Corporate Social ResponsibilityFor All

NATIONAL REVIEW REPORTCroatia

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OUTLINE

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OUTLINE 28) Project Management, Implementation of CSR

Projects at Company Level Commitment to Employees Respecting Human Rights Community Engagement Environmental Activities Engaging with the Supply Chain Fair Business Behavior Providing Remedy

9) Challenges in Implementing CSR10)Conclusions and Recommendations

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General Information

• This Research Report is part of the EU funded project in which the Turkish Confederation of Employer Associations (TİSK) is the Lead Civil Society Organisation (CSO). The Partners of TİSK in this project are:

• The International Organization of Employers (IOE)• Croatian Employers Association (CEA)• Business Confederation Macedonia (BCM)• Montenegrin Employers Federation (MEF) and • National Council of Small and Medium Sized Private

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Objectives

There are two specific objectives of the project:1) To build awareness and capacity in partnership/network of

employer organizations (EOs) in South East Europe regarding CSR in order to improve their participation in multi-stakeholder dialogue at national and international levels.

2) To create awareness and build capacity in the network of employer organizations (EOs) in the region to guide enterprises for their positive impacts on society and to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy.

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Sampling Methodology• Conducting 500 companies in the first phase, followed by 300 in the second

phase, and in the final phase to the total of 1,691 contacts• 100 responses received• Sub-samples in addition to the whole sample:

– based on size (SMEs versus larger companies)– based on sector (findings for the five biggest sectors)– based on ownership structure (private sector versus stated-owned companies;

companies with domestic headquarters versus companies with foreign headquarters)– based on markets (companies with mainly domestic market versus companies with

mainly a foreign market)• Companies were selected with taking into account the following criteria: size of

the companies, regional distribution of companies and sectors distribution in which companies operate

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• The sample was broadly distributed by regions as follows:

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Sampling Methodology

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Sampling

• The questionnaire was sent out to the questionnaire was sent to the email addresses of 2,491 companies from across Croatia

57 companies being members of the UN Global Compact Croatia

• The questionnaire was disseminated through:– Croatian Employers' Association membership network

(branch associations)– Croatian Business Council for Sustainable Development

members base – Kompass Croatia – Croatian Economy – database of Croatian

companies

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Sampling 2

• Companies with incomplete responses were contacted

• There are three basic reasons why the expected response rate was not reached within the targeted sample - extremely low return of 4% due to:1. summer months and the holidays2. lack of interest in this topic 3. lack of resources for any development issues

and the issue of CSR

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Analysis Strategy

• Perceptions of enterprises regarding CSR

• Degree of interest of enterprises in CSR

• Knowledge level at enterprises regarding internationally recognized and/or actual CSR initiatives

• Implementation of CSR projects at company level

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Distribution by size of companies

Company size Respondent Share

Micro 28 28.0%

Small 24 24.0%

Medium-sized 19 19.0%

Large 29 29.0%

Total 100 100.0%

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Distribution by sectors

Five largest sectors Respondent Share

Manufacturing 16 16.0%

Wholesale and retail trade 20 20.0%

Mining and quarrying 4 4.0%

Real estate activities 4 4.0%

Construction 10 10.0%

Other 46 46.0%

Total 100 100.0%

• Due to the relatively small number of participating companies, the results for specific sectors will not necessary show exact results for the sector so they need not be taken for granted

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Distribution by ownership type criteria

Ownership type Respondent Share

State 9 9.0%

Private 85 85.0%

Co-operative 0 0.0%

Mixed 6 6.0% Total 100 100.0%

• Due to the relatively small number of state companies and the small number of companies that operate on foreign markets, the results need to be taken only as guidelines and not as exact data

• Due to the relatively small number of state companies and the small number of companies that operate on foreign markets, the results need to be taken only as guidelines and not as exact data

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Companies with predominately domestic markets vs. predominately foreign markets

Market Respondent Share

Domestic 78 78.0%

Foreign 12 12.0%

Equally domestic and foreign 10 10.0%

Total 100 100.0%

Perception of Enterprises Regarding CSR

• General awareness of CSR is presented for the whole sample - 84% of companies are familiar with CSR

• Then the survey result is examined in terms ofOriginCompany sizeSectorCompany structureYears

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CSR Governance in the company• There is recorded existence of CSR departments in 55%

of companies :– In 90% of large companies – In 11% of small companies

• Department for Corporate Communications and PR (28.3%)

• Office of the Executive Manager (19.6%)• Teams of the people coming from various key

departments (13%) • Departments specifically organized for CSR (6.5%)• Environmental Protection Departments (4.3%) and others

