MORE THAN BUSINESS: CORPORATE

The Integration of Social and Environmental Perspectives into Business Operation

A Study by DEMOS Hungary

May 2006

The authors of the printed version: Kinga Deák, Gábor Győri The authors of the full version: Kinga Deák, Gábor Győri, Péter Báron, László Ágoston Editor: László Ágoston CONTENTS

Introduction Corporate social responsibility ante portas Attempt at a definition The customer as social actor and the corporation as social force Corporate and employee interests Global or local strategies? Regulations or voluntariness: corporate responsibility and the Government What kind of responsibility? – Theoretical foundations for CSR-strategies Social responsibility of the business sphere in Hungary Contents of the full version Bibliography Introduction

In the framework of corporate social responsibility corporations, integrate not only legal duties but also social and environmental perspectives into their business operation and shape their relations with groups involved in their own activities (consumers, employees, suppliers) according to these principles. Such a conscious attitude signifies a different relationship to employee rights, environmental protection, preservation of health, human rights, anti- corruption and business morals than mere profit-maximization although it is not clear whether it can be regarded as more successful in terms of long term profit considerations.

It is the main objective of DEMOS Hungary to promote the renewal of Hungarian public policy by collecting and drawing up professional arguments, connecting this with the creation of a social debate that is based on the principle of quality but emphatically non-elitist.and will reach a wide sphere of people.

It is our view that corporate social responsibility can be an important topic of the near future in Hungary, which it is worth paying heed to. The objective of the full study by DEMOS Hungary is to make public discourse on corporate social responsibility more concrete and poignant by giving a popular presentation of the theory of voluntary corporate social responsibility, and its legal regulations and practice in Hungary and abroad. Special attention has been paid to possibilities of failure and distortion implied in the practice of the corporate social responsibility of Hungarian business life. Our primary aim was to give a more in-depth insight into the topic than simple promotion and marketing are able to, as well as offering guidance for practical activities suited to the original conception.

Starting with the definition of the concept and an outline of the dilemmas involved, the first chapter deals with the relationships of corporate social responsibility to traditional structures like the relations of civil society and the government, corporations and trade unions and civil society and corporations. The second chapter elaborates on the role of the European Union and on regional differences in implementing corporate social responsibility. At the same time we are trying to show which methods and possibilities have already worked well in practice. Later we extend our analysis to the reality of corporate social responsibility in our region by giving a detailed analysis of Hungarian legislation in this sphere, presenting institutional actors in Hungary and the most wide-spread methods and tools. The present publication is an abridged version of the original study; which we hope will provoke thought and arouse interest in the topic. .

Corporate social responsibility ante portas

According to an old joke the following alarmed discussion took place between the staff of the American space-ship landing on the Moon and the scientific centre on the Earth: – Houston! Houston! We have a big problem! – What’s happened? – The Soviets have landed first and painted the Moon red. What should we do? – Let’s think it over for a moment…do you have white paint? – Oh, yes, we do. – Then paint “Coca-Cola” on it!

This is symbolically what has happened after 1990 in large parts of the area conquered earlier by socialism; the world is enchanted by the market economy, the background of the white letters, however, was not created simultaneously and with the same purpose as the inscript. The fall of the Soviet Union meant the overwhelming victory of the capitalist system; global trade and the market economy have never extended to such a large number of countries as today.

This success of capitalism was due not least to its creating unprecedented prosperity in the Western world. Although most developed countries follow different economic policy models their common foundation is market economy. After the systems of existing socialism in Eastern-Europe collapsed as if by magic, reformers and masses who were yearning for change had in mind not only democracy and civil liberties but also the abundance of wares in Western show-windows. The general acceptance of market economy, however, does not mean an uncritical attitude toward the practice of capitalism. Profit still has a somewhat dubious nature in the eyes of many citizens, and the image of corporate leaders as socially indifferent, polluting, exploiting agents who insist only on profit survives.

For evidence it is enough to take a closer look at the products of the Hollywood dream- factory. Three internationally acclaimed movies have put capitalist ruthlessness on the pillory in the last three years: in The Constant Gardener the multinational drug-industry experiments with defenseless Africans, in Syriana American oil-corporations trample down all emancipation efforts of the oil-producing countries, and in Lord of War a semi-illegal weapon-dealer tries to see to it that no bloody dictator be lacking Kalashnikovs. Nor is the past year an exception to the rule: numerous movies have been shot in the last decade that attack weapon-producers (The Runaway Jury), energy-producers (, Erin Brockowich), tobacco-producers (The Insider), the media (Quiz Show) or brokers (Wall Street) in the same style. The James Bond-movies can hardly be suspected of anti-Westernism and yet super capitalist scoundrels are frequently at the centre of the plot. The success of Michael Moore-style documentaries is also due to the criticism of the soulless entrepreneur.

There are innumerable instances of this sort and their common feature is that they essentially reflect a general social attitude: the entrepreneur does not assume responsibility for his/her environment taken in the broadest sense (including both social and natural environment). In spite of its success the capitalist system has a serious image-problem. Lots of people are convinced that the majority of businessmen are not concerned with the impact of their activities and in seeking maximal profit they tend to accept consequences that are damaging to society as a whole. In an abstract way we regard pollution, the exploitation of workers and the dissemination of dangerous products in developing countries (and often in developed ones as well) as a national-economical and global issue. At the same time we are perfectly aware of the fact that these problems have been caused by concrete firms and flesh and blood persons can be held to account for them.

This is why we have a system that produces unprecedented prosperity at an unbelievable pace on the one hand, while capable of significant negative impacts on the other hand, and moreover frequently both at the same time. The answer of progressive governments is state intervention. The state has the means to enforce the responsible behavior of corporations and minimize the negative impacts of their activities, or when negative impacts are inevitable consequences of a given product or service, to compensate for these by social contributions. The former category includes the limitation of emissions, and the latter for instance special taxation of environment pollution. According to a progressive outlook, the interests of the community are represented and formulated by politics and the state has the duty to enforce by all available means adherence of corporations to these interests (as they by themselves are not capable or willing to act in a responsible way).

The liberal approach to economy prevails especially in Anglo-Saxon conservative parties. According to this view state intervention should be reduced to a minimum. Damaging side- effects, they argue, are far less significant than representatives of the progressive approach assert; and if corporate activities do have harmful impacts then market principles can offer solutions. If for instance society wants unpolluted air it can have it on the basis of market supply and demand. The only impact of state intervention is to disturb the operation of markets and to prevent corporations from reacting efficiently to costumer demand – for the state can only form a distorted view of the citizens’ actual needs instead of estimating them correctly. This divided world of liberal market-fans and believers of a left-wing state-centered outlook saw the concept of the so-called Corporate Social Responsibility (CSR) emerge in the ’60s and ’70s. To avoid misunderstandings: Corporate Social Responsibility is not a new and distinct standpoint in a political and ideological debate, although it is capable of introducing, a new dimension to it whether it likes it or not,. In the framework of corporate social responsibility, corporations not only integrate legal duties but also social and environmental perspectives into their business operations and shape their relations to the groups involved in their activities (consumers, employees, suppliers) according to these principles. This consciously formed attitude reflects a different relationship to employee rights, environmental protection, the preservation of health, human rights, anti-corruption and business morals than mere profit-maximization although it is not clear whether it can be regarded as more successful in terms of long term profit considerations.

