GSZT Recommendations

on Social Responsibility

Foreword
Preliminaries:
Pursuant to a governmental decision, the GSZT (Gazdasgi s Szocilis Tancs Economic and Social
Council) was called upon to draw up a set of recommendations on corporate social responsibility aligned
with European Union priorities. As a part of this effort, at its meeting on 11 September 2006, the GSZT
resolved to set up an ad hoc Working Committee consisting of representatives of the different sides, who
are given consultative powers. Istvn Fekete, President of the Joint Venture Association was asked to
chair the Working Committee.
Working Committee Members:

Istvn Fekete, President of the Joint Venture Association,

Imre Palkovics, President of the Workers Councils (representing employees)

Dr. Jnos Rudnay, Chairman of the Association of International Companies in Hungary
(representing employers)

Andrs Lukcs, President of the Clean Air Action Group (representing civil society)

Joined at a later stage: Pl Kapusy, Managing Director of Kvet-Inem Hungria (representing
civil society)
Professional consultant and coordinator: Braun & Partners Kft. (Rbert Braun associate professor,
managing consultant, Zsuzsanna Gring, consultant)

After several months of negotiations, the recommendations were completed in early May, which the
Working Committee then submitted to the GSZT. In these recommendations, taking into account
international experience, methods and principles, the drafters have summarised those areas and possible
actions which decision-makers might consider when establishing their corporate responsibility strategy.
On 3 July 2007, the GSZT discussed the document titled Corporate Social Responsibility (drawn up by
the Working Committee in accordance with its mandate) and adopted with the proviso that it be
forwarded to the government (Economic Cabinet) only after discussion and consideration of the
substantive proposals voiced at the meeting, together with the amendments adopted.
Among the issues raised at the GSZT meeting on 3 July, which are now incorporated in the current
(supplemented) document, we would like to emphasise the following points.
As was set out in the former version of the document, social responsibility can be interpreted in various
contexts. Besides typically relevant issues (such as environmental protection, respect for human rights,
requirement for safety and health at work, voluntariness, fair trade), proposals raised at the meeting
placed particular emphasis on charitable donations, equal opportunities and consumer protection.
Although the elaboration of the individual subtopics (e.g. which areas are worthy of support and how
they should be supported) is beyond the scope of these recommendations, it can be expected in fact, it
is one of the objectives of this document that the publication of these recommendations will lead the
GSZT to mobilise significant communication resources which will in turn create a forum where these ideas
can be expressed in more specific forms. (This approach is further supported by the view that these
recommendations should not seek to define practical actions which cannot be implemented by the GSZT.)
Among the objectives, and as a part of raising public awareness, the improvement of the nations
cultural, artistic and scientific life was highlighted.

Besides market players, the state, civil society, media, and local governments have also been included in
the document. They have been incorporated into each relevant section of the recommendations without
disrupting the strictly logical structure.
Following a proposal from the employees side, a key point is that socially responsible operations and
efforts to realise them may not serve to relieve companies from any obligations stipulated by law or by
international conventions. The observance of the latter is an essential condition for responsible operation.
In addition, companies are free to establish codes of ethics to regulate their own operations.
Lest the scope of these recommendations be considered too broad, new deliberations at the meeting
rather questioned the pertinence of narrowing the recommendations, given that the GSZT is precisely the
organisation in Hungary which is in the position to make such a recommendation on social responsibility
addressing the actors of all the sectors included in the document. The GSZTs strength lies in its
involvement of civil organisations and representatives of academia in the complex conciliation processes,
beyond traditional interest reconciliation forums.
In response to well-founded comments about the mapping of future activities, it has been added to the
recommendations that the GSZT should set up a permanent mandate CSR Committee within its own
organisation which would submit annual reports to the GSZT on the results achieved in the CSR field and
on the implementation of specific items from these recommendations.

CORPORATE SOCIAL RESPONSIBILITY

CSR is a concept whereby companies integrate social and environmental concerns in their business
operations and in their interaction with their stakeholders on a voluntary basis.
(European Commission, 2002)

EXECUTIVE SUMMARY
On of the foremost challenges companies have to face in the 21st century is how to integrate social
values into their business operations, that is the idea of assuming social responsibility beyond daily
business activities. Corporate stakeholders employees, customers, owners, government, local
community, suppliers, the academic community and international organisations all increasingly expect,
and even frequently demand that the values which are important to them, including ethical operation or
environmental values, also be present in the day-to-day operations of corporations. At the same time,
corporations are still wary of venturing into this field, as the methods which would enable them to answer
these challenges have not yet been incorporated into their strategic and operational practices. Therefore,
taking into account international experience, methods and principles, the GSZT summarises in these
recommendations those areas and possible actions which corporate decision-makers might wish to
consider when establishing their responsibility strategies.
The recommendations assist companies in:
finding the means which will enable them to cope effectively with social, economic and
environmental challenges;
incorporating these considerations into their business strategies;
involving their stakeholders into the decision-making processes;
contributing to the dissemination of the notion of social responsibility and its scientific basis; and
informing the people living around them about their socially responsible activities, in accordance
with uniform principles and standards.
Each recommendation is presented in the same format, with proposed actions grouped under the
following sub-headings:
Stakeholder Involvement;
Governance;
Strategy;
Performance Management;
Publication and
Authentication.
Besides enterprises, the state and local governments are also key economic actors: acting as employers,
owners, regulators and opinion leaders, they can significantly influence the actual implementation of
socially responsible corporate activities in the entire economy. Thus, the GSZT also makes
recommendations following the same structure for the state and local governments. As for economic
operators, key stakeholders include those civil organisations which advocate the values important to them
based on the principle of social representation, often forcing economic operators to support and
implement these values. With a view to fostering cooperation between economic operators and
representatives of societal values and interests, we have also formulated recommendations for civil
society, following again the same structure. Finally, in order to contribute to the presentation of "good
practices", we have also made recommendations to representatives of the media, since, in the 21st
century, this sector can do the most to turn the ideas of social responsibility into functioning, accepted
and authentic practices in all sectors of our society.

RECOMMENDATIONS OF THE WORKING COMMITTEE TO THE GSZT:

To adopt these recommendations,
to endorse them,
to forward them to the government,
and to raise public awareness about them as well as about the principles and the approaches
included therein.

Furthermore, to develop structures and programmes whereby micro- and macro-level progress in the
field of corporate social responsibility can be measured and evaluated (such as a permanent CRS
Committee, annual reports, accounts).

The GSZT should set up a permanent mandate CSR Committee within its own organisation, charged
with submitting annual reports to the GSZT on the results achieved in the CSR field, and the
implementation of specific items from these recommendation.

*This recommendation was drawn up for the GSZTs CSR Working Committee by Braun & Partners, a strategic consultancy firm.
Pending its adoption by the Working Committee, the content of this document constitutes the intellectual property of Braun &
Partners, and its use is not permitted unless authorised by the owner.

