Research study Readiness of the Region’s private and public sectors for the EU CSR policy framework Nikica Kusinikova, Macedonia

Scope of the study 1.Overview of the CSR movement at the EU level and emergence of EU-wide CSR related standard and policy guidelines; 2.Comparison between the core EU CSR related policy guidelines and standards with the ones currently under implementation in Bosnia and Herzegovina, Croatia, Macedonia and Serbia; 3.Preparedness of the targeted countries’ private sectors for the EU accession in terms of CSR, social and environmental standards and current performance

1. CSR related standards and policy guidelines at EU level A. Corporate Social Responsibility  GREEN PAPER Promoting a European framework for CSR 2001  COMMUNICATION FROM THE COMMISSION concerning CSR: A business contribution to Sustainable Development, COM (2002) 347 final  COMMUNICATION From The Commission To The European Parliament, The Council And The European Economic And Social Committee Implementing The Partnership For Growth And Jobs: Making Europe A Pole Of Excellence On Corporate Social Responsibility, COM(2006) 136 final  COMMUNICATION FROM THE COMMISSION concerning Sustainable Consumption and Production and Sustainable Industrial Policy Action Plan, COM(2008) 397 final  European Parliament Resolution on CSR 2002 and 2003

1. CSR related standards and policy guidelines at EU level B. Policy related to SMEs  COMMUNICATION FROM THE COMMISSION – Modern SME Policy for Growth and Employment COM (2005) 551 final  COMMUNICATION FROM THE COMMISSION – “Think Small First”, A “Small Business Act” for Europe COM (2008) 394 final C. Policy related to Sustainable Business Development  PRESIDENCY CONCLUSIONS Göteborg European Council 15 and 16 June 2001  COMMUNICATION FROM THE COMMISSION On the review of the Sustainable Development Strategy 2005

1. CSR related standards and policy guidelines at EU level  Strategy proposes 7 areas with specific measures:  Increasing knowledge about the positive impact of CSR on business and societies in Europe and abroad, in particular in developing countries;  Developing the exchange of experience and good practice on CSR between enterprises;  Promoting the development of CSR management skills;  Fostering CSR among SMEs;  Facilitating convergence and transparency of CSR practices and tools;  Launching a Multi-Stakeholder Forum on CSR at EU level;  Integrating CSR into Community policies

2. CSR Policy framework in the targeted countries  BOSNIA AND HERZEGOVINA: (1)Development Strategy of Bosnia and Herzegovina ; (2)Strategy for SME development of BiH ; and (3)Law on fostering the development of SMEs of Republika Srpska

2. CSR Policy framework in the targeted countries  BOSNIA AND HERZEGOVINA – key findings:  There is no CSR specific policy and the concept is not reflected in the main development documents;  Government shares the vision and need for sustainable development but lacks awareness about the concept, role and development potential of CSR;  Existing strategic documents provide solid basis for broader discussion on CSR and possible incorporation in the future strategies;  Evident need for extensive awareness raising and capacity building of institutions on CSR

2. CSR Policy framework in the targeted countries  CROATIA: (1)Strategic Framework for Development ; (2) Strategy on Sustainable Development (adopted in 2009)  Key findings:  There is no CSR specific policy; however  Key strategic documents identify the role of the business in achieving sustainable development;  CSR is recognized as a concept and goals and measures for its promotion are incorporated in several segments of the documents

2. CSR Policy framework in the targeted countries  CROATIA – key findings:  Some proposed measures:  encourage CSR;  achieve competitiveness by increasing efficiency, while reducing risk to humans and environment, and incorporating principles of socially responsible and transparent business;  integrate cleaner production programs in the prod. processes;  promote environmental label;  introduce sustainability in the public procurement  Existing policies do not recognize the specific role and challenges of SMEs related to sustainable development  Policies could benefit from more targeted and elaborated approach to CSR

2. CSR Policy framework in the targeted countries  MACEDONIA: (1)National Agenda on CSR in Republic of Macedonia ; (2)National Strategy on Sustainable Development ; (3)National Strategy for SME development  Key findings:  First officially adopted CSR policy in the SEE;  The National CSR Agenda to a large extend reflects the recommendations and proposed actions of the EU policies;  Existing appropriate infrastructure – cross-sectoral coordinating body and separate CSR Unit within the Ministry of Economy

