Corporate Responsibility in Europe - Thomas Beschorner - ebook

Corporate Responsibility in Europe ebook

Thomas Beschorner

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Opis

The sector-specific approach to Corporate Responsibility (CR) has attracted little attention so far, although the industrial sector is a key variable in any company's economic environment. Therefore, this book introduces sector-specific CR as a way to increase the success and impact of business engagement. It focuses on sector-specific initiatives with government involvement as appropriate governance mechanisms to address sustainability challenges through public-private collaboration. What is the state of sector-specific CR across Europe? How do sector-specific initiatives work and what are criteria for their good performance? What roles do governments play in such initiatives? To answer these questions, the book draws on rich empirical evidence from five industries across eight European countries as well as on the expertise of numerous CR and industry experts. In doing so, its target audience is both researchers and practitioners. Academics will find a starting point for further research in this emerging field, whereas practitioners are offered empirical and effective models for promoting sector-specific CR.

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Thomas Beschorner, Thomas Hajduk, Samuil Simeonov (eds.)

Corporate Responsibility in Europe

Government Involvement in Sector-specific Initiatives

Bibliographic information published by the Deutsche Nationalbibliothek

The Deutsche Nationalbibliothek lists this publication in theDeutsche Nationalbibliografie; detailed bibliographic datais available on the Internet at http://dnb.d-nb.de.

© E-Book-Ausgabe 2013

© 2013 Verlag Bertelsmann Stiftung, Gütersloh

Responsible: Samuil Simeonov

Copy editor: Josh Ward, Bonn

Production editor: Sabine Reimann

Cover design: Bertelsmann Stiftung

Cover illustration: © guybrush/photocase.com

Icons: © Matthias Enter – Fotolia.com

Typesetting and printing: Hans Kock Buch- und Offsetdruck GmbH, Bielefeld

ISBN 978-3-86793-337-7 (Print)

ISBN 978-3-86793-523-4 (PDF)

ISBN 978-3-86793-524-1 (EPUB)

www.bertelsmann-stiftung.org/publications

Table of Contents

Preface

Tackling societal problems through public-private collaboration

Birgit Riess

Companies should play a leading role in developing and implementing CR strategies

Jörg Trautner

Voluntary private standards as an element of Corporate Responsibility

Hans-Peter Egler

Responsible Care—the chemical sector approach towards sustainability

Hubert Mandery

“Indeed, the need for investing jointly for the common good!”

Stefan Crets

1. Sector-specific Corporate Responsibility in Europe: Introduction

Thomas Beschorner, Thomas Hajduk, Samuil Simeonov

2. Experts’ Views on Sector-specific Corporate Responsibility

Thomas Hajduk and Samuil Simeonov

3. Sector-specific Corporate Responsibility in Europe

Samuil Simeonov and Eva Krauss

4. Sector-specific Corporate Responsibility in Denmark

Steen Vallentin and Andreas Schmiegelow

5. Sector-specific Corporate Responsibility in France

Julia Roloff

6. Sector-specific Corporate Responsibility in Germany

Thomas Hajduk and Thomas Beschorner

7. Sector-specific Corporate Responsibility in the Netherlands

Tobias Goessling

8. Sector-specific Corporate Responsibility in Poland

Janusz Reichel

9. Sector-specific Corporate Responsibility in Spain

Marta de la Cuesta González and Eva Pardo

10. Sector-specific Corporate Responsibility in Switzerland

Christoph Weber-Berg, Sabrina Stucki, Sandra Huber-Ingold

11. Sector-specific Corporate Responsibility in the United Kingdom

Anja Schaefer

12. Features and Trends of Sector-specific Corporate Responsibility in Europe

Thomas Hajduk and Samuil Simeonov

13. From Body of Knowledge to Ways of Thinking: Theoretical Implications of Sector-specific CR in Europe

Thomas Beschorner and Thomas Hajduk

Appendix 1

Appendix 2

Best practices of sector-specific CR initiatives

List of Figures and Tables

List of Abbreviations

Contributors

Tackling societal problems through public-private collaboration

Although the UN’s Rio+20 conference of June 2012 had generally disappointing outcomes, it should be noted that business made great efforts to contribute to more sustainable development. Indeed, the Rio+20 Corporate Sustainability Forum resulted in over 200 commitments demonstrating the private sector’s growing role in related efforts. As the summit’s final declaration emphasises, “(The) implementation of sustainable development will depend on active engagement of both the public and private sectors.”

