Corporate Social Responsibility and Sustainability from a Global,

European and Corporate Perspective.Corporate Social

Responsibility and Sustainable Governance
Lutz Michael BCHNER1
Abstract: Shareholder value, financial crisis, turbo capitalism, fair products, risk
management, management compensation, compliance management, employer branding
are terms that are on everyones lips at the moment. More and more the fields of action of
Corporate Social Responsibility (CSR), often called soft skills, become clear to
management and its stakeholders. Investors take notice of these aspects as well.
Companies that neglect to fulfill their social responsibility towards workers, customers,
society and environment at large will not be successful in the long term. The article gives
an overview about the principles of CSR, the institutional framework of corporate social
and sustainable management and its contents. Companies, practicing just shareholder
value and neglecting the stakeholder dialogue will more and more loose market shares
compared with those which develop a holistic strategy on corporate responsibility. But
CSR is not just part of marketing or public relations. The European Union's strategy on
CSR is enlarging this approach on all kind of organisations.
The contribution describes the different approaches of the European Union, the
Global Compact, the OECD and the ILO on CSR, describes the principles of the Global
Reporting Initiative and the recent ISO standard 26000. It goes into corporate codes
which obligate companies on CSR. Finally it shows the relevance of CSR for trade unions
and employee representatives.
Keywords: Corporate Social Responsibility; sustainability (CSR); EU-strategy on
CSR; corporate culture; stakeholder dialogue; CSR strategy
The most efficient method, to meet the most urgent problems of the world often consists
in mobilizing the companies in a way which benefits themselves and the society at the same time
Michael E. Porter, Harvard Business School

Introduction
Employees want good employers, customers want fair products, and society
wants generous and environmentally sound companies. Businesses are no longer
governed by shareholder value alone; increasingly, their decisions are influenced by their
responsibility towards employees, customers, the environment and the society they
operate in. For a rising number of businesses, whether large or small, ignoring these soft
factors is weakening their competitive edge.
In this context the buzzwords on everyones lips are corporate social
responsibility, or CSR and Sustainability. Yet what is CSR, and what is Sustainability?
Who decides what CSR is supposed to achieve, and who measures the effects of
responsible corporate governance? The driving force behind the rising significance of
1

European Institute for Labour and Industrial Relations, Seeheim-Jugenheim.

42

CSR is capital market expectations. Analysts and rating agencies no longer just look at
revenue and profit, they are also starting to examine whether a companys profits were
generated in a sustainable manner, that is: applying ecologically and socially sound
principles. Employees, customers and the wider public are also starting to show an interest
in how a company manages its business.
Definition of terms
The Anglo-Saxon concept of corporate social responsibility expresses the
assumption that in the US business world, companies play a key role when it comes to social
responsibility. That said, there is no generally accepted definition of CSR. Since only
persons, rather than companies, can take on social responsibility, CSR presupposes a certain
attitude on the part of a companys managers. In other words, CSR could also be described
as a kind of value or management attitude that has sustainable business as its main objective
and leads the company to engage in civic activities in its closer environment. Corporate
social responsibility should not be confused with the following terms:
Sustainability can be defined as follows.
Sustainable development envisions a development which takes economic, social
and ecological aspects into account and treats them equally. Economic operations
following this principle shall meet the needs of the present without compromising the
ability of future generations to meet their own needs and the justified claims of the poorer
countries to have access to wealth
or
How can the present generation meet its needs in ways that are not only
economically viable, environmentally sound and socially equitable but that also allow
future generations to do the same2.
Corporate governance, which is part of CSR yet focuses on reconciling the
interests of all of the stakeholders of a company and on ensuring transparency of
governance;
Corporate citizenship, which primarily refers to companies contributions to the
society they operate in; and
(Corporate) sustainability, which is defined as meeting the needs of the present
without compromising the ability of future generations to meet their own needs.
Companies shaping corporate strategies with mutuality between needs of corporation and
society.Companys ability to achieve its business goals and increase long-term
shareholder value by integrating economic, environmental and social opportunities into its
business strategies.
Unlike corporate social responsibility, sustainability refers not only to a
companys responsibility towards its stakeholders, taking into account economic,
ecological and social aspects, but also to its responsibility towards humanity as a whole,
towards the environment and towards future generations. CSR is an integral element of
sustainable corporate governance.3
2
3

