Corporate Social Responsibility - Can man treat paradoxes creatively?

^{Photo by Arshad Pooloo on Unsplash}

There is a contradiction about what corporates are or should and should not be responsible for. I want to shed some light onto this topic and also talk about the fact that paradoxes arise at the lines of this discussion ever so often. Are there solutions and if yes, how do they look like?

But what does corporate social responsibility CSR mean?

Since I found the English Wiki version less clear, I translate parts of the German one:

There is no generally accepted definition of Corporate Social Responsibility (CSR). While the terms CSR and Corporate Citizenship (CC) are often used as synonyms in business practice, the German-language literature has developed a clear position on the relationship between the two concepts:

Accordingly, Corporate Citizenship (CC) is only one part of the social responsibility of companies and refers to the commitment of companies to solving social problems in the local environment of the company that goes beyond the actual business activity. CC is thus essentially reduced to sponsoring, donations and foundations.[2]
In Europe, the CSR definition anchored in the European Commission's Green Paper has established itself as a common understanding:[3]
"A concept that serves as a basis for companies to integrate social and environmental concerns in their business activities and in their interaction with stakeholders on a voluntary basis.

It goes on to say:

In the modern understanding, CSR is increasingly understood as a holistic corporate concept that integrates all sustainability dimensions and includes all "social, ecological and economic contributions of a company to the voluntary assumption of social responsibility that go beyond compliance with statutory provisions".

The sources and papers that I mention in the appendix begin with a definition or provide information that a uniform definition does not exist. Nevertheless, one can assume that at least the understanding of this has matured in the meantime and that CSR is understood as much more than pure "charity".

Two views on companies/corporates

The concept of corporate social responsibility (CSR) has long been used as an effective lens through which to examine the actions business can take toward ensuring mutual long-term well-being and sustainability. Klaus Schwab
Read more at: https://www.brainyquote.com/topics/social_responsibility

• On the one hand, we want companies to act responsibly, i.e. much more than simply providing jobs, producing goods and services, but to have a responsible and reasonable relationship with citizens and institutions of social relevance. It is not enough for us for a company to focus only on self-preservation, to invest only in self-interest and not to care about the rest of the world.

Milton Friedman: „The social responsibility of business is to increase its profits“

• On the other hand, there is the view that companies should not bear such responsibility because they are merely economic participants. They should not interfere in civic issues, they should not influence cultural events, they should have no effect on educational institutions and so on.

Now it should be obvious that those who run a business feel addressed by both the one statement and the other. Involvement can be seen as both negative and positive.

The second view is basically irrelevant to the extent that influence takes place beyond an existing theory that CSR "shouldn't be". The reality - the impact - of in particular large and very influential companies is therefore the point we are usually mostly interested in.

But what can be meant by " involvement "?

An example of how such involvement can be called is that of "stakeholder dialogue":

It would ... be a "smart" corporate strategy to enter into dialogue with the individual stakeholder groups.[25] Of course, companies will first have reservations about critical questions and exuberant expectations on the part of stakeholder groups. But stakeholder dialogues have a high innovation potential if - to name one example - a car manufacturer makes contact with environmental initiatives. Such dialogues can have a positive impact on a company's ability to innovate in areas such as energy efficiency, emissions and mobility.

^{Photo by Vlad Tchompalov on Unsplash}

^{Photo by Yeo Khee on Unsplash}

Citizens as stakeholders

What I perceive is an increased attention and quality demand of my fellow human beings when it comes to the methods and materials used by companies. This is mostly a minority who have this in mind and who deal with environmental and human rights issues. But it has always been minorities that have shown themselves to be critical and that heralded the beginning of a slow but constant change. It takes time for something to become the standard, and that time is called to stand the test of time with intelligence and patience.