Socially responsible business, in contrast to earlier practice, is therefore not a blind flight in the course of which the “pilot” of the corporation heads at maximum speed towards a single objective of maximizing profit, leaving all social consequences out of consideration. A corporate manager who stimulates social responsibility seeks to compensate for the total impact of corporate activity by coordinating business activities with the interests of the local, national and global community.

We shall discuss below in detail what this means in practice, but it is worth looking now however, at the “political” interpretation of this phenomenon. Many left-wing representatives tend to oppose the concept of corporate responsibility. It is their conviction that corporate responsibility is no more than a PR-trick and does not cover any real communal pledge. They regard corporate responsibility as a sort of fig-leaf that helps irresponsible governments to evade important social tasks by hiding behind corporate pseudo-activities.

Liberals are also divided in this respect. At the beginning of the debate on corporate social responsibility Milton Friedman even denied that the term had any meaning. According to Friedman the only obligation of entrepreneurs is making profit (Friedman, 1970). Other liberals approve of capital having increased social responsibility, although they are afraid that corporate social responsibility only foreshadows a heightened state role. This is why they insist on such involvement being exclusively voluntary. We believe that in a representative democratic system, politics and thereby the state, cannot be absolved from the fundamental task of identifying and enforcing communal interests. No matter how wide-spread the practice of corporate responsibility seems to be, the state is not allowed to “privatize” its own responsibility by handing it over to civil society or the competitive sphere. This is not what corporate social responsibility is about; it is about how and in what forms and directions business life can be socially involved aside from its obligations laid down in laws and regulations. We are convinced that all efforts in this direction should be supported in a circumspect way, but also optimistically and decisively. To stress the responsibility of politics means also that we do not agree with the argument that corporate social responsibility is exclusively a voluntary activity. The dividing line between voluntary and prescribed social involvement should be drawn by the local community and the government.

• In this paper, however, we try to make clear the kind of corporate behavior that voluntarily seeks ways and possibilities of taking responsibility. Although corporate social responsibility is a new concept giving new impetus to thinking through this kind of activity, the fact of taking responsibility itself is no novelty. The state has long obliged corporations – as all social actors – to adhere to certain rules and to contribute to the communal budget (taxation). Among provisions on responsible behavior we find e.g. limitation of working hours, paid holidays and keeping work-security and environmental measures. Corporate social responsibility has been renewed by both its voluntary nature – i.e. social activity beyond the levels prescribed by the state – and the form and content of the activity. But why should a corporate manager take more responsibility for society than that required by the state? Arguments supporting corporate social responsibility can be manifold even in the case of one individual actor not to mention a whole business sector. Some corporate managers try to adapt their business practices to their outlook on responsible citizenship. As they argue a strict division between the citizen “self” and business “self” is as absurd as completely separating market and communal spheres. What you can expect from the individual in terms of responsible citizen behavior applies in the same way to a corporation – and it is up to the management to shape the activities of the firm according to this principle. Others try to turn their corporation towards voluntary responsibility on the basis of religious values. Some managers enjoy social respect for their responsible activities – and all their steps in this direction are motivated by this consideration. It is difficult to find a common denominator in motivational terms in all these different moral values that would explain corporate social responsibility in general. The most general single explanation is corporate interest. If a businessman realizes that corporate social responsibility is advantageous for his/her firm then involvement is the logical step no matter what his/her individual moral or political values are. Nevertheless this doesn’t mean that responsible thinking would be irrelevant in corporate social responsibility for it is only an alternative (indirect) way of making profits. First, if a corporation is unable to maintain responsible relations to the interests of the community (only pretending to be responsible on the surface), it regularly fails to form a successful strategy. Second, social responsibility is not always a profitable corporate activity. Expert opinions differ concerning the impact of social responsibility on business profits; one of the reasons is that several business advantages of responsibility can hardly if at all be expressed in plain cash.

Nevertheless it can be argued that social responsibility is not only a cost-side item in the corporate balance: it brings both material and less tangible profits – e.g. more favorable social judgment and a better atmosphere in the work-place. Concerning the spread of corporate social responsibility we regard it as crucial whether or not the given social actors are aware of those forms of their involvement that are (or can be) harmonized with business interests (Bevan et al., 2004). Without this awareness social responsibility as a fundamental part of corporate strategy is bound to remain limited. All those who are involved by the operation of a corporation (owners, customers, employees, suppliers and the community) in a broad sense include its whole environment, in many respects society as a whole. The success of a given corporation has several side-effects for society as a whole which is why the latter is also interested in promoting its activities. The corporation in turn is involved in society which is why it is interested in supporting its well-being. Corporate social responsibility means the harmonization of the interests of all involved, and the creation of common sustainability. It is impossible and useless to separate the corporation from its environment as if it could function independently of the social context. The interests of the community and the corporation do necessarily collide in some areas (here state regulation is required), but in others there are no oppositions: possibilities of common goal-attainment are at hand. Such possibilities have been characteristically neglected so far. Neither the corporate sphere, nor politics have made any attempts to broaden and improve their social roles by taking the business interests of corporations into consideration.

In the next pages we undertake to find these common areas by showing why corporations should be interested in social responsibility and how an increased role of corporations is beneficial for those involved in their activities (employees, local and global communities and governments). Then we shall give a short description of the concept of corporate social responsibility followed by the analysis of post-materialist society and conscious consumer attitudes as crucial elements in the process leading to responsible involvement. We believe that the social context of corporations has changed in such a way that requires the modification of the fundamental principles of their operation. In the fourth part we shall try to show in a more concrete way the advantages that socially responsible corporations may obtain, also specifying some positive impacts on the part of employees.

In which areas do the actors of economic life intend to broaden their social roles, i.e. what are the issues they are prepared to deal with – these are by no means irrelevant questions. What is more important and serves the interests of a given corporation better: dealing with international issues (like global poverty or environmental pollution) or with the needs of the local community where the corporation is established and which are perhaps less urgent and have lower PR-value? Global activity is important and has many PR-advantages but the corporation should not neglect its direct social environment either. The aim is to find a healthy balance between both roles – as argued in the fifth part of the paper. In the sixth part we try to make clear the possible role of politics in corporate social responsibility – why is it worthwhile for the government to support the voluntary involvement of business. In the seventh and final part we give the broad outlines of a successful CSR-strategy.

