpractitioners,thesemanticexperienceisbestdescribedbyBradGoogins’essay“LostinTranslation”(Googins2007).Inasmall,non-representativesur-veyCCCDconductedamongCSRmanagersonthejobdescription,skillsandqualifica-tionsofacorporatecitizenshipprofessionalinGermany(samplerestrictedtocompaniesthatareaboveaverageuptohighperformersinintegratedcitizenship),wefoundthatallnamesarebeingusedandthatalongwiththedifferentwording,differentissuesarefocusedoninacompany’spractice(Schwalbach/Schwerk/Lang,i.E.).Forsome,corporateciti-zenshipisprimarilyaboutsustainableprod-uctsand/orproduction,othersconcentrateoncommunityinvolvement,athirdcategoryemphasizestransparencyandcorporategov-ernance.Systematiccoherenceistobefoundneitherincorporatepracticenorinacademicdiscourse.

German Perspectives on Corporate CitizenshipBy Susanne Lang, Frank Heuberger and Anja Schwerk,

Center for Corporate Citizenship Deutschland




Interestingly,thereisnocommonGermantranslationforeitherCSRorcorporateciti-zenship,whilethereisabroadlyusedGer-manwordforsustainability(“nachhaltig-keit”).Languageheretellsussomethingaboutthe(non-)rootednessoftherespectiveconceptsintheGerman(business)culture:bothcorporatecitizenshipandC(S)RremainAnglicismsthathavefoundtheirwayintoGermandiscourseandpracticesonlyslowly.Sustainabilityandrelatedissues,ontheotherhand,haveformedpartofpublicdiscourseandbusinesspracticeforalongtime.

Inthemeantime,therehasbeenalivelyaca-demicdebateoncorporatecitizenship,butunderdifferentnamesandlargelydetachedfromthediscourseamongpractitioners.Cor-poratepracticeincludingthepractitioners’discourseontheonehandandacademicre-searchontheotherhand,remainmoreorlessseparated.Economicresearchdoesnotreflectthepracticalquestionsincompanies;viceversacorporatepracticetakeslittleinterestinacademicdebatesoncorporatecitizenship.

The academic debate on corporate

citizenship/CSR in GermanyTheAnglo-SaxontermscorporatecitizenshipandCSRhavemadetheirwayintoGermanacademiclanguagejustrecently,andtheaca-demicdiscourseisstilldominatedbyethi-calapproachestocorporateresponsibility,withabothhighlytheoreticalandnormativebackground.Historically,manymainstreameconomistsrefusetherightofexistenceforbusinessethicsasasubdivisionofeconom-ics.Mainstreameconomistshavebeenargu-ingthattheeconomicactivitywasembed-dedinpracticalconstraints.Specifically,the

neoclassicaleconomicmodelonlydealtwiththefunctionallogicofthemarketsystemandclaimedtobeavalue-freetheory.Itwasformanyyearscommonsensethatmoralandethicalresponsibilitieshavetheirrelevanceinprivateandfamilylifebutnotasascientificobjectineconomictheory.

Formalmodelsonthebasisofnarroweco-nomicassumptionslikethesolelyself-inter-estedhomooeconomicusoropportunismweremuchmorepopularineconomicsthanthenon-formalandnormativeassumptionsofbusinessethics.Nevertheless,somepartial-lycompetingGermanviewshaveemerged.Thebest-knownisthe“EconomicTheoryofMorale”byKarlHomannandcolleagues.Ho-manntriestocombinetheeconomicconceptsofincentivesanddilemmasituationswithethicalquestions.JosefWielandproceedsinasimilarwayinhis“TheoryofGovernanceEthics.”HorstSteinmannandAlfredLöhrandmorerecentlyAndreasGeorgSchererestablishtheir“CorrectiveBusinessEthics”onthebasisofdiscourseethicsinthetradi-tionofHabermas.Theybasicallyagreewiththeprofitmaximizationprinciple,butonlyaslongasitwillnotcomeinconflictwithethicalconcerns.Butifpeaceinsocietyisindanger,consensualproceduresshouldbeusedtofindpeacefulsolutionsforconflictswithinternalorexternalstakeholders.PeterUllrichfromtheUniversityofSt.Gallenisanotherpopu-larrepresentativeintheGerman-speakinglandscapewithhisapproachof“IntegrativeEconomicEthics.”Ulrichchallengestheeco-nomicparadigmthatmarketsolutionsareinprincipleethicallyright.Instead,hedemandsacriticalreflectiononthenormativefounda-tionoftheeconomicwayofthinking.




Morerecently,researchersinthefieldofbusi-nessethicsandCSRtrytoavoidthecontro-versialandmainlyjusttheoreticaldiscus-sionoftheeconomicparadigm.Insteadtheychooseamoreinterdisciplinaryapproachwithinsightsfrompoliticalsciences,sociolo-gyand/orlaw.Yet,acurrentstudyofrelevantGermanjournalsbetween2000and2004providesvaluableinsightsintothestateoftheartoftheGermanacademicdebateonCSR(Hansen/Schrader2005).Theresultsshowthatonlyoneof50articlesinthethreemostrenownedGermaneconomicjournalsisdeal-ingwithcorporateresponsibilityorsimilartopics.HalfofthosearticleswerewrittenbyresearchassistantsorinterestedbusinesspractitionerswithouttheparticipationofaGermanprofessor.Theresultsshowthatthetopicisstillnotveryprevalentinthemain-streamGermanscientificlandscape.

Theoutsiderpositionofcorporatecitizenshipismirroredintheacademiccurricula.Accord-ingtoasurveydonebyHumboldtUniversity,RobertBoschFoundationandCCCDamongeconomicdepartmentsofuniversities,colleg-es(“fachhochschulen”)andbusinessschoolsinGermany,60percentoftheuniversitiesandalmost50percentofcollegesoffercours-esoncorporatecitizenship-relatedissues.Yet,51percentofthesecoursesareaboutbusinessethics,andanother24percentaboutenviron-mentalmanagement.Therest,25percent,isheldonsustainabilitymanagement(8per-cent),(explicit)corporatecitizenshiporCSR(9percent)andanother8percentonmiscel-laneousrelatedtopics(Schwalbach/Schwerk/Langi.E.).

Corporate citizenship and the social

contract in GermanyAtthebeginningofthe21stcentury,corpo-ratecitizenship(bothinthenarrowmeaningofcommunityinvolvementandinthebroadsensesynonymouswithCR)hasfinallyar-rivedinGermany,probablyheretostayforgood,butwithauniquerhythm.Whilebeingamongtheleadersintermsofenvironment,Germanyistobefoundamongthelaggardsincorporatecommunityinvolvement,andiscertainlybehindintermsofbusiness-lednetworksororganizationsofcorporateciti-zenship.Thisinconsistencydeservesacloserlook.Thelaggingnolessthantheleadinghastodowiththeinstitutionalarrangementsinthestillstate-centeredsocialcontractinGer-many,withtheroleofgovernmentandtheroleofcivilsociety.

Asregardsthecomparativelystrongperfor-manceofGermancompaniesinenvironmen-talissues,therewerecompanies,particularlysmallandmediumenterprises(SMEs)thatsawandstillseethebusinessopportunityinenvironmentallyfriendlytechnologies.1Yet,themajorityofbusinessesonlyreactedtogov-ernmentregulation,whichinitiallywasmoti-vatedbycivicaction.Thehistorydatesbacktotheearly1970s,whentheso-callednewsocialmovementspushedenvironmentalissuesonthepoliticalagenda.Thethensocial-liberalgovernmentrespondedwithanearlyenviron-mentalprogramandsubsequentlegislation.

1For 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 mar-ket shares between 5 percent (sustainable water production) and 30 percent (energy production); Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit 2007.




WiththefoundingoftheGreenPartyin1979,Germanywasamongthefirstcountriestoinstitutionalizetheenvironmentalistmove-ment,andenvironmentalissueshaveplayedanimportantroleinpublicconsciousnessandvaluesaswellasinpoliticsandlegisla-tioneversince.Ironically,eventhoughthebusinesscommunitystronglyemphasizesthevoluntarycharacterofcorporatecitizenship,theleadershippositionofGermancompaniesinenvironmentalstandardsisduerathertocompliancetolegalobligationsthantovolun-tarybusinessaction.

Thelaggingbehindintermsofcommunityinvolvementalsohasitsreasonintheroleandresponsibilitiesofatraditionallystronggovernment.Germany,likeotherEuropeancountries,hasdistinctivewelfarestatetradi-tions,meaningthatsocialwelfare,healthcare,educationandcommunityinfrastruc-tureetc.aswellastheredistributionofwealthwouldbetakencareofbygovernment;includ-ingthefundingofcivilsocietyorganizations.2Businesswasexpectedtoobeythelaws,paytaxesandcontributetheirsharetothesocialsecuritysystem.Companieshaddirectsocialresponsibilitiesonlyforvocationaltraining(theso-called“dualsystem”)andtheemploy-mentofpeoplewithdisabilities(bothrespon-sibilitiesbeingregulatedbylaw);moreover,theycouldgettaxdeductionsfordonationstocharities.Otherthanthat,thepoliticalandso-cialresponsibilityofbusinesswaschanneledthroughtheemployers’federations.Today,atleastatthelevelofthefederations,business

2According to the international Civicus Civil Society Index, non-profit organizations in Germany are primarily financed by public authorities (64.3 %). The rate of 64.3 % is not untypical for Eu-rope, 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.

ratherfearsbeingusedasasubstituteforthewelfarestateinsteadofactivelypromotingcorporatecommunityinvolvementanditsop-portunitiesforbusiness.

Whiletherightsandresponsibilitiesofgov-ernmentandcivilsocietyhaveconstantlybeennegotiatedandreadjustedduringthelast30years,thepublicdebateabouttheroleofbusinessinsocietyhasonlyjustbegun.

A closer look: The state of corporate

citizenship Withsomeexceptions,thecurrentGermandebateoncorporatecitizenshipisdominat-edbyprograms,bestpracticepresentationsandCSRreportsofthemajorplayersandtransnationalcompanies.Theirrepresenta-tivesdominatethestageatchatroundsandroundtables,awardceremoniesandpublicdebates,conferencesandinterviews.TherearestilloccasionalreferencestoGermantra-ditionsdatingbacktothe19thcentury,whenmedium-sizedenterprisesdidlastingservice,andfactoryownersfeltthemoralobligationtocopewiththeworstconsequencesofpov-erty.Buttheestablishedsocio-ethicalmotiva-tionof“dogood,butdon’ttalkaboutit”,whileshunningmedia-effectivepublicappearancesinthepuritanmanner,isbeginningtofade.ThesuccessstoryoftheGermanwelfarestateandsocialmarketeconomy(“sozialeMark-twirtschaft”)arecitedincreasinglylessoften.Inotherwords:thesocialcontractinGer-manyischanging,thetraditional,postWorldWarIIroleofbusinessinsocietythatdefinedcorporateresponsibilityischanging,andbothbusinessandsocietyneedtoelaborateanup-to-dateunderstandingoftheroleofbusinessinsociety,integratingGermantraditionsofcorporatecitizenship(orwhateverisleftof




them)withthenewopportunitiesandchal-lengesofglobalcorporatecitizenship.

Itwould,however,bewrongtoassumethemajorityofinternationalbusinessesorthebigU.S.companiesinGermanyexpresstheirsocialcommitmentatthelevelofsophisti-catedcorporatecitizenshipstrategies.Wefindabroadrange,frommoreorlessoccasionalphilanthropyuptoanintegratedstrategyofcorporatecitizenshipandhowtoimplementitintobusinessoperationsinorder“tomaketheworldabetterplace”.Andwefindabroadrangeofgoals,frommerephilanthropytovariousstrategicmotives(CCCD2007).

DataoftheCCCDsurveyoncorporateciti-zenshipinGermany3alsoshowhowtypesandtoolsofcorporatecitizenshiparedistrib-utedamongGermancompanies:corporategiving(91percent,corporatevolunteering(61percent),servicesfreeofcharge(54percent),andcooperationwithnon-profitpartners(47percent).

Internationalguidelinesandstandardsarewidelyacceptedandintegratedintocompanypolicy.Butthisisnotthewholepicture.Inrecentyears,agenuinepartnershipbetweenbusinessesandnon-profitorganizationshasemerged,withsomepioneersofethicalcor-poratemanagement.Onthewhole,Germancompaniesarestilllookingforthe“businesscase”whileatthesametimetheyhardlymea-sureandevaluatetheircitizenshippractices.

UniqueaboutcorporatecitizenshipinGer-

3The CCCD survey on corporate citizenship in Germany is a repre-sentative Survey conducted among 501 German companies (small, medium-sized and large businesses) by means of telephone poll.

many,andwithsomevariationsinEurope,istheroleplayedbygovernmentalframeworklegislationandpoliticalinfluence.MajorU.S.companiesinparticularhavealwaysbeenac-customedtoprovidingarangeofservices,whichinaGermancontextwouldbecalled“welfare”servicesandareusedtonegotiatestakeholdergroups’demandsandexpecta-tionsindirectdialogue,withoutinputfromthestate.InEurope,especiallyinGermany,thesituationisdifferent.Herethestateisactingbothaslegislatorandmoderator,orenablerornetworkingagent,andisthereforenotaninsignificantpartnerforindustry’sCSRpolicies.Apartfromprovidingbusiness-friendlytaxationpolicy,thestateisexpectedtosetupmediationandsupportstructuresforcorporatecitizenship,tofundresearchontheissueortoestablisharecognitioncultureforcommittedcompanies,whichiseffectivefromapublicitypointofview.

InGermany,therelationshipwithstakehold-ersisstronglyinfluencedbythestateforthesimplereasonthatthirdsectoractivistsandNGOsarepubliclyfundedtothetuneof60percentormore.Theshapeofthefuturere-lationshipbetweenindustryandthenonprof-itsectordependsongrowingmutualtrustandmutuallearning,butevenmoreonwhatamountstofuturestatefinancialsupport.

Some challenges aheadWhilemorethanthreebusinessesoutoffourclaimthatcorporatecitizenshipformspartoftheircorporatecultureandtheirself-concep-tion,stillthemajorityofGermanbusinesseshavenotchosentobecorporatecitizensontheirowninitiative.Fewerthan40percentofthecompaniesquestionedintheCCCDsur-veyareactivelysearchingforareasinwhichto




becomeactiveandengaged,whiletheothersjustreact.Evenfewerbusinessessetmeasur-abletargets.MostGermancompanies,par-ticularlysmallandmedium-sizedenterprises,arefarremovedfromaninclusiveconceptwhichwouldmakecorporatecitizenshipanintegralpartofthecorporatestrategy,incor-poratedintothecompanies’corebusinessandcompetencies.

Moreover,CCCD’scomparativefindingsshowthat,unlikeAmericancompanies,themajorityofGermanbusinessesarenotcon-vincedthatcorporatecitizenshipcanmakeanymeasurablecontributiontotheireco-nomicsuccess.InGermany,only40percentofbusinesses,irrespectiveofcompanysize,expecttheircommitmenttoyieldanypositiveeconomicresult.IntheU.S.,63percentofall

enterprises,and84percentoflargeenterpris-es,areconvincedthattheircivicinvolvementwillhaveanimmediateandpositiveeffectontheirbusinessactivities(BostonCollegeCenterforCorporateCitizenship,2007).ThefindingssuggestthatinGermany,thebusi-nesscaseforcorporatecitizenshipwillstillhavetobecreated.

Speakingofthefuture,amajority(morethan70percent)ofallthecompanieswhichre-pliedtotheCCCDsurveyhavereportedthattheirfutureCSRinvestmentwillstayroughlyatcurrentlevels.Thisassessmentreferstobothcashgiftsanddonationsinkindandtheuseofownstaffforcommunitycommitment.Whilejust10percentofbusinessesbegintolimittheirfinancialcommitment,twiceasmanyexpecttoraisetheirbudgetforcivic




involvement.Alargenumberofsmallandmedium-sizedbusinessesexpecttoincreasetheirfundsforcivicinvolvementinthefu-ture.Large-scalebusinesses,bycontrast,tendtofocusmoreonusinggiftsinkindfortheircommitmentefforts.Developmentpotentialforcorporatevolunteeringisrecognizedpre-dominantly,thoughwithfewgenuinediffer-ences,bymedium-sizedenterprises.

Players and drivers of corporate

citizenshipItishardtoclearlyandunambiguouslyiden-tifywhoorwhatdrivescorporatecitizenship

inGermanytoday.Herearesome“candi-dates”:

Government: Governmentiscertainlyamongtheimportantdrivers,particularlywithregardtoenviron-mentallegislation,yethasplayedanunde-terminedroleuptonowinhowtodealwithcorporatecitizenship.Therewereinterestingmovesinthelate’90s,whenhigh-levelgov-ernmentrepresentativesoftheSchroedergov-ernmentuptochancellorGerhardSchroederhimselfaddressedtheissue,andtherewasinputfromaparliamentarystudycommissionon“thefutureofcivicengagement”,address-




ingtheroleofbusinessinsocietyfromacivilsocietystandpoint.Butnoneoftheseinci-dentshaseverbeenembeddedinabiggerini-tiativetopromotecorporatecitizenship;rath-ertherewassomereservationalsoonthesideofthegovernmentprotagoniststhemselves:coulditactuallybetheirbusinesstodefinethebusinessofbusiness?(AftertheInterna-tionalYearofVolunteersin2001,membersofthebusinesscommunityconfessedthattheyhadexpectedtobeexposedtofarmorepublicandgovernmentpressurethantheyactuallywere.)

Duringthecurrentlegislationperiod,gov-ernmenthaskeptquietuntilthesummerof2007.ChancellorMerkeladdressedtheissueattheG8meetingthatyear,buthersuccessinincludingacommitmenttoresponsiblebusinesspracticesinthefinaldeclarationoftheG8summitin2007hasnotledtopracti-calconsequencessofar.Worthmentioningisarecentlylaunchedinitiativeforcivicengage-mentthataddressesthebusinesscommunitytopromotecorporatecitizenship.Theinitia-tiveistooyoungtotellitsimpact,butuptonowthefeedbackfromthebusinesscommu-nityisencouraging.

TheEUcommissionalsoplaysaninterestingpart,havingdeclaredCSRasoneofthepillarsoftheEuropeanstrategyforcompetitiveness.

Scandals, crises, lack of trustTherehavebeenmajorcrisesofcorporategovernanceinleadingcompanies(corruptionscandalsatVolkswagenandSiemens,law-suitsagainstmanagementandsupervisoryboards)whichhavefurtherloweredtrustandconfidenceinbusiness.Andtheyear2008addedanewshocktoanalreadyuneasyau-

dience.WhenNokiaannouncedinJanuary2008theclosingoftheirGermanfactorythenewshitlikeaboltoutoftheblue.Thefac-toryyieldeddecentreturns,theworkershadbeenaskedtoprovideextrashiftsoverChrist-mastime,andproductionwascompetitiveevenintermsofunitlaborcosts.ThepublicwonderedwhythecompanywouldwanttomovethemanufacturingtoRomania,particu-larlyacompanylikeNokiawhowascommon-lyregardedasresponsibleandreliable.Thepubliclysharedanddiscussedexperiencethatcompaniesclosedownevenprofitable,com-petitivebusinessunitsleadstoanewqualityofdistrustandinsecurityaboutbusiness.

Only7percentofGermancitizenstrustmul-tinationalcorporations–whichmakestheMNC’stheendofalist,leadbylocalcompa-nies(51percent),NGO’s(44percent),andtheUnitedNations(34percent).Atthelowerendwefindtradeunions(23percent),themedia(14percent),andgovernments(13percent)(Tochtermann2007:13).Interestingly,thetradeunionsrangefarbelowlocalcompa-nies(23percentvs.51percent).Wemaytakethisasanindicatorthatthecrisisofcorporategovernancehasaffectedthetradeunions,too.Moreover,thereisanongoingdebateaboutadequatesalariesforC-levelmanagers,whichhaveevenbeentakenupbygovernmentre-cently.Thecomplementarydebateisonlivingwagesandminimumwage,alsodebatedwithconsiderablepoliticalpassion.Theongoingargumentaboutmanagersalariesatthetopend,minimumwageatthebottomendoftheremunerationscaleindicatesclearlythattheformerconsensusaboutthedistributionofwealthhascomeundone.Businessandgov-ernmentwillhavetofindawaytore-establishalegitimatesystem.




c) The capital market, rating and rankingsEvenifinGermanythecapitalmarketdoesnothavethesamesignificanceasintheAn-glo-Saxoncountries,ratingsareneverthelessasimportant.BecausemanyoftheGermanMNCsaretradedinternationallytheyhavetofocusonperformingwellinratings,whichholdstruenotonlyforpurelyfinancialbutalsoforratingswithadditionalethicalcriteria.Meanwhile,formosttopexecutivesofGer-manMNCsitisimportantthattheircom-panyislistedintheDowJonesSustainabilityIndexortheFTSE4Good.SomeofthemostpopularGermanbusinessmagazines(“Man-agerMagazin”or“Wirtschaftswoche”)featureannualrankingsofcompanies’CSRperfor-mance.ItisimportantforCSRdepartmentstocomeoutontopoftheserankingstojustifytheirexistence.

Consumers and the publicConsumerawarenessandactivityinGerma-nyandbeyondiscontroversial.Whilesomeexpertsdiagnosea“newconsumerism,”oth-erscriticizeGermanconsumersforbeingmuch“milder”thaninothercountries(Arbe-itskreisBürgergesellschaftandAktivierenderStaat,2006).Thetruthislikelytobefoundinbetweenthetwoextremes.Eventhoughwestronglydistrustvariouspiecesofmarketresearchclaimingtoprovewhatconsumerswoulddotorewardsocialandecologicalre-sponsibility4,thereisincreasingevidencethat

4There have been all sorts of studies claiming that x percent of con-sumers 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 be-ing ready to pay more.

corporatecitizenshipmatterstoconsumers.Forexample,accordingtoarecentsurveyonconsumerbehavior,morethanhalfofthein-tervieweessaidthattheyhadboycottedcertainfoodbrandsorfoodretailersbecauseoftheircorporatepolicy(Tochtermann,2007).

Thepublic,consumersand(potential)em-ployeesinGermanyexpectcompaniesto:

• Providejobscreatingand/ormaintainingjobs.Thisistobefoundontopranksofanypollofexpectationstowardbusinesses(cf.e.g.Lunau/Wettstein2004:149;Puls2006:5and6).

• Showgoodcorporategovernance(regularaccounting,nocorruption,etc.).WehaveanecdotalevidencefromcompanieswhoruninternationalprogramsthattoGermanaudiences,goodcorporategovernanceismuchmoreimportantthancommunityin-volvement

Theseexpectationsareinmaximumaccor-dancewiththetraditionalsocialcontractofpayingtaxes,complyingwithlawsandprovid-ingjobs,whichisclearlyshownbythefind-ingthatthemajorityof1,000intervieweesagreedwiththestatement:“Acompany’sforemosttaskistoprovidegoodproductsandservices,jobsandtopaytaxes.Compa-niesshouldnotberequestedtodomore”(54percentyes,45percentno)(Lunau/Wettstein2004:138).

Thenagain,thereareagrowingnumberofLOHAS(LifestylesofHealthandSustain-ability)consumersseriouslyconcernedaboutsocialandenvironmentalstandardsandbas-ingtheirpurchasedecisionongoodcorporate




citizenship.Organicfoodismovingfromthecornerstothecentershelvesofgrocerystores,fair-tradeproductsaregainingground(e.g.Wenzel/Kierig/Rauch,2007),andcivilsocietyresearchisdebatinganew“consumerism”(ForschungsjournalNeueSozialeBewegun-gen,2005).Evenifwearenottoooptimisticaboutconsumerbehavioratthepointofsaleasopposedtoattitudesinthepollingsitua-tion,therecertainlyisasignificantmarketsharetobegainedorlostthroughresponsiblebusinesspractice,andatleastmarketingandadvertisinghavediscoveredtheopportunities.

Multinational corporationsWithafewexceptions(likethecaseofthepharmaceuticalcompanyBetapharm),thecompaniesthatleadthewaytogoodcorporatecitizenshiparethemultinationals(theirlead-ershipironicallyleadstothechallengethatittakesallsortsofguidelinesandcommuni-quéstoavoidtheimpressionthatcorporatecitizenshipisonlyforMNCs;SMEsarelikelytoperceivecorporatecitizenshipasalargeen-terpriseonly-issue).Itishardtotellwhethertheleadershiproleofthetransnationalcom-paniesderivesfromtheactualqualityoftheirprogramsorratherfromtheircommunica-tionstrategies–theyaretheoneswhodogoodandtalkandreportaboutit,whileoth-ersremainquiet.Buteitherway,bymakingpubliccommitmentsandprovidingpubliclyaccessiblereports,theinternationalcorpora-tionsmakecorporatecitizenshipandrelatedissuesvisible,andenablestakeholderstojudgeandchallengetheconsistencyandthecredibilityofacompany’scitizenship.

Important corporate citizenship issues Theissueofthedayiscertainlyclimatechangeandrelatedenvironmentalchallenges.

The“megatrend”ofclimatechangegoesinlinewiththetraditionalGermanenvironmen-talawareness.Thesecondbigissueiscorpo-rategovernance–withtherecentscandalsatVolkswagenandSiemens(twoflagshipsoftheGermanmodelofcorporateresponsibil-ity),withthedelegitimizationoftheGermanmodelofco-determinationbetweenworkerscouncilsandmanagementatthecorporatelevel,thesocialpartnershipbetweentradeunionsandemployers’federationsatasocietylevel,thebalancingofinterestsbetweenbusi-nessandsocietyhasbecomeachallenge.Athirdissue,oneoftheevergreensonthecor-poratecitizenshipagenda,iseducation,atalllevels,fromkindergartenthroughschooluptouniversity.

Lastbutnotleast,therearepracticalissuesofcorporatecitizenshipmanagementthattheexecutivesCCCDisworkingwithhaveputontheir(andour)agenda:

• Corporate citizenship management.Thereiscontinuousincreaseofprofessionalismentailingallsortsofmanagementissuessuchasmainstreamingcorporatecitizen-ship,integrationandcoordination,evalua-tionandmeasurement,etc.

• Corporate volunteering.AbigissueinGer-manyduetothefactthatcompanieshaveonlyjustbeguntoplayaroleinthelivelycultureofvolunteerisminGermany.

SummaryFinally,theeditorhasaskedforthreepiecesofadvicethatwewouldgivetoaninternationalbusinessleaderlookingtoinvestinGermanyaboutcorporatecitizenshiphere.




Thegoodnewsis:thereareleadershipop-portunitiesforcorporatecommunityinvolve-mentandcross-sectorpartnership,includingtheopportunitytoparticipateinthedevelop-mentofanewsocialcontractbetweenbusi-ness,government,andcivilsociety.However,itwilltakesomeefforttoconvinceboththecompany’smanagementandemployeesinGermanyaswellastheexternalstakeholders.Therewillbechallengesforthecompany’scredibilityasagoodcorporatecitizen.Andtherewillbefewcommunitypartnersreadytopartnerwithacompany.Sinceinteractionbetweensocietyandbusinesshasbeenchan-neledthroughgovernment,thereisstilllittletonotraditionofdirectcollaborationbetweencivilsocietyandbusiness.

TheGermanbusinessandcivicculturearenotkeentoexperiment.Insteadofwelcomingout-of-the-boxthinking,acorporatecitizenwillratherbeaskedforhislicensetooperate.Germanaudienceswillaskformanuals.SobereadyforGermanengineering.

Foreigncompanieswillfindimportantpartnersingovernment.Anycompanyiswelladvisedtolookfordialogueandcollabo-rationwiththelocalauthoritiesandthemu-nicipalcouncilatitslocation.Fearswiththesettlementofcompaniescanbesolvedfromthestartbynotignoringthelocalpoliticalstructure.

Corporate citizenship organizations in

Germany:BBE–BundesnetzwerkBürgerschaftlichesEngagement–www.b-b-e.de

BertelsmannStiftung–www.bertelsmann-stif-tung.de/CSR

CCCD–www.cccdeutschland.org

Econsense–www.econsense.de

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Wenzel,Eike/Kierig,Anja/Rauch,Christian2007:ZielgruppeLOHAS–wiedergrüneLifestyledieMärkteerobert.Kelkheim:Zuku-nftsinstitutGmbH,Februar2007.




Cultural context and social contractIn 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 citizenshipMany of the larger companies in the United Kingdom have well articulated CSR strate-gies 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 re-sponsible manner. However, smaller companies continue to limit their approach to CSR to philanthropy. Business-NGO partnerships have become common and increas-ingly 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.

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Driving forces and motivations:• NGO pressures and partnerships

Issues of prominence:• Climate change• Employability• Poverty reduction• Education

Business in the communityBusiness 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.




CSR in the United KingdomBy David Halley, Business in the Community

TheconceptofcorporatecitizenshipintheUnitedKingdomhasitsoriginsintheethicalapproachtobusinessofanumberofpromi-nent,originallyfamily-ownedfirms,suchasCadbury,LeverBrothers(laterUnilever)andMarksandSpencer,whichrantheirbusinessinanethicalmanner,inparticularlookingtothewelfareoftheiremployees-ensuringprimaryeducationforchildrenanddecenthousingasatBournville(Cadbury)andPortSunlight(LeverBros.).ThisphilanthropicapproachtocommercelaidthefoundationsforthesituationtodayintheU.K.wheretheneedforcompaniestomanageinaresponsi-blemanneracrossthevarioussectorsoftheiractivityisgenerally,ifnotuniversally,under-stood.

ThetermwhichisinmostcommonusageintheU.K.iscorporatesocialresponsibility,orCSR.AtBusinessintheCommunity(BitC)weseethislabelasoverrestrictiveandopentomisinterpretation,andwherepossibleprefertousetheterm“responsiblebusinessprac-tice.”However,theCSRlabelisverywidelyacceptedandistheoneusedgenerallyintheU.K.ItisinterestingtonotethatincountriesspeakingRomancelanguages,CSRhasbeentranslateddirectly-asinResponsabiliteSocialdel’EntrepriseorResponsibilidadSocialdelaEmpresa-andanewacronym,RSE,hasbe-comethestandard.

ManyofthelargercompaniesintheU.K.willbynowhavegenerallywellarticulatedCSRstrategiesandcodesofpractice,demonstrat-ingthattheyhavemovedonfromphilanthro-

pytoamorecomprehensiveapproachtohowtheymanageinaresponsiblemanner.How-ever,thisisnotuniversal,andparticularlyatthemid-sizedlevel,thereisstillaperceptionthatthisisaboutphilanthropy.ItispartofthemissionoforganizationslikeBitCtochangethisbehaviorovertime.

A multisector approachSincethederegulationofthefinanceindustryandtheprivatizationofpublicutilitiesintheearly’80s,businesshasnottendedtolooktogovernmenttosettheframeworkforrespon-siblebusinesspractice,beyondexistinglegalrequirements.However,governmenthasap-pointedaministerforCSR,andhisroleistoprovideguidanceandtosupportbestprac-ticeinthemarketplace.Theexpectationsarethereforeonbusinesstoleadandtoengageinbestpractice,andarethesameforlocal-lyownedcompaniesaswellasforforeign-ownedcompanies.Indeed,manyoverseascompanieshavedemonstratedexcellentprac-ticeacrossthekeyareasofCSR,receivingsig-nificantU.K.awards,includingToyota,BHPBillitonandDeutscheBank.

ThepositionoftheNGOorregisteredcharitysectorvis-à-visbusinessisinteresting.WhilethelargerNGOshavetraditionallyheldthecorporatesectoruptoscrutiny,andoftenwitheffectiveresults(e.g.ShellandGreenpeace,orNikeandSavetheChildren),wehavealsoseenastrengtheningofthelinksbetweenbusinessandcharitiesoverrecentyears.Asthemanagementofcharitieshasbecomenec-essarilymoreprofessional,businesshasbeen




encouragedtoplayapositiveandsupportiverole–asvolunteers,mentors,anddonorsofproductsandservices,providingNGOswithaccesstotechnology,premises,publicityandtraining.Forthebusiness,benefitsoftheserelationshipsincludebetteremployeerecruit-mentandretention,enhancedreputation,improvedinsightsintothemarketplaceandbetterrelationswithgovernment.

NGOsmostactiveintheU.K.willincludeFriendsoftheEarth,Oxfam,AgeConcern,SavetheChildren,Greenpeace,ScopeandLiberty.NGOsactiveabroad,butbasedintheU.K.,includeCARE,ActionAidandWorldVision.

OneofthekeyactivitiesforBITCthroughitsregionalofficesistodeliverworkshopsforNGOsandcharitiesonhowbettertoworkwithbusiness.TheseeventsprovedpopularintheU.K.BITChasalsosuccessfullyex-portedthemtocountriesasdiverseasCzechRepublic,Poland,HongKong,ChileandNewZealand.

