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Renewing Europe’s strategy for corporate social responsibility

Eva Cahill, Chief Executive Officer of Kinelea, surveys recent developments in European policy on corporate social responsiblity (CSR).

Last week the European Commission published a package of measures to support entrepreneurship and responsible business. Most notably in relation to contributing to the EU’s treaty objectives of sustainable development, the EC published a renewed EU strategy 2011-14 for Corporate Social Responsibility.

Redefining CSR

The strategy redefines CSR, its benefits to an organisation and the role of different sizes and complexities of organisations in applying internal and external CSR practices. The action plan for 2011-2014 includes supporting best practices and encouraging dialogue and dissemination of responsible business conduct through the supply chain, to contribute to the success of Europe’s 2020 Growth Strategy.

Future plans

Future plans include the launch next year of a European Awards scheme for CSR partnerships and in 2013 the creation of multi-stakeholder CSR platforms allowing public commitments of organisations to, and joint monitoring of, CSR initiatives. To improve credibility of ‘green’ marketing and address the issue of ‘green washing’ the 2012 outcomes from the Unfair Commercial Practices Directive will be addressed. In 2012 the Commission plans to develop a code of good practice for self- and co-regulation initiatives which will include performance indicators and monitoring, review and non compliance processes. More open stakeholder debate on organisation’s CSR activities and ‘trust’ surveys are also planned.

To strengthen market incentives for CSR, and encourage a level and more competitive social and financial playing field for organisational activities and decisions, the EU will strengthen policies in the field of consumption, public procurement and investment as part of the Public Procurement Directives 2011 review. The EC will be encouraging investors, including public authorities, to integrate non-financial information into investment decisions and asking European asset managers and owners, in particular pension funds, to sign up to the UN Principles for Responsible Investment.

The EU is also encouraging further environmental and social disclosure and will propose legislation on the transparency of the social and environmental information provided by companies as announced in the Single Market Act. A policy on common frameworks for benchmarking and measurement is being developed. The Commission also refers to the ongoing work of the Global Reporting Initiative (GRI) and the International Integrated Reporting Committee (IIRC).

CSR in education

The EU encourages Member States education establishments to integrate CSR at secondary school and university level. European business schools are encouraged to sign the UN Principles for Responsible Management Education (PRME). The Commission will provide further funding on CSR projects under the Framework 7 and Horizon 2020 programmes. By mid 2012 Member States are invited to develop or update their plans or actions to promote CSR.

Linking with international principles

The Commission states that it will monitor the commitments made by European enterprises with more than 1,000 employees to take account of internationally recognised CSR principles and guidelines, and will take account of ISO 26000 Guidance Standard on Social Responsibility in its own operating practices.

The Commission invites:

In 2012, the Commission will develop human rights guidance for some sectors, including SMEs, based on the UN Guiding Principles on Business and Human Rights and publish a report on EU priorities in the implementation of the principles. The Commission expects all European enterprises to address their human rights responsibilities, as defined in the UN Guiding Principles and requests that Member States develop by the end of 2012 national plans for the implementation of these principles.

The Commission will publish a proposal by the end of this year on their plans for implementation of the actions mentioned above and calls on European business leaders to issue, before mid 2012, an open and accountable commitment to responsible business conduct, with clear targets for 2015 and 2020.

Revising directives

Revision of both the Transparency Directive (2004/109/EC) to cover listed companies and the Accounting Directives (78/660/EEC and 83/349/EEC) to cover large non-listed companies is also planned, with an new obligation to report payments (taxes, royalties and bonuses) made by large extractive (oil, gas, mining) and logging industries to governments all over the world through a system of country-by-country Reporting.

The Transparency Directive amendments proposed would also ‘prevent investors from secretly building up a controlling stake in a listed company (“hidden ownership”). Such practices can give rise to possible market abuse, low levels of investor confidence and misalignment of investor intentions’ say the Commission.

Listed companies, including small and medium-sized issuers, would no longer be obliged to publish quarterly financial information under the new proposed revision of the Transparency Directive (2004/109/EC).

Supporting social business

The Commission is also assisting social business in accessing funding under the Social Business Initiative and simplifying the regulatory environment for them and SMEs.

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