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					              Dr Béla Galgoczi:
    European Trade Union Institute, Brussels



Changing patterns of corporate social responsibility in
                         Europe




 EU – Japan workshop on Corporate Social Responsibility


          Hitotsubashi University, Tokyo, Japan

              26-27 November 2004, Tokyo
  Brief overview of the different corporate governance
                   models, in Europe:

Liberal market economy vs. Co-ordinated market
  economy /with alternatives, as social-democratic,
  Rhineland – model or etatistic/.
The basic differences of the two major models:
- financing /dominantly/ through capital markets or
  bank credits;
- corporate governance /CEO, dual board, “patron”/;
-          innovation      /market,  venture   capital,
  incrementalistic/;
- participation, employee representation /conflictual,
  co-operative, participatory/;
- qualification, training and human resource policies.
   Universal problems with corporate governance


• Raising uncertainties and complexity regarding the
  social dimension of company behaviour /co-operation
  vs. Conflictual relations; short term vs. Long-term
  perspective/;
• Dealing with people in a global economy;
• Need for stability – externalisation of social and
  environmental aspects is not sustainable in long-term
  perspective;
• Declining influence of nations vs. Social partners
  rooted nationally
         The emergence of the CSR concept



One of the most important drivers of CSR is the idea
  that there is a “business case” for responsibility.
• not only the financial performance of a company can
  be objectively measured,
• but the non-financial performance can also be
  analysed, reported
• auditing and certifying methods to be developed
• the term “triple bottom line” - which links financial,
  environmental and social performance of companies.
                   Definitions of CSR

• Corporate social responsibility is a commitment by a
  company to manage its role in society – as producer,
  employer, market player, customer and citizen – in a
  responsible and sustainable manner.
• including a set of voluntary principles – over and
  above legal requirements – that seek a positive impact
  on societies
• CSR is “good corporate governance” – doing good
  /not being seen as doing good/ by recognising the
  company’s responsibility to all its stakeholder groups.
• CSR is a concept, whereby companies integrate social
  and environmental concerns in their business
  operations and in their interaction with their
  stakeholders on voluntary basis.
      Promoting democracy on company level


   Workers involvement is a social and economic
    advantage; it is a need in civil society
   European framework and support must help to improve
    traditional practices in national/local working cultures
    inshaping challenges from globalization
   Workers involvement will become a new importance in
    thinking on a new social role of – multinational –
    companies after the decade of a pure shareholder
    value approach
   Workers involvement is more than strong legal
    framework: f.e. HRM, CSR, financial participation
          Structure of European level governance

•   Legally binding

•
•   Regulation    European law               legislative act
•   Directive     European framework law     legislative act
•
•                 European regulation      non-legislative
•   Decision      European decision        non-legislative
•
•   Not legally binding
•
•   Recommendation             Recommendation
•   Opinion                    Opinion
•
Workers Involvement – Pieces of a Puzzle
                   Direct

                                   Workers

Collective      Participation
Bargaining                      Representation




             Co-determination
   Capital                      Sectoral
                                Policies
Ownership
   Workers Involvement – as legislative elements of the
                 European Framework



Information & Consultation         European Works Councils




      SE-Directive
          The European framework of WP




•  Information and consultation and participation of
  employees belongs to the core elements of the
  European Social Model. n
• From the end of the 1980s workers’ participation has
  received particular attention and has been embedded
  in several EU Directives.
• This went parallel with the rediscovery of the
  importance of human resources and trust-based
  employee relations in company success
      Renewing the European governance system
Less top-down approach
Complementing policy tools by non-legislative elements
  Appropriate use can be made of alternatives to legislation
  without undermining the provisions of the Treaty
• - co-regulation
• - self-regulation
• - voluntary sectoral agreements
• - open method of co-ordination (encouraging co-operation,
  exchange of best practice, agree common targets and guidelines
  for member states)
  Legislation as part of a broader solution combining formal rules
  with other non-binding tools.
      Place of CSR, as soft law element in Eur governance

