Companies slash CSR budgets but still see it as a priority

Newsroom 04/12/2008 | 16:19

“I think the level of the CSR budgets set aside by some companies will drop but globally the total level of CSR expenditure will increase since new companies will appear who will be interested in getting involved in this area,” says Dragos Bucurenci, the general manager of the MaiMultVerde environmental association.
Take Petrom, one of the Romanian companies that has recently pumped extensive funds, resources and time into its social responsibility programs.
The budget that the company allotted to CSR projects in 2007 and 2008 was EUR 10 million. Approximately EUR 8 million has already been spent. So far, the projects that have been implemented have been drawn from several different categories such as environmental protection, education, communities and employees.
“CSR activity should be connected to a company's area of business. If you do not have a coherent strategy, you risk getting lost on the way,” Mona Nicolici, the firm's CSR communication manager, tells Business Review. “Since the projects we have done so far are connected to our business model, I do not believe that we will adopt new topics. I think we will continue on the same path.”
The company is now working on its CSR strategy for next year and for the medium term, until 2015. “We are still discussing the budget for next year. It will certainly not be at the same level as before but it will still be a high sum,” says Nicolici. She says that all CSR budgets will definitely decrease because cost and investment cuts are currently being made by all companies owing to the economic crisis.
“All companies are making budget cuts at the level of the entire business, not only CSR activities. There are also some that have decided not to invest at all in CSR which I believe is a bad move,” says Nicolici.
Catalin Gheorghe, communication director at the Association for Community Relations, tells BR the signals so far indicate, “CSR budgets are stagnating or being blocked, since these are times when companies are re-drafting their forecasts for the future. Rather than talking about a crisis, we are talking about a moment of confusion and disorientation. The financial projections that many companies have made seem no longer to be valid and I think everybody needs some time to revise their estimates and then to make the necessary decisions.” Gheorghe adds that an intelligent company, “even though it will reduce its CSR budget, will monitor the impact of its social involvement more so that even if budgets as value decrease, the impact of the budget cut on the community and the company will not be as big.”
Judging by the number of CSR activities and the budgets allotted by companies for these actions, Gheorghe says Romania has a CSR culture in the making. “We are organizing an event that awards social involvement, the Gala People for People in collaboration with AmCham, and this trend can be seen there, since there are better and more durable projects,” he says. However, the approaches taken are not very diverse and all projects are seen as being part of the same category.
“The methods are not very creative. Differentiation is needed so that CSR has an impact both on the society and within the company implementing it. Moreover, these activities are not visible enough. The mass media will not write about every sponsorship made, because it is not news-worthy,” says Gheorghe.
The solution in this case is to “fabricate” news, but it should not be empty of meaning, but rather should have substance, which means that “something should happen during that activity.”
Organizing a large-scale event or show ensures that you can get a social event or campaign forward, but as this sector is getting more crowded and the public becomes more educated, the impact of such a move can turn sour.
Petrom has chosen to involve the press and opinion leaders of Romanian society but Nicolici says it is up to each company to find its own system of differentiation. “We have had days and weeks that we've spent in discussions with opinion leaders and journalists.We have involved them in volunteering programs and they have built houses together and we got them to experience this CSR exercise themselves,” she says. In her opinion, this is a good method to promote a project since it is much more credible and long-term oriented.
“If you see a piece of news, you may forget it the next day but if you are constant in conveying your message differently, it will stick in the mind of the person you are talking to,” adds the CSR manager.
Due to extensive CSR activities, studies conducted by the company found that in 2007 Petrom had evolved in the perceptions of the public and its employees from a company that was not seen as socially responsible into the most involved company in CSR, according to Nicolici.
These activities have thrown a positive light on the company's behavior, the relations it establishes with partners, the negotiations and investments it makes as well as its relation with the authorities, “all of which you cannot quantify but are still there.”
Nicolici says there is no means to quantify the concrete benefits of a CSR project on the business. “I do not think people will buy more or less gasoline if we tell them a percentage of its price will go to a certain project,” she says. However, there are ways to evaluate the impact and the efficiency of a CSR project which can compare the investment a company makes and the impact it has on the community. The benefits can be seen at the level of the employees and their degree of satisfaction and also the perception of the brand.
“Involving the employees is a very under-used method which is cheaper, generates supplementary funds and also satisfaction among employees,” says Gheorghe.
Studies indicate that 87 percent of the employees involved in CSR feel connected to the companies they work for, compared to just 33 percent of the employees of firms not involved in CSR activities. “Generally all our CSR activities have an internal component since it would be frustrating for our employees to find out from television that their company was implementing CSR projects for others but was not willing to help them as well,” says Nicolici.
Corporations' appetite for CSR has gradually increased and top managers are much keener to achieve things that should matter on the long term. They are looking at their activities and trying to connect CSR to what they do. Additionally, CSR is becoming a business model and companies are paying more attention to what it really means, since it cannot only relate to PR and getting involved in a few social programs.
“Romania is following the pattern of other countries which now have a longer CSR history, where CSR was also once seen merely as sponsorships, philanthropy and charity and not as a sustainability model,” says Nicolici.
The Edelman Good Purpose II study carried out in October indicates that 80 percent of consumers feel that during a recession it is still important for brands and companies to set aside money for social purposes.
Seven out of ten consumers would remain faithful to a brand even in times of recession if it helped a good cause. Nearly 9 in 10 consumers (87 percent) feel it is their duty to contribute to a better society and environment while 83 percent are willing to change their own consumption habits to help make tomorrow's world a better place.
A study conducted in Romania with financial support from the Trust for Civil Society on a sample of 1,100 respondents with a 3 percent margin of error indicates that in 2007, 60 percent of Romanians made a charitable donation. Most donations (60 percent) were financial, 38 percent consisted of money and objects/services and just 3 percent were donations exclusively of objects and services.
Forty percent of donations went on religious causes, 20 percent to social ones, 10 percent to heath causes, about 8 percent to charity and volunteering, 2 percent to education and research, 2 percent to art and culture, 2 percent to social development and 1-2 percent to environment protection.

By Otilia Haraga

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