International View of Corporate Social Responsibility

Joaquín Garralda. Professor. IE Business School

6 November 2008

Corporate Social Responsibility now forms an integral part of the corporate DNA, but like humans, CSR comprises different ethnic groups.

Around the year 2000, large multinational firms began to understand that if there was political instability, corruption and social malaise in less developed countries and they did not have minimum levels of health and education, poverty would become structural and the effects of the situation would not be limited to the said countries, but would also affect developed markets in various ways.

In addition, supranational political bodies began to recognise the need to support the business community in order to reach the "Millennium Development Goals", a United Nations initiative created to eradicate world poverty. One example of this recognition is the United Nations Global Compact initiative, presented to large international enterprises by Kofi Annan in a meeting at the Davos World Economic Summit (Switzerland) in 1999. For the enterprise, signing this initiative means trying to include the 10 principles (respect for human rights, labour rights, the environment and anti-corruption processes) in all their transactions, regardless of the country in which they operate. The ultimate goal is for businesses to set voluntary limits to their procedures in environments where institutional fragility or the lack of control over resources could lead to behaviour not in keeping with a more human and sustainable world.

However, these reflections and responses have not been welcomed in the same manner by businesses in every country. In the Europe of advanced countries, the concept of corporate social responsibility is very high-profile among large enterprises and tentative steps to follow suit are also being seen in the most innovative small and medium-sized enterprises. Adhesion to solidarity organisations, the signing of commitments such as the United Nations Global Compact and the acceptance of commitments to tertiary-sector associations, among other actions, are giving rise to a change in the management paradigm of many enterprises. Despite the fact that, in many cases, it is still a matter of "communication" (or marketing), there is also evidence that many boards of directors approach the issue with interest and look for solutions that adapt to each company´s circumstances.

In the United States, the acceptance of the CR concept has been more lukewarm and closely associated with the term of sustainability, which has more to do with environmental problems and focuses on problems caused by climatic change. From a conservative liberal standpoint, the justification of costs, expenses and investments made to deal with the risks of global warming is very rational in sectors like insurance, real estate or leisure parks, etc., where businesses are showing their concern, and this can be seen in finance practices that are more demanding in environmental issues. For example, the number of firms in the United States that have subscribed to the Global Compact principles has been lower in relation to its size; however, it must be said that consideration must be given to the fact that in their context of legal claims involving millions of dollars, enterprises are more cautious when signing commitments, especially when their interpretation may be ambiguous and cannot be easily controlled in all their activities worldwide, as is the case.

In Latin America, this international movement is different, albeit coherent with the above. Corporate concern for issues affected by CSR tends to focus on social action, i.e. the approach is more philanthropic, as shown in the family groups that follow guidelines which reflect the values of their owners or the company´s founder. In general, they develop programmes to help more underprivileged individuals in their operative environment.

Logically, besides concern for the living conditions of individuals in their own region, the issue of environmental protection is recurring in mining companies that declare their awareness of CSR. The examples of Compañía Minera Antamina and Cementos Lima are particularly revealing.
However, for this aid and these programmes to be "sustainable" over time and in order to avoid excessively protective paternalism that can be unpopular, the companies of Latin America that have made a commitment to CSR need to evolve from the paradigm of generic philanthropy to that of strategic philanthropy, in which the aid supplied by enterprise is closely related to the business´s activity and has less to do with the needs and shortages of the environment in which it operates.

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