The World Guide to Sustainable Enterprise - Volume 3: Europe

Wayne Visser

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781783534586
• eBook ISBN: 9781351284509
• Topic: Business
• Subtopic: Business General
• Index: Business

The World Guide to Sustainable Enterprise is the first comprehensive global compendium that clearly describes the national approaches to sustainable enterprise. Through a systematic review of each country, this quick-to-access reference guide showcases the similarities and differences in each region. Every country profile includes key information about the relevant history, country-specific issues, trends, research, and the leading organizations operating in the field as well as best-practice case studies. The guide comprises four volumes, each dedicated to a specific region of the world.   In a world where organizations are working increasingly across national and regional boundaries and research takes a joined-up and international approach, this book is an essential guide for practitioners and researchers in the disciplines of business sustainability, social enterprise and corporate responsibility. The first of its kind, this reference book provides the reader with a unique insight into what is the current state-of-play in each country.  Each edited volume provides expert contributions from around the world; the contributors have been selected on the basis of their knowledge of the country and their clear experience in sustainable enterprise. Each regional/country profile includes the following subsections: Sustainable Enterprise in context; Priority issues; Trends; Government policies; Case studies; Further resources; and References.  This unique resource will be an essential acquisition for all organizations who need to benchmark their sustainable enterprise strategies throughout different regions and cultures and want the best possible intelligence on the key issues and concerns relating to sustainable business and social responsibility in all of the markets in which they operate. It provides a useful companion reference collection to the World Guide to CSR, also edited by Wayne Visser. The full Four Volume Set of The World Guide to Sustainable Enterprise is available for purchase as a single item at a 25% discounted rate.

Part 1
Regional profiles

I
Eastern and southern Europe

Rodica Milena Zaharia

Professor, Bucharest University of Economic Studies, Romania

Dragos Tuta-Mihaylov

Founder and General Manager, The CSR Agency, Romania

Alexandru Ardelean

Editor-in-Chief, The CSR Report Magazine Romania, Romania

Ileana Magureanu

Managing Director, CSR International, Romania

Regional context

Eastern Europe includes Belarus, Bulgaria, Czech Republic, Hungary, Poland, Republic of Moldova, Romania, Russian Federation, Slovakia and Ukraine. Southern Europe includes; Albania, Andorra, Bosnia and Herzegovina, Croatia, Gibraltar, Greece, Holy See, Italy, Malta, Montenegro, Portugal, San Marino, Serbia, Slovenia, Spain, and Macedonia. Eastern and southern Europe is a very complex region in terms of economic, social and political challenges. Among these countries there are developed economies (such as Italy, or Spain), former communist countries (eastern European and western Balkan states), and members and non-members of the EU.

Sustainability is a major concern for this region; however, the way sustainable development is translated into governmental policies and business practices varies across the region according to country priorities and constraints. Apart from the economic, social and political particularities of each country, a major threat to sustainability in the region is insecurity. One of the security challenges originates from the conflict between the Ukraine and the Russian Federation. Another is the refugee crisis, with forced migrants travelling from countries in conflict such as Syria, Iraq, North African states or Afghanistan. A humanitarian crisis generated by these conflicts can take prominence over any other existing concern.

Social enterprises as a driver of sustainable development offer a diverse picture in this region. Determinants that increase the need for social initiatives in eastern and southern Europe are related to structural unemployment, increasing budget deficits, the inefficiency of traditional passive social policies in integrating disadvantaged groups, and an ever higher number of people excluded from the labour market. Also, there is a growing demand for a stronger welfare system in Europe, in general, and in countries belonging to this region in particular. Social enterprises are seen as a good way to respond to these socio economic needs.

Some countries are much more advanced than others in developing social enterprises. In Italy and Spain, countries with a strong cooperative tradition (Defourny and Nyssens 2010), social enterprises are experiencing extra ordinary growth. In other countries, such as Albania or Belarus, this sector is still in its infancy. Even in the former communist countries that are now members of the EU, such as Romania or Bulgaria, the initiatives meant to establish social enterprises are rather modest. In former communist countries outside the EU, the communist heritage, with its paternal-istic mentality, is still a strong barrier for developing social enterprises. Besides this, in many cases the legislation is still unclear, the non-profit sector is weak and vulnerable to political influence, or financial resources supporting these initiatives are insufficient.

Another impediment to social enterprises, especially in the new democracies, is corruption. In the 2014 Corruption Perception Index by Transparency International (2015), eastern and southern European countries range (out of 174 countries ranked) from rank 31 (Portugal, the least corrupt country in the region) to 142 (Ukraine), with other countries also ranked low (Russia 136, Belarus 119, Albania 110).

