Communication from the Commission  concerning Corporate Social Responsibility: A business contribution to Sustainable Development
Date: 2002-07-02
Institutions: European Commission
Subjects: EU policy, European Union, action programme, management, public awareness campaign, social role, sustainable development, type of business

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 2.7.2002
COM(2002) 347 final

COMMUNICATION FROM THE COMMISSION

concerning

Corporate Social Responsibility:
A business contribution to Sustainable Development

TABLE OF CONTENTS

COMMUNICATION FROM THE COMMISSION concerning Corporate Social
Responsibility: A business contribution to Sustainable Development....................................... 1

1.

2.

3.

4.

4.1.

4.2.

4.3.

4.4.

4.5.

5.

5.1.

5.2.

5.3.

5.4.

5.5.

6.

7.

7.1.

7.2.

7.3.

7.4.

7.5.

7.6.

7.7.

Introduction.................................................................................................................. 3

Synthesis of consultation on Green Paper on CSR ...................................................... 3

A European action framework for CSR ....................................................................... 5

Improve the knowledge about CSR and facilitate the exchange of experience and
good practice ................................................................................................................ 9

Increasing knowledge about the impact of CSR on business and society ................... 9

Developing the exchange of experience and good practices on CSR between
businesses................................................................................................................... 10

Developing the exchange of experience and good practices on CSR between Member
states........................................................................................................................... 10

Developing CSR management skills.......................................................................... 11

Fostering CSR among SMEs ..................................................................................... 11

Promoting convergence and transparency of CSR practices and tools...................... 12

Codes of conduct........................................................................................................ 13

Management standards............................................................................................... 14

Measurement, reporting and assurance ...................................................................... 14

Labels ......................................................................................................................... 15

Socially Responsible Investment (SRI) ..................................................................... 16

Launching a EU multi-stakeholder forum on CSR .................................................... 17

Integrating CSR in all EU policies............................................................................. 18

Employment and social affairs policy........................................................................ 19

Enterprise policy ........................................................................................................ 20

Environmental policy................................................................................................. 20

Consumer Policy ........................................................................................................ 21

Public procurement policy ......................................................................................... 21

External relations policies, including development policy and trade ........................ 22

Public administrations................................................................................................ 24

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1. 

INTRODUCTION

In  July  2001,  the  Commission  presented  a  Green  Paper  “Promoting  a  European
Framework for Corporate Social Responsibility”1. The aims of this document were,
firstly, to launch a debate about the concept of corporate social responsibility (CSR)
and,  secondly,  to  identify  how  to  build  a  partnership  for  the  development  of  a
European framework for the promotion of CSR.

The Green paper defined CSR as “a concept whereby companies integrate social and
environmental  concerns  in  their  business  operations  and  in  their  interaction  with
their  stakeholders  on  a  voluntary  basis”  as  they  are  increasingly  aware  that
responsible  behaviour  leads  to  sustainable  business  success.  CSR  is  also  about
managing  change  at  company  level  in  a  socially  responsible  manner.  This  happens
when a company seeks to set the trade-offs between the requirements and the needs
of  the  various  stakeholders  into  a  balance,  which  is  acceptable  to  all  parties.  If
companies  succeed  in  managing  change  in  a  socially  responsible  manner,  this  will
have a positive impact at the macro-economic level.

CSR can therefore make a contribution to achieving the strategic goal of becoming,
by 2010, “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" adopted by the Lisbon Summit of March 2000, and to the European
Strategy for Sustainable Development.

The consultation process on the Green Paper has supported Community action in the
field  of  CSR.  In  the  present  Communication,  which  constitutes  a  follow-up  to  last
year’s  Green  paper,  the  Commission  presents  a  EU  strategy  to  promote  CSR.  It
consists  of  six  chapters.  The  first  chapter  briefly  summarises  the  outcome  of  the
consultation process. The second chapter develops the European strategy to promote
CSR  including  a  definition  of  the  concept  of  CSR,  its  place  in  the  sustainable
development  context  and  its  impact  on  business  and  society.  Chapters  three  to  six
describe related proposed actions.

The Communication is addressed to the European institutions, Member States, Social
Partners  as  well  as  business  and  consumer  associations,  individual  enterprises  and
other concerned parties, as the European strategy to promote CSR can only be further
developed  and  implemented  through  their  joint  efforts.  The  Commission  invites
enterprises and their stakeholders as well as Social Partners in candidate countries to
join this initiative.

2. 

SYNTHESIS OF CONSULTATION ON GREEN PAPER ON CSR

The  Commission  received  more  than  250  responses  to  the  Green  Paper,  which  are
posted  on  the  Europa  website  (http://europa.eu.int/comm/employment_social/soc-
dial/csr/csr_responses.htm).  About  half  of  these  responses  came  from  employers'
organisations,  business  associations  and  individual  enterprises.  Trade  unions  and
civil  society  organisations  accounted  for  another  large  portion  of  responses.

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COM (2001) 366

3

                                                
Furthermore,  organisations  at  local,  regional,  national,  European  and  international
level as well as academics and other interested individuals have responded.

The  European  institutions,  Council,  Parliament,  Economic  and  Social  Committee,
Committee  of  Regions  equally  adopted  positions  on  the  Green  paper.  Finally  a
number of Member States sent their comments to the Commission.

All respondents welcomed the Green paper and confirmed the usefulness of an open
debate  about  the  concept  of  CSR.  Almost  all  parties  -  social  partners  and  other
respondents to the Green paper - supported Community action in this field.

to  regulate  CSR  at  EU 

However, there are also significant differences between the positions expressed:
(cid:1)  Enterprises stressed the voluntary nature of CSR, its integration in the sustainable
development  context  and  that  its  content  should  be  developed  at  global  level.
Enterprises  emphasised  there  would  not  be  “one-size-fits-all”  solutions.  In  the
level  would  be
view  of  businesses,  attempts 
counterproductive,  because  this  would  stifle  creativity  and  innovation  among
enterprises  which  drive  the  successful  development  of  CSR,  and  could  lead  to
conflicting priorities for enterprises operating in different geographical areas;
(cid:1)  Trade unions and civil society organisations emphasised that voluntary initiatives
are  not  sufficient  to  protect  workers  and  citizens  rights.  They  advocated  for  a
regulatory  framework  establishing  minimum  standards  and  ensuring  a  level
playing field. They also insisted that in order to be credible, CSR practices could
not  be  developed,  implemented  and  evaluated  unilaterally  by  businesses,  but
rather with the involvement of relevant stakeholders. They also asked for effective
mechanisms to ensure a company's accountability for its social and environmental
impact;

(cid:1)  Investors stressed the need to improve disclosure and transparency of companies'
practices,  rating  agencies'  methodology  and  investment  management  of  SRI
(socially responsible investment) funds and pension funds;

(cid:1)  Consumers' organisations underlined the importance of trustworthy and complete
information about the ethical, social and environmental conditions in which goods
and services are produced and traded to guide them in their purchase choices;
(cid:1)  The  Council,  in  its  Resolution  of  3  December  2001,  stressed  that  a  European
approach to CSR could complement existing measures at local and national level,
imparting  to  them  an  added  value,  in  order  to  contribute  to  the  development  of
CSR. The Council mentioned that CSR can contribute not only to encouraging a
high  level  of  social  cohesion,  environmental  protection  and  respect  for
fundamental  rights,  but  also  to  improving  competitiveness  in  all  types  of
businesses, from SMEs to multinationals, and in all sectors of activity;

(cid:1)  The Economic and Social Committee highlighted that the principles of voluntary
action  and  environmental,  economic  and  social  sustainability,  together  with
guidance from international organisations' existing agreements are to be the frame
of reference for further European initiatives in support of companies' efforts to act
in a socially responsible way;

(cid:1)  The Committee of the Regions saw a role for the  European level  in  providing  a
framework  for  raising  awareness,  promoting  responsible  principles  and  assisting
businesses and public authorities in incorporating CSR in their activities;

4

(cid:1)  The  European  Parliament  proposed  to  mainstream  CSR  in  all  areas  of  EU
competence, in particular  regional  and  social funding, and to create a  EU multi-
stakeholder CSR platform. It called for triple bottom line reporting by companies
on  their  social  and  environmental  performance,  including  the  human  rights
dimension.

