The project “Nordic Experiences: Corporate Social Responsibility and Innovation strategies in Nordic Companies” has established a unique list of the 500 largest companies in the Nordic region and explores whether companies in the Nordic region have implemented a relationship between innovation and social responsibility in their business strategies.
Within the Nordic region the 500 largest companies constitute the core of economic development and growth. How do companies integrate the sustainability and responsibility policies in their day to day business operations?
The Dynamics of Social Responsibility and Innovation: A study of Nordic 500 Companies
The Nordic countries have for more than 40 years applied a welfare economy model where inclusion in the labor market, diversity and equality are basic elements. The model has been crucial for the economic development in all the Nordic countries and governments have considered them to constitute a prerequisite for stability and economic growth. In a global context this is perceived as an innovative perspective on economic policy.
In recent years the model has been related to innovation and development in the corporate world and new perspectives on innovation policy have been introduced. Companies are expected to implement the basic principles of social responsibility and sustainability in their strategies for global expansion and presence.
To integrate these perspectives in the value chain and innovation activities requires that companies acknowledge the advantage of a mainstreamed policy also in their day to day business.
To what extent have the largest companies in the Nordic region implemented the overall policy perspective?
The first part of the report describes the development of the concept of corporate social responsibility and how companies perceive the principles of the concept. In the second chapter a model for mainstreaming the principle of sustainable development within companies is introduced and empirical documentation of the dynamics of innovation and sustainability from top innovative companies in the Nordic region is presented.
Some have questioned the use of responsible reporting in companies and argued that they easily become part of a “window dressing” activity in business.
However, measurement, reporting and verification are important elements in a credible business strategy. Good reports expose target conflicts and try to solve them with stakeholder engagement. The clearer the core requirements for sustainability management the more level the playing field for future competition. Transparency in reporting and verification is crucial: Trust lowers transaction costs. Some of the international standards for reporting require only modest actions taken in the companies. Others are far more extensive and allow the company to document and verify all policies and actions by external audition, and are thus transparent according to targets and practical reality.
Some companies describe that their responsible perspectives and activities in business were implemented even before the concept of “sustainable innovation” was introduced. Previous studies have often presented documentation of single standard reporting. In this report the total reporting practice has been reviewed and related to other dimensions of business strategies, and thus given us a more comprehensive picture of the effects of reporting practices. The study explores differences in responsible reporting between the Nordic countries.
The study researches in detail the membership and reporting to the UN Global Compact and the Global Reporting Initiative (GRI). The Nordic region is among top reporters compared to a number of countries, but there are major differences between the five Nordic countries. The Nordic countries hold themselves to high standards of gender equality, transparency and social responsibility. There are some significant differences in both the number of major companies reporting to international standards and the appliance of different standards. Overall, Sweden and Denmark have the largest number of companies who reports. Denmark has a considerable higher number of companies that are members of the UN Global Compact, and a majority of these are small and medium enterprises. In the other countries the tendency is that the large companies report. In Sweden and Finland, the majority reports to the Global Reporting Initiative. In this standard it is also transparent whether the companies employ an external evaluation of their performance and internal practices and organization.
A detailed analysis of the Nordic 500 companies is conducted in the second part of the report. The numbers presented also demonstrate effects on other measures like diversity and equality in the Nordic 500 companies. The Nordic 500 companies have compared to other economic regions, developed a high level of gender diversity in corporate governance. There are however noticeable differences between the groups of companies in the different countries. The results show that a mainstreaming of corporate social responsibility and sustainability in the innovation strategies so far is a reality in a minor group of Nordic 500 companies. Approximately 1/3 of the largest Nordic companies are affiliated with the UN Global Compact or/and report to Global Reporting Initiative. Just over ¼ of the companies have a third party evaluation of their reports. The third party evaluation is seen as critical to the level of transparency in the company.