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Smart Regulation 3: Mandatory Social and Environmental Reporting
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Smart Regulation 3: Mandatory Social and Environmental Reporting


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Presentation given by Filip Gregor (ECCJ lawyer) at the ECCJ/PSE conference on 29 May 2008 in Brussels

Presentation given by Filip Gregor (ECCJ lawyer) at the ECCJ/PSE conference on 29 May 2008 in Brussels

Published in: Business, Economy & Finance

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  • 1. Smart Regulation
      • Proposal 3:
      • Mandatory Social and Environmental Reporting
      • Filip Gregor
  • 2. The Legal Proposal
    • The parent companies will be mandated to disclose:
      • The enterprise structure and its sphere of responsibility
      • The risks of human rights abuse and environmental damage within the enterprise's operation or operations within its sphere of responsibility
      • Data on environmental and social impacts of the operations of the enterprise in the reporting period
  • 3. Why is the Proposal needed?
    • Increased transparency of business operations would spur voluntary improvements.
    • Voluntary initiatives lack assesment and enforcement mechanisms – as result the reports are impossible to compare and often ignoring material and controversial issues.
    • The markets cannot discrimate well between good and bad performers – business case for CSR is not working.
  • 4. Missing Standards
    • Company fear and refusal to disclose voluntarily – risk of legal liability, competitive disadvantage, divulgence of trade secrets
    • Greenwashing
    • Lack of reporting templates as a source of confusion
    • Lack of clarity what social and environmental issues are companies responsible for
  • 5. Aim of the Proposal
    • The proposal seeks to achieve that public and those in control of companies have information about what is important with respect to the company's impacts on human rights and environment
    • Through better transparency to improvements
  • 6. Scope of the Proposal
    • The law will extend to all large companies incorporated in the EU or listed on European stock exchanges.
    • To protect EU companies from unfair competition, the law will also require European subsidiaries of non-EU companies to disclose information about the whole group they belong to.
  • 7. Mandating GRI?
    • Voluntary initiatives provide a useful basis and experience (and so do existing mandatory schemes)
    • They are self-evaluated and self-assessed, they offer several levels of complicity
    • Mandatory scheme has to be clear, unambiguous, audited and enforceable.
  • 8. Are directors liable?
    • The directors will be liable for public sanctions if the reporting standards are not observed properly
    • Strict liability, however, limited by fault based liability of the company in the area of risks reporting
  • 9. Verification & Enforcement
    • The reports would require independent verification
    • Public liability enforced by state or interested agencies
    • Standing to those having a sufficient interest or mantaining an impairment of right