Opinion of the Economic and Social Committee on the "Green Paper: Promoting a European framework for Corporate Social Responsibility" (COM(2001) 366 final)
Date: 2002-03-20
Institutions: European Economic and Social Committee
Subjects: job creation, labour law, social legislation, social situation, type of business

C 125/44

EN

Official Journal of the European Communities

27.5.2002

Opinion of the Economic and Social Committee on the ‘Green Paper: Promoting a European
framework for Corporate Social Responsibility’

(COM(2001) 366 final)

(2002/C 125/11)

On 25 July 2001 the European Commission decided to consult the Economic and Social Committee,
under Article 262 of the Treaty establishing the European Community, on the ‘Green Paper: Promoting a
European framework for Corporate Social Responsibility’.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the
Committee’s work on the subject, adopted its opinion on 19 December 2001. The rapporteur was
Ms Hornung-Draus and the co-rapporteurs were Ms Engelen-Kefer and Mr Koffelt.

At its 389th Plenary Session held on 20 and 21 March 2002 (meeting of 20 March), the Economic and
Social Committee adopted the following opinion by 117 votes to four with 14 abstentions.

1. General comments

Corporate social commitment is an important basis for
1.1.
creating and maintaining civil society institutions, and extends
beyond existing national, European and international
law.
There are many positive examples which show that cooper-
ation between companies and trade unions, as well as local
bodies and associations, is a feature of local civic commitment.

The issue now is for companies to apply CSR to develop good
relationships with all stakeholders: shareholders, workers,
trade unions, customers, suppliers, sub-contractors,
local
organisations and authorities — mainly in the human, social,
financial and environmental spheres — on the basis of
voluntary action and/or negotiation. The question for the EU
is how to find ways of encouraging this development.

1.2.
Globalisation leads to worldwide business networks,
contractual arrangements and new forms of division of labour.
This means that companies must increasingly consider the
international dimension of their social responsibility. Com-
panies with international operations often make an important
contribution through their economic presence to improving
living and working conditions in developing countries. By
investing in production facilities or buying goods and products
for processing from local companies, they help to create and
safeguard employment, finance welfare services, improve the
level of education, bring about structural change and thus
if
strengthen the economy in these countries. However,
companies do not behave responsibly, considerable risks arise.
These particularly concern the threat to local small business
structures, exploitation of
raw
materials, political interference, violation of core labour stan-
dards, trade union freedoms, child labour, forced labour and
discrimination against women and minorities, etc.

the environment and of

1.3.
Corporate social responsibility in the international
context has been an important issue for international organis-
ations for many years. The International Labour Organisation
(ILO) introduced important principles with its Core Labour
Standards; the OECD followed suit with its guidelines for
enterprises; and the United Nations has
multinational
addressed the issue in the context of globalisation with Kofi
Annan’s Global Compact Initiative. In its Green Paper, the
Commission raises the question of whether European rules are
also needed to promote CSR.

Even if corporate social responsibility is not a new
1.4.
phenomenon, it is particularly relevant in the age of globalisa-
tion. The ever more vehement protests of anti-globalisation
campaigners evidence the growing unease that people feel
about worldwide networking and an increasingly ‘virtual’
economy. The unease expressed in these protests is taken very
seriously by the ESC. It advocates a broader dialogue in which
these fears and misgivings are articulated and which enhances
the transparency of the rules by which the global economy
operates. Above all, the debate should encourage certain
companies to make the necessary changes in their behaviour
and so promote social responsibility.

1.5.
The ESC hopes that this Green Paper will initiate a
critical debate on the issue of corporate social responsibility,
the basis of which must be the concept of sustainable
development. Since the Gothenburg Summit if not before,
sustainability in the environmental, social and economic fields
has become an important frame of reference for economics
and politics. We must try and ensure that a better balance is
achieved between the ‘shareholder value’ and the interests of
workers and their representatives and other stakeholders
— customers, suppliers, the local community and society.
Companies must make profits in order to survive in a
competitive environment, safeguard their future and so create
jobs. It is in the economic interests of businesses to behave in

27.5.2002

EN

Official Journal of the European Communities

C 125/45

a socially responsible way;
it serves their own long-term
interests. Corporate investors need a favourable and stable
environment: legal certainty and harmony, fair relations at
work and an investment-friendly social climate. Companies
cannot be indifferent to the society in which they operate.
Every business must take the social environment into account
in its economic calculations and decisions.

