CORPORATE SOCIAL RESPONSIBILITY IN GENERAL
1. CSR values and practices, including levels of support from government, business and the general public
A conceptual awareness of CSR, eg as ‘triple bottom line’ thinking combining economic, environmental and social responsibility, is relatively new in Finland as elsewhere. Many elements of CSR are, however, not new phenomena in Finland, as a Nordic welfare state. Furthermore, the industrial era preceding the rise of the welfare state may be said to have had a relatively gentle face compared to many other western European States or Russia, when it came to balancing between efficiency (results) and human conditions.
Large-scale industrialisation started in Finland at the end of the 19th century, ie at a stage when social security issues were increasingly debated in western societies. As industrialisation progressed the employers typically established small, rather self-contained, communities adjacent to the manufacturing premises. Today, these communities are considered a valuable cultural heritage. The employer provided accommodation, basic education for worker’s children, healthcare for families and the like. From a legal point of view, the employers’ actions were voluntary. Subsequently, mandatory legislation covering various elements of CSR was adopted, as will be described further below.
CSR as a concept has been debated for only a few years in Finland. The development has been quite rapid, however, and the attitude in the business community towards CSR is generally quite favourable, according to a study published by the Finnish Central Chamber of Commerce in January 2003. This survey also indicated reasonably widespread agreement that economic benefits could be achieved through sustainable CSR programmes.
A fair number of Finnish listed companies publish CSR guidelines. Formalisation of corporate social thinking, and movement towards more disclosure to the market, could be expected to constitute continuing trends. This development also necessitates clearer legal concepts covering such reporting and the responsibility for meeting standards. On a governmental level, CSR is becoming an increasingly important element of public policy. There are also several organisations that actively promote CSR. Among Finnish consumers, as certainly elsewhere, the awareness of CSR is growing steadily. According to a recent study (Marketing Radar, Yritykset ja Yhteiskuntavastuu (Corporations and CSR) 2004), 35 per cent of the respondents “fully agreed” with the statement “I prefer to buy the products of companies with better-than-average CSR standards”. That figure was up nine percentage points over the year (2003-2004). Only two per cent “fully disagreed” with the statement.
2. Laws, statutes, government publications or other significant framework documents
Finland has no legislation that treats CSR in a consolidated fashion. On the other hand, several domestic acts impose upon companies binding legal obligations that relate to certain areas of CSR; these are described in more detail below. Further, the Finnish Constitution (1999/731, as amended) contains reference to several elements of basic human rights that have a clear, albeit indirect, bearing on CSR.
The Finnish government and the Finnish President are actively participating in the global
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discussion fora on CSR and globalisation. The President, Ms Tarja Halonen, has been particularly concerned by social issues related to globalisation; she has, for example, co-chaired an independent World Commission on the Social Dimension of Globalisation, which was established by the International Labour Organisation (ILO) in 2002 and gave its official report in 2004 (see www.ilo.org/public/english/fairglobalization/report/index.htm). Domestically, the government is promoting CSR and disseminating information on it; for example, companies are encouraged to adhere to the OECD Guidelines for Multinational Enterprises (2000). There is a body called MONIKA, associated with the Ministry of Trade and Industry, responsible for promoting the OECD Guidelines in Finland. Sustainable development programmes have been developed both in government – the first of these having been published in 1998 – and at local level.
3. International treaties, conventions or standards
In addition to participating actively in the international discussion fora on CSR, Finland has ratified most international conventions and treaties which cover CSR. As an EU member state, Finland participates in European co-operation on CSR issues. Relevant EU-originated statutes include the Council Resolution OJ 2003/C39/02 on corporate responsibility and the 2001 Green Paper ‘Promoting a European Framework for Corporate Social Responsibility’. The OECD Guidelines mentioned above, as well as the 1992 Rio Declaration on Environment and Development and the follow-up UN Summit held in Johannesburg in September 2002, have been of major importance for the promotion of CSR in Finland.
There are also certain noteworthy international industrial standards concerning the environment that companies may adopt voluntarily. The adoption of voluntary environmental standards has become increasingly popular among Finnish companies over the past decade: the Eco Management and Audit Scheme (EMAS) and ISO 14001 seem to be the best known in Finland.
