The institute has awarded 150 companies with a “socially responsible label” when they have followed and implemented the guidelines of their programme.
The CSR guide book, which can be downloaded for free upon registration, has around 120 individual themes, which are the expectations of society to companies. Each company must check if they are affected by each issue or not.
Martine Huberty: Tell us more about what you do.
Norman Fisch: CSR is the contribution by companies to sustainable development. CSR is obviously a very important factor in the image of our country--if we have many responsible companies, we all benefit from that. A company which applies CSR can also manage its reputation. Secondly, a CSR company is more competitive: it has better procedures, better governance, and better relations with its actors. This is the basis of a good economic approach which makes the company fit for the future.
The first component of sustainable development is good governance, the second component is social, how the company handles its human resources, and the third is the environmental impact of the company, how it handles resources and manages waste.
It’s important to note that there is no generic solution for every company, but every company has a specific responsibility, depending on the sector, their activities, their size. A company which produces something is probably more inclined to do more in the environmental aspect, than one where three people sit in front of a computer.
Our mission is to show every company should and must be socially responsible, but first they must understand their own impact and in which areas they must do some work.
You said that CSR increases productivity?
We always think of companies as structures that produce money. In reality a company is there to produce value, not defined as money, but as knowledge. Everything is related to the people that work there, that manage processes, these individual values that people have and how they work together (innovative, collaborative). This intangible package must be built up by the company as stock. The first basis of a company is to bring together the right skills and competencies and get them to collaborate.
The second value is that all the working processes must be organised, and the third value is that the company, through its work, can produce for its clients. This also includes the reputation, or attributes of the product or service, anything that motivates the client to spend money on that product or service. Then we only get to the fourth value, which is money that the company can gain or save if it organises these processes better.
The social component concerns employees. How does this differ from good human resources management?
A good HR policy is not just about paying a salary. An employee wants most of all recognition of his work. A company can give additional benefits.
If you manage to get your employees to be as healthy and motivated in the evening when they leave work as they are in the morning, then you have a labour force which works better together, is more creative and productive. This is especially necessary and true in our service-oriented economy, where the main capital is the people. A company is not the owner of a person if it pays a salary--on the contrary. The capital goes home in the evening.
There is a lot of evidence, not just of increasing productivity, but also of saving money. If you lose one person, you can calculate that you lose a year’s salary. Why? That person won’t leave straight away, but is disengaged for a few months before s/he quits. It can get so far that s/he actively disengages or even tries to sabotage internally. A lot of value and money is lost there. When the person leaves, work flows can be disrupted. A client may not get the products, which has a negative impact on the reputation. Maybe you lose a client or contract. There is a knowledge gap. You must invest money to find a new person, not just work-wise, but you need to pay for the ads and the whole recruitment process. If you have recruited someone, it’s not certain the person is right for the job, you may need to train them for 3 or 5 months before they can work properly. That is the cost point, but the most important thing is knowledge, a person’s competencies, the social capital, relational capital. Building that up again costs money, and in the process you lose money because you could have done other work processes which are more productive for your clients.
Picture credit: Pexels
Burnout and psychosocial risks are becoming more common.
We know companies work under increasing pressure and the work that has to be done has increased exponentially and there are fewer resources. We need to question ourselves if we want to turn that around and reorient ourselves in terms of what the company actually wants to produce and for whom. This includes a good strategy and good governance to see how this work can be generated. If that question is not asked, there can be no correct CSR.
Most of the problems that companies face, be it a high turnover or loss of clients and partners, can be traced back to bad management, and bad management is the result of failing to do the right things at the right time.
Does the CSR try to replace dialogue with trade unions?
We have one subject “social dialogue” in our guide, where we insist that the company should encourage its employees to be in trade unions and get the appropriate resources for the management of the staff delegation. Employees should ideally, like in Germany, be part of the management board, so that they can co-manage companies. That is the ideal situation, it’s not a negative constraint, but it’s a condition that the two important actors for the survival of the company work in the same direction.
Which companies are not concerned?
Every company is concerned, but in different ways, depending on its activities. For a company which cools with water, this resource becomes an important factor to control and manage.
