Latvia, CSR Tiger!

Latvia, along with its neighbours Lithuania and Estonia, earned the title of ‘Baltic Tiger’ through the mid-noughties. Latvia doubled GDP in about 15 years following its independence, including a drive toward private ownership (Latvia is a lot less state-owned than many of its neighbours, including Belarus). Its citizens had started to enjoy economic wealth that was unprecedented in living memory.

It seems that may have been a curse, because in 2007, and pre-empting the ‘global’ financial crisis, the Baltic Tigers started to take a turn for the worse. (Incidentally, ‘GFC’ is a misleading term if one looks at global GDP over that time; really it was a ‘developed’ economic crisis – most of Asia, Africa, South America and Australia never had it better!) Between 2007 and 2009, Latvia lost 24% of its GDP. At the same time the country also saw unemployment rise from 5% to 20%. Either of those losses would cause most countries to go into meltdown. In addition, thanks to their relatively new-found freedom, some of Latvia’s best and brightest decided to take up alternative opportunities throughout Europe and Russia, shedding about 10% of its citizens since 2000.

And yet I was in Riga last week (currently one of my favorite European cities in spite of the raft of Ryan Air sourced buck’s parties and related party buses) and there is a remarkable feeling of hope and courage about the place that seems to defy their recent history. No doubt my optimism was due to the shining sun for much of the time I was there, but their optimism is no doubt due to their remarkable recovery in the last two or three years. Latvia leads almost all of Europe in terms of economic growth since 2009. It is especially confusing to discern what worked in Latvia that didn’t work elsewhere. Both the left and right of economics claim some successes in the recovery; confusing because some of the reforms were IMF sanctioned while others were anti-IMF policy (Latvia’s devaluation story).

I want to suggest that the rise of CSR in spite of the economic woes of business in Latvia is linked to a new kind of CSR. I was in Riga to train a Latvian cohort of burgeoning CSR professionals on CSR, including using risk as a CSR framework and how to make community investment a strategically important priority for Latvian businesses. I was impressed by the thirst for knowledge of CSR and the desire of the participants to use CSR to improve Latvia’s place in the Baltic states and in the EU, which they are on track to join in 2014. No doubt their enthusiasm is in part due to the connections of companies that operate in Latvia to places where CSR already has lots of traction, but also to the quality of business schools in the region. And also to the influence of Hauska & Partner on the business community.

But it’s hard to ignore the contribution of Dace Avena, of the Institute for Corporate Sustainability and Responsibility, to the development of CSR in Latvia. Like many people central to local development of CSR, she is very well connected to people with influence, but unlike some who are at the centre of development of CSR, she is an amazingly good listener and as a result can spot opportunities and connections that others simply miss.

The connection of CSR to Ministers in the Latvian government goes well beyond impressive. The Ministers of Latvia are involved in giving CSR awards to Latvian companies, which means that the Latvian government knows loads about good practice in CSR, and also about how CSR can benefit business. Latvia has also started to own a distinctly Latvian version of CSR, including their own CSR Index (Ilgtspejas Indekss), which has taken some of the best learning on CSR from BITC’s CR Index and others and, like Tom Jones in The Voice would say, made it their own.

In many respects, Latvia is well placed to skip over some of the CSR development that has taken place throughout Europe in the last 15 years. They can go straight past the lost years of reporting on CSR, which meant that many companies were telling the world all about their GRI-ready report, without really understanding the importance of internal and external communication of CSR, and go straight to targeted communication on the issues that really matter in relation to CSR.

CSR professionals, I recommend that you keep an eye on Latvia as an example of a ‘CSR Tiger’. I also heartily recommend the post by CSR International on Myths about CSR in Developing Countries. CSR in Latvia isn’t being led by big companies – the ones that are doing it well are almost universally smaller companies. Some of them, like Electrolux have a large parent company based elsewhere, and a visionary leader that is re-inventing CSR in a Latvian way.

But others like Riga International Airport (which is a government owned entity) is small and stretching the boundaries of CSR in Latvia. Much of the focus at this stage is on engaging employees, and the huge connection that they are seeing with creating both economic value for companies and a stronger Latvia. The embracing of the business case and risk management to drive CSR means that Latvia will probably progress faster than many.

Highlights of the Trip

As much for my own benefit, I’m also noting a few highlights from the trip.

  • Eduards Reneslacis, CEO of Electrolux Latvia, gave a warm and stirring presentation of how he and a few key others helped motivate all their staff to get strategically engaged in their communities. I would happily roll him out in front of UK companies to tell their story of strategic community investment.
  • The streets of Riga look very different in March to June. There is a wonderful outdoor culture in the Old Town, with all manner of fairly substantial patios springing up to accommodate the throng of al fresco diners/drinkers
  • How far the understanding of CSR has come in the last few years, and even in the few months since I was last there to run training earlier this year.
  • Latvia’s history is replete with domination by ‘foreign’ powers, and its Museum of the Occupation of Latvia reminds us of its troubled history.
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