CORPORATE SOCIAL RESPONSIBILITY IN GENERAL
1. CSR values and practices, including levels of support from government, business and the general public
CSR issues have become topical in recent years and attracted substantial interest from government, NGOs and business associations. Relevant authorities, such as the Ministry of Economy and Labour, have elaborated a distinct CSR policy, although it is incorporated into the broader area of social dialogue. CSR concerns are promoted in legislation covering such specific areas as environment protection, employment or corporate law. CSR elements are also found in laws such as those on public access to information on the environment, or in legislative proposals concerning, for instance, the right of employees to consultation and information from employers, which are often drafted to implement EC laws.
Apart from general measures, local authorities and NGOs, which under the Administrative Procedure Code or specific statutes enjoy the right to intervene, are often actively involved in proceedings concerning, eg large investments or projects impacting the environment, typically large manufacturing sites or shopping centres. Traditionally, issues of social responsibility remain an area of interest for trade unions. They often participate in platforms for dialogue with employers and authorities. Moreover, small and medium sized enterprises join in such dialogue to mitigate distortions to local labour markets produced by large retailers, especially in the fast-moving consumer goods sector.
Leading business associations such as the Business Centre Club, the Polish Confederation of Private Employers and the Confederation of Polish Employers regularly host CSR events and provide private sector representatives for various conciliatory bodies such as, for instance, steering committees of structural funds. A growing number of NGOs, consultancies and research organisations focus on CSR aspects of business activities, including the Responsible Business Forum, the Polish Forum for Corporate Governance, the Business Ethics Centre, the Foundation for Social Communication, the Polish Chamber of Commerce, the Academy for Development of Philanthropy or the Gdansk Institute for Market Economics. One of their many activities is to publish reports on implementation of CSR rules in Poland: the most recent include the Gdansk Institute’s paper on Reporting on Social Responsibility by Banks, Companies and Financial Institutions and its white paper on Corporate Governance, and the Foundation for Social Communication’s 2003 report on consumers’ and opinion formers’ views of CSR.
Additionally, companies are increasingly providing voluntary CSR reporting or announcing their own detailed CSR standards, as was the case with the main Polish pension funds. They can also become involved as strategic partners of NGOs, promoting compliance with CSR requirements and supporting the publication of CSR reports. A number of awards have been funded and granted annually to private firms with CSR activities, eg Donor of the Year. Recently educational courses on CSR have been established.
2. Laws, statutes, government publications or other significant framework documents
Rather than having a single legal framework for CSR, Polish legislation accommodates elements of CSR across socially-sensitive areas such as employment, industrial relationships, competition, consumer protection and product safety, state aid, tax, discrimination and local administration. Necessary safeguards are present in the regulatory framework for financial markets, stocks and corporate governance, as well as in criminal law. The statutory background is discussed in the sections below. However, certain general instruments may also be relevant for CSR purposes.
The regulation of social dialogue, a common mechanism for negotiation between businesses, employees and public authorities, includes the Business Associations Act of 1991, the Trade Unions Act of 1991, the Social and Economic Council Act of 2001 (also featuring regional Social Dialogue Councils), the Employment Promotion Act of 1994, the Collective Dispute Resolution Act of 1991 and the European Works Council Act of 2002. Proposals include the Act on Employees’ Rights to Information and Consultation, which will implement the Directive 2002/14/EC of the European parliament and Council of 11 March 2002, which establishes a framework for informing and consulting employees.
Elements of CSR are further integrated into broad governmental programmes such as the National Regional Development Strategy or the National Social Integration Strategy. Technical CSR standards, valid for specific sectors or businesses, are often developed by NGOs or take the form of best practice agreed upon multilaterally by various stakeholders, as was the case with corporate governances codes (discussed below). Polish legislation also includes rules on penal liability of companies within areas relevant to CSR. These issues used to be governed by the Collective Penal Liability (Corporate Entities) Act of 2002, under which companies may be held liable under criminal law, and prosecuted for crimes and offences of its directors, employees and other representatives, even though companies are not allowed to participate in criminal proceedings against these individuals. Still, court judgments in individual cases are deemed decisive in proceedings against a company. These rules were often contested since, pursuant to the traditional notion of criminal liability, only individuals may be subject to criminal prosecution; they were also alleged to disregard common standards of criminal law such as the right of defence. These concerns led the Constitutional Tribunal on 25 October 2004 to hold a substantial part of the Collective Penal Liability (Corporate Entities) Act to be contrary to the Polish Constitution (K 18/03); this judgment will take effect on 30 June 2005 and the relevant provisions of the Act will not apply beyond that date.
