When talking about responsible business conduct, the Commission uses the term Corporate Social Responsibility (CSR), which it defines as the responsibility of companies for their impact on society.
EU environment policies aim to protect the environment and biodiversity, minimize risks to human health, and promote the transition to a circular economy. They are interlinked with the main aim of the European Green Deal Striving to be the first climate-neutral continent.
Deforestation The EU aims to protect and improve the health of existing forests, especially primary forests, while significantly increasing sustainable, biodiverse forest coverage worldwide.
Fit for 55 package – Climate The Fit for 55 legislative proposals cover a wide range of policy areas including climate, energy, transport and taxation, setting out the ways in which the Commission will reach its updated 2030 greenhouse gas emissions net reduction target of 55% in real terms
Carbon Border Adjustment Mechanism (CBAM) is the EU’s landmark tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries.
Ecodesign for Sustainable Products The new regulation will improve EU products’ circularity, energy performance and other environmental sustainability aspects.
Green claims New criteria to stop companies from making misleading claims about environmental merits of their products and services
Empowering consumers for the green transition The proposal empowers consumers for the green transition through better protection against unfair commercial practices and better information.
Business and biodiversity The EU Business & Biodiversity Platform provides a unique forum for dialogue and policy interface to discuss the links between business and biodiversity at EU level
The Net-Zero Industry Act is an initiative stemming from the Green Deal Industrial Plan which aims to scale up the manufacturing of clean technologies in the EU. This means increasing the EU’s manufacturing capacity of technologies that support the clean energy transition and release extremely low, zero or negative greenhouse gas emissions when they operate.
The Environmental Liability Directive establishes a framework for environmental liability with regard to prevention and remedying environmental damage based on the “polluter pays” principle for own operations. It does not cover companies’ value chains.
Social policy on corporate social responsibility
The proclamation of the European Pillar of Social Rights by the European Commission, the European Parliament and the Council in November 2017 was the fourth major attempt to strengthen the social dimension of the European Union since its inception. The Pillar of Social Rights is about better delivering on rights for citizens by building on 20 key principles.
Business and Human Rights The growing complexity and globalisation of supply chains renders it increasingly important to promote the application of high human rights and sustainability standards in EU countries and around the world. In line with this, the EU is a frontrunner in implementing the UN Guiding Principles on Business and Human Rights the first globally agreed standard to prevent, address and remedy negative effects on human rights caused by business activities.
The European Union Agency for Fundamental Rights (FRA) also covers the aspects of Business and Human Rights in its work.
Action plan on Human rights and Democracy The action plan aims to improve EU leadership on human rights and streamline its decision-making, strengthen partnerships with governments, businesses and social partners, address accountability gaps and erosion of the rule of law.
The Commission communication on Decent Work Worldwide reaffirms the EU’s commitment to champion decent work both at home and around the world. The elimination of child labour and forced labour is at the heart of this endeavour.
Forced labour: The EU has several laws in place to tackle forced labour, for instance on human trafficking and on sanctions against employers of migrants in an irregular situation In addition, the European Commission has issued guidance to help EU businesses comply with international standards on forced labour in their operations and supply chains.
In 2022 the Commission has also put forward a Proposal for a Regulation on prohibiting products made with forced labour on the Union market.
Child labour The EU continuously works to address the root causes of child labour by tackling poverty, inequalities, increasing access to quality education and social protection, promoting due diligence for sustainable supply chains, and supporting partner governments, local actors and businesses, especially in the most affected countries.
Gender equality The EU has made significant progress in gender equality over the last decades. The goal is a Union where women and men, girls and boys, in all their diversity, are free to pursue their chosen path in life, have equal opportunities to thrive, and can equally participate in and lead our European society.
Combatting discrimination Article 10 of the Treaty for the European Union states the right to equality and non-discrimination. It stipulates that in defining and implementing its policies and activities, the EU shall aim to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation.
Data protection The right to privacy and the protection of data is a fundamental aspect of modern society. In 2016 the EU adopted a General Data Protection Regulation (‘GDPR’) which regulates the processing by an individual, a company or an organisation of personal data relating to individuals in the EU. It increases the transparency on the use of data by the company or public authority.
