Corporate social responsibility is a relatively new concept coming from a need to alleviate negative impacts of corporate management and corporate world in general, which have more power over our everyday lives than many realize. Few decades ago the world recognized the devastating impact of social corporate irresponsibility on society and environment, as well as the need for counter-balancing measures. CSR is a very broad concept that has many definitions and practices. It primarily includes aspects such as human rights, corporate governance, environmental effects and ethical labor practices. Simply put, CSR is a voluntary implementation of ethical principles to business practice that will have direct positive impacts on employees, working conditions, local community and environment – thus creating a reliable and responsible business that makes profit. Whatever the definition is, the purpose of CSR is to bring changes to how businesses (big and small) can still be profitable and successful and at the same time responsible and sustainable.
As mentioned above, CSR principles are usually voluntary and go beyond hard statutory law. They represent a type of soft law and are related to the universal legal principle of good faith (bona fides). At the same time, soft law nature of CSR does not mean it is “weak” law. On the contrary, CSR is a subject that has different links with many areas of law, including international law and European law, corporate law and corporate governance, tort law and contract law, procedural law, labor and environmental law, and criminal law. All of these areas contribute importantly to the development of CSR, and ultimately help respond to the serious challenges of today. For example, few years ago a special issue of the Utrecht Journal of International and European Law (https://www.utrechtjournal.org/8/volume/30/issue/78/) covered several of these areas and offered interesting insights into the legal aspects of CSR.
Going beyond the legal aspects, there is increasing evidence of importance of CSR for consumers. For example, a 2017 study conducted in the US (http://www.conecomm.com/research-blog/2017-csr-study) found that more than 60 percent of Americans hope businesses will drive social and environmental change in the absence of government regulation. The majority of consumers surveyed (87 percent) said they would purchase a product because a company supported an issue they care about. More importantly, study showed that 76 percent would refuse to buy from a company if they learn it supports an issue contrary to their own beliefs.
Of course, markets of individual countries such as Serbia and United States are hard to compare, as is the social awareness of their consumers. However, Chamber of commerce and industry of Serbia has recognized the universal importance of CSR values and principles and has provided a very good Guide to responsible business practice http://www.pks.rs/SADRZAJ/Files/Kvalitet/Vodic%20za%20odgovorno%20preduzetnistvo.pdf). Creators of this very compelling brochure provide examples how companies (big, medium, small or even micro) in Serbia and the region can implement CSR principles. The focus is on four aspects: employees, business surroundings, local community and environment.
- Employees – their skills and competence as well as their wellbeing are essential for establishing a profitable and highly competitive business. One way to establish these values is in giving opportunities to employees for constant development and education and providing a healthy working environment and care for them and their families.
- Business surroundings – for building a good business reputation the key is to have transparent business policies and taking good care of clients and consumers and their needs by providing them with high quality products and services.
- Local community – in a market with many competing businesses, creating an advantage and becoming more competitive is to recognize and satisfy the needs of local community and thus get the title of a “good neighbor” – the situation in which all the stakeholders win.
- Environment – one of the main problems of today is certainly the environmental protection and businesses of all sizes have an obligation to make themselves energy efficient and sustainable, without even mentioning the cost savings resulting from it.
This was a short introduction to concept of CSR, and in some of the coming posts we will present more specific points on where Serbia stands in terms of regulating and promoting CSR principles.