Archive for the ‘Blog’ Category
By Lama Diab
Corporate Social Responsibility (CSR) is becoming more fully integrated into the company’s core business strategy. CSR moved beyond philanthropy. It is identified as activity benefiting its shareholders. Industries, that are dependent on the exploitation of natural resources, such as chemical, mining and crude oil production, gas and electric industries, have identified environmental responsibility as their primary CSR focus.
In the Middle East, we can find companies that are still perceiving CSR as philanthropy and have not yet passed it to a “core business strategy “. Is it because of the cultural and religious belief, that we should give to the poor (Zakat or charity), so they consider it as their CSR? Should it be obligatory so that companies will start thinking about CSR more strategically?
Over the past few years, the interest has literally exploded in regional media and business community with a lot of foreign companies working in the field, companies hiring CSR specialists and setting up CSR departments. The focus is also getting more strategic and more diversified. We still see a lot of community initiatives but companies have started experimenting with other avenues and the focus on other aspects of CSR has heightened, as said by Dr. Fatih Mehmet Gul.
A survey “What Do Middle Eastern Leaders Think about CSR”, conducted by Sustainability Advisory Group (SAG) in 2009, revealed that the majority of leaders in the Middle East (106 respondents ranging from UAE, KSA, Lebanon, Oman, Palestine, Jordan and Qatar) work in CSR/Sustainability (22%). CSR becomes an essential part of regional business activity, but we can’t deny that there is a difference between Arab countries in applying and practicing CSR.
In Oman and Dubai, over the past couple of years, there have been various meaningful initiatives. Companies in these countries are taking CSR and sustainability very seriously and they are showing an increasing commitment to CSR. Other countries like Lebanon, when it comes to CSR and sustainability, have largely focused purely on PR activities masked as CSR.
What are the main challenges in the region?
In an article called “CSR in the Arab World: A Mission Impossible?” written by Kjetil Selvik, the main challenges of CSR in the Arab countries are displayed. It is hard to spot the difference between CSR and Zakat in practice. Moreover, in Arab countries, CSR is often reduced to some donations like money or food, or planting trees in public parks. Measures like these do not satisfy the ambitions of CSR promoters, who would like to see systematic changes in how companies are operating. Does this mean that CSR won’t have a development impact in the Arab World?
One of the main challenges is that CSR is associated with profit logic. The Zakat model differs fundamentally in its incentive for acts of social responsibility. This is something that the individual is supposed to do for God. On another hand CSR is promoted as a business tool to improve the company’s reputation, and companies frequently share successful CSR stories with the media and the public. The normative difference between CSR and Zakat complicates the entrance of CSR into the Arab World. The CSR model introduces an instrumental framework that collides with local sensitivities. This is a potential problem of which organizations and businesses trying to introduce CSR in Arab countries should take note, says Selvik.
In conclusion, companies in the Middle East are realizing the importance in adopting a CSR strategy and what it can bring for them as a benefit on their triple bottom line. They are trying to go beyond a simple donation or planting trees. Moreover, they are starting to measure their KPIs and to write sustainable reports. It is true that companies in the Middle East still have a long road for sustainability, but it is good that there is a will, and when there is a will there is a way!
By Saskia Kloezeman
True locally owned CSR companies operating in the international markets are able to contribute to sustainable development for developing countries. This sounds logical and simple, while unfortunately the reality is different.
In developing countries investments made by local people do provide more sustainable job opportunities. The moment they have established connections with the international markets, these can be long term trade relationship, which build human capacity, technology and provide growing returns for their company, country, and in turn increase demand for service delivery.
International investors that establish their companies in developing countries can employ as much local people as they need, train them, build proper facilities, schools, hospitals, etc. At a certain moment they decide to pull out their investments as their returns peaked, and other countries provide more attractive benefits. In that situation, people lose their income, the facilities build for the community might not have sustained as they were supported by the company, not the community.
International companies have more opportunities to hire knowledgeable people to facilitate application procedures for grants, development funds or insurances and to apply CSR policies, strategies and upgraded technologies. Local communities will on the short term directly benefit from this. On the long term, local communities will not get the core information that is crucial to set up CSR business or the access to the international buyers. International companies are in a position to select carefully the country to invest and have done their homework before they invest in a country. This in contrary to successful domestic investors, who might just have finalized their high school. They are not aware that CSR exists and cannot benefit their company and country at large. The moment local companies can be CSR accredited, they will be able to increase their business into the international arena and sustain development within their own country.