Theacademiccommunityhasseizedtheop-portunitiesofferedbytheemergenceofCSRaswell.AnexcellentexampleistheCSRDe-partmentattheNottinghamUniversityBusi-nessSchool,undertheleadershipsofDirectorProfessorJeremyMoon.Thedepartmentun-dertakesawiderangeofresearchandoffersCSRrelatedcoursesuptoandincludingattheMBAlevel.

AnotherdevelopmentwhichmaybeuniqueinEuropeisBusinessintheCommunity(BitC).Foundedin1982asaresponsebybusinesstoseriousinner-cityriots,BitCaimstoinspire,challenge,engageandsupport

businessincontinuallyimprovingitsposi-tiveimpactonsociety.Itdoesthisbyfocusingitsactivityonspecificissue-basedcampaignsacrossthefourimpactareasofWorkplace,Environment,MarketplaceandCommunity,andinbuildinglocaldeliverypartnershipsthatextenditsreachandimpact.

Itsmemberscommittoactionandtothecontinualimprovementoftheircompany’simpactonsociety.Acommunityimpactteamhasasitsmissiontodevelopinnovativesolu-tionsandtoevaluatetherealimpactachievedthroughengagingbusinessinthecommu-nity.Thecommunityimpactteamhasaclearfocustoengagecompaniesintacklingprioritycommunityissuesthroughpartnershipswiththegovernmentandawiderangeofcommu-nityorientatedorganizations.BusinessintheCommunityhasovermanyyearsdevelopedandimplementedmanysuccessful,innova-tiveprogramsinvolvingthousandsofem-ployeevolunteersandbusinessleadershipcollaboration.Thefollowinglessonsfromthisperiodprovideausefulintelligenceinmovingcommunityimpactforward:

• Theneedtofocusonlessprioritycommu-nityissuesandmakeasignificantimpactoneach

• Theneedtobeleadingedgeandinnovative• Theimportanceofdeliverypartnersinor-

dertoextendourcapacityasanalternativetodoingeverythingourselves

• Theimportanceofevidence-basedevalu-ationtomeasurerealimpactbothinthecommunityandincompanies

• Theneedforgreaterengagementofsmallandmediumenterprises(SMEs)atthelo-callevel




• TheimportanceofprovidingexpertiseoncommunityimpactonaEuropeanplat-formtomeettheneedsofthosecompanieswhichoperateacrossEurope

AnewinitiativewhichBitChasbeenen-gagedinistheBusinessActiononHealthCampaignwhichdrawstogetheremployers’perspectivesonpromotinghealthatwork.Itisworkingtoimprovetheimpactcompanieshaveonemployees’healthandwell-being.Throughresearch,eventsandawardsthecampaignaimstosupport,challengeanden-gagecompanies.Itlooksatbothphysicalandmentalhealth,andreferstoallthemeasuresthatacompanycaninfluenceinandthroughtheworkenvironment,acceptingthebasicpremisethatimprovingandmaximizinggoodhealthpromotesproductivityandemployeeretention.

Inordertosupportmembercompaniesinthemanagementandsustainableimprove-mentoftheirresponsiblebusinesspractice,wehavedeveloped,verymuchwithourmem-bers’assistance,aCorporateResponsibilityIndexwhichcompaniescompleteannually.TheIndexprovidescompanieswithasetofprocessindicatorsandasetofimpactindica-torsacrossthefourkeyareas.Bothsetsofin-dicatorsaresetacrossthreelevelsofincreas-ingsophistication,toreflectthejourneyfrombeginnertodevelopedpractitionerwhichthecompanywillbeon.

AmongthemajorplayersinthefieldintheU.K.,inadditiontoBitC,mustbecitedTheCorporateCitizenshipCompany,Account-Ability,theEthicalCorporation,TransparencyInternational,theWorldBusinessCouncilforSustainableDevelopment(WBCSD),andSmartCompany.

Business moving the needle of innovationTherearemanyexamplesofinnovativecom-panyprogramsandprocessesaimedatim-provingimpactintheworkplace,themarket-place,theenvironmentorthecommunity.TheindustrieswhichcanbesaidtoleadinthefieldofCSRincludetechnology,financialandlegalservicesandretail.Sectorscatchingupincludemanufacturingandtheextractiveindustries.

AnexcellentexampleisMarksandSpencer(M&S),amajorretailchainandafoundingcompanyofBitC.Asmentionedabove,theyhavetraditionallybeenconcernedfortheiremployeesandforthecommunitieswheretheydobusiness.Overthelastfiveyearstheyhavedevelopedaprogramofsupporttohomelessyoungpeople,calledMarksandStart.Theprogrammakessix-weekworkex-perienceplacementsavailabletotheyounghomelessthroughthechainof400storesacrosstheU.K.Inthisway,theparticipantsgetexperienceoftheworkenvironment,learnappropriatesocialandworkskills,andcom-pletethesixweekswitharecommendationfromM&Stopotentialfutureemployers.

Anexampleofhowcompaniesareincreas-inglyworkingcollaborativelytoaddresssocialorenvironmentalproblemsistheENGAGEprogramwhichbringstogetherCitibank,IBM,AllenandOvery,Freshfields,Linklaters,KPMG,Nokia,DLAPiuperandothers.TheobjectiveofENGAGEistoexpandemployeecommunityengagementthroughcollabora-tiveactionbetweencompaniesandtheirworkwithlocalcommunitypartners.ENGAGEworksinbuildingcapacitywithinandbe-tweencompanies,buildingcapacityofcom-munitypartners,andthroughEUawareness




andpolicywork.Thisnetworkhassuccessful-lyimplementedcollaborativeinitiativesinkeyEuropeancities,includingBratislava,Frank-furt,Madrid,Paris,PragueandMilan.ThelaunchofENGAGEinIstanbulinNovemberattheKocMuseumcountedwiththepres-enceofHRHThePrinceofWales,PresidentofBitC.

TheENGAGELeadershipTeamhasestab-lishedafruitfuldialoguewiththeEuropeanCommissionandParliament.TheEuropeanCommissionpassedtheCSRAllianceCom-municationinMarch2006.ENGAGEreactedpassionatelytotheomissionofemployeecommunityengagementinthiscommuni-cation.AsaresultofENGAGE’sletters,andmeetingsandworkwiththeEuropeanParlia-ment’srapporteur,RichardHowitt,theFeb-ruary2007ParliamentresponseunderlinestheimportanceoftheEU-budgetlineforpilotprojectssuchasthoseinvolvingemployeecommunityengagement,andpointsoutthatsocialandenvironmentalresponsibilityap-pliestogovernmentalandnon-governmentalorganizationsasmuchasitdoestobusiness.TheParliamentalsocalledontheCommis-siontofulfillitscommitmenttopublishanannualreportonthesocialandenvironmen-talimpactofitsowndirectactivities,aswellasdevelopingpoliciestoencouragethestaffofEUinstitutionstoundertakevoluntarycommunityengagement.

AtthemomenttheENGAGEnetworkisac-tivelyworkingondemonstratinghowemploy-eecommunityengagementcanhelpEuropemeetthe2010LisbonGoals.ENGAGEisfacilitatingaresearchprojecttohighlightthatEmployeeCommunityEngagementisanef-fectivetooltodevelopemployabilityskillsnotjustintheemployeesinvolvedbutinmany

differentgroupsinthecommunities,e.g.homelessness(BitCReadyforWorkscheme)orschoolstudentsindeprivedareasofFrank-furt(ENGAGEinFrankfurtproject).

Moving forward in partnershipToday,theU.K.facesmanychallengesforbusiness,governmentandNGOstoaddresstogether.ThekeyissuesintheU.K.atthistimeincludeclimatechange,employability,povertyreductionandeducation.TogetherwithbusinessandwithgovernmentBitChasidentifiedthefollowingkeyprioritiesforac-tion:

• Raisingtheachievementofyoungpeople;demonstratinghowbusinesscanimprovetheopportunitiesforyoungpeopleintheareaofbasicskillsandemployability;

• Employability–removingbarrierstowork;tohelpdisadvantagedindividualsandgroupstofindemploymentbyprovidingtraining,workplacementandemploymentopportunities;

• Deprivedareas–engagingbusinesstoworkwithkeypartnerstotackleseriousis-suesinareasofpovertyanddisadvantage.

OuradvicetoaninternationalbusinessleaderlookingtoinvestinthecountrywouldofcoursebetobecomeamemberofBitC.Inad-dition,wewouldadvisethemtoseekappro-priatepartnerships,whetherwithNGOs,edu-cationalestablishmentsorlocalauthorities,andtoensuretheappropriateresourceisputinplacetodevelopthestrategyandpractice.ThebusinessleaderwouldneedtobefamiliarwiththekeyNGOs,asabove,withtheDepart-mentforTradeandIndustryandtheHomeOffice,andtoformlinkswiththeConfedera-tionforBritishIndustry.




Cultural context and social contractToday 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 citizenshipAt 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 philanthro-py. After a crisis such as the earthquake in May 2008, there is a clear sign companies

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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




IntroductionThepurposeofthisreportistoprovidethereaderwiththelatestbackgroundandtrendsoncorporatecitizenship,knownascorporatesocialresponsibility(CSR)andalsosome-timesreferredtoassustainabledevelopment,inChina.Thereportisnotintendedtofore-castwhereChina’sCSRwillbeinthefuture.Rather,itisstructuredaroundthecurrentCSRpracticesofforeigncorporationsinChi-naandmotivationfordomesticChinesecom-paniestoadoptCSR.

WeareatthebrinkofwitnessingthelatesttransformationofChina’sdramaticsocio-eco-nomicgrowth.Thisphaseoftransformationiscalledinternalization.Withagrowingnum-berofforeigncompaniesinvestinginChina,andlocalcompaniesgoingglobal,improvedqualityandhigherstandardsarebecomingrequirementsforsuccessintheChinesemar-ket.Insomeindustries,forthefirsttime,themainlandChinamarketofferssubstantialcompetitionandcollaborationbetweenChi-neseandforeigncompaniestopromoteandadopthigherstandardsofbusinesspracticesaroundtheworld.

Whilebigideaslike“harmonioussociety”haveunitedleadersfromgovernment,inboardrooms,andmainstreetsalloverthecountrytocarefullyexaminethegrowingimportanceofenvironmentandsocialchal-lengestoChina’sfuture,China’srapiddevel-opmentandsocio-economictransformationhavebirthednewsocialchallengessuchasmassmigrationtocities,increasingdemand

forcleanwater,uncontrollableenvironmentaldegradation,etc.It’stimeforpolicymakerstorethinktheirapproachestoalltheseproblemsandforcorporationstorapidlyembracecor-poratesocialresponsibilityascorporatestrat-egyandmanagement.

The emergence of CSR in ChinaInChinatoday,CSRismovingrapidlyfromconceptualstudyintoimplementationandtheevaluationofCSRinitiativesatindivid-ualcompanies.Governmentministriesandagencies,theiraffiliatedresearchinstitutions,economicorganizations,andothergroupsarepublishingtheoreticalresearchonCSR,casestudiesofCSRinitiatives,andguidelinesforevaluatingCSR.Examplesinclude“TheRecommendedCSRStandardsforChineseCorporations”andthe“CompilationofBestPractices”publishedbytheChinaEnterpriseConfederationandtheChinaBusinessCoun-cilforSustainableDevelopment(CBCSD),aswellastheMinistryofCommerce’sguide-linesforthepreparationofCSRreports.CSRtheorizinganddialogingaregoingonatalllevelsofgovernment,civilsociety,aswellasintheChinesebusinesssectoritself.Thisisaccompaniedbymyriadconferences,awardceremonies,eventsandmeetings.

IntheChinesesettingtheconceptofCSRisbothemergingandevolving.AtthistimemostChinesecompaniesarejustgettingstartedwithalearningprocesspredominantlyfocusedonwhatCSRis.Differentorganiza-tionsarepromotingCSRwithoutsufficientcoordinationamongthemselves,butthereis

China’s CSR Campaign - Harmonious societyBy Kwang Ryu, Boston College Center for Corporate Citizenship and William Valentino, Bayer China




nodoubtthatCSRisbecomingincreasinglyimportantinChina,astheinitiativesunder-takenbythegovernment,economicorgani-zations,andcompaniescontinuetogainmo-mentum.

Onceconsideredatradebarrier,thenegativeviewpointtowardCSRhasdisappearedandCSRhasburstintothecollectiveconscious-nessofanentirenation,largelybypolicythinkingsupportedatthehighestlevelsofgovernment.Ithasbecomecloselyalignedwiththegovernmentpoliciesofcreatinga“harmonioussociety,”andtheformationofa“newsocialistcountryside.”ItrepresentsarevivalofConfucianthoughtwherethefocushasalwaysbeenoncreatingharmonyinhu-mansociety.

Chinesecompanies,normallydrivenbythedesiretomaximizeprofits,arebeginningtorecognizethatCSRcanofferasoftcompeti-tiveadvantageinahyper-competitivebusi-nessenvironment.Theyarealsodiscoveringthattherearebenefitsforbrandingandrepu-tationbuildingonaninternationalscaleandthisisbeginningtodriveamorepragmaticapproachbydomesticenterprisestowardso-cialresponsibility.

ThepublicationofCSR,orsustainabledevel-opment,reportsbykeyChinesecorporationssuchasStateGrid,Sinopec,Cosco,ChinaMo-bile,ChinaHuaNeng,ChinaLife,andChinaSouthernAirlinesareonlythetipoftheice-bergofhowChinesecompaniesarebegin-ningtobecomeresponsivetoCSR.ChinaMo-bileexplainsthattheemphasisofitsreportin2007wasplacedonfulfillingthe“conceptofcorporatesocialresponsibilityandrealizingharmoniousgrowthbetweenenterpriseand

industry,andsocietyandthenaturalenviron-ment,byimplementingthefourmajorprin-ciplesofcountryside,life,cultureandgreen.”

A state-led approachTheChinesegovernment’spursuitofeco-nomicprosperityandsocialreformoverthepasttwoandahalfdecadeshasresultedinprosperityformanyChinesecitizens.Butthisrapiddevelopmenthascomeataprice.Thenegativeconsequencesarerealandre-quireanactionableresponse:thewideninggapbetweenrichandpoor,theincomegapbetweeninteriorareasandcoastalregionsaswellasbetweenurbanandruralpopulations,unemployment,poverty,corruption,poorlaborconditions,aninadequatehealth-caresystem,andpollutionandextensiveenviron-mentaldeterioration.

Theresultoftacklingtheseissueshasbeenanewpolicyapproachfocusedonaharmoni-oussocietythatmergespolicywiththevari-ousissuesandconceptsofCSRandsustain-abledevelopment.Itcallsfortheintegrationofsocialandenvironmentalconcernswithcontinuedrapidgrowthanddevelopmentaimedatmaintainingsustainabilityandanacceptablelevelofsocialequity.

Atthegovernmentlevelthereisaconsider-ableinterestininternationalstandards,suchastheUnitedNationsGlobalCompact,SocialAccountability(SA)8000,andtheInterna-tionalStandardOrganization(ISO)SocialResponsibilitystandards.Internationalsym-posiaandseminarsarebeingheldfrequentlythroughoutthecountry,alongwithinterna-tionalinstitutionsandEuropeanandAmeri-canorganizations.Therearealsostrongin-dicationsthattheChinesegovernmentand




economicorganizationsareseekingtoestab-lishChina’sownstandardsandaccreditationcriteria.

ThepublicationofCSRguidelinesbySASAC(State-ownedAssetsSupervisionandAdmin-istrationCommissionoftheStateCouncil)inJanuary2008,theactiveinvolvementofotherhighlevelgovernmentorganizationssuchastheNationalDevelopmentandReformCom-mission(NDRC),theMinistryofCommerce,theMinistryofScienceandTechnology,andChineseacademicinstitutionsandgovern-mentthink-tankshaveplacedCSRhighonChina’spolicyagenda.

AkeytopicregardingCSRinChinatodayisthedevelopmentofarobustcivilsocietywherealegalsystemhasnotyetbeendevel-opedtoproperlyaccommodateNGOs.Thismakesitdifficulttoselectsuitablepartnersandmethodsofcollaboration.Thegovern-mentremainsgenerallywaryofpublicactiv-ismandhaslongmaintainedtightrestric-tionsonnongovernmentalgroups.Facedwiththepotentialforagravehumanitariancrisis,thegovernmentforthemomenthaslooseneditsgriponNGOsandisallowingthemtoplayaminorbutstillimportantroleofidentifyinglocalneedsandadvisingonimplementinginitiativestomatchthoseneeds.Someana-lystsseethisasakeystepforChinaandthespring2008earthquakemightprovetobeadefiningmomentthatwillplacepressureonChinatoallowmorespaceforcivilsocietyinthefuture.

Chinese CSR - Reality, relevance and

responsivenessTherapidemergenceandevolutionofCSRinChinaandgloballyhascreatedanewmindset

wherecompaniesareincreasinglyacceptingaccountabilityfortheireconomic,socialandenvironmentalimpacts.AfteracrisissuchastheearthquakeinMay2008,thereisaclearsignthatcompaniesarealreadymovingCSRbeyondjustaspirationsandrhetorictoactionsthathaveimpactandbringaboutsystemicchange.Inthecaseoftheearthquake,therehasbeenagradualbutclearshiftfromtheimmediateshort-termrescueandreliefeffortstomorelong-termthinkingaboutrebuilding,rehabilitationandsocialdevelopmentoftheaffectedareas.ThisiswheretherealpictureanddefinitionofCSRisemergingandevolv-inginChina,goingfarbeyondtheimmediatephilanthropicresponsestoimplementingalonger-termviewofredevelopmentandre-buildinglivesandlivelihoods.

Tounderstandthereality,relevanceandre-sponsivenessofCSRinChina,abasicunder-standingofCSRisnecessary.TounderstandCSRbetterinthecontextofChinaitiscriticaltoexaminehowforeigncompaniesandChi-neseenterprisesaredrivingitfromtheirownperspectivesandneeds.ThiswillultimatelyhelptograsptheimportanceofCSRforcom-paniesinChinatodayandwhereitmightbegoinginthefuture.

FormultinationalstherealityofCSRtodayisthatignoringitisnolongerachoice.ViewedonaglobalscalebutimplementedlocallyinChina,businessesarebeingforcedtotakealargerviewoftheirresponsibilitiesinaworldoverseenbycross-bordercompacts,suchastheKyotoProtocolortheU.N.GlobalCom-pact.Theseandotherconventionshavecodi-fiedandpromulgatedCSRideasaddressingissuesfromglobalwarmingtolabor,humanandenvironmentalrights.Socialaudits,eth-




icsaudits,codesofconduct,stakeholdermap-ping,socialcapitalandenvironmentalimpactstudiesandcorporatesustainabledevelop-mentorCSRreportshavenowalsobecomeanimportantpartofthecorporatelandscape.

CSRbecomesrealforcompaniesinChinaastheyincludeCSRintheirbusinessstrategiestobuildandwinthetrustoftheirstakehold-ersandtocreatecompetitiveadvantage.ThistiesCSRverycloselytocorporatebrandingandimage.ItisherethatCSRcreatesthealignmentbetweenacompany’sexplicitin-tentiontodefineitsvaluesanditsroleinso-cietybyaddressingenvironmental,socialandsustainabilityissues.(Table1belowhighlightsthekeybusinessrisksandCSR-relatedissuesinChinabyindustry.)Integratingsustainabil-ityintobusinessstrategyandintegratingtheexpectationsofstakeholdersthroughrespon-sivebestpracticesmeanstakingavalue-addedapproach.Thisisbasedonthepremisethatasustainablecorporationisonethatcreatesprofitforshareholderswhileprotectingtheenvironmentandimprovingthelivesofthosewithwhomthecompanyinteracts.

Key industry specific CSR-related

challenges in China

IT, Electronics, Telecommunications• Digital divide:Thegapthatstillexistsin

Chinabetweenthosewithandwithoutdigitalconnectivity,Internetaccess,andthepropertechnicalskillsandtrainingtooperatemachinery.Thisisparticularlytrueinruralareasandamongmigrantlaborcommunities.

• Training, attracting, and retaining talent: Thegreatinvestmentofcompaniesinthissectorineducation,scholarships,teachertraining,researchandteachingmaterials(mostlyelectronic-based)signalstheirbusi-nessprioritytoattractandretaintoptechtalentinChina.Althoughseveralprogramsinstilledbythesecompaniesseektocre-ativelyengageyoungtalent,insuchacom-petitiveatmosphere,itseemsthesecompa-nieswouldhavedifficultyretainingmuchofthetalenttheyhaveinvestedin.Thereisalsoverylittlementionofhowcompaniesmeasurethesuccessoftheprogramstheyhavefoundedandcontinuetosupport,asitrelatestotheirbottomline.

• Emerging as leaders in competitive market:BecausetheITsectorisoneofthemostadvancedinpromotinginnovationandnetworkingsolutionstodevelopmentchal-lengesinChina,ithasbecomeverychal-lengingforcompaniestoemergeaslead-ersin“sustainability”and“innovation”inChinawhichisincreasinglyimportantforbrandmanagement,governmentrelation-ships,andmarketexpansioninChina.

Pharmaceuticals, health and beauty

products• Limited access to medical goods and ser-

vices:Manyofthepotentialstakeholderswhoareinmostneedofthesecompanies’goodsandservicescannotaccessthembecauseofsituationsofpovertyorgeo-graphicalisolation.ManyoftheCSRpro-gramslistedwithinthisindustry,therefore,seektoaddresstheneedsofthesepeoplethroughspecialcommunityaccessfacilita-tion.




• Lack of doctors, medical talent, and proper remuneration:Chinasuffersfromalackofqualifiedhealthcareworkers,specificallyincommunity-levelhospitalsandclinics.Thisisduetoinsufficientmedicaleduca-tionandalsomarketincentivesthathavemadejobsinthemedicalfieldlessremu-nerativethanotherfieldsthatcanattracttoptalentwithtoppaypackages.Attheendof2005,therewereatotalof542,700healthprofessionalsinpublichealthorga-nizations.Amongthem,490,400(about90percent)workedinpublichospitals.Thisleavesaratioofciviliantohealthpro-fessionalsinChinaof25:1withamuchlessfavorableratioinruralareas.Healthprofessionalsamountto17percentofthetotalemployeesinserviceunitsofChina,onlylessthantheeducationsector.

• Lack of health and hygiene education: Limitededucationinhealthandhygiene,especiallyinremoteareas,exacerbatesthischallengeasitproducesgreaterdemandforhealthservicesandcasesofpreventableillness.ThisisparticularlyemphasizedinregardtoHIV/AIDSandearlychildhoodcareeducation.

Agriculture, food and beverage, chemicals,

life sciences• Infrastructural underdevelopment: Asmany

ofthecompaniesworkinginthisindustryhavecoreoperationsinChina’sruralareastheyfacechallengesposedbyChina’sin-frastructuralunderdevelopment–oftenintheformofpoorroadsleadingtodifficulttransportation.

• Urban migration:Inindustriesthatdependontheretentionoftalentinruralareas,urbanmigrationasaresultofChina’srapiddevelopmentcanbeharmfultoitsoperations.Acounterargumentcanalsobemade,however,thaturbanmigrationandtheriseinmonetarywealthamongcon-sumerswhohavemoredisposableincomeisnecessaryforthegrowthofthesecompa-niesinChina.

• Insufficient talent in sciences:Especiallyinruralareas,Chinasuffersfromalackofad-equatetalentdevelopmentinthesciences.

Utilities and energy • Environmental degradation and brand man-

agement:TheseverityofenvironmentalgrievancesthroughoutChinaandtheroleoffossilfueluseinexacerbatingthisprob-lemhaveputpressureonenergycompa-niestousetheirexpertiseandresourcesinfindingviablealternativeenergysourceandenergyefficiencysolutions.ThishasbecomenecessaryforcompaniesoperatinginthissectortoremaincompetitiveanddeveloppositivegovernmentrelationsinChina.

• Lack of environmental health and safety awareness and enforcement:EnergyandUtilitycompaniesthatworkwithextensivesuppliersinChinafacetheriskofworkingwithpartnerswholackproperEHStrain-inganddonotupholdessentialenviron-mentalandsafetystandards.Thisservesasalargeliabilityforcompanieswheretheramificationsofharmtotheenvironmentandpersonalhealthandsafetycanbequitesevere.




Manufacturing (clothing, apparel, house-

wares)• Responsible supply chain management:

Withthenewlaborlawthathasgoneintoeffectatthebeginningof2008,andprob-lemswithsuppliersaccusedofcommittinglaborabuses,manufacturingcompanieshavetohavefullawarenessoveralllinksintheirproductionchain.Aproblemsomecompaniesface,however,istheconflictofdemandinglow-pricegoodsaswellashighqualityfactoryconditions.

• Consumer growth and irresponsibility:AsChina’seconomydevelopsrapidlyandpeo-pleareemergingoutofpoverty,Chineseconsumersaregainingpurchasingpowerforamuchwidervarietyofgoodsthaneverbefore.Thenewscaleofwastegeneratedfrompackagedgoodsandcausticeffectsoftheirproductionhasseriousenvironmen-talimplications.Thisplacesgreatrespon-sibilityonmanufacturingcompaniestomaketheirproductslessenvironmentallycausticinproduction,consumption,anddisposal.ItalsoposestheneedforgreatereducationonresponsibleconsumerhabitsinChinaandcooperationwiththegovern-menttocreatemarketincentivesformoreresponsibleconsumption.

Professional services • Unethical, fraudulent, and illegal activity

(white collar crime):Financialservicesareknowngloballyforbeingparticularlysus-ceptibletocasesofwhite-collarcrime.Con-sideringtheproblemswithcorruptionandproperlawenforcementinChina,aswellasthenewdevelopmentofthefinancialservicesindustryincountry,thechancesforfraudulentactivityinChinaaresignifi-cant.

• Talent attraction, development and retention:Inthefinancialservicessector,employeesareacompany’sgreatestas-sets.ConsideringtheshortageofadequatemanagerialskillsinChina,talentmanage-mentisanespeciallysignificantchallengeforcompaniesinthisindustry.

Shipping, transportation, and automotive

industry• Environmental degradation:Autouseisone

oftheprimecontributingfactorsofglobalwarming,airpollutionandclimatechange.InBeijing,thesecond-mostpollutedcityintheworld,automobilesaccountforthelargestamountofcarbondioxideintheatmosphere.ForthehealthandwellbeingofChinesecustomersandthereforecom-petitivenessmovingforward,carcompa-niesareexpectedtoincreasefuelefficiencyanddevelopcarswithalternativeenergysources.Similarly,shippingagenciesareexpectedtouseincreasinglyfuelefficientandgreentransportationmethods.

Focus of “real CSR”“RealCSR”ischaracterizedbyafocusontopicssuchasstakeholders,businessethics,socialcontract,corporatecitizenship,publicpolicyandbestpractices.ThisincludesCSRasadriverforbrandreputation,competitiveadvantageandasanimportantkeytoattract-ingandretainingthebestemployeesintheconstantbattlefortalentandnewstaff.Thisframeworkisenhancedbyagrowingnet-workofbusiness-supportedorganizationspresentinChinawhosponsorannualcon-ferences,seminarsandworkshops,conducttraining,researchandconsultancyservicesforcompaniessignalingtheircommitmenttohigherethical,socialandenvironmental




performancealongsidetheirtraditionalbusi-nessresults.Bestcompanylists,awardsandrankings,singlingoutfirmswho’ssocialorenvironmentalperformancesstandouthavebecomeaspecificfocusforthemedia.

CSRinitiativesbyforeigncompaniesinChi-nahaveinitiallyfocusedonlegalandregu-latorycompliance,riskmanagementandphilanthropicactivities.Whatbeganaspre-cautionarymeasureshavedramaticallyshiftedtowardtheobjectiveofincreasingcorporatevalueinthemarketplacethroughstrategicCSR.EuropeanandAmericancompaniesinChinaaretakingaproactiveapproachbyes-tablishingCSRcommitteesattheirchambersofcommerce.TheysupportCSRcommitteeactivitieswithbothhumanandfinancialre-sourcesandworktoformorganizationalandstrategictieswithgovernmentauthorities,theChinesemedia,European,AmericanandChi-neseNGOs,andotherstakeholders.Theseac-tionsenablethemtoidentifytheneedsofthelocalcommunitiesandaligntheirCSRinitia-tiveswiththoseneedsandtheircorebusi-nessesandvalues.Inreportingabouttheiref-fortstostakeholders,companieshighlightthebenefitsreapedfromCSRthataremanifestedingoodreputation,branding,publicrecogni-tionandcompetitiveadvantage,formingthebasicsofabusinesscaseforCSR.

Development impacts CSR in ChinaIn2007asurveyofChina’sbusinesscli-mateconductedbyMcKinsey,morethan80percentofglobalexecutivessurveyedsaidthatChinashouldrespondtothesocial,eco-nomicandenvironmentalthreatstoitsfu-turegrowth.However,only60percentofthesamerespondentsweresomewhatoptimisticaboutChina’sabilitytosufficientlyaddressthosesamethreats.

Thesurveyalsoidentifiedthefollowingtopis-suesasthegreatestthreattoChina’scontin-uedgrowthanddevelopment:

• Environmental:water,pollutionandurbanization.

• Social:risingincomeinequalityandeducation.

China’s environmental challengesChina’senvironmentalchallengestakefourforms;water,rapidurbanizationandcleanen-ergy.First,themostseriouschallengeChinaisfacingrelativetothesizeofitspopulationisaccesstocleanwater.Thereisagrowingde-mandforcleanwatertosustaincurrentpopu-lationandeconomicactivitylevels.Fromaneconomicsense,Chinaislosinguptous$36billioninindustrialoutputduetoalackofcleanwatertorunfactories.Today,two-thirdsofChina’sfastgrowing650citiesdonothaveaccesstoadequatewatersupply.

RisingenergyneedsashundredsofmillionsofpeoplemigratefromcountrytocityposeagreatrisktoChina.About600millionChi-nesealreadyliveincities,butthatrepresentsonly45percentofthepopulation.McKinsey(2005)predictsthatanother350millionwillmigratetocitiesby2025.Thisinfluxofpopu-lationtocitieswilllikelydoublethecurrentdemandofenergyinurbanareas.Demandforwaterwillalsoincreaseby70-100percent.

Chinaiscommittedtoimprovingthetotaluseofrenewableenergyto15percentofitspri-maryenergymixby2020(from7.7percentin2005).Toreachitsrenewableenergygoalsbyyear2020,ChinasaiditneedstwotrillionYuan(us$265billion)ofinvestment.Atare-centrenewableenergyconferencehostedby




InternationalCooperationCenter(ICC)andtheNDRC,ChenDeming,China’stopenergyofficer,saidthatthebulkoftheinvestment–morethan80percent–willcomefrombothChineseandmultinationalenterprises.

Growing income gapSince1980,China’snewworldpolicyhaspulledmorethan400millionChineseoutofextremepovertyandapredominantlyru-ralsocietytourbanizationandindustrializa-tion.Anadditional60millionto70millionpeopleareexpectedtojoinChina’seconomicreformandleavetheimpoverishedcountry-side.Whileagrowingnumberofthemi-grantChinesepopulationpulledmorethan120millionpeopleoutofextremepovertyinthepastdecadealone,thisphenomenonhasalsoincreasedtheurban-ruralincomeratio.Today,thetop20percentofthehighest-earn-ingpopulationinChinaisearning4.9timesmorethanpeopleinruralChina.Thisgrow-ingincomeinequalityresultsinmorethanadifferenceinlifestyle.AmajorityofruralChi-nesecitizensdonothaveaccesstoadequateeducation,healthcare,oranadequatesocialwelfaresystem.

Lack of access to education and societal

impactsMostchildrenintheruralareasofChinahavelimitedtonoaccesstoevenbasiceducationandthusarecondemnedtoasubsistenceex-istence.Persistentdisparitiesinincomeandgenderpreferencehavedeepenedtheprob-lemofaccesstoeducationforruralChinesechildren.

Asaresult,manychildreninruralareasofChinaaretradedasalaborcommodity.CompoundingthissituationisChina’srapid

economicgrowth,whichisincreasingthede-mandforunskilledworkersinmanufacturingandserviceindustries.Thistrend,coupledwithalackofopportunityforaneducation,isresultinginyoungfemaleworkersenteringthedarkworldofchildlaborandsextraffick-ing.ThelackofaprotectiveenvironmentinruralChinaforchildrenoftenresultsinvio-lence,abuseandexploitation.

A natural disaster impacts CSR in ChinaTheMay12,2008,7.9magnitudeearthquakestruckwithdevastatingresultsinwesternSi-chuanProvincebutitalsorockedthecorpo-ratesector,notjustinChinabutaroundtheworld.

