Government Resolution on Corporate Social Responsibility

Transcription

1 Government Resolution on Corporate Social Responsibility In line with the Government Programme issued in June 2011, the Government supports projects that strengthen international standards and guidelines for corporate social responsibility (CSR), and promotes better integration of responsibility in industrial, development, and trade policies and in public procurement. The purpose of this Resolution is to put Finnish enterprises and administration in a position of leadership in CSR. What is CSR? CSR has traditionally referred to responsibility for the environment, workers, consumers, local communities, stakeholders, and other aspects, which exceeds the minimum legal requirements. This definition can be built upon to require organisations to identify their key stakeholders and conduct dialogue with them in order to find solutions for their shared problems. By defining CSR through its impacts, the parties can align their expectations for each other's responsible conduct. The Government Resolution on CSR is built upon a notion of CSR as the responsibility of organisations for their impacts on society. Changes taking place in the operating environment In future, the importance of CSR will be influenced by at least the following social trends: globalisation, poverty and inequality, digitalisation, climate change, sustainable use of energy and natural resources, economic rise and urbanisation of developing countries, demographic change with emphasis on ageing, rising importance of CSR among stakeholders, and, connected to these trends, human rights issues and a greater emphasis on human rights abuses. Globalisation is introducing new international rules to Finnish enterprises and other organisations, seeking to ensure a level playing field and build global justice. Globalisation is creating issues such as long supply chains, which present risks to core labour standards, human rights, and the environment. However, globalisation also provides a number of opportunities for economic growth and development. Mitigation of poverty and inequality and the prevention of human rights abuses call for broad-based cooperation with developing countries, where responsible enterprises and other organisations play a key role. For this cooperation to succeed, it is vital that organisations acknowledge the impacts of their operations on, and prevent the growth of, poverty and inequality. Digitalisation creates new opportunities for advancing equality, democracy, and human rights by facilitating dissemination of information, communication, and availability of services. Digitalisation also enables the assessment of CSR practices and impacts and the comparison of results. On the other hand, digitalisation presents risks to data protection and of human rights abuses, the latter being carried out by unethical states or criminals using spy and tracking software. 1

2 Climate change and sustainable use of energy and natural resources mean that continuously diminishing resources must be stretched further. The environment and our natural resources cannot withstand current consumption rates or the emissions caused by them. Global population growth, industrialisation, and increases in consumption are putting further pressure on natural resources and the environment. These concerns are closely related to production conditions, transportation, and greater material efficiency. The economic rise and urbanisation of developing countries is bringing labour from the countryside to cities. This movement is creating specific challenges to employment provision and to the methods employed by society as a whole and individual operators to help workers integrate in cities. Demographic change with an emphasis on ageing is building pressure on sustainable public finances and the provision of welfare services. As the size of the working-age population decreases, it is vital that working-age people can enter the job market in larger numbers and that the rate of employment is increased. Different societal actors must work together, particularly with young people and those in a weaker position in the labour market, to prevent the exclusion of these segments from the labour market. Such exclusion can take place due to rapid economic fluctuations, structural changes in the business sector, the high level of skills required on the labour market, and toughening competition. The rising importance of CSR has been demonstrated in areas such as the increasing popularity of ethical trading, ethical concerns about tax planning and ethical and environmental concerns about production methods. Investors are attaching greater importance to responsible conduct and ethics. It is evident that stakeholders, whether citizens, consumers, investors, or enterprises, will gradually become more interested in CSR. The level of standards set for responsible conduct will also rise. Finally, the growing importance of CSR can be seen in statements concerning the issue in a number of documents, such as Finland's Development Policy Programme 2012, Government Resolution on State Ownership Policy 2011, Action Plan on External Economic Relations 2012, Government report to Parliament on the human rights policy 2009, and the preparations for the Government's Foresight Report. Future prospects and target status for 2015 The above-mentioned social trends call for a strategic and sustained CSR policy. Finland profits from firstrate legislation and a strong democratic tradition. Problems are openly debated, and there is readiness to work together to find solutions to problems. Globally, demand for responsible solutions will increase and their significance will grow. In this context, the strengths of Finnish society and enterprises should be promoted, taking full advantage of the business opportunities created by social trends, while meeting requirements for responsible conduct in such business operations. Responsibility will also become an increasingly important factor in maintaining the competitiveness of Finnish enterprises in the global operating environment. Succeeding in the operating environment of 2015 requires the following developments. The public and private sector alike are fully committed to CSR. CSR is part of the strategic leadership of organisations, and organisations operate in an open and transparent manner. Organisations are able to anticipate and adapt to changes in their operating environment, and to conduct a dialogue with stakeholders on their expectations concerning responsibility. 2

