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291
CYELP 13 [2017] 291-312
* Oleksandra Kolohoida, Iryna Lukach and Valeriia Poiedynok are professors in the Depart-
ment of Economic Law of the Faculty of Law of Taras Shevchenko National University of
Kyiv, Ukraine.
LEGAL ASPECTS OF CORPORATE SOCIAL
RESPONSIBILITY IN UKRAINE ON THE WAY TO
EUROPEAN INTEGRATION
Oleksandra Kolohoida, Iryna Lukach, Valeriia Poiedynok*
Summary: Corporate social responsibility is a new form of dialogue
between business, society and the state. This article explores the pos-
sibilities of legislating for corporate social responsibility in Ukraine
in respect of implementing the Association Agreement of 2014 be-
tween the European Union and its Member States, of the one part,
and Ukraine, of the other part. Different approaches to introducing
corporate social responsibility standards are examined. The paper
considers not only international literature regarding the subject, but
also Ukrainian sources which are methodologically important concern-
ing the economic and legal implementation of Directive 2014/95/EU.
In conclusion, the legal ways of legislating for CSR are considered.
1 Introduction
In the present context, every modern state is facing important stra-
tegic social tasks: to build a civic society and improve its citizens’ welfare.
It is impossible to resolve these tasks without regulating the power of the
state. In the modern world, cooperation between the state and corpora-
tions should not concern just taxation and opening new jobs. Neverthe-
less, the trends in the economic and legal corporate doctrine of the 20th
century prove that the social component of corporate activity is a sup-
plement to its main function, ie prot-making. This is not possible with-
out a certain amount of corporate involvement providing for the labour
market and contributing to the state budget Given this, corporations are
a strategic internal partner of the state in the sphere of stable economic
development, and they form the basis of building European Union (EU)
policies, as the EU countries have approached the process of regulation
of the social role corporations play from a different perspective than that
of the USA. Based on global experience, the concept of corporate social
responsibility (hereinafter: CSR) may become a platform for interaction
between the state, society and global corporations. However, the initia-
292 Oleksandra Kolohoida, Iryna Lukach, Valeriia Poiedynok: Legal Aspects of...
tive regarding its introduction and implementation should be taken by
the state, as has already happened in many Western European countries.
The Association Agreement between the European Union and its
Member States, on the one hand, and Ukraine, on the other hand (here-
inafter: Association Agreement)1 has established numerous tasks for
Ukrainian legislation. One of them is to create conditions for enhanced
economic and trade relations leading towards Ukraine’s gradual integra-
tion in the EU internal market, including by setting up the Deep and
Comprehensive Free Trade Area as stipulated in Title IV (Trade and
Trade-related Matters) of the Agreement, and to support Ukrainian ef-
forts to complete its transition into a functioning market economy by
means of, inter alia, progressive approximation of its legislation to that of
the Union.2 In this connection, a new approach to understanding corpo-
rate behaviour is required.
This article faces particular issues. First, CSR is a new approach
in the research of Ukrainian corporate law. There are very few articles
exploring CSR legal regulation, while the current economic CSR imple-
mentation has been examined in scientic literature only briey. Second,
general Ukrainian economic literature deals with studies of the history
of CSR only, while the impact of implementing CSR in Ukrainian com-
panies, or even deeper considerations – its impact upon legislation – is
seldom under discussion. Third, some practical CSR implementation has
already been attempted in other former Soviet countries. In many ways,
Ukraine has similar problems in the context of economic and legislative
history. On the other hand, Ukraine has its own unique approach to CSR
in the Association Agreement context, as well as in the context of clearly
preferred European perspectives. For this reason, the implementation of
CSR by other former Soviet countries should be viewed in regard to the
implementation of EU legislation.
2 CSR research development
At the beginning of this study, it should be noted that society’s ob-
ligations are placed not only on its members but also on creditors and
corporate management authorities. This idea was described in the stake-
holder theory suggested by the economist M Freeman who stated that
stakeholders were those who affected the achievement of corporate goals,
while the corporation affected its stakeholders in the process of achieving
its goals.3 Stakeholders are considered a part of the company – including
1 Association Agreement between the European Union and its Member States, on the one
hand, and Ukraine, on the other hand [2014] OJ 161/3.
2 Association Agreement (n 1) art 1(2)(c).
3 M Friedman, ‘The Social Responsibility of Business Is to Increase its Prots’ The New
York Times Magazine (New York, 13 September 1970) 31.
293
CYELP 13 [2017] 291-312
customers, suppliers, nanciers, creditors, shareholders, employees, lo-
cal and national governments, tax authorities and local communities.4
The stakeholder theory allowed for an innovative assessment of the sub-
jective structure of corporate relations and became the basis for the elab-
oration of many contemporary corporation theories, the CSR theory in
particular.
In this context, it should be noted that CSR is not aimed at es-
tablishing balance between the interests of corporations, the state and
society as the optimal model available. The rst scientic research to un-
derstand the essence of CSR, its principles and methods was launched in
the 1950s. The main role in elaborating this theory was played by Ameri-
can academics, while in Europe the CSR concept was ofcially formed
only in the late 20th century.
At the current stage of society’s economic development, there has
been a search for the ethical legitimisation of late capitalism through the
prism of establishing a ‘moral capitalism’ principle. Therefore, as G Elk-
ington states, ‘businessmen all over the world acknowledge the fact that
the key markets are on the verge of rapid changes conditioned by new
environmental standards and connected to consumer demands. This re-
sults in the new bottom lines being deployed along the old “prot-loss”
constants’. The trends mentioned by the researcher are the environmen-
tal, economic and social responsibility of any business, ie the formation
of such economic thinking where business becomes a social factor, and
its responsibility is understood not only as responsibility for its activity
but also as responsibility before local communities adjoining such busi-
ness activity area.5
Based on G Elkington’s concept, managers have to make adminis-
trative decisions by relying not only on anticipated nancial indices but
also on the indices reecting the social environmental purposes of cor-
porate activities. The central thesis of the triple criterion concept is the
preservation of the three types of capital – economic, environmental and
social, for the purposes of providing for the long-term economic develop-
ment of society.6
To unite the efforts of businessmen and trade unions, nongovern-
mental organisations and governmental agencies, and to direct such ef-
forts to support and apply the ten universal principles related to human
rights protection, labour standards and environmental protection, as well
as to ght corruption, the United Nations Global Compact was signed in
4 F Easterbrook and DR Fischel, The Economic Structure of Corporate Law (Harvard Uni-
versity Press 1996) 2.
