Speech "Public Policy and Corporate Social Responsibility" by Mr Erkki Liikanen, Member of the European Commission, responsible for Enterprise and the Information Society.
Thank you for inviting me to speak to you at today’s seminar on the theme of Public Policy and Corporate Social Responsibility (CSR).
I would also like to thank the Centre for European Reform for the preparation of its pamphlet discussing the role of the EU in Corporate Social Responsibility, which is a good basis for today’s discussions.
What is Corporate Social Responsibility?
In its Green paper of 2001, the Commission defined Corporate Social Responsibility 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. The follow-up Communication of last year added that CSR is the contribution of businesses to sustainable development.
There is a long tradition of businesses or entrepreneurs which have made valuable voluntary contributions to societal welfare, in addition to contributions resulting from their economic activity. Several major European companies have strong traditions of responsible attitudes. Their survival is evidence of the fact that societal responsibility can be compatible with financial business success.
But responsible entrepreneurship is not reserved for large companies, although they may dominate the public discourse. Many SMEs have been engaged in social activities to benefit their local communities. These activities are, however, often less visible than those of larger companies since SMEs do not think of them as ‘Corporate Social Responsibility’ and do not communicate them in a formal manner.
Building on this tradition, there are at least two new features in the current debate about Corporate Social Responsibility:
Firstly, the attempt to develop and establish it as a concept which is linked to strategic business management.
Secondly, the attempt to strengthen the interaction between the company and its stakeholders. Partnerships or co-operation can help businesses improve their performance and reduce risks. The benefit for stakeholders is that businesses become part of the solution and not the problem.
With these ambitions, Corporate Social Responsibility will not heal the world. But responsible business conduct can make a significant contribution to addressing the social and environmental challenges we are facing.
It can help to create a more business-friendly climate in societies.
The state of play of the current discussion and the challenges
Last October, the Commission created a European Multi-stakeholder Forum on Corporate Social Responsibility.
The meetings we have had so far have provided us with an insight into the richness of approaches and practices, where businesses get together with stakeholder parties to improve their social or environmental performance.
These range from Heineken’s programme in South Africa to help its employees fight and treat AIDS to the Responsible Care initiative of the chemicals industry.
However, there are also several challenges. The Forum addresses them in its Round Table meetings, and several other bodies in Europe and abroad are occupied with them as well.
Let me outline three major challenges of this Forum:
* We need a better understanding of the possibilities and limits for business contributions to sustainable development. We need to know more about the impacts on economic growth, social welfare and environmental protection.
* How can we spread Corporate Social Responsibility among the business community? How can we convince the laggards and sceptics to encourage companies to go beyond their obligations?
* How can we create greater transparency by developing Corporate Social Responsibility instruments and at the same time avoid it becoming a box-ticking exercise?
These are just a few of the challenges, which we seek to address through the Multi-stakeholder Forum.
Businesses should drive this debate as it deals with their responsibilities. But Corporate Social Responsibility is not a unilateral matter. It can only be formulated successfully if all relevant actors are involved and make their contributions.
The role of public authorities in Corporate Social Responsibility
Let me now turn to the role of public policies and the contribution they can make.
Corporate Social Responsibility – milestones on the EU agenda
* Former Commission President Jacques Delors set the starting point of the Commission’s work in this area. In 1993 he made an appeal to businesses to contribute to public authorities’ efforts in combating unemployment a social policy issue. The appeal led to the creation of the Business Network for Social Cohesion, now known (and present here in this meeting) under its new name CSR Europe.
* The Lisbon Summit Conclusions of March 2000 encourage voluntary Corporate Social Responsibility action by businesses.
* In 2001 the Commission published its Green Paper on Corporate Social Responsibility. There was a follow-up policy document in 2002 and, later that same year, the creation of the European Multi-stakeholder Forum on CSR.
Since Jacques Delors’ appeal placed Corporate Social Responsibility in the social policy area, the understanding of Corporate Social Responsibility has changed significantly.
Nowadays, Corporate Social Responsibility is defined in a much broader way. It is linked to sustainable development with its three dimensions: economic, social and environmental.
The debate about Public policies and Corporate Social Responsibility
The debate about Corporate Social Responsibility, its definition, the ways to manage, promote and measure it, is still in its infancy. I should add that the discussion about the role of public policies in this context is also still open.
It is no surprise that the views of stakeholders on this differ. Positions reflect backgrounds and interests, although they also vary within the groups there is no black and white pattern:
* A minority of certainly major enterprises ask policy makers to give them encouraging and enabling support, while others would prefer avoiding any involvement of public authorities in Corporate Social Responsibility,
* Other organisations eg trade unions tend to call for a closer involvement of public authorities in the debate and plead that public policies should establish compulsory minimum expectations. However, there are also voices which state that legislation on Corporate Social Responsibility will not be sufficient.
Neither does a look at Member State policies deliver a clear picture:
A number of them have adopted Corporate Social Responsibility policies, in particular those with relatively flexible business environments. But the focus of these policies differs: for example it is on Community investment in the UK, integrating disadvantaged groups into the labour market in Denmark, and human rights issues in developing countries in the Netherlands.