3 Authorities endorse solutions that facilitate, on the one hand, a level playing field for enterprises and, on the other, realisation of the rights of local populations, workers, and consumers, while using a number of methods to take account of environmental protection, economic sustainability, and human rights. Finland works actively to promote responsibility in enterprises and the public sector and to facilitate the creation of, and compliance with, global responsibility commitments. Benchmarks are employed to measure CSR in organisations of various sizes and in a number of sectors. Central government is committed to effective internal coordination with respect to CSR. Through this Resolution, the Government is clarifying its own CSR objectives, while strengthening the responsible conduct of Finnish enterprises and the public sector. The Government commits to promoting CSR through this action plan, in partnership with the public sector, enterprises, NGOs, labour market organisations and other organisations. The State is committed to responsible conduct in its own operations. The Government's objective is for Finnish enterprises to take a position of leadership in CSR. Leadership requires that the number of enterprises strongly committed to CSR will grow, and that enterprises are able to set targets for their social impacts and assess their results in dialogue with stakeholders. These factors will also significantly affect the development of Finnish competitiveness, Finnish welfare, and global justice. Principal responsibility: Ministry of Employment and the Economy, Ministry for Foreign Affairs 1 International policy framework 1.1. Sustainable development Sustainable development provides a wider social policy framework for CSR, as they share the same thematic areas. Finland is committed to the UN policy process for economically, environmentally and socially sustainable development. At the Rio+20 conference, the member states agreed on the creation of global benchmarks for sustainable development and encouraged enterprises, states, and other stakeholders to develop globally convergent CSR reporting models. In accordance with the Government Programme, the national strategy for sustainable development will be reviewed. The strategy will set out Finland's national vision, principles, and targets for sustainable development for The strategy will be prepared in cooperation with the administrative branches and other organisations. The Finnish National Commission on Sustainable Development (FNCSD) will be responsible for monitoring the implementation and effectiveness of this social commitment to sustainable development. 3

4 The Government recognises the links between CSR and sustainable development and takes account of CSR issues in drawing up the new strategy for sustainable development. Principal responsibility: Ministry of the Environment, Ministry of Employment and the Economy 1.2 The Commission s strategy for CSR The European Commission outlines its objectives for progress in CSR in its communication of October , which takes account of international developments in CSR and the objectives of the Europe 2020 strategy. In this communication, the Commission puts forward a new definition of CSR as the responsibility of enterprises for their impacts on society. The agenda for action set out in the communication includes the Commission's commitments and proposals for action by enterprises, European Union member states, and other stakeholders. In the agenda for action, the Commission emphasises areas such as enhancing the visibility of CSR and disseminating good practices, better integrating environmental and social criteria into public procurement, improving self- and co-regulation processes, and improving company disclosure of social and environmental information. The Commission will also publish a report on EU priorities in the implementation of the UN Guiding Principles on Business and Human Rights, and develop human rights guidance for the relevant business sectors and SMEs. According to the Commission, European CSR policy should be built upon internationally recognised principles and guidelines. In order to align European and global approaches to CSR, the Commission will monitor the commitments made by large European enterprises, in order to take account of internationally recognised principles and guidelines. The Commission calls on EU member states to develop or update their own plans for the promotion of CSR. Finally, the Commission invites member states to develop national plans for the implementation of the UN Guiding Principles. The Government updates its own CSR action plan through this Resolution. The Government will develop a national plan for the implementation of the UN Guiding Principles. 1.3 Promoting internationally recognised CSR principles and guidelines Internationally recognised CSR principles and guidelines are needed in order to advance global responsibility and to guarantee more-equal conditions for competition. These include the OECD Guidelines for Multinational Enterprises, the principles of the United Nations Global Compact, the ISO Guidance Standard on Social Responsibility, the ILO Tri-partite Declaration of Principles Concerning Multinational Enterprises and Social Policy, and the United Nations Guiding Principles on Business and Human Rights. The OECD Guidelines for Multinational Enterprises provide a comprehensive set of rules for responsible business conduct. With another 42 states, Finland has made a commitment to promote the OECD Guidelines by establishing a National Contact Point (NCP) to assist in the application of the Guidelines. Finland's NCP is the Committee on Social and Corporate Responsibility, appointed by the Government and operating under and with the Ministry of Employment and the Economy. The Government considers it important that enterprises respect internationally recognised conventions and comply with CSR principles and 1 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: A renewed EU strategy for Corporate Social Responsibility (COM(2011) 681 final), 4

