Today more than ever, companies must take a position on social responsibility. Deutsche Bank took a clear stand early by putting its CSR program under the “Building social capital” principle. A pure philanthropic approach is no longer an option for other companies, either, especially given the challenges of the global economy. Karl Homann, an expert on business ethics, offers an analytical view.

The social responsibility of companies – commonly referred to as corporate responsibility (CR), corporate social responsibility (CSR) or corporate citizenship (CC) – has become a topic of growing importance to management and the general public alike. Many companies are in search of a CSR strategy that meets citizens’ expectations without weakening their global competitiveness or disappointing shareholders. The question is whether and in what form social responsibility can be (made) productive.

Many still view social responsibility as a form of patronage, in the old sense. But this view is no longer valid because in earlier times, support was arbitrary. Later, corporate responsibility took on the meaning mostly of regional support for social and cultural activities. What remained unclear, however, is how this assistance contributed to long-term corporate success.

For this reason, many companies today seek a strategy that links social responsibility to their “core business.” Rightly so, they have stopped presenting themselves as selfless donors and begun promoting the idea of making a significant investment (with the expectation of achieving reasonable returns). But doesn’t society expect much more from companies than a mere strengthening and consolidation of their core business? Arguably, global problems, such as hunger, poverty, and environmental protection, or the protection and advancement of human rights and democratic structures, have precious little in common with the core business of many enterprises.

Moreover, the understanding of corporate responsibility is often misconstrued with views on the legitimacy of companies not compatible with democratic structures. When, for instance, people speak about companies having an obligation to “give back” or obtain their “license to operate” through CSR activities, the assumption is that operating a company is a privilege to be earned. Apart from the fact that this idea can be criticized as a modern form of selling indulgences, this is a form of legitimacy typical of absolutism. In democratic societies, companies gain their legitimacy by fulfilling a social contract, such as providing people with goods and services. As such, their legitimacy is founded in their core business and not in their additional CSR activities.

Another question concerns the geographical scope of social responsibility. Are the expectations of the general public met when companies, which operate today as global citizens, look only after themselves? Clearly, they can no longer ignore global problems.

Nor can we dodge the question of how to systematically explore the meaning of social responsibility. What is it really all about?

Corporate social responsibility is about helping companies and society alike. It is about creating conditions for mutual, sustainable advancement. From a company perspective, an investment that benefits society benefits everyone. Understanding, practicing, and justifying social responsibility in an environment of global competition is only imaginable and achievable as a win-win model.

All this raises questions like: What measures are necessary to achieve this goal? What areas show social deficits? Where are crisis hot spots that need to be confronted?

Societies are strong when they have stable, reliable internal structures. Dictators have always sought to destroy such structures in an effort to crush resistance that they fear could emerge from organized, networked groups.

The stability and diversity of networks is essential to strong societies, as are communication, transparency, and the active participation of broad sections of the populace in society requiring at least a minimum level of education and wealth. Enabling and strengthening the independence of citizens and their own sense of responsibility is equally important.

Social responsibility viewed as such encourages companies to become involved in various areas, such as corporate volunteering and promoting education, culture, and health initiatives, and to participate in social and political discussions.

This is already valid nationally. But it is even more valid globally, especially in developing or poor countries. In these regions, the goals of the United Nations Global Compact initiative, which are focused on human rights, environmental protection initiatives, suitable working conditions, fighting corruption, or the efforts to establish microfinance institutions, play an important role.

In this context, two areas of responsibility are worthy of special mention. First of all, as the current financial crisis shows, grave deficits exist in industry governance at the global level. German companies, in particular, should offer their experience and accept responsibility for establishing a viable global economic order. Second of all, especially in Germany, we have a deep mistrust toward business. To ensure the future prosperity of all people, companies need to promote the free market economy, and they can do so by explaining its ethical significance in a clear and comprehensible manner. We could call this communication responsibility. In addition to their actions, companies should become more proactive and assume responsibility for a viable economic order and for communicating the importance of social responsibility.

Increasingly, we recognize the value of immaterial resources for sustainable, successful business. These add a new, strategic direction to the social responsibility of companies. Let me emphasize five points:

• Frequently random, diffuse CSR measures of the past need to be bundled and integrated into corporate strategies.



• These measures, which have often had a regional and core-business focus, need to be expanded to include global and social perspectives.



• Companies will need to coordinate how to jointly organize this global task, which they can only achieve through a division of labor – despite the fact that they already compete, and will continue to compete, in many markets.



• Companies will also need to cooperate with other social subsystems, such as policymakers, NGOs, the media, and educational institutions.



• Last but not least, leadership that goes far beyond business issues is required at the top of every corporation.

The long-term success of companies can only be achieved in well-developed societies with social capital and diversified networks. As policymakers lose their capacity to control – with the exception, perhaps, of the current crisis – and the need for global controls continues to grow dramatically, companies are well advised to invest in becoming successful corporate citizens, for their own benefit and the general welfare.