Intheaftermathoftheearthquake,China’scorporatesectormobilizedimmediatelyalongwithmanyforeignmultinationals.Theout-pouringofmonetaryandin-kinddonationsbybothChineseandmultinationalcorporationsoperatinginChina,alongwiththesocialac-tivismonthepartofmanyindividualemploy-ees,wasswiftandmassive.Thegroundswellofcompassionrepresentedbytheresponsesamplifiednationalprideandenthusiasm,butalsoclearlyframedcorporateactioninthiscrisisascorporatesocialresponsibilitybasedonthedeepChinesetraditionthatwhendi-sasterstrikes,helpcomesfromallsides.

Thepublicresponsehasgrownexponential-lyviatheInternetwithmillionsofChinesecitizensclearlyexpressingtheirgrowingex-pectationsthatthosewiththemeanstohelpshouldcontributemorewhileconnectingthisspecificallytocorporatesocialresponsibility.SeveralonlinecommunitiesinChinahavebeenlaudingcompaniesandindividualswhohaveemergedwiththemostgenerousdona-




tionsintheaftermathoftheearthquakeinWenchuancounty.Internetcommunicationhasemergedintheformofblogs,rankinglists,articlesandevenboycottsandprotestsagainstcompaniesthathavebeenseenastoo“stingy”intheiraidefforts.Thisiscausingmanylocalcompanies,evenhighprofileChi-neseandmanyforeignfirms,tocomeunderseverecriticism.ThiscynicalanalysisistheresultofCSRbeingdefinedsolelyintermsofsnapshotandheadline-grabbingphilanthrop-icgiving.

Incontrasttoforeigncompanies,state-ownedenterprises(SOEs)inChinahaveearnedaparticularlybrightspotlightandsignificantreputationbenefitsfromtheunanimousgenerosityinrespondingtotheearthquake.Withinaweekofthequake,128SOEsunderdirectadministrationofthecentralgovern-mentdonated1.16billionyuan(us$166mil-lion).ThegenerosityandtheshowofsupportareexpectedtogoalongwayineasingthecontemptwithwhichasectionoftheChinesepublicviewsthelargeSOEsandtheirmonop-olystatus.

Viewedaspurephilanthropy,thisresponseisseenasanessentialefforttoimmediatelyspeedreliefandhelptothemost-affectedar-easoftheearthquakezone.Inthecontextofrankings,theamountofmoneydonatedbe-comesthefocus,somewhatapublicrelationstoolthatovershadowstheactualimpactandintentofacompany’sCSRefforts.Thiseventhasbeguntofuelcompetitionamongcompa-niesvyingtobeperceivedasthemostsociallyresponsible.

Framed as philanthropy for the time beingWithnumerousenterprisesbasedorinvest-inginChinaprovidingunprecedentedsup-port,theperceptionoftheroleoftheprivatesectorhasbeguntoframeCSRmoreasphi-lanthropy.TherecentearthquakewasatestofthebenevolenceandresponsibilityofeveryChinesecitizenbutaboveallthekeyresponsi-bilityofcorporatecitizenswhowereexpectedtodotheirshareandcontributetothereliefefforts.

Placedinthemindsetofphilanthropy,thepublicandcorporatereactionsbecameanatu-raloutpouringofgriefanddesiretohelp,fu-eledbyunprecedentedmediacoveragethatclearlysignaledthatthosewithwealthandre-sourceshadaresponsibilitytogiveback.Thepublicoutpouringhasbeendramatic.Butthemediareportingwassuccessfulineducating,sensitizingandmobilizinganincreasinglywealthyurbanChinesesociety,whonowhavethemeanstodonate,totherealityofChina’swideninggapbetweenrichandpoor,betweeninteriorareassuchasSichuanandcoastalre-gions,aswellasbetweentheurbanandruralpopulationsofChina.

OverthepasttwoyearsthegovernmenthasbeenactivelypursuingaconceptofCSRwithChinesecharacteristics,basedonthepolicyguidelinesof“PeopleFirst”and“HarmoniousSociety.”Butthisnaturaldisasterprovedtobeadefiningmomentthatunleashedpublicopinionregardingwhatpeopleexpecttheroleofbusinessinsocietytobe.Itwasalsoaloudwake-upcallforbusinessesinChinathatCSRhasbecomeanewimperative.

CSRisadiversetopicwithmanydefinitionsandrepresentedbymanyterms.Itcovers




diversefieldssuchas,environment,health,povertyreduction,socialdevelopment,edu-cation,laborstandards,humanrightsandsupplychains.Thisalsoincludesstrategicphilanthropy,whichespeciallyattimesofnaturaldisasterandcrisissuchastheSich-uanearthquake,basicallydefineshowthemajorityperceivesCSRinChina.ButCSRisnotjustphilanthropy,andthecurrentcontextoftheearthquakedoesnotdefineCSRinthebiggerpictureandnorisitindicativeofhowitisevolvinginChinatoday.Itisonlyindica-tiveofthestagethatCSRisinatthemomentinChinaasitmovestobecomingamorestra-tegicpartofdoingbusinessonaneverydaybasis,notjustwhenacrisisstrikes.

Reflections on reality, relevance and

responsiveness of CSR in ChinaCSRisbothemergingandevolvinginChinaagainstthebackdropofrapideconomic,polit-ical,socialandglobalchange.Foreigncompa-niesareevolvingandadaptingwhileChinesecompaniesareembracingandadaptingCSRtolocalneeds.Bothareactingintandemwithgovernmentandcivilsocietytocreatemutualbenefitbasedontheunderlyingconceptsofsustainabledevelopment.Theyarerealizingthatitismorefeasibleandproductivetocre-atethefuturethanitistojustpredictit.

Legalandregulatorycomplianceandriskmanagementwillalwaysremainessentialele-mentsofCSRforallcompanies.TheyarethefoundationforCSRandwillcontinuetobeso.Therealchallengeforcompanies,how-ever,istounderstandhowtobecomebemorestrategicinmanagingCSR,toensurethattheirinitiativesresultinincreasedcorporatevalueandimprovedcorporateimage.

CSRhasbecomethecatalystforcompaniestoact,prosperandcontributetothesolutionsofsomeofsociety’sbiggestproblems.Inthebiggerpictureitrepresentsanenvironmentwherebusinessesdonotstandapartbutareanintegralpieceofatotalcommunity.Thisisacoreconceptthatiscriticalforunderstand-ingthebusinessandsocietyrelationship,whichdefinesCSRnotonlyinChina,butev-erywhere.

ReferencesBostonCollege,CenterforCorporateCitizen-ship.(2007).“TheStateofCorporateCiti-zenship,2007,”ChestnutHill,Ma:BCCCC,December.

Googins,B.,Mirvis,P.andRochlin,S.(2007).BeyondGoodCompany:NextGenerationCorporateCitizenship,NewYork:PalgraveMacMillan.

McKinsey&Co.(2007).“CheckingChina’svitalsigns:Thesocialchallenges”OnlineatMcKinsey.com.

McKinsey&Co.(2007).“DoingbusinessinChina:AMcKinseySurveyofexecutivesinAsia”OnlineatMcKinsey.com.

Woetzel,JonathanandJanamitraDevan.(2008)“GrowingPains”TheWallStreetJour-nal,April14,2008.

Economy,ElizabethandKennethLieberthal(2007)“ScorchedEarth:WillEnvironmentalRiskinChinaOverwhelmItsOpportunities?”HarvardBusinessReview,June1,2007.




Cultural context and social contractThe 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 improv-ing access to basic services, education, credit and the development of new skills for the work force.

Current state and transformation of citizenshipIn 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

Philippine Corporate Citizenship Summary

Makati City, Philippines

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philanthropy and public relations to a new developing focus on strategic stakeholder relationships. Yet, in practice, CSR is still primarily charity-based, and advanced man-agement 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 ManagementThe 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.




CorporateSocialResponsibility(CSR)inthePhilippineshasevolvedoverthelast50years—fromphilanthropyandpublicrela-tionstodevelopingstrategicshareholderrelationships—partlybecausecorporationstodaymustmeetincreasingexpectationsfrommultiplestakeholders,fromemployeestocommunities,fromsupplierstogovernmentcorporations.

CSRinthePhilippinesisrootedinourcul-ture.Inthe1960s,itstartedasgiftgivingandwentthroughaprocessoftransforma-tiontowardcorporatecitizenship.Then,indi-vidualgiftgiving,volunteerisminchurchesorschoolandthe“bayanihan”cultureortheconceptofmutualaidtoneighbors,brothersorfellowmen,wereprominent.Nowadays,bothfor-profitcorporationsandnonprofitor-ganizationsareinstitutionalizingandcontin-uouslyimprovingthepracticeofCSR,regard-lessoftheeconomiccyclesandsocialissuesfacingthecountry.

TherootsofCSRinthePhilippinesareevi-dentintheperceptionthatcorporationshaveobligations,notonlytotheiremployeesbutalsototheenvironment,andtocommunitiesinneed.Thisperceptionissharedacrossallareas,bysector,class,genderandagegroup.Societalpressuresandtheinabilityofthepub-lic/governmentsectortocompletelysatisfysociety’sbasicneedshasalsoservedtotrans-formandexpandtherolethatfirmsneedtoplayfromsimplymakingmoneytoassistinginsocialandeconomicdevelopment.

PhilippineCSRpracticesarehighlydiverse–donations,volunteerism,marketingcam-paigns,andotherspecialprojects.Forde-cades,theprimarybeneficiarieswere,andstillare,theeducationandhealthsectors.Lately,corporationshavetargetedothersectorssuchasdisasterrelief,environmentmanagement,communitylivelihoodprojectsandevenup-liftingofindigenouspeople.

SuccessfulCSRprogramsbeginwithiden-tifyingthesocialissuesthatbestmatchthecompany’savailableskillsandresources.Thechallengethereforeistofindthecorrectmatchamongthesefactorstocreatevaluetoallstakeholders.Today,companieseducateandprovidetrainingtotheiremployees,useinnovativetechnologyandexpertisetodevel-opunconventionalservicesandproductsthatarewithinthereachofeveryFilipino.Thusintheprocess,companiesaddressissuessuchaspoverty,lackofeducation,poorhealth,etc.ThegreatestchallengeforPhilippinecom-paniestodayisdetermininghowbesttouseCSRasastrategicbusinessmodel.

Optimizingthecollaborativeeffortsorcon-vergenceisacriticalpathtosuccessfullyimplementingCSR.BasedonthePhilippineexperience,implementingCSRisbetterex-ecutedthroughpartnerships.Governmentandcorporationpartnershipsineducation,environment,andhealthhaveprovedfruitful.However,relativelyfewpartnershipshavead-vancedtoamoreintegrativelevelwherethereiscollectiveactionandorganizationalintegra-

CSR in the PhilippinesBy 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




tion.Thekeyfactorforsuccessisthedevelop-mentofmutualtrustamongstakeholdersandthesenseofdutytoservethecommunity,andinparticularthesocietyatlarge.Atthemacrolevelthegovernmentinitiatesandprovidesappropriatepoliciesandpractices.Localgov-ernmentunitsinturnarebeingchallengedtoefficientlydevelopCSRpartnershipsandpracticesastheactivitiesofmanycompaniesgobeyondtheboundariesofthefirm.

Astrongcommitmentfrombusinesslead-ersisanotherkeysuccessfactorforCSRinthePhilippines.Corporateleadersrecognizetheyhavearoleincommunitydevelopment.AlthoughCSRinthecountryisinstitutional-ized,individualleadershipisamajorinflu-encerwithintheorganizationtodemonstratecommitmentandtoensurecontinuityofCSRprogramsandpractices.

Evolution of CSR in the PhilippinesInthePhilippines,CSRappearstohaveevolvedoverthelastfourdecadesmainlyasaresponsetothecountry’sworseningsocio-economicconditions,asshowninthetableonpage47.

IndevelopingcountrieslikethePhilippines,whereatleastathirdofthepopulationlivebelowthepovertyline,individualandcorpo-ratephilanthropyarecriticalincomplement-ingthelimitedbudgetofgovernmentinad-dressingthebasicneedsofthedisadvantaged.Philanthropicactivitiesarenecessitiesinthefightforsocialjustice,fortrueequality,andforsocialandeconomicdevelopment.Asaresult,CSRhasbecomeastrategicmanage-menttoolthatallcompaniesmustlearntointegrateintotheiroperationsiftheyareto

developasustainablemodelof“trust”withthemanycommunitiestheyserve.5

The network of multisectoral groups in the

PhilippinesTheexpansionandimplementationofCSRinvolvesbusinessnetworkingwithothersec-tors,includingthegovernment,civilsocietyorganizations(CSOs)orNPOs,andotherpri-vateorganizations.

ThePhilippinegovernmentdevelopeditscorporatecitizenshipprogram“toen-couragecompaniestostarttheirownCSRprograms.”6ToencourageCSR,thegovern-menthastheresponsibilitytodrawupregula-tions,grantincentivesandprovideafriendlypoliticalclimate,andalsotosteerbusinesstowardareaswherehelpisneededandsearchforpartnersindevelopmentalprograms.Businessnetworkingwithlocalgovernmentunits(LGUs)ishighlyencouragedforCSR.Theskills,expertiseandresourcesofLGUscomplementthoseofbusiness;inturn,net-workingexposestheLGUstoeffectivecorpo-ratepractices.

InthePhilippines,thereareNonProfitOrga-nizations(NPOs)forwhomadvocacyandlob-byingaredistinctfunctions.CSOsinparticu-larincludenonstate,nonprofitorganizationsandgroups,socio-civicorganizations,aca-demia,media,religiousgroups,cooperativesandpeople’sorganizations.Theywereorigi-nallywatchdogsofgovernmentperformance.

5Jaime 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

www.BCCorporateCitizenship.org Global Education Research Network 47

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 eco-nomic and social problems by giving donations in cash and in kind, usually indirectly to charita-ble 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 spo-radic, 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 Prog-ress (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 foun-dations 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 deterio-rate with the assassination of Benigno Aquino, Jr., archrival to ruling dictator, Ferdinand Mar-cos. Many companies responded by provid-ing regular and comprehensive services to the communities in their localities. From this form of assistance emerged the movement and in-stitutionalization of community relations or COMREL.

Taking into consideration the interest of the community further strengthened the CSR net-work by incorporating the end-users in the de-sign 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 well-being 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 ca-pability 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 frame-works. For example, PBSP pushed for the participation of corporate citizens in improv-ing access to basic services, education, credit, and the development of new skills for the work force to help them improve their lives.

A trend appears to be developing whereby the CSR network may be characterized by integra-tion of values, goals, resources, and skills be-tween business and other sectors—including not just the families of employees or the com-munity, but a broader community of direct and indirect stakeholders.




Today,theyareinvolvedinthedeliveryofvari-ouspublicserviceslikehealthandeducationaswellasmicro-enterprisesandcooperativesdevelopment.

Thereareprivateconsortiumsthatpromotecorporatecitizenshipinthebusinesscommu-nityandprovidevenuesforsharingtheexpe-riencesofcompaniesandopeningopportuni-tiesforjointpracticesandresourcesharing.TheseprivateorganizationsincludetheAIM-Amb.RamonV.delRosarioSr.CenterforCorporateResponsibility,thePhilippineBusi-nessforSocialProgress(PBSP),theLeagueofCorporateFoundationsandtheCorporateNetworkforDisasterResponse(CNDR).

The Asian culture and CSRCSRgoesbeyondcompliancewithlawsandregulations,7andhaslongbeenpartandpar-celoftheAsianculture.8TheChineseculture,whichiscommonlypresentintheAsianre-gion,isessentiallyaboutthefamilyculture.Thefamily,whichisthebasicunitofsociety,providesaprototypeofacommunity.Thefamilyisnotanabstractorganizationbutal-waysaconcretefamilycomposedofconcreteindividuals.Itrepresentstheprototypeofthe

72005 AFCSR Survey 63% of the respondent said that CSR is be-yond compliance of rules and regulations

8CSR in the APEC Region. APEC December 2005

idealrelationshipsamongitscitizens.Theroleofthisgroupisthepropagatorofthecor-poratecultureamongitsmembersaswellasitsprotector;itiswheretheindividualmem-berreceiveshistrainingandvalueswhereheissocialized.InAsia,thefundamentalthink-ingisthatthefamilyrunsintheheartofthemodernrationality.Thus,thisrepresentsthesocialsideoftheAsianbusinessenterprise.9

ThefamilycorporationistheprevalentformofbusinessinAsia.Thedominanceoffam-ilycorporationsorbusinessesseparatesAsiafromtherestoftheworld.Twothirdsoflistedcompanies,andsubstantiallyallprivatecom-panies,arefamilyrun.

CSRisanaturalextensionofthefamilycor-poration,asbusinessinAsiaissomehowat-tachedtotheidentityofthefamily.Businesstransactionsareanextensionofthehonorofthefamilyanditsname,andafailureofthecorporationisseenasafailureofthefamily.

EthicalvaluesandconcernforthesocietyarealsoalargepartofthereligiousbeliefandtraditionalnormsofcountriessuchasThai-land,Indonesia,HongKong,JapanandthePhilippines.ThesecountriespossessspecificculturaltraditionsthatareconsistentwiththeconceptofCSR.

9Silos, Leonardo. “Management and the Tao: Organization as Community.” Asian Institute of Management. 1998.

Country Family Groupings % listed Assets % of GDPIndonesia 15 61.7 21.5Philippines 15 55.4 46.7Hong Kong 15 34.4 84.2

Source: The Morality of Corporate Governance: Issues of Quality and Quantity, Ismail Adams, September 2003




The Asian way is differentAlthoughthecorevaluesembodiedinCSRareintrinsicallygood,itisnaïvetobelievethatCSRintheWestisthesameelsewhere.CSRinAsiaisdifferent.AsianleaderspracticetheirownformofCSRbecause:

1. Asian capitalism is different.Sincesmallercompaniespossessfeweroftheadvan-tagesavailableelsewhere,Asiancompa-niescompeteoncostsinordertosurvive.Thustheyfaceproblemswithrespecttosocialsafetynets,environmentalandotherrelatedissues.AsiancompaniespracticetheirownversionofCSR(i.e.focusingontreatingstaffmembersaspartofanextendedfamily).Moreover,Asianfirms’CSRpracticesgenerallycontinueintheformofcharities,providingtokenstoheedenvironmentalissuesandoffsetpressuresfromthemarket.10

2. Social problems in Asia are different.Asiaisconsideredoneofthemostimportantcomponentsoftheworldeconomy11:

Theregionrepresents56percentoftheto-talworldpopulation.

TheachievementofAsianeconomieshaslargelycontributedtoglobaleconomicdevelopmentand25percentoftheworldGDPandworld’stradeinthelasttwode-cades.

10Chandran Nair. “Practice and Perception of CSR in Asia.” Lead-ing Perspectives. Global Institute for Tomorrow. Fall 2005 page 4 and 15

11Jin, Liquin. Poverty and Security in Asia. Asian Development Bank. 30 March 2004

3. Asia faces a number of challenges12:Eventhoughtherehasbeenasignificantreductioninpovertyincidences,13povertyremainsasaseriouschallenge.Inaddi-tion,almostalldevelopingeconomiesinAsiaarefacedwiththeproblemofcorrup-tion.Asia’smosturgenttaskisinstitution-building.Propereconomicinfrastructuresshouldbesupportedbyreasonablepoliticalapparatus.TheworkisdishearteningbutwilldefinitelytestthetruecolorsofAsianleaders.

Additional challenges:• Asiahousestwothirdsoftheworld’spoor;• Thedevelopmentgapbetweenregionsis

enlarging;• Regionalconflictsandunstablepolitical

situations;• Theregionisstillintheearlystagesofna-

tionhood,andtheimpactofcolonialismremains;14

• Poorpublicandcorporategovernance

Asia does not report CSR practicesDisclosureisonewayofpromotingCSR.Itisessentialforbusinessestoactivelycom-municatetheirconcernsforsociety,andtosincerelylistentothestakeholders’viewsandrecommendations.Corporations(especiallymultinationalcorporations)mustunderstandlocalperspectivesandrespectthecultureandindividualityofeachcountry/region.Howev-er,inAsia,businessestendtoestablishavis-

12ibid Jin

13poverty incidence drop by 32 percent in 1990, and 22 percent in 2000

14Chan, Ronnie. Asia’s Future in a Globalized World. 23 November 1999 (the article was originally published in the German journal Internationale Politik)




iblerelationshipwiththestakeholdersbasedondirectdialogues(i.e.treatingstaffmem-berslikeanextendedfamily,thusthereisnoneedtoreportsuchpractices).

AstudyonCSRinawebsitereportingnotedthatthepercentageofcompaniesthatreporttheirCSRactivitiesisextensivelyverylow(withtheexclusionofJapan).15Thisconclu-sionisbasedonthetop50companieswithcorporatewebsitesinsevenAsiancountries.

Someoftheconclusionsfromthisstudystatethat:

• ThereareproportionatelyfewerCSRcom-panies(companiesimplementingCSR

15Chambers, Eleanor; Chapple, Wendy; Moon, Jeremy; Sullivan, Michael. “CSR in Asia: A Seven Country Study of CSR web site Reporting” International Center for Corporate Responsibility, Not-tingham University Business School 2005

projects)inthesevenselectedcountriesthanintheUnitedKingdom.

• ThereisgreatvariationinthepenetrationofCSRamongtheselectedcountries(asdeterminedbythenumberofcompaniespracticingCSR,theamountbudgetedforCSRprojectsandsurveysofbusinessandpublicawarenessofCSR).

• InnocountrydidamajorityofCSRcom-paniesreportCSRextensively(onlyinIn-diaandthePhilippinesdomorethan30percentofcompaniesreportCSR).

Thesefindingsaresimilartothe2005APECstudywhichfoundthatalthoughthereisplentyofevidenceofCSRinAsia,awarenessandreportingislowandlimited.AlthoughtheCSRconceptispracticed,theCSRtermi-nologyisunpopularinAsia.Moreoften,thepracticeofCSRisnotlabeledassuch.For

CSR in Asia: A seven country study of CSR web site reportingPenetration Extent of CSR reporting

Country % of CSR Co. Minimal (%) Medium (%) Extensive (%)India 72 16.7 47.2 36.1South Korea 52 27.0 46.0 27Thailand 42 23.8 61.9 14.3Singapore 38 42.1 42.1 15.8Malaysia 32 25 50.0 25.0Philippines 30 28.6 35.7 35.7Indonesia 24 72.7 9.1 18.2Mean

(7 Counties)

41 28.5 44.4 27.1

United Kingdom 98% Source: Chambers, Eleanor; Chapple, Wendy; Moon, Jeremy; Sullivan, Mi-chael. “ CSR in Asia: A Seven Country Study of CSR Web site Reporting” International Center for Corporate Responsibility, Nottingham University Business School 2005

Japan 96%

Note: Minimal–one to two pages/ Medium–three to 10 pages / Extensive–over 10 pages




example,inthePhilippines,althoughcorpo-rationspracticedsomeformofCSRthroughprogramsorprojectsasearlyasthe1970s,theawarenessofCSRtothisdateislow.APhilip-pineBusinessforSocialProgress(PBSP)sur-veyshowedthatonlyoneoutof10FilipinosknowthemeaningoftheCSRterminology.

However,businessesintheregionareslowlyrecognizingtheneedforexternalsocialre-porting.AsGlobeTelecom’sJeffreryTarayaohassaid,“CSRisreallyaboutbusinessad-vocatingsocialdevelopmentcauses.Therearetoomany,butbycommunicatingittothegeneralpublic,wearehelpingidentifythemostimportantissues.”16

Driving forces for CSR in AsiaThepracticeofCSRisgenerallyinfluencedbythecountryortheregion’sdistinctfea-tures.Inanopinionsurvey17onthepractices

16Quote from Globe Telecom’s Jeffrery Tarayao. From article by Damazo, Jet. “Companies Want the Public to Know They’re So-cially Responsible,” 02 August 2007 downloaded from http://www.newsbreak.com.ph/index.php?option=com_content&task=view&id=3551&Itemid=88889053

17From the actual number of AFCSR participants of 384, around 60 CSR executives and practitioners (15.63 percent) answered the sur-vey. The margin of error is +11.64 percent.

andmotivationsofAsiancompaniesonCSRprogramsconductedduringthe2005AsianForumonCorporateSocialResponsibilityinJakarta,Indonesia,thevaluesoftheemploy-eesandtheorganizationsasawholeplayanessentialroleinmotivatingCSRpractices.

AnotherdrivingforceinformalizingCSRpracticesinbusinessesarethelawsandregu-lations,corporategovernanceandothercom-plianceprogramsimposedbythegovernment(seeTablebelow).Asaresult,CSRisbecom-ingacorporatepolicyinAsiaandAsianexec-utivesandofficershavebegunbringingtheirmanagementexpertisetobearonCSRplansandprograms.18

OneexampleofagovernmentmandatedCSRpolicycanbefoundfortheminer-alsindustry.InthePhilippines,theminer-alsindustryisbelievedtoplayasignificant

182005 AFCSR Executive Survey

Motivations of Asian companies on CSRDriving Forces % Rank =1

Company’s and its people’ values (Individual behavior) 28Corporate governance, regulations and compliance program 20Competitive strategy and benchmarking (strategy of organizations) 17Change of attitudes among people toward being more critical against companies and caring for business ethics and social responsible invest-ments (societal demands)

17

Implicit manner of doing business (operation) 10Profitability and sustainability (market forces) 10

Source: RVR Center for Corporate Responsibility, 2005




roleinthedevelopmentofitseconomy.In2003alone,theindustryregisteredus$758.37Million(orPhP41.9Billion)inproduction,us$519Minexportearningsandpaidus$38M(orPhP2.1B)intaxesandfees.Theindus-tryemployed112,000workersandprovidedus$72.4-90.5M(orPhP4-PhP5B)inwagesandbenefits.

In2004,ExecutiveOrder(E.O.)No.270wasamendedtoprovidefortherevitalizationoftheindustrythroughthepromotionofre-sponsibleminingthatadherestotheprin-ciplesofsustainabledevelopment:economic

growth,environmentalprotectionandsocialequity.ItincludedaMineralsActionPlan(MAP)thatwillimplementtheprovisionsoftheE.O.Theplanalsopromotesthedevelop-mentofdownstreamindustriestomaximizethebenefitsorvalue-addedfrommining.Theplanprovidesforthecompletionofthemineralsvaluechainthroughregularinfor-mationonmineralproductsandmarkets,jointresearchanddevelopmentandcapacity-buildingprogramsforlocalengineersandresearchersondownstreamindustries,andpromotionofinvestments.

CSRissuesandchallengesalsovaryindegree

andform,thusthemotivationtoimplementprogramsalsovaries.Forsomeindustriesacompany’ssafetyreputation(suchasintheminingindustry)canimpactheavilyonthedemandsforitsproductsandthelevelofitsshareprice.

AsianpractitionersofCSRbelievethatcom-munitytrustandreputationarethemostim-portantmotivesforCSR,followedbyinter-nalcustomersatisfaction,sustainabilityandcustomerloyalty19.Thisfindingissimilartothe2005AFCSROpinionSurveywhereinitstatedthatCSRprogramsinAsiaarecon-

ductedasameanstoenhanceacompany’sreputation,accordingto40percentofthere-spondents.

InAsia,CSRispracticedbecauseinternalandexternalstakeholdersputpressureoncompaniestoaddresssociety’sconcerns.OnemainargumentfordevelopingcountriesintheirimplementationofCSRisthatbusinesscouldnotthriveinanenvironmentwherethemajorityofthepopulaceispoor.Asnotedin


AFCSR survey of Asian CSR practitionersValue of CSR % of Base

In Asia, CSR is an initiative to enhance a company’s reputation 40 %In Asia, CSR is a noble act of charity or an endeavor of corporate philanthropy

26.7 %

In Asia, CSR is a philanthropy deeply ingrained in the corporation’s strategies.

28.3 %





Thailand20andthePhilippines,thecorpo-rationshelpedbecausetherewasaneedtohelp.Ontheotherhand,themainfactorthatpushescountrieslikeJapan,Singapore,HongKongandTaiwanismainlycompliancetoin-ternationalstandardsandcompetition.

MostCSRpractitionersarelargecorpora-tionsorbusinessesthathaveexportdealings/transactions.Forexample,SingaporeMNCsbroughtvaluesandpracticesofheadofficessuchascorporatephilanthropyandvolunteer-ism.TheSMCs(electoraldivisions)inSinga-porearegenerallyfacedwiththechallengeofcompetition(within)anddonotpayattentiontoCSR.Companiesthereforewhoareen-gagedininternationalbusinessarerequiredtointegrateCSRintheiroperations.ThisobservationissimilartoaU.K.studywhichfoundthatincreasedCSRisafunctionofin-ternationalizationofbusinesses.Firmsoper-atinginternationallyaremorelikelytoengageinCSRandtoinstitutionalizeitthroughcom-panycodes.

Theseobservationsaresecondedbya2007Newsbreak21survey.FromJulytoearlyOc-tober,Newsbreaksent104surveystolocalandmultinationalcompanieswithannualrevenuesofatleastP60million,andwithemployeesrangingfrom24to32,000.ThegoalwastodetermineifCSRisembeddedinthecompanyintermsofstructureandleader-ship,fundingandlogistics,andreportingandassessment.TheobjectivewastodistinguishcompanieswithgenuineCSRprograms.ThesurveyaskedquestionsontheCSRintheir

20ibid APEC

21An online publication owned by the Public Trust Media Group, Inc.

corporatestructure,budgets,activities,initia-torsandenforcersofCSR,reportingandmea-surementtools,CSRpolicies,andorganiza-tionalstructureforCSR.

Outofthis,54companiesresponded.Thekeyfindingswereasfollows:

• Inmostofthecompanies,theCEOiniti-atesCSRprograms.

• TheentrypointforCSRpracticehasbeenconcentratedontwoaspects:communityworkandPR.

• Gettingtheotherfunctionalgroupsin-volvedinembeddingtheCSRstrategyintothewaythecompanyplansandimple-mentsproductsandservicesisrare.

• MostcompaniesleavetheCSRimplemen-tationtothecorporatefoundation,whilehalfsaytheyletthepublicrelationsorcorporatecommunicationsgrouptakethelead.

• Nexttothecommunity,theemployeesarethestakeholdersthatthecompaniestargetfortheirCSR.Investorsarelowpriority.

About57percentofthecompaniescitedtheimportanceofmeetingcommunities’expecta-tionsandinterests.Also,53percentsaidem-ployeesatisfactionisakeymeasureintheirCSRsuccess.Thelowprioritygiventostake-holdersotherthancommunityandemployeesshowsthattherewardandpunishmentap-proachtypicalinWesterncountriesaswellasinmoreprogressiveAsiancountriesishardlypresenthere.Mostofthesurveyrespondentscatertothelocaleconomy,wherepressurepoints—eitherfrominvestorsorconsum-ers—arenotyetasestablished.




CSR is mostly addressed through

philanthropic modes but has taken

different formsInAsia,responsiblecorporationsareper-ceivedasthoseconcernedandactiveincommunitywelfare,thatoffertop-qualityproducts/servicesandstandbehindtheirproducts/servicesifsomethinggoeswrong.Peoplearegenerallymoreconcernedaboutthesocialaspectofthecorporation.There-fore,externalCSRpracticesarefocusedontheenvironmentandsocialcommunityis-suessuchaseducationandhealthwhereasinternalCSRaredirectedontheemployeesorworkplaceimprovement.AstudyofthenumberofnominatedprojectsandprogramsreceivedbytheAIM-RVRCenterfromtheinceptionoftheAsianCSRAwardsin2003ascomparedtothelatestentriesin2006,concludedthatexternalCSRispracticedmoreoftenthaninternalCSR.

Asiancompaniesgenerallyrespondtositua-tionsinfourlevels:resourcetransfer(corpo-rategivingandphilanthropy),communityrelations(directinvolvementincommunity-basedprojects),business/industrypractices(CSRthroughcodesofconduct;valuechainmanagement),andbusinessstrategy(marketsolutiontopublicneeds/problems).

CSRisstillpracticedthroughgiftgiving,do-nations,andvolunteerismthroughouttheregions.Insomecases,eventhoughtheCSRconceptisevidentattheindividuallevelbe-causeoftheAsian“charitable”culture,prac-ticesmaynotactuallytranslateatthecorpo-ratelevelinalltypesofbusinesses,asisthecaseinHongKong.Whencorporationsdogive,itisliterallyjustgivingcashtochari-tiesratherthandefinitesocialresponsibility

practices22.Thus,corporationsinAsiathataregenerallyengagedincommunitydevel-opmentandemployeeresponsibilityissues,mostlyaddresstheseissuesthroughthephil-anthropicmode.