Collaboration between politics, business and civil society has already become a paradigm for governance and the provision of common goods. Since the World Summit on Sustainable Development, held in Johannesburg in 2002, public-private collaboration has enjoyed an enormous increase in popularity in the belief that it represents the only way to tackle global challenges, such as climate change, poverty and a growing scarcity of natural resources.

Business’s contribution to solving such societal challenges has come to be known as Corporate Responsibility (CR). This refers to the mutual relationships between business, politics and society, and depicts the role that companies play in the communities they operate in. As the latest related communication of the European Commission defines it, CR is “the responsibility of enterprises for their impacts on society”. However, CR should be seen as an effective complement to rather than a substitute for public regulation. It draws on the private sector’s potential to play a role in tackling complex problems through action beyond legal responsibility and respecting widely accepted societal norms and values.

Responsible business behaviour refers to three spheres of influence. Above all, it refers to companies’ core business through their products and services, production processes and supply chains. Second, companies can also be responsible “citizens”, promoting education in and providing support for the communities they operate in. Lastly, business actors can collaborate so as to maximise the impact of their individual efforts to achieve sustainability-related goals. Since companies can be adversely affected by the above-mentioned challenges and are simultaneously subject to rising societal expectations, it is in their long-term interest to operate responsibly.

In practice, there is a wide range of examples of how companies have gotten involved in promoting the common good. However, most of these concern the actions of individual companies that, even if effective, often have only a limited impact or can even lead to a first-mover disadvantage. By collaborating with their peers and other stakeholders, companies can avoid such negative effects and maximise the results of those efforts. This is particularly the case when it comes to collaboration with public authorities since they are better positioned to tackle societal problems. In addition, this kind of collaboration benefits society as a whole because it increases the outreach and impact of the efforts undertaken and resources invested.

Since companies from the same industry face similar challenges and issues, public-private collaboration in the form of sector-specific initiatives can be particularly effective at solving common problems at the sectoral level. Well-known examples of such initiatives at the international level include the Equator Principles in the financial sector, the sector supplements of the Global Reporting Initiative (GRI) framework and standards such as those set by the Forest Stewardship Council (FSC) and the Extractives Industries Transparency Initiative (EITI). Each of these falls into the category of self- and co-regulation. As such, they represent alternative structures and processes to traditional governance in which actors from different societal sectors shape public-policy decision-making from the agenda-setting to the implementation stage.

This book studies sector-specific CR initiatives and instruments at the national level as forms of self- and co-regulation. It focuses on the role that public actors play in such initiatives and instruments as well as the different approaches they use to promote CR. As the German federal government’s “Action Plan for CSR” points out, political bodies play a crucial role as an enabler of responsible business behaviour by fostering a conducive environment through market incentives and increased transparency.

For many years, the Bertelsmann Stiftung has been promoting the role of governments as an enabler of a responsible operating environment for companies. Several of the foundation’s studies have investigated and analysed political strategies and instruments for promoting CR.

Furthermore, the Stiftung also supports collective action within business-driven networks and promotes collaboration among a wide range of regional stakeholders through its business-driven Partners in Responsibility model. Within these local, business-driven networks, companies pool their resources and collaborate with local governments, civil society organisations and community groups in developing innovative and effective solutions for structural problems that affect their immediate environment.

