Mapping the evolution of corporate social responsibility – insights from the Finnish forest industry

Abstract

The number of companies engaging in corporate social responsibility (CSR) has increased significantly. However, the ways in which CSR is understood and practised are strongly dependent on contextual characteristics, such as the industry. The objective of this study is to map the evolution of CSR in the Finnish forest industry. Drawing from thematic interviews with selected participants and from environmental and CSR reports, the underlying factors and stakeholders that have influenced the development of CSR at different times are identified. The findings indicate that there are four main areas in the evolution of CSR, during which the emphasis of different elements of CSR has varied. The stakeholder groups driving CSR have turned from authorities and trade unions to local communities, non-governmental organisations and customers. Managers may find the results useful when analysing the development of CSR practices and the role of stakeholders in this development.

Keywords

Corporate social responsibility Corporate social responsibility reporting CSR CSR evolution CSR reporting Forest industry Stakeholders

Introduction

Corporate social responsibility (CSR) has grown significantly in relevance and stature during the last decades, and by the late 1990s, it has become a widely accepted idea promoted by companies, governments, non-governmental organisations (NGOs) and individual consumers alike (Lee 2008; Kyvelou, Marava and Kokkoni 2011; Carroll 2015). In consequence, the number of companies engaging in CSR and reporting their initiatives has increased significantly in the twenty-first century: over 90% of the world's largest 250 companies include CSR in their reporting (KPMG 2013). However, the multidimensional and constantly evolving concept of CSR may be challenging for businesses to interpret, implement and manage. In addition to defining the relevant CSR issues, companies are expected to conform to temporally changing stakeholder expectations (Carroll 1979). The implementation of CSR has been characterised as an organisational change process that involves learning over time (Maon, Lindgreen and Swaen 2009), which is why examination of the long-term development of CSR in an organisation is needed.

The ways by which CSR is understood and practised in companies are strongly dependent on contextual characteristics, such as the industry within which they operate (Vidal and Kozak 2008a). Also the stakeholder interests and activities differ across industries and different regions (Chand 2006; Tsoi 2010). This calls for case studies that take account of these contextual characteristics. This study maps the evolution of CSR in the Finnish forest industry. Due to the use of natural resources and large-scale operations, the forest industry has a high impact on the environment, which makes it an interesting and relevant context to study CSR. Drawing from thematic interviews with selected participants, four phases in the evolution of CSR in the context of the Finnish forest industry are identified. With its 23 million forest hectares, Finland is among the major suppliers of forest products to global markets (Finnish Forest Research Institute 2011). In addition to describing the evolution of the phenomenon, the underlying factors and stakeholders that have influenced the development at different times are identified. The findings of this study can give insights to managers when analysing the development of CSR practices and the role of stakeholders in this development. By its very nature, the forest industry has been an easy target for criticism and forced companies to cope with CSR issues for a long time. Today, internationalisation and the new kind of complexity of the value chain make CSR increasingly relevant within the forest industry.

Next, previous research on CSR with a focus on writings defining the essence of CSR and CSR in the forest industry is briefly reviewed. Second, the research design is presented, and based on the thematic interviews, an understanding of the evolution of CSR in the Finnish forest industry is formulated. Finally there is a discussion and conclusions.

Defining and reasoning CSR

Firms acting in the current global business environment are confronted with demand for pursuing responsible practices throughout the business chain. This is clearly visible among public firms, where the demand for transparent practices comes firstly from shareholders. Thus, reporting corporate social issues has become a custom. Furthermore, in many business areas customer awareness and transparency have increased as the Internet and social media enable the information to diffuse faster than ever: firms that go for opportunistic behaviour may in a short time become a subject of large-scale boycotts and image bruises. Today, especially large-scale industries that are dependent on natural resources – such as the forest industry – have to comply continuously with the public demand for environmental responsibility. However, CSR has been a talking point in business and the subject of research for decades although the discussion seems to have gained mounting popularity and publicity lately (Dierkes and Coppock 1973; Ekwueme, Egbunike and Onyali 2013). Regardless of this, there is still some difficulty in defining what exactly is meant by CSR and what socially responsible business is. For example, Dahlsrud (2008) found as many as 37 definitions for CSR. However, he concludes that the confusion lies not so much in the definition than in ‘how CSR is socially constructed in a specific context’ (Dahlsrud 2008, p. 6). Dahlsrud (2008) reports that the different definitions typically rest upon similar categories of responsible business, and these categories often originate from Carroll's (1979) definition. According to Carroll (1979, p. 500), CSR ‘encompasses the economic, legal, ethical, and discretionary expectations that society has of organisations at a given point in time’. The level of responsibility ranges from the first and foremost economic responsibilities to discretionary responsibilities left for individual judgement and choice of the companies (Carroll 1979). In Carroll's definition the environmental dimension is missing, although it is often taken as a part of CSR (Dahlsrud 2008). Another way of identifying CSR is to emphasise the independence of economic, social and environmental responsibility. This has been referred to as the so-called triple bottom line (TBL) model, which was introduced by Elkington (1997). In the model, economic, social and environmental responsibilities are of equal significance. Therefore, a responsible company takes all the three dimensions equally into account.

