Corporate Citizenship in Europe

February 01, 1994

An international conference “Promoting Corporate Citizenship in the New Europe”, was held last October in Barcelona. Here John Griffiths, a consultant to the organisers, Corporate Citizenship Europe, discusses the prospects for corporate community activity across the continent.

The concept of corporate citizenship in Europe is nothing new. As early as the Middle Ages, the “Befuinages” of Flanders demonstrated a form of cooperative community action. Since industrialisation and the organisation of capital, Europe’s more enlightened entrepreneurs have appreciated that putting something back into the community can realise benefits for all: the workers, their families, the local community, as well as the entrepreneur. By the 1790s, one British politician was compelled to remark “we are just now overrun with philanthropy and God knows where it will stop or whither it will lead us.”

The 1990s, however, have brought fresh challenges and new pressures to bear on businesses. A “New Europe” has emerged, part by design and part by accident, the coming together of a single market, 35 years in the making, and a former communist bloc, suddenly freed to experiment with the systems of capitalist democracy. The common thread in these two developments has been the power of citizen action and people’s disillusionment with the controls and impositions of the institutions of twentieth century European society, including government, the trades unions, traditional political parties and the vestiges of the welfare state. If businesses are to respond to the popular movement towards a society based on less regulation and greater individual choice, they must find the capacity to contribute more to the general health and welfare of the community. In short, the modern concept of corporate community investment challenges the long-held notion that only agencies in the non-commercial sector can safeguard social responsibility.

For those working in corporate community affairs, the corollary of deregulation and diversity in the New Europe must be an acceptance that there is no one definition of “corporate citizenship”. This can only be positive, as it encourages a variety of methods of community investment; there is little to be gained by pedants debating the meaning of corporate citizenship or singling out those activities it either includes or excludes. The motivation for corporate community involvement is equally wide-ranging from, on the one hand, “meeting the company’s moral responsibility” to “pursuing competitive advantage” on the other.

Business in Europe is potentially a force for social change. This is apparent from data which shows that the leading companies have revenues in excess of the Gross Domestic Product of all but the world’s largest nation states and that an increasing number of the top 50 industrial corporations (22, up from 8 25 years ago) are headquartered in Western Europe. Nevertheless, European companies’ involvement in the community pales into insignificance compared to their American counterparts. There are indications that this trend could be reversed. The governments of the European Union are increasingly interested in forging partnerships with the corporate sector. Businesses who have been quick to make strategic alliances (the first half of 1992 alone witnessed 800 formal joint ventures in Europe) have an ideal opportunity to develop joint programmes of community investment and underpin their commercial activities.

The leading Anglo-American exponents of corporate community investment now make partnership with other sectors in the economy a prerequisite of committing significant business resources to social or community-development programmes. In the United States, where non-profit organisations have consistently worked with the corporate sector, it has long been acknowledged that government has a role to promote such cross-sectoral collaboration by offering tax incentives, matched funding for partnership projects and encouraging good practice. The Americans appreciate that synergy is frequently generated by the three component sectors of the economy – the private public and non-profit – working together.

Comparisons between the European Union and the United States are often misleading. The markets may be of similar size and feature many of the same corporate names, but the institutions which have shaped the European Union are unlikely to create a business environment of shared goals, values and management styles. In America, companies and their communities use a common language which even extends to the jargon that pervades the subject of corporate community investment; in Europe, there is a high risk of confusion in using terminology and business-speak which simply does not translate across borders. For many advocates of corporate citizenship in Europe, it is essential to clarify differences of terminology and language before turning attention to the inconsistencies in the legal and fiscal environment.

It is equally important to set realistic goals for the promotion of corporate citizenship in Europe. The issue of community investment still has to reach the agenda of many corporations, let alone government. Equally, it must be acknowledged that some companies, even some of the leading corporate donors, will want to plough their own furrow irrespective of any new incentives from government, or solicitations from other organisations to from partnership in the community.

These cautionary observations apart, the recent Corporate Citizenship in Europe Barcelona Conference acknowledged that there are signs that the European Union, mainly through the Commission in Brussels, is taking an interest in the role of corporation in community affairs. Several initiatives bode well for companies which are committed to developing partnerships with government and to extending their community involvement across Europe. These include:

a social and employment affairs forum to develop partnership projects backed by Directorate General V of the European Commission (employment and social affairs)

a European Parliament Intergroup being established on the subject of Community Development

a major study of the role of the Transnational Corporation (TNC) in emerging economies being undertaken for Directorate General VIII (development)

The publication last December of the European Commission’s White Paper on Growth, Competitiveness and Employment suggests that in future there will be new opportunities and incentives for corporate community investment in Europe. The paper argues for innovative ideas and methods to increase the solidarity of society, particularly between those who have jobs and those without, by investing in the voluntary sector and local communities. Commission President Jacques Delors deplores the failure of the European economy which is so strikingly exemplified by the existence in Europe of 40 million people living below the poverty line. When he argues, “this is a matter for the Member states, but it is also the business of each citizen to practice ‘neighbourly solidarity'” he no doubt includes the corporate citizen.

Corporate Citizenship Europe (formerly Corporate Community Investment in Europe) has produced a detailed report of the Barcelona Conference, Promoting Corporate Citizenship in Europe. Contact: Angeles Simon-Dubl? Corporate Citizenship Europe c/o the European Foundation Centre 51 rue de la Concorde B-1050 Brussels Tel: 010 322 512 8938 Fax: 010 322 512 3265

Corporate Citizenship Briefing, issue no: 14 – February, 1994