Rights for people, rules for big business
As corporations have proven incapable of regulating themselves, we are calling for binding legal frameworks that allow peoples' to protect themselves against corporate power. Such frameworks have to:
Guarantee communities a legal right of redress for activities that adversely affect them, as well as rights to prior consultation.
Guarantee individuals and communities rights over the resources they need to enjoy a healthy and sustainable life.
Place a duty on directors of corporations to take account of social and environmental factors when taking business decisions
Require corporations to meet best environmental, social, labour and human rights standards wherever they operate.
Friends of the Earth Europe is one of the initiators of the European Coalition for Corporate Justice (ECCJ).
Together with this european-wide coalition, we campaign for the vision of a sustainable world in which corporations' drive for profit is balanced by the interest of society at large and respects human, social and environmental rights. To ensure such a vision, we are convinced that legally enforceable mechanisms based on internationally agreed standards and principles in the areas of human, social and environmental rights are necessary to reverse the unsustainable impacts of business activities
Corporate Justice is based on the following 6 principles:
1) Corporate Justice should be based on internationally agreed standards and principles in the areas of human rights and social, labour, environmental and economic standards for corporate behaviour.
2) Although voluntary initiatives can be successful in some cases, regulatory measures are necessary to ensure all corporations abide by national and internationally agreed standards, whichever provides the higher standard.
3) Stakeholders' rights are fundamental to Corporate Justice. They are required for stakeholders to hold companies to account for their impacts and for the duties of companies and their directors. A basic prerequisite is the existence of systematic internal and external dialogue processes. Stakeholders should be involved from the early stages of strategy and policy development.
4) Corporate Accountability initiatives can only be effective and credible if they include mechanisms for independent monitoring and verification of their claims, and mechanisms of redress for those affected by corporate activities.
5) Corporate Justice requires high and consistent levels of transparency of business activities and products. This implies mandatory social and environmental reporting, disclosure of payments, subsidies and lobbying vis-a-vis public authorities, and consumers' and other stakeholders' right to know about the production process, products and services.
6) Improving business's impact requires changes in companies' core business activities, throughout their supply chain. It also requires responsible behaviour to be internalised throughout corporate governance, strategy, purchasing policies and business models in order to meet the standards set in existing agreements
The European Coalition for Corporate Justice (ECCJ) is an initiative of 16 European organisation. For a full list of the members click here.
A number of CSR guidelines are used by more and more
companies today. The guidelines are however all voluntary initiatives
and do not hold companies legally accountable towards the community
in which they operate or include any sanction mechanisms (1).
The Euroean Commission published a Communication on Corporate Social Responsibility (CSR) in March 2006, but also fails to go beyond voluntary committments. The voluntary CSR initiatives have the potential to bring environmental
and social responsibility into practice to some extent, but CSR-labelling
is too often used as a pure marketing tool. This is what is called greenwash or bluewash.
The EU debate on CSR
From 2002-04, the European Commission organized a multi-stakeholder dialogue on CSR. Friends of the Earth Europe participated in that process, criticizing the EU for its primary focus on ineffective voluntary instruments. In March 2006, the Commission came forward with a Communication on Corporate Social Responsibility (CSR). All the recommendations and proposals made by Civil Society organisation before and during the Multi-Stakeholder Forum have never been taken seriously. Instead, the Commission launched an alliance with industry to promote CSR - a PR operation that will have no serious impact on environmental or social issues.
Emphasis in the EU proposal is put on growth and competitiveness: CSR is a way 'to help SME (Small and Medium sized Enterprises) to flourish and growth' instead of improving the responsibility, sustainability and accountability of companies. It does not include:
Mechanism to ensure accountability of companies to their stakeholders
Social and environmental reporting requirements
Public policy measures such as public procurement and public subsidies to stimulate responsible behavior
Implementation of international standards and principles
Mechanisms to involve stakeholders from the early stages of CSR strategy development
Independent monitoring/verification
A new Multistakeholder Forum on CSR
The European
Commission organised on December 7 2006 a follow-up meeting to the
Multistakeholder forum
(MSF) on CSR.
However, because it was clear that the focus would remain on voluntary initiatives, and because of the negative experiences at the last MSF, Friends of the Earth Europe was reluctant to participate because our concerns would not be addressed in a constructive way. Several Brussels
based NGOs stepped out
of the process in September, followed by the ECCJ in October.