CSR practices may be motivated by the desire to improve the company's image and competitiveness (Panapanaan, Linnanen, Karvonen and Phan 2003), as well as the desire to legitimise the organisation's operations, that is, to gain the license to operate (Deegan 2002). According to the latter view, organisations cannot continue to exist if their operations are not considered acceptable or legitimate by society (Deegan 2002).

Another approach to reason CSR is called stakeholder theory. According to this approach, the firm has a large group of stakeholders who are affected by the firm's actions and whose interests the firm cannot neglect. Thus, a successful business requires a wider set of goals than just showing profit and serving the interests of the shareholders at the expense of other stakeholders (Freeman 1984; Elkington 1997). Clarkson (1995, p. 106) defines a stakeholder as a person or as a group ‘that have, or claim, ownership, rights, or interests in a corporation and its activities, past, present, or future’. He further divides the stakeholders into primary and secondary stakeholders. Primary stakeholders are characterised as ‘one without whose continuing participation the corporation cannot survive’ (Clarkson 1995, p. 106), and they are typically shareholders, employees, customers and public stakeholders. Secondary stakeholders include media and special interest groups, that is, ‘those who influence or affect, or are influenced or affected by, the corporation, … and are not essential for its survival’ (Clarkson 1995, p. 107). Thus, the firm stays in the business only by taking into account the implications of its actions to its stakeholders, and it is therefore the expectations of the stakeholders that are likely to have an impact on the firm's strategies and actions. However, as there are many different stakeholder groups with different aims, companies will not – and probably cannot – respond equally to the expectations of all the stakeholders, but are more likely to respond to those who are considered powerful (Deegan 2000). The power of the stakeholder depends on the degree of the stakeholder's control over resources required by the organisation: the more critical the resource is to the survival of the organisation, the greater is the probability that the stakeholder expectations and demands are addressed to (Ullmann 1985; Deegan 2000). This has been empirically examined and verified by Neu, Warsame and Pedwell (1998) who found that companies conformed to the expectations of financial stakeholders and government regulators more than those of environmentalists.

Adoption of CSR practices

While CSR is not necessarily thought of as an inherent part of doing business, the demands of stakeholder, risk aversion, image building or other reasons motivate firms to implement CSR practices. The implementation or adoption process of CSR practices in a firm's activities has been described in different development models (see a review by Maon, Lindgreen and Swaen 2010). These are often stage models, which assume that organisations go through different levels of acceptance, understanding and integration of CSR. For example, Zadek (2004) argues that organisations typically go through five stages of learning when they develop their CSR practices. In the first, defensive, stage the firm defends against possible accusations by denying its responsibility. In the second stage, called compliance, the firm complies with CSR demands by creating a visible corporate policy, and this practice is taken as a cost of doing business. In the managerial stage the societal issues are embedded in the management processes of the firm, and in the strategic stage the societal issues are also integrated into the business strategy. In the final stage, called civil, the firm promotes industry participation in CSR in order to reach some benefit through collective action. Maon et al. (2010) suggest a model where CSR development proceeds through three cultural phases: CSR cultural reluctance, cultural grasp and cultural embedment. First, CSR is ignored or taken as a constraint; in the second phase the firm becomes familiar with CSR and in the last phase the firm has integrated the CSR principles, is utilising it innovatively and sees CSR as an opportunity. Like these two models, it is common to various different stage models that they include stages ranging from denial, rejection or indifference (‘do nothing’) to proactive integration of CRS practices (‘do much’) (Maon et al. 2010).