TABLE OF CONTENTS

Executive Summary ________________________________________________________ 3

TABLE OF CONTENTS _______________________________________________________ 5
Corporate Social Responsibility overview and background _________________________ 6
DOMESTIC and European Overview ___________________________________________ 10
THE GSZTs Recommendations_______________________________________________ 14
1)

The Market Sector, Companies _________________________________________ 14

Stakeholder Involvement _______________________________________________________14
i) Dialogue ________________________________________________________________ 14
ii) Responsible Lobbying _____________________________________________________ 14
b) Management _________________________________________________________________14
i) Independent Managers and Board Members ___________________________________ 14
ii) Institutionalisation of Business Ethics _________________________________________ 16
c) Strategy _____________________________________________________________________16
i) Responsible Marketing _____________________________________________________ 16
ii) Implementing the Recommendations of International Organisations ________________ 16
d) Performance Management ______________________________________________________17
i) The Application of Management Systems for Corporate Governance ________________ 17
ii) Development of Social Labelling Processes ___________________________________ 17
iii) Responsible Development of Supplier Relationships _____________________________ 17
e) Sustainable Corporations, Publication______________________________________________18
i) Sustainability Reporting ____________________________________________________ 18
f)
Authentication ________________________________________________________________18
a)

2)

The State and Local Governments _______________________________________ 18

Stakeholder Involvement and Getting Involved ______________________________________18
Governance: Role Model (Transparency, Role as Owner and Employer) __________________19
Strategy _____________________________________________________________________19
i) Providing an Appropriate Legislative and Economic Policy Framework _______________ 19
ii) Adoption of International Recommendations, Participation in International Initiatives __ 20
d) Performance Management ______________________________________________________20
i) Responsible Public Procurement _____________________________________________ 20
ii) Development of Incentives _________________________________________________ 20
e) Publication ___________________________________________________________________21
i) Sustainability Reports on Public Undertakings __________________________________ 21
ii) Targeted Communication __________________________________________________ 21
f)
Authentication; Establishment of Qualification Bodies _________________________________21
a)
b)
c)

3)

Civil Society ________________________________________________________ 22

Stakeholder Involvement _______________________________________________________22
i) Partnership ______________________________________________________________ 22
ii) Publication of Cooperative Principles and Values ________________________________ 22
b) Governance __________________________________________________________________22
i) Independent Expert Participation ____________________________________________ 22
ii) Transparent Management __________________________________________________ 23
c) Strategy: Dissemination of International Standards and Recommendations _______________23
d) Performance Management: Trainings for the Market Sector and the Media________________23
e) Publication, Public Reports ______________________________________________________23
f)
Participation in Authentication ___________________________________________________24
a)

4)
a)
b)
c)
d)

Media _____________________________________________________________ 24
Strategy _____________________________________________________________________24
Active Stakeholder Partnership ___________________________________________________24
Publication Channel ____________________________________________________________25
Tools for Verifying Authenticity ___________________________________________________25

SUMMARY: AN OVERVIEW OF THE GSZTs RECOMMENDATIONS_____________________ 26

ANNEX _________________________________________________________________ 27
5

CORPORATE SOCIAL RESPONSIBILITY OVERVIEW AND BACKGROUND

The Economic and Social Council (Gazdasgi s Szocilis Tancs hereinafter: (GSZT)1 is a body which
has been set up by the Hungarian Government, in line with the efforts of the European Union, with a
view to promote social dialogue As a part of these efforts, the GSZT has prepared these
recommendations to popularise, disseminate and support both the idea and practice of corporate social
responsibility.
There are several different definitions of the concept of corporate social responsibility.2 As a
starting point, we shall use the definition provided by the European Commission: CSR is a concept
whereby companies integrate social and environmental concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis. (European Commission, 2002).
Though its history may be traced back to ancient times, the modern approach to CSR originated
in the 1950s.3 A great impetus to the discussion of this issue was given by Milton Friedmans keynote
paper against the social responsibility of business.4 Friedman took a firm stand on the issue claiming that
the societal responsibility of corporate entities is to represent business interests and implement business
objectives, or in other words, profit maximisation, as perfectly as possible within the framework of legal
responsibilities and ethical norms.
Friedmans standpoint at that time is not in conflict with the current expansion of CSR, since the
social corporate environment, consumer expectations, individual and community relationships to our built
and natural heritage and also the perception of ethical business operations have all undergone significant
changes since the 1960s. In the two subsequent decades, CSR gradually gained ground and attention, a
series of definitions were established and theories became more and more elaborate and specialised. In
the last decade of the 20th century, new issues in the CSR context came to the forefront, including
stakeholder involvement into decision-making processes, concerns of modern business ethics,
sustainability or the concept of corporate citizenship. Now, since the turn of the millennium, an evergreater emphasis is being put on the greatest possible involvement of stakeholders, as well as on
measurability, accountability and transparency.
Corporate social responsibility can be interpreted in various contexts, and it has become the
focus of interest in many cases. Typically relevant issues include environmental concerns, the fight for
respect for human rights and against child labour, work health and safety requirements, volunteering,
charitable donations, fair trade, equal opportunities and consumer protection. In the context of business
operations, the above requirements and principles can be grouped according to three dimensions5:
economic, environmental and social, ethical performance dimensions (Figure 1).

Like similar bodies in other EU Member States and developed countries, the GSZT is a consultative forum, i.e. it
gives opinions and recommendations and adopts positions. These are not legally binding, but they have impact
owing to the participants personal reputation and/or the significance of the supportive social interest groups. The
GSZT is independent from the government and from political parties. Its members have a mandate spanning beyond
the current four-year governmental cycle. They are not nominated by the government; selection mechanisms
operate impersonally and independently from the government.
2
Abbreviated as CSR.
3
Howard R. Bowens book from 1953 titled Social Responsibilities of the Businessman is considered as the starting
point of this approach.
4
The Social Responsibility of Business Is to Increase Its Profits The New York Times Magazine, 13 September 1970
5
Such triple grouping is used in the GRI (Global Reporting Initiative).

Figure 1: Dimensions of Corporate Social Responsibility

The economic dimension of corporate social responsibility reflects on the local and global
economic impact of corporate operations, while its environmental dimension is connected with
environmental impact, pollution and environmental protection. The social dimension investigates issues
such as labour practices, working environment and labour management, human rights, the local
community and society, consumer interests and product liability.
These
principles
and
requirements have been popularised in a series of international initiatives, recommendation and
standards. Some focus on a single dimension (e.g.: ISO 14001 on environmental protection; UN norms:
social and ethical issues; ILO: labour and social affairs), while others cover only a single issue but
interpret it in all three dimensions (e.g.: GRI: reporting; OECD: principles for multinational companies)
and there are also instruments which cover several dimensions and several areas (e.g.: AA1000AS)
(Figure 2).
Figure 2: Assessment Methods and Standards

Today, the two major pillars of corporate social responsibility are the establishment of active
dialogue with stakeholders and their involvement, as well as the implementation of accountability and
transparency.
Stakeholder involvement is primarily aimed at the development of strategic trends and
operating principles which ensure sustainable performance and development. In such a process, the
knowledge acquired from the stakeholders and resulting innovations allow the company to increase its
performance in a way that will be sustainable in the long term. This will benefit not only the company,
but also the stakeholders themselves and society as a whole.
Stakeholders include all groups that can be
organisation or that are affected by the operation of
related performance.
Main corporate stakeholders:
- employees,
- clients, consumers,
- owners, shareholders, members,
- government, regulatory bodies,
- local community,
- business partners, suppliers,

considered to affect the operation of the

the organisation, its products, services and

NGOs, trade unions,

media,
competitors,
academic community,
international organisations.