3. 

A EUROPEAN ACTION FRAMEWORK FOR CSR

Defining CSR

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.

The  main  function  of  an  enterprise  is  to  create  value  through  producing  goods  and
services  that  society  demands,  thereby  generating  profit  for  its  owners  and
shareholders as well as welfare for society, particularly through an ongoing process
of job creation. However, new social and market pressures are gradually leading to a
change in the values and in the horizon of business activity.

There  is  today  a  growing  perception  among  enterprises  that  sustainable  business
success  and  shareholder  value  cannot  be  achieve  solely  through  maximising  short-
term  profits,  but  instead  through  market-oriented  yet  responsible  behaviour.
Companies  are  aware  that  they  can  contribute  to  sustainable  development  by
managing their operations in such a way as to enhance economic growth and increase
competitiveness  whilst  ensuring  environmental  protection  and  promoting  social
responsibility, including consumer interests.

In  this  context,  an  increasing  number  of  firms  have  embraced  a  culture  of  CSR.
Despite  the  wide  spectrum  of  approaches  to  CSR,  there  is  large  consensus  on  its
main features:

–  CSR  is  behaviour  by  businesses  over  and  above  legal  requirements,  voluntarily

adopted because businesses deem it to be in their long-term interest;

–  CSR is intrinsically linked to the concept of sustainable development: businesses
need  to  integrate  the  economic,  social  and  environmental  impact  in  their
operations;

–  CSR is not an optional "add-on" to business core activities - but about the way in

which businesses are managed.

Socially  responsible  initiatives  by  entrepreneurs  have  a  long  tradition  in  Europe.
What distinguishes today’s understanding of CSR from the initiatives of the past is
the attempt to manage it strategically and to develop instruments for this. It means a
business  approach,  which  puts  stakeholder  expectations  and  the  principle  of
continuous  improvement  and  innovation  at  the  heart  of  business  strategies.  What
constitutes CSR depends on the particular situation of individual enterprises and on
the specific context in which they operate, be it in Europe or elsewhere. In view of
the EU enlargement it is however important to enhance common understanding both
in Member States and candidate countries.

5

The growing recognition of CSR

CSR has found recognition among enterprises, policy-makers and other stakeholders,
as an important element of new and emerging forms of governance, which can help
them to respond to the following fundamental changes:
(cid:1)  Globalisation  has  created  new  opportunities  for  enterprises,  but  it  also  has
increased their organisational complexity and the increasing extension of business
activities abroad has led to new responsibilities on a global scale, particularly  in
developing countries.

(cid:1)  Considerations of image and reputation play an increasingly important role in the
business  competitive  environment,  as  consumers  and  NGO’s  ask  for  more
information about the conditions in which products and services are generated and
the sustainability impact thereof, and tend to reward, with their behaviour, socially
and environmentally responsible firms.

(cid:1)  Partly  as  a  consequence  of  this,  financial  stakeholders  ask  for  the  disclosure  of
information  going  beyond  traditional  financial  reporting  so  as  to  allow  them  to
better  identify  the  success  and  risk  factors  inherent  in  a  company  and  its
responsiveness to public opinion.

(cid:1)  As knowledge and innovation become increasingly important for competitiveness,
enterprises  have  a  higher  interest  in  retaining  highly  skilled  and  competent
personnel.

The global dimension of CSR

Responses  to  the  Green  Paper  demonstrated  the  global  nature  of  CSR  issues  and
concerns, reflecting the fact that a growing number of enterprises, including SMEs,
are  developing  their  business  world-wide,  as  they  take  advantage  of  market
liberalisation and trade integration and are sourcing from subsidiaries  and suppliers
in developing countries.

Global  governance,  and  the  interrelation  between  trade,  investment  and  sustainable
development are key issues in the CSR debate. Indeed, awareness of CSR issues and
concerns  will  contribute  to  promote  more  sustainable  investments,  more  effective
development co-operation and technology transfers.

Both  processes  of  trade  and  financial  markets  liberalisation  should  be  matched  by
appropriate progress towards an effective system of global governance including its
social  and  environmental  dimensions.  Globalisation  has  also  increasingly  exposed
enterprises  to  transboundary  economic  criminality,  requiring  an  international
response.

By  abiding  by  internationally  accepted  standards,  multinational  enterprises  can
contribute  to  ensure  that  international  trade  markets  function  in  a  more  sustainable
way  and  it  is  therefore  important  that  the  promotion  of  CSR  at  international  level
takes as its basis international standards and agreed instruments.

Those agreed instruments are, at present, of two kinds. First, the OECD Guidelines
for  Multinational  Enterprises  are  the  most  comprehensive,  internationally  endorsed
set  of  rules  governing  the  activities  of  multinationals.  In  promoting  CSR  in
developing  countries,  EU  businesses  should  demonstrate  and  publicise  their  world-

6

wide adherence to them. Second, beyond CSR, international agreements are in place
and their implementation by governments should be promoted. In its communication
on  Promoting  Core  Labour  Standards  and  Improving  Social  Governance  in  the
context of Globalisation2, the Commission stressed the need to ensure the respect for
core  labour  standards  in  the  context  of  globalisation.  It  stressed  in  particular  the
universality of core labour standards and the need for codes of conduct to integrate
the ILO fundamental Conventions.

At the same time, identifying common frameworks for the global dimension of CSR
is  challenging  due  to  the  diversity  in  domestic  policy  frameworks,  protection  of
workers  and  environmental  regulation.  A  number  of  initiatives  in  which  European
companies  participate,  such  as  Investors  for  Africa,  World  Business  Council  for
Sustainable Development, and the UN Global Compact have sought to identify basic
principles and practices. The underlying approach should be that, at global level, just
as at European, the implementation of CSR principles should also go over and above
the  legal  requirements  that businesses need to comply  with,  and  approaches  should
involve consultation with local stakeholders.

Green  paper  responses  also  stressed  the  important  role  played  by  Governments,
international  organisations  and  the  civil  society  in  raising  awareness  and  enforcing
implementation  of  internationally  agreed  social  and  environmental  standards.  The
added value of EU activity in this area, and in promoting the international dimension
of CSR is developed in section 7.6.

Challenges for its further diffusion

The challenges to a further awareness, dissemination and adoption of CSR practices
among enterprises stem from insufficient :
(cid:1)  knowledge  about  the  relationship  between  CSR  and  business  performance  (the

“business case”);

(cid:1)  consensus  between  the  various  parties  involved  on  an  adequate  concept  taking
account  of  the  global  dimension  of  CSR,  in  particular  the  diversity  in  domestic
policy frameworks in the world.

(cid:1)  teaching  and  training  about  the  role  of  CSR,  especially  in  commercial  and

management schools;

(cid:1)  awareness and resources among SMEs;
(cid:1)  transparency,  which  stems  from  the  lack  of  generally  accepted  instruments  to

design, manage and communicate CSR policies;

(cid:1)  consumers’ and investors’ recognition and endorsement of CSR behaviours;
(cid:1)  coherence in public policies.

Towards a EU action framework for CSR

In  principle,  adopting  CSR  is  clearly  a  matter  for  enterprises  themselves,  which  is
dynamically  shaped 
their  stakeholders.
Nevertheless, as there is evidence suggesting  that CSR  creates  value for society  by

interaction  between 

them  and 

in 

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COM(2001)416

7

                                                
contributing to a more sustainable development, there is a role for public authorities
in promoting socially and environmentally responsible practices by enterprises.