Corporate sustainability due diligence On May 24, 2024, the Council of the European Union gave final approval to the Corporate Sustainability Due Diligence Directive (CSDDD). The Directive introduces the obligation for companies to conduct appropriate human rights and environmental due diligence with respect to their operations, operations of their subsidiaries, and operations of their business partners in companies’ chains of activities. The Directive will affect EU companies with more than 1,000 employees with a turnover of more than 450 million euros and companies established in accordance with the legislation of a third country with a turnover of more than 450 million euros in the Union and their activities ranging from the production of goods or the provision of services to further distribution, transportation, or storage of products. Companies affected by the Directive will have to undertake and implement a risk-based system to monitor, prevent or remedy human rights or environmental harms identified by the Directive. Companies covered by the Directive will also have to adopt and implement a climate transition plan in accordance with the Paris Agreement on climate change. Member states have two years to comply with the Directive. The Directive will be applied depending on the size of the company in the time frame:
– 3 years from the entry into force of the Directive for companies with more than 5,000 employees and a turnover of 1,500 million euros
– 4 years from the date of entry into force for companies with more than 3,000 employees and a turnover of EUR 900 million
– 5 years from the entry into force of the Directive for companies with more than 1,000 employees and a turnover of EUR 450 million.
Public procurement Under EU public procurement rules, contracting authorities may take multiple aspects into account when purchasing works, goods or services. Examples include protecting the environment, supporting social considerations and fostering innovation. Green Public procurement and Social procurement can be important elements in fostering sustainability in the EU economy.
Anti-corruption Fighting corruption is an important element of responsible business conduct
To fight tax evasion a corruption-related crime, Directive (EU) 2010/24 provides for mutual assistance for the recovery of claims relating to taxes, duties and other measures. Directive (EU) 2011/16 in Administrative Cooperation in direct taxation provides for mutual assistance to combat tax evasion and tax avoidance, as well as measures to enhance corporate tax transparency.
Country by country reporting (CBCR) The CBCR directive aims to enhance the corporate transparency of big multinational companies. It will require certain multinational undertakings with revenue of more than €750 million to disclose publicly in a specific report the income tax they pay..
Shareholders rights Directive (EU) 2007/36 sets out certain rights for shareholders in listed companies. This Directive was amended by Directive (EU) 2017/828 which aims to encourage more long-term engagement of shareholders.
Protection of whistleblowers Providing effective protection to whistleblowers (i.e. persons who report or disclose information on a wrongdoing) from retaliation increases legal certainty for potential whistleblowers and thereby encourages whistleblowing also through the media. The Directive (EU) 2019/1937 on the protection of persons who report breaches of Union law was adopted on 23 October 2019 and entered into force on 16 December 2019.
Equal pay The Pay transparency directive entered into force on 6 June 2023. The new rules will provide for more transparency and effective enforcement of the equal pay principle between women and men as well as improve access to justice for victims of pay discrimination.
Sustainable finance entails the process of taking environmental, social and governance (ESG) considerations into account when making investment decisions in the financial sector, leading to more long-term investments in sustainable economic activity.
The EU sustainable finance framework includes the following building blocks below.
Corporate disclosure of climate-related information There is an EU Guidance for companies on how to report on the impacts of their business on the climate and on the impacts of climate change on their business.
EU labels for benchmarks (climate, ESG) and benchmarks’ ESG disclosures help make benchmark methodologies more transparent when it comes to ESG & put forward standards for the methodology of low-carbon and ESG benchmarks in EU.
Sustainability-related disclosure in the financial services sector (SDFR) A regulation adopted in 2019 lays down sustainability disclosure obligations for manufacturers of financial products and financial advisers toward end-investors.
European green bond standard An EU-wide standard to encourage market participants to issue and invest in EU green bonds and improve the effectiveness, transparency, comparability and credibility of the market.
Taxonomy The EU taxonomy is a classification system, establishing a list of environmentally sustainable economic activities. It could play an important role helping the EU scale up sustainable investment and implement the European Green Deal.
