Corporate responsibility in the SME sector (pdf) (1.1

Corporate responsibility in
the SME sector
Best Practices

This brochure, created in 2009, was commissioned by the
Ministry of Employment and the Economy. The Centre for
Responsible Business at the Turku School of Economics was
responsible for drafting the content, in co-operation with
various collaborative partners. This brochure includes
examples of enterprises and projects that exercise
corporate responsibility. Such examples will assist SMEs
in developing their own responsibility-based activities.
We wish to thank all of the enterprises included in this
brochure and all collaborative partners involved in this
project. The concept is based on a brochure created in
2007 as part of the European Commission Programme
‘Mainstreaming Corporate Social Responsibility (CSR)
Among SMEs’.
Contact information in Finland
Ministry of Employment
and the Economy
Labour and Trade Department
www.tem.fi/enterprises
University of Turku
Centre for Responsible Business
cereb@tse.fi
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What?
Corporate responsibility refers to the balanced development and
management of environmental, social and economic factors in enterprises,
in co-operation with stakeholders. The various dimensions of
responsibility are closely integrated. In the case of responsible and
consistent managing of the enterprise focused on long-term goals,
responsibility supports business activities. Each enterprise defines
the most suitable focus points and implementation methods for its
business activities.
Corporate responsibility is a strategic method by which all SMEs can
enhance their competitiveness, meet the challenges of sustainable
development and develop their business activities. Corporate responsibility
creates win-win situations, in which everyone benefits.
The characteristics of corporate responsibility include
actions that benefit employees, stakeholders and the environment
voluntary actions exceeding the requirements of legislation
and agreements
openness and transparency of business activity
taking simultaneously account of economic, social and
environmental responsibility
consistent activities rather than ad hoc actions
being a part of the business strategy, not separate actions.
Corporate responsibility is referred to using various terms, such as
responsible business, corporate citizenship, responsible entrepreneurship
and sustainable development. In most cases, these refer to the
same concept.
SMEs often function responsibly, but do
not know how to use the potential of
responsibility to their advantage!
Why?
Although the concepts of corporate responsibility and corporate social
responsibility are mainly used in reference to large companies and
corporations, also SMEs can use responsibility as a strategic means
of improving their competitiveness.
Enterprises wish to act responsibly for various reasons. A key motivation
is improving their long-term profitability and operating conditions.
Responsibility can have a positive impact on the
competitiveness of SMEs in the following ways
new business ideas and broader markets
better products and production processes result in improved
customer satisfaction and loyalty
employees are more motivated and committed, which in turn
increases creativity and innovativeness within the enterprise
expenses are reduced and profitability increases, as both human
and production resources are used more efficiently
a better position in the job market assists in the competition for
skilled workers
improved opportunities for networking with, for example, business
partners and authorities
positive publicity and visibility
improved public image provides better opportunities, for example,
to arrange financing
increased revenue on account of all of the above-mentioned factors.
The benefits of corporate responsibility also
apply in reverse: if you do not act responsibly,
you may lose your reputation and the trust
of the markets.
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Responsibility can take the form of various practical actions, which
are not necessarily complicated or expensive.
SMEs behaving responsibly are active in one or more of the areas of
responsibility named below. These areas are not separate, but closely
interconnected and mutually supportive.
Customers
and the
markets
Environment
Responsible
enterprise
Products,
services and
the supply
chain
Personnel
Society,
the local
community
Enterprises can begin to develop their responsibility within the
areas they themselves have chosen. Later on, they can gradually
extend their responsible actions, and make them more comprehensive
and systematic.
Many SMEs do not focus on merely one area of responsibility, but have
taken a more comprehensive approach. By this way, responsibility
becomes part of their business activities and concept.
The following pages give a more detailed description of each area
included in the figure.
SMEs exercise responsibility through the following steps:
1. Discuss the values and business practices of the enterprise.
2. Write down the business principles: what do we want to do?
3. Discuss responsibility with the stakeholders: what are their
expectations? What type of co-operation is possible?
4. Add responsibility to the everyday activities of the enterprise.
5. Measure responsibility for the purposes of future improvements.
6. Communicate about progressing responsibility.
7. Conduct assessments periodically and make the necessary
improvements.
Decide what to do,
and do as you decided.
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Personnel
Responsible actions of SMEs related to personnel may include
employee training and skills development
staff participation in decision-making
working towards improved occupational health and safety,
and improving working conditions
supporting the balance between work and personal life
promoting unbiased and equal opportunities, diversity and
tolerance
fair and just wages that act as an incentive to employees, or other
types of benefits, such as pension systems and staff well-being
vouchers.