The need for public action to promote CSR results also from inadequate governance
at the global and national levels. In its communication "towards a global partnership
for  sustainable  development"  (13.2.2002),  the  Commission  has  stressed  that
globalisation  may  result  in  negative  effects  if  it  goes  uncontrolled.  CSR  public
policies may help shape globalisation in a positive way by promoting good company
practices that complement public efforts for sustainable development.

Community action in the field of CSR has to build on the core principles laid down
in  international  agreements  and  should  be  developed  in  full  respect  of  subsidiarity
principles.  Within  this  scope,  there  are  at  least  two  reasons  pointing  to  the
opportunity  and  the  need  for  Community  Action  in  the  field  of  CSR.  Firstly,  CSR
may  be  a  useful  instrument  in  furthering  Community  policies.  Secondly,  the
proliferation of different CSR instruments (such as management standards, labelling
and certification schemes, reporting, etc.) that are difficult to compare, is confusing
for business, consumers, investors, other stakeholders and the public and this, in turn,
could  be  a  source  of  market  distortion.  Therefore,  there  is  a  role  for  Community
action  to  facilitate  convergence  in  the  instruments  used  in  the  light  of  the  need  to
ensure  a  proper  functioning  of  the  internal  market  and  the  preservation  of  a  level
playing field.

CSR practices and instruments will be more effective if they are part of a concerted
effort by all those concerned towards shared objectives. They should be transparent
and based on clear and verifiable criteria or benchmarks. Public policy can contribute
to the development of an action framework with a view to promote transparency and
thus credibility for CSR practices.

Principles for Community action

The  Commission  proposes  to  build  its  strategy  to  promote  CSR  on  a  number  of
principles. These are as follows:
–  recognition of voluntary nature of CSR;
–  need for credibility and transparency of CSR practices;
–  focus on activities where Community involvement adds value;
–  balanced and all-encompassing approach to CSR, including economic, social and

environmental issues as well as consumer interests;
–  attention to the needs and characteristics of SMEs;
–  support and compatibility with existing international agreements and instruments

(ILO core labour standards, OECD guidelines for multinational enterprises)

The Commission proposes to focus its strategy on the following areas:
(1) 

Increasing  knowledge  about  the  positive  impact  of  CSR  on  business  and
societies in Europe and abroad, in particular in developing countries;
Developing  the  exchange  of  experience  and  good  practice  on  CSR  between
enterprises;
Promoting the development of CSR management skills;
Fostering CSR among SMEs;
Facilitating convergence and transparency of CSR practices and tools;
Launching a Multi-Stakeholder Forum on CSR at EU level;
Integrating CSR into Community policies.

(2) 

(3) 
(4) 
(5) 
(6) 
(7) 

8

The Commission is prepared to involve the candidate countries as much as possible
in  the  implementation  of  this  strategy.  It  will  also  promote  CSR  as  an  incentive  to
enhancing sustainable development and good governance in developing countries.

4. 

IMPROVE THE KNOWLEDGE ABOUT CSR AND FACILITATE THE EXCHANGE OF
EXPERIENCE AND GOOD PRACTICE

4.1. 

Increasing knowledge about the impact of CSR on business and society

The responses to the Green paper reflect a broad consensus among businesses about
the  expectation  that  CSR  will  be  of  strategic  importance  to  ensure  the  long-term
business success.

The  potential  of  CSR  policies  to  strengthen  the  symbiotic  relationship  between
enterprises  and  society  has  already  been  demonstrated  in  areas  such  as  sustainable
growth,  education  and  social  cohesion.  CSR  can  support  the  creation  of  an
atmosphere  of  trust  within  companies,  which  leads  to  a  stronger  commitment  of
employees and higher innovation performance. A similar atmosphere of trust in co-
operation  among  other  stakeholders  (business  partners,  suppliers,  and  consumers)
can  increase  the  external  innovation  performance.  Consumer  confidence  fostered
through  CSR  can  be  a  major  contributor  to  economic  growth.  More  specifically,
through  CSR  practices,  enterprises  can  play  an  important  role  in  preventing  and
combating  corruption  and  bribery,  and  in  helping  preventing  the  use  of  enterprises
for money laundering and criminal activities financing.

CSR policies can also boost the societal benefit that enterprises create with regard to
innovation.  Innovative  practices  aiming  at  better  jobs,  safer  and  employee-friendly
workplaces, gender mainstreaming and the innovation or technology transfer to local
communities  and  developing  countries,  leading  to  a  more  equitable  North-South
economic  and  social  development, are further  examples  of  societal  benefits  created
by  innovative  enterprises.  Indeed,  CSR  may  play  a  positive  role  in  fostering
development  in  third  countries  by  helping  to  establish  a  dialogue  between  these
countries,  their  public  authorities,  social  partners  and  civil  society  and  foreign
companies.

The  desire  of  enterprises  to  improve  their  risk  management  is  a  powerful  factor
behind  CSR.  Enterprises  generally  agree  that  CSR  helps  them  in  managing  their
risks, their intangible assets, their internal processes, and their relations with internal
and external stakeholders. . It has also been argued that opportunities and advantages
for  enterprises  stemming 
international  social  and
from  complying  with 
environmental  conventions,  norms  or  "soft  law  "  instruments  can  outweigh  costs.
Although  most  businesses  support  the  assumption  of  a  positive  impact  of  CSR  on
competitiveness, particularly in the long term, they are however not able to quantify
this effect.

Solid  evidence  that  social  and  environmental  responsibility  supports  competitiveness  and
sustainable  development,  in  particular  in  SMEs,  would  be  the  best  and  most  effective
argument to encourage the uptake of CSR among enterprises, in particular through:

–  strengthening research on how and under which circumstances enterprises adopting CSR
can  contribute  to  the  objective  of  enhanced  competitiveness  and  a  more  sustainable
development:  the  establishment  of  a  priority  area  on  "citizens  and  governance  in  the

9

knowledge-based  society"  in  the  Framework  Programme  2002-2006  of  the  European
Community  for  research,  technological  development  and  demonstration  activities,  will
contribute to gaining this knowledge;

–  supporting  activities  promoted  by  businesses,  social  partners,  education  and  training
institutions  and  other  stakeholders,  aiming  at  raising  awareness  and  improving
knowledge about CSR;

–  analysis  and  dissemination  of  information  about  CSR  practices  and  their  results  for

companies and for host countries.

4.2. 

Developing  the  exchange  of  experience  and  good  practices  on  CSR  between
businesses

In  their  responses  to  the  Green  paper,  business  organisations  and  individual
enterprises stressed the importance of the exchange of experience and good practices
about  CSR  between  companies,  as  an  important  vehicle  to  develop  the  concept
further. It can help businesses to acquaint themselves with the concept, to benchmark
their position against competitors and to build up a consensus about its instruments,
such  as  reporting  standards  or  verification  procedures.  These  exchanges  could  be
particularly  beneficial  at  sectoral  level,  where  they  can  play  an  important  role  is
identifying  common  challenges  and  options  for  co-operation  between  competitors.
Such co-operation could reduce the costs of adopting CSR and help to create a level-
playing field. It could also help to diffuse CSR in supply chains.

Co-operatives,  mutuals  and  associations  as  membership-led  organisations  have  a
long  tradition  in  combining  economic  viability  with  social  responsibility.  They
ensure this through stakeholder dialogue and participative management and thus can
provide an important reference to other organisations.

The effectiveness of existing fora for the exchange of good practice and experience at local,
regional,  national  and  EU  level,  could  be  reinforced  through  better  networking  and  co-
ordination of their activities.

The integration of CSR into the work of European business support networks would facilitate
dialogue and co-operation between them.

4.3. 

