13 March 2007
The European Parliament today agreed that it was time to put the corporate social responsibility claims of companies to the test and to make directors 'personally responsible' for any shortcomings.
Businesses could be forced to file reports on the economic, social and environmental impact of their activities, under new plans approved by Euro-MPs.
The European Parliament backed plans to make it compulsory for firms to disclose exactly what they do in terms of achieving "corporate social responsibility" (CSR).
A report by British Labour MEP Richard Howitt said mandatory reporting should cover not just social and environmental issues, but observance by businesses of human rights and basic workers' rights.
Mr Howitt said: "Consumers, customers, employees and investors must have the opportunity to select or reject products, suppliers, jobs and companies depending on whether they are more or less responsible in terms of the environment and social conditions."
He wants the principle of CSR to embrace issues such as lifelong learning, work organisation, equal opportunities, social inclusion, sustainable development and ethics.
"Many firms have started to claim they are socially responsible, but it is time to test their claims, by measuring whether their actions really do contribute to combating inequality and environmental degradation," said Mr Howitt.
"People who are victims of any company's social irresponsibility, including people in countries outside the EU, should have clear rights to go to court."
Mr Howitt added: "I believe that making the directors of large companies personally responsible for the harmful social and environmental effects of their firms' activities will bring about a swift improvement in performance.
"The EU must act as a global leader on exporting corporate social responsibility standards, as it has done on climate change. Some of our best European companies are real champions in the global debate on corporate social responsibility and it is time for the European Union to show leadership."
Today's vote, if endorsed by EU governments would mean EU-wide rules not just on mandatory reporting, but obliging company directors with more than 1,000 staff to take personal responsibility for minimising their firms' harmful effects, and giving victims of EU company activities around the world the right to go to court in Europe.
The EU Parliament said it also wanted small to medium-sized businesses to participate in CSR, and suggested that the European Commission targeted their participation through their "specialist associations".
However, the European SME employers' association (UEAPME) said any proposals to introduce legally binding reporting clauses and additional liabilities would "shy small businesses away from CSR practices".
UEAPME secretary general, Hans-Werner Müller, said: "We are strongly convinced of the added value of CSR for small businesses. Socially responsible practices are in fact already taking place in European small businesses, yet for many SMEs CSR remains a relatively unknown concept.
"The Howitt report currently on the European Parliament's agenda does not help in this respect - it puts businesses under a bad light and is filled with unreasonable, unworkable and excessively bureaucratic measures."
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