Fede Fede Fede
Federal Executive Board ral Executive Board ral Executive Board ral Executive Board
Responsible:
Dietmar Hexel DGB Federal Executive Board
Enquiries to:
Rainald Thannisch Codetermination Policy Department
030 240 60 605
Status as of 6 Feb 2012
Statement of the German
Confederation of Trade Unions
on the CSR Communication of the EU Commission of
25 October 2011
1. The new communication of the EU Commission
1.1 The fundamental requirements of the Confederation of German Trade Unions (DGB) with respect to CSR and its expectations of the EU Commission
On 25 October 2011 the EU Commission presented the communication about
"A renewed EU strategy (2011-14) for Corporate Social Responsibility (CSR)".
The German Confederation of Trade Unions (DGB) is taking advantage of this statement to point out its fundamental position on CSR:
At the heart of this matter for the DGB and the trade unions is the fact that even today there are no binding inter-state regulations for enforcing a social dimension to
globalisation.
The DGB is therefore in favour of a regulatory framework which places social, ecological and economic goals on the same footing.
Beyond legal regulations, CSR can supplement the protection of employees, although this requires proof of legal compliance as a minimum requirement. Voluntary CSR concepts can supplement national, European and international legal regulations and collective agreements, but can never replace them even in the future. Furthermore, the further development and expansion of legal and collective agreement standards must not be obstructed.
The protection of employees, consumers - and last but not least the environment - against corporate abuse has to be extended. In a democratic society, companies must fulfil their social responsibilities. Democratically elected workers' representatives must be involved in the development of a CSR strategy. A debate on the extent and the effects of CSR therefore only makes sense for the German trade unions if the
codetermination and participation of the workforce and trade unions represent important structural elements. The DGB will advocate unified, verifiable CSR standards. Only standardisation opens up competitive advantages for those companies who act in a socially responsible manner, while it is only comparability which facilitates consumers' purchasing decisions.
The rule, both nationally and internationally is: companies are not authorised to define their responsibility towards society alone.1
The European Union (EU) must not shy away from important international requirements and developments and with its member states should make constructive contributions towards implementing the obligation of states to protect human rights, the duties of companies to take care and access of victims to compensation. An important task of governments will be to demand management systems and disclosure obligations so that with impact assessments and analyses, enterprises understand the effects on human rights of their corporate activities as a core element of their duty to take care. From the trade union perspective this may be an important and necessary step for
democratisation of the economy if it is performed with the active participation of the trade unions and other stakeholders.
1.2 A new definition of CSR
"The Commission puts forward a new definition of CSR as "the responsibility of enterprises for their impacts on society”. Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that
responsibility. To fully meet their corporate social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and
consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of (1) maximising the creation of shared value for their owners/shareholders and for their other stakeholders and society at large; (2) identifying, preventing and mitigating their possible adverse impacts."
This definition is helpful because it underlines the requirement to comply with applicable legal regulations and collective agreements as a precondition for responsible action and demands the consideration of "social, environmental, ethical, human rights and
consumer concerns in close collaboration with the stakeholders" in the core business.
This specifies the necessary framework for corporate responsibility.
1 Cf. decision of the 19th Annual DGB Federal Congress on the theme of "Sustainable Corporate Social Responsibility (CSR) – Mandatory rules that apply to all!, published on the Internet at:
http://www.dgb.de/-/a3I
1.3 The role of stakeholders and other players
The Commission assumes a specific distribution of roles for the parties involved:
"The development of CSR should be led by enterprises themselves. 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. Many enterprises nevertheless value the existence of principles and guidelines that are supported by public authorities, to benchmark their own policies and performance, and to promote a more level playing field.
Trade unions and civil society organisations identify problems, bring pressure for improvement and can work constructively with enterprises to co-build solutions.
Consumers and investors are in a position to enhance market reward for socially responsible companies through the consumption and investment decisions they take.
The media can raise awareness of both the positive and negative impacts of
enterprises. Public authorities and these other stakeholders should demonstrate social responsibility, including in their relations with enterprises."
One aspect which should be fundamentally welcomed is the "smart mix of voluntary policy measures" and "complementary regulations, as here – although this is only a small step – this represents a departure from the dogma of exclusive voluntariness.