1.6.
The ESC supports the European Commission: corpor-
ate social responsibility is an important contribution to
realising the strategic goal which the EU set itself at the Lisbon
Summit of becoming ‘the most competitive and dynamic
knowledge-based economy in the world, capable of sustainable
economic growth with more and better jobs and greater social
cohesion’.

1.7.
But if the Lisbon objectives are the point of reference,
then strengthening company competitiveness must also be
taken into account. This is because competitiveness and
profitability, as the basis for long-term survival, are the
essential prerequisite for companies accepting social responsi-
bility. The connection between business success and social
responsibility must be seen in the following terms: social
responsibility together with economic success contribute to a
company’s sustainability. It is therefore important to persuade
companies to see social responsibility as a long-term undertak-
ing, as a strategic investment in policies such as marketing,
management tools and activities.

1.10.
CSR is a complex area that must be addressed
carefully and thoroughly. Local cultural features and legal
environments have a direct impact on the development of CSR.
The Commission unfortunately overlooks this complexity, but
it must be taken into account. Distinctions must be drawn
between the different geographical
levels of action (local,
national, European and global), between developing and
industrialised countries, between large multinational corpor-
ations, SMEs and micro-businesses, and between sectors.
The Commission’s observations also assume a traditional
hierarchical company structure, whereas new types of structure
and work organisation (part-time, teleworking, virtual com-
panies, etc.) should also be considered.

1.11.
Voluntary — including negotiated — action is one of
the fundamental principles of CSR. Voluntary measures and
initiatives give businesses the opportunity to develop appropri-
ate company- or sector-specific approaches and models of
social responsibility. Approaches that are developed inside
companies and sectors are much better accepted than require-
ments imposed from outside. This realisation is reflected in
existing initiatives — e.g. on social codes of conduct, at the
level of the ILO, the OECD and the United Nations — which
are all based on the principle of voluntary implementation of
CSR measures.

1.8.
Corporate social responsibility is not just about cre-
ating and safeguarding employment; it is also about developing
better jobs with adequate health and safety at work, taking the
needs of people with disabilities (1) into account and promoting
a culture of lifelong learning. Socially responsible behaviour
means companies applying existing social rules in a committed
way and endeavouring to build up spirit of partnership.
This also means developing labour relations and promoting
negotiations with and participation of workers.

1.12.
The decision by a company voluntarily to implement
CSR measures — whether in the form of codes of conduct,
charters or quality labels — presupposes of course that it is
also willing to make a binding commitment. The ESC wel-
comes relevant joint actions and voluntary agreements in
relation to CSR between the social partners and partners to
wage agreements, which may also provide for appropriate
monitoring and evaluation mechanisms.

1.9.
Profit, investment, consumption, labour costs, regu-
lation, taxes, an optimum supply of goods, a high level of
employment, growth, dignified existence, welfare, solidarity,
mutual respect, self-discipline, morale at work, freedom and
justice are inextricably linked and form the cornerstone of
our system of values and economic set-up. In this context
businesses must be managed successfully, which means they
must be economically efficient and socially responsible.

(1) Cf. ESC opinion on the European Year of People with Disabilities

— OJ C 36, 8.2.2002.

1.13.
The principle that social codes of conduct should be
voluntary also derives from another consideration. In the EU
and its Member States, companies are obliged by law and by
minimum standards to satisfy certain requirements — which
are exactly the same for all companies — to help promote the
development of responsible behaviour. CSR concerns activities
that go beyond simple compliance with existing laws. It is no
coincidence that the impetus to develop and apply social codes
of conduct came mainly from those countries and cultures
which have only limited social legislation. There is no question
that companies have to respect existing laws. But all measures
to strengthen CSR go by definition beyond existing legal
provisions and can only be of a voluntary nature.

C 125/46

EN

Official Journal of the European Communities

27.5.2002

1.14.
The ESC feels that the Green Paper does not suf-
ficiently explore the particular role that companies in the social
economy (third sector) play in promoting CSR. This is a pity,
since this sector provides particularly good examples of how
social responsibility can form the basis for business objectives.
Many companies in the social economy regularly publish
reports about their CSR measures or use specific instruments
such as social audits or social balance sheets to assess their
activities. The ESC believes that particular attention should be
drawn to such activities.