5 J Elkington, The Zeronauts: Breaking the Sustainability Barrier (Routledge 2012) 50.
6 Elkington (n 5) 250.
294 Oleksandra Kolohoida, Iryna Lukach, Valeriia Poiedynok: Legal Aspects of...
2000. This document is a voluntary initiative aimed at uniting socially
responsible companies to exchange their experience in implementing re-
spective programmes and projects. Currently, this treaty unites several
thousands of companies from over 100 countries which form one of the
largest voluntary initiatives in the world.
The most interesting thing is to assess the effect of corporate so-
cial activity on the reputation and indices of the main corporate activity.
First, the assessment results conrm the hypothesis that social factors,
along with economic ones, do affect the main activity indices of the com-
pany. Second, the research establishes the interdependence of social re-
sponsibility, reputation and trademark loyalty.7
In Article 3.1 of the Renewed EU Strategy for Corporate Social Re-
sponsibility 2011-20148 (hereinafter: Communication), the European
Commission provides a new denition of CSR: the ‘responsibility of com-
panies for their effect upon society’. The precondition to achieve such
responsibility is compliance with the effective legislation and collective
agreements between social partners. To comply with the CSR require-
ments in full, companies need to have the ability to integrate social, en-
vironmental and ethical human rights and consumer aspects into their
economic activity, as well as to introduce strategies by directly cooperat-
ing with the parties concerned, in order to maximise the share price for
members/shareholders, stakeholders and society in general and to fore-
cast, prevent and neutralise possible negative consequences.
3 Current Ukrainian economic CSR issues
Meanwhile, based on the UN research of Ukrainian business, 49.1%
of companies on average perform no monitoring of the social consequenc-
es of innovative development; 29.4% of companies do this from time to
time, and only 5.3% of them use accurate indices. Judging by foreign
experience, France pays much more attention to CSR matters as it has
an effective law obliging every public company with business activity to
report annually on the introduction of social programmes and on the
prospects of innovative activity.9
7 SB Kim and DY Kim, ‘The Impacts of Corporate Social Responsibility, Service Quality
and Transparency on Relationship Quality and Customer Loyalty in the Hotel Industry’
(2016) Asian Journal of Sustainability and Social Responsibility 12.
8 Commission, ‘Communication to the European Parliament, the Council, the European
Economic and Social Committee and the Committee of the Regions: A renewed EU strategy
2011-2014 for Corporate Social Responsibility’ COM (2011) 681 nal.
9 N Voloskovets ‘Corporate Social Responsibility as the Basis of Innovative Development
of Modern Economy’ (2010) 7 Scientic Works of Kirovohrad National Technical University:
Economic Sciences 127.
295
CYELP 13 [2017] 291-312
Ukrainian economists believe that the key problem in CSR regu-
lation is the introduction of, and compliance with, the requirements of
effective legislation in the sphere of socially responsible business behav-
iour for the formation and development of the domestic CSR model based
on strategic partnership between the government and business. The need
for social responsibility of business in Ukraine is conditioned by the fol-
lowing factors:
- the low level of corporate culture and the resulting nancial and
economic weakness of a large number of companies in Ukraine;
- legal nihilism and the deformation of legal awareness – the
culture of respecting legal standards and law in general is at an
early stage of development in Ukraine;
- the low level of appreciation by society of the role of business;
- the closed nature of Ukrainian companies;
- the uneven consideration of the interests of stakeholders: com-
panies take more account of the interests of consumers and
government authorities, and they are less concerned with non-
governmental and research organisations and education institu-
tions with which there is hardly any cooperation.10
Other aspects of implementing SCR standards are state-owned cor-
porations (SOCs). They amount to a considerable 16.3% of the Ukrainian
economy but in some specic areas this number is even higher. It should
be noted that this sphere relates to strategic areas, along with agriculture
(53.3%), electricity transmission (49.6%), scientic research (66%), and
transport (27.6).11 Unfortunately, the level of disclosure of Ukrainian SOCs
is insignicant. Analysis of the SOCs’ openness has shown that their aver-
age disclosure level is 10% (while for private companies this is 19 %). Most
often, SOCs do not publish nancial reports on websites; it is difcult to
nd policies and reports regarding social or environmental protection.12 In
this regard, the introduction of CSR into SOCs without any exceptions is
highly important; the paper will consider this subject further.
Thus, there is another problem: the information provided by SOCs
is far from complete and lacks compliance with standards such as those
10 NO Shira and AI Ivashchenko, ‘Directions of Implementation of the System of Corporate
Social Responsibility in the Practice of Ukrainian Enterprises’ (2013) 11 Efektyvna eko-
nomika.
11 Ministry of Economic Development and Trade of Ukraine, Specic Gravity of the Govern-
mental Sector in the Economy <www.me.gov.ua/Documents/Download?id=19dffa6e-66b2-
449b-8df3-54b2e0a181e0> accessed 10 October 2017.
12 I Kurinna and others, Transparency and Corporate Social Responsibility (Poligraa Yus-
ton 2014) 5.
296 Oleksandra Kolohoida, Iryna Lukach, Valeriia Poiedynok: Legal Aspects of...
of the OECD. European economists insist that the information offered by
SOCs and governmental authorities should comply with the OECD (2015)
recommendations: ie, it has to be relevant, sufcient and reliable, and
provided on a timely and regular basis in order to improve credibility.13
For the purposes of introducing innovations and developing an ap-
proach to CSR, exible terms and conditions have to be stipulated for
corporations. In this, the availability of principles and guidance issued by
the governmental authorities are a reference point for many companies
concerning their own policies and productivity.
It should be noted that the Communication also calls on nongovern-
mental organisations to participate in CSR. In particular, as specied in
article 3.4 of part 3 of the Communication, trade unions and nongovern-
mental civil organisations are called on to identify problems and partici-
pate in setting up constructive cooperation with companies to nd a joint
solution. Consumers and investors may increase market remuneration
for socially responsible companies through consumption and through
the investment decisions they make. The mass media are able to raise
awareness regarding the positive and negative effect of companies. Gov-
ernmental authorities and other stakeholders have to demonstrate social
responsibility, including responsibility in their relations with companies.
To sum up the importance of CSR, we should note that such a for-
mat allows not only present conicts and contradictions to be ascer-
tained but also for large businesses and governmental authorities to be
connected, on the one hand, and the public represented by trade unions,
associations and the mass media, on the other hand, within the frame-
works of a single programme. This programme has the purpose of instill-
ing a responsible attitude in corporations towards their social duties with
the simultaneous maximisation of corporate prot, including that for the
purpose of achieving an important social effect.