However, the fact that neither the Council nor the Parliament is mentioned, and that the trade unions and civil society organisations only play a role which is subordinate to the
"leading" role of enterprises in the development of CSR, is unacceptable and might undermine the primacy of politics.
2. Important content, requirements and aims of the Agenda for Action 2011- 2014
The agenda for action of the EU Commission comprises obligations for the Commission itself, as well as proposals for companies, member states and other stakeholder groups.
According to the Commission, the particular features of small and medium-sized enterprises (SMEs) and their limited resources should always be taken into consideration in such a way that they are not placed under an unnecessary administrative burden.
The most important proposals of the Commission include:
"The Commission intends to:
1. Create in 2013 multistakeholder CSR platforms in a number of relevant industrial sectors, for enterprises, their workers and other stakeholders to make public commitments on the CSR issues relevant to each sector and jointly monitor progress.
2. Launch from 2012 onwards a European award scheme for CSR partnerships between enterprises and other stakeholders."
Such platforms and awards have already been in existence for some years, but not in every industry and every region. The assessment of the instruments fluctuates between the generation of a positive contribution towards transparency and use as a stage merely for self presentation. However, it is a fact that up to now they have not contributed to any structural improvements in the various sectors and supply chains.
"Improving and tracking levels of trust in business The Commission intends to:
3. Address the issue of misleading marketing related to the environmental impacts of products (so-called "green-washing") in the context of the report on the application of the Unfair Commercial Practices Directive foreseen for 2012, and consider the need for possible specific measures on this issue."
Misleading marketing ("green-washing") is rightly seen as a problem here. It is
noteworthy that the Commission – from our perspective more clearly than ever before – has announced its intention to deal with this form of abuse. Regrettably, however, it remains open which countermeasures the EU Commission might take.
The fundamental rule is that trade unions play an important role in unmasking "green- washing". They can point out misleading marketing and rectify the abuses together with the companies. Here, trade unions could fall back on the communication within the various international and European trade union structures. As a contract partner of international framework agreements with multinational companies, global or European trade union federations in particular can play an important role in this respect.
A further important function can also be taken over - in the German system of industrial relations - by the democratically elected employee representatives on the works council, on the European works council and the co-determined supervisory board, which as company insiders have at their disposal important CSR-relevant information and
therefore – in comparison to the role of other stakeholders – have a significantly deeper insight into corporate practices. In this respect they can review the implementation of CSR measures in a practical manner and provide important suggestions and tips for the CSR strategy of a company, so to speak.
Against this background the DGB is demanding that the employee representatives be taken into consideration in a manner which is appropriate with respect to their
importance for a practical CSR policy in the agenda for action of the EU Commission.
"The Commission intends to:
4. Initiate an open debate with citizens, enterprises and other stakeholders on the role and potential of business in the 21st century, with the aim of encouraging common understanding and expectations, and carry out periodic surveys of citizen trust in business and attitudes towards CSR."
There is a strong need for open debate. Trade unions and critical NGOs have been working in this direction for decades. For this reason, this intention should be supported.
The decisive factor remains whether insights gained from the discussion do indeed result in new strategies and have an impact on the development of a unified CSR policy.
"The Commission intends to:
5. Launch a process in 2012 with enterprises and other stakeholders to develop a code of good practice for self- and co-regulation exercises, which should improve the effectiveness of the CSR process."
Employee representatives should be explicitly included in the process of developing and implementing the code of practice.
"The Commission intends to:
6. Facilitate the better integration of social and environmental considerations into public procurement as part of the 2011 review of the Public Procurement Directives, without introducing additional administrative burdens for contracting authorities or enterprises, and without undermining the principle of awarding contracts to the most economically advantageous tender."
The DGB supports the plan of the EU Commission to finally incorporate social and ecological criteria more strongly in the public procurement system, after the European Court of Justice has declared in several of its rulings that the integration of these criteria is permitted. Here we continue to demand the strict linkage of public contracts to compliance with the ILO core labour standards and to the payment of collectively
agreed or customary local wages in order to bring to an end wage dumping in the award of public contracts, instead of emphasising the concerns about administrative burdens.
It also goes without saying that the EU member states, the majority of which are also OECD member states, also comply with the OECD guidelines which they have passed and ratified themselves and urge the companies within their countries to apply the guidelines.