Gro Harlem Bruntland (ed.), Our Common Future: The World Commission on Environment and
Development, (Oxford: Oxford University Press, 1987).
Gail Thomas and Margaret Nowak, Corporate Social Responsibility: A Definition, Working
Paper Series, no. 62. Curtin University of Technology, Graduate School of Business, (December
2006),
http://www.business.curtin.edu.au/files/GSB_Working_Paper_No._62_Corp_Social_Resp_A_def

43

Aspects of social responsibility

More specifically, companies fulfill their responsibilities towards society if they:
-treat their employees fairly, support them and allow them to participate,
-preserve natural resources and use them efficiently,
-ensure that the production processes in their value chain are socially and
ecologically sound,
-comply with core labor standards and respect human rights,
-contribute to the common good,
-invest strongly in education and training,
-promote cultural diversity and tolerance throughout the company,
-engage in fair competition,
-seek to prevent corruption,
-maintain transparency concerning their corporate governance, and
-respect consumers' rights and interests.4
CSR a European issue
The European Union's activities in the field of corporate social responsibility5 are
based on the assumption that an economy can only be successful in the long term if in
addition to economic aspects, it takes equal account of the social, ecological and welfare
interests of all stakeholders. Based on the Lisbon Strategy, which the EU adopted in 2000
with the aim of becoming, by 2010, the most competitive and dynamic knowledge-based
economy in the world without losing sight of the social aspects of growth, in its 2001
Green Paper the European Commission drew up a European definition of corporate social
responsibility. Here, CSR is a 'concept whereby companies integrate social and
environmental concerns - beyond mere compliance - in their business operations and in
their interaction with their stakeholders on a voluntary basis. Corporate social
responsibility, then, is based on three fundamental principles:
-It is a holistic concept of corporate governance (economic, ecological, and social).
-It is voluntary.
-The best practice approach prevails. In other words, it does not suffice just to
fulfill legal expectations; a company must invest in human capital, the environment and its
relations with stakeholders6.
In addition to the Green Paper, in 2002 the Commission published a
Communication concerning corporate social responsibility: a business contribution to
sustainable development. The European Multi-Stakeholder Forum on CSR, composed of

inition_Thomas___Nowak.pdf (Accessed May 18, 2012); Eubusiness, Corporate Social

Responsibility in the EU, (25 August 2006),http://www.eubusiness.com/topics/social/corporatesocial-responsibility-in-the-eu/ (accessed May 18, 2012)
Eubusiness, Corporate Social Responsibility in the EU, (25 August 2006),
http://www.eubusiness.com/topics/social/corporate-social-responsibility-in-the-eu/
(accessed
May 18, 2012)
See : European Commission. Employment, Social Affairs & Inclusion, Compendium of Public
CSR Policies, http://ec.europa.eu/social/main.jsp?langId=de&catId=89&newsId=1012 (accessed
May 18, 2012); European Commission. Employment, Social Affairs & Inclusion, Corporate
Social Responsibility (CSR) in the EU, http://ec.europa.eu/social/main.jsp?catId=
331&langId=en) (accessed May 18, 2012)
Commission of the European Communities, Green Paper Promoting a European framework for
Corporate Social Responsibility, COM(2001) 366 final (Brussels, 18.7.2001), http://eurlex.europa.eu/LexUriServ/site/en/com/2001/com2001_0366en01.pdf (accessed May 18, 2012)

