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Socially Active Companies are More Competitive

Social responsibility amongst business in Russia is gradually transforming from a corporate voluntary decision to standard conduct in the market. Society, state and business associations all expect notable social work from companies. Not taking part in sociallly responsible tasks often affects a company’s reputation, which can result in the loss of influence in the region. And on the contrary, becoming involved in social activities can make companies feel more confident, according to Irina Krasnopolskaya, Research Fellow of Centre for Studies of Civil Society and Non-Profit Sector

Corporate social responsibility is shown in business participation in solving problems traditionally controlled by the state: education, unemployment, and ecology. Socially aware activity by business is becoming standard practice, though it is not always initially desired, especially in cases when a company starts social activity following pressure from the government, society or international organisations. However businesses themselves can insist on corporate social responsibility as part of a professional code of ethics, states Irina Krasnopolskaya in her report ‘The status and Role of Corporate Social Responsibility in the Institutional Structure of Russian Society’.

In fact, a company’s social policy should take into account the interests of its stakeholders along with its own interests in the economic, social and environmental sectors. Corporate social responsibility is profitable for companies: it helps them improve in professional ratings, receive certificates and accreditation, strengthen their position on the market and create additional motivation for employees. Most active companies even work as ‘agents of social change’, for instance on a regional scale.

The researcher analyzed the reasons and the results of corporate social responsibility for different stakeholders and studied different ways of that social activities can become institutionalized via state, businesses and society.

Corporate social responsibility helps regions patch budget holes

The state is the largest factor determining the institutionalization of CSR. The government usually sets administrative regulations and statutory requirements for a company’s social responsibility. However regional government often forces local businesses into social responsibility, says Krasnopolskaya. Thus companies usually have to take into account the balance of political forces in the region and to compromise. Sometimes company resources supplement regional budgets, they are spent not only on capital projects, but also cover current expenditure.

In international practice, soft law and intersectoral partnership contribute to the development of CSR. These rules are enshrined in the European Social Charter and Green Paper ‘Promoting a European Framework for Corporate Social Responsibility’.

Companies test social decisions for the state

New tools for solving social problems, which can be applied by social protection bodies, are created and tested as part of CSR. Sometimes companies start underground activity with local governments.

Following the requirements of the government, companies can lobby for their own interests, and get the best deals and orders, rewards and benefits from the authorities, according to the researcher.

CSR as a pass to professional associations

Society is another stakeholder whose interests should be taken into account. Companies have to act according to social expectations, norms and rules, mentions Krasnopolskaya. However, they also need to take into account the interests of their colleagues – professional groups and the business community in general in order to get social legitimacy in the society. In this sense, CSR acts as a pass to professional associations, which often follow various codes of professional behavior, from corporate to ethical. Krasnopolskaya gives examples of international standards, followed by many companies: Principles for Responsible Investing, OECD Guidelines for Multinational Enterprises.

Business community ‘legalized’ social reports

Business associations, such as International Business Leaders Forum, Global Environmental Management Initiative, World Economic Forum, and othersare actively involved in the institutionalization of company social activities, says the researcher.

As a result of such activity by Russian and international organizations, the publication of social reports has became apositive sign for large companies. Voluntary ecological certification according to international standards has also become common among socially responsible companies.

Media controls company social work

Many companies are accept that it is normal to be ranked in the ratings of newspapers and magazines, as well as well-known audit and consulting companies, such as Pricewaterhouse Coopers. Independent observers monitor the way companies fulfill their social obligations. They control human and worker rights observation. There are also special research centres for exchanging information about socially responsible business.

CSR as resource of assistance and motivation

Society receives tangible benefits from company social activities, notes the speaker. In this sense corporate volunteering is important, as it complements the traditional participation of citizens in the volunteer movement. It is an effective tool for increasing employee loyalty. Volunteering improves their motivation; they feel involved in both social and political activity. They feel more satisfied with their lives, added the expert.

Socially active companies engaged in the third sector

One of the main results of CSR institutionalization is an engagement in new forms of social relationships, such as social responsibility, in the sphere of civil society.

Thus, CSR goes beyond the economic and financial spheres. Companies become institutional actors, connecting the state, market and society, and most socially active companies already act as ‘agents of social change’, states Krasnopolskaya.


Author: Olga Sobolevskaya, May 06, 2014