However, the modern Ukrainian legislation contains no general CSR
principles. Individual aspects of respective government policy are men-
tioned in various government programmes, but Ukraine is not engaged in
any complex activities regarding the introduction of CSR. Nevertheless,
even with the lack of any support from the government, there is major
public work – the book Best CSR Practices in Ukraine was published ve
years ago and has been regularly updated since then.14 The seventh edi-
tion includes 35 CSR practices from various companies in Ukraine. Quite
13 J-R Córdoba-Pachón, R Garde-Sánchez and M-P Rodríguez-Bolívar. ‘A Systemic View of
Corporate Social Responsibility (CSR) in State-Owned Enterprises (SOEs)’ (2014) 21 Knowl-
edge and Process Management 216.
14 CSR Practices in Ukraine <http://csr-ukraine.org/wp-content/uploads/2017/01/CSR-
cases-in-Ukraine-2016.pdf> accessed 9 May 2017.
297
CYELP 13 [2017] 291-312
a number of the major Ukrainian corporations provide reports of their
CSR-related activities on their websites, and this has a signicant practi-
cal meaning at the international level as CSR is included in the system of
many standards which we shall discuss below.
The assessment of the level of corporate social responsibility in
Ukraine is complicated by the fact that the CSR reports are optional, and
there is no single standard that might work; accordingly, such reports
are provided by only a small number of enterprises, and the information
contained therein often prevents comparative analysis of the level and
range of social response of different enterprises.15 Such purposes must
be claried for the Ukrainian market players who sometimes lack infor-
mation regarding CSR. In this aspect, it should be stressed that CSR in
Ukraine is mostly viewed as charity work. Even the Best CSR Practices
in Ukraine guide has no structured strategy and is more opinion-based
journalism than a report with specic gures. It mostly focuses on char-
ity work or help in building such things as football pitches. As will be
shown later in the paper, modern understanding of CSR is that it is not
only charity. Another complex issue that Ukrainian businesses mainly
focus on regarding CSR is personal development. These issues are a top
priority in Ukraine, where the levels of labour protection and salaries are
still very low compared to Europe. But once again, as a rule, CSR reports
are not structured.16
Some Ukrainian state companies do have structured social report-
ing.17 In Ukraine, the rst CSR reports emerged in 2005. Since then and
until 2016, 28 companies published 47 reports, with most reports led
in the period 2010–2013. Judging by CSR publications made by Ukrain-
ian economists, there was a dramatic decline in CSR reports in 2014.
This was mainly the result of the Donetsk Region situation which is cur-
rently beyond Ukraine’s control and was annexed by a pro-Russian self-
proclaimed formation. This situation has led to a massive anti-terrorism
operation without a state of war actually being declared.
This tragic stage of Ukrainian history was the main reason for the
rapid drop in CSR reports. Gross domestic product fell by 17.6% in
2015 (compared to 2013).18 Donetsk and Luhansk, being the epicentre
of the conict zone, saw industrial production decline by 32% and 42%
15 E Kovalenko, ‘Issues of Corporate Social Responsibility Development in Ukraine’ (2015)
Global and National Issues of Economic 153.
16 Kyivstar CSR Report <http://report.obolon.ua/ru/society/development_regions> ac-
cessed 18 June 2017.
17 Lifecell Social Reports <www.lifecell.ua/en/about_lifecell/social-responsibility/social-
reports/> accessed 17 June 2017.
18 Main Indices of Social and Economic Development of Ukraine <www.ukrstat.gov.ua/
operativ/operativ2015/mp/op_u/op0415_u.htm> accessed 18 June 2017.
298 Oleksandra Kolohoida, Iryna Lukach, Valeriia Poiedynok: Legal Aspects of...
respectively.19 Economic losses were also very high on the corporate
market. Market capitalisation of Ukrainian public companies dropped
from UAH 542 billion (5 May 2015) to UAH 22 billion (5 May 2016).20 As
of the end of 2014, out of 22,852 registered companies limited by shares,
2,081 were from the Donetsk or Lugansk regions.21 By the end of 2015,
the number of companies limited by shares and registered in the Donetsk
or Luhansk regions dropped to 1,142. As many as 66.15% of these
were located in the Donetsk Region where the Ukrainian government
temporarily has no power, and 73.91% were in the same uncontrolled
territory of the Lugansk Region.22
All these economic and social cataclysms have led to a general re-
duction of companies ling their CSR report; again, one has to remember
that the reports in Ukraine have been made and led on a voluntary basis
since so far neither Ukrainian legislation nor stock market regulations
have contained any CSR report requirements.
There are legal works regarding the social orientation of the economy
in the sphere of economic law to introduce CSR in Ukraine which are
cited in this paper to show that Ukrainian economists have conducted
some research in this eld. Special attention should be paid to the CSR
of major corporations and the prospects for their enhancement as well as
for a change of their identity as a result of consideration given to their im-
portant social contribution. Besides, it would be expedient to introduce
voluntary CSR reporting by public companies limited by shares, but still
to provide for its denition on a legislative level.
An important sign of CSR is that not only is the corporation itself in-
volved, but so are other parties of corporate relations. While corporate de-
velopment decisions are made by various subjects, each of them should
be held responsible for their actions. For instance, supervisory board
members should exhibit a bona de attitude to possible social conse-
quences when approving an important agreement. The same goes for the
shareholders who vote at a general meeting. Concerning the responsibil-
ity of a corporation in particular, its personalisation is graded. Naturally,
a socially positive corporate image has to become the external attribute
19 ‘The Ukrainian Economy Is Not Terrible Everywhere’ The Economist (London, 2016)
<www.economist.com/blogs/freeexchange/2016/01/lviv-not-donetsk> accessed 18 Sep-
tember 2017.
20 National Securities and Stock Market Commission of Ukraine, ‘Stock Exchange of
Ukraine’ <www.nssmc.gov.ua/day_analytics> accessed 18 September 2017.
21 National Securities and Stock Market Commission of Ukraine (2015) ‘Annual Report
of Ukraine’ 61, 64 <www.nssmc.gov.ua/user_les/content/58/1434454281.pdf> accessed
18 September 2017.
22 National Securities and Stock Market Commission of Ukraine (2016) ‘Annual Report
Ukraine’ 92 <www.nssmc.gov.ua/user_les/content/58/1473066406.pdf> accessed 18
September 2017.
