Corporate accountability campaigners were heartened by the Commission's 'Social Business Initiative' and 'Corporate Social Responsibility' strategy, unveiled on 25 October.
"It's a completely different tone" from the EU's previous CSR policy, said Paul de Clerck, a corporate accountability campaigner at Friends of the Earth Europe.
"The Commission clearly stepped away from its purely voluntary approach," he told EurActiv.
As part of the new CSR approach, the Commission said it will bring forward "a new legislative proposal" in 2012 to improve company disclosure of social and environmental information, a move welcomed by de Clerck who said it would help fight "greenwash".
Companies that "do the right thing" should also be rewarded with updated EU public procurement rules, due by year-end.
"European policy-makers no longer consider that CSR excludes the option of regulating the business sector," said the European Coalition for Corporate Justice (ECCJ), a pressure group where de Clerck is an active member.
One of the key elements of the Commission initiative is to introduce a system of country-by-country reporting for companies active in the oil, gas, mining or logging in order to improve the transparency of their activities abroad.
"Reporting taxes, royalties and bonuses that a multinational pays to a host government will show a company's financial impact in host countries," the Commission explained in a statement.
The initiative goes "well beyond the US Dodd-Frank Act," boasted Michel Barnier, the EU's internal market commissioner, saying it will "help to achieve a new step in the quality of our relations with Africa, based on mutual accountability and transparency."
The Dodd-Frank Act, a sweeping financial reform and consumer protection law enacted in 2010, seeks in part to limit risky derivatives trading and lending practices in the United States.
The changes to the transparency directive would also prevent companies from secretly building up a controlling stake in a listed company, like when Porsche suddenly revealed in 2008 that it owned or had positions on more than 74% of Volkswagen shares.
But despite the progress made in some areas, NGOs said the plan still contained loopholes. "European headquarters of companies cannot be held accountable for the damage caused by their subsidiaries or in their supply chain in developing countries," noted the ECCJ.
"Nor does the plan clarify how the legal framework can improve access to justice for victims of corporate abuses."
Cutting red tape for SMEs
Amendments to the two accounting directives are also aimed at cutting red tape for small companies.
SMEs listed on the stock exchange will also no longer have to file quarterly financial statements, reducing their costs by a potential €1.7 billion per year.