5 guidelines. Human rights and core labour standards must be respected and environmental concerns taken into account, including in long supply and production chains. Finland is taking an active part in global processes where international CSR principles and guidelines are being developed. The objective is to produce clear, simple, and mutually consistent CSR principles and guidelines in order to reduce the administrative burdens on enterprises and other organisations. The Government will ensure that the NCP has sufficient resources to foster effective application of the OECD Guidelines. The Government will also ensure that clear and easily available information is provided on international CSR recommendations and guidelines. The Government encourages large Finnish enterprises to take up at least one international CSR guideline, such as the OECD Guidelines for Multinational Enterprises, the principles of the UN Global Compact, or the ISO Guidance Standard on Social Responsibility, as their guideline or basis for CRS policy. The Government also encourages large Finnish multinationals to respect the ILO Tri-partite Declaration of Principles Concerning Multinational Enterprises and Social Policy and the UN Guiding Principles on Business and Human Rights. The Government will develop the criteria for monitoring CSR progress, by determining what international indicators are available and how they might be utilised. Principal responsibility: Ministry of Employment and the Economy, Ministry for Foreign Affairs, Ministry of the Environment 2 Promoting CSR in the private sector Requirements set by the markets, stakeholders, and legislation for CSR continue to develop. With business s customers attaching increasing importance to CSR, responsible conduct is being emphasised when enterprises take steps to maintain their competitiveness. In order to meet these requirements, more Finnish enterprises should adopt a transparent CSR model, which includes the development of their business operations on the basis of a careful preliminary assessment of social impacts and interaction with their stakeholders, such as consumers, customers, contractual partners, and local communities. Enterprises that do not directly involve customer interfaces must also be prepared for growing requirements. While the objectives of sustainable development constitute important reasons for fostering responsible business conduct, it is also very much in the interests of government officials to foster business competitiveness, in order to promote the national economy and in advancing global justice. Global justice includes the goal that, in order to ensure a level playing field, CSR should be consistently applied to enterprises based in different countries. The Government encourages enterprises to assess impacts of their operations and value and production chains in relation to key environmental and social concerns, in order to identify key risks and effects, and to make a commitment to reducing their negative impacts. As enterprises seek to become leaders in CSR, they are invited to monitor the development of CSR with respect to their field and competitors, and CSR commitments at international level. 5

6 Principal responsibility: Ministry of Employment and the Economy 2.1 Enterprises and human rights Several themes related to human rights are under discussion in Finland, even though they are not always identified as specifically human rights issues. Such themes include non-discrimination, decent work, workers' freedom of movement, freedom of association, and data and privacy protection. The realisation of core labour standards therefore involves the realisation of human rights. Many environmental problems are also linked to human rights abuses, for example when pollution threatens the right of local communities to health and food. Finland has made a commitment to promote the UN Guiding Principles on Business and Human rights 2, published in June These so-called Ruggie principles are also included in the latest OECD Guidelines for Multinational Enterprises. On this basis, the OECD National Contact Points 3 can be asked to examine whether an enterprise has complied with the human rights principles determined in the Guidelines. The Government will develop a national plan for the implementation of the UN Guiding Principles. In conjunction with developing the plan, the division of duties of government agencies will be clarified and any requirements for legislative amendments will be reviewed. A tool will be prepared in partnership with stakeholders, to promote UN initiatives and the practical implementation of the UN Guiding Principles. The Government considers it important that enterprises take account of the actual and potential effects of their operations on the human rights of their stakeholders workers, shareholders, customers, and local communities, with a particular emphasis on those who are vulnerable to exclusion. The Government's objective is to strengthen the national enforcement, monitoring, and implementation of international and local human rights conventions. Principal responsibility: Ministry for Foreign Affairs, Ministry of Justice, Ministry of Employment and the Economy More extensive environmental and social impact assessment of officially supported export financing In the provision of Finnish officially supported export financing, the environmental impacts of all guaranteed projects are taken into account as part of the total risk assessment. This covers the project location, the level of environmental impact, and risks to finances or reputation. In issuing export financing, the environmental policy and the environmental impact assessment system of Finnvera plc., a specialised financing company owned by the State, are employed. The Act on the State's Export Credit Guarantees (422/2001) and the OECD Recommendation on the Environment and Export Credits have been taken into account in the development of these tools. The OECD Arrangement on Export Credits guarantees a level 2 Guiding Principles on Business and Human rights Implementing the United Nations Protect, Respect and Remedy Framework, 3 In Finland, requests for examination in individual cases concerning compliance with the OECD Guidelines are processed by the Ministry of Employment and the Economy alongside the Committee on Social and Corporate Responsibility. For further information, see 6