3. International treaties, conventions or standards
In the course of its transformation to a market economy, Poland ratified a range of international instruments relevant to CSR. In 1991, Poland joined the Council of Europe, which was followed by ratification of the Convention on Laundering, Search, Seizure and Confiscation of Proceeds from Crime and the Criminal Law Convention on Corruption, which requires recognition of such offences as direct or indirect bribery in the private sector, further discussed in section 7 below. Poland is a co-founder of the UN and a party to a large number of UN treaties and conventions, such as the Basel Convention on the Control of Cross-border Movements of Hazardous Wastes and their Disposal. Further, concepts of sustainable development and the “polluter pays” principle, elaborated during the Earth Summits in Rio de Janeiro and Johannesburg, have been integrated into Polish legislation. Poland has also ratified conventions featuring various elements of employer responsibility, and especially, those drafted under the auspices of the International Labour Organisation such as the Labour Statistics Convention or the Safety Provisions (Building) Convention. Finally, accession to the European Community has led to the application of all relevant EU laws.
4. Non-statutory sources of liability for companies
Under Polish law, any enforceable liability necessarily depends on the provisions of the law, however broad and general. The following comments refer to liability based on requirements of equity, as far as these are incorporated into the law.
General conditions of liability include rules on torts (Article 415 of the Civil Code 1964),
whereby companies may be held liable for any damage and personal injury suffered by third parties provided that relevant actions or omissions, fault on the side of a company, damage or personal injury and a causal link are demonstrated. Article 416 of the Civil Code further specifies that companies are also liable for torts of their statutory bodies. Similarly, companies will incur liability for actions and omissions of their representatives, unless they substantiate the proper choice of that representative. A company may also be exonerated if it is able to prove that the activities for which its liability is claimed were entrusted to a third-party professional.
Furthermore, companies that operate facilities using natural forces such as fuels, electricity or combustion, may be held liable for any damage or injury towards third parties or their own staff. As an exception to the general rule, liability for such facilities is strict and thus the issue of fault in operation of facilities is irrelevant. Such strict liability reflects the concept that those operating amenities solely for commercial profit that necessarily involve risk to health or property of third parties must incur liability for these amenities, regardless of whether they acted with due care or not. However, liability will be prevented or mitigated in case of force majeure, when damage or injury was caused by the victim or third party for which the company may not be responsible.
Further to the above rules, third parties claiming imminent danger of damage or injury due to a lack of proper supervision of such operating facilities may request the company concerned to take all precautions necessary and, when appropriate, to provide security. If such a request is refused the dispute will be resolved by the courts. In the context of CSR, the Civil Code provides more detailed rules on tort liability for personal injuries, including the extent of compensation, and of costs of treatment, retraining for other employment and the possible award of permanent disability pensions if the injury affects the victim’s employment opportunities, income or chances of future success. Moreover, companies may be sued under rules on unjust enrichment, unless the proceeds from the business were consumed and not substituted by other assets.
Detailed application of rules on tort will largely depend on the facts of a case, and will reflect the current policy of courts, as well as public opinion and legal tradition. For these reasons, tort actions against tobacco producers were rejected by the common courts, since, in the courts’ view, consumers were sufficiently informed and hence could not raise claims based on their conscious decision to use health-affecting products. Moreover, since onus probandi generally rests on plaintiffs, difficulties with satisfactory evidence may prevent successful actions, especially since the courts will only exceptionally take the initiative in tort cases. In this regard, in the case of penalised torts, prior decisions of criminal courts will usually be prejudicial to private actions and thus civil proceedings will focus on the assessment of proper compensation. Class actions are not allowed, although claimants affected by the same circumstances may pool their individual actions. When the public interest requires, prosecutors may also bring or step into proceedings.