"The Commission intends to:
7. Consider a requirement on all investment funds and financial institutions to inform all their clients (citizens, enterprises, public authorities etc.) about any ethical or responsible investment criteria they apply or any standards and codes to which they adhere."
At this point more political courage is required, as investments are at the heart of the economic system. The DGB therefore urges the EU Commission not only "to consider"
corresponding reporting obligations, but also to specifically pass them into law.
Improving company disclosure of social and environmental information:
"In order to ensure a level playing field, as announced in the Single Market Act the Commission will present a legislative proposal on the transparency of the social and environmental information provided by companies in all sectors."
The DGB expressly welcomes the plans of the EU Commission to increase the transparency of social and environmental information by means of legal regulations.
This transparency should be aligned not only to the interests of the external
stakeholders, but also the interests of the employees, which is why the democratically elected employee representatives are to be involved in the publication.
Here it should be taken into account that only standardisation of the CSR reports opens up competitive advantages to those enterprises which act in a socially responsible manner, and that only comparability facilitates the purchasing decisions of consumers and provides employees with indications of where their company stands in the worldwide comparison.
The DGB is therefore in favour of mandatory accountability and publicity requirements for companies concerning the environment, social and human rights.
From the trade union point of view, CSR reports must - with the incorporation of the GRI standards - relate specifically to
- the working and employment conditions throughout the entire enterprise, i.e.
also across the entire supply chain,
- the opportunities for participation of the employees, - the promotion of disadvantaged groups of individuals - and the compatibility of family and career.
Only where employee-friendly working and codetermination structures are present can a credible CSR strategy be communicated to the outside world.
"The Commission intends to:
10. Monitor the commitments made by European enterprises with more than 1.000 employees to take account of internationally recognised CSR principles and guidelines, and take account of the ISO 26000 Guidance Standard on Social Responsibility in its own operations.
The Commission invites:
B. All large European enterprises to make a commitment by 2014 to take account of at least one of the following sets of principles and guidelines when developing their approach to CSR: the UN Global Compact, the OECD Guidelines for Multinational Enterprises, or the ISO 26000 Guidance Standard on Social Responsibility.
C. All European-based multinational enterprises to make a commitment by 2014 to respect the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy."
In the opinion of the DGB, future proceedings could specifically aim at converting the current invitation into a clear legal obligation. Should this not be enforceable, an intermediate step that is at least conceivable is to place all multinational companies located in Europe under an obligation in conjunction with the target improvement in transparency to report whether - and if so to what extent - they comply with the ILO Tripartite Declaration of Principles concerning multinational enterprises and social policy.
The continuing call of the EU Commission on large enterprises to comply either with the OECD guidelines, the Global Compact or ISO standard 26000 is also a move in the right direction. However, in the view of the DGB it is not very expedient - and a sign of a certain degree of arbitrariness in the CSR strategy - to place the three aforementioned instruments on the same level. For example, in spite of their continuing weaknesses,
from the trade union point of view the recently revised OECD guidelines offer the most comprehensive frame of reference for exercising corporate responsibility with respect to social and environmental issues. Moreover, they also deal with the behaviour of
enterprises towards consumers, fiscal authorities and the public sector. The complaints procedure with the national contact points with which they are inseparably associated makes them a particularly valuable instrument from the trade union point of view.
In contrast, the principles of the Global Compact are not binding, although if the enterprises enter into a voluntary undertaking to implement the Global Compact principles they represent an additional frame of reference. In turn, we reject ISO 26000 as a reference framework, as ISO is not in a position to prevent the increasing abuse of ISO 26000 for certification purposes.
The result of this is that in various legal fields, tasks that have previously been taken over by the state, e.g. independent, state control and monitoring, are being gradually released for privatisation. For an analysis of the facts, companies are using the services of certifiers, which can also be selected and paid by the companies to be checked.
In this respect there is much to be said for further developing the invitation of the EU Commission to the large European enterprises to comply with the OECD guidelines into an obligation, without thereby discrediting other international standards such as the Global Compact, which can also continue to be used as well.
"The Commission intends to:
11. Work with enterprises and stakeholders in 2012 to develop human rights guidance for a limited number of relevant industrial sectors, as well as guidance for small and medium-sized enterprises, based on the UN Guiding Principles.
12. Publish by the end of 2012 a report on EU priorities in the implementation of the UN Guiding Principles, and thereafter to issue periodic progress reports.
