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European Commission

José Manuel Durão Barroso

President of the European Commission

Speech by President Barroso: "Business and Policy Strategies Towards 2020: meeting the Challenge of Sustainable and Inclusive Growth"

Enterprise 2020 Summit/Brussels

29 November 2012

Dear President,

My dear friend Etienne Davignon,

Ladies and gentlemen,

First of all let me say to you how pleased I am to be here on the invitation of my dear friend Etienne Davignon. As he said we should follow him and in many in his initiatives he is showing great leadership and I want to thank you for this very important initiative. It is a pleasure to do it here in BOZAR – one of the great Brussels and Belgium institutions. In fact, I was telling Etienne Davignon that it is today quite difficult to imagine Brussels without BOZAR.

I very much thank CSR Europe for the invitation for the first "Enterprise 2020 summit" you are organising here in Brussels. Since its creation in 1995 - responding to the appeal of then Commission President Jacques Delors, CSR Europe has been extremely active in promoting the values of corporate social responsibility and since we share the commitment to the priorities of smart, sustainable and inclusive growth. It is therefore an obvious partner for the European Commission as we implement the Europe 2020 agenda for growth and jobs.

Europe 2020 is intended to build a stronger European Union, based on an economy with the competitiveness, the skills and the flexibility to thrive in a rapidly changing world, but also an economy founded on social inclusion and Europe's social model, the social market economy. This is a task for us all - the European Commission and the European institutions, the Member States, businesses and the social partners - and this is why the Commission fully supports the Enterprise 2020 initiative. I thank you for your reference to my meeting with you two years ago when I could on behalf of the European Commission express my support to your initiative.

Corporate Social Responsibility is an inseparable part of rebuilding a globally competitive European economy on the basis of innovation, trust and European values.

And social innovation is a powerful force to modernise our economy, to tap into new sectors and markets, to stimulate entrepreneurship and to meet the challenges we face in maintaining our inclusive and cohesive social model. Of course, I know that this social model is under pressure. Some people say that the European social model is dead. I do not agree. I think it is obvious that in the face of more, sometimes extremely challenging competition, we have to modernise it. But, it will be a mistake from a European perspective and thinking in terms of social stability and the best conditions for development of businesses in Europe, it would be a real serious mistake to put in question the basic principles of our social market economy in Europe. I think it can be an asset and certainly is if we make the necessary for more competitiveness in our European Union.

We live in an age of global interdependence, where information technology means that we know far more, and much more quickly, about what happens at the other end of the world, about how others live and about how the decisions we take may impact on the lives of others, be it in the European Union or beyond.

In such an age, corporate social responsibility is increasingly important. It is a mechanism for ensuring that our values are well defended here in Europe and more broadly shared in other parts of the world. It has both an internal European dimension as well as a broader global dimension, and although it can generate costs, for a company the potential benefits are considerable.

These considerations were at the heart of the Communication which the European Commission adopted in October 2011, setting out our Corporate Social Responsibility strategy until 2014. Our approach is based on a light but robust touch, creating a framework for CSR in Europe based on ensuring transparency, providing guidance and raising awareness.

Inside the European Union, we are working on common standards for the provision of information on CSR; for firms operating across the world, we are building on the basis of the UN guiding principles.

But I can tell you that these matters are already to take part of our contact with our major partners including those for whom the notion of social corporate responsibility does not figure high in their priorities or is even not well known. Even at Summit level, when with the President of the European Council I meet some of the global partners we have, we address some issues that are directly or indirectly linked to the corporate social responsibility because this is also important for the definition of the level playing field. It is not easy to have this kind of debate, to be very open with you, but I think it is necessary and I think it is in the interest not only of Europe, but also in the interest of some of our partners and in the interest of a better open economy in Europe.

The reality is that these measures that we are developing increase transparency: firms will face comparable obligations and consumers will be able to make a fair judgement about a company's performance.

We also need to increase awareness. For example how consumers perceive CSR can be a vital factor in driving business behaviour. To help firms make better decisions the European Commission will publish early next year the results of survey citizen perceptions of impacts of business on society. In another effort to raise awareness I am happy to announce that we are working, in partnership with CSR Europe, on a new European CSR Award Scheme.

I believe that enlightened business leaders already understood that the advantages also that they can add from an intelligent strategy of CSR. We know that today clients, consumers are more and more sophisticated. They are more discriminating in their choices than in their behaviour and so they should be able to reward the companies that show a real commitment to the principle and to the practice of CSR.

Beyond CSR, the European Commission supports the creation of a favourable environment for social business in Europe, and for the social economy at large.

The European Commission presented last year the Social Business Initiative as one of the 12 actions to uncap the potential of the Single Market, what we call the Single Market Act I. This is aimed at supporting social enterprises, notably by improving access to finance and proposing a revision of public procurement and state aid rules, to take better into account the social dimension.

This is also aimed at reducing administrative burdens on small and medium-sized enterprises and setting the conditions for a strong, dynamic social market economy in the medium and long term.

Ladies and gentlemen,

A responsible approach to business means more sustainable economic growth. And maintaining Europe's social model is a condition of success for our overall Europe 2020 strategy of, what we have been calling, smart, sustainable and inclusive growth.

