Business Poised to Fill Growing Social Gap

If Stuttgart’s public fountains are clean and in good repair, local metal-casting concern Bornemann + Haller may be the one to thank.

The company is not in the fountain business, but in 2002 it "adopted" Stuttgart’s fountains, taking responsibility for their repair and upkeep, together with the local government, as part of its “goal-oriented company policy” of social engagement.

The move continues a long tradition of German firms taking an active role in communities, be they local or international. In this case, a company official said the project was chosen even though "fountains aren't our business," because the need was there and a top executive took an interest.

Finding a good fit

While Achim Halfmann appreciates the corporate support for local projects, he'd rather the random nature of it be replaced by with joint actions between business and communities that would help support various causes as well as the companies that fund them.

"Businesses must learn to make the most of their social involvement, and see that it matches their product, their workers, their community -- that it reflects what their company is about," said Halfmann, whose consulting company, public integration, Ltd., helps firms develop strategies for aiding their communities.

German firms are certainly not laggards when it comes to corporate social responsibility, or CSR. A recent EU study showed 54 percent of German companies took an active social role in the life of their communities, compared with an EU average of 49 percent.

Filling the gap

But Germany is still well behind European leader Finland, where 83 percent of small and midsize companies are social do-gooders.

"The Anglo-Saxon business world is far ahead of Europe" when it comes to taking advantage of the opportunities CSR presents, Halfmann said. "They've been doing this for a long time."

Yet CSR seems poised to become even more important to the welfare of German business. It stands to fill the gap between two conflicting trends: shrinking levels of social spending by the government and an increasing desire by shareholder to see that companies are doing something besides just looking to maximize profits.

Andreas Gross, spokesman for the BDA employers' association, said: "CSR ... has taken on a new dimension in the past two, maybe three years.”

His organization runs a Web site, csrgermany.de, which lists German firms that have CSR programs and the various forms they take.

“What has changed is that the public is much more aware of these issues,” Gross said, noting that Germany’s Manager Magazin ran a ranking of companies' CSR activities for the first time last year.

“It is certainly relevant for companies that are listed on the stock exchange -- they are more carefully watched,” he added.

More and more, companies are realizing that investors as well as consumers are keeping a watchful eye. Germany’s respected consumer magazine Stiftung Warentest has started adding social criteria to its product ratings. And woe to the company that gets on the wrong side of an environmental boycott, like the one that Greenpeace started against Shell after the oil company announced plans to sink a platform off the North Sea a decade ago.

Ecopencils?

One example of a firm that has successfully tied its social activities to its market segment is Europe’s biggest pencil maker, Faber-Castell. More than a decade ago, the southern German firm developed a pioneering reforestation project in Brazil. The project -- far from the rain forest -- grows trees for its pencils while creating a sanctuary for protected species. The company also developed environmentally friendly, water-soluble lacquers for its pencil coatings, winning kudos from the EU environment ministry. And in 2000, Faber Castell instituted a social charter that forbids child labor and supports equal opportunity and equal pay.

Such projects are often as much about good publicity as they are about deeply held belief, and the line between the two can be blurry.

But in a 2005 study by the international consulting firm Pleon, only 10 percent of companies admitted their CSR activities were solely meant as PR.

Still, there are great gulfs in terms of credibility, said Wolfgang Stark, professor at the University of Essen, in a recent Deutschlandfunk radio interview.

He called Britain's Body Shop a "beacon of virtue." The cosmetics firm is renowned for being built around socially responsible action. But he also talked about companies that “basically support CSR projects in Germany with their left hand, and support a system of exploitation in Nigeria with the right."

"I think we will have to live a bit longer with this ambivalence,” he added.