Articles, posts and podcasts about sustainable supply chains, mostly


EU financial crisis and Communication on CSR are bedfellows on transparency

With every crisis since Enron I and many other members of the responsible business trade have said thing such as:

“This, despite how awful it is, will help to make the case for business ethics, corporate responsibility etc”

To an extent, that’s been true.

Now with the EU financial crisis, commentators are suggesting that finally Europe will have to open the bank books and ‘fess up about just how big the liabilities are.

The only solution, some suggest, is total transparency. Only then can we move forward, recapitalise our banks, and work out how we will pay the bills. (Higher taxes seem very likely!)

If this ‘macro transparency’ push happens, driven by the G20 meeting later this year, then there MAY be something positive to come out of all of this current mess: A change in the culture of secrecy that still holds much sway across European business culture.

On the ‘micro’ side, the European Commission’s latest position on CSR comes out in just a few days. This will also lead to greater and increased transparency for business, eventually ensconced in national law across the EU.

Its contents are an open secret. I’ve embedded a presentation below which covers what will probably be in it.

If you don’t have time to scroll through my various musings on management, CSR and the EU, then here’s a quick summary of what the EC’s latest thinking is on CSR and transparency:

– New Communication on CSR is due early October 2011, The first since 2006.

– A new legislative proposal “The Single Market Act” in April 2011 committed EU to new legislation on social and environmental transparency.

– John Ruggie’s business and human rights framework important within the new CSR communication: The EC is considering specific human rights guidance for SMEs.

– The new Communication will stress importance of global guidelines : ILO, OECD, Global Compact, ISO 26,000. There is NO PLAN to develop separate EU guidelines.

– One key theme will be non-financial disclosure by large EU companies. (i.e. More of it!)

– Q1 2012: There will be a proposal to update EU law on what companies will be obliged to disclose.

– Proposal will go eventually to EU Parliament, final version will become EU law to be implemented nationally.

My prediction: There WILL be EU Law by mid 2013 at the earliest on further EU company disclosure on CSR issuea.

BUT: It is hard to say what the final outcome will be exactly. (That partly depends on the lobbying effectiveness of various groups!)

HOWEVER: It is very likely to go beyond current EU Business Review requirements on disclosure and transparency.

The key question for the Commission is MATERIALITY : Will companies be asked to disclose things they do not feel will be useful?

The October Communication document will discuss reporting and repeat commitments, but will not say the precise proposals will be.

The key period for “debate” (read: Lobbying) will be between October 2011 and March 2012. Get ready for that…

You can find out how some of the top companies are planning to respond, at this event in November in London.

Here’s the presentation I delivered on this recently, which has a bit more in it than above: