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12FINANCIAL INSTRUMENTS FOR THE IMPLEMENTATION OF SOCIAL RESPONSIBILITY OF
AGRIBUSINESS
Varchenko O.,
Doctor of Economics, Professor Nechyporenko L.
Master of economics Bila Tserkva National Agrarian University
Abstract
The essence definition of "corporate social responsibility concept is clarified, the difference of which lies in the comprehensive consideration of the directions of its implementation on the generalization of the social responsibility needs of business, which provides: compliance with current legislation; ensuring high quality goods and services, decent and safe working conditions at the enterprise; information openness, as well as the implementation of social initiatives. The main approaches to the definition of subjects and levels of business social responsibility are generalized, on the basis of which theoretical and methodical recommendations for determining the directions of social responsibility of agribusiness enterprises are developed. This allows the company to gain the support of the local community, increase the image and prestige of employment, become a market leader, improve the quality of life, health and well-being of the population, which will increase its social capitalization. The financial instruments for the implementation of social responsibility of agribusiness entities are systematized and the directions of their improvement are determined.
Keywords: corporate social responsibility, agricultural enterprises, financial instruments, state support.
Relevance of research. At the end of the last century, the processes of globalization have led to a change in understanding of the role of business in society, as corporations have geographically distributed assets that affect the economy and the environment. This has necessitated the introduction of the concept of "social responsibility", which means the limits of possible use of resources by large industrial companies without harming current and future generations, which is consistent with the global order of sustainable development. At the same time, the trust of consumers, investors and employees, the reputational capital of enterprises are important strategic assets that ensure the sustainable development of economic entities and their competitiveness in the global economy. Therefore, it is necessary to consider corporate social responsibility, or corporate social responsibility (CSR) as a specific approach to corporate governance not only at the level of mission and values, but also in the production, marketing and social policy of companies. As a result, many domestic companies have begun to implement methods of social accounting and non-financial reporting, focusing on international standards. Given the fact that in modern conditions of socially oriented management, agrarian business is faced with the need to reorient from the model of orientation to obtain maximum profit on a multi-purpose socially oriented model. This model involves taking into account the final results of economic, social, environmental and spiritual components. It should be noted that the socially oriented model of effective development of the agricultural sector of the country's economy is a key element in building the level of trust in the population, employees, consumers and authorities and affects the financial instruments of support and regulation. This is what determines the relevance of the topic of this study.
The purpose of the study is to summarize the theoretical foundations and practical actions on financial
instruments for the implementation of the principles of corporate social responsibility by agribusiness entities and substantiate the directions of intensification of social responsibility policy.
Materials and methods. The theoretical basis of the study were the main provisions of economic theory in the neo-institutional paradigm and systems analysis, the work of domestic and foreign scholars in the field of investment, general management, management theory, as well as a systems approach. In processing the actual material used traditional scientific research methods: the method of comparison, economic and statistical analysis, expert assessments.
The information and empirical basis of the study were public financial (accounting) and non-financial (social) reporting of agribusiness companies, sources of information on the Internet and the results of their own research.
Results of the research. Consider approaches to the interpretation of the concept of corporate social responsibility, which are characterized by significant differences, as there are differences in understanding the nature of business responsibility, the principles underlying it, the functions and components that define it. Corporate social responsibility until 2010 was a concept that had more than 80 different definitions such as corporate citizenship, charity, corporate social responsibility, etc., which led to an abstract understanding of CSR and the inability to compare the social responsibility of one company with another [1, p.159]. At the same time, during this period we came to a common opinion in the interpretation of social responsibility, when the ISO 26000 standard was adopted, which stated that social responsibility is the company's responsibility for the impact of its decisions and actions on society, environment through transparent and ethical behavior. sustainable development, takes into account the expectations of stakeholders, complies with current
legislation and international standards of conduct, is integrated into the activities of the organization and is practiced in its relations with others [2].
It is believed that the founder of the discussion on social responsibility was G. Bowen, who considered corporate social responsibility based on the implementation of such policies, decisions or behaviors that would be desirable from the standpoint of goals and values of society [3].
In turn, F. Kotler defines corporate social responsibility as a commitment of business to promote economic development through joint work with employees, their families, the local community and society in general in order to improve the quality of life [4, p. 94]. M. Friedman took a slightly different view, believing that there is only one social responsibility in business -to use their resources and perform actions aimed at increasing profits as long as it complies with the rules of the game, that is, to participate in open and free competition without deception and fraud [5, p.155]. We do not agree with this opinion, because the focus only on profit does not take into account the impact of the company on the environment, social impact on employees, community and society.