44

representatives of companies and NGOs, was set up the same year. Finally, in 2006 the
European Alliance for Corporate Social Responsibility, a joint initiative of the European
Commission and the business community, was launched as an open partnership for
enterprises to promote and encourage CSR7.
In October 2011 the European Commission released a Communication from the
Commission to the European Parliament, the Council, the European Economic and Social
Committee and the Committee of the Region8 (COM(2011) 681 final) which contains
renewed the EU strategy for Corporate Social Responsibility.
The Commission puts forward a new definition of CSR as the responsibility of
enterprises for their impacts on societies to fully meet their corporate social
responsibility, enterprises should have in place a process to integrate social,
environmental, ethical, human rights and consumer concerns into their business operations
and core strategy in close collaboration with their stakeholders, with the aim of:
-maximizing the creation of shared value for their owners/shareholders and for
their other stakeholders and society at large;
-identifying, preventing and mitigating their possible adverse impacts.
The rest of the document outlines the alignment with global standards, recent
economic challenges, business of all sizes (corporate to SME) and their complimentary
developments such as the Social Business Initiative (SBI).
Finally the Commission calls on European business leaders, including those from
the financial sector, to issue, before mid 2012, an open and accountable commitment to
promote, in close cooperation with the public authorities and their other stakeholders, the
uptake of responsible business conduct by a much larger of EU enterprises, with clear
targets for 2015 and 20209.
Bringing corporate culture to life: a prerequisite
The basic idea behind corporate social responsibility is that of a partnership
between the state, the private sector and civil society. CSR presupposes a positive
corporate culture that is reflected in the way the company is managed and structured.
Sustainability management must take a holistic approach and has to be integrated into core
corporate governance processes. These days, growing emphasis is given to the
measurability of corporate activity. For this reason, CSR if used purely as a marketing tool
will not satisfy the demands of the market. There are three types of corporate social
responsibility:
-CSR that is motivated by intrinsic economic interests,
-CSR as an element of risk management,
-and the implementation of CSR concepts in order to follow a trend or fashion.
If treated as part of a long-term strategy, CSR can deliver benefits to the company,
to its stakeholders (especially its employees, customers and the environment) and to
society at large. A genuinely value-oriented and sustainable management approach leads
7

Commission of the European Communities, Communication from the Commission concerning

Corporate Social Responsibility: A Business Contribution to Sustainable Development,
COM(2002) 347 Final, http://trade.ec.europa.eu/doclib/docs/2006/february/tradoc_127374.pdf
(Brussels, 2nd July 2002) (accessed April 29, 2012)
8
Ibid.
9
European Commission. Enterprise and Industry, Sustainable and Responsible Business
Corporate Social Responsibility (CSR), http://ec.europa.eu/enterprise/policies/sustainablebusiness/corporate- social-responsibility/index_en.htm (accessed May 18, 2012)

45

to measurable positive economic results and in turn improves the competitive position of
the company, be it small, large or medium-sized. Among the main benefits are an
improved working environment, a more motivated workforce, and greater productivity.
There is more interest from customers and investors, the company's position in the market
is strengthened and its enterprise value is enhanced. For a company seeking to employ
skilled workers employer branding, which determines a company's attractiveness as an
employer, plays a major role, not just for potential applicants. Many companies are
starting to focus on their CSR performance. The quality of their efforts is measured,
evaluated and documented in CSR reports.
The principles of CSR
Corporate social responsibility as a management concept recognises the fact that
companies maintain diverse relationships with their environment. Environment' in this
sense refers to both the actual environment and the companies stakeholders - employees,
customers, suppliers, NGOs, banks, local authorities, neighbors, investors, and
shareholders. The dialog with these external groups contributes towards the company's
success. Besides, a companys conduct towards its employees plays a major role.
Employees are a company's key players, and they ensure the continued high quality of its
products. They represent the companys face to the customer. In this context, exercising
ones responsibility towards society goes beyond the existing legal framework. All
companies, regardless of their size, offer enormous potential in this respect. For instance
they can offer basic and advanced training, or introduce diversity management. The
European interpretation of corporate social responsibility makes a distinction between the
internal and the external dimension of CSR. The internal dimension covers:
-occupational health and safety,
-working conditions,
-HR development, basic and advanced training, age management,
-work-life balance,
-internal communication and the quality of the social dialogue,
-corporate environmental protection,
-risk management,
-and corporate visions and values.
By contrast, the external dimension covers:
-global environmental protection,
-respect for human rights,
-compliance with international guidelines,
-fair trade initiatives,
-and social commitment of the company.
The careful consideration of the ecological problems that result from production,
transportation, packaging and waste disposal makes a sustainable contribution to society.
The responsibility that large companies have for their global supply chains requires them
to have special supply chain management strategies that ensure compliance with existing
standards. In their role as suppliers and subcontractors, small and medium-sized
enterprises are often part of the value chain. Also, procurement guidelines often contain a
series of soft factors that play a role in connection with tenders, and also when applying