      Soft law                 independence with respect to state
  law as adaptation to globalisation
•
      Privatisation of labour standards  deregulation
• Defined as a (additional and) different form of regulation  self
  regulation or auto-regulation of undertakings
•
           Advantage: social control over transnational production
  activities
            Dangers: lack of social compensation for economic
  inequality, selection of issues  weakening of workers’ rights,
  substitute to state law and negotiated norms
         Remedies: Involvement of social partners (sectoral level,
  European Works Councils), to adapt legislation (procedures,
  social labeling).
       Accountability vs responsibility
• The term “corporate accountability” is being used to refer to the
  obligations on corporations imposed by governments and to the
  corporate governance framework established to hold
  management accountable. On the other hand, “corporate social
  responsibility” stands for voluntary activities without being
  accountable. It is widely accepted that that regulatory and
  corporate governance frameworks can shape corporate
  behaviour more than CSR principles or initiatives. There is a
  growing recognition – especially among trade unionists – that
  these regulatory frameworks are inadequate.
            Challenges of CSR for trade unions
• Most trade unionists see CSR as a desirable goal, although some
  see it more as a dangerous attempt to create a substitute for the
  traditional roles of both governments and trade unions. In this
  regard unionists often see CSR as a mere public relation exercise
  by companies
• The most controversial issue in the concept of CSR for trade
  unions is its voluntary character, being “above and beyond legal
  requirements”.
• Some see CSR as an alternative to regulation and as an
  alternative to interest representation of employees by trade
  unions.
            Challenges of CSR for trade unions
• Private standard-setting
  Trade unions face a series of challenges with respect to
  standards. Business is using codes of conducts and other forms
  of private standard setting in the social area to redefine or
  reinterpret standards so as to make their responsibility seem less,
  than it really is.
• Reporting and verification
  Agreeing on what to report to the public about the social impacts
  is a crucial form of standard-setting. Unlike financial and
  environmental reporting, the social dimension has a high level of
  intangibles.
• Socially responsible investment (SRI)
  Influencing investment funds that claim to invest in companies
  that are socially responsible. Works, where workers institutions
  with an interest in CSR have influence on investment decisions
  (e.g. Pension Funds)
           Challenges of CSR for trade unions
• Social rating, social labels and awards
  The CSR phenomenon features positive incentives, such as
  awards, labels, best practices. These concern labour issues
  ranging from human resource practice awards to labels related to
  supply chain codes. Trade unions are often bypassed and
  “experts” engaged to judge the reports may not be familiar with
  industrial relations. Such labels and awards have serious
  credibility problems, as the basic motivation is to gain
  commercial benefits..

  The CSR concept can thus appear in contradictory forms. It
  stresses the importance of engaging stakeholders but at the
  same time, stresses unilateral management action. The danger
  is that CSR is more about management systems and checklists
  than genuine dialogue. The management prefers to choose its
  „stakeholders‟ for dialogue. Too often, companies engage
  NGO-s over workplace issues and avoid trade unions.
     The major concerns of ETUC regarding CSR
  The basic message of the ETUC resolution is that CSR should
  complement, but in no way replace, legislation on social and
  environmental rights or standards set by collective bargaining.

  The most important unfounded illusions towards CSR, as the
  ETUC sees:
• The illusion that CSR would sweep away the balance of power,
  as the employers’ responsibilities are diluted;
• The illusion that all stakeholders are on equal footing in this
  policy;
• The illusion that the voluntary method of other best practices
  would be enough to assert CSR.
   The major concerns of ETUC regarding CSR

The Executive Committee of the ETUC stressed that, “rather than
being regarded as an added extra, CSR must permeate the
very being of the company and its governance, covering its
entire operation and taking on board social and environmental
issues in its day-to-day management.”

The prerequisite for CSR is respect for collective bargaining and
laws, which means companies must act to:
• promote collective bargaining where there it is insufficient or
even nonexistent;
• enhance the involvement of trade unions, workers and their
representatives as well as the respect for and defence of their
rights.
  Opportunities for trade unions through CSR


Even if the acceptance of CSR principles in European trade union
circles are rather mixed, it is vital to address these questions
by trade unions in order to be able to shape them . Trade
unions could use the instruments of CSR as a springboard for
reaching employees, having been out of their scope sofar.

It could be a proper strategy for trade unions to oppose the
unilateral, voluntary approach of companies and opt for a
framing of corporate social responsibility either by laws or by
contractual agreements with the trade unions and other
stakeholders.
         Possible priority topics for trade unions
    Activities in alliance with NGO-s and other stakeholders, as:
•   Meetings and debates to formulate trade union and NGO
    approaches to CSR;
•   Educational activities in using int’l standard-setting systems;
•   Joint campaigns for identifying major TU principles on CSR;
•   Work on the establishment of countervailing powers in the field of
    consumption and sustainable development.
    Setting a target for the following major goals:
    Within a foreseeable time, all international companies to sign
    contractual agreements with the workers’ rep’s in all their
    daughter and branch companies in order to implement at least
    the eight ILO Conventions – to be registered at the ILO.
•   Work for extending the ILO’s standard-setting system.
•   On European level, trade unions should contribute to developing
    the European governance in its tools in tackling CSR.
The option of using the EWC-s in shaping company
              policies in line with CSR
    As EWC-s operate on corporate basis, on European or even
    worldwide level, they can deal with many of the issues, taken
    up in CSR:
  Internal issues
- Human resources management – training, equal opportunities
- Health and safety issues
- Adaptations to change – restructuring
- Management of environmental impacts
     External issues
- Local communities
    - Business partners, consumers, suppliers
- Human rights, trade union recognition
    - Global environmental concerns.
                 Concluding remarks



CSR is neither an objective nor an option, it is a context offering
challenges and opportunities that can also be shaped.
These opportunities all mean that trade unions would have lots of
options in shaping CSR practices and make sure, that the CSR
initiative is not weakening their basis and influence, but
contributes to their strengthening. It needs however a nuanced
approach and not a defensive stance.

				
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posted:10/2/2011
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