2.3.
In order for companies’ positive potential to develop
as effectively as possible, there must be a sound legal frame-
work for business start-ups and investment, and for securing
free international trade as far as possible — subject to the ILO
core labour standards. The governments and authorities of the
countries in question are called upon to provide this. They are
also responsible for providing an efficient education system
and effective social security institutions, which companies help
to fund through the taxes they pay.

1.15.
The Commission generally approaches the issue
of CSR too much from the angle of large multinational
corporations. The majority of companies in Europe are small
and medium-sized businesses, or micro-businesses, which
require an approach to CSR that is specifically adapted to their
situation and needs. In this connection the ESC notes that it is
absolutely necessary to distinguish between the social dimen-
sion of corporate responsibility and the environmental and
societal dimension. Environmental protection in particular is a
new sphere for many SMEs, calling for other resources and
approaches than the social dimension.

2. Levels of action — global level

2.1.
There is still a wide gap in prosperity between the
industrialised and developing countries. Because the economy
in many developing countries is weaker and democratic and
other representative structures sometimes underdeveloped, the
terms of employment are often far inferior to those in the
industrialised world. This means that there are still unaccept-
able forms of child labour, very low wages, suppression of
trade unions and unhealthy working conditions.

2.2. Many companies have already introduced measures to
improve working conditions that go beyond the existing legal
requirements in their branches and subsidiaries — and even
for their contractors, suppliers and licensees — in developing
countries. Such initiatives are explicitly welcomed and support-
ed by the ESC. Even allowing for the lower economic
performance of developing countries, practices such as forced
labour and extreme forms of child labour are unacceptable.
All forms of discrimination against trade unions must also be
precluded and freedom of association respected. By endeav-
ouring, within their sphere of influence and with the resources
available to them, to effect positive changes, companies with
international operations are providing an important impetus
to development as a whole.

2.4.
It is also the task of legislators, governments and
authorities in the countries concerned to introduce appropriate
social and employment legislation and to ensure that it is
respected. Developing countries often fall short here, especially
as regards the enforcement of legislation. For instance, child
labour is banned in many developing countries, but without
the ban being enforced. In addition, trade union rights are
trampled on in many countries. The primary objective must
therefore be to achieve application of the necessary laws and
international workers’ and human rights by the relevant state
authorities. This is an important goal of the International
Labour Organisation (ILO). The World Bank, the IMF and the
WTO must also consider social responsibility when playing
their international role. European companies operating in a
given country can help, too, setting an example for other
companies by respecting legal provisions themselves and
encouraging local business partners to comply with employ-
ment laws. The legislation of the host country is thus the basis
and binding minimal
framework for socially responsible
behaviour by international companies.

Declarations and legal

2.5.
instruments of international
socio-political organisations, especially those of the ILO, also
provide important basic guidance. Although such declarations
are intended first and foremost for governments, companies
can promote the objectives contained in them within their
own sphere of influence. The ILO Declaration of Fundamental
Principles and Rights at Work of 18 June 1998 is a good
example, expressing the commitment of the ILO member states
to implement the following principles and rights considered to
be fundamental in the workplace:

— freedom of association and recognition of the right to

collective bargaining;

— elimination of all forms of forced or compulsory labour;

— effective abolition of the worst forms of child labour; and

— elimination of discrimination in respect of employment

and occupation.

27.5.2002

EN

Official Journal of the European Communities

C 125/47

2.6.
Other relevant legal instruments are the 1977 ILO
Tripartite Declaration of Principles Concerning Multinational
Enterprises and Social Policy and the 1976 OECD Guidelines
for Multinational Enterprises, in particular the chapter in the
latter on employment and industrial relations.

a strain on the legal and practical capacities of a company,
especially an SME. However, businesses can demonstrate their
social responsibility in relation to invitations to tender and
contracts. The ESC agrees with the Commission’s view that
corporate social responsibility has an external as well as an
internal dimension. This also applies to subcontractors and
suppliers in developing countries.

2.7.
For companies to effectively practise their social com-
mitment it is important that they be able to choose approaches
which suit their particular situation and which best reflect their
possibilities for dealing with business partners in developing
countries. The market position of a large multinational com-
pany already gives it more leverage than an SME. In many
sectors the tables are even turned, with SMEs from industrial-
ised countries facing large market-dominating suppliers, over
which they have very little influence, in the developing world.