Instead, the ECCJ organised a European Conference "Towards a Regulatory Approach to Corporate Accountability" as a forum for discussion and to present proposals for a regulatory approach on CSR and Corporate
Accountability. This conference took place in Brussels on Wednesday, December 6th in Brussels (see press release)
On February 8, 2007 the European Commission released the results of the last reconvening of the European Multistakeholder Forum (MSF) on Dec 7 2006. The Forum included 145 representatives of employers' organisations, governments, European institutions and trade unions.
Although many participants expressed their regret at the absence of civil society, the outcomes reinforced the ECCJ view that DG Enterprise has hijacked CSR for use in its push to improve European competitiveness without concern for social and environmental costs. The unequivocal support of a voluntary-only approach to CSR was reiterated, best practices were shared and successful initiatives applauded - but constructive ways to ensure compliance with internationally agreed standards, standardise codes of conduct and ensure adherence to such codes were not examined (see the official results of the MSF)
The Parliament calls on the Commission to strengthen it's CSR policy
On December 20, the Employment and Social Affairs Committee of the European Parliament took its first big step toward making a statement on CSR. Their report on CSR made clear that the Parliament had reservations concerning the European Commission's Communication on CSR. This report, although non-binding,sent a clear signal to the European Commission that despite its Communication and despite the outcome of its unfairly conducted Mulitstakeholder forum, there is no consensus on the Commission's loose definition of CSR and its half-hearted programmes.
On March 13 2007, the amended report was passed by the full Parliament, telling the Commission that it needs to fill the gaps left by its Communication on CSR. It urges the Commission to extend legal obligations to some key aspects of corporate accountability, such as directors' duties, foreign direct liability and mandatory disclosure for lobbyists.
read the press release: MEPs call on Commission to strengthen Corporate Social Responsibility policy (13.03.07)
On May 30 2007, just days before the G8 summit in Germany, ECCJ, Friends of the Earth Europe and a group of other NGOs send a follow-up letter to the European Commission and the EU troika, calling for action on the European Parliament's resolution on CSR.
Briefing paper by ECCJ on CSR at the European level which overviews the current state of affairs and highlights proposals and recommendations to the European Parliament and the European Commission (November 2006)
The last decades of economic globalisation have provided businesses, in particular large multinational corporations, with new and more favourable opportunities, where economic investments easily can be done over borders. Following this development both the number of transnational corporations has drastically increased and the social and environmental impacts of their operations have gained in their global dimension of consequence.
Legal conditions encouraging cowboy-capitalism
Unfortunately the development of a framework of duties and obligations ensuring that those powerful and influent economic players must take their responsibilities did not follow the change. Instead regulations of corporations are still today to a large extent dependent on national legislation, while States are the responsible stakeholders for international laws, conventions and treaties regarding human and social rights and the environment.
The mix of those legal limitations and also the complex structure of corporations today, - their unclear connections between the holding company (-ies) and its subsidies that is often referred as corporate veil - make it almost impossible to regulate companies' activities and tend to reward cowboy-capitalism with high environmental and social costs for the taxpayer.
The race to the bottom by national governments
While short term benefits dictate to a large extent the operations of corporations today in order to satisfy shareholder appetite and survive in the stock markets, the temptation to cut costs on the social and environmental side are very high. Therefore, governments seeking to attract investment are in competition against each other to offer the most 'interesting' conditions for foreign companies. Since no global binding framework exists ensuring the respect by corporations of minimum environmental and social standards, this translates into the erosion of national environmental and social protection and taxation systems. This has a double negative impact - not only the social and environmental costs are dumped on the back of taxpayers, but furthermore corporate taxes are lost and States get even more in difficulty to finance public services - such as social security, public health or education - which are fundamental to the good functioning of society.
Rights for people, rules for big business
As corporations have proven incapable of regulating themselves, we are calling for binding legal frameworks that allow peoples' to protect themselves against corporate power. Such frameworks have to:
Guarantee communities a legal right of redress for activities that adversely affect them, as well as rights to prior consultation.
Guarantee individuals and communities rights over the resources they need to enjoy a healthy and sustainable life.
Place a duty on directors of corporations to take account of social and environmental factors when taking business decisions
Require corporations to meet best environmental, social, labour and human rights standards wherever they operate.
