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February 13, 2002
Report Argues that Europe Outperforms the U.S. in Corporate Social Responsibility
    by William Baue

According to a study recently released by the National Policy Association, the United States has fallen behind Europe in advancing corporate social responsibility.

The theory and practice of corporate social responsibility (CSR) may have been "made in the USA," but recently Europe has taken over the lead in promoting CSR, according to a recent study conducted by the National Policy Association (NPA). The report examines the promotion of CSR through public policy.

NPA is a Washington, D.C.-based nonprofit research organization that seeks to advance discussions about public policy. NPA received funding from the Boeckler, UN, Ford, and Rockefeller Foundations to produce this report, entitled The European Response to Public Demands for Global Corporate Responsibility.

"The United States was traditionally one of the principal leaders in global business ethics," said NPA Senior Fellow Dr. Susan Ariel Aaronson, who co-authored the study with NPA Research Associate James Reeves. "However, in recent years European initiatives have eclipsed the level of American commitment to corporate social responsibility. The U.S. government and American corporations are dragging their feet while the Europeans have sprung ahead and are creating a different corporate environment."

The report proceeds from the notion that CSR exerts a positive influence on social, environmental, and financial bottom lines.

"There is a growing body of evidence that markets will reward . . . companies for their good social and environmental performance," the report states. "Many European executives have become convinced that corporations with stronger social and environmental performance will outperform corporations with poor social/environmental performance. . . . American executives, in contrast, are not as enthusiastic on CSR."

The study attributes this difference to the strong role European public policy plays in promoting CSR, though the authors are cautious not to endorse regulations mandating CSR.

"We reject an over-directive approach [to CSR], which would stifle creativity," said Elisabeth Altekoster of the German automobile manufacturer Volkswagen. "Jonathan Austin, a consultant on CSR in the UK, argued that if government starts to legislate, this might slow down CSR," the report states.

The report proposes that governments should act to clarify and standardize the diverse approaches to CSR, but not mandate them.

"[Policymakers] are attempting to find a middle way, which holds corporations accountable, while not thwarting the many benefits that companies bring to their stakeholders: the consumers, employees, subcontractors, and even competitors," the report states.

The report devotes a majority of its attention to examples of CSR initiatives in Europe, both on a pan-European as well as individual country level. For example, the report cites the success of social labeling in Germany. There, the "Rugmark" label certifies that the production of rugs did not involve child labor. Rugmark labeled products also have a one percent price increase, the proceeds from which are used to fund schools for the children of rug workers. Dr. Aaronson and Mr. Reeves conclude each section of the report with suggestions of what governments can do to promote CSR.

The authors devote relatively little attention on theories explaining why Europe may be ahead of the U.S. in CSR initiatives. They offer public pressure and market pressures as possible reasons, then devote only a paragraph to each explanation. They conclude by arguing that business culture explains the discrepancy, but again spend only a paragraph explicating their point. Readers looking for a more comprehensive explanation of European advances in CSR will have to look to other research.


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