If corporate responsibility for health and environmental sustainability is to spread through European MNEs, it must be made attractive to businesses by recognizing best practice and championing leading companies so that shareholders and customers can distinguish between well-performing companies and others. It is also important to engage the private sector, shareholder and consumer groups in formulating standards of good practice and methods of audit so that they are owned by the stakeholders. Processes such as these have begun to take shape at the European level and within member states. In 2001, the European Commission’s green paper on this topic defined corporate social responsibility (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”. The paper went on to stress the principle of voluntarism in corporate social responsibility, but argued that it was important for long-term shareholder value and sustainability.
Some elements of corporate responsibility are underpinned by legislation and regulations, for example, those concerning obligations to pay taxes, account for financial performance, and protect the health and safety of employees and consumers. Other aspects of corporate responsibility, referred to as corporate social responsibility, may be seen as voluntary actions that exceed minimum standards of behaviour and may be monitored against standards of good practice. These depend on the value that company boards, employees, shareholders, customers and other stakeholders ascribe to good practice, and the extent to which they are aware of these actions and the business’s impact.
The Tripartite Declaration on Multinational Enterprises and Social Policy reiterated the responsibility of multinational enterprises (MNEs) for health and other social and economic impacts on employees, communities and future generations, as well as customers and shareholders. The Bangkok Charter for Health Promotion in a Globalized World clarified these responsibilities in relation to global health.
If corporate responsibility for health and environmental sustainability is to spread through European MNEs, it must be made attractive to businesses by recognizing best practice and championing leading companies so that shareholders and customers can distinguish between well-performing companies and others. It is also important to engage the private sector, shareholder and consumer groups in formulating standards of good practice and methods of audit so that they are owned by the stakeholders. Processes such as these have begun to take shape at the European level and within member states.
Already, in 2004, the EU set up a multi-stakeholder forum on CSR, the European Alliance for Corporate Social Responsibility, whose findings informed the development of a 2006 Commission communication on CSR. And as more and more research provides evidence for a business case for CSR, businesses are standardizing their approach on their own initiative. In growing numbers, European businesses are becoming voluntary partners of this alliance; however, there remains a European debate on CSR, which focuses on the degree to which government, at a European and national level, should lead or legislate on this issue.
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Further Definitions
The Tripartite Declaration on Multinational Enterprises and Social Policy:
The importance of ensuring that MNEs (sometimes called Transnational Corporations (TNCs)) are socially and environmentally responsible was recognised in the tripartite declaration on multinational enterprises and social policy adopted by the International Labour Organization (ILO) in 1977. In 1999 Kofi Annan called on MNE’s to commit to a global compact for responsible globality and similar themes were evident in the United Nations Conference on Trade and Development (UNCTAD)’s World Investment Report of 2003 and the UN Sub-Commission on Human Rights of the same year. In 2005 the UN Secretary-General named a special representative on human rights and trans-national corporations to “identify and clarify standards of corporate responsibility and accountability for trans-national corporations.” The United Nations has come to realise that the corporate responsibility agenda is bound to fail if it is not embedded in a framework of binding rules.
Support for voluntary action to take responsibility for health may be backed by labelling-such has been successful in the case of “fair trade” goods. It is also important to gain public recognition for those MNEs that meet guidelines for social responsibility, including health impacts. Private companies are eligible nominees for the Gates Foundation’s Global Health Award which aims to reward best practices in this field. It is equally important to identify those MNEs which do not meet acceptable standards in order to inform and organise consumer action. The use of tools such as labels, awards and ranking indices have become popular means to provide incentives for private sector change.
However, the responsibility of MNEs for health is wider than simply compliance with voluntary codes such as the Organisation for Economic Cooperation and Development (OECD) guidelines for MNEs. Adherence to international conventions and national regulations on health and safety at work, environmental standards and consumer protection must be backed by international and local enforcement action to avoid what has been termed a “race to the bottom” in which states compete to attract international investment by lowering standards and costs for health and safety, environmental standards and labour conditions.
The Bangkok Charter for Health Promotion in a Globalised World:
of 2005 stressed that MNEs have a responsibility to ensure health and safety in the workplace, and to promote the health and well-being of their employees, their families and communities. They should also contribute to lessening wider global health impacts, such as those associated with global environmental change by complying with local, national and international regulations and agreements that promote and protect health. Ethical and responsible business practices and fair trade exemplify the type of business practice that should be supported by consumers and civil society, and by government incentives and regulations.
It is important to note that MNEs often operate through local subsidiaries and contractors that feel a lesser obligation to comply with international standards, since they are less visible to consumers and other stakeholders. The compensation case fought by South African asbestos miners in the UK courts against an MNE-operated subsidiary showed that MNEs can be held to international standards of health and safety. And the case brought by the EU against RJR Nabisco and Phillip Morris over links with smugglers and narcotics traffickers in Spain and links with money launderers in the Caribbean is another example of corporate responsibility backed by legal sanctions.
European Alliance for Corporate Social Responsibility:
is a network of over 70 European MNEs and 25 national partner organisations which serves as a platform for sharing of best practices on CSR, innovating new projects between businesses and stakeholders and further shaping the business and political agenda on sustainability and competitiveness. Member State governments are also increasingly involved in supporting developments in CSR. For example, the Federal Ministry of Labour and Social Affairs of the Germany Government have several units dedicated to CSR and a website which was recently launched. In addition, they have compiled a CSR glossary in German which will be translated into English shortly.
European Debate on CSR:
has been polarised by companies who don’t want to see the public sector get involved, and NGOs and trade unions who lobby for increased regulation. However, as expressed by Member of the European Parliament (EP) Richard Howitt (UK; who was the rapporteur on behalf of the EP to promote CSR for three legislative terms), at a conference in Germany in April 2008, the European Parliament feels that this polarisation contradicts the true spirit of what CSR is about. “It’s about cooperating, it’s about building partnerships, it’s about building trust, and it’s about building new understandings.” But the EP believes that some basic regulation may be useful in unleashing the full potential of CSR in Europe, and the focus of that regulation is transparency. With increased transparency investors, graduates choosing employers and consumers choosing products and services will be enabled by CSR to make ethical and socially beneficial decisions.
The EP also holds the opinion that “companies’ financial reporting, annually, should incorporate not simply financial results but social and environmental results as well in a mandatory fashion.” This sort of reporting was enacted in the UK in 2006 as part of the Companies act, and social reporting in now happening in six other EU Member States. But as a result of this polarisation mentioned above difficulties have arisen at the EU level where discussions on CSR have stagnated. European NGOs including Oxfam International and Amnesty International have gone as far as boycotting discussions at the EU level because they could not come to an agreement with the Commission and business actors on an agenda. Pressure may be needed from the Member States to end this gridlock and to get companies and NGOs back around the table in Brussels.
Furthermore, the EP feels strongly that a European approach to CSR should not be a separatist approach. Rather European actors should aim to support the existing international standards and CSR regimes and not to create new ones. Currently the G8 Heiligendamm Process seeks, through a process of conversions, to bring together GOCA and the United Nations Global Compacts, the OECD Guidelines for Multinational Enterprises, the ILO and its principles, the three most credible voluntary international CSR initiatives into a more consistent and coherent global CSR framework. The biggest concern for CSR is not what happens within Europe but further up the supply chain in countries with weaker governance. This is why it is essential for European actors to be united in their support for CSR frameworks at the global level.