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Douglas Alexander MP - Former Minister of State for E-Commerce and CompetitivenessEcho Research Forum |
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| (Left DTI 29/5/02) | |
| I am delighted to be with you this morning to address the Echo Forum on CSR and help launch your new international report on CSR. It is obviously an auspicious day for launches, as later today I will also be launching the Government's second report on CSR.
I want to begin my remarks this morning by seeking to place the Government's approach to Corporate Social Responsibility in the wider political and economic context, before highlighting the challenges we face, in turn, at an international and a national level. It is perhaps only fitting that I preface these remarks by acknowledging that the events of the past year have reminded us that these are challenging times for politicians. The increasingly globalised world in which we live of course demands new responses to the challenge of national and indeed international security. Yet the transformations in trade, technology, communications and culture that we have witnessed in recent years also demand new thinking and new responses from politicians. In recent years the dominating domestic challenge with which policy makers have come to wrestle in this increasingly globalised world is whether we can create a fairer society as well as a more dynamic market economy. Now many of us would recognise the old and familiar political paradigm, which depicts a fundamental choice between creating a fairer society and promoting a dynamic economy. Indeed a certainty that such a choice has to be made was all to often the hallmark of political debate over recent decades. The old left - representing the interests of the state – and the new right – representing the interests of the market – chose different sides, but both shared a common conviction that a choice had to be made. Yet new circumstances call for new responses. And one of the virtues of the developments in our politics and our economy is that we have managed to leave behind much of that sterile debate and replace it with a more constructive dialogue. Indeed, I would argue that amidst the day to day events that dominate domestic politics, it is all too easy to be blind to the scale of the shifts that are taking place, and its effect on political decision-making. Let me explain my point. Probably the two most significant turning points in recent geopolitical history were the fall of the Berlin Wall and the fall of the World Trade Center Towers. Professor Klaus Schwab has argued that the fall of the wall was seen as a triumph of capitalism over communism, which altered the balance decisively in favour of the market over the state. The result, he argues, was a decade during which "the emphasis on economics over politics led to unreal expectations about the role of business and economics in promoting the public good." September 11th altered that political argument. Even those on the right who had previously decried government as irrelevant and ineffectual, witnessed its vital role in providing emergency services, national security, and economic stability. So in my view we are now leaving behind a familiar but dated political discourse that asserts that the only role for government is to abolish itself. The sterile debate of those who say `Government is the enemy´ and those who say `Government alone is the answer´ is steadily less relevant to the challenges that we face at home and abroad. Such a discourse offers no answer to the international challenges of terrorism, environmental degradation or Third World debt. And it is all but useless for determining how to lock in economic stability at a national level, rebuild a health service, raise standards in schools or deal with the threat of crime. Yet the scale of change in the economic sphere over recent years has been at least as rapid and as profound, as the change affecting our politics in the emerging economy. Human capital is the prime source of wealth creation here in Britain and indeed across the developed economies. So investment in human capital, and children and our people is an economic necessity rather than a social cost to be borne. And once a stable economic framework is secured, the way to grow the economy effectively is to grow the labour force – literally by drawing more and more people into employment, metaphorically, by expanding the capacity and productivity of each person employed. This means creating the conditions in which good businesses can flourish:
Each of these policy imperatives is based on a simple but profound insight – that in this emerging economy the policies that we need for social justice – by extending opportunities across society – are the same policies that we need to create a successful modern economy. Such an understanding of the modern economy does not argue that government has no role in the market. Indeed it argues that the appropriate intervention of government, be that through setting market frameworks, addressing market failures or incentivising certain types of behaviour, is vital to the effectiveness of the modern economy and the equity of modern society. This is the broader economic context in which the government's approach to CSR should be understood. Yet there is a certain irony in the fact that this new policy agenda has started to emerge at precisely the point when the legitimacy of the globalised economy is increasingly being questioned. The Prime Minister stated recently "if globalisation works only for the benefit of the few, then it will fail and will deserve to fail." And for every writer like Thomas Friedman seeking to fully understand the significance of the unprecedented global flows of goods, services and capital we are now witnessing, there are others like George Monbiot and Naomi Klein who have concluded that the effects of such developments can already be condemned. Take the riots that took place at the summits in Barcelona or previously in Gothenburg and Genoa. Amidst the media coverage of the rioting and the protests, the Plan for Africa was all but lost. Yet as well as the violent protest that caught the headlines, there were many more people protesting, united in their hostility to globalisation. Articulating these concerns, UN Secretary General and Nobel Peace Prize winner Kofi Annan has asked the question that I believe underpins many of these international concerns. "How can we ensure that globalisation becomes a positive force for all of the world's people instead of leaving billions of them behind in squalor?" And I have no doubt that this question challenges not only companies but also governments to act. It is not acceptable for a company to make beautiful furniture for the homes of rich families in the west