The Commission also:
D. Expects all European enterprises to meet the corporate responsibility to respect human rights, as defined in the UN Guiding Principles.
E. Invites EU Member States to develop by the end of 2012 national plans for the implementation of the UN Guiding Principles."
In May 2011 the United Nations adopted the "Guiding Principles on Business and Human Rights"2. These principles are the provisional result of very tough political efforts to develop worldwide rules for companies, which have been going on since the early
2 http://www.business-humanrights.org/media/documents/ruggie/ruggie-guiding-principles-21- mar-2011.pdf
1970s. In August 2003 the "UN Sub-commission for the Promotion and Protection of Human Rights" - after five years of groundwork - unanimously passed the "UN Norms on the Responsibilities of Multinational Corporations and other Business Enterprises with Regard to Human Rights"3, which in the case of their acceptance would have represented an enormous step in the direction of binding regulations for transnational companies. The lobby of the enterprises ensured that this approach was taken off the agenda. In place of the United Nations standards, John Ruggie, the UN special
representative for human rights and the economy, developed the "Guiding Principles on Business and Human Rights" framework with the three pillars of "Protect, Respect, Remedy", which by civil society organisations in particular is critically assessed as not going far enough.
This view is shared by the DGB, which fundamentally welcomes the implementation of the UN guidelines, but considers them to be inadequate. We refer again to the OECD guidelines as the most comprehensive international framework at the moment for sustainable and social corporate activities, which has also been enhanced by the human rights chapter added in the latest revision.
3. Summary and outlook on the debate about CSR in Germany
With the new UN guiding principles for business and human rights and the communication of the EU Commission, the CSR policy is being furnished with a significantly refined business base. The clarification of the definition of CSR as a primary responsibility of enterprises with respect to society is a positive innovation.
Insofar as legal regulations for the disclosure of the social and ecological information of companies are implemented in the coming years, this would be an important step in the direction of transparency and verifiability.
One aspect which remains unsatisfactory is the integration of the democratically elected employee representatives in the CSR strategy, as well as the lack of international, unified, verifiable and mandatory regulations which are required in order to generally define and implement the principles of the social responsibility of enterprises. In our eyes, enterprises are not authorised to define their responsibility towards society by themselves.
It has also been shown that the principle of voluntariness is not sufficient to protect employees' and human rights. At this point, statutory regulations are needed. Genuine commitments are also required for the improved coordination of European and global
3 http://www1.umn.edu/humanrts/links/norms-Aug2003.html
CSR concepts which the EU Commission is striving for. The EU is under an obligation not to leave the implementation of CSR guidelines exclusively up to enterprises, but to create more effective instruments which make it easier to monitor compliance with social and ecological standards - and enforce them if necessary. Overall, the demands of the EU Commission are therefore too vague and not binding enough, as "giving consideration to something" or "intending something" will not yet have any effect. What is important is that these proposals are indeed implemented.
Even so, the EU has taken a first important step in the right direction which also contains groundbreaking elements for the German debate concerning CSR.
Nevertheless, from the trade union point of view this step must be followed by further measures. This concerns the national level in particular.
In the CSR Forum of the Federal Government, the organisations represented there, including the central associations of industry, as well as the DGB and its member trade unions IG BCE, IG Metall and ver.di, agreed on a common understanding of CSR. The core element of this common understanding is the statement: "Companies exercise social responsibility in particular by supporting and involving employees and treating them fairly. CSR is voluntary, but not arbitrary" (underlined by the DGB).
From the trade union perspective it is of key importance to address the question of measures against the arbitrariness of corporate CSR strategies. To this purpose the EU Commission has provided major impetus through its proposals to strengthen the transparency of and commitment to CSR.
Against this background, the DGB calls upon the Federal Government to make a constructive contribution towards the implementation and further refinement of the EU strategy together with the members of the CSR Forum. One contribution towards this could be the further development of the CSR agenda for action of the Federal Government in such a way that it corresponds to the smart mix of voluntary policy measures and, where necessary, complementary regulation demanded by the EU Commission and takes into account the UN guiding principles.
Ultimately, it is essential for the DGB that the CSR concepts of an enterprise result without fail in a significant improvement in the working conditions of employees in Germany, Europe and worldwide (also in the supply chain) and that there is a perceptible contribution to the preservation of our environment.
