The actions of companies have significant impacts on the lives of citizens in the EU and around the world. Not just in terms of the products and services they offer or the jobs and opportunities they create, but also in terms of working conditions, human rights, health, the environment, innovation, education and training.
Corporate social responsibility / Responsible business conduct
For this reason, EU citizens rightly expect that companies understand their positive and negative impacts on society and the environment. And, therefore, prevent, manage and mitigate any negative impact that they may cause, including within their global supply chain. Living up to this duty is commonly known as 'corporate social responsibility' (CSR) or 'responsible business conduct' (RBC).
Public authorities, including the EU, have an important role in supporting and encouraging companies to conduct their business responsibly. Over the last years, we've introduced a smart mix of voluntary and mandatory actions to promote CSR/RBC, and implement the UN guiding principles on business and human rights (UNGPs) and the UN 2030 agenda for sustainable development. (SDG reference and link) Corporate contribution to SDG agenda.
In 2011, the Commission adopted its renewed strategy for CSR, which combines horizontal approaches to promote CSR/RBC with more specific approaches for individual sectors and policy areas. Following up on its strategy, the Commission published a staff working document (SWD(2019) 143) in March 2019. It gives an overview of the Commission's and the European External Action Service's (EEAS) progress implementing CSR/RBC and business and human rights.
What is Corporate Social Responsibility?
The Commission has defined CSR as the responsibility of enterprises for their impact on society and, therefore, it should be company led. Companies can become socially responsible by
- integrating social, environmental, ethical, consumer, and human rights concerns into their business strategy and operations
- following the law
Why is CSR important?
- For enterprises, CSR and RBC provide important benefits in terms of risk management, cost savings, access to capital, customer relationships, HR management, sustainability of operations, ability to innovate and eventually profit
- For the EU economy, CSR and RBC make companies more sustainable and innovative, which contributes to a more sustainable economy
- For society, CSR and RBC offer a set of values on which we can build a more cohesive society and on which we can base the transition to a sustainable economic system
European Commission strategy on CSR
The Commission promotes CSR in the EU and encourages enterprises to adhere to international guidelines and principles. More specifically, the EU’s policy is built on its 2011 renewed strategy for CSR, which aims to align European and global approaches to CSR. This strategy stressed the importance of enhancing the visibility of CSR and disseminating good practices, through the integration of CSR into education, training, and research.
Responsible business conduct (RBC)
This is an alternative term introduced by the OECD in close cooperation with business, trade unions and non-governmental organisations. The OECD has defined RBC as "making a positive contribution to economic, environmental and social progress with a view to achieving sustainable development and avoiding and addressing adverse impacts related to an enterprise's direct and indirect operations, products or services." The Commission has adhered to the recommendations of OECD on Role of governments promoting RBC coherence.
Business and human rights
Human rights are an increasingly important aspect of CSR/RBC, especially when it comes to businesses' global supply chains. The UN guiding principles on business and human rights (UNGPs) define what companies and governments should so businesses don't have a negative impact on human rights. These guiding principles were endorsed by the UN Human Rights Council in 2011, stating that business enterprises are specialised organs of society, which requires them to comply with all applicable laws and to respect human rights.
The EU endorsed the UN guiding principles in its 2015 and 2020 action plans on human rights and democracy and has committed to supporting their implementation. As part of this process the Commission is developing a comprehensive framework for the implementation of the UNGPs.
ESG (Environmental, Social and Corporate Governance)
In past years the concept of ESG emerged. ESG definition is a framework or criteria to measure the sustainability and ethical impact of an investment or a company focusing on 3 fields: Environmental, Social and Corporate Governance. While the term ESG is often used in the context of investing, stakeholders include also customers, suppliers, and employees, all of whom are increasingly interested in how sustainable an organisation’s operations are.
Key documents for CSR/RBC policy
- A renewed EU strategy 2011-14 for corporate social responsibility (2011)
- Communication on the next steps for a sustainable European Future (2016)
- Reflection paper: towards a sustainable Europe by 2030 (2019)
- EU Action plan on human rights and democracy 2020-2024 (2020)