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CSR: the issue of corporate social responsibility

Business law, European law
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In 2001, in order to support companies wishing to engage in sustainable development, the European Union published a Green Paper on Corporate Social Responsibility (CSR) where it defined corporate social responsibility as follows:” the voluntary integration of social and ecological concerns of companies to their business activities and relationships with their stakeholders. Being socially responsible means not only fully meeting applicable legal obligations, but also going beyond and investing “more” in human capital, the environment and relationships with stakeholders. stakeholders ”. In its 3 th < / sup> Communication on CSR of 2011 , the Commission offers us a more simplistic definition: “ the responsibility of companies vis-à-vis the effects they have on society” . Based on these two definitions, it seems that corporate social responsibility refers to how they can act to improve the environment around them, that of workers and all of their relationships. For example, the concept of a company’s social responsibility includes the measures it puts in place to improve the working conditions of employees or its environmental commitment, which may include the organization of sorting and recycling of waste. waste in the company.

 

Corporate Social Responsibility Europe

 

The social strategy has an important place in the European Union, it is included in the European strategies for employment and social cohesion but also in the strategy on sustainable development. It was from the 1990s that the European Union took on this social mission in companies. During this period the Corporate Social Responsibility Europe was created to promote dialogue and the exchange of good CSR practices in order to achieve the United Nations Sustainable Development Goals. We can therefore see that corporate social responsibility is not only part of a European orientation but is a concept that must be applied at the international level to achieve a broader goal of sustainable development.

It is since the European summit in Lisbon in 2000 that CSR has really become a priority for the European Union. It is considered that companies are not only economic actors of the EU but also social actors who must behave socially responsible.

 

 

 

 

But this notion remains vague, is CSR a simple moral commitment that companies must implement in a logic of solidarity, image etc. or is it a source of legal obligations that can be monitored, assessed and sanctioned? It is the legal framework of this notion that has been the source of challenges within the EU and that has divided the players. The 2001 Green Paper played an essential role in the framework of social responsibility, in its definition it establishes the link between law and CSR: CSR must go beyond legal obligations; however, it cannot replace the legal rules in force.

 

Corporate social responsibility must also go beyond the borders of Europe

 

Then, the Green Paper developed the dimension of CSR. There is an internal dimension and an external dimension. The internal dimension is mentioned as follows: “ Within the company, socially responsible practices primarily affect employees and concern, for example, investment in human capital, health and safety, as well as change management, while responsible ecological practices relate primarily to the management of natural resources used in production. They open a way for managing change and reconciling social development and increased competitiveness ”. The internal dimension of CSR would therefore be a development factor for the company making it possible to improve the working conditions, the productivity and the competitiveness of the company, for example, this can involve an adjustment of working time or even by putting in place measures to combat discrimination. Regarding the external dimension of CSR, the Green Paper considers that: “ Social responsibilityiale of companies extends beyond the perimeter of the company, into the local community, and involves, apart from employees and shareholders, a wide range of stakeholders: business partners and suppliers, customers, public authorities and NGOs representing the local community as well as the environment. “This responsibility takes on an international orientation,” In a world characterized by multinational investments and production chains spread over the planet, the corporate social responsibility must also go beyond the borders of Europe . “It therefore refers to the way in which the company fits into and plays a role in the world around it, more broadly, the external dimension of CSR refers to the influence of the company at the international level. The external engagement of a company can involve support for non-profit associations but also the implementation of consumer prevention campaigns, for example. We can therefore see that CSR goes beyond a simple legal and regulatory framework but that it consists of being part of a real social and societal fabric.

 

 

global

 

 

Originally, CSR was based on a voluntary approach by companies. However, the situation has evolved: various regulations have been adopted which impose on companies obligations of an environmental nature and legally binding. The question therefore arises as to what are the mandatory standards that companies are required to comply with in terms of CSR?

 

The importance of integrating social, environmental, ethical, human rights and consumer concerns into their business activities and basic strategy

 