Forexample,57percentofcompaniesinIn-donesiapracticeCSR,withMNCshavingahigherlevelofrecognition.However,itisrec-ognizedthatthereisstillalackofunderstand-ingonhowitshouldbepracticed.CSRisperceivedmerelyasgivingforsocialactivities.TheIndonesianeconomyreportedthatIndo-nesiancompaniespracticingCSRareinthecompliancestage23wheretheyadoptpolicy-basedcomplianceasacostofdoingbusiness.However,countriessuchasIndiaandthePhilippinesexhibitextra-philanthropicmodesthroughcommunitypartnerships,productsandemployeerelationcodes,andfounda-tions.24ThemajorfindingoftheNewsbreaksurveynotedthatabout60percentofthere-spondentssaytheyleavetheCSRimplemen-tationtothecorporatefoundation,while50percentsaytheyletthepublicrelationsorcor-poratecommunicationsgrouptakethelead.Furthermore,theentrypointforCSRprac-ticeinthePhilippineshasbeenconcentratedoncommunityworkandpublicrelations.Anoverwhelming90percentoftherespon-dentssaythecommunitywheretheyoperateabusinessistheirmainoroneoftheirtargetstakeholders.Thiswasapparentincompaniesfromthefollowingindustries:manufactur-ing,foodandbeverage,telecommunications,


23Based on Simon Zadek’s model “The Five Stages of Organizational Learning” for companies developing a sense of corporate responsi-bility.

24ICCSR Study




bankingandfinance,education,energyandpower,automotive,healthandpharmaceuticalcompanies.

The success of CSR activities requires

partnerships between business, civil

society, and the governmentTherearekeyorganizationsineachcountrythathelpencourageCSRpractices.Thesepri-vateorganizationsfacilitatetheactivitiesandcollaborationsofkeyactorsinCSReffortsineachcountry.CompaniesshouldcoordinateandcollaborateonCSReffortswithgovern-mentandotherprivateorganizationsinorderforprogresstobeachieved.ThesetwokeygroupssharethetaskofpromulgatingCSRinAsia.Basedonthegraphicbelow,partner-shipswithNGOs,LGUsoranyexternalorga-

nizationtendtomakeCSRprogramsmorecredible(74percent).

Insomecases,themoreactivegroupsmaybemoreaggressivethantheothers.Forexample,thegovernmentpropagatesassertivelyinChi-neseTaipeiandVietnamcomparedtoThai-land,thePhilippines,SingaporeandHongKong,wheretheprivatecorporations,specifi-callytheMNCs,aretakingtheleadonCSR.CSRgoalscanbeachievedbyfosteringbetterunderstandingamongnongovernmentalor-ganization(NGO)partners.Studies,however,showthatsuchpartnershipsorcollaborationarenotpracticedinallAsiancountries.Pock-etsofCSRdevelopmentinAsiancountriesorCSRpromulgationarestillhighlydependentonthekeyplayersineacheconomy.

NGOs and Active Groups are responsible for the CSR drivers





Companies are beginning to integrate CSR

into their core business and strategyTherearealsosomepracticesthatshowthatCSRconceptsarealreadyalignedtoothergoodbusinesspracticessuchasgreenproduc-tion,EnvironmentalManagementSystems(EMS),andothercodesofconduct.Asianbusinessesarerealizingthatlocalinitiativesactuallymakebusinessessustainableasitfos-tersdeeplong-termcommunityrelationshipsandinvestments.Addressingsocialissuesisbecomingcentraltoabusiness’strategy.

Emerging Business Models

Business Model Core Issue Addressed Community Based

Intervention

Relevant

Industries

Collective Accountability

Problems with col-lection, pilferage

Small groups monitor usage, promote compli-ance, provide social insurance

Utilities Finance

Livelihood Partnership

Brands lacks positive equity, cultural divisions can separate inter-ests of consumers and producers

Business offers additional services around core prod-uct/service that promote primary demand while providing train-ing or cooperative business programs to community

Telephone Services

Utilities

Agriculture

Scalable, Embedded Distribution

Traditional delivery too costly relative to purchase size, density of consumers

Low-cost, commu-nity based distribu-tion points employ key workers in low income areas

Fast-mov-ing and/or low value consumer goods

TelecomSource: A grassroots approach to emerging-market consumers. The Mckinsey Report 2006 number 4

AstheManagementAssociationofthePhil-ippines(MAP)reported,despitetherisingpricesofoilandbasiccommoditiescompa-niescontinuetospendoncommunityproj-ectswheretheyoperate.Philippinecompa-niescannotaffordnottopracticeCSR.Forexample,thePhilippineNationalOilCo-En-ergyDevelopmentCorp.(PNOC-EDC),larg-estproducerofgeothermalenergy,spendsanaverageof167millionforCSRactivities.“IfwedonotdoCSR,whichconnotesforussecurityandcontinuingoperations,wewould




stopandthatwouldmeanalossofP100mil-lionaday,”thepresidentofPNOC-EDCMr.PaulAquinosaid.25

MAPlaunchedacampaigntoawardsomeofits900individualmemberswholedtheirrespectivecompaniesinmakingCSRpartoftheirrespectivecorporatestrategies.ThismeantincludingCSRintheboardagendaandallocatedbudgetforitsimplementation.

ConclusionCSRisanevolvingprocess–initsdefinitionandpractice.ThereisnosingledefinitionofCSR.CompaniesdefinetheCSRconceptintermsofhowacompanyconductsitselfinre-lationtoitsinternalandexternalconstituen-cies.Thecommonperceptionisthatcompa-niescannotdoCSRactivitieswithoutprofit.However,whenacompanypracticesCSRbecauseitisperceivedtobeprofitabletodoso,profitinthissenseisgood.Nocompanycangivewhatitdoesnothave,profitmakingthereforemakessense.

CSRhasbecomeacompetitivetoolascom-paniesfusetheircorebusinesspracticeswithCSRprograms.Thebasicchallengethereforeishowtomaximizetheresourceswhilepro-motingsocio-economicdevelopment26.

25Estopace, Dennis. “CSR Spending Remains Flat.” Business Mirror. 28 May 2008

26Senen Bacani, chairman and president of La Frutera, Inc




Cultural context and social contractThe 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 environmen-tal standards, it also gave rise to early manifestations of voluntary business initiatives to contribute to government policy changes and social development. Today, philan-thropy 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 citizenshipIn the past Corporate citizenship in South Africa was largely limited to corporate so-cial investment (CSI), interpreted as strategic philanthropy focused on education and health projects. Today it is moving toward a more integrated approach focused on sus-

South Africa Corporate Citizenship Summary

Pretoria, South Africa

© is

tock

.com




tainable development and linked to collaborative governance initiatives and partner-ships. “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 re-port at least annually on their social, ethical, safety, health and environmental manage-ment.

Driving forces and motivations:• Government regulation, particularly “Black Economic Empowerment” (BEE) poli-

cies 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 AfricaThe Center for Corporate Citizenship South Africa is lo-cated within the College of Economic and Management Sciences at the University of South Africa. It was estab-

lished to be a global leader in building individual and institutional capacity for sus-tainable 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 in-tegrating corporate citizenship into their management practices.

CCC provides unique opportunities to improve corporate citizenship practice and in-troduce 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.




AbstractTounderstandthemeaningandnatureofcorporatecitizenshipinSouthAfricaitisnecessarytoreviewthehistoricalandcontem-poraryrelationshipbetweenbusinessanditsstakeholders.Thispaperreviewsthedevelop-mentofthisrelationshipbyfocusingonthemediatingeffectsofthesocio-politicalandeconomicrealitiesinthecountry,andvariousmeansofcorporateregulation.Throughanassessmentofthesecontextualrealitiesahis-toricalprogressionfromnon-involvement,tocorporatesocialinvestmenttosustainabilityandpartnershipisobserved.Asbefore,busi-nessinSouthAfricaisnavigatingchallengesandopportunitiesposedbycontextualsocio-economicissuesandregulation.Thegoalofcorporatecitizenshipistoattainabalancebetweenshort-termandlong-termgoals,andeconomicandsocialgoals.Itisrecommendedtoforeigncompaniestostrategizecorporatecitizenshipfromapluralistandsocialdevel-opmentperspective,tobemindfulofregula-tionandmarketdrivers,andtointegratethesetraditionalbarrierstoenterprisecreativelyintothebusinessbyengagingininitiativesto-wardcollaborativegovernance.

Introduction Themeaningandstatusofcorporatecitizen-ship(CC)inSouthAfricahasbeeninfluencedbythecountry’shistoryofinequalityandinjustice.Inthebroadestsense,CCreferstotheroleofbusinessinsociety,anditentails

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

thecontributionofbusinesstosustainabledevelopment.InSouthAfrica,corporateciti-zenshipisalsocalledcorporatesocialrespon-sibility(CSR)andcorporatesocialinvestment(CSI).Thoughvariousnamesareassociatedwithdifferentapproachesandpractices,CC,CSRandCSIareoftenusedinterchange-ablyinSouthAfrica.Thisreflectsthechang-ingnatureofCCinSouthAfrica.Today,theidealroleofbusinessinSouthAfricaistouseitscapabilitiestoconstructivelycontrib-utetothecountry’ssocioeconomicdevelop-mentthroughreciprocalengagementwithstakeholders.However,historicallyCChasnotalwaysbeenconceptualizedinthisway.Inaddition,thecurrentmeaningandstatusofCCisimpactedbysystemicissuesunder-miningsustainabledevelopment.Companieshavetodealwithdomesticchallengessuchastheneedforaffirmativeactionandblackeconomicempowerment,spiralingeconomiccrimessuchasfraudandmoneylaunder-ing,aswellastherealityofAIDSandpov-ertyonthecontinent.(Rossouw,vanderWatt&Malan,2002,p.301).Thepurposeofthispaperistodescribethemeaning,natureandmediatorsofCCinSouthAfricabypresent-inganassessmentofthehistoricalandcon-temporaryroleofbusinessinsocietyandtheimplicationhereofforthenatureofCC;andanassessmentofcurrentcontextualchalleng-es,andtheassociateddriversthatshapetheuniqueformofCC.ThisassessmentreliesforanumberofitssourcesandargumentsonHamann(2008).Basedontheseassess-




mentsrecommendationsforstrategizingCCinSouthAfricanoperationswillbemade.

The progression of corporate citizenship:

From exclusive to mutual development InSouthAfricathedevelopmentandtrans-formationforcorporatecitizenshipiscloselyrelatedtothecountry’ssocio-politicalandeconomichistory.Thiscontextualhistoryhasinfluencedtherelationshipbetweenbusiness,societalstakeholders,andthegovernment.Onemightarguethatcorporateresponsibilityhasdevelopedinvariousothernationstatesinasimilarjuxtapositionofbusinessinrela-tiontostakeholders.However,inSouthAfricatherelationshipbetweenbusinessanditsnon-financialstakeholders(allstakeholdersexceptinvestors)hasvariedfromnon-involve-menttoacontemporaryrelationshipcharac-terizedbypurposefulengagementformutualgain.Thisrelationshiphasbeenmediatedbythelegacyofcolonialismandapartheidasbigbusinesseswereimplicatedinthathistory–hypocriticallybothasco-conspiratorandbeneficiaryofapartheid,andascriticalagentagainstapartheid.TherelationshipanalogyisthereforeusefultounderstandtheroleofbusinessinSouthAfrica,andhowcorporatecitizenshiphasevolved.Table1providesanillustrationoftheprogressionoftherelation-shipbetweenbusinessanditsnon-financialstakeholdersandtheconsequentfocusofcor-poratecitizenship.

Thisdevelopmentaltypologyhighlightstherelationaldynamicsbetweenbusinessandnon-financialstakeholdersandhowithasdeterminedthemeaningandpracticeofcor-poratecitizenship.Inthefollowingsectionthistypologywillbeexplainedbyfocusingonthenatureoftherelationshipbetweenbusi-

nessanditsstakeholders;socio-politicalandeconomicfactorsandhowtherelationshipevolvedovertime.

Non-involvement: Early industrialization

and the rise of apartheidRetrospectively,itishardtoimaginethattherewasatimethattherewaslittleinter-actionbetweenbusinessanditsnon-finan-cialstakeholders.However,SouthAfrica’sbusinesssectorwasdevelopedontheAn-gloSaxonbusinessprincipleofmaximizingshareholdervaluewiththeexpectationthatthiswouldbenefitsocietyasawhole(i.e.thehiddenhandeffectofthemarket).ThisliberaleconomicdoctrinecatapultedSouthAfrica’searlyeconomyfromsubsistenceagricultureandsmallindustryintoaworld-classnaturalresourceextractionandexporteconomy.ThebigminingcompanieswhichweremainlyownedandoperatedbyBritishcolonialistsneededcheap,relativelyunskilledlaborfortheminingofdeep,low-gradeores(Moodie&NdatsheinHamann,2008).Thisrequire-mentperpetuatedthestate’sracistpolicies,includingtaxationofruralblacksinordertoforcethemintowagelaborandtheestablish-mentofarigoroussystemofmigrantlabor(Hamann,2008).Theroleofbusinessinapartheidiscontentiousassomearguethatbusinesshadintroducedthemigrantlaborsystem,single-sexhostels,workplacesegrega-tion,theracialdivisionoflaborandraciallydiscriminatorysalaries(Fig,2005,p.599).Theoppressiveanddiscriminatingstrategiesinitiatedparticularlybyminingcompaniesbenefitedonlythewhiteminority.Itwasac-knowledgedbytheTruthandReconciliationCommission(TRC,2003,p.150)thattheseexclusionarypracticesinstitutedbybusiness-esultimatelyinformedthenationaliststate’s




Table 1: The typology of business-nonfinancial stakeholder relations in South Africa

Timeline

Nature of relationship with non-fi-nancial stake-holders 1

Non- involvement

Ad hoc- involvement

Systematic involvement

Pre-systemic involvement

Systemic in-volvement

Mutualism

Relationship characteris-tics

The business of business is business

Paternalis-tic relation-ship with no boundaries

Paternalistic but with de-fined bound-aries

Consultation, but decisions are made solely by business

Consultation and engage-ment that leads to mu-tual decision making

Collaboration that leads to mutual benefits and progress

Focus of cor-porate citi-zenship

Industrial relations or unionism

Collective private sector efforts (i.e. Urban Foun-dation, Sul-livan code) and philan-thropy

Social re-sponsibility and strategic philanthropy

Social investment

Empower-ment of non-financial stakeholders

Partnership or collaborative governance

1The relationship characteristics was adapted from on an study of the level of business community involvement (O’Brien, 2000)

Colonialism - 1940 1960 1970 1980 1990 2000 2007

Institutionalization Sanctions (1964/late 1970s) Sullivan Principles of Apartheid (1948) Release of political prisoners (1990) First Democratic Election (1994)

apartheidpolicies.Asthesepoliciesremainedrelativelyunchangedduringthe20thcentury,ruralSouthAfricawasprogressivelyimpov-erished,thesocietywasraciallysegregated,anddissentanddiscontentwiththeapartheidgovernmentgrew.

Ad-hoc involvement: Business’ role in the

liberalization movementOnthecontrary,towardthelate1970sandearly1980sbusinessstartedtotakealeadroleinlobbyingagainstapartheidpoliciesmostlybecausebusinesswasoperatingun-derpressureduetoincreasedpoliticalten-sion,violenceandeconomicsanctions.Some




bigSouthAfricancompaniessuchasAngloAmericaandRembrandtstartedtoadoptanad-hocsocialresponsibility.Hereby,busi-nesstriedtoamelioratesomeoftheworstelementsoftheapartheidstatethroughvari-ousinitiatives.TheUrbanFoundationwasacollectivebusinesseffortaimedatstabi-lizingconditionsintheurbanblacktown-shipsbyprovidingprivatesectorsupporttourbandevelopmentissues(Hamann,2008).IndividuallysomebusinessleadersinSouthAfricalobbiedforafasterpacebygovern-mentinprogramsaimedatimprovingblackhousing,education,andjobtraining.Otherswereadvocatingfortheremovaloflawsthatdiscriminatedagainstnonwhitesinthecitieswheretheywork.Againstthisbackgrounditisarguedthatbusinesswasinstrumentalinthedownfallofapartheid(Fig,2005).Thetypeofrelationshipwithnonfinancialstake-holderswasthereforeclearlyinformedanddrivenbybusinessinterests,emotionsand“doing-good”(O’Brien2000:24)inacon-textofsocio-politicalandeconomicinjustice.However,therelationshipbetweenbusinessandsocietydidnotdevelopbeyondthispater-nalism.Assumptionsweremadeaboutwhatwasthebestfornon-financialstakeholdersasanyinterventionatthatstagewasperceivedasbetterthannothing.Hypocrisy,businessen-lightenedself-interestandassociatedfeelingsofdoinggoodprevailedbecauseacontribu-tionwasmadetoagoodcause–negatingthedamagingeffectsofapartheidpolicy,whilstbusinessandtradepartnersbenefitedfromapartheidpolicy.

Attheheightofthepoliticaltribulationsinthelate1970’sthefivebiggestinvestorsintheSouthAfricaeconomywereGreatBritain(40percent),theUnitedStates(20percent),

WestGermany(10percent),SwitzerlandandFrance(each5percent).In1979theUnit-edStatessold$1.5billionworthofgoodstoSouthAfrica,andimported$1.9billionworthofSouthAfricanproductsmostlymineralsthatwerevitaltoU.S.militaryandindustrialneeds.Ontheotherhand,SouthAfricawasdependentonindustrializedcountriesforcapitalflowsandhightechnology–comput-ers,scientificinstruments,nuclearenergy,etc.(Phyllis,1982).Thougheconomicsanc-tionsweredebatedsincethe1960stheywerenevermandatory.Itwasonlyinthelate1970sthattradesanctionswereformalized.Becauseofthedependencyontraderelationsandfor-eigncapitalflowsthetradesanctionsplacedthebusinesssectorunderenormouspressuretopushtowardtheeliminationofapartheid.U.S.companieswiththebiggestinvestmentsinSouthAfricaincludedFord,GeneralMo-tors,MobilandCaltexOil.TheseAmericanfirmsinadditiontosmalleroperationsandotherinternationalcorporationscameunderattackfromconsumersandinvestorsinhomecountriestodisinvestinSouthAfricaandornottofollowbusinesspracticesunderapart-heidnorms.Theseearlyexamplesofconsum-erandinvestoractivismwereinstrumentalinthedevelopmentoftheSullivanPrincipalsthatprovidedguidancetoAmericancorpo-rateoperationsinSouthAfrica(Waddock&Bodwell,2007).TheSullivanPrincipleswasastatementoffairemploymentpracticesthatincluded:equalpayforequalworkforblacksandwhites;nonsegregationintheworkplace;trainingprogramstoadvanceblacks;im-provedhousing,transportation,schoolsandhealthcare(Mangaliso,1997).ThroughtheSullivanPrinciplescorporateresponsibilityinSouthAfricawasformalizedandoperatedaseffortstoimprovesocialstandardswithin




corebusinessactivitiesandby“constructiveengagement”(Marzullo,1987)withcivilso-cietyandstateinterests.Alperson(1995:5)describestheSullivanPrinciplesasa“turn-ingpoint”inthe“vocabulary”ofcorporatere-sponsibilityinSouthAfrica.Yet,theSullivanPrincipleswerealsometwithconsiderablere-sistanceorcriticism,whichemphasizedthatonlyafewcorporationseffectivelyadoptedtheprinciples(Mangaliso,1997).Aprominentconcernwasthattheprinciplesweremeanttoaccommodatethemountingpressurestodisinvest(Orkin,1989),thuspreventingmoresignificantpressurebeingexertedontheapartheidgovernment(Bezuidenhout,Fig,Hamann,&Omar,2007).ThoughtheSulli-vanPrinciplesmadeanimpactintheem-ploymentpracticesduringapartheid,itonlyaffectedtheblackemployeeswhowereem-ployedinAmericancorporations,whichrep-resentedjust1percentoftheeconomicallyac-tiveblackpopulation(Mangaliso,1997).Theyfailedtoaddresscentralproblemsofapart-heidsuchasuniversalsuffrage.Theimpactofbothlocalandinternationalbusiness’advoca-cyagainstapartheidmustthereforebeseenascomplementarytocivilsocietyliberalizationmovements.Herebytheanti-apartheidmove-mentrepresentsoneofthebiggestandmostsuccessfulbusiness–civilsocietypartnerships.

Asaresultofthesedevelopments,business-es’relationshipsandinvolvementinsocietyrangedfromad-hoctoregular,orderlyandcoordinatedintervention.Irrespectiveofthepaternalisticnatureoftherelationship,theinvolvementprovedvaluablebecauseagreatdegreeofmonetary(throughphilanthropy)andmoralsupportwasgenerated.However,thistypeofrelationshipwasthreatenedbythecontinuousneedforgivingandengagement

duetothebottomlesspitofsocialdemands,needs,andpoliticalchallenges.Thefeelingsofwell-beingassociatedwithgivinganden-gagementweresoonreplacedwithresent-ment–andthisresultedinamixtureoffrus-trationandangerorthedesiretowithdrawtothepointofnon-involvement.

Systematic involvement: Strategizing the

role of business in the new South AfricaTowardtheendofapartheidandduringtheearlyyearsoftransitionthebusinesscommu-nityrealizeditcouldnotbeeverythingtoev-eryone.Inaddition,businesswasalsocritical-lyawarethattherewereveryfewguaranteesaboutthepost-apartheidgovernment’spolicyonthenatureofthemarketeconomy(Ros-souwetal.,2002).“Businesswassomewhatnervousofanysubstantialorradicaleconom-icchange.Itrealizedthatithadtoaccom-modatenewpriorities,buttherewassomeuncertaintyastohowfaritwouldneedtotransform”(Fig,2005,p.600).Fromthelate1980sonwardorganizedbusinessdelegationswereinnegotiationswithAfricanNationalCongress(ANC)leadershipinexile,inordertoestablishcommonground.Afterdemocra-tization,businesswassatisfiedbytheconti-nuityoffiscalandfinancialgovernance(Fig,2005).Asaresult,therelationshipbetweenbusinessandsocietybecamemorepurposefulwithclearerparameters.Amuchmoresys-tematicandstrategicapproachtostakeholderrelationshipswasdeveloping.Philanthropicinitiativeswerefacilitatedthroughplanning,budgeting,andscreeningofapplications.Thesystematicnatureoftherelationshippresent-edaturningpointincorporateresponsibil-ity,becausethead-hoc,hitandmissapproachwasbeingreplacedwithstrategicphilan-thropy(O’Brien2000).Businesswasatease




withthisrelationshipbecauseitwasinthepositiontomakeclearandrationaldecisionsthatwereusuallycloselyrelatedtocorporateinterestssuchassocialinvestmentsineduca-tionandcommunitydevelopment(Alperson,1995).

Pre-systemic involvement: The role of busi-

ness in nation buildingPost-apartheidpolicymandatedbusinesspar-ticipationinnationbuildingandtherecon-structionanddevelopmentofthenewSouthAfrica.Thephilosophicalapproachunderpin-ningpostapartheidpolicyofsocialdevelop-mententailedintegratedeconomicandsocialpoliciesandpluralism(Pretorius,2002).Thismeantthatbusinessasadistinctsectorinsociety,togetherwithcivilsocietyorga-nizationsandgovernmentwasencouragedandmandatedtocontributetothecountry’sdevelopment(Pretorius,2002).Theemerg-ingrelationshipbetweenbusinessandnon-financialstakeholderswasreferredtoascorporatesocialinvestment(CSI).Itbecamethedominantinterpretationofcorporateso-cialresponsibilityinSouthAfrica(Hamann,2008)anditservedasafoundationforpublicrelations,marketingandadvertising(O’Brien,2000).Emphasiswasplacedonnationbuild-ing,educationandhealthprojects(Alperson,1995)eithernationallyorinthecommunitiessurroundingcompanies’operations.Businessrecognizedandlegitimizedthisresponsibil-ityasagoodinvestment.CSInecessitateda“win-winscenarioinwhichreturnscouldbeidentifiedwhilstmeetingcommunityneeds”(O’Brien,2002,p.25).“But,theproblemwasthattherewasnomeasureofwhatthesocialreturnwouldbe,becauseitwasnotanin-tegralpartofthebusiness”(MoshoeshoeinBezuidenhoutetal.,2007:37).Thisisevident

inthefactthereislittlecomparableaccount-abilityofCSIexpendituresamongcompanies(Hamann,2008).Nonetheless,theCSImove-mentrepresentedanextensionofbusinesses’responsibilityofcompliancetothelaw,payingtaxandprovidingemploymentbyinvestinginthecommunityandthefutureofSouthAfri-ca.Hereby,SouthAfricanbusinessreorientedthetraditionalCSRdefinitionintermsofthewell-knowncorporateresponsibilitypyramidmodelofCarroll(Hamann,2008).Hamann(2008)explains:

AccordingtoCarroll,CSRencompassestheeconomic,legal,ethical,anddiscretionary–orphilanthropic–expectationsthatsocietyhasoforganizations,andtheeconomicandlegalresponsibilitiesaredescribedintermsofwhatisrequired,theethicalonesaswhatisexpected,andthephilanthropiconesaswhatisdesired(Carroll,2004).VisserarguesthatCarroll’smodelrequiressubstantialrevi-sionifadaptedtothe(South)Africancontext,suggestingthatthedominantinterpretationofCSRintermsofphilanthropicactivitiesmeansthatdiscretionaryaspectsofCSRareoftenmoreimportanteventhanthelegalandethicalones.This,heargues,isbecausethesocioeconomicdevelopmentneedsinmanypartsofAfricaare“sogreatthatphilanthropyisanexpectednorm,”andalsobecauseCSRingeneral“isstillinanearlystageofmaturi-ty.”Incontrast,legalresponsibilitiesareseentorepresent“farlessofapressureforgoodconduct,”becausethelegalinfrastructureisoftenpoorlydevelopedand“manyAfricancountriesarealsobehindthedevelopedworldintermsofincorporatinghumanrightsandotherissuesrelevanttoCSRintotheirlegisla-tion”(Visser,inHamann,2008).




Systemic involvement: Integrating corpo-

rate responsibility toward achieving mutu-

alism Today,14yearsafterdemocratization,theCSIrelationshipisincreasinglyperceivedaslim-itedasitlacksintegrityandparticipationthatleadstoempowerment(afundamentalprin-cipleofdemocracy).Differentiationbetweenwhatisimportanttothecorporationandtherealneedsofthecommunityareoftenveryvague.And,eventhoughCSIinitiativeshavenodoubtbeenmakingimportantdevelop-mentcontributions,theyarenotintegratedoralignedtocorebusiness.

Inaddressingthelackofintegrityandpar-ticipation,businessescommittedtocorpo-ratecitizenshipinSouthAfricaareincreas-inglyrealizingthatasystemicapproachtobusiness’roleandpositioninsocietyhelpsthemtobetteractualizetheirresponsibilitiestobothfinancialandnonfinancialstakehold-ers.Asystemicapproachimpliesthatbusi-nessandsocietyismutuallyinterdependent(Kleinhans,1994;VandenHeever&Hugo,1990;O’Brien,2000).Businessisdefinedinrelationtoitsstakeholdersandherebythecor-porationisseenasanintegratedpartofandstakeholderinsociety.Thistypeofinvolve-mentisdistinguishedbyalevelofinteractionandparticipationthatischaracterizedbyen-gagement.And,itisbasedupontheinclusivestakeholderapproachtocorporategovernance(seesectiononmarketdrivers).Asthisrela-tionshipisemergingtheabilitytosharedeci-sionmakingandnonfinancialstakeholders’influenceonbusinessstrategyisverylimited.Consequently,thetrustthatisdevelopingthroughengagementisprogressivelybeingthreatened.Unfortunately,variousnonfinan-cialstakeholdersareeitherwithdrawingfrom

consultationswithbusinessastheirinputsareignored,orstakeholdersonlyprovidein-putandfeedbackthatarefavorablyreceivedbybusiness.

Fewbusinessesareslowlyovercomingthispaternalistictendencyofunilateraldeci-sionmakingbyconstructivelyengagingwithstakeholdersandupholdingmutualdecisionmakingthatresultsinempowermentandadvancementofallpartiesinvolved(O’Brien,2000).HamannandDeJongh(2008)de-scribethisasashiftfromsocialinvestmenttosustainabledevelopmentandcollabora-tivegovernance.Thisrelationshipistypical-lydirectedatdevelopment(O’Brien,2000,Pretorius,2002).Emphasisisonsharedaimsandtheprocessofengagement,ofwhichthebenefitsaresometimesmoreenduringthanspecificoutcomes(O’Brien,2000;Preto-rius,2002).Thistypeofinvolvementisverysimilartosystemicinvolvementhoweveritischaracterizedbydistinctcollaboration.Skillsaretransferredthroughcollaborationandknowledgeexchangebringsaboutknowledgegenerationandempowerment.Theultimatemoveawayformpaternalismistobeabletothinkof“empoweringpeopleasequalswithinthebusinessenvironmentandforalltore-alizetheirinterdependenciesandcommonmembershipofthecommunity”(O’Brien,2000,p.26).Hereby,“thescaleofanalysisandengagementhasincreasedfromtheleveloftheindividualcompanytothevaluechainandthebroadergovernanceframework.Thishasrequiredadifferentmodeofengage-ment,wherebyproactivecompaniesseektosupportcollaborativegovernanceinitiativesthatentailashiftinresponsibilityforpolicy-making,implementation,andtheprovisionofsocialgoodsandservicesfromgovernmentto




amorediffuseconstellationofsocialactors,withaspecialroleforbusiness”(Hamann,2008).Theconsequenceofthisintegratedleadershipandownershipprocessisgrowthanddevelopmentofallthepartiesinvolved.Otherbenefitsaregreaterdevelopmentim-pactparticularlyinsectorsrelatedtobusinessinterest,suchaseducationandemploymentgeneration(Ashman,2001).Also,goalsoforganizationalcapacityaremorelikelytobeachieved.Itisalsobecomingevidentthat“civ-ilsocietyorganizations(CSOs)andbusiness-esreapmutualbenefitsfromcollaboration”,althoughCSOsstilltendtoshouldermoreofthecosts(Ashman,2001,p.1097).

Insummary,themeaningandnatureofcor-poratecitizenshiphasevolvedagainstthebackgroundofthecountry’ssocio-politicalandeconomicrealities.Theroleandposi-tionofbusinesswithinthiscontextcouldbedescribedasa“double-edgedsword:thephilanthropicgesturesandpoliticalmaneu-verscharacteristicoftheUrbanFoundation,thoughcontributingnodoubttosocialdevel-opmentandperhapsasofteningoftheharsh-estelementsoftheapartheidgovernment’spolicies,occurredsidebysidewithcontinuedexploitationofblacklabor,aswellaslowoc-cupationalhealth,safety,andenvironmentalstandards”(Hamann,2008).Today,inpost-apartheidSouthAfricatheroleofbusinessisdefinedfromapluralistapproachwithinasocialdevelopmentalpolicyframework.Busi-nessisseenasanimportantstakeholderinsociety,andinadditiontophilanthropicsocialinvestmentactivities,businessshouldincol-laborationwithgovernmentandcivilsocietyworktogethertowardthecountry’ssocialandeconomicdevelopment.

The contemporary socioeconomic drivers

of corporate citizenship in South AfricaThoughitisimportanttounderstandhowcorporatecitizenshiphasdevelopedinSouthAfrica,itisalsonecessarytorecognizethecurrentsocioeconomicrealitiesandhowtheseimpactbusinessoperations.Forexam-ple,thestatefacilitatescorporatecitizenshipthroughvariousgovernment-ledinterventionstoaddressthesesocioeconomicchallenges(SeeHamann,2008forasummaryofnation-allegislationofpertinencetocorporateciti-zenshipinSouthAfrica).Byrecognizingthecontextualchallenges,theneedforempower-mentandcollaborativecorporatecitizenshipbecomesmuchclearer.

Themostinfluentialsocioeconomicandenvironmentalissuesaffectingbusinessinpost-apartheidSouthAfricaare:theHIVandAIDSpandemic;theneedfortransformationandredressofpastimbalances;skillsshort-ageandjobcreation;crime;andenvironmen-talconcernsrelatinginparticulartoenergyef-ficiency.Table2summarizestheseissuesandotherasitrelatestocorporatecitizenship.