Attempt at a definition

If the number (in our case perhaps the endless number) of definitions signifies the wide- spread nature of a given concept then we can regard corporate social responsibility as a real wide-spread phenomenon. Concepts with approximately the same content have lots of different names, whereas the same name can apply to different contents. Our aim is more modest: among the fashionable definitions and conceptual frameworks we should like to give a brief sketch of two that both serve as appropriate starting points. Concerning both definitions we also formulate the criteria that we believe the definition should meet, as well as those that we consider as superfluous or misleading.

According to the definition given by Jeremy Moon (the internationally acclaimed researcher of corporate social responsibility), business social responsibility – as he calls it – is “any voluntary financial, productive or service contribution supporting communal or government aims. This does not include activities directly connected to the productive or commercial activity of a given corporation. Activities that are obligatory on the basis of legal or governmental regulation are not included either.” (Moon, 2002) Moon’s definition has two important features.

First, he stresses the voluntary nature of corporate social responsibility. This is essential, for we believe there is no sense of giving a lengthy analysis of an activity that could only be avoided at the price of illegal behavior or offence by the corporation; these must be simply fulfilled just like tax-paying or adhering to labour-security rules.

Moon also stresses the formulation of community goals. Corporate social responsibility should be useful for the given community and must serve its interests. We do not agree, however, with his statement that the measures undertaken in order to shape the operation of someone’s own corporation must automatically be excluded from social responsibility. Business activity affects the relations of the corporation to society on several levels and if a corporation tries to shape its business activity with the aim of attaining the best possible impact on the environment within the framework of its CSR-strategy, then this can remain a part of social responsibility.

On the basis of what has been said so far we can formulate the following criteria as necessary elements of a definition: 1. The activity should have a positive social impact; 2. It should be a voluntary activity that is not simply a question of complying with requirements established and made compulsory by state organs; 3. It does not exclude issues within the corporation itself provided they clearly represent social values.

Moreover, corporate social responsibility should exceed simple charity that lacks any strategic consideration. A crucial element of responsibility lies in corporate managers thinking through the social position, goals and social impacts of the corporation and trying to formulate a strategic approach concerning the social role of the firm by taking these factors into consideration. Social responsibility is most efficient if the corporation is actually keen on making clear the interactions of the corporation with society and is trying to integrate these experiences into its operation. In this respect the definition of the Institute of seems to be appropriate. IBE holds that social responsibility “is the voluntary activity of the corporation, with the goal of reacting to the moral, social and environmental effects of its business activity as well as meeting the interests of the main actors involved in the corporation”.

Reality, including European practice outlined in the next chapters is far more complex and such a definition cannot apply to all existing forms of corporate social responsibility. Formulating the above criteria is nevertheless an important part of the presentation of this activity since by these means the reader may gain a glimpse into the dilemmas that should be taken into consideration by any corporation in drawing up its CSR-strategy and any government in defining the frameworks that regulate corporate social responsibility.

The customer as social actor and the corporation as a social force

In the middle of the ’90s Shell decided to withdraw an outdated oil-rig in the North Sea, Brent Spar by trailing it to the middle of the Atlantic then sinking it. Among the reasons to do so was the following: sinking the rig requires significantly less material and human resources than transporting and destroying it on the mainland. Yet what seemed to be a reasonable decision from the point of view of the oil-corporation literally shocked the environmentalists. The ordinary citizen – they argued – would be rightly punished if he/she polluted the sea, whereas the multinational corporation may “throw” enormous quantities of chemical garbage into the sea with state permission. started a massive anti-Shell campaign, as they were particularly afraid that permission to sink Brent Spar would establish a precedent and foreshadow the general form for destroying oil- rigs. The protest included the boycott of all Shell-products as long as the multinational oil company was not willing to transport Brent Spar to the mainland. The Greenpeace-campaign proved to be extremely successful, especially in Western-Europe; Shell was forced to surrender: Brent Spar was transported to the mainland and it was cleansed and disassembled according to environmental protection rules.

Boycott as a form of consumer behavior is not new. In the 18th century American settlers initiated concrete revolutionary activity by an organized boycott of tea imported from England (this was the famous Boston Tea Party). In England, Congolean sugar was boycotted in the 19th century as a demonstration against the brutal politics of Belgian colonialists. Therefore the idea of the customer as a moral actor and ethical consumption was not born with the destruction of Brent Spar. Nevertheless the boycott against Shell signified a new phenomenon in many respects. Civil society organized itself at a far greater speed and on a much wider scale which is why the effects of the boycott were experienced much earlier. While the organization of the sugar-boycott against Belgium took several years at that time, Greenpeace now can mobilize broad masses world-wide within a couple of months.

The increased efficiency of civil reaction to real or presumed corporate transgressions has been due to a dual process. The first is relatively simple: the coordination of international civil society has become easier since far more developed communication technologies are available. The second reason: citizens of the Western world have acquired unprecedented material security in recent decades due to rapid economic development and the increased level of prosperity. The struggle for everyday means of subsistence has practically ceased to exist for the majority of citizens, which is why the supply of material goods as a central issue has been increasingly replaced by problems of life quality, sustainable development and ethics. This process has been described in social science papers as the spread of post-materialist values. In this process many new phenomena, e.g. environmental protection, the enforcement of human rights, the development of the third world, etc. have become parts of public discourse as well as of politics and the civil sphere.

One of the crucial points of the critiques on globalization is the fact that constantly strengthening multinational corporations are confronted with constantly weakening governments and defenseless citizens. The situation is, however, by no means that simple, as the Brent Spar case shows. Western societies are populated by increasingly informed citizens who have recognized that consumption is not only a question of buying certain products and services, but also an ethical choice. While the choice of consumers used to be determined by the price and quality of a product, the situation has changed recently: many consumers have recognized that by choosing a particular product, they also giving their judgment on the social role of the given corporation. If the activity of the corporation does not fit the given citizen’s ethical views, he/she can send a message through the appropriate consumer behavior: even if the product is cheap or better quality, until the irresponsible behavior of the company changes, the consumer will choose a different product. And vice versa: if the corporation has laid special emphasis on the positive social impacts of its activity then it can be rewarded by increased consumer sales.

Corporations have long become aware of the fact that many customers buy not only products but also images. Nowadays most advertisements do not only praise the “everything used to be dirty but no longer” quality of a detergent or a chocolate “made of the best milk but containing a minimal amount of calories”. The fact that the product has been bought by fellow-consumers belonging to such and such a social strata and with such and such life-styles is also an integral part of the message. Products also have borrowed identities: what I buy is what I am. Buying is not only a material act for the post-modern customer; it is also an expression of one’s personality. If one wonders how any product can be advertised by laid- back young people without showing the product itself on the screen, there is an easy answer: the product is an image as well and this is far more adequately symbolized by the qualities of laid-back lifestyle, cleverness, skillfulness, beauty, care, love etc. than by the physical reality of the product.