7 playing field for exporters from different countries. From the outset, the Finnish national guidelines have complied with the OECD-level principles. A review of the OECD environmental recommendation was debated in , and a new recommendation was issued in late June 2012 by the OECD Council 4. Alongside environmental impacts, the new recommendation takes better account of the social impacts of export projects on workers and local communities. The project assessment takes better account of areas such as working conditions and labour rights, health and safety of workers and people living within the impact area of the project, land acquisition and any subsequent forced removals, indigenous peoples, cultural heritage, and any involvement in forced labour or child labour. Finnvera plc. is updating its environmental policy to meet the requirements set out in the new OECD recommendation. Finland is committed to continuing its work with the other OECD countries in the OECD Working Party on Export Credits and Credit Guarantees, involving social impacts, such as human rights issues, as part of the new recommendation on the environment. Finland will participate in the development of tools and shared approaches in order to take account of social impacts, including human rights issues, at project level in officially supported export financing. Principal responsibility: Ministry of Employment and the Economy (Finnvera plc.) Promoting the realisation of human rights and assessing environmental and social impacts in development policy supporting the private sector The Ministry for Foreign Affairs supports Finnish private sector development cooperation projects through Finnfund and Finnpartnership, a business partnership programme. Its soft loan instrument will be replaced by other modes of cooperation. An important operator with respect to development policy, Finnfund (Finnish Fund for Industrial Cooperation Ltd) has the State as a majority shareholder. Finnfund is a Finnish development finance company with a special government mandate. It is one of Finnish development policy s key instruments in supporting private sector development. Finnfund plays a very specific role in development policy: it promotes economic and social development in developing countries by financing self-supporting, responsible private business activities. At the Ministry for Foreign Affairs, the Unit for Development Financing Institutions in the Department for Development Policy is responsible for Finnfund's corporate governance. Finnpartnership is a business partnership programme, whose objective is to increase long-term commercial cooperation between enterprises and other interested parties in Finland and developing countries. Finnfund's and Finnpartnership's operations must produce positive developmental or environmental impacts in developing countries. Finnfund and Finnpartnership promote the realisation of human rights in line with the Finnish development policy. Finnfund and Finnpartnership require an assessment of the developmental and environmental 4 Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (The Common Approaches ), TAD/ECG(2012)5, 7