4. Non-statutory sources of liability for companies
This question is not relevant to the Finnish legal system.
5. Principal institutions, government agencies and/or major non-governmental organisations (NGOs)
The governmental institutions that mainly deal with CSR issues are the Ministry of Trade and Industry and the Ministry of the Environment. The Prime Minister and the Minister of Environment jointly chair the Finnish National Commission on Sustainable Development (FNCSD), which was established in 1993. FNCSD is active in promoting sustainable development issues among Finnish companies and acts as a forum for discussion on international and national sustainable development issues and best practices. In addition to government officials, businesses and non-governmental sectors are represented in the FNCSD (for more information, see www.ymparisto.fi/download.asp?contentid=16246&lan=EN). As mentioned above, MONIKA promotes the adoption of the OECD Guidelines.
Other noteworthy bodies dealing with CSR issues are the Finnish Central Chamber of Commerce, the Confederation of Finnish Industries (EK), the Finnish Business and Policy Forum (EVA), the Finnish Business and Society network and the Finnish Ethical Forum. There are a great number of international NGOs active in Finland within the many different areas of CSR; these include Amnesty International, Human Rights Watch, Greenpeace, the Red Cross, Save the Children and WWF.
SPECIFIC AREAS OF CORPORATE SOCIAL RESPONSIBILITY
6. Human rights
The Finnish Constitution provides for the protection of several basic human rights, many of which are also relevant from a CSR perspective, such as the right to equal treatment, the right to employment and the right to a sound environment. Employment and environmental legislation also include several provisions that cover CSR directly. Finland has ratified most of the relevant international conventions on human rights, such as the International Convention on Civil and Political Rights and the International Convention on Economic, Social and Cultural Rights, both of December 1966, as well as the European Convention on Human Rights and Fundamental Freedoms of November 1950.
7. Corruption
According to Transparency International, Finland is the least corrupt country in the world. Though the significance of such estimates is debatable, generally it is probably true that the societal base-culture is not corrupt. Finland has, however, had its share of bribery scandals involving civil servants, and certain fields of business have a reputation as promoters of the so-called grey economy (eg some sectors of the construction industry). The offer, giving and acceptance of bribes are criminal offences. There is also some investigation of potential corruption abroad.
8. Corporate governance and business ethics
Overview of recent corporate governance reforms
The basic requirements for corporate governance in Finland are set out primarily in the Finnish Companies Act. It includes provisions on the relationship between the board of directors, the managing director and the shareholders and on their respective rights and obligations. Amendments to the Companies Act are currently being prepared and it is envisaged that a Bill will be presented in early 2005.
The duties of a publicly listed company and its board of directors towards the securities market are regulated by the Finnish Securities Market Act, and other regulations, such as those issued by the Finnish Financial Supervision Authority (FSA). Listed companies are also subject to the rules of the Helsinki Exchanges, which recently adopted the new Corporate Governance Code as part of its regulatory framework. This code rests on the ‘comply or explain’ principle, ie listed companies must either adhere to the rules of the code or explain publicly any deviations and the reasons for them. The Corporate Governance Code came into force as of 1 July 2004. The US Sarbanes-Oxley Act and corresponding European initiatives have obviously resulted in an increased awareness of the issues they deal with, ie mainly financial reporting, and an increased debate on its cross-border effects and the most effective means of regulation. The Corporate Governance Code can be seen as a response to the increased debate on the subject in general and to the European corporate governance initiatives.
Shareholders’ rights
Shareholders exercise their rights at a company shareholders’ meeting. Such rights include the right to attend the meeting, the right to request information relating to the matters decided upon at the meeting, the right to make proposals at the meeting and the right to vote. In the last couple of years many Finnish listed companies have developed the AGM into a meaningful encounter between the management and the board, on the one hand, and shareholders on the other. Historically AGMs have been seen as strictly decision-making fora with interaction brought to a necessary minimum.