2.8. Within the CSR framework, companies can focus on
the issues that are particularly important for their sector and
for the market in which they operate. Thus the textiles industry
concentrates on child labour, whereas the oil industry has
been particularly concerned about environmental issues. While
one company will prefer external monitoring or certification,
another will find internal action and monitoring more appro-
priate. What ultimately counts is whether the initiative is
actually effective.

2.9.
Some companies and sectoral associations draw up
codes of conduct in which they undertake to respect or
promote social and ethical standards or enter into a specific
social commitment. Such codes of conduct are the expression
of a particular corporate culture and philosophy and reflect
the long-term social goals and priorities of the company or
sector concerned. If a company or sector chooses to adopt this
approach, it is important that their means of action should be
realistically and credibly applied. This is the case for instance
with codes of conduct that provide for progressive implemen-
tation of the desired social standards through partnership with
suppliers and contractors in the developing countries.

2.11.
The ESC is nevertheless aware of the practical difficult-
ies. Even large companies often find it impossible to require
that their main suppliers, never mind subcontractors, observe
internal company CSR standards. The economies of most
developing countries are characterised by a plethora of small
and very small companies. Major European textile companies,
for example, are easily dealing with 12,000 — 15,000 main
suppliers in a country like India. The number of subcontractors
can only be guessed at. It is primarily the responsibility of the
countries in question to ensure that their laws are respected.
Cooperation with trade unions and NGOs can also help to
identify failure to respect standards.

2.12.
Rules of conduct and corporate social commitment
must take account of the local culture, traditions and economic
environment. Rigorous enforcement of excessively high social
standards in developing countries could,
for example, be
interpreted as an attempt on the part of the industrialised
world to raise local labour costs and so deprive developing
countries of a part of their competitive advantage. Problems of
fundamental
gender discrimination and failure to respect
human rights as recognised by the international community
cannot be put on the same level as competitive advantage.
This would substantially reduce the cooperation of those
countries that is essential to improving social conditions.
Businesses nevertheless can, and should, undertake to over-
come these problems through their CSR activities at company
level.

2.10.
In its Green Paper the Commission calls for compa-
nies to be answerable not only for their subsidiaries, but also
for their suppliers, as far as CSR and compliance with legal
requirements are concerned. Although the ESC can understand
this demand, it feels that it will be difficult to enforce fully.
Hardly any company can provide a guarantee that certain
labour standards will be respected by their suppliers and
contractors. Given the increasing complexity of relationships
with suppliers — production chains sometimes extend over
several continents — such a guarantee would put too much of

The principles of CSR at global

2.13.
level are often
enshrined in ILO agreements. The ESC stresses the importance
of the ILO core labour standards as minimum requirements
under international law that must be respected worldwide. But
since ILO agreements are addressed to governments, they are
only suitable to a limited extent as guidelines and a basis for
action for businesses. The agreements need to be translated’
for implementation in companies. The ESC explicitly welcomes
the ILO work on practical implementation of ILO agreements
in companies and on the specific application of social codes of
conduct in company supply chains.

C 125/48

EN

Official Journal of the European Communities

27.5.2002

2.14.
In this connection the ESC welcomes the initiative of
the European Commission (Communication of 18 July 2001
‘Promoting core labour standards and improving social govern-
ance in the context of globalisation’)
the
ILO’s efforts to improve respect for core labour standards
worldwide.

in support of

workers. This is accepted by all concerned and forms the basis
for CSR in Europe, without the legal framework (social and
environmental policy) suffering as a result.

international

The ESC notes that

2.15.
institutions —
especially the World Bank, the IWF and the WTO — must
apply CSR. An important step in this direction would be to
ensure when loans or trade concessions are granted that the
companies involved respect at least the ILO core labour
standards in every case. The ESC also notes that international
companies are already making a noticeable effort to alert their
suppliers and contractors worldwide — and especially in the
developing countries — to the advantages of good working
conditions, and to achieve improvements by providing incen-
tives, encouragement and advice and by setting a good
example themselves (1). These efforts, which have a long-term
perspective, will be most effective if a favourable environment
is created in the countries concerned and the companies are
given the necessary scope to maximise their innovative
potential.