CSR development or evolution studies increase our understanding of how and why firms adopt CSR practices. On the one hand, this understanding could enlarge the possibilities of different stakeholders (such as governments) to influence the firms’ CSR practices. On the other hand, it helps the firms themselves to perceive their situation and possibilities relating to CSR. The next section shortly describes the CSR research in the forest industry. Although several recent researches can be found, there is still a lack of studies that would enlighten the CSR development within the forest industry with a longer historical perspective.

CSR in the forest industry

Industries with high impact on environment – like the forest industry – are followed often closely not only by regulators but also by local communities and environmental groups. In the forest industry firms specialised in pulp and paper manufacturing are often large, which may further increase scrutiny by stakeholder groups. Large firms are more visible to the public eye than small firms, and therefore their businesses may be more vulnerable to adverse reactions (Brammer and Pavelin 2004). Moreover, because in the past the forest industry was typically a capital- and labour-intensive industry, with mills located close to resources, firms were not only important to the economy at a national level, but also locally as significant employers, often greatly shaping the local history (Mäkelä and Näsi, 2010). At the same time the industry typically has had some negative impacts on surrounding nature and local inhabitants, for example in the form of problematic odour and pollution of the water system. These aspects make the forest industry an interesting context to study CSR and its evolution.

Recent research gives a positive picture of the current state of CSR in the forest industry (see Li and Toppinen (2011) for an overview of the state-of-the-art qualitative and quantitative studies on corporate responsibility (CR) in forest-based industry). Sharma and Henriques (2005) examined the Canadian forest products companies, and they concluded that the sector has moved from mere pollution control and eco-efficiency to intermediate CSR practices, such as recirculation of materials and sustainable harvesting of lumber. By content analysing the top 20 pulp and paper industry (PPI) companies’ sustainability reports, Vidal and Kozak (2008b) concluded that the sector was moving towards a more balanced view of social, economic and environmental responsibilities. Sinclair and Walton (2003), for their part, examined environmental reporting conducted by the top 100 PPI companies, and concluded that reporting by the Scandinavian companies is extensive. Mikkilä and Toppinen (2008) studied CR reporting in 10 world's largest PPI companies, and found that there is little flexibility for company-specific diversification in reporting, especially in terms of financial and environmental reporting. Toppinen, Li, Tuppura and Xiong (2012) also analysed the CSR disclosure of 66 forest industry firms in Global Reporting Initiative framework, and found that CSR reporting is positively related to firm size and business diversity, but a positive relationship was not found between CSR reporting and financial performance. The more careful CSR reporting of larger firms may indicate that larger firms meet greater demand for transparency from stakeholders than smaller firms.

Sonnenfeld (2002) examined the influence of social and environmental movements on pulp and paper manufacturing in the light of ecological modernisation theory, concluding that environmental social movements have had a profound influence on the adoption of more environmentally friendly techniques by the industry since the mid-1980s. Sharma and Henriques (2005), for one, found that the adoption of CSR practices among the forest products companies were driven by social ecological stakeholders (such as NGOs and local communities) and economic stakeholders (such as customers). On the other hand, by conducting a survey among the Canadian PPI, Doonan, Lanoie and Laplante (2005) found that environmental directors perceive pressure on a company's environmental performance coming most importantly from the government, the general public and the higher level of management, whereas financial or consumer markets are not perceived as important sources of pressure. Näsi, Näsi, Phillips and Zyglidopoulos (1997) carried out content analyses for four forest companies for a 16-year period to compare the applicability of three perspectives on the management of corporate social issues. The approaches were: life cycle theory, legitimacy theory and stakeholder theory. While the authors found value in all the three approaches, the stakeholder theory seemed the most applicable to analyse the management of social issues in the firms under study. They found support that firms respond to the demands of the most powerful stakeholders, and when the power relations of the stakeholder groups change, the issues addressed may also change over time. They interpreted that at times of reduced economic success firms reduce their attention to environmental issues, since the economically motivated stakeholders demand more attention. Matilainen (2013) has studied CSR in the Russian forest sector. She found forest certification to be a significant CSR initiative in Russia, which emphasises the environmental dimension of CSR and the company's relations with its customers. Vidal, Bull and Kozak (2010) recognise that the ways that CSR practices diffuse to companies are decisive. They found that there are three main factors that affect the diffusion of CSR practices in the forest sector. First, the places and conditions within which the company is situated (‘external contextual characteristics’) define which CSR issues are relevant to the firm. Second, the people who bring CSR information and practices into the company (‘connectors’) are critical. Third, the experts and expert organisations influence the diffusion of CSR information and practices. The authors conclude that companies and expert organisations influence each other, and that both have influence on the CSR trends that emerge in the industry.

