Corporate & Securities Law

By Jim Hamilton

As he nears the end of his second and presumably last term on the European Commission, Commissioner Gunter Verheugen emphasized that corporate social responsibility remains even more relevant in the financial crisis. The Commission believes that corporate social responsibility is good in good times, he noted, but an undeniable must to cope with bad times because it helps to build trust, which the Commissioner called a vital commodity in the current circumstances The biggest competitiveness gains will come to those enterprises who integrate corporate social responsibility in their core strategy and purpose. Mr. Verheugen is Commissioner for Enterprise, as well as Vice-President of the Commission.

In earlier remarks this year, the Commissioner noted that those who believe that financial markets are best when left completely alone have been recently proven wrong. Policy makers and regulators must adopt rules which effectively enable markets to operate in the interest of society. Clearly, in a market economy, business has to make profit, he acknowledged. However, a genuinely European view holds that to achieve this objective in a sustainable way, the economic activities must ultimately serve the interests of society. Enterprises do this through the wealth they generate, the jobs they provide, and the goods and services they offer, while taking care of the environment and local communities where they operate.

But the issue goes a step further, he said, it is a question of ethical behavior, of ethical standards. The financial turmoil has revealed an unexpected degree of selfishness and greed existing in our society. This must be changed, emphasized the Commissioner, not by legislation, since ethical behavior cannot be decreed by law. Instead, he said that society must put in place an environment where such behavior is not tolerated but punished.

Full post as published by Jim Hamilton's World of Securities Regulation on November 29, 2009 (boomark / email).