The following study combines both areas of interests: the role of public actors and the collective-action approach. In this regard, it ties in with the current public debate at the European and national levels on new governance and better regulation through private-sector involvement. Furthermore, it gives policymakers an overview of the approaches to sector-specific CR and of the ways currently being used to increase societal impacts through public-private collaboration. The book’s target audience is both researchers and practitioners. Academics will find a starting point for further research in this emerging field, whereas practitioners are offered empirical and effective models for promoting sector-specific CR.

Birgit Riess

Director “Business in Society”

Bertelsmann Stiftung

Gütersloh, Germany

Companies should play a leading role in developing and implementing CR strategies

The issue of responsible company management is becoming more and more important in both the business world and society at large—and especially in the age of globalisation. Likewise, although companies both big and small are increasingly active on the international stage, the legal frameworks for economic activity are not keeping pace with these changes and frequently continue to differ according to country. This results in gaps in terms of regulations for global trade relations that will probably be difficult to fill in the short term via binding international frameworks. Indeed, global interests and national levels are simply too diverse, and one can even hear calls in many areas of the business world for a reliable “level playing field” for internationally active companies.

Under these circumstances, standards such as the OECD Guidelines for Multinational Enterprises, the U.N. Global Compact and the ILO Declaration on Fundamental Principles and Rights at Work have become dramatically more important when it comes to compensating for regulatory gaps whenever possible. These standards establish a frame of reference for other instruments and initiatives that have developed over time in order to give companies guidance when making operational decisions and realizing their responsibilities towards society. This often involves sector-specific initiatives and instruments of Corporate Social Responsibility (CSR). Such solutions can benefit companies because their competitors also face comparable problems, issues and challenges, because sector-wide solutions can reduce transaction costs and because they can create synergies.

There is a wide range of actors involved in developing sector-specific CSR instruments and initiatives. In addition to representatives from the broader business world, sector associations and individual companies, this often also includes actors drawn from government and civil society. This is a good thing. Indeed, if CSR is to be both effective and legitimate, it requires the cooperation of all social stakeholders.

With its communication “A renewed EU strategy 2011–14 for Corporate Social Responsibility”, the European Commission sent out a clear signal that CSR would be used as a cornerstone of growth, employment and sustainability goals in the context of the “Europe 2020” strategy and that it would contribute to tackling global challenges. In this context, the Commission set in motion an important process that aims to improve “self- and co-regulation” and lead to a new code of conduct in order to be able to better regulate relevant social issues in the various economic sectors.

When it comes to gaining legitimacy for these forms of regulation and acceptance of the agreements that have been reached, the specific rules of collaboration underlying them will be of critical importance. For example, this relates to rules of procedure and participation, which will be decisive in determining the effectiveness, efficiency and legitimacy of cross-sectoral collaborations.

Against this backdrop, Germany’s Federal Government has deliberately opted for a multi-stakeholder approach. In 2009, the Federal Ministry for Labour and Social Affairs played a leading role by convening the National CSR Forum, comprised of experts from business, unions, nongovernmental organisations and politics. The Forum advises the Federal Government on the development and implementation of the National CSR Strategy and engages in dialogue on how to further develop the social responsibility of companies. In October 2010, on the basis of a “Common Understanding of Corporate Social Responsibility in Germany” and after adopting a “Recommendations Report” of the National CSR Forum, the Federal Government approved the “National Action Plan for CSR”, which includes more than 40 concrete measures.

In its communication, the European Commission stipulated that, more than anything else, companies themselves should play a leading role in developing and implementing CSR strategies. In Germany, this view is shared by both the Federal Government and the National CSR Forum. Investors, consumers, unions and civil society organisations can use their respective influence on companies in order to jointly tackle existing challenges. Politicians and administrators should play a supporting role in the field of CSR and focus on shaping both the regulatory framework and the social environment.