This is not because it’s a new moral demand for companies, but there’s a new way society says “we give you a licence to operate”. It offers better connections with all the stakeholders. A company is an actor that depends on society, it works with society. It needs resources from society, whether it’s staff or clients or investors, which are all people. Companies cannot be parasites and give nothing back.
Modern companies have understood that they can only survive if they create value for themselves and create or maintain value for society. Luxembourg can really build on that, we are strong because our government supports this, and we are happy that the majority of employers take a visionary approach to support this.
Are there any sectors where you have very few downloads for the guide?
We have applications across the board, big and small, from industry, service. But we have a majority of SMEs (80%) in Luxembourg, and most of the companies we awarded the CSR label to were not small companies. But we don’t want to give the label to everyone, we’re happy if a company downloads the guide and worked on that. We then go to the company and show them the 10 essential points for their company.
Horesca is a sector where not many businesses contacted us. I think it’s because there are not many actors: you have the boss and one person who does the accounting and I imagine the staff management falls short.
Picture credit: INDR
Were there any specific deficiencies in certain sectors?
In construction, it’s obvious that health and safety is the biggest concern. Construction companies must demonstrate that their staff are trained to build passive houses.
In the banking sector, I imagine it’s psychosocial risks, and generally the well-being at work is increasingly important.
In the logistics sector, it would be energy consumption, because we can’t continue building our economy on fossil fuels.
Companies must adapt to the latest technologies to prove that they are a responsible actor. Most companies have a negative impact in some area, and they cannot turn it into a positive or get rid of it completely. But they can try to communicate their impacts as transparently as possible, so that they might indirectly get ideas for solutions. That could happen through other partners or actors. The waste of one company could be an input for another company- this is related to the circular economy as well.
For trade and retail, mobility is a big issue. A company can influence how a person behaves on the road. It can provide training on eco-driving, or install zero tolerance of breaking the highway code.
The most common criticism of CSR is that it is only a PR exercise…
Reputation is a very important factor. We say that in CSR any action must benefit the company as well. It’s about doing an analysis of the negative impact and finding solutions in the realm of the possible. If it implemented something and didn’t get anything out of it, neither new competencies nor improve working processes nor benefit the client in some way nor save or gain money, then it’s not a good investment in that specific action. Then it’s better to do something else which benefits some stakeholder and itself. One of the benefits of CSR is indeed reputation management. But to say CSR is just greenwashing is not true. If there are scandals in CSR, it’s because the actions were not correctly implemented.
What are the implications for the labour market?
A CSR person works across departments to identify the issues, and works with almost every department, such as HR, logistics, accounting. This new job has been created, it’s a CSR coordinator, it doesn’t need to be a new permanent job, and sometimes it’s the head or the right hand of the HR director.
ProRSE is the first new association on CSR, and we want to find out how big the sector is in these jobs and associates. Very few companies would actually hire such a coordinator. New competences are needed. We will have external consultants which can implement such policies in a company for some time, and we will have auditors because two new EU directives will come into force, one on public procurement (marché public) which states that for public contracts a company must prove it works responsibly in some way. In order to prove that, it must be verified by auditors, approved by us or someone else. There will be social and environmental auditors. Then there is also the extra-financial reporting for bigger companies which has become compulsory, and companies must hire internally to produce those reports. It is not enough to put your accounts on the table, but you also must show the environmental and social impacts of your company on society. If it does that in a transparent way, it finds out indirectly where its impacts are negative, and the company should then work on those. Companies should be able to neutralise all the negative impacts.
How do you select and control the CSR label?
Our label is awarded for three years. If a company follows all the rules we set up, did an analysis, has set up a strategy and action plan, that there is a coordinator and management behind it, then we consider the company can continue like that. It’s a virtuous circle because it benefits from it. We encourage them to re-invest the money they saved into CSR, which engenders a transformative process.
Many firms got the labels three times in a row, and they have had the same coordinator. A good company works well, it’s tautological.
What are your targets?
This year we hope to get to 200 labels. The main target is to present Luxembourg as one of the main CSR countries by 2020.
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