Thesocialnatureofthemajorityoftheseissuesiscloselyrelatedtopovertyeradica-tionandthecountry’sneedforsustainablesocioeconomicdevelopment-conceptualizedassocialdevelopment.Socialdevelopmentreferstotheeconomic,socialandpoliticalwell-beingofallpeople,groups,communitiesandsocieties.Well-beingisconceptualizedinbroadterms,contrarytothetraditionalno-tionsofwelfare,whichisindicativeofpsycho-socialwell-beingonly.Theaimofsocialde-velopmentistoachieveeconomicandsocialgoals,preferablethroughintegrativepolicymeans(Midgely,1995).Fromasocialdevelop-

www.BCCorporateCitizenship.org68 Global Education Research Network

Table 2: Selection of Corporate Citizenship issues in South Africa

HIV and Aids – prevalence testing, prevention measures, clinical and medical support, busi-ness 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 busi-nesses 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 In-dex ( 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 atmo-spheric 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 Cor-porate Governance




mentperspectivecollaborationismorethanjustameanstoanend;itisanendinitselfbecauseoftheinherentsocialandhumancapitalbenefits(Pretorius,2000).Partnershiporcollaborationbetweensectors(i.e.public-privatepartnerships)isthereforeusedmorefrequentlyasastrategytoachieveintegrativegoals(Pretorius,2000).SocialdevelopmentissuesinSouthAfricaareinterrelatedandim-pacttheeconomyandbusinessdirectlyandindirectly.Theremainderofthissectionbrief-lyillustratesthescopeofthesocioeconomicchallenges,theimpactonbusiness,andtheroleofbusiness.

HIV and AIDS SouthAfricaiscurrentlyattheepicenteroftheAIDSpandemicandthediseaseisaffect-ingallaspectsofSouthAfricansociety.Preva-lencerateshaveincreasedfrom0.7percentin1990to27.9percentin2003(DepartmentofHealth2004).Povertyisregardedasanimportantco-factorinthelikelihoodofinfec-tionbecauseofresultingbehavioralandbio-logicalfactors(Marks2002,Nattrass,2004).TheresponseofcorporateSouthAfricatoHIV/AIDShasbeenslow,partialanderratic(Dickinson2004).Frequently,theresponseofcompaniestoHIV/AIDShasbeendrivenfrom“below”bymiddleandlow-levelman-agersratherthanasastrategicissuebytopmanagement(Dickinson&Stevens2004;Dickinson,DraftDocument).Itiswidelyac-knowledgedthattheHIV/AIDSepidemicwillsignificantlyimpactSouthAfricanbusinessintermsofmarkets,investorconfidenceandworkforcesandtheskillstheyembody(Whi-teside&Sunter,2000).ItgoeswithoutsayingthatinadditiontorespondingtohowHIV/AIDScouldaffectoperationsandprofitability,thediseasehasbecomeanimportantareaanddriverofCC.

Skills development and job creationJobcreationandskillsdevelopmentisama-jornationaldevelopmentobjectivetoaddresspovertyandtodeveloptheeconomy.How-ever,uptillthelate1990senterprisetrainingwasathistoriclows.Thiswashamperingthesocialdevelopmentgoalsofgovernmentandstrainingeconomicgrowth.TheSkillsDevel-opmentLeviesActof1999soughttocorrectthisbycreatinganationallevysystemappli-cabletoallenterprisesbasedontaxing1per-centofpayrollexpenditure.Importanttonoteinthisregardisthefactthat,whilegovern-mentnowlevied1percentofpayroll,theKingCommission’srecommendationsonCorpo-rateGovernanceinSouthAfricasuggestedthatenterprisesinvest4percentofpayrollexpenditureontraining(IOD,2002).Inthiscontext,government’slevycaninfactbeconsideredascrowdingoutenterprise’sowntraininginitiatives.Thelogicherethoughisthatpublicprovisionoftheseservicesisnec-essarytocorrectthemarketfailuresassociat-edwithhistoricallypoorlevelsofinvestmentbyenterprisesinpersonneltraining(Daniels,2006).Thehighpriorityofskillsdevelop-menthasbeenasignificantdriverofmostCCpractices.

Crime Crimeimpactsbusinessbothdirectlyandindirectly.Directlybythetheftofpropertyandmoney,andcorruption,andindirectlythroughreducedbusinessconfidence,lossofinvestment,immigrationandthesteadyero-sionofthefoundationsuponwhichtheecon-omyisbuilt(BAC,2008).Businessesmostlyseek to support government’s efforts by com-plementing its resources with entrepreneurial, managerial and technological skills. Businessesalsocollaboratewithcivilsocietyinvarious




initiativestocombatcrime.Thoughbusiness-esparticipationisvoluntary,crimepreventioneffortsbybusinessarenumerousandinterna-tionallyacclaimed(BAC,2008).

Transformation and black economic em-

powermentTheneedfortransformationandreconcilia-tionofpastimbalancesinsocietyaremainlyfacilitatedthroughemploymentequity,affir-mativeactionandBroadBasedBlackEco-nomicEmpowerment(BBBEE).OfthethreeinitiativesBBBEEismostcomprehensiveasitalsoentailsemploymentequityandaffir-mativeaction.Governmentencouragesblackeconomicempowerment(BEE)transactionsasthemainvehiclethroughwhichtheaimsofBBBEEshouldbeachieved.ThepurposeofBBBEEistheempowermentofexcludedgroupssuchaswomen,workers,youth,peo-plewithdisabilitiesandpeoplelivinginruralareas,throughtheadoptionofdiversebutin-tegratedsocioeconomicstrategies.Inthisway“real”empowermentneedstobepromoted.TheextenttowhichBBBEEempowersthebroadercommunityisstillofkeyconcern.Inarecentinvestigationoftheextentofcommu-nityempowermentthroughBBBEEtransac-tionsitwasconcludedthat:

WhileBEEhasthepotentialtocontributetothederacializationofownershipoftheSouthAfricaneconomy,theanalysisoftheBEEdealsconcludedfrom2004to2006onlymarginallyincludedthosewhoaredisem-poweredandexcludedfromfulleconomicandsocialparticipationinthesociety.Thetwogroupswhogainedthegreatestaccesstothedealswereemployeesandwomen.Thesegroupsarenothomogenousanditismorethanlikelythatmanagersandwomen-owned

companiesbenefitedmorethanlowerlevelworkersandpoor,ruralwomenandwomenwithdisabilitiesincludingthoseinlow-paidemployment.Peoplewithdisabilitiesandyouthalsobenefitedtoalesserextent.InthisrespectthedealsfellshortoftheintentionsoftheBBBEElegislation.(Patel&Graham,un-publishedreport).

InBEEtransactionstheemphasisismainlyplacedonincreasingcorporateownershipbytheblackmajoritypopulationthatwasexclud-edfromeconomicgainsduringapartheid.BEEtransactionsareprivateplacementsofequitywithblackempowermentgroupsbyfirmsprimarilyownedbywhiteSouthAfri-cans.MostforeigninvestorsareconcernedaboutthemarketperformanceoftheseBEEtransactions.However,inarecentstudyitwasfound“thatonaverage,theannouncementofaBEEtransactionisassociatedwithasignifi-cantpositiveincreaseofalmosttwopercentinthemarketvalueofequityoftheannounc-ingfirm…[Secondly],thepositiveabnormalreturnsassociatewithBEEtransactionsaresignificantlypositivelycorrelatedwiththeproportionofthefirm’sequityacquiredbytheBEEgroup….Additionally[itwasfoundthat]theaverageBEEtransactioniscompletedatasignificantdiscount(ofalmosttenpercent)fromthemarketpriceofequityforthepar-ticipatingfirm”(Jackson,Alessandri&Black,2005,p20-21).

Debatesandnegotiationsbetweenthegov-ernment,businessandotherrole-playershasbeenongoingforsometime,howeveritwasonlyrecentlythatitwasmoreconclusivelyde-finedbythemeansofa“balancedscorecard”(DTI,2007),assummarizedinTable3.Thisscorecarddefinestheparametersandrequire-mentsofBBBEE.




Table 3: Broad-Based Black Economic Empowerment Scorecard

Scorecard

componentFocus areas

Ownership

(20 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

Management

control

(10 percent)

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

Employment equity

(10 percent)

• 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

Skills

development

(20 percent)

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

Preferential

procurement

(20 percent)

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• The 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

Enterprise

Development

(10 percent)

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 re-lating to profit and turnover

Socio–economic

Development

initiatives

(10 percent)

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 turn-over

Adopted from Hamann (2008)




Againstthebackgroundofempiricalevi-denceBBBEEtransactionsareassociatedwithsignificantpositiveabnormalreturnsfortheshareholdersoftheannouncingfirms.TodatevalidandreliableempiricalevidenceisstilllackingtoillustratetheBBBEEbenefitstononfinancialstakeholders(i.e.employeesandthepreviouslydisadvantagedcommunity).Thus,Jacksonetal.(2005)arguesthatinthecaseofatypicalBBBEEtransactionthepriceofcorporatesocialresponsibilityissmallerthatthebenefit.

Throughpro-socialresponsibilitylegislation(suchasBBBEE)thenewdemocraticregimehasfacilitatedtheintegrationofsocialjusticeintocorebusinessactivities.Issuesrelatingtoemploymentequity,affirmativeaction,andskillstrainingaregovernedbythestatethroughlegislationandbusinessisexpectedtocomplywiththeserequirements.ThroughsectorChartersandtherecentBlackEconom-icEmpowermentAct(2003)andpublicationofthesubsequentbalancedscorecard(DTI,2007)issuesrelatingtobusinessownership,managementcontrol,employmentequity,skillsdevelopment,procurement,enterprisedevelopmentandsocioeconomicinitiativesarealsodirectedbythestate.HamannanddeJongh(2008)arguethatthismakesthecorporatecitizenshipfunctioninSouthAfricauniqueascorporatecitizenship“cannotbepurelydefinedasvoluntaryinitiatives,andar-guablytherearenocleardistinctionsordivi-sionsbetweenvoluntarybusinessactionsandstate-ledinterventions.”Itisthereforecrucialforforeigninvestorstotakenoteoftherel-evantlegislationandintegrateitaccordinglywithintheirbusiness.Variouscollectivebusi-nessinitiativeshavebeenestablishedtofacili-tatedialogueandinnovationaroundtheseis-

suesandrelevantregulationandstandardsinordertoavoidsituationswhereconformancetoregulationsandstandardsconstrainman-agementandenterprise.TheseinitiativesaresummarizedinTable3.

The business culture in South Africa

and other market drivers of corporate

citizenshipThedevelopmentofformalcorporategov-ernanceguidelineshappenedagainstthebackdropofdemocratizationinSouthAfricain1994.Thesewereuncertaintimes,asitwasnotyetclearifthetransitiontodemoc-racywouldevolvepeacefully.ThefirstreportongoodcorporategovernancewasdevelopedbytheKingCommitteeduringtheseuncer-tainsocial,politicalandeconomictimes.ItisforthesereasonsthattheKingCommit-teerecognizedthat“aproperbalanceneedstobeachievedbetweenfreedomtomanage,accountabilityandtheinterestsofthedif-ferentstakeholders”(IOD,1994,p.3).Theintegratedapproach(laterreferredtoasaninclusiveapproachtocorporategovernanceintherevisedcodepublishedin2002)wasadoptedinthefirstKingreportin1994.Ac-cordingtoRichardWilkinson,chiefexecutiveofficeroftheInstituteforDirectorsinSouthAfrica,“theKingReportwasthefirstreportoncorporategovernancethatembracedtheconceptsofstakeholderengagement,ethicsandenvironmentalmanagementandactivelyencouragedaninclusiveapproachtotheseissues”(inRossouwetal.,2002,p.300).Thispioneeringworkwasfurtherelaboratedthroughareviewofissuesrelatingtonon-financialreporting.Guidelinesforsocialandethicalaccounting,auditingandreporting(increasinglyreferredtoassocialaccounting)aswellasonSafety,HealthandEnvironmen-




tal(SHE)issueswereprovided(Rossouwetal.,2002,p.300).Somearguethattheadop-tionoftheinclusiveapproachwasillustrativeofthepredominantlywhite-ownedbusinesscommunity’scommitmentorenlightenedself-interesttotransformationandcoopera-tioninnationbuildinganddevelopmentinSouthAfrica.Butitwasalsonecessarytocon-structauniquecharacterforthenewSouthAfricaneconomy,preferablydifferentfromitshistoricEurocentricandAnglo-Saxonorienta-tions.Greatconfidencewasplacedintheen-trenchmentofAfricanvaluesintothecodessuchasUbuntu27.Rossouwetal.(2002,p.300)arguedthattheintegrationofvaluesfundamentaltoAfricanculturewasseenas“ameanstopromoteandupholdthestandardsofgoodcorporategovernance”andnotasameanstoobstructthetraditionalwaysofacorporation.

Theinclusiveapproachthattranspiresfromthisgovernancecoderecognizesthatcorpora-tionsareconnectednetworksofstakeholderinterests,andasaresultrecognizedstake-holderswillbeconsideredwhendevelopingcorporatestrategies.Engagement,however,isrestrictedonthebasisthatthebusinessrelationshipwithstakeholdersmustbe“mu-tuallybeneficial”(IOD,2002,p.8).Iffuturevalue(profitability)istobegeneratedthenitisnecessarytoachieveabalancebetweenconformance(tostandardsandregulationsofcorporateresponsibility)andenterprise(per-formancecharacterizedbyprofitability).TheKingIIadvocatesthat:“itwillbepotentiallyirreparable,andhavefar-reachingconse-

27Ubuntu - an African ethic or humanist philosophy often summa-rized as humanity towards others. Self-development or improve-ment is encouraged but only when it benefits others simultane-ously.

quences;bothfortheenterpriseandthesoci-etiesandenvironmentwithinwhichthecor-porationoperatesifbalancesarenotstruck”(IOD,2002,p.91).Suchabalancethereforealsoentailsthatanenterprisemustbalancetheneedforlong-termviabilityandprosper-ity–oftheenterpriseitselfandthesocietiesandenvironmentuponwhichitreliesforitsabilitytogenerateeconomicvalue–withtherequirementforshort-termcompetitivenessandfinancialgain.Thisbalanceultimatelyrepresentssustainabledevelopmentinthecorporatecontext.Sustainabledevelopmentisalsocharacterized“asdevelopmentthatmeetstheneedsofthepresentwithoutcompromis-ingtheabilityoffuturegenerationstomeettheirownneeds”(IOD,2002,p.91).Thecompromisingoffuturevaluecreationforachievingshort-termbenefitisthuscounter-productive.Thereforesustainabilitycanbeseentofocusonthose“non-financialaspectsofcorporatepracticethat,inturninfluencetheenterprise’sabilitytosurviveandprosperinthecommunitieswithinwhichitoperates,andsoensurefuturevaluecreation”(IOD,2002,p.91).Alsomorespecifically,sustain-abledevelopmentistheachievementofposi-tivesynergybetweentheeconomic,social,environmentalandinstitutionaldimensionsbetweenthecorporationandsociety.Commit-menttoachievesuchabalanceandcontributetosocietyatlargeiscalledcorporatecitizen-ship(CommonwealthBusinessCouncilinIOD,2002,p.91).

TheKingIIalsomakesexplicitreferencetotheGlobalReportingInitiative(GRI)guide-linesanditrequiresthat“everycompanyshouldreportatleastannuallyonthena-tureandextentofitssocial,transformation[includingblackeconomicempowerment],




ethical,safety,health,andenvironmentalmanagementpoliciesandpractices”(p.35).Itisnotedthatwhileitsrecommendationsarenotmandatory,conformanceis“intheenlightenedself-interestofeveryenterprise”and“canbeencouragedinvariousways”(p.19).Indeed,theJohannesburgSecuritiesEx-change(JSE)nowrequireslistedcompaniestodemonstratecompliancewithpartsoftheKingIICode,andthisrepresentsapowerfulmarketbasedinstitutionaldriverforCC.

Inadditiontogoodcorporategovernance,investorsareincreasinglyplayingaroleinpushingtheCCagenda.Althoughthismove-mentisstillemerging(Sonneberg&Ha-mann,2006)itonlyrepresentsonepercentofinvestmentsundermanagement.Topro-videabenchmarkforSRIinvestors,aswellasanimpetusforCCmoregenerally,theJSElaunchedasustainabilityindexin2004calledtheJSESociallyResponsibleInvestment(SRI)Index.TheIndexiscenteredonasetofabout70criteriaorindicators,groupedintermsofthefouroverarchingcategoriesofcorporategovernance,society,environmentandecon-omy.TheoriginalcriteriawerebasedontheFTSE4GoodmodelbutweretailoredtosuittheSouthAfricancontext,andtheyarecon-tinuouslymodified.WithregardtotheimpactoftheIndexinSouthAfrica,SonnenbergandHamann(2006:316)concludeasfollows:

There is no doubt that the Index has in-creased awareness of corporate citizenship among JSE listed companies. Its most sig-nificant 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

them with a deeper understanding of a range of sustainability issues… A further important contribution, both for compa-nies and the broader stakeholder commu-nity 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 mate-rialize. The reasons include questionnaire fatigue and uncertainty as to the benefits of participating in the Index.

Othermultilateralandmulti-stakeholderini-tiativesthathavevariedinfluenceonCCinSouthAfricaistheUnitedNationsGlobalCompact;theGlobalReportingInitiative;TheCarbonDisclosureProject;ISO14000series;ISO26000,OECDGuidelinesonMultina-tionalEnterprises;theForestStewardshipCouncil;theKimberlyProcessCertificationPrinciples;thePrinciplesforResponsibleInvestment;theHumanRightsComplianceAssessment;theExtractiveIndustriestrans-parencyInitiative;andincreasingemphasisonfairtradeandrelatedcertificationsystems(seeHanks,Hamann&Sayers,2007foradetailedreportofthestatusofthesestandardsandprinciplesinSouthAfrica).

Rankingsandawardsthroughperformanceappraisalsdoplayanimportantroleinfoster-ingawarenessandpeerpressureamongcom-paniesinrelationtocorporatecitizenship.ThetwomoreprominentrankingsinSouthAfricaaretheSRI(asdiscussedearlier)andtheUNISACentreforCorporateCitizenship




researchprojectthatentailstherankingofthetop52companiesontheJSEonthebasisofanestablishedmethodologycalledAccount-abilityRatingTM.Companiesareratedinrelationtotheirperformanceinthefollowingareas(Hamann,2008):

• Strategic intent–Thatis,theextenttowhichsustainabilityissuesarereflectedincompanystrategy;

• Governance–Includingissuessuchasboardoversightandresponsibilityforsus-tainabilityissues;

• Performance management–Thedegreetowhichsustainabilityobjectivesareinstitu-tionalizedinday-to-daymanagement;

• Stakeholder engagement–Themannerandextenttowhichstakeholdersareen-gagedinsettingobjectivesandtheirimple-mentation;

• Public disclosure–Withemphasisonthequalityandcontentofsustainabilityreport-ing;

• Assurance–Theextentandmannerinwhichcompanies’publicdisclosureonsustainabilityissuesisauditedorverifiedbyindependentassessors.

DistrustinratingsinSouthAfricaishowev-erprevalent(HamannanddeJongh,2008).Themainconcernislowreliabilityofdata,lowvalidityofmeasurementconstructs,andalackofcomparabilitybetweenmethodologies(Chatterjie&Levine,inHamann,2008).Inaddition,theinteractionsbetweencompaniesandtheirsocioeconomicandnaturalenviron-

mentsareapproachedsuperficially.HamannanddeJongh(2008)conclude“thatthereisaneedformorecontext-specificassessmentsthattakeintoconsiderationthecomplexitiesofsustainabledevelopmentatthelocallevel.”TakenintoaccountthecollaborativedirectioninwhichCCisevolvinginSouthAfrica,theseratingsandassessmentswouldneedtocon-sidertheextenttowhichCCisintegratedintobusinesspracticesandthenatureandimpactofsustainablecollaboration.Throughpartici-patoryresearchassessments,stakeholderscouldplayamorefundamentalroleinstruc-turingassessmenttoolsandparticipatinginimpactassessment.

Conclusion: Challenges and opportunities

for the expansion of corporate citizenship

in South AfricaThesocioeconomicandpoliticalhistoryofSouthAfricahasinformedthedynamicna-tureofcorporatecitizenship.Itiscriticalthatthecurrentmeaningandstatusofcorporatecitizenshipisunderstoodagainstthishistori-calbackground.Ofsimilarimportanceistherecognitionofcurrentsystemicchallengesthatthreatensustainablebusinessdevelop-ment.TheimpactofhistoryandcontextualissuesinformstheroleofbusinessinSouthAfricaandtheextenttowhichthegovern-mentfacilitatescorporatecitizenshipthroughlegislation.

MainmarketdriversofCCaretheinclusivecorporategovernancethatpresentsacultur-allyrelevantframeworkforoperatingCCinSouthAfrica;SRI;rankingsandawards;andmultilateralandinternationalstandardsandprinciples.Thesedriversareshapingthere-sponseofbusinesstoCC.Currentlytheun-derstandingofcorporatecitizenshipisshift-




ingawayfromCSItowardmorecollaborativeandreciprocalengagementwithnonfinancialstakeholders.Alignmentofcorporateciti-zenshiptocorebusinessfunctionsismostlyfacilitatedbycivilregulation,multilateralregulationsandmultistakeholderagreements.Itisagainstthisbackgroundthatitisdiffi-culttodescribeCCinSouthAfricaasvolun-tary.Thoughconformancecanbeseenasanobstacletoenterprise,businessisbenefitingfromtherelationshiptogetherwithnonfinan-cialstakeholders.Reachingthisbalanceisstillamainchallengeincorporatecitizenshippractice.

Furthermore,theemergingcollaborativechar-acteristicofcorporatecitizenshippresentsanopportunityforinnovation,businessexpan-sionandeffectivesocialdevelopment.Socialdevelopmentisdefinedasintegrativeeco-nomicandsocialpolicythataimstoachievesocialandeconomicgoalssimultaneously.SouthAfrica’spolicyenvironmenttherebyprovidesopportunitytointegratecorporatecitizenshipintocorebusiness.

Currentlythereisaneedforregionalandnationalperformanceappraisalsofcorporatecitizenship.Businesssocialandeconomicimpactmustbeillustrated.Aparticipatoryorcollaborativeeffortbetweenbusinessanditsstakeholderstoestimateperformanceandimpactwillbeadvantageous,asmostperfor-manceappraisalsareremovedfromthereal-ity.Thoughthisisachallenge,opportunityexistsforlocalandmulti-nationalcorpora-tionstocontributeeffectivelyandefficientlytodevelopment.

Theexpansionofcorporatecitizenshipmustbeinharmonywiththebusinessculture

ofinclusivecorporategovernancewhichisalignedtothevaluesofUbuntu.Hereby,cor-poratecitizenshippracticewillmakebusi-nesspracticeculturallyrelevantandappropri-atebothnationallyandintheregion.ThisisparticularlyimportantasforeignbusinessesoftenuseSouthAfricaasagatewayintotherestofAfrica.

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Cultural context and social contractThe concept of corporate citizenship in the United Arab Emirates is based on a tradi-tion 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 citizenshipIn 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 con-ventional 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.

United Arab Emirates Corporate Citizenship Summary

Dubai, United Arab Emirates

© T

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ings




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 BusinessThe 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 com-

merce 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 exper-tise in business ethics and corporate social responsibility in Dubai, positively impact-ing Dubai Chamber members and stakeholders through the provision of knowledge resource and value-added services that enable them to develop global business stan-dards of integrity. The center’s mission is “to raise the level of awareness, and encour-age 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.




Contextual backgroundLocatedintheArabianPeninsula,theUnit-edArabEmirates(U.A.E.)wascreatedwhentheBritishwithdrewfromtheGulfin1971.ThecountryiscomprisedofsevensovereignEmirates:AbuDhabi(whichisthefederalcapitalandthelargestcity),Dubai,Sharjah,RasAlKhaimah,Ajman,FujairahandUmmAlQaiwain.TheU.A.E.isgovernedbyheredi-taryrule,namelybythesupremecouncilofrulers,whichismadeupoftherulersofeachEmirate,alongwiththeCrownPrincesanddeputiesofeachruler.Theyareresponsibleforgeneralpolicymattersandratifyingfed-erallaws.TheU.A.E.isoneofthesixmem-bersoftheGulfCorporateCouncil(GCC).Allsixcountriesaremajoroilexporters.Infact,45percentoftheworld’soilreservesareesti-matedtobeinthisregion.TheU.A.E.isalsoamemberoftheUnitedNations(U.N.),In-ternationalMonetaryFund(IMF),OilProductExportingCountries(OPEC)andtheWorldTradeOrganization(WTO).Therulershavemadestrongeffortstoensurethatthecountryisstablethroughoutitsrapiddevelopment.Modernandimpressivehigh-risebuildings,well-equippedhospitals,dependableelectric-ityandwatersupplies,educationalestablish-mentsandmoderntransportationnetworksaresomeexamplesofhowtherulershavetransformedtheU.A.E..Dubaiinparticu-larisawell-knownglobalcommercialcenterandbusinesscapitaloftheMiddleEast,partlyduetoitstax-freestatusandpositionasakeytradingroutebetweentheEastandtheWest.KeyincomegeneratingactivitiesoftheU.A.E.includemanufacturing,re-exporting,bank-

ing,financialservices,tourism,retailinganddistribution.

The state of social responsibility activities

in the U.A.E.SociallyresponsibleactionsarenotnewtotheU.A.E.,whichhasawell-establishedtraditionofsolidarityandcharity.Infact,thepaternal-istandcollectivistcharacteristicsoftheU.A.E.culture,togetherwithitsreligiosity(IslamicvaluesrelatedtoZakat-donations),seemtobetheunderlyingrootmotivatingcharityandsocialassistance,themostcommonformsofaidinthisregion.

Whilecharitabledonationsandvoluntaryso-cialinitiativesaredeeplyrootedinthesocialtradition,awarenessandpracticesofcorpo-ratesocialresponsibility(CSR)arestilltheinfancystage.ThedevelopmentofaCSRdebate,whichisbarelystartingintheU.A.E.,canbeattributedtotheeffortsofsomebusi-nessesandpoliticalleaders,arecentincreaseinmediacoverage,andthelaunchofsev-eralinitiativestopromoteCSRintheU.A.E.(whichincludetheCentreforResponsibleBusiness(CRB)attheDubaiChamber28,theCentreforCorporateValue(DCCV)29,andMasdar30–theworld’sfirstattempttocreateazero-carbonzero-wastecity).However,ac-cordingtoarecentsurvey(Rettab&BenBrik,

28See www.dubai-ethics.ae

29www.dccv.ae

30www.masdarU.A.E..com

Corporate Social Responsibility in the U.A.E.By Anis Ben Brik, Dubai Chamber Centre for Responsible Business




2008),CSRstilldoesnotappearasstronginDubaiasinotherWesterncountries.Al-thoughbusinessleadersinDubaiaccept,andarebeginningtoembrace,corporatesocialre-sponsibility,themajorityofcompaniesshowalimitedunderstandingoftheconceptofCSR.Fewcompanieshaverespondedbydevelop-ingpracticesformanagingtherisksandtheopportunitiesassociatedwithCSR.Instead,corporationsinDubaiseemnarrowlyfocusedoneconomicefficiency,legalcomplianceandcharitableactivities,andmuchlesssoonmeetingotherstakeholders’expectations.

Onereasonsomecompaniesareonthefencewithregardtocorporatesocialresponsibil-itymaybeconfusionandindecisionoveritsstrategicvalue.Thereisahighlevelofskepti-cismaboutCSRandmanymanagersviewitasyetanotherfadthatwillultimatelygooutoffashionandthathaslittleutilityfortheirorganizations,andmayevenharmfirms’or-ganizationalperformance.Assuch,firmsintheU.A.E.donotrecognizethevalueofcom-municatingCSRpracticestotheirstakehold-ers.Todate,veryfewcorporations—lessthan

0 10 20 30 40 50 60 70 80

36.0%

62.9%

18.2%

49.6%

7.1%

7.9%

1.4%

6.4%

Being as profitableas possible

Doing what thelaw expects

Providing voluntary assistance to charitiesand community organzaitons

Doing what is expectedmorally and ethically

The Meaning of Corporate Social Responsibility% of respondents

Agree

Strongly Agree

Source: Rettab & Ben Brik (2008)




10—intheU.A.E.publicizetheirenviron-mentalandsocialreports.

Thisperspectivecouldbeduetoseveralfactors31:

• Themonopolypositionofmanycompa-nieswhichresultsinlesserpressuretobeaccountabletotheirstakeholders;

• AlackofawarenessamongstakeholdersofthevalueofCSR;

• AlackofacomprehensiveframeworktohelpmanagersidentifyappropriateCSRactionsrelevanttotheirbusinessandstakeholders;

• AdearthofcommunicationplatformstodisseminateinformationaboutCSRactivities;

• Alackofsocialsolidarityaffectedbygrow-ingculturaldiversityandsocialstratifica-tion,aswellashighturnoveramongman-agersandemployeesduetoturbulentlabormarket.32

How CSR is defined in the U.A.E.Accordingtoa2007DubaiChamberCSRsurvey(seefigure),themajorityofcompanies(70.8percent)aremorelikelytoseecorporate

31These factors are based on an extensive discussion with practi-tioners in Dubai through CSR stakeholders workshops and discus-sion forums organized by the centre of responsible business at the chamber of commerce and attended by the authors.

32The U.A.E. business environment consists of over 120 nation-alities from a wide range of cultural, religious and ethnics back-grounds. 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 Eu-rope, North America, Australia and New Zealand (2.2 percent)

socialresponsibilityasthenarrowconven-tionalviewoftheirroleinsociety,tocomplywithlawsandregulations.

Only20percent(19.6percent)ofcompaniesbelievethatcorporatesocialresponsibilityincludesvoluntaryengagementinactivitiesorprogramstopromotehumanwelfareandgoodwill,andtoassistcharitiesandcommu-nityorganizations.Thesurveyalsorevealsthatmorethanahalf(56percent)ofcompa-niesintheU.A.E.recognizecorporatesocialresponsibilitytobebroaderincludingmoralandethicalstandards,norms,orexpectationsthatreflectaconcernforwhatstakeholders(e.g.,consumers,employees,shareholders)regardasfairandjust.Mostcompaniesagreethatregulatorycompliance,businessgrowthandworkplacehealthandsafetyarethetoprolescompaniesplayinsociety,demonstrat-ingtheir”narrow”understandingofthepri-vatesector’sroleinhelpingsolvesocialandenvironmentalissues.

Corporate social responsibility issues in

the U.A.E.Asmentionedabove,Dubaihassustainedaperiodofrapidgrowthduringthelastthreedecades.Thecity-statemovedfromanob-scuresemi-nomadicEmiratetoaglobalfi-nancialandcommercialhubwithsignificantcompetitiveadvantages.Thisfasteconomicgrowth,generatedbyhugefactorinputs,hasalsohadunintendedharmfulsideeffectssuchasanunequalwelfaredistribution,enor-mousenvironmentaldamage,andhighin-centivesforopportunisticbusinessbehavior.Thisrapidgrowthhasalsoincreasedthede-mandformanpoweratlevelshigherthantheannualGDPgrowthrate.Asaresult,thecur-




rentworkingagepopulationismadeupofanincreasinglyyoungagegroupandthecountryisgrowingmoreandmorereliantuponanex-patriateworkforce.Thesefactorshavecausedaremarkabledeclineinlaborproductivityrates.Thehighdegreeoftemporarymigra-tion(exceeding80percentoftheworkforce)andhighturnoverrateamongmanagersandemployeesinthisturbulentmarkethasalsoresultedinpoorlaborpractices(primarilylowwages).Althoughthegovernmenthasintro-ducedanumberoflawstoregulatecorporateconduct,muchhingesontheinstitutionalca-pacity(orlackthereof)tomonitorandenforcetheseregulations.

Accordingtoarecentstudy33,theU.A.E.hasthehighestpopulationgrowthratesintheworld,estimatedat5.6percent.Theestimatedpopulationin2005wasaround5million,ofwhich45percentareunder15yearsofage.Thisdemographicsituationhasseriousim-pactsontheeducation,training,andcapacitybuildingneededtodevelopthefuturelaborsupply.Thebusinesscommunityhasanim-portantstakeinensuringthestabilityandqualityofthefuturelaborsupply.

Thefactorsaddressedaboveprovideagoodindicationofthevarioussocial,environmen-talandeconomicissuesandchallengesbusi-nessesintheU.A.E.willfaceinthenextfewyears.Theissueshighlighttheneedforacorporatesocialresponsibilityagendafocus-ingonworkplace,communityandhumanresourcedevelopment,andreducingenviron-mentalimpact.

