Intro to CSR // Part III - An International Review of CSR Performance
This is the third post out of three in my series on "What is CSR and why is it important?" See the first post "What is CSR?" here and the second post "Why is CSR important?" here.
As already stated in Part II of my Intro to CSR-Series, there is unfortunately no “global standard” on norms and width of CSR activities and Reporting Regulations for companies and organizations. Besides some very basic laws on the environmental and social impact (especially in the areas of Environmental Law, Social Law and Economical Law), most CSR norms are formulated in form of “suggestions”, which differ from nation state to nation state or intergovernmental alliance. To get a little deeper understanding of what that means, I want to state some examples on the actual CSR performance worldwide, making no claim on exhaustiveness: The EU directive for example, calls since 2017 on most of the 500+ employee companies to fulfill their reporting duties, suggesting on several categories to focus on (like ‘people’, ‘emissions’, etc.) and to either use the GRI (Global Reporting Index) or the DNK (Deutscher Nachhaltigkeitskodex) or other national codex’s as CSR Standards. Unfortunately, an institutionalized control of whether the companies are reporting in an exhaustive, holistic way (instead of picking out just the “raisins” to talk about) and serious facts-checking still remain utopic ideals. In the USA, the EPA (Environmental Protection Agency), inaugurated 1970 by President Richard Nixon as independent executive agency of the federal government, sets regulations on environmental impact, especially on highly emissive industries like the manufacturing, oil and water industries. These laws are following a quite basic approach, and are even, depending on the presidency, softened. Just in 2020, President Trump allowed companies to break the monitoring and reporting rules regarding pollution without penalty.
It's not just black and white in the CSR world
In Asia, there is a wide range of CSR approaches and performances. Very interesting are the findings of the International Center for Corporate Social Responsibility (iccsr) of the University of Nottingham comparing seven Asian countries with their Top 50 companies. They couldn’t find a correlation between the general wealth, the degree of democratic institutions and human as well as labor rights with the actual CSR performance of businesses. It seems like it has a bigger impact on the actual importance of CSR for corporates if the company is operating internationally. Consequently, the better performing countries India (with 72% of the Top 50 companies performing CSR reporting) and South Korea (52%) are not necessarily the richer countries in the study, like e.g., Singapore. On the other end we find The Philippines (with 30% of the Top 50 companies performing CSR reporting) and Indonesia (24%). It has to be made clear that the simple fact of conducting a CSR report not necessarily means the company is also performing an extensive CSR approach. Just 36% of the “CSR-companies” in India were ranked by the iccsr-study as performing an “extensive actual CSR coverage”, meaning they are nut just picking out the raisins to report on. The numbers in the other 6 investigated countries remain even lower. As the Interamerican Development Bank (IADB) states in their analysis on CSR in Latin America, there is a “limited evidence of actual CSR activity in the region”. This has many reasons. To name a few factors, (1) the IADB observes a lack of institutional capacity of many governments, (2) states a culture of weak corporate governance, as well as a (3) poor infrastructure and, last but not least, points out that there is usually a (4) smaller business scale than in other regions. Point No. 4 would support the findings of the iccsr in Asia, claiming that internationally operating businesses are more motivated to implement CSR. If companies in Latin America are to implement a CSR strategy, they are unfortunately often not able to follow their efforts in a sustainable way: “might be affordable one fiscal year but not the next”.
To summarize – There is plenty of room for improvement, both on the corporate and the governmental level!
Usually CSR is being framed as “companies voluntarily going beyond what the law requires to achieve social and environmental objectives during the course of their daily business activities”
(Source: University of Oxford).
There are very few international examples with a more ambitious CSR approach being actually incorporated in national law. France for example has one of the bolder legal CSR approaches, together with China, South Africa and Denmark being one of the few countries putting CSR explicitly into law. Nevertheless, we should always consider that simple reporting without exhaustive control is not sustainable nor effective – the CSR efforts reported about can be exaggerating the actual CSR practice and performance, or in some cases, even underestimating the real efforts.