Corporate social responsibility of the German companies
Initiated by Gesellschaft fuer Internationale Zusammenarbeit (GIZ) as part of its Intergrated Mineral Resource Initiative programme. Representatives from Baganuur, Monpolymet, Erdenes Tavan Tolgoi, Peabody Energy, Centerra Gold, Aspire Mining, Khunnu Coal, Prophecy Coal, Leighton Asia, and MoEnCo took part in the event. Representatives of Mongolian Economy were in attendance to document the proceedings.
The delegation met with the Bundestag (Germany’s parliament), the German Ministry of Labour and Social Affairs, Confederation of Trade Unions, energy producer RWE, as well as the companies Thyssen Krupp, Daimler, Siemens, IBM, and several other institutions including the Bertelsmann Foundation, the Bosh Foundation, the Chamber of Commerce and Industry of the Stuttgart and Karlsruhe regions, the Technology Institute Karlsuhe, and Deutsche Bank.
How do you imagine Germany? What pictures come to mind? People associate this country with the great writer Goethe, classical music, football, and even beer. Germany, which has a long history of development, has a leading position on the globe, not only for its arts and culture but also in science, technology, and economics. Everyone knows the brand Made in Germany, but what is the secret to its economic development?
The secret of this country is in its responsible businesses, which have chosen the paths towards sustainable development. They take care of nature and the environment; contribute a great deal to the social wellbeing, while operating profitably.
The concept of sustainable development was developed in the 1980s by the U.N. World Commission for Environment and Development. It closely ties concerns for natural capacities with the social and economic challenges humankind is confronted with. The commission defines sustainability as a process of change in which the exploitation of resources, direction of investments, and orientation of technological development and institutional change are all in harmony.
Responsible mining is essential for Mongolia, a country that contains tremendous mineral resources.
“IMRI has been working for the past two years with the mining companies as well as with other enterprises with the focus on CSR,” said GIZ’s IMRI Director, Dr. Stefan Hanselmann speaking on the background of the CSR study tour.
“The results of the survey last year showed that companies need practical information about how to implement CSR in their strategies. Therefore we are organizing this tour for the representatives of Mongolian mining companies to introduce them to the CSR experiences of Germany’s leading companies. We believe the practice is more efficient than theory alone”.
Eco Parliament
The CSR forum started at the Bundestag and the Ministry of Labour and Social Affairs. The Green Party and environmentally oriented coalitions have been active since the 1980s in Berlin. In front of the Bundestag (the equivalent of Sukhbaatar Square in Mongolia) is a silky green area with bushes growing. Tourists, people on bikes, and parents with their children sit there to relax in the green environment.
Over three million visitors come to Berlin from all over the world to see the German parliament building. The elevator inside of it as well as most of its interior is made of glass, which symbolizes the transparency of its public activities. The upper part of the parliament has 620 seats for parliament members and has a special design. One can look at the members of the Bundestag during their meetings, or go up to the roof of the parliament building while standing inside the huge glass cupola. At the middle of the cupola is a cone-shaped light sculpture with 360 mirrors, a visible indicator of the energy-efficient technology used there.
CSR in Action
Germany’s federal government supports corporate social responsibility, as evidenced by the national action plan for CSR in Germany by the Ministry of Labour and Social Affairs. Its aims include promoting enterprises that champion the practices of CSR and imbedding corporate responsibility practices in small and medium sized enterprises, public institutions and businesses.
Member of parliament Ute Kumpf noted strongly in a presentation she gave that all the standards set for private companies should also be followed by the public sector. She held a speech about corporate social responsibility in Germany, as one with personal affections towards Mongolia. Kumpf joined the delegation when visiting some of the companies and provided additional advice and information regarding CSR.
A national CSR forum with relevant stakeholders was held three years ago by the Ministry of Labour and Social Affairs. Almost 80 percent of all the recommendations submitted to the German government there were adopted, which laid down the foundation for corporate social responsibility nationwide.
Corporate social responsibility activities should be anchored in the core of a business. Its main aim is to address sustainable business operations. The German government focuses especially on CSR for small and medium sized enterprises. A budget of 36 million euros (USD 44 million) has been allocated to finance the consultation and training of these enterprises.
It should also be noted that the public and private sectors have considered the issues of CSR since before the forum was first held in 2009.