33See for example U.A.E. HR report, 2005, www.tanmia.ae

The role of stakeholders in CSR

development TheslowdevelopmentofCSRintheU.A.E.canbelargelyattributedtoanunfavorableinstitutionalframeworkandlackofpressurefromstakeholders.Withoutstandardsandap-pealssystems,businessescanfreelyandinde-pendentlychoosewhetherornottheywishtoengageinCSRactivities.Further,thereisnocoercivepressuretoadoptCSR.LocalbodiesandgovernmentagencieschampioningCSRdonothavesufficientpowertocoercefirmstoengageinresponsiblebusinesspracticesandordictatewhichpracticesaremorede-sirable.ThedecisiontoadoptorrejectCSRrests,toaverylargeextent,withthemanage-mentofthefirm.However,arecentsurveyonCSRrevealsthatcompaniesintheU.A.E.arebeginningtostepuptotheplatetotakemoredirectactiononsocialandenvironmentalis-sues.MostindustrysectorsreportpositiveviewstowardCSR.

However,industriesarebehindincommu-nitydevelopment,employeevolunteeringandethicalmarketingpractices(seeAttitudestowardCSRinUAEbyindustryonpage86).Themajorityofindustrysectorswerelesslikelyforexampletoengagewiththecommu-nityandtomaintainaclearpolicy/strategytoimprovecommunityconditions.Likewise,anevenlowershareofcompaniesacrosstheseindustriessupportemployeevolunteering.

CSR challenges in the U.A.E.TheU.A.E.hasafast-growingeconomy.Itisrapidlydiversifyingintoareassuchasbank-ingandfinance,tourism,manufacturing,andlogisticstonameafew.Thecity-stateofDubaihasparticularlyloftyplansforgrowthinthecomingyears.Yet,achievingsuchrapid




growthinasustainablemannerismoredif-ficultthatitusedtobe.GrowthforDubaicanmeannotonlyincreasedrevenues,butalsoanimprovedabilitytosustainafairandequitabledistributionofrightsandresponsi-bilitiesthatdefinetheroleofeachcitizenandorganizationinsociety.

Globalization,regionalpoliticalcrises,andthechangingdemographicsoftheworkforcewillallhaveastrongimpactonDubai’sabil-itytocompeteglobally.Industryconsolidationandnewcompetitionfromnontraditionalandglobalsourceshavemadeitdifficulttostandout,forcinggovernmentandbusinessestoredoubletheireffortstodefineanddeliversuch“growth”value.Bydoingmoretoad-dressenvironmentalandsocialchallenges,businessesintheregioncanenhancetheircompetitivenessthroughCSRactivitiesfromsupplychainpractices,toeducation,healthandsafety,communitydevelopment,anden-vironmentalprotection.

TheCSRagendafortheU.A.E.willbebased

onsocialdialogueandpartnership(inter-sec-torandprivate-publicpartnershipsinpar-ticular).ThechallengeforbusinessesintheU.A.E.istomovebeyondanarrowfocusonthelegal,reputationaloreconomiclogic,andaccepttherightsandresponsibilitiescon-nectedtotheimpactithasonallstakehold-ers.Thischangewillrequirearevisionoftheroleofbusinessinsociety.Thechallengesfacingbusinessestodayalsoclearlypointtotheneedtoinvestindeepinternalchangeandimprovements,toredesignthevaluechainandtooptimizebusiness’positivefootprint.Fromthewayresourcesareallocatedtothewaypeoplearehiredandmotivated,andfromtheprocurementofresourcestothemarket-ingandsalesofproductsandservices,eachfunctionalactivityshouldbeadaptedtofullyembedaconsiderationofitspotentialsocialandenvironmentalimpact.

TheroleofpublicinstitutionsintheU.A.E.shouldbetorecognizegoodpracticeincorpo-ratesocialresponsibilityandmakeitmean-ingful,aswellastoenablesimpleraccess

Attitudes toward CSR in UAE by industry

Industry:

Positive view

toward CSR

Likelihood

companies

will engage

with

communities

Companies in

support of employee

volunteeringManufacturing 69% 6.6% 3.3%Trading 68% 5.9% 5.9%Education 67% 14%Real Estate 64% 7.1% 3.6%Finance and Banking 64%Hospitality 66% 9.3%




bothtobusinessservicesandsocial/environ-mentalservicesforbusiness.Thechallengeforpolicymakersistodevelopregulationsandpoliciestopromotetransparencyandaccount-ability,anti-fraudandcorruption,occupation-alhealthandsafety,humanandlaborrightsprotection,sociallyresponsibleinvestment,andgreensupplychaininitiatives.Moreem-phasisdirectedtoconsumers’awarenessofresponsibleconsumptionwouldalsobenefittheadvancementofCSRintheU.A.E..

Recommendations for international

businessesDespitetheprematurestageoftheCSRagendainDubai,businesseshaveanexcel-lentpointofdepartureformovingforward.InternationalbusinessleaderscancontributetotheeconomicgrowthoftheU.A.E.inare-sponsiblemannerthrough“green”technologytransfer,greenbuilding,greenpurchasing,theuseofrenewableenergyresources,capac-itybuildingandhumancapitaldevelopment.Theseinternationalbusinessleaderswhoarecommittedtosociallyresponsiblepracticescanhaveanevengreaterimpact.TheywillhavetheopportunitytoreinforcethepoliciesandlawsoftheU.A.E.,contributetoenviron-mentalsustainabilityandpromotecorelabor,environmental,andsupplychainstandardsandhumanrightsintheU.A.E.

ReferencesIMF.2005.UnitedArabEmirates:SelectedIssuesandStatisticalAppendix.Washington.Washington,DC.:IMF.

NBD.2004.EmiratizationEffortsintheU.A.E.:ImpedimentstoaSeriousVision.Eco-nomicReport:AQuarterlyPublicationoftheNationalBankofDubai,8(4):2–3.

Rettab,B.,&BenBrik,A.2008.TheStateofCorporateSocialResponsibilityinDubai:Changingtogether.U.A.E.Dubai:DubaiChamber,CentreforResponsibleBusiness.

Tanmia.2005.HumanResourcesReport..AbuDhabi:U.A.E.:NationalHumanRe-sourceDevelopmentandEmploymentAu-thority(Tanmia).

U.A.E..2005.UnitedArabEmiratesYearbook2005.Dubai:TridentPublishing.




Cultural context and social contractBrazilian society expects companies to meet the demands for consumption of goods and services while contributing to the construction of a national sustainable develop-ment 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 sus-tainable development, and expect the private sector to play a significant although vol-untary role.

Current state and transformation of citizenshipIn Brazil, understanding of the term “corporate citizenship” is limited to corporate vol-unteering 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

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still is a misunderstanding between philanthropy, social actions and social responsibil-ity. Some Brazilian companies are ahead of the curve, engaging in cross-sector partner-ships 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 ResponsibilityEthos Institute – Business and Social Responsibility is a non-governmental organization created with the mission of mobiliz-ing, sensitizing and helping companies to manage their busi-nesses 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 en-vironment.

Conceived by businessmen and executives from the private sector, Ethos Institute is a center for mobilization, organization of knowledge, exchange of experiences and de-velopment 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 world-wide.




InBrazil,theterm“corporatecitizenship”isusedasasynonymforcorporatevolunteer-ing,orfortheemployees’participationinthecompany’scommunityprogramsso“corpo-ratecitizenship”representsasmallpartofacompany’sactivitiesrelatedtosocialrespon-sibility.Thetermsocialresponsibilitystartedtobeusedincompanies,universities,andinsocietyingeneralin1998,whentheInstitutoEthosdeEmpresaseResponsabilidadeSocial(RSEorCSR)wasfounded.Inthe10yearssince,theRSEmovementhasgrownincom-paniesandinsocietyanddevelopedanin-ternationalreputation,throughEthos’SocialResponsibilityindicators,forshowinghowcompaniescanbeacatalystforsocialtrans-formations.ThisBrazilianoriginalitymadeamajorcontributiontotheinternationalmove-mentofcorporateresponsibility.

Inourcountry,societystillexpectsthemarket(companies)toproducesocialwelfareandisputtingincreasingpressureoncompaniestodoso.Companiesareexpectedtomeetthedemandsforacertainlevelofindividualcon-sumptionofgoodsandserviceswhilepro-motingchangesinbusinessadministrationtocontributetotheconstructionofasustain-abledevelopmentmodel.Therefore,inBrazil,thechallengesofcorporatesocialresponsi-bilityincorporate“moral”dilemmasintheconstructionofanewsocietybychangingthewaybusinessisconducted.

InBrazil,thesocialresponsibilitymovementgainedpowerstartingin1990,stimulatedby

thequalitymovement,whichpermeatedthe1980sandpromotedarevolutionincompanymanagementsystemsinthecountry.Inthe1990s,theretreatofthestateandtheadvanceofthemarketmadethecompaniesentrustedwithpeople’swell-beingandsocialjusticeex-pectations.

Theprinciplesandvaluesofsociallyrespon-siblemanagementhavecontributedtocom-paniesmeetingsomeoftheseexpectations,makingthemrealagentsofsocialtransfor-mationwhilenotforgettingtheneedforgoodfinancialperformance.Actually,whatwasno-ticedinourcountryisthatinordertohaveafavorableenvironmentforbusiness,people’squalityoflifeneededtoimprove.Business,asoneofthemostorganizedsectorsofsociety,playsanimportantrole.Therefore,corporatesocialresponsibilityinBrazilfacesmorecom-plexchallengesandputscompaniesintheunprecedentedpositionofchangingsocietybychangingthewaytheydobusiness.

Howisthischangebeingmadeinbusiness?Throughdialoguewiththepeopleinvolvedintheactivitiesofthecompany:suppliers,insiders,environmentalactivists,localcom-munities,governmentandsocietyingeneral,aswellastheshareholders.Whentheseseg-ments’demandsareintegratedinstrategicplanning,asequalaspectsofthecompany,environmentalconcerns,suppliers’standardsandcommunitypartnerships,amongothers,ethicalconsiderationoftheirconcernsisacentralpartofdoingbusiness.

Brazil Applies Originality to Corporate CitizenshipInstituto Ethos de Empresas e Responsabilidade Social [Ethos Institute of Companies and Social

Responsibility], Ricardo Young - President




Foundedin1998,InstitutoEthosdeEmpre-saseResponsabilidadeSocialhascontrib-utedtothedevelopmentoftheRSEinBrazil,orientatedbytheviewthattheincorporationofthecountry’ssocialandenvironmentalobjectivestothecompanies’economicgoalsisprimordialtobuildingasocietywithsocialjusticeandsustainabledevelopment.There-fore,ithasbeencarryingout,withtheactiveparticipationofitsassociatesandcompaniesingeneral,across-partyandmulti-sectorar-ticulationofsocialresponsibilitypracticesofcompanieswithfederal,stateandmunicipalgovernmentpublicpoliciesorientedtosocialinclusion,povertyandhungereradication,corruptionfightingandenvironmentaldevel-opment.Amongtheexamples:theNationalPactforslavelaboreradication,articulatedbyEthosInstitute,InternationalLaborOrgani-zationandReporterBrazilNGOwithrep-resentativesfrombigcompanieswhohaveagreedtomonitortheirsupplychainsandadoptcommercialsanctionsagainstsuppli-erswhobenefitfromslaveworkconditions.CompaniessuchasWalmart,Petrobras,C&AandfinancialinstitutionssuchasBancoItauandABNRealdonotbuyoroffercredittocompaniesandbusinessmenaccusedofsuchpractices.

Anotherinnovation,thePactforIntegrityandAgainstCorruption–articulatedbytheEthosInstitute,Unodc,PatriRelacõesGovernamen-tais&PoliticasPublicas,theWorldEconomicForumandGlobalPactBrazilianCommit-tee,withBrazilianAssociationofAdvertise-mentAgenciesandFundaçãoFordsupport,containsaseriesofguidelinesandproceduresthatthesigningcompaniesagreedtoadoptinitsrelationshipwithpublicauthorities.Today

therearemorethan500signatoriesandac-tionseffectivelyadoptedbythemandalsobysupplychainshavebeguntochangeorgani-zationalculture.Theseactionsandthemediacampaigntopublicizeitacrossthecountrycanbeviewedatthewebsitewww.empresali-mpa.org.br.

The“futureagenda”fortheRSEBrazilianmovementandforInstitutoEthosishugeandurgent.Theeffectsofglobalwarmingmakeitmoreimportanttosearchforanewmodelofcivilization,basedonsustainableproductionandconsumption,withsocialinclusionandenvironmentalbalance.Inordertocontributewiththissearch,InstitutoEthosandtheRSEmovementinBrazilmustdeependialoguesamongsectorsandencouragethemobiliza-tionintwointerdependentways:1.Createconsumerproducts,processesandservicesthatreduceoreliminateeconomicactivitythatnegativelyaffectstheenvironmentwhileincludingdevelopingnations;and2.Acceler-ate,withothersocialactors,theestablishmentofnewlegalmilestoneswhichguaranteeso-cialinclusionandenvironmentalbalance.

Withintheresponsiblemanagementscope,InstitutoEthoshasbeenplaying,sinceitsfoundationin1998,theroleofpioneerbring-ingenlightenmenttosociety.FromInstitutoEthos,sprangInstitutoAkatufortheConsci-entiousConsumption,dedicatedtoeducat-ingandmobilizingpeopleforconscientiousconsumption;andNossaSãoPauloandRioComoVamosmovements,dedicatedtocom-mittingsocietyandgovernmenttoaddress-ingessentialareassuchaseducation,health,safety,housing,work,leisure,cultureandtransportationandservices.




Therearevariousentitiesfromothersectorsthroughoutthecountryworkingonseveralis-suesandmakingadifference.Theirinfluencewilltendtogrowaspeoplebecomeawarethatchangingthisrealityonlydependsonthemandtheyhavetoparticipatemoreactivelyinthedecisionsthataffecteverybody’slife.IbelievethatacomparisonwithEuropedoesnotapply.InEurope,thestateisstillaregula-torybodyandRSEadvancesbecausetherearelawsforthis.InBrazilandLatinAmerica,weconsidertheentities’volunteercommitmenttoresponsiblebusinessandasustainableso-cietyimportant.Asfromthesegoodpractices,wepressurethegovernmentfornewlegalmilestones.

Althoughthereisnocompanyorgroupofcompaniesthatcanbeidentifiedas“sociallyresponsible”therearethosewhosepracticesareinamoreadvancedstage.ThesearetheonesIconsider“aheadofthecurve”.Inthiscase,IindicatethecompanieslistedintheCorporateSustainabilityIndexoftheStockMarketofSãoPaulo.Thereare33companiesselectedbysocial,environmentalandeco-nomiccriteriawhoseprofitabilityisincreas-ingandconstant.Atthesamelevel,therearecompaniesthatarepartoftheso-called“ethicalfunds,”specificallyEthical,fromABNRealandItaúSocialfromItaúBank,whoseprofitabilityisalsoveryattractive.Thesearepubliccompanies.Wheretosearchforindica-torsfortheprivateones?Oneplaceissomeofthe“rankings”developedbyconsultingagen-ciesandpublishedinthemediaasthe“bestcompaniestoworkin”and“thebestpracticesofsustainability.”Theseclassificationsareinterestingbecausetheyallowcomparisonbe-tweentheperformanceofpublicandprivate

companiesrelatedtosomeresponsibleman-agementindicators.

InBrazil,consideringtheadvancesprevi-ouslymentionedinthisarticle,therestillisamisunderstandingbetweenphilanthropy,so-cialactionsandsocialresponsibility.Thefirsttworeferespeciallytothecompanies’activi-tiesorientedtoaspecificgroupofpeople:thecommunity.RSE(corporatesocialrespon-sibility)isfocusedmoreonchangesinthewaycompaniesdobusiness.Therearethreekeyissueswheresocialconcernsandbusi-nessmanagementmustcometogether:theenvironment,withafocusontheAmazon;corruptionfightingandworkplaceconditions.InstitutoEthoshasbeenworkingtohelpcompaniesadvanceonthisagenda.RegardingtheAmazonissue,theForumAmazoniaSus-tentávelwillbringtogetherseveralsocialsec-torstodiscussasetofsustainabilitycriteriatoguidetheinvestmentsandgovernmentalpoliciesfortheregion.Concerningcorruptionfighting,ithasbeenpromotingexemplarycompanypracticesthatcanbeadoptedbyoth-ercompanies.Regardingworkplaceissues,ithasbeenpressuringorganizationstomaketheOITagendainsupplychainseffective.

NextIwouldliketodiscusstheimpactofclimatechangeonbusiness.OutsideBrazilandLatinAmerica,itseemsthatthedebateisrestrictedtotheenvironmentaleffectstothisorthatregionoftheworld.Ifthereisnotacompletetransformationincivilization,inthesenseofsocialinclusionofmillionsofpoorpeopleinthejobmarket,health,educa-tionandalsoconsumption,therewillbenoenvironmentalsolution.Infact,therewillbenosolution.




Iwillstateahypotheticalexampletoillustratemyconcern.Pakistanisoneofthepoorestandmostpopulatedcountriesintheworldwithalmostnoindustryandverylowcon-sumptionfromitspopulation.Itscarbonemissionisalsominimal.Duetoageographi-calirony,itsterritoryislocatedbelowsealevel.Therefore,anyincreaseinthevolumeoftheseawatercanliterallysinkthecountry.It’slikelythat,ifthishypotheticalfloodoc-curs,millionsofpeoplewillhavetobemovedtootherregionsoftheglobe.Theywillneedhouses,education,andwork(evenifinsmallamounts).Whowillpaythisbill?Theanswertothisquestionpresentsethicaldilemmaswehavebeentryingtoescapeformorethantwocenturiesofindustrializationandwaste.Wecannotignorethisanymore.Wemuststartasustainablecycleofproductionandconsump-tionthatisenvironmentallybalancedandso-ciallyinclusiveorelse.

InBrazil,werecommendtointernationalbusinessexecutives,whowishtoinvestinthecountry,tosearchforcompaniesthathaveproductsorservicesthatguaranteesocialin-clusion,environmentalbalanceandgooddivi-dendsforshareholders.Brazilalreadyoffersmanyofthesealternatives;theyjustneedtobesupported.

Thereareseveralrelevantinitiativesandor-ganizations,invarioussectors,thatwouldbeareferenceforthosewhowanttoknowthecorporatesocialresponsibilityevolutionprocessinBrazil.Itwouldbeinterestingtodividetheminsomeway,butbecausetheyhavedistinctnaturesandreachdifferenttypesofpeoplecomparisonswouldbeunfair.How-

ever,theyareresponsibleforagreatdealofgrowthandtransformationintheRSEfieldanddeservetobementioned:

• NGOs:InstitutoAkatu(consciouscon-sumptionandRSEresearch);GIFE(in-cludescorporatefoundationsandinstitutesnotalwaysfocusedonthemanagementprocessbutonprivatesocialinvestment).

• Federation of industries:stateofParanáandMinasGerai;

• Activities:GlobalPactBrazilianCommit-tee,normISO26000workgroupcoordi-natedbyInstitutoEthos

• Universities:Althoughvariouscoursesarebeingoffered,someuniversitiesstandoutwiththeircoursesrelatedtoRSE,as:FGVParanáandFundaçãoDomCabral;

• Media:MagazinePage22,RevistaPlurale,AgenciaEnvolverde(website),MercadoÉtico(website),IniciativaPlanetaSusten-tável(publisherAbril),RevistaÉpocaNegó-cios,RevistaRazãoSocial(JornalOGlobonewspaper),EmpresaseComunidades(JornalValorEconômiconewspaper),Ci-dadeseSoluções(TVprogram);

• Events:EthosInternationalConference




Cultural context and social contractChilean 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 pro-vide healthy and safe products in accordance with legislation and environmental pro-tection, 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 citizenshipSince the late 1990s corporate citizenship, or corporate social responsibility (CSR), has been understood more as a business vision than a personal philanthropic exercise, en-compassing 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

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an approach focused on common investment, cause marketing or the technical-pro-ductive 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 pres-sure from the NGO sector to implement corporate citizenship policies and regula-tions.

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 responsi-bility, 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 so-ciety 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 responsi-bility, active collaborator of the GRI and local focal point for the Asia-Pacific Economic Cooperation forum on CSR




Manyinvestigationsabouttrends,percep-tions,andgoodpracticesofcorporatesocialresponsibilityhavedemonstratedthatthistopicinLatinAmerica,andparticularlyinChile,ismakinghugestrides.Thekeydriversincludecommerceandglobalization,includ-ingmultinationalcorporationsactinglocally,butalsomanylocalones,inparticularsmall-andmedium-sizeenterprises(SMEs).IssuesaddressedthroughCSRareprimarilyrelatedtogoodlaborpractices,environmentalman-agementandcommunityengagementandsupplychaindevelopment(forlargecompa-nies).

The evolution of CSR in ChileEvidenceofcorporatesocialresponsibility(CSR–themostcommontermusedinChile)canbefoundamongaseriesofphilanthrop-icactionsasfarbackas1920.Atthebegin-ning,theseinitiativesweremainlydrivenbybusinessmen’spersonalvalues,andwerenotintegratedintobusinessstrategies.However,economicglobalization,marketliberaliza-tionandanincreasinglydemandingsociety(mostlystilloutsidethecountry),begantoshifttheparadigmstowardagreatercommit-menttosocietyandtoanewrealitywheregovernment,theprivatesectorandcivilsoci-etyinteractmoredeeply.Sincethelate1990s,CSRhasbeenunderstoodmoreasabusinessvisionthanapersonalphilanthropicexercise,encompassingbroaderissuesfromtheenvi-ronmenttohumandevelopmentandsocialcapital.Thetopichasalsogeneratedgrowing

interestamongbusinesssectors,governmentandcivilsociety.

Todaythisthemehasadvancedfromanincip-ientsubjectandhasbeguntodevelopmoreprofoundlyandacademically.Representativesofeachsectorofsocietyhavebeguntounder-standthattheyarenotindependentfromoneanotherbutthateachmustbehaverespon-siblywitheverygrouptheyinteractwithandparticipateequallyinthesocialdevelopmentofthecountry.Thischangeisalsocorrelat-edwithanincreasedunderstandingofCSRamongsociety,andmoreandmoreChileancompaniesadoptingresponsiblecorporatepolicies(suchasemployeepersonaldevelop-ment,environmentalcare,closerrelationswithcommunities,andsupplychainrespon-sibility).Progresshasbeenfurtherencour-agedbyindustryassociations,thegovernmentandSMEs.

Citizenship: For a better working

environmentTheconceptofCSRiswellknownandde-mandedbytoday’sconsumersindevelopedcountries,butitalsohasextendedtoChile.ChileansarebecomingmorefamiliarwithCSRandtheyvaluethepracticesrelatedtoit.However,theyrealizethattheadoptionofCSRisnotyetwidespread,asmanybusiness-esinChilestillfollowashorttermprofit-driv-enstrategy.

Chile - CSR starts at homeBy Dante Pesce, VINCULAR Responsabilidad Social Empresaria Pontificia Universidad Católica de

Valparaíso [Center for Corporate Social Responsibility at Catholic University of Valparaiso




Theseviewsaresupportedbysurveyresearch.TheinternationalstudybyMORI(2005),“ResponsabilidadSocialCorporativa,”mea-suredtheperceptionandvaluethatChileanconsumershaveofthesociallyresponsiblebehaviorofcompanies.Thestudyfoundthatcompaniesareconcernedabouttheimpactoftheiroperationsonsociety,andwherethereisamanagementapproachtoaddresstheirsustainabilityimpactsbyaligningtheirobjec-tiveswiththerequirementsoftheirstakehold-ers,theyactuallygetrecognitionbynationalpublicopinion,whichresultsinacompetitiveadvantageforthecompany.Accordingtothestudy,around90percentofconsumershopethatbigcompaniesprovidethemwithhealthyandsafeproductsinaccordancewithlegisla-tionandenvironmentalprotection.Employeetreatmentandlaborpracticeswerelistedinsecondplace.Whenaskedaboutthecondi-tionsnecessarytoconsideracompanysociallyresponsible,respondentscitedthequalityoflifeintheworkplace(92percent),andcon-cernfortheenvironment(79percent).

Basedontheseperceptions,itisimportantforcompaniestoconsiderstakeholderopinionswhenformulatingbusinessstrategies,putCSRintopractice,andincorporateitsgov-erningprinciplesinacross-functionalwaythroughouttheirmanagementstrategy.

InChilethenumberofconsumerswhoarebecomingfamiliarwiththisconceptandwhofactoritintotheirpurchasingdecisionsisincreasing.Asevidence,55percentofcon-sumersbelievethatacompanysellsmoreproductsifitissociallyresponsible.Inotherwords,CSRisdefinitelyonChileans’minds,ifnotyetguidingtheirpurchasingbehavior.

The state: Reorienting its roleThestateperceivesCSRasadevelopedcountryconceptasopposedtoadevelopingone,anditstillhasnotbeenabletodecidehowmuchofanactiveroleitshouldplayinthismatter.Researchoneightpublicorga-nizations’views,approaches,andinitiativesrelatedtoCSRconceptsandpractices(RedPuentesChileandtheProgramaDeAccionDeMujeres(PROSAM),2004)supportthisview.ThisresearchgivesmixedsignalsabouttherolethestatemusttakeinthecontextofCSR.Someoftheseorganizationsbelievethat“thegovernmentmustassumeanactiverole,callingonthecompaniestoincludepoliciesandpracticesofsocialresponsibility,”whileothersbelievethatthelackofgovernmentpoliciestocoordinatetheprivateinitiativesinthisareaandpromoteitthroughincentives“wouldleavethetopiccircumscribedonlytothesocialcompromiseandthephilanthropyofthebusinessmen,denyingitsglobalstrate-giccharacter.”

Inourview,thegovernmentmustatleastpromotethelegalnormsforworkerprotec-tion,educatesocietyaboutCSR,andeducatethebusinessworldaboutthesocialpracticesdemandedbythefreetradetreatyagreementssignedbetweenChileandotherdevelopedna-tions.AstheeconomistandresearcheroftheCentrodeEstudiosAlternativos(CENDA),JacoboSchatán,stated,“theweakeningoftheprotectiveroleofthestatehaschangedfromadefensevisionofthecommonwelfare,oftheprotectionofthenationalsovereigntyandofthepopulation’sdisadvantagedgroups,tothepredominanceofanideologyandaneo-liberaleconomicmodelinwhichthemarketprevails.”Asaresult,theChileanstatemustcentralizeitseffortsandassumeamoreactive




roleintheapplicationofCSR(AgendaCiuda-dana.RedPuentes,2005).

ThegovernmenthasfeaturedafewCSRini-tiativesunderitsapproachtocompetitiveness.TheNationalScientificandTechnologicalRe-searchCouncil,throughtheFundforScien-tificandTechnologicalDevelopment,andtheEconomicDevelopmentAgency,havesup-portedaseriesofpioneeringprojectsattheregionallevel.Thesehavebeenaimedatde-velopingconcreteinstrumentsofCSRman-agementandimprovingthecompetitivenessofcompanies,includingsmallbusinesses,throughtheadoptionofCSR.Thisinitiativehasestablishedrelationshipswithbusinessassociationstoreachaconsensus,particularlyonenvironmentalmattersandsupportforthecommunity,aimedatraisingawarenessofCSRandrespondingtotheinternationaldemands.TheAcuerdodeProducciónLim-pia(CleanProductionAgreement)(APL)andtheprogramofBuenasPrácticasAgrícolas(GoodAgriculturalPracticesProtocol)(BPA),areexamplesoftheseinitiatives.Additionally,thereareotheremblematicinitiatives,bornoutfromthecoordinatedeffortbetweenor-ganizedindustrialfirmsandthegovernment.Anexampleisthecreationofthemutualsys-temoflaborsafetyin1958thatlaterbecameRepublicLaw,ensuringthatallworkersinChileareentitledtoreceivehealthbenefitsfromtheiremployers.

DuringDecember2007thedefinitionofex-cellenceforthenationalqualityawardwasmodifiedasexcellenceforsustainability,includingmostaspectsofCSR.Thegovern-mentalagencyforeconomicdevelopment(whichprovidesfinancialsupportforSMEs)isalsoadjustingitsinstrumentstoformal-

lyaddresssustainabilityandCSRpractices,providingincentivesfortheadoptionofbestpractices.Thesedevelopmentsarerecent,butverypromisingfortheeventualscalabilityofCSR.

The businessmen: Increased adoption

of CSRTheconcernforsensitivesocialtopicsistra-ditionalbehaviorfromtheChileanbusinessworld;ithasitsoriginsinastrongCatholicreligioninfluence.Thiswealthysocialactivity,relatedtophilanthropy,offersaresponseandamoresystematiccommitmenttothecom-pany’sdifferentstakeholders.“TolegitimizeCSRasanintegrativecomponentofallbusi-nessmanagement,isanobjectivethatistobeaccomplished:CSRisdefinitivelyafunda-mentaltopicinthecountrytoday,”statesthepresidentoftheConfederacióndelaProduc-ciónydelComercio(ProductionandTradeConfederation’s)CSRcommission.

ThevariousCSRinitiativesdevelopedbytheChileanbusinessworldareexamplesoftherelevancethatthistopicnowenjoysinthecountry.ChileancompanieshaveincreasinglytakenupCSRmodelsandworldinitiatives.Morethan50companiesarenowreportingunderGlobalReportingInitiativespecifica-tions(alargeincreasefrom13in2005),in-cluding13SMEs.TheGlobalCompactisalsoactiveintheChileanbusinesscommunity,butmostoftheattentionisbeingdirectedtotheISO26,000forSocialResponsibilitypro-cess,whichhasinvolvedmostbusinessasso-ciationsandover40companies.

Ontheotherhand,manycompaniesaresubscribingtotheAPL–theAgreementforCleanProduction.AccordingtotheNational




CleanProductionCouncil,1,671companiesfromsomeofthecountry’smainproductivesectorshavesignedthisagreement.Mean-while,1,200companieshaveadoptedBPA(GoodAgriculturalPracticesProtocol)pro-grams,accordingtotheFruitDevelopmentFoundation(FDF).

Anotherimportantsignofprogressisthe9,535companies(85percentofwhichareSMEs)involvedinprivate-publicpartner-ships.TheNationalWorker’sUnion(CUT)openedaLaborObservatoryinSeptember2005,withthegoalofincreasingcollectivebargainingandnegotiationcapacityandinflu-ence,greaterunioncooperationwithincom-panies,andincreaseddialogueamongactors,topromoterespectforworkers’rights,afun-damentalelementofcompanyandcountrycompetitiveness.

ThesetrendsindicatethatbusinessmenareindeedbecomingawareofthebenefitsofCSRinitiativesandtheirincorporationintheinternalmanagementofacompany.Businessleadershaveshownanincreasinginterestinthissubject,andbecauseofthat,thebusinessfocus,traditionallycenteredonshareholders’satisfaction,isstaringtobroadenandincludeawidergroupofstakeholders.

Civil Society: Promoting a culture

of supportCivilsociety,representedmainlybynot-for-profitorganizationsandfoundations,NGOsandacademia,exercisesagrowingscrutinyovercompaniesinChiletoday.ThesegroupsenvisageCSRasapotentialmechanismforovercomingbarriersofunderdevelopment,throughimprovementsinthequalityoflifeandtheimprovementofthecountry’simage,

whilealsoimprovingeconomiccompetitive-ness.

ThissectorassociatesCSRmainlywiththeenvironmentalissue,employeeconditionsandcommunityengagement.Thus,theirrolehasbeentopromoteacollaborativeculturethatunitesallstakeholdersbycommonval-ues.

Thesegroupscanexertdemandsandcon-stantinfluencetowardthestatetoimple-mentCSRpoliciesandregulateandcontrol,throughtheparticipationofpublicpolicyde-cisionprocesses,inthismatter.Thisisdonesothatcompaniescancontributepermanent-lytothesocial,laborandenvironmentalreso-lutionofproblemsatthelocal,nationalandinternationallevels,guaranteeingtransparen-cy,effectiveness,anddemocraticparticipationofthestakeholdersandjointinitiatives.

Insidethissegment,academiaalsoplaysauniqueroleindevelopingCSR-relatedpartici-pationinitiatives.Forexample,thePontificiaUniversidadCatólicadeChileismemberoftheredSocialEnterpriseKnowledgeNetwork(SEKN);thePontificiaUniversidadCatólicadeValparaíso(PUCV)createdVINCULARCenterforCSRin2001,thefirstChileanuni-versityinitiativededicatedtothedevelopmentofconsultancy,trainingandappliedresearchinCSR;andthirteenuniversitiesmakeupthenetworkUniversidadConstruyePaís,aprogramofuniversitysocialresponsibilitysponsoredbyFundaciónAvina.Thesenotice-ablegroupsarguethatthereisaclearneedofsynergywithotheractorssuchaslocalandnationalgovernments,amongothers,togen-eratethenecessaryculturalchangetoadvancethisconcept.




