Recommended actions to foster the adoption of Corporate Social ...

As illustrated in the next table, the situation is notmuch better in the human rights arena.OrganizationIndexNumber ofCountries inthe IndexHumanRights Watch(2004) Child Labor 191 143HRW,AmnestyInternational,USDepartmentStateUNESCO,UNDP 79HRW,AmnestyInternational,USDepartmentStateChild Rightsrisk 192 100EducationalAttainment 166 109HumanRightsrespect 194 1103 Current State of CSREl Salvador’sRankingIn 2005, the Business Foundation for Social Action(Fundemas) 80 started a program on theimplementation of CSR in SMEs. The main resultsfrom the program include: (i) there is a clearknowledge of the meaning of CSR; and (ii) theconcept of CSR is far from the concept of charity,because CSR is seen as entrepreneurs’ voluntaryactions that create a better internal quality of life inthe enterprise and CSR refers to responsibility notonly towards shareholders but towards employeesand community.As Fundemas (2004) emphasizes, the concept of CSRin El Salvador has passed through four historicalstages: (1) libertarian thought, (2) the model of selfinterest,(3) the focus on morality and (4) the focuson stakeholders. The first kind of social responsibilitywas philanthropy. After that, CSR took part in a newtrend directed toward modernization andimprovement of business through the guarantee ofsustainable development, and included new elementssuch as respect of ethical values, compliance withlegal requirements, and respect towards people,communities and the environment.Roberto Murray Meza, Fundemas’s president,pointed out the important role of CSRimplementation in the improvement ofcompetitiveness in SMEs. According to Meza, ElSalvador will have many difficulties in competingwith other countries, such as China, on the basis ofcosts, but it could create a CSR mark to distinguishitself in the market and to attract foreign investments.Vives, Corral and Isusi (2005) in their survey to 214SMEs from different sectors, such as trade,manufacturing and services, reveal that 32.2percent of SMEs develop high grade CSR activities,while the others practice low grade CSR activities.As for compliance with laws, only two out of threeenterprises comply with social security laws andonly one out of three enterprises complies withenvironmental laws. Moreover, only 6.6 percent ofthe enterprises interviewed have a social orenvironmental report. Regarding the SMEperception of CSR, half of the enterprisesinterviewed declared that they consider thedevelopment of CSR activities a priority and most ofthem are conscious that society is demanding moresocially and environmentally responsible behaviorfrom companies. On the other hand, the mainreasons why SMEs do not practice CSR are a lack offinancial resources and because they do notconsider CSR activities related to their corebusiness. One of the main problems in CSRimplementation is the lack of information on CSRissues. In fact, only 12.3 percent of the SMEsinterviewed considered CSR awareness and publicinstitutions’ efforts adequate in El Salvador.79 www.maplecroft.com80 Fundemas (Fundacion Empresarial para la Accion Social) is an association whose aim is to contribute to the integral and sustainablehuman development, through areas of health, capability, professional training, environment, infrastructure, and culture.88 Recommended actions to foster the adoption of Corporate Social Responsibility (CSR) practices in Small and Medium Enterprises (SMEs)