25 October 2011 EU has published a new strategy for CSR. A short (only 15 pages!) EU document and worth reading for any type of enterprise. Why?

2011 saw criticism of CSR, proposition of new terms & understanding of what CSR is and may say – also increased awareness among large and small companies, including improved results for the Sustainability Index in Latvia for example.

This EU strategy “renews” the EU approach to CSR in various ways and provides guiding principles that all EU based companies and governments alike would have to take into consideration when planning strategies and action for 2012 & onward. So, what has or has not changed?

The major changes: in line with the overall development of the CSR subjects – the definition has also changed. CSR is defined as “the responsibility of enterprises for their impacts on society”. Short and presumably very wide definition and it includes some renewed aspects.

In our seminars for SMEs in Latvia (under the framework of Employers Confederation project) we have continuously emphasized that disregarding any fancy CSR policies – the one of the elements in maintaining company CSR stand is “law”. Particularly relevant subject, when considering the tendencies to circumvent or blankly ignore legal provisions, meant for example to protect employees, or within the context of current Shadow economy discussion & tax evasion in LV.  Thus the EU position is clarified in this regard & CSR includes “the respect for applicable legislation, and for collective agreements between social partners”  as a prerequisite for meeting that responsibility. 

In line with the developments of the CSR subject and company implementation levels the EU approach takes the shared value creation in the center of its definition (once the prerequisites are fulfilled): “Maximizing the creation of shared value for their owners/shareholders and for their other stakeholders and society at large”. Of course, making profit is of importance to the enterprises, however the CSR 2.0 (see earlier post on Wayne Vissers book) calls for innovation of products, services and business models that support the maximization of value for the society as a whole. Or, as the EU strategy puts it “that contribute to societal well-being and lead to higher quality and more productive jobs.” However, the workload can not be put only on companies – if the context of operations is unfavorable to the active promotion of these CSR approaches, the company competitiveness can be impeded. Therefore,

the other important aspect of the strategy is emphasis on the role of the public sector in supporting the voluntary company measures and where necessary, improving the regulation.

Furthermore, the steps envisaged in the strategy for 2011-2014 show what trends enterprises will have to follow. EU will try to:

  • enhance visibility of CSR & promote good practices
  • work with improving trust in business, through f.ex. activities against misleading marketing, particularly green-washing;
  • support enterprises in the process of voluntary self-regulation
  • and encourage public sector support through market actions like – procurement, promotion customer support for sustainable products & services; improve investment climate to include CSR and support reporting initiatives (disclosure).

The activities that call particular attention to state action are related to national & regional CSR policy development,  and inclusion of CSR in education, training & research.

Finally, all of the actions should try to follow the international principles, particularly OECD, UN, ILO principles that include reference to principles of human rights, labour practices, environmental protection and also anti-corruption.

A renewed strategy, it does bring the latest developments in CSR field into one common reference point for EU with an ambition behind – to secure best standing of EU based companies. It also leaves room for enterprises to choose the best possible action in given circumstances. I believe Latvia is not the only country where the public sector has to catch up with current progress of companies that have marked the “best in class”. and secure procurement and investment policies that favor sustainability vs short term, unsustainable and often “cheapest” solutions.

See the full EU strategy at http://ec.europa.eu/enterprise/policies/sustainable-business/files/csr/new-csr/act_en.pdf 

Further references on situation in Latvia: http://www.ilgtspejasindekss.lv/ 

Posted by: Dace Kavasa | 5 August 2011

Social business – charity or business?

Just returned from Latvian art directors club (www.ladc.lv) lecture on social business http://ladc.lv/news/39 by Hanz Reitz. Interesting 2 hours, of which the “temperature” in the room was taken by the question/answer session, that also reflected our groups key questions on what is social business? do people working for it earn money or? how is profit redistributed? can we trust…? or isn’t it that the social business by creating more opportunities is also continuing to create the consumption and increase of population  – resulting in more trouble for the planet?