For example, public authorities can provide strong incentives for sustainable sourcing by taking social and environmental criteria into consideration during tendering and award procedures. With an order volume accounting for roughly 13 per cent of Germany’s GDP, federal, state and municipal governments enjoy a market position that can be used for the benefit of sustainability. As part of the Federal Government’s National Sustainability Strategy, an “Alliance for Sustainable Procurement” has been launched in order to significantly increase the share of sustainable products and services in public purchasing. One essential tool of the Alliance are sector-specific groups of experts and association representatives tasked with developing guidelines and recommendations on procurement that can then be used to develop sector-specific standards and procedures. Plans also call for establishing a central competence centre for sustainable procurement that would coordinate tasks across divisions according to a master plan and improve the exchange of information between all actors.

Given these activities and plans, we very much welcome the fact that the present study aims to develop criteria for good sector-specific CSR instruments and initiatives. In doing so, the analysis can make an important contribution to strengthening the CSR approach in everyday practice and preserving the vitality and dynamism of Europe.

Jörg Trautner

Head of Unit “CSR – Corporate Social Responsibility”

Germany’s Federal Ministry for Labour and Social Affairs

Berlin, Germany

Voluntary private standards as an element of Corporate Responsibility—a commitment within the framework of economic development cooperation in Switzerland

Economic and climate crises, in addition to social challenges, have given increased impetus to the sustainable and efficient use of resources. In addition, more attention has been directed towards efforts to secure the supply of raw materials and food. In this context, industrial and trading companies at both the global and local levels are playing a central role!

Ever-increasing importance is being attached to forging a globally coordinated approach to these issues as well as to harmonising international trading, social and environmental regulations at all levels. Globalisation and the growing complexity of production processes within international supply or value chains are creating gaps and conflicts of interest that have yet to be satisfactorily resolved by international regulations. For example, the World Trade Organisation’s (WTO) regulations on international trade do not differentiate between final products and their process and production methods (PPMs). At the same time, international social and environmental regulations, such as those of the International Labour Organization (ILO) and the climate and biodiversity conventions, primarily deal with issues of social and environmental concern related to methods of production.

Given these circumstances, more tools that can be implemented globally to deal with imminent challenges are needed to close the above-mentioned gaps. Such instruments can only be developed on a joint basis and with the inclusion of all relevant stakeholder groups, and they must be built upon the latest scientific knowledge. In this context, a crucial role is played by structured dialogue platforms involving key target groups in multi-stakeholder initiatives. These can spur the development of voluntary private standards for sustainable consumption and responsible production.

Many of these global instruments and initiatives focus on specific industrial sectors in an effort to cater to the particular challenges and demands they face. While some of these initiatives are purely business-driven, others are based on cooperation between companies, governments and nongovernmental actors. Regardless of their type, however, what they all share in common is the principle of collective action in pursuit of a common goal. In order to bring about a level playing field and increase an industry’s credibility within society at large, many companies that are attuned to sustainability issues are clearly committed to the idea of “corporate social and environmental sustainability” and consequently choose to become central partners in these initiatives.

Although the standards and labels of these initiatives are generally viewed as market-based and led by the private sector, the Swiss Government has formulated a concept that uses targeted subsidies to support these instruments. As part of it, and within the specific framework of trade-related development cooperation, Switzerland’s State Secretariat for Economic Affairs (SECO) is supporting the creation of labels and their application in developing countries in order to promote trading in goods and services from developing countries that is environmentally and socially responsible. The plan envisions the following support measures:

a)  Granting start-up financing for the development of selected labels;

b)  Aiding the development of expertise in certification;

c)  Co-financing neutral dialogue platforms and multi-stakeholder processes;

d)  Co-financing scaling-up measures related to harmonising systems of standards and capacity-building programmes as well as increasing the efficiency of private standards; and

e)  Conducting local impact assessments.