These countries promote Corporate Social Responsibility through certain measures, such as the obligation of pension fund operators to make statements on whether they have a Corporate Social Responsibility policy, which are relatively ‘soft’.
But France has adopted another approach with its Law on Reporting. Several other Member States are not particularly active in this field.
The European Parliament’s Resolution on the Green paper, adopted last year, put the emphasis much more on rule-setting and intervention by the Commission than this year’s Resolution on the follow-up Communication. It favours a facilitating and encouraging role of the Commission.
The Commission’s approach
Allow me to tell you of the Commission’s view on its own role in this context.
Let me start by saying that work on Corporate Social Responsibility is a learning process. It started with the consultation process on the Green Paper.
From the reactions to the Green Paper, the Commission drew a number of conclusions:
* Corporate Social Responsibility is not an issue for regulation,
* Corporate Social Responsibility can not be imposed against the will of enterprises, but can only be promoted together with them under involvement of their stakeholders,
* The first step to promote Corporate Social Responsibility is to fill the knowledge gaps and increase the consensus among the relevant actors,
* The Commission can best serve these objectives by assuming a facilitating role, which promotes the dialogue between enterprises and stakeholders.
The Multi-stakeholder Forum on CSR was created in October 2002 by the Commission. It includes representatives of different groups, business representatives, trade unions and civil society.
What was, and still is important for the success of the exercise, is:
* firstly, to ensure a fair balance between the stakeholder parties and their interests;
* secondly, in order to ensure the involvement of all parties, the Commission had to offer stakeholders control and ownership of the process.
In this situation, the Commission could make the most effective contribution to the further development and promotion of Corporate Social Responsibility by ‘re-dressing’ its role to that of a facilitating ‘honest broker’.
The role and activities of Enterprise policy
The Commission is treating Corporate Social Responsibility as a cross-cutting policy issue. Several services are actively involved in the work of the Multi-stakeholder Forum.
It allows each policy area to bring credibility towards its constituents.
At this stage, the priorities of enterprise policy are the following:
* firstly, the organisation of the Multi-stakeholder Forum, where DG Enterprise is responsible for organising two of the four Round Tables: ‘improving knowledge about Corporate Social Responsibility and facilitating the exchange of experience and good practice’ and the one on Fostering CSR among SMEs;
* secondly, the adaptation of the Corporate Social Responsibility concept to the situation and needs of SMEs as well as its promotion among them.
We expect that the Multi-stakeholder Forum will contribute to the debate, in particular the first priority on improving knowledge and furthering consensus.
Indeed the Round Table meetings which have already taken place have proved to be very inspiring and encouraging experiences, both with respect to the quality of presentations and discussions, as well as the constructive climate. Participants did not merely exchange positions, but engaged in real discussions.
This promising start makes me optimistic that the Forum will be able to come back to the Commission in 2004 with a significant report about the results of its work.
With regard to SMEs, our second priority, DG Enterprise is carrying out a project on Responsible entrepreneurship for SMEs under its Multi-annual programme for Enterprise and Entrepreneurship. With the help of experts from Member States and candidate countries, a selection of good practice cases among European SMEs has been identified which will be published later this year.
Thirdly, and in order to involve more enterprises, and in particular SMEs into this debate and to raise their awareness of the potential benefits from Corporate Social Responsibility, my services are planning a pan-European awareness raising campaign together with the creation of a web-based resource centre. It should be implemented next year. A call for tenders will be published this summer.
We are planning to organise Round Table meetings in all Member States and accession candidate countries, which should carry the debate we have started at European level in the Multi-stakeholder Forum to national and regional level.
Review of the policy approach in 2004
In last year’s Communication, the Commission set out a strategy to promote Corporate Social Responsibility. I believe that we should now stick to it.
In the follow-up, we created the European Multi-stakeholder Forum. We have expressed our expectations and have equipped it with a clear mandate and mission.
The Forum should now put the time it has been allotted to full use and produce a report including conclusions and suggestions, as scheduled. The Commission should then take the time to analyse it and decide about its further approach and any possible additional initiatives.
Centre for European Reform Position
In its pamphlet, the Centre for European Reform provides a number of suggestions which go beyond encouragement and include legislative initiatives.
This includes the proposal to amend company law to require major companies to provide a statement of their Corporate Social Responsibility policy in their annual reports. Another proposal is to oblige European pension funds to state their ethical policies.
We welcome these proposals in general and will discuss them further. However, the work of the Multi-Stakeholder Forum is to come up with results where the Commission will react in 2004. No further invitiatives should be taken in the meantime at EU level.
The promotion of Corporate Social Responsibility as the business contribution to sustainable development is a long-term task.
Commission and stakeholder parties have just begun work on this matter, which clearly falls under the responsibility of businesses themselves.
There are good reasons to stick to this approach:
* One reason is that the discussion about Corporate Social Responsibility is still in an early phase. We need to find out more about what works and what does not.
* Another reason is that we should not risk destroying the ‘social capital’ and trust that could build up in the Multi-stakeholder Forum.
Thank you for your attention.