Companies’

2.16.
financial behaviour is also an aspect
of socially responsible behaviour (e.g. money laundering,
corruption, tax havens). More specifically, as far as socially
responsible investment (SRI)
is concerned, the Committee
recommends that more precise criteria be used in the evalu-
ation or rating of socially responsible company behaviour.
These criteria should therefore be based on comparable
in
elements (in environmental
comparing a steel company with a bank). Moreover, these
criteria should not lead to companies being excluded solely on
the basis of their products and/or spheres of activity (e.g.
petroleum, microchips or aluminium production). Overall, the
aim should be to improve the general framework for SRI, and
this should involve both statutory and collective agreements
at worldwide and European levels.

there is no point

terms,

3. Levels of action — European level

3.1.
In its Green Paper the European Commission raises the
question of a new European framework for CSR. Companies
are a part of society and operate in a social environment that
is shaped by laws and collective agreements which regulate the
labour market, reconcile interests on both sides and protect

(1) For concrete examples, see:
http://oracle02.ilo.org:6060/dyn/basi/vpisearch.first
http://www.csreurope.org/csr–europe/Databank/databankindex.htm
http://www.csrforum.com/csr/csrwebassist.nsf/content/a1c2a3.html
http://www.business-impact.org/bi2/case–studies–2k/

Employee participation and representation of their
3.2.
interests at work are in most cases regulated by law (the
Directive on European works councils and the information
and consultation directive at EU level and in various ways
within individual member states). The ESC calls for these
existing rules to be consistently applied so that industrial
change can take place in a socially acceptable way by
reconciling interests on a fair basis.

3.3.
In the context of existing social regulations, the main
issue in Europe is to create an ethos in which CSR has a secure
place. The European level
is suitable as a framework for
comparing notes about successful CSR initiatives and for
incorporating CSR into business strategies through awareness-
raising.

Corporate social responsibility is not

just a task
3.4.
of management and employee representatives. The state,
municipalities, ordinary people and civil society must also
make their contribution to social responsibility. The ESC is
pleased that the Commission addresses this issue in its White
Paper on European governance.

3.5.
Companies are constrained by the environment they
find in whichever country they are operating. This means that
it is not mandatory, for example, to comply with an ILO
convention in a country that has not ratified that convention
and incorporated it into national
law. Even if companies
cannot, and may not, be called upon to compensate for
government failures, their social responsibility should lead
them to do more than just what they are legally obliged to
do. The ILO Tripartite Declaration of Principles Concerning
Multinational Enterprises provides an important frame of
reference in this respect. The ESC would point out that the ILO
core labour standards apply as an aspect of human rights in all
ILO member states, regardless of whether or not they have
been ratified. Each member state is bound through its member-
ship of the ILO alone to ensure that the core labour standards
— union rights, collective bargaining, ban on child labour,
forced labour and discrimination — are observed, and is
also responsible for ensuring that companies abide by the
standards. The European countries have a particular duty to
incorporate the ILO labour standards into their national
legislation. The European Union can generally play a proactive
part when international agreements are drawn up by trying to
ensure they are supported by a broad consensus and signed by
as many states as possible.

27.5.2002

EN

Official Journal of the European Communities

C 125/49

3.6.
The principle that CSR measures are voluntary is
particularly important in the ESC’s view. Establishing detailed,
binding pan-European rules would be inappropriate. Uniform,
detailed CSR standards create a risk of companies, especially
SMEs and companies in the social economy, being forced into
a straitjacket. Companies should have the option of developing
tailored, sector-specific and particularly efficient approaches
that are appropriate to their specific situation. General Euro-
pean principles agreed by the social partners could help to
promote more widely the CSR practices that many companies
are already applying. The ESC therefore explicitly welcomes
action by the social partners to flesh out certain aspects of
CSR, e.g. in the spheres of health and industrial safety or
promotion of equal opportunities. The specific EU context of
CSR could be developed on the basis of joint initiatives and
voluntary agreements between the social partners, as for
example happens in the textiles sector. The Commission could
enhance transparency, coherence and good practice in this
sphere by promoting partnership between the key CSR
players.

3.7.
CSR has both qualitative and quantitative aspects,
varying according to sector and business situation, which
means that monitoring and evaluation must also be managed
differently.

The ESC welcomes measures that support and promote
3.8.
the publicising of examples of good practice with regard to
socially responsible behaviour. A large number of networks
that do this already exist in the member states, such as
the French ‘Observatoire de la responsabilité sociétale des
entreprises’ (ORSE), a network to promote corporate social
responsibility.

