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Corporate Social Responsibility European Style

Bibliographic reference De Schutter, Olivier. Corporate Social Responsibility European Style. In: European Law Journal, Vol. 14, no. 2, p. 203-236 (2008)
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  1. Manne H., Business Law, 26, 533 (1970)
  2. Berle A. A., Corporate Powers as Powers in Trust, 10.2307/1331341
  3. Dodd E. Merrick, For Whom Are Corporate Managers Trustees?, 10.2307/1331697
  4. Roth G., Hastings Law Journal, 30, 1433 (1978)
  5. Engel David L., An Approach to Corporate Social Responsibility, 10.2307/1228440
  6. Chanin J. M., Indiana Journal of Global Legal Studies, 12, 745 (2005)
  7. MacLeod S., Wisconsin International Law Journal, 23, 541 (2005)
  8. Conclusions of the Presidency, European Council held in Lisbon, 23-24 March 2000, at para 5.
  9. ibid, para 38.
  10. The Sustainable Development Strategy for Europe agreed at the Gotenborg European Council of June 2001 added sustainable development (and, thus, a concern for the environment) to economic growth and social cohesion as the strategic goals to be pursued in the framework of what came to be called the Lisbon strategy.
  11. The evaluation of the Lisbon strategy, which was strongly influenced by the report of the Kok Group appointed by the Council, led to a revised Lisbon Strategy which was agreed at the Spring European Council of 23-24 March 2005. The revised Lisbon Strategy did not change the original intentions of the Lisbon strategy but refocused the strategy on growth and jobs. In addition it decided on a new method of governance for the Lisbon Strategy, involving the adoption by the Council of Integrated Guidelines for Growth and Jobs (integrating the Broad Economic Policy Guidelines, both macroeconomic and microeconomic, and the Employment Guidelines). These Integrated Guidelines become the basis for Member States to produce National Reform Programmes, the first of which were submitted to the Commission in October 2005 for the period 2005-2008.
  12. COM (2001) 366 final, of 28 July 2001.
  13. ibid, para 20.
  14. The Green Paper is very clear that CSR ‘should . . . not be seen as a substitute to regulation or legislation concerning social rights or environmental standards, including the development of new appropriate legislation. In countries where such regulations do not exist, efforts should focus on putting the proper regulatory or legislative framework in place in order to define a level playing field on the basis of which socially responsible practices can be developed’ (para 22).
  15. The positions are collected on the website available at
  16. COM (2002) 347 final, of 2 July 2002.
  17. ibid, at 8.
  18. ibid, at 9.
  19. ibid, at 10.
  20. ibid, at 10.
  21. ibid, at 12.
  22. ibid, at 13.
  23. See, originally, Council Regulation (EEC) No 1836/93 of 29 June 1993 allowing voluntary participation by companies in the industrial sector in a Community eco-management and audit scheme, [1993] OJ L168/1.
  24. Regulation (EC) No 761/2001 of the European Parliament and of the Council of 19 March 2001 allowing voluntary participation by organisations in a Community eco-management and audit scheme (EMAS), [2001] OJ L114/1 (and thecorrigendumin [2002] OJ L327/10).
  25. The Commission Regulation (EC) No 196/2006 of 3 February 2006 ([2006] OJ L32/4) amends Annex I to Regulation (EC) No 761/2001 taking account of the European Standard EN ISO 14001:2004, and repeals Decision 97/265/EC on the Standard EN ISO 14001:1996.
  26. See Regulation (EC) No 761/2001, n 22supra, Art 3(2).
  27. Seeibid, Art 4(1).
  28. ibid, at 15-16.
  29. European Parliament Resolution on the Commission Green Paper on Promoting a European Framework for Corporate Social Responsibility, COM (2001) 366 (C5-0161/2002-2002/2069(COS), 30 April 2002, rapp. R. Howitt).
  30. Paragraph 14 of the operative part of the Resolution.
  31. Resolution on EU standards for European enterprises operating in developing countries: towards a European Code of Conduct (EP doc. A4-0508/98), [1999] OJ C104/180.
  32. At para 14 of the operative part.
  33. At paras 16-18.
  34. Report on the Commission Green Paper on Promoting a European framework for Corporate Social Responsibility, COM(2001) 366 (C5-0161/2002-2002/2069(COS), rapp. R. Howitt), at 18.