Well, key conclusions – for models of social enterprise – can look up various companies. Since Hans is a co creator of  Grameen Creative Lab there were many examples from the Grameen companies – all following 7 principles http://www.grameencreativelab.com/a-concept-to-eradicate-poverty/7-principles.html resulting in fun, purposeful and enjoyable work, and also profits being re-distributed for creation of more “good”.

The discussion came to an interesting conclusion – we can not blame the growth of population for our misfortunes. Planet can probably sustain as many as we reproduce… but only if we change our thinking, philosophy of business from “profit as the key goal” to “creating value” as the key goal – where of course, profit comes handy… whether for re-investing as in social business, or for own benefit in dividends as in conventional business.

Posted by: Dace Kavasa | 30 May 2011

Is it better if cannibals learn to eat with forks?

The context…

Continuing the subject that Arjan posted earlier „Greed is no longer good” I offer some thoughts and observations on the book by Wayne Visser „The Age of Responsibility: CSR 2.0 and the New DNA of Business”. The book comes with a very clear message – we need a paradigm shift on how we live. There is no return „back to normal”, or pre-crisis way of life.

The book is thought provoking, insightful and at the same time easy to read. Businesses will find a number of inspiring examples of how to improve competitiveness by looking at “business as usual” form a different perspective. Moreover, I would like to say that this book is a must read not only for individuals and businesses, but also for public officials – since the proposed paradigm shift requires conscious and long term commitment of public sector, or “smart regulation”.

In the context of writing this post the beginning of the book is worth quoting, particularly for audience of Latvia – in the light of events of 28 May 2011 when the President, first time in history of our republic, used his right to initiate dismissal of the Parliament. It starts with “What is responsibility?”

The book…

What is responsibility? “Responsibility is literally what it says – our ability to respond. It is a choice we make [...]. To be responsible is to be proactive [...]” or „Taking responsibility is a way to taking ownership in our lives, of acknowledging our own hand in the shaping of destiny.” The book offers a good platform to increase awareness of the context, through facts and references to global problems, links with business operations and individual responsibility. It verbalizes links between global problems and micro-level activities.

Wayne also offers his definition of CSR, which nicely combines various positions leaving the specific wording (corporate social responsibility, sustainability, citizenship etc) for your own choice: “CSR [Corporate Sustainability and Responsibility] is the way in which business consistently creates shared value in society through economic development, good governance, stakeholder responsiveness and environmental improvement  or CSR is an integrated, systemic approach by business that builds rather than erodes or destroys, economic, social, human and natural capital.”  Accordingly, if defined like this – CSR has failed and therefore we require a paradigm shift from Age of Greed to Age of Responsibility. It is not enough to start doing “less harm”, but to turn the planet towards positive balance of its resources (all types) the book calls to redefine the approach. What does it all mean?

The ages and stages….

The first part of the book – The ages of Greed, Philanthropy, Marketing, Management and Responsibility – is the facts and context review of CSR development.  While in practice such linear development is observed in many of the companies – the stages do not imply a linear development that a company has to go through.

Apart from getting more insight into facts and figures and CSR development, I found interesting facts on the purpose of corporations and principle of reciprocity.

Age of Greed provides extensive examples of the corporate dis-balance, including personal greed.  However, this part also leads us to think of the unbalanced rules of the game (national and global economy, use of resources, externalization), governance issues and performance management (all reflected later in the other “Ages”).

Age of Philanthropy introduces “The Golden Rule”, found in the major religions of the world – “what you do not want done to yourself, do not do to others” (quoting Confucius). This enlightened self-interest to look into future and not just at the very moment forms part of the principles for change discussed later in the book. It makes one think about long term business and impact vs. short term deals.

Did you know that originally the Charters of Incorporations were given only to companies that provided some sort of public good? We now take for granted “company limited” titles – that is acquitting or limiting responsibility. Whereas historically this limited responsibility was granted only for the purposes of business that generated greater public wealth, like railroad, water, communications… “The notion that this was simply about creating wealth for the owners of the company was alien”[1] .

