What is the Actual State of CSR in the EU-10?

1
What is the Actual State of CSR in the EU-10?

• Summary of experiences on the situation of CSR in
  the EU-10
• Pavel Franc
• Programme GARDE
• The Environmental Law Service
• 15. 9. 2006

2
CSR in the EU 10

• Post - communist countries have no social
  background that would be supportive of CSR.
• CSR is driven by multinationals coming to the New
  EU Member States.

3
CSR as a concept is driven by large foreign
investors (corporations)

• Every year around USD 25 billion in Foreign
  Direct Investment flows into the CEE region.
• The share of foreign affiliates in each
  host-country is very high in the EU -10 (e.g., in
  Hungary - more than 50, Czech Republic 40).
• FDI changes social structures, the physical
  landscape, and the whole economic climate
• (there were 1 873 greenfield FDIs during 2002
  -2004 in the EU 10).
• Source UNCTAD World Investment Report 2005.

4
Investors dont take CSR seriously Holistic
approach is missing.

• CSR is not an optional "add-on" to business core
  activities - but about the way in which
  businesses are managed.
• Businesses need to integrate the economic,
  social, and environmental impact in their
  operations.
• Communication from the Commission, COM(2002) 347
  final

5
Investors dont take CSR seriously Business
solutions come first

• CAUSE
• Securing investments is investors' only
  priority. Environmental and social aspects do not
  warrant sufficient importance during
  decision-making.
• EFFECTS
• Conflicts with the public interest
• Frequent illegalities during approval procedures
• Corruption
• Irresponsible demands towards governments

6
Investors dont take CSR seriouslyCSR becomes a
part of corporate governance only after the
investment is secured.

• CAUSE
• Superficial implementation of companies' CSR
  policies.
• EFFECTS
• Multinationals don't inform the public about
  their CSR policies.
• CSR used only for PR purposes.
• Local management not properly trained to
  understand CSR
• - Illegalities and breaches of companies' CSR
  policies.
• - Philanthropy only.
• No open dialogue exists between multinationals
  and civil society or other stakeholders.

7
Societal ignorance of CSR

• CAUSE
• Societal ignorance of CSR - gt No expectations
  towards corporations.
• EFFECTS
• Political representatives pander to investors.
• Corporations' CSR policies are not being
  monitored by the public. The only active NGOs are
  the "BINGO organizations" (Business Oriented
  NGOs).
• Relationships between the various stakeholders
  and the corporations are deficient.
• Trade unions do not use collective bargaining to
  promote CSR.

8
Conclusions

• Corporations still have a problem with
  integrating responsibility for their economic,
  social, and environmental impact into their
  operations.
• Too often, corporations do not comply with their
  own CSR policies.
• Very often CSR is viewed as a sophisticated kind
  of Public Relations.

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Recommendations

• Legal framework for CSR
• a) Transparency Companies should have to prove
  they are complying with their own voluntarily
  declared CSR obligations.
• b) Companies which abuse CSR for PR purposes
  without implementing real actions should be
  liable.

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Recommendations

• Policies supporting CSR activities
• Raising public awareness of CSR.
• Public procurement standards should favour
  companies which can prove they meet higher CSR
  standards than their competitors.
• Tax allowances.

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Recommendations

• Legal framework for better law enforcement
• Better access to justice for victims of corporate
  abuses.
• Legal liability for subsidiaries activities.
• Criminal liability of legal persons.
• Legal duty to incorporate management system
  standards that would secure integration of
  environmental and social standards into the
  decision-making of transnational corporations.

12
CSR becomes a part of corporate governance only
after the investment is secured.
13
Local management not properly trained to
understand CSR.
14
Superficial implementation of companies' CSR
policies

• Local management doesn't respect existing CSR
  policies.
• Philanthrophy only.
• Greenwashing and bluewashing.

15
Multinationals don't inform the public about
their CSR policies.
16
No open dialogue exists between multinationals
and civil society or other stakeholders.
17
Societal ignorance of CSR.
18
NO EXPECTATIONS TOWARDS CORPORATIONS

• Political representatives pander to investors.
• Race to the bottom among the EU-10 states.
• Civil society organisations are not well informed
  about CSR.
• The only active NGOs are the "BINGO
  organisations" (Business Oriented NGOs).
• Trade unions don't use collective bargaining to
  promote CSR.
• Watchdog organisations are not focused on CSR.
• Corporations' CSR policies are not being
  monitored by the public.

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NO EXPECTATIONS TOWARDS CORPORATIONS (2)

• There is no active relationship between the
  different stakeholders and corporations.