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Global concepts in local communities

Solidarity as a development platform

Corporate responsibility response to needs from the environment

The corporate responsibility strategy was mentioned for the first time in the second half of the

20th century in the USA. It was created as a response to various economic and social pressures

with which companies were facing.

The increasing demands for establishing corporate responsibility came from various groups of

activists in 1960s, which led to significant changes in social legislation of the USA ten years

later. New state bodies and organizations were formed, such as the Environmental Protection

Agency, Committee for Employee Equality, and Committee for Consumer Protection and the

Committee for Safety and Health Protection, with the aim of formally regulating the

relationships between companies and employees, consumers and citizens as stakeholders. Since

that time, executive management has constantly been tackling the task of balancing between the

obligations towards owners of capital and legal obligations towards the increasingly large group

of stakeholders, who say they have legal and ethical rights.

In that context, Corporate Social Responsibility CSR is mentioned for the first time.

According to one of the definitions, CSR is a voluntary and continuous activity of companies in

accordance with business ethics, with the aim of contributing to economic development,

improving the quality of life of employees in companies, their families, local community and the

entire society.

It is thought that corporate responsibility consists of four types of responsibility: economic, legal,

ethical and philanthropic dimension. This pyramid was presented back in 1991 by Archie B.

Carroll PhD manager, author and professor, and it is still widely used to explain the main areas

of responsibility. B. Carroll says that companies have a manifold responsibility that can be

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presented in the pyramid, where the bottom of the pyramid contains the basic responsibilities of a

company. If a company is meeting the obligations on a lower level, that means it is meeting its

obligations toward the shareholders and the law and that it can move on to the higher level of

responsibility toward the society.

Dr. Archie B. Carroll pyramid of responsibility of companies

The first and main responsibility of a company is its economic responsibility, which means that

before all, a company should be profitable. Besides that, a company has legal responsibility and

has to abide by legal norms prescribed by law. After a company meets these two demands, it can

deal with ethical responsibility, which includes activities that a company undertakes in

accordance with its believes and its mission, not because it is obliged to do so. Philanthropic

philanthropic responsibility -

quality of life and environment

ethical responsibility -

ethics

legal responsibility - legality

economic responsibility - profitability

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responsibility means that a company makes efforts to contribute to the society, i.e. to somehow

give back to the society.

Corporate philanthropy is seen as a special activity that includes donating financial or other

means to non-profit organizations. Corporations most often donate money, but other forms of

help are present as well (premises, services, help in promotion, etc.). Some companies organize

volunteering, which includes volunteers investing their time and work to contribute to realization

of certain CSR activities.

Advantages of companies that carry out CSR programs:

- HR/ human resources profiling and building company reputation, benefits for employees

- Risk management investing in ethical brands or positioning of the company as

environmentally responsible, thus affecting its value

- Brand differentiation through increasing loyalty, reputation, proactivity

- Business development addressing potential challenges, possibilities for cooperation,

development of new products, services or markets

- Resource management preservation of resources and identification of potential challenges by

engaging experts

- Management of the interested public (stakeholders) managing and improving relations with

various stakeholders, such as NGOs, institutions, media, etc.

From endowments to solidarity funds and corporate foundations

Ever since Studenica was built, the Serbian nation has had many founders, ascetics and

benefactors people who left their property to the society and future generations. As historical

sources indicate, the practice of endowments builds on the tradition from the period of Roman

emperors, while in our area it gained momentum in the Middle Ages, during the Nemanji

dynasty. About one thousand foundations and endowments are currently registered in Serbia.

In the former social system socialism, CSR did not exist in its current form. Nevertheless,

despite the planned economy in ex-Yugoslavia, legal entities (from basic organizations of

associated labour, BOALs, to large economic giants) carried out activities that we would

nowadays call socially responsible. Investing in the community was an important determinant of

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that policy. Therefore, companies invested in everything that was important for the community

from infrastructure to schools and hospitals.

During 1990s, after the change of the social system, wars in the region and humanitarian

catastrophes, most of the funds were collected from large international organizations and donors,

for the needs of financing the economic recovery and building of the country. Domestic NGOs

were often local partners in implementation of various project activities among members of the

business community.

A research conducted in 2005 by organization Smart Kolektiv among members of the business

community clearly confirmed that most companies see CSR as a chance to create a positive

image of the company (improve the companys image) with the aim of better market positioning.

The most common answer was that CSR benefited the most to consumers (84%), employees

(76%) and the local community (61%). Only seven companies stated that these activities were

directed to the society as a whole.

CSR in Serbia and the region

One of the key moments for CSR in Serbia happened during the catastrophic floods in May

2014, when representatives of the corporate sector showed a high level of solidarity with citizens

from the jeopardized areas. During that period, representatives of companies donated money,

products, provided services and were personally engaged. This way, they expressed support to

those in need citizens, local communities and state institutions. As a result of the dedication to

remedying the consequences of floods, many companies founded monetary funds to collect

money for restoration of the flooded areas.

