Although the concept of corporate social responsibility (CSR) dates back to the second half of the ^19th century, with social demands arising from the industrial revolution, corporate transparency in environmental and social matters, as part of a global approach, is a trend that can be observed in Europe since the beginning of the 2000s. The reporting of non-financial data makes it possible to assess the value of a company through its human and social capital, via a broader prism than that of a strictly accounting approach.

Since the differences between the terms "social", which is classically used, and "societal", an ill-founded neologism and an anglicism that has been in vogue for the past few decades, are not clearly established (the two concepts often overlap), we will consider these two terms as synonyms in the article.

History of the concept and related notions

In the 19th century, during the industrial development, more than CSR strictly speaking, it is a paternalistic approach in large industrial companies, related to the awareness and development of a certain social morality among managers. This movement is mainly dedicated to charitable actions.

In the 1950s, this movement was taken up by American authors who forged the concept of CSR on the basis of religious and ethical postulates.

In 1953, Howard Bowen, a Protestant minister, published a book entitled "Responsibility of the business man". He was the first to use the term "Corporate Social Responsibility", which was later translated as "corporate social responsibility". In his book, Bowen insists on the essential part of the company in the development of the American national values in terms of possibility of social ascension. This book laid the foundation for CSR and marked its advent.

In 1970, Milton Friedman, one of the most important economists of the twentieth century, wrote that "the social responsibility of business is to increase its profits. This view was representative of the disbelief in the corporate world at that time.

In the 1980s, another vision of the company emerged and numerous studies were published, considering that the company is not only responsible to the owners of the capital but also to all its employees, suppliers, customers, and the territories in which it is located (Edward Freeman in 1984 with "Strategic management: a stakeholder approach", and Archie B. Carrol in 1999 with the stakeholder theory). Carrol in 1999 with the stakeholder theory).

In 1992, the second Earth Summit was held in Rio de Janeiro, with the presence of 173 heads of state. This conference led to the adoption of the Rio Convention and the establishment of Agenda 21 (action program for the 21st century oriented towards sustainable development). The latter aims to fight against poverty and exclusion, and to promote the production of sustainable goods and services and the protection of the environment.

Since the 1990s, many national and international normative frameworks have been created and have provided common recommendations for general compliance with this social responsibility. These include:

- the OECD Guidelines for Multinational Enterprises

- the ILO Tripartite Declaration on Multinational Enterprises and Social Policy

- the United Nations Global Compact, launched in July 2000

- the ISO 26000 guidelines on social responsibility of organizations (these are not requirements, so no certification is involved)

- the UN guidelines on human rights and transnational corporations

In France, since the early 2000s, several legislative changes have anchored this extra-financial reporting in practice. In 2001, the so-called NRE law (on new economic regulations) obliged listed companies to publish some of this information for the first time. But it is above all the law known as Grenelle II, of 2010, which really established the main system, called CSR reporting (social and environmental responsibility).

Since the transposition on July 19, 2017 of Directive 2014/95/EU (by Ordinance No. 2017-1180) concerning the publication of non-financial information and information relating to diversity by certain large companies and certain groups, the so-called "Grenelle 2" system disappears and is replaced, for financial years beginning on or after September 1, 2017, by the system instituting a non-financial performance statement. From now on, it is no longer a matter of filling in a precise list of pre-established CSR information that is identical for all companies, but of a declaration that presents:

- the business model

- the main risks on non-financial themes

- the policies and procedures implemented and their results

- key performance indicators

This new system is surrounded by new texts relating to related subjects: the law on the duty of care enacted on March 28, 2017 (summary of measures in the chronology at the bottom of this document), the Sapin II law, reform of the management report, etc. The combination of these new obligations represents a significant challenge for many companies, with sometimes joint presentation in their management report of the non-financial risks and due diligence measures they implement.

The Pact bill, presented to the French Council of Ministers on June 18 of this year, contains various CSR provisions, a summary of which can be found in the chronology at the end of this article.

The issues

The advantages of these systems are mainly the obtaining of extra-financial information thanks to their mandatory publicity and the gains in terms of reputation for the company that develops its CSR communication.