Best CSR practice companies
Small and medium enterprises represent 99.7 percent of all German companies.They are thought of as the backbone of the German economy.
According to the European Union’s definition of a small- to medium-sized enterprise, one must have up to 250 employees, and may generate 50 million euros in total sales.
Antje Brehmer, an expert at the CSR Unit of the Ministry of Labour and Social Affairs said that Germany’s small and medium enterprises do not widely document their CSR activities but contribute a lot to education and the economy. Policy maker Kumpf noted that CSR should not be considered a public relations activity.
However, it is well known that CSR in Mongolia is an essential element of a company’s marketing and promotional tools. Companies with good CSR practices are measured by the following criteria in Germany:
• Fair treatment of employees
• Protection and efficient use of natural resources
• Responsible management of the supply chain
• Compliance with human rights and core labour standards of the International Labour Organization
• Transparent operations
German companies implemented their CSR strategy along the “triple bottom line”, which is based on social, environmental, and economic dimensions. CSR has been followed actively over the last 10 years, but its origins were developed during the industrialisation era.
German engineer Robert Bosch, the founder of Bosch Group, was a socially-conscious entrepreneur because he believed that the wellbeing of the company was connected with the wellbeing of its workers. In 1906 he was the first German entrepreneur to institute the eight-hour work day. His employees were entitled to free Saturday afternoons and regular vacation. In 1919, the corporate print newspaper Bosch-Zuender included topics on social peace and how to prevent future economic crises.
When the average annual wage for a worker was 1,341deutsche marks, he paid his staff salaries of 2,000 marks. Bosch believed that, in the long term, an honest and fair approach to business will always be the most profitable. The Bosch Foundation is one of Germany’s vital contributing to health, science, education, and international relations.
RWE: Energy Production
One of the highlights of the CSR study tour was a visit to the electricity and gas company RWE in Essen city.
The representatives of Mongolian mining companies were able to see the Rhenish lignite mining in real life practice and study the implementation of CSR activities. RWE is one of Europe’s five leading electric and gas suppliers, and the number one energy producer in Germany. The total reserve of the Rhenish mining area is estimated at 20 billion tonnes of brown coal. RWE has a lease to extract 3.5 billion tonnes until 2045. The remnant reserves will be left for the next generation, as decided by the company and the community where the site is found.
This strict resolution was made for the sake of the German citizens and the environment. RWE is already implementing its restoration activities, throwing away the idea that companies should first exploit then restore.
This strict resolution was made for the sake of the German citizens and the environment. RWE is already implementing its restoration activities, throwing away the idea that companies should first exploit then restore.
When RWE’s mining lease expires in 2045, the 180-meter-deep, 23 square kilometer sea will be deemed restored.
The Rhenish mining site consists of three parts: Garzweiler, Linden and Hambach. The open-pit mine has the capacity to extract up to one million tonnes of brown coal during summer. Last year 91 tonnes was extracted, producing 70 terrawatts an hour. One form of corporate responsibility is also technical renewal.
For instance, in Neurath two 1,000-megawatt power plants are constructed.
RWE’s CSR strategy:
• Climate protection
• Energy-efficiency
• Innovation
• Guarantee for supply
• Management of supply
• Setting energy tariffs for the market
• Response to changes to demographic
• Labour safety and health management
• Environmental focus
• Social responsibility
In order to run the mining operation in Germany, numerous documents and licenses are needed. Dr. Bernhard Goymann, manager of the Nature and Environment Protection Division ,said that environmental issues have become increasingly more important over the last 10 years in Germany. One of the clearest examples of RWE’s commitment to protecting the local wildlife from mining activities is its purchase of a piece of land from a private owner dedicated to conserving the local bat and woodpecker populations.
ThyssenKrupp: Metallurgical Production
The delegates put on the uniforms that factory workers wear, including the protective eye-wear, and entered the ThyssenKrupp factory in Duisburg to witness steel production. The green environment principal could be seen even among all the huge pipes. There were even rabbits hopping from the bus window. Outside of the factory building were portraits of the workers hanging.
The history of the company starts with Friedrich Krupp open cast steel factory in Essen in 1811.
ThyssenKrupp Steel produces 12 to 20 tonnes of metallurgical products for the international market, including elevators, plant technology, components technology, and marine systems. The company employs 180,000 employees in around 80 countries.