The customer consumes not only the product itself but its image as well and identifies with it. From here it is just a short step to drawing the inference that the image of the firm is an integral part of the product that has been consumed. It is the corporation itself rather than any concrete product that the aforementioned associations belong to in most cases. Most images “purchased” by these means have no positive social returns whatsoever. The process in the course of which a customer who intends to express his/her personality through consumption pays more attention to the producer’s responsible attitude towards society is also part of this phenomenon – to the extent that this kind of attention is an integral part of the consumer’s personality. As the consumer who identifies him/herself with the laid-back lifestyle of “Mentos” does not exclusively focus on the essence of the product (by choosing this product instead of another owing to its image), so anybody who considers social responsibility as important pays a lot of attention to those products whose producers best meet his/her ethical expectations. The difference is perhaps that those people who choose products on the basis of social responsibility criteria seem to be more conscious in their choices of certain products and in avoiding others.

Fundamental social changes have made corporate social responsibility surpass mere “voluntary charity”: the principal issue is increasingly adaptation to changed social roles. There is no strict division among the different spheres of society (business, civil and state). On the individual level citizens do not separate their consumer, employee and citizen self, and in many instances they extend the responsibilities implied by the latter to their behavior concerning the former. We do not argue that this is a completely new process and that citizens used to treat the above roles separately in all respects. This is of course not true although there is no space here for a detailed analysis. We claim that in some areas, e.g. purchasing – citizens have become more self-aware concerning their social responsibility.

Different social roles become blurred on the individual level which is why citizens are not willing to accept that corporations should have exclusively business interests. If citizens are willing to make sacrifices for e.g. the protection of the environment, the third world or human rights then it is quite legitimate to claim that corporations should not be exempted from doing the same. In a society where customers do not make any difference between their consumer and citizen self, corporations that draw a strict dividing line between citizen’s responsibility and business activity tend to lose their relations with the consumer. Relations that have been based on a combination of price-quality and advertisement so far are increasingly being supplemented by social responsibility. This is why the point is not whether a firm is capable of “charity” in the long run but whether it can adapt to changes in corporate social roles (Murray, 2003).

The Friedman axiom mentioned earlier, according to which the exclusive moral responsibility of a corporation is to make profits for the owners, has been overwritten. Friedman and the theoreticians of corporate social responsibility used to interpret CSR as a voluntary activity carried out on the basis of rules set by the government. In their outlook social responsibility was completely separated from the fundamental task of the corporation, i.e. business activity and profit-making. Potential PR-advantages flowing from social responsibility were of course quite clear from the outset but it was only later that the recognition of a possible close connection between changing consumer attitudes and business activity and social responsibility got the upper hand.

For corporations the importance of responsible behavior and conveying the appropriate image can bring more than direct advantages. This is well illustrated by the Brent Spar campaign. According to several experts sinking the rig would have been a better solution not only from a business but also even from an environmental point of view. As they argued there was much less oil in the derrick than Greenpeace assumed (later the organization, too, admitted this) and this implied less danger in case of sinking the rig. Fast bio-regeneration, according to this view was safe in deep waters and they also drew attention to the fact that transporting the rig with the oil into the mainland would have caused a lot more harm in the sensitive biosphere of the coastland. It was also legitimate to argue that the costs of transporting to the mainland and dismantling of the rig (which were about twice as high as for sinking it) could have been spent on more efficient environmental projects.

Without trying to do late justice in such a complicated matter let us assume for a moment that Shell was right. In this case the decision that was made under direct pressure of the public proved to be a bad solution for both the corporation and society. But as soon as Greenpeace publicly attacked Shell this fact lost all significance whatsoever. In the public eye Shell is almost automatically guilty since the British firm is – as opposed to Greenpeace struggling for the protection of the environment – a multinational corporation whose exclusive goal is making profits and which is not famous for its socially responsible attitudes. In this case reputation meant a lot and if eventually Shell proved to be right the mistake (or extreme opinion) of Greenpeace would have damaged its hitherto positive reputation. And this was independent of the fact of who was right in this particular case – there are situations where corporate interests do harmonize with the interests of the larger society although some NGO-s (by mistake or owing to their different interests) are reluctant to admit this. The German journalist, Dirk Maxeiner gave the following analysis of the Brent Spar case:

“The good news is that multinational corporations are less powerful then we may think – at least when they are directly confronted with the consumer. The other lesson, however, is less favorable. We have learnt that speaking out the truth doesn’t help much unless you are reliable or trusted. This is why debates among corporations, NGO-s and politics are frequently not about truth or the facts but about reliability. The problem is sometimes exactly this.” (Maxeiner, 2003) Maxeiner as a keen critic of Greenpeace is primarily worried about the manipulation carried out by NGO-s. But the reverse approach is also true: if multinational corporations were not only concerned with profit-making but took responsibility for the larger society as well this would increase their reliability and they would enjoy greater public trust. E.g. if in the United States the icon of social responsibility, the ice cream-producer Ben & Jerry had got into a similar situation the public would certainly have paid more attention to the arguments of the corporation and any boycott would certainly have failed.

Boycotting is an extreme example but similar situations – when political decision-makers need to maneuver among the needs of corporations, the opinions of NGO-s and the interests of the larger society – are everyday practice. Decision-makers should pay attention to both the opinions of both NGOs and voters since the latter decide on their future fate in office and the former frequently influence the latter. In such a situation the point is not only the conformity of corporate interests to the interests of the larger society but also whether voters are willing to believe it. Serving the interests of an irresponsible corporation may easily bring accusations of corruption or a lack of principles.

In order to ensure adequate social dialogue on significant matters and controversial issues, all important social actors need to be credible. Part of this naturally is being able to assume that each such actor takes both his/her own interests and the interests of the larger community into consideration. Corporations have enormous power which is why they can influence their larger environment – and not only their economic surroundings. Their activities have numerous (both positive and negative) impacts on larger society and they usually have a far greater influence then each citizen. This is why it is a legitimate expectation that their activities be judged not only by their successful business but also on the basis of their willingness to take responsibility for the larger community.

If a corporation follows an appropriate CSR-strategy this could help both its internal operation (employees) and external environment (local communities, civil society and the government). The next parts of this chapter deal with both the potential advantages and risks or dilemmas of corporate social responsibility.

