Taking responsibility
May 30, 2011
British EU official Thomas Dodd rarely receives visitors in his small office at the European Commission. Brochures from multinational companies are stacked high on his desk and a glossy magazine from the American Tobacco Company lies on top of the pile.
Dodd, who manages the European Commission's Directorate-General for Enterprise and Industry, quickly clears it away.
He develops regulations for European companies, as well as for their social and ecological responsibility in the world. But there's a clear dilemma here - how do you tell companies which are up against competitors from fast growing economies like China or India, whose environmental and social regulations are much weaker, that they have to enforce strict EU standards?
"Companies make a big contribution to developing weaker states, fighting poverty and getting human rights nowadays," Dodd said.
He said cases where this was not true were the exception rather than the rule. That's why the EU Commission is banking on voluntary commitments from firms.
But non-governmental organisations (NGOs) are always drawing attention to the fact that European companies are involved in the exploitation of people and the environment in both developing and emerging countries - be it directly or indirectly.
Voluntary commitments plus pressure
Take this example given by the sustainable development watchdog GermanWatch: According to the NGO, a Chinese textile company which was once one of grocery store chain Aldi's most important suppliers kept its workers in almost slave-like conditions.
After the news became public, Aldi joined the Business Social Compliance Initiative (BSCI).
More than 500 companies have joined the BSCI and voluntarily committed to comply with international labour and environmental standards. But it's up to the companies themselves to assess whether or not they stick to this agreement - and the results are not published.
Sven Giegold, co-founder of attac, an NGO critical of globalization, says he thinks voluntary commitments are good as a matter of principle.
But the activist, who now represents the Greens in the EU parliament, says without legally binding regulations, "those who act voluntarily are stupid" because they incur higher business costs and lose some of their competitive advantage.
He says it is "absolutely necessary" that the EU comes up with "strong regulations set in law."
Corporate responsibility governed by law
That's what the European Coalition for Corporate Justice (ECCJ), an initiative made up of around 250 European NGOs, including GermanWatch, is also calling for. The initiative, based in Brussels, wants European companies to take on responsibility for their subsidiary firms and suppliers in other countries.
It also wants firms to provide a report about the social and ecological consequences of their business, which could allow consumers to choose responsible producers, if they wanted.
"People in developing countries who are harmed by European firms must get access to European courts," said Gustavo Hernandez of the ECCJ, explaining another of the group's demands. In the case of Aldi, for example, the Chinese workers affected were not able to sue the discounter in either a German or a European court.
"First the affected states must ensure themselves that they call the criminal companies to account," Dodd explained.
Europe – a double standard?
But MEP Giegold complains that EU has double standards.
"Many continue to find the European values attractive," he said. "Many people dream of combining personal freedom, democracy, human rights and an efficient economy but at the same time they see how these companies behave in other parts of the world. That's when the European dream loses its charm," he warned.
But there is still the odd ray of hope here and there: On July 13th, the European Commission is publishing a new strategy document for corporate responsibility and it wants to come up with a draft law by the end of the year to oblige companies to report on the social and ecological consequences of their business in third states.
Author: Katrin Matthaei, Brussels / mm
Editor: Kyle James