Minority shareholders have a right to initiate a derivative suit on behalf of the company, subject to the fulfilment of certain conditions. A derivative suit can be initiated by a shareholder or a group of shareholders representing at least one-tenth of all shares in the
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company, or the equivalent of one-third of the shares represented at the shareholders’ meeting. Reasons may be, eg, that the shareholders’ meeting ought to have decided on whether to bring a suit against the directors, but that such matter has not been brought to or decided at the meeting, or that the board of directors has been granted discharge from liability by the shareholders’ meeting, but minority shareholders representing at least one-tenth of the shares in the company or one-third of the shares represented at the meeting had voted against that decision.
Management structure and the role of directors
Finnish companies can have either a one-tier or a two-tier board structure. The board of directors is the mandatory corporate body elected by the shareholders’ meeting, whereas the supervisory board is a special corporate body that may be elected in larger companies if provided for in their articles of association. Supervisory boards exist mainly in state-owned companies and are in decline. The Finnish supervisory boards cannot be directly compared with two-tier systems of other countries, since in Finland the board of directors is always the main corporate decision-making body.
The directors of Finnish listed companies are elected by the shareholders’ meeting. The Corporate Governance Code recommends that a majority of the directors be independent of the company, and at least two directors be independent of major shareholders. If the company has a nomination committee, the committee is responsible for the preparation of nominations of directors to be presented to the shareholders’ meeting.
The board of directors is responsible for the management and the proper organisation of the company’s operations. The board generally elects the managing director and is responsible for the supervision of the book-keeping and of the financial matters of the company. The duties of the board of directors include a duty of care, and a duty of loyalty requiring that the directors act with loyalty towards, and in the best interest of, the company, and with such prudence as to ensure that the interests of the company are secured. In case of breach of his/her duties, a director, or the managing director, may be held liable to compensate all damage wilfully or negligently caused to the company in his/her office. A director, and the managing director, may also be held liable directly towards a shareholder or another third person if such party has suffered damage through the directors’ breach of the Companies Act or the company’s articles of association. Breach of the Securities Market Act and the directors’ duties towards the market, eg in connection with the company’s disclosure obligations, may also lead to liability under the securities market legislation. The shareholders’ meeting has an unrestricted right to remove a director from office at any time.
The board of directors may freely decide when and how to meet. The Corporate Governance Code, however, recommends that the board adopt a written charter describing its work and working methods, and that the company disclose the main content of such charter to the market. The company must also report the number of board meetings held during a year as well as the average attendance of directors at the board meetings. It is further recommended that the board of directors conduct an annual evaluation of its performance and working methods. It must also be ensured that each director is properly introduced to the operations of the company and that (s)he is provided with the necessary information on the operations of the company on a regular basis.
The main rule is that the board of directors must make all its decisions in corpore and it may not in general delegate its duties and responsibility under law. This does not mean, however, that the board of directors is not able to assign certain matters to be prepared eg by board committees or give certain directors their own areas of responsibility subject to the above main rule. Any related decisions, however, can only be taken by the full board and at the full board’s responsibility. Specific board committees are a relatively new, and rapidly developing, phenomenon in Finnish companies. The Corporate Governance Code provides for each company to evaluate the necessity and expediency of establishing a certain committee. The Corporate Governance Code addresses the role of the audit, nomination and compensation committees. Also other committees may be established if needed.
The remuneration of directors is decided upon by the shareholders’ meeting when electing the directors. The remuneration may, in addition to salary, comprise performance-related incentive schemes, pension schemes, rewards in the form of shares and share-related compensation systems. It is, however, recommended in the Corporate Governance Code that executive directors not participate in share-related compensation systems. The company must disclose all remuneration paid to directors and committee members during the financial year, including all shares received by directors and information on all share-related schemes that the directors are participating in.
According to the Companies Act, a director may not participate when the board deals with an agreement between him/herself and the company, or with an agreement between the company and a third party from which (s)he would receive a material benefit that may be contrary to the company’s interests. The director will have to evaluate in casu whether his/her personal interest in a matter may be contrary to the company’s and may, pursuant to his/her duty of loyalty, be required to abstain where (s)he has a self-interest that may be in conflict with the company interests. Also, entering into certain agreements or loan arrangements with persons belonging to the so-called inner circle of the company is subject to specific rules under the Companies Act. The board of directors is further bound by a duty to observe the principle of equality of shareholders.