299
CYELP 13 [2017] 291-312
of such responsibility. But the formation of CSR is impossible without
the due responsible behaviour of other subjects of corporate relations.
This also proves that corporate management bodies should be singled
out among the corporate relations subjects as they take an active role in
the formation of CSR practices. Corporations are integrated in social life
to a certain extent, and this is why they have rights and obligations that
no other types of legal entities have. For instance, obligations to form au-
thorised capital enable corporations to be liable for their debts.
In the light of implementing the CSR, the important role of stock ex-
changes should be stressed. Due to the UN Sustainable Stock Exchanges
initiative, 18 global stock exchanges, including the New York Stock Ex-
change, NASDAQ, the London Stock Exchange, and the German and Ital-
ian stock exchanges are participating in the promotion of CSR. One of the
priorities of this initiative is environmental, social and corporate manage-
ment. Unfortunately, none of the Ukrainian or Russian stock exchanges
is part of this programme, although there are representatives from Ka-
zakhstan and Belarus.23 In this regard, it should be stressed that SCR
cannot be implemented by the state itself. A large part of it must be done
through market participants. Two major stock exchanges of Ukraine pro-
vide no CSR-related data in their reports or ethical codes.24 The adoption
of the UN Sustainable Stock Exchanges initiative by major Ukrainian
stock exchanges is required in this sphere.
4 Legal component of CSR
The legal component is extremely important in CSR nowadays. Con-
cerning the denition of the state in terms of the CSR process, it is neces-
sary to consider the opinion of M Friedman who believed that civil society
was not able to control the social activities of businesses effectively and
could not make them act responsibly. The only power able to do so was
‘the iron st’ of government, although this process would mean death for
any business.25
We consider that CSR has mutual effects upon other types of re-
sponsibility: on the one hand, law denes rules of behaviour that the
corporation is absolutely bound to comply with; on the other hand, legal
standards are called upon to ensure the protability of the company, and
establish environmental and basic ethical norms. In particular, no law
can force corporations to undertake charity, but it may well encourage
23 ‘Sustainable Stock Exchanges (SSE) initiative’ <http://www.sseinitiative.org/about/>
accessed 18 September 2017.
24 PFTS Stock Exchange <http://pfts.ua/en/1-about-pfts-se> accessed 18 September
2017.
25 Friedman (n 3) 32, 33.
300 Oleksandra Kolohoida, Iryna Lukach, Valeriia Poiedynok: Legal Aspects of...
them to do so. The complexity of this process will depend on such factors
as the size of the company and the nature of its activity. For the majority
of small and medium-sized companies, especially micro-companies, the
CSR process will probably remain informal and intuitive. Nevertheless,
the tradition of regulating CSR by public companies is formal.
Under article 3.4 of the Communication, it is the companies them-
selves that have to develop CSR. Public authorities can play an auxiliary
role by skilfully combining voluntary measures and, if necessary, addi-
tional regulations, for instance to ensure transparency, and to establish
a market incentive for responsible business behaviour and corporate ac-
countability.
The introduction of a legal strategy for CSR may occur on three
levels:
- governmental – approval of CSR programmes and laws, as well as
the future adoption of a complex law on CSR;
- public – introduction of public control, supervision, regulation and
incentives for CSR. This means that both nongovernmental organi-
sations and stock exchanges may act as subjects of the initiative;
- entrepreneurial – large companies have to be active and initiate
CSR measures.
The UN denes the state as one of the most important partners in
the CSR development process. Thus, the state may become a regulator
for CSR between society, corporations and the state itself. UN special-
ists dene the following among the ve main public trends of CSR: 1)
corporate management; 2) reporting and disclosure; 3) participation of
the public and development; 4) responsible management and production
(which are the main corporate operations, so they have to be the most
important items on the CSR agenda); 5) responsible consumption.26
As a rule, the American trend in introducing CSR is characterised
by a more voluntary approach; in this, the load of implementing CSR is
borne by the public and is based on the social awareness of citizens and
corporations alike. For Europe, enhancing the governmental regulation
of CSR standards is more characteristic and is based on CSR reporting
and accountability. A brief history of this should be studied to make a
connection to the implementation of CSR in Ukraine.
We should note that the complex implementation of CSR, as cur-
rently seen in European countries, started quite recently. In particular,
26 The Role of Governments in Promoting Corporate Responsibility and Private Sector En-
gagement in Development <www.vub.ac.be/klimostoolkit/sites/default/les/documents/
role_of_governments_in_csr.pdf > accessed 18 September 2017.
301
CYELP 13 [2017] 291-312
the experience of Denmark in this context is very valuable: in 2008, the
Danish Parliament adopted the Act amending the Dutch Financial State-
ments Act (Report on social responsibility for large businesses). This law
was aimed at stimulating corporations to take an active role regarding
CSR and to cooperate with other countries in this area. Legislative de-
mands are a part of the First National CSR Action Plan (May 2008), and
they should facilitate an increase in the international competitiveness of
Danish companies. The law demands large businesses in Denmark to be
responsible for their work in the CSR area. In 2013, a new requirement
was made stipulating direct responsibility for observing human rights
by corporations and for reducing any negative effect they might have
on the environment. This law is non-regulatory, ie Danish companies
are free to choose whether they want to work based on CSR; however,
they have to be guided by CSR policy or have to clearly state their non-
compliance. The specied law establishes the following trends of activity
in CSR: standards, instructions or principles of CSR used in business;
the implementation of CSR policy by businesses, including any systems
or procedures used; assessment by businesses of what was achieved by
means of CSR initiatives during the nancial year, as well as any expec-
tations of the future initiatives.27
The Danish experience was used in other EU countries and nally
ended up as the basis for Directive 2014/95/EU28 amending Directive
2013/34/EU29 as regards disclosure of non-nancial and diversity in-
formation by certain large undertakings and groups. The provisions of
this new directive emerged from a compromise between those Member
States which are more advanced in reporting non-nancial information,
such as Denmark and France, and Member States which had previously
implemented the minimum requirements stipulated in the Accounting
Directive, such as Poland, Germany and the Czech Republic.30
Large undertakings which are public-interest entities exceeding the
criterion of an average number of 500 employees during the nancial
year on their balance sheet dates must include a non-nancial state-
27 Danish Business Authority, ‘Legislation’ (CSRgov) <http://csrgov.dk/legislation> ac-
cessed 18 September 2017.