A large number of German companies operate in the quality segment and would have little prospect of economic success if they were to rely on cheap products. Entrepreneurs who only look at the cost factor earn species protection and are threatened with extinction. "Intelligent" management personnel also has other factors in mind. When it comes to quality products, companies are quickly and naturally confronted with "critical" questions that focus on the product and its production process. They ask where the product comes from, what its quality is and what its price is. However, social groups such as citizens' initiatives and interest groups, whose demands are not limited to the company's business operations, also act as stakeholders. In a broad sense, these stakeholders have political demands on the company. [21] "The company is no longer understood as a private event, but as a publicly exposed organization." [22]

If a company does not fulfill its social responsibility or only rhetorically, or even refuses to engage in discourse with stakeholders, a loss of image and loss of turnover is to be expected, as the example of the incriminated working conditions at Nike[23] or the Shell Group's announced sinking of the "Brent Spar" oil rig[24] showed.

Federal Agency for Civic Education/German source

I work as an individual freelancer in institutions that see themselves as stakeholders. My three clients are:

• A multi-generational house for women of all cultures and offers appropriate to the very small purse, such as educational offers, joint undertakings, excursions, childcare, low-threshold counselling, etc.

• A house with a very broad spectrum of social offers that would go beyond the scope of the list. It is an extremely valuable offer in the urban district

• A youth support organisation that provides housing for young adults and takes care of them holistically, who have lost track and need support in coping with their life plan.

These stakeholders influence the political and entrepreneurial actors in my country. They are in active dialogue with decision-makers from the side of Hamburg's citizens (i.e. the elected Hamburg government and opposition parties), the EU and SMEs (small and medium-sized enterprises) as well as large companies.

Donation is one part of social work. From time to time the supporters visit one of the social institutions and want to learn more about our work, for example "Barclay Card". I would like to add that there are no demands. It is surprising in the nature of this support that the company even sends several employees to the institution to learn how we work and function, rather than organizing visits to Barclay Card for us employees. When I heard that the first time, I really was caught by surprise. When I briefly met those sent people I sensed their authentic interest. Not as "corporates" but as human beings.

There is a lot going on behind the scenes and what this platform also needs is in my opinion some glimpses and presented facts of those scenes. So this article is also an attempt to be a journalist of political shown activity in the sense of being a member of a "polis".

Education for children

From the elective or profile subjects, as it has recently been called, my son has chosen the profile "youth-full" at his school from grade eight. Behind this artificial term lies the theme "Youth" and "Useful" under the umbrella of "Environmental Issues" and "Human Rights" and "Business".

^{Photo by chuttersnap on Unsplash}

This means that the schools are also aware that corporate responsibility is a reality and not a theory. Otherwise this would not be included in the curriculum. I welcome the practical orientation of this profile and would like to give the school credit for seriously dealing with the interfaces between business and the effects of corporate action on our society and offering pupils a forum and learning field. In addition, children are really smart and see in their life reality which businesses dominate both off- and online.

You can read on the website Teacher Training, launched by the Baden-Würtenberg state government:

Proposal for a teaching sequence on business ethics/CSR:

What do business ethics and corporate social responsibility mean?

• CSR in Germany and around the world - is there global responsibility?
• What expectations does society have of entrepreneurial activity? - Corporate responsibility and society
• What contribution can I make? - CSR and sustainable development
• Corporate responsibility and consumers - what role does CSR reporting play?
• Demand and reality - does it fit together?
• Case study as conclusion

What examples can journalists give where corporate responsibility takes place and can set a trend?
Here is a translated excerpt from the German business magazine "brandeins":

^{Photo by Jeff Sheldon on Unsplash}

For example Otto-Versand: In the mid-nineties, the textile retailer was targeted by the "Campaign for Clean Clothing" and was quickly pilloried for inhumane working conditions at suppliers in Southeast Asia. Otto didn't throw his suppliers out, but trained them, even though they were reluctant to do so at first. Even then, Otto subjected himself to rules of conduct that were tougher than those of other companies today: what child labour is is determined either by national law or by the rules of the United Nations - Otto always chooses the sharper variant. Not only the statutory minimum wage is paid, but also a living wage. Employees who work overtime may not work more than 60 hours a week, one day a week is mandatory. These standards apply along the entire value chain down to the last home worker.

