Enacting laws relating to corporate social responsibility is a much-discussed topic both nationally and internationally. In Finland, the objective of enacting a corporate social responsibility act is recorded in the Government Programme, and corporate social responsibility legislation is also promoted on EU level. In Europe, France already has a corporate social responsibility act, and the German government is committed to regulating corporate social responsibility.
“The introduction of EU-level corporate social responsibility legislation would be a game changer. Globally, the European Union is a powerful regulator: If a company wishes to enter the EU market, it also needs to comply with EU regulations,” Saloranta points out.
Consumer decisions matter, politicians should make decisions
Corporate social responsibility regulation is based on the UN Guiding Principles on Business and Human Rights. According to these principles, states have the duty to protect human rights, companies are responsible for respecting human rights, and victims of human rights violations must have access to remedy, such as protection and compensation for damages.
There is great variation between different countries in how well the principles are upheld: In Finland, human rights are well protected, but in Bangladesh they’re not. There is also variation in the level of legislation that governs corporate social responsibility.
“Companies’ responsibility for respecting human rights can be interpreted to mean that companies should at least refrain from violating them. If, however, a company causes harm, it should guarantee access to remedy, such as paying victims for damages.”
However, fear of sanctions can raise companies’ threshold to exploring the responsibility of their supply chains.
“Companies should have reasonable opportunities to uphold human rights. There has been talk about ‘a safe harbour’ that would protect companies against too severe consequences, were they to take sufficient action to promote human rights at the sources of their supply chains.”
Nowadays, companies seek to identify weaknesses in their corporate social responsibility through sustainability reporting. Saloranta would like to see an increasingly active approach to these reports.
“Companies aren’t always too keen to look into how responsible and sustainable they are. If they are aware of risks and yet speak to the contrary, they’re doing greenwashing. Risks should be assessed systematically instead of merely copying standardised code of conducts and committing to them on a general level.”
The majority of Finnish companies are generally committed to respecting human rights, but there is great variation in the level of that commitment, according to the final report of the SIHTI project, which examined how Finnish companies are fulfilling their human rights responsibilities in relation to expectations set out in the UN Guiding Principles on Business and Human Rights.
“There are few companies that take human rights into consideration on a large scale, and there are plenty of companies that talk about respecting human rights without really doing anything about them.”