Corporate social responsibility (CSR) is gaining ground among entrepreneurs in European economies who are increasingly aiming to combine business success with active pro-social and eco-friendly policies.
At this week’s Krynica Economic Forum, a special panel will be held to discuss the importance of CSR in the activities of chosen companies in Poland as well as new development paths for CSR. There will also be a debate about whether CSR is a core aspect of companies’ strategies or simply a fad.
In Poland however, CSR has still not fully caught on yet.
Last in the class
The value of Polish assets invested in adherence to sustainable and responsible investment principles (SRI) stood at E5.2 billion last year, according to the European SRI Study 2012 carried out by Eurosif, an NGO which promotes CSR. That put Poland in last place out of the 14 European countries surveyed.
Meanwhile, the value of funds invested in SRI in Europe amounted to E6.7 trillion.
SRI can involve strategies such as “exclusion” which entails avoiding investing in companies involved in particular business endeavors considered negative by many, such as cigarette and tobacco manufacturing or gambling. Another method is “community investing,” which allows for investment directly into community-based organizations
“The [SRI] report shows that the CSR concept is getting wider recognition and better understanding [in Poland], but skepticism about activities of businesses, including CSR activities, remains high,” said Mirella Panek-Owsiańska, president of the Responsible Business Forum (FOB), a Polish NGO which promotes CSR.
“Polish company owners should engage in a dialogue with stakeholders and consumers, and financial institutions should start promoting the idea of responsible investing. Universities and academic circles should ask themselves whether the time has come to stop teaching business, management and economics as something outside the realm of ethics or responsibility,” she added.
“Finally, regulators should find a way to support responsible business. Social responsibility is everyone’s responsibility,” Ms Panek-Owsiańska said.
CSR makes economic sense
But in a time of economic crisis and belt-tightening, can Polish businesses be convinced of the necessity of CSR? Eurosif believes the crisis actually offers an “opportunity” for CSR.
“As market volatility leads to higher risk premium requirements, cost of and access to capital will worsen. Investors are bound to pay more and more attention to factors affecting capital risks, including environmental, social and governance factors, when assessing an investment in a particular company,” Eurosif wrote.
It added that companies will subsequently need to carefully manage their cost of capital and address the growing concerns of investors around their sustainability, which entails a forward-looking view about how they manage environmental, social and governance (ESG) aspects. According to Eurosif, there is a “strong body of academic evidence” to suggest healthy ESG performance is positively correlated with lower cost of capital.
Also at a time when regulators are seeking ways to reconcile financial markets with “the real economy” and unlock the potential for long term investment and smart, sustainable and inclusive growth, “SRI should be seen as a complementary resource to realize that potential,” Eurosif said.
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