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Corporate Responsibility

Russian businesses are thriving in a growing economy, but the economic statistics mask the fact that there are some underlying social problems. In the West, companies are playing an active role in the development of society after picking up on the idea of Corporate Social Responsibility (CSR), yet this remains a relatively ignored concept in Russia. Miramed, a US-based charity working in Russia, is seeking to promote CSR and help society develop as successfully as the economy.

The idea of CSR is that "together the two sectors can develop projects to support the community," according to Eric Schempp, the Development Director from Miramed. Their website states that "children are in crisis," with 400,000 of them in orphanages with little or no prospects for the future. Of children who leave orphanages at 17, over 50 percent are involved in crime or prostitution, 30 percent become addicted to drugs or alcohol, and 10 percent commit suicide within a year. Miramed focuses on pairing companies with NGOs that try to combat social problems. They also provide their own support to orphans and their most interesting venture is unique Christmas cards for companies to send to their employees. They are designed by orphans, and companies can buy one particular design, which they will own exclusively.

The easiest way for companies to be socially responsible is through NGOs, which have expertise in a particular field. There are plenty of NGOs, but there is also competition for finances. Miramed's total revenue was $1.4 million dollars in 2006, with 45 percent of this coming from the federal government and 52 percent from private support.

Schempp acknowledged that at the moment CSR is a relatively undeveloped concept in Russia. Miramed primarily deals with the local branches of international companies and Russian companies have yet to embrace CSR. In the West it has been an important concept since the 1980s, and many companies have improved their image through CSR. In contrast, others have suffered due to negative perceptions over unethical behavior.

Being socially responsible is not simply an act of selfless generosity but can also be an important PR device for companies. Consumers are now choosing brands depending on how socially responsible the company is. In the past, consumers focused on the difference between goods in terms of quality and price, but that is changing. As the distinction between the price and quality of different brands decreases, customers choose products based on the companies image.

"For the Russian consumer it (CSR) has not traditionally been a factor in the decision-making process"  Schempp said. However, as Russians earn more and disposable income increases, CSR will develop due to its increasing importance for consumers. In other words, "the companies that are going to be most successful are the ones that realize the importance of CSR today." Those that are socially responsible will be able to create a positive public image and loyal base of customers.

By Ed Bentley