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European Policy Framework Essay

European Policy Framework has made the amendments to its earlier directives by providing the modified reporting requirements in the director’s report so that it has become mandatory on the part of certain companies to report on non-financial matters also. Non-financial key performance indicators, employees’ issues and the environmental issues will be covered in this reporting requirement. The UK government has also taken various initiatives to lend support to the development of CSR control measures. As a first step, the government appointed the World’s first minister for CSR in the year 2000.

The responsibility of the minister included o Developing the business case o Encouraging good practice o Promoting CSR internationally o Joining up action across Government The government also appointed three related All Party Parliamentary Groups to look after the implementation of the CSR measures. The Minister was convinced about the provision of more legislative measures for the implementation of the CSR compliance as well as to ensure the proper reporting by the companies. In May 2004 the UK policy framework submitted comprised of the following recommendations:

o Extant policy emphasises voluntary approaches to CSR. o CSR does not operate outside existing or future legal frameworks o It is incumbent on policymakers

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to create an enabling legal environment within which CSR can flourish o The OFR was seen as a key component of that legal environment There were conflicting views on how the CSR can be regulated. While the business and industrial houses favoured voluntarism for the compliance, the Trade Unions and Civil Society Organisations opined that o voluntary initiatives would not protect workers’ and citizens’ rights

o a regulatory framework would established minimum standards and ensure a level playing-field The Company Law Review Steering Group recommended o Companies of significant economic size be required to produce, as part of their annual report and accounts, an OFR. o It would provide information on direction, performance and “all other aspects which the directors judge necessary to an understanding of the business, such as key business relationships and environmental and social impacts” The reporting requirements envisaged by the Companies Act 1985 (Operating and Financial Review and Directors’ Report etc.

) Regulations 2005 (SI. 2005 No. 1011) provide for a duty to prepare and present an “Operating and Financial Review” (OFR) . The OFR includes all the aspects of the CSR which the companies are expected to comply with. This requirement was placed on all the quoted companies numbering approximately 1290. Under the provisions of Section 234 of the 1985 Act (Duty to prepare directors’ report), the directors of a company shall for each financial year prepare a report (a “directors’ report”) complying with the general requirements of section 234ZZA and containing the business review specified in section 234ZZB.

The Act also provided for special provision for small and medium sized companies The European policy framework defines the scope of CSR as Corporate social responsibility (CSR) is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis It is about enterprises deciding to go beyond minimum legal requirements and obligations stemming from collective agreements in order to address societal needs”.

However whether the companies look at the CSR principles with the same intent as the governments see it or still the Companies do not treat it with seriousness is a question that needs to be decided over a period of time. As of now it appears that the contribution to sustainable development can be expected from the companies only through legislative and other coercive measures and not voluntarily on their own accord.


1. Anita Roddick, Corporate social responsibility – latest trend or the way forward? Dame Anita Roddick to speak at LSE BodyShop  mallenbaker.net/

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