Volkswagen
Focus on a Member
Gerhard Prätorius, Head of Coordination CSR and Sustainability at Volkswagen, discusses the strategic issues and driving forces behind CSR.
This interview is based on an article originally published by Manager Magazin in March 2008. The full interview in German is available at mm.de.
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| Gerhard Prätorius, Head of Coordination CSR and Sustainability, Volkswagen |
Mr Prätorius, you are responsible for corporate social responsibility (CSR) and sustainability issues at Volkswagen. What sort of approach should businesses take with respect to these themes and why are they important?
Companies can't be indifferent to how people respond to them. The public, customers and, increasingly, investors too expect a business to act responsibly. Unlike in the 1990s, globalisation today has become a driving force of efforts to protect our climate and preserve resources, of efforts to find sustainable solutions.
Within this process, those enterprises which make use of such opportunities will lead the field. Hence, CSR is a strategic theme, the importance of which is likely to grow.
Do CSR measures not require that shareholders' money be spent - money which could otherwise go towards increasing company profits?
Enterprise has always lent its support to social projects - and that is a good thing. What's new is an appreciation for the need to establish close links between CSR and sustainability on the one hand and core economic processes, product goals and competitive objectives on the other.
To put it more bluntly: Rather than opting for just any form of social commitment, we are now seeing a systematic approach. We are also able to show that good positioning in the different rankings and ratings is more likely to enhance the value of a company than it is to diminish it.
Investments in sustainable technologies, in highly qualified employees and in an attractive company profile clearly have the effect, all in all, of adding value to a company rather than detracting from its value.
Which proportion of overall profit should be spent on CSR? After all, a disproportionate financial investment would not serve the intended purpose.
That's not something you need to be worried about. Seriously though, since there are no binding accounting rules in place at this stage, it is difficult to define a figure for CSR expenditures. And besides, it isn't much use to compare the figures for different companies. We are currently working on an information system that will help us make inroads in this respect.
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Is there any correlation between a company's financial performance and its level of social contribution?
A financially successful and healthy company evidently tends to always have options for making social contributions. That is the traditional side of CSR. And this, incidentally, is what the agencies look at when they compile their company profiles. Corporate citizenship is an important reputation factor.
What should the driving force behind CSR be - a moral desire to do good or strictly economic considerations?
In my view these are not two separate alternatives. Economic considerations should not per se be judged to be immoral. Useful empirical findings are now available which show that it is the economically successful businesses which also have the more convincing CSR solutions. That, incidentally, is also affirmation for our economic system. If this were not so, we would be looking at a system error.
Do the CSR endeavours within a company tend to be initiated by middle management or at the board level?
CSR initiatives come from all sides, both from in-house and external parties. But the management board needs to want it, or it won't work.
Other aspects increasingly play a role. Volkswagen wishes to be an attractive employer, and we all know that the competition to attract good people is likely to become increasingly difficult. A company's reputation is a key factor in this competition. Ratings and rankings, therefore, are not just an issue which interests the capital markets. The themes of CSR, sustainability and environment are all critical reputation factors for a company.
What are the rules for CSR reporting by which Volkswagen abides?
Our Sustainability Report is oriented on the standards prescribed by the Global Reporting Initiative. We are, however, observing the ongoing discourse very closely - the proposal by the German Association of Financial Analysts, for example, concerning the KPIs, the key performance indicators. Substantial advances will be made in the area of reporting in the near future, just as enhancements were made in general corporate reporting in the past.
Do you co-operate with NGOs and, if so, which ones and why?
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| Fuel Economy Training with Germany’s Transport Minister, Wolfgang Tiefensee, in Berlin |
An active stakeholder dialogue is as much part of the CSR profile as Volkswagen is part of Wolfsburg. We have, for example, been co-operating with NABU, the biggest environmental conservation group in Germany, for several years now. We run collaborative projects - projects involving issues such as fuel economy.
We jointly support the preservation of biodiversity and the reintroduction of wolves. What is important is that our collaboration has a basis which is strong and trusting in the face of controversy.
On the international stage, we work closely with the International Labour Organization, in collaboration with which we are very active in areas such as HIV prevention. This particular commitment helps to provide an understanding of what is at the core of CSR: While we, as an employer, are directly concerned with prevention and therapy in some countries, our work is also helping to address the issue as a concern in society as a whole.
How severely does the market punish breaches of CSR?
CSR is risk management, i.e. being responsible about dealing with risks.
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