Montenegro

Perception of Corporate Social Responsibility Concept in Montenegro

Corporate Social Responsibility (CSR) is a concept that integrates social and environmental care on voluntary basis in companies’ businesses and in their relationships with partners and associates. It implies that corporate decisions should turn companies’ operations toward improving of economic, social and natural environment.

Responsible business can play a decisive role in combating corruption, enhancing transparency in the markets, promoting environmentally clean production, creating employment opportunities for marginalized groups. CSR is becoming a source of social innovation and development of new products and services for lower income consumers. All these practices, if adopted by business sector can substantially improve social cohesion, and build a healthy foundation of sustainable economy and society.

UNDP Resident Representative a.i./UN Interagency Focal Point in Montenegro Mr. Garret Tankosić Kelly reminded in his introductory remarks that the beginning of the 21st century is seeing a specific global trend emerging - competitiveness which is determined by a company’s ability to create a win/win/win situation for the wholly trinity of people, profits, planet. He took the automaker industry as an example: This month General Motors closed down 4 of its truck&SUVplants, affecting over 10,000 employees. Together with Ford Motor and Crysler, the 3 companies closed more than 35 factories since 2005 and eliminated some 149,000 jobs in the same period. All three have failed to consider the triple bottom line -people/profit/planet- and respond appropriately with the launch of a smaller, hybric electric cars. Conversely, by launching its hybrid in the late 1990s, Toyota has pushed GM from its number one spot of the car making industry, a position GM has held since 1931. In the period from 2001-2006 companies who invested in accordance with this triple bottom line earned 7.3% return on their investment as opposed to the average of 3% of all other companies. Similarly, from 2003 to 2005 the stock value of companies who meet globally accepted CSR criteria as opposed to all other companies in the FTSE Index was higher on average from 8 to 18 dollar units. In other words, the market financially awards those companies who are efficient in use of energy and other materials that go into production of their goods and services, and who consider the triple bottom line -people/profit/planet- as the core of their business strategy. 

“The European Commission recognized the wholly trinity in its Green Paper ‘Promoting a European Framework for Corporate Social Responsibility’ where it defines the Corporate Social Responsibility as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. CSR is a prominent feature of modern corporate business that, as ex-UN Secretary General Kofi Annan said, gives human face to globalization,” said Mr. Tankosić Kelly. “Although an emerging practice among private sector in developed countries and a parameter of companies’ success in highly competitive markets, CSR is still a vague concept in Montenegro. Here companies who do implement activities which can be regarded as CSR may not be fully aware of the concept, while others may not realize how CSR contributes to their bottom line. But, as we’ve seen with the global examples and automobile industry, the market rewards those companies who invest in accordance with the triple bottom line - people, profit, planet - or socially and environmentally responsibly.”

“Montenegro has recently signed Stabilization and Association Agreement with the EU,” Mr. Tankosić Kelly continued, „and is working hard to meet the requirements needed for a country to be recognized as an equal partner of the European countries. Indicators of high CSR involvement are a very useful tool for promotion of mature society which is ready to be part of the European community. And the state authorities, business sector representatives and wider audience can do a lot for promotion of CSR values. CSR is the way for the future. There is no longer an economically feasible alternative to going out to ‘the blue ocean.’ The sooner the companies realize this, better equipped they will be to compete in the market. By advocating for higher social, environmental and governance standards as well as for public private partnerships you will set up a basis for long term business sustainability. The reputation of your companies will improve, you will be able to attract the best employees, and reap financial awards. I would like to thank you again for your presence here with the hope that CSR practices will become your core value, still financially rewarding but with more of a positive impact on society,” concluded Mr. Tankosić Kelly.

The research on the presence of CSR Concept in Montenegro showed that the awareness of social responsibility exists among Montenegrin enterprises, and entrepreneurs are aware that CSR is an important tool for development of their business – however, it still needs improvements and further promotion. There is awareness of CSR among Montenegrin enterprises, and among those big, private owned and foreign ones even to a larger extent. Small firms do apply some of CSR activities, though they are sometimes not fully aware of the concept.
 