The guarantee of companies to stay in developing countries is crucial to sustain economic growth and create sustainable income and tax revenues for that specific country. Local companies are the one that stay in their country and expand, while international investors more often might decide to sell their business and move to another country.
To conclude, a major bottleneck is that in general recognized or certified CSR companies that are exporting products are not locally owned, which creates various risks in sustainable development. The knowledge-gap and the regulations of the exporting markets is another bottleneck.
Solutions could be shared ownership of international CSR businesses. Providing opportunities for local communities to take over a part of the shares in companies to which they provide raw materials or services will guarantee the sustainability of the company in that specific area.
On the international CSR-arena, work should be done on accessibility of markets from companies in developing countries that are locally owned, while additional efforts have to be put in place to set up the CSR business, educating staff and to continue being profitable.
By Maryam Sadeghi
For those who are interested in Corporate Social Responsibility issues, it is quite normal to look at sources, as many as possible, to see the trends, new regulations, activities and researches that help improve social and environmental practices of Business. This helps me, as others who study in this area, to see what is going on about CSR in various disciplines. There is a need for a broader insight and seeing the problem from different angles.
Through participating in different events and workshops across disciplines to see the latest activities in this area, I was surprised to see the different understanding in different disciplines of Business and Management about CSR. The next step was to explore what other departments are doing in this area, which showed the deep level of mismatch. It is mainly because of the nature of the each discipline, but the lack of awareness of some aspect can be a problem. For instance in Engineering discipline, the focus is far from those researches that carried out in Business and Management disciplines. However, knowing the findings in other areas can help solve some issues and bring a new perspective that even can explain the problem better, especially if that particular aspect has been researched a lot in one discipline but still is a significant challenge in another discipline. In a similar vein, in the other disciplines, there are less awareness towards practical aspects, technologies and overall solutions that engineering disciplines offer and for sure this happens in many disciplines, as well.
This prompted me to think about the wider aspect of the issue that corporate social responsibility is a controversial issue, that we are dealing with internationally, because of current concerns over social and environmental issues in general and the significant role of business in particular. However, the research about social and environmental issue is so divergent; of course, each discipline works on the issue from a unique aspect and also researchers mostly aware of their own disciplines.
However, as Popper says, we should move from the ‘subject’ and its domains towards ‘the problem’ in the research. Therefore, do we need change practicing our research and seeing things from different perspectives? IF so, to what extent is there enough encouragement for an interdisciplinary approach to the social and environmental issues?
For example, in my searching on the internet to see how many schools and research centers offer interdisciplinary research in the CSR and related subjects, I can say, I found remarkably few. Similarly, cases in multi-discipline research that really confined to multi-supervision projects mainly because of the research grants.
According to Prof. Williams from university of Sheffield, multidisciplinary research is not always interdisciplinary. As interdisciplinary research, supposedly brings new understanding from different angles to help solve a problem that cannot be done necessarily within a discipline. Thus, the interdisciplinary approach helps grasp a broader dimension of an issue.
To conclude this it seems that the interdisciplinary approach in CSR is still a gap to be filled, and this field requires people from various backgrounds to bring their different perspective towards the field. As according to the definition by the National Academy of Sciences, 2004: “Interdisciplinary research is a mode of research by teams or individuals that integrate information, data, techniques, tools, perspectives, concepts and theories from two or more disciplines… to solve problems whose solution are beyond the scope of a single discipline”.
By Katja Blomé
At the time of writing, the Global Reporting Initiative (GRI) is about to launch its “fourth generation of sustainability reporting guidelines”; G4. GRI is one of the most widely recognized and respected frameworks for corporate social responsibility and many large organizations use it to demonstrate their commitment to CSR. GRI aims to stay up to date with, and map out, the route for the ever-changing and evolving business environment of the 21st century. The guidelines have been modified on a regular basis since the first version was launched in 2000. Using GRI to report on corporate sustainability has always been a choice – not an obligation. The voluntary nature of these kinds of frameworks has been questioned before, and the launch of G4 once again raises the topic. I argue that now is a good time for Sweden to make sustainability reporting mandatory…again.
Sabrina Vetters concluded, in her blog from September 2012, that a mandatory approach to corporate responsibility would have a positive impact. She noted the need for an effective implementation mechanism and assessment of a number of questions regarding the implementation of such a system. Sure enough, making companies legally abide to social and environmental issues would most certainly demand a major change of the system. But.. wait a minute. Haven’t we done this before?