When it comes to non-optimal behaviour from the perspective of CSR, Mäkelä and Näsi (2010), for example, have analysed how social responsibility is conceived and augmented by a forest industry company and by its stakeholders when downsising the company's operations. They conclude that the corporation emphasised its economic responsibilities as a global business firm, whereas the key stakeholders (employees and local community) called for local responsibility. Joutsenvirta and Vaara (2009) studied media texts relating to a pulp mill project by a Finnish forest industry company that sparked a lot of criticism and opposition from civil activists. They argue that in this case company representatives tended to distance themselves from political disputes and highlight their expert knowledge in technical and environmental evaluations.

The next section presents the empirical part of this study. The aim of the empirical study is to map the evolution of CSR in the Finnish forest industry from the industry perspective, and to recognise the important steps and motivations behind the development of CSR practices to their current shape.

Evolution of CSR in the Finnish forest industry

Methodology

Since the goal was to uncover subjective viewpoints and provide a comprehensive understanding of the CSR phenomenon, qualitative research design was considered appropriate. Furthermore, it has been recognised that a small sample research is suitable for understanding the characteristics and determinants of a certain phenomenon (Lamberti and Lettieri 2009). The case companies, Stora Enso and UPM, are among the world's largest forest industry companies 1

¹Measured in terms of total sales, Stora Enso was the fifth largest and UPM the eighth largest forest industry company worldwide in 2009 (Finnish Forest Research Institute, 2010).

and the two largest ones operating in Finland, which is why they were chosen to represent the Finnish forest industry in this study. Both companies were founded at the end of the nineteenth century. Today, Stora Enso is a global paper, packaging and forest products company with production facilities in more than 35 countries and with approximately 30 000 employees (Stora Enso 2011). UPM is also a global company with production facilities in 16 countries and approximately 25 000 employees worldwide. The three business groups of UPM include energy and pulp, paper and engineered materials (UPM 2011).

The data were gathered by conducting thematic interviews with selected participants. To obtain quality data, participants were chosen with years or even decades of experience in the forest industry. Altogether 11 participants were selected (see Appendix 1). The objective was to interview such persons who, based on their organisational positions, had the best available knowledge of the state and development of CSR in the case companies. Two former managers from UPM with long careers within the forest industry were interviewed in order to collect historical data. Interviewed managers from Stora Enso encompassed the Head of Sustainability, Senior Vice President in Sales and Marketing, and Environmental Manager for Stora Enso Forest. In order to compare the situation in another Finnish forest company, Vice President in Communications from Metsä-Botnia was interviewed. The environmental organisations were represented by a Forest Manager of WWF Finland and a Forest Campaigner of Greenpeace. The viewpoints of an employee organisation were represented by a Researcher from a Paper Union. The customer viewpoint was given by the Director of Sanoma Magazines, Finland. The Director of Finnish Forest Industries Federation (FFIF) represented the industrial federation point of view.

The interviews were conducted between November 2008 and June 2009. A list of themes (see Appendix 2) was prepared for the interviews and e-mailed to the interviewees in advance. Due to different positions and backgrounds of the interviewees, the order and the scale of the themes and questions under discussion varied. However, all the themes were covered in each interview. All the interviews, lasting from 30 to 90 minutes, were audio-recorded and transcribed. After transcription, the data were systematically studied in order to map the evolution of CSR and to identify the underlying factors and stakeholders that have influenced the evolution: the data were themed in order to identify and highlight the relevant topics with respect to the research problem. This made it possible to compare the existence and occurrence of certain themes within the data. The themes were drawn from the TBL model. For additional information the annual, environmental and CSR reports prepared by the case companies in 1998–2008 were covered. The following section presents the findings of this study, and quotes from the interviews to illustrate the data have been used. The interviews were conducted in Finnish and therefore the quotes included in the manuscript were translated from Finnish to English. Quotes were chosen that synthesise the overall data the best, that is, quotes that would only represent sporadic opinions were not included in the study.