Through Age of Marketing we are introduced to the Drivers of CSR: brand, trust, reputation.  Unfortunately, seems like in Latvia, we are yet stuck in the thinking of how to communicate (read “sell”) better and manage potential risks of reputation, without considering the real impact of activities. As example, see the 10 signs of green-was: do they not reflect the current reality, at least in the Baltic states?

“The Greenwash Guide” by Futerra: 10 signs of greenwash

  1. Fluffy language – words without clear meaning (like ECO-friendly)
  2. Green products vs. dirty company
  3. Suggestive pictures (unjustified green impact, like flowers growing out of factory exhaust pipes)
  4. Irrelevant claims (emphasising small benefit, when everything else is un-green)
  5. Best in class – declaring you are greener than competitors
  6. Just not credible – like “eco-friendly cigarettes”
  7. Gobbledygook – use of jargon that only scientists can understand
  8. Imaginary friends – a “label” like third party endorsement, though it does not exist
  9. No proof
  10. Out-right lying

See the link for the guide http://www.futerra.co.uk/downloads/Greenwash_Guide.pdf

The history and context part of the book ends with Age of Management where risk management for marketing purposes is taken a step further and some efforts to include the CSR into company strategy are made. “Triple bottom line”, “eco-efficiency”, “stakeholder engagement” are the terms widely used by this generation of CSR. The questions asked here are:

-          Is standardisation of CSR good? This discussion is particularly relevant in the Baltic context, as movements to make one reference point are created. Shall we leave business to “self-regulate”? Some arguments still dominant in Latvia are that CSR has been initiated by companies, therefore it should be left for self-regulation and it has nothing to do with government regulation. The risk here remains that the root causes of the problems are not addressed, therefore the answer of the book on “letting voluntary codes set the bar” is NO. Standardized checklists  limits creativity and solutions that are needed to address the root causes of the problems faced by the society and companies as its members;

-          Does performance measurement rewards long term thinking? – likewise, no. Not because companies are not interested, but because market rewards externalization.

-          Are stakeholders involved? Involving stakeholders should be in the core of the corporate governance.

These different approaches to CSR have resulted in increased number of CSR reports, but often with CSR being “add-on” activities, that have nothing to do with the company core operations. The good governance, stakeholder relations and eco-efficiency is thus still seen as a risk management issue, rather than radical innovation to change the paradigm and reporting by itself is not a solution. To summarize,  John Elkington in his book Cannibals with forks, borrowing title from a quote by Polish poet Stanislaw Lec “Would it be progress if cannibals learned to eat with forks?”, compared that “cannibals were companies – displaying aggressive, acquisitive behavior in the marketplace – and forks the three prongs of the triple bottom line” widely used in the various reporting indexes, but leaving the root causes not dealt with.

The book leads through these questions  to the final context chapter “Age of Responsibility” or the “radical confessions”. Examples and stories of conventional businesses turning around and introducing radically new ways of taking on core business responsibly. This part also introduces the principles that had for a while dominated the leadership and human resource discipline, along with developments of the web and networking culture – people as a capital and their capacity to innovate through cooperation. Somehow the individual and rights perspective was missing in the book so far. It does come in at this stage and through the second part of the book, but considering the power of global companies (equivalent to states in some cases) the debate on legal and human rights could have been included more.

Nevertheless, the second part of the book goes on to answer some of the questions and dilemmas, offering a framework for change through value creation, good governance, societal contribution and environmental integrity. It offers a WEB 2.0 analogy and 5 principles for successful business operations that can help th paradigm shift:  creativity, scalability, responsiveness, glocality and circularity.

How to apply these principles? – to be continued in a week…


[1] The Age of Management, from quote of Joel Bakan, author of The Corporation. Pp.105

An interesting research has come out predicting that current activities of companies and history of last 4 years will lead to “tipping point” for sustainability business market.  The increased activity is registered not only in the sustainability assurance & reporting field, but also in risk management (particularly environmental risks) and most important – sustainable innovations.