28 Directive 2014/95/EU of the European Parliament and of the Council of 22 October
2014 amending Directive 2013/34/EU as regards disclosure of non-nancial and diversity
information by certain large undertakings and groups [2014] OJ L330/1.
29 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013
on the annual nancial statements, consolidated nancial statements and related reports
of certain types of undertakings, amending Directive 2006/43/EC of the European Parlia-
ment and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC
[2013] OJ L182/19.
30 J Witkowska, ‘Corporate Social Responsibility: Selected Theoretical and Empirical As-
pects’ (2016) 19-1 Comparative Economic Research 36.
302 Oleksandra Kolohoida, Iryna Lukach, Valeriia Poiedynok: Legal Aspects of...
ment in their management report. Regarding Ukraine, it is highly impor-
tant that the Directive sets obligations not only for public companies but
also for public-interest entities to make non-nancial reports. The ratio
of stock market capitalisation to GDP for Ukraine in 2014 was 29.21%
which fell to 3.21% in 2015.31 This indicator is undoubtedly very low. The
ratio of stock market capitalisation to GDP for the US in 2014 was 146%,
and 52.58% for the EU. The reasons for such a decline in Ukraine have
been specied above.
Furthermore, some large companies are afraid to register as a com-
pany limited by shares while the stock market is still not fully formed.
For example, Nova Poshta which is the leader in the private mail delivery
market employs 22,000 people, although it is a limited liability company
(the LLC form in Ukraine is regulated more like that in the USA and not as
in Germany), while Epicentr, the largest Ukrainian construction products
supermarket network, hardly has any information on the number of em-
ployees. If Ukraine supports the implementation of Directive 2014/95/
EU, then such large off-exchange companies would be bound to le their
non-nancial reports. It is also important to full provisions concern-
ing consolidated non-nancial statements in Ukraine and remember that
many Ukrainian enterprises are members of large groups.
In this respect, a CSR report would be the only source of relevant
public information regarding some large LLCs which make no public re-
port unless it is legally regulated. This is why it is important to report
some corporate information with regard to CSR, Directive 2014/95/EU
includes not only CSR action but also some information regarding the
undertaking. Within the frameworks of such a report, these companies
have to provide the information necessary to understand the company’s
development, performance, position and the impact of its activity relat-
ing to, at the very least, environmental, social and labour force matters,
respect for human rights, anti-corruption and bribery matters, including:
(a) a brief description of the undertaking’s business model;
(b) a description of the policies pursued by the undertaking in
relation to those matters, including the due diligence processes
implemented;
(c) the outcome of those policies;
(d) the principal risks related to those matters linked to the un-
dertaking’s operations including, where relevant and proportion-
ate, its business relationships, products or services which are
likely to cause adverse impacts in those areas, and how the un-
dertaking manages those risks;
31 National Securities and Stock Market Commission of Ukraine (n 21) 26.
303
CYELP 13 [2017] 291-312
(e) non-nancial key performance indicators relevant to the par-
ticular business.
Currently, there are fteen EU countries actively engaged in CSR
regulation and public policy development.32 In many EU countries, it is
the government authorities that propagate and promote CSR. For exam-
ple, in Italy the process of CSR and social accountability development is
controlled by the Ministry of Labour and Social Development. In Spain,
left-wing parties actively supported the adoption of the Act on CSR by
the parliament in 2003; besides, the State Expert Technical Commission
for CSR was established which aims to assist businesses in combining
economic activity with other activities for the good of society. In Lithu-
ania, a CSR strategy for 2006–2008 was developed and its implementa-
tion helped to improve the position of the country. In Poland, the Ministry
of Labour established a CSR work group consisting of representatives of
many departments; its activities ensured the stable position of that coun-
try in the global social charity rating during the period 2004–2010.33 Con-
sidering global experience, the development of CSR may be undertaken
by the Ministry of Social Policy of Ukraine.
With regard to SOCs, it must be stressed that Directive 2014/95/
EU makes no exception for any company. Further, Member States should
ensure the existence of adequate and effective means to guarantee the
disclosure of non-nancial information by undertakings in compliance
with this Directive. To that end, Member States should ensure that ef-
fective national procedures are in place to enforce compliance with the
obligations laid down by this Directive, and that those procedures are
available to all persons and legal entities having a legitimate interest,
in accordance with national law, in ensuring that the provisions of the
Directive are respected.34 SOC policies regarding the CSR report will also
bring the Ukraine Act on Governance of State-owned Objects into effect.
According to article 11.2.19 of the act, the SOC board is responsible for
CSR policy and for the sustainable development of the SOC. Neverthe-
less, as was shown previously, this norm was not put into effect on the
Ukrainian state-owned market.
It should be stressed that CSR report regulation must be made at
the Ukrainian legislative level and be introduced as a law.
32 ‘Corporate Social Responsibility National Public Policies in the European Union - Com-
pendium 2014 - Digital Single Market - European Commission’. Digital Single Market
<https://ec.europa.eu/digital-single-market/en/news/corporate-social-responsibility-na-
tional-public-policies-european-union-compendium-2014> accessed 16 July 2017.
33 V Bulba and M Tretiak, ‘Foreign Experience of Governmental Regulation of Corporate So-
cial Responsibility of Businesses’ (2013) 3 Theory and Practice of Government Control 346.