  35. Conley J. M., Journal of Corporate Law, 31, 1 (2005)
  36. More details on the CSR EMS Forum may be found on the website of the Forum, hosted by DG Employment and Social Affairs of the Commission, available at Unless indicated otherwise, all the information relating to the CSR EMS Forum is from that website.
  37. The first roundtable was held on 22 April 2002, days before the formal adoption by the relevant committee of the European Parliament of the resolution based on the Howitt report on the Commission Green Paper on Promoting a European framework for Corporate Social Responsibility. The resolution was adopted in plenary in June 2002.
  38. Jackie Morin, then Head of the D1 Unit, Directorate General Employment and Social Affairs.
  39. According to the mandate defined in October 2002, the CSR EMS Forum was to: ‘improv[e] knowledge about the relationship between CSR and sustainable development (including its impact on competitiveness, social cohesion and environmental protection) by facilitating the exchange of experience and good practices and bringing together existing CSR instruments and initiatives, with a special emphasis on SME specific aspects’; and ‘explor[e] the appropriateness of establishing common guiding principles for CSR practices and instruments, taking into account existing EU initiatives and legislation and internationally agreed instruments such as OECD Guidelines for multinational enterprises, Council of Europe Social Charter, ILO core labour conventions and the International Bill of Human Rights’.
  40. This may be contrasted with the view expressed at the high-level meeting by Anne-Sophie Parent for the Social Platform-a coalition of 38 European non-governmental organisations in the social sector-that ‘the Forum must make strong recommendations on how to establish a convergence of standards on CSR, in order to promote credible, verifiable systems of reporting and auditing’.
  41. The roundables were organised on ‘Improving knowledge about CSR and facilitating the exchange of experience and good practice’; ‘Fostering CSR among SMEs’; ‘Diversity, convergence and transparency of CSR practices and tools’; and on ‘CSR Development aspects’.
  42. This author was present at the final high-level meeting, as the representative of the International Federation for Human Rights (FIDH).
  43. At 4.
  44. At 15.
  45. De Schutter Olivier, Europe in Search of its Civil Society, 10.1111/1468-0386.00150
  46. For a lucid account, see MacLeod,op citn 5supra, at 549-551.
  47. Communication of the Commission, Implementing the Partnership for Growth and Jobs: Making Europe a Pole of Excellence on CSR, COM (2006) 136 final of 22 March 2006.
  48. At 1.
  49. As a last-minute add-on to the communication after an intervention from the European Trade Unions Confederation (ETUC), the Commission states that it ‘recognises that without the active support and constructive criticism of nonbusiness stakeholders, CSR will not flourish. The Commission's backing of the Alliance is not a substitute for further dialogue with all stakeholders. The Commission remains committed to facilitating such dialogue, including through regular review meetings of the Multistakeholder Forum’.
  50. It is ironic that, under the heading of ‘ensuring an enabling environment for CSR’-as one of the objectives of the European Alliance on CSR-the communication states that ‘With the new European Strategy for Growth and Jobs and through its initiative on better regulation, the European Commission and EU Member States have committed themselves to set up and strengthen a business-friendly environment in which entrepreneurs and enterprises can flourish and grow’ (at 12). The ‘enabling environment for CSR’, thus, is one which is business-friendly, rather than one including a regulatory framework for CSR to be rewarded.
  51. According to a press release from MEP Richard Howitt from 22 March 2006, a leaked internal memo from the European Employers Organisation UNICE described the draft communication as a ‘true success’ because ‘concessions to other stakeholders . . . will have no real impact’.
  52. See the 2001 Green Paper on Corporate Social Responsibility, para 24.
  53. See, in particular, the report prepared by Vicky Kemp for WWF-UK and Cable & Wireless plc,To Whose Profit? Building a Business Case for Sustainability(2001).
  54. These arguments can only be very briefly summarised here. See further the presentations at the seminar organised on 17 June 2004 by Directorate General Enterprise of the European Commission with the European Academy of Business in Society (EABIS),The Business Case for CSR: Reflections and Research, available at; C. Holliday, S. Schmidheiny and P. Watts,Walking the Talk-The Business Case for Sustainable Development(Greenleaf, 2002); R. Willard,The Sustainability Advantage. The Next Sustainability Wave(New Society Publishers, 2003); R. Willard,Teaching Business Sustainability: From Theory to Practice(Greenleaf, 2004).
  55. Green Paper on Corporate Social Responsibility, para 39.
  56. ibid, paras 45-46.