Corporate and employee interests

Lots of studies have dealt recently with the question of whether social responsibility could increase the income of a corporation. Some studies have answered in the affirmative, whilst others have argued that the impact of CSR to corporate profits was negative or indifferent. It has not been clarified so far whether resources invested into corporate social responsibility would be profitable in the short or long term (Murray, 2003). For the time being clear results cannot be expected since – as was made clear in the preceding chapter – several advantages of social responsibility cannot be quantitatively determined. Still, what advantages can a corporation expect from CSR? Speaking of “advantages” we think of conventional corporate profits, i.e. we interpret corporate social responsibility as a process that – though not immediately – may promote the attainment of the fundamental goal of the corporation, profit- maximalization in the long run. This is not to say that this is the direct aim or fundamental advantage of responsible social action. In agreement with the introduction of the present chapter, however, analyzing the corporation’s interest in social responsibility we are dealing with this kind of advantage. First we could mention PR-advantages. In a world abounding in advertisements it is increasingly difficult to sell goods of similar qualities and prices. The impact of ads may remain the same but as the ordinary citizen is confronted with an increased quantity of them their relative efficiency is decreasing, i.e. they must be continuously refreshed to attain the predetermined goal. The average consumer develops a more critical attitude toward products purchased and pays more attention to the possible dangers implied in their consumption in terms of health or to negative social consequences implied in their production process. Under these circumstances literally everything that positively differentiates the product for the consumer may bring advantages to the producer. The reverse is also true: everything that brings about negative associations in the customer’s mind may decrease the chances of sales.

On the other hand those corporations whose activities have been emphatically based on the image of responsibility (as for instance Ben & Jerry mentioned earlier, the producer of the British Body Shop cosmetics or the Co-operative Bank) assemble a critical mass of loyal consumers that can bring serious advantages amid acute market competition (Bevan et al., 2004). Moreover, their customers are usually both more educated, well-to-do and less price- sensitive. It is of course impossible that all firms should base their image on responsible operation; the more corporations take social responsibility seriously, the lesser the advantage flowing from this will be. Moreover, the more wide-spread corporate social responsibility becomes, the more difficult (slower and more expensive) the adaptation of late-comer corporations to customers’ expectations will be.

Another essential advantage of corporate social responsibility manifests itself in the workplace environment. The image of the corporation contributes a lot to satisfaction in the workplace: the community evaluation of the workplace necessarily affects the mood and psychological state of employees. The positive community image of the corporation improves the public feeling of its employees. Positive image has several concrete advantages: satisfied employees are less willing to change jobs and are more loyal and efficient in their work. This implies less fluctuation, more accumulated knowledge and experience and smaller expenses for training new workforce. Satisfied employees work more, harder, and more efficiently thereby increasing the effectiveness of the given firm (Murray, 2003; Bevan et al., 2004). This can be manifested in the length of working hours, in the formation of a pleasant workplace atmosphere, the services made available to the employees, and in internal training possibilities etc.

The interests of employers and employees coincide in training: by the acquisition of competitive knowledge the employee will be capable of better work and of having better career possibilities. The employee is also interested in the positive image of his/her corporation in the local community. A negative external evaluation of the firm makes working conditions worse in psychological terms and this inevitably has an impact on work morale. On the contrary one can be proud of a corporation that is trying to continuously improve the opportunities of local life and to play a positive role in the community. Again, this could enhance workplace motivation.

Global or local strategies?

One of the dilemmas of corporate social responsibility is whether the “good deeds” of the corporation should be expressed on a global or local level. The source of this dilemma could lie in the nature of the given corporation. Thinking in real local terms is quite alien from global corporations since they are most aware of the fact that all decisions and impacts are both global and local. The two concepts can rarely be separated; and for genuinely global firms such a separation would be quite inappropriate or senseless in terms of responsibility.

What are the relevant differences that would make a corporation decide how much and what to spend on, and what lies closer to its corporate interests? As mentioned earlier the goal of voluntary corporate social responsibility is to compensate for negative impacts generated by its operation on one hand, and overall social activity on the other. The kind of corporate social responsibility that would tolerate sharp differences among its several levels (e.g. actively promoting social goals while creating intolerable working conditions for the staff) won’t hold in the long run. The same applies to the difference between global and local levels. If a corporation is spending a lot of energy on international environmental projects but conspicuously fails to protect its immediate surroundings, then it can hardly be characterized by efficient corporate social responsibility. Sooner or later the contradiction between the different levels of corporate behavior will come into view, neutralizing the positive effects of social responsibility. In order to preserve the image of responsibility the balance should be maintained between the different levels of the corporation.

International social responsibility is frequently more spectacular (i.e. a better PR tool) but local involvement also has several advantages. Improving the life quality of the local community strengthens the immediate surroundings of the corporation as well which has a favorable business impact. There are many ways by which corporations can improve community life (e.g. promoting local education, child care, health, infrastructure etc.); there are no general rules as to which kind of social investments are most useful for the community. Needs are different for each community and the possibilities of corporations are also individual. All well thought out and consistently applied CSR-programs can be successful: investing in the surrounding community, the corporation can initiate (or reinforce) several social processes that will improve its position in the long run. For example, successful social investments will result in improved public security, a more livable community, decreasing emigration, and the movement of a trained workforce to that location – all these developments favor business as well.

Involvement in the local community may prove especially important in third world countries. In many instances multinational corporations operate here in a practically regulation-free environment: the central government pays no attention to regulating businesses, is not interested in the economic circumstances of investing firms or has no means to influence them. In a situation like this multinational corporations operate in an ethical – and frequently legal – vacuum, defining the rules themselves. Corporations are actually drawn to the developing countries – among other advantages – by the frequent overregulation they experience at home. Under such circumstances corporations have no state-enforced social responsibilities but taxation and it is their own decision whether they respect and if so to what extend community interests.

An effective standard of responsible corporate behavior is how the given firm behaves in a non-regulated environment. Respect for the fundamental rights of employees (e.g. avoiding lengthy working hours and , security in the workplace etc.), avoidance of pollution and taking local residents’ needs into consideration – all require responsible decisions that are unlikely to make the break-even point in terms of mere profitability. By creating a better workplace atmosphere in the local community and building up a positive image in the demand market of products even responsible behavior may result in positive returns. This is especially true if the corporation – by measures leading to an improvement of life-quality – is trying to improve the conditions of the local community by surpassing the general rules of decency. From the point of view of a multinational corporation even relatively small expenditure may result in a considerable improvement in the life of a local community of a developing country and these investments will certainly bring adequate returns since the aforementioned advantages (concerning local responsibility) bring accumulated returns in this case.

Finally we should stress that the community-promoting activity of corporations create mutually favorable relations between the leadership of the local self-government and the corporation. Many decisions influencing the business processes of the corporation are made on local level. In these cases the self-government’s favorable judgment of corporate activity helps a great deal. To maintain good relations with the corporation is of course useful for the self-government as well, since its investments and business decisions may have a significant impact on community life.