Developing  the  exchange  of  experience  and  good  practices  on  CSR  between
Member states

Several  Member  states  have  developed  CSR  policies,  which  differ  because  they
reflect  national  traditions,  situations  and  challenges.  In  order  to  facilitate  the
exchange of information about national policies and to support its work in the area of
CSR,  the  Commission  has  gathered  together  a  group  of  High-Level  Social
Representatives from the Member States that has met on a regular basis.

The Commission will continue to facilitate an exchange of information and dissemination of
good practices about awareness raising strategies and activities, with a particular emphasis
on  SME,  and  initiatives  aimed  at  exploring  and  establishing  Total  Quality  Management
Systems as well as other policies (CSR-related legislation and support). It will also propose
a  peer  review  of  the  CSR  practices  in  Member  States,  assessing  the  performance  and  the
value added of regulatory frameworks and monitoring schemes.

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4.4. 

Developing CSR management skills

Most  respondents  to  the  Green  Paper  stressed  the  importance  of  education  and
training  of  managers,  employees,  and  other  actors  to  promote  CSR.  The  education
system, at all levels, has a crucial role to play in the fostering of social responsibility
in citizens, including those who are working – or will work – in the world of business
or outside it. It can fulfil this role by enabling citizens to understand and appreciate
social,  environmental  and  ethical  values  and  equipping  them  to  take  informed
decisions.  Education  and  training  in  the  field  of  business  administration  have
particular  relevance  to  CSR  in  this  context,  and  the  encouragement  of  an  effective
dialogue between the worlds of business and education on this subject can contribute
to the promotion of CSR principles and practices.

The exchange of good practices in integrating CSR principles in general education as well
as  in  business  administration  training  could  be  further  developed  between  education
systems, companies, employee representatives and other stakeholders, including consumers.

The  Structural  Funds  provide  significant  financial  support  for  the  economic  and  social
conversion of areas in structural difficulties, and for adapting and  modernising education,
training  and  employment  policies  and  systems,  particularly  in  order  to  increase  the
adaptability and employability of workers. In this respect the European Social Fund could
be  used  to  promote  CSR  in  management  training  and  for  other  employees,  as  well  as  to
develop teaching materials and courses in educational institutions, including those active in
lifelong learning, in co-operation with enterprises.

4.5. 

Fostering CSR among SMEs

The CSR concept was developed mainly by and for large multinational enterprises.
In  line  with  the  Commission’s  “Think  Small  First”  strategy,  the  CSR  concept,
practices  and  instruments  should  be  adapted  to  suit  the  specific  situation  of  SMEs
which  make  up  the  vast  majority  of  European  enterprises.  Because  of  their  lower
complexity  and  the  strong  role  of  the  owner,  SMEs  often  manage  their  societal
impact  in  a  more  intuitive  and  informal  way  than  large  companies.  In  fact,  many
SMEs  are  already  implementing  socially  and  environmentally  responsible  practices
without  being  familiar  with  the  CSR  concept  or  communicating  their  activities.
These practices are often defined and understood as responsible entrepreneurship by
SMEs.

50%  of  recently  surveyed3  European  SMEs  indicate  that  they  already  carry  out
socially  and  environmentally  responsible  activities  for  the  benefit  of  their  external
stakeholders.  Their  community  and  social  engagement  could  be  characterised  as
being  local  in  scope,  occasional  in  nature,  and  unrelated  to  business  strategy.  The
main driver would be the ethical consideration of the owner/manager, even though a
significant  number  of  SMEs  also  recognise  business  benefits  such  as  improved
relations  with  consumers  and  the  local  community.  Furthermore,  a  positive
correlation  between  SME's  strategic  focus  and  their  socially  responsible  activities
can  be  established:  SMEs  focussing  on  innovation,  quality  and  growth  also  score

3

The 2001 ENSR survey of over 7,000 SMEs in: European SMEs and Social and Environmental
Responsibility, report published in the 7th Observatory of European SMEs, 2002, European
Commission, Enterprise DG
(http://europa.eu.int/comm/enterprise/enterprise_policy/analysis/observatory.htm)

11

                                                
higher  on  current  or  future  social  engagement.  Lack  of  awareness  seems  to  be  the
most significant obstacle to social engagement, especially among the smallest SMEs,
followed by resource constraints. Small business associations, support organisations
and  networks  have  an  important  role  to  play  in  raising  awareness  through  the
provision of information, user-friendly tools and the dissemination of good practices
cases.

Since  SMEs  do  not  draw  value  from  their  engagement  in  the  same  way  as  a  large
company,  it  is  important  to  assist  SMEs  in  adopting  a  more  strategic  approach.
Collecting  evidence  on  the  business  case  for  different  types  of  SMEs  operating  in
diverse  cultural  backgrounds  is  key  to  a  better  understanding  and  increased  SME
participation.  In  the  future,  the  most  significant  pressure  on  SMEs  to  adopt  CSR
practices is likely to come from their large business customers, which in return could
help SMEs cope with these challenges through the provision of training, mentoring
schemes and other initiatives.

To facilitate the wider adoption of responsible entrepreneurship practices by SMEs, there is
a need to raise further awareness about their economic benefits and to promote them as a
risk management tool, as well as to:

–  work  towards  a  better  understanding  of  SMEs’  current  social  and  environmental
engagement, including research into SME-specific aspects of CSR and the business case;

–  foster the exchange and dissemination of good practices cases identified with the help of
Member  State  and  candidate  countries  experts,  SME  representative  organisations,
business  support  organisations  and  consumer  organisations  (e.g.  through  publications,
on-line collection of good practices etc.);

–  facilitate the development and dissemination of user-friendly, tailor-made tools for those
SMEs  that  wish  to  engage  in  or  further  develop  socially  responsible  actions  on  a
voluntary basis (information material, SME-toolkit, etc.);

–  bring the attention of SME associations and business support organisations to CSR issues
with a view to their integration into support provision for responsible entrepreneurship
initiatives in SMEs;

–  facilitate  co-operation  between  large  companies  and  SMEs  to  manage  their  social  and
environmental responsibility (e.g. supply chain management, mentoring schemes etc.), in
accordance with national and EU competition rules;

–  raise awareness among SMEs with regard to the impact of their activities on developing
countries, and promote SMEs proactive policies, in particular in the fields of core labour
standards, eradication of child-labour, gender equality, education, training, health-care
assistance and insurance.

5. 

PROMOTING CONVERGENCE AND TRANSPARENCY OF CSR PRACTICES AND TOOLS

CSR relates to a very wide range of company activities. This is particularly the case
when an enterprise operates in several countries and has to adapt its activities to the
specific  situations  in  these  countries.  This  diversity  has  helped  to  create  an
impressive  richness  of  voluntary  enterprise  initiatives,  which  often  include
innovative  elements,  but  also  implies  challenges,  namely  the  lack  of  transparency
and comparability.

Transparency is a key element of the CSR debate as it helps businesses to improve
their practices and behaviour; transparency also enables businesses and third parties

12

to  measure  the  results  achieved4.  CSR  benchmarks  against  which  the  social  and
environmental performance of businesses can be measured and compared are useful
to  provide  transparency  and  facilitate  an  effective  and  credible  benchmarking.  The
interest in benchmarks has resulted in an increase of guidelines, principles and codes
during  the  last  decade.  Not  all  of  these  tools  are  comparable  in  scope,  intent,
implementation  or  applicability  to  particular  businesses,  sectors  or  industries.  They
do  not  answer  to  the  need  for  effective  transparency  about  business  social  and
environmental performance. As expectations for CSR become more defined, there is
a  need  for  a  certain  convergence  of  concepts,  instruments,  practices,  which  would
increase  transparency  without  stifling  innovation,  and  would  offer  benefits  to  all
parties. CSR benchmarks should build upon core values and take their starting point
in  international  agreed  instruments  such  as  ILO  core  labour  standards  and  OECD
guidelines for multinational enterprises.