46

for credit. Finally, CSR also extends to include companies civil society engagement in a
wide variety of forms, such as sponsorship.10
At the international level the Global Compact, the OECD and the International
Labor Organization have created an institutional framework for CSR that has been
instrumental in shaping the European approach.
The Global Compact
The United Nations Global Compact is a strategic policy initiative that dates back
to 1999 and, by the time of writing, had grown to cover more than 4,000 businesses from
120 countries. It maintains a network that spans around 130 countries. Member businesses
are expected to:
-support and respect internationally proclaimed human rights;
-ensure they are not complicit in human rights abuses;
-uphold the freedom of association and the effective recognition of the right to
collective bargaining;
-eliminate all forms of forced and compulsory labor;
-abolish child labor;
-eliminate discrimination in respect of employment and occupation;
-support a precautionary approach to environmental challenges;
-undertake initiatives to promote greater environmental responsibility;
-develop and propagate environmentally friendly technologies;
-and work against corruption in all its forms, including extortion and bribery.
Several governments, UN agencies and NGOs support the Global Compact.
However, the initiative has attracted criticism in particular from NGOs, which claim that
its membership criteria are not strict enough and that its standards are based on documents
that represent a general consensus and so are covered by national legislation anyway.
Members need not fear any sanctions or checks, they claim; also, Global Compact
participation could be misused by hangers-on as a marketing tool, putting the reputation of
this valuable global initiative into jeopardy11.
OECD Guidelines for Multinational Enterprises
In contrast to the Global Compact, the OECDs Guidelines for Multinational
Enterprises (MNEs) represent the only multilaterally recognised code to have been jointly
adopted by governments. The Guidelines are recommendations addressed by governments
to MNEs operating in or from OECD countries. Like the Global Compact, they make
reference to business ethics, including employment and industrial relations, human rights,
environment, information disclosure, combating bribery, competition, consumer interests,
science and technology, and taxation.
The OECD Guidelines are divided into the following chapters:
1. Concept and principles
2. General Policies
3. Disclosure
10

Bundesministerium fr Umwel, Corporate Social Responsibility - gesellschaftliche

Verantwortung von Unternehmen, http://www.umweltministerium.de/files/wirtschaft_und_
umwelt/unternehmensverantwortung_csr/nachhaltigkeitsmanagement/application/pdf/csr-studie_
langfassung_bmu.pdf(accessed May 18, 2012)
11
United Nations, United Nations Global Compact, http://www.unglobalcompact.org (accessed
May 18, 2012)

47

4. Human Rights
5. Employment and Industrial Relations
6. Environment
7. Combating bribary
8. Consumer interests
9. Science and Technology
10. Competition
11. Taxation
Compliance with the Guidelines is monitored jointly by governments, businesses,
business associations, unions, other employee organisations and NGOs at the national and
international level.
The Global Compact and the OECD Guidelines are complementary global
instruments for promoting corporate responsibility. They should not be perceived as
competing alternatives. Both are based on the principle of self-regulation. There are
differences, however, in terms of their implementation and enforcement mechanisms. The
OECD Guidelines appear more effective in that respect12.
ILO Declaration of Principles
The International Labor Organizations tripartite Declaration of Principles
concerning Multinational Enterprises and Social Policy of 1977/2000 is another
framework of reference for businesses. The Declaration was jointly negotiated and
adopted by governments, employee and employer organisations and is hence based on
broad consensus. Unlike the OECD Guidelines the Declaration restricts itself exclusively
to sociopolitical issues, and is to be observed merely on a voluntary basis. Specifically, it
recommends that:
-multinational enterprises, particularly when operating in developing countries,
should endeavor to increase employment opportunities;
-policies designed to promote equality of opportunity and treatment in
employment should be pursued;
-multinationals should seek to provide stable employment;
-multinationals should ensure that training is provided for all of their employees in
the host country;
-multinationals should provide the best possible wages, benefits and conditions of
work, and
-workers should have freedom of association and the right to organise13.
Global Reporting Initiative
The idea behind the Global Reporting Initiative (GRI) is that reports on businesses
economic and social achievements become just as commonplace as those on their financial
performance. The GRI stipulates specific guidelines on sustainable reporting as well as
12