The process of stakeholder involvement can be divided into four stages. In the planning stage
we need to identify stakeholders, to determine relevant topics and fields, the purpose and object of
involvement, and to lay the foundation for the involvement process. Subsequently, in the preparation
and involvement stage, we need to prepare the individual steps of the actual involvement process, to
establish and reinforce the capacities required for the process, to organise the dialogues and to
process the results. In the reaction and measurement stage, the aim is to operationalise the
knowledge gained from the process, to incorporate it into the strategy, and to prepare the next round
of stakeholder dialogue based on the measurement and follow-up of the results. This circular process
of social dialogue enables the company to react effectively to environmental, economic and social
challenges and demands.

Accountability comprises transparency, accounting to the stakeholders, responding to the

needs and interests of stakeholder groups, and, naturally, compliance with the law and other ethical,
behavioural, industry-specific requirements, codes and principles. Accountability presupposes that
stakeholders have been identified, provided with appropriate information and have been granted an
opportunity for bilateral dialogue. One of the most important and most effective means of giving
accounts to stakeholders is the sustainability report (or CSR report), which reveals and presents
company performance and its impact on sustainable development systematically, according to the
afore-mentioned three dimensions (environmental protection, economic and societal responsibility)6.
On the other hand, reporting also entails the need for authentication: besides exploring the
actual problems, the processes developed in response to them and the data and statements published
should be verified and certified by an external auditor.
In addition to providing a role model for followers and consumers alike, the companies which
are in the forefront of social responsibility as defined by these principles gain market advantages,
which may lead to substantial economic results in the long run.
Corporate behaviour guided by public awareness brings important business benefits as well.
Good stakeholder relationships and the consideration of their opinions is manifested in the form of
positive feedback, which can significantly improve trust and positive opinion both major factors in
building the companys brand value. The assumption of social responsibility helps prevent potential
losses and minimalise current and future costs, in part because more satisfied customers will remain
loyal to the company, which, in a context of ever-increasing economic competition, means substantial
competitive advantages. Furthermore, more satisfied employees are more committed to the company,
which in turn reduces fluctuation costs. Public awareness can become a major source of corporate
learning and innovation, which may open up new market opportunities and a more efficient course of
business for the company, thereby maintaining its competitiveness. Responsible corporate behaviour
may result in better access to capital investments, since investors are becoming increasingly aware of
these aspects when making their investment decisions. Current and future cost reductions also have a
positive impact on the companys financial results, thereby promoting its competitiveness and
strengthening its market position and profitability.
In addition, the assumption of social responsibility contributes to the development of a more
conscious and better-educated society, which ensures a secure background for the companys
operations in the long run.
However, such efforts will only gain ground if they do not remain isolated examples. If there
is no support from the market, market processes will not follow the forerunners, which will
compromise sustainability. For that reason, economic and social incentives are required which support
and recognise publicly aware corporate activity.
This largely depends on the state, since it holds such tools, namely those connected with
supportive economic policy on the one hand, and with regulatory schemes on the other hand, which
enable it to create a positive environment that supports economic operators in assuming social
responsibility.

According to the most common definition: Sustainable development is development that meets the needs of
the present generation without compromising the chance for future generations to meet their own needs. The
concept interprets sustainable economic, ecological and social development as a whole (Our Common Future,
published by the Brundtland Committee).

Society also has a role to play in acknowledging the assumption of social responsibility: the
key actors and developers of a social environment which is supportive of publicly conscious economic
activity are more conscious consumers, willing and able to make choices, as well as NGOs and media
fighting for and supporting social responsibility.
If the state, corporations, civil society, the media and, not least of all, citizens all manage to
cooperate in this way, a framework for socially responsible corporate operations will be created, which
will bring social results extending well beyond business culture, leading to sustainable economic, social
and environmental performance not only locally, but in the long term also at the national or even
international level.

DOMESTIC AND EUROPEAN OVERVIEW

Corporate social responsibility is not an unknown concept in Hungary. We have numerous awards and
surveys recognising and examining corporate social responsibility or performance in certain specific
subfields. The primary fields covered are working conditions, employment7 and environmental
protection8, but we can also find initiatives in the field of charitable donations and philanthropy9.
Although still in a small number but there are some (more) comprehensive awards and qualifications,
which recognise corporate responsibility as a whole, instead of concentrating only on certain specific
subfields.10
Studies show that the majority of leaders of the largest domestic companies11 have recognised
the importance and long-term business gains of social responsibility (Figure 3); nearly two thirds of
them are certain that companies which put greater emphasis on social responsibility will, in the long
run, achieve better financial results than the ones which ignore such values.
Figure 3 Do you believe that companies which put greater emphasis on social responsibility will, in
the long run, achieve better financial results than the ones which ignore such values?

4%
33%

63%

yes

no

unsure

Source: Braun & Partners Gfk Hungria: CSR in the managements view,
2006

A major pillar of corporate social responsibility is active stakeholder dialogue and the
involvement of stakeholder groups. Responses to the question as to which stakeholder groups are
considered by Hungarian company managers to be the most important produced the result that
employees, consumers and shareholders are regarded as the top three stakeholder groups (Figure 4).
This means that primarily the interests of these three groups will be taken into account by managers
when making strategic decisions.
Consequently, company managers claim that the major driving force for the promotion of
corporate social responsibility in Hungary will originate from greater attention on the part of the
owners and increased sensitivity on the part of consumers (Figure 5). These opinions and data
underline the crucial significance of stakeholder dialogue and the importance of involving stakeholder
groups.

Inclusive Workplace Award (Equal Opportunities Methodology Award, Budapest); Family Friendly Workplace
Award (Ministry of Social Affairs and Labour), Best Workplace (Hewitt), Cycle Friendly Workplace Award (Ministry
of Economy and Transport), Healthy Workplace Award (AmCham).
8
EMAS AWARD (EU), Environmental Saving Award (Kvet), Central European Environmental Reporting Award
(Deloitte), Business World for the Environment (HBLF).
9
Individual and Corporate Donor of the Year (NIOK), TOP Corporate Philanthropist (Hungarian Donors Forum).
10
Business Ethics Award (Budapest Club, Market and Profit), Progressive Professional Awards Social
Responsibility Awards (Progressive Magazine).
11
The list of research participants is divided into two parts. The first part contains twenty-five companies, which
were selected based on the Top 200 ranking of the economic magazin Figyel. This price revenue-based list was
corrected based on the lists of the largest employers and of the companies having the highest net results. Thus,
the scope of interviewed companies includes those with high net revenues, many employees and high net results
in the 2004 business year.
The second list comprises companies which are either members of the Club of Companies with
Negotiable Shares or have demonstrated both nationally and internationally outstanding performance.

10

The media has a decisive role in the assumption of social responsibility, however, the
Hungarian situation clearly shows that respondent company managers do not perceive significant
media attention in this field.
Figure 4. Who do you think are your companys most important stakeholders?
Our employees

81,5%

Our consumers

77,8%

Our shareholders, creditors

37,0%

Government, regulatory authorities

25,9%

Local communities

25,9%

General public opinion

Our top managers
Our suppliers, business partners
Our institutional investors
Local governments
0%

18,5%
14,8%
14,8%
7,4%
3,7%
20%

40%

60%

80%

100%

Source: Braun & Partners Gfk Hungaria: CSR in the managements view Company managers on
Corporate Social Responsibility, 2006

Figure 5. What factors will promote the significance and role of CSR?