4. Levels of action — national and local level

4.1.
The Green Paper discusses the impact of CSR measures
at local level. The ESC notes that companies in the social
economy (third sector) are generally SMEs or micro-businesses,
which see the local dimension of CSR as their main task. Their
local commitment to social and environmental responsibility
is based on a long-term economic perspective in that they
work for the community (e.g. neighbourhood assistance,
integration measures, environmental projects). The Com-
mission should draw more attention to this existing dimension
of CSR at local level.

cultures, ways of life or philosophies will have a more open
attitude towards them. This approach must be adopted in
education, family policy and industry. Globalisation presents
modern society with this challenge.

4.3.
To be viable, companies need competent staff who can
navigate the knowledge and information society freely and
independently. Integration and application of new develop-
ments require that people be qualified and prepared and
able to engage in lifelong learning. The ESC believes that
governments, industry, the social partners and individuals have
an equal responsibility here. Their roles must be clearly defined
in an open dialogue.

4.4.
Family policy, cultural policy and economic policy
should no longer be seen in isolation. It must be made easier
for families to have children; women must be able to continue
working in the jobs for which they are qualified; and children
must have the best possible education opportunities. Business
must take account of the needs of employees who are parents
and practise a family-friendly, i.e. socially responsible, strategy.

4.5.
CSR requires not just a commitment on the part of
managers and a socially responsible business strategy; it also
requires people, employees, who are willing to apply CSR in
their personal sphere of influence and to behave accordingly.
The ESC therefore believes it is particularly important to invest
in civic pride. Education systems can do this by inculcating in
children from nursery school upwards a sense of belonging to
a community, based on the principle of solidarity and the
principle that each person must accept his or her responsibility.
Families must be encouraged to serve the community with
their children. Businesses can improve the climate for civic
commitment by rewarding socially responsible behaviour
and providing incentives to encourage staff to be socially
committed.

The ESC notes that CSR is both about encouraging a
4.2.
spirit of communication and about willingness to keep learn-
ing. People who can communicate with each other and are
open to new knowledge are also able to live together in a
socially acceptable way, so that there is no room for intolerance
and discrimination based on ethnicity, disability, sexual orien-
tation or gender. Anyone who knows something about other

4.6.
The ESC welcomes the idea of social responsibility
networks at local or regional level, which are already operating
widely. Within such networks, businesses, social partners and
the public sector cooperate with the other partners in organised
civil society in order to develop and implement joint objectives
for socially responsible actions. However, it is important to
avoid overburdening SMEs at local level with additional red
tape.

C 125/50

EN

Official Journal of the European Communities

27.5.2002

5. Conclusion

Corporate social responsibility is a key theme for the
5.1.
ESC, which will keep a close watch on and actively monitor its
further development. The ESC hopes that the above remarks
are taken into account by the European Commission when it

gives further consideration to this issue. The principles of
voluntary action and environmental, economic and social
sustainability,
together with guidance from international
organisations’ existing agreements are to be the European
Commission’s frame of reference for further initiatives in
support of companies’ efforts to act in a socially responsible
way.

Brussels, 20 March 2002.

The President

of the Economic and Social Committee

Göke FRERICHS

APPENDIX

to the Opinion of the Economic and Social Committee

Amendments defeated

The following amendments, which received at least one quarter of the votes cast, were defeated in the course of the
Committee’s debates:

To be positioned before the General Section

‘1.1.

Preamble

Most observers of corporate behaviour would agree that companies have a huge potential for doing economic and
social good for stakeholders as well as fulfilling their obligations to shareholders. Historically the raison d’être of the
company is economic. By fulfilling its Corporate Economic Purpose a company also fulfils its legal and contractual
responsibilities to stakeholders. In the last thirty years there has been an increasing understanding by companies, as
well as politicians and observers, that some companies, on a voluntary basis, also have considerable potential to
benefit stakeholders through programmes of corporate social responsibility. Such programmes need to be consistent
with the Company’s Economic Purpose and would generally involve business cases focussed on Company survival
and success in the medium to longer term. Failure to achieve the Corporate Economic Purpose not only makes
Corporate Social Responsibility impossible, it also means that stakeholders suffer immeasurable social damage. When
the Corporate Economic Purpose is achieved, companies can have a considerable potential for making the world a
better place. The ESC would urge the Commission to take more account of the Corporate Economic Purpose in its
White Paper in due course.’

