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EUROPEAN COMMISSION

Brussels, XXX F2 ARES PO COMMUNICATION CSR [](2011) XXX draft

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT A renewed EU strategy 2011-14 for Corporate Social Responsibility

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TABLE OF CONTENTS
1. 2. 3. 4. 4.1. 4.2. 4.3. 4.3.1. 4.3.2. 4.3.3. 4.4. 4.5. 4.6. 4.7. 4.7.1. 4.7.2. 4.7.3. 5. Introduction .................................................................................................................. 2 Progress and remaining challenges: the need for a renewed European policy on CSR ...................................................................................................................................... 3 A modern understanding of corporate social responsibility ........................................ 4 An agenda for action 2011-2014.................................................................................. 6 Recognising and enhancing CSR in European enterprises .......................................... 6 Improving and tracking levels of trust in business....................................................... 8 Enhancing market reward for CSR .............................................................................. 8 Consumption ................................................................................................................ 9 Public procurement ...................................................................................................... 9 Investment .................................................................................................................. 10 Improving company disclosure of social and environmental information................. 10 Further integrating CSR into education, training and research.................................. 12 Emphasising the importance of national and sub-national CSR policies .................. 12 Better aligning European and global approaches to CSR .......................................... 13 Focusing on internationally recognised CSR principles and guidelines.................... 13 Implementing the UN Guiding Principles on Business and Human Rights .............. 14 Emphasising CSR in relations with other countries and regions in the world, including through trade policies and development policies....................................... 15 Conclusion.................................................................................................................. 16

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1.

INTRODUCTION

Corporate social responsibility (CSR) is a process whereby companies integrate social, environmental and ethical issues into their business operations and strategy in close interaction with their stakeholders, going beyond the requirements of applicable legislation and collective agreements. CSR is multidimensional and covers a wide range of issues. According to most internationally recognised CSR principles and guidelines, CSR at least covers human rights, labour and employment practices (such as training, diversity, and employee health and well-being), environmental issues (such as biodiversity, climate change and pollution prevention), and combating bribery and corruption. Consumer interests and community involvement and development are also often considered part of the CSR agenda. The promotion of social and environmental responsibility through the supply-chain, and disclosure of non-financial information are recognised as important cross-cutting issues. A strategic approach to CSR is increasingly important to the competitiveness of enterprises1, helping them to create value both for owners and shareholders, and for other stakeholders and society at large, including disadvantaged and vulnerable groups. A reputation for having responsible enterprises can enhance the European Unions global competitive positioning. Thanks to its potential to enhance companies' commitment and contribution to smart, sustainable and inclusive growth, CSR is a crucial part of the exit strategy from the economic crisis and the transformation to a more cohesive society and a sustainable economic system. Provided it is managed and practiced in a credible and transparent manner, CSR strengthens the European social model and is an opportunity for enterprises to win the trust and respect of citizens. An increasing number of large European companies and also SMEs adopt socially responsible business strategies as CSR is increasingly proving to be a successful business model. This allows responsible companies to respond to evolving trends in consumer's choices which are increasingly focussed on companies' behaviour. Through CSR enterprises can significantly contribute to the European Unions treaty objectives of sustainable development and a highly competitive social market economy. CSR underpins in particular the objectives of the Europe 2020 strategy for smart, sustainable and inclusive growth and its flagship initiatives, such as the Agenda for New Skills and Jobs, Youth on the Move, the European Platform against Poverty and Social Exclusion, as well as the implementation of the actions proposed in the Single Market Act for a new growth. Indeed numbers of them make direct references to the importance of corporate social responsibility2.

European Competitiveness Report 2008 (COM(2008)774), and accompanying Staff Working Paper SEC(2008) 2853 2 Including the Integrated Industrial Policy for the Globalisation Era COM(2010)614, the European Platform against Poverty and Social Exclusion COM(201)1564 and the Single Market Act(COM(2011)206.

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2.

