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Corporate Citizenship

Corporate citizenship is a new challenge to the strategic management, it demands to team up with external partners to actively identify and solve social problems. Corporations co-operate with external partners, often non-governmental-organizations (NGO), that are involved in educational, social, cultural, civic or political affaires, to help solving problems in their societiesÕ environment. It can be seen as a kind of pathfinder activity, it should not be realized as a sugar-daddy activity. Corporate citizens do not only donate money, further more they may also contribute with employee engagement, professional experience, organization talent and information to this co-operations.
Successful corporate-citizenship-projects in general follow certain guidelines concerning concept, partnership, community and sustainability. They are supposed to come with a strategic concept, instead of doing a random collection of engagement; they should realize their projects in partnership, instead of acting isolated; they need to be wide spread in the corporation, instead of relating the whole project to only one responsible person, who would act isolated. And last but not least they are implemented to engage with a lasting effect, instead of holding a short-term PR event (Habisch, 2004). Corporations can win in many ways by these co-operations, but they need to develop special competencies to establish and care for these networks.
Since the late 1990s, the term corporate citizenship began to replace corporate social performance (CSP) from the early 90th and stakeholder approach from the mid 80th (Waddock, 2004), the two terms will be explained later on. Corporations, as independent legal entities, are involved in the social developments on a local, regional, national and global basis, and can be thought of as corporate citizens with legal rights and duties - responsibilities. Therefore, all corporations are corporate citizens, but their citizenship performance may vary just as it does for any individual citizen (Waddock, 2002). One important part of this performance variance is the communication of CC.

CC related Terms

For a better understanding of the development and meaning of CC I will explain the related terms: stakeholder approach, corporate social responsibility and triple-bottom line in this section as well as CC itself in a few sentences.

Stakeholder Approach & Stakeholder Relationship Management
Since the 1980th the stakeholder approach has raised increasing attention (Waddock, 2004). Freeman, who supported the idea that no corporation could exist without stakeholder relationship, has made this stakeholder approach popular. This stakeholder view promotes the idea that corporations are more successful, when they have a better stakeholder relationship (Waddock, 2004). As the wording of Ôstakeholder approachÕ implies the dominant role of the corporation, the concept is renamed in Ôstakeholder relationship managementÕ. This concept is more driven by Ômutual interestsÕ (Waddock, 2004), which is even more important for the concept of CC.

Triple bottom line: economic, environmental, social impacts
In the long-term perspective economic, environmental and social components contribute to the business outcome as explained in the HSG business model (RŸegg-StŸrm, 2004). After the World Economy Forum met in 1992, it became popular in the political world to talk about the Òtriple bottom lineÓ. This is related to the economic aspect of entrepreneurial activities (bottom line = result, outcome) and includes the social and environmental aspects to the economic aspect as part of the responsibility of the corporation. In 2004, the World Economic Forum reports changes in the investor recognition of CC. It confirms that CC is beginning to be realized as a driver of corporate performance and that mainstream investors might become increasingly interested in these issues (Bergrem, 2004). This might affect the corporationsÕ communication on CC.

Corporate Social Responsibility (CSR/CR)
Corporate social responsibility (CSR) is a terms being often associated with CC. Sometimes it is called only Corporate Responsibility (CR). CSR is concerned with the corporationsÕ discretional relationships with its societal and community stakeholders. It intends to improve a relevant aspect of society or relationship with communities or NGOs (Waddock, 2004). CSR is a problem driven concept for the corporationsÕ value management approach; in contrast the CC-concept is proactive.
To differentiate the two terms, the Economic & Social Council of the UN formulated a supportive definition in December 2002:
... 68. Corporate social responsibility is a widely used concept to describe specific decision-making policies of the business community that are: linked to ethical values; in fully compliance with existing legal requirements; and show respect for people and the priorities of local communities, including environmental protecting. This social responsibility, combined with corporate responsibility to a range of stakeholders, notably consumers, employees and their representatives, investors and stakeholders, is assessed in terms of meeting a growing range of standards.
... 69. Corporate citizenship entails a similar approach and is often used interchangeably with corporate social responsibility, although it is potentially wider in scope, implying an active role for private sector entities as ÒcitizensÓ, having both rights and responsibilities. In addition to adopting the business policies and practices of corporate social responsibility, corporate citizenship is geared, in particular, to maximizing private sector contributions to social development without undermining business practices. The concept of corporate citizenship goes beyond focusing on compliance, responding to external scrutiny or simply minimizing negative impacts, thereby engaging the private sector in amore proactive way to actively search out and pursue ways to promote social development.

