The debate on sustainability started in the last decades of the 20th century (Gothenburg 2001). For the past 15 years (green paper on CSR) the EU has been clearly pursuing the goal of putting sustainable development at the heart of its policies and corporate responsibility at the heart of all business strategies.
CSR benefits both companies and society
A good example was the communication on a renewed EU strategy 2011-14 for Corporate Social responsibility, which was published in October 2011. Its revised definition of corporate social responsibility describes CSR as "the responsibility of enterprises for their impacts on society".
This new definition amounted to a paradigm shift by the European Commission on CSR. It corrected its previous understanding of CSR by doing away with the voluntary component and by giving priority to the responsibility of enterprises for their impacts on society. In doing so, the Commission brought its understanding in line with the updated understanding of CSR as laid down in other international frameworks such as the UN Guiding Principles on Business and Human Rights and the revised OECD Guidelines for Multinational Enterprises. Here are some other core components of the EU's 2011 CSR strategy:
• "The development of CSR should be led by enterprises themselves.
• But public authorities should play a supporting role through "a smart mix of voluntary policy measures and, where necessary, complementary regulation, for example to promote transparency, create market incentives for responsible business conduct, and ensure corporate accountability.
• Enterprises must be given the flexibility to innovate and to develop an approach to CSR that is appropriate to their circumstances."
The Commission implemented the smart mix of voluntary policy measures and binding rules with its directives on non-financial reporting and public procurement. The key motivation behind the EU's CSR strategy is the conviction that CSR is good for companies. But CSR is also an asset for Europe's economy and society, since it stands for more stability, sustainability and innovation. For example, the EU fosters the necessary dialogue on shared values and goals with the help of a multi-stakeholder forum, which it convened and which serves as a discussion platform bringing together civil society and companies.
The Commission's strategy aims to promote the visibility of CSR and the sharing of best practices and to improve trust in the private sector and in the ability of companies to regulate themselves. As an important stepping stone to reaching this goal, the EU promotes and requires reporting and disclosure of CSR-relevant information.
More visibility for responsibility and sustainability
The directive on non-financial reporting sets out the contours of the binding reporting obligations concerning non-financial information applicable to a certain category of companies. The directive applies to large undertakings which are public-interest entities such as publicly-listed companies, banks and insurers employing more than 500 staff members. In their reports they are expected to disclose information on their strategies in the fields of the environment, social and worker concerns, human rights, the fight against corruption and boardroom diversity. The deadline for national implementation is 6 December 2016.
In its 2011-2014 CSR strategy, the Commission stresses that social and environmental concerns are to to be given a greater bearing on public procurement. For example, the revised version of EU procurement law creates the option of doing more to leverage tenders in support of strategic goals such as the promotion of social, environmental and innovative objectives. This is a boon to companies whose corporate responsibility extends all the way to their production and supply chains, and it creates incentives for companies to comply with international corporate responsibility standards (e.g. ILO's core labour standards).
The Commission will likely present its updated CSR strategy in 2016. The goal will be to further advance the implementation of international principles in order to create a level playing field globally and to continue to foster the leadership of European companies in the field of sustainable business practices. As an export champion, it is in Germany's vital interest to help drive this project, actively helping to shape the Commission's new CSR strategy. A shared European understanding of corporate due diligence along supply chains, support for small and medium-sized enterprises and for effective grievance mechanisms are particularly important to Germany in its efforts to help establish a global level playing field.