Voluntary private standards and labels help fill the gaps left by international regulations. Quality labels, such as those of the Forest Stewardship Council or the Fairtrade Foundation, are standards of behaviour that define generally applicable and globally binding criteria for production methods and processes in the private agricultural sector. As part of these labelling regimes, private actors can provide substantial resources, ensure adherence to legal standards and lend legitimacy and credibility to such standards. Likewise, the application of voluntary standards is exerting a growing influence on the manufacturing processes, sourcing methods and corporate policies of international companies. Having certification performed by independent bodies both ensures that the criteria are met and facilitates the ability to trace where and under what conditions a product was manufactured. The implementation and monitoring of these standards also contributes to improved risk management.

Furthermore, when it comes to the socially responsible and environmentally acceptable use of raw materials, the application of voluntary private standards also helps increase the efficiency, productivity, quality and diversification of products. Moreover, sustainable trade improves market access, generates income and ultimately contributes to reducing poverty.

In the end, market participants along the entire value chain – including agricultural producers, manufacturers, trading companies, retailers and, last but not least, informed, critical consumers – can all benefit from the implementation of voluntary private standards and labels in international trade. Likewise, since the commitment of international and national companies and agricultural producers to use the requirements of voluntary private systems of standards contributes to global sustainable development, forging close links between Corporate Social Responsibility (CSR) measures at the sectoral level and these instruments appears to be an efficient and effective path toward making sustainable production and consumption patterns more permanent.

Hans-Peter Egler

Head of Trade Promotion

State Secretariat for Economic Affairs SECO

Economic Cooperation and Development

Bern, Switzerland

Responsible Care—the chemical sector approach towards sustainability

Responsible Care is the chemical industry’s commitment to sustainability and Corporate Social Responsibility. It embodies the global chemical industry’s environmental, health and safety initiatives to drive continuous improvement in performance, in its own operations as well as up and down the value chain for all products. It achieves that goal by meeting and going beyond legislative and regulatory compliance, and by adopting cooperative and voluntary initiatives with governments and other stakeholders related to the chemical industry.

Responsible Care, introduced in 1985, is the chemical industry’s response to being challenged on its impact on health and environment. By the end of 2011 it was being implemented by 55 chemical associations around the globe. In Europe 28 national federations across the continent apply Responsible Care, including Russia, Ukraine and Turkey. Expansion of Responsible Care is set to continue with expressions of interest and applications from countries in Asia and Africa.

Launched in February 2006, the Global Charter is the update of the Responsible Care Programme, taking on board recommendations of stakeholders from around the world. The Charter extends the process of continuous improvement beyond chemicals manufacturing to other activities, focusing on new challenges facing the chemical industry and global society like public health issues related to chemicals. The CEOs of all the national chemical associations and more than 150 of the world’s largest chemical companies have signed up to the Global Charter, demonstrating a strong commitment from the top of the chemical industry to sustainability.

In Europe, Responsible Care offers a broad multi-stakeholder platform for the chemical industry, involving companies, their employees, the local communities and other stakeholders, including national authorities for specific projects. The latter are instrumental in providing informed input and in monitoring progress. Over the years, chemical companies, national associations and Cefic, the European Chemical Industry Council, have identified main challenges and developed solutions making them publicly available to their stakeholders and the general public.

In addition, Cefic is taking all steps to encourage more companies—especially small and medium-sized enterprises (SMEs)—to participate in Responsible Care and foster social responsibility. This was the very objective of the “prisme2” multi-stakeholder project on corporate social responsibility, which Cefic started in 2008 with the support of the EU Commission. Nearly 30 partners and sponsors including large companies, associations, trade unions, institutions and agencies teamed up for this initiative. “prisme2” stands for “Promoting Responsibility in SMEs”. The squared symbol implies the redoubled effort coming from industry and trade unions.

Among others, trade unions are key partners in implementing the principles of the Global Charter. They meet chemical associations in the European Social Dialogue, of which Responsible Care is a key element. Closely related to the cooperation with trade unions is Cefic’s engagement with the European Agency for Safety and Health at Work (OSHA). In 2010–11, Cefic was an official partner in the agency’s Healthy Workplaces Campaign to raise awareness of safety at work and reduce work-related accidents.