Regulation or voluntary consent: corporate responsibility and government

However new the expression of corporate social responsibility, CSR, itself may be, the extra- economical responsibility of the business sphere should not be a novelty from a factual point of view. The state has long realized that corporate operation had a significant social impact beyond business activity; this is why governments have long forced corporations to reduce or compensate for potentially negative impacts of their activity. Modern corporations and the modern state were born in interaction: the unprecedented stock of state instruments – from the social network to the modern army – has been due to the economic successes of corporations, whereas corporate successes have been guaranteed by the legal security ensured by the state. In spite of joint successes the state has realized that the free operation of corporations does not always harmonize with community values, the protection of which was an important obligation of states in the Western society on its way to democracy. A considerable part of state regulations has therefore been directed to the operations of corporations: e.g. the prohibition of child labour when corporations tried to employ children owing to the cheapness of this kind of workforce; forcing corporations to take work security measures; and making corporations pay for or repair environmental damages. Of course the state was not always there when it should have been. On rare occasions it was not needed either for corporate managers themselves made their way in the right direction expected by society (or their sense of justice). The point is that the state has permanently played an important regulatory role in compensating for the negative impacts of economic functioning.

The formation of the welfare state has been accompanied by the proliferation of bureaucracy. The number of issues that the state tried to solve by legislation or regulations increased and the economic price has often been left out of consideration. The reverse is true nowadays: in the debate concerning the treatment of our permanent European economic crisis we keep listening to the argument about the overwhelming role of the state and over-taxation. Moreover – as the statement goes – business is prevented from being flexible enough to cope with dynamically expanding Asian and North-American economies.

The need for corporate responsibility hasn’t diminished either. A significant part of accumulated social capital is operated by corporations, the responsibility of loading and protecting employees still rests upon them and they continue to play a large role in creating pollution. The dilemma of governments is the following: to promote the exploitation of these resources for community goals – apart from taxation and the unavoidable regulation – without harming the healthy operation of the economy.

It is far from offering a perfect solution, but corporate social responsibility with its innovative approach and efficiency may help in solving this dilemma. The present level of regulation is a kind of common denominator that to a given degree validates community interests, and sees to it that more sensitive corporations do not become bankrupt or forced to give up their activities. A higher level of regulation would harm another community interest, i.e. healthy economic development.

Corporations are differently sensitive to regulation and its consequence: obligatory social involvement. Some could endure greater “burdens” owing to more profitable operation, better structure or management and could devote more energy and resources to social involvement. Social responsibility is capable of utilizing this capacity if the given corporation volunteers to regroup one part of its resources to socially responsible activities.

Another reason for the differences in endurance is that the capacities of corporations also differ concerning various fields of involvement. Whereas some corporations are capable of greater achievements in environmental protection, others are more inclined to develop local communities. This is why regulation can also affect firms differently: while one form of regulation may almost bring those especially affected to the floor, others may find it quite easy to adapt to the regulations. Voluntary social responsibility makes it possible for corporations to become especially active in fields that are most compatible with their profiles. Naturally by these means regulation doesn’t become superfluous, and corporations are not entitled to choose entirely at will the form of social responsibility they take, although the principle of comparative advantages can be applied to the field of social responsibility as well.

The state plays the role of establishing the unavoidable extent and means of regulation, encouraging voluntary involvement beyond this extent and securing a structured framework for corporate social responsibility (Murray, 2003). Encouragement can take various forms; there are several examples in the chapters of the full version dealing with international practice. The regulatory system for social responsibility is also part of the structured framework formulating fundamental requirements without detracting from their voluntary nature. From a state point of view it is an advantage of social responsibility that the innovative socio-political approaches offered by the voluntary activity of corporations can be such that would have never occurred to politicians and experts of the central administration. If the formation of social policy is no longer the privilege of ministry planners, and corporations also devote their creative energies to this field, the chances of innovation will certainly increase. Decentralization and greater social autonomy often encourage innovation and due to corporate social responsibility this attitude can also prevail in social policy.

One could easily imagine that certain activities that have now been integrated into the framework of voluntary corporate social responsibility will eventually belong to the circle of fundamental state-prescribed activities. The concept of CSR in the modern sense is based on the principle of voluntariness, but voluntary corporate responsibility will repeatedly raise the question: would it not be better to make all these activities and results compulsory through regulation. Successful CSR-innovations, the concrete examples of fruitful social responsibility, will urge governments to at least consider whether it is not worth extending fruitful projects to all corporations in the interests of the community. Corporations are afraid of such consequences and they regard the increased need for state regulation as the greatest risk of social responsibility (Murray, 2003). Just as is the case with social responsibility in general, corporate social responsibility will presumably also remain a source of tensions between government and business.

It is quite improbable, however, that leaders of national economies operating in a competitive international environment would move in an extreme direction in this respect. A detailed, elaborate and tested system of requirements would entail serious economic advantages. The regulatory system of the welfare state drawn up in its most expansive period has been reduced recently, whereas the scope of action of corporations has characteristically been expanding. Their burden has diminished. CSR means in part the “privatization” of social responsibility which coincides with the process by which various social actors (e.g. individuals, local and regional self-governments, NGO-s) enjoy increasing autonomy in the shaping of community life.

One cannot of course exclude the possibility that the balance will shift again towards greater state involvement but the reason will certainly not be successful corporate social responsibility. A shrinking state will incite feelings of insecurity and helplessness and may encourage direct political involvement – usually bringing grist to the mill of populist parties. This can to some extent be compensated for by successful corporate responsibility provided the services it offers were not introduced following the rigid regulation of the central state but by innovative and flexible means and methods. One of the fundamental conditions of the shrinking state and the increasing autonomy of social actors is that the responsibilities of the state could be taken over by various social actors in a regulation-free environment. In corporate social responsibility this process should be recognized by the given actors, primarily by the state and the business sphere.

Corporate social responsibility makes it possible for the state to solve a part of its socio- political ambitions with the help of the voluntary involvement of the corporations without putting extreme burdens on the economy. It is worthwhile for both parties to make use of this possibility.

What kind of responsibility? Theoretical principles of CSR-strategies

One of the problems of corporate social responsibility is that this competitive institution strives to achieve good results in a field whose way of thinking, goals and methods are in many respects alien to corporate operation. Though improving social conditions can be a side- effect of successful corporate functioning, in the majority of cases it doesn’t belong to its fundamental goals. In practicing corporate social responsibility one should reflect on an unusual problem-complex in an irregular way within the corporation.