Notwithstanding the above, companies may incur liability for unfair competitive practices under the Unfair Competition Act of 1993, which reflects a wide variety of CSR issues. The Act prevents in general terms any activities contrary to best practice, if the interests of other enterprises or customers and consumers may be adversely affected, even if the activities are not unlawful under other laws. The Act contains a list of such activities, including false or misleading geographical designation of marketed products, breach of business secrets, advocacy of withdrawal or non-compliance with concluded contracts, passing off, misrepresentations, corruption, prevention of new market entrants, unfair or illegal advertising, chain selling or application of consortial schemes. The above liability will often be supported or superceded by more specific statutory rules on consumer protection, including product safety, distant contracts and consumer contracts, e-commerce, intellectual property, competition law or sector-specific regulations governing markets such as foodstuffs, cosmetic products, pharmaceuticals, electronic communications or financial services.
5. Principal institutions, government agencies and/or major non-governmental organisations (NGOs)
No single public institution supervises or co-ordinates CSR in Poland; a variety of public bodies are charged with specific aspects of the issue. Human and civil rights are overseen by three major institutions involved in the promotion of equal rights: the (General) Ombudsman, the Government Plenipotentiary for Equal Status of Women and Men and the Ombudsman for Children. Protection of the environment and enforcement of the ‘polluter pays’ principle vis-à-vis corporations has been entrusted to environmental inspectorates operating both at the national and regional levels. Levies imposed through environmental fees and fines are directly appropriated by the national and regional Funds for Environmental Protection towards investments aimed at environmental protection. The Ministry of Economy and Labour and the National Labour Inspectorate investigate and supervise compliance with labour law, including, in particular, health and safety rules. Other enforcement agencies involved in CSR compliance within areas of their jurisdiction include the Office for Protection of Competition and Consumers and local consumer ombudsmen, various inspection agencies (labour, trade, construction, foodstuffs), the Inspector General for Data Protection, the Children’s Ombudsman (abusive TV content, clinical trials, alcohol advertising targetted at minors), the insurance ombudsman and banking arbitrators.
Poland was the first European country to implement the programme of the Global Compact Project at local level. Concern for the issue is evident from the activities of the UN Co-ordinator of the Global Compact Project and the NGOs involved, eg the Centre for Ethics in Business in Warsaw, and the Polish Forum for Corporate Governance established by the Gdansk Institute for Market Economics. General human rights issues are monitored by international organisations such as the Helsinki Foundation for Human Rights and Amnesty International.
SPECIFIC AREAS OF CORPORATE SOCIAL RESPONSIBILITY
6. Human rights
According to Polish constitutional rules, all signed and ratified international conventions supersede domestic laws. The main convention in this area, the European Convention on Human Rights, not only imposes several positive obligations upon Polish authorities, but also directly guarantees some essential rights and can be enforced by the European Court of Human Rights. Many UN treaties and conventions have also been ratified, and even where they may be not directly linked to the subject, their role in promoting human rights cannot be underestimated.
The Polish Constitution of 2 April 1997 is the most important instrument of human rights protection, and features a wide range of humanitarian, civic, social and economic rights. Crucially, the Constitution works on the principle of direct applicability: it may be directly invoked by citizens in proceedings and litigation. The interpretations used by the courts so far indicate that some rights are deemed general and conditional, whereas others may be enforced regardless of whether implementing statutes have been enacted to that effect. The adjudication and interpretation of complaints against a breach of the Constitution, including human rights claims, have primarily been within the jurisdiction of the Polish Constitutional Tribunal. The principle of equal rights is paramount in the Constitution and Polish legislation and has been developed by the Tribunal.
7. Corruption
Corruption has remained high on the public and political agenda for many years, and is still an issue both for companies seeking to participate in regulated activities and for authorities. Criminal penalties for corruption-related offences include imprisonment for up to eight years, except for minor offences, in accordance with Articles 229-230 of the Polish Criminal Code Act. This Act further recognises qualified bribery in cases where public officials accept benefits of great value, undertake unlawful actions or make exercise of their statutory powers conditional upon receipt of benefits; in these cases the courts may issue sentences of imprisonment for up to 12 years.
Although these penalties apply both to public officials accepting benefits and to individuals in the private sector offering them, Polish criminal laws provide for leniency designed to encourage disclosure of corruption by breaking ties of solidarity between bribers and public officials. Under Article 229(6) of the Criminal Code Act, if a public officer accepts offered benefits, private individuals are relieved from penal liability if they disclose corruption and the relevant circumstances prior to it becoming known to prosecutors.