2. CSR Policy framework in the targeted countries  MACEDONIA - key findings:  No specific reference on SMEs – it was addressed later in the implementation phase;  Implementation should be improved with monitoring not only on implemented activities but also on achieved results ;  Critical challenge is reflecting the CSR concept into the other development policies; existing sectoral strategies do not specifically address the issue of CSR

2. CSR Policy framework in the targeted countries  SERBIA: (1)Strategy on CSR - National Agenda of Republic of Serbia on CSR ; (2)National Strategy on Sustainable Development;  Key findings:  Officially adopted CSR policy that to a large extend reflects the recommendations and proposed actions of the EU policies;  Strong political commitment to CSR – it is also reflected in other strategic documents;  Establishing implementation bodies is under way and it is expected that policies in the area will be advanced further

2. CSR Policy framework in the targeted countries  SERBIA - key findings:  Establishing implementation bodies is under way and it is expected that policies in the area will be advanced further ;  Similar to Macedonia, the document does not refer to specific challenges and needs of the SMEs related to CSR;  Implementation of adopted CSR strategy is still in the beginning phase and will require time to evaluate relevance and impact

3. Private sector (SMEs) and CSR in the targeted countries  The Survey : Year implemented# of companies Croatia Bosnia and Herzegovina Serbia Macedonia201131

3. Private sector (SMEs) and CSR in the targeted countries  Definition of CSR : CSR is a comprehensive set of policies, practices and programs that are strategically integrated throughout business operations and decision- making processes to minimize the negative impact on the company's social and natural environment CSR is the commitment of a company to strictly abide to national labour and environmental laws CSR describes the way in which a company manages its economic, social and environmental relationships, and the way it engages with its stakeholders Macedonia 45%39%32% Serbia 55.56%22.23%44.45% Croatia 50%23%21% BiH %-

3. Private sector (SMEs) and CSR in the targeted countries  CSR Activities:  Most of the companies in Macedonia identified: Reducing air pollution caused by company cars and Offering training possibilities for employees;  CSR activities in Croatia are connected more to benefits to the environment than labour issues or safety which is reflected in the fact that 92% of responders agree that “CSR includes actions that protect the environment”;  In Bosnia and Herzegovina the companies often identify the CSR activities as: “investment in local communities”, “social donations” and “investments in employees” as predominant responsible activities of their firm;  The companies in Serbia (94,45%) recognized the following activities as part of CSR: Offering free lunch to employees, Providing job possibilities to handicapped people, Utilizing energy saving light pulps, Measures to enhance employee motivation, Investigating CSR commitment of potential business partners. But, also the surveyed companies in Serbia recognized Providing small occasional gifts to officials dealing with company matters such as registration or permits as CSR activity.

3. Private sector (SMEs) and CSR in the targeted countries  Obstacles to implement CSR in SME’s:

3. Private sector (SMEs) and CSR in the targeted countries  Incentives to implement CSR : MKSRBCROBiH microsmall Government financial incentives22.58%77.78%100.00%62.00%65% Free/subsidized counseling51.61%66.67%88.00%67.00%52.50% Concessional credit/matching grant schemes 29.03%16.67%75.00% Award schemes9.68%5.56%52.50% Sponsored participation in fairs19.35%2.22%50.00% Linkages with larger firms45.16%27.78%38.00%43.00%50.00% Facilitated participation in business networks 32.26%16.67%60.00% Others (please specify in the box below):6.45%5.56%0.00%

3. Private sector (SMEs) and CSR in the targeted countries  Expected impact from CSR : Huge positive impact reputation of the firm, brand awareness quality customer satisfaction salesmedia presence MK73,34%70% 63,34% SRB76,47% 66,67% 70,58% CRO50%38%75%50% BiH30%15% Huge negative impact is seen in absenteeism rate according to Macedonian and Serbian surveyed companies and in operational costs according to the companies from Bosnia and Herzegovina.

3. Private sector (SMEs) and CSR in the targeted countries  Readiness of SMEs to implement CSR : If the service was offered free of charge? If the service was offered for a market- based fee? Specific working hours of staff on CSR activities Macedonia90%13,8%74% Serbia74%10%88.89% Croatia76%42%44% Bosnia and Herzegovina 90%25%-

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