CSR in Russia by U.S.-Russia Business Council

Introductory Comment of the New Eurasia Foundation

The Evolution of CSR in Russia

Foreign companies operating in Russia actively assist the Russian economy’s modernization while making a tangible contribution to the development of corporate social responsibility (CSR) standards and practices.

Corporate social responsibility is not an entirely new concept in Russia. Prior to the 1917 October Revolution, the foundation of such practices evolved synchronously with the development of industrial economies in Europe and the Americas. With the onset of the Soviet era, though, the institution of corporate social responsibility acquired a peculiar, exaggerated form: Soviet enterprises were required to address practically all social questions related to their workers, ranging from food and housing to health care. During the process of privatization in the 1990s, the majority of Russian companies rid themselves of non-core assets, such as their social infrastructure objects, to improve their attractiveness to investors. Consequently, the absence of effective mechanisms of collaboration between businesses and government resulted in the degradation of this existing infrastructure and provoked a social crisis in many Russian regions.

As Russians adjusted to the new economic system, it became increasingly clear that big business could not refrain from participating in the social development of their labor force or of the territories in which they operate.

Corporate charity programs, whose popularity has been growing over the past several years, are by themselves not a substitute for well thought-out strategic investment plans for social development with the needs of business in mind.

Russia’s integration into the global economy and the arrival of foreign companies with their experience in the implementation of social and charitable programs facilitated the development of new corporate citizenship approaches and standards. However, the methods used to implement these programs frequently fail to satisfy the companies employing them as well as the regional bodies of power for a number of reasons, including:

Before the onset of the current economic crisis, a number of serious steps had been taken to facilitate the development of a corporate social responsibility system in Russia. CSR had caught the attention of the federal authorities, the Russian Union of Industrialists and Entrepreneurs had designed corporate social responsibility standards, and the majority of large Russian companies had made it a permanent practice to publish regular social reports.

• a lack of transparency in the allocation of program funds;

Effects of the Crisis

•

a lack of programs with long-term effects;

• the lack of a connection between social responsibility program activities and the corporations’ plans and interests; and • the lack of cooperation with other organizations (including non-commercial organizations) operating within the same territory.

The global economic recession has seriously affected the scale of corporate social responsibility programs. At the same time, the crisis makes it necessary to search for new, more effective approaches and solutions to CSR. Based on the New Eurasia Foundation’s experiences, the following current trends appear to be most promising: • Corporations are interested in pursuing cross-sectoral partnerships in the field of social

Introductory Comment of the New Eurasia Foundation

development. Facing insufficient resources to support social infrastructure on their own, corporations are demonstrating increasingly greater interest in seeking public funds for such purposes. The state has been supportive of such collaboration, viewing it as the means for modernizing social systems. • Companies are prepared to implement social programs in a cooperative fashion with others. An increasingly large number of companies sharing common interests are prepared to consolidate their efforts and resources in order to implement social programs. A new initiative has appeared in the practice of forming “trustee councils” dedicated to enhancing the efficiency and transparency of CSR programs implemented by companies at the local level. • The circle of stakeholders on which corporations rely for the implementation of their social activities keeps expanding. Large corporations have radically changed their attitudes toward small businesses, finding much-needed partners for their social efforts in specific territories. Small businesses help to ensure the flexibility of the labor market and the competitiveness of the local consumer market. The most promising corporate citizenship programs encourage local communities to be pro-active and independent, thereby enabling them to overcome a welfare

mentality. In this connection, large corporations have come to appreciate their cooperation with the local “third sector” organizations. These trends are best manifested in the spheres in which corporate interests coincide with the priorities of the state’s social policy. Such spheres include: • Reform of the housing and utilities infrastructure, including the organization of housing construction; • Modernization of the system of professional education as a first priority, which is concerned with the preparation and retraining of professional working personnel; • Attracting a trained foreign work force, including the migration of compatriots from abroad; • Commercialization potential; and •

domestic

intellectual

Support for small business.

The organization of public-private collaboration within these spheres enables corporations rapidly to achieve sustainable social development outcomes

and develop mutually beneficial cooperation with authorities and local communities. In this environment, the need for swift deployment of new corporate citizenship approaches creates the demand for new social technologies that can be used effectively to manage risks and develop successful partnerships with stakeholders. The New Eurasia Foundation is one of the largest social development agencies in Russia concerned with analyzing, summarizing and adapting such technologies. Since its inception, the Foundation has realized more than 30 projects and programs in various social development spheres, implementing many of these in partnership with large, Russian-based and multinational corporations. In its work, the Foundation uses a broad spectrum of innovative social technologies and relies on a network of experts and practitioners from various regions of the Russian Federation. Despite the current economic crisis, the Foundation has not suspended a single program. In fact, we have noticed that Russian and international companies have been showing an increasing interest in new social development technologies and approaches. For us, this serves as an objective confirmation that progress in the sphere of CSR is not abating, but instead gaining momentum.

КСО в России:

ЭксонМобил

CSR Profile:

ExxonMobil