Environmental law has been firmly manifested in Sweden since 1999, when the major guidelines were reassessed, altered and reinforced. Today, pretty much all activity that has any impact on the environment is regulated. Much of the regulation applies to companies, as they constitute the main producing facilities and thus, the major polluters. Corporations are obliged to set up systems and routines that monitor their operations, and are scrutinized to controls regularly by the local authorities. The result is a, globally speaking, quite impressive system where the damaging activities are visible, measured and controlled. The strong enforcement of environmental law has created a large demand on expertise and most universities now offer programmes on environmental subjects. All larger producing corporations have at least one person working full-time with environmental matters. Could not social, economic and governance sustainability be regulated?
Law enforcement is a controversial topic that raises classical dilemmas such as that of the involvement of the state. This is a source of debate in any country. What can be said for Sweden is that the state is strong enough to exercise this kind of control. A large number of states are too weak and the governments simply don’t have enough power capital to put any kind of pressure on national or international corporations. If the government decided to put more pressure on corporations, Sweden would risk losing short term business. In the long term, however, the country would reaffirm its position as a world leader in sustainability matters. We should, like GRI, aim to stay up to date with, and map out, other countries’ sustainability work. Making G4 reporting mandatory to all corporations would be a first step in this direction.
By Selena Lucien & Sophie Langlois
As outlined by Andrew Kitching when discussing director liability under the Canadian Business Corporations Act, some commentators assert that shareholders should only make up one part of the broader stakeholder interest in making decisions for the corporation. They believe that the shareholder primacy model, concerned primarily with profit maximization, sidelines stakeholder interests and actually restrains directors’ ability to provide long-term guidance and leadership.
There is growing evidence that shareholders can actually be better served with improved stakeholder engagement and consideration beyond meager public relations campaigns. A UN Global Compact report states, “If stakeholders are adversely affected by a company’s actions, shareholders’ value will suffer. With the growth in pension and insurance funds and other institutional investors, shareholders are increasingly also company stakeholders…therefore these groups’ needs are increasingly interconnected.”
Moreover, shareholders are demanding change and are gradually pushing for strong corporate sustainability strategies. A study conducted by Ernst & Young titled Shareholders press boards on social and environmental risks: Is your company prepared? evaluated American shareholder proposals from 2010 and found that resolutions focusing on environmental and social issues made up the largest portion of shareholder proposals. Moreover, it concluded that shareholders increasingly believe that a robust social and environmental business model correlates strongly with risk management strategies and ultimately its portfolio performance.
A more recent collaborative study by The Conference Board and FactSet indicated that the number of shareholder proposals in the United States concerning social and environmental policy issues (243 proposals in 2011) continued to increase since 2007, despite the decline in other subjects; they constituted 35.2% of the total number of proposals. This data represents the “increasing sensitivity of shareholders to the long-term value generation potential of a cohesive corporate sustainability strategy.”
A forward-looking trend is revolutionizing the expectations placed on corporations. This is exemplified with the B Corps model, an organization that has successfully pushed for the creation of a new legal classification for corporations which aims to “create a material positive impact on society and the environment.”
The trend observed in Canada has been less active, with only 2% shareholder proposals related to social and environmental issues appearing on the S&P/TSX Composite Index in 2010. The S&P had only 254 corporations in 2010, compared to the American Russell’s 3000 and the S&P’s 500. This may reflect a cultural difference in outspokeness or interest in environmental and social sustainability amongst Canadian and American shareholders.
At a recent lecture at Toronto’s Rotman School of Business, Richard Ross, previous Chair and CEO of Inmet Mining Corporation, a Canadian mining company, elaborated on the decision-making process surrounding Inmet’s involvement in the Papua New Guinean Ok Tedi mine. His main message was that mining companies today must “grow responsibly” to increase value for shareholders. Such an approach requires a sound knowledge and understanding of all aspects of corporate responsibility. It also requires a willingness on the part of companies to make decisions that impact short-term profitability and growth with a view to minimizing longer-term reputational and financial risk. During Inmet’s involvement, Ok Tedi was successful in striking a balance between profitability and mitigating environmental impact.
When other shareholders in Ok Tedi decided to follow a course of action that did not meet Inmet’s view of sustainability, they decided to end the partnership and exit the mine. No doubt Inmet could have made a profit in the short-term by staying in the project; however, the risk to their “social license to operate”, which is the key to achieving long-term growth and value creation, could have been impacted.