PROGRESS AND REMAINING CHALLENGES: THE NEED FOR A RENEWED POLICY ON CSR

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European enterprises have made significant progress in the field of CSR since the Commissions 2001 Green Paper on CSR in 2001 and in particular since its last communication on CSR in 20063. Indicators of progress include: The number of EU enterprises listed as having signed up to the ten CSR principles of the United Nations Global Compact has risen from 600 in 2006 to over 1900 in 2011. The number of organisations with sites registered under the EUs Environmental Management and Audit Scheme (EMAS) has risen from 3,300 in 2006 to over 4,600 in 20114. The number of Eco-label licenses awarded for more environmentally friendly products increased from 380 in 2006 to over 1,100 in 2010. The number of EU companies signing transnational company agreements with global or European workers organisations, covering issues such as labour standards, rose from 79 in 2006 to over 140 in 2011. The Business Social Compliance Initiative, a European, business-driven initiative for companies to improve working conditions in their supply-chains, has increased its membership from 69 in 2007 to over 700 in 2011. The number of European enterprises reporting on their CSR and sustainability performance is estimated to have risen from about 1,500 in 2006 to about 2,500 in 20105. The number of European enterprises publishing sustainability reports according to the guidelines of the Global Reporting Initiative rose from 270 to over 850 in the same period.

Many enterprises deserve recognition for their leadership and innovative CSR approaches. Leading enterprises are very sophisticated in their understanding of societal challenges, and equally ambitious in providing solutions. Through the European Alliance on CSR, launched with support from the Commission in 2006, leading enterprises developed a series of practical tools on key issues, for example gender equality, responsible supply-chain management, and improving dialogue with investors on companies non-financial performance. Important challenges remain however. Although many of the indicators demonstrate progress, there is room to do better. Many large companies in the EU still do not have CSR policies or have not fully integrated CSR into business operations and core strategy. Accusations persist of the involvement of a small minority of European enterprises in human rights harm and failure to respect core labour standards. Furthermore, progress has been uneven across the EU, with enterprises in some Member States frequently recognised as global leaders in CSR, while in other Member States the degree of awareness and engagement is much lower. The CSR potential of the 23million SMEs is not yet sufficiently validated and recognized.

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COM(2001)366 and COM(2006)136 Of these organisations, it is estimated that about 80% are enterprises. 5 Corporateregister.com

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Moreover the context in which enterprises operate has evolved in recent years. The opportunities for growth by integrating societal concerns into business operations and strategy are increasingly recognised, although more can still be done to make sure that the market sufficiently rewards responsible business practices. The focus of Europe 2020 strategy on sustainable and inclusive growth creates new opportunities for business to contribute to a sustainable growth model for our society. The economic crisis and its social consequences have focused attention on the social and ethical performance of business. A number of important global CSR principles and guidelines have been created or recently revised. Enterprises and governments in some emerging economies have become increasingly ambitious in their approach to CSR. This communication sets out an ambitious and modern European CSR policy, fully adapted to the new challenges. It aims to meet the expectations expressed by the European Parliament, the Council, a number of Member States, enterprises and other stakeholder groups. It reaffirms the EUs global leadership in this field, and will enable the EU to better defend its interests and values in international fora and in relations with partner countries and regions. A European approach to CSR is necessary to guide and coordinate EU Member State policies, helping to avoid the development of divergent approaches, such as different national CSR principles and guidelines that could create additional costs for enterprises operating in more than one EU Member State. The strategy put forward in this communication also provides a framework to better coordinate and implement European policies relevant to CSR. It also provides continuity with the Commissions 2006 communication on CSR in a number of aspects, including emphasis on the multistakeholder approach, the need for business leadership, the need to recognise the important potential of SMEs while taking account of their particular circumstances, and the links between CSR and competitiveness. But, in this communication, the Commission further develops certain important aspects which were not sufficiently tackled in the 2006 one and which deserve a stronger political leadership from the Commission and the EU, in particular after the financial, economic and social crisis which emerged in 2008. Within this new context, the Commission puts forward now a modern understanding of the concept CSR, stressing the need for enterprises to take a strategic approach, and acknowledging that public authorities can support the development of CSR through a smart mix of mainly voluntary and, where necessary, regulatory policy measures, as described in Chapter 3; a new focus on how CSR can help to build greater trust in business;, as proposed in Chapters 4.1 and 4.2; proposals to create greater market reward for CSR, including by addressing responsible consumption, public procurement and investment, as defined in Chapter 4.3; and a stronger emphasis on disclosure of non-financial information ( see in Chapter 4.4 ), on internationally recognised CSR guidelines ( as refered in Chapter 4.7.1 ) and principles and guidelines, on business and human rights, ( as described in Chapter 4.7.2 ) ; and on disclosure of non-financial information; A MODERN UNDERSTANDING OF CORPORATE SOCIAL RESPONSIBILITY

