4.2.5 Employee matters

On 'employee matters', neither the Modernisation Directive nor the Preamble thereto provides any form of clarification. However, certain EP resolutions that preceded the Directive and influenced the text of article 1.14 have been examined.1 The EP argued that European companies should avoid the use of double standards: that is, applying stricter health and safety norms in production facilities in Europe than in production units 'abroad', such as in developing countries that may not have such strict legislation as the EU, or that may have strict legislation that is not enforced. Increasing globalisation and withdrawal of foreign investment restrictions facilitate outsourcing and in-sourcing business models which in turn bear a risk of misuse of local legal and factual circumstances. This is why the EP, the Commission and the Council promote the development of CSR.2 The EP resolved that CSR requires that companies generate information on their conduct abroad and thus create transparency on their business practices worldwide. Information on the effects of corporate activities on the local and worldwide environment should be made available.

The same applies to companies' behaviour as regards local labour standards and compliance with human rights, for instance freedom of speech and freedom of association. Viewed in this light, the words 'employee matters', as used in article 1.14, should be interpreted broadly. They may refer to issues of health and safety, human rights, schooling, education and career perspective, maybe also fair payment, all related to employees of the company and its subsidiaries and branch offices. This implies that the annual report information should not only provide information on compliance with local legislation, but also on the way the company follows best practices in its worldwide operations in respect of the P of People. This may well exceed legal requirements.