The European Commission is considering imposing "standardised mandatory reporting" on how companies communicate about corporate social and environmental issues, in an effort to rebuild citizens' trust in business ethics.
The proposal, due in October, will suggest policy directions on corporate social responsibility (CSR) but will shy away from binding legislative measures at this stage, EURACTIV has learned.
"A key objective is to generate higher levels of trust in business on the part of citizens," says the European Commission in a paper highlighting its motivations for drawing up the initiative.
Previous attempts to define CSR policies at EU level became mired in a dispute on whether or not to make the rules legally binding, with business groups firmly rejecting what they saw as a costly burden on companies.
Environmental groups, meanwhile, slammed CSR initiatives as little more than a "PR operation" and pulled out of a Commission-sponsored stakeholder forum in 2006. They rejoined it three years later on the promise that the EU executive would look beyond voluntary measures.
This time around, the Commission sees the economic crisis as an opportunity to re-launch the process by offering companies a chance to improve their ethical standards and revamp their image.
"A renewed CSR policy will help the EU address contemporary social and environmental challenges, especially as an exit from the economic crisis continues to be sought," says the Commission's explanatory document.
The initiative, it says, will "encourage all businesses to pursue actions with social or environmental objectives as part of their daily activities".
The new CSR strategy will be "based on a deeper understanding of the potential and purpose of business to create shared value for owners/shareholders and for other stakeholders and society at large," the EU executive further explains.
Mandatory vs. voluntary
Beyond the vague wording though, debate is likely to centre once again on the mandatory vs. voluntary issue.
But the Commission seems ready to take the bull by the horns and reopen the discussion. "Reporting is an area where a lot more could be done," said one EU official close to the dossier, speaking on condition of anonymity.
"On the obligation side, standardised mandatory reporting is definitely something we're looking into," the official added. But he admitted that this aspect of the upcoming proposal was "not very concrete yet".
In fact, with the economic slowdown and resistance expected from business groups, the Commission might well be inclined to backtrack on mandatory reporting rules.
"The EU approach to CSR must continue to be based on the awareness that it is driven by business," said BusinessEurope, the European employers' organisation, warning of the costs that mandatory reporting would impose on companies.
"The Commission should avoid setting further, more rigid requirements for companies in terms of disclosure of non-financial information. Current legislation is sufficient."
Speaking to EURACTIV on condition of anonymity, a corporate lobbyist in Brussels said the Commission was likely to insist on the accountability side of the equation by pressing companies to respect international standards such as ISO 26000 or supporting international initiatives such as the UN Global Compact and the UN Principles for Responsible Investment (UNPRI).
However, he said modern CSR policies should encourage businesses to "go beyond existing legislation" by setting higher expectations. Supply chain management, human rights and transparency disclosure are likely to take centre stage in future discussions, the source said.