This doesn’t mean however that one should completely depart from “corporate mentality”. It is in some respects an advantage of CSR that it introduces a new, corporate outlook to social policy. The achievement-based approach of the competitive sphere can bring about positive effects in carrying through socio-political aims. The first issue to decide concerns the fields in which the corporation can and is willing to initiate projects. One of the evident possibilities for the corporation is compensating the harmful – or potentially harmful – effects of its own operation or product through CSR programs. A fast food chain could organize lectures on the potential damages of extreme hamburger-consumption of health and promote programs to treat eating disturbances. An oil-producing company can somewhat compensate for the pollution caused by its product by promoting environmental projects. Another possibility is for the corporation to react to issues that are quite independent from its activity by social responsibility. There are endless possibilities in this field: promoting international development programs or elaborating domestic educational and training programs – just to mention a few.

It is essential for the corporation to weigh the actual need for the scheduled program and to think through the kind of problems it can deal efficiently with given the resources devoted to this aim. One has to elaborate clear objectives and although the expected results need not be given in concrete terms the desired effects should at least be specified. The goal of harmonizing the resources and the project is efficacy. The firm expects a maximum return from material investments and efforts. Corporations must not give up these ambitions even in case of planning and implementing CSR-programs. An important watershed between real social responsibility and pure image-improving measures lies in the corporation’s serious insistence on positive results. As mentioned above some aspects of business mentality should be extended to CSR-projects as well; the most important is probably success-orientation. For socially oriented projects exact calculation is frequently more difficult than for corporate activities (sometimes it is simply meaningless). Corporate CSR-reports – as has been emphasized in the full version – frequently disclose only masses of data on insignificant or hardly significant developments instead of offering qualitative accounts on relevant projects.

In order to be credible, corporate social responsibility should offer more than mere surface treatment. Of course one should not expect of an oil-company that it single-handedly reverse the greenhouse effect; moreover we should insist on a state (or multi-state) solution for major global and national problems. This of course doesn’t mean that any oil-company would really assume its social responsibility by merely planting two trees. One of the goals of social responsibility is to make corporate involvement in social values and aims credible and to make the corporation a trustworthy social partner in debates on public interest. Although credible social responsibility has no specific level, attentive consumers, it can be assumed that in the long term NGO-s and politicians will be able to differentiate between corporations that are really trying to bring about positive changes and those whose merely formal activity serves only image-making. Moreover, if the image of corporate social responsibility secures real and significant advantages then competition between corporations makes it difficult to continue false practices.

In forming their strategy, planners should see to it that corporate social responsibility is adapted to some extent to the preferences of those who make use of the products or services. The scope of socially valuable CSR-projects is practically endless and by devoting energy to a project the corporation should not be ashamed of trying to appeal to its customers (or future customers) as well. Leaving the expected impact on customers out of consideration is harmful rather than favorable in terms of social responsibility – in the long run it reinforces the skeptical idea that business interests are incompatible with social involvement. On the other hand positive consumer judgment promotes business achievement and can bring about greater and/or more enduring social responsibility.

In forming its CSR-strategy the corporation should be aware of the profiles and expectations of its consumers: what do they pay attention to, what are their value preferences and what kind of activity are they indifferent to. The CSR-budget of a toy-company is probably not worth spending on pensioners’ programs; a better solution would be assisting poor families since parents can better identify with the problems of the latter and perceive and value help more. The outcome of such a differentiated approach is of course never the establishment of generally valid rules. In the example mentioned earlier it is enough to consider that a large number of toys are sold to grandparents who of course would appreciate the attention paid to their age-group. In spite of this if CSR-strategies are formed on the basis of targeted and relevant surveys, then they can have the best possible PR-effect.

CSR strategy must also pay attention to the fact that it should harmonize with the business goals of the corporation and should not deprive business activity of too many resources. Although there is no longer general acceptance of Friedman’s statement that the exclusive concern of corporations should be profit-making, there is a wide-spread agreement that profits should remain the main motives of corporate operation. This doesn’t mean, however, that some firms have not subordinated profit-making to social involvement; whilst others try to create a complete balance between their business and community interests. Such institutions, however, have difficulties operating in the market and some can only survive by state subsidies or by being classified as nonprofit companies. The rest rely on a narrow – but mostly loyal – stratum of customers or offers some special product that has no competitor. The principles underlying the operation of such firms would be difficult to generalize within a market economy. Such companies could only become competitive in general terms if consumers were willing to renounce a significant part of the purchasing power of their income on behalf of more expensive but “socially responsible” products. As long as this is not the case social responsibility will play a secondary role among the objectives of any corporation.

In the present situation profit-making should go alongside social responsibility and it is a fundamental right of corporations that, while observing state regulations, they nevertheless focus on profit-making. CSR programs should serve both purposes and they can be successful if the corporation can adapt its business interests to its social involvement.

Social responsibility of the business sphere in Hungary

We hope the full version of our text will give an adequately sophisticated picture of the concept of corporate social responsibility born in the (characteristically Anglo-Saxon) world of developed democracies and market economies. When speaking of the possibilities of the social responsibility of the business sphere in Hungary it would evidently be wrong to take American and British relations as starting points. It would, however, be just as great a mistake to dismiss such a possibility on the basis that a higher social and economic level is required first, with no lessons to be drawn for our government and business spheres.

Drawing the conclusions for Hungary, one should not forget that corporate social responsibility has evolved and spread to a large extent under the pressure of consumers in Western Europe. In developed consumer societies costumers are forcing business actors to reduce or compensate for negative effects of direct economic activity, through the need of identifying with the product. Similar pressures cannot be expected in our region or in our country which is why both the media encouraging corporations to undertake real responsibility for its outstanding PR-value and the state creating legal frameworks and an inciting environment will probably play far more significant roles.

As in the other Eastern-European countries, in Hungary too the practice of corporate social responsibility has only a short past. Since the European Parliament and the Council of Europe have adopted the 2003/51/EK directive and the Hungarian Parliament made the respective legal harmonization step a mistaken view has prevailed in Hungarian public life according to which the directive (and consequently the new Accountancy Act enacted on January 1, 2005) laid a reporting duty on all companies. The analysis of the directive and the Accountancy Act however, clearly shows that this is not true. On the other hand companies will be entitled to give an account beyond legal prescriptions of those indicators referred to in the present accountancy law within a couple of years. The next few years will be crucial in deciding whether corporate social responsibility could be successfully formed to both a needed and demanded authentic tool. The first years will probably be those of adaptation and learning.

Looking over the reports of firms operating in Hungary – sustainability or CSR-reports, social accounts or corporate citizenship reports – we get a complex picture. Whereas some corporations give a detailed, illustrated report with pictures and diagrams, others publish more modest and laconic reports or simply fail to make any accounts on their social activities. The economic, social and environmental (the so-called ) approach is quite wide- spread among the reporting corporations but the social responsibility chapter is characteristically underemphasized. As a separate problem we should mention the fact that blurring social responsibility and corporate charity is still too frequent, moreover the presentation of human resources (and most importantly that of the principles concerning equal opportunities) is quite incomplete or entirely missing from the reports.

