Corporate Social Responsibility (CSR)

Policy background

Documents

Links

CSR - Policy background

The European Union and its member states regard the promotion of Corporate Social Responsibility (CSR) as an important vehicle in achieving sustainable development. The European Commission defines CSR as “a concept whereby companies integrate social and environmental concerns in their business activities and in interaction with their stakeholders on a voluntary basis”. The European Union thus supports the view that complying with CSR should be voluntary. In the eyes of the European Commission, CSR is a complement to hard law rather than a substitute for it.

Discussions on CSR at the EU level date back to 1995. That year, President of the European Commission Jacques Delors launched a “Manifesto of Enterprises against Social Exclusion”. The Commission co-operated in this initiative with representatives of European business. The Manifesto resulted into the establishment of CSR Europe. CSR Europe is a business-driven network to help promote socially responsible behaviour within European companies. It was not until March 2000, when the Lisbon Summit was held, that the issue of CSR became more prominent on the political agenda. In Lisbon the European leaders integrated corporate responsibility into the strategic goal of the European Union becoming, by the year 2010, “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.” The outcomes of the Lisbon Summit and the Nice Summit held in December of the same year led to the publication of European Commission’s first green paper on CSR in the summer of 2001. The green paper aimed to foster debate on CSR and to create a partnership among stakeholders for realising a framework which promotes CSR.

In 2002, the European Commission adopted a follow-up to the green paper through the publication of a Communication on CSR. The Communication sets out the European Union’s objectives which are, among others:

• To complement existing, voluntary initiatives on CSR at the corporate level, such as voluntary codes of conduct applied within companies and at the international level, such as the OECD Guidelines for multinational enterprises (MNEs) and the UN Global Compact initiative.
• To contribute to making CSR more transparent and more credible to stakeholders.
• To give special attention to small- and medium-sized enterprises (SMEs) 
• To establish the European Union Multi-Stakeholder Forum on CSR (CSR EMS Forum).

Through CSR the European Union not only aims to contribute to sustainable development within the Union, but also outside the European Union, particularly in developing countries. One way is to ensure that European companies adhere to principles of CSR when operating in developing countries. Another way is to promote application of CSR principles by local companies in developing countries. In developing countries the European Commission believes that there is limited awareness of the CSR concept. The Commission seeks to promote understanding of the concept which, according to the European Commission, is not a form of protectionism or a brake on investment. Rather, CSR is a way of attracting FDI and a market opportunity. An example of the latter is labelling schemes, which protect the environment but also give compliers with these schemes competitive advantages over non-compliers. CSR is not only a cost but also a source for profits.

The European Commission highlights assistance programmes as potential means in improving CSR awareness in developing countries. In addition the European Union plans to co-operate more with other industrialised nations, multi-lateral institutions and private enterprises.

An international framework for CSR

The European Union regards the EU level as the best level to address the issue of CSR. In the case of other countries, this will be the national level in the opinion of the European Union. The European Union does not favour an international framework beyond the existing, voluntary initiatives of the OECD Guidelines for MNEs, the Global Reporting Initiative of the UN Environmental Programme (UNEP) and UN Global Compact. It is against legally binding rules or codes of conduct for private companies.

Developing countries are more in favour of working towards an international framework with legally binding principles. Fears that CSR is used as a means of protectionism, as is mentioned by the European Union, do not seem to be strong. The preference on behalf of developing countries for legally binding codes of conduct for corporate behaviour stems from the influence of large MNEs on developing countries. Developing countries regard binding codes of conduct necessary to have more leverage on large, MNEs from developed countries. Since the OECD Guidelines for MNEs are designed by the industrialised nations without significant involvement of developing countries they do not regard the OECD Guidelines as adequate benchmarks for the situation in the majority of developing countries. As of 2001, only Argentina, Brazil and Chile had adhered to the OECD principles (OECD, 2001).

The differences between the European Union and developing countries – the G77 – became apparent prior to the Johannesburg World Summit on Sustainable Development in 2002. (See for example Third World Network, 2002 ). NGOs had pushed for the inclusion of corporate responsibility on the agenda. The developing countries were hoping that the Johannesburg Summit would result in the establishment of a framework of binding principles for CSR. The European Union and the United States were against the establishment of such a mandatory framework. In the Plan of Implementation of the Summit, the participants promised to promote CSR through an intergovernmental agreement, but they did not specify whether this promotion will result in making international guidelines mandatory for CSR.

Documents

Communication from the Commission concerning Corporate Social Responsibility: A business contribution to Sustainable Development Paper, European Commission, COM(2002) 347 final, Brussels, 2002

This document sets out a strategy for the European Commission on how to promote implementation of CSR principles. 

Green paper promoting a European framework for Corporate Social Responsibility, European Commission, COM(2001) 366 final, Brussels, 2001

With this green paper the European Commission aimed to foster dialogue on CSR.

The 2002 report on Corporate Social Responsibility, UK Department of Trade and Industry, 2002

This report is a British document on CSR. It focuses on partnerships between the UK government, the business community and civil society.

Key Outcomes of the Summit, UN Johannesburg Summit 2002

This document lists the outcomes of the Johannesburg Summit. It mentions CSR briefly on page 4.

The OECD Guidelines for Multinational Enterprises, OECD, 2001, Policy Brief, June 2001, Paris

This brief gives a summary on the OECD Guidelines and the revision of the older guidelines

Links

DG Trade’s section on Corporate Social Responsibilty

DG Employment and social affairs’ section on Corporate Social Responsibility

DG Enterprise’s section on Corporate Social Responsibility

These three sites are related to the three different Directorate-Generals within the European Commission and deal with the EU position on CSR. 

Developing Corporate Social Responsibility in the UK, UK Department of Trade and Industry

This site is a link to an initiative of the UK trade department to promote CSR practices.

United Nations Global Compact Initiative

Homepage of the initiative which was proposed by UN Secretary General Kofi Annan in 1999.

Global Reporting Initiative of the United Nations Environment Programme

This site of UNEP aims to help private companies in improving reporting tools on the effects of their corporate activities on the environment.