Ms. Milijana Komar, CEED Project Manager said that, according to the basic results of the research, big and private companies are indeed more active with respect to CSR activities, whereas small companies are applying some activities though at times unaware of the overall concept. “Lack of knowledge about CSR, lack of technical support during its implementation and lack of support and interest of buyers are the reasons for noninclusion of CSR, it was stated in the research. Although social responsibility is based on the  firms’ voluntary engagement, local entrepreneurs still consider that the Government should have a leading role in improving of the CSR concept, and it’s role is perceived as the key factor even though the companies in Montenegro recognise CSR as a tool for their development. Furthermore, small companies are not fully aware of the importance of this concept which should in fact hold key place in the future of Montenegro. Local authorities do not fully understand their role in promotion of CSR, while the universities currently do not have impact on promoting of this way of doing business. Regarding local authorities, they are involved in humanitarian and environmental actions, but without indentifying themselves as a strong bond between the local community and local enterprises. The other actors - subjects to the research concluded that the NGO sector is the most familiarized with the term CSR and the related activities. However, labor unions are not much familiar with CSR. Also, business associations must be more active on raising of awareness of CSR, while the media should generally distribute much more information to the public and companies. The state needs to take active participation in this project too, by increasing awareness, level of education and through enticement measures. Beside the Government, the University is the key factor which should have a greater impact, as well as NGO sector,” Ms. Komar said.

Ms. Komar’s presentation (MNE)

 

Ms. Marina Kaneti, Regional Project Coordinator, UNDP Albania, while presenting the Regional Project on Corporate Social Responsibility said that the companies with prevailing foreign capital have better understanding and application of CSR concept than the companies which are “purely” domestic, while small companies are conducting it selectively. “The research recommendations are that regional governments should work on increasing awareness of CSR. Montenegro has certain legislation in this domain, and its related legislation frame is better than in the surroundings. Thus, the first step has been made and what remains now is to apply those laws,” Ms. Kaneti concluded.

Ms. Kaneti’s presentation (ENG)

 

 

 

 

*     *     *

For the private sector, the concept of corporate social responsibility is the way for the future that will give competitive advantages to those that start on time with this type of activities. Through adoption of this concept the companies will also accomplish comparative advantage by achieving trust and good reputation on the market. Although an emerging practice among private sector in developed countries and a parameter of companies’ success in highly competitive markets, CSR is still a vague concept in Montenegro. As it represents a very important tool in achieving the EU commercial standards, there is a need to further promote its values to decision makers, business sector representatives and the public in Montenegro.

*     *     *

In line with the premise ‘do CSR, not talk about it!’, and to demonstrate practical benefits of CSR the UNDP Montenegro has incorporated some of its related activities through two pilot projects:

In partnership with Hypo Alpe Adria Bank and ProMonte, UNDP provides energy efficiency audits which will highlight how much energy these companies spend in their premises and where the potential areas for saving are.  The companies will learn how they can achieve eco-efficiency: save money through increased efficiency, and protect environment.
  

 

UNDP Montenegro in cooperation with the Black Mountain Montenegro Ltd and the Kayak Montenegro will organize a two day 'Adventure Race Montenegro' in October, which will bring together over 150 competitors in areas of running, kayaking and biking and attract global media houses such as BBC and CNN. The race will show how eco tourism, sustainable and efficient use of Montenegro’s environment, biodiversity, and cultural and natural heritage are some of the premium ways for income generation.

 

*     *     *

In 2006 the Regional UNDP Bureau for Europe and Commonwealth of Independent States (CIS) in Bratislava prepared a project proposal and received funding from the European Commission to work on addressing some of the challenges in the field of corporate social responsibility in new EU member countries and candidate countries. As a follow up of this initiative, in the period between October last year to July this year the UNDP Albania is implementing a regional project related to the corporate social responsibility baseline in Albania, Bosnia and Herzegovina, Montenegro, Serbia and Kosovo - UN ATSCR 1244.

Within the project, an assessment of the presence of the corporate social responsibility concept was conducted in large, medium and small enterprises in all the mentioned countries and territories.

The main aim of the project is promotion of the corporate social responsibility principles among business sector and the wider public, and inclusion of business representatives in future activities in this domain.