The State of Corporate Responsibility in Estonia

Kristiina Esop 18. Feb 2019
In May 2018, the Responsible Business Forum (Vastutustundliku Ettevõtluse Foorum) acknowledged 70 Estonian companies for their commitment, and their readiness to contribute to society to a larger extent than prescribed by law. KRISTIINA ESOP, the Managing Director of Responsible Business Forum Estonia gives an overview of how far the Estonian business community has come on its journey to understanding and embodying corporate social responsibility.

Today, corporate social responsibility is much more discussed in Estonia than it was, for example, five years ago. However, compared to other Nordic countries, it is still rather minimal. We have reached a point where there is public and substantive discussion about the role and responsibility of companies, in addition to making a profit, of course.

Taavi Veskimägi, CEO of Elering, the Estonian national transmission system operator for electricity and natural gas, wrote recently about the top management’s responsibility to contribute to the development of their homeland and take part in public discussions. In addition, companies have begun to include social and environmental indicators in their annual reports (and other information channels), in addition to financial results, of course. What is more, it seems that the topic of reliability is becoming more and more important, and each year we add new companies to our Index of Corporate Social Responsibility

Corporate social responsibility (CSR) mainly refers to the integration of social, environmental, and economic dimensions at the management level. For example, it includes the consideration of the needs of stakeholders, and conscious management of impacts resulting from one’s business activities. By implementing the principles of value-based and systemic management, businesses can send a strong signal to the rest of the society about what is important to them and how they are contributing to our shared living environment. Those signals can be transmitted in various ways, for example, through public statements made by the management, and also through employee attitudes towards their customers. What is more, corporate social responsibility is currently very topical on the Nasdaq Baltic stock exchange. By raising awareness about these issues, we can draw investors’ attention to multifaceted factors that give an indication of a company’s reliability.

The companies that do not value social responsibility are doing themselves a disservice in the long-run. How? We live in an information society, which means that people are much more aware of problems and injustices plaguing our societies. The majority of today’s youth belong to organisations that contribute to achieving some larger social objective or solving some larger social problem. People are placing more and more value on finding meaning in their work, as well as applying their individual talents. The skills necessary for developing a dialogue with stakeholders help, in addition to drawing in new business opportunities, also with attracting talents, and that is becoming one of the main priorities for companies.

It is beneficial for employers to know what is in the focus of the most critical public debates, and where their company could contribute to mitigating these problems both within their own sector and beyond.

Trends in Cross-Sectoral Collaboration Models

It is becoming more and more common that sustainable business models that are inherently aimed at systemic problem-solving and improving the well-being of society give rise to cross-sectoral collaboration.

In her interview to the Estonian Responsible Business Forum, Anne Larilahti, Vice President of Sustainable Strategy at Telia Company, talked vividly about the generation of various socially beneficial business solutions through shared values with different stakeholders. She pointed out how the globally established United Nations Sustainable Development Goals offer various business opportunities for companies. For example, in Estonia, Telia is collaborating with the city of Tartu and the University of Tartu on the SmartEnCity project which aims to develop a better, more innovative and energy-efficient urban environment. Jointly planned activities in the framework of this project include, for example, the development of the smart city model, creating an integrated infrastructure in Tartu, development of smart home solutions, and also utilising big data analysis for such projects, etc.

Currently there are few systemic solutions for many large-scale social problems in Estonia but we have become significantly more attentive and more courageous in talking about sustainability issues. We are creating more and more business models to address social problems. The third sector is also offering various collaborative models, e.g. Good Deed Foundation or social enterprise Re-Use Centre collaborating with companies across sectors in order to create a stronger and more effective re-use network.

Since more serious problems are usually cross-sectoral, and transcend stakeholder groups, they are also more easily solved through collaboration. In doing that, it is important to take into consideration the idiosyncrasies of different organisations, i.e. company vs non-profit vs public sector agency. An even more complex task is to find a systemic collaborative model that is suitable for all. If we want to contribute to solving some larger social problem (e.g. eradication of poverty, sustainable consumption, ageing society, etc.), it is critical to take the sustainability dimension into consideration from the start, and not only for the private sector but for all parties concerned.

When engaging the private sector, it is important to ensure that the investment would support both the development of the company itself but also the society at large. Such collaboration should focus both on the development of the people involved in creating changes but also clearly defined starting points and objectives that must be achieved. We should start describing objectives that have social impact similarly to economic indicators.

In conclusion, business success used to mean primarily the enrichment of stockholders, and social benefits were trickled down in the form of contributions rich business people made to society, whereas the new model that questions the old one is inherently more systemic and impactful. Our people and the natural environment are starting to be valued more and more, meaning that even in the course of performing their duties employees are interested in meaning and development, ensuring their mental well-being, and enjoying healthy food at the office.

It is good to remember that the sustainability model has three dimensions that focus on sustaining the people, the planet, and prosperity, and that the three are always interconnected. Therefore, summon the courage to make sure that the changes you bring to society are those that matter.

Responsible Business Forum in Estonia has been promoting the development responsible business practices in Estonia since 2005. As the only umbrella organisation, the Forum comprises local companies that practice socially responsible entrepreneurship. The Forum has developed a strong member network, and works actively with other organisations and networks that are important to their members. The Forum aims to promote awareness about the benefits of adopting responsible business practices, also offering deliverables in terms of improved public image. The Responsible Business Forum in Estonia comprises companies that value responsible business practices in order to ensure the sustainability of their company, and also that of the society and the country at large.