  57. See, for instance, the list compiled on the Social Investment Forum, available at The Domini European Social Equity Fund for example, a mutual fund for US investors seeking to invest in socially responsible European companies, states that it avoids investing in corporations ‘that derive significant revenues from the manufacture of tobacco products or alcoholic beverages, derive significant benefit from the operation of gambling enterprises, . . . have a significant direct ownership share in, operate, or design nuclear power plants, [manufacture] firearms [or are] major military contractors. It may also exclude companies with poor performance in the following areas: corporate governance, community and corporate citizenship, employee relations and diversity, environment and sustainability, labor and other human rights, and product and consumer issues’; see the website available at
  58. It is no wonder that, in the 2001 Green Paper on Corporate Social Responsibility, the Commission adopts a cautious attitude towards the relationship of socially responsible practice and economic benefits: ‘There is a need’, they write, ‘for a better knowledge and further studies on the impact of corporate social responsibility on business performance’ (para 27).
  59. Regulation (EC) No 761/2001, n 22supra, 12th Recital of the Preamble.
  60. On the conditions for the use of the logo, seeibid, Art 8.
  61. Seeibid, Art 12(1).
  62. S. Zadek, P. Raynard and C. Oliveira,Responsible Competitiveness. Reshaping Global Markets through Responsible Business Practices, Accountability in association with Fundacao Dom Cabral(December 2005).
  63. See M. Forstater and J. Oelschaegel with M. Sillanpaa,What Assures Consumers?, Accountability and National Consumers Council Report (July 2006), available at
  64. Green Paper on Corporate Social Responsibility, para 58.
  65. ibid, para 82.
  66. While such costs may be minimal in certain cases, it is difficult to conceive of a system where they would be nil. At a minimum-where the company already complies entirely in its practices with the requirements laid down in the code of conduct-reporting obligations will impose certain bureaucratic burdens and will require the training of personnel.
  67. Moniteur belge, 26 March 2002. The law entered into force on 1 September 2002. It was further implemented by by a Royal Decree (Arrete royal) of 4 April 2003,Moniteur belge, 28 August 2003.
  68. This committee for socially responsible production comprises eight members appointed by the relevant ministerial departments, two representatives of employers, two representatives of workers' unions, two representatives of consumer organisations and two representatives of development NGOs.
  69. This auditing has two components, one ‘documentary’ component (research based on all available sources of information about the production process of the particular good or service) and one ‘visit’ component (based on site visits including interviews with employees or suppliers, for instance). See ‘Arrete ministeriel du 7 avril 2003 approuvant le reglement d’ordre interieur du Comite pour une production socialement responsible’,Moniteur belge, 28 August 2003.
  70. The labels were granted to an insurance product commercialised by Ethias; to an interim employment service offered by Randstad Belgium; to a stone commercialised by a mining company; and to Standard SA8000 produced by Social Accountability International.
  71. Some of these remarks have been inspired by the report recently released by the FIDH: P. Kalfayan and L. HennebelAn Overview of Corporate Social Responsibility in Hungary(September 2006).
  72. The privatisations of the 1990s led to major inflows of FDI in CEE countries. The accession of ten CEE countries to the EU in 2004 has been a comparatively less significant factor in their attractiveness. On average, the market share of FDI of the new Member States increased following their accession to the EU, with the majority of FDI coming from EU-15 states. At the same time, ‘not all of the new Member states have benefited from increased levels of FDI, with both Czech Republic and Hungary losing market share. Poland has out performed the rest of the new member states, overtaking Hungary as the leading destination for FDI. Slovakia plus the three Baltic States, Estonia, Lativa and Lithuania, have all recorded an increase in FDI post accession’ (OCO Consulting, (2006) 1(1)FDI Quarterly12).
  73. See generally S. Alessandrini (ed),The EU Foreign Direct Investment in Central and Eastern Europe(Giuffre Editore, 2000).
  74. Harris Chauncy D., The Market as a Factor in the Localization of Industry in the United States, 10.2307/2561395
  75. See the comment in the 2005 Foreign Direct Investment Confidence Index that ‘Despite rising costs and more regulations, new EU members are relatively more attractive to global companies. This is due to higher levels of productivity and better tax rates. The average corporate tax rate among the new EU members is 20 percent, but reaches 31 percent for the EU-15’; see the website available at
  76. MAH Jai S., TAMULAITIS Donatas, Investment Incentives in the Central and Eastern European Transition Economies, 10.1163/221190000x00078
  77. See A Johnson, ‘FDI Inflows to the Transition Economies in Eastern Europe: Magnitude and Determinants’, in S. Hacker, B. Johansson and C. Karlsson (eds),Emerging Market Economies and European Economic Integration(Edward Elgar, 2004), and in a longer, more technical version,CESIS Electronic Working Paper Series, No 59 (January 2006).