There are about 35 corporations in Hungary that have prepared (at least once in the preceding five years) environmental and/or sustainability (including CSR) reports. This list makes no claims of completeness: Alcoa-Köfém Kft., Arcadom Építőipari Rt., Atel Csepeli Vállalatcsoport, Audi Hungária Motor Kft., BorsodChem Rt., British American Tobacco Hungary, Budapesti Erőmű Rt., DENSO Gyártó Magyarország Kft., Dél-Dunántúli Gázszolgáltató Rt., Diósgyôri Papírgyár Rt., Dreher Sörgyárak Rt., Dunapack Papír és Csomagolóanyag Rt., ÉMV Észak-Magyarországi Vegyiművek Kft., Fiat – GM Powertrain, Flextronics International Kft., Gördülő-Simmering Kft., IBM Storage Products Kft., Legrand Kontavill Rt., Magyar Olaj- és Gázipari Rt., Magyar Posta Rt., Magyar Telecom Csoport (korábban Matáv Rt.), Magyar Villamos Mûvek Rt., NABI Autóbuszipari Rt., Opel Magyarország Autóipari Kft., Paksi Atomerőmű Rt., Pannonplast Műanyagipari Rt., Pannunion Csomagolóanyag Kft., Phoenix-Rubber Gumiipari Kft., Richter Gedeon Rt., Sanofi-Synthelabo Chinoin Rt., Tetra Pak Rt., Tiszai Vegyi Kombinát Rt., Zwack Csoport – Budapesti Likôripari Kft. etc. It is worth special emphasis that the first sustainability report was made in 2002 by Budapest Erőmű Rt.

On the basis of the available reports it is difficult to draw conclusions concerning the social responsibility of Hungarian corporations. It is not only that we have little information about the social responsibility of non-reporting corporations (and leaving these corporations out of consideration would give a distorted image of the domestic practice of social responsibility), but in many cases even the published reports fail to give a successful presentation of the “corporate philosophy” underlying CSR-projects put into practice.

The majority of the reports can be credited with a detailed analysis of the corporate relations with the involved groups. A frequent deficiency is, however, that this relationship has not been evaluated by a problem-centered approach. One cannot follow the process that brought about the targeted social responsibility of the corporation that was focused on the solution of an identified problem. To put it differently: the reader frequently finds it difficult to contribute the surveys and results listed in the reports to the conscious corporate effort aiming at correcting an existing deficiency and not to the pressure of “always better and more beautiful” (conformity constraint).

We believe it would be more expedient to present in a more structured way corporate social responsibility in the reports, putting greater emphasis on the problem identified by the corporation and the proposition to solve it. In this field, too, less would be more: it would be better if corporations would get involved in only some outstanding fields and then consistently carry through their relevant CSR-ideas (e.g. concerning the ageing workforce, the permanently unemployed or the employment of persons with disabilities).

Another frequent problem is that putting social responsibility into practice by shaping partnership relations is quite rare by corporations although they are not expected to solve the emerging and identified problems alone. Stressing government encouragement in this field would be very useful since quite a lot EU-funded projects are to be implemented (e.g. concerning employments policies) that would help corporations to make their social responsibility more targeted.

It was especially characteristic of the reporting on community activities that they have failed to present the points of connection that would make corporation programs socially responsible by separating them from charities. They have also failed to describe the problem- identification processes that would be qualified to present the corporation as making conscious partnerships with a community actor (NGO, self-government or sport club) in order to solve some existing and identified problem. In many instances the formation of partnerships is not even mentioned in CSR-reports, although presenting potential partners would by itself make their socially responsible intentions authentic. All this would again shift the community activity of the corporation towards charity.

Another characteristic deficiency is a lack of long-term thinking. Although the ageing society or equal opportunities issues are well-known challenges in Hungary as well, the corporation reports characteristically do not present their relevant and existing data from this perspective. The wider society doesn’t of course expect individual corporations to offer solutions to these problems, but corporations should be interested in demonstrating their relevant efforts and stressing their involvement in the efforts of society. In presenting corporate reports it would also expedient to clarify corporation efforts from the perspective of an existing problem of broad social relevance.

To sum up: a comprehensive view on social responsibility activities of corporations has been characteristically offered by reports that include the most important economic, environmental and social indicators prepared by GRI for international standard sustainability accounts. It is of course not necessary for corporations to prepare their reports according to GRI-directives; it is enough that they cover its most important indicators. Those firms, however, that prepare their reports according to GRI-directives (e.g. British American Tobacco Hungary, DENSO Gyártó Magyarország Kft., Magyar Villamos Művek Rt.) generally publish more concise and detailed reports. A frequent problem for corporations is that, lacking social data, they are unable to present their social responsibility several years’ retrospectively, by time-series in a numerical way. This is why CSR-chapters tend to frequently formulate future ideas of the corporation in an abstract, textual way.

It is a crucial question concerning the expansion of corporate social responsibility whether social actors will recognize those forms of involvement that can be – eventually easily – harmonized with business interests.

Table of Contents of the Full Version

Introduction I. Corporate social responsibility – whom is it good for? 1.1. Corporate social responsibility ante portas 1.2. Attempt at a definition 1.3. The customer as social actor and the corporation as social force 1.4. Corporate and employee interests 1.5. Global or local strategies? 1.6. Regulation or volunteering. Corporate responsibility and the government 1.7. What kind of responsibility? – Theoretical foundations to CSR-strategies

II. Corporate Social Responsibility in the European Union II.1. Community policy Main steps in community CSR-policy Corporate social responsibility by small and medium sized companies Main questions of EU-policies II.2. The policies of some European top actors Great-Britain – the prize pupil of corporate social responsibility Belgium Denmark Netherlands France II.3. The main directives of voluntariness Ethical codices Management standards Ethical stock exchange indexes II.4. Case-studies Corporate social responsibility at Barclay’s Corporate social responsibility by British Telecom Some cases of responsible corporate behavior among small and medium sized companies III. Social responsibility in the former Socialist countries Poland Slovakia and the Czech Republic Latvia and Lithuania IV. Corporate social responsibility in Hungary IV.1. The legislative framework Prescriptions based on legal harmonization Hungarian legal initiatives IV.2. Directives and recommendations Institutional incentives – the recommendation of BÉT The stimulating role of chambers and professional organizations Market incentives – OTP Alapkezelő International incentives – UNO Global Agreement Network IV.3. The role of counseling firms and academic workshops IV.4. The reporting practice of Hungarian corporations

Postscript Appendix A historical overview of corporate social responsibility The formation of the concept of corporate social responsibility The silent ’80s The dominance of environmental reports A change of paradigm in the new millennium?

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