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CSR for ALL NATIONAL REVIEW STUDY - Montenegro -
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• SUMMARY
• Research was conducted in July-August 2013 and
  included 121 companies
• It showed continual awareness raising on concept
  and its importance, but its implementation is
  still not at the satisfacory level
• Most important reasons structure of Montenegrin
  economy and lack of institutional and legislative
  support
• Companies mostly express their interest for
  supporting CSR initiatives, BUT there is a little
  evidence on implementation
• In most cases, companies do not or rarely use CSR
  tools nor they participate in UN Global Compact
  initiative
• BUT respondents expressed their interest in
  participating in the trainings later during the
  project
• Main external organization that companies turn to
  for help and assistance is EMPLOYERS ORGANIZATION

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• INTRODUCTION
• National Review Study conducted by DeFacto
  consultancy agency
• Consists of two parts
• Desk review methodology by IOE general
  information on national social structure,
  political and economic situation, general
  classification of enterprises, national framework
  and current state of CSR, legislation and its
  compliance
• Survey aiming to assess the inclusiveness and
  accountability of the private sector
  participation in CSR, covering 10 different
  topics

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• Survey covered 113 (94,4) SMEs and 8 (6,6)
  large companies
• The most represented sectors of activity are
  wholesale and retail trade (28,1), construction
  (19) and other service activities (15,7)
• More than half of companies (55) operate only at
  the Montenegrin market, 10 have operations in
  two countries, 13 of all interviewed companies
  have economic activities in three countries, and
  after percentage decreases significantly

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• II. COUNTRY PROFILE
• POPULATION
• Montenegro regained its independence in May 2006
  and became 192nd member of UN, with its current
  Constitution passed in October 2007
• Civic, democratic, ecological and social justice
  state (Constitution of Montenegro)
• Montenegro is a parliamentary republic with
  independently elected President
• According to the latest census (2011), Montenegro
  has 620,029 inhabitants, of which adult
  population represents 76,5 of all 49,4 men and
  50,6 women
• Most people live in urban areas (63,2)
• National absolute poverty line is 175,25 EUR and
  9,5 of population live below poverty line

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• II. COUNTRY PROFILE
• ECONOMY
• Macroeconomic environment in 2012 reduction of
  economic activities, negative trends in industry,
  construction and forestry motor of growth is
  still tourism
• Inflation rate in 2012 5,1 (in comparison with
  2,8 in 2011)
• Financial sector maintained stability, although
  there is a growth in late credit payments and
  number and amount of non-performing loans
• Deficit of state budget in 2012 was 4,9 of GDP
  public debt was 51,1 of GDP
• Net inflow of foreign direct investment growth of
  18,6 (mostly investment in companies and banks,
  real-estate and inter-company debt)
• Relatively high rank in WB Doing Business 2013
  report at 51st place among 185 countries, but
  some aspects still poorly regulated (issuing
  business permits, contract enforcement, property
  registration)

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• II. COUNTRY PROFILE
• ECONOMY (cont.)
• Global Competitiveness Index (2012-2013) 72nd
  among 144 countries
• GDP per capita 5.356 EUR based on purchasing
  power parity, ranked 68th among 180 countries
  (World Bank)

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• II. COUNTRY PROFILE
• LABOUR MARKET
• Unemployment rate 21,5
• Employment to population ratio (percentage of
  working-age population employed) 45,9 in Q1
  2013, very low in comparison to other European
  countries (average of 65,3 in OECD countries)
• High youth unemployment rate 45,3
• Employment by sector 17,4 in central/local
  government, NGOs and humanitarian organizations
  28,3 in government/municipality owned companies
  51,3 in privately owned companies
• Estimated informal sector 20 of GDP

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• III. NATIONAL CSR CONTEXT
• MOST IMPORTANT ACTIVITIES
• 2005
• MEF Ethical Code of employers in line with UN
  Global Compact and UN MDG
• 2006
• Center for development of NGOs Survey on CSR
  among 57 companies (2006)
• 2007
• Center for development of NGOs and OSCE Round
  table Development of CSR in MNE
• Ministry of finance, Association of
  municipalities, MEF, Center for development of
  NGOs Analysis of legislation for CSR
  development (inter-sector working group)
• Association for democratic prosperity ADP ZID
  Yearly reward for volunteerism (ongoing)

