EU's new CSR report offers realistic initiatives to promote sustainability - 30 December, 2011.
Strategy report shows how businesses can benefit by becoming more responsible and also make Europe more competitive
In the midst of the Euro-zone crisis, it would have been easy to miss
the recent publication of the new Communication on Corporate Social Responsibility (CSR) from
the European Commission. Publication had been delayed several times as rival
camps battled over the text.
The final product will disappoint those calling for far more regulation
of business behaviour but it is an intellectually coherent, pragmatic and
useful document.
There are a number of important features for those interested in improving
their reputations and, therefore, the licence to operate of companies. The
report offers a new EU definition of CSR which emphasises that this is about
core business purpose and strategy and how business
makes all its money – not how it spends a tiny fraction of it in the community.
Specifically, it says CSR is "the responsibility of enterprises
for their impacts on society." It's a timely and welcome definition. CSR
is about minimising negative environment, social and economic impacts and
maximising the positive impacts.
There is a useful clarification of some key aspects of responsible
business practice needing more attention, such as companies' tax strategies,
human rights and supply chain issues.
In the past, there have been suggestions that the EU should develop its
distinctive CSR approach. Happily, such shortsightedness is abandoned in favour
of a clear endorsement of global standards such as the OECD guidelines for
multinationals, the UN guiding principles on business and human rights, and the new
ISO 26000 guidance standard for CSR.
The report also offers a robust defence for a smart mix of laws, market
incentives, and collective self-regulation as the best means to advance CSR to
maximise shared value for business and society. Indeed supporters of what Michael
Porter and Mark Kramer call shared value, or what Adrian Hodges and I termed as
corporate social opportunity, will be pleased by the commission's explicit
recognition that done well, CSR can deliver value simultaneously to business
and to society – and it is by far the most sustainable.
Those following the UK's experimentation with responsibility deals for
joint commitments between government and businesses will be pleased to see that
the commission plans to identify good practice in the creation of such deals,
which it calls the "self or co-regulation exercises."
Despite the inherent difficulties in doing so, there is also a
commission commitment to look further at incorporating environmental and social
performance criteria within public procurement rules.
Another potentially useful step is the proposal for multi-stakeholders
in high impact industries. This could help broker serious discussions about
contentious business practices between companies and stakeholders – although
whether the EU Commission needs to lead on this could be questioned.
Personally, I am less enthused by proposals for an EU-wide CSR awards
scheme. Whilst awards can help showcase and collect good practice, they would
need a critical mass of better resources and organisation to become credible.
The section of the report likely to attract most comment is on
corporate reporting of environmental, social and governance impacts. Many had
expected a more precise proposal on reporting instructions than "the
commission will present a legislative proposal on the transparency of the
environmental and social information provided by companies in all sectors"
at some unspecified date in the future.
As the commission notes, whilst there are important international moves
towards the development of Integrated Reporting; and more companies are
publishing CR or sustainability reports, this only yet covers a small
proportion of the 42,000 multinationals operating in the EU. Following the
Danish example of "comply or explain" - requiring large companies to
state whether they have a CR policy and if so, to regularly report on progress,
is surely the least that should now be expected of large multinationals across
the EU.
The commission also invites all large enterprises to make a public
commitment by 2014 to one of a number of specified international frameworks,
such as the UN global compact. Will it name and shame companies that don't do
so?
Overall, the strategy report is an intelligent description of what
corporate responsibility is; and offers a realistic set of initiatives to
promote more responsible business.
International business has an urgent need to restore trust and the EU
to improve competitiveness. Embedding CSR can help to do both.
David
Grayson is professor of corporate responsibility and director of the Doughty
Centre for Corporate Responsibility at Cranfield School of Management, UK. He
is a member of the editorial advisory group forGuardian
Sustainable Business.
Source: www.guardian.co.uk
Dec 30, 2011.