OECD. Directorate for Financial and Enterprise Affairs, OECD Guidelines for Multinational
Enterprises,
http://www.oecd.org/document/28/0,3746,en_2649_34889_2397532_1_1_1_1,00.html (accessed
May 18, 2012)
13
International Labour Organisation, Tripartite Declaration of Principles Concerning
Multinational Enterprises and Social Policy (MNE Declaration) - 4th Edition,
http://www.ilo.org/empent/ Publications/WCMS_094386/lang--en/index.htm (accessed May 18,
2012)

48

recommendations for companies on how to communicate their CSR activities effectively.

GRI is based on a set of Reporting Principles that aim to give stakeholders a clearer picture
on the one hand, and enable a comparison of the various social and ecological approaches
and measures on the other. These Reporting Principles are:
-transparency;
-stakeholder inclusiveness;
-reliability;
-completeness;
-materiality;
-sustainability context (performance in a wider ecological, economic and social
context);
-accuracy;
-balance;
-comparability;
-clarity;
-and timeliness.14
CSR Europe
Besides these international institutions and frameworks there are also several
international CSR platforms. One of them is CSR Europe, a business network for
corporations striving to integrate CSR into the way they do business. At the time of
writing, the network had 75 multinational corporations and 25 national partner
organisations as members.15
Industry and corporate codes
Industry and corporate codes play an increasingly important role in connection
with CSR.
Industry codes
Industry codes are regulations on social and ecological values that, generally
speaking, the representatives of a given branch of industry negotiate with an industry
union. These voluntary agreements are intended for all companies in the industry in
question. Existing codes include:
-the code of business practices for the toy industry16;
-the code of conduct for the textile and apparel industry17;
-the code of conduct for the sugar industry18;

14

Global Reporting Initiative, www.globalreporting.org (accessed May 18, 2012)

CSR Europe, http://www.csreurope.org/pages/en/about_us.html (accessed May 18, 2012);
International Aspects of Corporate Social Responsibility (CSR) Practical Advice for
Companies, Bundesverband der Deutschen Arbeitgeber (BDA). Berlin: February 2006,
http://www.agvbw.de/lv/cms.nsf/d8b9db68eb323349c1256e22003fb0cd/c23fc4b9c839efe1c125754a00331aba/$
FILE/Leitfaden%20CSR%20englisch.pdf (accessed May 20, 2012)
16
International Council of Toy Industries, Code of Business Practices, http://www.toyicti.org/info/codeofbusinesspractices.html (accessed May 18, 2012)
17
Peppermint-Holding, Code of Conduct for the Textile and Fashion Industry. As Adopted during
the t+m General Assembly on 2 December 2010, http://www.peppermint-holding.de/wpcontent/uploads/2011-Code-of-Conduct_ENG.pdf (accessed May 18, 2012)
15

49
19

-the Joint Declaration on CSR of UNI Telecom Global Union and ETNO ;
-the guidelines governing responsible action in the social market economy,
adopted in 2008 by Germanys Mining, Chemical and Energy Industrial Union IG BCE
and the German chemical employers association BAVC20.
There are also a number of International Framework Agreements, or IFAs, which
serve as globally binding formal agreements between international industry unions and
multinational corporations. Most IFAs focus on compliance with the ILO's core labor
standards, payment of adequate wages, ensuring humane working conditions and
occupational health and safety. They are frequently only valid for the corporations
themselves, but not - which would be preferable - for companies further down the supply
chain.21
Corporate codes
Corporate codes22are sets of rules that businesses adopt in order to systematically
integrate their ecological and social principles and values into the corporate culture. Many
of these codes also cover the businesses supply chains. In fact supply chains are
increasingly coming into the public focus, notably in the toy and textile industries. The
idea is that companies should do everything in their power to ensure that existing
regulations (e.g. the Global Compact, OECD Guidelines) are observed by all stakeholders,
including suppliers, wherever they are in the world. While corporate codes can take many
different shapes, most follow the same basic principles:
-They are aligned with the ILOs core labor standards;
-They correspond to the OECD Guidelines and the Global Compact;
-They are linked to the Universal Declaration of Human Rights;
-They contain environmental commitments;
-They refer to general working hours and the payment of living wages;
-They refer to industrial health and safety standards;
-They call for socially responsible corporate action;
-They contain a reference to the social dialogue.
Corporate codes serve to turn compliance with ecological and social standards
into a systematic element of corporate policy. The institutional framework that has come
to dominate the field of CSR demonstrates that there are a multitude of approaches that
are putting companies under pressure to rethink their ecological and social attitudes. The
opinions of the capital market are increasingly influenced by the degree to which
companies are meeting these standards.
Examples for codes of conduct (ethics):
18

