The responsible revolution

Smaller firms have only just begun to hop on the bandwagon, however, and big steps need to be taken before SMEs see CSR as an investment, rather than a cost.

Just a few years ago, an entrepreneur in Poland who mentioned the idea of responsible business might have been laughed out of the room for a perceived ignorance of the free market's workings. Now, corporate social responsibility (CSR) is becoming a key part of companies' business models. Although CSR is a relatively new phenomenon for small and medium enterprises, global leaders are showing firms how CSR can benefit their image and their bottom line.

If one were to ask Poles what they think corporate social responsibility (CSR) means, the answers received would vary wildly, from "another way to promote a business," to "sponsorship and charity work," and even "a return to socialism."

"We have a huge problem in Poland with the definition of responsible business and its use," admits Mirella Panek-Owsiańska, general director of the Responsible Business Forum (FOB), the biggest Polish NGO promoting CSR. "It still depends on the person who offers it. Often, for public-relations managers, CSR is the latest and most fashionable PR tool. Scholars have their own definitions and they argue over which parts should be included. Also, there are companies that publish inserts describing their charitable work and call them 'CSR and social reports'. All of these opinions are far from what CSR really should be, namely a comprehensive method of managing and taking all groups of stakeholders into consideration," Panek-Owsiańska explains.

What's at stake

Research done last year by the World Bank confirms the general director's observations. The majority of Polish managers understand CSR as an ethical activity (80 percent) and obeying the law (about 70 percent), but less than 30 percent see CSR as a partnership with stakeholders. Part of that may result from the fact that the definition of a "stakeholder" deviates from that which is generally accepted in the West. While businessmen agree that stakeholders are stockholders and clients, only 40 percent take this attitude towards their employees and less than one tenth see NGOs as stakeholders.

Despite the confusion, experts stress that interest in CSR has skyrocketed recently. "We are now observing the global renaissance of CSR. This process has not passed over Poland," says Kamil Wyszkowski, a coordinator of the local branch of Global Compact, a UN agency that promotes CSR worldwide.

Until recently, few had heard of CSR. After decades of communism and the resulting abuse of the word "social" in all its forms, Polish managers were suspicious of anything connected with the term. Intoxicated by the profitable possibilities in capitalism, they did not see the necessity of companies' involvement in society. Fortunately this time has passed, and along with it the distaste for the idea.

However, it is still difficult to conclude how developed responsible business is in Poland. Some academics claim that the market has reached the point where companies are forced to take CSR activities into account when planning their strategies. Others argue that only a part of Polish managers have achieved the legal minimum, whereas a huge number have still not even taken this step.

"There are companies that think maturely about this issue, and try to act responsibly during the whole process of production, from the moment of gathering materials to consumers. But this attitude towards CSR is still rare," says Panek-Owsiańska.

Global leaders

The best performers are global firms, which were the pioneers of CSR in Poland and still play the largest role. 'Being responsible' is often a part of a large corporation's policy. Therefore, like their mother-companies around the world, Polish subsidiaries prepare a large range of CSR projects designed for various social groups. Moreover, these companies not only serve as positive examples, but also often help smaller firms initiate CSR programs. Global Compact and FOB have drawn inspiration from this handing-down of CSR values, and have prepared a platform enabling communication between companies more and less experienced with CSR.

These activities often fill an enormous gap in Polish social life. When government funds can't satisfy society's needs, corporate support comes to the rescue of many initiatives. One of the many examples is a fund worth zł.3.5 million established by Telekomunikacja Polska. It hands out grants to local organizations that work with people at risk of social exclusion. Similarly, through its Green Office program, experts from British Petroleum teach employers from smaller firms how to reduce their consumption of water and electricity.

"Big companies have money to hire a person responsible for CSR. Small and medium-sized firms do not have the extra cash. But this does not mean that they do not conduct responsible business. Very often small firms initiate quite good CSR programs, but they do not know that what they are doing is called CSR," says Global Compact's Wyszkowski.

CSR's natural environment

The emergence of CSR is the result of specific economic and social factors that took place in Western countries. It needs special conditions to become generally accepted. Among these are: legal stability; a low-level of corruption; a high level of consumer awareness; a well-developed democracy; and low unemployment.

Unfortunately, not all of these elements can be found in Poland. There is little doubt about the strength of Poland's democracy and opinion polls continue to show that consumers increasingly take into consideration not only the price of the products they buy, but also the company's social involvement. Still, legislation, corruption, and unemployment are the most serious obstacles to CSR implementation.

A discouraging example is Waldemar Gronowski, a baker from Legnica, who went bankrupt because the tax office ordered him to pay zł.250,000 in tax for bread given for free to charity. Furthermore, research shows that managers often stifle the inititation of CSR activities in their firms because they fear higher costs, higher expectations from shareholders, and a negative influence on profitability.

Value for money

However, managers who have implemented responsible business programs say they get a high return on these "investments."

"I strongly believe that responsible business has long-lasting effects. Firms that act honestly gain not only more prestige but also more revenue," says Tomasz Szponder, the owner of publishing house Rebis. "We have had situations, where, for example, in the busy period before Christmas, printing companies decided to print extra copies of our books, not our competitors, or good translators agreed to translate for us for less money, because they trust us."

Experts agree. "At the beginning small firms are afraid of the costs. But as soon as they see that responsible business does not cost much, and the income it brings in can be quite high, they quickly get involved in this idea," says Panek-Owsiańska.

Just a few weeks ago, on the Polish shelves of one of the cheapest discount chains, a product which was the result of three years of research by a few cooperating companies and organizations appeared. It is special semolina for children, enriched in vitamins and minerals, which costs only zł.0.60. This is Poland's first socially-minded product aimed at reducing malnutrition in children. Perhaps this is a sign that although CSR is still a new idea in Poland, it is gaining momentum.