Furthermore, criminal liability covers intermediaries who, by claiming specific ability to influence national or foreign authorities, or entities managing public funds, demand benefits from third parties in return for expedition of specific affairs of interest to the latter. Prosecution may follow regardless of whether intermediaries were able to achieve the effects sought or merely made false statements to third parties in this regard. Moreover, if such intermediaries seek to influence authorities by unlawful means, a penalty of imprisonment for up to eight years may apply. Again, as a leniency measure, the Criminal Code Act exempts intermediaries who, after acceptance by public officers of incriminating benefits, disclose relevant circumstances to prosecutors in advance.
Moreover, Polish law penalises corruption in the private sector. The Criminal Code Act provides for the penalty of imprisonment for up to five years for directors of a private corporation or other individuals capable of affecting activities of such a corporation due to post held, who accept benefits for actions that may cause damage to the company, activities falling under unfair competition or for unlawful treatment of certain contractors. Criminal liability applies likewise to those who offer such bribes, although, again, they may benefit from leniency measures.
General clauses of Polish tax statutes preclude deduction of all expenses related to unlawful or illegal operations. In addition, separate tax rules allow tax authorities to require indication from individuals of the source of their revenues, especially when they list expenses that do not correspond to their income. Otherwise, any revenues of unknown origin are taxed at a flat rate of 75 per cent; penal fiscal liability may follow. Corruption has also been dealt with by specific legislation targetted at public officers, requiring annual disclosure of their personal funds and assets. Anti-money laundering legislation, in line with OECD standards and EC directives, includes the Anti-Money Laundering Act of 2000, as recently amended. Supervision in this area is undertaken by the General Inspector of Financial Information within the Ministry of Finance.
8. Corporate governance and business ethics
In continental systems, including Poland’s, legislation primarily regulates principles of management and control of legal entities. In Poland, the relevant body of law includes the Commercial Companies Code of 2000, which provides general regulation of all private and public companies except for partnerships regulated in the Civil Code, and specific laws covering certain types of activity. This group of specific corporate governance regulations detailing additional information and control duties of commercial entities includes laws governing financial institutions, ie banks, insurance companies, pension funds, investment funds, and companies listed on the stock exchange. These laws include, among others, the Banking Law Act of 1997, the Insurance Activity Act of 2003, the Act on Insurance and Pension Supervision and the Insurance Ombudsman Act of 2003, the Act on Commercialisation and Privatisation of State Enterprises of 1996, the Public Trade in Securities Law Act of 1997 and the Bonds Act of 1995.
Investment funds and pension funds are regulated in Poland by very rigorous laws, principally the Investment Fund Act of 2004 and the Act on the Organisation and Functioning of Pension Funds of 1997, which focus on the quality and scope of information presented, as it corresponds to the high level of security required in the sector. The group of regulations introducing additional provisions on corporate governance in all commercial entities includes the Freedom of Commercial Activity Act of 2004, the Bankruptcy and Composition Law Act of 2003, the Protection of Competition and Consumers Act of 2000, the National Court Register Act of 1997, the Accounting Act of 2000 and the Anti-Money Laundering Act of 2000. In 2000, the Act on Remuneration of Persons Managing Certain Legal Entities was adopted, imposing limitations of remuneration for managers, management and supervisory board members, and liquidators and chief accountants of state enterprises, companies with shares held by the state treasury or local authorities and some other entities.
Since corporate governance is a relatively new concept in Poland, public discussion of the Polish model of owner supervision of joint stock companies only commenced in January 1999 at the First Forum on Corporate Governance. In 2002, the management and supervisory boards of the Warsaw Stock Exchange adopted the so-called Good Practices Code (Good Practices in Public Companies in 2002), drafted by a Good Practices Committee comprised of representatives of various capital market stakeholders and institutions, as well as practitioners and academics actively engaged in the Polish economy. This document aimed to consolidate good corporate governance customs in public companies and to promote business ethics. The Code covers good practices in the activities of general assemblies, supervisory boards and in regard to relations with third parties and institutions. Good practices were based on the ‘comply or explain’ principle, which allows refusal of some or even all proposed instructions.
Banks operating as public companies should adapt not only to the Good Practices Code mentioned above, but also to the Principles of Good Banking Practice adopted in 2001 by the XII General Assembly of the Association of Polish Banks to supercede the Code of Good Banking Practice of 1995. The Principles of Good Banking Practice cover relations with clients, employees and other banks and as well as procedures followed by banks as employers although they do not specify an approach by banks towards the public and local communities (so-called corporate citizenship). Even though this document is not strictly a code of ethics due to its lack of reference to ethical norms, it established the Banking Ethics Commission as a monitor of compliance by banks and their employees of the principles expressed.