Reason

The Green Paper gives inadequate recognition to the scale of social contributions companies make when they fulfil
this Corporate Economic Purpose.

27.5.2002

EN

Official Journal of the European Communities

C 125/51

Result of the vote

For: 45, against: 79, abstentions: 11.

To be positioned before the General Section

‘1.2. Corporate Economic Purpose

The primary purpose of a company is economic and its principal relationships and responsibilities are legal
1.2.1.
and contractual, not voluntary. Indeed, all the elements of social cohesion — employment, community cohesion,
national social cohesion, old age supported by savings and investment — can only be achieved if companies achieve
their Corporate Economic Purpose.

1.2.2.
Profitability is a key primary measure of a company’s performance. Profit enables it to act competitively
and invest in the future. The profitability of a company is continually tested by the challenge of market forces. These
continually change the market environment of the company. A company fulfils its purpose if it survives these
challenges and thrives. For this to be achieved a company’s economic model must be sustainable in the long term.

1.2.3.
Stakeholder relationships are legal and contractual, yet only by surviving and thriving can a company fulfil
its obligations to maintain employment and the quality of employment, to maintain orders to suppliers and
partnership relationships with suppliers, and to satisfy consumer demand and ensure customer satisfaction.

In the community in which it is located, a thriving company maintains employment, supporting employees
1.2.4.
and their families who in turn patronise local suppliers of goods and services; a thriving company is also itself a
major customer for local suppliers of goods and services. A thriving company provides the economic lifeblood of its
community and supports its social cohesion.

1.2.5.
A thriving company pays taxes on its profit; it collects taxes from its employees on behalf of the government
and contributes, with its employees, to social security funds. It also pays and collects VAT revenues for the
government. The company is the central component of the national taxation system, which in turn funds the social
model.

1.2.6.
A percentage of the profits of a thriving company are paid as dividends to shareholders. Increasingly, these
shareholders are pension funds and insurance companies, which manage the life savings of individuals in anticipation
of old age. Such schemes rely on the profits and dividends of companies.

1.2.7.
Profit is the measure of a thriving company. Declining profits hurt not only the long-term savings of private
individuals, they also impact on employment, suppliers, customers and government revenues. Therefore a company
should not sacrifice profit in the short term without expectation of profit in the medium to long term.’

Reason

The Green Paper fails to recognise that civic society and social cohesion are dependent on companies achieving their
Corporate Economic Purpose.

C 125/52

EN

Official Journal of the European Communities

27.5.2002

Result of the vote

For: 47, against: 86, abstentions: 17.

To be positioned before the General Section

‘1.3. Corporate Social Responsibility

1.3.1.
Corporate Social Responsibility is a continually developing concept. It involves an engagement with direct
stakeholders, society and the environment which should also be in the interests of shareholders, especially if it
underpins the long-term sustainability of the business model.

1.3.2.
Direct stakeholders are customers, suppliers and employees. Basic relationships with stakeholders are
contractual and legal. Voluntary extensions to relationships with direct stakeholders may involve arrangements that
demonstrate socially responsible behaviour. For example, customers can be offered products from socially responsible
suppliers and contractors, employment conditions may be “affirmative” in many ways and involve extra investment
in human resources.

1.3.3. Where extensions to direct stakeholder relationships are concerned, companies will normally seek to
demonstrate via a business case that these actions, with the related costs, are in the interests of shareholders. This
may involve long time-frames and require shareholder “education” in some cases.

A more complex dimension of CSR involves the community; both the local community in which the
1.3.4.
company operates and society at large. In this context, the business case may be less evident and the payback will
more frequently be long term.

It is in the context of society at large that the overriding issue of sustainability occurs. A balance must be
1.3.5.
achieved between the sustainability of the company — its ability to survive and thrive — and sustainable development
generally, with its three aspects — economic, social and environmental. The legal and regulatory framework for
sustainable development may well need development to complement CSR initiatives. Indeed, CSR initiatives may
well stimulate and shape such legislation or regulation.

1.3.6.
By definition CSR is voluntary. Nevertheless there are existing frameworks. Companies may develop codes
of conduct which define ethical and responsible conduct vis-à-vis stakeholders and the community. In addition,
companies join together to combine their resources. Much business activity in the community has a philanthropic
dimension.