59,3%
Increased consumer sensitivity to CSR-related
issues

55,6%
44,4%

CSR brings proven competitive advantage

40,7%
37,0%

More pressure from the government and

authorities

37,0%
37,0%

Company scandals, crises

33,3%
29,6%

Globalisation
0%

14,8%
20%

40%

60%

80%

100%

Source: Braun & Partners Gfk Hungria: CSR in the managements view Company managers on
Corporate Social Responsibility, 2006

However, surveys on the role and significance of corporate social responsibility are not only
relevant to companies but also to consumers. Firstly, because consumers constitute a major
stakeholder group (as indicated above), and secondly, because they are the recipients whose

11

assessment and opinion is followed with much attention. According to the latest research findings,
almost two thirds (73.1%) of Hungarian consumers think that the importance of corporate social
responsibility is medium or higher (Figure 6).
These findings demonstrate that consumers are one step ahead of companies in the CSRcycle". For companies, although the issue and concerns of corporate social responsibility are present,
they appear only in a latent way in the form of ad hoc measures and programmes, not integrated in
any strategy. Consumers, in comparison, are somewhat more aware and would welcome publicly
responsible corporate actions (Figure 7).
Figure 6. The importance of corporate social responsibility according to consumers
50%
40%

38,3%

34,8%

30%
15,9%

20%

7,4%

10%

3,6%

0%
Very important

Medium

Somewhat
important

Not important at
all

Don't know

Source: Braun & Partners Median Opinion and Market Research Institute: Public opinion research
on Corporate Social Responsibility A representative survey on what people know and think of
CSR, 2006

Figure 7. The model of the corporate/consumer/employee CSR cycle

Companies
latent
increasing
strengthening
institutionalised

Consumers
uncertain
welcome
expected
obligatory

Employees
hoped for
beneficial
requested
prescribed

Besides stakeholder involvement, the other major pillar of corporate social responsibility is
accountability. The core of accountability lies in publicly released information on business activity,
management processes, strategic decision-making, results and objectives (reports, websites,
publications, etc.) Such publicly available information on socially responsible business activity and the
tendencies revealed by them are explored in the Accountability Rating Hungary survey. This 2006
survey found that the Hungarian average (17%) was far behind the global average (34%), which
clearly indicates that the practice of corporate social responsibility is still very much in the early
developmental phase. This is confirmed by the fact that, the first non-financial report at the
international level was released as early as the start of the 1970s, the first Hungarian report of this
kind, EBK (Egszsg, biztonsg s krnyezet Health, safety, environment), was published only in
1996. At the same time, the gap between top performers (52% and 72%) indicates that the leading
Hungarian companies are rapidly catching up with the international level.
In summary, it can be stated that responsibility and the consideration of environmental, economic and
social factors are present in domestic companies (more than 1100 companies are ISO 14001 certified,
7 EMAS schemes are registered in Hungary, and about 40 companies publish environmental or
sustainability reports),12 but there are only a few organisations where this is manifested in actual
strategies and actions developed with stakeholder involvement.
Civil society shows a similar picture. Hungarian NGOs are increasingly embracing the cause of
corporate social responsibility as a whole or by focusing on one particular issue, such as employment.
A growing number of initiatives and programmes support corporate efforts and provide guidelines,
12

Source: KVET, http://www.kovet.hu/view/main/173.html.

12

models and professional assistance. Nonetheless, just as we have seen with companies, civil society
as a whole has not yet reached the level of international practice.
In two fields: employment and environmental protection have already shown more intensive
and definitive social initiatives and results. The domestic trade union movement has taken a firm and
effective approach to the issue of employment and employee interest representation. In accordance
with provisions and guidelines established in the ILO Tripartite Declaration of Principles concerning
Multinational Enterprises and Social Policy, the United Nations Global Compact, and the OECD
Guidelines for Multinational Enterprises, they strive to develop a quality labour practice that can
ensure sustainable performance and competitiveness in both domestic and international markets.
With respect to environmental issues, we can find both professional consultancy firms and
organisations having successful civil initiatives, as well as an international background, perspective
and access to information who rigorously call companies to account for environmental protection.
They primarily represent aspects of social responsibility concerning environmental sustainability (e.g.:
KVET, Air Action Group, Greenpeace Hungary, Vdegylet).
The promotion of CSR is a central element of the European Unions sustainability strategy.
Already in 1993, Jacques Delors Appeal called upon businesses to assume a role in addressing social
problems, which was subsequently integrated in the 1995 Declaration against Social Exclusion. The
first official position on the business case for responsibility was taken at the Lisbon Summit in March
2000 and published in the Strategy adopted on that occasion. The European Council has stated that
companies have a key role in reaching European strategic objectives. Socially responsible business
operations are a crucial factor contributing to the attainment of sustainable economic development,
which requires competitiveness, a knowledge-based economy, better job opportunities and
strengthened social cohesion. As soon as the topic was put on the Communitys political agenda, it
grew into a seriously supported and widely negotiated case, as it was addressed by the European
Council both in March 2001 in Stockholm and in June 2001 in Gothenburg.
The CSR issue was also raised at the Gothenburg Summit in the context of sustainable
development. It was pointed out that for the development of a knowledge-based, competitive and
dynamic European economy and long-tem sustainability, besides economic and social aspects, it is
also essential to consider environmental and ecological sustainability.
It was also at the Lisbon Summit where the still ongoing debate and discussion of the topic
was launched. Highlights of these ongoing negotiations and exchange of ideas include the 2001 EU
Green Paper on Corporate Social Responsibility, the new CSR Strategy published in July 2002, and the
European Multi-Stakeholder Forum which has been operating since the autumn of 2002, with the
objective of attaining the broadest possible societal involvement in the Europe-wide dialogue on
corporate social responsibility.

13

THE GSZTS RECOMMENDATIONS

Drawing from the above discussion, with a view to create a publicly aware society, to promote the
nations cultural, artistic and academic endeavours, and to ensure responsible behaviour and
competition, the GSZT makes the following recommendations addressed to marker actors, the state,
local governments, civil society and the media:
1) The Market Sector, Companies

a) Stakeholder Involvement
i)

Dialogue
The primary aim of stakeholder involvement is to develop strategic trends and operating
principles which ensure sustainable performance and development. In such a process, the
knowledge acquired from the stakeholders and resulting innovations allow the company to
increase its performance in a way that will be sustainable in the long term. This will
benefit not only the company, but also the stakeholders themselves and society as a
whole.

