What is it: Businesses

Businesses can make an important contribution to sustainable development in society. To quote Kofi Annan (United Nations Global Compact Network):

"...let's choose to unite the powers of markets with the authority of universal ideals. Let us choose to reconcile the creative forces of private entrepreneurship with the needs of the disadvantaged and the requirements of the future generations..."

When practicing sustainability a company looks for a balance between business performance, social aspects and environment-related aspects. It emerges that in general these interests are not conflicting, but rather reinforcing each other, certainly if you look at the long-term. Practicing sustainability has everything to do with making the most of the market opportunities. The WBCSD (World Business Council for Sustainable Development) also assumes the basic principle that a well-balanced strategy in Corporate Social Responsibility, based on good ethical values, clearly offers business advantages. This fits together with the idea that most of the measures that your company undertakes to operate in a more sustainable manner translate directly into optimisation of your business operations.

Norms, values, views and interests of the stakeholders also determine the business strategy. In order to tackle this well, it is essential to have an intensive dialogue with internal and external stakeholders, as well as open and honest communication channels.

CSR is a development initiated mainly by industrial multi-nationals. They experienced as the first people the power and might of the stakeholders, which they had not taken into account before. Nowadays society also pays increasingly more attention to the non-industrial sectors such as the financial world. New developments such as establishing reporting guidelines for the SMEs by GRI (Global Reporting Initiative), EU-wide organisation of an SME awareness raising campaign on CSR , and and setting up the CSR Netherlands, shows that sustainability is becoming more and more important to SMEs as well.

Multinationals
For many multinational determining the extent of their responsibility poses a major dilemma. What are the company’s legitimate spheres of influence and where are the limits of their influence and derived accountability? An example from Unilever demonstrates how the demands of society can at times stretch beyond the pure legal responsibility of a company.

Unilever runs into image damage

In May 2003 Unilever received negative publicity in the press due to its involvement with child labour. In the Indian cotton cultivation sector children are employed in the production of cottonseeds. This occurs as well in the cottonseed production of a company in which Unilever subsidiary, Hindustan Lever, has a 26% share since March 2002. Since it concerns a minor share of subsidiary, it could be argued that Unilever’s accountability is limited. However, society saw this quite differently. Amnesty International, the Dutch Trade Union Confederation (FNV), the Dutch Organisation for International Assistance (NOVIB) and the India Committee of the Netherlands (LIV) made this issue public and were of the opinion that Unilever – via the supply chain liability – is jointly responsible for the production of cottonseed by children. As a result of this action the Indian Association of Seed Industry with which all the involved enterprises are associated announced a resolution to actively fight against child labour in cottonseed production. According to the India Committee of the Netherlands this promise (end of 2004) has not been fulfilled yet.

An important aspect of practicing sustainability is being aware of the social and environmental interests in other countries and taking these into account. Companies that operate on an international scale have to deal with “everyone’s dissenting opinions”. Cultures and attitudes towards authority as well as values and norms can differ in each country. In addition, the social and environmental standards are not as strict everywhere. Therefore, a company can be tempted to choose for easy financial profits in the short-term. However, the risks involved are great. Companies are vulnerable in a society where information is disseminated rapidly. Employing double standards with regard to values and norms or not exercising proper control and management of the value chain will lead to irrevocable damage to the company’s image.

In addition to spheres of influence, a company can also look into issues that occur in the supply chain or in the life cycle of a product. The figure below contains a number of challenges that a manufacturing company can encounter in the supply chain.

Small- and Medium-Sized Companies (SME)
Scanning for opportunities and risks in the market is one of the aspects of corporate social responsibility. Corporate social responsibility is a development initiated mainly by industrial multi-nationals. These companies (such as Philips, Unilever, Shell, H&M, DAF, etc.) are more and more active in processing and implementing a CSR policy in which product and chain oriented environmental protection is a central issue. This is relevant to all small and medium-sized enterprises (SME) that supply big companies, which are practicing product and chain-oriented environmental protection. If these suppliers do not anticipate this development adequately, they risk losing their position in the future to the competition with more environmental-friendly products or services.

An additional development with far-reaching consequences for SMEs is the tendency towards conglomeration of enterprises, which is expressed in merges into mega enterprises. Medium-sized businesses have more difficulties competing due to the sharp increases in development costs and globalisation. This makes it necessary to rely on big companies. SMEs that want to maintain a position at the international level will have to adjust themselves to these circumstances. Orientation on the circumstances and detecting both opportunities and threats is an important aspect of corporate social responsibility.

Studies clearly show that tools that could be employed by SMEs would have to be directed at the specific problems of SMEs. The Strategic Sustainability Scan is therefore also adapted for SMEs.

You can practice sustainability in every activity in your company, from strategy to finance. Just to name a few examples for operating your business: You can devote attention to environmental-friendly products when purchasing or subcontracting, maintaining your facility and surrounding greenery, or when choosing environmental-friendly material for your production process. You could ensure favourable working conditions and facilities by which your employees will enjoy working and will be motivated. You could also request good working conditions from you suppliers.

You can also cooperate actively with other parties to ensure optimum quality. You could ask your suppliers, customers and other parties what they think of your products or services, and jointly work on improving and innovating. You can actively inform others about how you operate, what your plans are, etc. so that they can think along and have more confidence in your company.