Priority issues

Given the complexity of this region, there are numerous priority issues for these countries. General challenges include economic constraints, labour market shortages, an ageing population and climate change threats. Specific problems include the civil war risk in the Ukraine, the deepening economic crisis in Greece and the recent refugee crisis that affects mostly the southern and eastern borders of the EU.

In terms of economic challenges, the levels of public debt and unemployment (mostly youth unemployment) are a priority issue for the countries in this region. Greece seems to have major difficulties in finding the most appropriate solution for solving the economic crisis, while public debt to GDP ratios are a problem for several countries, such as Greece (177%), Italy (132%), Portugal (130%) and Cyprus (103)% (Eurostat, 2015a).

There is an uneven situation among countries in the region as regards unemployment. According to Eurostat (2015c), certain countries in this region record some of the lowest unemployment rates in Europe (Czech Republic and Malta, both 5.1%) while others have some of the highest unemployment rate (Macedonia 27.5%, Greece 25% and Spain, 22%). Youth unemployment is a major concern, as it records higher rates than general unemployment does. In July 2015, the lowest rates were found in Malta (8.7%) and the highest in Greece (51.8%), Spain (48.6%), Croatia (43.1%) and Italy (40.5%).

Reducing inequalities and social exclusion are the main social priority issues for the region. Although all countries face the risk of poverty and exclusion from education, employment or training for an increasing number of people, large disparities exist among countries from eastern and southern Europe. Among the countries that are members of the EU, Bulgaria (48%), Romania (40.4%), Greece (35.7%) and Hungary (33.5%) record the highest percentages of the population at risk of poverty or social exclusion, and Czech Republic (14.6%) the lowest, according to Eurostat (2015b). The conflict in the Ukraine, which started after the annexation of Crimea by Russia, has forced more than a million people to leave their homes. The consequences of this conflict are difficult to predict, with potential impacts across the full spectrum of social, economic, political, environmental and security issues.

Environmental issues are critical for the region. There are many concerns in this respect: from climate change, which leads to extreme weather events such as heat waves, floods and droughts, to waste and resource efficiency, or safe and clean energy resources. Again, there are large gaps among countries. In terms of CO₂ emissions per capita, one of the most important causes of climate change, the figures vary largely among countries from the region: from 1.6 tonnes per capita in Albania to 12.6 tonnes per capita for Russian Federation in 2011 (World Bank, 2015).

Trends

To determine the CSR models in the so-called New Europe countries (new EU member states and candidate countries), a formula has been developed (Letica, 2010) taking into account the varieties of capitalism, social models, public policies promoting CSR and the existing conditions of the “market for virtue” (existing and potential customers’ demand for “virtue” within firm’s products and services – Vogel, 2005). Three CSR models were identified in New Europe, two of which are present in our targeted region: the New Central European model (found in Czech Republic, Slovakia, Poland, Hungary, Slovenia and Croatia), which includes elements of the Central European model (coordinated CSR) and rudimentary aspects of the communist/socialist model of CSR, and the western Balkan model (found in Albania, Bosnia and Herzegovina, Serbia, Kosovo, Macedonia, Montenegro, Bulgaria and Romania), which is the least developed of all New Europe CSR models.

CSR and sustainability requires engagement with internal and external stakeholders (European Commission, 2011). In Mediterranean countries, the improvement of relationships with stakeholders seems to be the primary motivation for companies to have a CSR policy (Krambia-Kapardis and Huntingford, 2012). CSR is also strongly linked to human development, according to a study on the relationship between the Human Development Index (HDI) and the National Index of Corporate Social Responsibility in 12 countries, among which nine (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Hungary, Macedonia, Romania, Poland and Serbia) are in eastern and southern Europe (Gangone and Ganescu, 2014).

The research grouped countries into four CSR performance categories in terms of meeting stakeholder expectations. The “competitive ones” are countries such as Poland, Hungary and Bulgaria, with the greatest potential to align to global requirements of corporate social responsibility. The “responsible ones” are countries such as Albania, with above-average values on the stakeholder satisfaction index, but a below-average level of human development.

The “cautious ones” are countries such as Romania and Croatia, with above-average values of human development, but a below-average level of stakeholder satisfaction. The “late ones”, Serbia, Macedonia and Bosnia and Herzegovina, have low levels of both the stakeholder satisfaction and human development, the cause being the low level of expression of stake-holder expectations and reduced corporate focus on corporate social responsibility in these countries.