Some researchers identify four approaches to understanding the essence of corporate social responsibility [6, p.45]: market approach; approach from the standpoint of state regulation; approach from the standpoint of "corporate conscience"; approach from the standpoint of the interested person. We believe that these models of corporate social responsibility, both in theory and in practice, existed synchronously. Thus, the era of the emergence and development of corporations was the most common market approach, in times of crisis - an approach from the standpoint of state regulation, and years of stable growth - an approach based on the values of "corporate conscience". In periods of economic and social transformation, the complexity of doing business, increasing competition - an approach from the standpoint of the person concerned [7, p.12]. We believe that the market approach and the "stakeholder" approach are identical and characterize similar positions on the basics of corporate social responsibility. Therefore, approaches to the definition of corporate social responsibility should be considered in terms of market approach and approach from the standpoint of government regulation.
The most capacious interpretation of the concept of corporate social responsibility according to the market approach is found in domestic scholars who consider through corporate ethics; corporate social policy towards society; corporate policy in the field of environmental
protection; principles and approaches to corporate governance and corporate behavior; human rights issues (including equal opportunities for women and men, people with special social needs, for different age groups) in relations with suppliers, consumers, staff.
The approach from the standpoint of state regulation should include the opinion of scholars who believe that corporate social responsibility involves the implementation of a system of measures both regulated by the state (within the law) and voluntary (at the initiative of the subject). The basis of social responsibility is rational management in the process of production activities, taking into account the moral values of society on the principles of openness and transparency [8, p. 18]. We share the position of researchers who believe that the highest level of social responsibility of business is: participation in charity events; implementation of measures for environmental protection; interaction with public authorities and readiness to provide assistance in critical situations; ensuring the production of high quality products;
reduction of consumption of raw materials and energy resources; refusal to participate in corrupt actions; compliance with the basic principles of social responsibility of the International Organization for Standardization, which are reflected in the standard ISO 26000: 2010. It is obvious that the orientation of the enterprise management system to solve social problems is the basis for improving the efficiency of the enterprise's interaction with the external environment and contributes to the growth of its social capital.
Financial support is a rather complex system of influencing various aspects of the activities of economic entities in the agricultural sector. In view of this, the financial mechanism for the development of social responsibility of agricultural sector entities should be considered as a set of strategic vision of the financial mechanism at the state level, taking into account direct (financial methods, levers, incentives, regulatory support) and indirect (social partnership, social entrepre-neurship, social investment) impact (Fig. 1).
It is obvious that the effectiveness of financial instruments will be achieved in the case of active interaction of public administration and government with all stakeholders concerned. This means that at the national level, a favorable socially oriented investment climate should be created to stimulate economic entities in the agricultural sector (preferential taxation, lending, subsidies). Agrarian business needs to intensify local social responsibility, which will allow it to receive state preferences and attract foreign funds from international organizations (social investments, grants).
Financial mechanism for the implementation of social responsibility
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Direct impact tools
Financial methods
Planning concepts, strategies
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- direct state support (programs, projects);
- indirect state support (monetary, investment, pricing policy);
- international support programs, grants;
- self-financing of agricultural enterprises (income, profit, depreciation):
- financial instruments (agricultural receipts)
Financial regulation
system of norms and standards
Financial control
targeted use of budget funds
Socially oriented
investment climate
Preferential taxation of agricultural enterprises engaged in LSV
Preferential lending to agricultural enterprises that provide LSV
Budget subsidies to agricultural enterprises that provide LSV
Institutions
Constitution of Ukraine; Laws of the Verkhovna Rada; bylaws
Fig. 1. The structure of the financial mechanism for the implementation of social responsibility of the agricultural sector
Source: developed by the authors.
The financial mechanism for implementing CSR depends on the formation and development of a socially oriented investment climate in the agricultural sector, which directly affects the living standards of the rural population, social infrastructure, education, unemployment and more. It is agribusiness enterprises that act as regulators and coordinators of the implementation of the principles of sustainable development of rural areas, as the well-being of the rural population depends on the results of their activities.
Socially oriented economy balances the economic principles of agricultural enterprise management with social, environmental, spiritual guarantees and justice. That is, a socially oriented economy based on a favorable investment climate creates the necessary conditions for the development of social orientation of the agricultural enterprise (social policy, motivation, energy efficiency, environmental safety of products, etc.). The social orientation of the state also depends on the development of the investment climate in Ukraine, as a positive investment climate helps to solve social problems (employment, subsistence level, minimum wage), allows to renew and modernize production, introduce new technologies, achieve positive economic growth in all sectors. economy.
It is proved that agricultural enterprises choose for themselves a socially-oriented model of development under a positive investment climate created in the country, ie the state assumes the function of a guarantor of favorable conditions for agricultural business, ensuring investment attractiveness of the agricultural sector (system of benefits, preferences, grants). . It should be borne in mind that the country's agricultural sector creates not only goods but also irreplaceable non-commodity goods (living standards and welfare of the rural population, development of rural infrastructure, etc.), which is the basis for providing agricultural support to businesses.
Regarding the level of state support for the agricultural sector of Ukraine, it has undergone some changes in recent years. Thus, the volume of direct state support and the abolition of the preferential VAT payment regime, which accounted for a significant share of total state support, decreased significantly. It should be noted that state support for agriculture as a percentage of gross revenue in Ukraine is 8%, the world average is 17 percent.