As a leading force behind the first MBA program with a specialization in global mining management at the Schulich School of Business in Toronto, Ross explained that senior management in mining companies must now have, as a core competency, a strong appreciation for and understanding of all aspects of corporate responsibility. Ultimately they must have a clear vision of what sustainability looks like for their companies and to make sure that their directors and shareholders understand the cost and opportunity of growing responsibly.
While the Board of Directors is responsible for ensuring profit maximization for the shareholders, it is becoming increasingly evident that long-term sustainable value creation depends on a robust social and environmental risk management plan. Directors are most effective when they are able to address increasingly complex environmental and social risks. The trajectory towards responsible and sustainable investment supports a more balanced approach to the director’s fiduciary duty and this suggests stronger consideration for stakeholder interests.
By Selena Lucien & Sophie Langlois
Globalization has reconfigured the relationship between business, government and society, and in so doing has increased the importance of CSR worldwide. In fact, during the last half of the twentieth century, the value of world trade soared from $57 billion to $6 trillion because of increased global interconnectedness. With the liberalization of financial markets, technological advances and privatized banking have provided ample investment opportunities worldwide. While the nature of doing business has changed, the social and environmental vulnerabilities continue to be undermined at the corporate decision-making table. As corporations continue to grow in size and impact, they should simultaneously be expected to contribute to the sustainability of their business operations and, where relevant, the environment. While profit maximization is a key driver for any successful business, other stakeholder interests should also be addressed with care.
Undoubtedly, there have been many encouraging strides by corporations and their boards of directors to implement anti-corruption practices, increase transparency in their disclosure of public filings, report on the social and environmental impacts of their business activity, demand director independence and diversity on their boards and so forth. Boards of directors have matured from the “old boys club” style of operation that once existed. The American 2002 Sarbanes-Oxley Act is one example of regulation that has influenced best practices of corporate governance in Canada and abroad. Boards are now expected to have a majority of Directors who are independent from management, to exercise good judgment, and to be wise and skilled in an area of expertise valuable to the decision-making of the corporation. However, often absent at the boardroom table are Directors skilled in ethics, corporate social responsibility, anti-corruption, or environmental and/or human rights issues.
As occurrences of corporate environmental and social disaster persist (BP Oil Spill, the Global Financial Crisis, NIKE, Exxon Valdez to name a few), Boards of Directors are increasingly looked to with reasonable scrutiny for their oversight, knowledge and understanding of the risks and vulnerabilities in the execution of business decisions. Corporate boards can best serve their shareholders when they are capable of providing well-informed and strategic oversight that go beyond financial performance. If boards are not equipped with “know-how” in risk management, including social and environmental risks, they risk harming their reputation and driving share performance down.
Stephen Erlichman, Executive Director at the Canadian Coalition for Good Governance, believes that “a culture of integrity starting at the highest level – that’s very, very important for companies… People have their own moral compass.” A new business environment is emerging and boards can increase their effectiveness when equipped with the momentum and tools to compete in a forward-looking, responsible and sustainable global business environment. If they don’t, they risk falling behind.
But aren’t directors constricted by their fiduciary duty to shareholders? Absolutely. But this does not necessarily mean profit maximization at any expense. Essentially, shareholders trust that company directors will manage and protect their money. The common expectation is that a director serves a shareholder first and foremost by maximizing profits. However, in an increasingly interconnected world, the line between sustainable business activity and profit maximization is murky, and these two have become increasingly interdependent.
By Frank van Elsen
Since the late 1990s it has become increasingly important for corporations to account for their behavior, products, brands, and reputation. This is due to the sense that a company’s success is tied not only to guarding its own well-being but also to that of the natural and social environment in which it operates. This perspective on CSR, named the Business Case approach, has by its use in the business community had many proven advantages for the development of CSR. The advantages of such an approach have been receiving a lot of attention. This post however hopes to shed some more light on the possible disadvantages of such a view for the development of CSR.
The Business Case for CSR can be viewed as a reconciliation of two very differing perspectives on CSR. The first perspective originated in the 1950s and placed emphasis on businesses’ responsibilities to society and doing good for society with reference to morality and charity as a moral practice of businesses, while the second originated as a response to the first one and which emphasized the dangers associated with such a view on CSR. This interpretation stressed that the only responsibility businesses have to society is to make money for its shareholders. The Business Case interpretation reconciled these two interpretations by stressing the notion of enlightened self-interest, meaning that it is in the long-term self-interest of businesses to engage in CSR. CSR provides indirect benefits to companies, which will pay out in the long term by delivering intangible assets to a company, such as brand loyalty and risk reduction. The business case interpretation changed the debate on CSR because it meant that a choice between profits or ethical behavior does not have to be made, since acting ethical is considered to be profitable. The choice between focusing on profits or principles disappears when companies can achieve win-win situations which promote ethics and boost profits at the same time. Arguments for the business case interpretation of CSR are that it provides cost and risk reduction for companies, helps gain competitive advantage, helps developing reputation and legitimacy and that it helps in creating win-win situations for both the business community as well as society in general.