Increasing evidence of compared pre-crisis and crisis performance of companies also indicates that sustainability practices are not only “ethical” moves, but a good way to increase competitive advantage.

As the authors of the article (link below) point out “The analyst firm said that the global recession killed the idea of sustainable business spending as an ethical imperative to simply stop climate change. Instead, boards are increasingly in tune with the idea that global economic growth increases natural resource costs and causes risky environmental impacts, changing the source of competitive advantage.”

The trends are moving to new forms of business and taking different approach to look at competitive advantage – are you and your company moving the same way?

Read more on http://www.environmentalleader.com/2011/05/23/report-2013-will-be-sustainability-tipping-point/ and for more details contact authors of the research and register for a free webinar on http://www.verdantix.com/

Posted by: Arjan Tupan | 18 April 2011

Greed is no longer good

For the third time, Diklu Pils was the venue of the Dikli Forum this weekend, organised by the Konrad Adenauer Stiftung (KAS). The topic of how a social market economy and CSR can help economies cope better with crises was of direct interest for the CSR committee at AmCham, so we were honored to be invited for opening the event with the traditional dinner speech.

The mixed group of attendees at the forum, consisting of policy makers, scholars and entrepreneurs from Latvia and abroad, made for an ideal setting to generate ideas and combine points of view. From the discussion on Friday night and Saturday morning – I couldn’t attend longer than that, unfortunately – there were some key thing I learned. First of all, in Western Europe and the US corporate social responsibility has come a long way, and many lessons were learned. Latvia has the great opportunity to take these lessons into account, and leapfrog development into the next stage. For that it is important not to stress the uniqueness of Latvia, but to seek the common ground and not reinvent the wheel. There are many institution – AmCham, KAS – that are more than willing to share the experiences, and several schools that have done research into the subject (SSE Riga, EBS in Estonia). The second lesson from the Dikli Forum was that there are great examples available here in Latvia and the other Baltic States of how you can use CSR as a practical framework to improve your company’s profitability. These examples need to be highlighted. Through sustainability or CSR indexes, and through platforms like the Dikli Forum.

Another lesson learned is that transparency is very important. Transparency creates a level playing field, in which companies can thrive. The sustainability indexes are very helpful in this, but there is a lot that lawmakers can do in this respect as well. European Union directives will certainly help, but parliaments have the responsibility to translate these into workable solutions for the respective countries. Input from businesses and the public is key. Transparency also helps give consumers to make informed choices. And there is an opportunity for entrepreneurs here, especially in the new technology field, to translate the information gathered by the indexes and scholars into practical consumer information. The increasing availability of for example smart phones can then bring this information to points of purchase. This consumer involvement leads to maybe the most important lesson I took from the Dikli Forum, which is related to maybe the best know pyramidic model: Maslow’s hierarchy of needs.

What you see happening in Western Europe is that companies become more and more responsible. I believe this is a reaction to the fact that societies are evolving towards the top of Maslow’s pyramid. With people in these societies reaching the summit of Self-actualisation, the pressure on businesses mounts to act on that. Because people are consumers, employees, voters and leaders. This results in a shift in the relation that businesses have with society. From the principle of ‘Greed is good’ to the principle of contributing to society. Not only because the organization thinks that is good PR, but because customers, business partners, employees and leaders demand this. Despite the crisis, many in the Baltic states have reached the top-levels of the hierarchy of needs, and businesses and law-makers alike should take the resulting demands into account. It is time to move away from viewing all businesses as organisms that take as much from society as they can to increase their profits and regard them as partners in making the most of life. With of course a good set of measures to discourage the ones that still think that Greed is good.

