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How to integrate adapted CSR policies in SMEs?

Conference Report - September 2012

CSR is no longer an option but is a key component of a sustainable business strategy for SMEs

Corporate social responsibility – CSR –  was once an issue reserved for the world’s large companies and focused on supporting their brand image and public perception. But the principles of sustainable and ethical company behaviour are now of increasing relevance to the world of SMEs and should be an important component of every company’s longer term business strategy and planning.

Even the term ‘CSR’ is not particularly well suited to the world of SMEs and the current social and environmental context.  Today’s focus is on sustainable behaviour in business which can perhaps be better described as ‘responsible entrepreneurship’. 

These were some of the issues emerging from the breakfast debate organised by Edenred and Toute l’Europe.eu in Brussels, 17 September.

Driving the expansion of good CSR principles across Europe are the European Commission which recently published a CSR Action Plan, and the CSR Europe platform which now brings together many of the leading companies in Europe and pushing for higher standards and best practice in this area.

Speaking on behalf of the European authorities in the debate was Ajnacska B. Nagy of the Commission’s CSR Team (Directorate-General Enterprise). As an introduction to the issue, she reminded the participants about the importance of SMEs in the European economic network: more than 99% of the companies in the European Union are SMEs and they are counting for more than half of the value-added produced by the private sector in the EU. She outlined to the audience the Commission’s work in bringing together SMEs and promoting their commitment to ‘responsible entrepreneurship’ through inter alia its “Agenda for Action” which covers eight areas, such as enhancing the market reward for CSR, and better aligning European and global approaches to CSR.  

The European Commission in its “Renewed strategy 2011-14 for corporate social responsibility” takes quite a broad view of what areas this should cover. It describes CSR as a process to “integrate social, environmental, ethical, human rights and consumer concerns in their business operations”.

The creation of a network for SMEs to share and discuss best practices is one priority in the European Commission action plan. She mentioned in particular an important networking event that took place in Berlin last June 12th and 13th gathering both SMEs representatives and CSR advisors. She presented one example of the CSR issues discussed during this meeting the inclusion of human rights in the business goals of a company.  

Ms B. Nagy told the audience that the Commission is currently financing the development of a guidance document to help SMEs get to grips with Human Rights issues. This document will be available on the European Commission website and will be communicated to SMEs among others ways through professional organizations. In parallel, the Commission has organised roundtables in 3 sectors: Employment and Recruitment agencies, ICT/Telecommunications, and Oil and Gas.

The Small business Act for Europe, adopted in June 2008 aims to improve the overall approach to entrepreneurship, permanently anchor the "think small first" principle and to promote SME's growth.

Stefan Crets, Executive Director of CSR Europe, pointed to the growing realisation among company strategists – however large the company – that CSR has to be viewed as a central plank of corporate strategy and essential to being able to operate sustainably and profitably in the future. In today’s changing and increasingly globalized work, the integration of the principles of corporate social responsibility is becoming an important component of the medium-term business strategy of a company. 

But a key issue in the discussion was how small firms – from the micro to the mid-size company can be encouraged invest the time and resources to be compliant with the requirements of corporate social responsibility. Stefan Crets stressed that the issue should not be seen by them as one of compliance, new obligations and red tape. The way a company is acting toward its customers, as well as toward its employees is key for ensuring competitiveness and growth in a sustainable future. 

Stefan Crets touched on the issue of good leadership in companies as potential driving force for implementing CSR.  While there can be costs involved in adapting company operations to the CSR requirements of sustainable production, it requires to the vision and perception of the top management to appreciate the good mid to long term business sense of fully embracing the principles of CSR. Indeed the personal and ethical values of SME owners, managers and employees can be a strong motivation for an enterprise to pay more attention to social and environmental issues. If the companies fully appreciate the long term commercial benefits of responsible entrepreneurship, they will embrace it.

CSR is not a short-cut to business success, but an investment that can pay off in the longer term. It can bring advantages, for example in terms of staff retention and recruitment, staff development and motivation, customer loyalty and reduced expenditure on energy. 

SMEs increasingly work in a networked environment for both innovation and business development and good CSR principles are essential for this, he said. Mr. Crets highlighted the opportunity in terms of innovation and co-construction. Big companies increasingly work with SMEs as suppliers and even co-innovators. When large companies are committed to CSR, it is essential that their partner companies follow the same principles. This is a further motivation for SMEs to adhere to these principles, he explained.

Discussion also focused on the area of public procurement where local authorities as potential customers and partners for SMEs can require certain levels of responsible corporate behaviour either explicitly or implicitly in the dealings with the SMEs they choose to work with.

SMEs usually identify themselves closely with the region or town where they are located. The social and environmental issues of concern to them will probably be local and regional in nature. It is at the local and regional level that the positive impact of having a greater uptake of CSR can best be felt, whether it be in economic, social or environmental terms.

From a human resources perspective, in today’s more environmentally conscious society, it is understandable that employees increasingly want to work with organizations who operate sustainable and ethically. A strong commitment to CSR can help companies to both recruit and retain good staff.

In line with the approach of the ‘Policies and Practices’ debates, the panel also featured Jean-Pascal Arnaud, Secretary General of the European Club for Human Resources, who was able to draw on his wealth of experience to highlight the practical realities of demanding more CSR commitment from Europe’s small businesses.

CSR is not necessarily a new concept for SMEs. It was pointed out a large proportion of SMEs have always done things that could today be called “corporate social responsibility”, even if they don’t use the term. What is new is the growing attention given to CSR by policy-makers, consumers, trade unions and non-governmental organisations. 

To get the right messages across about CSR existing business support organisations and SME intermediaries need to be encouraged and helped to better integrate CSR into the advice and support that they give to SMEs. Such organisations are key channels of communication with SMEs and are qualified to communicate about CSR in a way that is relevant and understandable to them.

Some speakers focused on the importance of working from the ground up at the educational level to increase awareness of sustainable corporate management. Indeed the leading business schools themselves, it was suggested, could perhaps take a stronger line in promoting CSR as an integral part of a corporate business model.

With different codes of good CSR practice being produced by organisations such as the United Nations and the OECD, Jean-Pascal Arnaud took the view that standards laid down in the ISO 26000 approach to CSR can be more readily understood by the business community and their advisers and is a more practical route to follow.

Corporate Social Responsibility (CSR) is not a “bolt-on” to how business is run. It goes to the core of how business does business: how it sources, manufactures, markets and how it engages its stakeholders and the wider environment. 

CSR is now about the long-term sustainability of business and of society and is relevant for businesses of all shapes and sizes.