The weak points of the CSR provisions, in addition to the different methods of assessing impacts, are based on the fact that the information is written in a free manner by the companies concerned, making it difficult to compare the assessments from one company to another, without reprocessing after the fact.

Lexicon

CSR: Corporate Social Responsibility is, according to a definition given by the European Union in 2001 in a Green Paper, a concept by which companies integrate social, environmental and economic concerns in their activities and in their interactions with their stakeholders, on a voluntary basis.

Diversity Charter: Launched in October 2004, the Diversity Charter encourages companies to ensure the promotion of and respect for diversity in their workforce. By signing it, these companies commit to fight against all forms of discrimination and to implement an approach in favor of diversity.

Social climate: level of satisfaction of people within a company.

Responsible communication: responsible communication integrates the principles of sustainable development in both the content and the form of a message by taking into account key notions such as ethics, transparency and legitimacy.

Sustainable development: development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Circular economy: organization of economic and social activities using modes of production, consumption and exchange based on eco-design, repair, reuse and recycling, and aiming to reduce the resources used and the damage caused to the environment.

Energy efficiency: the ratio of what can be usefully recovered from the machine to what was spent to operate it. This is known as efficiency ("what is of interest to us over what it costs"). Energy efficiency aims to increase this yield and therefore to decrease the initial costs in order to increase the yields and therefore spend a minimum of energy for the same process.

Renewable energies: energies whose consumption does not decrease and does not affect the resource on a human time scale.

SRI (Socially Responsible Investment): SRI is a form of investment that systematically aims to take into account extra-financial criteria related to the environment, social and governance (also known as ESG criteria), in short, it is the application of sustainable development principles to the financial sphere.

ISO 14000: The ISO 14000 series of standards refers to all standards concerning environmental management.

ISO 26000: The ISO 26000 standard concerns the social responsibility of organizations. It defines how organizations can and must contribute to sustainable development.

Environmental management: management method of an organization that takes into account the environmental impact of its activities, evaluates this impact and aims to reduce it.

Global Compact: a United Nations initiative launched in July 2000 to encourage companies around the world to adopt a socially responsible attitude by committing to integrate and promote principles relating to labor rights, human rights, sustainable development and the fight against corruption.

Energy performance: quantity of energy actually consumed or estimated in the context of a standardized use based on reference values.

Chronology

May 15, 2001: publication of the NRE law (on New Economic Regulations), which requires listed companies to publish information on the social and environmental consequences of their activities in their management report. The implementing decree was published by the Jospin government in February 2002.

July 12, 2010: promulgation of the Grenelle II law, which implements the commitments of the Grenelle Environment Forum. Its article 225 is specifically related to the transparency of companies in environmental and social matters.

April 24, 2012: publication of the decree implementing Article 225 of the Grenelle II law, which extends the obligations for companies to publish information in their management report on the "social and environmental consequences of their activities, and on their societal commitments to sustainable development."

Main changes compared to the NRE law :

Extension of obligations to unlisted companies with more than 500 employees.
Expansion of the topics on which companies must publish information (work accidents, equal treatment of employees, compliance with ILO conventions1 , fair practices, etc.).
Reporting obligation on the consolidated financial perimeter including foreign subsidiaries.
Obligation of verification by an independent third party with a certificate of presence of this information and an opinion on its sincerity.

December 9, 2016: promulgation of the Sapin II law, which as of June 1, 2017, imposed a general transparency and corruption prevention obligation for companies with more than 500 employees and at least €100 million.

There is a convergence between anti-corruption and CSR requirements. Companies are now obliged to include in their management report information on actions to prevent corruption. Compliance refers to the obligation to respect professional and ethical standards, codes of conduct and specific rules applicable to an activity. It also refers to a company's ability to put in place processes aimed at ensuring good governance. In this sense, CSR can perfectly fit in with compliance programs, and in particular the codes of ethics that are part of them.