Corporate Citizenship
CC is the attempt to integrate CSR and the stakeholder approach (Waddock, 2004). Exemplary CC comes out, when the organization systematically monitors and addresses the demand of each stakeholder group (Maignan, 2001). It wants to avoid a result of unrelated activities aimed at displaying the goodwill of the corporation toward its stakeholder groups.
A proactive corporation, being involved in CC, is aware of the responsibilities imposed by its stakeholders (Maignan, 2001). CC should be manifested in the corporationsÕ strategy.

CC related Organizations: International, European and National

As CC activities are often motivated or even awarded by global, continental or national organizations, I will introduce the political & economical organizations: Global Reporting Initiative, Dow Jones Sustainability Index, Global Compact, CSR Europe and Initiative Freiheit&Verantwortung. The existence by itself and the recognized acting of these organizations emphasize the growing impact of CC and the importance to know how to communicate about CC.

Global Reporting Initiatives (GRI)
To monitor and to make public the environmental responsibility of corporations a voluntary development has been the establishment of the Global Reporting Initiative (GRI) as an independent body, supported by a multi-stakeholder governance structure. The GRI was first initiated in 1997, as a joint initiative of the United Nations Environment Program (UNEP) and the Coalition of Environmentally Responsible Economies (CERES), a group of more than 80 investors, environmental and community organizations. In 2002 the GRI became independent and is today an official collaborating center of UNEP offering a framework for companies to help them report on their economic, social and environmental performance (triple-bottom line performance). The GRI develops sector-specific indicators to ensure relevant information for different industry sectors. For details see www.globalreporting.org

Dow Jones Sustainability Index (DJSI)
Launched in 1999, the Dow Jones Sustainability Index is the first global index tracking the financial performance of the leading sustainability-driven companies worldwide. Based on the cooperation of Dow Jones Index, STOXX Limited and SAM the DJSI provides asset managers with reliable and objective benchmarks to manage sustainability-portfolios. Currently 50 DJSI-licenses are held by asset managers in 14 countries to manage a variety of financial products including active and passive funds, certificates and segregated accounts. In total, in 2004 these licensees manage 2.8 billion EUR based on the DJSI. For details see: www.sustainability-indexes.com. As CC is strongly related to sustainability, CC activities and the way they are communicated might affect the assessment of a corporation by this DJSI. Some of the corporations I investigate in this study are members in this Index: Allianz AG, BASF AG, Deutsche Telekom AG and Ford Motor Co. In the annual report of these corporations this membership is communicated with a logo of the DJSI at a prominent position.

Global Compacts
Kofi Annan established the Global Compact, a UN corporate citizenship initiative at the World Economy Forum 2000. It has enrolled more than 1,800 corporations until 2004, over half of them from developing and transition economies. They have agreed to support human rights, environmental protection and non-corrupt business practices. The Global Compact's intention is on how corporations can integrate the Compact's Nine Principles for business performance on human rights, labor and the environment into business development and decisions. For details see www.unglobalcompact.org. BASF AG, one of the corporations I looked at for this study, names these principles on its web: http://corporate.basf.com/de/sustainability/global_compact/umsetzung.html and explains its own activities related to these principles to the stakeholders.

Corporate Social Responsibilities Europe (CSR Europe)
In 1995 a group of European managers published the ÔEuropean Declaration of Businesses against Social ExclusionÕ with the aim to strengthen the recognition of social responsibility. One part of it was the foundation of the CSR Europe as a network for European corporations. This network intends to transfer the idea of social responsibility into the corporations, offers trainings and organizes dialogues between corporations, politics and NGOs all over Europe. For details see www.csreurope.org. Among the corporations I investigated, BASF and IBM are members.

Fig. 1.: Logo collection of the members of the CSR Europe

Reporting Initiative Initiative Freiheit und Verantwortung, Germany
The 'Initiative Freiheit und Verantwortung', which can be translated to 'Initiative for liberty and responsibility' is a formation of top associations of German economy (BDI, BDA, DIHK, ZDH) and the German business magazine WirtschaftsWoche with the patronage of the German president, to support social engagement of corporations. Since 2001, every year it offers the Award for liberty & responsibility in cooperation with the Center for Corporate Citizenship, of the University Eichstaett, Germany (www.corporatecitizen.de). The initiative awards small, mid and large firms, who did outstanding and exemplary activities to society. A yearly seminar concerning CC is organized as well. For details see: www.freiheit-und-verantwortung.de

Communicating Corporate Citizenship
Insight into Reasons for Performance Differences

written by Dipl. Designer Tanja Thallmaier
eMBA for Media & Communication
=mcminstitute, University of St. Gallen
St. Gallen December 10th 2004