Europe Leads U.S. In Promoting Responsible Business

Europe Leads U.S. In Promoting Responsible Business

According to a recent National Policy Association study, European governments and businesses are substantially ahead of their American counterparts in developing public policies for responsible business practices.

“The United States was traditionally one of the principal leaders in global business ethics,” says project director and NPA Senior Fellow Dr. Susan Ariel Aaronson. “This was especially true of high-profile cases such as the ITT scandal in Chile in the 1970s and the boycott of apartheid South Africa. However, in recent years European initiatives have eclipsed the level of American commitment to corporate social responsibility. The U.S. government and American corporations are dragging their feet, while the Europeans have sprung ahead and are creating a different corporate environment.”

The report, The European Response to Public Demands for Global Corporate Responsibility [PDF], authored by Aaronson and NPA Research Associate James Reeves, identifies public policies to promote corporate social responsibility (CSR) developed in Austria, Belgium, Denmark, Germany, the European Union, the Netherlands, Sweden, and the United Kingdom.

The authors note how the British linked pension fund rules to triple bottom line reporting -- in which companies must report not only their earnings, but also how their business practices affect social factors and the environment. In addition, the British government was the first to create a Minister of Corporate Responsibility.

For their part, the Dutch linked the granting of export credits to the acceptance of the OECD Guidelines for Multinational Enterprises, a set of voluntary guidelines to govern business practices agreed to by all OECD members, including the United States. The Danish government created The Copenhagen Center, an organization that encourages the creation of social partnerships between business, labor, and nongovernmental organizations. All of the governments in the study strongly support for the OECD Guidelines.

In general, European businesses view CSR as a tool for creating a market edge and have made greater strides in promoting CSR than their American colleagues. For example, the Confederation of German Industries explicitly endorses the OECD Guidelines. The Confederation of Danish Industries supports the Danish Center for Human Rights to develop a Human Rights Impact Assessment to help businesses voluntarily assess their impact human rights.

The report is part of NPA’s project on corporate social responsibility and it can be downloaded from NPA’s newly revamped project Web site: www.multinationalguidelines.org. The project received funding from the Boeckler, UN, Ford, and Rockefeller foundations.