Already back in 2003 the European Chemical Employers Group (ECEG), the European Mine, Chemical and Energy Workers’ Federation (EMCEF, now IndustriAll), and Cefic, signed a Memorandum of Understanding on Responsible Care. Responsible Care has proved complementary to the ongoing dialogue of the social partners on specific EU projects targeting improvement in health and safety at the workplace as well as environmental protection.

More recently, in May 2012, Cefic launched its first-ever Sustainability Report, a joint effort of companies and national associations, but already receiving input and feedback from a series of stakeholders.

Corporate Social Responsibility and Responsible Care require a continuous, transparent and open dialogue with all relevant stakeholders to review how industry addresses the sustainability challenges. It is a collective exercise, monitoring performance, establishing benchmarks and ensuring best practice sharing at regional and local level.

Cefic coordinates that dialogue at European level and supports our member companies in embracing Responsible Care and fostering social responsibility, so as to disseminate best practices across Europe and beyond. Both an ethic and a commitment, Responsible Care seeks to build trust in an industry essential to improving living standards and the quality of life.

Dr. Hubert Mandery

Director General

European Chemical Industry Council (Cefic)

Brussels, Belgium

“Indeed, the need for investing jointly for the common good!”

The recent – and ongoing – financial crisis has added both challenges and opportunities to the portfolio of sustainability issues: climate change, poverty, resource scarcity, demographic changes, emissions... The interdependence between different actors—states, regions, cities, local communities and institutions, non-governmental organisations and action groups, multinationals and Small and Medium Enterprises—has subsequently increased and there is a growing awareness that practical problems and issues cannot be faced by one actor alone.

As the instability in the markets and the ecosystem increases, it becomes vital to have a systematic response from government, business and society together. Transformative change is however only possible through step-by-step practical collaboration and joint efforts from within and between these different actors.

It is in this context that CSR Europe launched its Enterprise 2020 Initiative. CSR Europe is a practitioner’s network of multinational companies and national CSR business-membership organisations. Together the network reaches out to more than 5000 companies in Europe to advance the CSR agenda. Enterprise 2020 was launched in October 2010 with the ambition to promote responsible and sustainable business practice to tackle emerging societal challenges across the globe. Through providing the necessary guidance and a platform for collaboration to promote continuous improvement and transition towards a sustainable economy, Enterprise 2020 aims to shape the sustainable company of the future, to the point whereby a company will have fully integrated CSR into its business strategies. The company of the future will operate profitably through mainstreamed responsibility and transparency, and innovates solutions for the planet and its people, in close cooperation with all stakeholders.

Through a series of collaborative and member-driven projects organised through the CSR Europe network, in liaison with corporations, national CSR partner networks and stakeholders, the Enterprise 2020 initiative serves as an incubator and platform to confront some of the most pressing sustainability challenges. The results of these projects will serve as a basis to develop the necessary synergies with European and international policymaking. Scale and impact are the key drivers in this effort and it is in this regard that cross-sectorial and sectorial collaborations need to be incubated, nurtured and scaled-up.

In this framework, the role of governments in relation to CSR is all the more important and it is changing: not through specific regulation or demands for various (paper) commitments but rather by policy implementation focused on multi-stakeholder collaboration and solution development. Businesses, local actors, non-governmental stakeholders are all part of the solution. For business, there is an opportunity for developing new products and services linked to social innovation whereby stakeholders should be part of the design and planning process.

For this reason, this publication by Bertelsmann Stiftung becomes all the more important and very timely. It points out what sectors can achieve through more collaboration and also points to the critical success factors for achieving the required impact. And impact is what is needed.