Findings

Creation of a local infrastructure

The first decades of the twentieth century were marked by modernisation and expansion of the Finnish forest industry operations. The first era in the evolution of CSR that could be identified as ‘creation of local infrastructure’ saw the emergence of socially responsible way of thinking in the case companies. Nearly all the respondents emphasised the importance of these early days of the industrial history. For instance, the manager of Metsä-Botnia described this by saying that ‘social responsibility was more advanced [in the first decades of the 20th century] than it is today’.

CSR, according to the interviewees, meant responsibility for both the productions and the employees. Both economic and social dimensions of CSR were implemented. Factories were situated in small towns and outside city centres. The former manager from UPM pointed out that:

At the time, there were many prevailing social issues: apartments for the employees, hospitals, own police, own priest.

Such a large-scale social responsibility was possible because the factories were largely family-owned. The focus was on setting up the productions as well as securing the growth and continuance of the operations. In order to do so, the case companies contributed to the societal development by building the local infrastructure surrounding the factories. Employees were probably the most important resource enabling the business, which is reflected in the following statement by the former manager of UPM:

At the time, human resources were sort of even more important than today.

Even though the implementation of CSR may well have been subconscious, Stora Enso and UPM nevertheless had social responsibility over and above legal requirements. Therefore, it can be said that the companies carried out their responsibility also on ethical or discretionary level. This particular way of carrying out wide social responsibility is usually considered a Scandinavian phenomenon (Juholin 2004), but according to Panapanaan et al. (2003), the situation was similar in countries such as the UK and the USA, where companies were also viewed as centres of community. Along with the development of the Finnish welfare society, the society started to take charge of these matters and the case companies emphasised their focus on the bottom line.

Full steam ahead

During the second era in the evolution of CSR, called ‘full steam ahead’, the primary role of the case companies turned into creators of economic well-being. Operations expanded and ownership structure became more fragmented. The focus of the companies shifted to operating as efficiently as possible and contributing to the post-war Finnish economy. Cost savings were the only motivation to develop operations. Environmental issues were not yet a major concern, as reflected in the following statement by the former manager of UPM:

It was not a problem, our factory emitted all its waste waters into the lake, you did not need to cleanse them. It did not occur to anyone that it could contaminate the lake.

At this point, spokesmen on behalf of the natural environment did not exist, and there were no CSR demands by any stakeholder groups. Paper Union, however, became powerful in attending to the employees’ interests. The trade union movement continued to stay powerful until the 1980s. Marketing and supervision of the case companies’ interests were assigned to institutions such as the FFIF and the Bank of Finland. Some respondents even found that these institutions implemented CSR on behalf of the case companies. The implementation of CSR was therefore limited to economic and legal dimensions.

Control of emissions

The third era in the evolution of CSR in the case companies can be seen to have begun in the 1960s. Along with the expanding operations and the increased pollution load, respectively, the case companies were forced to take the first steps towards environmental responsibility and start considering ‘emission control’. Production standards, such as best available techniques were also introduced at this point. At first, the activities towards cleaner productions were mainly authority-driven. As a result of the strict environmental regulations and permission processes that started to develop in the 1960s and 1970s, the case companies had to build technology that dramatically decreased emissions to water, air, and soil. As the representative of Stora Enso said:

In the 1970s and 1980s, we had to wrestle with very difficult things and develop such technology that enabled radical decrease in emissions. ( … ) If you look at the decrease in emissions from the 1970s until today, it has been incredible.

Significant milestones at the time were the Water Act of 1961 and the emergence of environmental centres that harmonised the regulations and the permission processes. The new, subject-to-license way of operating and building factories received criticism and resistance at first, as the manager of FFIF put forward in the following statement:

The way of thinking was so new that it must have felt for the first licensed ones as an obligation that was slightly opposed to. ( … ) Then they realised that ‘wait a minute, we have the same goals here.’

From then on, cooperation with the authorities was distinctive for the case companies, and the prevention and control of emissions became the state-of-the-art guideline while planning investments. At the same time, according to the former manager of UPM, there were still, for example, American forest industry companies that considered investments only from the economic point of view. Although some investments in conservation or in improving eco-efficiency often enhance at least the firm's short-term profitability, the more costly investments resulting in fundamental changes in products and processes do not necessarily lead to directly visible economic benefits (see Sharma and Henriques 2005). This is why regulators often are important stakeholders in driving the adoption of sustainability practices. At this point, however, the case companies had also uncompelled, factory-specific research and development activities, as put by the former manager of UPM:

At the time, our own innovations emerged. They could be innovations for the forest industry as a whole: equipment improvements, process improvements, and technological improvements. Their significance was huge, even though they did not directly influence the environment, did not always significantly decrease the loading.