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Areas of priority regarding CSR

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• Largest number of answer given to:– Responsibility towards employees (62%) – Responsibility towards the local community (27%) – Fair business practices (26%)

• On a total ranking list– Responsibility towards employees with 27.7% – Securing jobs with 10%– Human rights with 10%

Degree of Interest of Enterprises 2

• Reasons for Engaging in CSR

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Degree of Interest of Enterprises 3• Familiarity with CSR instruments, tools and initiatives:

– 68% are familiar with some of the CSR instruments – 2% are not familiar with a single tool or instrument– 30% did not answer this question

• Use of CSR Instruments, Tools and Initiatives: CSR Index is used by 25.6% UN Global Compact is used by 23.1% GRI 19.2%

• 32% of companies publicly commit to their obligation to CSR

• Code of conduct exists in 55% of the companies (86% large companies)

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Degree of Interest of Enterprises 4

• 46.4% of companies publicly report on CSR • Approaches to reporting:

– Online reporting by 29.1%– CSR reports by 19% – Integrated reporting and meeting with

stakeholders by 16.5%• 51% of the companies consult with external

stakeholders regarding company responsibilities

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Assessing Governmental Policies towards CSR

• 92% of the companies think that government support for CSR is useful as it increases awareness of CSR and represents a good foundation for companies’ CSR policies

• Governmental policies are useful and should:- Inform - Raise awareness - Introduce awards - Introduce tax reductions.

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• Most stated that the significance of CSR in the future will grow (73%), as to the areas of importance:

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The significance of CSR in a company in the future

Area f Share

Responsibility with regard to the environment 54 16.3%

Responsibility towards employees 50 15.1%

Responsibility towards the local community/region 45 13.6%Fair business behaviour 40 12.1%

Securing jobs 35 10.6%

Respecting human rights 35 10.6%

Anti-corruption behaviour 31 9.4%

Engaging with the supply chain 27 8.2%

Support for culture, science and sports 14 4.2% Total 331 100.0%

Demand for Training

• Following areas are expressed to draw the most attention:

Responsibility towards the local community Responsibility with regard to the environment Anti-corruption behaviour Responsibility towards employees Fair business behaviour Respecting human rights Securing jobs

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Project Management, Implementation of CSR Projects at Company Level

• The results are summarized in the following activities :commitment to employeesrespecting human rightscommunity engagementenvironmental activitiesengaging with the supply chainfair business behavior providing remedy

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Commitment to Employees• Very good results of Croatian companies as to the issue of:

– work-life balance of employees - 83%– training of employees - 95%– promotion of healthy and safe work environments - 96%– rights to establish and join organizations of their own choosing and

engagement in social dialogue processes - 79% – measures to abolish child labor - 81%

• 66% reported having feedback mechanisms for workers to submit issues of concern to management, but 16% were unsure if they exist

• Worst results were recorded as to the measures for disabled people: only 29% of the companies agreed with the claim (mostly large), while 65% of the companies disagreed or completely disagreed, or were unsure of the answer (mostly by micro and small companies)

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Respecting Human Rights• Here we have 96% that strongly agree or agree, others were

unsure (micro and small), and there were no negative answers• As to the issue of public commitment to respect human rights,

84% were positive answers, 10% stated being unsure, and 5% of answers were negative statements

• Much worse results are seen in the question of engagement in due diligence and human rights impact assessments in their company- only 32% of the survey participants agrees or agrees completely (22% and 10%) , 40% were unsure, and 22% completely disagrees or disagrees with this statement

• More responsibility and sensibility on these issues was shown by large and foreign trade companies

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Community Engagement• Rather good proportion of companies are included in community

engagement; by ranking:– support of education and training institutions and initiatives -

70%, support for social initiatives - 66%, support of cultural projects - 54%, support for amateur sports associations by 51%, support for particularly small infrastructure initiatives- by 42%

• Lowest result was recorded in the support for professional sports associations – by 26%

• Large companies are more involved in all means of support, but there are some differences between sectors

• Foreign markets companies invest more in the local infrastructure initiatives

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Environmental Activities• Very large number of positive answers on the issue, by ranking:

– Energy consumption reduction - 92% (Better results were recorded in the state owned companies, private companies there were 2.4% of negative results - although not significant, still surprising)

– Waste recycling policies - 89% – Systematic efforts to reduce the use of natural resources - 81% (17% did not

know how to answer this question) – Pollution emission reduction measures - 78% (interestingly 18% of the

survey’s participants were unsure, among which in large companies 3.4% were unsure).