Examples
Smartum Oy has created vouchers for exercise services (Liikuntaseteli),
and cultural services (Kulttuuriseteli). In 2007, Smartum won Excellence
Finland’s Innovation of the Year Award in the SME category, in recognition
of the enterprise’s creative innovations exploiting an existing network
of services. The vouchers encourage employees to take care of to their
well-being. In the same year, the enterprise also won the Ethical Leader
2007 Award. www.smartum.fi
Oy Pinifer Ltd manufactures eco-friendly vegetable oil-based
bio-lubricants, and the associated products, services and equipment.
Bio-lubricants are non-toxic and biodegradable. The enterprise is
committed to reducing its energy consumption and production of
waste, and strives to increase its level of recycling. Pinifer also strives
to communicate openly and take into account the occupational health,
job satisfaction and safety of its personnel. Responsibility has helped
develop employees’ skills and environmental awareness, while
improving the quality of its business activities and public image.
These factors have been assessed through, for example, customer
satisfaction surveys, which have clearly shown that issues related
to the environment, occupational safety and quality are important
to the enterprise’s customers. www.pinifer.fi
The owners of Berner Ltd want their staff to become committed to
the enterprise. The enterprise has been distributing ten per cent of its
profits as annual bonuses to staff members since 1946. Bonuses for
employees have been in proportion to their salary. During excellent
years, staff members have been awarded bonuses equivalent to
3.5 months of salary. Additionally, the enterprise’s goal is to establish
long-term partnerships with a variety of stakeholders.
http://eng.berner.fi/
Great Place to Work Institute Finland conducts an annual survey
to identify the best workplaces in Finland and publishes the results.
Organisations included on the list are entitled to use the Finland’s Best
Workplaces logo for a year. The best workplaces are mainly selected
on the basis of the organisations’ employee opinions, as well as the
findings of a workplace management assessment tool. The list has a
separate category for SMEs. In 2008, the number one enterprise in
the SME category was Reaktor Innovations. The enterprise has been
particularly successful in creating long-term responsible management
practices. In practice this means, for example, flexibility and supporting
employees in various life situations.
www.greatplacetowork.com
www.reaktor.fi
Competent, active and involved staff forms the basis of our competitiveness.
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Society and the local community
Responsible actions of SMEs related to society and the local
community may include
providing financial well-being, jobs and opportunities to
improve skills
co-operating with educational institutions, and offering trainee
positions
promoting diversity
contributing to society in a wider sense, such as helping people
in developing countries, or reducing poverty
responsible investing
interacting and co-operating with, for example, the public sector,
other enterprises and NGOs
developing people’s living environments through various
campaigns
giving donations and providing support in non-financial ways,
such as providing the enterprise’s products or services to selected
organisations and events.
Examples
Kalevala Jewelry donates part of the proceeds from its jewellery
collection ‘Gravity’ designed by Kaisaleena Mäkelä, to the Women’s
Bank. The Women’s Bank supports women’s entrepreneurship in the
developing countries and provides women with opportunities to earn
a living for themselves and their families. It also helps to improve the
well-being of the local community in general. Previously, Kalevala
Jewelry donated part of the proceeds of the ‘Africa’ jewellery collection
to a project providing basic education to young girls in Ghana.
The Women’s Bank is a fund coordinated by Finn Church Aid.
www.kalevalakoru.com
Co-operation is the power!
Manpower Inclusive is a recruitment and human resource enterprise,
with the status of a social enterprise. The enterprise promotes
diversity and equality in the work places. Manpower Inclusive strives
to improve the employability of job seekers who are in a weak position
in the job market, through participation in a variety of programmes.
