Monday, June 02, 2008

Reforming European business instead of voluntary CSR

Brussels, May 29 - Disappointed by the Commission's inaction and focus on voluntary actions in the field of Corporate Social Responsibility (CSR), European NGOs and national coalitions working on corporate accountability decided in 2005 to launch the European Coalition for Corporate Justice (ECCJ).

ECCJ aims to promote an ethical regulatory framework for European business, wherever in the world that business may operate. Now, three years later, ECCJ with the PSE (Socialist Group in the European Parliament) held a conference on 'Smart regulation: Legislative opportunities for the EU to improve corporate accountability' (agenda). The aim was to present three concrete legislative proposals that could close the regulatory gap and create a level playing field.
Noreena Hertz, author of 'The Silent Takeover' and 'The Debt Threat', gave a very optimistic introduction to the day. She stressed the increased forces pressuring for change: more consumers buy fair trade, more investors value environmental standards. "History has shown us that most of the calls have been heard", Hertz explained, referring to the abolition of slavery or the mainstreaming of the green movement. "There are precedents, and the timing is good." she continued, referring to the window of opportunity opening with the appointment of a new Commission next year. "Together we can create a new global order! Together, we can change the course of history!"
The first and most ambitious proposal, Extending Parent Company Liability, suggests that parent companies should be held liable for for any environmental and human rights violations caused by their subsidiaries and contractors. As lawyer David Chivers explained, the extension of the EU law to non-EU companies that have a direct or indirect presence in the EU is necessary to avoid unfair competition. Lee Swepston, former ILO Senior Advisor on Human Rights, added that higher costs are not an argument. "In former times, business also argued that limiting child labour to 12 hours per day will ruin business. And it didn't!" RaĆ¼l Romeva i Rueda, MEP for the European Greens, closed arguing that we "should not care about how realistic the proposal is, but how real it is." We should fight for the proposal which should be real one day, and not for the one which is most realistic.
Olivier de Schutter, recently appointed UN Special Rapporteur on the Right to Food, presented the second ECCJ proposal, the Duty of Care. According to the proposal, companies should take reasonable steps to identify and prevent human rights or environmental abuses within their sphere of responsibility. If the parent company does not take all reasonable steps, it can be held legally liable. De Schutter did not conceal the problems of the proposal, for example that the Duty of Care could be interpreted as the imposition of Northern standards on Southern countries. Moreover, the question of remedies remains. The aim is to push Northern companies to support their partners with technical and financial support, building up local capacities to comply with the social and environmental standards, instead of cutting relations. Kate MacDonald from the London School of Economics strongly underlined de Schutter's last point, which she called "external misalignment between power and responsibility."
The third area of legal reform, Mandatory Social and Environmental Reporting, seemed to be the most feasible proposal, because it is already practiced in eight EU Member States, including France. CEO's could be held legally liable if reporting standards are not observed. According to Filip Gregor, ECCJ lawyer, the resulting increased transparency would spur voluntary improvements. However, the risk of greenwashing, and weak comparability between reports persist. Crucial support came from Matt Christensen, Executive Director of the European Social Investment Forum. He was "very positive regarding the proposal," if it is not too much work for the directors, and if investors can find the information in one document. Inspired by Christensen, Diana Wallis, liberal MEP, already thought there are some concrete steps to realize mandatory social and environmental reporting to be seen within the window of opportunity opened by climate change, such as the UK carbon reporting.

According to its website: the ECCJ "believes that these [three] proposals would lead to a coherent and harmonised approach to business regulation, putting an end to the unfair competition caused by companies who profit from human rights and environmental abuses," says Ruth Casals, coordinator of the network. "These proposals will provide long needed justice for victims of environmental or human rights abuses by companies based in Europe."

by Birthe Paul