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Douglas Alexander MP - Former Minister of State for E-Commerce and CompetitivenessPromoting Corporate Social Responsibility at home and abroad |
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| (Left DTI 29/5/02) | |
| Thank you for the opportunity to speak at your annual conference.
Today I would like to set out how I see CSR fitting in to the broader policy objectives of the Government and examine the Government's current and future role in advancing the CSR agenda at home and abroad. I would particularly like to give my perspective on recent European developments. We all recognise the challenges of the increasingly globalised world in which we live, which of course demand new responses to maintaining national cohesion and indeed international security. 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 economy is whether we can create a fairer society as well as a more dynamic market economy. That political mission is undertaken against a CHANGING economic context. Human capitalism is now 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. 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. It means creating the conditions in which good businesses can flourish;
Such policy imperatives are based on a simple but profound insight – that in the emerging economy of the 21st century, 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 a critique of the 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. And it is within such a broader framework that 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 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 as we saw again yesterday in Barcelona, 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 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. There are clearly big challenges to business. It is not acceptable for a company to make highly priced goods for highly paid consumers in the developed world by ruining the health of children in the sweatshops of the developing work. 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 too often to polarise between narrow cynicism which doubts that private enterprise can ever make a genuine contribution to the common good, and evangelical optimism which suggest that CSR will be the answer to every problem. To try and find a way through such divergent views, we need first to be clear as 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 message today is that CSR has positive benefits and real value for all business. Environmental issues are attracting increasing attention in boardrooms – for sound business reasons. Consideration of environmental impacts brings many opportunities – new markets, innovations, fresh ways of thinking – for those businesses who seize the chance. Many companies are also recognising the savings offered by increased resource productivity - the generation of more wealth from less energy and fewer resources. It is in the bottom-line interests of all organisations to improve the literacy and numeracy levels of their staff. A recent report produced by Ernst and Young estimated that poor basic skills cost UK business over £8bn a year. Productivity per-hour-worked in the UK is 20% lower than it is in Germany. The social costs of poor literacy and numeracy levels are also manifold, with those affected likely to suffer diverse forms of social disadvantage and reduced opportunity. Addressing the workforce's basic skills can be regarded as one of the key areas of CSR that has a watertight business case. Ironically the strength of the business case has led some to be sceptical about CSR, with critics seeking to condemn it as simply as 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. So what then has been the response of the Government here in the UK? During our first term we took the lead on this debate and produced the Government's first report on CSR, which highlighted current business activities and revealed clearly that the CSR agenda is moving well beyond how companies give money away - to central questions of how companies make money. This reflects my own view that CSR should be understood as a journey on which businesses engage - rather than merely a justification for a business's activities. We are currently compiling the second report on CSR, which will be published in April. This Government has an ambitious vision for CSR: to see private and public sector organisations in the UK taking account of their social and environmental impact, and taking action to address the key challenges in their areas of operation. Therefore the Government has done more than simply celebrate the success of business initiatives in the field of CSR. Instead we are helping to create the environment in which this journey can take place. You are, of course, all very aware of the Occupational Pension Schemes (Investment) Regulations 1996, which require pension scheme trustees to state their policy regarding the extent to which social, environmental or ethical considerations are taken into account in the selection, retention and realisation of investments. I believe the initiative has made a valuable contribution to this area of commerce. And we have announced that shareholders are to be given the right to an annual vote on directors' pay. New legislation will be introduced to ensure greater transparency, improve accountability and strengthen links between performance and pay. The Government is encouraging social and environmental reporting and has published voluntary guidelines on environmental reporting. We are supporting the work of the Business Impact Task Force in providing a framework that can be used for wider reporting on CSR. In addition, we are also supporting work led by Business in the Community on a possible Index. I have also personally commissioned a mapping exercise to help business understand more clearly the various current approaches and how they relate (if at all) to one another. Yet at an international level as well, the UK, both through Government and many leading businesses, is already playing a leading role in pushing forward CSR objectives. This is why supermarkets and other UK firms have been so keen to join the Ethical Trade Initiative. As you know, the ETI is an alliance of companies, non-governmental organisations and trade union organisations, that is identifying and promoting good practice in putting employment standards into action and is working to improve conditions of employment in the supply chain, of goods delivered to consumers in Britain. This private sector led approach is underpinned by Governmental action. The United Kingdom has played its full part in developing various international conventions and codes, some of which - such as the UN's Universal Declaration on Human Rights - are of general relevance to business activity. Others - such as the OECD's guidelines on multinational enterprises - are more specific and are important in setting standards against which, companies operating abroad, can assess their performance. These Guidelines are backed by the UK and many other Governments as representing a minimum standard that companies operating internationally should be able to adhere to. A range of departments, from the Foreign and Commonwealth Office to the Department for International Development, my own Department, the DTI, and the Department for Work and Pensions have all made valuable contributions to such initiatives. Turning now to the Green paper, the European Commission published their Green Paper on CSR in July, and we held a major consultation during the second half of 2001. The consultation demonstrated a uniform agreement that partnership building is vital to CSR, and is an area that UK business takes a lead. Indeed, of the 250 responses that the Commission received, over 80 came from UK organisations. Our response to the Green Paper centred on 3 main areas:
On issues such as reporting and labelling, I believe that Government can bring added value through providing advice and guidance and through facilitating discussion between interested parties. The Commission plans to publish a White Paper in the summer, which will set out its conclusions from the consultation and detail proposals for action. So in conclusion 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 CSR in addressing issues such as enduring inequalities or environmental degradation. Yet those limitations should not encourage us to turn away from the opportunities offered. 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 |
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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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