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all articles 19. February 2020

Let's talk about Corporate Social Responsibility! (Seriously)

When we launched our company in 2017, it was our intention from the outset to not only make the world a little bit better with our core business operations, but also to look beyond our own company’s horizons and take on responsibility for social and environmental issues. Corporate Social Responsibility (CSR) offers us a great opportunity to have an even greater impact than by our actual business activities.

The closer we looked into the world of CSR, the more aware we became of just how many companies have already committed themselves to this cause and the fantastic initiatives have been implemented, in some cases over many years. For us, it was very inspiring.

But we also became aware that there is a dark side to CSR: greenwashing. The mere fact that a separate term has been coined for this phenomenon makes it clear that it has already become common practice for companies, especially large ones, to use their own CSR measures to distract from the negative impact that their corporate policies have on society and the environment.

Nonetheless, CSR is an internationally recognised concept for tackling global problems on a social and environmental level. It is about the responsibility of businesses to positively shape the climate on social, environmental but also on political issues. Its potential is too large and important to allow CSR to be degraded into just an empty phrase put out by some marketing department.

So let us talk about CSR once again. Seriously.

Recap: There is actually a good idea behind CSR

Even though the term Corporate Social Responsibility first appeared in a scientific publication in the 1950s, the concept has become increasingly important since the 1990s, especially with the increasing globalization of production processes and supply chains.

However, there is no uniform definition of Corporate Social Responsibility. Depending on the sector and business model, CSR initiatives can be found in many different guises, ranging from supporting social or environmental projects to attempts to continuously improve production processes, for example to make them more energy-efficient or reduce their impact on resources.

The European Union first formulated concrete framework conditions on how companies can take on social responsibility in its 2001 Greenbook, in which it defined CSR as "a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.". A later version describes CSR as "the responsibility of enterprises for their impacts on society".

Since 2010, the non-certifiable ISO standard 26000 "Guidance on Social Responsibility" has provided internationally recognized guidelines to help companies raise their awareness for social responsibility and promote the use of standardised terminology.

More than 80 percent of the world's largest companies now report annually on their CSR measures - on a voluntary basis.

Do good and talk about it

Of course, voluntary is not obligatory. Many companies have only started actively taking CSR measures mainly as a result of public pressure, for example for better working conditions or using natural resources more sparingly. The collapse of a textile factory in Bangladesh in 2013, which cost the lives of more than 1000 workers, comes to mind. Companies that years ago were criticised for poor working conditions or even child labour are now committed to improving such abuses. Nike is one such example.

Altruism or not – for businesses today, taking on social and environmental responsibility is crucial to their competitiveness. Ultimately, constantly putting their own production processes and business models to the test and questioning them goes hand in hand with innovation within the company. Philips is a good example of this: the company is closely investigating how a circular economy can help it further develop its production processes, something which is also leading it to question its current business model.

It is precisely such approaches to integrating CSR into actual core business operations that offer great potential, not only to help shape the future through business activities, but also to do business profitably and to make a contribution to the common good!

That’s fantastic, right?

In addition, it is becoming increasingly important for customers, employees and business partners to understand the values of the companies that they want to work with. And investors today also take a closer look at how profits are generated and how companies position themselves with regards to human rights or environmental protection.

Making a difference with a political stance

In our opinion, what is lacking in the context of CSR is a clear political stance, especially in Germany. There are only a few businesses or CEOs in Germany who publicly voice a political opinion. Particularly in today's world, where constitutions that are based on the principles of democracy and liberty are under increasing threat, it should be the duty of every company to take a clear stance on this issue. "Companies [should] very certainly be partisan when it comes to our liberal way of life as a whole," says Johannes Bohnen, a political and communications consultant, in an article in which he also cites examples of the few CEOs who have shown a clear political stance.

First and foremost is Siemens boss Joe Kaeser, who also voices his political opinion where it does not necessarily concern Siemens' core business. For example, he publicly accused the leader of the AfD parliamentary group, Alice Weidel, of damaging the country's reputation with her nationalism. 

However, Kaeser's example also suggests why many CEOs shy away from taking a political stance in public. Certainly because, on the one hand, they are afraid that it will alienate some of their customers and business partners. On the other hand however, it is perhaps also because a CEO’s loss of credibility can be correspondingly large if their own political opinions come into conflict with the company’s actual business activities. Just a few weeks ago, the Siemens boss was sharply criticized by Fridays for Future activist Luisa Neubauer because he said that Siemens remains committed to fulfilling an order to supply technology for a controversial coal mine in Australia. Nevertheless, the environmental activist credited Kaeser for being critical of his own decision and believes that he is capable of correcting such a mistake. It remains to be seen how this situation will impact Joe Kaeser and Siemens' credibility in the long run.

We are convinced that admitting mistakes and learning from them, and therefore gradually improving business activities, is more likely to pay off for companies in the long term than by covering up wrong decisions or greenwashing them with CSR measures that are simply designed for good publicity.

Examples in the USA in particular show the great opportunities and potential for companies to take a political stance. For example, a joint initiative by companies such as Salesforce, AirBnB, Ebay and Lyft succeeded in having a controversial law allowing discrimination on the grounds of sexual orientation amended. In general, American companies are much more open about their political stance than in Germany.

However, especially when it comes to political interference by companies, transparency should be paramount, ensuring that lobbying and greenwashing do not stand a chance in the first place.

Conclusion

For us, it is always encouraging and motivating to see how companies take their social, environmental and political responsibility seriously and put it into practice; how responsibility is regarded as a continuous process of questioning one's own company and gradually improving it; how entrepreneurship can become a driving force for constant innovation, and how this leads to a clear political stance that respects people and the environment. Such examples show what a global concept like Corporate Social Responsibility can seriously achieve - much more than just fine words in a glossy report.

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