The German way of business

02 February 2010

Germany is sometimes viewed as a slow-mover on CSR. But German companies argue that by complying with a strict regulatory framework, they have been doing CSR for years, writes Stephen Gardner. 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 at 84 out of 183 countries for ease of starting a company, well behind Britain 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 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 social responsibility. Fabien Pattberg, a CSR consultant and founder of the Sustainability Forum website, says he left his native Germany for Britain because in his homeland CSR 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. But Germany is putting the spotlight on CSR. The Federal Ministry of Labour and Social Affairs established at the start of 2009 a national CSR Forum with a mandate to come up with "stakeholder recommendations" for a national CSR strategy. In an interim report published in mid-2009, the Forum describes a healthy CSR landscape in Germany, listing 19 government-sponsored initiatives and organisations, and nearly 40 bubbling from the bottom up – from companies and civil society. These work in particular on some of the issues considered most crucial in Germany, such as sustainability, climate change and social diversity. CSR defined The Forum has adopted a view of CSR that focuses on how companies are managed from the top. It states that CSR 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, CSR 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 in 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 United States, firms value greater freedom of manoeuvre, seeing deregulation as a means of increasing competitiveness and thus boosting innovation – including in fields such as CSR. 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 CSR-related projects for Germany's Federal Environment Ministry, says that some while non-German companies write about employee issues in their CSR 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 CSR for years – they just haven't labelled it as such. Nevertheless, the CSR Forum in its interim report argues that more can be done. Active CSR 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 CSR strategy. This might shed some light on Germany's business culture contradictions. Originally published in Ethical Corporation magazine, as part of a special briefing on CSR in Germany.

 

< Prev		Next >