Late last month, the European Commission published its long-awaited Communication on “A Renewed EU Strategy 2011-2014 for Corporate Social Responsibility (CSR).” The Communication represents a call to companies operating in Europe for CSR to become more integrated in corporate strategy and actions, more widespread among large enterprises and more results-oriented.

A Broader Definition and Set of Expectations for CSR in Europe

The Communication introduces a new definition of CSR as “the responsibility of enterprises for their impacts on society.” Previously, the Commission defined CSR as the voluntary integration of social and environmental objectives into business activity and stakeholder relationships. To fully meet this responsibility, enterprises should have in place a process to integrate human rights and social, environmental, ethical and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders.

The Communication also defines the scope of CSR by reference to a core set of global principles and standards on issues including human rights, labor and employment practices, environmental and consumer interests, bribery and corruption, community involvement, supply chain responsibility and CSR reporting.

Among the expectations signaled by the Communication are the need for more large enterprises operating in Europe to adopt a long-term, strategic approach to CSR; to align their CSR strategies with global standards; to provide greater transparency and reporting on social and environmental impacts; and to give greater attention to human rights issues. The Communication refers several times to large enterprises but does not define the term; by implication “large” means non-SMEs, for which the EU definition is enterprises with fewer than 250 employees or turnover of €50 million.

The Communication also specifically notes that responsible business conduct is “especially important when private-sector operators provide public services” but does not call out specific services or sectors.

The Commission's Agenda for Action on CSR 2011-2014

Overall, the Communication views the role of public authorities as supporting CSR through voluntary policy measures and, where necessary, complementary regulation to promote transparency, create market incentives for responsible conduct and ensure corporate accountability.

In this regard, the Communication sets out an Agenda for Action where the Commission intends to take or extend initiatives or invites European businesses to do so.

The possibility of EU regulation is foreshadowed in three areas:

CSR reporting

As announced in the Single Market Act, the Commission will present a legislative proposal on the transparency of the social and environmental information provided by companies in all sectors. This is a reference to mandating minimum standards for CSR reporting and disclosure. Preparations for this, including impact assessment of possible options, are already underway.

Green marketing

The Commission will consider the issue of misleading marketing about the environmental impacts of products (so-called “green-washing”) in the context of the report on the application of the Unfair Commercial Practices Directive during 2012.

Financial sector disclosure

The Commission will consider making it a requirement on all investment funds and financial institutions to inform all their clients about any ethical or responsible investment criteria they apply, or codes and standards to which they adhere.

Other initiatives that the Commission intends to take include expansion of Commission-sponsored multi-stakeholder platforms in specific industry sectors, building on existing initiatives in sectors such as retail, pharmaceuticals, food and advertising. (Note: the sectors and potential formats and topics for these platforms are not specified. This implies some recognition that successful CSR stakeholder models occur in a range of formats and locations.)

The Commission also plans to launch a European CSR award scheme for partnerships between enterprises and stakeholders, both to develop a code of good CSR practice for self- and co-regulation exercises and to step up its monitoring of commitments by European enterprises with more than 1,000 employees to adhere to international CSR principles and guidelines.

Finally, the Commission issues a call to action for wider adoption by European companies of specific global codes and principles. All large European enterprises are invited to commit by 2014 to at least one of the United Nations Global Compact, the OECD Guidelines for Multilateral Enterprises or the ISO 26000 Guidance Standard on Social Responsibility. All Europe-based multinational enterprises are invited to make a commitment by 2014 to respect the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy. And all European enterprises are invited to meet the corporate responsibility to respect human rights, as defined in the UN Guiding Principles on Business and Human Rights.