Several market-driven international multi-stakeholder initiatives are emerging, which
work towards convergence and transparency in the area of CSR. Member states have
taken  various  initiatives  to  promote  them,  in  accordance  with  their  respective
approaches to CSR. The Commission wishes to do its part in facilitating convergence
and transparency in the area of CSR, by facilitating the development, diffusion and
acceptance  of  these  international  multi-stakeholder  initiatives  by  enterprises  and
stakeholders.

Increased convergence and transparency would be desirable in the following fields:

Codes of Conduct,

(1) 
(2)  Management standards
(3) 
(4) 
(5) 

Accounting, auditing and reporting
Labels
Social responsible investment

5.1. 

Codes of conduct

The  increasing  public  interest  in  the  social  and  environmental  impact  and  ethical
standards  of  industry  has  moved  many  companies,  in  particular  those  of  the
consumer  goods  sector,  to  adopt  codes  of  conduct  relating  to  labour  issues,  human
rights and the environment.

Codes  of  conduct  are  innovative  and  important  instruments  for  the  promotion  of
fundamental human, labour and environmental rights, and anti-corruption practices -
especially  in  countries  where  public  authorities  fail  to  enforce  minimum  standards.
However, it should be underlined that they are  complementary to national, EU  and
international legislation and collective bargaining, and not a substitute to them.

The  biggest  challenge  related  to  codes  is  to  ensure  that  they  are  effectively
implemented,  monitored  and  verified.  In  this  respect,  the  Commission  promotes
business  widespread  adherence  to  codes  of  conducts  developed  by  international
organisations. Special attention should be given to implementing codes in respect of
workers in the informal sector and sub-contractors and in the free-trade zones.

The Commission believes that codes of conducts should:

4

Greater transparency also prevents companies from being used by organised crime, and terrorist groups
to launder or generate money for their benefit.

13

                                                
–  build  on  the  ILO  fundamental  Conventions  and  the  OECD  guidelines  for

multinational enterprises as a common minimum standard of reference;

–  include  appropriate  mechanisms  for  evaluation  and  verification  of 

their

implementation, as well as a system of compliance;

–  involve  the  social  partners  and  other  relevant  stakeholder  which  are  affected  by
their  elaboration,

in  developing  countries, 

those 

in 

including 

them, 
implementation as well as monitoring;

–  disseminate experience of good practices of European enterprises.

The Commission invites the CSR EMS Forum (see below) to consider the effectiveness and
credibility of existing codes of conducts and how convergence can be promoted at European
level.

5.2.  Management standards

Faced with a widening range of complex issues in areas such as labour practices and
supplier relations, with implications across their organisations, businesses, regardless
of sector, size, structure or maturity, would benefit from the inclusion of social and
environmental  issues  into  their  daily  operations.  In  this  context,  CSR  management
systems - like Total Quality Management systems - could allow enterprises to have a
clear  picture  of  their  social  and  environmental  impacts,  help  them  to  target  the
significant ones and manage them well.

The  Eco-Management  and  Audit  Scheme  (EMAS),  for  example,  allows  voluntary
participation in an environmental management scheme. It is a scheme for companies
and  other  organisations  that  are  willing  to  commit  themselves  to  evaluate,  manage
and  improve  their  environmental  and  economic  performance.  In  addition,  active
employee involvement is a driving force for EMAS and a contribution to the social
management of organisations.

The  Commission  will  promote  the  uptake  of  EMAS  as  a  CSR  instrument  and  explore  the
opportunity to  apply the  EMAS  approach  to  address  the  social  performance  of  companies
and other organisations. It invites the CSR EMS Forum (see below) to examine this issue.

5.3.  Measurement, reporting and assurance

In the last decade, more and more companies have started to publish information on
their  social  and  environmental  performance.  "Triple  bottom  line"  reporting  of
economic, social and environmental indicators is emerging as good practice. At this
early stage of experimentation, flexibility may ensure that reporting is appropriate to
each individual business. However, a greater consensus on the type of information to
be  disclosed,  the  reporting  format,  the  indicators  used  and  the  reliability  of  the
evaluation  and  audit  procedure  would  allow  for  a  more  meaningful  benchmarking
and  communication  of  companies'  performance  within  particular  sectors  and  for
businesses  of  similar  size.  The  guidelines  developed  by  the  Global  Reporting
Initiative (GRI) are a good example of a set of guidelines for reporting which could
be the base of such consensus.

The  Gyllenhammar  Report  on  “Managing  Change”  referred  to  the  need  for  social
reports to be drawn up in consultation with employees’ representatives and to contain

14

structured  information  about  practices  and  policies  relating  to  employment  and
working conditions.

In  its  communication  on  the  EU  Strategy  for  Sustainable  Development  (15/5/2001),  the
Commission invited all publicly-quoted companies with at least 500 staff to publish a “triple
bottom  line”  in  their  annual  reports  to  shareholders  that  measures  their  performance
against economic, environmental and social criteria.5

The  Commission  invites  the  CSR  EMS  Forum  (see  below)  to  develop  commonly  agreed
guidelines and criteria for measurement, reporting and assurance by mid-2004.

5.4. 

Labels

The consumer right to information is founded in the EC Treaty. Information should
be  accurate  and  accessible  to  be  useful  to  consumers.  As  Consumers  express  a
growing  preference  for  socially  and  environmentally  responsible  products  and
services,  access  to  relevant  information  about  the  social  and  environmental
conditions  of  production  is  crucial  to  help  them  to  make  informed  choices.  Such
information  is  available  in  different  forms  and  from  different  sources,  including
claims made by the producer, information from consumer organisations and 3rd party
verified labels.

Adherence  to  commonly  agreed  criteria  for  making  and  assessing  social  and
environmental claims of a self-declaratory character would contribute to improve the
effectiveness and credibility of these claims. Monitoring of claims by Member States
and  stakeholders  is  essential.  The  Commission  is  finalising  guidelines  for  making
and assessing environmental self-declared claims by producers or distributors, based
on the ISO 14021:1999 standard, with the objective of preventing misleading claims
and encouraging good ones.

Consumers also receive information through recognition schemes, such as listing of
awards,  prizes,  labels,  etc.,  which  identify  good  practices  on  specific  subjects.  The
EU-Ecolabel6  as  well  as  fair  trade  and  ethical  trade  initiatives  and  labels  are
examples  of  3rd  party  verified  product  labelling  schemes.  They  are,  however,  only
available  for  a  limited  range  of  product  categories.  For  most  consumer  products,
relevant social and environmental information is not easily accessible.

Both  the  ethical  and  fair-trade  movements  are  now  aligning  themselves  under
common  initiatives  aiming  at  developing  transparent  and  verifiable  criteria  for
labelling  and  certification.  The  Commission  welcomes  these  efforts  as  well  as  the
rationalisation  of  existing  labels  through  initiatives  such  as  the  new  common  fair

5

6

In  the  recent  proposal  for  the  modernisation  of  the  Fourth  (78/660/EEC)  and  Seventh  Council
Directives  (83/349/EEC)  adopted  on  28  May  2002,  COM(2002)259,  the  Commission  has  proposed
amendments  to  those  Directives  to  promote  the  inclusion,  in  the  annual  review,  of  non-financial
information relevant to an understanding of the performance of the business and its position at the year
end - i.e. the annual review should not be restricted to the financial aspects of performance or year end
position.
The  EU-Ecolabel  (“the  Flower”)  is  awarded  to  products  of  the  highest  environmental  quality.  The
Flower is a transparent and credible label since the compliance with the criteria is certified, verified and
monitored by an independent third party. The consumer can be confident that the product bearing the
label is one of the best with respect to its environmental performance.

