Take care of your staff or lose out, green paper warns

Date: 28/06/01

By John Shelley

THE European Commission could publish an annual league table of the best EU companies to work for as part of plans to make businesses have 'more heart'.

The suggestion is included in a green paper on corporate social responsibility, which is due to be unveiled by Social Affairs Commissioner Anna

Diamantopoulou and Enterprise chief Erkki Liikanen next week. In the paper, the Commissioners will argue that European firms must take more seriously their responsibilities to their employees, the environment and society. They say that as well as helping to create a better Europe for citizens this will also boost the Union's economy: "It is about building relationships with customers, about attracting and retaining talented staff, about managing risk and about assuring reputation. It should be treated as an investment, not a cost," they add. As well as publishing the paper, the Commission is launching a consultation process with national and local authorities, businesses and non-governmental organisations, asking them to come up with ways of encouraging companies to behave more ethically.

Diamantopoulou and Liikanen say social responsibility is becoming the key to business success because customers and shareholders alike are increasingly demanding business with conscience.

In addition, they say that within the workplace skilled workers are becoming ever more valuable and increasingly mobile - which means companies cannot afford to be complacent about how they treat their staff.

The damaging effect of such complacency, they argue, is highlighted by studies of a number of mergers and acquisitions, which showed that few restructuring operations actually managed to reduce costs or improve productivity. The Commissioners say this is because "they are often carried out in a way which causes morale, motivation, loyalty, creativity and productivity of employees to suffer".

They conclude: "Responsible restructuring would thus make good business." The consultation under the green paper is due to be completed by the end of the year and is likely to be followed by concrete proposals in 2002. At this stage the Commission is reserved about what these might be, although the paper does suggest some direct action the EU could take. As well as the idea of listing companies that treat their employees well, Diamantopoulou and Liikanen suggest the EU could play a role in monitoring or approving the use of "social labels" - such as "cruelty-free" and "dolphin-friendly" - which are being embossed on ever-more products. The Commission says there are now so many such labels that the overall effect is to confuse rather than inform consumers.

Feature on the forthcoming Green Paper on corporate social responsibility.