Today, Otto is regarded in Germany as a pioneer when it comes to corporate social responsibility. And the image gain is not everything. Because the use of pesticides is strictly monitored in the countries of origin, the clothes no longer arrive poisoned in Germany - expensive cleaning is saved. In addition, Otto has opened up a new field of business for itself: The Group sells the knowledge it has acquired. Since 2000, the Otto subsidiary Systain Consulting has been advising other companies on the development and implementation of socially responsible management and production systems. Systain currently has an annual turnover of two million euros. "It's not much yet," says Managing Director Joachim Schlange, "but it's an important thing. And Otto can use the findings from the feedback loop to its advantage."

Are you "staff"? Or "student"?

Corporate responsibility can, however, be implemented much better if employees also have an interest in it. What about the staff? Is everyone only busy with short-term tasks and would it then be a hassle on top to get involved in the company's impact on the social and natural environment? If I work somewhere as a designer, laboratory assistant, architect, creative or administrative employee, don't I have to worry about what my company does in this respect?

The answer is obvious, isn't it?

It's not only a top down attempt, it is also a bottom up one.

So if you are a student and gain practical experience in an institute, you can do it with your eyes open. If, for example, you work with laboratory animals or insects that give their lives in this work, you can help to compensate for it. For this purpose, students from the same faculty can join forces, bring their professors on board and think about this conflict as well as form working groups to propose compensation. It should be clear to every active person that he or she is moving in conflict areas.

One man, who acted as a pioneer from top down is Mr. Hans-Dietrich Reckhaus, the owner of a pesticide producing company.

It all began with Erika

The businessman had entered into a collaboration with two artists, after he wanted them to present a new fly-catching product for him in a way that would be suitable for advertising. Instead, the two asked him if he had ever thought about the value of a fly, and instead of killing vermin, wouldn't it make sense to publicize its value? Thus, a rather unusual and almost ridiculous-looking action was brought to life that called on the inhabitants of a small German town to save their flies and, in doing so, made a fly called "Erika" the leading insect, so to speak. In short, the whole thing became something much bigger: A seal of approval for biocides.

^{Photo by Michael Payne on Unsplash}

Quotation brandeins:

Anyone who buys a product with the label pays a fee which is used to compensate for the damage caused by the product. "Because", according to the entrepreneur's new insight, "insects are fascinating animals that have a great value for us and the ecosystem". He approached the matter scientifically and commissioned biologists to develop a rather complex model. Among other things, the aim is to determine the biomass of the killed insects - for example, Flippi is supposed to cost 200 flies their lives on average - and an adequate balance in the wild. Reckhaus immediately took action himself, first having the flat roof of his administration building reinforced and then creating a 200 square metre biotope to neutralise 72,000 fly discs.

In a later interview with Jörg Thadeus, a German journalist who moderates a podcast series for the business magazine "brandeins", Reckhaus explains his difficulties and that the industry had declared him crazy and that he would not be particularly welcome at such business meetings. Nevertheless, Mr. Reckhaus is sticking to his current model and his vision, it looks like, is to get out of the insect killing business at some point and focus on licensing his label.

With an annual turnover of approximately 20 million euros and 50 employees, he is one of the medium-sized companies in Germany. In the beginning, his staff had not been able to fully get to grips with his ideas, but in the meantime the employees stand behind him and are therefore the first to be able to say that their boss has changed from Saulus to Paulus.

The German Federal Statistical Office:

In 2011, more than 99 % of all companies belonged to the SME group, and their share of the workforce exceeded 60 %. In addition, SMEs accounted for almost 34% of sales, almost 43% of gross investment and a good half of gross value added.

SMEs = small and medium-sized enterprises.

Key figures:

Small companies have up to 49 employees and an annual turnover of up to 10 million euros.
Medium-sized companies have up to 249 employees and an annual turnover of up to 50 million euros.

source

Without naming any further data, one can say that the economic importance of small and medium-sized enterprises in Germany is considerable and that, contrary to what is commonly thought and suggested in the media, only large companies and corporations are the most important players.

However, one must not conceal the fact that SMEs are dependent on other companies, which are the medium-sized ones with about half the number, the small ones to an insignificant extent.

The trend among German consumers seems to point in a direction where it is important how companies behave with regard to their impact on people and the environment. If big companies lead changes others may follow.