15

                                                
trade  label  launched  by  the  Fair-trade  Labelling  Organisations  (FLO)  and  will
examine the need to adopt further measures to promote fair and ethical trade.

in 

Participation 
labelling  schemes  should  be  voluntary.  Labels  should  be
implemented  in  an  objective,  transparent,  credible  and  non-discriminatory  manner,
respecting  EU  international  obligations  and  applicable  competition  rules.  The  ILO
core labour conventions should constitute a minimum baseline for such schemes. The
EU supports the work of the ILO with regard to private voluntary initiatives.

By teaching the practice of making informed product choices, education could help
develop  a  better  understanding  of  the  need  for  socially  responsible  products  and
services.

In  its  new  consumer  policy  strategy  for  2002  to  2006,  the  Commission  committed  to
examining existing private labelling schemes, such as organic labelling, fair trade and CSR
measures,  to  assess  their  effectiveness  and  the  need  for  further  measures  in  achieving  the
objectives  of  transparency  and  information  for  consumers  with  a  view  to  promote
sustainable development.

The Commission invites the CSR EMS Forum (see below) to seek to define commonly agreed
guidelines  for  labelling  schemes  supporting  ILO  core  conventions  and  environmental
standards.

5.5. 

Socially Responsible Investment (SRI)

For  Socially  Responsible  Investment  (SRI)  to  contribute  to  the  promotion  of  CSR,
the  development  by  rating  organisations  -  independent  consultants  or  SRI
departments  of  investment  banks  -  of  criteria  and  indicators  which  identify  the
factors  of  competitive  advantage  and  business  success  of  socially  responsible
enterprises is essential.

With  the  aim  of  raising  awareness  about  SRI  issues,  several  Member  States  have
already adopted legislation requiring pension funds to disclose whether and how they
take  account  of  social,  environmental  and  ethical  factors  in  their  investment
decisions. Although such legislation does not oblige pension funds trustees to adopt
SRI  policies,  it  increases  their  transparency  on  the  issue.  As  pension  funds  start  to
require more information from the enterprises they invest in, these enterprises see an
advantage in publicising information on their social and environmental performance.

Registration statements and prospectuses issued at the time of an IPO (initial public
offering),  can  be  another  useful  source  of  information  on  social  and  environmental
risks  allowing  the  prospective  investor  to  assess  the  overall  risks  associated  with  a
business.

The  Commission  invites  occupational  pension  schemes  and  retail  investment  funds  to
disclose whether and how they take account of social, environmental and ethical factors in
their investment decisions.

The Commission encourages initiatives aiming at monitoring and benchmarking practices of
pension  funds  and  investment  funds  with  regard to  and  in support  of  CSR,  and  invites  the
CSR  EMS  Forum  (see  below)  to  consider  whether  a  common  EU  approach  can  be
established.

16

6. 

LAUNCHING A EU MULTI-STAKEHOLDER FORUM ON CSR

The  previous  chapter  identified  a  number  of  areas  (codes  of  conduct;  management
standards;  accounting,  auditing  and  reporting;  labels;  and  socially  responsible
investment)  where  increased  convergence  and  transparency  is  desirable  in  order  to
further  promote  the  development  of  CSR  practices  at  European  level,  based  on
European  values,  and  to  facilitate  its  contribution  to  the  EU's  strategic  goal  as
adopted by the Lisbon Summit for 2010.

Common approaches and one-size-fits-all solutions may not be possible in all areas,
since  CSR  is  a  fluid  concept,  and  stakeholders  also  have  different  and  sometimes
conflicting  interests.  But  a  structured  and  partnership-based  approach  between
businesses and their various stakeholders, as outlined in the Green Paper, can be used
to draw on practical experience, build consensus where this is possible, and promote
innovation.

The EU success in promoting CSR ultimately depends on widespread “ownership” of
the  principles  of  CSR  by  businesses,  social  partners,  civil  society,  including
consumer organisations, and public authorities, including from third countries, which
should  be  based  on  comprehensive  partnership  with  representatives  of  society  at
large. The involvement of all affected stakeholders is key to ensure acceptance and
credibility of CSR and better compliance with its principles. In their responses to the
Green  Paper,  a  number  of  respondents  invited  the  Commission  to  facilitate  a
dialogue between businesses and their stakeholders.

The Commission therefore proposes to set up a EU Multi-Stakeholder Forum on CSR (CSR
EMS Forum) with the aim of promoting transparency and convergence of CSR practices and
instruments, through:

–  exchange of experience and good practice between actors at EU level;

–  bringing together existing initiatives within the EU, and seeking to establish common EU
approach and guiding principles, including as a basis for dialogue in international fora
and with third countries;

–  identifying and exploring areas where additional action is needed at European level.

The  proposed  Forum,  to  be  chaired  by  the  Commission,  will  bring  together  some
forty European representative organisations of employers, employees, consumers and
civil  society  as  well  as  professional  associations  and  business  networks.  The
Commission  will  aim  to  ensure  a  balanced  representation  of  the  stakeholders.  The
other EU institutions will be invited with observer status.

A two-level structure is envisaged:

–  two plenary meetings of the Forum - at political level - each year, to agree broad

guidelines, rules of procedures and a work programme, and assess progress;

–  theme-based Round Tables, in a more restricted composition to be defined by the
Forum itself, to implement the work programme. Depending on the specific issues
addressed,  participation 
include  relevant
stakeholders and experts, including through the use of the Internet to consult and
seek input, where costs prohibit direct participation. Participation from developing
countries will also be ensured.

these  Round  Tables  should 

to 

17

A  steering  group  including  representatives  from  the  Commission  and  from  leading
participating  organisations  will  be  responsible  for  the  daily  management  of  the
Forum.

The agenda, documents tabled  and results of the  CSR  Round Tables will be public
and posted on Europa. The activities of the Forum will be supported from within the
existing financial, human and administrative resources of the Commission.

The Commission invites the CSR EMS Forum to address and to agree by mid-2004
if possible on guiding principles on the following issues:
(cid:2)  the relationship between CSR and competitiveness (business case);
(cid:2)  the  contribution  of  CSR  to  sustainable  development,  in  particular  in  developing

countries, and to gender mainstreaming;

(cid:2)  SME-specific  aspects  (tools,  coaching/mentoring  practices  by  large  enterprises,

supply chain aspects);

–  effectiveness and credibility of codes of conducts, to be based on internationally
agreed principles, in particular the OECD guidelines for multinational enterprises;

–  development of commonly agreed guidelines  and criteria for CSR  measurement,

reporting and assurance;

(cid:2)  definition  of  commonly  agreed  guidelines  for  labelling  schemes,  supporting  the

ILO core conventions and environmental standards;
(cid:2)  disclosure on pension and retail funds SRI policies.

The Forum may also identify other issues, which need to be considered.

The  CSR  EMS  Forum  is  invited  to  present  before  summer  2004  a  report  about  its
work to the Commission, which should then make an evaluation of its results, decide
on  its  future  and  consider  if  any  other  initiative,  involving  in  particular  enterprises
and the other stakeholders, is appropriate to further promote CSR.

7. 

INTEGRATING CSR IN ALL EU POLICIES

In the context of the strategy for sustainable development adopted by the European
Union at the Gothenburg Summit of June 2001, and of the Charter of Fundamental
Rights of the European Union, proclaimed in Nice in December 2000, the European
Union  is  committed  to  fully  integrate  economic,  social  and  environmental
considerations  as  well  as  fundamental  rights  including  core  labour  standards  and
gender equality, into its policies and actions, with due respect to both their internal
and external dimensions.

CSR  practices  can  contribute  to  the  objectives  of  EU  policies,  in  particular
sustainable  development,  by  supplementing  existing  policy  tools  such  as  trade  and
development agreements.