Corporate sustainability reporting: EU rules require large companies and listed companies to publish regular reports on the social and environmental risks they face, and on how their activities impact people and the environment. On 5 January 2023, the Corporate Sustainability Reporting Directive entered into force. This new directive modernises and strengthens the rules concerning the social and environmental information that companies have to report.
Sector and product initiatives
Batteries: In December 2020 the Commission proposed a new Batteries Regulation This regulation aims to ensure that batteries placed on the EU market fit into the circular economy and are sustainable and safe throughout their entire life cycle.
Deforestation: The EU aims to protect and improve the health of existing forests, especially primary forests, while significantly increasing sustainable, biodiverse forest coverage worldwide. The 2023 regulation on deforestation-free supply chains focuses on certain commodities and product supply chains. It has a very specific objective, namely to reduce the impact of EU consumption and production on deforestation and forest degradation worldwide.
Conflict minerals regulation The Conflict Minerals Regulation aims to help stem the trade in four minerals – tin, tantalum, tungsten and gold – which sometimes finance armed conflict or are mined using forced labour. The regulation requires EU companies in the supply chain to ensure they import these minerals and metals from responsible and conflict-free sources only.
Sustainable Textiles: The EU strategy for sustainable and circular textiles addresses the production and consumption of textiles, whilst recognising the importance of the textiles sector. The strategy aims to create a greener, more competitive sector that is more resistant to global shocks.
Farm to Fork strategy is at the heart of the European Green Deal aiming to make food systems fair, healthy and environmentally-friendly.
Common Fisheries Policy It is a set of rules for sustainably managing European fishing fleets and conserving fish stocks.
The Critical Raw Materials Act (CRM Act) will ensure EU access to a secure and sustainable supply of critical raw materials, enabling Europe to meet its 2030 climate and digital objectives. On of its aim is improving sustainability and circularity of critical raw materials on the EU market.
Plastics The EU is taking action on plastics to tackle plastic pollution and marine litter, and to accelerate the transition to a circular plastics economy
Chemicals The Chemicals Strategy for Sustainability: Towards a Toxic-free Environment published on 14 October 2020 took a first step towards the zero-pollution ambition set by the Commission’s European Green Deal.
Supporting measures, tools and studies
As the biggest SME support network around the globe, the Enterprise Europe Network provides companies with specific expertise and advise through Sustainability Advisors, who will tailor their advice to adapt to the companies for future-proof sustainable businesses.
A guide is available with tips and tricks to CSR Advisors helping SMEs including a CSR roadmap for SMEs.
SMEs can also use the SME checklist for responsible and sustainable conduct and a good practice document including 30 cases of SMEs and start-ups that have successfully designed and implemented CSR and sustainability-related activities.
The European Commission has published guidelines for SMEs on Business and Human Rights and sectoral guides on implementing the UNGPs for the following sectors: ICT sector oil&gas sector and for employment and recruitment agencies
The Commission has published in 2021 guidance to help EU businesses comply with international standards on forced labour in their operations and supply chains.
The EU has also published general Human Rights Guidelines on issues of importance to the EU mainly aimed at EU delegations.
Due diligence ready! portal As part of the conflict minerals regulation, a portal was set up to support SMEs applying the regulation. It includes a due diligence toolbox.
In cooperation with the International Trade Center, the Commission published guidance in April 2022 on designing effective and inclusive accompanying support to due diligence legislation: Making mandatory human rights and environmental due diligence work for all
The Buying Social guide is a practical guide for public buyers. It includes concrete suggestions and examples and it covers the whole procurement process.
The EU Helpdesk for Green Public Procurement provides timely and accurate answers to stakeholders’ enquiries, and to promote and disseminate information on green public procurement. It is accessible to all interested parties within the EU and the EEA.
Uptake of Corporate Social Responsibility (CSR) by European SMEs and start-ups (2021)
Study on due diligence requirements through the supply chain (2020)
Study on directors’ duties and sustainable corporate governance (2020)
A renewed EU strategy 2011-14 for corporate social responsibility (2011)
Communication on the next steps for a sustainable European Future (2016)
Reflection paper: towards a sustainable Europe by 2030 (2019)
EU Action plan on human rights and democracy 2020-2024 (2020)