Corporate Social Responsibility (CSR) refers to a business approach that aligns a company’s values, strategies and management to societal concerns. There is no all embracing definition for CSR, yet it is commonly acknowledged that CSR involves a company’s devotion to contribute to the common good and to operate in a responsible and sustainable manner. The EU defines CSR as a company’s responsibility to “have in place a process to integrate social, environmental, ethical and human rights concerns into their business operations and core strategy in close collaboration with their stakeholders”.
The Origins of CSR
Supposedly, the notion of sustainability has its origins in German forestry. In the 18th century, extreme deforestation had led to an alarming wood shortage which was causing a loss of prosperity. Carlo von Carlowitz, considered to be the father of sustainable yield forestry, called on society for a better management of forests in order to ensure their preservation for future generations. In the 1970s, the issue of sustainable business practices appeared on the agenda of the OECD and both politics and business started to consider the trade-offs between economic growth and its impacts for society and environment.
Today, CSR has become a key principle for most businesses, as well as public institutions and organisations. Recently, the European Commission has published a CSR action agenda which aims at enhancing positive impacts – for example through the innovation of new products and services that are beneficial to society and enterprises themselves – and to minimise and prevent negative impacts of business behaviour.
Where to implement CSR
CSR can be implemented in a lot of different areas. To show societal engagement, CSR can involve education initiatives, programmes for disease prevention and the company’s interaction with socio-political issues. Moreover, environmental commitment can be shown by environmental friendly production techniques, such as running factories only on renewable energies.
Concerning responsible treatment of employees, CSR involves managing resources to maintain workforce capabilities and employee satisfaction, for example through specialised training, as well as fair remuneration or other employee benefits such as corporate health and fitness programmes or child care opportunities. Here, gender equality and an integrative approach to corporate cultural diversity also contribute to a company’s CSR balance.
CSR in the automotive industry
In the automotive industry, CSR plays a very important role. As an energy intensive industry, car manufacturers have long been developing alternative production techniques to reduce the industry’s carbon footprint. Next to recycling procedures and an increasing use of renewable energies throughout the production process, the automotive industry has also developed innovative technologies, such as zero-emission electric or hybrid-driven cars in order become more environmental friendly.
Therefore, CSR has generally been deeply incorporated in the business strategy of car manufacturers. For example, the BMW Group defined sustainability as a key corporate principle back in 2000 and refined its sustainability strategy over the last few years. The main objective of the BMW commitment is to integrate sustainability throughout the entire value chain and its underlying processes – creating an added value for the company, the environment and society. Economic, social and ecological responsibility is part of the BMW core business and comprises of activities that go well beyond compliance with legislation.
How to measure CSR
There are various CSR ratings which measure companies’ CSR commitment based on specific indicators. Some of the most prestigious sustainability rating indexes are the Global 500 Leadership Index and the Dow Jones Sustainability Index (DJSI). The Dow Jones Sustainability Index evaluates the sustainability performance of the largest 2500 companies that are listed in the Dow Jones. The DJSI assesses issues such as corporate governance, risk management, branding, climate change mitigation, supply chain standards and labour practices.
To be incorporated in the index, companies are assessed and selected based on their long term economic, social and environmental asset management plans. The evaluation of a company’s CSR engagement is measured via an annual questionnaire, company transparency documents, media and stakeholder reports as well as via personal contact with the companies. Once a company is listed on the DJSI, it is monitored daily for any arising critical issues.
In the automotive industry, the DJSI includes industry-specific as well as general sustainability criteria. In the 2012 assessment, the BMW Group was named the world’s most sustainable car manufacturer for the eighth consecutive year. Next to Fiat and Volkswagen, the other two automotive industry enterprises listed, the BMW Group is the only one to feature in the renowned index every year for the past fourteen. The ranking shows that the BMW Group is not only a leader in the sector, but is also in the top three companies from all sectors worldwide.
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