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• III. NATIONAL CSR CONTEXT
• 2008
• Center for development of NGOs, MEF, Telecom,
  Telenor Training of trainers and consultants of
  CSR
• Center for development of NGOs, MEF, Telecom,
  Telenor Trainings on CSR and inter-sector
  cooperation (2008-2012)
• Chamber of Commerce of MNE Seminars on CSR
  (ongoing)
• UNDP, CEED Baseline study on CSR in MNE
• Chamber of Commerce of MNE CSR Reward (ongoing)

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• III. NATIONAL CSR CONTEXT
• 2009
• Center for development of NGOs First Regional
  Conference on CSR Development of CSR in MNE and
  in the region examples from practice
• Fund for active citizenship (FAKT) Reward for
  Philanthropy (ongoing)
• Center for development of NGOs Regional Network
  of NGOs active in CSR
• 2010
• Center for development of NGOs CSR Newsletter
• Center for development of NGOs, MEF, National
  Agency for SMEs, UNDP CSR Forum
• Center for development of NGOs, MEF, National
  Agency for SMEs, UNDP Conference Launching UN
  Global Compact in MNE establishment of UN
  Global Compact Network
• FAKT Corporative Philanthropy as an
  Investment publication Regional Conference
  Role of the Media in development of
  Philanthropy
• FAKT, Open Society Institute Corporate
  Philanthropy in Montenegro publication

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• III. NATIONAL CSR CONTEXT
• 2011
• Center for development of NGOs Training on
  reporting on CSR in line with GRI and UN Global
  Compact
• Center for development of NGOs Lectures on CSR
  in academic community
• UNDP, MEF, National Agency for SMEs, Center for
  development of NGOs and DeFacto consultancy
  agency CSR Survey
• MEF Business guidelines on Principles of Labour
  Rights of UN Global Compact
• Department for support to the National Council
  for Sustainable Development Membership in
  regional network for SMEs CSR
• Department for support to the National Council
  for Sustainable Development, Government of
  Netherlands Encouraging Dialogue and
  partnership for sustainable development between
  Government and business sector in MNE
  (conference)

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• III. NATIONAL CSR CONTEXT
• 2012
• FAKT, NGO Need Round table Social
  Responsibility
• MEF Women in business potential of
  Montenegrin economy survey and round table
• PUBLIC POLICIES
• Encouraging culture of giving and CSR within
  Strategy of Cooperation between the Govt and
  NGOs (2007-2011)
• Estimation of level of CSR awareness within
  Strategy of development of SMEs 2011-2015
• Defining strategic framework for sustainable
  expenditure, production and promoting of CSR
  within National sustainable development Strategy
  (2011-2012)

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• IV. COMPANY SURVEY RESULTS
• Information on the survey sample
• Regional distribution central 58,6, south
  31,4, north 9,9
• Distribution according to the main industry
  wholesale and retail trade 28,1, construction
  19, other service activities 15,7, financial
  and insurance 10,7, accommodation and food
  services 9,9
• Type of ownership structure 73,3 limited
  liability company, listed company 16,6,
  cooperative 6,6
• Origin of the capital 85 mainly domestic, 15
  mainly foreign capital
• Number of employees micro and small enterprises
  - 70,2, medium 23,1, large 6,6
• Origin of companies operations 55 no foreign
  operations, 10 operate in 2 countries, 13,7 in
  3 countries, 3,7 in 4 and 8,7 in 5
• Regional presence of business partners 90,9
  domestic, 55,4 EU, 46,3 Western Balkans, 9,1
  Asia

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• IV. COMPANY SURVEY RESULTS
• Information on the survey sample
• Regional presence of direct suppliers 81,8
  domestic 55,4 EU 46,3 Western Balkans 8,3
  Asia
• Regional presence of costumers 97,5 domestic
  40,5 EU 39,7 WB 8 Asia

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IV. COMPANY SURVEY RESULTS Information on the
survey sample
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IV. COMPANY SURVEY RESULTS General awareness of
CSR
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• General awareness of CSR
• The most aware are respondents from financial and
  insurance companies (92), while the least aware
  are those working in other services (47.4)
• More companies that have foreign capital are
  aware of the term then those with the domestic
  which could be explained by the fact that in
  these cases from abroad with the capital comes
  also a more developed business culture
• all representatives of the large companies within
  our sample are aware of the CSR