Mr. Reckhaus is one remarkable example. He found himself in contradiction. He managed to move imaginatively in an ambiguous state of tension. He did not want to solve a problem "once and for all", but found a creative way of dealing with the particular problems of his product. He has a very interesting characteristic: patience until the time is ripe and meanwhile not ruining his company. He thinks in longer terms.

^{Photo by The Roaming Platypus on Unsplash}

It is not the expression of interest rates, wages and money supply that are responsible for long-term upswings, but how much the inhabitants of a country adapt and implement new technical, social, institutional and intellectual success patterns. Economists naturally see this differently. The solution could lie in the middle, since it is thanks to the money supply that new developments can only become known in the first place and then be accepted by the population. On the other hand, money supply can simply prevent potential success patterns from coming onto the market. Until not so long ago, the power of the traditional media also played a not inconsiderable role in this. Only slowly are new forms of financing such as crowdfunding beginning to open up new avenues for developments that the population actually wants. But here, too, it will be some time before the people's "wanting" is actually intrinsic and not based on patterns of the past.

source(translated from German)

Reactions to bad practice

Where do we see that there are consequences if a company does not take its responsibility seriously enough? How does the public and the customers of a company react?

Let me give you an example:
Coca-Cola caused an investigation by the Indian government due to containing high levels of pesticide residues and water pollution in India. In a scientific paper of four case studies on Corporate Social Responsibility the authors state:

The long legal procedures against the Indian government that Coca-Cola had to face were not the only consequence of the conflict. The brand suffered a great loss of consumer trust and reputational damage in India and abroad.41 In India there was an overall sales drop of 40% within two weeks after the release of the 2003 CSE report. The impact in annual sales was a decline of 15% in overall sales in 2003 – in comparison to prior annual growth rates of 25-30%.42 This highly publicised conflict in India also caught the attention of consumers in the US. After a series of demonstrations by students who joined two activist groups in the US, ten American universities43 temporarily stopped selling Coca-Cola products at their campus facilities.44

According to Pirson and Malhotra, the main reason why this controversy ended so badly for Coca- Cola lies in its response to the problem.46 Coca-Cola denied having produced beverages containing elevated levels of pesticides, as well as having over-exploited and polluted water resources.47 By denying all claims and trying to prove its integrity, instead of demonstrating concern towards the situation, Coca- Cola failed to regain consumers’ trust.48 The Indian population viewed Coca-Cola as a corporate villain who cared more about profits than public health.49 In comparison, previous conflicts experienced by the company in the US and Belgium were better handled because it included stakeholder engagement in its strategy.50

source

There is something else behind CSR's thinking: whether there is a future in which jobs must be maintained at all costs, even though a company's products or services obviously harm the environment and people.

That's the wonder: How can a company still be successful if it abolishes itself and thus its actual product step by step?

Mr Reckhaus's example is so interesting simply because he represents a company reinventing and changing itself in the long run.

How can other corporations transform their know-how from being a bad guy to a good player?

From Audi, for example, there is the statement "we sell mobility". Does this mean that car manufacturers no longer want to concentrate purely on the production business, but want to offer their expertise in engine construction and technical design elsewhere? Can we imagine a future in which a car manufacturer combines environmental initiatives and opens up a business area that is both profitable and responsible?

A look into the future of energy supply in 2040

^{Picture: by Eva Decker - University Freiburg, AG Reski Ralf Reski, CC BY-SA 1.0, https://commons.wikimedia.org/w/index.php?curid=29181109}

On the German website "Themen-Seiten" the results of an international future study called "Delphi Energy Future 2040" are published, which was a joint project of the Federal Association of Energy and Water Management (BDEW), the German Society for International Cooperation (GIZ) and PricewaterhouseCoopers (PwC). For this purpose, there was a survey of around 500 energy experts from more than 40 countries from business, science and politics.

