Ethical Performance
inside intelligence for responsible business


MEPs vote on mandatory social reporting directive

June 2002

A resolution backing mandatory social and environmental reporting was due to be put to the vote in the European Parliament on 30 May.

The resolution invites the European Commission to bring forward a proposal in the form of a directive ‘for social and environmental reporting to be included alongside financial reporting requirements’.

It also calls on the EC to ensure that such reporting is a requirement of stock exchange listing in member states.

The resolution is effectively the collective response of European members of parliament to the EC’s green paper on CSR, issued last year.

Although technically the views of MEPs have no greater weight than those of other interested persons, they will have considerable influence as details of the white paper on CSR, to be published in July, are worked out.

The final wording of the resolution differs from earlier drafts in several important respects. It retains the central call for mandatory reporting, but the wording used is much less specific and softer in tone. It no longer specifies what kind of companies should be required to produce mandatory reports, nor any timetable.

Earlier drafts had proposed a Europe-wide pension fund disclosure regulation on socially responsible investment. This too was dropped. The final resolution merely asks all European pension funds to ‘state their ethical criteria in their investment policies’.

However, it retains a demand for the creation of a ‘EU multi-stakeholder CSR forum’ of cross-sector representatives to monitor social and environmental reporting. It also calls on the EC to put forward a proposal on social labelling of products.

Additionally, it asks the EC to investigate the possibility of creating an ombudsman to oversee the behaviour of European companies operating in developing countries.

While MEPs have generally welcomed the interest shown in CSR by the Commission, its intervention was severely criticized this month in a book by two CSR specialists. Steve Hilton and Giles Gibbons, former Saatchi and Saatchi executives who founded the consulting firm Good Business, say that the EC’s actions amount to ‘a blundering, bureaucratic, heavy-handed grasping for regulatory control that would have left the five-year planners in Stalin’s Kremlin in need of a stiff drink for fear that they’d over-reached themselves.’

‘Bureaucrats of this type simply don’t understand that innovation in the area of CSR … will come about without their well-meaning intervention.’

Hilton and Gibbons, whose clients include Coca-Cola and Nike, add in the book, titled Good Business: ‘In many ways it is laughable that the EC, an outfit that is consistently criticized by the European Court of Auditors for lack of transparency and its failure to comply with generally accepted accounting principles – and which has done as much as any other institution on earth to keep developing countries in poverty by refusing to dismantle its trade barriers … has the nerve to lecture anyone on social responsibility.’


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