The term sustainability is nothing new for ThyssenKrupp; it has 200 years of experience in this area. For example in 1870 it built a hospital for its workers. Sustainability is reflected in the core of its business strategy, and is based on political and market surveys. For ThyssenKrupp, the balance between the environment, people and industry is essential.
“We are very aware of the situation that we are the part of the value chain. Keeping the high standards in all aspects is important”, Vice President for Environment and Climate Dr. Hans-Joern Weddige said.
In other words, the business can be sustainable through the preservation of good quality.
Nine key priorities for integrating sustainability into daily business:
1. Sustainable solutions for customers (The company provides consultancy to its customers on how to use its products more efficiently. In Duisburg, not only is new steel developed, but the staff educates customers about how they can use their natural resources more efficiently.)
2. Knowledge as a key resource (Thus, attracting skilled workforces is important.)
3. Compliance with responsible corporate culture and values (If you want to be in business for 200 years, you have to have a sound culture.)
4. Efficient production of energy and resources
5. High standards of health and safety
6. Corporate governance and its compliance
7. Sustainable supply chains
8. Community involvement and development.
9. Transparency
ThyssenKrupp has invested nearly 1 billion euros (USD 1.1 billion) towards environmental issues in only a year.
When asked about water consumption, Klaus Potthoff, director of Division Materials said, “We consume at ThyssenKrupp Steel Duisburg 3 million litres of water a day. We are glad that thanks to many years of effort now we can recycle 96 percent of our used water. For the future we are aiming to reach 97 percent”.
When people hear about a metallurgical plant, they think of it as a polluting operation somewhere in the desert. ThyssenKrupp borders natural protected areas and has lots of green space, presenting an excellent example of big industry with the best CSR practices. It is the only plant in the world with a system that prevents the dust from being released into the environment.
The company found its own technologically innovative solutions.
Visit at the Chamber of Commerce and Industry of the Stuttgart region
The Chamber of Commerce and Industry in Stuttgart, Germany is the country’s second largest and has 150,000 small and medium sized companies as members. Several wars in Europe during the 19th century left the population of Baden-Wuerttemberg poor. Its economy only started to flourish after Gottlied Daimler from Schorndorf and Wilhelm Maybach, the “King of Designers”, invented the first motorbike in 1885, and the first automobile the following year.
Herbert Mueller, president of the Stuttgart Chamber of Commerce and Industry, discussed corporate social responsibility (CSR) during a panel on the topic as well as the current economic situations of Germany and Mongolia.
In your opinion, where should CSR begin?
CSR should start with a good human resources policy. Human resources is the key. First is the equal treatment of men and women. The second thing is if they make a profit then they can retain the equity of the company. If they don’t have equity, you will not survive prices.
These companies want to become independent from the banks. Then continue the investment in research and development. When we entered the 2008-2009 crisis, our companies kept their personnel. Keeping personnel during a crisis is important. Another important step is networking. Companies should build their networks with suppliers.
What we also do is connect schools with companies. Company employees are sent to schools to explain their jobs to children.
How did the idea of CSR begin in Germany?
The idea of CSR came up about 10 years ago. It was a question often asked about by big investors. Big investment funds and securities firms wanted to see CSR and sustainability policies at public companies, so in Germany it began with large listed companies. They publish their CSR reports every year, documenting what they have done, and the smaller companies learnt from that. Small and medium companies have their strategies, but need more education on CSR.
Macro economic and political aspects that drove successful growth in Germany:
• Good schools and universities.
• Good infrastructure: railways, air traffic, shipping, and roads.
• A reliable legal system.
• No corruption.
• An adequate tax system: The government needs tax revenue. We are fighting for our companies in government to prevent tax hikes.
• The need for clustering: Companies need to be international—the domestic market is not enough.
• Helping young people become entrepreneurs build their own companies is one of our main objectives. Most young people want to be employed by big companies.
• A constant supply of energy.
• The banking system: Long-term relationships with one or two banks are important. It is not good to change banks very often.
• Politicians that are favourable towards the private sector: The economy cannot function without business.
The government must support industry. That is very important.
This report will be continued in the next issue with spotlights on Deutsche Bank, IBM, and Siemens.
This report will be continued in the next issue with spotlights on Deutsche Bank, IBM, and Siemens.
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