• Worse results were recorded in environmental management systems (ISO 14001 and EMAS) - 39% (16% did not know how to answer this question, whilst the rest gave a negative answer) – all companies in the mining and quarrying have certificates

• As in most of the questions, the results are better in large and state owned companies and foreign markets operating companies

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Engaging with the Supply Chain• The results were recorded as to the following issues, by ranking:

– Integration of ethical, social and environmental criteria in purchasing, distribution and contracting policies - 75% (19% of the participants were unsure)

– The existence of audits of social and ecological performance of its suppliers - 55% (20% were unsure, 23% with a negative answer)

– The existence of training on social, ecological, human rights and OSH issues to suppliers - 31% (37% do not have it, 29% were unsure)

• The best results were recorded in mixed owned companies and large companies, and if divided by sectors, companies in the mining and quarrying sector again have the best results

• Worst results are recorded in the companies that do business in the domestic market

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Fair Business Behavior • Fair business behavior was recorded are as follows:

– the identification of risks from corruption and the implementation and maintenance of policies and practices that counter corruption and extortion - in 75% companies (18% did not know the answer)

– the existence of rules regarding responsible political involvement and contributions, and how to deal with conflicts of interest - in 69% companies (26% unsure answers)

– the existence of procedures to prevent anti-competitive behavior - in 52% companies (36% were unsure)

• Despite the anti-corruption measures taken by the government, state owned companies are worse - 11% do not have this policy

• As to company size, the results are different – only in 1st issue it is not relevant, and worst results were recorded by small companies

• Best results are in the mining and quarrying and manufacturing sector• All negative answers were recorded in the companies that dominantly operate in

the domestic market

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Providing Remedy

• 52% of companies have reported insurance of legal redress in cases of human rights abuse

• These procedures are not noted in all sizes of companies although less in large companies (3.4%), while somewhat more in small companies (12%)

• These procedures are also more common in private companies - 7% of them declared not having them, state owned companies don’t have them in 11% of the cases

• If divided by sectors, the best results are recorded in the manufacturing sector with 74% ; in the mining and quarrying sector there were no negative answers, but 25% of the surveyed companies did not answer the question

• Again, these procedures don’t exist only in the companies that operate in the domestic market

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Conclusions and Recommendations• CSR is more common in large companies, those in manufacturing and resource intensive

sectors and export companies, therefore education should be oriented to small and medium companies.

• The survey results show CSR implementation levels higher than expected - It is our presumption that part of the positive answers are based on single good examples rather than on systematically defined practices which also calls for more education about the topic.

• Even though there is no significant violation of human rights, national statistical data (equality of gender, rights of whistle-blowers, employment of disabled persons) tell us that survey’s participants don’t have enough knowledge on best practices - therefore, education and raising of awareness is needed to help a better understanding of this issue and in the future maybe more realistic results in the survey.

• As in the future, the importance of CSR will grow, as well as its influence, mostly in the areas of environment, employees, and the community and fair business practices, and as companies expressed their interest, additional training on these topics should be provided.

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Conclusions and Recommendations 2• Also, stronger CSR implementation in environmentally intensive companies tells

us that higher regulatory standards are supportive for CSR implementation as well as the other outside pressures such as value chain measures, therefore higher CSR implementation levels are found in export companies. In the long term, the chain of value pressure should be increased so that companies operating predominantly in domestic markets should gain more knowledge and find their business case to invest in CSR.

• Additional education is needed for representatives of public sector and creators of public policies from not just the area of CSR, but also about tax policy, public procurement and other important areas for socially and environmentally positive practices. This would strengthen the capacities of the public sector to create positive mechanisms to support CSR.

• It is important to strengthen the importance of CSR in government institutions and public companies and to introduce CSR criteria to the distribution of funds from the Croatian Development Bank or the Ministries of Entrepreneurship and Economy.

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Conclusions and Recommendations 3• It is necessary also to strengthen the government’s supportive measures

because the survey shows that CSR develops mostly as a result of outside pressure such as buyers, investor, suppliers or clients. Government influence can be very important through the creation of supportive measures; green public procurement, tax refunds or through support awarding, better information or general awareness raising about the business case for CSR.

• It is necessary to strengthen promotional activities such as the existing

conferences, the CSR Index, the publication of handbooks and guidelines, newsletters, special thematic editions in weekly business newspapers and support the role of the public sector in these activities to raise awareness on the importance of CSR implementation.

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Thank you! Biserka Sladovic, PSC Member Sandra Radakovic, Contact Person

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