20 June 2002 | Robin Parker
Small firms' socially responsible activities are more often a reaction to supply chain pressures than the result of a coherent policy, according to a European Commission-backed analysis.
Half of European small firms are engaged in some form of corporate social responsibility (CSR), but their ethical activities are "occasional and unrelated to the business strategy", the Observatory of Small and Medium Enterprises said in its study of more than 7,000 small and medium-sized enterprises (SMEs).
The observatory, which monitors small firms' economic performance, found particular scepticism about the business benefits of environmental improvements, which tend to be driven by pressure from subcontractors and suppliers.
While most firms could identify the direct benefits to customer loyalty and community or supply chain relations, there was no agreed definition of CSR, particularly its environmental aspect.
The observatory suggested SMEs spread understanding of the potential benefits of CSR across to staff and communicate such activities more effectively to stakeholders.
The problem is particularly acute because SMEs lack the resources and are under less pressure than large firms to be socially responsible, it said.
Stephen Alambrites, head of parliamentary affairs at the Federation of Small Businesses, said that large companies with more established CSR policies should pass their experience down the supply chain.
"Lack of resources and experience in this area makes it particularly hard for small businesses, but they have to build the business case and learn that it can help their reputation," he added.
Finland is the country most engaged in such practices, with 83 per cent of SMEs involved in CSR activities. France and the UK are among those at the other end of the scale, with between a third and a half of firms involved.
The observatory suggested European and national public bodies help SMEs with research into their success in this area and benchmarking the business benefits.
The report follows the publication of Encouraging Responsible Business, a guide by the UK government-backed Small Business Service to help firms share their CSR successes, available by calling 0870 150 2500.