1.3.7.
On the basis of the analysis above the ESC can support the definition given in paragraph 20 of the Green
Paper that CSR is “a concept whereby companies integrate social and environmental concerns in their business
operations and in their interaction with their stakeholders on a “voluntary basis””.’

Reason

There is no definition of Corporate Social Responsibility in the Opinion. It is useful to contrast and compare
Corporate Social Responsibility and Corporate Economic Purpose.

Result of the vote

For: 40, against: 95, abstentions: 19.

Point 1.3

Insert the following sentence before the last sentence:

‘Trade unions have made a key contribution to the development of this framework.’

27.5.2002

EN

Official Journal of the European Communities

C 125/53

Result of the vote

For: 59, against: 76, abstentions: 11.

Point 1.4

Change the last sentence to read as follows:

‘“Above all, however, the debate between employers and trade unions should encourage …”’

Result of the vote

For: 56, against: 83, abstentions: 13.

Point 1.5, the fourth sentence

Replace ‘make profits’ by ‘be competitive’.

Result of the vote

For: 46, against: 81, abstentions: 9.

Point 1.5

Add to the last sentence:

‘“in order to give back to society and the environment what it took out when it was set up (existing housing, health
services, schools and higher education institutions, transport, etc.)”.’

Reason

All interests are equally important, whether those of shareholders, employees, employee representatives, customers,
suppliers, local authorities, society, etc.

Result of the vote

For: 39, against: 71, abstentions: 15.

Point 1.7

Amend end of point as follows:

‘“success is the sine qua non for assuming social responsibility, …”’

Reason

Self-evident.

Result of the vote

For: 61, against: 82, abstention: 10.

C 125/54

EN

Official Journal of the European Communities

27.5.2002

Point 1.8

Add the following at the end of the first sentence:

‘“… a culture of lifelong learning, as well as improving access to training and investing in continuing training for all
categories of workers.”’

Result of the vote

For: 66, against: 67, abstention: 6.

Point 1.9

Delete the following phrase in the first sentence:

‘… self-discipline, morale at work …’

Result of the vote

For: 54, against: 66, abstentions: 15.

Point 1.9

Delete

‘“system of values and”.’

Reason

The values of profit and of liberty should not be put on the same level, and neither should investment and mutual
respect, or consumption and a dignified existence. It might be felt that they are closely linked, but they should not be
grouped together indiscriminately to represent the current state of social Europe. This would give the impression
that we have already eliminated all causes of poverty and exclusion from the labour market, and need only applaud
our achievements.

‘Form the cornerstone of our economic set-up’ is already very optimistic.

Result of the vote

For: 41, against: 55, abstentions: 10.

Point 1.11

Amend the third sentence as follows:

‘“Approaches that are developed inside a company are much better accepted “by management” than requirements
imposed from outside.”’

Reason

It remains to be proven that workers in a company are on the same level as the management or shareholders.
Legislators (who make the law) and negotiators (who conclude sectoral or inter-trade framework agreements) have
been legitimately elected or appointed, either by universal suffrage, or by a method of nomination based on
representativeness. These democratic principles underpin the rule of law in the EU Member States, and there is no
reason to suppose that they are not accepted.

27.5.2002

EN

Official Journal of the European Communities

C 125/55

Result of the vote

For: 34, against: 60, abstentions: 13.

Point 2.3

After the last sentence add:

‘“At the same time, the Committee feels that CSR must bear in mind that the practice of relocating unskilled
production activities and encouraging immigration of highly-skilled workers in order to meet the labour shortages
faced by European companies contributes to a weakening of human resources in the countries concerned.”’

Reason

There is little benefit in calling on states to make public investments in training top-level or future workers if this
only encourages a brain drain. This matter is an integral part of corporate social responsibility.

Result of the vote

For: 37, against: 89, abstentions: 12.

Point 2.4

After the last sentence add:

‘“However, the voluntary nature of CSR enables European companies operating in such countries to refrain from
using child labour, even when local legislation allows such practice, CSR can encourage companies in these countries
to pay higher wages to parents than to their children, whilst still remaining well below European salaries.”’

Reason

This is a good example showing that, in this case, corporate responsibility is the same as social responsibility and
that the voluntary nature of CSR can go beyond national legislation.

Result of the vote

For: 48, against: 71, abstentions: 11.