The European Commission should act as a facilitator to help increase awareness on corporate social responsibility (CSR) issues, But these matters should be discussed within companies, according to participants in the Triple Bottom Line Investing in Europe conference, held in Lisbon last month and hosted by the European Commission.
“Companies used to be the cause of the problem and now they are seen as part of the solution,” said Mark Brykman, managing director of Belgian Shell. “The world is now a much smaller place and companies are more in the spotlight than ever before.” Privatisations are forcing companies to take on duties that were governments’ responsibilities and they need to show a greater commitment to safety and environmental issues. “People want to know that the products they are buying have been manufactured ethically, and I believe that taking into account the question of CSR is the key for success for businesses in the 21st century,” Brykman said.
“There is no relation between the rules of business and the rules of society any longer,” Amy Domini, managing principal at Boston-based Domini Social Investments . “Corporates still provide us with goods and services but we’d rather they did it with less harm.”
However, the impact of socially responsible investment (SRI) in the financial markets is growing. “Two of the three largest fund managers in the US are now launching social funds, and the situation is the same all around the world,” she says.
When embracing CSR, companies have to deal with four major tasks – reporting, strategy, governance and performance – which were discussed in four parallel workshops.
“Reporting is fundamental for CSR to flourish and it must be precise, concise transparent and, especially diverse,” says Robert Rubinstein, founder and director of Amsterdam-based firm Brooklyn Bridge, summarising the results of the workshop. “It is also a way for taking the temperature of a corporation and has to take into account companies’ different needs,” he said. “It is the role of the EC to facilitate this process without forgetting cultural diversity.”
On the performance side, delegates agreed that SRI funds can perform, “but the issue is that we have to prove that that performance does exist and disseminate that data,” said Tessa Tennant, board director of Calvert World Values Fund. “The Commission should come up with this idea of dissemination and analysis of the environmental and social value drivers in investment,” she said.
In terms of pension funds Tennant pointed out: “We think the Commission should encourage an EU-wide adoption of statements of investment principles regarding social investment for pension funds. This will be a fact for UK pension funds in July, when pension funds will have to state their approach to SRI, and similar actions are taking place in other countries such as Switzerland, the Netherlands, Norway and Sweden,” she said. “But beyond that, we haven’t been able to identify any other initiatives. We believe the Commission should facilitate this process by encouraging meetings for pension funds from different countries to discuss best practice.” Participants agreed on the fact that, even though it is not possible to legislate best practice, companies should be able to identify it and raise awareness on this matter.
Marcel van Marrewijk, from Rotterdam-based KDI, said: “When talking about CSR we have to state as a basic principle that companies are part of the society and so they have to act in a responsible way.”
Marie Donnelly, head of unit EMPL D/3 at the European Commission, said: “It is clear that SRI is not a PR exercise and all the signals that have come up during the sessions appear to be quite positive.” She added: “We have a lot of discussion about cultural differences which are part of the European identity, but we shouldn’t make too much of that. If we make our cultural differences such a big barrier, we’ll never end up with anything.
“We have to revisit the funding, management of our pension systems, taking into account sustainability. We can’t wait until there are initiatives from each European country on these issues. We need something, and we need it now.”
Corporate restructuring and the growth of companies could sometimes make leaders to lose contact with reality. “The language of money is still too narrow,” said Peter Pruzan, professor at Copenhagen Business School. “In terms of reporting people tend to think that the financial data is the only sort that matters and this shouldn’t be that way,” he said. However, companies have the duty to keep their business healthy and growing. “The most unethical thing that a company can do is to go bankrupt.”