Montenegro

CSR in Montenegro: Private sector is a link between the government, NGOs and society

Podgorica, 16 December 2011

„In our society the sustainable development in broader terms is still identified as an environmental and green issue, although sustainable development in its essence is about balancing economic development with social needs of a society and the natural limits of the communities which we live in. Therefore, corporate social responsibility is very important for small and medium enterprises, which are the backbone of our economy,“ said Ms. Bosiljka Vuković, Head of the Division for the support to the National Council for Sustainable Development in the Ministry of Sustainable Development and Tourism at a consultative meeting entitled „The introduction of the principles of corporate social responsibility into national policy of Montenegro“. The meeting was organized by the Cabinet of Deputy Prime Minister for Economic policy and financial system and the Ministry of sustainable development and tourism, in cooperation with the UNDP in Montenegro, with an aim to present the recommendations from the „Analysis of the introduction of the principles of corporate social responsibility into national policy“ to representatives from ministries, government institutions, business associations and civil society. The recommendations should serve as a basis for consultation with representatives of the mentioned institutions, which will result in final recommendations for the completion of this study.

This project represents a continuation of organizers’ efforts to promote CSR as a concept that involves taking responsibility of companies for the impact of their activities on customers, suppliers, employees, the community and the environment in all aspects of their operations, and is a way of concretizing the contribution of economic sectors to achieving the principles of sustainable development.

„The Government of Montenegro sees Corporate Social Responsibility (CSR) as a means to enhance sustainable development strategy, an integral part of its national strategy for competitiveness and as an instrument for improving the situation of our companies in the global economic scene,“ said Mr. Vujica Lazović, Deputy Prime Minister for economic policy and financial system. He also said that many companies in Montenegro still do not understand the long-term benefits of socially responsible approach, and many business people and entrepreneurs believe they do not have at their disposal sufficient resources or knowledge to engage in various strategies. On the other hand, the general public is not sufficiently informed about the values of CSR and consumer awareness is still insufficient, so that when making a purchase no other aspect is taken into account than the price and quality, in order to identify the product. “Montenegro is at the beginning of the road as far as the implementation of CSR activities in its policies is concerned. However, what is important to note is that we in the Government see CSR as a tool to enhance the sustainable development strategy, as part of our national competitiveness strategy, and as an instrument in improving the position of our companies in the global economic scene. In countries with developed market economy, social responsibility is increasingly becoming a significant factor in consumers’ decision making and choosing a particular product, which is why socially responsible companies gain a competitive advantage over the competition. But, if countries such as Montenegro, and the companies coming from them, want to do have profitable businesses, they will have to accept all the demands of the global market, one of which is increasingly - CSR,“ said Mr. Lazović. He pointed out that it is necessary that the Government take the initiative and clearly define the responsibility of all in the process of successful implementation of CSR. „The state must recognize the importance of CSR as a strategy that will help the domestic competitiveness, and it should also try to achieve a higher degree of integration of CSR into strategic objectives of Montenegrin companies with the system of encouraging the socially responsible and penalizing the irresponsible ones. Also, companies need to understand that social responsibility is not just a passing trend, but the modern way of doing business. CSR in essence represents the awareness of the new position, the importance that companies have in the modern, global society, as well as the responsibility arising from these elements,“ Mr. Lazović underlined.

Given the important role of the business sector in ensuring sustainable development, and confronting the environmental, social and other challenges at the same time, the European Union member countries have in the last decade accessed to Corporate Social Responsibility strategically, with long-term planning of methods and instruments for its implementation. The commitment of the European Union, expressed especially through the work of the European Commission, shows that CSR is an essential element of the European social model and it will contribute positively to the European strategy for sustainable development. All this contributes to the ultimate goal: making the most competitive economy based on knowledge, which can provide sustainable economic growth with new and better paid jobs and greater social cohesion.

UN Resident Coordinator and UNDP Resident Representative to Montenegro, Mr. Rastislav Vrbensky estimated that the modern concept of CSR is a platform for economic development of countries in terms of building structures in a way that it becomes a national concept. „Montenegro belongs to the group of countries that are ready to enter a new phase of corporate social responsibility, which involves active participation of the state as a leader of the overall process. In the global framework there are specialized funds opting for socially responsible investing. An integrated approach to corporate social responsibility at the national level creates the conditions for use of these funds in Montenegro, too,“ said Mr. Vrbensky. He emphasized that the UNDP, through the promotion of balanced regional development and the green economy, will be a partner of Montenegro in this initiative.

One of the main characteristics of the current structure in Montenegro is that it perceives companies exclusively as engines of economic development which operate independently from the rest of society except in urgent and emergency cases, when our economic sector should become one of the important factors for providing solutions and responses to general social problems. Because of this understanding of the role of economy, the business sector is often omitted from the discussion on sustainable development. Because of this understanding Montenegro today still has to take on the challenge of attaining sustainable development, because without a strong role of the business sector, sustainable development loses the second half of the meaning of the phrase – it loses its development. Domestic companies must take responsibility for the impact of their activities on customers, suppliers, employees, the community and the environment in order to be competitive and global marketplace. It is therefore imperative that the general public learns about the values ​​of corporate social responsibility.