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CSR requires a high degree of engagement with, and transparency towards, a companys internal and external stakeholders. More intensive engagement with stakeholders enables

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enterprises to better anticipate and take advantage of fast changing societal expectations and operating conditions. To maximise the competitive advantages that CSR can bring, enterprises should adopt a longterm, strategic approach, and proactively manage social, environmental and ethical risks and opportunities that are linked with their core business. Enterprises that manage CSR as a peripheral concern, mainly related to public relations or philanthropy, are likely to miss opportunities for growth and competitiveness gains. CSR has a responsibility and accountability dimension, which helps companies to minimise and eliminate their negative social and environmental impacts; and a commercial opportunity and innovation dimension, which enables companies to maximise their contribution to societal wellbeing, including through the development of innovative products, services and business models which lead to higher quality and more productive jobs. Respect for applicable legislation and collective agreements is of course a prerequisite for any meaningful approach to CSR. For most small and medium-sized enterprises, CSR is informal and intuitive. For companies seeking a more formal approach, especially large companies, authoritative guidance is provided by internationally recognised CSR principles and guidelines, in particular the ten principles of the United Nations Global Compact, the OECD Guidelines for Multinational Enterprises, the ISO 26000 Guidance Standard on Social Responsibility, the ILO Tri-partite Declaration of Principles Concerning Multinational Enterprises and Social Policy, and the United Nations Guiding Principles on Business and Human Rights. The Commission will ensure that these new and/or updated internationally recognised CSR principles and guidelines will be duly integrated in the EU own CSR policies, in coherence with the EU values and objectives as defined in the Lisbon Treaty. The concept of CSR is applicable to all enterprises, regardless of size or other characteristics, although any attempt to promote CSR must take into account the specific circumstances of SMEs. Certain types of enterprise, such as cooperatives, mutuals, and family-owned businesses, have ownership and governance structures that can be especially conducive to responsible behaviour. Therefore, while this communication primarily refers to the place of enterprises in society and to their relations with internal and external stakeholders, it is adopted together with a complementary but distinct Social Business Initiative (SBI). The SBI specifically targets enterprises whose primary purpose is explicitly social and/or environmental, that reinvest profits for that purpose, and whose internal organisation reflects the societal objectives. The SBI deals with the ecosystem required for social business initiatives and social innovation to flourish and contribute to the European social market economy. CSR is separate from but linked to the concept of corporate governance, which is defined as the system by which companies are directed and controlled and as a set of relationships between a companys management, its board, its shareholders and its other stakeholders. The Commission will consider possible policy measures in 2012 to upgrade the EU corporate governance framework, in the light of responses to its Green Paper on this issue6.

COM(2001)164

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The development of CSR should be lead by enterprises themselves. Public authorities and other stakeholders should play a supporting role through a smart mix of mainly voluntary and, where necessary, regulatory policy measures. In urging companies to take more social responsibility, public authorities should ensure that their own actions enhance private initiative and enterprise capacity for innovation. The role of public authorities in support of CSR takes a number of forms: Encouraging and facilitating CSR, for example by: partnering with business on specific issues; supporting awareness-raising, training and research; convening discussions between enterprises and other stakeholders; publicly recognising good practice. Helping to clarify public expectations regarding CSR, on which enterprises can then build their own particular approach. 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 CSR principles and guidelines that are supported by public authorities, to benchmark their own policies and performance, and to promote a more level playing field. Adopting polices and, where necessary, regulations to create market incentives that reward responsible companies, to promote transparency and to ensure corporate accountability.

