AEC's response to the European Commission's Green Paper (18.7.2001)
"Promoting a European framework for corporate social responsibility"

AEC Opinion Paper
CORPORATE SOCIAL RESPONSIBILITY (CSR)

AEC'S COMMENTS ON THE GREEN PAPER: "PROMOTING A EUROPEAN FRAMEWORK FOR CORPORATE SOCIAL RESPONSIBILITY", PUBLISHED BY THE EUROPEAN COMMISSION (18.7.2001)

The acronym AEC designates the Association of European Consumers, socially and environmentally aware. It was the intention of national associations who are members of AEC to underline through the very name of their association its European dimension and the fundamental nature of the commitment they want to assume and sustain through their activities.

Papers already published by the AEC include the position paper "Consommation Responsable" ("Responsible Consumption") published in October 2001; it defines what the AEC means by "responsible consumer" and presents demands relative to this position. A number of comments on the Commission's CSR Green Paper are briefly anticipated in this document: here the AEC returns to the subject in order to better contribute to the present debate.
Previously in July 2001, the AEC published the opinion paper "AEC's Comments on the EU Commission's Green Paper on Integrated Product Policy", which includes a number of themes also present in the CSR Green Paper. The AEC does not wish to go back over this but notes with some satisfaction that a number of suggestions contained in this document, particularly on the subject of the integration of the ethical qualities of products, were taken on board by the Commission.

The Green Paper is aimed at businesses; comments by the AEC will only present their views on general matters concerning their part in the process, and on processes regulating the interaction between consumers and businesses.

I)
The AEC is happy, together with the Commission, to address itself directly and openly to businesses by stressing their responsibilities.

A reminder is necessary in this area because too much socially and environmentally bad practice has been justified on the basis of a so-called "consumer choice" on the market. In practice the various actors in the chain (producer, manufacturer, distributor) share a global responsibility and everyone, in the area of social responsibility as in others, must be responsible for all.
Nevertheless it has to be pointed out that true consumer choice is totally dependent on information which is both extensive and reliable: when this is lacking, consumers will naturally think that correct production processes have taken place in good faith before the product has reached the market, either in relation to the work itself or to the environment, because this is the normal assumption to make. Strong reactions by consumers when malpractice by businesses is discovered demonstrate their feelings of betrayal. It is precisely in order to prevent such abuses that responsible consumers, members of the NGOs or of any other association (religious, trade unions or privately as is more and more the case), have been the first to initiate the current debate.

II)
AEC agrees with the Green Paper (#2) about the nature of CSR. Points 20-25 go over principles which AEC sees as fundamental, such as: need "to go beyond" legal compliance without taking the place of the proper authorities; important role of SMEs (Small and Medium Enterprises) and appreciation of innovative practices introduced by the "Third Sector" (even if it is not identifed by the Green Paper); reference to indirect responsibility, etc.
AEC supports the aim expressed in point 26 "to develop a better knowledge of the impact of social responsibility measures by businesses on their economic performance" but notes that the NGOs are not mentioned among those that could carry out "new joint research programmes" (companies, public authorities, universities).
This is paradoxical because not only the NGOs' major contribution to economic thinking is now unquestioned but also because the Green Paper itself (#3 and 3.1 passim), on the subject of CSR policies, talks about the need to retrain company staff at all levels and recognises weaknesses in traditional training and by extension in the institutions which provide it. Furthermore, research is one area where diversity in expertise can be clear and fruitful without creating conflict through its actions.
Consumers ask from businesses that they assume with courage and creativity their basic role, i.e that of intelligent link between resources and needs: that, through their organisational capacities they accumulate an intellectual, financial and technical capital capable of finding sustainable solutions to the practical problems of people in any part of the world, while commiting themselvest to change unsustainable modes of consumption.

III)
In fact, in the area of price transparency, everything remains to be done: here common initiatives must be encouraged and the responsibility of all must be stressed, research being specifically relevant to these objectives.
Consumers are confronted with prices at the retailers level but price transparency is not a problem which can be solved only in relation to them nor is it their sole responsibility.
Prices are supposed to represent the value of the product: in fact they comprise (1) cost and benefits incurred by the parties who are directly involved (2) in the part (3) of the life cycle of the product preceding its arrival on the market. Fiscal policies cannot counterbalance any more this threefold limitation to the capacity of consumers to evaluate through prices the global value of goods and services in order to reach the solution which will improve their wellbeing. This a very complex area for whoever wants to go beyond the mere acquisition of general but sufficiently reliable information, but the main obstacle resides maybe in the fact that data and necessary information are to be obtained from a multiplicity of parties with conflicting interests: furthermore, this information is presently studied through methods dependent on classification and an institutional organisation which remains fragmented.

AEC calls for a strong political will to manifest itself; it must be able to sustain detailed economic studies which will inform consumers of the true implications of their choices, i.e. on the market and in the lifestyles they are able to adopt.

