Corporate Social Responsibility in Serbia

Nina Djokovic, MIB

1. Introduction
In the last couple of decades, the Republic of Serbia has been exposed to war,
bombing by the NATO alliance and sanctioned by the economic and political measures
of the United Nations. Political regime formed economic disorder, financial chaos with
hyperinflation, inflationary financing of the economy, subordination of the business
criteria to the political cycles, spontaneous insider privatisations governed by crude
force and widespread political rent-seeking activities. (Losonez, 2005) All this resulted
in Serbia falling behind most of the trends of other, developed countries.
However, after large demonstrations, which took place on 5th October 2000, the
situation started to change. Although corruption, illegal privatisation and bribery
remained a big problem in Serbian society, there have been noticeable changes in the
way things work, especially in the corporate world. After the transition from a
centralised economy to market economy, Serbia has applied to join European Union
in 2009, but has been granted the status of EU-candidate state only on March 1, 2012.
(DW.com, 2014) The whole process of becoming an EU-candidate state was followed
by numerous reforms in many aspects of the countrys behaviour and its economy.

2. CSR development
During the socialist time, CSR did exist in Serbia in the form of benefactions,
donations, foundations and endowments. It was perceived as a way of giving for the
benefit of wider community and it has a long tradition since 12th century. (Mijatovic
Ivana, 2015) However, it is not until the 21st century, that modern CSR development
began to take shape. It all began with foreign direct investments and big multinational
companies that launched their business activities in Serbia and implemented their
business practices, CSR policies and procedures. In parallel, there have been
initiatives from the NGO sector for cooperation and partnership between these two
sectors. However, the term Corporate Social Responsibility has been noted in the
official strategies of the Republic of Serbia only in 2008. Since that time, many laws
have been passed by the government that were adapted to European laws, such as
Anti-Discrimination Law, Mobbing Law, Health and Work Safety Law, Consumer
Protection Law and numerous laws related to environmental protection.
Although all these laws have been passed, their implementation is not at all
satisfactory. There is still a big problem with black economy and safety at work. Also,
many employers in Serbia do not fulfil their basic obligations, such as giving employee
wages and salaries and paying benefits. Consequently, it is very challenging to raise
corporate responsibility awareness when employers do not meet the basic legal
obligation. Furthermore, there are various cases of unauthorized collection and use of
personal data and aggressive advertising. According to the European Commission
report, Serbia is performing very poorly when it comes to environmental protection,
due to various ecological accidents and government corruption, which lead to some

private stakeholders and companies getting permissions to build in places where it is

not allowed. (Business Leaders Forum, 2014)

3. Research
CSR is a relatively new concept in Serbia and is still poorly understood by the Serbian
public. According to a research conducted in 2010, two third of 2,241 examinees have
never heard or did not understand what CSR meant.
In general, in Serbia, many companies still have too little awareness of the benefits of
corporate social responsibility, since it is seen as an activity requiring investment
funds, which does not make a profit. On the other hand, a research poll conducted in
2013 presents that:
-

73% of Serbs would rather buy from a store that belongs to a socially
responsible company, even if the prices were a bit higher;
68% of Serbs would rather use the services of a socially responsible company
even if it less conveniently located;
87% of Serbs would rather work in a socially responsible company, even if the
salaries in the company were a bit lower.

According to the same research, most Serbian citizens believe that companies should
be responsible in various business aspects, in order to be considered a socially
responsible company. This proves that they have the correct understanding of CSR,
which is indeed a much broader concept than mere philanthropy and investment in
the community. Unfortunately, due to various bad practices and experiences, citizens
still mostly perceive CSR companies to be those that merely take care of employees
- primarily in health and safety, but also the opportunities for development and
promotion. Furthermore, only 20% of citizens believe that Serbian companies are
socially responsible, giving them an average grade of 2.6 out of 5. Regarding
stakeholders, citizens believe that companies are mostly responsible when it comes
to the community (20%), then to costumers (18%) and the least of them believe that
companies are responsible towards employees (only 8%).
In comparison to 52% of European citizens that believe that companies positively
contribute to the society, in Serbia only 32% believe that international companies do
so and only 26% believe that large Serbian companies have a positive impact.
(Business Leaders Forum, 2014)

4. CSR Certification
National Alliance for Local Economic Development (NALED), as a member of UN
Global Compact, initiated the CSR program in 2011. It actively promotes socially
responsible business activities and that is why it developed a comprehensive list of
119 criteria and indicators neutrally assessing whether a company acts socially
responsible, and to what extent, together with its partners. A company is certified as
socially responsible if it meets more than 75% of these indicators, which are grouped
into 5 equally important areas:

1. Corporate governance transparent and ethical company management and

monitoring system;
2. Market fair relations towards suppliers, competition and buyers;
3. Working environment safe and motivating working conditions;
4. Local community supporting the economic and social development of the local
community;
5. Environment minimizing the negative environmental impact.
The CSR Certificate provides a company's buyers, suppliers and business partners
with a unique guarantee that the company acts completely in accordance with the Law,
national and international CSR standards and principles. Out of the first 5 companies
that got certificated in 2012, two are Serbian companies, Tigar and Sunce and three
are international, Coca-Cola Hellenic, Eurobank EFG and Holcim (NALED, 2016).

5. Conclusion
CSR is a rather new concept in Serbia and thus not well known to the public, nor
substantially supported by companies. The first significant initiatives of real
development can be traced back to 2008, to the time when the Business Leaders
Forum (BLF) was founded. This is the first coalition of socially responsible companies
in Serbia established with a mission to stimulate the development of corporate social
responsibility and to set permanent and stable CSR practices in the Serbian business
sector. The network was founded as an initiative of non-profit CSR organization Smart
kolektiv and several leading Serbian and multinational companies. Today it counts 25
members. (The European Business Network for Corporate Social Responsibility,
2016)
Several authors in Serbia state that CSR has an impact on the financial performance
of the company, consumer attitude and behaviour towards the company, and
ultimately on the companys reputation, like in the other European countries.
(Vlastelica Bakic Tamara, 2016) Research also shows that costumers would rather
buy products and services that are socially responsible. However, very few companies
actually state that they are CSR. Usually, companies do not take care of their
employees, do not give them salaries, do not pay for social insurance nor pension, do
not take care of the environment and laws. Although, a lot of laws exist that oblige
companies to behave socially responsible, research shows that they are implemented
very poorly and that nobody, in practice, controls the behaviour of companies. Thus,
there are a lot of companies that set bad examples. Unfortunately, there are very few
good ones, such as Coca-Cola Hellenic, that take care of employees, the environment
and also that financially support multiple NGOs and student organisations.
Since Serbia is on its way to becoming an EU member, most of the regulations are
aligned with western-world countries, but implementation of them is poorly performed,
followed by huge corruption and bribery, which, as a consequence, leads to pollution,
to neglecting employees and to generally irresponsible, profit-driven behaviour of
companies.

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