Posted by: Arjan Tupan | 23 February 2011

Reporting on CSR to improve profitability and transparency

Opening the event ‘Why do companies report on CSR?’, moderator Romans Baumanis shared an experience he had some years ago with experimental theatre. During a festival in Moscow, a Russian company performed a piece in which an actor came up on stage, walking around stomping his boots and saying ‘What can I do alone?’. This continued for some time, until he was joined by another person, then another and another, until the stage was full of actors stomping their feet and saying ‘What can I do alone?’ to the point that the theatre was almost physically trembling. It seemed that the 10 organizing international chambers of commerce had taken a lesson from that performance when they joined forces to organize this event in which the Latvian Sustainability Index and companies with real and tangible experience in the positive effect of CSR on doing business in Latvia came on stage and showed what you can do together.

The first part of the evening was dedicated to the Latvian Sustainability Index. This year will be the second time companies can register for it and self-assess their CSR efforts. Last year, 70 companies joined in, with four main motivations: recognition and market advantage, learning more about CSR, self-appraisal and having an internationally understandable evaluation. The assessment will focus on five areas, with each their own weight in the final verdict: strategy (15%), market relations (20%), society (15%), labour issues (25%) and environment (25%). The main take-away of the presentation was the time-line for this year’s index, which is rather short. Registration has already opened and runs to 4 March. The Sustainability Index Institute will provide training to companies that need it, and that will be in the period from 17 February to 25 March. Registered companies can fill in the assessment between 4 March and the deadline is 25 March. Results will be published, and awards given, on 12 May. So if you are interested in having your company in the Sustainability Index, or want to do a self assessment, go to the webiste: http://www.ilgtspejasindekss.lv/.

The Index is currently only open for businesses. But the question was raised why not also NGOs and state institutions could apply. Hopefully that will be an extension for next year.

More interesting was the panel discussion. Laura Mikelsone from Cemex, Harolds Bulmanis from Aldaris, Eduards Reneslacis from Electrolux and Gordon Fyfe from Coca-Cola Hellenic were the panelists, moderated by Romans Baumanis. As a warm-up, Mr Baumanis asked the panelists what CSR was really about, bringing out one of the biggest challenges in the field: finding common ground. In Latvia, but also in places with a higher CSR maturity, there’s always a discussion about definitions, and there just doesn’t seem to be a single definition that everybody can agree upon. The answers from the panel where a good illustration of that. If you look for a perfect definition, you’ll be lost. But there is definitely common ground. CSR, according to the panel, is about long term business performance. Maybe Mr Fyfe illustrated it best with his personal take. Some years ago he would have had two words for it: “window dressing”. Since he joined Coca-Cola Hellenic and got more experience with CSR in practice and how it affects a company, his two words have changed. Now, he says, they’re “common sense”.

Read More…

Posted by: Dace Kavasa | 3 February 2011

Estonia ranks companies in 2010: Lowest scores… and why?

We are back with some more information on Estonian Corporate Responsibility Index 2010.  This time – lowest score (average 48%) were received for the question block on stakeholder relations & communication.

My first question was – why? Is it so hard to inform, share, agree not only on CSR policies, but on company operation in general? Lets look what the questions were:

The 4th block of questions is titled “Measurement, reporting and communication” with two areas of focus – does your company measure impact related to (a) community, (b) environment, (c) marketplace and (d) workplace. And the second focus area was on communication: how, to whom, and in what form (reports, standards, audits).

I contacted Elina Rääsk about their post on http://www.csr.ee/10342 to get more information on what are the reasons and explanations behind the low scores.

The impact measurement section received average score of 47% only. I was wondering whether there is any systematic measurement in place, a reference to any audits and it seems no. Moreover, Elina’s observation is that neither stakeholders are holding companies accountable.  It seems that more detailed overview of % in the 4 categories of impact measurement would give even clearer picture – are companies doing measurements towards Community, Environment, Marketplace or Workplace impact. My presumption is that Workplace and Environment would within this section receive higher points, again primarily because the regulations in this area are rather strict and companies are including these subjects in their annual reports or environmental reports, if such are required.