The GSZT recommends that companies operating in Hungary engage in systematic and
transparent dialogue with their stakeholders, and integrate their findings into their
corporate strategy.
ii)

Responsible Lobbying
One form for companies to assume social responsibility and exert influence is by
channelling their interests into government policy and decisions. Responsible lobbying
practices provide a framework for this in a way that fits well with the ideas and
implementation of corporate social responsibility. Responsible lobbying does not distort
market competition in favour of the company.
Responsible lobbying is consistent with corporate strategy and corporate values, thus, it
cannot result in actions and influences that diverge from the declared principles.
Furthermore, it is pursued in accordance in areas and with principles that have been
publicly established, and is open to stakeholder demands. Responsible lobbying is
effective in sustainably integrating corporate practice into legislation, as it merges
ongoing regulatory processes with the practical knowledge of company experts by clearly
indicating the fields influenced, the scope of envisaged results, and the possible and
accepted lobbying channels.

The GSZT recommends that companies operating in Hungary set frameworks which
ensure transparent and accountable lobbying activity, in accordance with the principles of
responsible lobbying. With their lobbying activity, they should only advocate interests that
promote fair competition.
b) Management
i)

Independent Managers and Board Members

In corporate management processes, the most effective way to implement the principles
of corporate social responsibility in practice is to designate independent members from
the board of directors and the supervisory board. Independent managers and board
members (i.e. neither owners nor employees of the company) can more be more effective
in representing the principles and values of social responsibility, especially if they are
experts, external advisors or members of NGOs dealing with various areas or issues of
social responsibility. A further essential requirement is that their responsibilities and
decision-making powers be channelled into the company's strategic decision-making
processes.

The GSZT recommends that companies operating in Hungary involve independent

members in their board of directors and supervisory board in their corporate governance

14

system who represent the values of business and social sustainability in strategic decisionmaking independently from the owners and management.

15

ii)

Institutionalisation of Business Ethics

We would like to emphasise that socially responsible operation and efforts to realise them
may not serve to relieve companies from any obligations stipulated by law or by
international conventions. The observance of the latter is an essential condition for
responsible operation. In addition, companies are free to establish codes of ethics to
regulate their own operations.
The drafting and implementation of codes of ethics, the creation of an internal ethics
committee, the dissemination of ethical behaviour and attitudes in the business world are
all different manifestations of social control and responsibility. However, social
responsibility should not only be the concern of top managers, but also that of middle
management, and, in fact, of all employees. Real corporate social responsibility is
achieved when it forms an organic part of corporate strategy, and when each and every
employee participates in its implementation. Business ethics institutions (codes of ethics,
ethics committee) contribute to the equal treatment of each employee, customer and
partner, compel the company to publicly and unambiguously declare its ethical values and
to observe these when making decisions. This can significantly strengthen the managers'
and employees' commitment to ethical business conduct.

The GSZT recommends that companies operating in Hungary develop business ethics
institutions (codes of ethics, ethics committees, etc.) as required and permitted in
consideration of the company's size, and to make these accessible to stakeholders.

c) Strategy
i)

Responsible Marketing
Corporate marketing activities also require responsible conduct (product liability, ethical
issues related to services, environmental impact of the product and its packaging,
responsible pricing, ethical establishment of distribution channels, etc.). Some of these
requirements are also regulated by law. Nevertheless, even within the legal framework,
there is a need for developing responsible ethical principles and values and for
implementing ethical principles established by specific professions or sectors in order to
ensure responsible marketing activity.

The GSZT recommends that companies operating in Hungary carry out their marketing
activities with due consideration to the principles in the codes of ethics published by the
given professional representation body based on industry-wide negotiations.
ii)

Implementing the Recommendations of International Organisations

International recommendations and standards adopted after wide-ranging consultations
with business and NGO representatives can greatly contribute to the realisation of publicly
aware corporate practices.
These recommendations include:

the United Nations Global Compact, which establishes a set of 9 principles in the fields
of human rights, employee rights and environmental rights;

The ILO Tripartite Declaration of Principles concerning Multinational Enterprises and
Social Policy, which systematically reviews all topics related to socially sustainable
development and human rights, employment and labour;

the EU Green Paper presented by the European Commission in July 2001;

the OECD Guidelines for Multinational Enterprises;

the Human Rights Guidelines for Companies published by Amnesty International,
which reminds companies of the prohibition of discrimination, calls for the observance
of human rights and for the provision of fair working conditions and fair wages;

the AA1000 series is a comprehensive set of standards providing detailed guidelines
for a number of subtopics. This initiative attempts to fulfil two basic needs: firstly, it
serves as a framework which enables organisations to assess and change their ethical
and social performance, and secondly, it gives an opportunity for outsiders to verify

16

the authenticity of said performance. The standard is centred on the mapping and
involvement of social groups and the development and maintenance of social dialogue.

The GSZT recommends that companies operating in Hungary, in their strategic planning
and during the operation of their socially responsible practices, apply internationally
accepted and tested models, standards and recommendations.
d) Performance Management
i)

The Application of Management Systems for Corporate Governance

Besides strategic processes, performance management and corporate governance are
also regulated in numerous international standards, which integrate the fundamental
demands of publicly responsible corporate behaviour. Such management systems for
corporate governance include: ISO 9001 on Quality Management Systems, ISO 14001 on
Environmental Management, EMAS (Environmental Management and Audit Scheme): an
EU regulation in force since 199313, which allow industrial companies seeking to improve
their environmental performance to voluntarily register in a common European Union
system, and to authenticate and publish their environmental declaration.
These integrated management systems also help with the drafting of sustainability
reports, since, in addition to the establishment of the actual processes, they can facilitate
the collection of required measurement figures and data.

The GSZT recommends that companies operating in Hungary, in their strategic planning
and during the operation of their socially responsible practices, apply internationally
accepted and tested standards for corporate governance management systems.
ii)

Development of Social Labelling Processes

Placing different social labels on products and services allows producers and service
providers to set their socially and ecologically responsible products apart from the others
and also to communicate this feature to consumers.
Social labels may be requested based on compliance with qualification systems and
principles under state supervision. Such labels include one that is actually called social
label, granted based on compliance with ILO principles on working conditions and
circumstances (following the Belgian social label), or various ecolabels granted to
production technologies and products complying with environmental protection
requirements.

The GSZT recommends that companies operating in Hungary use social labels,
Hungarian Environment-Friendly Product labels and European Ecolabels.
iii)

Responsible Development of Supplier Relationships

Besides social and environmental impacts of its operation, a socially responsible company
also assumes responsibility for the economic impact of its activities. This may be
implemented through the responsible development of supplier relationships and by
establishing principles and codes which are also applicable to and expected from the
company's suppliers. This is the best practice of corporate social responsibility: if the
ordering companies demonstrate responsible practices to their suppliers and demand that
they to follow the example, this will also reinforce their own responsible behaviour.

The GSZT recommends that companies operating in Hungary lay down principles and
codes which are also applicable to and expected from their suppliers.

13

Eco-Management and Audit Scheme, EC1836/93

17

e) Sustainable Corporations, Publication

i)

Sustainability Reporting
The sustainability report is a major pillar of accountability and transparency. The aim of
sustainability reporting is for organisations to render accounts of the economic,
environmental and social aspects of their activities, products and services at one place.
One of the benefits of reporting is that it increases the commitment of the parties
concerned, and due to transparency and information supply, it reinforces stakeholder
dialogue and increases the stakeholders' satisfaction and commitment. It improves the
measurement of the organisations contribution to natural, human and social capital,
thereby ensuring its legitimacy. As a result, the organisations performance will remain
sustainable in the long term.
It is important that international companies operating in Hungary should not content
themselves with the sustainability report of their mother company, but should also draw
up independent domestic reports. However, the global comparability of such reports, both
in structure and in content, can only be ensured if internationally accepted standards are
followed in their preparation. Companies applying different international standards and
recommendations may participate in global competition, catch up with leading companies,
and benefit from the increasing recognition and commitment of global and local
stakeholders (employees, customers, partners). One of the most widely used and
accepted reporting standards is the GRI (Global Reporting Initiative), which sets
comprehensive guidelines and indices for measuring and presenting the social, economic
and environmental impacts of business activity.

