Russian business leaders are still divided. Some are ready to include philanthropy as part of their social responsibility, as is generally accepted in the West. But others still see their responsibility to society as paying their taxes and abiding by the law.
“Corporate philanthropy is part of the social responsibility of companies that can afford it,” said Thomas Wagner, Eastern Europe director of Otis.
Otis, a multinational company with 3,000 employees in Russia, helped sponsor St. Petersburg’s 300th anniversary celebration last year, as well as other events.
“We are a customer-facing business, so we expect our socially responsible investments to affect the bottom line positively, especially in Russia where the big players do not do as much as they could,” he said.
In general, Western companies define corporate social responsibility broadly, seeing a clear link to the bottom line.
“Corporate social responsibility includes business ethics, philanthropy, community and labor relations, environmental concerns and other issues affecting all of the company’s stakeholders,” said Cheryl Raven, international programs consultant at the Ethics Resource Center in Washington, D.C.
The Russian business community is more reluctant to accept this definition, fearful of being forced to fill the post-Soviet social infrastructure vacuum.
“Corporate philanthropy, unlike corporate social responsibility, is not an obligation, but a personal choice of each company,” said Igor Yurgens, executive vice president of RSPP, the country’s largest business lobby.
Yurgens said he equates corporate social responsibility with business operating in a way that is safe for employees and the environment, creates jobs, pays salaries and complies with tax regulations.
“The difference between corporate social responsibility in Russia and in the West is the degree to which [it] developed as a concept,” said Stanislav Vartanyan, project manager of Rossiiskoye Partnerstvo, which aims to strengthen relations between business, government and nonprofit organizations.
In Soviet times the state took responsibility for alleviating all social problems. After the command economy’s collapse, which took the social safety net with it, private companies began filling in the gap.
Despite their investments into social development, local businesses are resentful of “mandatory philanthropy” that local authorities often require.
“Companies are put in the position where they cannot refuse a request of local police and other authorities to sponsor Victory Day or similar events,” said Boris Tsirulnikov, executive director of Tolyatti Community Foundation, a nonprofit group working to develop business and government links in Tolyatti.
“Mandatory philanthropy” is particularly a concern for small and mid-sized business because smaller companies are easier to pressure, said Sergei Borisov, president of Opora Russia, which supports small business development.
Despite these problems, Vartanyan is confident that corporate social responsibility in Russia will eventually converge with the Western definition.
After all, a broad understanding of social responsibility did not emerge in the West overnight.
“In the United States, corporate philanthropy is encouraged by the tax code,” said Art Franczek, president of the American Institute of Business and Economics in Moscow.
Franczek also stressed that many Western companies honor their environmental responsibilities primarily because they are forced to do so by government regulations.
As Russia’s legal system develops and the positive effects of social spending on the bottom line become clearer, companies’ understanding of corporate social responsibility is likely to expand.