Disclosure
Pursuant to the Securities Market Act, a listed company is under an obligation to disclose to the market all decisions by, and information concerning, the company, and activities that are likely to have a material influence on the value of its shares. The rules of the Helsinki Exchanges further specify situations when information needs to be disclosed, and the manner of disclosure. The liability for breach of the company’s disclosure obligations pursuant to the Securities Market Act mainly lies with the company. The board of directors could be held liable to compensate to the company damage caused to it. There is, however, very little legal precedent relating to such liabilities. Breach of the Helsinki Exchanges rules are dealt with by the Disciplinary Board of the Exchange, which may impose disciplinary sanctions on the company.
Public disclosure is a tool when dealing with CSR. To the extent that listed companies have adopted CSR programmes, they are often keen to publish them. With the increasing importance for (institutional) investors of engaging in socially responsible investment, the relative importance of CSR programmes and the manner of their presentation grows as a result. Hence, there is, on the one hand, a trend towards better-quality CSR programmes and compliance with them. On the other, there is a growing need for companies to treat disclosure of CSR-related information in the same manner as other disclosures, as there could be Securities Market Law implications.
Enforcement
Enforcement of the regulation of listed companies is in practice mainly carried out by the Financial Supervision Authority, or through the Helsinki Exchanges’ disciplinary procedures. In addition to market supervision, the enforcement of corporate law by individual shareholders or the companies’ decision-making bodies themselves would generally be carried out through court or arbitral proceedings.
9. Corporate responsibility to employees
In Finland, labour and employment law consists of parliamentary acts, supplementary regulations, decisions of the Council of State and decisions of various ministries and central
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administrative boards. Companies are generally subject to labour laws irrespective of their size or line of business. To the extent the provisions of labour laws are non-mandatory, the subject matter of such provisions is often stipulated in collective bargaining agreements or, to a more limited extent, in individual employment contracts.
The basic statutes on labour and employment issues in Finland are the Act on Employment Contracts (2001/55, as amended) and the Act on Co-operation within Enterprises (1978/725, as amended). The Act on Employment Contracts sets out, among other things, the general rules and regulations regarding the term of employment, employers’ and employees’ duties, statutory benefits as well as lay-off and termination of employment. The Act on Co-operation within Enterprises sets out procedural rules and regulations regarding, among other things, employee representation, lay-off and termination of employment and the impact of corporate restructuring on employment. Other relevant statutes applying to all employment relationships are, inter alia, the Working Hours Act (1996/605, as amended), the Annual Leave Act (1973/272, as amended) and the Safety at Work Act (2002/738, as amended).
The Finnish labour market is highly organised. There are numerous collective bargaining agreements embracing the entire field of employment and setting out specific rules that substitute or supplement employment law, and setting limits on private contracting. According to the Collective Agreements Act (1946/436, as amended), where a clause of an employment contract conflicts with a corresponding provision of a collective agreement to the employee’s disadvantage, the clause is invalid and the provisions of the collective agreement will apply, provided that the employee and employer are bound by the collective agreement. The Collective Agreements Act provides that a collective agreement is binding not only on the parties to the agreement but also on the registered member associations of organisations that are party to the agreement, and on employers and employees who during the period covered by the agreement are, or have been, members of an organisation bound by the agreement.
According to the Act on Employment Contracts, the employer is generally obliged to observe salary and other conditions sanctioned for the work in question in any national collective agreement that may be deemed to constitute general practice in the field concerned, and that has been confirmed to be generally binding by a special commission appointed by the government. Therefore, such national collective bargaining agreement may be binding on employment relationships whether or not the employer is a party to the collective bargaining agreement or a member of an association that is a party to the agreement. Furthermore, any clauses of any employment contract that are contrary to the provisions set out in such a national collective bargaining agreement are invalid and superseded by the corresponding provisions of the relevant collective bargaining agreement.
Employee representation is regulated by the Act on Representation of Personnel in Management (1990/725, as amended). The Act is applicable to Finnish companies with a minimum of 150 employees in Finland. Under this Act, employee representation may be agreed within the company. If no agreement is reached, employees have the right to require statutory representation as set forth in the Act. In such a case, groups of personnel may nominate their representatives to the supervisory board, the board of directors or to management groups (ie, the corporate body for employee representation being chosen by the employer). Traditionally, employee representatives have not become members of statutory corporate bodies (with ensuing liability), but of management groups.
