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First concrete steps of the European Union on CSR 0

The European commission unveiled on Tuesday (25 October) its new communication on corporate social responsibility (CSR). It sets out how European enterprises can benefit from CSR as well as contributing to society, even in Africa, as a whole by taking greater steps to meet their social responsibility.

The EC’s new strategy on CSR is part of a package of measures on responsible business. Presented by Commissioners Michel Barnier, László Andor, respectively in charge of the Internal market, employment and social affairs and vice-president Antonio Tajani, responsible for industry and entrepreneurship, it aims to help enterprises achieve their full potential in terms of creating wealth, jobs and innovative solutions to the many challenges facing Europe’s society.

“The European Commission is seeking the mandatory disclosure by European energy, mining and forestry firms of payments to foreign governments, under legislation proposed (this week)” writes Toby Vogel, from European Voice. “The rules are part of revisions to the 2004 transparency directive, and are designed to curb corruption in asset-rich countries. The Commission’s proposed changes require the backing of national governments and Members of the European Parliament. Firms in the extractive industries oppose elements of the new rules, notably project-by-project reporting, which they say would lead to the disclosure of commercial secrets”.

This is the first time in 10 years that the Commission has changed its definition of CSR. Its previous definition was: “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 new definition is consistent with internationally recognised CSR principles and guidelines, such as the OECD Guidelines for Multinational Enterprises, the ISO 26000 Guidance Standard on Social Responsibility and the United Nations Guiding Principles on Business and Human Rights. It should provide greater clarity for enterprises, and contribute to greater global consistency in the expectations on business, regardless of where they operate such as the African continent.

“Today the EU is reinforcing its own name to that list,” said Howitt, stressing the EU can take leadership on CSR beyond its own border, at G20 level, so that the goal of sustainability can be fully integrated with company financial reporting worldwide by 2020″.

Sustainability and CSR is at the very heart of the Europe 2020 Strategy.  “In the Parliament I will be working to ensure that we tie all the tools together to ensure that Europe is working in coordination with business to promote the sustainablility agenda,”said Richard Howitt, Member of the European Parliament (EP) for the Labour Party, in charge of the dossier for the parliamentary institution of the European Union.

“On climate change governments are saying to business that we can’t do it without you. We reject simply letting the argument be dominated by past wrongs, and instead focus on how we can work together in the future to meet new challenges. It is a refreshing change that I hope we can foster for the CSR debate as a whole,” Howitt added.

Reactions from companies and civil society

Companies in the sector had sought generous exemptions and fought against project-level reporting of fees, royalties and taxes – a battle they lost” writes European Voice. “They say that project-by-project reporting risks damaging the competitiveness of European firms, which would be subject to tougher rules than their counterparts from countries such as Brazil, China and India. They argue that transparency rules could also force them to break the law of the countries in which they operate”.

“We welcome the leadership of the EC’s President Barroso and Commissioner Barnier and the strong support of Britain and France for a proposal which could make a profound difference to many resource-rich-but-poor countries,” said Simon Taylor, Founding Director of Global Witness. “When adopted into EU law, this would be a major step towards global standards in transparency.”

Natural resource exports are worth hundreds of billions of dollars a year to developing countries but many countries have derived little lasting benefit from them. Corruption and tax avoidance have drained away funds that are badly needed for development in countries like Angola and the Democratic Republic of Congo, leaving these countries poorer, less stable and more vulnerable to violent conflict.

An EU law promoting project-and country-level reporting of revenues would complement legislation passed in the United States last year, as part of the Dodd Frank financial reform act. It would also bolster the work of the Extractive Industries Transparency Initiative, an association of governments, companies and civil society groups of which Global Witness is a board member.

“This proposal provides a strong foundation which should be reinforced by the European Parliament and Council when they consider it in the coming months. This would send a powerful signal to resource-rich countries that Europe wants a trading relationship based on transparency, fairness and mutual benefit,” added Taylor.

More critical is Paul de Clerck, steering group member of ECCJ, who said: “European companies such as Shell, Tesco and ArcelorMittal take the profits from their business in developing countries but don’t want to be responsible for the damage that they cause. The EU must put in place legislation that will hold European companies accountable for the damage caused by their subsidiaries or suppliers and they must take steps to make it easier for victims to go to a European court in case of abuses.

For more information on European Commission’s communication, click here.

By Staff – Afronline

Sources: European Voice, EurActriv.com, Global Witness and European Coalition for Corporate Justice

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