In Ukraine, corporate social responsibility is a growing trend due to the influx of foreign business and increasing interest among Ukraine’s wealthiest.
For businesses and corporations in the West, corporate social responsibility (CSR) is part of standard business practice and plays a large role in shaping corporate culture.
But in Ukraine, CSR is a growing trend that is taking off as a result of the influx of foreign business, increasing interest among Ukraine’s wealthiest and the strong presence of non-governmental organizations (NGOs).
“When I first arrived here (in 2004), nobody was talking about CSR, and nobody was talking about philanthropy,” said Thomas Eymond-Laritaz, president of the Victor Pinchuk Foundation and among four panelists who participated in a discussion on CSR practices at the European Bank for Reconstruction and Development’s Annual Meeting in Kyiv on May 18.
Since then, particularly after the Orange Revolution, CSR has caught on in Ukraine, with conferences and awareness activities bringing it to the forefront.
Just last year, the first directory recognizing companies in Ukraine for their responsible business activities was published, sponsored by numerous organizations, including the Ukraine Citizens Action Network, Institute for Sustainable Communities, as well as the American Chamber of Commerce and the European Business Association.
Eymond-Laritaz said there was now a “revolution” in Ukraine, as well as Eastern Europe, with more local businesses becoming engaged in CSR.
“Companies have realized that doing good is good for their company,” he said.
“This was unimaginable just three years ago,” he said, adding that CSR is highlighted more often by the media and conferences occur every two to three months.
The EBRD panel stressed the need to distinguish between philanthropy and CSR practices, which are often confused.
“Among the things I’ve noticed here as in other parts of Central and Eastern Europe is that there’s a huge amount of confusion between what’s philanthropy, and what’s CSR,” said Toby Webb, the discussion’s moderator and the founding editor of Ethical Corporation magazine and www.ethicalcorp.com.
Webb said he visited Ukraine three times during the last six to eight months and often saw examples of this confusion in the business community.
“I heard of one company that’s sponsoring a tiger at a zoo and they presented this as part of its CSR strategy,” said Webb. “We should all help tigers, and they need our help. But this is not corporate social responsibility. This is philanthropy.”
CSR is clearly associated with what is good for the company, its employees and their families, the local environment and the community surrounding it, EymondLaritaz said.
“Most of the people just didn’t understand that there is a huge difference, and we had to explain that there is a huge difference, because the CSR policy of the company is there to serve the goals of the company,” he said. “It’s doing business and investing socially in a way that’s also good for the business.”
In the last two to three years, System Capital Management (SCM), one of Ukraine’s largest industrial holdings owned by its richest citizen, Rinat Akhmetov, has been developing a CSR strategy that’s part of its integrated business strategy.
“What drives our business strategy in this area is our responsibility first and foremost as a business,” said Jock MendozaWilson, the company’s director of corporate and investor relations.
“You have to focus on those issues that matter for your business and your longterm success and sustainability.”
CSR is fundamental to solving business efficiency issues, said MendozaWilson, as it helps tackle problems like risk reduction, improving efficiency, and keeping costs under control.
Transparency in the corporation’s structure and ownership was one of the first areas SCM tried to address, MendozaWilson said.
With assets in Ukraine’s heavy industries, SCM’s uses its CSR strategies to improve efficiency at the outdated and inefficient Sovietera facilities.
Faced with a “war for talent,” the company is also trying to attract and retain the best employees, to motivate the workforce, protect its health and safety, and invest in the local community.
“What we tried to do is design a program that mixes those business objectives,” he said.
In the view of East Europe Foundation President Andrew Wilson, there isn’t enough CSR.
The East Europe Foundation is a nonprofit established in Kyiv by the Eurasia Foundation in 2007. It runs economic and community development programs with funding from governments, corporations and other foundations.
Wilson stressed that the “exciting, cuttingedge CSR partnerships” are really “only being done by a handful of domestic corporations and the international community” in Ukraine. “We need to take CSR to the next step,” he added.
Three major barriers obstruct CSR projects in Ukraine, Wilson said. The first is the public, which takes a different view of corporations than the public in more developed countries.
“The public really doesn’t understand at this point what CSR is and why it’s important,” Wilson said. “For that reason, companies don’t feel the same kind of pressure from the public as they do in developed countries.”
The second barrier is the media, which “has a hesitancy to report on, and provide good coverage of the good things that corporations are doing for their communities,” Wilson said.
The third barrier is the businesses themselves, who don’t yet see the economic value of it.
“They don’t see that it can be a winwin for the community and the corporation,” Wilson said. “They look at it as another expense in their budget. They see a line of people and organizations coming to them for handouts.”
