CSR on the back-burner

The issue of what is called “sustainability reporting” or, alternatively, “non-financial reporting” is becoming quite prominent in the debates about corporate governance and corporate responsibility. This debate, however, is largely restricted to companies listed on the stock exchange and often focuses on the needs of shareholders to understand the risks they are exposed to through non-financial issues of the companies they invest in.

The problem with voluntarism is the question of priorities- Saviour Rizzo

In spite of the prominence this issue is being given, it has not been very topical in Malta. It was only when the European Commission published its new policy framework – Responsible Business Package – that the Malta Business Bureau issued a statement in which it expressed its belief that corporate social responsibility should be company-driven and that business should be given the flexibility to tailor-make its CSR approach according to the exigencies of its size and the market in which it operates. This stance taken by MBB is in tune with that generally adopted by Maltese policymakers in their lobbying at EU level where stress is often laid on the preponderance of micro firms operating in the Maltese economy.

Such legal impositions related to non-financial reporting can add costs to these companies, costs that might jeopardise their economic viability.

Compliance with the principles of sustainability is sought more by incentives such as awards and certification. The emphasis tends to be on waste management, resource efficiency and general environmental management.

The Malta Tourism Authority awards an eco certificate to the hotels that comply with a set of 10 criteria. In 2011, the annual award given to the firm in the hospitality industry that approximates most to the ideal of the sustainability set by these criteria was won by Westin Dragonara Resort.

Another award, given by the Cleaner Technology Centre and Wasterserv Malta, is the Environment Award for Enterprise, which, this year, was won by GreenPak for being instrumental in setting the rules for the recycling industry in Malta.

These initiatives are in line with the stance adopted by MBB, which is advocating a policy of voluntarism rather than imposition by law.

The one sphere that is characterised by legal provisions rather than voluntarism is occupational health and safety. Legislation in this regard spells the duties and responsibilities of the employer and is very specific about the presence of representation/s of workers at the workplace and of their right to consultation and training about OHS matters.

There is also a legally established authority, the Occupational Health and Safety Authority, that monitors the implementation and enforcement of these legal provisions. However, there are no legal provisions to oblige firms to include or refer to their actions related to OHS in their reporting.

There are no other specific legal provisions that grant consultation and information rights to workplace representatives to issues related to training, skills and workplace development, labour force characteristics, environmental impact and risks, outsourcing and supply chain management.

EU Directive 2002/14/EC, establishing a general framework for informing and consulting employees in the European Community, was transposed into Maltese law through the Employee Information and Consultation Regulations (Legal Notice 10 of 2006).

Consultation and information rights are also given to employees’ representative in cases of transfer of business affecting the conditions of employment of the transferred employees (Legal Notice 85 of 2003).

Apart from these regulations there is no other legislation that includes provisions for information and consultation.

By and large, the Maltese regulations on information and consultation are a replica of the directive, thus lacking any further details or national practice. This means that, in effect, though this transposition is correct, it is not optimal in the sense that Maltese employers and employees are not guided as to the details and/or practicality of how the consultation is to be conducted.

Furthermore, the Malta regulations do not expand on what the appropriate level of negotiation should be or what appropriate consultation should be. They are limited to the general wording found in the definitions “information” and “consultation” as provided in the directive.

The Maltese trade unions do not seem to be unduly concerned about these shortcomings.

Institutional bodies of workers’ participation at the workplace level may not be seen as effective tools to enhance their bargaining power. As regards non-financial matters, since these are not considered to be bread and butter issues by their constituents, they do not feature high on their agenda.

This “let it be” attitude is complemented by the low key policy adopted by the employers’ association and, to a certain extent, even by the government in these matters.

It looks as if there are no qualms among the social partners about the prevalent spirit of voluntarism with regard to the information and consultation rights and the issues related to sustainability.

The problem with voluntarism is the question of priorities. Without a binding legal framework and a lack of top-down government initiatives, Maltese firms, left to their own devices, might be tempted to put CSR issues on the back-burner.

While such a mindset persists, CSR in Malta will never reach the level attained by other countries, which have adopted CSR as a public policy priority.

The political visibility which the Commission has been striving to give to CSR is unlikely to be attained with a policy of voluntarism.