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28/09/2016

Trusting corporations to be responsible: A failed EU experiment

Trade & Society

Trusting corporations to be responsible: A failed EU experiment

VW police van. Scotland, 2013.

[Ray Foster/Flickr]

The Dieselgate scandal is just the latest example of corporations hijacking the Corporate Social Responsibility agenda, Jérôme Chaplier.

Jérôme Chaplier is Coordinator of the European Coalition for Corporate Justice.

Over the years, the concept of Corporate Social Responsibility (CSR) has been hijacked by corporations, and drained of its intended meaning. The duty of businesses to adopt real transparency and accountability mechanisms was obscured by a smokescreen of charity events, football tournaments and photo ops.

Meanwhile, the European Union and its member states held steadfastly to their corporate-sponsored belief that businesses should be left to interpret what socially responsible behaviour meant. And so, Volkswagen, and many others alike, managed to tiptoe away from their moral and legal responsibilities. 

Together with keeping their CSR window-dressing machine well oiled, companies like Volkswagen heavily invest in lobbying – VW’s EU lobbying budget for 2014 alone was €3.5 million. Their aim: to dissuade EU decision-makers from imposing mandatory regulations for corporations, and efficiently implementing Europe’s crippled environmental legislative framework.

And where EU lobbyists fail, national governments step up to do their bidding. As the Guardian reveals, four months before the emissions scandal broke the governments of Germany, France and the UK were not only supporting outdated tests but trying to create additional loopholes. As ridiculous as it sounds, Germany even asked for the laboratory tests to be performed on downhill tracks.

A price paid in human casualties

The emissions scandal is set to cost VW €33 billion , plus serious damage to its brand. But what has its irresponsible behaviour cost all of us? Does the detrimental impact of its actions on the environment and public health not add up to a much higher, collective loss? 

Approximately 400,000 people die prematurely in Europe each year due to air pollution. An estimated 59 people in the US will die solely because of VW‘s efforts to bypass the law. Companies have a huge impact on our lives and the lives of generations to come, and the negative consequences of their activities can cause long-terms and sometimes irreparable damages to people, society and the environment.

The reality is the full price for VW’s wrongdoings is paid in human casualties and their crimes are a violation of our basic rights. 

Responsibility knows no boundaries

The tile of VW’s CSR Report proclaims “responsibility knows no boundaries”, but greed would have been a better illustration for their company policy. In the document’s foreword, ex-CEO Martin Winterkorn lists “an intact environment” as their “above all” concern. What he forgets to mention is that in between sponsoring “musical litter bins” in Sweden, and promoting safe-driving in China, VW also worked on subverting the EU CSR agenda.

While civil society fights for improved regulation and improved transparency, corporations want to transform the EU’s CSR Strategy into a system of rewards and recognitions. For example, Business Europe (whose Corporate Advisory and Support Group includes VW) explicitly asked the European Commission to “respect and promote the business driven nature of CSR” and stop “focusing on CSR as a strategy to respond to risks and mitigate negative impacts of company actions”. 

The Commission can change things by putting forth a new CSR Strategy (expected in 2016) that promotes ambitious rules for better accountability, and obliges businesses to address and mitigate the concrete risks and impacts of their activities. It does not help that discussions on the Strategy are being led by the same Directorate, (DG Grow), that previously promoted weak accountability standards and absence of control, but DG Grow can seize the opportunity to correct past mistakes.

Lessons learned?

The VW scandal is not a story about a rogue corporation that broke the rules and eventually got caught, but a perfect illustration of the defective regulatory and monitoring framework in place at all levels of governance. It is a symptom of a systemic failure, which has been festering for years under the complicit watch of the EU and member states alike. 

The EU must start an independent, thorough investigation into the emissions scandal, clearing out its own backyard in the process. The EU and member states should to stop involving VW and other law-breaking companies in policy consultations, or in events and delegations. The fact that Angela Merkel was accompanied by VW on a recent trade visit to China is a scandalous sign of political support. A major facilitator for inaccurate emissions testing is the system itself that entails no supervision at EU level. And this could be fixed by taking the reins of the vetting process from the national agencies that now issue EU-wide approvals.

The VW scandal has not only exposed how little some companies care about human rights or how weak our regulatory system is. It also proved that the concept of CSR is being depleted of meaning by glossy PR campaigns and relentless lobbying. Just as citizens cannot respect some laws and ignore others, companies should not be allowed to pick and choose what human rights they want to uphold. By haggling and asking for a self-tailored responsibility and mitigation system, corporations are requesting to be placed above the law.

This is why the next CSR Strategy is a concrete opportunity for the EU to demonstrate that after decades of environmental and human rights scandals, they have finally learned their lesson.