Since the end of the nineties, there has been an initiative to increase the awareness of companies regarding their social and environmental impact, as well as the undesirable consequences of the bad governance of organisations that imply effects such as the loss of jobs, among others. The Reflection has been clear. Companies can decrease their social risks relating to Human Rights for example in their supply chain; limiting their environmental risks by becoming more efficient and improving the environment by reducing pollution or competing in good faith thus maximising their positive impact, establishing mechanisms that fight against corruption. Some leading companies also understood that these aspects, apart from being considered in a formal manner due to ethical issues, responded to society’s interests and would imply a competitive advantage in the future.
The concern for the social, environmental and good governance aspects of companies, their incorporation into the strategy and management of the same, with the aim of minimising risks and innovating in order to be part of the solution to global challenges, is known as Corporate Social Responsibility (CSR).
Today, many countries, including Spain since 2014, have national CSR strategies aimed at inculcating this philosophy in companies. Accordingly, various mechanisms have been developed to influence this motivation. Some legal mechanisms such as the Non-Financial Reporting Directive, which from 2018 will oblige more than six thousand large European companies to publish their social, environmental and good governance results in their annual reports. Another mechanism is the Good Governance Code of the CNMV (National Securities Market Commission), which from this year publishes listed companies that have a CSR policy and report (more than 60% in its first year of application) as well as how many of these have mechanisms for compliance with, and monitoring of these policies (in this case the figure does not reach 40%). Other mechanisms such as the promotion of government procurement by administrations with social and environmental criteria or the promotion of socially responsible investment (SRI) are generating new incentives to advance this process.
Obviously the leading companies are anticipating these stimuli, internalising the aspects such as demographic change, climate change, the development of sustainable cities, the need to develop skills for the jobs of the future, the reduction of inequality, transparency or disability are issues which companies through their products, services and operation characteristics can and have a conclusive response.
On a worldwide level, in 2015, significant global agreements were developed whereby society involved companies more than ever as agents that should form part of the process to achieve the Sustainable Development Objectives (SDO) of the United Nations or the Paris Agreement on climate change.
What elements can committed companies offer? At Foretica, we can state that there are fundamentally four. Firstly, a clear leadership from their management manifested through policies and strategies in which social responsibility is present. Of course, great declarations alone are not enough, thus the second element is management. This involves focusing on objectives, goals, indicators, employee training, budgets, etc. For example, many companies have already made a commitment to achieving zero greenhouse gas emissions in the next five years. A management challenge but one which will however involve significant advantages for companies that anticipate the “decarbonisation” of the economy. However, not only large companies, but small and medium companies, by means of pre-existing tools, through management standards such as SGE 21, can incorporate this philosophy into their companies as 120 organisations in Spain that follow this model have already done so.
Two more aspects. Dialogue is fundamental. Understanding the concerns of employees, customers, suppliers, administration or citizens is fundamental to establishing those most relevant, prioritising them and giving the right responses to achieve a licence to operate. Finally, these aspects are only effective in well managed and transparent organisations that provide accounts of the commitments proposed.
In conclusion, social responsibility is a decisive factor for success for companies that wish to survive in the coming years. The speed of their deployment will depend on the emphasis that regulators, investors, the companies themselves and us as citizens and consumers wish to place.
Germán Granda, General Manager of Forética