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CSR Governance in Your company Does a company
have a specific department responsible for
CSR?
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• CSR Governance in companies
• As the company is larger, its capacities are
  higher 70 of large companies and only 26 of
  SMEs have a special CSR unit
• By sector, 53,8 of financial and insurance
  businesses and 45,5 of companies providing
  accommodation and food services have special CSR
  units
• 36 of companies with foreign capital and only
  26 of those with domestic capital have CSR units
• CSR unit is a part of which department?

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• CSR Priorities
• Highest responsibility - towards employees
  (53.3), fair business behavior (38.3) and
  respecting human rights (31.6)
• Lowest responsibility anticorruption behavior
  (43.8), toward environment (40) and engaging in
  supply chain (34.8)
• Indifferent towards philanthropy (76.9),
  securing jobs (60) and anti-corruptive behavior
  (50)

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• CSR Activities
• Commitment towards employees
• My company promotes healthy and safe work
  environments 95,9 (strongly) agree
• My company has in place policies to ensure
  non-discriminatory behavior with regard to
  gender, age, ethnic background, religion, sexual
  orientation 95,9 agree
• BUT
• - My company undertakes measures to the
  recruitment and employment of disabled people
  27,7 disagree/strongly disagree

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• CSR Activities
• 2) Respecting human rights
• Percentage of companies agreeing with the general
  statements is higher than those agreeing with
  specific ones Respecting human rights is a
  priority of my company (95 agree) vs. My
  company has started to implement the UN Guiding
  principles for Business and Human Rights (only
  35,9 agree)
• 3) Community engagement
• Highest support to social initiatives (69.5) and
  cultural projects (68.6), smallest interest in
  small infrastructure initiatives (51.3)
• 4) Environmental activities
• Most companies try to reduce energy consumption
  (87.4) and pollution emissions (78.3)
• Interesting 51.7 stated that they are unsure if
  they have environmental management system or
  standard in place

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• CSR Activities
• 5) Engaging with the supply chain
• Most companies integrate ethical, social and
  environmental criteria in its purchasing,
  distribution and contracting policies 69.5
• Only 31.4 audits the social and ecological
  performance of suppliers, 18.8 provides training
  on different topics to suppliers and only 11.2
  participate in supply chain initiatives like
  BSCI. For these 3 statements, over 50
  respondents were not sure
• 6) Fair business behavior
• - 93.4 identify risks of corruption and
  implement policies and practices against it and
  82.4 have clear rules on responsible political
  involvement and conflict of interest

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• CSR Activities
• 7) Providing remedy
• Majority of companies provide for remediation in
  cases when they cause or contribute to a human
  rights abuse (77.6) and have stakeholder
  engagement processes in place for employees of
  business partners to raise concerns (68.6)

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• Reasons for engaging in CSR
• Main reasons culture of the company (43.7),
  attracting and motivating employees (22.7) and
  attracting clients (20.2)
• Least important reasons NGOs campaigns (2.5),
  interest from government (3.4) and reputational
  risk concerns (5)
• Interesting 18.5 dont have any particular
  reason!

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• Use of CSR instruments, tools and initiatives
• 40 of companies are aware of UN Guiding
  principles for Business and Human Rights, 24.8
  with ISO 26000 and least aware of GRI (5.7)
• BUT, usage of these instruments and tools is low
  83 dont use them, and those who stated that
  are using couldnt provide specific answer on
  what particular instruments and tools are they
  using
• Participation in voluntary initiatives like UN
  Global Compact very low!