To ensure the coherence of EU policies, the Commission is committed to:

–  further promote the integration of CSR principles into EU policies, where appropriate;

18

–  publish  a report  on  CSR  in  2004,  on  the  work  of  the  CSR  EMS  Forum  and  the  results

reached by then, as well as on the integration of CSR in all EU policies;

–  set  up  an  interservice  group  on  CSR  within  the  Commission,  in  order  to  share
information and achieve consistency between the actions of the Commission in the field of
CSR.

7.1. 

Employment and social affairs policy

Within a business CSR relates to quality employment, lifelong learning, information,
consultation and participation of workers, equal opportunities, integration of people
with disabilities anticipation of industrial change and restructuring. Social dialogue is
seen as a powerful instrument to address employment-related issues.

Employment and social policy integrates the principles of CSR, in particular, through
the  European  Employment  Strategy,  an 
responsible
restructuring, the European Social Inclusion Strategy, initiatives to promote equality
and diversity in the workplace, the EU Disability Strategy and the Health and Safety
Strategy.

initiative  on  socially 

In  its  document  "Anticipating  and  managing  change:  a  dynamic  approach  to  the
social aspects of corporate restructuring", the Commission has stressed that properly
taking  into  account and  addressing  the  social  impact  of  restructuring  contributes  to
its acceptance and to enhance its positive potential. The Commission has called upon
the social partners to give their opinion in relation to the usefulness of establishing at
Community  level  a  number  of  principles  for  action,  which  would  support  business
good practice in restructuring situations.

In  its  communication  “Adapting  to  change  in  work  and  society:  a  new  Community
strategy on health and safety at work 2002–2006”7, the Commission has expressed its
intention  to  encourage  instruments  which  promote  innovative  approaches,  to
encourage the various parties to “go a step further” and to associate all the interested
parties  in  achieving  the  overall  objectives  of  this  strategy,  more  especially  in  new
fields which do not lend themselves easily to a normative approach.

Deeply  rooted  societal  changes  such  as  increasing  participation  of  women  in  the
labour market should be reflected in CSR, adapting structural changes and changing
the work environment in order to create more balanced conditions for both genders
acknowledging the valuable contribution  of women  as strategies which will benefit
the society as well as the enterprise itself.

The  2003  European  Year  of  People  with  Disabilities  provides  an  opportunity  for
enterprises to exchange experience of CSR practices and strategies and to undertake
actions with  a view to acting in  a socially  responsible manner towards people with
disabilities  in  relation  to  promoting  equal  employment  opportunities,  developing
designed-for-all products as well as improving accessibility to assistive technologies.

7

(COM(2002) 118 final)

19

                                                
7.2. 

Enterprise policy

Only competitive and profitable enterprises are able to make a long-term contribution
to sustainable development by generating wealth and jobs without compromising the
social  and  environmental  needs  of  society.  In  fact,  only  profitable  firms  are
sustainable and have better chances to adopt/develop responsible practices.

The role of enterprise policy is to help create a business environment, which supports
the  Lisbon  objective  of  becoming  the  world’s  most  dynamic  knowledge-driven
economy, supports entrepreneurship and a sustainable economic growth. Its objective
is  to  ensure  a  balanced  approach  to  sustainable  development,  which  maximises
synergies between its economic, social and environmental dimensions.

Another key element is to support businesses in enhancing their competitiveness and
in  meeting  the  challenges  of  the  transition  to  the  knowledge  economy.  A  special
focus  of  enterprise  policy  is  on  SMEs  and  responsible  entrepreneurship,  where
projects with Member states are carried out to identify good practices in policy and
support. Further action priorities focus, among others, on research on the impact of
CSR and sustainable development on business performance, industry-sector specific
aspects  (ICTs,  tourism,  services,  social  economy),  CSR  and  innovation  and  the
management of the intangible assets of firms.

7.3. 

Environmental policy

Environmental  requirements  have  developed,  over  the  last  25  years,  to  become  of
horizontal nature, applying to all Community policies, as is demonstrated by Article
6 EC Treaty. At the same time CSR includes sound and progressive  environmental
principles.  Experience  shows  that  undertakings,  which  follow  sound  environmental
standards,  are,  in  medium  and  long  term,  more  competitive  on  the  international
market,  as  environmental  standards  promote  innovation  and  modernisation  of
processes and products and lead to cleaner technologies. Conversely it may also be
that  internationally  competitive  firms  are  better  able  to  invest  in  newer,  more
efficient and cleaner technologies.

The role of business in fostering environmental sustainability is a central issue in the
newly  adopted  6th  Environmental  Action  Programme,  and  builds  on  a  number  of
community  actions  which  have  addressed  the  various  dimensions  of  business
responsibility in the environmental field.

–  The  already  mentioned  Eco-Management  and  Audit  Scheme  (EMAS)  promotes
continuous  improvements  in  the  environmental  performance  of  industrial
activities by  committing  firms to evaluate  and  improve  their  own  environmental
performance.

–  The  Commission  also  actively  supports  the  European  Eco-Efficiency  Initiative
(EEEI), an initiative of the World Business Council for Sustainable Development
and  the  European  Partners  for  the  Environment,  which  aims  to  integrate  eco-
efficiency throughout European business, and in European Union (EU) industrial
and economic policies.

–  The  Recommendation  of 

the  recognition,
measurement  and  disclosure  of  environmental  issues  in  the  annual  accounts  and

the  European  Commission  on 

20

annual  reports  of  companies  has  set  community  standards  in  order  to  produce
reliable,  comparable  and  useful  information  on  the  firms'  environmental
performance.

–  In its communication "Environmental Technology for Sustainable Development"8,
the  Commission  has  underlined  the  importance  of  environmental  technologies,
and their ability to contribute  both  to  the  profitability  of  individual  firms  and  to
the competitiveness of  the economy.  In  particular,  the  use  of  cleaner  'integrated'
technologies  are  often  associated  with  improved  process  efficiency  and  can
provide  savings  for  the  firm  thanks  to  improved  resource  efficiency,  reduced
waste  etc.  This  provides  clear  guidance  for  action  by  enterprises  willing  to
improve  their  environmental  performance.  The  Commission  intends  to  address
this  issue  in  the  context  of  its  forthcoming  Action  Plan  to  promote  green
technologies.

As  part  of  their  CSR  strategies,  enterprises  are  invited  to  adopt  the  above  mentioned
principles and approaches. EMAS can be a key tool to implement them.

7.4. 

Consumer Policy

CSR  has  partly  evolved  in  response  to  consumer  demands  and  expectations.
Consumers,  in  their  purchasing  behaviour,  increasingly  require  information  and
reassurance that their wider interests, such as environmental and social concerns, are
being  taken  into  account.  Enterprises  are  increasingly  sensitive  to  these  demands
both to retain existing customers and to attract new customers.

Consumers and their representative organisations have therefore an important role to
play  in  the  evolution  of  CSR.  If  CSR  is  therefore  to  continue  to  serve  its  purpose,
strong  lines  of  communication  between  enterprises  and  consumers  need  to  be
created.

Concerning  fair  commercial  practices,  the  Commission  is  in  the  process  of
consulting  interested  parties  on  the  detail  of  a  possible  framework  directive  which
would harmonise national rules on the fairness of commercial practices (advertising,
aggressive  marketing,  after-sale  customer  assistance,  etc.)  between  businesses  and
consumers9.

7.5. 