8 impacts of their projects, compliance with the laws and requirements of the target country, and compliance with international-level criteria for the project s environmental and social aspects. In line with Finland's Development Policy Programme, in partnership with the private sector the Ministry for Foreign Affairs will develop new modes of cooperation that replace the soft loan instrument, promote development policy objectives, and complement other development policy instruments. Although new soft loans will not be extended, it is important that the assessment of environmental and social impacts, including the realisation of human rights obligations, is continued in the existing soft loan projects. The Government will continue to promote the realisation of human rights and require the Finnfund and the Finnpartnership business partnership programme to carry out developmental and environmental impact assessments. The Ministry for Foreign Affairs will require that the environmental and social impact assessment, including the realisation of human rights obligations, be continued in existing soft loan projects. Principal responsibility: Ministry for Foreign Affairs 2.2 Role of self- and co-regulation in implementing CSR Traditionally, self- and co-regulation have been deemed an instrument complementing or replacing legislation. From the CSR viewpoint, self- and co-regulation can be understood as a part of the measures enterprises take as part of their responsible conduct. Many enterprises participate in self- or co-regulation exercises in CSR processes, for example in order to create sector-wide codes of conduct for CSR. Such exercises can help enterprises to understand changing phenomena and develop new, more responsible practices from their own starting points. CSR systems based on self- and co-regulation need credibility, created by transparent processes, open reporting on compliance with agreed CRS principles, effectiveness of sanctions imposed for noncompliance, and inclusion of stakeholders. To be effective, a CSR system needs monitoring, conflict-solving procedures, and clearly communicated methods for utilising the opportunities of stakeholders and individual citizens to make a difference. Resources must be allocated to staff training in order to ensure that all members of staff in the enterprises committed to the CSR system understand how compliance with the guidelines will affect them in practice. Self- and co-regulation processes are part of the EU better regulation programme 5. The Commission has launched a project with enterprises and other stakeholders, for the development of a code of good practice for self- and co-regulation exercises in the CSR process. The Government encourages the participation of industry organisations in international and national cooperation, in order to create effective and reliable self- and co-regulation processes for CSR. Principal responsibility: Ministry of Employment and the Economy 5 Communication from the Commission to the Council and the European Parliament: Better Regulation for Growth and Jobs in the European Union (COM(2005) 97 final), 8

9 2.3 Promoting CSR in the SME sector Not all enterprises have sufficient resources to assess their own CSR actions. Most Finnish businesses are small- or medium-sized enterprises, which may be interested in assessing and improving their CSR but lack the tools to implement it. Some may have unclear views on what exactly responsibility means or what it could mean in their own industry. A clearer message on the expectations placed on SMEs is required to promote CSR in the SME sector. This Resolution seeks to address this issue. New practical tools are required to help SMEs begin assessing the scale and type of risks in relation to their own operations. Such tools include the SME section of the CSR Compass online tool, maintained by the Ministry of Employment and the Economy, and a number of ecolabels and environmental systems, which help SMEs to responsibly manage their production chains. The Government invites key organisations representing SMEs to work in partnership, to develop methods for promoting CSR in the SME sector. Such tools might include a selfregulation system tailored to the SME sector, which enterprises could use to identify environmental and social risks in their operations and to develop their communications. Furthermore, the Government will seek to increase awareness of the existing practical tools. Principal responsibility: Ministry of Employment and the Economy 2.4 Financial obligations and CSR CSR extends to the duty of enterprises to meet their financial obligations. The Government is implementing an action plan to combat non-observed economic activity, or the grey economy, and economic crimes. This strategy is aimed at reducing grey economy activity and economic crime, and to support legal business activity and healthy competition. The Government seeks to prevent international tax evasion primarily through tax legislation, international tax conventions, and better tax surveillance. Apart from legislative obligations, society is increasingly paying attention to corporate tax planning and corporate procedures in laying off workforce. Meeting financial obligations has been acknowledged as part of corporate reputation management. Prevention of non-observed economic activity is being implemented and improved in line with the Government Resolution of 19 January 2012 and the proposals for action included in that resolution 6. In line with the Government Programme, Finland will work at the forefront of combating international tax evasion. With regard to the tax information exchange agreements, the objective is to make automatic exchange of information an international standard. Principal responsibility: Ministry of Finance The Government encourages enterprises to attend to the increasing importance of meeting their financial obligations as part of their CSR strategy and reputation management. 6 Government Resolution on an action plan to combat non-observed economic activity and economic crimes in , issued on 19 January 2012 (in Finnish), 9