This conclusion is also backed by UNDP (2008) findings in Albania, Bosnia and Herzegovina, Kosovo, Montenegro and Serbia, where only 12% of the businesses surveyed involved stakeholders in company activities and decision-making processes. Moreover, the understanding of CSR among western Balkan companies is limited; they view it mainly as philanthropy, community support and environmental protection. As a consequence, CSR activities usually consist of ad hoc donations to charities and communities, environmental projects, and investments in occupational health and employee training.

A similar behaviour is manifested by new EU members and candidate countries from central and eastern Europe (CEE). CEE companies don’t see CSR as central to risk management and stakeholder relationships and they often connect it with philanthropy and sponsorship. Moreover, even if they are involved in forms of stakeholder dialogue, the absence of a dynamic civil society movement currently limits the ability for stakeholder opinion to help shape strategy (Line and Braun, 2007).

It is more often foreign, multinational companies with long-term commitments to local and global economic success that drive the social agenda (UNDP, 2008), while most domestic companies in CEE pursue CSR as a strategy to enter the EU markets or as a vehicle for innovation in their business models (Letica, 2010). Countries in the former Soviet Union share this export-driven perspective (Manzhynski, 2014), as Russian businesses are becoming world players in the global economy where CSR norms and practices are required. SMEs in the Mediterranean Region also contribute towards CSR because they also see a link between CSR and competitiveness (Krambia-Kapardis and Huntingford, 2012). However, this is mainly about reputational benefits, rather CSR-driven innovation nor or access to new markets.

Government policies

The maturity of public CSR policies seems to differ significantly among the CEE and Mediterranean Member states (Martinuzzi et al., 2012). Bulgaria, Cyprus, Czech Republic, Italy and Poland are the only countries in the targeted region that have fully fledged national CSR strategies and action plans (EU, 2014). Hungary, Malta and Spain have National Action Plans (NAPs) close to completion and the remaining countries (Croatia, Greece, Portugal, Romania and Slovakia) are currently developing NAPs.

In a paper that characterizes the spectrum of the public policies on CSR in Europe (Steurer et al., 2012), five policy instruments (i.e. legal, economic, informational, partnering and hybrid tools) and three fields of action (i.e. awareness of CSR, socially responsible investment and sustainable public procurement) were analysed. The transition countries from the CEE region are the least active in promoting CSR across all three themes. Although Hungary, Poland and Slovenia are as active as Italy, Spain, and Portugal, the average number of initiatives for the entire CEE region is below that of the Mediterranean model, and significantly below the leading Anglo-Saxon and Scandinavian countries.

Regarding the quality of public policies on CSR, a few high-profile and numerous low-profile instruments can be distinguished for each of the three fields of action. Regarding the spread of high-profile CSR policy instruments across Europe, the only such instrument that was adopted by more than half of the surveyed CEE countries were procurement laws that enable sustainable public procurement (renewed in line with the EU directives).

A UNDP (2008) study conducted in Albania, Bosnia and Herzegovina, Kosovo, Montenegro and Serbia revealed that the capacity of governments in effective policy-making and in implementing necessary reforms is even more limited. The policy environment where businesses operate does not actively encourage CSR engagement to an adequate level. Unlike an increasing number of EU member states, none of the western Balkan countries covered in the study has established a national CSR agenda with clearly defined objectives for incorporating CSR values in business practices.

In this subregion, while governments have adopted a wide range of laws and regulations that relate to different aspects of CSR, mainly as a precondition to EU accession, mechanisms to implement and enforce this legislation are often weak or absent. Governments lack the capacity or information needed to provide financial and/or nonfinancial incentives for CSR engagement and to assist in creating a socially responsible business climate. In addition, CSR may not be prioritized by governments over other pressing issues in post-conflict, transition economies, such as completing privatization programmes, reducing unemployment and rural poverty, and ensuring political stability.

The countries coming from the former Soviet Union have a different perspective and they all seem to support the development of cooperatives, which, as social enterprises, seek to generate social benefits rather than being purely profit oriented and therefore are generally considered to be contributing towards CSR goals. Cooperative legislation in practically all CIS countries (with the exception of Belarus and Turkmenistan) recognizes the basic principles of cooperation annunciated by the International Co-operative Alliance (ICA): voluntary participation, freedom of exit, democratic governance, emphasis on member benefits (ICA, 2013).

Although CIS society is divided regarding the image of cooperatives and their social responsibility (Tcaciuc et al., 2012), CoopSR (cooperative social responsibility) strengthens and complements the CSR approach (ILO, 2009). Cooperatives create economic security mainly through their economic stability, not the least in times of crises (ILO, 2009), contribute to maintaining the ecological balance a...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Introduction
• Part 1: Regional profiles
• Part 2: Country profiles
• About the editor
• About the contributors
• Other volumes of the World Guide to Sustainable Enterprise