According to the case company managers, the technological competence gained in those days is the cornerstone of the companies’ current competitiveness. However, as the manager of Sanoma Magazines representing the customer point of view suspected, these investments were motivated mainly by process efficiency rather than by environmentalism.

Still, many respondents found that the triggers for true environmental responsibility were the environmental and civic movements of the 1970s and 1980s. At the time, severe environmental accidents (such as the destruction of a lake by the Lievestuore pulp factory) took place in Finland. As a result, environmental organisations and local communities surrounding the factories emerged to oppose the forest industry. An example of an effective movement given by the respondents includes the campaign by Greenpeace against chlorine bleaching in the late 1980s. These movements were effective in the way that they eventually made the case companies modify their operations and adopt chlorine-free technologies, for example. Environmental organisations became powerful in influencing public opinion. A former manager of UPM put it as follows:

Certain customers started expecting it [chlorine-free pulp] only because these [environmental] organisations demanded so.

The processes were therefore re-designed due to external pressure rather than by internal motivation. The case company managers, however, did not completely agree on the influence of the environmental organisations. Some found that the role of the NGOs in the development of environmental responsibility has been pointlessly emphasised, whereas others found the NGOs as remarkable opinion leaders and important initiators of societal discussion. The representatives of the NGOs themselves, on the other hand, found their role as the spokesmen on behalf of the environment important. All in all, in the case companies the era of emission control can be seen as a starting point for actual environmental responsibility.

Global environmental and social responsibility

The fourth era in the evolution of CSR, identified as ‘global environmental and social responsibility’ began in the late 1980s in the case companies. This era has been characterised by consolidation and internationalisation of the forest industry. The case companies, too, began the search for competitiveness and economies of scale by merging and gradually expanding their operations into developing countries. Internationalisation, however, placed Stora Enso and UPM in front of new environmental and social challenges, particularly relating to land ownership and wood procurement in the tropic. Along with global operations, the companies needed to extend their responsibility respectively. Important drivers for CSR mentioned by many respondents were the environmental conferences and protocols, such as the UNCED Earth Summit in Rio de Janeiro in 1992, which made the principles of sustainable development common knowledge. As a result, forest certification and wood sourcing took off in the case companies.

As a result of the increased awareness of environmental issues, the customers of the case companies began to demand CSR in the late 1990s. At the same time, Stora Enso started systematic work for segmenting its customers based on their CSR demands. The role of the NGOs as opinion leaders continued. According to the representative of Greenpeace, changes resulted in the forest companies’ operations when Greenpeace campaigned for protecting the Northern old-growth forests in 2005. As a result Stora Enso refrained from buying wood that was against the will of reindeer owners’ association. The forest campaigner said that:

The decision by Stora Enso in 2005 definitely resulted from the German customers saying that it is not okay. They do not want wood that is opposed by the local reindeer farmers and Laplanders.

In the late 1990s, another milestone in the evolution of CSR was reached when the first distinct environmental reports were published in 1995 by UPM and 1998 by Stora Enso. According to the case company managers, the launch of the environmental reports was company-inspired rather than demanded by any stakeholder group. Reporting was seen as a way to gain the license to operate as well as to provide the stakeholders with correct information. At the turn of the millennium, internationalisation of the case companies accelerated and the companies faced new social challenges, such as poverty and human rights issues, which had not been relevant in Finland. In Finland, on the other hand, the accelerating structural change and low profitability forced the case companies to permanently shut down some of their capacity and reduce their work force. Stora Enso first defined its principles of social responsibility in 2000. Both case companies expanded their environmental reports into comprehensive CSR reports covering environmental, social and economic responsibilities: the holistic phase covering all the three dimensions of the TBL was reached. Many interviewees pointed out that while doing business in developing countries, the case companies are in front of the same challenges as in Finland in the beginning of the twentieth century. A manager of Stora Enso summarised that:

When Western companies go to the countries of rapid economic development, we need to take charge of many things that in Finland are taken care of by the state, town or municipality. We build roads, hospitals and schools in order to guarantee the functioning of our own production there.