Other stakeholders also have an important role to play in supporting the development of CSR. Trade unions and civil society organisations identify problems, bring pressure for improvement and can work constructively with business 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 social and environmental issues that are relevant to enterprises, and draw attention to good and bad business practices. 4. AN AGENDA FOR ACTION 2011-2014

The following agenda contains commitments from the European Commission itself, as well as suggestions for enterprises, Member States, and different stakeholder groups, with a view to strengthening the CSR process within the EU and globally. In implementing this agenda, the Commission will at all times take account of the differences between SMEs and larger enterprises, and avoid creating unnecessary administrative burden for business. 4.1. Recognising and enhancing CSR in European enterprises

By giving public recognition to what enterprises do in the field of CSR, the EU can help to identify good practice, foster exchange of experience between enterprises in different Member States and beyond, and encourage more enterprises to develop their own strategic approaches to CSR. The results of relevant EU funded research programmes can provide a basis for the development of innovative CSR methodologies.

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Small and medium-sized enterprises often require advice on CSR that is tailored to their particular circumstances. The lessons from initiatives in different Member States to support CSR amongst SMEs can be used to further increase the quality and impact of support to SMEs in this field. After adequate capacity building the Enterprise Europe Network can improve the quality and availability of CSR advice for SMEs at EU level. Initiatives to promote CSR should take account of the fact that different sectors have different CSR priorities, as already acknowledged in some sector-based CSR initiatives supported by the Commission. In recent years several sectoral social dialogue committees have promoted good CSR practices and established guidelines, for example on CSR reporting7. The Commission facilitates such initiatives by European social partners, and recognises that CSR contributes to and supplements social dialogue. Innovative and effective CSR policies have also been developed by way of transnational company agreements (TCAs) concluded between enterprises and European or global workers' organisations. The EU supports TCAs through exchanges of experience, financial support, monitoring, and studies8. The Commission realises the need for dialogue on issues such as employability and workforce evolutions, demographic change, the needs of young people, active ageing with reference to the European Year for Active Ageing in 2012, and employee health and well-being: it will promote such dialogue in 2011-2012 with enterprises and other stakeholders, including, where appropriate, with public and private employment services, on how enterprises can contribute to a more inclusive society. The Commission has launched a number of programmes to work with enterprises and other stakeholders on some critical social and environmental issues, such as the Retail Forum for Sustainability, the EU Platform for Diet, Physical Activity and Health, the Business and Biodiversity Campaign and the process on corporate responsibility in the pharmaceutical industry. Further engagement with enterprises will be important for the success of Europe 2020 flagship initiatives. CSR Europes Enterprise 2020 initiative is to be welcomed as an example of business leadership in the field of CSR that is particularly relevant to EU policy objectives.: the Commission will cooperate with CSR Europe to review the initial results of this initiative, which are expected by the end of 2012, and to help define its next steps The Commission will: Create in 2012 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.

See Chapter 6.3.4 of "Industrial relations in Europe 2010", European Commission, DG Employment Social Affairs and Inclusion, 2011 "The role of transnational company agreements in the context of increasing international integration COM(2008) 419 final". Between 2000 and 2010, some 200 transnational company agreements have been concluded in 100 companies employing 10 Million employees, of which 80 international framework agreements concluded with Global trade union federations. See database, work of the expert group and related information at http://ec.europa.eu/social/main.jsp?catId=707&langId=en&intPageId=214.

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Launch in 2012 European annual awards for CSR partnerships between enterprises and their stakeholders. Support in 2012 an initiative to build the capacity of the Enterprise Europe Network in the field of CSR, in order to improve the quality and availability of CSR advice for small and medium-sized enterprises. Enhance its support for transnational company agreements by assessing the work carried out in this field since 2008, and launching in 2011 a searchable database of such agreements. Adopt a communication on volunteering in 2011, drawing attention to employee volunteering as part of company CSR policies.

4.2.

