ANALYSIS: Call for CSR legislation is far stronger abroad - If it is detailed legislation on CSR you are looking for, don't waste time in Westminster, says Adam Hill

Although the Government produced guidelines on environmental reporting in November, last week's Department of Trade and Industry report on CSR emphasised 'light touch' regulation, such as a recent move requiring pension funds to say whether they have a particular ethical investment policies, and to explain what those are.

The DTI also has some proposals within the current Company Law Review, which would require firms to disclose their attitudes to what CSR minister Douglas Alexander, unveiling the strategy last week, called 'significant social and environmental issues'.

However, the Government's proposals have not yet seen the light of day and while it has long made encouraging noises about CSR, its attitude remains distinctly 'hands off'.

Indeed, the greatest regulatory pressure on CSR appears to be coming from beyond these shores.

For all its activity, the United Nations has a limited influence on international regulation. 'There are a raft of things coming out of the UN that create a framework for regulatory compliance,' explains Fraser Hardie, MD of corporate comms consultancy Blue Rubicon.

But UN involvement in CSR issues, in areas such as the Global Compact, is pitched at a rarified level, focusing on corporate responsibility for promoting human rights. 'It has probably inspired companies to do more than they would otherwise, but Kofi Annan has not called for global legislation on CSR per se,' says Mallen Baker, Business in the Community development director. The UK government has signed up for the International Labour Organisation's guidelines on how firms should behave, but these are not legally binding.

This leaves the European Union. Stephen Serpell is on the boards of B2B network CSR Europe and the Boston Center for Corporate Citizenship and has just finished a secondment as senior consultant on CSR to Alexander's team at the DTI.

He warns: 'People certainly need to pay attention to the way the regulatory debate is going because it is not confined to the UK. The European discussion is heading towards how companies should report, which is quite prescriptive. If you go down that road you had better make sure that you are specifying the right standard: CSR is still evolving and so are the measurement tools.'

Baker agrees. 'Legislation is good for enforcing minimum standards but not for promoting best practice. Nobody's got a very good definition of "social impact

and there is no concensus on what constitutes core data,' he says.

Lastest findings by Echo Research, revealed this month, shows that not only is CSR moving up the corporate agenda - more than 80 per cent of CEOs and key CSR experts believe corporate responsibility delivers direct branding and employee benefit - the media is also taking notice.

The research shows that from January 2001 to March this year favourable coverage of ethical investment and companies replacing the state, as the main source of social support, increased. Also gaining column inches were reporting of the similarities between shareholders and stakeholders and CSR being recognised by law.

Despite increased attention Hardie insists that there is no need for over regulation: 'A convergence of factors will drive companies towards CSR for hard financial reasons such as reducing the costs of borrowing and labour, and of securing long-term licence to operate.' Regulation on many CSR issues is, therefore, superfluous, he argues.

This is certainly the view of the UK and Scandinavian countries. However, France, Belgium, the Netherlands and southern European states favour a more prescriptive approach to reporting and may hold sway.

Things should become clearer in June or July when the European Parliament publishes its CSR Green Paper follow-up. A European framework for CSR reporting may be ambitious, given that CSR means different things depending on different countries' social and business cultures, and the sectors companies are in, but the Paper appears likely to favour mandatory reporting for CSR all the way down to companies with 250 employees.

Although the CSR Toolkit, an EU-funded pilot aimed at establishing a framework for the smallest firms to report their CSR activities, is under way in Italy, Finland, Belgium, France and the UK, relatively small firms still face the prospect of working within the same reporting guidelines as giants such as BT.

As Serpell says: 'Whatever gets proposed, will it really fit the needs of small businesses as well as large ones? Reporting can be quite intensive, and you have to ask whether there is a single reporting formula that will be cost effective. If I were a company of 250 employees I would break into a sweat at that.'

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in