The economic responsibility was still considered by the case company managers as the first and foremost responsibility and the cornerstone of the operations. The following two comments made by a former manager of UPM and a manager of Stora Enso, respectively, reflect the current motivation for CSR:

The international image has become much more important than distinct stakeholder relations. I think it's the first thing the group tries to keep up. ( … ) I think customers make their decisions based on the international image.

We do it [CSR] because we have to, we do it for the sake of the risks, and because I want the customers to buy our paper rather than the neighbour's. That's it.

Thus, it seems that taking care of CSR issues has become a way of securing the survival or continuity of the business. In today's forest industry CSR issues are clearly of strategic nature, and therefore sufficient attention and effort are required to avoid costly mistakes. One potential risk came up in the comment given by a representative of Metsä-Botnia:

[Responsibility] has become such a competitive weapon, that you should always be sort of one step ahead. I think there's a risk that we take measures that are very short-sighted.

Discussion and conclusions

The purpose of this study was to shed light on the evolution of CSR in the Finnish forest industry and thus to provide a comprehensive understanding of the CSR phenomenon. Figure 1 illustrates the milestones in the evolution of CSR in the case companies as well as the embodiment of the different dimensions of CSR.

Figure 1

Milestones in the evolution of CSR in the case companies

The findings indicate that the evolution of CSR in the Finnish forest industry has been a long and a phased process driven by multiple factors and stakeholders. The case companies have considered responsibility issues in their relations with the surrounding society for a long time, but the implementation of the responsibility has changed over time. Whereas economic responsibility has always been a precondition for operations, environmentally it seems that the case companies have shifted their focus from elementary pollution control practices to more advanced practices, such as re-design of business processes. Today, congruent with Vidal and Kozak (2008b), the forest industry companies view CSR holistically embracing all the three dimensions of the TBL. Profitability and shareholder value remain the cornerstones of operations and the case companies see CSR as a means to gain competitive advantage. CSR is linked to risk management, competitiveness and long-term profitability rather than philanthropy, which is congruent with previous studies analysing CSR (Panapanaan et al. 2003; Juholin 2004).

This study supports the view that companies react to salient stakeholders who are powerful or critical with respect to the resources they are holding (Ullmann 1985; Neu et al. 1998; Deegan 2000; Castka and Balzarova 2008). Based on this study, the forest companies have addressed the concerns of customers more than those of NGOs. However, NGOs have been able to influence the companies through other stakeholders, such as customers. In that our findings are in line with Sonnenfeld (2002), according to whom, environmental NGOs have influenced the forest industry profoundly. The stakeholder groups driving CSR in the case companies have turned from the authorities and the trade unions to NGOs, local communities, customers and individual consumers as well as ethical investors.

Table 1 summarises the CSR evolution in the case companies. The development has been divided into four eras, and for each era Table 1 shows the characteristic conceptualisation, the level of commitment and motivation of CSR as well as the stakeholder groups influencing the implementation of CSR in each era.

Table 1

Four eras of CSR development in the case companies.

Era	Years	TBL	Levels	Stakeholders	Motivation
Creation of a local infrastructure	–1950	Economic, social	Economic, legal, ethical/discretionary	Employees	Ability to operate
Full steam ahead	1950–1960	Economic	Economic, legal	Owners, trade unions	Ability to operate
Emission control	1960–1985	Economic, environmental	Economic, legal	Regulators, industrial federations, trade unions, NGOs, local communities	License to operate
Global environmental and social responsibility	1985–	Economic, social and environmental	Economic, legal, ethical, discretionary	Customers, NGOs, regulators, investors, employees, local communities	Ability to operate, license to operate, competitive advantage

In the first phase of the CSR evolution, the forest companies focused on setting up the operations and securing the factors of production, which is why they needed to contribute to the society by creating the local infrastructure surrounding the factories. In order to guarantee the availability of employees, which was the most important resource at the time, the case companies implemented social responsibility above legal requirements. CSR was therefore internally motivated by the ability to operate, but implemented on ethical or discretionary level.

