CSR State of Play - October 2010

The situation in Europe

 

In November 2009, the Swedish and the Spanish Council Presidency released a joint statement envisaging amongst other measures, concrete legal steps to protect the victims of corporate abuse. Unfortunately none have been undertaken since then and Belgium, which has taken over the EU Council presidency in the second half of 2010, is not interested in putting CSR on the agenda at all.

 

In the meantime the international trade (INTA) committee of the European Parliament is considering the inclusion of clauses referring to corporate responsibility in trade agreements. In September the committee considered a first draft of the report. Later this year, it will discuss amendments to the report, which once approved by the committee will have to go through the plenary of the European Parliament. The first draft of the report looks promising, but it is too early to tell if the final version of it will be a real step forwards or if it will be largely ineffective. As a further word of caution, it has to be added that once the final report has been approved, the Parliament will then have to negotiate with the Council and with the Commission on how the inclusion of CSR clauses in trade agreements should work in practice.

 

In 2008 the EU presented its worrisome Raw Materials initiative which had among its objectives to promote and secure the EU's access to raw materials in third countries, without foreseeing adequate measures to control the activities of European companies exploiting natural resources in third countries. Ever more committed to this objective, the Commissioner for Industry Antonio Tajani will publish later this year a communication on strategies to ensure access to raw materials, again with the objective of securing the EU's access to raw materials, not of helping African countries to use these raw materials successfully for their own development.  

 

The Dodd-Frank Act

 

The Wall Street Reform Act (also known as the Dodd-Frank Act, after the two main authors Barny Frank and Chris Dodd) signed into law by President Barack Obama in July this year also contains a passage regarding reforms in the oil, gas and mining sector which are relevant to the struggle for greater accountability of Transnational Corporations (TNCs) active in these sectors. The Dodd-Frank Act requires multinationals quoted on Wall Street to disclose their payments to foreign governments; purchasers of minerals originating from conflict zones have to prove that this did not contribute to the enrichment of armed groups.

 

Disclosure and transparency alone are not enough to prevent abuses, but it gives civil society and consumers the means to hold those companies accountable for their action. It gives local communities the possibility of knowing where extractive projects take place and how much money they generate. It exposes if and how much a company pays to a brutal and oppressive regime in order to do business in a host country, thereby shaming the company publicly. The availability of this information will allow civil society and consumers in the Western world to specifically target those TNCs which do business with oppressive regimes.

 

The concrete provisions to implement this act have not yet been written, therefore it is not completely clear how it will work out in practice. For example, a majority of interpretations state that the act should also apply to European companies quoted on the Wall Street, and to subsidiaries, but only the implementation will show if this is really the case. In any case the Dodd-Frank Act is an important step in the right direction, and one can only hope that European legislators will take a similar approach soon.

 

 

Thomas Lazzeri

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