At European level, the CSR communication of 25 October 2011 marks the abandonment of the attachment of the European executive to a purely voluntary nature of CSR, the Commission affirmed in this communication that: “ To assume this responsibility, it is first necessary that the companies respect the legislation in force and the collective agreements concluded between social partners. “ But for this objective to be achieved, certain conditions must be met,” In order to fully discharge their social responsibility, companies should have engaged, in close collaboration with their stakeholders, a process designed to integrate social, environmental, ethical, human rights and consumer concerns into their business activities and basic strategy ”. The CSR approach is part of an openness to the company and its stakeholders. Concretely, the CSR approaches and strategies refer to the various policies implemented in companies to contribute, for example, to the protection of the environment, social inclusion, or economic development … In its 2011 communication, the Commission affirms its will “ examine the possibility of imposing on all investment funds and financial institutions the obligation to inform all their clients (citizens, companies, public authorities, etc.) of all the criteria they apply in terms of ethical or responsible investment and all the standards and codes to which they adhere. ”. And it implemented this proposal by adopting the directive 2014 / 95 / EU which amends Directive 2013/34 / EU as regards the publication of non-financial information and information relating to diversity by certain large companies and groups. This provides that: “ Member States should ensure that adequate and effective arrangements are in place to ensure the publication of non-financial information by companies . “. Behind this decision, we can see that the Commission wants to force companies to take responsibility for the decisions they take which have a social impact. In 2017, the European Union wrote a guideline to support companies in this obligation. This defines in particular the notion of “significant information” to be published in accordance with Directive 2014/95 / EU: the significant term is defined as “ the status of information which one can reasonably believe that the omission ou Inaccuracy can influence the decisions users make based on the company’s financial statements. The significant importance of each item is assessed in the context of other similar items “.

 

 

 

puzzle

 

 

But the Commission is not the only one to have decided to impose more responsibility on companies: several Member States have established obligations regarding the communication of information of a non-financial nature which go beyond European legislative provisions. In France, the Autorité des marchés financiers has notably published a doctrine manual on the financial information of listed companies intended for SMEs and mid-caps in order to remind them of the various texts to which they are subject to financial information.

In Belgium, the code Buysse has been in place since 2005 to address recommendations for the attention of companies not listed on the stock exchange and which allows them to guide them in determining their social responsibility policy. This code takes into account in particular the role of shareholders in corporate social responsibility. Indeed, they have a role to play and are themselves subject to obligations. It sets out a number of obligations that they must fulfill: commitment in their role, respect for the competences of each body, explanation of their expectations and long-term objectives…. CSR is therefore not carried out only at the level of the company but also at the level of each organ.

 

Integrating CSR into business law mechanisms

 

In 2015 the OECD and the G20 revised the principles of corporate governance . These principles see corporate governance as “ referring to the relationships between a company’s management, board of directors, shareholders and other stakeholders “. Directly echoing CSR, these “ principles take into account the interests of employees and other stakeholders as well as the important contribution they make to the success and long-term results of the company. Certain other factors relevant to decision-making processes, including environmental, ethical and anti-corruption concerns, are also taken into account in the Principles, but they are addressed more specifically in other instruments, which are referenced in the Principles ”. CSR is therefore at the heart of the management of the company and demonstrating the integration of CSR into the mechanisms of business law, we can read that “ the board of directors is certainly responsible to society and its shareholders, but it also has an obligation to serve their best interests. “ Therefore, ” The board of directors is moreover expected to take due account of other stakeholders and to serve their interests fairly, in particular those of employees, creditors, customers, suppliers and local communities ”. This shows that today the company is no longer seen as a mere economic actor but that it must integrate and participate in the world around it. Its social and environmental impact must be central factors in company policy and each of its actors is socially responsible.

 

 

european parliament

 

 

The European Union now seems to want to step up its regulations on CSR. The European Commissioner for Justice, Didier Reynders, announced on April 29, 2020, that the European Commission would present, by 2021, a legislative initiative on the duty of vigilance of ordering companies vis-à-vis their funds. -treaters, in human rights and environmental matters. It would be a regulation obliging companies to identify, prevent and reduce human rights violations and environmental damage, or face penalties. This regulation would aim to introduce a reasonable duty of vigilance on the part of companies on theirr supply chain at a time when we are aware that human rights are not always respected when it comes to production chains.

Germany has already taken this direction with the “Lieferkettengesetz” bill which is intended to apply from 2023. It requires certain companies to put in place procedures aimed at identifying, preventing and mitigating negative impacts on human rights and the environment caused by their own activity or that of members of their supply chains. Companies would have an obligation to monitor their direct and indirect suppliers and internal procedures will have to be instituted.

We therefore note that Corporate Social Responsibility is a very broad concept which depends on state legislation but also on the raison d’être of the company. However, adopting a corporate social responsibility policy is essential to improve its competitiveness both nationally and internationally. Knowing the legal obligations incumbent on each player in the company is essential in order to define the appropriate policy.

 

 

The Eternoscorp team supports you in all your questions about the legal obligations incumbent on you as well as in defining the social policy most suited to your situation and the direction you wish to take.

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Mr. Fabregue was Eternos Corporation Head of Legal up until 2020, where he headed the legal department.

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