Benefits and opportunitiesTheincorporationofCSRcanenhancebusi-nesses’abilitytoretainclients(stillmostlyoutofChile)andgainlegitimacywithitsemploy-eesandshareholders.Thesebusinessbenefitsapplytomultiplestakeholdergroupsandhelpmaintainaharmoniousclimatebetweenbusi-nessandsociety.

Attheproductivesectorlevel,CSRisbecom-inganopportunitytoobtaincompetitivead-vantages,asitdifferentiatesbusinessesfromthemainstreamcompetition,increasestheircompetitivenessinamarketwhereproductsarebecomingincreasinglyhomogeneous,improvesqualityoflifeintheworkplace,improvescompanyreputationandattractsforeigninvestment.Thus,CSRoffersanotherpossibilityforovercomingthebarrierstode-velopment.Italsogeneratesopportunitiesforentryintodevelopedcountriesthroughfulfill-mentofstandardsandinternationalcertifica-tions.Proofofthisisthatcompanieswhichhaveincorporatedgoodpractices,ingeneral,areadvancingtheuseofISOcertifications.ThenewDefinitionofExcellence,theISO26,000processandsoontocomechangesinpublicpolicyincentivesforCSRwillsurelyre-inforcethistrend.

Businesses’acknowledgementoftheseben-efitsandopportunitiesisproducingamulti-pliereffectthatcontributestofurthersocialdevelopment.OrganizationsinChilewillbeincreasinglyencouragedtoadoptortoin-creaseCSReffortsandtheirpositiveimpacts.

ChallengesBusinesspracticesthathaveintegratedCSRprinciplesareundoubtedlyapotentialdis-tinguishingelementinaglobalizedmarket.

ManyofthecompaniesthatpromoteorareidentifiedwithCSR,undertakeitfromthefieldofthecommoninvestment,causemar-ketingorthetechnical-productivequalitynormsfulfillment,suchastheISO9000and14000.Thesekindsoffactorsindicatethat,inthiscountry,thereisanotabledevelopmentoftheconceptofCSR,whichhasbeenintegrat-edintothemostimportantbusinessorgani-zations.

Additionally,thereareinstitutionssolelyfo-cusedonthisissue,whichhaveadvancedtheinclusionanddevelopmentofCSRprojectsinsmallandmedium-sizedenterprises.Theseinstitutionsarepioneeringprojectsatregion-alandnationallevels,implyinganenormouschallengegiventheimportanceofthesecom-paniesasgeneratorsofwealth,employmentandsocialcohesion.

ChilehashadaprominentparticipationinthedevelopmentprocessoftheISO26000SocialResponsibilitynorm,becauseunlikeanyotherdevelopingcountry,the“MirrorCommittee”madeupof80-plusrepresenta-tiveorganizationsfromallthesectorsrequest-edbyISO,placesthecountryinaleadingpositionatacontinentallevel.InSeptember2008theplenaryofthisprocesswilltakeplaceinChile,whichshouldallowCSRtogainsignificantmomentuminthecountry.

However,theprocessisjustbeginninganditisnecessarytomaintainandincreasestake-holderparticipation.AsCSRimpliesacul-turalchange,itisnecessarytoeducateatalllevels.Awareness,thesharingofbestprac-ticesandexecutivetrainingisfundamentaltoawideradoptionofCSRamongChileancompanies.




ReflectionsChile’sentranceontotheworldmarketandtheproliferationofinternationalnormsthatrequiregreatercommitmenttosustainabledevelopment,hasledtoachangeinthevisionofhowcompaniesinteractwiththeenviron-mentandsociety.Asaresult,theincorpora-tionofCSRintobusinessgoalshasbecomeanessentialfactorforsuccess.Thus,“theap-proachtothetopichasevolvedfromachari-tablesocialaction–linkedwithphilanthropicbusinessman,motivatedbypersonalreasons–towardananswerandmoresystematiccommitmentofbusiness,assumingasocialroleinthecommunity.Thenotionofthecompanyasanentitythat,asasinglebody,actsinthegenerationofwealthaswellasinsocialethicalbehaviorhasalsoemergedwithforce.”(www.empresa.org)

Therearenumerousexperiencesandpracti-calbestpracticecasesofCSRbywell-knownChileancompaniesthathavethepowertogenerateamultipliereffect.Nevertheless,thereisstillalongwaytogotoincorporatethisconceptasanormofdoingbusiness.AmongtheinitiativesthatmarktendencyinthedevelopmentoftheCSR,aretheAPL,BPA,theCSRpoliciesaimedatimprovingtheworkenvironmentandtheimplementationofconcreteCSRactionsintechnicalandhighereducationinstitutions(dualformation).Be-sides,academiahasbeguntoincorporateCSRintoitscurriculumplanofdiverseuniversitycourses.ButtheinternalizationoftheCSRisnotspontaneous.Workandincentivesbycivicorganizations,businessesandgovernmentarerequired.IntheseenvironmentsthetasktostrengthenandpromoteCSRisincreas-inginintensity.Thistaskshouldbesharedamongalltheactorsinvolved.

ThoughChileisinamoreincipientphase,comparedwiththelevelreachedinthede-velopedworld,governmentsanddiversecivilsocietyorganizationsandalsosomecompa-nieshavebeenunitedtoreachagreementsonthevoluntaryadoptionofCSRregulations,especiallyinenvironmentaltopicsandforcommunitysupport.Inparallel,organizationshavebeenconstitutedtopromoteandtoposi-tiontheconceptsuchasAcciónRSE,Fun-daciónPROhumana,SofofaResponsabilidadSocial,UniónSocialdeEmpresariosyEjecu-tivosCristianos(USEC)andVincularCenterforCSRatCatholicUniversityofValparaíso.




Cultural context and social contractCorporate 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 citizenshipCorporate citizenship in the United States (which is also often described as corporate social responsibility or sustainability) is characterized by a distinct and strong corpo-rate culture, a preference for voluntary standards, a renewed focus on stakeholder en-

United States Corporate Citizenship Summary

New York, United States

© D

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gagement and cautious progress on transparency and reporting. Community involve-ment 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 CitizenshipThe 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 pro-vided research, executive education and convenings on corporate citizenship topics. Because of its affiliation with Boston College’s Carroll School of Management, the cen-ter 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.




TheevolutionofcorporatecitizenshipintheUnitedStatesisreflectedinthechangesthathaveoccurredattheBostonCollegeCen-terforCorporateCitizenship.IntheUnitedStatescorporatecitizenshipwasbuiltonalongtraditioninphilanthropicgiving.WhentheCenterwasfoundedin1983underthename,TheCenterforCorporateCommunityRelations,itsfocuswastoinspireandguidecompaniesintheireffortstocreatestrongtiestolocalcommunityforthepurposeofestablishingalicensetooperate.Thisofteninvolvedhelpingcompaniesbecomemorestrategicinhowtheyweregivingbacktotheirlocalcommunities.

Overtheyears,theworldandtheneedsofsocietyhavechanged.Ascompaniesbegantoexperiencepressurefromallanglestodomorethangivephilanthropydollars,thecen-tersawitsrolechangeaswell.NowundertheidentityoftheCenterforCorporateCitizen-ship,itprovidestheknowledgeandtrainingtoday’scompaniesneedtoreadjusttoanewandmorecomplexroleinsociety.Severaldynamicshavenecessitatedtheemergenceofthisnewrole,including:thenumberofgovernancescandalsthathavetarnishedthereputationofbusinessinAmerica;thehu-manrightsissuestheglobalizationofsupplychainshasuncovered;thenetworkedworldthatmovesinformationatthespeedoflight;andtheheightenedconcernofnearlyallAmericansabouttheenvironmentandtheircountry’soverdependenceonforeignsourcesofenergy.

Theseevents,combinedwithashiftawayfromgovernmentprovisionofsocialservic-esandtheincreasingthreatsfromclimatechange,emerginghealthchallenges,andanagingsociety,havecreatedanewsocialcon-tractthatAmericanbusinessesarebegin-ningtograsp.Inthisenvironment,corporatecitizenshipisinconstantflux.TheAmericancontextofcorporatecitizenshipiscenteredaroundawiderangeofinterpretations,whicharecommonlybasedonelementsofadistinctandstrongcorporateculture,apreferenceforvoluntarystandards,renewedfocusonstake-holderengagementandcautiousprogressontransparencyandreporting.

The historical roots of corporate

citizenship in the U.S.Theargumentisongoingoverwhencorpo-ratecitizenshipbegan.Someclaimittookrootinthe1990s,otherspointtobeginningsinthe1960s.ButtheUnitedStateshasanevenlongerhistoryofthethemesengenderedincorporatecitizenship.Thesearerootedincor-porateandprivatephilanthropy,whichdatesbacktothefirstmajorenterprisesinAmeri-canhistory.Entrepreneurswhoamassedgreatfortunesfromcreatingthefirstrailwaysandenergysources,namessuchasCarnegieandRockefeller,arethesameindividualswhopro-videdfundingforsomeofthefinestuniversi-ties,hospitals,andartscentersintheUnitedStates.Asnewissueswereraisedovertime,privateenterprisesslowlyadaptedtheircon-ceptsofcorporatecitizenship.

Corporate Citizenship in the United StatesBy Sylvia Kinnicutt, The Boston College Center for Corporate Citizenship




Forexample,oncetheindustrialrevolutionandwidespreadeconomicdevelopmentwaswellunderway,issuessuchasproductsafetyandworkers’rightssurfacedandbecamehighlypoliticalaftertheturnofthe20thcen-tury.Environmentalconcernswerethenexttopicinthedebateaboutbusinesses’widerresponsibility.BookssuchasRachelCar-son’s“SilentSpring”stirredpublicoutrageinthe1960soverenvironmentaldegradation,promptingbusinessestoreconsidertheirwid-erimpact.Inresponsetotheseconcerns,theU.S.governmentsteppedinwithnewregula-tionsmakingbusinessesresponsiblefortheenvironmentaleffectsoftheiroperations.

AtthistimetheU.S.sawtheemergenceofinnovativenewbusinesseswithasocialcon-scioussuchasBen&Jerry’s.Companiessuchasthesefelttheyneededtoexceedrequiredregulation,andsawabusinessopportunityinvoluntarilybeingagoodcorporatecitizen.Theperiodofthe1980sand1990s,however,sawadeclineinregulationandrenewedem-phasisonafree-marketeconomy.Whiletheeconomygrew,laborandenvironmentalis-suesbubbledunderthesurface.Inresponse,civilsocietygroupsbegantogrowinsize,numberandinfluence,astheyhavearoundtheworld.Theprivatesectorbegantofaceincreasingpressurefromarangeofactivistgroups.

Proponentsoftheviewthatcorporatecitizen-shipreallybegantotakeholdinthe1990spointtothescandalsrelatedtoabuseofwork-ersindevelopingcountriesthatawakenedtheAmericanconsciousness.Whileseveralcompanieswerecaughtinhumanrightscontroversieslinkedtoglobalizedbusinesspractices,othercorporatepowerhousesbegan

totopplefromirresponsiblecorporategover-nance.Thesescandalsnotonlyruinedcom-paniessuchasEnron,WorldComandTyco,theyseverelydamagedcorporatereputationsacrosstheboardandshrankpublictrustinbusinesstoall-timelows.Theresultingfed-erallegislation,Sarbanes-Oxley,wasacriticalsignofchangeintherelationshipbetweenbusinessandgovernment.Soonafterthiscri-sis,anothergroundswellbegantoerupt.MoreandmoreAmericansheardthemessageofAlGoreandarenowbeginningtoworryiftheyhaveignoredthe“inconvenienttruth”abouttheenvironment.

Throughoutthe1990sthenonprofitcommu-nitystrengthenedandenhanceditspressureoncompaniestoadoptresponsiblebusinessstrategiesbeyondwhatisrequiredbyregula-tion.Thedevelopmentoftechnologyandin-creasingavailabilityofinformationstrength-enedthepoweroftheseorganizations.Inanefforttoimprovereputations,somecompa-niesbegantoingraincorporatecitizenshipintotheirbusiness,cleverlyapplyingtheirbestskillstosocialcauses.IBM’sReinventingEducationbecameoneofthemostsuccessfulsignatureprogramstoaddressarealnation-alproblem.Somecompaniesalsofoundthelinkbetweensocialbenefitandprofits.Forexample,Ciscobegantrainingandtechnologyeducationtoensureapooloffuturework-ers,andGElaunchedanewbusinesslineofenergy-conservingproductsthatisexpectedtoproducerevenueupwardof$20billionby201034.

34GE ecomagination web site: http://ge.ecomagination.com/site/in-dex.html#vision/commitments




EthicalCorporationcolumnistMallenBakerwroteatthecloseof2007,thatit“wastheyearthattherecouldnolongerbeanydoubtthatcorporatesocialresponsibilityarrivedasastrategicissueforbusiness.”Worldwideeventshavemadethisstatementtrueonaglobalscale,butit’sparticularlytruefortheUnitedStates.ThepastyearhasprovidedconsiderableevidenceofBaker’sclaim.Oneofthemostinterestingistheriseofthe“cor-poratecitizenshipexecutive.”Everydaytherearemoreseniorexecutivesbeingnamedtoleadthisfunctioninsomeofthelargestcom-panies.Whilenotallcompaniesareengag-ingtheseissuesyet,surveyshaveprovedthatasignificantmajorityofbusinessleadersareatleastawareofthechangestheirbusiness-esneedtomake.Inresponse,amarketforcorporatecitizenshipisbeginningtodevel-op.Majormanagementconsulting,PR,andcommunicationsagenciesseebusinessop-portunityinprovidingcorporatecitizenshipstrategyandadviceandarenowinapositiontorespond.TheAmericanpressisbegin-ningtotakethesestoriesmoreseriously,astheamountofcorporatecitizenshipnewshasrisensharply.AnotherpromisingsignforthefuturecanbefoundatAmericanbusinessschools.MBAprogramsarerespondingtotheswellingdemandamongstudentstoincludecorporatecitizenshipintheircurriculums.ThesetrendsindicatethatwhiletheideaofcorporatecitizenshipisnotyetingraineddeeplyinthecultureandconsciousnessoftheAmericanpeople,amovementisindeedafoot.

A pre-paradigmatic stageAspractitionersandobserversofthisfieldhavepointedout,perhapswithfrustration,thereareawidevarietyofdefinitionsofcor-

poratecitizenshipandtheterminologyusedtodescribeitiseverexpanding.BradleyGoo-gins,PhilipMirvis,andStevenRochlinde-scribethefieldas“pre-paradigmatic”intheirbook,“BeyondGoodCompany:NextGenera-tionCorporateCitizenship.”WhiletheBostonCollegeCenterfocusesonthetermcorporatecitizenship,viewingitasanaturalprogres-sionfromthepreviousfocusoncorporatecommunityinvolvement,thetermscorporatesocialresponsibility(CSR)anditsmanyvaria-tions(corporateresponsibility,socialrespon-sibility,etc.)joinotherterminologyincludingthe“triplebottomline,”andsustainability.Inthispre-paradigmaticphase,Americanbusi-nesseshaveadoptedwhateverform–andcor-respondingterm–theyfeltfitbestwiththeirbusinessandapproachtosocialandenviron-mentalissues.

Inadditiontotheconfusionoverterms,thereisstrongdifferenceontheirmeanings.Forsome,allofthisamountstophilanthropyandcommunityrelations.OthersintheU.S.,par-ticularlythoseusingtheterm“sustainability,”havelimitedtheirfocustotheimpactontheenvironment.Somedropthe”social”fromcorporatesocialresponsibility,notwantingtobelimitedtocertainissues.Others,haveadistastefortheword”responsibility,”contend-ingitshouldbeavoluntaryinitiative.

Corporatecitizenship,infact,canencompassagreatvarietyofissues,rangingfromcom-munitygivingtoemployeewell-being,envi-ronmentalmanagement,humanrights,prod-uctsafetyandsocialinnovation.Despitethis,mostAmericancompaniesstillhaveaviewthatislargelylimitedtoquestionsofethicsandworkforce.TheBostonCollegeCenter’s2007StateofCorporateCitizenshipsurvey,




whichexploredseniorexecutives’attitudes,aspirations,andactionsregardingtheroleofbusinessinsociety,revealedthatwhilecom-paniesdidvalueotherelementsofcorporatecitizenship,aspectsconsidered“critical”werelimited.

TheCentercontendsthatcorporatecitizen-shipinthe21stcenturyisdrivingamajortransitionfromamodelthatalloweduncon-nectedactivities—suchascompliancewithgovernanceandethicallaws,endorsingglobalstandards,promotingstrongphilanthropic

andvolunteeractivities—toserveassurro-gatesforcitizenship.Thecurrentglobalchal-lengesoftransparency,stakeholderexpec-tations,accountability,trustandreputationrequireastrategicapproachendorsedatthehighestlevelsofthecompanyandintegratedandalignedthroughoutthebusinessopera-tion.

The U.S. social contractAmericansagreethatthesocialcontractisbroken.The2007StateofCorporateCiti-zenshipreportrevealedthat60percentof

CriticalVery

Important Total Small Co. Medium Co. Large Co.

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.”

Operating with ethical business practices

Supporting employee volunteerism

Responding to community/interest groupsregarding issues they care about

Building employee diversity within your business

Protecting the environment

Providing good paying jobs

Working with suppliers/vendors to ensurethey operate ethically

Improving conditions in your community

Protecting consumers

Providing employee benefits

Maximizing long-run profits for owners

Marketing and advertising products and services responsibly

Managing and reporting company finances accurately

Valuing employees and treating them well

28% 40% 68% 69% 64% 70%

17% 32% 49% 43% 51% 65%

14% 32% 46% 45% 46% 51%

45% 31% 76% 74% 76% 84%

22% 32% 54% 52% 48% 62%

60% 27% 87% 88% 84% 88%

43% 38% 81% 83% 80% 78%

29% 32% 61% 59% 62% 66%

20% 40% 60% 53% 71% 69%

27% 33% 60% 57% 59% 70%

19% 36% 55% 53% 55% 59%

13% 39% 52% 50% 51% 61%

17% 32% 49% 50% 46% 53%

16% 29% 45% 42% 42% 54%

*Note: Percentages may not add up to 100% due to rounding




executivesbelievetheexistingsocialcontracteitherhassomeseriousstructuralflawsorneedsafundamentaloverhaul.IntheUnitedStates,thegovernmentdoesnotprovideforallneededsocialservices.Additionally,muchofwhatiscoveredbyfederaltaxrevenue–fromhealthcaretothesecurityofdiplomatsoverseas–isoftencarriedoutbyprivatecon-tractors.Thissystemispartlyduetotheindi-vidualisticcapitalistsystemAmericanshaveadopted,whichdiffersgreatlyfromthemoresocialiststylegovernmentsinEurope.WhileAmericanshaveageneraldistasteforgovern-mentcontrol,theyarebeginningtorecognizethatthelimitationsofthestatehavecontrib-utedtoproblemssuchasaweakenededuca-tionsystem,alackofadequatehealthcarecoverage,andenvironmentaldegradation.Theseareasarenolongerthepurviewofthestate,andtheircontinuedaggravationisthefaultofallthreesectors–business,societyandgovernment.

Despitetheseflaws,intheUnitedStatesthesocialcontractisnotyetahighpoliticalprior-ity.Blamecontinuestorestontheshouldersofgovernment,aswitnessedin2005whenHurricaneKatrinaravagedtheUnitedStates’GulfCoast.Whenadequateaidandsupportfailedtoreachthefloodvictimsofthatareapromptly,theFederalEmergencyManage-mentAgencywasbatteredrelentlesslyinthemediaandbythepublic.Interestingly,businesssteppeduptofillthevoidascompa-niessuchasWalmartandUPSappliedtheirlogisticalexpertisetogetimmediateaidtovictims.CorporateAmericawaslaudedforitsroleinKatrina,somethingthatwasgreatlyappreciatedalthoughnotexpected.Afterthis

experience,therecognitionofashiftingsocialcontracthasgrown.Katrina,andthelargerclimatephenomenon,globalwarming,haverevealedasystemiccrisis.Withnopoliticalconsensusonasolution,Americanbusiness-esarerealizingtheyneedtostandupandin-tervenefortheirownsurvival.

Americansocietynowexpectsbusinesstodomore,butthereisstillawidegapbetweentheperceptionsofsocietyvs.theviewsofbusi-nessitself.Forexample,just42percentofse-niorexecutivespolledfortheStateofCorpo-rateCitizenshipbelievecorporationsshouldberesponsibleforimprovingeducationandskillsintheircommunitiesintheUnitesStates,while61percentoftheAmericanpub-licexpectsthemto.Morethan75percentofAmericanssurveyedbyFleishman-HillardandtheNationalConsumersLeaguesaidU.S.companieshavepoorrecordsoncorporateso-cialresponsibility,andalargemajoritywouldsupportagovernment-ledapproachtoensurecompaniesareaddressingsocialissues.Thiscouldsignalasignificantchangeinthesocialcontactifnotaddressed.

Someinitiativesareunderwaythatmayservetonarrowthegapbetweentheexpectationsofthepublicandbusiness.TheUnitedStatesClimateActionPartnership(USCAP)isonesucheffortthathasunitedbusinessleadersalongwithsomeenvironmentalgroupstopushtheU.S.governmenttowardastrongerclimatechangepolicy.Businessesarealsolookingtotheirformeradversaries,nonprofitorganizations,aspartnersinaddressingsocialissues.




The state of corporate citizenship

in the U.S.BertelsmanStiftunghasnamedtheUnit-edStates,the“birthplaceofCSR.”35Whilethisclaimisopentodebate,theU.S.clearlyleadsinsomeareasofcorporatecitizenshipbutlagsinothers.Comparatively,commu-nitygivingremainsthegreateststrengthofAmericanbusinessinthisarea.Communityinvolvementandvolunteeringhavebecomeingrainedincorporateculturesandarewidelyacceptedelementsofasuccessfulbusinessstrategy.TheStateofCorporateCitizenshipsurveyreportedthattwo-thirdsofcompaniesprovidephilanthropicsupporttocommuni-ties.Theissuesatthetopofthelisttosupportarethosethathaveprovedmostmaterialtobusiness.Theycurrentlyincludeeducation,

35Bertelsman Stiftung, (2007) “The CSR Navigator: Public Policies in Africa, the Americas, Asia, and Europe.”

caringforworkers(andretirees),healthcare,andtheenvironment(relativetopreservation,climatechangeandenergyindependence).TheseissuesarethetopareasofcommunitysupportreportedbytheStateofCorporateCitizenship.36

TheU.S.alsohaspocketsofpromisingsocialinnovation,apracticeseenasanewgenera-tionofphilanthropy.ExamplesincludeGE’sinvestmentinenvironmentally-friendlytech-nologies,IBM’seffortstoapplytechnologyto“reinventeducation,”andthecreationofa$100laptopforlow-incomemarketsbyAMDanditspartners.

AnimportantareawhereAmericancom-

36The Boston College Center for Corporate Citizenship, (2007) “State of Corporate Citizenship 2007: Time to Get Real: Closing the Gap Between Rhetoric and Reality.”

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?”

% of Total MentionsOverall Small Co. Medium Co. Large Co.

Education

Arts and culture

Economic development

Environmental issues

Community safety

Sports

Affordable housing

Child care

Literacy

Job training

Health care, including nutrition and physical fitness

Don’t know / no answer

53% 56% 47% 47%

35% 35% 34% 38%

32% 25% 45% 38%

26% 29% 23% 19%

19% 13% 27% 19%

19% 19% 14% 26%

15% 14% 13% 21%

14% 15% 14% 14%

12% 11% 14% 12%

11% 10% 14% 9%

2% 2% 3% 1%

10% 8% 10% 15%




panieslagisreporting.Only21percentofcompaniesreporttothepubliconcorporatecitizenshipissues37andjustfiveU.S.com-paniesarelistedamongthetop50leadersofsustainabilityreporting.38Whiletheactiv-ityofsocialreportinghasmultipliedgreatlyamongAmericancompanies,theystillarebehindEuropeansduetoaconcernonthepartofmanycompaniesthattheymayreporttoomuch.Decidingwhatandhowmuchtosaypubliclyhasbecomeamajorchallengeofcorporatecommunicationsandpublicrela-tionsexecutives.Thesociallyresponsiblein-vestmentfield,whilenotasinfluentialasinEurope,doesservetodrivecompaniestowardofincreasedtransparency,asfewcompanieswanttobeexcludedfromsuchpubliclistings.Acceptanceofinternationalinitiativeshasal-sobeenslow.TheGRIdatabasecontains229reportsfromU.S.businesses,butmanymorecompaniesareproducingsocialreportsthatdonotfollowGRIcriteria.

Whenitcomestomanagingcorporateciti-zenshipasanintegratedelementofbusinessstrategyAmericanbusinessleaderssufferfromarhetoric-realitygap.TheStateofCor-porateCitizenshipreportrevealedthat60percentofexecutivessaycorporatecitizenshipispartoftheirbusinessstrategytoalargeorverylargeextent.Butonly28percenthavepoliciesrelatedtocorporatecitizenshipandonly25percenthaveanindividualorteamresponsibleformanagingtheseissues.This



mismatchofcorporatetalkandactioniscom-poundedbyaconstantlyshiftingenvironmentthatmayputacompanyuponapedestalonedayandtossitinthemudthenext.Somein-dustrieshavegivengreaterattentiontocorpo-ratecitizenshipthanothers,butthisislargelytheeffectofcrises,whichhaverockedthepharmaceutical,consumerproduct,energyandfoodandbeveragesectorsdisproportion-ately.Eventhesecompanieshavebeencau-tioustosteptoofarahead,afraidofmediaorconsumerbacklash.

Primary corporate citizenship driversWhilegovernmentregulationhasbeenanunderlyingdriverofthecorporatecitizenshipmovementinEurope,intheUnitedStatesthismomentumhaslargelycomefromtheprivatesector.Majorplayersinthemarket,employeesandconsumers,haveforcedtheprivatesectortotaketheseissuesintoac-count,butimpetusforchangeisalsocomingfrominsidecorporateoffices.Privatebusi-nessesintheU.S.arefundamentallydriventoengageincorporatecitizenshipbythefol-lowing:

Traditions and valuesTheStateofCorporateCitizenshipsurveyfoundthattraditionsandvaluesaretheNo.1motivationforengagingincorporatecitizen-ship.39Whilemanymotivationsarecitedbycompanies–suchasimprovingemployeemoraleandretention,enhancedreputation,reducedrisk,andopportunityforcompeti-





tiveadvantage–corporatecitizenshipoftendoesn’tamounttomuchunlessitis“partoftheDNA”ofanAmericancompany.Compa-nieswithalonghistoryofphilanthropyandethicalvalueshavefounditeasiertoingrainbroadervisionsofcorporatecitizenshipintothecompanythancompanieswithoutsuchhistories.

Risk ManagementForU.S.companies,corporatecitizenshipisalsostartingtobecomeariskmanage-menttool.Humanrightsstatements,codesofconduct,andnowclimatechangestrate-giesarenecessarytoolstopreventthetypesofscandalsthatrockedcompaniesinthe1990s.However,Americancompaniesstillstrug-gletoemploycorporatecitizenshipasariskmitigator,forinsomeinstances,takingthesestepscanincreaserisk(orperceivedrisk).Takingastandonanissueattractspublicat-tentionandraisesexpectations.

Competitive and Market PressureThecompetitivenatureofAmericanbusinesshashelpedcorporatecitizenshiptospreadrel-ativelyquickly,asbusinessesstriveto“keepupwiththeJoneses”onthisissue.Whilemuchofcorporatecitizenshipisstillfocusedaroundphilanthropy,Americanbusinessesinrecentyearshaveadoptedcorporatecitizenshipasastrategicelementoftheirbusinessbutthisisaslowprocess.WhentheBostonCollegeCen-teraskedanumberofcompaniestodescribetheirapproachtoinnovationincorporatecitizenship,mostagreedwiththestatementthattheyarea“thoughtfuladopter”onlyonceideashavetakenrootintheirindustry.

CompaniesintheU.S.havefacedanincreaseinpressurefromcivilsociety,buttheyarealsonowfeelingpressurefromthemarket,primarilytheiremployeesandconsumers.Americancompaniesareincreasinglyinflu-encedbyconsumersandclients,whethertheyareadirecttoconsumerorab-to-bbusiness.Clearly,consumerproductscompaniessuchasNikeandMattelfacethegreatestpressurefromconsumers,butmanagementconsult-ingcompaniesforexample,arealsofacingpressurefromtheirclientstodisclosesocial/environmentalindicatorsinrequestsforpro-posals.Thereisnowmoreandmoreevidencethatcorporatecitizenshipmatterstotoday’semployees.AConeCommunicationspollrevealedthat65percentoftheunder-30gen-erationsaystheiremployer’ssocial/environ-mentalactivitiesmakethemfeelloyaltotheircompany.40Companiesthatmustcompeteforthebrightestgraduatesneedtoconsiderthisstatistic.

Opportunity for InnovationFinally,Americancompaniesarerecognizingcorporatecitizenshipcanprovideanopportu-nityforprofits.Thesecancomethroughanimprovedreputationandbrandrecognition,differentiationfromcompetitors,costsav-ings(fromenergyusetoemployeeproduc-tivity),andnewproductsandcustomers.Forexample,Nikenowappliesthe“ROIsquared”principle,mandatingthateveryinitiativemusthaveapositiveimpactontheworldandapositiveimpactforthecompany’sbottomline.Inthisway,thefirmchallengesitscre-ativedesignteamtodevelopinnovativeshoeswithbothcuttingedgefunctionandsustain-

40Cone, Inc. (2006) “The 2006 Cone Millennial Cause Study.” <www.coneinc.com>




ability.Othercompaniesareexpandingtheirproductlinesthroughacquisitiontoinclude“green”andsociallybeneficialproducts.Clo-rox,acompanywell-knownforchemicallybasedbleachproductshasrecentlyacquiredBurt’sBees,anallnaturalproducerofbeautyandhygieneproducts.IBMhascommittedtoseekingout“socialinnovationthatmatters”whereveritcan,andhasinstitutedopen-sourced“innovationjams”tominevaluableideas.Benefitsfromsocialinnovationarebe-comingaprimetargetforthesecompanies.

SecondamongcorporatecitizenshipdriversaretheUnitedStates’numerous“nonprofits.”Nonprofitshaveplayedanimportantcatalystroleinthedevelopmentofcorporatecitizen-shipinitsearlystages.Long-timeadversariesofbusiness,theseorganizationshavecapi-talizedontheinformationagetoexposeir-responsiblebusinesspractices.Businesses’relationshipswithNGOshavetodatelarge-lybeenlimitedtofinancialsupport(manyAmericanbusinessesfunneltheircharitablegivingdollarsthroughorganizationssuchastheUnitedWay),oravoidance.IntheU.S.asinothercountries,theserelationshipsarechanging.Whilehands-offgivingremainsthestandard,thenonprofit-businessrelationshipisbecomingmorecollaborativeinnature.Asnonprofitsaredroppingtheircombativestrat-egyinfavorofcollaboration,strongallianceshaveformedtothebenefitofbothsectors.NonprofitsintheU.S.serveassurrogatesforthepublic’sinterests,especiallywhenthegov-ernmentdoesnotproperlyrepresentthem.

Finally,thethirdsector–government–islastamongcorporatecitizenshipdriversintheUnitedStates.TheU.S.GeneralAccountingOffice(GAO)indicatesthatwhilethegovern-

mentplaysaminorroleasanendorserandfacilitatorofcorporatecitizenship,intheU.S.thereisnoclearleadershiponthisissuefromgovernment.41Whilethereisnovisiblecon-tactpersonorcoordinationpointatthefed-erallevel,somedepartmentsareengaginginvariousways.FirstamongthesedepartmentsistheEnvironmentalProtectionAgencywhichworkstocontrolpollutionthroughvol-untaryprogramswithcorporationsandistak-inganincreasinglystrongstand.Additionally,theU.S.AgencyforInternationalDevelop-ment’sGlobalDevelopmentAlliance(GDA)hasbeguntoleverageresourcesfromtheprivatesectortoachievedevelopmentgoals.OtherdepartmentssuchastheU.S.ChamberofCommerce,primarilythroughtheBusi-nessCivicLeadershipCenter(BCLC),providetrainingonruleoflaw,humanrights,andcorporatestewardshipforcommercialserviceemployeessotheycanprovidethisinforma-tiontocompanies.Despitesomeactivity,itisnotclearthatcorporatecitizenshipisahighpriorityfortheU.S.government.Eventssuchas9/11,andafocusonenhancingcompeti-tivenessanddevelopment,mayhaveresetpri-oritiesawayfromcorporatecitizenship.42

Whilethegovernmenthastraditionallyactedinsupportofbusinessandprivatesectorin-terests,recenteventssuggestanincreaseinregulatorycontrolmaybeimminent.Accord-ingtoformerRepublicanU.S.Sen.JimTalentofMissouri,“Thegenerallylukewarmpercep-tionofU.S.corporationsonsocialrespon-sibility,alongwiththeprevailingbeliefthat

41United States Government Accountability Office, (2005) “Global-ization: Numerous Federal Activities Complement U.S. Business’s Global Corporate Social Responsibility Efforts.”





