Companies take responsibility

The Bertelsmann Stiftung is using the 2016 Reinhard Mohn Prize to recognize a renowned entrepreneur for his or her life's work. How is responsible entrepreneurship defined today? An interview with Birgit Riess, expert for corporate responsibility at the Bertelsmann Stiftung.

Responsible entrepreneurship – what does that mean exactly?

Birgit Riess: In recent years a widespread understanding has taken root of what is now expected in the area of corporate responsibility beyond existing legal requirements. The framework has been set by international agreements such at the ILO's core conventions, the OECD's Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. Management and reporting standards that build on these agreements, such as ISO 26000, the Global Reporting Initiative and Germany's Sustainability Code, provide guidance when it comes to responsible entrepreneurial activities and facilitate evaluations of those activities. In addition, numerous industry initiatives are developing standards for challenges currently impacting specific sectors. Corporate responsibility is not static; the requirements that responsible corporate leaders must meet are changing, meaning they are constantly growing analogous to the societal debate on corporate responsibility. In turn, corporate responsibility can reach its full potential for both society and the business community when companies practice it voluntarily and live it day in and day out. But that doesn’t mean it's wholly arbitrary. Dialogue is needed with social interest groups, critically thinking consumers and an informed public. In keeping with the principle of checks and balances, that dialogue ensures companies remained embedded in society.

"The social market economy is dependent on the business community doing its part to create an economic and social order that is both sustainable and intergenerationally just."

Birgit Riess, expert for corporate responsibility at the Bertelsmann Stiftung

In Germany, the social market economy has shown itself to be a well-functioning "embedding mechanism." Corporate social responsibility is one of the basic elements of the social market economy. In keeping with the principle of subsidiarity, companies should get involved in those situations where government solutions ultimately prove ineffective or where "private" responses make solutions possible that are better because they are tailor-made.

In practical terms, where does the business community’s responsibility for society begin?

Birgit Riess: Responsibility begins with a company's core business. A business organization can promote sustainable social development through resource-efficient production processes and products, technological and social innovations, fair dealings with its suppliers and by acting in a socially responsible manner in general. Above all, companies take responsibility when they put the background conditions in place in their own organizations that allow employees to contribute to the best of their abilities in each phase of life. This means both creating a corporate culture that promotes appreciation among and for the workforce and introducing specific measures that allow the company to recruit employees and retain them over the long term. It also means giving young people a chance even when conditions are not ideal and offering corporate day-care services and flexible work schedules that make it easier to achieve work-life balance. Promoting diversity within the organization is crucial if companies want to recruit and retain highly skilled staff. It is also an important part of ensuring integration and inclusion within society. Measures for promoting occupational health and opportunities for systematic, ongoing training make it possible to keep older employees and their wealth of experience and knowledge in the organization, thereby protecting the company from the impact of demographic shifts.

"Health, families, lifelong learning – employers can provide support in almost every area."

Birgit Riess, expert for corporate responsibility at the Bertelsmann Stiftung

And companies that support employees' civic engagement can count on having a workforce that is motivated and satisfied, and they thereby contribute to the common good in a highly effective manner. That kind of culture – one that focuses on employees – creates working environments that add to quality of life and benefit the company, the workforce and society at large in equal measure.

Sustainable corporate structures that take a holistic view of employees have an impact beyond the organization in two ways. First, favorable working conditions have a positive effect on employees' private lives; they promote quality of life even when employees are not at work and ensure employees have the time and money needed for a healthy social life. Second, such conditions can have a positive impact on the social and political structures employees engage with; to that extent, quality work environments have the potential to become a key part of regional environments that offer high quality of life.

Enterprises vs. entrepreneurs – is there a difference?

Birgit Riess: That's a question we've been looking at for quite some time, for which there is of course no one-size-fits-all answer. It is often said that owner-operated and family-run companies think and act intergenerationally – that social responsibility is embedded in their DNA. The link between risk and accountability is also said to result in highly responsible behavior. What is certainly true is that entrepreneurs are particularly concerned about maintaining the value of their enterprise over the long term, especially when profit expectations are not determined by anonymous shareholders. At the same time, it is not possible to say, based on what we've seen in practice, that family-run companies per se are exemplary when it comes to economic, environmental and social responsibility. The major publically listed companies are in the spotlight to a much greater degree and must meet much higher expectations. Our experience shows that they manage their social responsibilities in a largely systematic manner while integrating ecological and social concerns in their value chains. The Bertelsmann Stiftung's Corporate Responsibility Index clearly reveals what is most important: that a company’s senior management actually wants to take responsibility.