March 27, 2017: promulgation of law n°2017-399 on the duty of care of parent companies and ordering companies. This text completes the CSR. It encourages companies to better control the risks of all kinds associated with their subcontracting chain.

This law creates an obligation for joint-stock companies employing, within their company or in their subsidiaries, at least 5,000 employees in France or at least 10,000 employees worldwide, to establish a vigilance plan, to implement it and to publish it.

This plan includes "reasonable vigilance measures to identify and prevent serious violations of human rights and fundamental freedoms, the health and safety of individuals, and the environment". It covers the activities of the company, its direct or indirect subsidiaries, its subcontractors and suppliers with whom it has an established business relationship, insofar as these activities are related to the relationship.

It includes the following measures:

A risk map.
Procedures for regular evaluation of the situation of subsidiaries, subcontractors and suppliers.
Appropriate actions to mitigate risks or prevent serious harm.
A mechanism for alerting and collecting reports on the existence or occurrence of risks.
A system for monitoring and evaluating the measures implemented.

July 19, 2017: order no. 2017-1180 on the publication of non-financial information by certain large companies and certain groups of companies, which transposes the European Directive 2014/95/EU of the European Parliament and of the Council of October 22, 2014.

August 9, 2017: decree no. 2017-1265 taken for the application of the aforementioned ordinance, which specifies the thresholds from which certain companies are required to produce the extra-financial performance statement as well as the content and presentation methods of this statement.

March 9, 2018: as part of the PACTE law (Plan d'Action pour la Croissance et la Transformation des Entreprises), submission of the report to Bercy of the "Company and General Interest" mission by Jean-Dominique Senard (head of Michelin) and Nicole Notat (former head of the CFDT), with an important proposal: "The company must be managed in its own interest, considering the social and environmental stakes of its activity."

March 12, 2018: interview in Le Monde with Bruno Le Maire, Minister of Economy and Finance, who confirms the government's desire to include a "modification of the civil code" in the PACTE bill to be presented to the Council of Ministers in the second half of May. "To be profitable, companies can no longer turn away from social and environmental issues. This is a demand from consumers and citizens as well as investors."

June 18, 2018: presentation of the Pact law to the Council of Ministers. According to the explanatory memorandum, Article 59 enshrines the notion of social interest and opens the possibility for entrepreneurs who wish to do so to enshrine their company's raison d'être in their articles of association, following the recommendations of the report "the company, an object of collective interest" by Jean-Dominique Senard and Nicole Notat. This article aims, on the one hand, to enshrine the jurisprudential notion of social interest within article 1833 of the Civil Code. The proposed obligation to manage companies "in the social interest, taking into account social and environmental issues" thus consists of ratifying, in the Civil Code, the application of this concept in case law. All managers should ask themselves about these issues and consider them carefully, in the interest of the company, when making management decisions.

On the other hand, by amending article 1835 of the Civil Code, this would allow the partners of any company to include its raison d'être in the company's articles of association. This notion of raison d'être aims to bring company directors and companies closer to their environment in the long term. The report "l'entreprise, objet d'intérêt collectif" by Jean-Dominique Senard and Nicole Notat indicates that the notion of raison d'être can be defined "as the expression of what is indispensable to fulfill the corporate purpose". This draft article thus encourages, in the form of a knock-on effect, companies to no longer be guided by a single "raison d'avoir", but also by a "raison d'être".

The next article on CSR will discuss in detail the national provisions in force as well as the related sanctions.

*Ellisphere is a signatory to the founding texts of CSR (Global Compact, Diversity Charter) and reports its progress to these organizations every year. It has its performance assessed by an independent organization, EcoVadis => score of 70/100 in 2020 ("advanced" level): certification and sustainable development profile.
Ellisphere respects the 10 universal principles of the UN Global Compact on human rights, labor standards and the environment.
Ellisphere is a signatory of the Diversity Charter to publicize and emphasize its commitment in this area.
Ellisphere is a signatory of the SNCD's Responsible Development Charter (2020 edition).
Ellisphere is a signatory of the CNA/Corporate Ombudsman's Responsible Supplier Relations Charter.