Given the comparative sizes of development aid and Foreign Direct Investment, it seems absolutely necessary that Europe develops ways in which European companies aid the sustainable development and respect for human rights in all of the countries in which they have an influence, both in Europe and in the developing world.
Quakers have a long association with the idea that business should not only measure its success by the financial profits it makes. Many Quaker industrialists of the 19th century were at the forefront of developing ways of working that ensured respect and social provision for their workers. During their own time they were at the forefront of what we now know as Corporate Social Responsibility (CSR).
QCEA has produced a collection of four briefing papers on four themes of Corporate Social Responsibility to act as an educational tool for Quakers around Europe, to aid them in reflecting upon the issues and challenges that CSR presents.
Corporate Social Responsibility: What is it?
Corporate Social Responsibility is a widely defined concept that explores the responsibilities of business towards society. There are three broad areas: the environment; employees and neighbours; and consumers where this responsibility lies outside of the financial responsibilities that Companies have towards shareholders and other investors. CSR is also linked to the idea of social and environmental sustainability; how businesses should act to ensure that their business contributes to a future where the environment is protected and people’s basic human rights are protected, both in the short and long term. Business’ role as creators of wealth for society can contribute but the wealth must be achieved in a sustainable way.
Companies across Europe are obliged to produce annual reports and annual accounts, which have been verified by third party auditors, to ensure that accurate information concerning the financial running of a business is available to all those it may concern. However there is no widespread legal obligation across Europe for companies to report on their non-financial impacts. Where companies do produce a report on the non-financial impacts of their business, this is called social reporting. Given the increasing influence that business has over our daily lives, a reassessment of what information citizens, consumers, employees and NGOs have the right to access is necessary.
For many companies the primacy of the shareholder is unchallenged and is seen as a reason why other dialogue with stakeholders such as employees, consumers and those whose lives are affected by the company cannot redefine for whose benefit the company is run. Therefore some people wish to use whatever investments they have in a way that reflects their values. There are three main approaches to ethical investment: ethical screening, positive investment and investor engagement, which may or may not be adopted in combination.
Rules, Regulations and Codes
There are a wide variety of rules, regulations and codes of conduct that have been promoted by different sectors of society as a source of the principles by which companies should operate. Some are voluntary and unilaterally supported by companies, whilst others are more binding in nature. Some cater for all companies whilst others cater for a specific size or sector of business. There are a wide variety of opinions about what the ideal regulatory framework for business behaviour should be, with many business organisations advocating voluntary codes arguing that they allow companies to be innovative in Corporate Social Responsibility; NGOs argue that regulation is necessary to change behaviour and ensure that good intentions mean more than publicity material.