ACCA - The global body for professional accountants
Policies and practices will need to be proportional to each company’s circumstances and business model
—John Davies, head of technical, ACCA

ACCA welcomes the publication of the European Commission’s CSR Communication, but calls for proportionality of policies and practices according to each company’s circumstances and business model

John Davies, head of Technical at ACCA, says: 'We welcome the emphasis on the business case for CSR in the Commission's Communication. Especially in current market conditions, governments should be promoting policies that focus on ways of bringing together, in a transparent way, social objectives and business self-interest. Company transparency on social and environmental issues is essential from a consumer's point of view, but also for other stakeholders, including enterprises themselves and investors.

'ACCA is a longstanding advocate of financial, non-financial and integrated reporting and is pleased to see that the Commission refers to the Global Reporting Initiative and the International Integrated Reporting Committee as leading examples', John Davies adds. 

The global accountancy body considers that the new definition of CSR put forward by the Commission as 'the responsibility of enterprises for their impacts on society' is a real improvement. However, ACCA warns about the risk of adopting an approach in the future that would be too compliance driven and restrictive in scope. 

John Davies explains: 'CSR should be about encouraging companies to adopt business strategies that are driven by socially responsible values and which incorporate a holistic approach to the management of risk. On this basis, government strategy and policy should focus on making clear to businesses why it is in their interests to act in accordance with CSR, rather to focus on CSR from the compliance perspective.'

'Additionally, the scope of CSR should not be disproportionately focused on purely 'social and environmental' matters; awareness of wider ethical and human rights concerns should also be part of business operations and core strategy. We argue that CSR should also be about responsible business behaviour in paying debts and dealing with creditors, or about employment policies such as prohibiting child labour', John Davies stresses. 

ACCA shares the European Commission and the rapporteur on CSR for the European Parliament Richard Howitt MEP’s view that the development of CSR should be 'enterprises driven'. Public authorities should only play a supporting role through a mix of a majority of voluntary and, where strictly necessary, ad-hoc regulatory policy measures in order to promote transparency, create market incentives for responsible business conduct, and ensure corporate accountability. 

John Davies adds: 'We share the Commission's view that CSR cannot be exhaustively imposed by law as it falls within the scope of what enterprises do beyond legal requirements. Governments should set the tone and offer infrastructure support, but they should not be directing companies generally in the shaping of their business models. Ultimately businesses should further engage in CSR because they see the benefits for themselves.

'In this spirit, we welcome the recognition that while CSR is relevant to all, policies and practices will need to be proportional to each company’s circumstances and business model' he adds 

The Communication includes many recommendations that ACCA supports. These include measures that aim to promote further collaboration between businesses, public authorities and other stakeholders such as multi-stakeholder CSR platforms, or aiming to facilitate the better integration of social and environmental considerations into public procurements in a way that does not discriminate against SMEs. 

'Small businesses are a major engine of economic recovery and job creation; we should not disenfranchise them from public procurements because it is more difficult for them to meet regulatory standards and targets', John Davies explains. 

'ACCA fully concurs with the Commission that trust and respect by citizens represent a key issue in order to create an environment in which enterprises can innovate and grow. We agree that the gap between citizens' expectations and their perception of the reality of business behaviour is partly caused by inappropriate communication by some enterprises on their sustainability achievements or by some irresponsible behaviours. Accountancy and audit, which should exist to engender trust and confidence in businesses by ensuring that businesses transactions are fairly accounted for and disclosed, are part of the solution to address this concern', John Davies concludes.