34 Association Agreement (n 1) Preamble, art 10.
304 Oleksandra Kolohoida, Iryna Lukach, Valeriia Poiedynok: Legal Aspects of...
5 CSR reporting standards
Directive 2014/95/EU promotes the ‘comply or explain’ principle:
if a company fails to pursue policies relating to anti-bribery and cor-
ruption, environmental, or other non-nancial matters, it will have to
explain the reasons for such failure in its annual report. The directive
instructs Member States to ‘ensure that adequate and effective means
exist to guarantee disclosure of non-nancial information...’ and, to that
end, that ‘effective national procedures are in place to enforce compliance
with the obligations laid down by this Directive...’35
Instead of making a non-nancial statement, undertakings may pro-
duce a separate report drawn up according to an alternative, national,
union-based or international framework. The preamble mentions several
examples of such frameworks: the Eco-Management and Audit Scheme
(EMAS), the UN Global Compact, OECD Guidelines for Multinational En-
terprises, ISO 26000 and the Global Reporting Initiative.36
Standards need to be elaborated in order to facilitate the implemen-
tation of the CSR concept by all enterprises, on the one hand, and to vali-
date and monitor corporate social responsibility which enterprises adopt
or declare, on the other hand. Available tools include norms and stand-
ards developed by independent organisations, which can be grouped
as follows: process-related standards enabling identication of how re-
lationships with stakeholders are shaped and how communication and
management systems are built (AA1000, GRI); performance standards
identifying volumes of admissibility (Global Compact, ILO Conventions);
standards relating to principles which help identify best practices in in-
dividual areas (eg OECD Guidelines); certication standards specifying
which management systems in certain areas can be certied (SA 8000,
ISO14001, EMAS); and review standards providing information concern-
ing the conditions that must be met to assign an enterprise to a certain
group (FTSE4Good, DJSGI).37
Understanding the need to choose some of those standards for
Ukraine to prevent turning non-nancial reporting into a formal process,
we should make a brief examination of reports. European economists pre-
sume that in contrast to the AA1000 Standard and SA8000 standards,
the Guidance on social responsibility developed by ISO is an international
35 Changes Ahead for Corporate Sustainability Disclosures Following Publication of New
EU Directive (2014) 4 <www.willkie.com/~/media/Files/Publications/2014/12/Changes_
Ahead_for_Corporate_Sustainability_Disclosures_Following_Publication_of_New_EU_Direc-
tive.pdf> accessed 16 July 2017.
36 Dániel Gergely Szabó and Karsten Engsig Sørensen, ‘New EU Directive on the Disclosure
of Non-Financial Information (CSR)’ (2015) 12(3) European Company and Financial Law
Review 337.
37 Witkowska (n 30) 32.
305
CYELP 13 [2017] 291-312
standard that is not subject to certication. The standard does not con-
cern the management system per se, but it contains elements that can
be incorporated into existing systems, such as quality management (ISO
9001), environmental management (ISO 14001), and health and safe-
ty management (OHSAS 18001/PN-N-18001) (ISO, PKN 2015). It is a
document promoting and facilitating business activities in the area of
social responsibility. It highlights the relevance of the social responsibil-
ity structure, its multidimensional nature, and its connection with the
international human rights standards, environmental protection, and
anti-corruption areas.38
ISO 26000 is the social responsibility standard for all organisations
and a derivative of the International Standards. To ensure consisten-
cy, ISO has entered into special agreements with the ILO, the Global
Compact, the Global Reporting Initiative (GRI)(48) and the OECD. ISO
26000 does not offer guidance on social responsibility performance re-
porting. However, the ISO 26000 content does cover a very similar range
of topics to that in the GRI Reporting Guidelines. The ISO guidance pro-
vides a structure for companies to organise their activities, which can
then be measured and presented in the company’s report following the
GRI guidance. No formal accreditation process is available for the ISO
26000 standard. Some countries (eg Germany, Italy) have developed na-
tional guidance tools for companies wishing to be ISO 26000 compliant.
In some of the Nordic countries, efforts have been made to make state-
owned businesses ISO 26000-compliant and to work in partnership in
the Nordic region to promote these principles.39
Now, CSR is only mentioned twice in the Principles of Corporate
Conduct of Ukraine (hereinafter: the Principles). A company introduces
an effective system of internal control over the reliability of information
disclosed by the company, putting responsibility on the executive body
for the reliability of accounting, nancial and non-nancial information
(4.2 Principles). Nevertheless, the Principles do not specify what kind of
information the non-nancial report should contain, and this cannot be
compared with the information provided in Directive 2014/95/EU. Nei-
ther do the Principles state whether there are any sanctions in place or
explanations for disclosure of such information. Ukraine’s Law on Com-
panies Limited by Shares does not provide any such information either.
Another reference to CSR in the Principles concerns the fact that the
executive body of a company, through its own activities, is aware of its so-
cial responsibility for the activities of the given company. However, there
is no evidence in what way such awareness must exist.
38 Witkowska (n 30) 33-34.
39 N Williamson A Stampe-Knippel and T Weber, ‘CSR: National Public Policies in the Euro-
pean Union - Compendium 2014’ (European Commission 2014) 16 <http://ec.europa.eu/
social/BlobServlet?docId=12899&langId=en> accessed 16 July 2017.
306 Oleksandra Kolohoida, Iryna Lukach, Valeriia Poiedynok: Legal Aspects of...
Due to the problem concerning the reforms in Ukraine that should
be made legally rather than provided by businesses, as the case stands,
the implementation of reporting standards is highly important. This is
why it must be done through the National Securities and Stock Market
Commission of Ukraine. As we may presume, report standards should
be recommended for large undertakings which are public-interest enti-
ties in the light of the implementation of Directive 2014/95/EU, unless
the undertaking provides explanations as to its failure to implement the
standards.
6 Perspectives of CSR regulation in Ukrainian legislation
According to the Association Agreement, parties must strive to fa-
cilitate trade in products that contribute to sustainable development, in-
cluding products that are the subject of schemes such as fair and ethi-
cal trade schemes, as well as those respecting CSR and accountability
principles.40 Another article of the Association Agreement provides that
the parties must promote CSR and accountability, and encourage re-
sponsible business practices, such as those promoted by the UN Global
Compact of 2000, the International Labour Organization (ILO) Tripartite
Declaration of Principles concerning Multinational Enterprises and So-
cial Policy of 1977, as amended in 2006, and the OECD Guidelines for
Multinational Enterprises of 1976, as amended in 2000.41 It is signicant
that the Association Agreement puts CSR before economic principles,
meaning accountability in this eld. It is determined that trading must
be done in a manner that respects CSR. This means that not only must
business affairs be conducted in compliance with CSR, but CSR itself has
to be strongly incorporated in Ukrainian legislation.
In this relation we might assume that legal regulation of CSR must
be done in several ways: by implementing the CSR principles in the legis-
lation itself and by including CSR information in the nancial reports of
public companies, as was considered earlier.
We should note that the Economic Code of Ukraine contains several
provisions where CSR is mentioned:
- as the preamble states, the Economic Code is aimed at ensur-
ing the growth of the business activities of enterprises, the devel-
opment of entrepreneurship and the resulting increase of pub-
lic production efciency and its social orientation in conformity
with the requirements of the Constitution of Ukraine, the estab-
lishment of public business procedures in the economic system
40 Association Agreement (n 1) art 293(2).
41 Association Agreement (n 1) art 422.
307
CYELP 13 [2017] 291-312
of Ukraine, and the facilitation of its harmonisation with other
economic systems;
- entrepreneurship is dened as a business activity carried out
to achieve economic and social results as well as aimed at gain-
ing prot (part 2 of Article 3 of the Economic Code of Ukraine).