In 2002 the White Book of Corporate Governance was published by the Institute of Market Economy Studies, together with a Corporate Supervision Code launched under the auspices of the Centre for International Private Enterprise, an American foundation affiliated to the US Chamber of Commerce. This publication covers corporate governance issues such as the level of protection of shareholders, the structure of ownership and control, types of investors active on the market, the manner of functioning by supervisory and management boards as well as external control mechanisms. In November 2003, the Institute of Market Economy Studies issued the Report on Corporate Social Responsibility by Banks, Companies and Financial Institutions in Poland. This showed that over 90 per cent of firms released reports to the public concerning incorporation (acceptance) of corporate governance principles in their business strategy, in accordance with the Good Practices Code, but also that the quality of information presented on internet sites and in annual reports for potential investors and the public is relatively low and access relatively limited. In assessing the level of awareness and implementation of the concept of socially responsible business in national stock exchanges, the report emphasised that only a small number of enterprises had drafted and approved a Code of Ethics or a Code of Business Conduct specifying the principles of their pro-social, pro-environmental, human rights protection and employment policies.
The Warsaw Stock Exchange concluded consultations on 15 August 2004 on a document entitled Principles of Good Practice 2005, which will introduce by the end of 2005 changes to the principles contained in Good Practices in Public Companies in 2002 as required under EU standards. One common problem is the overly general formulation of principles, which in connection with insufficient attention by the stock market to verification of statements on compliance, significantly diminishes the value of such statements.
9. Corporate responsibility to employees
The protection of employees remains at the centre of Polish labour law. The Labour Code contains provisions constituting the minimum level of protection that must be ensured by employers. To counterbalance the economic mismatch between employee and employer, the Civil Procedure Code provides procedural benefits for employees in court proceedings on labour law matters, such as exemption from court fees and availability of oral claims. Poland’s accession to the EU necessitates significant changes to national labour laws. These are evident in recent wide-ranging amendments to the Labour Code of 1974, containing composite labour law regulations that have been in force since 1 January 2004 that adapted existing regulations to the acquis communautaire, to some degree introduced greater precision, and introduced provisions hitherto unknown in Polish Labour law.
The most important changes to Polish labour law include the introduction of a list of information that employees may request from an employer; accurate definition of compulsory elements of an employment contract; reinforcement of employers’ obligations to notify; definition of bullying; enhancement of protection against discrimination (currently very broad); and a change in the amount of vacation leave (by increasing such leave to a minimum of 20 days). Essential changes also affect working time issues, especially based on implementing Directive 93/104/EC of 13 December 1993 on working time, as amended by Directive 2000/34/EC.
The Labour Code also governs issues related to remuneration, severance payments due to employees, non-competition clauses, internal workplace regulations, responsibility for maintenance of order and financial responsibility of employees, leave, parental rights and employment of minors. Further, the Labour Code requires employers hiring more than 20 employees to establish, in agreement with the workplace trade union organisation, working regulations covering labour, working conditions, working time, conditions of remuneration payment, etc. Should employees not be covered by collective labour agreements, an employer is obliged to establish, in agreement with the workplace trade union organisation, rules of remuneration that incorporate salary schemes.
The Labour Code not only contains provisions concerning individual employment rights, but also deals with issues concerning collective labour agreements and health and safety. In this regard, the Labour Code defines the rights and responsibilities of employer and employee and lays down general guidelines on health protection, hazardous substances, industrial accidents and occupational diseases, compulsory training, means of protection, consultations and supervision of health and safety. There are further detailed regulations of the Minister of Labour and Social Affairs and the Council of Ministers on health and safety at work, including provisions on accidents and their registration, a regulation listing occupational diseases, a regulation on recording occupational diseases and effects of such diseases, a regulation on maximum permissible levels of concentration and intensity of hazardous substances in the work environment and a regulation covering medical examinations of employees and preventive health care.
