Sweden has the reputation of being a leader in actively promoting corporate social responsibility (CSR), and Swedish companies such as H&M, IKEA, Ericsson, ICA, Swedbank, and Scania are known to be leaders in sustainability and corporate responsibility.
The recent KPMG International Corporate Responsibility Reporting Survey 2011 found that 95% of the 250 largest global companies has undertaken Corporate Responsibility reporting. This widespread adoption by top companies is encouraging, however, the survey also shows the difference in the level of reporting among the 3,400 companies across 34 countries.
For example, Sweden is one of the leading countries, with 72% of its top 100 companies now reporting on their corporate responsibility initiatives. On the other hand, there are countries lagging behind, such as Singapore with only 43% of its top 100 companies with corporate responsibility reporting.
Another previous Responsible Competitiveness Index ranking published in 2007 by AccountAbility ranks 108 countries on how they are performing in their efforts to promote responsible business practices. Sweden emerged as the top country while Singapore is number 15.
What can Singapore learn from Sweden’s success and experience in embracing CSR? It seems that Sweden’s success in CSR is mainly due to the government leading and coordinating, and big companies taking responsibility. The cultural context in Sweden could also helped to play a part.
Government Leading and Coordinating
One key reason for Sweden’s success in CSR is due to the government playing an active role in coordinating CSR policies and integrating them into trade and foreign policy strategies.
The CSR focus is mainly coordinated by Sweden’s CSR Ambassador, Ms Lisa Emelia Svensson, at the Swedish Partnership for Global Responsibility, part of the International Trade Policy Department in the Ministry for Foreign Affairs. The Swedish Partnership for Global Responsibility encourages Swedish companies to embrace CSR and serves as a platform for businesses, labour unions, and non-governmental organisations to work together.
Sweden looks at 4 pillars of CSR – anti-corruption, human rights, labour standards, and the environment. Lisa shares that from the Swedish perspective, CSR is purely integrated into the business model and vision of companies and involves the top management, and she stresses that CSR is not public relations or philanthropy. With more companies operating in the global market, businesses also have an important role in the overall development of the society.
The main CSR instrument used by Sweden is the OECD Guidelines for Multinational Enterprises, which are negotiated by the OECD member countries, and are recommendations from governments to businesses on how to integrate CSR. Sweden also supports the UN Global Compact and the ISO 26000.
The Swedish government is actively promoting CSR because it sees CSR as a tool for promoting free trade. Sweden is a free trade-friendly country, but if companies do not take responsibility for human rights, labour or environmental issues, there could be trade sanctions and the government would find it difficult to have an open free trade agenda. So CSR goes hand in hand with free trade and global development.
As the Swedish CSR Ambassador, Lisa coordinates CSR policies within the government offices and works with 7 Ministers, to integrate the policies holistically so that Sweden can have a coordinated position on CSR, especially in international meetings. “I think it’s important to keep a very overall integrated perspective, it’s one of the success factors,” says Lisa.
Another effort by the Swedish government in taking the lead is to require all state-owned enterprises to have CSR reporting, in accordance with the Global Reporting Initiative (GRI), since 2007.
The government’s lead in CSR is acknowledged by the business community. Ms Marianne Bogle, Operations Manager at CSR Sweden, the leading business network that focuses on CSR and community involvement in Sweden, agrees: “I think different to other governments is that the Swedish government takes CSR extremely seriously.”
Big Companies Taking Responsibility
The other main reason for the success of CSR in Sweden is that big Swedish companies are taking responsibility voluntarily. In the recent Newsweek Green Rankings 2010, the top 200 greenest global companies included Swedish companies such as Ericsson, TeliaSonera, Atlas Copco, Scania, H&M, and Volvo.
Mr Göran Norén, Head of Industrial Policy and External Relations, Confederation of Swedish Enterprise, which is Sweden’s largest and most influential business federation, shares that Swedish companies are active at CSR, as they understand that if their company is to do business in the long run, they have to deal with all relations with the suppliers, customers, and the government.
There is increasing transparency in the global context, and no place to hide anymore. It makes good business sense as companies would lose money if they do not handle issues in the right way. Businesses have to be in the driving seat and take corporate responsibility, thus earning trust from the government and building partnerships.