Public procurement policy

The EU public procurement rules are of an essentially economic nature but have also
to be seen in the light of the sustainability requirement of Art. 2 of EC Treaty. The
interpretative communications of the Commission on the Community law applicable
integrating  social10  and
the  possibilities 
to  public  procurement  and 
environmental11  considerations 
into  public  procurement  have  clarified  how
Community  law  offers  numerous  possibilities  to  public  purchasers  who  wish  to
into  public  procurement
integrate  social  and  environmental  considerations 

for 

8

9

10

11

(COM(2002)122)
COM(2002) 289 final, COM(2001) 531 final
COM(2001) 566 final of 15.10.2001
COM(2001) 274 final of 4.7.2001

21

                                                
procedures,  whilst  at  the  same  time  ensuring  respect  of  the  principle  of  value  for
money for taxpayers and equal access for all EU suppliers.12

When  public  procurement  does  not  fall  under  the  scope  of  the  EU  public
procurement directives, public purchasers are  generally freer to integrate social  and
environmental considerations into their procedures provided that they are compatible
with the general rules and principles of the EC Treaty and Member States legislation.
However public purchasers generally lack specific information as to what social and
environmental  characteristics  they  may  seek  for  a  given  product.  To  address  the
environmental dimension of this issue Guidelines on greening public procurement by
using the European Eco-label criteria have been issued by Commission's services in
November 2001. Work is currently underway on a number of other initiatives in the
field of public procurement and the environment. These include a practical handbook
on green public procurement, and a database providing information on environmental
aspects of key products and services for corporate and public purchasers."

Facilitating  the  exchange  of  experience  about  the  possibilities  to  take  into  account  social
considerations  in  public  procurement  -  as  outlined  in  the  Commission's  communication  -
could be useful to raise awareness amongst public purchasers.

7.6. 

External relations policies, including development policy and trade

The European Union can make more effective the promotion of CSR at international
level  because  it  has  a  unique  set  of  agreements  with  third  countries  and  regional
groupings,  including  the  Cotonou  Agreement  with  the  African,  Caribbean  and
Pacific countries. Since 1994, these have incorporated a clause defining human rights
as  a  fundamental  element  of  the  agreement,  which  serves  as  the  basis  for  dialogue
with a third country government on human rights. This includes encouraging respect
for  core  labour  standards,  since  this  forms  a  necessary  underpinning  for  successful
CSR activity by companies investing in developing countries.

The EU's approach in this area was set out in the Communications on The EU role in
promoting human rights and democratisation in third countries13, and on Promoting
Core  Labour  Standards  and  Improving  Social  Governance  in  the  context  of
Globalisation14.  It  includes  the  use  of  bilateral  dialogue  with  governments  and
development assistance to build capacity, and of additional trade incentives under the
EU's  Generalised  System  of  Preferences  (GSP)  where  countries  comply  and  apply
minimum social and environmental standards. GSP also provides for their temporary
withdrawal where countries that commit serious and systematic violations of any of
the  core  labour  standards  referred  to  in  the  ILO  Declaration  on  Fundamental
Principles and Rights at Work.

The EU also has a role in promoting dialogue between the EU and third country civil
societies,  including  business,  and  can  use  this  role  to  further  the  spread  of  CSR.
Trade unions, consumer associations, human rights defenders and other “watchdog”
mechanisms  play  an  important  role  in  promoting  and  ensuring  respect  for
fundamental  rights.  By  promoting  exchange  of  experience  and  sharing  of  good

12

13

14

In  addition,  non-compliance  with  relevant  legislation  i.e.  in  the  social  or  environmental  field  may  be
taken into account by the purchaser in order to exclude a contractor from participating in a contract.
COM (2001) 252) final
COM(2001)416

22

                                                
practices  between  counterparts  in  the  EU  and  developing  countries,  the  EU  can
contribute to building capacity to monitor the on-the-ground application by investors,
foreign and domestic, to CSR principles. Such debate can also promote convergence
of approaches. EC assistance programmes can potentially be used to provide support
to such dialogue and capacity building concerning CSR.

Promoting debate on CSR is particularly useful in developing countries where there
is little understanding of the concept, or where it is regarded with suspicion as a form
of  protectionism  or  a  brake  on  investment  flows,  rather  than  as  a  potential  market
opportunity  (e.g.  through  social  labelling  schemes)  and  a  means  of  attracting  FDI.
But  it  is  also  useful  for  the  EU  to  encourage  the  inclusion  of  CSR  as  a  topic  for
dialogue  with  developed  country  governments,  business  and  civil  society,
particularly where these are major sources of FDI, so as to promote convergent and
effective global approaches.

The EU can take the lead in promoting CSR in multilateral and  global fora such as
the  OECD  and  the  forthcoming  Johannesburg  World  Summit  on  Sustainable
Development in August 2002.

The EU can also engage directly with multinational enterprises and encourage them
to play a part in promoting respect for human rights and labour standards, including
gender  equality,  particularly  where  their  operations  have  an  influential  role  in
countries with a poor record in this area.

Additionally,  where  public  support  is  provided  to  enterprises,  this  implies  co-
responsibility of the government in those activities. These activities should therefore
comply with the OECD  guidelines  for  multinational enterprises, and,  inter alia, not
involve  bribery,  pollution  of  the  environment  or  child  or  forced  labour.  Making
access  to  subsidies  for  international  trade  promotion,  investment  and  export  credit
insurance, as well as access to public procurement, conditional on adherence to and
compliance with the OECD guidelines for multinational enterprises, while respecting
EC  international  commitments,  could  be  considered  by  EU  Member  States  and  by
other States adherent to the OECD Declaration on International Investment.

Further to the adoption of the 1997 OECD Convention on bribery of foreign public
officials  in  international  business  transactions,  it  is  a  punishable  offence  (including
corporate liability) in all state parties’ jurisdictions (including all EU Member States)
to bribe  a foreign  public  official  of  any  jurisdiction  world-wide.  Awareness-raising
within  the  entire  private  sector  should  be  improved  with  a  view  to  sensitising
companies  to  the  damaging  consequences  that  corrupt  practices  might  have  on
companies and their reputation, thus contributing to the prevention of corruption.

To  promote  CSR  principles  and  practice  at  international  level,  and  particularly  in
developing countries, the Commission:

–  Will  pursue  the  approach  outlined  in  its  Communication  on  Promoting  Core  Labour
Standards and Improving Social Governance in the context of Globalisation. It reiterates
its  call  to  the  Council  adopts  at  the  earliest  opportunity  a  strategy  to  improve  global
social governance and promote core labour standards as a necessary foundation of the
present initiative on CSR.

–  In line with this approach, provide support for capacity building and technical assistance
to developing countries to promote compliance with agreed international environmental

23

and  labour  standards,  thereby  helping  to  promote  sustainable  development  and
establishing  a  solid  basis  for  the  application  of  CSR  principles  by  both  foreign  and
domestic investors;

–  Promote awareness and  application  of  CSR  abroad,  including  through  its  Delegations,
by encouraging debate and exchange of good practice, between and among third country
and European stakeholders;

–  Support  and  promote  the  commitment  of  the  Community  and  EU  Member  States
regarding  the  OECD  Guidelines  for  multinational  enterprises,  through  the  inclusion  in
EU  external  relations  agreements  of  the  phrase:  “The  Parties  (or  the  European
Community  and  its  Member  States)  remind  their  multinational  enterprises  of  their
recommendations  to  observe  the  OECD  Guidelines  for  Multinational  enterprises,
wherever they operate.

7.7. 

Public administrations

Public administrations, including the Commission, need to practice CSR principles in
their own management and with their own “stakeholders”.

The Commission has decided to take a  more integrated and systematic  approach to
the management of social and environmental matters within its administration. It has
decided to register under the EMAS scheme and encourages other public authorities
also to follow this example.

The Commission intends to:

–  integrate  further  social  and  environmental  priorities  within  its  management,

including its own public procurement;

–  assess  its  social  and  environmental  performance  by  publishing  a  social  and

environmental report by 2004;

–  launch an awareness raising campaign towards the Commission’s agents in 2003.

The Commission invites public  administrations at national,  regional and  local  level
to also examine their practices with  a  view  to  integrating  social  and  environmental
considerations.

24