Congressmayneedtogetinvolved,couldleadtoincreasedoversightoftheprivatesectoronCapitolHill.”43Wehavealreadyseenthepublicsectorrespondtocorporategovernancescandalswithtoughregulation.AreassuchastheenvironmentandhumanrightsarealsogainingimportanceinWashington.

Thenonprofitcommunity,alongwithsomebusinesses,ispushingforastrongergovern-menthand.Itisyettobedeterminedwhetherthegovernmentwillrespondwithmorepuni-tiveandcompliance-focusedlegislationsuchasSarbanesOxley,orfavorasystembasedonself-regulation.Manythinkregulationondisclosurerequirementsandenvironmen-talstandardsaresoontocome.Thenation’sautomakerswerealreadyhitwithregulationonfuelefficiencystandardslatelastyear.Onthestate-leveltherehasbeenanincreaseinregulation,particularlyaroundenvironmen-talstandards,indicatinggrowingdemandforstatecontrol.The2008presidentialelectionalsopresentsuncertaintiesforbusinessonwhatrolethegovernmentwillassumeafterthechangeinadministration.

SummaryCorporatecitizenshipintheUnitedStatesisaprocessinaconstantstateofflux.Businesstodaycannotaffordtoignoretheseissues.Thedriversofcorporatecitizenshipwithintheprivatesector–corporatevalues,mar-ketpressure,riskandopportunity–willonlystrengthenincomingyearsrequiringnewthinkingonthesocialcontractandtraditionalbusinessstrategy.

43Fleishman-Hillard, (2007) “Expert Panel to Discuss Political Implications of 2007 Survey on Corporate Social Responsibility at Georgetown University,” <http://www.fleishman.com/point-of-view/News/pr050907.html>

Tounderstandthecontextofcorporateciti-zenshipintheUnitedStatestodayitisimpor-tanttounderstandthephilanthropycontext.Whilethisrepresentsanearlyandlimitedstateofcorporatecitizenship,allbusinessesarestillexpectedtocontribute.Constantlychangingconsumerandmarketforcesshouldalsobecloselymonitoredfornewexpecta-tionsfromcustomers,employeesandsocietyatlarge.BusinessleadersapproachingtheU.S.fromabroadmustkeepabreastwithreg-ulationssuchasSarbanes-Oxleyandpreparefornewlegislationinthisareaandothers.Businessesmustlooktotheleadersintheirindustry;orriskbeingleftinthedust.







These reports from members of the Global Edu-cation Research Network (GERN) on the state of corporate citizenship around the world em-phasize its global dimensions and local features. The Boston College Center for Corporate Citi-zenship 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 Manage-ment, McKinsey & Co., the research arm of the Economist and others helps to round out the picture.

A global scan of corporate citizenshipBy Philip H. Mirvis, Boston College Center for Corporate Citizenship

Here observations from GERN members are combined with survey data to provide a scan of corporate citizenship around the world.

The responsibilities of businessWhat does the public see as the responsibili-ties of business? A GlobeScan poll asked people around the world whether or not companies were “not at all” or “somewhat” or “complete-ly” responsible for various aspects of business operations and their impact on society. In 2007, the pollsters found that large majorities in twen-




ty-five countries hold companies completely responsible for the safety of their products, fair treatment of employees, responsible manage-ment of their supply chain and for not harming the environment. These are, of course, opera-tional 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 re-ducing the rich poor gap. Add in the category of partially responsible, and business is respon-sible, 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 responsibil-ity? GlobeScan finds that, among the countries they’ve surveyed, more than 80 percent of Bra-zilians hold business responsible for its perfor-mance in 10 dimensions of corporate citizen-ship. 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 respon-sible for citizenship — double the number com-pared to six years ago.

Reports from researchers in the GERN reinforce the idea that business is moving from a philan-thropic conception of citizenship to a broader view. But the thrust and priorities of corporate citizenship seems to vary from country to coun-try. On this point, GlobeScan asked the pub-lic: What is the most important thing a com-pany 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

example, puts prime emphasis on community involvement; in Australia, the United Kingdom, and much of Europe on protecting the environ-ment; and in Mexico and China on the qual-ity 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 tradition-al conceptions of company responsibilities to employees and the commonweal and height-ened concerns about products and service in nations embarking on consumerism and global trade. Country reports affirm that businesses are taking these responsibilities on in advanc-ing their citizenship agenda. In addition, there seems to be growing interest in environmental sustainability among both the public and busi-ness 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 wor-ried about global warming.2

Ratings of corporate citizenship around

the worldHowisbusinessdoingoverallonitsrespon-sibilityscorecard?AmultiyearlookatpublicopinionworldwidebyGlobeScanshowspub-licexpectationsofcompanieshavebeenris-ingandthatratingsoftheirsocialresponsibil-ityhavebeendropping(seeFigure2).RecentdatafromtheReputationInstitutedocumentsthatin25countriesstudied,anaverageofjust1-in-5peopleagreethat“mostcompaniesaresociallyresponsible.”Roughly16percentofAmericansseeitthisway—fewerthaninMexico(35percent)andCanada(26percent)




butmorethanintheU.K.(11percent)andJa-pan(9percent).

Plainlytherearegapsbetweenpublicexpec-tationsandcorporateperformanceinthisarena.Toinvestigatethese,theCenter’s2007StateofCorporateCitizenshipsurveyofU.S.businesscomparedexecutive’sviewsoncor-porateresponsibilitieswiththeGlobeScanconsumerdata(seeFigure2).Interestingly,therewassomealignmentbetweenexecutiveandconsumerratingsonbusiness’respon-sibilitytoprovideequaltreatmentofemploy-eesandsupportforcharitiesandcommunityprojects.Butthereweresomegapsinopin-

ionsaboutmanagement.Forinstance,thepublic(85percent)moresothanbusinessleaders(74percent)believesthatcorpora-tionsshouldapplythesamehighstandardseverywheretheyoperateintheworld.Andthegapgrowswhenitcomestoensuringthatproductshavebeenproducedinasociallyandenvironmentallyresponsibleway.Thebiggestgaps,however,centeronexpectationsthatbusinessshouldreducehumanrightsabusesinworldandhelpbridgethegapbetweenrichandpoor.3

Inturn,McKinsey&Co.documentsagapbetweenpublicandcorporateviewsinparts




ofWesternEurope,aswellasJapan,IndiaandChina.In2005-06polling,thepublicputfarmoreimportancethandidbusinesslead-ersonenvironmentalissues,pensionsandretirementbenefits,andhealthcarebenefits.4Nowonderthesearelabeledaskeyrisksfac-ingbusinessintheyearsahead.Still,thereismovementafoot:Afollow-upsurveyfindsthattodaybusinessleadersrateenvironmen-talissueseverybitasimportantasconsum-ersdo,a20percentincreasefrom2006to2007.5

Globally,some68percentofexecutivessaylargecorporationsmakeapositivecontribu-tiontothepublicgoodtoatleastsomeextent.Yetonly48percentofthepublicagree.ThisgapisgreatestinNorthAmericawhere3-out-of-4executivessaycorporationscontributetothepublicgoodversus40percentofthe

public.ItisalsosubstantialinEuropeandmuchoftheAsia-Pacific.Bycomparison,thepublicinChinaandIndiagivelargecorpora-tionsbettermarksthandobusinessleaders.Thismayhavesomethingtodowiththeirun-rivaledsuccessatjobcreationanddeliveryintheconsumermarket.

AnotablefactorrelatedtothesegapsisthediminishedroleofgovernmentintheUnitedStatesandacontinuinglossoftrustandcon-fidenceinpublicofficials.Butthisisalsoaworldwidephenomenon.Majoritiesmistrusttheirnationalgovernmentinpollsaroundtheworld.AstheGERNmembersreport,thepubliceverywhereisturningtobusiness,par-ticularlybigbusiness,todomoreforsocietyandtotakebettercareofthenaturalenviron-ment.Akeyquestion,then,iswhatmotivatesbusinesstodoso.

Top three responsibilities of large companies according to:

0

20

40

60

80

10090%

83%88%

75%

85%

74%

treat allemployeesfairly

ensure P&Sdon’t harmenvironment

apply samestandardsglobally

Public

Executives




Roots of corporate citizenshipTheGERNcountryreportshighlightsomeofthedistinctsocio-culturalmotivationsforcorporatecitizenshiparoundtheworld.Theseinclude:

• Religious and moral sentiments.Thesemotivesarecitedforcorporatephilanthro-pyandresponsibleemploymentpracticesintheU.S.,Europe,andLatinAmerica(Judeo-Christianroots),inAsia(Bud-dhism,Catholicism)andintheMiddleEast(theIslamicvalueofZakat—dona-tions).

• Cultural and corporate values.Differenceswerealsonotedtotheextentnationswereinclinedtoamoreindividualisticversuscollectiveculturewiththeformermoreinclinedtolaissez-fairebusinesspracticesandvoluntarycorporateinitiativesandthelattermorepronetostateandindustryinfluenceovercorporateconductandthedirectionofcorporatesocialresponsibility.Thismayalsoapplytoadoptionofinstru-mentssuchastheGlobalReportingIni-tiativeandinvolvementinmulti-nationalgroupssuchastheU.N.GlobalCompact.

• Market structure and economy.Therela-tiveprevalenceoffamily-ownedenterpriseseemstoemphasizecorporateresponsibili-tytothecommonwealmoresothanpublicownership.Thisextendstothetreatmentofemployeesas“partofthefamily”insomeculturesasopposedtomoreimper-sonalrelationshipswithoutfamilialobliga-tions.Moreover,thecountriesrepresentedinGERNincludethoseassociatedwithAn-glo-SaxoncapitalismintheU.S.andU.K.,amarketeconomysurroundedbyawelfare

stateinmuchofEurope,amarketecon-omysubjecttocommandinChinaandtoroyaldecreeintheUnitedArabEmir-ates,andthemixedmodelsocio-economyofBrazil,SouthAfricaandtosomeextentChile.

Nodatabaseorsetofsurveysissufficienttoparseouttherelativeimportanceofthesefac-torsforcorporateinterestin,andpracticesof,citizenshipindifferentpartsoftheworld.TheGERNauthors,however,notethatglobaliza-tionandthespreadofmultinationalcompa-nieshaveshapedthecitizenshipagendaineachoftheircountries.Tothispoint,McKin-sey&Co.’s2006surveyofmorethan4,000executivesin116countriesfoundthatjust16percentadoptedtheviewthatbusinessshould“focussolelyonprovidinghighestpossiblere-turnstoinvestorswhileobeyingalllawsandregulations.”6Theother84percentagreedwiththestatementthatbusinessshould“gen-eratehighreturnstoinvestorsbutbalancethatwithcontributingtothebroaderpublicgood.”

The relative importance of corporate

citizenship around the worldSomehunchesabouttherelevanceofthesesocio-culturalandmoremarket-baseddriversofcitizenshipcanbedevelopedbylookingattherelevanceofcitizenshiparoundtheworld.Forinstance,researchersfromtheReputationInstitutehavestudiedthereputationsofmorethan600companiesbasedon30,000onlineinterviewswithconsumersin25countries.Inresponsetoageneralquestion,between50and80percentoftherespondents(de-pendingonthecountry)agreethatcitizen-shipprogramshaveastrongeffectonthereputationsofcompanies.Thisperceptionis




strongestincountriessuchasSouthAfrica,Brazil,ChinaandMexicowhere,theresearch-ersargue,companiesplayamoreimportantroleinsocietaldevelopment.Still,morethan53percentofthepublicintheUnitedStates.seesastronglinkbetweencitizenshipandreputation.

Diggingdeeperintothedatabase,theRepu-tationInstitute’sresearchershaveanalyzedtherelationshipbetweendifferentaspectsofafirmanditsoverallreputation.7Thetoppre-dictorofcorporatereputationgloballyiswhattheytermthe“heartbeat”factor—thepub-lic’soverallrespectfor,andtrustin,acom-pany.Inits2008globalsurvey,thecombinedratingsofacompany’sgovernance,socialresponsibilityandworkplacepracticesmadenearlyasmuchofacontributiontoitsreputa-

tionoverall,atleastinthepublic’seyes,asthecombinedratingsofacompany’sproductsandservices,innovativeness,financialperfor-manceandleadership.

Onacountrybycountrybasis,therearede-cideddifferencesinrelativeimportanceofthethree“citizenship”factors.WorkingwiththeReputationInstitute,theBostonCollegeCenteranalyzedtheimportofeachofthethreefactorsassociatedwithcitizenshipinthecountriessampled(seeTable4).

Inthecaseofgovernance,forexample,theimportanceplacedonbehavingethicallyandbeingopenandtransparentishighestinsev-eralcountriesinemergingmarkets(Chile,Mexico,India)and,interestingly,themostadvancedcountrieswithAnglo-Saxoncapital-

Responsibilities of large companies according to:

0

20

40

60

80

100

79%

56%62%

32%

61%

41%

53%

31%

49%

21%

productsmade responsibly

reducehuman rightsabuses

improveeducation & skills

increase economicstability

reduce gapb/n rich &poor

Public

Executives




ism(Australia,Canada,theUnitedStatesandUnitedKingdom).Thismayhavesomethingtodowiththestrengthoftheregulatoryenvi-ronmentinthesenationsversus,say,North-ernEuropeancountries.Itmayalsoreflectthepublic’sreactionstocorporatemisdeeds,prominentintheU.S.,theU.K.,AustraliaandCanada,aswellasinSouthKoreawhichalsomakesthelist.

Whenitcomestotherelativeimportanceas-signedtocorporatecitizenship,supportinggoodcausesandnotharmingtheenviron-ment,theEuropeansingeneralputgreaterweightonthesefactorsinjudgingacom-pany’sreputation.Theyalsofactorworkplace

conditionsandhowcompaniestreattheirpeopleintothereputationcalculusmoresothaninothercountries.Thisdoesn’tmeanthattheworkplaceisunimportantinratingsofcorporationselsewhere.Rather,itmeansthatotherfactorsaresimplymoreimportantinthepublic’sjudgmentofcompanies.

Onthiscount,theReputationInstitutefindsthat,onaverage,75to80percentofthosepolledinsome25countrieswould“prefertoworkforacompanythatisknownforitsso-cialresponsibility.”Italsoshowsthattheap-pealofcorporatecitizenshiptoemployeesisbynomeanslimitedtotheU.S.ordevelopedeconomieswiththeircomparativelyprosper-

Importance to Corporate Reputation of “Citizenship”Factors

National Publics Giving Highest Importance to …

Corporate Social/Environment Workplace and

Governance Performance 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




ousandwell-educatedworkforces.Onthecontrary,whiletheReputationInstituterankssocialresponsibilityasasignificantdriverinattractingemployeesintheU.S.(morethan62percentsayitisimportanttothem),itisevenmoreimportantinChile(69percent),India(69percent),SouthAfrica(77percent),andChina(79percent).Interestingly,itap-pearslessofadriverintheUnitedKingdom(46percentsayitisimportant)andJapan(49percent).

Summingthisup,theReputationInstitutereports,forinstance,thatcitizenshipisveryimportanttotheChinese.Itisamajorfactorintheirratingsofacompany’sreputation,andveryrelevantinemployeeandconsumerchoices.Butnotethatthisrelationshipworksintwoways:Goodcorporatecitizensareac-claimedandthosethatperformbadlyasciti-zensaredevaluedandavoidedinChina.ThissamerelationaltrendisfoundinIndia,Mexi-co,Brazil,Chileandotheremergingmarketswherethepublicisinterestedincorporatecitizenshipandcompaniesareseenascriticaltoeconomicandsocialdevelopment.

Bycomparison,citizenshipisnotmuchofadiscriminatorinreputationalrankingsinRus-sia.Whynot?OnetheoryisthatbecausethegreatmajorityofRussiansdon’ttrustcorpora-tions,theydon’tgivecredencetotheideathatfirmscanbegoodcorporatecitizens.Thisnegativeviewofcorporatepracticesandinten-tionsalsodampenstherelevanceofcitizen-shipintheUnitedKingdomandtoalesserextentFranceandGermany.

Someofthiscanbeexplainedbythestageofeconomicdevelopmentincountries,therolehistoricallyassumedbycompaniesversusthe

state,andtheparticularsofnationalculture.Take,forexample,thequestionofwhetherornotmultinationalcompaniesaregoodforsociety.IntheU.S.,astrongmarketcapital-istcountrywherecorporationsareneitherdamnednorpraised,publicopinionsplitsroughly50/50astowhetherornotglobalcompaniesoperateinthebestinterestsofsociety.InEurope,bycomparison,only1-in-3trustcompaniesinthisregard.

Commercial motivations for citizenshipAnewbook,“BeyondGoodCompany:NextGenerationCorporateCitizenship,”docu-mentshowfirmsenactcitizenshipthroughthedistinctlensesof1)compliancewithlawsandindustrystandards,2)voluntarycontri-butionstosociety,3)riskmanagementand4)gamechanging,byaddressingsocialissuesasopportunitiestoimprovethebusinessandsociety.8TheGERNresearchteamestimatesthatwhilemostcompaniesineachregionstudiedseecitizenshipinthesefirsttwodi-mensions,increasingnumbersattendtoriskandtheirlicensetooperate,andavanguardisusingcitizenshiptosecureacompetitiveadvantage.

Surveysofexecutivesgloballypaintasimi-larpicture.Asanexample,asurveybytheEconomistIntelligenceUnitofexecutivesinEurope,theAsia-PacificandNorthAmeri-cafindsthatsome45percentofthesampleconcurthey“explicitlyconsidertheviewsandimpactofexternalstakeholders”indecisionmaking.Butthereisasplitintherationaleforcitizenship:Justoverhalfseecorporateresponsibilityasa“necessarycostofdoingbusiness”andasmanysayitgivesthefirm“adistinctivepositioninthemarket.”9




Thereseemstobeaglobalconsensusamongbusinessexecutivesthatsocietyhashigherexpectationsforcorporateresponsibilitycom-paredtofiveyearsago.Lookingtowardthenextfiveyears,some55percentofexecutivesintheAmericas,62percentinEurope,and64percentintherestoftheworldthinktheseexpectationswillcontinuetoincrease.10TheGERNglobalreportsconcurthatexpecta-tionsforcorporatecitizenshipmountineverycountrystudied.Buthowcompaniesperceiveandactontheseexpectationsseemtodifferbycompany,industryandregion.

AstheGERNreportdocuments,socialis-suesofrelevancetobusinessdifferaroundtheworld.Thepublic,too,hassomewhatdifferentprioritiesandneedsregardingthecorporateroleinsociety.Onestudytookasystematiclookattherelevanceofdifferentstakeholdersindifferentregionsoftheworld.InWesternEurope,forexample,customersandgovernmentpolicymakersseemfarmoreinfluentialinshapingcorporatesustainabil-itystrategiesthanintheUnitedStates.U.S.companies,bycomparison,aremoreinflu-encedbytheactionsofcompetitors.AndintheAsia-Pacific,thekeyinfluencerisgovern-ment.Itisalsonotablethatdevelopingworldcustomersareseenasinfluentialin15percentofthecompaniessampled—aforcelikelyratedasmoresignificantinglobalbusinesses.

Management of citizenshipSurveyshaveonlyscratchedthesurfaceastohowcitizenshipismanagedincompanies.TheBostonCollegeCenter’s2007surveyofU.S.industryforexample,foundthatwhilethemajority(60percent)saiditwaspartoftheirbusinessstrategy,farfewerincorporateditintotheirbusinessplans(39percent),con-

sultedwithexternalstakeholders(29percent),orhadanindividualorteamresponsibleforcitizenshipissues(25percent).

Onaglobalscale,andamongaselectsampleofcompanies,McKinsey&Co.’s2007sur-veyofcompaniesparticipatingintheGlobalCompactfoundthat90percentofCEOsaredoingmorethantheydidfiveyearsagotoincorporateenvironmental,socialandgov-ernanceissuesintostrategyandoperations.Butgapsarenotable:72percentofCEOsagreethatcorporateresponsibilityshouldbeembeddedintostrategyandoperations,butonly50percentthinktheirfirmsdoso.And6-in-10saycorporateresponsibilityshouldbeinfusedintoglobalsupplychains,butonly27percentsaytheyaredoingso.11

EachoftheGERNreportsemphasized“per-formancegaps”incitizenship:betweenpublicexpectationsandbusinessresponsivenessandbetweenexecutives’rhetoricandcorporateac-tion.McKinsey&Co.pointstoseveralbarri-ersthatkeepcompaniesfromimplementinganintegratedandstrategicapproachtociti-zenship.Chiefonescitedincludecompetingcorporatepriorities(notedby43percent),thecomplexityofimplementingstrategyacrossbusinessfunctions(39percent),lackofrec-ognitionfromfinancialmarkets(25percent)anddifferentdefinitionsofcorporatesocialresponsibility/corporatecitizenshipacrossre-gionsandcultures(22percent).Whatthendoweknowabouthowcorporatecitizenshipismanagedindifferentpartsoftheworld?

AnEthicalInvestmentResearchService(EIRIS)studyofcorporateinvolvementwithsustainabilityfoundthatEuropeancompaniesaregenerallyaheadofthoseintheU.S.when




itcomestoresponsiblebusinesspractices. 12Withrespecttomanagingenvironmentalimpacts,forexample,EuropeanandJapanesecompaniesareclearleaders.Morethan90percentofhighimpactcompaniesinEuropeandJapanhavedevelopedbasicoradvancedpolicies,comparedwith75percentinAus-tralia/NewZealand,67percentintheU.S.and15percentinAsiaexcludingJapan.Andnearly75percentofEuropeancompaniesoperatinginhigh-riskcountrieshavedevel-opedabasicoradvancedhumanrightspolicycomparedwithlessthan40percentofNorthAmericancompaniesandaboutasixthofAsianfirms.Bycomparison,communityin-volvementisenactedineveryregionstudied.

TheSocietyforHumanResourceManage-mentprovidesanin-depthlookattheman-agementofcitizenshipintheU.S.,Australia,China,Canada,MexicoandBrazil.13Inter-estingly,Brazilleadsthegroupincorporateinvolvementincitizenship.Braziliancompa-niesaremostlikelytohavecitizenshippoli-cies,missionsandgoals,andtotakeaccountofcorporatesocialresponsibilityinbusinessdecisions.MexicanfirmsandoperationsalsoscorehighintheseregardsandlikeBrazilaremostapttohaveactiveboardsofdirectorsen-gagedincitizenshipmatters.Recallthatciti-zenshipisakeypriorityofthepublicinthesecountries.Onehypothesisisthatcorporateinvolvementincitizenshipsecuresalicensetooperateandgainsmarketapprobation.

InChinaandIndia,bycomparison,largefirmsdocomparativelywellontheirover-allprofilebutmid-sizeandsmalleroneslagbehinddevelopingcountrypractices.Compa-niesinbothcountrieslackastrongemployeevolunteertradition,butlargenumbersinboth

collectedmoniesordonatedinresponsetonaturaldisasters.Interestingly,theyalsosawglobalizationasakeydriverofcorporateso-cialresponsibilityandweremorelikelythanthoseinothernationstoviewcitizenshipasakeysourceofcompetitiveadvantage.

IntheSHRMstudy,theU.S.leadsinem-ployeevolunteeringanddonationstocharity—traditionalareasofengagementstrength.Interestingly,theU.S.executivesscorelowestonformalcorporatecitizenshippoliciesanddon’tparticularlyemphasizebroadersocialgoalsintheiragenda.AustralianandCana-diancompanies,bycomparison,scorehighlyonpoliciesandtakingstepstomovecitizen-shipintotheircorporategovernance.ThissamepathisbeingfollowedbyEuropeanbusinesses.

Toward next generation corporate

citizenshipThemovementtoward“nextgenerationcor-poratecitizenship”takesfirmsbeyondtradi-tionalmeasuresofcomplianceandcommuni-tycontributionstointegratingcitizenshipintotheorganizationandoperationsandtofac-toringitintoproductsandservices.Surveysshowthepublicsupportsthistrend.Pollsfindthatthepublicallovertheworldsaysthatthebestwayforcompaniestomakeapositivecontributiontosocietyisbyworkingtosolveaspecificsocialproblem,ratherthandonatingmoniestocharity(althoughbothrankbelowtheirprimarycontributionofdevelopingsaferandhealthierproductsandservices).What’sinvolvedinnextgenerationcitizenship?

Global citizenship.First,itextendscitizenshiptoaglobalscale.Thismeansapplyingworld-classstandardstooperationsanddealings




indevelopingandemergingmarkets.Italsomeanstakingaccountofsocialandenviron-mentalneedsaroundtheworldandtailoringactionstolocalneedsandcultureandcondi-tions.ThisisverymuchinkeepingwiththetrajectoryidentifiedbytheGERNcountrystudies.Whatactionsareneededonaglobalscale?ArecentsurveybyGlobeScanofmorethan300expertsinthefield,foundthatjust30percentratedstrategiccorporatephilan-thropyaseffectiveinachievingtheUnitedNations’millenniumdevelopmentgoals.Bycomparison,nearly75percentcreditednewbusinessmodelsandinnovationsaseithersomewhatorveryeffective.

Multisector partnerships.Thenextgenera-tionmovementalsoinvolvesmultisectorpartneringtoaddresssociety’sneeds.Thepubliccertainlyapprovesofthis.Onaglobalscale,NGOsearnfarmoretrustthanglobalcompaniesinboththeNorthern(68percentversus38percentaretrusted)andtheSouth-ernhemispheres(63percentversus46per-cent);andinboththeyaremoretrustedthannationalgovernments,domesticcompanies,tradeunionsandthemedia.14Whoismosttrustedtodowhat’sright?IntheU.S.,wheretrustinbusinessinthisregardhasbeenrela-tivelyconstantsince2001,trustinNGOshasincreaseddramatically,from36percentin2001to54percentin2006,movingwellaheadofbusiness.NGOsarenowthemosttrustedinstitutionineverycountryexceptJapanandBrazil.Thispushformultisectorsolutionstotheworld’smostpressingprob-lemsistodaybeingadvancedbytheWorldEconomicForumandUnitedNationsGlobalCompact.

Business versus government roles.Thestressonmultisectorpartneringinmeetingsoci-

ety’sneedsmustbeconsideredinthecon-textoftensionsintheUnitedStatesovertheroleofbusinessandgovernment.TheBostonCollegeCenter’ssurveysfoundnearlyallbusinessleadersadamantthatcorporatere-sponsibilityshouldbeavoluntaryoptionofcompanies,notlegislatedorregulatedbythegovernment.TheAmericanpublic’sviewonthisismarkedlydifferent.The2007Fleish-man-Hillard/NationalConsumer’sLeaguesurveyfoundthat4-of-5consumersbelievethatitis“extremely”or“very”importantforCongresstoensurecorporationsaddressis-suessuchasenergy,theenvironmentandhealthcare.

Onaglobalscale,thereisnotnearasmuchpreferencefor“freemarket”solutionstoso-cialproblems.Majoritiesincountriesinclud-ingIndonesia,Italy,ArgentinaandFranceagreethefreemarketworksbestwhenitisstronglyregulated.Furthermore,ontheim-portantmatterofbusinessemissions,one-thirdofconsumerssampledaroundthegloberespondfavorablytotheideaofincreasedregulation.Morebroadly,astudybyBer-telsmann-Stiftungarguesthatnationswithstrongstatesandatraditionoflegislationinthesocialarena(e.g.,Poland,France,China)aremoreapttoturntomandateaspectsofcorporatesocialresponsibility,whereasna-tionsgoodatmanagingchangewithtradi-tionsoftransparency(theU.K,SwedenandGermany)aremoreapttorelyonvoluntarymeasuresandpartnershipstosteercorporateconduct.15

The ‘glocal’ solution.OveralltheGERNre-portsandsurveydatapointtoatwo-dimen-sionalevolutionincorporatecitizenshiparoundtheworld.Globalstandardsforsocial




andenvironmentalperformance,criteriaforlistingsoninternationalstockexchanges,rankingssuchastheDJSIandFTS4good,andthepressfortransparencyandreportingallimpingeonlargecorporationswhatevertheiroriginsandwherevertheyoperate.Inasense,globalcorporationsarebeingpushedtowardadoptionofcommonfeaturesofcorporateconductanddisclosure.

Atthesametime,thedatashowthatlocaltraditions,needsandcircumstancesalsofac-torintocorporateconduct.ThatthepublicinBrazilhashighexpectationsofcorporateconduct,asanexample,necessarilyshapestheconductofBrazilianfirmsandglobalcompanieswithoperationsinthenation.TheSHRMstudydocumentstheimpactoncitizenshippoliciesanditsroleasasourceofcompetitiveadvantage.ThissamescenarioplaysthroughoutLatinAmerica.InAsia,bycomparison,interestishighbutpolicyandpracticesarenotnearasadvancedandthebrandofcitizenshipdeployedinJapanversusKorea,China,thePhilippinesandSoutheastAsiaisdiverse.

Atthispoint,theevidencesuggeststhatcor-porationsbasedinEuropeseemtobeaheadoftheU.S.whenitcomestointegrationandreporting.ManyEuropeancountries,forex-ample,regulatecorporateconductmoresothanintheU.S.andsetguidelinesforfirmsinseveralcitizenshiparenas.Moreover,theEuropeanUnionhashostedmultipleconven-ingsoncorporatesocialresponsibilityandsustainability;establishedworkinggroupsbetweenleadersinbusiness,government,andNGOsonselectissues;andissuedposi-tionpapersaimedatcompanies.Oneimpactisevident:Europeanfirmsarefarmorelikely

thanAmericanfirmstoissuesocial-and-envi-ronmentalreportsandtohavethemverifiedbyexternalauditors.

Anotherfeatureofnextgenerationcitizen-ship,justbeginningtoemergeinselectcor-porations,connectsittotheverypurposeandoperatingstrategiesofabusiness.Inseveralofthenextgenerationcompaniesprofiledin“BeyondGoodCompany,”thestrategicintentofthefirmisnotsimplytogoaboutitsbusi-nessresponsiblyandsustainably,itistomakearesponsibleandsustainablebusinessoutofaddressingtheworld’ssocialandenviron-mentalneeds.Allofthismeansthat,astheGERNreportspellsout,companiesarede-visingglobalandlocalcorporatecitizenshipthrusts,orasitmightbeput,“glocal”solu-tions.Moreover,itisevidentthatnewdefini-tionsofcitizenshipanditscentralitytobusi-nessarebeingdevisedbyglobalbusinessesandbylocalentrepreneurs.

(Endnotes)1The 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; Globe-Scan, Corporate Social Responsibility Monitor (2001-2006), http://www.GlobeScan.com; and GolinHarris, Doing Well by Doing Good: The Trajectory of Corporate Citizenship in Ameri-can 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).




2The McKinsey Quarterly. “How Companies think about Climate Change.” (2007);

3The State of Corporate Citizenship in the U.S. 2007. “Time to Get Real: Closing the Gap be-tween Rhetoric and Reality.” (Boston: BCCCC, 2007).

4Scott Beardsley, Sheila Bonini, Lenny Men-donca and Jeremy Oppenheim. “A new era for business,” Stanford Innovation Review, (Sum-mer, 2007); Sheila Bonini, Kerrin McKillop, and Lenny Mendonca, “The trust gap between consumers and the corporations,” The McKinsey Quarterly.

5Sheila Bonini, Greg Hintz, and Lenny Men-donca, “Addressing consumer concerns about climate change.” The McKinsey Quarterly.

6The McKinsey Quarterly. “Global Survey of Business Executives.” (January, 2006). Online edition at McKinsey.com. Cited throughout this paper.

7See Antonio Márquez and Charles J. Fombrun, “Measuring Corporate Social Responsibility.” Corporate Reputation Review, 7, 4, (January, 2005): 304-308.

8Beyond Good Company

9Economist Intelligence Unit

10Debby Bielak, Sheila Bonini, and Jerry Op-penheim, “CEO’s on strategy and social issues,” The McKinsey Quarterly.

11McKinsey & Co., “Shaping the New Rules of Competition: UN Global Compact Participant Mirror.” (July, 2007). Online at McKinsey.com.

12EIRIS, The State of Responsible Business, 2007

13Society for Human Resource Management, 2007 Corporate Social Responsibility.

14See GlobeScan, “Report on Issues and Reputa-tion,” (2005).

15Bertelsmann-Stiftung. The CSR Navigator: Public policies in Africa, the Americas, Asia and Europe




“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

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

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