Press Releases

    Note to Correspondent

    Note No. 207
    26 August 2002

    CORPORATE SOCIAL RESPONSIBILITY INCREASINGLY
    RELEVANT FOR DEVELOPING COUNTRIES

    UNIDO Study Highlights the Implications for
    Small and Medium Enterprises

    (reissused as received from UNIDO)

    Without integrating small- and medium-sized enterprises (SMEs) into the global "social value chain", the aim of corporate social responsibility (CSR) to help alleviate poverty will not be met, according to the United Nations Industrial Development Organization (UNIDO). The warning comes in its new publication Corporate Social Responsibility: Implications for Small and Medium Enterprises in Developing Countries, one of UNIDO’s contributions to the World Summit on Sustainable Development beginning next week in Johannesburg.

    CSR must be turned from a Northern preoccupation to a global agenda

    The study marks the first in-depth examination of CSR approaches in the context of the small-scale industrial sector. Set against the backdrop of transnational corporations’ dominance of globalization, debate until recently has focused mainly on their role in corporate responsibility and has largely been an issue of the North. UNIDO, however, points out that the issue is equally relevant for the South. In his foreword, the UNIDO Director-General, Carlos Magariños, sees "the task of the UN system to turn CSR from a Northern preoccupation into a truly global agenda."

    There is a danger, for instance, that CSR standards may undermine developing countries’ SMEs by becoming a protectionist mechanism for retaining jobs, trade and investment in the developed countries. The focus of social issues and production standards often reflects the concerns and priorities of consumers in the North, as well as prevailing technologies and best practices in the countries where they were developed. The burden of monitoring and certification can present a significant expense sufficient to bar developing country SMEs from some markets.

    CSR can enhance market access, cost-effectiveness, productivity and innovation for SMEs

    However, while acknowledging the challenges CSR presents, the study argues that there is an upside to integrating such approaches into SME development. Corporate responsibility represents more than just a change to the commercial environment in which individual SMEs do business. It must also be seen in terms of its potential broader benefits. CSR offers opportunities for increased market access, cost savings, productivity and innovation for SMEs bringing with them such spin-off benefits as education and community development.

    The study emphasizes that developing country SMEs, themselves, must be encouraged and assisted to adopt CSR policies. Transnational corporations, civil society organizations, governments and multilateral bodies such as the United Nations can play a crucial supportive role in this direction.

    CSR must be part of the core business strategy, not a philanthropic add-on

    While CSR has gained strength in tandem with economic expansion and stability, now as global economic growth seems to slow down, the study cautions, so may the trend towards CSR strategies.

    "If any downturn is compounded by global insecurity as a result of increased conflict, the further development of CSR", the study concludes, "will be seriously challenged. Where CSR is integrated within the core business strategy, it is likely to remain strong, whereas, CSR as a philanthropic add-on is vulnerable to cost cutting. Ultimately, the long-term success of CSR will be based on its ability to be positioned within the core of business strategy and development, thereby becoming part of ‘business as usual’."

    Corporate Social Responsibility traces the development of CSR as well as its dimensions and rationale. The 75-page publication offers a detailed analysis of trends in CSR, including the major issues lying behind the movement and its application from sectoral and regional perspectives. It goes on to assess the impact of CSR on small- and medium-sized enterprises in developing countries and its potential for reshaping markets through new types of alliances in the public, private and non-profit sectors.

    The full text of Corporate Social Responsibility is available on the Internet at the address:

    www.unido.org/business-partnerships

    For more information, please contact:

    Agustin Stellatelli
    Tel.: (+43 1) 26026 3477
    Fax: (+43 1) 26026 6881
    astellatelli@unido.org

      or

    wluetkenhorst@unido.org