For those interested to measure impact in these areas, you will have to look for standards or reporting mechanisms that include indicators and frameworks to ease your work, but also see the ongoing EU funded project – CSR Impact http://www.csr-impact.eu and while there is little information available yet, the results seem to be promising.

Communication and reporting section of the index refers to stakeholders and transparency. Most used resources for communicating are

  • company websites
  • intranets
  • annual reports

Very few companies have separate CSR reports, those usually being subsidiaries of MNCs or larger companies, who have investors interested in CSR. Are they needed? I would say no… IF the issues are well integrated and transparent in the Annual report it would show even more strategic thinking and links between core business and the CSR issues of interest.

It is easier to report if there is a clear standard to follow and the main ones listed by companies were ISO (environment, quality), EMAS (http://ec.europa.eu/environment/emas/documents/legislative_en.htm), less OHSAS (http://www.ohsas.org/ – on occupational health and safety) and only 1 company considered using SA8000 (see a useful description and other information on CSR on http://www.mallenbaker.net/csr/CSRfiles/SA8000.html). Unfortunately, there are too many differing standards, but companies can find the one most relevant to their materiality issues and get inspiration from others.

When thinking about the reporting to stakeholders I came across an interesting article by Graham Hubbard http://www.corporateregister.com/crra/2008-ceremony/media/UnsustainableReporting.pdf This report concludes that great deal of contents of reports can be classified as greenwash: not material (CSR is not linked to issues essential to company – strategy, governance, economic indicators, environment, employees, customers, suppliers and community), not assured by external auditors, not measured (CSR impact not linked to company performance data), not aggregated information, not comparable with other organisations due to different standards being used and presented favorably to the organisation rather than objectively.

Recommendations provided by Prof. Hubbard are useful to the Baltic companies when thinking about starting the reporting processes and improving performance in the indexes:

  • focus the report on specific needs of your organisation – make them “material” to your business strategy and reflect the specific context of operations
  • involve internal and external stakeholders to define the issues of materiality to your company
  • aggregate reporting of all data, rather than focusing on single case studies
  • develop standard measures to all material issues: environment, employees (for example, diversity indicators, employee satisfaction), carbon emissions and others
  • set clear performance targets
  • audit or externally verify your reports!
  • And integrate your CSR reports with the financial reports/annual reports and get board of directors approval

To conclude – why is it so difficult to score high on the measurement and reporting section? I would say: limited transparency culture of current management practices, which also includes stakeholder involvement, no (or limited) external verification of reports and I dare to say – also the lack of materiality of reports, though qualitative assessment of contents is not done by either Estonian index or the Latvian one.

Good luck with your reporting! And if you need assistance – contact us: Dace on dace_kavasa@yahoo.com & Arjan on arjan@whowalksthedog.com

 

In 2005 the first plans were made for the Swedish Business Awards, which were launched in Lithuania in 2006. Now, it has become one of the most important events in the Baltic business world. Especially since the awards were expanded to Estonia and Latvia in 2009. From the start, the awards included the corporate social responsibility category. A good reason to learn more about this initiative.

‘The Swedish Business Awards (SBA) aims to create a platform for discussion, a forum for people to meet, in the local community, but with a Swedish touch,’ says Vidas Korsakas, country manager for the Swedish Trade Council in Lithuania. ‘We wanted to reward companies that perform well and promote international cooperation.’ Innovativeness, openness, authenticity, caring and progressiveness – Sweden’s core values – were the guiding principles when the SBA project was created. That resulted in the three categories of the awards: young entrepreneur of the year, fastest growing swedish company and corporate social responsibility, which was pushed by the Swedish ambassador. One of the challenges was to explain and show that CSR is more than just about charity or sponsorships.