10 The Government emphasises the significance of CSR and finds the support programmes employed by enterprises in connection with redundancies a good example, as such programmes support re-employment, training and entrepreneurship. 2.5 Combating corruption and money laundering Corruption and money laundering disrupt healthy competition and weaken the functional ability of constitutional states. Unethical and illegal practices erode the corporate operating environment, the functioning of society, and the foundations of democracy. In combating corruption, Finland implements international obligations and, with other countries, takes an active part in anti-bribery action carried out by the UN, the Council of Europe, and the OECD. International efforts to combat bribery are based on the UN Convention against Corruption (UNCAC), OECD Anti-Bribery Convention and its supplementary documents and recommendations, and the anti-corruption recommendations issued by the Council of Europe. Finland combats corruption as part of its foreign policy, and Finland's Development Policy Programme highlights anti-corruption efforts. Finland also works actively to implement the recommendations in the fight against money laundering, issued by the OECD Financial Action Task Force (FATF). The Government's objective is to achieve a clear reduction in corruption in Finland and to make Finland the least corrupt state in the world, as measured by the Transparency International corruption index. Finland will effectively implement the recommendations issued to Finland by the UN, the OECD, and the Council of Europe, to improve anti-corruption legislation and practical implementation measures. Finland will effectively implement the recommendations issued by FATF to combat money laundering. Principal responsibility: Ministry of Justice (coordinating body), all implementing authorities Finland will work actively to promote the implementation of the UN Convention against Corruption, and to strengthen anti-corruption efforts in its development policy. Principal responsibility: Ministry of Justice, Ministry for Foreign Affairs 2.6 Company disclosure of social and environmental information Transparency is a core requirement for responsible business conduct, as it enables social impact assessment. The European Commission considers company disclosure of social and environmental information a possible means of building public trust in enterprises, in the aftermath of the international financial crisis. More open communication policy is also viewed as facilitating engagement with stakeholders and the identification of risks involved in sustainable development. Disclosure of relevant nonfinancial information has been seen to help investors contribute to the more efficient allocation of capital 10

11 and better achieve longer-term investment goals. Availability of relevant non-financial information has been considered particularly important in promoting responsible investment criteria. Some EU member states have adopted disclosure obligations for non-financial information, which exceed the scope of current Community legislation 7. By the end of 2012, the Commission intends to present regulatory proposals for improving the communication of social and environmental information. The proposals will not concern SMEs, which can, if they so wish, communicate such information informally and on a voluntary basis. The Government encourages stakeholders to improve awareness of corporate social and environmental responsibilities, and enterprises to take up management systems that support CSR and to disclose non-financial social and environmental information, for example in the form of a social impact assessment report. Principal responsibility: Ministry of Employment and the Economy 2.7 Promoting CSR in the mining industry Because the mining industry is experiencing a period of strong growth, in this agenda it is treated as an individual sector. It has been estimated that Finnish mining production will double by 2016, and the State has also invested in the development of the mining industry. The mining industry has been expected to bring significant benefits to the national economy through new jobs and investment, which also promote a balanced regional development. Investors, however, gauge how attractive Finnish mining is considered to be as an investment. In addition to the quality of natural resource deposits, the implementation of environmental and social obligations by mining companies constitutes a decisive factor. Poorly met obligations seriously threaten the acceptability of corporate activity and therefore the international competitiveness of the Finnish mining industry as a whole. The stability and predictability of the Finnish operating environment improve the opportunities to attract not only capital, but also investors with international mining expertise. The Ministry of Employment and the Economy is preparing a proposal for a government resolution to increase foreign investment, in which the mining sector will play a major role. In 2012, the Ministry of Employment and the Economy launched an initiative to carry out an extensive debate with stakeholders on mining operations, with the intention of drawing up an action plan by the end of Covering a number of themes, the objective of the action plan is to make Finland a pioneering force in sustainable mining. One of the factors determining long-term success in the mining sector depends on the ability of mining companies to align their interests with prevalent values in society, particularly in situations where mining operations are launched in new areas. For mining to become a genuine driver of local and regional development, the alignment of interests with those of the local population and other trades in the area should be acknowledged as an integral part of strategic leadership. The objective is to identify the investment needs for the long-term implementation of social and environmental responsibility. Strategic 7 The Accounting Directive 2003/51/EC requires that companies disclose in their annual reports the environmental and employment aspects necessary for an understanding of the company's development, performance or position. This requirement does not concern SMEs. 11