Focusing on CSR also helps businesses to recruit the right kind of people who want to work for a good company and do good while earning money, which is becoming increasingly important.
“We see CSR as a business opportunity, if you have strong CSR management, then you can focus on the business opportunity to find new products and services, and then you will be the future of enterprise”, says Marianne.
Lisa explains that there are challenges of integrating CSR into the business and it is a process that can be better, but Swedish companies are on average among the best in the world. She adds that companies can still make money in a reputable way, and should be proactive before problems happen. CSR is also getting higher on the political agenda, and is not something that can be ignored by businesses anymore.
Göran mentions that many Swedish companies have sustainability reports and the companies listed on the stock exchange provide sustainability reports on a voluntary basis. Lisa also adds that although the stock exchange in Sweden does not require CSR reporting, about 75% of Swedish companies do reporting as part of corporate transparency.
This is becoming important due to the trend for more comprehensive CSR reporting. The European Union (EU) is recently exploring legislation that would require big companies to have CSR reporting, which could be mandatory in the long term. Göran thinks that in 5 years time, there could be some binding regulations on CSR in Europe.
For small and medium-sized enterprises (SMEs), Göran said that more SMEs have to do something about CSR as they supply to the big companies along the supply chain in this global market, and would have to follow the CSR requirements of those big companies.
Lisa admits that there are challenges for SMEs in embracing CSR as they are too small to know what is going on along the supply chain in the global market. But she adds that no SME is too small to care, they can always start by asking questions about the hard and complex issues.
The success of CSR in Sweden could also be influenced by its cultural context. Sweden, like other Nordic countries, has a strong culture of environmental protection and sustainability. The Swedish culture of consensus could be influential too. Göran shares that in Sweden, people like to involve others in making decisions and to arrive at some consensus, and are also good at listening. These are traits for good stakeholder engagement in CSR.
There are others who say that “lagom” (loosely defined as enough, sufficient, or in balance) is an uniquely Swedish term or culture, which could explain why CSR is embraced in Sweden. The balance of making money while doing good is aligned with the lagom concept.
Swedish CSR might be unique from other countries, says Niklas Egels-Zandén, Assistant Professor at the School of Business, Economics and Law, University of Gothenburg. He explains that labour unions are involved in the CSR discussions in Sweden, which is not common in other countries. The stakeholder discussions usually look at multiple issues, which are addressed on an ongoing basis. There is low visibility and regular discussions done behind closed doors. In addition, the reason for engaging stakeholders is mainly to retain the trusting relationship of stakeholders.
He adds that home markets seem to influence a company’s CSR activities, depending on factors such as the codes of conduct in the country, and the type of pressures companies face due to stakeholders having different influence in different home environments. “There is no one size fits all,” says Niklas.
Niklas also cautions Asian companies in adopting CSR tools that are often predefined from the US or European context and which may not make sense in the Asian context. He advises Asian companies that they could build their own structures and models for dealing with supply chains, and think of their own strengths and build upon them.
Lessons for Singapore
Singapore can definitely learn from Sweden’s success and experience in embracing CSR. The government can do more to drive, coordinate and integrate CSR into its various agencies and policies. Singapore could also adopt Sweden’s example of requiring all state-owned enterprises to have CSR reporting.
Big companies in Singapore can also learn from their Swedish counterparts and take up their corporate responsibility voluntarily as it makes good business sense. Businesses should treat CSR as a business opportunity and not as a cost.
There is a need for companies to integrate CSR into the business model and vision, and involving the top management. It is also important to understand that CSR is not philanthropy or charity, which many companies in Singapore or Asia like to associate with.
Initiatives on CSR have to be customised according to the local context, although it should never neglect the principles of anti-corruption, human rights, labour standards, and the environment.
There are some cultural similarities between Singapore and Sweden such as both countries being very efficient, placing emphasis on sustainability, having a desire to reach consensus, and a good working tripartite relationship among the government, businesses and trade unions.
What Singapore could further work on is to embrace the Swedish lagom way of balancing economic growth and quality of life, of working effectively and living consciously, and of making profits while doing good.