By Richard Howitt MEP - 25th October 2011
The new communication, with its agenda for action to 2014, will set out a new and stronger approach for Europe
Richard Howitt
On Tuesday, the European commission will unveil its new communication on corporate social responsibility (CSR). It's no surprise and very welcome that this comes in the same week that governments are discussing core issues around securing a sustainable economic recovery.
Banks are the latest in a long line of oil companies, textile manufacturers, food producers and other transnational companies accused by some of shielding irresponsible business behaviour behind the so-called 'corporate veil'.
Despite many businesses seeking to provide leadership in establishing corporate social responsibility, today we face not only an economic crisis but also a crisis of citizens' trust in business itself. It is one which today's communication must show we will address.
The fact, which we all recognise, is that irresponsibility got us into the crisis, and must be addressed if any recovery is to be truly sustainable.
The grab for short term profits, however tempting in these difficult times, must be replaced with a longer-term more considered approach. The 'value' of the company and its long term profitability must equally include the environmental, social and ethical and human rights impacts of company operations.
The campaign to hold European based transnational companies to account for their global actions has been a long one. Europe has too often been accused itself of turning a blind eye, from Shell in Nigeria to the more recent Trafigura case which saw toxic waste banned in Europe but dumped indiscriminately in the Cote D'Ivoire.
As the parliament's rapporteur on CSR over three parliamentary terms I have sought to champion new international moves in the UN human rights council and in the OECD to set down human rights obligations for companies to publish social and environmental impacts alongside financial reporting and for comprehensive guidelines for multinational companies to follow. I warmly welcome that this latest communication will set a goal to align European CSR within these global approaches. I strongly advocate that a profusion of "divergent" approaches is itself costly to businesses and impedes the take-up of CSR.
Especially in the field of human rights, Europe must practice what it preaches. As European companies scramble to seek profits in the newly freed markets of the Arab Spring or cut costs in developing countries it is only right that we state clearly and unambiguously that international human rights law also extends to European companies. From today's communication, the EU and its member states will work with our businesses to implement the principles on business and human rights which we have voted in the UN human rights council.
Overall, the new communication, with its agenda for action to 2014, will set out a new and stronger approach for Europe.
Gone is the unhelpful argument of 'voluntary' versus 'mandatory', replaced instead by a new 'smart mix' of approaches encouraging market rewards for CSR, promises of pending legislation to improve improving company disclosure of non-financial performance and address head-on the charge that CSR has been use to "greenwash" companies' reputations.
On reporting requirements in particular, there is a new consensus emerging too, with pioneers such as the global reporting initiative and the Prince of Wales accounting for sustainability project - in both of which I am proud to represent European interests - now sitting with mainstream business and accountancy standards' bodies. Together they have committed themselves to achieve "integrated reporting" by business, an idea I'm proud to have championed for 10 years in the European parliament. Given the global establishment of this 'international integrated reporting committee', the communication must presage a decisive move by the European Union towards the common global objective of integrated sustainability business reporting worldwide by 2020.
While proper safeguards need to be made for small business, Denmark gives a European model for this new approach. A 2008 law, meaning 1100 of its largest companies must report on their environmental and human rights impacts or else be able to explain why not, has been a huge success. Over 97 per cent businesses supported the new law in the first year alone.
Over half of businesses in European internal market commissioner Michel Barnier's public consultation called for EU legislation on integrated reporting, provided it is based on international standards and phased-in appropriately.
I am delighted that after years of heated and polarised debate, including a boycott of discussions by NGOs of the European multi-stakeholder forum at one point, we are now at a point where businesses and all stakeholders agree on positive progress.
I welcome much of what has been achieved on CSR in Europe so far, but we must now look forward, the communication provides a clear signal that Europe is now ready to step up as an architect and an active player for new rules for corporate responsibility for the world.
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