In the second phase of the CSR evolution, along with the intensifying operations, the focus of the forest companies shifted to operating as efficiently and cost-effectively as possible. The environmental consciousness was only slowly awakening, and also the forest industry could continue producing without demands for environmental responsibility. Moreover, as the country was recovering from a war, it is likely that in the eyes of the society the role and the responsibility of the industry in the first place were to provide jobs and improve the national economy. The demands to curb the problematic odour and pollution of lakes and rivers came only later. Therefore, it may not be correct to state that the industry would have been in a stage of denial or knowingly ignoring CSR (see the defensive stage in Zadek's (2004) stage model, or the CSR cultural reluctance phase in the model by Maon et al. (2010)), even if there seem not to have been actions demonstrating environmental or social responsibility, except in the form of providing work and economic welfare.

During the third era, emission control, expanding operations and increased loading forced the case companies to turn their focus on efficient, but also environmentally friendly production operations. Companies adopted practices controlling or reducing emissions. Regulators, NGOs and local communities were important drivers of CSR at this point. During this era, the motivation for the implementation of CSR turned from the ability to operate to internally motivated license to operate and legitimacy. In addition to the cost savings due to the improved process efficiency, these practices were unlikely to create other visible advantages to the companies. Therefore, it may be that at this point the firms in the industry have found CSR more as a constraint than as an opportunity.

The latest era in the evolution of CSR began along with internationalisation. Global operations increased the amount and expectations of the stakeholders, which extended the responsibility of the forest companies, respectively. Today, the case companies view CSR holistically and implement practices beyond legal requirements on ethical and discretionary levels. Even so, it is likely that the case companies can go further in their CSR practices, at least in the light of the stage models of CSR evolution. For instance, according to Maon et al. (2010, p. 33) model, the highest phase of CSR development would indicate a situation, where CSR is an integrated part of business activities, and it ‘becomes important unto itself’. CSR practice at this phase is important part of the firm strategy and it is not only thought to contribute to the viability and success of the firm, but is also committed to sustainability and human well-being. However, the third phase in Maon et al. (2010) model would require profound transformation in the philosophy of making business in many firms; it remains to be seen whether business in general is going to develop to that direction and what is the impact of the financial crisis of 2008 on forest industry companies’ CSR initiatives (Jacob 2012).

While the results of this study cannot be directly generalised, the CSR development mapped may be of help when analysing the long-term development of CSR in a firm, or analysing the role of stakeholders in the firm's CSR practices. It is believed that with the help of similar studies firms are able to identify the current CSR status, and potentially reach faster the holistic phase of CSR that may benefit not only the stakeholders, but also the company itself. In consequence of the many structural changes and increased competitive pressures shaping the industry, the forest industry companies have been forced to search for new sources of competitive advantage and operate under the so-called bioeconomy or green economy. Therefore, it can be expected that the companies will continue to be under intense public scrutiny in the future, also. In terms of theoretical implications, this study contributes to the literature on CSR in the forest industry context. It increases understanding of how CSR has evolved over time and takes into account the contextual characteristics. To our current knowledge, this is among the first studies to map CSR evolution in the Finnish forest industry.

As in any research, there are limitations in this study. First, the empirical part of the study is mainly based on a rather small interview-based data which consist partly of individual perceptions of the respondents. Evidently some presumably important issues did not come up in the interviews. For example, the Greenpeace campaign against old-growth logging in Karelia in the mid-1990s (see e.g. Kortelainen 2012) was not mentioned. Second, UPM was represented only by two respondents who were no longer affiliated with the company, which, on the other hand, allowed them to speak freely of their former employer.

Naturally this kind of study drawing from interviews provides subjective data, and the generalisations of the findings over different industrial settings is limited. However, many measures were taken to ensure the reliability and validity of this study. First, the research design and research process has been reported as accurately as possible. Second, the potential influence of the interviewer on the interviewees was taken into account by being well-prepared for the interviews and acting as neutrally as possible. Third, the interviewees included both the case company and the stakeholder representatives, and in order to gain comparative information, one manager of another Finnish forest industry company was interviewed. The number of interviews can be considered sufficient due to data saturation. And in order to analyse the overall data in tandem and to avoid the risk of doing false interpretations from the data, all the interviews were audio-taped and transcribed. After each interview, the gathered data were also preliminarily analysed. Finally, the CSR reports by the case companies were also reviewed. Thus, the study draws both from primary and secondary data. As for the future research, many case company managers brought out that CSR is a source of competitive advantage. Therefore, there is a call for studies examining whether the connection between CSR and financial performance exists in the forest industry companies.

Footnotes

Appendix 1: List of interviews

Appendix 2: Interview themes

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