The National Labour Inspectorate appointed to supervise compliance with labour law in accordance with the National Labour Inspectorate Act of 1981 plays a vital role. The Inspectorate’s powers are quite broad and cover, in particular, health and safety at work, employment relations, remuneration for work and other benefits, working time, leave, protection of work performed by women and the employment of minors and disabled persons. The Inspectorate also has the right to prosecute minor infringements of employees’ rights, as defined in the Labour Code, and to participate in such cases as a public prosecutor. It is further empowered to examine relationships between parties and establish the existence of regular employment, whenever relationships between them appear to contain all relevant features, even when a contract, if any, provides otherwise.
One of the main principles of Polish labour law is the right to guaranteed remuneration for work performed. Under the Labour Code, public authorities define the minimum wage that is fixed annually by a tripartite commission comprising representatives of government, employees and employers, in accordance with the Minimum Wages Act of 2002. The amount of minimum wage determined as a result of negotiations is published in the Official Journal by 15 September of each year.
The Specific Mode of Employment Contract Termination (Reasons not Concerning Employees) Act of 2003, which is generally referred to as the Collective Redundancies Act, further demonstrates protection of employees as being the core function of labour law. The Act provides for a greater level of employee protection as compared to Directive 98/59/EC of 29 July 1998. In contrast to the Polish Act, the Directive only contains minimal requirements with respect to collective redundancies, eg consultations and notification. But, for instance, it does not require severance payments to dismissed employees. However, under the Collective Redundancies Act, all employees concerned have the right to a severance payment.
The Polish social security system is also of great importance. Three statutes generally deal with the security system: the Social Security System Act of 1998, the Social Security Benefits Act of 1999 with respect to illness or maternity leave and the Social Security Act of 2002 with respect to work accidents and occupational diseases. In addition, note must be taken of specific acts for various professional groups, eg the Social Security for Farmers Act of 1990.
Polish law also obliges employers hiring more than 20 employees to establish a corporate social benefits fund. Under the Corporate Social Benefits Funds Act of 1994, funds collected are used to finance social activities at the workplace; the award of allowances and benefits, and the level of supplements, depend largely on the personal, family and financial situations of entitled parties.
The Employment Promotion (Labour Market Institutions) Act of 2004 governs public authorities’ tasks with regard to promoting employment and mitigating the effects of unemployment. Public activities in this area are focused on full and productive employment, the development of human resources, the achievement of high work standards and the strengthening of social integration and solidarity.
10. Corporate responsibility towards the environment
The recent enlargement of the EU has had a significant effect on Polish environmental legislation, its enforcement, and environmental policies in general. Since 1 May 2004, Poland has had to apply EU legislation and Polish companies have had to comply with EU requirements on protection of the natural environment just as other member states have. Specific arrangements can only apply within transitional periods agreed upon during accession negotiations and transposed into the Act of Accession.
Protection of the environment in Poland is regulated by a complex set of statutes and implementing regulations. It covers protection of environmental compounds such as air, soil, ground and surface waters, the ozone layer (the Substances Depleting the Ozone Layer Act of 2004); introduces rules on waste management, including packaging waste and recycling requirements (the Packaging Waste (Deposit and Waste Charges Act of 2001); regulates management of genetically modified organisms (the Genetically Modified Organisms Act of 2001); counteracts noise pollution, damage resulting from serious accidents and maritime pollution (the Maritime Pollution Act of 1995); and governs trade in and use of plant protection products (the Plant Protection Act of 2003), etc. Major legislation is contained in the Environment Protection Act of 2001 and the Waste Act of 2001, the Water Law Act of 2001 and the Nature Conservation Act of 2004. This most recent legislation was adopted to adjust domestic law to meet the acquis communautaire.
Environmental legislation introduces an obligation to conduct an environmental assessment when carrying out investments that may heavily affect the environment. The regime targets, in particular, Nature 2000 areas and species, which are under specific protection pursuant to the Nature Conservation Act and in relation to which certain activities are entirely prohibited or, in some instances, are conditional upon provision of security for environmental compensation. Under Polish environmental legislation citizens have unrestricted access to information on the environment that can only be denied if protection of individual data is involved. Fees for access to information are low.