Nevertheless, when looking at the lists of nominees and winners of the CSR category, the impression is that most projects are aimed at community impact or charity. With an impressive grasp on detail, Mr Korsakas refutes that: ‘In 2008, the winner, MTV networks, was awarded for their campaign to raise awareness about climate change. And the winner of 2010, Rimi Lietuva, was awarded for their effort to employ disabled persons and promote integration of disabled people in the labour market.’ The Rimi project is indeed mainly an internal diversity program. But, as Mr Korsakas explains, in the process of the SBA, applications are collected and then reviewed by a nomination committee. And the community projects are often the most visible ones. Also, these are often the examples that are easiest to explain to a larger public, which combines well with the aim to promote CSR in the Baltic business community.

This year again, the SBA will continue in all three Baltic states. Coming back to that, the expansion to Estonia and Latvia took place in an interesting period, just as the financial crisis hit the Baltics. Mr Korsakas explained that the plans for the Estonian and Latvian editions were made in 2008, before the downturn. ‘And despite the crisis, we kept our promise,’ he says. For this year, the award events are planned for autumn, but no dates are fixed yet. The first stage, the application period, will be announced probably in March. Then the process of nomination (by the nomination committee) and selection (by the decision committee) will take place during spring and summer. When the final dates are known, we will of course report on that as well.

Every year, the Swedish Business Awards acknowledge companies operating in the three Baltic states. Every country has its own awards, with one of the three categories being Corporate Social Responsibility. In Estonia, the 2010 CSR category was won by Sorainen, the law firm operating in all three Baltic countries and Belarus. We talked to Gea Kallas, business development and marketing manager from the Estonian office to learn more about their winning CSR program.

Winning the CSR category of the Swedish Business Awards in Estonia is ‘a nice recognition for the company,’ says Ms Kallas. ‘We do not have support from a global group or a long standing tradition like some, but we aim to give back and did not lower our efforts during the downturn while many companies did so. It is good to see that our small targeted efforts in various fields have been noticed.’

As in all three countries, the entries for Estonia were dominated by projects focusing on community impact. The CSR activities with which Sorainen entered the competition were no exception to that. Their application focused on their involvement with the Good Deed Foundation, or Heateo Sihtasutus in Estonian, and the two projects the Foundation started: SINA (Suured Ideed Noorte Algatusel or: Great Initiatives of Young People) and Youth to School (Noored Kooli in Estonian). “We support these projects with legal advice, knowledge and/or with monetary contributions,” says Ms Kallas. With these projects Sorainen aims to provide positive and practical educational and entrepreneurial experience to Estonian youth. In the SINA project, high school students all over Estonia start social good projects. The aim is to both get fresh ideas on improving society from them, and to give the students experience with social entrepreneurship. The program provides the participants training and advice, though otherwise the projects are fully managed by students. The Youth to School program aims to get recent university graduates to teach in schools. Teachers in Estonia are often relatively old, and getting young enthusiastic teachers is a valuable addition to the educational system. On the other hand, the graduates benefit from getting an excellent leadership experience. One particular issue that Sorainen focuses on in this project is to get graduates that speak both Russian and Estonian into Russian schools. The higher education system is only in Estonian, so Russian high school students can increase their chances in the higher education system if they are also taught in Estonian. Next to that, most jobs require fluent Estonian, which is why unemployment among Russians is significantly higher.

These projects were not the only activities Sorainen undertakes in their corporate responsibility program. Most important is the focus on being a good employer and taking care of employees. Sorainen was one of the few companies in Estonia that continued their internship program in the downturn and did not cut back on training for their employees. That, and the fact that employees are encouraged to share knowledge both internally and through legal blogs and other media, has resulted in a very small employee turnover for the law firm. Kallas: ‘The loyalty of our people helped our company through the downturn.’ According to her, the firm’s CSR efforts are certainly contributing to the loyalty of employees and a low turnover.

In light of the commitment to improve the local economic environment, Sorainen was also a co-founder of the Estonian Service Industry Association, which aims to promote competitiveness and transparency in Estonian business.

