CSR - The social responsibility of companies

It is now widely recognised that companies can contribute to making the world more sustainable. Corporate Social Responsibility – referred to as CSR below – is almost ubiquitous in German and European companies nowadays and has long been more than just a fad. For a long time companies have been voluntarily committing to measures geared to benefiting the environment and society.

Since 2011 the European Commission has defined efforts to make the economy in Europe sustain-able on all levels through responsible corporate activities – i.e. CSR – as “the responsibility of or-ganizations for their impacts on society”. The EU views CSR as having the potential to contribute to fulfilling the strategic goals of Lisbon and Gothenburg – strengthening the competitiveness of the EU and fostering sustainable social and environmental development. More specifically, this means conserving natural resources, increasing family-friendliness and bringing about greater gender equality in society and the work place.

Yet: What have such voluntary corporate commitments actually done for society in recent years?  What will they do in future? What added value does Corporate Social Responsibility (CSR) have for society and the environment as a whole? In a nutshell: What effect does CSR have when viewed not from the perspective of companies but in terms of the common good?

For a number of years Oeko-Institut has been focusing on companies and their responsibility for sustainable development and urges companies and policy along the path towards sustainability.

IMPACT shows: Voluntary commitments are not enough

The IMPACT (Impact Measurement and Performance Analysis of CSR) research project is the largest European research project to date which scrutinizes the effects that voluntary CSR measures have outside of companies. What impacts do these CSR activities actually have? This question was addressed by 17 European research institutes in a project conducted under the lead-ership of Oeko-Institut and on behalf of the European Commission since 2010. At the heart of the project were the issues of environmental and climate protection and job quality. For example: Were CO2 emissions reduced and waste prevented? Have salaries become fairer?

A comparison of CSR-specific data from 2007 and 2010 was carried out, with the finding that CSR has a discernible effect, but one that can only be described as slightly positive. If it is also considered that not only voluntary measures but also other factors influence the result, it has to be assumed that the contribution to society being made by voluntary CSR activities is compara-tively low. However, on the positive side, almost all companies that were surveyed conduct their own CSR activities and are aware of most of the sustainability issues specified in the survey.

But – and this was also a key finding of the data analysis – the hurdle between awareness and action is too high in many cases. The automobile industry has, for example, not yet addressed the problems associated with the use of critical raw materials, although the industry is well aware of the problems. The same mechanism was identified in the case of water consumption in the clothing industry.

More political direction needed

Oeko-Institut is pressing for a useful and effective mixture of different instruments, depending on whether political intervention, the companies’ own initiatives or hybrid measures are the most suita-ble. The IMPACT project clearly shows that voluntary CSR activities are all well and good, but are not sufficient to bring about a fundamental change towards more sustainability.

Political decision-makers can strengthen the awareness of sustainability issues, foster corporate action and should make better use of available instruments in order to engender an actual added value for society.

Irrespective of the means chosen, it is crucial to keep the focus on the impacts for society. Oeko-Institut thus recommends abandoning the distinction between the impacts of voluntary and non-voluntary measures. Instead a holistic approach of Corporate Impact Assessment & Management should be applied, with the goal always being to reduce negative social impacts and create or strengthen the positive ones.