  78. For instance, following several waves of privatisation of formerly state-owned companies since 1989, more than 80% of the Czech economy is now in private hands. Privatisation programmes have been open to foreign investors, resulting in a situation where major state-owned companies have been privatised with foreign participation.
  79. J.P. Segal, A. Sobczak and C.E. Triomphe,Corporate Social Responsibility and Working Conditions(European Foundation for the Improvement of Living and Working Conditions, 2003), at 68.
  80. G. Szapary, ‘Comment on Henk Brouwer, Ralph de Haas and Bas Kiviet’, inFinancial Stability and Growth in Emerging Economies(FONDAD, September 2003), available at, referring in turn to an earlier study: European Central Bank,Financial Sector Development and Convergence in Accession Countries: An Overview, Background Paper for the Eurosystem Seminar with Accession Countries' Central Banks (Berlin, December 2001).
  81. See text accompanying nn 81-96infra.
  82. See text accompanying nn 108-117infra.
  83. Communication of the Commission on Corporate Social Responsibility: A business Contribtution to Sustainable Development, COM (2002) 347 final, at 23.
  84. Lefevre P., Journal des tribunaux-Droit europeen, 245 (2000)
  85. Case C-31/87,Beentjes[1988] ECR 4635; Case C-255/98,Commission v France[2000] ECR I-7445; Case C-513/99,Concordia Bus Finland[2002] ECR I-7213; Case C-448/01,EVN AG and Wienstrom GmbH[2003] ECR I-14527.
  86. Case C-225/98,Commission of the European Communities v France[2000] ECR I-7445.
  87. Council Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts, [1993] OJ L199/54.
  88. Case C-225/98, n 84supra, paras 50-51. France, however, was found to have violated its Community obligations for a number of other reasons.
  89. Case 31/87, n 83supra, paras 28 and 37.
  90. COM (2001) 566 final of 15 Ocotober 2001.
  91. COM (2001) 274 final of 4 July 2001.
  92. See Case C-513/99, n 83supra, para 64 (in which the court considers that Art 36(1) of Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts, [1992] OJ L209/1 does not prohibit the contracting authority to take into consideration ‘criteria relating to the preservation of the environment . . . provided that they are linked to the subject-matter of the contract, do not confer an unrestricted freedom of choice on the authority, are expressly mentioned in the contract documents or the tender notice, and comply with all the fundamental principles of Community law, in particular the principle of non-discrimination’). In Case C-448/01, n 83supra, the court confirms this case-law in the context of the awarding of a public contract for the supply of electricity to the Land of Karnten (Carinthia), which included an environmental criterion relating to the impact of the services on the environment.
  93. [2004] OJ L134/114. See also Directive 2005/75/EC of the European Parliament and of the Council of 16 November 2005 correcting Directive 2004/18/EC on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, [2005] OJ L323/55.
  94. [2004] OJ L134/1.
  95. 46th Recital of the Preamble of Directive 2004/18/EC, n 91supra; and 55th Recital of the Preamble of Directive 2004/17/EC, n 92supra.
  96. Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation, [2000] OJ L303/16.
  97. Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions, [1976] OJ L39/40. Directive as amended by Directive 2002/73/EC of the European Parliament and of the Council, [2002] OJ L269/15. See now Directive 2006/54/EC of 5 July 2006 (recast), [2006] OJ L204/23.
  98. 45th Recital of the Preamble of Directive 2004/18/EC, n 91supra; and 54th Recital of the Preamble of Directive 2004/17/EC, n 92supra.
  99. See Art 50 of Directive 2004/18/EC, n 91supra, and the 44th Recital of the Preamble; and Art 34(2)(b) and (6) of Directive 2004/17/EC, n 92supra, and the 53rd Recital of the Preamble.