When it comes to experiences in practice and in our region, I would like to mention two

different, but completely unique socially responsible concepts. The first concept aims to

contribute to improving the relations with local communities in which a company has offices

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through developing relations with employees. The second CSR program is characteristic in

contributing to the fight against breast cancer, one of the most common diseases among women

in Serbia, for six years already. An innovative banking program has been designed in such a way

that when it is used, a part of the funds go to the Ministry of Health, which continuously provides

funds for activities regarding prevention and treatment of this disease. This way, the end users of

payment cards contribute to fight against cancer, while the bank itself improves its relations with

various stakeholders: clients, media, state institutions and NGOs.

Solidarity Holidays

CSR program of company ArcelorMittal, the Solidarity Holidays program, enables its

employees from all units of this Group across the world to spend a part of their holidays

volunteering in some of the local communities this company is operating in. When it comes to

our closest environment, the first solidarity holiday was organized in 2011 in Prijedor, Bosnia

and Herzegovina, as a part of the project whose aim is to build trust among primary school pupils

of different nationalities through spending time in nature for several days, interactive learning

and dynamic sport and creative workshops, in which international volunteers are included, too.

So far, 40 volunteers from international branches of this company visited BiH. This year, within

the project Camp of childrens smiles, workers-volunteers from Argentina, Brazil, Egypt,

Macedonia, Mexico, Germany, Russia, USA, Spain and Ukraine spent their solidarity holiday

in Kozara near Prijedor.

During the unprecedented floods that struck our region last year, company ArcelorMittal once

again confirmed its policy of investing in the local community through a prompt, responsible

campaign and provided the most vulnerable areas of its local communities in Zenica and Prijedor

with the amount of USD 700,000.

Also, as a result of responsible behaviour, adhering to the strictest standards in the field of health

and protection of employees, reduction of environmental pollution and strong support to the local

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community was enabled, which is why company ArcelorMittal Zenica was included among the

16 most socially responsible companies in Bosnia and Herzegovina at the end of 2014.

The corporate program of investing in the local community in Bosnia and Herzegovina (in

Prijedor and Zenica) enabled support in realization of over 400 projects from many fields

education, health care, art, culture and sport.

MasterCard Hvala card that does good deeds

Another interesting concept is realized within the National program Serbia against cancer, in

which Alpha Bank, in cooperation with the Serbian Ministry of Health, has been donating for six

years funds for purchasing necessary devices and medical equipment for diagnosing breast

cancer to numerous health institutions across Serbia.

The funds were collected by using MasterCard Hvala credit cards. For every transaction, the

bank allocates a part of its funds and sends it to the fund of the National breast cancer prevention

program. Together with its clients, cardholders, Alpha Bank has so far donated to the Ministry of

Health funds that were used to equip oncology clinics across Serbia with new devices for early

breast cancer detection.

Benefaction as a legacy

Nowadays, CSR donations of companies have been substantially reduced due to the economic

crisis, lack of law harmonization and destimulating legislation. The state has adopted the Action

plan for implementing the Strategy of development and promotion of corporate social

responsibility for the period from 2010 to 2015, with the aim of creating an institutional

framework for development of this area in Serbia. However, there is not enough information on

realization of the planned activities.

When it comes to the practice of other countries that aim to encourage development of less

developed areas, the UK Government has passed a set of tax incentives for investments in the

community (The Community Investment Tax relief (CITR)). This way, the UK Government wants to

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encourage the opening of companies in less developed areas, employment of local population and

increasing income in municipalities in less developed parts of the country. Also, in 2000, the UK revised

the Law on Payroll Giving from 1986, which envisages the possibility for employees to give a part of

their salary to charity, and in return they will get a tax deduction in that amount. This way, the state

insures a steady income to charity organizations, it encourages humaneness in employees and improves

the reputation of companies whose employees give the most to charity.

In our society, there are individual roles and responsibilities of various stakeholders that affect

the development of CSR, from the state, local communities, media, to the NGO sector. Since

studies indicate that media representatives are dedicated to monitoring this area, focus needs to

be on improving cooperation and building trust among the representatives of the corporate and

the NGO sector. One of the recommended ways of timely education of business leaders is

inclusion of CSR as a discipline/optional course during the basic studies at faculties that are

concerned with predominantly economic problems.

In the end, we can only hope that the new business elite will keep the tradition of personal

responsibility towards the community and the society we live in, and the benefaction principle

that those who have should give to those who are in need.

References:

- The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational

Stakeholders, Business Horizons, July-August 1991Carroll, Archie B.

- An Introduction to CSR and corporate philanthropy, Making Networks Work: Empowering Civil Society

Euclid, May 2011

- Individualna i korporativna filantropija u Srbiji (praksa i stavovi graana i predstavnika kompanija) ,

USAID, BCIF; ISC (research conducted by Ipsos in 2012)

- Stavovi o drutveno odgovornom poslovanju u Crnoj Gori Tasco, SIPU, EU 2012

- Uvod u drutveno odgovorno poslovanje, prezentacija Neven Marinovi, SMart Kolektiv

- Edicija Lideri drutvene odgovornosti 2013, Business Info Group, 201. godine

- Veernje Novosti, Kult zadubinarstva, Talovi Markovi, September 18, 2013

- Politika za drutvenu odgovornost u Crnoj Gori, Ministarstvo odrivog razvoja i turizma, Podgorica 2013

- Action plan for implementing the Strategy of development and promotion of corporate social responsibility

in the Republic of Serbia for the period from 2010 to 2015, Official Gazette of RS, no. 4, 2012