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Kateryna Yushchenko, Chairman of the Supervisory Council of Ukraine 3000 International Charitable Foundation

Corporate Social Responsibility: Global Aspect
XVII Economic Forum in Krynytsia

Good afternoon.

It is a pleasure to be here at the 17th Economic Forum in Krynytsia.  I appreciate the opportunity to discuss a topic that is becoming increasingly important globally - corporate social responsibility. 

Around the world, both large multinationals and small local companies are reassessing the way they interact with their communities and formulating new strategies to better respond to the needs of consumers, partners, society and the environment alike.

Let us begin with some broad definitions of the meaning of business social responsibility.

First, being a good corporate citizen means maintaining high standards and acting ethically – producing a high-quality, safe product, providing safe and healthy working conditions, promoting equal opportunity and investing in personnel training and development.   It means maintaining an ethical approach to doing business – conducting business in a clear and transparent manner, maintaining standards of good corporate governance, paying taxes.

But there is another aspect of corporate responsibility – the actions a business takes to improve the community – local or international – in which it operates.  Over the past few years, more and more companies have come to understand that business operates more effectively and profitably when it also invests into sustainable communities.  And governments and international organizations have begun actively supporting this trend.

The World Business Council for Sustainable Development defines corporate social responsibility as “the continuing commitment by business to behave ethically and to contribute to economic development while improving the quality of life of the workforce and their families as well as of local community and society at large”.

The European Union named 2005 the year of social responsibility.

Research conducted in 2000 showed that 90% of the 45 largest European companies include information on mission, values, working environment, social and economic programs into their reporting, i.e., they inform the public about their social responsibility initiatives and programs. 

In Great Britain, government, businesses, civil society organizations, and media are working together to support what they call “Corporate Community Investment”. 

In the US, total giving to charitable organizations equals approximately 1.7 percent of Gross Domestic Product; corporate amounted to $12.7 billion in 2006.

The United Nations Global Compact Initiative, a forum to discuss and implement corporate responsibility is governed by ten universal principles in four key areas – anti-corruption, environmental sustainability, human rights and labor standards.

The UN Global Compact was successfully launched in Ukraine in April 2006.

I am proud that Ukrainian companies are joining this important global trend.

To date, more than 70 leading companies, business associations, labor and civil society organizations active in the area of corporate social responsibility have signed the Global Compact and confirmed their commitment to the 10 universal principles. 

In December 2005, more than 150 representatives of Ukrainian businesses, civil organizations and government banded together to create the Forum of Socially Responsible Business in Ukraine.

A study on socially responsible business conducted by a Ukrainian research firm in January 2007 showed that:

• 64% of Ukrainians polled understood the term “social responsibility” as the responsibility of business to society;
• 21% of Ukrainians take into account the social activity of a company when purchasing goods or services;
• 50% have greater trust in companies that are socially active;
• 58% of Ukrainian citizens believe that social responsibility should be targeted, first of all, to the health care sector;
• 46% - to orphans and homeless children;
• 28% believe that the priority should be environmental issues.  

However, state-oriented, paternalistic traditions are still strong – when asked who they expected to address their pressing social problems, 52% said the state in general, 37% – said government agencies, only 17% – said businesses.

At the same time, 74% respondents believe that business should invest in “good things”.

It is exciting for me that centuries-old traditions of not only charity but also social responsibility are being reborn in Ukraine and other countries in Central and Eastern Europe.   It is time for our countries to take an active role in the global development of an agenda for corporate social responsibility.  This process will ensure the development of sustainable democratic societies, social partnerships, and environmental awareness.

In building our social responsibility agenda, we should provide answers to the following questions:

• What are economic, legal and ethical expectations of society?
• Who does the community expect to deal with these needs businesses, the state or society?
• If businesses are expected to meet these expectations and needs, are they capable of doing it?

And the most important question: does the state create proper conditions/environment for businesses so that they can meet these needs and expectations?
 
The challenge for Eastern European countries is to create an appropriate balance of responsibility among business, state and community. There is a role for government – to create favorable environments (including public acceptance and recognition) in which businesses can develop and help others to develop.

In Ukraine there are tax incentives for giving, but they are inadequate in their current form.  We are looking at the programs of our neighbors to learn from their successes:
Most European countries, including Great Britain, Italy and Spain provide fiscal and financial incentives for corporate giving.
The Netherlands provide access to funding for companies that comply with “green investment” policies on environmental issues. The US offers annual tax benefits for employers who hire disabled, senior citizens, youth, and veterans. Charities in the US receive tax-deductible contributions and do not pay property and sales tax.
 
Allow me to summarize real bottom-line benefits attained by socially responsible businesses:

• Reduced costs, as many initiatives aimed at improving environmental performance decrease costs
• Improved connections with markets, as customers are increasingly basing purchasing decisions on value-based criteria in addition to traditional criteria such as price, quality, availability and convenience
• Motivated employees, as they are more likely to associate with employers that share common values. This fosters teamwork and help businesses attain their strategic goals
• Heightened business profile in the community and increased brand recognition, improved reputation – companies become and viewed as better and more responsible “corporate citizens”. Being active in the community can be instrumental in identifying new business opportunities, markets and strengthen relations with existing customer base.

We look forward to learning from your experience and to hearing about your initiatives, achievements and challenges.

We also look forward to developing a common agenda, solutions and recommendations - for the state, businesses and citizens – for all of us who contribute to and gain from socially responsible environments in our countries.

Poland, September 6, 2007