12 leadership in mining should take account of the impacts on local communities and the environment before, during and after mining operations. In the Commission's proposal for the new Accounting Directive 8 companies operating in the oil, natural gas, mineral, and primary forest sectors would be required to disclose any payments they make to governments in the countries in which they operate. Finland has long supported the Extractive Industries Transparency Initiative (EITI), which promotes financial responsibility and transparency in mining. The EITI is implemented by 35 countries, and supported by more than 60 largest oil, gas, and mining companies and over 80 global investment institutions 9. When operating in the countries which have adopted the initiative, oil, gas and mining companies must publish the payments they make to governments, while the governments must publish all revenues collected from such companies. With the growth of mining in Finland, the opportunity for Finland to become an EITI member country should be investigated. The Government promotes responsible mining operations. The Government will investigate the CSR communication methods and practices employed by mining companies operating in Finland. The Geological Survey of Finland (GTK) is leading a project on good guidance for the mining industry, which engages mining industry stakeholders. The results of these two projects, and information on best practices in responsible mining 10, will be used in launching the mining industry's self- or co-regulation process, together with the extractive industry. In this, the objective is to create a long-term strategic project which seeks to improve responsibility in the extractive industry. Principal responsibility: Ministry of Employment and the Economy Finland will investigate the opportunity to become a member of EITI. Principal responsibility: Ministry for Foreign Affairs 3 CSR in the public sector The public sector plays a major role in promoting CSR. This role has two sides: public sector compliance with CSR in the sector s own activities, and the strengthening and implementation of a policy framework and legislation supporting CSR. An assessment by public sector bodies on aspects of CSR in their own activities is helping to clarify the significance of such activities and to identify areas for improvement. Integrating social and environmental aspects with public procurement is an example of an action that promotes CSR through market mechanisms. The public sector is also a significant employer and economic operator. CSR covers responsible use of public funds and transparency of administration and activities. Along with central government, municipalities play a key role in developing responsible conduct in the public sector. 8 COM(2011) 0684, Proposal for a Directive of the European Parliament and of the Council on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings. 9 EITI (Extractive Industries Transparency Initiative), 14 September See Päivi Kauppila, Marja Liisa Räisänen and Sari Myllyoja (eds.): Best environmental practices in metallic mineral mining (in Finnish), Suomen Ympäristö 29/2011, 12

13 3.1 Promoting CSR in the administrative branches The Government has made a commitment to promote better adherence to CSR in its various policy sectors. For CSR principles to be implemented in all administrative branches, coordination across branches is needed. CSR can be best promoted when administrative branches assess their opportunities to facilitate responsible practices in their own activities or operating areas. In practice, this can mean compliance with international CSR guidelines, supporting a CSR initiative, using performance management instruments in promoting CSR, making environmentally and socially responsible purchases and investments, introducing an environmental management system, participating in competitions measuring the effectiveness of workplace communities, or disclosing information on administration, for example in the form of a CSR report. Authorities are also bound by their legal obligation to protect the population from legislative breaches or environmental offences. The Government Resolution on CSR is built upon a notion of CSR as the responsibility of organisations for their impacts on society. The ability to demonstrate these impacts is important, and stakeholders require a number of means of communicating with each other on the impacts of CSR. This also challenges the public sector to develop means of assessing its activities. The Government is committed to promoting CSR in its administrative branches. In order to meet this commitment, the Government requires that the ministries and administrative branches seek ways of including CSR in their systems and to report on their progress by the end of the parliamentary term. Principal responsibility: Ministry of Employment and the Economy, Ministry of Social Affairs and Health, Ministry of the Environment, Ownership Steering at the Prime Minister's Office 3.2 Promoting CSR in public procurement In the EU, the environmental and social aspects of public contracts 11 are becoming increasingly important. Interest is also growing at national level, since public contracts represent a major share of the service and product markets. Purchased goods that are manufactured fully or in part in risk countries, i.e. in the developing economies with weak governance, constitute one of the related concerns. Socially responsible procurement aims to set contract conditions that encourage suppliers to ensure that during the contract period goods and services have been produced in conditions where human rights and core labour standards are respected. In effect, suppliers must comply with international human rights conventions, such as the ILO conventions, the UN Convention on the Rights of the Child, legislation on minimum wages and working hours in the production country, and general environmental, health and safety requirements. The Government has made a commitment to promoting better adherence to CSR in public procurement. In addition, the European Commission has emphasised the significance of socially responsible public procurement in its communication on CSR, by inviting member states and public authorities to make full use of all possibilities offered by the current legal framework. The Commission has published a guide to 11 Social aspects can refer to areas such as on-site vocational training, compliance with the ILO conventions, working conditions and employment terms, or recruitment of partially disabled persons. However, the conditions must be non-discriminatory and comply with Community legislation, and must be disclosed in the contract notice or the invitation. 13