The social features of the general business principles dened in the
Economic Code prove the need to introduce CSR in economic law once
more, as the branch already has some experience regarding the social
nature of governmental regulation of economic activities in terms of a
socially oriented economy.
Directive 2014/95/EU is not mentioned in the Association Agree-
ment, as it was adopted later. In spite of what was mentioned above,
the Directive must be implemented with due consideration to Directive
2014/95/EU of the European Parliament and the Council dated 22 Octo-
ber 2014, amending Directive 2013/34/EU regarding disclosure of non-
nancial and diversity information by certain large undertakings and
groups, and Directive 2013/34/EU on the annual nancial statements,
consolidated nancial statements and related reports of certain types of
undertakings, amending Directive 2006/43/EC of the European Parlia-
ment and the Council and repealing Council Directives 78/660/EEC and
83/349/EEC.
Annex XXXV to Chapter 13 ‘Company Law, Corporate Governance,
Accounting and Auditing’ states that Ukraine undertakes to gradually
approximate its legislation to the following EU legislation within the
timeframes stipulated by Directive 2006/43/EC of the European Par-
liament and the Council dated 17 May 2006, on statutory audits of an-
nual accounts and consolidated accounts, amending Council Directives
78/660/EEC and 83/349/EEC. The Directive provisions must be im-
plemented within 3 years of the commencement of the Agreement. The
Association Agreement entered into force on 1 September 2017. For this
reason, the provisions of Directive 2014/95/EU should be implemented
by 1 September 2020.
Currently, there is a Draft Law on Amendments to the Law on Ac-
counting and Financial Reporting in Ukraine (regarding improving some
of its provisions) (hereinafter: Draft),42 led with the Verkhovna Rada of
Ukraine (the Supreme Council). The Explanation Note to the Draft states
that the Draft envisages the inclusion of a part of the basic provisions of
the new Directive 2013/34/EC in the Law.43 There is no such determina-
42 In general, the requirements of Directive 2013/34/EC are planned to be gradually im-
plemented by adopting regulatory acts, primarily, by amending the provisions (standards)
of accounting.
43 Draft Bill <http://search.ligazakon.ua/l_doc2.nsf/link1/GH3L200A.html> accessed 6
September 2017.
308 Oleksandra Kolohoida, Iryna Lukach, Valeriia Poiedynok: Legal Aspects of...
tion regarding the non-nancial reports. Instead, the Draft provides for
the management report – a document containing nancial and non--
nancial information that characterises the status and prospects of devel-
opment for the enterprise and revealing the main risks and uncertainties
in its activities.
For the purposes of understanding the management report, we
should consider article 19 of Directive 2013/34/EU, which has detailed
information regarding indications. In contrast to Directive 2013/34/EU,
the Draft establishes no type of enterprise or scope of information which
should be included in the management report. Furthermore, the Draft
contains a corresponding article establishing the procedure and terms for
ling nancial statements, consolidated nancial statements, manage-
ment reports and reports of payments made for the benet of the state,
to governmental authorities, as determined by the Cabinet of Ministers
of Ukraine, and similar requirements for banks as determined by the
National Bank of Ukraine. It is not clear why such an important part of
Directive 2013/34/EU regarding non-nancial information is going to be
implemented not by the Verkhovna Rada of Ukraine (the principal legis-
lative authority) but by the Cabinet of Ministers (which is an executive
authority).
Member States must ensure that the statutory auditor or audit rm
checks whether the non-nancial statement or a separate report has been
provided. The main enforcement mechanism related to the non-nancial
reporting requirements is a compulsory check by the auditor.44 The Draft
does not pay attention to the auditor check of the non-nancial report
(it should be noted, however, that the auditing and disclosure of the -
nancial report is prescribed in the Draft). The rules regarding the audit
of non-nancial reports should also be included in Ukrainian legislation.
It is not clear why the provisions of Directive 2014/95/EU, amend-
ing Directive 2013/34/EU, are not reected in the Draft. It might be the
subject of further drafts, but, as it appears, it would be better to imple-
ment Directive 2013/34/EU jointly with Directive 2014/95/EU. The law-
making process shows that Ukraine is currently failing to heed the need
for CSR, and this is why the CSR strategy must be fullled as discussed
below.
7 Strategy
In the light of signicant changes that must be made in Ukrainian
legislation regarding the perception of CSR, a government strategy is pre-
sumably needed in this eld. As the research reveals, state control and
44 Szabó and Sørensen (n 36) 336.
309
CYELP 13 [2017] 291-312
guidance regarding CSR implementation is highly important. The recent
development of such implementation includes drafting the National Ac-
tion Plan. Within ve years of its unanimous approval in June 2011 by
the United Nations Human Rights Council (UN HRC), the United Nations
Guiding Principles on Business and Human Rights (UNGPs) have become
the rst globally accepted standard covering the responsibilities of states
and businesses in preventing and addressing business-related human
rights abuse, and thus the authoritative point of reference for all those
working to ensure business respect for human rights. A common global
platform for action has been established, upon which cumulative pro-
gress has started to be recorded. Unanimous endorsement by the United
Nations (UN) has made the UNGPs a legitimate document to be taken up
in discussion with states around the world that would not otherwise en-
ter into discussion on human rights and business.45
The global business community must continue and accelerate its
work to fully respect human rights throughout its operations. But with-
out concerted action from all states in all regions of the world, the vi-
sion of the Guiding Principles will not be fully achieved. Not only are the
rights of the most vulnerable at stake, but business thrives when operat-
ing in jurisdictions with stable operating environments that support the
rule of law, justice, human rights, and sustainable development. Where
possible, business welcomes consistency amongst states. For these rea-
sons, business welcomes National Action Plans as a mechanism to set
out expectations and map ways forward.46 However, up to 31 December
2016, only twelve countries, ten of which are in Europe, have produced
National Action Plans: the United Kingdom (UK) (2013, 2016), the Neth-
erlands (2013), Denmark (2014), Finland (2014), Lithuania (2015), Swe-
den (2015), Norway (2015), Colombia (2015), Switzerland (2016), Ger-
many (2016), Italy (2016) and the United States (2016).47 In this respect,
Ukraine has an opportunity to set CSR standards on the newest level by
setting the UNGPs into action in Ukrainian legislation.
Here we should comment on the requirements of the National Action
Plan regarding implementation of CSR. Directive 2014/95/EU does not
45 Implementation of the UN Guiding Principles on Business and Human Rights 8 <www.
europarl.europa.eu/RegData/etudes/STUD/2017/578031/EXPO_STU(2017)578031_
EN.pdf > accessed 16 July 2017.
