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Corporate responsibility is more than a fad. In fact, the subject is becoming increasingly important; all large groups and many medium-sized companies are paying due attention to it. But what actually lies behind this term?

Daimler and BMW, Vodafone and Deutsche Telekom, BP and Bayer: there is hardly a single large group that has not tackled “corporate responsibility”. And even for medium-sized companies – whether they are tied to the stock market or not – the subject is gaining in importance, not least because it plays a role in lending decisions and can have a negative or positive effect depending on the outcome. But what exactly is it?

“Corporate responsibility" has a very wide-ranging meaning: it applies not only to staff, clients and suppliers, but also to the people in the neighbourhood, the municipality, even the whole world – every single aspect which can affect a company’s business transactions, whether ecologically, socially or economically.

To illustrate these possible effects, there are enough negative examples that we all know. Tanker spills polluting rivers and seas; cotton T-shirts treated with large amounts of pesticides triggering allergies in wearers and many severe illnesses in pickers and seamstresses. Shoes or toys bought here being produced on the other side of the world by children who have to work from dawn to dusk and are often held like slaves. Corruption tarnishes a company's reputation and thus also its economic success. And over the last few months we have repeatedly seen the debates that can be triggered by huge management salaries and bonuses simultaneously accompanied by calls for state support.

Not only globalisation, but also climate change have shown clearly that we do not live in the first world and the third world, but in one world for which we are all jointly accountable. The term “corporate responsibility” stands for a corporate philosophy which faces up to this accountability. Thus, CR involves defining the values according to which a company acts.

In view of the many relevant topics it covers, corporate responsibility is an umbrella term encompassing three other frequently used key terms:

•Corporate governance deals with issues related to company management and control, as well as transparency.

•Corporate citizenship describes how companies take action for the good of society.

•Corporate social responsibility deals with ecological, social and economic factors.

Companies often set up special CR departments, and principles or programmes are put together as a guideline for management and staff. Sometimes these are relatively vague, but often very precise instructions and rules of conduct are set down.

The topic also includes involvement in foundations and support for environmental initiatives or education programmes. When breweries protect the rainforest, mineral water producers found drinking water initiatives or pharmaceutical companies sponsor self-help groups, there is often not a clear answer to the question of whether this is for reasons of publicity or out of actual conviction. However, there are also countless examples of companies supporting schools or hospitals, for example, without any ballyhoo or clear economic interests.

In any case one thing is certain: that it is hard to correct a bad reputation, while a good reputation has a positive economic effect – not least on the capital market, which punishes companies for bad behaviour.

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