Europe believes in values

Companies today take responsibility for their actions far beyond their actual business – as taxpayers, providers of employment, investors in research and development and as good citizens in their regions. This is now so commonplace that the opposite attitude – declaring one's irresponsibility – would be headline news.

Most companies that act responsibly are not looking to make a fast buck, but to strengthen their business strategically in the long term. But it is still appropriate to ask whether spending on corporate responsibility (CR) is worth it, particularly in the midst of a crisis with cost-cutting on all fronts. Unsurprisingly, this spending is worth it, both during the crisis and the recovery, if CR is done right. There are three basic conditions: embedding, sustainability and leadership.

In the US, CR is discussed in depth and enjoys great public interest. However, in the relevant rankings, European companies are often ahead. And with good reason: companies that are deeply embedded in their societies are a traditional element of the European economic model. Examples of this are a strong vocational training system, environmental protection and cultural philanthropy. Is it worth it? Yes! One example is the continuously decreasing number of strikes, thanks to closer collaboration between the workforce, management and many regional stakeholders.

These kinds of cooperation strengthen companies even in a recession. Short-time working demonstrates this. While German GDP fell 5% this year, the unemployment rate has risen only a few tenths of a percentage point. Particularly in manufacturing, short-time working has been used instead of simply hiring and firing, thus maintaining the core of the German economy.

The second criterion for successful CR is sustainability. We can only return to sustainable growth if we tackle the big issues of our times – climate change and the demographic time bomb. We in Europe can rely on the strengths we neglected for many years and which were not valued abroad.

Our industrial strength is one of these, making up 24% of Germany's GDP compared to 14% in the US. Why is this important? Well, because green tech for example is a cross-sectional technology involving engineered products, systems engineering, electrical engineering and engineering services, and with these capabilities we can show that it is possible to link environmental protection and growth. The market for green tech will grow to EUR 3.2 trillion within the next few years, offering many opportunities for our companies. That is true sustainability.

Corporate responsibility has an important function within a company too. The latest crisis has highlighted the limits of the Anglo-American management model that long dominated the world. By contrast, continental Europe can rely on values that are now crucial: a long-term view and a broad-based, long-term understanding of corporate success. The crisis clearly shows that we have to think again about the management of companies. Trends are no longer reliable and we have to abandon the paradigm of wanting to plan everything down to the last cent. In this situation, managers need to ensure security with clear values. To make these values credible, they have to be lived out by the managers. According to surveys, young employees in particular want to implement their values in their daily work. This is also because they are convinced that this will make business more stable and profitable in the long term.

CR can thus clearly help business. Companies that take their responsibilities seriously gain many new ideas about issues that are important to people and thus about new markets as well. But the most persuasive argument in favor of CR and the underlying values is the performance of European companies.

We analyzed the success patterns of the world's 3,000 largest companies in a time series from 1998 through 2008, with impressive results for Europe. The European companies in this top group grew faster – at over 10% every year compared to below 9% for US firms and just 3% for Japanese ones. And they grew more profitably, with 13% higher profits per year on average compared to 1% among the main competitors. Europe has long stood for profitable growth. So CR can be of great value, in the real sense of the word!