46 Statement on National Action Plans on Business and Human Rights. Session at the UN
Annual Forum on Business and Human Rights / ‘National action plans to implement the
UN Guiding Principles: stepping up Government commitments and action’ 16 November
2016 <https://cdn.iccwbo.org/content/uploads/sites/3/2017/01/ICC-STATEMENT-ON-
NATIONAL-ACTION-PLANS-ON-BUSINESS-AND-HUMAN-RIGHTS-2016.pdf > accessed 16
July 2017.
47 Implementation of the UN Guiding Principles on Business and Human Rights 8 <www.
europarl.europa.eu/RegData/etudes/STUD/2017/578031/EXPO_STU(2017)578031_
EN.pdf> accessed 2 September 2017.
310 Oleksandra Kolohoida, Iryna Lukach, Valeriia Poiedynok: Legal Aspects of...
refer to Member States implementing national action plans. Such devel-
opments have begun with regard to the Commission’s Communication.
Member States were to develop or update by mid 2012 their own plans or
national lists of priority actions to promote CSR in support of the Europe
2020 strategy, with reference to internationally recognised CSR princi-
ples and guidelines and in cooperation with enterprises and other stake-
holders, taking account of the issues raised in the Communication.48
In this context, the Preamble (10) of Directive 2014/95/EU states
that:
Member States should ensure that adequate and effective means
exist to guarantee disclosure of non-nancial information by un-
dertakings in compliance with this Directive. To that end, Member
States should ensure that effective national procedures are in place
to enforce compliance with the obligations laid down by this Direc-
tive, and that those procedures are available to all persons and legal
entities having a legitimate interest, in accordance with national law,
in ensuring that the provisions of this Directive are respected.
In this respect the Ukrainian government does not have an obliga-
tion to make a National Action Plan regarding CSR implementation. But,
as may be seen from the experience of EU Member States, such a docu-
ment is important as the beginning of the implementation of Directive
2014/95/EU. As Ukraine is only at the start of the enforcement of CSR
laws, it might also be methodologically important to have a clear perspec-
tive of the application of CSR.
8 Gender Diversity
The participation and representation of women in corporate admin-
istration bodies is provided within the framework of CSR development.
Currently, this issue is resolved neither in Russian nor Ukrainian leg-
islation. Nevertheless, many EU countries have already introduced the
requirements regarding the minimal number of women in corporate ad-
ministration bodies. There is an EU-wide process currently running to
stimulate and set up discussion on, and the adoption of, the Directive on
improved gender balance among non-executive directors of companies
listed on stock exchanges of 14 November 2012, which aims to establish
a quota for female non-executive directors at the level of 40% by 2017.49
48 Communication (n 8) A 4.7.
49 A Masselot, ‘Balanced Representation between Men and Women in Business Law: The
French “Quota” System to the Test of EU Legislation’ (2014) 3(2) CELLS Online Paper Series
25.
311
CYELP 13 [2017] 291-312
Directive 2014/95/EU provides a description of the diversity policy
applied in relation to corporate administrative, management and super-
visory bodies with regard to aspects such as age, gender, or educational
and professional backgrounds, the objectives of that diversity policy, how
it has been implemented and the results achieved during the reporting
period. If no such policy is applied, the statement must contain an expla-
nation of why it has not been applied.50
The procedure of initiation to adopt the Directive commenced in the
background of the introduction of a successful quota of females in EU
countries. The rst to introduce quotas for female members on the su-
pervisory board was Norway in 2008; then this initiative was joined by
Spain, France, Iceland and Belgium. These countries have a 40% quota
for female representation in the supervisory council or on the board of
directors, while several other countries provide a slightly lower quota, in
particular, 1/3 in Italy, 30% in Belgium, the Netherlands and Germany
(where the respective law was adopted in 2015). Great Britain provides
no quotas for female representation on boards of directors; however the
average number of women in corporate management bodies makes up
23%. In the USA, this index is slightly lower – 17% – while all legislative
attempts to set it as high as 30% have been strongly resisted.51
We believe that one of the important elements of CSR in Ukraine is
to determine the minimum number of women in corporate management
bodies. It is important for law makers to pay attention to this problem
and to take sufcient measures to resolve it. It should be noted that it
is the companies limited by shares and large limited liability companies
that will be the main CSR subjects as they are the large players on the
market and have a direct effect on the social, innovative, environmental
and other aspects of the life of the state and on society as a whole.
9 Conclusions
A platform to develop CSR may be established within the framework
of corporate law, with the application of standards and norms from other
branches of law regarding the Association Agreement. European practice
in the introduction of CSR proves the need for legislative regulation. De-
spite the participation of many Ukrainian companies in the CSR process,
CSR reporting is not regulated either by Ukrainian laws (not even draft
laws) or other public regulations. The basis for the legal development of
CSR in Ukraine should be implemented at the legislative level for large
50 Directive 2014/95/EU, art 2.
51 A Smale and C Miller, ‘Germany Sets Gender Quota in Boardrooms’ The New York Times
(New York, 6 March 2015) <www.nytimes.com/2015/03/07/world/europe/german-law-
requires-more-women-on-corporate -boards.html?_r=0> accessed 16 July 2017.
312 Oleksandra Kolohoida, Iryna Lukach, Valeriia Poiedynok: Legal Aspects of...
undertakings which are public-interest entities, with full regard to Direc-
tive 2014/95/EU.
The current legal law-making process shows that Ukraine fails to
be aware of the need for CSR, and for this reason a CSR strategy must
be drawn up. It is highly important to stress that implementation must
be carried out by the legislative body of Ukraine – the Verkhovna Rada.
This conclusion is made not only because of the analyses of Directive
2014/95, but also in order to provide relevant implementation of CSR
reporting and its entry into force in Ukraine.
In order to ensure CSR at a modern level, a management report
or a non-nancial statement should contain information as established
by Directive 2014/95/EU. If a public-interest entity refuses to write a
CSR report, it has to specify reasons for such a refusal. Special attention
should be paid to the social responsibility of major corporations and the
prospects of their enhancement, as well as changes in their identity while
taking into account the important social level. The auditing issues of the
CSR report should also be legally regulated.
All these concerns create the need for a National Action Plan to be
made and established by the Ukrainian government in the same manner
used to introduce CSR in most European countries. The National Action
Plan will help form a legislative, executive and civil strategy to introduce
CSR into Ukrainian businesses.