Improving and tracking levels of trust in business

Like all organisations, including governments and the EU itself, enterprises need to be trusted by the societies in which they operate. It has been observed that trust in business has to some extent been damaged during the economic crisis9. There is frequently a gap between citizens expectations and what they perceive to be the reality of business behaviour. This gap is caused partly by instances of cases of irresponsible behaviour by some enterprises. It is also sometimes caused by an insufficient understanding on the part of some enterprises of fast evolving societal expectations, as well as by an insufficient awareness on the part of citizens and stakeholder organisations of the achievements of enterprises and the constraints under which they operate. The European business community should aspire to be amongst the most trusted groups of organisations in society. A more widespread uptake of credible and transparent CSR practices amongst European enterprises, as well as more open debate between enterprises, citizens and other stakeholders, should help to build greater trust in business. The Commission will: Launch in 2012 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. Carry out as from 2012 periodic surveys of citizen trust in business and attitudes towards CSR. Enhancing market reward for CSR

4.3.

Although the positive impacts of CSR on competitiveness are increasingly recognised, enterprises still face dilemmas in which the most socially responsible course of action may not be the most financially beneficial, at least in the short term. The EU should use existing

BUSINESSEUROPE report to 2010 plenary meeting of European Multistakeholder Forum on CSR.

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policies in the field of consumption, public procurement and investment to help strengthen market incentives for CSR. 4.3.1. Consumption

Although consumer attention to CSR-related issues has grown in recent years, significant barriers remain, including insufficient awareness and interest, the need sometimes to pay a price premium, and lack of easy access to the information necessary for making informed choices. Some enterprises are playing a pioneering role in helping consumers to make more sustainable and responsible choices. A single label covering all aspects of CSR is unlikely to be feasible, but labelling schemes on some individual aspects of CSR, such as the European Eco-label, can support more responsible consumption. In 2009 the Commission adopted a communication on trade-related sustainability assurance schemes, highlighting the need for consumers to understand the criteria underlying such schemes10. The Commission will: In the 2012 revision of the Sustainable Consumption and Production Action Plan, and the 2013 review of European consumer policy, identify new measures to facilitate more responsible consumption, possibly concerning labelling and consumer information. Public procurement

4.3.2.

The Commission published a guide on green public procurement in 2004, and has set an indicative target that 50% of all public procurement in the EU should comply with agreed green public procurement criteria. In 2011 the Commission also published a guide on Socially Responsible Public Procurement (SRPP), explaining how contracting authorities can integrate social considerations into public procurement within the existing EU legal framework. The further integration of environmental and social criteria into public procurement could strengthen the market reward for CSR, although it must be done in way that does not discriminate against small and medium-sized enterprises, and abides by Treaty provisions on non-discrimination, equality of treatment and transparency. The Commission will: As part of the 2011 review of the Public Procurement Directives, facilitate the better integration of social and environmental considerations into public procurement, without introducing additional administrative burdens for contracting authorities or enterprises.

The Commission invites:

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COM(2009)215

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Member States and public authorities at all levels to make full use of all possibilities offered by the current legal framework for public procurement. Investment

4.3.3.

By taking adequate account of social and environmental information, investors contribute to a more efficient allocation of capital that is able to better address longer-term goals, and create market incentives for socially responsible enterprises. The ability of investors to take account of social and environmental information is influenced by the relevance and quality of information disclosed by companies. The Commission will support in 2012 capacity-building for mainstream investors on how to integrate social and environmental information into investment decisions. Such information can also aid investors in taking a longer-term, more sustainable view of their investments and their returns. In parallel more shareholders should be encouraged to take an interest in the longer term performance of enterprises, on the basis of responses to the Commission's Green Paper on corporate governance. Public policy should support the further development of the sustainable and responsible investment (SRI) sector, and promote more responsible practices amongst mainstream investment actors. In response to the financial crisis, the Commission is making a number of regulatory proposals to ensure a more responsible and transparent financial system. Public authorities have a particular responsibility to promote CSR in enterprises which they own or in which they invest. The Commission will: Consider proposals for a requirement on institutional investors to inform clients about any ethical or responsible investment criteria they apply or any standards and codes to which they adhere. Consider support for labelling measures for the SRI sector, to help build trust and scale.

