Commission’s “responsible business” package remains stuck in old concepts

26/10/2011

The European Commission presented on 25 October a package of measures to support social entrepreneurship, reduce red tape for small businesses and make the extracting and logging industry more transparent in its reporting of activities with foreign governments.

 

The package was presented jointly by three commissioners (Antonio Tajani, Industry and Entrepreneurship; Michel Barnier, Internal Market and Services and László Andor, Employment, Social Affairs and Inclusion). It consists of several elements:

 

 

This “Responsible Business” package is a strange mixture of incoherent and even sometimes contradicting policy measures. These contradictions were very present in the quotes from the three Commissioners in the package’s press release. Whereas Mr. Tajani emphasised the less red-tape initiative for SMEs and commissioner Barnier drew attention to the Single Market potential and the supposed positive impact of this package on growth and jobs, social commissioner Andor underlined “solidarity, sustainability, inclusiveness and integrity”. Clearly a package with “sweets for all” and open to multiple interpretations.

What is also quite remarkable is that the Commission still frames this new package within the CSR (corporate social responsibility) and growth narrative and seems to have little knowledge of recent progress in thinking and practices on the role of businesses in a resource-constrained world. Amongst sustainable business experts there is a growing shift away from CSR towards a model of Creating Shared Value (CSV).

This “shared value” model puts societal needs at the core of business strategies and therefore includes a more integrated approach to social, environmental and energy concerns than the traditional CSR model.

The concept was very well described by business guru Michael E. Porter and Mark Kremer in an article in Harvard Business Review: “The purpose of the corporation must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy. It will also reshape capitalism and its relationship to society. Perhaps most important of all, learning how to create shared value is our best chance to legitimize business again..”

Although there are still uncertainties around this new strategic concept, it is clear that it has the potential to deliver much better on finding solutions to society’s growing sustainability challenges than the CSR instrument.

Putting environmental and social concerns at the heart of business also blurs the differences between “social businesses” and the traditional profit-oriented business sector. In that sense, the Commission’s Social Business action plan might be running behind the times. Maybe we do not need more social entrepreneurs, we need all businesses to become social.

Apparently, that new insight has not reached the European Commission yet.

In conclusion, it is doubtful whether this new commission initiative will do much to improve citizens’ trust in companies and help counter the new “anti-capitalist” revolt demonstrated by recent movements like the “Occupy Wall Street” and the “Indignados”.

Further Reading:

 

By Willy De Backer

Head of the Greening Europe Forum