The Commission is using all the instruments at disposal to fight social exclusion: from targeting cohesion funds to combat youth unemployment and support job creation in SMEs, to support for employment services and skills training. And we have also been fighting hard to maintain our support to food banks across Europe.

As you know, most of these instruments are at the national level. We in the Commission and at European level don't have many of these instruments because, according to the principle of subsidiarity, these policies are mainly a national responsibility.

But I'm making the case, with the Heads of State and Government, recently, last week precisely, when we discussed the Multi-annual Financial Framework - the budget for the next seven years for the European Union - about the need for the European level to have more instruments. Because it is a condition for the success of some of the reform programmes we have now in Europe. The social aspect of the implementation of these programmes is a very important condition. There are limits in terms of the social and political acceptability of some of the efforts that are going on in Europe. And this is a very important matter. Sometimes we look to economic policy forgetting the political economy. We look to economic policy forgetting another element of sound rational economic decision making, namely to try to get acceptable political and social conditions for the implementation of any programme.

And in fact we know that today in Europe, at least in some of our Member States, there are serious problems in terms of the acceptability of the programmes that the countries are developing, in terms of reforms, in terms of competitiveness and also that sometimes the European level takes the blame, even when it was not of course the fault of the European decision making -we have some problems, that were the result of decisions taken by others - but for which we sometimes lack the necessary instruments at the European level, including these instruments of cohesion and solidarity.

So not only from the point of view of justice, which is of course important, but also for reasons of economic efficiency and good sound economic policy making, it is important that we look at the instruments we have, at both national or subnational and European level to create the social conditions for the acceptability of some of the very many reforms that we are going through in Europe. This means not only fiscal consolidation but other reforms that in some cases touch very sensitive aspects of organisation of our Member States.

It is indeed not easy this task. In the current negotiations on the budget, the Commission is seeking to support spending that will help us achieve our objective of sustainable, inclusive growth and job creation: for instance, investment on more research and innovation with a programme that we have called Horizon 2020; financing pan-European networks of transport, energy and also digital networks with the Connecting Europe Facility; supporting cohesion and instruments such as the Globalisation Adjustment Fund and Fund for European Aid to the Most Deprived. These two funds being essential for the social balance of the package that we are developing.

As you are aware, no decision was taken at the last European Council on the MFF and we will return to the issue in the New Year. What is clear is that the final budget will be less than the Commission would have hoped – the discussion is now under the values we have proposed - and that we will of course have to look very attentively to the result of these negotiations. Because it's for me a matter of concern that precisely when Europe more than ever needs some kind of investment we are reducing a budget that is basically an investment for growth at the European level.

At a time when Europe faces major social challenges including an ageing population, high levels of youth unemployment and skills mismatches we need inventive solutions. Solutions that help meet the specific challenges we face but which also bring wider social and economic benefits. Such is the aim, of, for instance, the youth Employment Initiative proposed by the Commission, with task forces in the 8 Member States most concerned.

One obvious focus of attention for the future is social innovation. Social innovation is an engine for the kind of growth we are pursuing and we need not just to have good ideas but to ensure they have a wide social application.

Integrating social innovation across the EU's policies and support funds can help in this.

Social enterprises seek to serve the community’s interest rather than profit maximization. They often have an innovative nature, through the goods or services they offer, and through the organization or production methods they resort to. They often employ society’s most fragile members. They thus contribute to social cohesion, employment and the reduction of inequalities.

Our support to social innovation is not limited to the Social business initiative I mentioned earlier on. It is a vital part of Europe's Innovation Union and our social union.

It is also an investment priority in the New European Regional Development Fund. By providing support in an integrated coherent manner we can, as suggested by the title of this conference "scale up": take a small local idea and help develop it, support a start-up business and help the concept spread across the whole European Union and, why not, beyond the European Union.

For this approach to work, ideas need to flow upwards. I am therefore heartened to see a growing number of local and regional authorities, for example here in Belgium, or in France or Spain, incorporating social innovation priority lines into their development plans.

The quest for innovation applies both to business and to public authorities. Public sector innovation is vital at a time when we need to be ever more efficient, flexible and creative in order to maintain the level of services our citizens wait from us despite limited resources.

Ladies and gentlemen,

Let me conclude,

I have mentioned the importance of awareness in driving CSR and social innovation. This is why in October I launched the European Social Innovation Prize competition, in memory of Diogo Vasconcelos and I take this opportunity to encourage all of you here to participate in this competition!

The real prize in the medium term is of course a sustainable, smart and inclusive Europe, with a strong social market economy and an inclusive social model responding the values and expectation of our citizens.

Let us not forget – and the recent Award of the Nobel Peace Prize to the European Union is certainly the best reminder - that the aim of the European Union is to promote peace, its values and the well-being of its people.

We are certainly an economic union, we have certainly a currency, we certainly have and want to deepen our single market, but beyond the economy our goal is a political and social goal, it is of importance to our citizens.

Corporate social responsibility and social innovation are key elements in helping achieve this, and I count on you all to help deliver this.

I wish you the best of success in today's work and I'm waiting for your further innovative ideas so that we can pursue this very important agenda at the European level.

I thank you for your attention.

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