but leave a devastated forest landscape in Brazil. And it is clear already that businesses have come to understand the very considerable corporate risk involved in such actions. Shell encountered enormous public concern over its activities in Nigeria regarding the Ogoni people and the death of Ken Sara-Wiwa, as well as over the Brent Spar. And Nike and Gap both suffered as a direct result of conditions that were exposed in the factories run by some of their sub contractors, and now both companies sponsor an independent NGO, the Global Workers Alliance, to review their operations. Given their scale, it is fair to say that the actions of such multinationals are important not only for their own bottom line, but the world in which we live. Of the 100 largest economies in the world today, 51 are corporations. Indeed the top two hundred corporations have sales equivalent to one quarter of the world's total economic activity. Yet because in the last 50 years no country has lifted itself out of poverty without participating in the global economy, we will best help the poor not by opting out or by cutting cooperation across the world but by strengthening that co-operation, modernising our international rules and reforming the institutions of economic cooperation to meet the new challenges. So as Kofi Annan's observations reflect, the really challenging question is not whether we move forward with globalisation but how, and to whose benefit. And while there are extreme views that cannot, and never should be, accommodated, I believe that in the last few years - within the reasoned debate about globalisation - there is, increasing scope for agreement about the next steps forward. While over many decades the disagreement between pro- and anti-globalisation campaigners would have been so fundamental that no meeting of minds would have been possible, today many people who are wrongly labelled "anti-globalisation campaigners" – and who rightly campaign for trade on fair terms for developing countries – would also acknowledge:
And on such a basis it is clear that well directed globalisation is the road to rising prosperity and social justice on a global scale – of which there are four key building blocks. The first building block is an improvement in the terms on which the poorest countries participate in the global economy and to actively increase their capacity to do so: new rules of the game in codes and standards that all countries - rich and poor - can sign up to. The second building block is moving forward the great progress made at Doha by the swift adoption of an improved trade regime essential for developing countries participation on fair terms in the world economy. The third building block is a substantial transfer of additional resources from the richest to the poorest countries in the form of investment for development. Here the focus must not be on aid to compensate the poor for their poverty, but investment that builds new capacity to compete and address the long term causes of poverty. The fourth building block is the adoption by business internationally of high corporate standards for engagement as reliable and consistent partners in the development process. Backing up a code of corporate standards with financial support for the creation, in developing countries, of investment forums between public and private sectors. So on the international stage there are clearly major challenges for Government and as well as for business. And while few will deny the challenge of building a common view as to how corporations can make a positive contribution at local, national and international level, the debate tends all too often to reflect the old political paradigm of which I spoke earlier. As the writer Simon Zadek has argued all too often discussion about the contribution of CSR lurches between "Evangelical Optimism" - which suggests that it will be a panacea for every problem – to "Narrow Cynicism" – which doubts that private enterprise can ever make a genuine contribution to the common good. To try and find a way through such divergent views, we need first to be clear as to what we mean by corporate citizenship since it is a developing and often diverse categorisation. While there is no single definition, I believe a company pursuing this approach does three things:
In turn this approach to working can bring clear benefits to the businesses concerned, by reducing risk, by enhancing brand value, by opening doors and creating good will, and by improving its staff efficiency and morale. The economist James Tobin has been one of many to demonstrate the growing importance of assets such as intellectual capital, skills, research and development, brands, relationships and reputation in the knowledge economy. Ironically the very strength of the business case has led some to be sceptical about CSR, with critics seeking to condemn it as simply self serving publicity or corporate window dressing. Yet such criticism misses the point. A more fruitful approach is to look constructively at the ways in which businesses, Government and wider society can work together on issues of joint concern. In this regard Government faces two connected but separate challenges in promoting CSR - to increase the sheer number of businesses engaged in CSR, but also to deepen that engagement with CSR - into being something which permeates all business activities, instead of simply being an afterthought or an add on. This reflects my own view that CSR should be best understood as a journey on which businesses engage, rather than merely a justification for the activities of a particular business. This is the approach of Government that will inform the CSR strategy we unveil later today. It makes clear that at all levels, whether it is on international initiatives, the European Commission Green Paper, or domestic advances, work is being taken forward. In conclusion therefore let me reiterate that CSR has a key place within the Government's view of the kind of dynamic market economy and the kind of fair society – at home and abroad – towards which the Government is working. Of course there are limits to how much can be expected from individual business or CSR in general in addressing issues such as enduring inequalities or environmental degradation. Yet those limitations should not encourage us to turn away from the opportunities offered by this exciting agenda. It is instead by an effective partnership between Government, business and other sectors of society that we can best fulfil the real potential of the CSR agenda. Thank you very much. |
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Other speeches by Douglas Alexander MP - Former Minister of State for E-Commerce and Competitiveness
(the following are available from the archive) |
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