Investor influence and public procurement on agenda as EU Parliament debates CSR action next week

Plenary session and vote of MEPs next week.

The European Parliament (EP) is next week set to debate and vote on proposals to improve corporate social responsibility (CSR) activity, including the role that the UN-backed Principles of Responsible Investment (PRI) and integrated financial/non-financial reporting can play in its promotion. The debates in Parliament are part of its CSR Action Agenda for the period 2011-2014, which is the implementation process for legislation set by the European Commission’s 2011 policy on CSR
The Parliament debates will include considering a potential public procurement contract preference for companies with good social and environmental practices. Another will focus on whether investment funds and financial institutions should be made to inform clients about ethical or responsible investment criteria they apply or any standards and codes to which they adhere. The Parliament will scrutinise the content of two CSR reports from separate parliamentary committees at the February 5 plenary session, with a vote scheduled for the following day. One of the reports is being steered by Richard Howitt, MEP, acting as its ‘Rapporteur’ on behalf of the Parliament’s Committee on Employment and Social Affairs. Howitt, a member of the UK Labour Party and the Socialists and Democrats group in the European Parliament, has served as Rapporteur on CSR over three successive European Parliaments. He is also a member of thePRI’s Public Policy Advisory Group. His report welcomes moves by the European Commission, the EU’s executive arm, to engage with institutional investors on CSR issues.
The report calls for corporate engagement with investors to be “firmly based on support for the UN Principles for Responsible Investment and the principle of integrated reporting (IR)”. It says that the “beneficiaries of long-term investors such as pension funds have an interest in sustainable returns and in responsible corporate behaviour”.
The report also calls for the “incentives of investment agents” to be aligned with beneficiaries’ interests and not be restricted to maximising short-term returns. Howitt suggests the EU launch an initiative to look at the concept of “materiality” in corporate reporting.
The second report has been produced by fellow ‘Rapporteur’, Raffaele Baldassarre, of the EP’s Legal Affairs Committee. Baldassarre is a member of Italy’s Il Popolo della Libertà (People of Freedom) party and aligned with the EP’s centre right European People’s Party. His report argues that information on corporate sustainability should cover subcontracting and that information on corporate supply chains should be based on “globally accepted methodologies” such as the Global Reporting Initiative or the International Integrated Reporting Council.