In recent decades Corporate Social Responsibility has turned out to be a vital strategy for companies to improve their existence in society and the environment. Being a complete business behavior it aims to ensure the long-term viability of business by assuming an active role in the development of the community, the economy and the environment through good business practices.

Consumers need to know if the goods they buy or the services they use may threaten the environment and society in general. Communities are therefore also more supportive of companies that apply the company’s Corporate Social Responsibility (CSR) principles, teach them to their employees and at the same time take into consideration the general welfare of the people in their business activities. Indeed, a CSR strategy could be a powerful key to the success but also a solution in the current unstable economic situation.

CSR activities as a rescue package for companies

According to research by the British company “Envirowise”, acting green could help companies to get through the times of unpredictable customer reactions and market downturn. It suggests that the easiest way for a firm to save energy and make their employees think environmentally, is to show them water, electricity or gas bills. The document states that over a third of office workers act ecologically at home, but forget to apply these habits at work. So if companies are more transparent, staff will have a better understanding of how their actions can help reduce costs and the environmental impact of the business. The money they save this way could help the company to get through the current downturn.

So adopting CSR principles could substantially help to put forward the ambitious EU plan to fight climate change. Leaders want to reduce the EU’s CO2 emissions and related greenhouse gases by 20% by 2020, while boosting the bloc’s share of renewable energy use by 20% over the same period. So for a company these days it is more important to start thinking both commercially and environmentally.

Consumer’s view

Let’s focus on the link between being successful economically and environmentally responsible at the same time. Various polls show that people are keen to pay more money for “green products.” For instance, in March 2008 the Eurobarometer revealed that a huge majority of Europeans (75%) said that they agreed that they were “ready to buy environmentally friendly products even if they cost a little bit more”. Another 17% stated that they had bought some kind of green product the previous month.

The “Food Navigator” web portal states that “products with both functional and emotional benefits may be the way forward for manufacturers looking to make an impact on green consumerism.“ There are a few reasons why consumers turn to being more responsible:

• buying green products is a strong symbol of altruism,
• green consciousness becomes a strong symbol of responsibility in regards to the environment that we are about to leave for future generations,
• food habits: eating and drinking “bio” foodstuffs contributes to feeling good about one’s own health.

In addition, almost two thirds of the Eurobarometer’s respondents expressed belief that environmental responsibility is more important than competitiveness. Beside economic growth, preserving nature and its heritage becomes a top priority as well.

Business’s reply

Datamonitor surveys in recent years say that green elements of the market in Europe are on the rise. The organic sector has become one of the largest; analysts gauge it is worth 17 billion euros. Considering the facts mentioned above, this development seems to be a result of consumer demand. Listening to people’s preferences is one of the keys leading to success in business. The most recent Eurobarometer found that 52% of Europeans would recognize green products as a result of their labeling. Currently, however, there is no common European legislation in the field of “bio” or “eco” labeling.

Do successful businesses think environmentally?

The most important players on the market are becoming more responsible and take the environment into account. In the Sixth Annual Global Survey of Supply Chain Progress, together CSC, SCMR, CSCMP, Supply Chain Europe and Michigan State University concluded that “more than 80% of [market] leaders indicate an emphasis on green issues, as opposed to about half the laggards.” Being “green” is not just a political label but it has become a part of business philosophy.

Nevertheless, is it right to claim that an environmentally friendly business is the key to success? Or is it the other way round – that business success provides an opportunity to be friendly towards the environment? The second statement seems to be correct. However, the improvement in business strategies and the application of Information and Communication Technologies (ICT) bring cost savings and energy effectiveness, as another CSC report (Leading Edge Forum – Digital Disruptions) shows. Green logistics is given as an example. If a company uses ICT for optimization, a considerable saving in time, fuel, packaging, energy and work could be achieved. In other words, more sophisticated transportation leads to less CO2 and other greenhouse emissions. At the same time, innovative solutions require larger financial resources and only bigger companies are ready to pay for up-to-date technologies. Thus, being the best doesn’t imply thinking environmentally, but thinking environmentally implies that the business is doing well.

NOTICE: This article was prepared for and published in Connection Magazine (12/2008 – 01/2009) of The American Chamber of Commerce in The Slovak Republic.

Michal Hudec and Zuzana Tucekova, EurActiv.sk (the opinions expressed in this article represent the authors’ view, and not EurActiv’s position)