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• Use of CSR instruments, tools and initiatives
• 50.9 of interviewed companies said they had a
  public commitment to CSR, but only 6 of them
  could provide an internet link where this
  commitment could be accessed
• By sector, public commitment is highest in
  financial and insurance activities (83.3) and
  lowest in trade (33.3)
• 69.6 of foreign ownership companies, 51.5 of
  export oriented and 75 of large companies have
  stated commitment to CSR
• Majority of companies have code of conduct
  (74.2), but in 47 of cases it hasnt made known
  to suppliers in 66.6 of cases, companies follow
  code of conduct of another company
• In 76.7 cases, companies do not publicly report
  on CSR activities, but when they do, its usually
  done through meetings with stakeholders (54.2)
  and information on the Internet (41.7)
• Majority of companies (60) dont consult
  external stakeholders to understand their
  responsibilities, but of those who do in most
  cases they consult employers association
  (47.6), media (21) and NGOs (19)

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• Challenges implementing CSR
• Most important challenges general economic,
  social and environmental situation (29.2), lack
  of time and resources (26.5), difficulties
  implementing self-commitments (25.7) and lack of
  leverage over business partners (25.7)
• Problems with smallest level of influence
  availability of CSR tools in mother tongue
  (7.1), lack of senior management support (8)
  and difficulty to translate policies into
  specific measures (8)

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• Assessing governmental policies towards CSR
• Most respondents havent heard of any
  governmental policies toward CSR 82.9, but
  majority of those who have heard find them useful
  (78.1)
• Overwhelming majority of 98.2 believes that the
  state should support CSR through measures such as
  information, awareness raising, awards or tax
  benefits
• Recommendations by respondents
• Disseminate more info through media
• Awarding prizes and recognitions
• Tax and other benefits
• Education
• Investment or co-investment into CSR projects
• Public recognition of CSR companies

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• Future development of CSR
• 83.9 of respondents believe that significance of
  CSR in Montenegro will grow, while none of them
  said it will decrease
• The most important fields of CSR growth are
  responsibility towards employees (41.7), towards
  environment (37.4) and securing jobs (33).
• Smallest growth is expected in engaging with the
  supply chain (13.9)

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• Need of training
• Almost half of respondents (45.3) expressed
  their interest in participating in the trainings
  later on in the project
• Most interested are those in accommodation and
  food service companies (72.7) and those employed
  in financial and insurance business (53.8)
• More interested are those with foreign ownership
  (57.7) and domestic market oriented (46.9).
  Large companies are more interested than SMEs
  (62.5 vs. 44)
• Recommendations for the focus of the trainings
• Security of jobs
• Human rights
• Responsibility towards employees
• Support to culture
• Environmental protection
• Fair business
• Media and CSR

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• Some excerpts
• It would be good if the state could provide
  specific stimuli for companies that enforce CSR
  (such as tax benefits)
• We have many more important things than CSR. CSR
  comes at the very end
• Culture of doing business will take decades to
  improve until we reach EU level. We lag even
  behind Slovenia, Croatia

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• V. CONCLUSIONS
• Number of companies aware of CSR importance
  increases in time, but most companies dont have
  a specific organizational unit responsible for
  CSR, which indicates that its not planned and
  strategically positioned, but in most cases an ad
  hoc activity
• Large and organizationally strong companies are
  more dedicated to CSR, which means that SME
  oriented Montenegrin economy can be institutional
  challenge to the CSR
• Highest priority within CSR has been given to
  employees, fair business behavior and respect of
  human rights lowest priority shown to
  anticorruption behavior, environment and
  engagement in supply chains
• Main reasons of being socially responsible
  companys culture, attraction of clients and
  motivation of employees
• Prevailing number of companies dont participate
  in UN Global Compact

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• V. CONCLUSIONS (cont.)
• Public expression of commitment to CSR usually
  doesnt have evidence in official public
  reporting
• Clarifications on CSR are mostly asked for from
  employers organization
• Typically, companies are not informed about
  governmental policies toward CSR, but would
  consider them useful
• Suggested measures for government by companies
  information and education, awarding prizes, tax
  benefits, investment into CSR projects, better
  legislation in this field
• Almost half of respondents are interested in
  participating in training during the project!

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• RECOMMENDATIONS
• Shift focus to providing trainings and practical
  examples of CSR to introduce it in the management
  routine
• Make CSR tools and instruments more familiar to
  the companies with an emphasis on their use and
  utility
• Make governments activities more public and able
  to reach wide range of potential stakeholders
• Clear need of governments incentives for CSR,
  such as tax benefits, recognition etc.
• Intensify role of EO in mediation and information
  process
• Further promotion of initiatives such as UN GC
• Continuation of efforts in transforming legal
  framework to include CSR principles
• Stronger cooperation between government, NGOs and
  EO should be promoted and established