Shared value in the EU

European flag outside the Commission

EU flag

The EU has announced a new policy and some might think improved version of their CSR recommendations. The 13-page document includes a series of changes in both approach and basic assumptions on what role CSR should have. This will be the first article in a small series on the EU CSR policy the changes adopted and its possible impact.

The First change that comes to mind is the change in definition of CSR from “Corporate Social Responsibility is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” (European Commission, 2010) into a much shorter version were CSR as “the responsibility of enterprises for their impact on society”(European Commission, 2011), which is shorter but incompact much more.

A few examples on how the new definition changes the perspective on CSR. The organisations that need to engage in CSR activities are broaden from the old “companies” to a much broader framework which encompasses “enterprises”. This broad definition is much more in line with the ISO 26000 idea that all organisations have a commitment to society. While the EU does not take the full step and included the whole definition of the ISO is a clear step in that direction. Second CSR is now both activities, which are defined by the law and those that the organisations engage in on a voluntary basis. Which indicate that adhering to the law could be sufficient to live up to the minimum standard of social engagement.

Third, the EU have taken a clear stand on what CSR should be for and as they formulate that organisations “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 their other stakeholders and society at large
  • Identifying, preventing and mitigating their possible adverse impacts.”

While the concept of shared value as cornered by Porter and Kramer earlier in the year have found it way into numerous CSR policies it is also a controversial concept. As it is fails to address the moral and ethical concerns that stakeholders might have with the company outside the monetary realm and is seen as an attempt to make CSR a question of profit rather than if the actions of the organisation is positive or negative. Furthermore it puts the moral responsibility on the stakeholders rather than on the organisation and its management. As a reactive concept it is up to the stakeholders to make management aware of issues and not for management them selves to be proactive in ensuring that basic rights and environmental concerns are addressed.