The Commission invites: European asset managers and asset owners, especially pension funds, to sign up to the UN Principles for Responsible Investment. Improving company disclosure of social and environmental information

4.4.

Existing EU legislation requires enterprises to disclose environmental and employee-related information to the extent necessary for an understanding of the company's development, performance or position11. Member States may exempt SMEs. Some Member States have introduced disclosure requirements that go beyond existing EU legislation. There is a possibility that different national requirements could create additional costs for enterprises operating in more than one EU Member State.

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Fourth Directive on annual accounts 2003/51/EC

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Transparency is an important element of accountability, and contributes to building public trust in enterprises. Disclosure of social and environmental information facilitates engagement with stakeholders and the identification of material sustainability risks. Many market incentives for CSR can only work if there is adequate disclosure of social and environmental information from enterprises. Disclosure of social and environmental information can significantly benefit employees, consumers, and investors, as well as affected local communities. The recent public consultation organised by the Commission shows that certain stakeholders consider that current disclosure practices fail to meet their needs, while other stakeholders consider that current practices are acceptable or good. To meet the needs of enterprises and other stakeholders, information should be material, reliable, comparable, accessible, clear, timely, forward-looking as well as retrospective, and cost-effective to collect. The involvement of stakeholders in the disclosure process increases the likelihood that the information disclosed will meet stakeholder needs. Assurance of reported information can enhance its reliability. A growing number of European companies disclose social and environmental information using different means and channels. SMEs often communicate such information informally. In particular, one source estimates that about 2,500 European companies publish CSR or sustainability reports, which puts the EU in a position of global leadership12. However this is still only a small fraction of the 42,000 large companies operating in the EU. There are a number of international frameworks for the disclosure of social and environmental information, including the Global Reporting Initiative, the UN Global Compact, the OECD Guidelines for Multinational Enterprises, and the ISO 26000 Guidance Standard on Social Responsibility. Integrated financial and non-financial reporting represents an important goal for the medium and long term, and the Commission follows with interest the work of the International Integrated Reporting Committee. Policy measures to improve disclosure of social and environmental information must take account of the differences between companies, including the specific characteristics of SMEs, and avoid unnecessary administrative costs. All organisations, including civil society organisations and public authorities, are encouraged take steps to improve disclosure of their own social and environmental performance. The Commission realises the importance of developing appropriate measurements to aid disclosure and reporting. In the environmental field, a harmonised methodology for company measurement, management, and reporting of environmental impacts is being developed. In the social field, dialogue on social metrics will be pursued. The Commission will: Present in 2012 a legislative proposal on the transparency of the social and environmental information provided by companies in all sectors.

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CorporateRegister.com

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4.5.

By the end of 2013, publish a report on its own social and environmental performance. Further integrating CSR into education, training and research

The further development of CSR requires new skills as well as changes in values and behaviour. Enterprises increasingly invest in building the CSR-related skills of their managers and employees. A growing number of European business schools and some universities integrate CSR and sustainability into relevant teaching curricula, although more needs to be done. The UN Principles for Responsible Management Education are an important point of reference for business schools in particular, but less than 50% of European business schools are currently signatories. The EU is committed to promoting the concept of education for sustainable development and will continue to provide financial support for education and training projects on CSR under the EU Lifelong Learning Programme. High quality academic research supports the development of business practice and public policy in the field of CSR. Further research should build on the results of projects financed under the 6th and 7th European Research Programmes. The Commission will explore opportunities for financing further research on CSR still under the 7th European Research Programme, as well as under its successor, Horizon 2020. The Commission will: . Put forward in 2012 proposals to raise the awareness of education professionals on the importance of including CSR in relevant education curricula. Support partnerships between the Commission and private bodies in youth and nonformal education and training on socially responsible attitudes through the Youth in Action programme. Publish a list of all European business schools that have signed up to the UN Principles for Responsible Management Education, with the aim of encouraging all European business schools to sign the principles by the end of 2014.

The Commission also: Invites Member States to encourage education establishments to further integrate CSR, sustainable development and responsible citizenship into relevant education curricula, including where appropriate at secondary school and university level. Emphasising the importance of national and sub-national CSR policies

4.6.