The law firm does not report on, or measure for managerial purposes, the impact of their CSR efforts. This does happen on a per-project-basis. For example the number of successful placements of Russian-Estonian speaking graduates in the Youth to School project. Next to that, Sorainen looks at employee satisfaction surveys and feedback from interns. Winning the 2009 most employee- and family-friendly company award and in 2010 the most family-friendly company award in Estonia, was well appreciated and might be indicative of the success of the CSR activities. The big challenge is, however, that most standards, and the Estonian CSR index, are ‘mainly aimed at larger and industrial companies. It’s hard for a smaller service company to apply that,’ says Kallas.

You just learned about how Coca Cola HBC Estonia scored highest in CSR index in Estonia in 2010 among 55 participants (see the post from January 6). It did so also in 2007 – when the index was launched and only 14 companies participated. We contacted CSR Baltic in Estonia for more information and a summary of results you can also see on their website

Surprisingly, out of 55 participants of 2010 index only 11 were from the top 100 companies in Estonia. The conclusion of the organizers is rather pessimistic – economic success might not necessarily cause responsible attitude and behavior towards nature and society. Or, could we also say that the companies are careful in publicising their attitudes, since as Coca Cola representative put it – it also brings responsibility, in all business areas.

What is the Estonian Corporate Responsibility index is about?

The index looks at 4 key functions – business strategy, integration of CR principles, issue management and stakeholder reporting and communication. Average score of 2010 participants was 62 points out of 100, where issues management received highest of 71 % and progress measurement, stakeholder relations & communication lowest average of 48%.

Why would the scores differ between these two blocks of responses so much?

Issues management block receiving 71%  score looks at specific questions on community, environment, workplace and marketplace.

Community block focuses on specific activities chosen by the company, ability to communicate with stakeholders relevant for these activities and involvement of employees in volunteer activities for local community. My experience in Latvia shows that companies, regardless of their size, get involved in local charity projects, thus scoring high on this point would be relatively easy. Support for employee involvement in voluntary activities though lags behind and communication in all senses may not be the best trait, as the overall index results indicate.

Environment is the second block requiring to identify 3 key actions, and following with more specific questions regarding energy conservation, waste management, recycling, pollution prevention, carbon footprint calculation, sustainable transport options. There are a number of ways and examples of how to measure footprints and having a relatively developed national waste management system also helps companies.

I particularly welcome the supply chain question– “Has your company set environmental requirements/standards to its product/service suppliers?” – that goes well with the UN discussions on spheres of influence and accordingly also responsibility. In our CSR seminars in Latvia, when companies are asked about ability to impact supply chain the initial answer is 50/50. Once we discuss the link back to values and strategies of companies and means of influencing partners, the business representatives rise the influence bar to 70%.

Workplace questions relate to personnel development (long term and skills focus), particular involvement of specific groups and equal opportunities policies, level of involvement of employees in decision making, work-life balance policies, and securing health & safety.

What is interesting that the focus is more on “soft” issues, rather than well regulated health & safety issues that companies should implement by law anyway. Organisers recognise that it is still difficult to integrate principles of corporate responsibility among their employees, nevertheless this is should point out to businesses that participation, involvement of staff and communication are a success factors to other business activities.

Finally, marketplace questions received highest points and Estonian companies seem to have decent competitive ethics, fair advertising & labeling/information practices. Another interesting aspect that differs from Latvian index – Estonian companies had to consider answer to question whether the CSR activities help their innovation processes. Corporate Social Responsibility and increased innovation have been linked in other counties, with governments supporting, for example in Denmark (http://www.csrinnovation.dk/sw56211.asp), taking active steps in this direction. Maybe Estonia will be following the same steps?

Latest information on CR Index in Estonia see on http://www.csr.ee/10342 and you can access the questionnaire on the same website http://www.csr.ee/7518.

Keep tuned in – we will continue with the CR Index in Estonia – and information on 2010 index in Latvia should also come out soon.

Older Posts »

Categories

Follow

Get every new post delivered to your Inbox.