There are however also arguments against the business case interpretation of CSR which center around the contention that a business case interpretation actually leads to suboptimal CSR engagement. One of these is follows from the propagation of self-regulation of the business community inherent in the business case interpretation which leads to the assumption that businesses can create competitive advantage by leveraging their CSR efforts in the consumers’ eyes. There are however obstacles that prevent consumers from doing this.
In order for socially responsible companies to be rewarded by consumers, they need to be provided with complete, reliable and transparent information about the practices of these companies. Consumers however report having difficulty in getting this information. Companies can reduce the information asymmetry between them and consumers by issuing reports, but these often lack reliability and quality due to their limited scope, because companies do not disclose on all issues, or in depth, because the information provided is fragmented and incomplete. This market failure, coming from the lack of power of consumers to reward or punish companies on their CSR engagement means consumers will not be able to buy responsibly, resulting in the argument that CSR pays, at least as far as consumers are concerned, to be invoked. This diminishes the motivations of companies to undertake CSR plans. A way to decrease this market failure is to make reporting on CSR in a clear and understandable and comparable way mandatory, which however goes against the above stated basic assumption of the business case that CSR progress should not be encouraged or artificially produced by way of regulation.
By Helene Frimannslund
As one of the first countries in the world, the Norwegian Government has designed a holistic framework for policies concerning and promoting Corporate Social Responsibility (CSR). The intention is to increase awareness and stimulate social responsibility in both public and private corporate conduct. The desired outcome is that Norwegian companies are to be at the international frontline of carrying out social responsibility. CSR should be based on sound values and lead to respect of human rights and work rights, protection of the environment, fighting corruption and endorsing transparency amongst others. The Government further believes that viewing CSR as entirely voluntary will gradually be confronted in the close future. Some areas will remain voluntary, while engaging in other main areas will become obligatory, forming the baseline of expectations for all companies. A major challenge will be how to strike a good balance.
The three key components to the Norwegian government’s CSR engagement are: (1) exercising social responsibility in the Government’s own activities; (2) conveying society’s expectations to Norwegian companies; and (3) developing an international CSR framework. Some existing guidelines that receive political and economic support, and are highly recommended by the Norwegian government are: OECD Guidelines for Multinational Enterprises, UN Global Compact, Global Reporting Initiative and ISO 26 000. In addition the Government has its own CSR consultative body, KOMpakt. This organization is to strengthen the basis for developing the Government’s CSR policy and decision-making, and to enhance dialogue between the Government, private sector, interest groups and academia on key questions.
In later years, Norwegian companies have become increasingly involved in CSR by operating in countries post-conflict or suffering from weak governance. Foreign companies could potentially have a positive impact by setting high CSR standards that can subsequently be followed by local companies. The Government argues that to be at the frontline of CSR is in the companies’ own self- interest and can increase corporate competitiveness in an increasingly social responsible world market. The current Foreign Minister Espen Barth Eide has expressed that he hopes to see more businesses as keen and efficient drivers of development. Through innovation international corporations can have a special role in contributing to lifting people out of poverty and having an impact on energy and climate, water, biodiversity, agriculture and food, corruption and gender equality. This all comes to show that the Norwegian government has a very progressive, involved and optimistic view of CSR. One reaches far in supporting the establishment of both public and private CSR strategies that may in turn contribute to the promotion of inclusive development worldwide.
By Svetlana Skryagina
The notion of soft power – the ability of a country to attract and persuade, coined by Joseph Nye in the late 1980s, is recently being used in relation to corporate business. Drawing the analogy with nation-states, corporate soft power came into existence with strengthening of corporate hard power – business globalization and vast increase in the scale of operations. But how is it being addressed by the corporate world? If nation-states utilize the public diplomacy as a premier tool for influencing public opinion and promoting country image, what do companies employ? Corporate social responsibility (CSR) might be the case.
