NEWS ANALYSIS: Europe wakes up to the way of ethical business - Although an EC green paper shows Brussels has begun to catch on to the benefits of CSR, research for PRWeek suggests there is room for greater awareness, says Ben Bold

An EC green paper, published two weeks ago, has officially put corporate social responsibility on the map. Promoting A European Framework For CSR outlines the benefits for companies - in practical and communications terms - of adopting CSR policies.

It recognises that an increasing number of European companies are promoting CSR strategies as a response to 'a variety of social, environmental and economic pressures'.

In doing so, companies are not acting entirely altruistically - they are investing in their future and expect 'the voluntary commitment they adopt (to) increase profitability.'

Commissioners Anna Diamantopoulou and Erkki Liikanen launched the publication with the claim that more and more firms were realising the link between profitability and ethical practice. 'Conscientious firms not only attract and retain the best workers, they also get ahead in technology, vital for competitive edge,' the paper argues.

The EC's goals were backed by EU leaders at the March 2000 summit in Lisbon. They have also been espoused by the Brussels-based business network CSR Europe. This body was instrumental in acknowledging and developing the CSR initiative. Louise Gardiner, editor of its quarterly magazine, had a series of discussions with the EC's social affairs department. 'The green paper is based on a lot of work we did,' she says.

CSR Europe was launched by the EC in 1995 as part of its declaration against social exclusion. The body plans a roadshow in November that will visit 10 European countries, culminating in a UK visit. Awards for CSR excellence will be held in each country with public statements contributed by business- and opinion-leaders.

'The idea is to generate national interest while retaining a European perspective,' Gardiner says.

Any fears of statutory regulation are unfounded. The consensus is that companies, motivated by the regard in which consumers will hold them, need to drive their own CSR plans, and that the imposition of regulation will stifle enthusiasm. Self-regulation, the theory goes, will inspire competitiveness and ensure best practice.

But the green paper emphasises that if it is to become a regular tool in the management of corporate reputation, CSR should not be seen as a substitute to regulation.

'In countries where regulations do not exist, efforts should focus on putting the proper regulatory or legislative framework in place to define a level playing field on the basis of which socially responsible practices can be developed,' the paper stresses.

There is talk of creating a system where products are labelled as complying with a CSR standard. 'Many companies already label products and there are a number of social labels out there, which is all very well, but there are too many of them and they confuse the consumer,' Gardiner says.

The deputy head of the EC's employment and social affairs department, Dominique Be, insisted there were no plans to introduce an EU CSR label but accepts that steps less associated with officialdom could be considered.

John Drummond, director of CSR consultancy Corporate Culture, believes the UK and US are the CSR leaders: 'CSR covers a vast amount of stuff and some of these areas are already regulated. The EU's intention is to encourage and show best practice'.

While the green paper highlights the situation across the Continent, the impact of CSR is increasingly apparent in the UK. The Smart Company recently carried out a survey of 100 UK community leaders, in local government and NGOs, exclusively for PRWeek. The results suggest there is still a lot of work to be done in driving awareness of CSR initiatives.

When asked whether businesses had taken their responsibilities more seriously during recent years, only 25 per cent agreed they had. Almost as many, 19 per cent, disagreed, indicating that firms need to do more to publicise this work.

When asked which areas they thought companies already did enough to support, 28 per cent picked employment and training, 17 per cent education, 10 per cent protecting the environment, 9 per cent charities and community groups and 8 per cent the arts and culture.

Some companies are doing better than others at reaping the reputational benefit of CSR commitment. Asked to name those they believe demonstrate good CSR, 10 per cent of the sample mentioned BT. The Co-op Bank, Lloyds TSB, HSBC, Barclays and Natwest all ranked highly, as did Sainsbury's, Marks & Spencer, American Express, Boots, Shell and Tesco.

Looking ahead, 35 per cent of the sample thought the focus for CSR work should be on the environment and pollution, 22 per cent on employment issues, 19 per cent on education and 18 per cent on training and development. Seventeen per cent named involvement with local organisations while only 8 per cent picked staff relations.

While the views of community leaders are of value, the EC has launched a wider consultation process, inviting businesses and all other stakeholders to submit their views on a range of issues, including what they think the EU itself could do to promote the cause. After the consultation period, the EU will draft a more prescriptive white paper, to be issued next summer.

It is encouraging that the EC has recognised CSR as crucial to the profitability of the private sector. 'CSR should be a business opportunity providing returns in itself. It should be seen as a

long-term investment, not like advertising, where costs are lowered in economic cycles,' Be maintains.

Companies that take this on board will continue to light the way for others.

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