A renewed corporate social responsibility strategy has been published by the European Commission in response to the economic crisis and its damage to consumer confidence and levels of trust in business.
It claims that it is in the interests of enterprises to deal with CSR because, by engaging with its consumers, investors and the general public, businesses can anticipate and take advantage of society’s fast-changing expectations therefore creating opportunities for growth. CSR can also lead to higher levels of trust so businesses can innovate and grow, the strategy states. Ultimately, CSR is said to equate to a set of values leading to a more cohesive society and to the transition to a sustainable economic system.
The new strategy emphasises the importance of addressing ethics, human rights and consumer concerns as well as societal and environmental impacts in CSR policies.
Progress since the original 2006 strategy has included an increase from 600 to 1,900 in enterprises that have signed up to the CSR principles of the United Nations Global Compact; an increase from 79 to 140 enterprises which signed trans-national company agreements with global or European workers’ organisations and an increased membership (from 69 to 700) of the Business Social Compliance Initiative (a European, business-driven initiative for companies to improve working conditions in their supply-chains).
However, the Commission recognises that many companies in the EU have not yet fully integrated social and environmental concerns into their operations and that accusations persist of human rights abuses and a failure to respect labour standards in “a small minority” of European enterprises. In addition, only 15 out of 27 EU member states have national policy frameworks to promote CSR (including the UK’s Climate Change Act).
The previous definition of CSR was “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.”
The new definition is “the responsibility of enterprises for their impacts on society.” This wider remit requires businesses to respect applicable legislation and adhere to the UN Global Compact principles (below).
The Commission notes that the complexity of this process will depend on the size of the operation and will most likely remain “informal and intuitive” in small to medium sized enterprises.
The development of CSR should be led by enterprises themselves and be appropriate to their circumstances, the strategy stipulates. Public authorities should play a supporting role through voluntary policy measures and regulation (e.g. promoting transparency, creating market incentives for responsible business conduct, and ensuring corporate accountability.)
Trade unions and civil society organisations can bring pressure for improvement and consumers and investors are in a position to encourage socially responsible companies through their purchasing and investment decisions.
Between October 2011 (when the strategy was published) and 2014, the Commission intends to:
• enhance the visibility of CSR and copy good practices by (in 2013) creating multi-stakeholder CSR platforms for enterprises to publicise their commitments to CSR and launching a European award scheme for CSR partnerships between enterprises and other stakeholders;
• improve and track levels of trust in business by addressing misleading marketing related to the environmental impacts of products (i.e. ‘green-washing’) and starting an open debate with citizens, enterprises and others on the role and potential of business in the 21st century;
• improve self- and co-regulation processes by launching a process this year to develop a code of good practice which should improve the effectiveness of the CSR process;
• enhance the market reward for CSR by facilitating the better integration of social and environmental considerations into public procurement, without introducing additional administrative burdens for contracting authorities or enterprises, and without undermining the principle of awarding contracts to the most economically advantageous tender, by considering a requirement on all investment funds and financial institutions to inform their clients about any ethical or responsible investment criteria they apply;
• improve company disclosure of social and environmental information by encouraging all organisations, including civil society and public authorities, to do so;
• further integrate CSR into education, training and research by providing more financial support for education and training projects on CSR under the EU Lifelong Learning and Youth in Action Programmes;
• emphasise the importance of national and sub-national CSR policies by creating a peer review mechanism in 2012;
• better align European and global approaches to CSR by inviting all large European enterprises to make a commitment by 2014 to take account of at least one of the following: the UN Global Compact, the OECD Guidelines for Multinational Enterprises, or the International Organisation for Standardisation’s guidance standard on social responsibility. The Commission will promote responsible business conduct in its future policy initiatives in third world countries.
Enterprise and Industry Commissioner Antonio Tajani told the leaders’ summit of the United Nations Global Compact in 2010: “The European Union has the ambition of playing a leading role in the promotion of corporate social responsibility at a global level.”
He referred to CSR as “one of the necessary values underlying the new economic and social system that together we must build, taking account of the lessons from the crisis that we face today.” He emphasised: “The 10 principles of the United Nations Global Compact are without doubt a key reference point for the promotion of corporate social responsibility.”