Promoting corporate social responsibility

The Communication proposes to promote corporate social responsibility (CSR) in the European Union and globally. As part of the mid-term review of the Lisbon Strategy and the Sustainable Development Strategy, it traces the development of CSR in the European Union (EU) and sends a message to businesses to play a part in the partnership for growth and jobs. It gives its political support to the creation of a European Alliance on CSR. It also sets priorities with regard to CSR and announces a series of measures to achieve them, including cooperation with Member States, support for multi-stakeholder initiatives, research, SMEs and global action.

ACT

Communication from the Commission of 22 March 2006 to the European Parliament, the Council and the European Economic and Social Committee - Implementing the partnership for growth and jobs: making Europe a pole of excellence on corporate social responsibility [COM(2006) 136 final - Not published in the Official Journal].

SUMMARY

Corporate social responsibility * is part of the debate on globalisation and sustainable development. The Commission regards CSR as an aspect of the European social model and a means of defending solidarity, cohesion and equal opportunities against a backdrop of increasing global competition. CSR is also a way of addressing population ageing and can help to achieve a high quality of life in a healthy environment. The importance attached to CSR is reflected in the many related instruments and meetings:

in March 2000, the Lisbon European Council appealed to companies' sense of social responsibility;

in 2001, the Commission published a Green Paper promoting a European framework for CSR;

in 2002, a Communication proposed a Community strategy promoting CSR;

the European Parliament made valuable contributions to the debate in its resolutions of 2002 [PDF ] and 2003 [PDF ];

an opinion of the European Parliament is in the process of being adopted;

the European Economic and Social Committee (EESC) has adopted several opinions on CSR. An opinion was adopted in December 2006;

the European Multistakeholder Forum on CSR was set up in 2002 and submitted its final report in 2004. Businesses and stakeholders reached consensus on the need for further awareness-raising and competency-building activities in relation to CSR. There was no consensus, however, on topics such as company reporting requirements or the need for European standards on CSR. The Commission continued to attach great importance to dialogue with and among stakeholders and undertook to hold regular review meetings of the Multistakeholder Forum;

the Commission convened the Forum two years later, on 7 December 2006, including the Member States and academic institutions;

the Lisbon Strategy's new partnership for growth and jobs invited businesses to step up their commitment to CSR, including cooperation with other stakeholders;

in the Social Agenda, the Commission announced that it would improve the transparency of CSR;

in its contribution to the Spring European Council of March 2005, the Commission recognised that CSR could contribute to sustainable development while enhancing Europe's innovative potential and competitiveness. In return for the efforts made by the business community, the European Council stressed the importance for the EU of completing its internal market and making its legislation more business-friendly;

in the Integrated Guidelines for Growth and Jobs (2005-2008), the Council recommended that Member States should encourage enterprises to develop their corporate social responsibility;

the informal Hampton Court meeting in October 2005 proposed innovative solutions to the challenges posed by globalisation;

the revised Sustainable Development Strategy called on businesses, which it regarded as key partners, to reflect on the medium - and long-term policies needed for sustainability;

the Commission's 2006 Annual Progress Report on Growth and Jobs identified the promotion of entrepreneurial culture as a priority for Europe.

Uptake of CSR has improved in recent years thanks to social dialogue and European Works Councils. However, trade unions and other external stakeholders, such as investors, consumers and non-governmental organisations (NGOs), could further increase the uptake of CSR by playing a more active role and rewarding responsible business conduct.

Objectives

CSR practices cannot replace public policy, but they can contribute to a number of public policy objectives, such as:

the inclusion of disadvantaged groups in the labour market;

lifelong learning, which increases employability in the global knowledge economy and helps cope with the ageing of the working population;

improvements in public health, for example by means of voluntary labelling;

innovations that address societal and environmental problems, as a result of interaction with external stakeholders;

reduced levels of pollution and a more rational use of natural resources (adoption of environmental management systems, the Ecolabel scheme and investments in eco-innovation);

cultivating more favourable attitudes towards entrepreneurship;

respect for human rights, environmental protection and core labour standards, in developing countries and throughout the world;

poverty reduction and progress towards the Millennium Development Goals.

Alliance

In order to further encourage the adoption of socially responsible practices in the business community, the Commission is supporting an alliance which will act as an umbrella for CSR initiatives. The new instrument is open to European enterprises of all sizes, on a voluntary basis. There are no formal requirements for enterprises wishing to take part, and it does not imply any new financial obligations for the Commission. The Alliance will involve businesses and stakeholders in achieving the objectives of the renewed Lisbon Strategy and will provide increased support for their efforts through Community policies and instruments. The Commission will encourage participating enterprises to publicise their efforts in the area of CSR (strategies, initiatives, results, best practice) and will support stakeholders in developing their capacity to evaluate this information from businesses.

Dialogue with stakeholders

Recognising that CSR cannot flourish unless all stakeholders are involved, the Commission plans to hold a wide, inclusive debate on the subject. It proposes to hold regular meetings of the Multistakeholder Forum in order to review progress.

Proposed actions

The Commission will also focus on the following aspects:

raising awareness of CSR and promoting the exchange of best practice in a strengthened partnership that is broader than the alliance, including not only businesses but also all relevant stakeholders and national and regional authorities (particularly in Member States where CSR is a less well-known concept, as well as in acceding and candidate countries);

support for multi-stakeholder initiatives, involving social partners and NGOs at sectoral level;

cooperation with Member States within the Group of High-Level National Representatives on CSR in order to mobilise the range of national and regional instruments available to promote CSR;

raising consumer awareness of the impact of their choices and providing clearer information (on the supply chain, public health issues, etc.) to help them exercise critical choice;

interdisciplinary research under the 6th and 7th (DA) Research Framework Programmes to gain a greater understanding of CSR's contribution and the factors preventing or encouraging it;

incorporation of CSR, as a cross-cutting issue, into the curricula of business schools and other education institutions;

a specific approach to promote CSR among small and medium-sized enterprises (SMEs) through representative bodies, which is essential in order to harness the potential contribution of SMEs. Further research is needed to identify what SMEs already do in this area;

promoting instruments which propose international benchmarks for CSR, such as the UN Millennium Development Goals, the ILO Tripartite Declaration of Principles [PDF ], the Organisation for Economic Cooperation and Development's Guidelines for multinational enterprises (MNEs), and the UN Global Compact. In bilateral trade negotiations the Commission will address the issues of sustainable development, CSR and respect for the main international principles. In addition, since 1 January 2006 it has had the new Generalised System of Preferences, "GSP Plus", to encourage trade partners to have greater respect and sensitivity in this area. It will discuss how to promote CSR in the framework of the Cotonou Agreement, the New Strategy for Africa and the EU-Africa Business Forum to be held in autumn 2006. It will also follow other relevant international processes, such as the work of the UN Special Representative on Human Rights and Transnational Corporations and Other Business Enterprises, the development of an International Standardisation Organisation (ISO) guidance standard on social responsibility, as well as sectoral initiatives.

Report

One year after the publication of this Communication, following the discussion within the Multistakeholder Forum, the Commission will assess the development of CSR in Europe.

Background

The Communication is a response to the call to promote CSR within the new partnership for growth and jobs and the revised Sustainable Development Strategy. CSR can contribute to innovation and employability, which influence competitiveness and job creation and are key components of sustainable development.

Key terms used in the act

Corporate social responsibility: a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.