With the European economy faltering and public trust in business declining, the EU Commission’s new CSR strategy embodies a noticeably more hands-on approach than its last CSR communication issued in 2006. Institutional backing within the Commission appears stronger with three Commissioners standing behind it. Further, it represents a step-up in terms of language and commitment. The Commission’s proposed new definition of CSR – ‘the responsibility of enterprises for their impacts on society’ – places a tougher and clearer emphasis on business responsibility compared to the previous process-driven definition of ‘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 strategy continues to favour the voluntarist approach, but market mechanisms to encourage adoption of CSR are seen as needing a helping hand in the form of ‘complementary regulation, for example to promote transparency, create market incentives for responsible business conduct, and ensure corporate accountability’.
Action plan
In terms of specific actions, the Commission intends to:
- Improve the visibility of CSR through the creation of multistakeholder partnerships and an award scheme
- Initiate ‘an open debate with citizens, enterprises and other stakeholders on the role and potential of business in the 21st century’
- Develop a code of practice on self-regulation and co-regulation exercises to improve their credibility
- Enhance the market rewards for good CSR behavior including through strengthening the integration of social and environmental considerations within public procurement, and improving consideration of environmental, social and governance (ESG) factors in investment
- Bring forward a legislative proposal on reporting on social and environmental issues
- Improve training and education on CSR
- Introduce a scheme for benchmarking national CSR plans.
Additionally, there are important new commitments to encourage take-up of internationally-recognised norms and principles. The Commission wants all European-based multinationals to commit by 2014 to respect the ILO Tri-partite Declaration on Multinational Enterprises and Social Policy. Rudi Delarue from the ILO says that this is ‘one of the most concrete EU steps towards supporting the ILO and Decent Work as it can stimulate action, debate, awareness raising and visibility’.
Furthermore, the Commission proposes to monitor commitments by large companies to standards such as the OECD Guidelines for Multinational Enterprises. This falls short of monitoring compliance with these standards, but represents an extension of the Commission’s previous reach.
Guidance on human rights
The Commission also states that it recognizes that human rights have become more prominent within the CSR agenda, so it will be developing human rights guidance based on the UN Guiding Principles on business and human rights and will report on EU implementation of the Principles by the end of 2012.
Corporate responsibility campaigners will find much of this far too timid, however, and there is much that will rely on the way in which the commitments are taken up at a European and national level. But the new strategy does see the EC setting the bar higher for business on CSR, with a willingness to take a more active role in monitoring company behaviour. We wait with interest to see how this will develop in the next 12 months.