Target groups include people with disabilities and job seekers with
only partial working capacity. Manpower Inclusive is an affiliate of
Manpower Inc. www.manpower.fi
NOIR, a fashion industry SME in Denmark, fights against poverty and
strives to improve living conditions in Africa through responsible business
practices. NOIR manufactures and sells high-end fashion intended
to appeal to consumers’ social consciences. One per cent of the proceeds
from NOIR’s clothes sales is donated to cotton plantation workers
in Africa. Additionally, the NOIR Foundation provides medicine and
micro loans to less developed areas of Africa. www.noir.dk
The Baltic Sea Challenge, initiated by the Cities of Helsinki and
Turku, is intended to have a positive impact on the state of the Baltic
Sea’s marine environment. The challenge aims to involve enterprises in
voluntary actions to improve the state of the Baltic Sea. This is because
enterprises have a significant impact on the condition of the marine
environment, for example, through their logistical solutions, consumption
of raw materials, energy use and personnel. Enterprises participating
in the challenge will create action plans that include a list of
concrete actions for improving the state of their local waters and the
Baltic Sea. Many similar challenges and initiatives related to various
issues are underway in Finland. www.itamerihaaste.net/in_english
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Products, services and the supply chain
Responsible actions of SMEs related to products,
services and the supply chain may include
development of products and services that meet the expectations
of the customer for sustainable development
transparency of production processes and services, and availability
of information on the origin of products and services
exercising voluntary environmental, social and economic
responsibility, and following ethical guidelines and standards
throughout all phases of the supply chain
responsible actions throughout the subcontractor chain
continuous and sufficient R&D activity as anticipation for
future needs
innovative solutions for developing environmentally and socially
responsible products and services
the ability to describe the aspects of responsibility included in
the enterprise’s business activities to the main supplier.
Examples
Lappset Group is a manufacturer of playground equipment. Its mission
is to provide people of all ages with the opportunity to live healthier
and happier lives through play. Playing combines exercise and fun.
One of Lappset’s products is SmartUs. This encourages children to
exercise and supports learning in a way that appeals to today’s
children. SmartUs is an interactive learning environment that
combines playground equipment with video game technology.
www.lappset.com
Helkama Velox Oy manufactures bicycles in Finland. A bicycle is a
‘green’ mode of transport in line with sustainable development, since
its nonexistent carbon dioxide emissions. The bicycle production
processes of the enterprise’s factory in Hanko do not generate any
emissions into the soil, water or air. Helkama Oy also strives to manufacture
durable bicycles with long lifecycles. www.helkamavelox.fi
Enterprises may incorpotate responsibility
and the promotion of sustainable develop-
ment as part of their profitable and
competitive business activities.
Ekolådan in Sweden sells biodynamic and organic products
delivered directly to consumers’ doors using an energy-efficient
delivery system. The enterprise’s production processes have also
been developed to be as environmentally friendly as possible.
Ekolådan’s primary service innovation lies in the role played by
consumers as investors. The enterprise has purchased farms with
consumer investment funds, which supports its vision of bringing
consumers and products closer together. www.ekoladan.se
In 2001, Finnish enterprises in the industrial and trade sector established
a network agreeing on the principles of social responsibility
in importing. The aim is to ensure that consumer products
have been manufactured in socially and ethically acceptable production
conditions. Enterprises participating in the network are committed
to comply with the principles of responsibility in importing.
The network currently includes around 20 enterprises, about half
of which are SMEs. These enterprises benefit from the principles of
responsibility in importing, and also receive support in meeting the
global challenge related to the origins of retail products.
www.keskuskauppakamari.fi
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Customers and the markets
Responsible actions of SMEs related to markets or customers
may include
improving the quality and safety of products and services,
and making them more environmentally friendly
paying due attention to consumer protection and the accuracy of
consumer information
informing openly about product and service features to customers
fair and transparent pricing
voluntary services, such as recycling and maintenance
efficient customer feedback system
taking care of payments to suppliers and business partners on time
complying with ethical principles in advertising
avoiding the grey economy and corruption
reporting on corporate responsibility.
Examples
Eko-Expert Oy has developed a technological solution for recycling
blown-in insulation, which would otherwise be disposed of as landfill,
from renovation or demolition sites. This technology reduces Eko-
Expert’s customer companies’ transportation and waste management
costs. An Environmental Award was given to the enterprise by the
Association for Environmental Management in 2006.
www.eko-expert.com
The tourism enterprise Moominworld Ltd was established in
Naantali in 1993. The enterprise’s core values include environmental
awareness, safety, family-orientation, non-violence, friendliness, and
being adventurous and educational. For instance, the use of alcohol
and smoking are prohibited in the Moominland theme park. In 2004,
Moominworld was listed among the 25 European model companies
that adhere to ethical, social and environmental values. In the autumn
of 2008, the enterprise was awarded under the SME category of the
annual competition on CSR reporting in Finland.