Many public policy measures to support CSR are best carried out at national, regional and local level. Regional and local authorities should develop initiatives and policies in support of CSR, making use where appropriate of EU structural funds, especially the European Social Fund and the European Regional Development Fund.

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Support for SMEs in the field of CSR is usually most effectively provided at local and regional level. This is also because through CSR companies of all sizes can make an important contribution to sustainable territorial development and coherent development strategies at the local level, in accordance with the principles of smart and inclusive growth. This can help to tackle locally concentrated problems such as poverty and social inclusion (including of migrants). A smart use of EU structural funds can in this context be combined with companies' CSR policies. The Commission will: Discuss with Member States ways to improve the exchange of experience regarding national CSR policies, with a view to creating a peer review/benchmarking mechanism in 2012.

The Commission invites: Member States to develop or update by mid 2012 their own plans or national lists of priority actions to promote CSR in support of the Europe 2020 strategy, with reference to internationally recognised CSR principles and guidelines and in cooperation with enterprises and other stakeholders, taking account of the issues raised in this communication. Better aligning European and global approaches to CSR

4.7.

The EU should promote European interests in international CSR policy developments, while at the same time ensuring the integration of internationally recognised principles and guidelines into its own CSR policies. 4.7.1. Focusing on internationally recognised CSR principles and guidelines

The core set of internationally recognised CSR principles and guidelines represent an evolving and recently strengthened global framework for CSR. The Commission welcomes the involvement of several non-OECD countries in the recent update of the OECD Guidelines, and the participation of different stakeholder groups from many countries in the development of the ISO 26000 Guidance Standard. The Commission will step up its cooperation with Member States, partner countries and relevant international fora, including the UN, the OECD, the ILO and the G-20 to promote respect for internationally recognised CSR principles and guidelines and to foster greater consistency between them. By focussing on internationally recognised CSR principles and guidelines, the EU will be better able to defend its own values and to promote a more level global playing field. This approach also requires EU enterprises to renew their efforts to respect internationally recognised CSR principles and guidelines.

The Commission will: Monitor the commitments made by European enterprises with more than 1.000 employees to take account of internationally recognised CSR principles and

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guidelines and take account of the ISO 26000 Guidance Standard on Social Responsibility in its own operations. The Commission invites: All large European enterprises to make a commitment by 2014 to take account of at least one of the following internationally recognised 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. All European-based multinational enterprises to make a commitment by 2014 to respect the ILO Tri-partite Declaration of Principles Concerning Multinational Enterprises and Social Policy. Implementing the UN Guiding Principles on Business and Human Rights

4.7.2.

In June 2011 the UN Human Rights Council endorsed a set of Guiding Principles on Business and Human Rights for the implementation of the Protect, Respect, Remedy Framework that was itself endorsed in 2008. That framework comprises three distinct but interrelated pillars: The state duty to protect against human rights abuses by third parties, including business: some of the issues that EU Member States should address as part of this duty should be addressed at EU level for reasons of competence, or could be better addressed at EU level for reasons of scale. The corporate responsibility to respect human rights: this responsibility goes beyond compliance with laws and regulations protecting human rights. The Guiding Principles identify the need for enterprises to have a policy commitment to respect human rights; to carry out human rights due diligence in order to identify, prevent, mitigate and account for how they address their adverse human rights impacts; and to engage actively in remediation when an adverse human rights impact is identified. Difficulties in meeting the corporate responsibility to respect human rights are often greatest in countries where the state fails to meet its duty to protect human rights, typically countries with weak governance and/or affected by conflict. The need for access by victims to effective access to remedy: the system of National Contact Points for the OECD Guidelines can be a useful non-judicial remedy mechanism when allegations of human rights harm occur. Access to judicial remedy is sometimes necessary, and the EU works with many developing countries to improve their judicial systems. In its proposals to recast the Brussels I Regulation, which relates to civil and commercial disputes, the Commission has proposed measures that would improve access to justice in the EU for victims of human rights harm outside the EU, including harm caused by enterprises. Nevertheless, the legal liability of foreign companies and their subsidiaries for possible involvement in human rights harm outside the EU is the competence of Member States.