Eurosugar, Corporate Social Responsibility, http://www.eurosugar.org/en/csr_sommaire.html

(accessed May 18, 2012)
19
International Road Transport Union, IRU and ETF Joint Statement on the Review of the
Tachograph Regulation, (08 July 2010), http://ec.europa.eu/employment_social/dsw/public/
actRetrieveText.do?id=8578 (accessed May 18, 2012)
20
Responsible Care, Status Report 2008, http://www.icca-chem.org/ICCADocs/Status
_Report_2008.pdf (accessed May 18, 2012)
21
Eurofund, Framework Agreements, http://www.eurofound.europa.eu/areas/industrial
relations/dictionary/definitions/FRAMEWORKAGREEMENTS.htm (accessed May 18, 2012);
Isabelle Schmann et al., International Framework Agreements, Transfer. European Review of
Labour and Research, no. 14, vol. 1 (2008).
22
Actrav (Bureau for Workers' Activities), Corporate Codes of Conduct, (2011),
http://actrav.itcilo.org/actrav-english/telearn/global/ilo/code/main.htm (accessed May 18, 2012)

50

-Deutsche Telekom (2011);

-Deutsche Post-DHL (2011);
-Daimler (2011);
-GDF Suez (2010);
-EU (2008).
ISO 26000
ISO 26000 provides social responsibility guidance for all types of organisations,
such as Multinational Companies (MNEs), Small and Medium Sized companies (SMEs),
non-governmental organisations and government agencies. Organisations and stakeholders
become increasingly aware for the need for socially and environmentally responsible
behaviour. ISO 26000 is thus a timely and relevant guide to help organisations understand
what social responsibility is and what they need to do to operate in a socially responsible
way.
It is important to note that ISO 26000 contains voluntary guidance and is not for
use as a certification standard like ISO 9000 or ISO 14001. It is stressed in the guidance
that ISO 26000 is not a management system standard. It is not intended to appropriate for
certification purposes or regulatory or contractual use. Any offer to certify, or claims to be
certified, to ISO 26000 would be a misinterpretation of the intent and purpose and a
misuse of the International standard. As ISO 26000 does not contain requirements, any
such certification would not be a demonstration of conformity with the International
standard23.
Relevance of CSR for trade unions and employee representatives
CSR is a significant issue not just for employee representatives in supervisory
boards, but also for members of smaller-scale works councils as well as of central and
group works councils. The same is true for European Works Councils. While
responsibility for sustainable action remains with the business itself, its owners or
management boards, involving employee representation bodies in CSR activities can open
up a whole range of opportunities:
-they participate in shaping the businesss values;
-they are called upon to monitor full compliance with those values; and
-they exercise their actual duties in line with the principle of sustainability.
Since they are often also perceived as co-managers, they can come to play a kind
of watchdog role.24
Relevance of CSR for works councils
Looking at CSR in a corporate context it is clear that the subject, within the
internal framework of the Works Constitution Act, offers the representation bodies a
variety of opportunities for action. Most of these relate to human resources management
23

ISO, ISO 26000 Social Responsibility, http://www.iso.org/iso/discovering_iso_26000.pdf)

(accessed May 18, 2012)
24
ETUC European Trade Union Federation (ETUC), European Trade Unions and Corporate
Social Reponsibility. (Final Rapport), www.etuc.org/IMG/doc/CSRCESfinal3_EN1.doc
(Accessed May 18, 2012); Thomas Bredgaard, Corporate Social Responsibility Between Public
Policy and Enterprise Policy, in European Trade Union Institute (ETUI), The Role of Trade
Unions in Corporate Social Responsibility Initiatives (** December 2003),
http://www.samf.aau.dk/~thomas/etui.pdf (accessed May 18, 2012).