I would like to highlight a short excerpt of the text about a possible future:

Paradigm shift
Sustainability and decentralisation will assert themselves as economic paradigms. Experts assume that the use of decentralised renewable energy systems with battery storage systems in 2040 led to a new democratic self-organisation at the local level.
Batteries are the game changers: in 2040, battery power plants will assume the function of conventional power plants as frequency equalizers in terms of system stability.
The energy system is decentralized and networked: municipalities and social bottom-up movements are strengthened.
In 2040, energy supply took the form of a cell structure: interconnected cells and "islands" the size of a city or central region draw their energy from the sun, wind, storage facilities and a small conventional reserve.
Energy policy enables self-determination and the consumer demands sustainability: Consumers demand comprehensive sustainability of companies, products and services. Non-sustainable production is considered unethical.

Information about energy is provided "real time": in 2040, the electricity market will be characterised by high resolution, performance-measured customers and "real time pricing"; intelligent meters and terminals will enable consumption to be optimised.

New suppliers dominate the energy market: the traditional energy suppliers will only be responsible for a few technical functions such as grid operation, while many small producers will take over power generation and grid management has become the domain of international IT companies. In 2040, Internet giants and the data and IT industry will be the largest players in the energy world, processing large amounts of data and controlling supply and demand automatically. The classic energy industry remains analogous.

Further study results show that conventional power plants are becoming smaller and more flexible. Thermal capacity survives in small format: In 2040, the standards in conventional fossil power generation have also reversed: the formerly large power plants have become small format and flexible, with a capacity of regular not more than 100 MW.
Consumers will also make their demand more flexible - for example through demand side management.
Flat rate instead of kWh billing: In 2040, consumers will pay a flat rate for electricity based on their average consumption and their individual need for security of supply.

source

^{Picture: by Biodiesel33 - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=17930552}

Finally, all those who are deeply concerned with human existence reach a certain point:

The philosophical sources of human cooperation and the fact that nothing in the world can be resolved definitively, but life means learning to deal with the paradox.

The polarity between well doing and harming, tradition and novella, the contradiction between the new and the familiar, certainty and risk, testify to the eternal balance-act of things. Again: this is not a problem to be solved, but a conflict to be creatively dealt with. It's one that we are and will be confronted with again and again.

Predictions contradict each other. There is no certainty in either future forecasts or shifts in peoples thinking and acting. It's going to stay a very complex matter.

We as individuals can be active and thorough in the environments we move; where we can do about without falling into the complexity trap. We can talk and cooperate with others when our interest ist motivated and encouraged.

Thank you for reading.

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Text sources/scientific papers:

https://de.wikipedia.org/wiki/Corporate_Social_Responsibility

http://www.bpb.de/apuz/29861/gesellschaftliche-verantwortung-von-unternehmen?p=all

https://lehrerfortbildung-bw.de/u_gewi/wirtschaft/gym/bp2004/fb1_2/05_hilfen/unter3/

https://www.brandeins.de/magazine/brand-eins-wirtschaftsmagazin/2004/verantwortung/macht-s-gut

https://www.destatis.de/DE/Publikationen/WirtschaftStatistik/UnternehmenGewerbeanzeigen/BedeutungKleinerMittlererUnternehmen_12014.pdf?__blob=publicationFile

Megatrends of the future - What does this actually mean? (German) - download

Cedillo Torres, C.A., Garcia-French, M., Hordijk, R., Nguyen, K. and Olup, L., 2012. Four Case Studies on Corporate Social Responsibility: Do Conflicts Affect a Company’s Corporate Social Responsibility Policy?. Utrecht Law Review, 8(3), pp.51–73. DOI: http://doi.org/10.18352/ulr.205

Aspects of entrepreneurial Responsibility (German): Working Paper No. 9 of the University of Leibniz Hannover/ Business School - Prof. Dr. Michael Weisensee Prof. Dr. Lars Baumann

Guide to Sustainability Management(German): document

TED-Talk: Re-thinking corporate social responsibility: Andy Le Seelluer at TEDxStHelier

Walmarts Failure (German) - Technical University of Dortmund - working paper

An Overview of CSR Practices RESPONSE Benchmarking Report - Copenhagen Business School

INTERNET-TSUNAMIS - Political masses in the digital age (German) - A study by xaidialoge and the European University Viadrina