Germany is sometimes viewed as a slow-mover on corporate responsibility. But German companies say that by complying with a strict regulatory framework, they have been doing responsibility for years
Germany is sometimes viewed as a slow-mover on corporate responsibility. But German companies say that by complying with a strict regulatory framework, they have been doing responsibility for years
German business has a contradictory reputation. German corporations are seen as conservative, hierarchical and slow to change, with boardrooms that are even more white, male and middle-aged than elsewhere. German firms are notoriously shackled by regulation. The World Bank’s Doing Business 2010 report ranks Germany 84th out of 183 countries for ease of starting a company, well behind the UK and France. For ease of employing workers, Germany ranks even lower, at 158.
But Germany is clearly doing something right. It is Europe’s largest economy, and was the world’s biggest exporter by revenue until late last year when China took over. Germany is considered the world leader in environmental technologies, with firms such as Siemens and Bosch in the vanguard.
The contradictions are also evident in any discussion about corporate responsibility. Fabien Pattberg is a CR consultant and founder of the Sustainability Forum website. He says he left his native Germany for Britain because in his homeland corporate responsibility development was “just going too slowly”. Germany is “very hierarchical when it comes to the office culture” and this is a barrier to original thinking on corporate responsibility, Pattberg says.
The CR spotlight
But Germany is putting the spotlight on corporate responsibility. The federal ministry of labour and social affairs established a national CSR forum at the start of 2009 with a mandate to come up with “stakeholder recommendations” for a national corporate responsibility and sustainability strategy.
In an interim report published in mid-2009, the forum describes a healthy corporate responsibility landscape in Germany. It lists 19 government-sponsored initiatives and organisations, and nearly 40 bubbling from the bottom up – from companies and civil society. These work on some of the issues considered most crucial in Germany, such as sustainability, climate change and social diversity.
The forum has adopted a view of corporate responsibility that focuses on how companies are managed from the top. It states that the term is understood in Germany to mean “a company’s assumption of social responsibility above and beyond what is required by law. CSR is a byword for the practice of sustainable corporate governance in a company’s core business.”
Compare this with a British government definition, which places more emphasis on the external, ground-level actions of companies. In the British view, corporate responsibility is “about how business takes account of its economic, social and environmental impacts in the way it operates – maximising the benefits and minimising the downsides”.
The different focus is a consequence of differing corporate traditions between Germany and other countries. In Germany, companies are seen not just as profit-making enterprises, but as social agents that contribute to the greater good. In economies such as Britain and the US, firms value greater freedom of manoeuvre, seeing deregulation as a means of increasing competitiveness and thus boosting innovation – including in fields such as business ethics and corporate sustainability.
According to the CSR forum’s interim report, German firms accept that they must adhere to tight social and environmental regulations, and view compliance as part of good management practice. “What is showcased as CSR activities elsewhere is often regulated by law in Germany,” the report says.
One area in which this is particularly clear is employee relations. Thomas Loew, founder of the Berlin-based Institute 4 Sustainability, which has worked on a number of corporate responsibility-related projects for Germany’s federal environment ministry, says that while some non-German companies write about employee issues in their sustainability reports, German firms do not. Strong, positive employee-company relationships are taken for granted in Germany.
Many German companies therefore consider that they have been doing corporate responsibility for years – they just have not labelled it as such. Nevertheless, the CSR forum in its interim report argues that more can be done. Active corporate responsibility has a part to play in Germany’s sustainable development, and can help “German companies’ positioning in the international arena”.
The forum is likely to submit its final report in early 2011, and the government will lean on its findings to create a national corporate sustainability strategy. This might shed more light on Germany’s business culture contradictions.
Links:
Sustainability Forum www.sustainabilityforum.com
CSR Forum www.csr-in-deutschland.de
Institute 4 Sustainability www.4sustainability.org
Germany corporate responsibility factsheet
Socio-economic statistics
Population: 82.3 million
GDP (nominal): €2.6trn
GDP per capita: €31,821
Human Development Index: 0.947, ranked 22nd out of 180
Current leadership:
Federal president: Horst KÖhler
Federal chancellor: Angela Merkel
Noteworthy trading fact:
In 2009 China exceeded Germany as the world’s largest exporter
Primary industries:
Automobiles, machinery, metals and chemical goods