The GSZT recommends that companies operating in Hungary draw up sustainability

reports (in an internationally comparable form, if possible), and make these accessible to
stakeholders.
f)

Authentication
The mere presentation of facts and data and reporting is not sufficient if they are not
connected to long-term sustainability and strategy. Authentication by an independent
organisation is required in order to verify that the data and figures featured in the report
reflect actual processes and results, and that the information is balanced and impartial.
Authentication may concern the data and indices included in the report, the process itself,
or the management systems at the strategic level.

The GSZT recommends that companies operating in Hungary seek authentication for their
sustainability reports, management processes and CSR activity from independent
organisations.
2) The State and Local Governments

a) Stakeholder Involvement and Getting Involved

Responsible competition and socially responsible corporate behaviour are based on
stakeholder involvement. In this process, the state acts as a market sector stakeholder
which must represent its opinion and values. On the other hand, the state and local
governments are themselves economic operators as well, which means that they also
have to integrate the principles of responsible operation into their activities; hence they
should involve their own stakeholders (the economic, civil and academic sectors, citizens
and the media) in their operations. Traditional forms of involvement are already in
operation, such as elections, councils, representations, etc. The added value of
stakeholder involvement in responsible business activity is that each stakeholder group is
asked for feedback in connection with specific decisions and issues, and that they are
encouraged to engage in an active dialogue.

18

The GSZT recommends that the Government of the Hungarian Republic and the local
governments take an active part in the stakeholder dialogue of economic actors, and also
involve stakeholders in their own economic operations, asking for the opinion of each
stakeholder group about specific decisions and issues.
b) Governance: Role Model (Transparency, Role as Owner and Employer)
The operation of the state, state entities and local governments also determines the
behaviour of economic operators. It is essential that they show an example that can and
should be followed by all. The first and most important step is to ensure the transparency
and accountability of state and governmental organisations and public undertakings. An
example of this is a publication by the German Government which gives a detailed
account of long-term obligations assumed by the state and of its open and indirect
subsidies.14 Accountability is a necessary component of democracy, which serves as a
basis for public legitimacy.
Besides transparency, another important thing is the ownership and employer role of the
state and local governments. Accordingly, they should apply the same principles and
international standards to their own economic activities, which are applicable to economic
operators. As a natural consequence of their idiosyncratic nature, pubic undertakings, and
the state and local governments in their ownership and employer roles cannot be fully
equated with private sector companies. Nevertheless, the application of CSR principles,
and the related economic, environmental and social requirements are indispensable for
the long-term sustainable operation and development of the national economy.
This means that the principles of transparency and accountability should also apply to the
presentation of state and local governmental activities; for example the accessibility and
authenticity of impact studies and analyses regarding the results of state activities must
be ensured.

The GSZT recommends that the Government of the Hungarian Republic and the local
governments ensure the transparency and accountability in respect of surveys on the
impact of their own operations, budget and performance.
c) Strategy
i)

Providing an Appropriate Legislative and Economic Policy Framework

Socially responsible companies are not enough on their own if they are not integrated into
a political, economic and institutional environment that allows for the functioning of
responsible competition. Competitiveness, and, parallely, long-term sustainability do not
only determine business operations, but also influence the economy at the regional,
national and even international level. It is therefore an essential requirement that the
features of corporate social responsibility function at both the micro- and macroeconomic
levels. The responsible behaviour of market actors will be sustainable in the long term if
the surrounding market, economic and legislative environment recognises and endorses
such efforts.
Socially responsible behaviour is also important for financing of state and governmental
bodies and in fiscal planning. The current input financing of the state budget must be
transformed to output financing and, eventually, to outcome financing. Social
responsibility requires that, similarly to the company sector, budgetary areas also become
more responsive to performance-based endowments. This may result in a more
reasonable, transparent and accepted budgetary policy, which would also highlight the
recognition of public administrative work.
Any tax reform should fully consider the social requirement that fiscal policy must be
pursued consistently: it may not permit certain social groups to be exempted from their
obligations, thereby increasing the tax burden of others.

14

19

The GSZT recommends that, in order to establish the appropriate legislative and economic
policy framework, the Government of the Hungarian Republic and the Parliament should
set up a committee on the basis of equal representation with a mandate to review the
domestic legislative environment in consideration of the aspects of CSR and responsible
competition, and to make proposals on the transformation, development and expansion of
the existing legal framework to make it more supportive of CSR. The GSZT recommends
that the committee should involve representatives and experts of the affected economic
and social organisations.
ii)

Adoption of International Recommendations, Participation in International Initiatives

Some international standards and recommendations contain not only guidelines for
companies, but can also be interpreted and applied at the level of the national economy
(ILO, OECD, Transparency International). The adoption and gradual implementation of
these norms and adequate regulatory amendments can promote the efficiency of state
operations, the realisation and acceptance of accountability.
It is essential for the state and local governments to take part in national, European and
international conciliation processes which seek to develop and measure recommendations
on CSR and national and international responsible competition. In addition, by endorsing,
disseminating, and, in certain cases, even monitoring the domestic application of
standards aimed explicitly at companies, the state could do much encourage the
dissemination of CSR. At the macro level, an important addition would be the
measurement of actually implemented responsible competition, for which measurement
schemes are already available (RCI, NCRI), which attempt to link the aspects of corporate
responsibility with national competitiveness.

The GSZT recommends that, on the basis of the already existing measurement schemes
(Responsible Competitiveness Index [RCI], National Corporate Responsibility Index
[NCRI]), the Government of the Hungarian Republic, together with the international
organisation responsible for their development (AccountAbility), should initiate the
measurement of actually implemented responsible competition, and provide resources for
that purpose.
d) Performance Management
i)

Responsible Public Procurement

A major tool and form of state and local government economic activities is public
procurement. Responsible public procurement means that the public procurement
procedure requires or gives preference to adequately certified and authenticated
responsible products and services or to tenderers demonstrating corporate social
responsibility (the policy of favouring the socially and environmentally more advantageous
tender).
The EU Acquis regulates public procurement criteria in detail, granting authorities the
opportunity to integrate environmental, social or ethical criteria in their public
procurement procedures.