51

(e.g. social standards, equal opportunities, health, equal treatment, work-life balance,
OHS, reorganisations, and resource management) and can be exercised via existing
negotiation and decision-making rights.
However, companies often fail to consult works councils when drawing up their
social and environmental standards, guidelines and other internal codes of conduct - a
deficit that needs to be addressed. The type and intensity of works council participation
will depend on the companys corporate culture in general and the status inside the
company of the social dialogue in particular. Liaising with NGOs can be very helpful in
this respect. The representation bodies should seek to participate in these external fields of
action, too.
European and Worldwide Works Councils
Where companies with European or worldwide operations are concerned, mention
should be made of the special function of European Works Councils and, where applicable
(e.g. Volkswagen), Worldwide Works Councils. Since European Works have information
and consultation rights when it comes to transnational issues, they also have a role to play
in connection with CSR. For one, EWCs can request management to provide them with
information on relevant areas of the groups business; they can also monitor whether the
subsidiaries implement and comply with corporate codes. In other words, they can
demand that the principles underlying these codes be respected. These principles can
relate to environmental and data protection, diversity management, and compliance with
core labor standards and the OECD Guidelines, amongst other issues. In addition, EWCs
are called upon to conclude binding agreements with management in order to improve
labor, social and environmental standards at all sites where multinational corporations are
present. This is another area where cooperation with NGOs plays a major role. Meanwhile
a large number of transnational agreements have been concluded between EWCs and the
management of multinational enterprises. The European Commission calls upon European
Works Councils to help draw up constructive solutions to CSR issues, hence integrating
CSR in the organised social dialogue. The approach helps all stakeholders to adapt to
globalisation-induced changes. Again, cooperation with NGOs is an important element of
this process, too.
For instance, Electricit de France (EdF) has drawn up a global CSR agreement
that was signed by the management and the unions of all subsidiaries in the group. The
European Works Council played an instrumental role in this process. EdF also set up a
working group with equal representation from both sides of industry that is charged with
performing an annual analysis of progress made in this area, as well as of any problems
the company encountered.
More opportunities than risks
All this having been said, it is important not to forget that the involvement of
employee representatives in CSR does have its risks. In particular, there is a risk that the
employer side may use voluntary self-commitments to argue against the necessity of
works agreements. There is also a risk of being drawn into CSR projects that primarily
function as good PR for the company. However, on balance there are more opportunities
than risks. Since management and works councils approach CSR and sustainable
management from different angles, it is important to ensure that the works councils and
employee representatives exercise their influence in the supervisory bodies. They are in a
position to exercise that influence, above and beyond their legal rights, in order to shape

52

and monitor CSR processes, which ultimately benefits the company and in turn the
companys job situation.25
Summary
In summary, it is fair to claim that CSR is an instrument that helps to improve a
companys competitive position - which not least leads to more job security - and to create
new products and markets, not just in the name of short-term success, but also with the
aim of assuming long-term responsibility towards society. Integrating elements of
sustainability into corporate strategies and business processes delivers a multitude of
benefits in three basic areas:
-Improved financial performance;
-improved risk and reputation management;
-and improved stakeholder relations.
Works councils, employee representatives in supervisory boards and the unions
are all called upon to sit down and genuinely deal with corporate social responsibility and
sustainable management; only then can they leverage all the influence they have. This is
true for large companies and, in particular measure, for small and medium-sized
enterprises. A holistic, sustainable management approach is always a competitive
advantage. There is a willingness on the part of management to negotiate on CSR with the
employee representatives and also draw up binding agreements with the European Works
Councils, which is all the more a reason to be thoroughly prepared when the time comes.
Works councils should carefully monitor their companys CSR activities.
To this end, they need to:
-be familiar with the CSR areas of action and understand the reasons and
strategies behind CSR activities;
-be aware of the risks and opportunities of engaging in CSR;
-and identify ways to help shape CSR in practice.
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