Ethical Performance
inside intelligence for responsible business


east European business ‘is still ignoring CSR’

May 2007

Companies in central and eastern Europe have been accused of making little progress on corporate responsibility in the 17 years that have elapsed since the fall of the Berlin Wall.

A study by three church bodies concludes that ‘the whole issue of corporate responsibility is hardly known in the region’, despite the growth of private enterprise, the influence of western European multinationals, and the efforts of bodies such as CSR Europe.

The report, drawn up by two Czech organizations – the Work & Economy Research Network in the European Churches, and the Ecumenical Academy – plus the UK-based Ecumenical Council for Corporate Responsibility, says the region’s post-communist countries ‘have no real social background that would be supportive of corporate social responsibility’. It says most local businesses and investors think little of their social and environmental responsibilities ‘compared with securing viable investment on economic terms’. The publication even suggests that the World Bank and the European Investment Bank, major investors in the area, ‘lack environmental standards in some cases’ and that their ‘openness to stakeholder dialogue or engagement is sometimes limited’.

It adds that there is little pressure for change from the public, the government or civil society, and as a result the responsibility programmes of companies are often limited to sponsorship of public events or philanthropy. There is therefore no significant dialogue or interaction between companies and civil society.

Even companies operating in the region but based in western Europe, where CSR is  much more widespread, seem to forget about their responsibilities when working in central and eastern Europe, the study claims. Many companies that provide CSR training to their managers in the most developed European countries offer no such instruction to their central and eastern European staff.

The three bodies say an effort is needed, probably from governments, ‘to raise public awareness of the issues covered by CSR and of the need and possibilities for engagement’. They argue that governments also need to channel public procurement contracts only to responsible companies and favour them with tax allowances.

However, Geoffrey Mazullo, director of the Warsaw-based Partners for Financial Stability, which promotes governance standards in the region, said one bright spot was the growth of non-financial reporting. ‘There has been a significant change in corporate disclosure on environmental, social and governance issues over the past five years,’ he told EP. ‘A small but growing number of listed companies now publish stand-alone English-language reports, some of which comply with the GRI guidelines. This was not the case several years ago.’

The study says that churches, which generally have significant influence in the region, should play their part by making responsible investments. They should also produce guidance, run training programmes and consider establishing ethical investment banks similar to Triodos or Oikocredit.

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