06 CSR


Are socially responsible companies more competitive or less so?

Oscar Elvira

Within an economy, businesses as social partners that they are, play a crucial role in the society in which they operate. More advanced economies, in which there is greater social well-being, have a more dynamic and modern business sector, with more sustainable management models.

For decades, directors have followed common codes of conduct, which were difficult to question because they were the commonly accepted norm. Believing that sales and profits should rise each year, increasing margins to the maximum, reducing costs, as well as simply the will to achieve growth within the company, were ideas which were deeply embedded in company management. But were the ways they went about getting this justified? Should staff be pressurized by making them work overtime in order to achieve these objectives? The attempt to achieve certain financial objectives brought about aggressive decisions. There is a feeling that short-term profit was prioritized over sustainable results in the long-term.

But, in the past ten years, some things have changed. Companies are now concerned about the environmental consequences of their decisions. Not only this, but they are also adopting what is generally known as Corporate Social Responsibility (CSR), which aims to constitute a form of global management, resulting in an ethical relationship between the business and its environment. Changing times, and a renewed population, claim for businesses with social values and collective commitments as an essential base to competitiveness and corporate citizenship.

Corporate responsibility is a business development strategy. Companies which opt to take this route, just as the name suggests, aim to be responsible towards the environment (incorporating recycling policies and residue management), towards their staff (gender equality within organizations, good working conditions which allow for personal development and adaptation to family situations), towards society (by employing people at risk of social exclusion, with disabilities and the older population, those from different ethnic backgrounds, providing sponsorship or offering products that people need such as micro-credits from banks to small businesses and entrepreneurs to help them begin operating). Ultimately, CSR aims to drive competitiveness, sustainability and social cohesion, and become a way of understanding business as something that is not only focused on results, but on the way these will be achieved. It seeks a way of creating management models that are concerned with economic growth as well as personal development and respect for our environment.

On a global level, CSR is rapidly gaining ground and is an unavoidable commitment within companies. Spain has reached at a contradictive time, and one of development. The fact that it is not mandatory has allowed companies to avoid making such efforts during difficult times. Companies are under no obligation to inform or report about their efforts or investments in CSR. Reflecting on the actions carried out in Spain, unfortunately it could be said that there is some degree of conceptual confusion surrounding CSR, and that in some cases, the initiatives taken have been deceptive, in social marketing for the purpose of simply improving the corporate reputation, and actually have not helped transform the internal culture of the company. Social awareness on the subject continues to be very low among the general population, and there is still insufficient training and little awareness among company management. In the same company good CSR practices exist alongside infringement of social and employment legislation. There is no CSR in Public Administrations either, and any political talk in favour of sustainable business simply does not exist. It is a very different situation in emerging market economies such as Latin America, where CSR is rapidly advancing and implemented with great expectation. In Spain there is no public censorship for irresponsible conduct, efforts made by companies are not always rewarded, and doubts arise regarding the economic profitability of costly investments whose returns are unclear.

And to conclude, it should also be pointed out that talking about “social responsibility in companies”, in a country in which business news includes the exorbitant shielding of directors, disproportionately high salaries, scandals of “black credit cards” (executives’ using undeclared company credit cards for personal expenses), alongside housing evictions, wage freezing and reduction, is a complex task. If additionally, tax amnesty and “tax favours” to large companies are made by the Ministry of Finance so that these pay just 3% or 5% in corporation tax, and the Government applies a Labour Reform to make redundancies easier and cheaper, all of this results in an increase in social inequality and an increased indignation due to corruption.

It is time to demand greater penalization to individuals and businesses who are irresponsible. To this regard, uniting international observatory critics and providing them with guarantees and credibility would be a great boost to CSR.

The fundamental challenge is incorporating measures that do not only improve a company’s reputation, but make the commitment from their staff, clients and interest groups it relates with simple, so that voluntary work and philanthropy projects are closer to the relevant collective groups.

We have to think of business objectives that promote ethical, socially responsible decisions with a long-term vision, which are sustainable for the company, and which improve people’s quality of life. There is a long journey ahead to create greater sustainability in economic and business activity. Companies should be great places in which to work and be responsible.

Oscar Elvira

Oscar Elvira

Director of the Master in Banking and Finance, UPF Barcelona School of Management

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