It is known that the financial support of agricultural producers in 2020 amounted to 4.2 billion hryv-nias. Thus, it was planned to allocate UAH 1.5 billion to reduce the cost of loans, which will facilitate the access of agricultural producers to soft loans and reduce their cost to 5%. In order to optimize the support program and ensure transparency, there are restrictions on loans - up to UAH 15 million per 1 entity in animal husbandry, up to UAH 5 million - per 1 entity for land acquisition and other types of loans; one client - one authorized bank.
The next direction is the support of the livestock industry, UAH 1 billion has been allocated, where the main implementation tools are: reimbursement of the cost of facilities financed by borrowed bank loans; re-
imbursement of the cost of breeding (genetic) resources, livestock facilities, subsidies for existing bee colonies.
In order to intensify the processes of modernization of the material and technical base of agricultural enterprises, state payments to agricultural producers for cheaper machinery and equipment of domestic production in the amount of 1 billion hryvnias are envisaged. It is obvious that an important role in the implementation of the principles of sustainable development in agriculture is given to the development of farming and cooperatives, for the development of which UAH 400 million has been allocated in 2020, which are allocated in the form of partial compensation of costs related to advisory services - UAH 10 million. UAH and financial support to agricultural cooperatives cooperatives -UAH 30 million. in order to increase the number of objects of local processing of agricultural products and increase the level of employment of the rural population. UAH 185 million was directed to financial support for the development of farms, and UAH 215 million was allocated to family farms through the mechanism of additional payment in favor of insured persons. It should be noted that the instruments of state support of agricultural enterprises today do not provide an effective impact on increasing profitability and, accordingly, creating opportunities for the implementation of corporate social responsibility measures.
Thus, the level of state support for agriculture, subject to some reform of the mechanism for providing such support, provides sufficient opportunities to protect the domestic agricultural sector in terms of WTO membership and meets modern needs. As a result, the socially oriented investment climate will improve due to the introduction of stable and predictable rules, which will lead to an increase in the volume and improvement of the structure of social investments.
Financial instruments for the development of social responsibility of agricultural sector entities should be considered in the aggregate of the strategic vision of the financial mechanism at the state level, taking into account the instruments of direct (financial methods, levers, incentives, regulatory support) and indirect influence (social partnership, social entrepreneurship, social investment ). It was found that agricultural enterprises choose a socially oriented model of development in a positive investment climate created in the country, ie the state assumes the function of a guarantor of favorable conditions for agricultural business, ensuring investment attractiveness of the agricultural sector (system of benefits, preferences, grants ).
The peculiarities of the agricultural enterprises development, firstly, require the development of their own special approach to the regulation of social responsibility processes at both micro and macro levels, and secondly, bring to the fore in the management system of the social component.
Implementation of social responsibility measures should be focused on increasing the social capitalization of agricultural enterprises through the development of clear mechanisms for implementing ideas and approaches that would justify the socio-economic effect and achieve the following goals: determine the place of
social responsibility in increasing capitalization; establish relationships between economic and social capitalization of the enterprise; justify the need for simultaneous internal and external socialization of the enterprise.
One of the main mechanisms of social capitalization of agricultural enterprises is social responsibility, which is based on the active formation, use and increase of social capital of the enterprise. Thus, it is the tools of social responsibility of the enterprise is able to ensure the active growth of its level of capitalization, both social and economic. Note that social capitalization is provided through the active and rational use of social potential of the enterprise and the establishment of external social relations, and economic capitalization should be considered as a result of producing economic effect, which is achieved by increasing the social development of the enterprise.
The social capitalization of the enterprise involves taking into account external (establishing effective interaction with local communities, consumers, authorities and local governments, etc.) and internal (aimed at social investment in staff development, creating appropriate working conditions, creating a comfortable living environment, motivating employees to use tools social responsibility allow you to form a positive image of the agricultural enterprise, which will have a direct impact on the level of its capitalization.
Conclusions. Corporate social responsibility includes: the responsibility of the business structure for the impact of its decisions, actions and their consequences on society as a whole, social groups, the environment, taking into account the expectations of stakeholders; complies with international standards of business ethics and current legislation; provides for balancing the economic, environmental and social parameters of the organization in order to ensure its sustainable development.
The financial mechanism of development of social responsibility of subjects of agrarian sector needs to be considered in set of strategic vision of the financial mechanism at the state level, considering tools of direct (financial methods, levers, incentives, regulatory support) and indirect influence (social partnership, social business, social investments). ). It was found that agricultural enterprises choose a socially oriented model of development in a positive investment climate created in
the country, ie the state assumes the function of a guarantor of favorable conditions for agricultural business, ensuring investment attractiveness of the agricultural sector (system of benefits, preferences, grants ).
It is proved that the concept of social capitalization of an agricultural enterprise on the basis of social responsibility should focus on strengthening the role of social and environmental factors (internal and external). The defining element of the social capitalization of enterprises is social responsibility, which is based on the active formation, use and increase of social capital of the enterprise.
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