Implementation of the UN Guiding Principles on Business and Human Rights will require a high degree of cooperation between all parties concerned. A process involving enterprises and EU Delegations in partner countries will raise awareness and understanding of the challenges companies face that operate in countries where the state fails to meet its duty to protect human

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rights. Cooperation between Member States, the European Parliament, enterprises and other stakeholders will help to identify priorities for the further implementation of the UN Guiding Principles. In this context possible options for closer cooperation with the Council of Europe will be explored. Improving the coherence of European policies relevant to business and human rights is a critical challenge. Better implementation of the UN Guiding Principles will contribute to EU objectives regarding specific human rights issues and core labour standards, including child labour, forced prison labour, human trafficking, gender equality, nondiscrimination, freedom of association and the right to collective bargaining. The Commission will: Work with enterprises and stakeholders in 2012 to develop human rights guidance for small and medium-sized enterprises as well as specific guidance for a limited number of relevant industrial sectors, based on the UN Guiding Principles. Publish a report by the end of 2013 on the implementation of the framework in the context of European policies.

The Commission also: Expects all European enterprises to meet their corporate responsibility to respect human rights, as defined in the UN Guiding Principles, including policy commitment, human rights diligence and remediation. Invites EU Member States to develop by the end of 2012 national plans for the implementation of the UN Guiding Principles. Emphasising CSR in relations with other countries and regions in the world, including through trade policies and development policies

4.7.3.

The Commission promotes internationally recognised CSR principles and guidelines, as well as decent work13, by means of bilateral and regional policy dialogues with partner countries and regions and also through its trade policy and development assistance. Recently concluded free trade agreements have chapters on trade and sustainable development that make reference to CSR. The EUs Generalised System of Preferences (GSP) provides incentives to vulnerable developing countries to ratify and implement core international conventions on human rights, labour, the environment and governance. The Commissions proposal for a new GSP regulation envisages a reinforcement of the incentive arrangement combined with an enhanced dialogue with the beneficiary countries and improved monitoring of compliance. The Commission will ensure that future bilateral investment treaties negotiated at EU level are consistent with other EU policies, including decent work, health and safety and human rights. Furthermore where appropriate, it will propose to address CSR in established dialogues with partner countries and regions, including with candidate and potential candidate countries and countries covered by the European Neighbourhood Policy.

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Commission Communication: "Promoting decent work for all" COM(2006) 249 final; Commission Staff Working Document "Report on the EU contribution to the promotion of decent work in the world" SEC(2008)2184

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Enterprises, including EU enterprises operating in developing countries, can help to combat poverty and achieve the Millennium Development Goals. By promoting respect for international social and environmental standards, EU enterprises foster better governance in developing countries. Business models that target the poor as consumers, producers, and distributors help to maximise development impact. However, the potential synergies between EU development aid and the operations of European companies in developing countries are insufficiently exploited. The Commission will: When negotiating free trade agreements, propose to partners the inclusion of a chapter on sustainable development, including references to internationally recognised CSR principles and guidelines. Adopt a communication in 2012 on the external dimension of social policy, putting a particular emphasis on promoting decent work, core labour standards and CSR principles in its relations with EU partners worldwide. CONCLUSION

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This renewed European strategy on CSR aims to enhance the business contribution to sustainable development and the Europe 2020 objectives, building on the good progress already achieved by many European enterprises while also addressing remaining challenges and emerging issues. It should enable enterprises to fulfil their enormous potential to create value both for owners/shareholders and for other stakeholders and society at large. The Commission will work with Member States, enterprises and other stakeholders, within a renewed European CSR Forum, to periodically monitor progress and to jointly prepare a review meeting to be held by mid 2014. In preparation for that meeting the Commission will publish a report on the implementation of the agenda for action set out in this communication. On the basis of this communication, the European Commission would welcome discussion with and commitments from the Council, the European Parliament, the Economic and Social Committee, the Committee of the Regions, enterprises and other stakeholders.

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