The Environment Protection Act is most important and stipulates general rules regarding protection, use, and liability for misuse of the environment. Rules on liability are further detailed in the legislation mentioned above. The Act provides for a range of emissions permits: the principle types are (i) an integrated permit, (ii) permit for release of gas or dust into the atmosphere, (iii) water permit for intake and discharge of sewage into water or onto land, (iv) permit for generating waste, (v) permit for noise emissions and (vi) permit for electromagnetic radiation. The Environment Protection Act imposes levies such as environmental fees on companies that affect the natural environment. These fees apply to specific emissions, and are self assessed and paid quarterly to a relevant local authority (Marszalek). Fee levels are listed in a regulation of the Ministry of the Environment. If there is an effect on the environment without a required permit from an environmental authority, the environmental fee is increased by 100 per cent. The Act provides for three main types of liability that may apply to entities acting illegally and affecting the environment: administrative, civil and criminal liability. Administrative liability involves: (a) an administrative fine and obligation to redress harm or pay damages, if redress is not possible, (b) an order preventing continuation of activity concerned, or (c) an order for closure of an entity. An administrative fine is imposed for breach of specific requirements and is calculated on a daily or hourly basis, depending on the type and gravity of breach. An order for closure will only be made when there is significant deterioration of the environment or a threat to health or life.
The Environment Protection Act adopts the ‘polluter pays’ principle. A land holder is liable for contamination of land and liability arises from holding title to a site. It is not necessarily connected with a breach of, or an act contrary to, law. Land holders (owners or entities entered in the land register as holders) are strictly obliged by law to undertake remediation, without the requirement that they be given prior notice to do so from authorities, whenever soil is contaminated (except that the manner and scope of clean-up must be agreed upon with local authorities).
Administrative liability is determined by authorities at the regional level. National bodies serve as appeal bodies. The body authorised to inspect compliance with environmental issues in Poland is the National Environmental Inspectorate (Inspekcja Ochrony ?rodowiska). Inspectors have the right of access at any time to operating facilities, material and any information they consider necessary. They have an unrestricted right to collect samples and other measurements, 24 hours a day. Relevant bodies usually inspect once a year. The law requires an entity to be inspected at least every five years. In practice, the frequency of inspections depends on the focus of authorities in any year, inspection budgets and the number of inspectors available. Inspection can be expected after a serious incident or accident at an operating facility.
Civil liability is based on the general principle that any damage must be redressed by the responsible party or entity. Civil liability arises even if activity affecting the environment has occurred under, and in compliance with, a valid permit. If the harm or threat of harm applies to the general environment, ie not private property, authorities or NGOs can raise civil law claims. Persons who commit crimes under the Environment Protection Act are liable. In the case of companies, this applies to individuals who failed to comply with their duties, whose failure resulted in a crime (eg specific managers of a company, most often directors). The Collective Penal Liability (Corporate Entities) Act of 2002, discussed above in section 2, further implies that a company may be held liable for offences committed by its authorised agents, if the offence was, or could have been for the benefit of company (implicitly involving substantial profits on the part of the latter). This liability applies to any crime against the natural environment specified in the Criminal Code Act of 1997 (Articles 181-184 and 186188). The company may be held liable when an agent is found guilty of committing a crime listed therein and the company was negligent in selecting that party to be agent, or in supervising the party, or when its management did not prevent the crime. The penalty for a company found guilty of a crime against the natural environment committed by an individual is equivalent to five per cent of the company’s pre-tax income for the financial year preceding conviction, but not less that 5,000 zloty (about €1,250); additional sanctions may be imposed, eg on the company’s promotions or advertising, its operations or even through publication of notice of its guilt.
Poland has ratified various international environmental conventions and treaties, including conventions on liability for maritime pollution and the 1997 Kyoto Protocol to the United Nations Framework Convention on Climate Change. The new Directive 2004/35/EC of 21 April 2004 on Environmental Liability with Regard to the Prevention and Remedy of Environmental Damage will apply to Poland from 30 April 2007. The Directive implements the ‘polluter pays’ principle and concerns prevention of contamination arising from ongoing operations – although it does not apply to historic land contamination, and liability for that type of pollution in Poland will almost certainly depend on the holder of title to land. The Directive requires EU member states to encourage development of financial instruments and markets, but does not impose a system of mandatory insurance. Mandatory financial security has already been introduced in Polish environmental legislation: it applies to operation of waste landfills and to cross-border trade in waste.
11. Corporate responsibility to communities
The general legal framework is based on the Regional Development Act of 2000, which encourages business to participate in the development of disadvantaged areas. Under the Act, detailed rules of regional development policy are specified in the National Regional Development Strategy established by the Council of Ministers, together with local initiatives. The policy is further subject to negotiations with the National Regional Policy Council, the Common Commission of the Government and local authorities, managing authorities of specific regions and representatives of social and business partners. CSR issues are also involved in various PPP projects run at the local level, although proposal of a general legislative framework (the Public-Private Partnership Proposal of 2004) is still in the pipeline.
