A Snapshot of CSR in Central and Eastern Europe

By Sandra Feltham

Corporate social responsibility (CSR) is regarded as a universal concept based on the triple bottom line principle. But despite this widely acknowledged concept, its interpretation and popularity change over time and differ between regions. This applies not only to world regions such as the U.S. and Europe, but also on smaller scales, e.g. between Western Europe and Central and Eastern Europe (CEE).

Europe is the continent that first dealt with the CSR movement. Europe boasts traditionally more consistent CSR values, norms and perceptions compared to other areas of the world. European corporations tend to hold stronger and broader approaches to stakeholder relations, and that network is being established to help companies share and diffuse relevant information about CSR. Through CSR, corporations importantly contribute to the EU’s treaty objectives of sustainable development and highly competitive social market economy.

While CSR has a particularly strong resonance in parts of Western Europe, it took root slowly in Central and Eastern Europe. As the U.N. Development Program put it: "Due to the socialist heritage, there is a general perception, both in the business community and the public at large, that social responsibility and social caring is the primary role of government. Most companies consider their responsibility to operate in compliance with the legal and regulatory environment of the given country."

However, in recent years CSR a became a “hot” topic in Central and Eastern Europe. CEE countries are increasingly integrating themselves into the global political and economic system, and there is an emerging need to integrate corporate responsibility in the mainstream management education and executive education.

Western and Eastern Europe compared

Reputation remains the main focus of CSR in both Western and Eastern Europe. The main drivers for companies to adopt CSR in the CEE region is to protect brands and keep a company's ‘licence to operate’ -- society’s approval for their activities. The same is still true for many Western companies, but leaders moved on to addressing how sustainability affects the core business through innovation and strategy.

CSR (or sustainability) reporting is taking a similar route. While people in the CEE region are slowly learning how to apply it, in the West most of the companies have already managed to leverage reporting into significant benefits. Committing to CSR reporting led companies to develop their stakeholder relationships and also to improve management communication systems. One of the notable benefits was the setup of public commitments, which assisted companies in moving forward. Now, the new systems have worked into the company culture and yearly reports do not require extra effort.

In the CEE region, most of the big players are subsidiaries of multinational corporations normally headquartered elsewhere. Such subsidiaries are applying centrally managed CSR, customized to local laws and regulations. Only some would take the opportunity and make this process a competitive advantage.

The other issue is starting a conversation about any type of government intervention; the legacy of communism is vividly remembered. It has to be clear governments should limit the use of sustainability promotion policy measures through market devices not through direct planning. Although, the stance on whether CSR should be regulated or remain voluntary is equally mixed.

Data from the Czech Republic

Our CSR agency is based in Prague, Czech Republic, which is one of the leading countries in the area of sustainability in the CEE region. Many businesses still refrain from setting up their own CSR programs, usually citing the fear of increased costs, lack of time and human resources, lack of motivation, and insufficient knowledge of how to set up and apply a CSR strategy. Similarly, there are still some businesses that understand CSR as a false promise or an empty PR strategy rather than an inherent part of their corporate identity, although this trend is now luckily diminishing.

In 2016, research conducted by Ipsos showed that while consumers care about whether a product or service is provided under ethical conditions with regard to environmental conservation, their theoretical knowledge of CSR is not as widespread. According to the research, the public still wants companies to communicate ethically, focus on environmental friendly products and services and secure the safety of their employees.

Currently, phenomena such as fair trade, environmentally friendly products, farmers markets, social enterprises or organic farms demonstrate that products made in the context of ethical business and produced in a sustainable way are not only appealing, but also bring social benefits and are economically profitable. And thanks to the successful CSR case studies that have happened in the West, it is now only a matter of time before this concept will be fully applied also here.

Image credit: Flickr/Roman Boed

Sandra Feltham is Founder & Director of Flagship Consultancy - first specialized consultancy in the CEE focused on corporate sustainability strategy and non-financial reporting. Sandra is a leading expert on corporate sustainability strategy and sustainable development in the Czech Republic.