  100. Blumberg Ph., Business Law, 28, 1025 (1973)
  101. Branson D. M., Vanderbilt Law Review, 29, 539 (1976)
  102. Aguilera R., Academic Management Review, 28, 447 (2003)
  103. Williams C. A., Cornell International Law Journal, 38, 493 (2005)
  104. COM (2002) 259 final, of 28 May 2002.
  105. [2001] OJ L156/33. The Recommendation was based on the finding that ‘The lack of explicit rules has contributed to a situation where different stakeholders, including regulatory authorities, investors, financial analysts and the public in general may consider the environmental information disclosed by companies to be either inadequate or unreliable . . . voluntary disclosure of environmental data in the annual accounts and annual reports of companies is still running at low levels . . . In the absence of harmonised authoritative guidelines in relation to environmental issues and financial reporting, comparability between companies becomes difficult. When companies do disclose environmental information it is often the case that the value of the information is seriously handicapped by the absence of a common and recognised set of disclosures that includes the necessary definitions and concepts with regard to environmental issues. The information is often disclosed in a variety of non-harmonised ways among companies and/or reporting periods, rather than being presented in an integrated and consistent manner throughout the annual accounts and the annual report’ (4th and 5th Recitals of the Preamble). The Commission accordingly recommended that companies covered by the fourth and seventh Company Law Directives (Directives 78/660/EEC and 83/349/EEC, respectively) apply the provisions contained in the Annex to the recommendation in the preparation of the annual and consolidated accounts and the annual report and consolidated annual report.
  106. See the 7th Recital of the Preamble in the Proposal for a Directive of the European Parliament and of the Council amending Council Directives 78/660/EEC, 83/349/EEC and 91/674/EEC on the annual and consolidated accounts of certain types of companies and insurance undertakings.
  107. [1978] OJ L222/11; Directive as last amended at the time by Directive 2001/65/EEC, [2001] OJ L283/28.
  108. [1983] OJ L193/1; Directive as last amended by Directive 2001/65/EEC, [2001] OJ L283/28.
  109. In its Resolution on the Commission Green Paper, n 27supra, the European Parliament ‘Invites the Commission to bring forward a proposal in the appropriate Directive (The Fourth Company Law Directive) for social and environmental reporting to be included alongside financial reporting requirements’ (para 6 of the operative part of the Resolution).
  110. Proposal for a Directive of the European Parliament and of the Council amending Council Directives 78/660EEC and 83/349/EEC concerning the annual accounts of certain types of companies and consolidated accounts, COM (2004) 725 final of 27 October 2004. According to the Commission, it received more than 200 responses to its initial proposals, from 18 Member States; approximately half of the responses came from the business community; the other half came from other stakeholders.
  111. Directive 2006/46/EC of the European Parliament and of the Council of 14 June 2006 amending Council Directives 78/660/EEC on the annual accounts of certain types of companies, 83/349/EEC on consolidated accounts, 86/635/EEC on the annual accounts and consolidated accounts of banks and other financial institutions and 91/674/EEC on the annual accounts and consolidated accounts of insurance undertakings, [2006] OJ L224/1.
  112. 10th Recital of the Preamble. See Art 46a of Council Directive 78/660/EEC on the annual accounts of certain types of companies, as inserted by Art 1 of Directive 2006/46/EC, n 107supra; and the amendment to Art 36(2) of 83/349/EEC on consolidated accounts by Art 2(1) of Directive 2006/46/EC,ibid.
  113. European Parliament Resolution on the Commission Green Paper, n 27supra, para 33 of the operative part of the Resolution. Council Directive 84/450/EEC of 10 September 1984 relating to the approximation of laws, regulations and administrative provisions of the Member States concerning misleading advertising, [1984] OJ L250/17 is mentioned in the Preamble of the Resolution.
  114. Sutton M., University of Missouri-Kansas City Law Review, 72, 1159 (2003)
  115. Article 2 of Council Directive 84/450/EEC of 10 September 1984 concerning misleading and comparative advertising, as amended by Directive 97/55/EC of European Parliament and of the Council of 6 October 1997, [1997] OJ L290/18,corrigendum[1998] OJ L194/54.
  116. Council Directive 84/450/EEC, n 111supra, Art 3.
  117. ibid, Art 4(1).
  118. ibid, Art 6.
  119. Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’), [2005] OJ L149/22.
  120. These are defined as ‘an agreement or set of rules not imposed by law, regulation or administrative provision of a Member State which defines the behaviour of traders who undertake to be bound by the code in relation to one or more particular commercial practices or business sectors’ (Art 2(f) of the Unfair Commercial Practices Directive).
  121. 20th Recital of the Preamble.
  122. Article 6(1)(b) of the Directive.
  123. See text accompanying nn 98-108supra.