The Employment Contracts Act gives employers a mandatory duty not to discriminate against employees. An employer must treat all employees equally and may not discriminate on any grounds, eg origin, religion, age, political views, trade union membership or any other comparable reason. This obligation also applies in the recruitment of employees. The sanction for violating this mandatory obligation may be a fine or even imprisonment.
Discrimination based on gender is prohibited by the Equality between Women and Men
Act (1986/609, as amended), which makes it an employer’s duty to take affirmative steps to:
A breach of the obligation to treat women and men equally may result in a fine or imprisonment, and also in a liability to compensate the employee concerned. Moreover, a government bill has recently been introduced, whereby a new obligation will be imposed on employers to promote equal terms of employment for women and men in particular with respect to wages.
Maternity leave in Finland is 105 days, during which an employee receives a daily maternity benefit from the state (Social Insurance Institution). Paternity leave is 6-18 days in total. Parental leave, which is 158 days, follows immediately after the maternity leave, and may be taken by either the mother or the father. Maternity and parental benefit constitutes approximately 70 per cent or the employee’s regular salary. Upon returning from maternity leave or parental leave the employee is entitled to return to his/her former job.
The working environment is primarily governed by the Health and Safety at Work Act (2002/738), which has been amended several times to reflect, inter alia, the requirements of EU directives. There are also numerous Acts, decrees and executive orders (issued by different ministries) regulating safety and health at work.
An employer is obliged to pay pension insurance premiums, accident insurance premiums, unemployment insurance premiums and group life insurance premiums in accordance with Finnish legislation. Employers have a mandatory obligation to arrange pension security for its employees; this may be arranged through an employer’s pension fund or foundation. Pension funds are regulated by the Act on Pension Funds (1992/1164, as amended) and pension foundations are regulated by the Act on Pension Foundations (1995/1774, as amended). The rules of pension funds and foundations are approved and confirmed by the Ministry of Social Affairs and Health, and the Insurance Supervision Agency supervises their activity. Furthermore, the Ministry of Social Affairs and Health maintains a register of pension fund and foundations. If mandatory pension security is not arranged through an employer’s pension fund or foundation, it shall, primarily, be arranged via schemes administered by private insurance companies, in accordance with the Act on Employment Pensions (1961/395, as amended) or the Act on Temporary Employment Pensions (1962/134, as amended).
Mandatory employment pension schemes cover everyone who is employed (or self-employed). Such pension schemes cover, in general, old age pension, invalidity pension, unemployment pension, survivors’ pension and various early retirement pension schemes. Employment pension schemes supplement the minimum basic security provided by the national pension scheme. The employment pension provides employees with security for retirement (generally at the age of 65), disability, unemployment and certain other situations. The full old age pension paid by the employment pension scheme equals 60 per cent of earnings and it is, in general, payable after forty years of service. Following a recent reform of the pension system employees are entitled to retire between 63 and 68 years of age. The actual size of the pension depends on the age when the individual employee retires.
In addition to mandatory pension arrangements, it is possible to arrange additional pension security through an insurance company or a pension fund or foundation. Such additional pension security arrangements are subject to individual terms applicable to the arrangement in question. Furthermore, all residents of Finland above the age of 16 are in accordance with the National Pension Act (1956/347, as amended) covered by the national pension scheme for retirement (generally at the age of 65), disability and unemployment. The national pension is a basic pension that guarantees residents of Finland a minimum post-retirement income. The administration of the national pension scheme is in the hands of the Commissioners of the National Pensions Institute.
10.Corporate responsibility towards the environment
Internationally
Finland could be said to be a forerunner in the global debate on environmental protection. On a governmental level, the political process initiated through the UN Conference in Rio de Janeiro in 1992 is considered the most important in promoting sustainable development. At the follow-up conference in Johannesburg in 2002, the EU, on Finland’s initiative, proposed a major action plan, which aims to change unsustainable patterns of production and consumption. Finland has ratified all of the important international UN conventions on the environment and strives to factor environmental issues into every aspect of socio-economic life, including trade policies and development co-operation.