14 socially responsible public procurement 12. As with all requirements for public procurement, the social requirements must comply with the European Union s legal principles. In order to meet the legal principles of equality, non-discrimination, transparency, proportionality, and reciprocity, a number of advisory services have been developed for those responsible for public contracts, helping them to implement the procurement process. Such services include the public procurement section of the CSR Compass online tool, maintained by the Ministry of Employment and the Economy, which helps procurement authorities to set conditions on the implementation of reasonable working conditions throughout the supply chain. Other tools include the Motiva advisory service for piloting new operating models in one-off large environmental technology purchases, and the public procurement advisory unit jointly funded by the Ministry of Employment and the Economy and the Association of Finnish Local and Regional Authorities. The Government has issued a resolution 13 on promoting environmentally sustainable choices in public procurement. This sets out objectives for the use of public funds and measures to reduce greenhouse gases, the amount of waste, and environmental loads of chemicals, and to promote sustainable use of natural resources and environmentally-friendly innovations. In 2012, the Government will issue a resolution on the promotion of cleantech purchases in public procurement. The implementation of this resolution will be monitored annually, using specific criteria. The Act on public contracts will be reviewed alongside the Public Contracts Directive, currently under review in the EU. Instruments provided under legislation governing public procurement, for combating the grey economy and use of corporate tax havens, have been discussed during the preparations for the public contracts directives. The Government and the ministries make a commitment to consider environmental and social aspects in their own procurement. The Government encourages those involved in public procurement to familiarise themselves with the issues surrounding responsible purchasing and to evaluate how it could be promoted in their own purchasing units. The Government will continue to promote environmentally sustainable choices in public procurement, in line with previous resolutions. The Government will develop the provision of advice and tools to support environmentally and socially responsible procurement. Principal responsibility: Ministry of Employment and the Economy, Ministry of the Environment, Ministry of Finance 3.3 CSR in corporate governance of State-owned companies The State is a major shareholder in more than 50 companies. In line with the Government Programme, state ownership policy is being developed and corporate governance is being strengthened. The State is committed to raising the shareholder value of the companies it owns. Socially and economically sustainable profit is the basic premise of corporate governance. Ownership policy can support the controlled renewal 12 Buying Social: a guide to taking account of social considerations in public procurement (28 January 2011), 13 Government Resolution on the promotion of sustainable choices in public procurement, issued on 8 April 2009 (in Finnish), 14

15 of economic structures and socially sustainable development, while safeguarding the position of workers through periods of change. The Government issued a resolution for the parliamentary term on corporate governance on 3 November , which takes account of the promotion of CSR. The Cabinet Committee on Economic Policy issued an opinion on management remuneration in Stateowned companies on 13 August This opinion takes transparency and reasonability as its starting points. Remuneration must be anticipatable and transparent in order for all parties to assess its success. Total remuneration will become more tightly controlled in all companies. The opinion sets forth that the level of remuneration must be set at a sufficiently challenging level and, in particular, care should be taken that remuneration systems do not result in excessive incentives. The Government will act in line with its previously issued resolution on corporate governance and opinion on management remuneration in State-owned companies. Principal responsibility: Ownership Steering at the Prime Minister's Office 4 Costs of the action plan The action plan determined in the Resolution seeks to promote all aspects of CSR, through measures taken by public authorities. Measures included in the Resolution will be implemented within the framework of the central government finances and budget. 5 Coordination, monitoring and supplementing of the action plan The Committee on Social and Corporate Responsibility will act as the steering group of the action plan carried out under this Resolution. The steering group is tasked with defining the action plan, coordinating its implementation, and monitoring its realisation. Ministries and authorities responsible for the preparation of the measures within the action plan report on progress to the steering group on a regular basis. The steering group assesses the need for completing and updating the action plan, In particular, the steering group assesses the concrete measures required to supplement and further define the action plan. The Ministry of Employment and the Economy supports the steering group s monitoring work, by arranging systematic monitoring of the implementation and effectiveness of the action plan. If specific monitoring surveys are deemed necessary, they will be carried out in cooperation with the ministries in charge and stakeholders. 14 Government Resolution on State ownership policy, issued on 3 November 2011 (in Finnish), 15 Opinion of the Cabinet Committee on Economic Policy on the remuneration of corporate management and key personnel, 13 August 2012 (in Finnish), 15

16 The Committee on Social and Corporate Responsibility will act as the steering group of the action plan carried out under this Resolution. This steering group is tasked with further clarifying the action plan, coordinating its implementation, and monitoring its realisation. Principal responsibility: Ministry of Employment and the Economy 16