Ethical Performance
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MEPs ready to back Euro reporting law

May 2002

Mandatory social and environmental reporting across Europe may move a step closer this month if, as expected, the European Parliament formally requests that a commitment to such legislation be included in the forthcoming European white paper on corporate social responsibility.

MEPs will put forward a parliamentary resolution urging the European Commission to require mandatory reporting in what will effectively be their joint response to the CSR green paper issued last year.

A draft of their resolution calls on the European Commission to bring forward a proposal within three years ‘for a directive requiring enterprises with more than 250 employees or a turnover of over €34million (£2.4m, $3.5m) to undertake annual social and environmental reports’.

It states the directive should require such reports to be drawn up according to Global Reporting Initiative standards, cover a company’s entire supply chain and be independently verified.

Although the EC has said it wants to take a voluntary rather than regulatory approach to CSR in its white paper, the opinion of MEPs will carry special weight in deliberations on the paper’s final content.

‘In this context the views of the parliament do not theoretically have more weight than any other organization,’ said Dominique Be of the EC directorate general for employment and social affairs. ‘But of course politically this is of far higher standing than the other responses.’

British MEP Richard Howitt, who as EU rapporteur on the CSR green paper is responsible for leading the drafting of the resolution, said he was confident the call for mandatory reporting would remain, although there would be ‘many changes’ before MEPs voted on the proposal later this month.

‘I’m personally pushing forward the proposal for statutory social and environmental reporting, and I think we will win on the principle of that,’ he said. ‘There are big issues about the timescale and the size of companies to be affected, and I’m fairly flexible on those,’ he added.

The draft resolution also calls on the EC to introduce legislation requiring European pension funds ‘to state the ethical criteria in their investment policies’, and to force companies to appoint a board member responsible for CSR who will ‘promote stakeholder dialogue and the rights of minority shareholders’.

Among other recommendations, it says the EC should create a ‘CSR Platform’ organization with a secretariat provided by the EC and a board of representatives from business, trade unions, non-governmental organizations and public bodies.

The CSR Platform would offer companies the opportunity to register codes of conduct and verify them against standards such as the Organisation for Economic Co-operation and Development Guidelines for Multinationals. It would also be responsible for registering and verifying reports against the same standards.

The EU’s employment and social affairs committee, of which Howitt is a member, will put forward the resolution on behalf of MEPs. If passed in the European Parliament it will be examined by the European Commission, which will produce its white paper (technically known as a ‘communication’) in July this year.

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