I argue that Europe’s institutional diversity hampers standard-setting while economic crises and declining levels of business legitimacy facilitate it. Contention has been fuelled by CSR’s inherent ambiguity: is CSR a means to regulate the economy, or a domain of voluntary activity that must remain free of state regulation? Fearful of regulation, business groups – German employers in particular – have forcefully advocated the latter view. In addition to converting EU CSR from social-liberal to neo-liberal, business has neutralized two of the Commission’s standard-setting advocates. The financial crisis, the power of arguments and discourse, and the impact of global policy developments in the field of CSR have re-empowered standard-setters.
The paper concludes with a critical analysis of the Commission’s Directive to mandate Economic, Social and Governance reporting for large companies. I will analyze the fate of this Directive, which will be determined in negotiations in the Council and EP in the coming months. The proposal has already faced stiff resistance from the business community, and attempts are underway to weaken the proposal to the point of insignificance. This suggests that the notion of industry support for upward regulatory harmonization, while popular among liberal academics, is just wishful thinking.
