In a European survey (TNS Eurobarometer 2013: „How companies influence our society: Citizens’ View“) more than 30,000 EU citizens were asked how they view the influence of companies on society. Approximately 40 percent responded that cutting jobs, environmental destruction and corruption were the most relevant negative contributions of companies, while 35 percent believes that it is bad working conditions. 28 percent of respondents also view companies’ influence on politics (through lobbying) as a big negative contribution. Furthermore, a quarter of all respondents believe that companies foster overconsumption among consumers.

The topics mentioned here are all relevant aspects of Corporate Social Responsibility (CSR). CSR describes the task of companies to organise their activities in a manner that will have a positive impact on society.

CSR is not be confused with philanthropy, which may be attributed to companies that are particularly generous in supporting social activities (eg charitable donations). With philanthropy, some companies try to „give back“ something to society in return for reaping profits. However, the concept of philanthropy does not hold companies accountable for any negative impact their business may have had on society. In contrast, CSR is the concept of ensuring, from the beginning, that no company activity will have a negative impact or at least that negative impacts are effectively reduced.

With ISO 26000, Global Compact and the Global Reporting Initiative (GRI), there are a few international recommendations for measuring and documenting companies’ impact on society. Such recommendations are international, since it is advisable that all companies around the world act responsibly. Unfortunately, this is not the case. In some regions only a few companies are engaged in CSR. The number of companies that have a good track record in the relevant fields of CSR (environmental protection, economic stability and social commitment) is highest in Europe. This may be attributed to the fact that there are already very high standards in these fields in Europe.

CSR and CSR reporting are important instruments for improving the economy to the benefit of citizens. If companies need to publicly report on their CSR strategies and their implementation, then consumers are able to analyse for themselves if companies really act responsibly or merely “greenwash” their activities through their communications.

For this reason, the EU has adopted the CSR Guideline, which makes public CSR reporting mandatory for EU companies. Unfortunately, this guideline was effectively softened by lobby groups in the legislative process and now addresses only large size and publicly listed companies. This result is actually not really good for large parts of business: the EU’s more than 21 million small and medium size enterprises (SMEs), which employ roughly 70 percent of all privately employed citizens in the EU, are not covered by the guideline, although most of them probably have a good CSR footprint. With a reporting duty, they would have been able to prove to consumers that they have a particularly good impact on society. While initially causing higher costs, this measure would have had significant positive effects for SMEs, as they could have gained a higher reputation with consumers, which today are largely uninformed concerning CSR. The limitations of the EU’s CSR Guideline must be all the more disappointing for SMEs if one considers that more than 70 percent of the respondents of the aforementioned survey suppose that SMEs probably do more than big corporations to achieve a positive impact on society.

Citizens who depend on jobs and at the same time responsible consumers, we should encourage politicans to extend the CSR Guideline to include SMEs. Since SMEs need to invest comparatively more than large corporations in measuring their societal impact, taking into account their limited income, there should be a simplified reporting method. A reporting duty will undoubtedly be beneficial for SMEs if consumers learn that their gut feeling about SMEs’ CSR is actually true.

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Consumer Matrix     Euresponsible Index