CSR aspects of corporate responsibility towards communities have also been incorporated into the Estate Planning Act of 2003, which provides that management of available real estate by local authorities at the level of community necessarily takes account of issues concerning the natural environment, culture, public health, public interest or economic efficiency. These guidelines are incorporated into communal estate plans produced by local authorities; these include criteria that have to be satisfied by businesses intending to use land or premises offered by public authorities.
Apart from the above, special tax incentives were introduced on 1 January 2004 for businesses supporting NGO activities. Under the Corporate and Personal Income Tax Amendment Acts of 2003, domestic operators may deduct donations to qualified NGOs from taxable income up to ten per cent of their total gross income in case of corporate donators. These qualified NGOs may enjoy total exemption of their income. Other governmental programmes include the National Social Integration Strategy of 2004 aiming at combating social exclusion of the poor, disabled, addicted, criminal or chronically unemployed persons.
12. Corporate responsibility for overseas activities
Although the general principle of Polish criminal law is that of territoriality, it can be applied to Polish citizens who commit crimes or offences abroad, as well as to Polish citizens or foreigners who commit criminal actions against Polish economic interests. Several specific measures involving CSR in overseas activities apply. These include the Collective Penal Liability (Corporate Entities) Act of 2002, which provides for prosecution of collective entities, typically corporations, for an extensive list of offences. Also of note are the tax regulations that prevent deduction of foreign bribes discussed in section 7.
13. Procurement
All contracts involving public funds should be subject to a designated public procurement procedure. The major public body arbitrating and supervising disputes on substantial and procedural aspects of procurement proceedings is the Public Procurement Office. The general principles of proceedings include those derived from EC legislation such as openness, transparency and equal treatment of bidders. The Polish Civil Code Act compels entrepreneurs submitting an offer in a private tender to inform the other party of the ethics codes applied by the former.
14. CSR reporting and socially responsible investing
Surveys indicate that, according to 70 per cent of respondents, specific laws are necessary to impose CSR reporting duties on companies similar to those applicable in the area of financial accounting. But no general CSR reporting clause exists in Polish legislation. Nevertheless, elements of CSR reporting are provided for in a number of specific regulations.
Under the Accounting Act of 1994, company financial statements must feature additional information, including non-financial data. These documents are filed with the registry court and are available to the public. Comments on labour and environmental issues affecting the reporting entity may be included as non-financial data. But the requirements are mainly designed to disclose factors and circumstances likely to influence companies’ financial standing and safeguard investors’ interests, rather than to reflect CSR concerns.
Stock exchange regulations also require quoted companies to elaborate certain CSR issues in their prospectuses, such as their internal decision-making procedures, employment structure and policy, including remuneration policy, collective disputes with employees and their trade unions, social security coverage among staff and compliance with environmental obligations. Recent amendments to the Public Trade in Securities Law Act of 1997 also enhanced reporting requirements regarding compensation of directors and managers. Furthermore, many companies provide CSR information on a voluntary basis via internet sites, media, labelling or public relations campaigns.
Concerns over socially responsible investing have been spread across various legal instruments. In the case of mergers and acquisitions, corporate tax rules encourage restructuring schemes that assure the maintenance of operating businesses or business units, ensuring continuation of production and employment and preventing the division of assets. CSR concerns are integral to some state aid programmes, including the Financial Investment Act Support of 2002 and the 2002 Act on State Aid for Operators with Specific Significance for the Labour Market. In addition, regulations on state aid in special economic zones accommodate employment targets. Correspondingly, financial incentives may be granted under general state aid rules subject to Community rules, which often make state aid conditional upon maintenance of prescribed employment levels over a specific period of time. Apart from the regulatory framework, investors may often be requested, especially when dealing with local authorities, to accept social commitments, including parallel investments in communal infrastructure or services to the public. Such obligations are subject to negotiations with authorities. Among the most recent developments is the Social Employment Act of 2003. The general framework for employment of the disabled, introduced under the Disabled Act of 1997, has attracted constant interest from investors, especially in the SME sector, although some listed companies extensively use these arrangements as well.