The most important global organisation in the environmental sphere is the United Nations Environment Programme (UNEP), in which Finland is also actively involved. International co-operation on housing and social issues through Habitat, the United Nations Human Settlements Programme, is also important for Finland. Furthermore, there are several national and international co-operation projects carried out in the adjacent areas of Finland eg in the Nordic countries, in the Arctic area and increasingly in the Baltic area and Russia.
Domestic environmental policy instruments
Finland’s principal environmental policy instruments are legislative controls, economic instruments and informative measures. The main legislative control is largely exerted through compulsory environmental permits, notification procedures and environmental liability schemes, as briefly described below. Economic instruments include selective taxes and fees, as well as various kinds of subsidies, grants and tax exemptions, both for companies and individual citizens. Information measures, such as extensive research and monitoring work by authorities, has become increasingly important due to the high volume and complexity of the environmental regulation. The Finnish Environment Institute (SYKE) has a particular role in research and education work. In addition to the official measures, companies have voluntarily adopted a variety of market-based measures to highlight their own contributions towards improving the environment. Various business sectors have made energy-saving agreements with ministries and a special independent organisation (Motiva Oy) has been set up to promote energy savings. Many companies are also committed to continuous environmental improvements through their active involvement in the EMAS or ISO 14001 environmental management systems. Participation by Finnish companies in voluntary environmental management systems has developed during the past decade.
Essential environmental legislation
An integrated notification and permit system was introduced in Finland through the Finnish Environmental Protection Act 86/2000. In principle an environmental permit is required for all activities that may lead to environmental pollution. Other environmental legislation has been enacted to prohibit the use of certain harmful substances, to set limits on emissions, to enforce certain technical standards, to make producers responsible for waste products, to limit certain activities in special areas such as nature reserves, and to control land use planning.
The main enforcement powers related to environmental legislation are vested with the government or relevant authorities and are classified as administrative enforcement powers. The Environment Protection Act and the Finnish Criminal Act (1889/39) also provide for criminal sanctions for certain environmental offences. The Regional Environment Centres and municipal environmental authorities supervise environmental protection at local level. While they issue permits of regional environmental significance,and municipal authorities issue permits for activities with local environmental impact only, the Environmental Permit Authority is the authority for activities having more significant impact on the environment.
Environmental liability schemes
The Finnish liability regime for environmental damage is two-fold. It covers (1) civil liability, ie liability for damage caused to the property or health of third parties, and (2) liability towards the state for the actions or costs arising out of the duty to clean up contaminated land, which is regulated by public law.
A sui generis civil liability for damages to third party health and property caused by pollution or other similar impact on the environment is set forth in the Finnish Act on Compensation for Environmental Damages 1994/737. Purchasers of a business, as well as its operators, can be liable for damages caused by it, provided that the purchaser knew, or should have known, of the pollution or the disturbance causing the pollution. Further, an entity considered equal to the operator can be held liable for damages. The Act provides for strict liability without any requirement on cause and effect. The Act, however, only applies to damages caused by activities carried out after 1 June 1995. The Finnish Damages Act 1974/412 applies to environmental damages resulting from activities carried out before 1 June 1995 and which are not subject to any special legislation, such as legislation on nuclear or oil damage. Under the Damages Act, the obligation to compensate for environmental damage only arises where the damage has been caused intentionally or through negligence. In relation to activities that are highly likely to cause environmental damages, courts have on a case-by-case basis imposed either a strict liability on the operator or reversed the burden of proof to the benefit of the plaintiff.
As for clean-up liability, the ‘polluter pays’ principle applies with respect to liability for historic contamination of soil or groundwater. The holder of a property must restore soil and groundwater, in so far as this is not clearly unreasonable, if the polluting operator is not known or cannot be forced to fulfil his duties, and that the pollution has occurred with the consent of the holder, or if he knew, or should have known, the state of the area when it was acquired. However, with respect to contamination of soil or groundwater that took place prior to 1 January 1994, the holder of a property can, under certain circumstances, face the duty to clean up historic contamination regardless of whether he knew or should have known of the contamination, or whether the actual polluter can be identified.