CSR and corporate philanthropy programmes form a strategic basis of corporate soft power. International aid projects, including international pro bono and corporate volunteering initiatives, present a good example of companies’ efforts to contribute to social development, while enhancing their visibility and strengthening goodwill. One of the leaders in international pro bono services is IBM and its Corporate Service Corps program. Under the program IBM employees implement community-driven development projects for local communities, public bodies and non-governmental organizations in emerging markets. Since its launch in 2008 more than 1200 people took part in the program, making positive social impact in more than 20 countries around the world. Such projects allow business to create shared value in local communities, communicate its company image and at the same time develop employees through experiential learning.
Another way of shaping stakeholder preferences and mainstreaming values is through thought leadership and alignment with social context. As countries communicate their vision, culture and values through public organizations such as Goethe Institute, British Council or Confucius Institute, so companies establish corporate funds and fellowships to address topical social issues or target specific groups.
L’Oreal Women in Science International Fellowship program raises awareness on the contribution of women researchers to the sciences. Under the program more than 1200 outstanding female scientists across the globe were awarded the fellowships, supporting their further research since 1998. Avon is well-known for its Avon Breast Cancer Crusade – initiative, which comprises research, education, trainings, counseling and outreach on breast cancer, making the company a leading corporate supporter of the cause globally.
The clothing and outdoor gear manufacturer Patagonia challenged the basics of market economy by introducing the Common Threads Initiative. Using a break-through approach of free repairs for its clothing, constant research on creating eco-friendly yet durable fabrics, and responsibility for recycling its own garments, the company addressed the issue of excessive consumption.
All these cases speak loud of CSR as an effective corporate soft power instrument. Yet the question remains – will this power be used for better or for worse, strengthening CSR case or cheating on stakeholder expectations.
By Vanja Jankovic
Western Balkan (or Southeast Europe) countries are undertaking deep economic and political reforms – supported and strongly influenced by the EU. This is case also with CSR development in the region, which is based on the premise that social and environmental aspects of change have not always been prominent in transition towards market-based economy. Countries in the region are on different stages on their way towards EU integration, having many common challenges on their path. High levels of corruption, grey economy, decrease of economic activities, high unemployment and lack of respect for rule of law are some of them. These factors in great extend determine conditions in which CSR is being developed in the region.
Donors led CSR initiatives introduced new terms and concepts to companies and wide public in order to transform inherited, socialist CSR systems into strategic CSR frameworks. Yet, for majority, the picture is still unclear. While international companies are downloading and implementing instructions from their headquarters, domestic companies act on the edge of philanthropy and often use CSR as a PR tool. Media show little interest in, and society is largely unaware of CSR. Governments’ engagement in CSR is not only lacking, but often labeled as contra-productive, failing to provide environment that would enable CSR to grow. The most active player in CSR promotion in the region are non-governmental organizations, although quite modest in their CSR influence hence unable to put any significant pressure on business sector or governments. International organizations on the other hand conduct tailored interventions in CSR areas based on world best practices. However, donations for CSR promotion have shown to be inconsistent, varying from year to year in terms of funds, targets and issues covered.
Consequently to abovementioned, the most crucial environmental and social issues in the region are rarely addressed and potentials of CSR stay non-utilized.
Opportunities and potentials for Western Balkan countries to address these issues through regional CSR focus and planning need to be explored. New CSR frameworks and business models should reframe current perception of CSR as costly, Western concept that put yet another burden on the private sector. The common CSR model should be designed in order to deal with economic decline as well as with essential human, social and environmental problems faced. Alarmingly high unemployment, apathy and social injustice, poor access to health care and social services, poor work conditions, bad public and corporate governance, water infrastructure and supply, air pollution, urban waste disposal and other sustainability issues should be prioritized and should gather all relevant stakeholders with their knowledge, skills and resources in areas of common interest. This can be achieved only through cross-sectoral cooperation and social dialogue between stakeholders on all levels. Cases of other transitional countries, current members of EU, suggest that governments must play an important supporting and enabling function in this process, taking into consideration lack of market-based incentives and drivers. The role of EU will continue to be crucial in CSR development in the region, therefore CSR policies, initiatives and tools coming from EU institutions need to be modified to support this process in consistent way.
If put in the right context, CSR could utilize its potentials to mitigate negative effects of transition in the region, build its capacities for reform and growth and increase its ability to fulfill EU accession criteria at the same time. Keys in accomplishing sustainability agenda are collaboration and togetherness promoted and practiced among wide number of stakeholders on local, national, regional as well as on EU level. So there is an urgent need that all stakeholders in regional economic development put synergistic effort to create positive impacts in their sphere of influence.