The GSZT recommends that, in public procurement procedures, the Government of the
Hungarian Republic, the Parliament and the local governments, in line with EU
regulations, support responsible corporate behaviour, consider and give preference to
responsible products and the services of responsible companies.
ii)

Development of Incentives
A determining feature of corporate social responsibility is that it is voluntary. Socially
responsible business behaviour is not generated by legal requirements and regulations;
rather, it is the result of changes in the economic environment. Consequently, the state is
not required to lay down strict and generally binding rules. On the contrary, the state may
exert a beneficial impact on the dissemination of socially responsible business behaviour
by developing economic incentives which recognise responsible companies but which do

20

not impose sanctions on ones that fail to integrate these principles into their market
rationale.
As an example of such an incentive, the state may create different qualification or
labelling schemes, e.g.: ecomark, social label or fair trade. These qualification schemes
serve to distinguish companies which are in full compliance with certain guidelines (for
instance the ILO recommendations in the labour field) and compliant products and
services. This positive discrimination encourages economic operators to form their
business performance in line with such social and environmental principles, and also
motivates consumers to consider these aspects when making purchase decisions. Existing
labels (such as the Hungarian environment-friendly product label) should be reviewed,
and new, accepted qualification schemes should be introduced.
It may serve as a further economic incentive if socially responsible companies are
acknowledged, and the requirement for social responsibility is incorporated as an
assessment criterion in the various state subsidy programmes.

The GSZT recommends that the Government of the Hungarian Republic initiate the
application of further public qualification and labelling schemes and elaborate the
detailed rules thereof (ecomark, social label or fair trade). The GSZT will also contribute to
the development of such a label by its own means.
e) Publication
i)

Sustainability Reports on Public Undertakings

Reporting is a major means of accountability. Accordingly, for companies owned by the
state or local governments, annual reports and sustainability reports have a dual function:
to serve as a role model for other economic operators, and to ensure the transparency of
the state as an economic operator. If accepted, internationally recognised standards are
applied, the performance of public undertakings can be compared to the results of both
domestic and foreign companies.

The GSZT recommends that the Government of the Hungarian Republic and local
governments compel each company in which they are majority owners to draw up annual
and sustainability reports (in an internationally comparable form, if possible), and to make
them publicly accessible.
ii)

Targeted Communication
Socially responsible economic actions will result in business gains for the company in the
long run if they are also valued by society (for example in making purchase decisions).
This is why the state besides creating an appropriate economic and legislative
environment should also make efforts educated society and raise public awareness.
This requires the integration of public awareness issues into the educational system,
complemented by trainings which help assume related citizen roles.
Support should also be provided to research, conferences and researcher forums which
supply both multifaceted theoretical surveys and impact studies, and the provision of
factual, wide-ranging and balanced information.

The GSZT recommends that the Government of the Hungarian Republic launch a
communication campaign with a view to changing citizens attitudes towards public
awareness and social responsibility, and to positively influence related views.
f)

Authentication; Establishment of Qualification Bodies

In respect of authentication, the state should assume a crucial role. State-established
qualification bodies could serve as the basis for the application of different product labels
(ecolabel, social label, etc.). Such market-independent qualification schemes play a
significant role in the authentication of responsible corporate practices, environmentally
conscious products or production processes which allow for sustainable development.

21

The GSZT recommends that the Government of the Hungarian Republic and the
Parliament set up qualification schemes which recognise responsible corporate activities,
and responsible production, products and services which meet environmental and social
demands.

3) Civil Society

a) Stakeholder Involvement
i)

Partnership
Partnership with the market and civil society, and the establishment and maintenance of
common dialogue both lay the foundation for the creation of an economic policy
environment which supports socially responsible business operations. Tripartite
negotiations ensure that the different interests and values are expressed, discussed and
the opinions are incorporated. On that basis, it is possible to establish mutual agreements,
norms or regulations which stimulate cooperation between the market sector, the
government and civil society.
Furthermore, civil society can contribute to the renewal of tax awareness among
individuals and tax-paying organisations.
This partnership can serve as a basis for serious cooperation if it is implemented in every
possible case, which means that more and more negotiations, preparatory and
consultative forums are held with the joint participation of state, market and civil
representatives.

The GSZT recommends that NGOs operating in Hungary initiate cooperations, joint and
actions with the company sector that result in the exercise of civil societys verifying and
authenticating function in a way that is also effective for the stakeholders of company
operation and contributes to the raising of tax awareness.
ii)

Publication of Cooperative Principles and Values

Relationships between NGOs and the market sector can be established in several ways
and through multiple channels. For the sake of transparency, one responsible NGO should
make publicly available those cooperative principles and values governing its relationships
with companies and public authorities.

The GSZT recommends that NGOs operating in Hungary publish on their websites or by
other means the cooperative principles and values which determine their relationships
with economic operators.
b) Governance
i)

Independent Expert Participation

In the field of performance management, an important feature of socially responsible
companies is that they involve independent managers and board members who are
responsible for the implementation of responsible company behaviour. On the basis of
their expertise, involvedness and represented principles, civil experts can also fulfil these
tasks themselves, thereby representing the needs and interests of their own field of
specialisation (e.g.: the employment of disadvantaged workers or environmentally
conscious production) or of general social and environmental needs in corporate decisionmaking processes.

22

The GSZT recommends that NGOs operating in Hungary participate as independent

experts and board members in corporate decision-making and in the preparation of
strategic decisions.
ii)

Transparent Management
As in the market and state sectors, transparent management is indispensable also for the
responsible operation of NGOs that can further strengthen trust in NGOs, and allow them
to respond faster and more effectively to economic and social challenges. If powers,
designation procedures and management processes are made transparent and publicly
accessible, it will also facilitate reporting to stakeholders.

The GSZT recommends that NGOs operating in Hungary make their management
structure and processes transparent and publicly accessible.
c) Strategy: Dissemination of International Standards and Recommendations
NGOs can have a decisive role in the dissemination of international recommendations,
principles and standards. There are already some serious organisations in Hungary
dealing with the dissemination, installation and auditing of various international
management systems for quality assessment or corporate governance, but they are still
few in number. A possible driving force behind this effort may be a number of
international NGOs or networks dealing with CSR which also have Hungarian branch
offices.
NGOs could be in the frontline for the domestic implementation of such efforts and
principles as the employment of disadvantaged workers, the creation of equal
opportunities at companies, environmentally conscious corporate governance, etc., and
also possibly even in international cooperation in these areas.

The GSZT recommends that NGOs operating in Hungary represent and actively
disseminate international standards, principles and recommendations on corporate social
responsibility.
d) Performance Management: Trainings for the Market Sector and the Media
In the field of performance management, NGOs have a decisive role to play in trainings
for the market sector and the media. As external independent actors and advisors, they
can help companies explore and understand their industrial impact on environmental,
economic and social levels. Furthermore, they can provide training for the media, where
they present the different areas of and possibilities for corporate social responsibility.

The GSZT recommends that NGOs operating in Hungary hold trainings for the market
sector and the media on corporate social responsibility and on the practice of
performance management.
e) Publication, Public Reports
In civil society, transparency constitutes a fundamental principle which can ensure
legitimate operation between market and state. Actual accountability and the presentation
of transparent economic relations will strengthen the role of NGOs in the economy and as
opinion leaders. As well, the position of trust they enjoy owing to their independency
entails a corollary responsibility to fully observe the principles of transparency and
accountability in their operations. In their case, budgetary accounts and the presentation
of management and social activities form particularly important elements of their public
reports.

The GSZT recommends that NGOs operating in Hungary draw up public reports to present
their responsible operating practices, and make these accessible to the stakeholders, in
particular to the state and the corporate sector.