Environmental management and disclosure obligations
The Environmental Protection Act imposes a general obligation on operators of businesses to have sufficient knowledge of their environmental activities, as well as to take proper care and caution to prevent pollution, from which it may be concluded that sufficient environmental management should be introduced to govern such duties. There are also certain statutory requirements for environmental management of operators involved, for example, in the processing of hazardous substances. The Act further obliges operators to be sufficiently aware of the impact that their activities have on the environment, of related environmental risks and of possibilities to reduce negative impact. Operators must furthermore notify the authorities of any other changes that may be of significance in terms of supervision. In addition to the general duties above, operators have a particular obligation, at the risk of criminal sanctions, to monitor and immediately notify the supervising environmental authority of substances leaked into the soil or ground water that may cause pollution. The obligation is clearly placed with the operator of the activity causing the threat for pollution and not with, for instance, the current owner of property where pollution has occurred earlier. If the pollution can cause danger to health, an obligation to notify the supervising authority arises from health-related regulation or on the basis of general principles of care and the preservation of nature.
Disclosure obligations on companies related to environmental liabilities are increasingly enforced through national and international laws and standards related to accounting and reporting, which require companies to give information on all substantial financial environmental liabilities in their bookkeeping and/or disclose such liabilities to their investors. In 2003 the Finnish Accountancy Board issued general guidelines on booking, calculation and reporting of environmental matters in the annual accounts based on the EC Commission’s recommendation (2001/453/EC), and taking into account IAS standards.
11.Corporate responsibility to communities
The main form of governmental promotion of CSR towards local communities is the granting of public subsidies for operations in areas that are considered in need of development. Otherwise, there seems to be no significant regulation that would be relevant from a CSR-perspective.
12. Corporate responsibility for overseas activities
The most important set of regulation are the OECD Guidelines, which are actively promoted by the Finnish government. A noteworthy NGO in the field is FinnWatch, which collects, analyses and distributes information on Finnish multinational companies. It is particularly interested in the consequences of these companies’ operations on human and labour rights, on the environment and in their developmental and social consequences.
13. Procurement
The Act on Public Procurements (1992/1505) implements the relevant EC directives. There is very little other procurement regulation that would have a bearing on CSR. Perhaps one good example is the Guidelines of the Ministry of Industry and Trade concerning Energy Efficiency in Public Procurement.
14.CSR reporting and socially responsible investing
Institutional investors, who play an important part in Finnish economic life as significant shareholders in many companies, are not regulated by any particular law; neither does the Corporate Governance Code establish any particular duties for them. There is a clear tendency among institutional investors to become more active in the field of CSR, and an increasing number of them are making public their ownership policies – an example being the Finnish Association of Mutual Funds, which recently made public its ownership policy and recommended each member fund to establish and disclose its personal ownership policy. Institutional investors’ increased interest in CSR enhances companies’ need to adopt CSR programmes and actively disclose the compliance therewith.
SOURCES
Books:
Lindholm, T, Rasinaho, V, and Virtanen, O, Yhtiökokous corporate governancen hengessä, WS Bookwell Oy, Juva 2004.
Guidelines:
Vastuullisen yritystoiminnan edistämistä koskevat kauppa- ja teollisuusministeriön linjaukset
(Guidelines by the Ministry of Trade and Industry for the promotion of CSR), 11 February
2004.
Recommendation for corporate governance of listed companies, by the Helsinki Exchange,
the Central Chamber of Commerce and the Confederation of Finnish Industry and
Employers December 2003.
Studies:
Marketing Radar, Yritykset ja Yhteiskuntavastuu 2004.
The Confederation of Finnish Industry and Employers, Yrityksen yhteiskuntavastuu,
January 2001.
Some web pages:
The Ministry of Trade and Industry www.ktm.fi
The Environmental Administration of Finland www.ymparisto.fi
The Finnish National Commission on Sustainable Development (FNCSD):
www.ymparisto.fi/download.asp?contentid=16246&lan=EN
The Government Programme of Prime Minister Matti Vanhanen’s Government on 24 June 2003: www.vnk.fi/tiedostot/pdf/en/39357.pdf
The World Commission on the Social Dimension of Globalisation:
www.ilo.org/public/english/fairglobalization/origin/index.htm
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