Category: Corporate governance

Corporate Social Responsibility – The Situation in Germany from the Trade Unions’ Point of View

Posted: April 02, 2012   By: Rainald Thannisch Category: Corporate governance,

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Stefanie Schreckenbach is a student in political science in Berlin and currently working as an intern at the Confederation of German Trade Unions. Rainald Thannisch is the policy officer in the Department of co-determination of the Executive Board at the Confederation of German Trade Unions.

Stefanie Schreckenbach is a student in political science in Berlin and currently working as an intern at the Confederation of German Trade Unions. Rainald Thannisch is the policy officer in the Department of co-determination of the Executive Board at the Confederation of German Trade Unions.

This post is co-authored by Stefanie Schreckenbach, political science student and intern at the Confederation of German Trade Unions, and Rainald Thannisch, policy officer at the Department of co-determination of the Executive Board at the Confederation of German Trade Unions.

Introduction

The idea of CSR initially emerged in North America during the 1960s and has only recently entered the spotlight in Europe.

The CSR concept in Europe differs a great deal from the American understanding because many social issues that are part of the original CSR social approach, such as employee participation, education and healthcare, are regulated by law in European countries.  Many elements of the CSR concept, formulated and theoretically developed in the United States, were already implicitly part of European attitudes and laws long before the idea of explicitly formulated CSR strategies was brought to Europe (for the most part by multi-national companies). Therefore, the voluntary character of CSR and its recent rise to political and economic prominence is on the one hand seen critically – as a potential instrument for deregulation and undermining traditionally established labour regulation – but also as a chance to implement social practices which exceed what is required by existing laws.

German industrial relations are significantly shaped by co-determination. Due to the strength of employee participation, they are more consensual than is the case in many countries, which benefits both working men and women and their employers.

As stated above, the German system of co-determination is an implicit and mandatory part of corporate social responsibility. Employee representatives in works councils and company supervisory boards can actively influence companies’ decision-making, to the benefit of the employees. As representatives of one of the main stakeholders in an enterprise, who are democratically legitimized to act in the interest of the employees, they should be able to directly participate in the development of a CSR strategy. Representatives of the relevant trade union should also be engaged in the process.

The European Commission’s revised CSR strategy

The new strategy of the European Commission, published on 25 October 2011 (http://ec.europa.eu/enterprise/policies/sustainable-business/files/csr/new-csr/act_en.pdf), offers a new definition of CSR, which is: “the responsibility of enterprises for their impacts on society”. This new definition emphasizes the societal responsibility of the company, in contrast with the previous definition which put it on a voluntary basis. The German trade unions generally welcomed the proposals for new reforms, which include plans for a legislative proposal by the EU Commission on the transparency of ecological and social information provided by companies, the explicit addressing of the problem of misleading marketing (so-called green-washing) and consideration of specific measures for the creation of a peer review mechanism for national CSR policies covering all EU member states.

Other proposals were also made by the Commission, however without being specific. Need for action still exists in including employees and in addressing the absence of revisable and binding rules for definition and implementation of CSR in European companies. Once again the European Commission ignored the significance of standardized norms for an effective outcome of policies concerning sustainable, responsible business.

Altogether, the new strategy of the European Commission is an important step towards the enhanced transparency of social and ecological information and an explicit statement on the social responsibility of corporations. However, from a trade union point of view, the issues of obligatory rules and the inclusion of employees in CSR policies have not been addressed satisfactorily.  

The Confederation of German Trade Unions’ (DGB) demands

At its 19th Federal Convention in May 2010, the Confederation of German Trade Unions approved a Ten Point Paper, which formulated demands for sustainability and responsibilities of enterprises, which add an ecological and social dimension to economic globalisation.

The German trade unions assume compliance with the law as a minimum requirement for all corporations. CSR can provide additional protective measures for employees. Indispensable CSR criteria are transparency, verifiability, comparability and participation, in order to prevent voluntary commitments from only amounting to corporate public relations.

The DGB and its affiliated trade unions also demand a binding international framework that would subject globalisation to minimum social and environmental standards, as well as to more stringent liability rules when corporations violate national and international rules.

Within global operations of companies compliant with ILO relevant conventions, the provisions of labour law and the environmental requirements of host countries along the whole value-added chain are required.

Today there are many fairly adequate instruments to enforce international social and environmental labour standards. From the German trade union’s point of view, presently the most suitable are the OECD Guidelines for Multinational Enterprises (http://www.oecd.org/dataoecd/43/29/48004323.pdf). These allow for the establishment of National Contact Points handling all matters concerning the guidelines for companies operating in the specific countries, which also includes the investigation of complaints filed about specific business actions.

 The National CSR Forum

The current situation in Germany is affected by the debate on the new EU strategy, the debate on international CSR Standards and the discussions in the German CSR Forum, particularly with regard to policy recommendations for a National Plan of Action on CSR.

On July 1stthe German National CSR Forum published an advisory report based on the results of their consultations. As the Forum aims at a multi-stakeholder consensus, the members represent companies, employers’ organisations, trade unions, NGOs and the government. In this report they agreed upon a collective understanding of the meaning of Corporate Social Responsibility in Germany, which emphasizes that “CSR is voluntary but not arbitrary.”

The basic tenets of a common understanding of CSR are, among other things, the fair treatment and involvement of a company’s employees, the prudent and efficient use of natural resources, the positive contribution to the community, the guarantee of socially and environmentally responsible operations along the whole value added chain, and the support of human rights and ILO core labour standards and their observation on an international level.

Unfortunately, neither regular reporting nor transparency are intended to be binding in order to monitor corporations’ compliance with CSR. This will remain one of the main demands of the German trade unions and the DGB in order to add a social dimension to globalization.

In general, it is essential and reasonable that a CSR strategy will improve the employment and overall living conditions of people and will contribute to the sustainable preservation of our environment.

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