23

f)

Participation in Authentication
NGOs as external experts can have a decisive role in the authentication of socially
responsible corporate practices. This can include, on the one hand, examination and
qualification of responsible corporate behaviour as such, together with the related
corporate and involvement processes, on the other hand, it may refer to the examination
of the correctness of published data and results, and it may also mean qualification of
responsible principles and processes implemented at the strategic level and systematically
integrated into corporate governance.

The GSZT recommends that NGOs operating in Hungary take an active part in the
authentication of the economic operators socially responsible practices.
4) Media

a) Strategy
The media has a dual responsibility in the field of corporate social responsibility. Firstly,
they also operate in a corporate form, thus their own operations also require social
responsibility, stakeholder involvement, the assessment and improvement of economic,
social and environmental impacts.
Secondly, in the era of an information-based society, the media has a prominent role in
raising relevant topics, opinion and problems, and in informing/educating the public.
Therefore, the balanced supply of information, objectivity and the presentation of the
widest possible range of opinions is indispensable for responsible media operation.
The media are also an important channel for boosting public awareness, since by raising
issues of environmental and social sustainability and by giving a balanced overview of
different opinions, arguments for and against, they can promote and reinforce
opportunities for the forming of opinions in the private and civil sectors. Transmitting
information and providing the opportunity for in-depth knowledge of divergent views will
generate an ever-greater demand for information. A society which is more aware will
operate in a substantially more democratic context an important feature of media
activity. An important consideration in that regard is that the media can utilise their
unique potential for developing public awareness, including the improvement of tax
awareness among individuals and taxpayer organisations.
Naturally, each different type of media highlights different types of topics: for instance,
internet and television offer a forum for different stages of stakeholder dialogue, while
different ecological issues may be raised in a newspaper or on a satellite television
program. However, they shall all assume the same responsibility for the ways they
present and select information, news and events.15

The GSZT recommends that Hungarian media actors, following the responsible practice of
other countries, initiate sectoral cooperation and set up a forum for raising (public)
awareness in society, raising issues of social sustainability, presenting different opinions,
arguments for and against and information related to the assumption of responsibility and
responsible operation, and also for promoting responsible advertising and self-regulation.
b) Active Stakeholder Partnership
The media can have an active role in the process of stakeholder involvement and
dialogue, firstly, as a channel for the opinions of the different sides, and secondly, as an
important stakeholder itself in corporate social responsibility. This is why it is important
that media are represented in the establishment of stakeholder partnership, and that they
inform the broader public of these processes.

The GSZT recommends that Hungarian media actors be active members and agents in the
establishment of stakeholder dialogue and multilateral partnership.

15

The GSZT endorses the position adopted by the Hungarian Advertising Association and Braun & Partners, which
can be found annexed to this document.

24

c) Publication Channel
The media acts as a key actor in the formation of public opinion and social awareness. In
this respect, their reports on the economic actors socially responsible activities and on
socially conscious corporate behaviour form one of the most efficient publication channels
for companies, NGOs and the state. At the same time, the media bear a crucial
responsibility for the supply of this type of information; they should make all efforts to
present transparent and authentic corporate performance which rely on real involvement
and strategic processes, instead of serving as a mere advertising surface.

The GSZT recommends that Hungarian media actors provide a forum for the presentation
of authentic and transparent business operations, examples, and socially responsible
actions, thereby raising the awareness of and providing information to the recipients in
society.
d) Tools for Verifying Authenticity
Authentication is a means for measuring and assessing corporate social responsibility.
The media can provide active assistance in this area by using their own tools (reports,
fact-finding, news, information gathering, interviewing stakeholders) to investigate,
demonstrate or to question authenticity, and to enumerate good examples and practices
worth following.

The GSZT recommends that Hungarian media actors use their own tools to present
corporate social responsibility, to examine authenticity and to present good examples and
practices worth following.

25

SUMMARY: AN OVERVIEW OF THE GSZTS RECOMMENDATIONS

SECTORS

FIELDS
1. stakeholder
involvement

Market, companies

State, local governments

- to create stakeholder dialogue

and involvement
- responsible lobbying

- stakeholder involvement and

getting involved

- to cooperate with the market

and state sectors
- to publish the principles,
values and forms which govern
their responsible cooperation
with the market
- to be a role model of
- to participate as independent
transparency, and also as an
external experts
owner and employer
- to ensure the transparency of
their own operations
- to provide an appropriate
- to disseminate international
proper legislative and economic standards and
policy framework
recommendations
- to adopt international
recommendations, to
participate in international
initiatives
- responsible public
- training for the market sector
procurement
and the media
- development of incentives

- independent members on the

management board
- to adopt a code of ethics

3. strategy

- responsible marketing
- to adopt and strategically
implement recommendations of
international organisations

4. performance
management

- to apply corporate governance

management systems
- to set up social labelling
processes
- to develop responsible supplier
relationships
- sustainability reports
- sustainability reports of public
undertakings
- targeted communication

6. Authentication

Media
(subject to the same
requirements as companies,
besides special responsibility in
the following fields:)

2. governance

5. Publication

Civil society

- authenticated social reports

and processes

- to take an active part in

stakeholder partnership

- to initiate sectoral
cooperation for raising (public)
awareness in society

- sustainability reports

- to serve as a channel and a

forum for the publication of
results, reports and socially
responsible actions
- to develop and operate social - to participate in authentication - to explore and present
labelling schemes
authenticity

26

ANNEX

Legal demarcation
As a consequence of the currently effective interpretation of the law (by the National Radio and
Television Commission ORTT), the display of a business associations socially responsible actions
qualifies as covert advertisement, and entails the imposition of substantial fines. We disapprove of this
practice for several reasons.
Covert advertisement as defined in the Media Act (paragraph 4 Article 2) comprises encouragement
to purchase goods, to use a service or to perform any other business action. Where viewers/listeners
are informed of a market operators socially responsible actions, the above-indicated factor is only
very minimally present. The presentation and reception of such information will not result in direct
business action. This type of presentation only serves to generate an image of a socially committed
business actor in the viewers/listeners mind, which though it may indirectly contribute to a more
positive judgment on that economic operator does not at all imply that it would be manifested in
direct purchase of goods or use of services. For the above reasons, we claim that the interpretation
and sanctioning of reports on socially responsible activities as covert advertisements is based on a farfetched and unlawfully extending construction of "encouragement to such actions", which conflicts
with both the legislators intent and with the literal meaning of the provision. This broad interpretation
is no less harmful for society, since real endorsement for the CSR business case, whereby the state
could also share its public responsibility with market actors, would require realistic legislation and law
enforcement.
Contrary to the logical treatment of the issue in the Act on Advertising, in the Media Act, covert
advertisement is not defined by cross-reference to the definition of advertisement, still, it is also
teleologically probable that the two concepts are dogmatically linked. Therefore, to get a proper
understanding of covert advertisement, it is advisable to first examine the definition of
advertisement. This requires that publication is made in consideration, which is again not true in the
above-discussed cases.
Consequently, if the electronic media reports on a market actors socially responsible activity, this does
not qualify as advertisement, provided that no product or service is displayed that is directly available
on the market, and no advertising line or encouragement to purchase is included which would give
encourage purchase or directly display the corporate image. Such reports contain mere facts without
confirmation or value judgment, and inform of responsible practices without consideration.

27