www.muumimaailma.fi
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A small kitchen manufacturing enterprise in Germany, Die Möbelmacher
GmbH, organises free cookery courses for its customers,
aimed at familiarising them with the kitchens the firm manufactures
and a healthy diet. The enterprise has taken the initiative by participating
in varied forms of co-operation. Once a year, local manufac-
turers get together for a ‘regional day’ to share experiences and
discuss their approaches to sustainable business activities. In recent
years, this co-operation has made a significant contribution to
increasing the enterprise’s turnover. www.diemoebelmacher.de
Fair Unlimited in Sweden is a B2B enterprise that sells corporate
gifts bearing the Fair Trade certification mark. Its product selection
includes clothes, food products, confectionary, snacks, footballs,
and gift boxes and bags. All of its products have been manufactured
through small-scale production in locations all over the world. This
means that the enterprise cannot set tight requirements for the
producers in terms of price, quality and delivery times. Because Fair
Unlimited co-operates directly with Fair Trade suppliers, it must
adhere to the international Fair Trade standards of the Fairtrade
Labelling Organisations International. www.fairunlimited.se
Productive, efficient, and at the
same time environmentally friendly.
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Environment
Environmentally friendly actions of SMEs may include
taking systematic account of environmental issues in business
activities
planning innovative and environmentally friendly products and
production processes
taking account of the environmental impacts of products and
services throughout their whole lifecycle
encouraging customers, personnel and business partners to adopt
environmentally friendly practices
reducing the use of materials, energy and water, and making
their use more efficient
reducing the production of waste, and reusing and recycling waste
components
conducting suppliers’ environmental assessments
favouring environmentally friendly products and services in all
acquisitions.
Examples
For Lindström Oy, reducing its environmental load is an essential part
of business activities. Material efficiency is included in the modular business
operation system the enterprise uses in all countries in which it operates.
The enterprise’s textiles are serviced 20 to 200 times during their
lifecycle, depending on their purpose. For example, a roller towel that has
been washed over a hundred times is equivalent to around 24,000 disposable
paper towels. A used roller towel from a dispenser equals two kilos
of solid waste, whereas the corresponding number of disposable paper
towels generates 80 kilos of waste. www.lindstromgroup.com
Kiilto Oy is a chemical industry enterprise. Its main product is adhesives.
Finland’s largest solar power plant is located on the roof of Kiilto’s
production plant in Lempäälä, with 332 solar panels. These panels
produce around 60,500 kWh of electricity per year, equivalent to around
one per cent of Kiilto’s own energy consumption. The enterprise has
invested in environmental responsibility in both its own development
and that of its products. www.kiilto.com
Piiloset by Finnsusp Oy in Lieto has developed and manufactured,
for example, a variety of contact lens care products since 1978. Their
contact lens care solutions are environmentally friendly. The enterprise’s
R&D efforts have produced BioSoak – the only care solution in the world
that contains a biodegradable detergent that is not harmful to living
organisms in the environment. The enterprise’s production process
is also designed to be as environmentally friendly as possible, for
example, in terms of recycling carton and plastic during different phases
of production processes. Piiloset by Finnsusp Oy is a prime example of
an enterprise that takes comprehensive account of various environmental
issues. It is the first enterprise in Finland’s optical industry to be
awarded the ISO 9001:2000 certificate. www.piiloset.fi
Farm-Fill Umweltinnovations- und Vertriebs GmbH is a small toy
resale enterprise in Austria. The enterprise’s main product is PlayMais
toys. Toys are manufactured using renewable resources, such as maize,
and no fertilizers or pesticides are used in the cultivation process. As
children play with PlayMais toys, they can learn about organic products
and develop their creativity. www.farmfill.at
One man’s waste is another man’s resource!
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Additional information
Organisation Internet address Main content
Ministry of Employment
and the Economy (TEM)
Finnish Business &
Society (FiBS)
www.tem.fi/enterprises The website includes
information on corporate
social responsibility.
www.fibsry.fi/fibs-is-anetwork-for-responsiblebusiness
European Commission www.ec.europa.eu/enterprise/
csr/campaign/documentation/
index_en.htm
Small Business
Journey
A network of enterprises,
partly funded by the Ministry of
Employment and the Economy,
that promotes economically,
socially and environmentally
sustainable business activities
in Finland.
European Commission website
on CSR includes, for example,
information on CSR for SMEs.
www.smallbusinessjourney.com Instructions for SMEs in English:
how to improve profitability
through responsible business
practices
Ministry of Employment and the Economy
P.O. Box 32, FI-00023 GOVERNMENT, Finland
Tel. +358 10 60 6000
Fax +358 9 1606 2166
www.tem.fi/enterprises Layout: Proinno Design Oy