It therefore seems an appropriate setting to highlight the statement of Ban Ki-Moon at the World Economic Forum last year: “Together, let us tear down the walls between the development agenda and the climate agenda. Between business, government and civil society. Between global security and global sustainability. It is good business, good politics and good for society.”

Stefan Crets

Executive Director

CSR Europe

Brussels, Belgium

1.  Sector-specific Corporate Responsibility in Europe: Introduction

Thomas Beschorner, Thomas Hajduk, Samuil Simeonov

1.1 Introduction

Corporate responsibility (CR) is a tricky notion. Its prominence among practitioners and scholars alike has grown over the last two decades. So have various attempts to define responsibility. The endorsement of the ISO 26 000 norm has been the most comprehensive step so far towards pinning down the essence of CR. Yet even this common understanding of the social responsibility of organisations cannot go beyond being a general blueprint for CR since “it is an individual organisation’s responsibility to identify which issues are relevant and significant for the organisation to address, through its own considerations and through dialogue with stakeholders” (ISO 2010: vi). In other words, if CR is to be made concrete and applicable, it needs to be boiled down to the concrete circumstances of an individual company. Each company and, more generally, each organisation has not only its own non-arbitrary responsibilities, but also its own issues, needs and capabilities – all of which need to be taken into consideration.

However, building a concept of CR merely upon individual firm perspectives seems neither theoretically adequate nor sufficient for CR practices. Firstly, business responsibilities are not arbitrary but, rather, need to be connected to some general moral norms in order to be both effective and credible within society. Secondly, even the largest corporation – let alone any small or medium-sized enterprise (SME) – cannot live up to the entire range of sustainable-development challenges that come along with its responsibility. Indeed, the problems are simply too complex and interrelated to be sufficiently tackled by a single company, whatever its size may be. Thirdly, since enterprises in market economies compete with each other, they sometimes cannot easily adopt measures that might risk creating competitive disadvantages (Fairchild 2008). While we do not regard business logic as the “ultima ratio” for CR (Beschorner 2004), we assume that chances of implementation are higher when businesses cooperate. For this reason, CR concepts need to consider an institutional level – the rules of the game – as an important part of their architectures. Fourthly, in recent years, it became clear that fruitful CR practices could especially be realised through collaborations (Wettstein 2012) between a set of different actors with diverse resources and capabilities. Hence, interactions between businesses, NGOs, political actors and other organisations seem to be a crucial aspect of CR in the 21st century.

What is denoted here is the search for a concept of CR analysis and practice that allows for dealing with and connecting CR to the activities of individual companies as well as the institutional arrangements they operate under. This leads to two important actors in the field: businesses and political actors.

1.2 On businesses and political actors

Globalisation is a fact of life for most people. The flow of capital, goods, people and information around the globe offers opportunities for unprecedented economic growth, but it also gives rise to an unknowable degree of risks. Whereas the advantages and disadvantages of globalisation are subject to (normative) debate (see, e.g., Stiglitz 2002; Baghwati 2004), there is a strong consensus that it has brought serious challenges to the nation-state. Governments, as the traditional source of governance, are faced with complex and interconnected problems that they can no longer deal with on their own (Rosenau and Czempiel 1992; Zürn 1998). The deficient governance of common goods, such as water or the climate, are examples of governments’ limited problem-solving capacity vis-à-vis such challenges, the biggest of which is sustainable development.1

The intergovernmental debate about economic growth and whether it can be reconciled with environmental limitations and social concerns began as early as in the 1960s (Schrijver 2010). The United Nations Conference on the Human Environment (1972), the World Commission on Environment and Development (the “Brundlandt Commission”) (1983–1987) and the United Nations Conference on Environment and Development (1992) mark important steps in governments’ process of recognising the global challenges linked to human development and the need to make economic growth more compatible with social and environmental considerations. However, these events also indicate the limitation of government action. The scale of sustainable-development challenges cannot be merely addressed by the command-and-control mode of governance characteristic of traditional bureaucracies.

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