The FINANCIAL — The practice of Corporate Social Responsibility is characterized by a positive trend in Georgia. Georgian businesses have started separating CSR from charity and philanthropy. The integration of Georgian companies with global markets and the Association Agreement promises to bring about greater development of CSR. Large companies remain more socially responsible businesses in Georgia, contrary to SMEs. Meanwhile, internal CSR remains more developed in the country, so accordingly Georgian businesses need to focus more on the corporate social investments.
“We have been actively arranging meetings with managers and CEOs. Various types of trainings have been held by Eurasia Partnership Foundation (EPF). The main message we tried to clarify was what kinds of benefits CSR can bring for them. There is no clear demand for CSR among society. Accordingly, companies are less motivated to implement it. The fact that CSR is linked to extra expenditures hampers its development. So, clarifying the benefits is the mechanism which actually works. The concept of CSR means its voluntary implementation. It cannot be compulsory. Besides companies’ goodwill the Government should provide extra motivation for businesses to be socially responsible. CSR should include more strategic actions, which will then bring much more results for everyone, including the companies,” Viktor Baramia, Senior Program Manager at Eurasia Partnership Foundation, told The FINANCIAL.
Baramia believes that knowledge of the issue is very important. “The CEOs and top managers of large-scale companies are mostly educated abroad. Accordingly, they are familiar with CSR and all its principles. Therefore this practice should subsequently be distributed across lower levels. However, here we face a rupture in the chain. CSR is not taught as a separate course at business schools. It is considered a component of business ethics. Caucasus University is the exception. It is very important for students that are potential employees of large companies, where CSR is on the agenda. This might be one of the reasons why the situation in terms of corporate responsibility is improving.”
Q. Which is the most socially responsible company in Georgia?
A. I will refrain from naming a specific company. However, I will say that unfortunately CSR is not on the agendas of small and medium-sized businesses. So, the role of most socially responsible companies is relegated to big companies. CSR is especially active among companies incorporated in international networks. This comes from the strategy of the central office. Maybe the scales of the project are smaller in Georgian branches though compared with their headquarters. This might be due to a lack of demand from the local market. However, the general strategy of CSR in these companies is sturdier. Meanwhile, the charity campaigns of such large companies are more eye-catching than corporate social investment campaigns. In its turn, CSI projects need more strategic approach and resources. In this regard human resources have a key role. That’s why CSI projects are more neglected by companies. Charity is more related to being a component of PR. Big companies are well aware of what benefits they can get from CSR activities. Though, currently, internal CSR, which refers to HR strategy, is more developed.
Even the international studies show that all companies, including small and medium-sized companies that have implemented CSR practice are more successful in doing business. Such companies turned out to be stronger even during the recession.
Q. What are the main benefits that CSR brings to all the players involved in it?
A. CSR brings a lot of benefits to each player. Actually this is the main challenge. Let’s consider internal CSR. Employees that are satisfied due to their working standards, directly impact on the company’s efficiency. External CSR is a positive example for employees to do a good job. At the same time it is an image of the company – an image of a positive and kind company. CSR indicates quality, taking care of customers and desire to develop. The final result is reflected in its sales. We are in direct connection with the benefits for customers, as they receive quality and competition. The companies’ revenue growth will cause a greater sum of budget which is one of the main benefits for the Government from CSR, together with satisfied citizens.
The Government gets an opportunity to delegate its work to businesses. The Government should provide social services, social requirements, employ specific social groups. All of this is too much pressure. Therefore, CSR delegates these functions to some extent. In some cases it unloads the state. As a result, the Government should create an environment that will ensure the satisfaction of all rings. Meeting everyone’s interests is difficult, but possible.
Q. What is the role of the Government in creating a socially responsible society?
A. In the current law there are just several articles which may encourage companies to carry out CSR activities. However, they are so unimportant that many people do not even know about them. Therefore there is lots of work to be done from everyone’s side. More talks about this issue may be really helpful. It would be important for businesses to start considering NGOs as partners not just as organizations requiring funding. Cooperation will be more effective in this case.
Q. Can we say that the lack of development of CSR is linked to the existing socio-economic situation in the country?
A. If the socio-economic conditions would be higher in Georgia, then the demand for CSR would be higher in accordance. However, with this logic, social responsibility would not develop in the country till the economic situation improves. On the other hand, the sense of being socially responsible means that you support the improvement of the social situation. Accordingly it is important for the companies to see that an improved social situation will improve their business. The pace of development of the country is linked to the development of CSR. The pace of development is so very accelerated and local companies are so very integrated with international markets, that the development stages of CSR will be greater in the future. Companies’ desire to enter the EU market will contribute to it.
Q. Which direction of CSR needs expanding in Georgia?
A. Developing external CSR would be important nowadays. It enables collaboration between various sectors yet on a higher level. External CSR offers more opportunities. I can hardly imagine a company implementing external CSR and ignoring the internal. If such a precedent takes place it will mean that proper perception of the concept of CSR does not exist in that company. Internal responsibility is what causes the external one. In general, in Georgia internal CSR is more developed than external.
Q. How does EPF stimulate CSR?Â
A. EPF tries to stimulate CSR activities among businesses. The competition the Best Food Enterprise of 2014 is underway within our Food Safety project. The idea of the competition is to reveal the companies that are meeting food safety standards. This is also a part of CSR. Companies that take care of food safety, take care of their customers. We encourage companies to revise their responsibility and highlight it. We try to make clear for entrepreneurs that by taking care of their customers and meeting standards, they will increase the benefit to themselves. This is a very simple algorithm.
The second direction, in which we are actively cooperating with companies and businesses, is a social entrepreneurship programme. This programme includes a business carrying out a social mission. Its implementation, income or profit is used for a social mission. It is not a standard, profit-oriented business. It mostly incorporates non-governmental organizations. It is focused on solving existing societal and environmental problems. It includes support and employment of various vulnerable groups of population, e.g. people with special needs, internally displaced persons, probationers, etc. Attracted income is reinvested back into the social enterprise and is focused on achieving this goal. Social enterprise, on the one hand, helps society. At the same time it is an important contributor to the country’s socio-economic development. One of its main advantages is that social entrepreneurs unite people with a very common problem and they together take care of its resolution.
Along with our partner organization, we have been arranging a competition for business school students for three years now. We want to involve students in the development of social enterprises. Participants are writing business plans. This initiative is focused on creating a new business plan to establish a new social enterprise and implementing small projects so support existing enterprises. Within our start-up fund we are financing winning business plan idea. At the moment we have two social enterprises supported by EPF that were initiated as result of cooperation between students and non-profit organizations. Jury panels are made up of businessmen and representatives of leading companies. They are evaluating the competitors from the perspective of their pragmatic viewpoints. It is important that company representatives are not only providing prizes for students, but also other opportunities, like internship. This year, some of the jury members will also provide master classes for the winners of the first round of the competition. They will give them specific guidance on how to implement projects. We do hope that this kind of involvement from companies will be continued. The competition Students for Social Enterprise is a clear illustration of how the interest and involvement of companies is growing from year to year.
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