Industry affects society and the natural environment. It does so through several channels, such as by creating jobs, producing useful goods, supporting community activities, helping solve societal issues, ensuring the environmental sustainability of its activities, etc. In order to make this impact as virtuous as possible, many companies have in place a corporate social responsibility (CSR) strategy and programme.

The European Commission defines CSR as: "A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis."

Promoting CSR has been a high policy priority for the EU for many years, as illustrated by the 2006 Commission strategy [158 KB] to make the Union a "pole of excellence" in the field. In addition, the European Commission has supported a number of business-led initiatives to promote CSR, such as the European Alliance for Corporate Social Responsibility . It also facilitates dialogue through the European Multistakeholder Forum on CSR.

In order to ensure a wide uptake of CSR, the European Commission backs efforts, including a number of EU-funded projects, to promote it in individual industrial sectors. For instance, PRISME2 [80 KB] aims to create a networking programme dedicated to building CSR capacity among SMEs in the chemical industry. This was carried out in the context of 'Responsible Care', the chemical industry's global voluntary initiative to improve its health, safety and environmental performance. The European Chemical Industry Council (CEFIC) has also created a Responsible Care toolbox for SMEs, covering a wide range of topics from occupational health and safety to energy efficiency and supply chain management.

Similarly, the BRE [81 KB] project aims to foster CSR in the European construction sector by bringing together large firms, SMEs and other relevant stakeholders to develop a set of indicators which correlate sustainability and competitiveness measures, as well as to investigate the connection between social and economic value. The project has produced guidelines to enhance CSR: by analysing 44 best practices in different areas, it shows how the adoption of socially responsible behaviour can enhance the competitiveness of business in the construction sector and the territory it belongs to.

For its part, the COSMIC [81 KB] project is working to analyse the relationship between CSR and competitiveness all along the textile/clothing supply chain, including identifying the role played by demand factors and the main voluntary CSR instruments.

Restoring confidence

Given the additional costs involved, it is tempting to think of CSR as something of an optional luxury in difficult economic times. In actual fact, CSR is more important than ever in the context of the global financial and economic crises.

This is partly because public confidence in the social and environmental responsibility of businesses has been shaken. For example, the financial crisis damaged public trust in the banking and financial sectors, while the subsequent economic fallout - with its accompanying recession and job cuts - hurt confidence in the social responsibility of industry and large corporations.

However, there are signs that confidence is recovering. For instance, the 2010 edition of a trust barometer reveals that trust in business has risen considerably, mainly driven by western economies. One of the reasons attributed to this improvement is the growing tendency among corporations to listen to and engage their stakeholders, and to play a role in addressing societal challenges. This clearly shows the importance of CSR.

Good for the bottom line

As the above illustrates, CSR is not just about protecting the environment, conserving natural resources and getting enterprises to help address and resolve societal issues, it is also good for business. By enhancing public confidence in a company, it can boost competitiveness. The 2008 European Competitiveness Report [120 KB] found that CSR can have a positive impact on six different determinants of competitiveness: cost structure, human resources, customer perspective, innovation capacity, management of risk and reputation, and financial performance.

"CSR is an essential component of risk and reputation management for many companies, and becomes increasingly important as enterprises are exposed to greater public scrutiny," the report concludes. "Certain aspects of CSR, such as the creation of employee-friendly work-places, can enhance a firm's capacity for innovation."

Despite its name, the benefits of CSR are not limited to corporations. Even if the term was originally designed for large enterprises, small and medium-sized enterprises (SMEs) can also reap the rewards of CSR. The European Commission has played a pioneering role in adapting the concept and tools of CSR to meet the needs of SMEs. Towards that end, the Commission has co-financed a number of projects [105 KB] in this field and has worked with a group of European experts to draw lessons [683 KB] on how best to support and encourage smaller enterprises to exercise their social responsibility.

The text only of the articles can be republished as long as the source of the article is quoted: Enterprise & Industry magazine (http://ec.europa.eu/enterprise/magazine/index_en.htm), © European Union, 2008 - 2012