„This meeting is important for two main reasons - one is the fact that although this event is primarily dedicated to the state administration today we have here representatives of economic, professional and NGO sector, because partnership of all social structures is a necessary precondition for reconstruction of trust in our society and for ensuring sustainable development. The other reason is that the subject of today's meeting is the role of economy in achieving sustainable development through the concept of corporate social responsibility,“ said Ms. Bosiljka Vuković, Head of the Division for the support to the National Council for Sustainable Development in the Ministry of Sustainable Development and Tourism. „The CSR concept offers a new vision to define the role of business in society, a vision which sets businessmen as a link between the state/Government and NGOs/wider society. In this chain, each of these three subjects has its own clearly defined role. We are here today to talk about what the state can and should do to encourage the development of this new culture and role of economy in the society, i.e. how to enable acceleration of the economy growth, using its full potential, creativity and dynamism, and moreover, to ensure at the same time that the long-term economic growth is transformed into a just, inclusive and sustainable growth. In the EU, 15 of 27 countries have a state policy for the promotion of CSR. It is a recommendation of the European Commission that all Member States adopt national plans for implementing the United Nations basic principles on CSR by the end of next year. As a future EU member, it is my hope that this gathering will take us in that direction. But essentially, the process of corporate social responsibility will be guided and formed by companies themselves.“

What is important to achieve is a greater involvement of academic community in research and promotion of CSR, aided by adequate funding by public and private sector and the European Union, to ensure the exchange of knowledge, skills and innovative measures. Strengthening of the complementary role of the Government in promoting CSR is of utmost importance, and success can be achieved only in partnership with the business sector. Mr. Goran Lazarevski, UNDP Consultant from the Macedonian National Coodination Body pointed out that the competitive race in Europe is exhausting, and Montenegro should ensure its competitiveness before it becomes part of the EU.

The government announced an initiative to clear and define responsibilities of all involved parties in order to implement CSR as part of national policy.

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The conclusions of the consultative meeting „The introduction of the principles of corporate social responsibility into national policy of Montenegro“:

- In Montenegro, the prerequisites are met for active involvement of government in supporting and promoting the implementation of CSR as a system operating at the national level: the institutions of business and civil sectors have been built, and they have the knowledge and desire to be intensely engaged in this topic. This represents a solid basis on which to continue to build;

- Participation of the state is of essential importance for the success of the initiative and, in partnership with other stakeholders, is the only correct step further;

- The state’s interest is clear: success in the field of corporate social responsibility is changing the face of economic and business environment: it provides steady growth and respect for labor rights, it promotes stable demand and provides good quality and conscientious investors from home and abroad, as well as environmental protection.

- It should be borne in mind that CSR is an important measure to attract foreign direct investment: at a global scale today, for example, the funds that invest in socially responsible projects contain assets exceeding 300 billion dollars. This represents a significant potential for Montenegro, too, and the basic prerequisite is that potential partners demonstrate that they uphold the principle of corporate social responsibility;

- Of key importance for the further successful development of the CSR concept is a fact which this analysis revealed - that the state in its system already has a lot of the elements that are directly or indirectly connected with this concept, i. e. 11 strategies’ and 26 laws’ content treats specific issues related to CSR;

- Through good cooperation in the past with the donor community a partnership has been built that should certainly be used in the future activities;

- High commitment of the Government of Montenegro to this topic, and to sustainable development in general, gives reason for confidence that support will continue from that side;

- Important task that the country now faces is finding the best approach for establishing structures and mechanisms to support the concept of corporate social responsibility. Namely, through the internal analysis of available resources and priorities, as well as through intensive consultations with representatives of industry and civil society, a model should be found that will suit the situation in Montenegro and lead to maximum results in the shortest possible time.

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CSR is not giving, a short-term donation or aid; it is not an expense that a company, depending on its size or its current profit, has decided to set aside for activities that are not in its basic business plan. Corporate Social Responsibility is a long-term investment of a company, an investment that through openness to the community helps the company to ensure competitiveness in the market, better relationships with current and potential clients and customers, and a quick response to market needs that reduces business and investment risks and, ultimately, a possibility that the company outlives its original owner.

The main goal of each company is making profit, and the country’s economic growth relies on this fact. This kind of growth is taken as a prerequisite for the general development and progress of the state and society. However, as the impacts of global economic and financial crisis have shown, it became clear that no company that bases its business strategy on short-term earnings without taking into account the consequences of their long-term activities on its employees, the benefit of their clients, the wider community, as well as the environment whose limited natural resources it uses – can develop or do business in long-term with high profit.

The rights and the level of satisfaction of employees, suppliers, customers, shareholders, needs and aspirations of the community and the limitations imposed by nature… - calculating all these factors into the everyday business decisions beyond what is prescribed by the law as a minimum obligation is called Corporate Social Responsibility.