IV)
Consumers will not be placated by palliatives for their consciences: they know the connection between income and purchasing power, survival and resources, quality of life and environment, identity and culture. They also know that with globalisation bad practices are exported and imported like everything else, from one end of the planet to the other and in any direction: through solidarity, but also in order to protect themselves, their aim is to get rid of these wherever possible, starting from the worst instances but not stopping there. Furthermore, the advantages gained by these practices are becoming obvious to everyone and are particularly relevant in the case of private organisations more and more unaccountable to national communities of any kind.
In the area of social behaviour, all consequences for human groups affected through the life cycle of the product are at stake: not only "workers" within factories who are also "consumers", but also all those "consumers" who are their dependents. We are talking about salaries and also about any other systems liable to improve life-style without taking the place of existing institutions. This is about taxation of course but also about any intervention which, through respectful dialogue with the relevant participants, will be seen as desirable and useful by those it will affect.

The diverse qualities of products are not interchangeable; there is at present a demand for higher quality and on the basis of the respect for what has already been gained, well informed consumers can make choices which involve retaining the current quality of products or services or favouring changes without affecting that quality.

V)
AEC warns not to repeat the costly mistakes made in the area of corporate social responsibility through "ecological" claims; there is a need to transfer experience acquired and appropriate tools of communication.
The disastrous problems encountered when information on the environmental performance of products was first made available, led to mistrust among consumers with regard to environmental claims on products. Such episodes interfere with the proper operation of the market to the detriment of consumers themselves: there are known examples of Ecolabel products, which, were it not for the distrust which is attached to them, could be sold at very competitive prices. The BSE and dioxin disasters also prove that disappointment is long term.
Reliable claims are particularly important in the context of a globalisation process dependent on transport and more and more on communication. Several of the tools which have been developed require participation and control by NGOs and consumer organisations and try to ensure that communication be complete, relevant and truthful; they have to be put into practice even though it is too early to stop some choices.
The problems created by ecological claims proved also that consumers no longer apply the simplistic concept of value for money and that they do not accept trade off between qualities. At the same time this experience has increased enormously consumers' capacity to recognise different qualities in products, to take into account production processes and to think in terms of lifecycles: this also applies to social claims.
There is a risk that a hasty reaction to consumers' ethical expectations will produce a false response distinguishing between a market for "the rich" and one for "the poor". AEC will do its best to stop this happening; nothing would be less ethical in itself and more wrong for everyone.

VI)
The Green Paper chapter on labelling (#3.4) introduces key points towards good understanding between consumers and companies. In general terms AEC considers that global production and trade require that all important aspects of the product and its production process be communicated to consumers before purchase: on the global market presuppositions (which are always linked to a specific culture) must be banished. Yet, informing the consumer is not necessarily synonymous with the attribution of labels to each company.

Eco-labels have revealed furthermore that sustainable development will never have the support of the majority of consumers unless they are given reliable ways to confront their economic effort (which they measure in proportion to their income) to benefits whose extent and recipients they know.
A number of surveys have noted the gap between environmental and social "worries" and "good intentions" of the majority of consumers and the "green or ethical" purchases of a very small minority. Most of these surveys draw conclusions which are hardly flattering about the consistency of consumer behaviour and stress that the most underprivileged among them are those who are the least sensitive to the problems of our planet.
In our opinion, inconsistency is a problem for the researchers themselves as it is paradoxical:
a) using "economic" arguments, to reproach a single one of the actors for behaving in a rational way: i.e. for not wanting to pay extra for what (such as honesty) is a duty and what (such as a healthy environment) is a right (Consumer Chart, UN 1985).
b) using "sociological" arguments, to add to the problems of the poorest consumers and to fail to recognise that at the moment, through higher prices, "ethical" and "green" consumers purchase above all and consciously, the communicative value attached to these products. At the same time a message is more efficient if it is unusual ... and this contradicts the major need for good behaviour to be normal.

The most competitive practices of the best companies must be found first in the widening of their market at the expense of the least effective products in qualitative terms. There is room here for governments to display through public procurement consistency betweeen what they demand from their citizens and their political programme on the one hand and the criteria for adjudication on the other.

VII)
AEC notes that the CSR document does not introduce a clear enough distinction, seemingly essential to consumers, between production and distribution companies, which through the choices they make play a major role in consumer choices.
a) Consumers want to know purchase policies of distributors because they condition their own.
You can only choose what is on offer on your market: thus, you have to be able to control whether the selection criteria of products on offer adopted by the retail point are compatible with your own. It has to be pointed out that the mere sale of "organic" or "ethical" products cannot be said to be the answer to this demand.
b) The presentation of products is equally important and must be familiar to consumers.
Some companies make their profit through rent-seeking and not through a fair renumeration of enterprise and work: consumers should be informed of a number of practices which in the end will influence their choices and for which they will pay the final bill: they include for example the leasing of sale outlets including conditions that leases will be cancelled in the case of companies who do not "push" their product sufficiently through advertising.
c) Price policies: those that would be aimed at a fairer distribution of benefits among all those in the chain should be brought to the consumers' attention.

VIII)
Commercial communications need to be more reasonable including bans on misleading advertising.
Advertising brings significant costs and precedes purchases but consumers are the ones who pay for it in the end: having to pay for aberrant practices is paradoxical. Variations in the capacity of companies to anticipate these costs can have negative effects on products which in fact would be appreciated by consumers. The onus should not be on them to find solutions to this problem, but it is essential to circulate freely information about production or trade practices whose goals are particularly commendable.