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Stephen Timms MPNew Local Government Network (NLGN) Conference |
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I am delighted to be back on local government territory this morning and I want to refer to my own local government experience in speaking to you. But, I want to begin by acknowledging that it might at first appear rather odd for the Government-wide lead for corporate social responsibility to be in my ministerial brief which is around competitiveness. But it isn't a mistake. What is becoming increasingly apparent is that corporate social responsibility is a highly creative activity. When sharp corporate minds backed by the expertise and resources of their organisation join forces with the local commitment and understanding of an effective local authority or the passion of a well-organised NGO in order to address a shared environmental or social concern, that is a very fruitful source for innovation. And innovation is increasingly the lifeblood of our economy and is a key to raising the competitiveness of the UK economy. And given the pro-innovation stance of NLGN, it is a very good topic for the network to be focusing on. Recent NOP research showed that 9 in 10 Chief Executives across Europe saw innovation and creativity as key to a competitive organisation, and 2 in 3 believed that responsible business practice could promote innovation, by increasing learning from outside and promoting a broader perspective in the organisation. Being a catalyst for innovation and creativity emerges as a significant justification for integrating CSR into the business mainstream. One of the first things that happened when I became Leader of Newham Council in 1990 was that I had a visit from the then also new Chief Executive of Tate and Lyle, the biggest private sector employer in Newham. This may be a slightly unfair characterisation of the relationship before that meeting between Newham Council and its biggest private sector employer, but if it is, it is only slightly unfair. The truth is they never talked. As far as I could work out the relationship had been set in stone in the 1950s when the Labour Party wanted to nationalise the sugar industry and Tate and Lyle's Mr Cube was crusading against. The two had been on opposite sides of an ideological war and had barely spoken in the intervening forty years. I think the only discussion had been when Tate and Lyle came in each year to complain about the rates rise, had been listened to politely and ignored - and that was it. For the Council there began with that conversation an immensely fruitful partnership which has flourished ever since. There have been benefits at many different levels and in lots of unexpected ways as well as in the ways that were originally intended. What I think a growing number of local authorities and others are discovering is that responsible corporate engagement can bring ambition and imagination and organisation where otherwise there was just despair. It can bring new ideas and new approaches, new enthusiasm of the kind that gets things done. It can put caring people - of whom there are many - in touch with situations that need caring about, and there are lots of them too. IPPR published new research yesterday drawn from a survey of firms in London, which found what they described as "a huge bank of goodwill in the London business community". I think they are right about that and it is a very important resource for local government. There is a lot of potential from small firms as well as large ones, and we have been working with small business organisations to help small firms contribute. I note that David North from Tesco is a participant today, and in September a large new Tesco Store opened in Beckton in my constituency. Among its employees are over 100 local residents who were formerly unemployed. They include a man who told me he had been unemployed for 13 years following an injury at work, another who had been jobless for eight years and a number of Asian housewives who have never worked before – never had the confidence to consider working – but who have for the past couple of months now been in jobs in that store. The reason for that store making such a significant contribution to regeneration in that community is a partnership between the company, the local Council, the Employment Service, the local College and others. The Employment Service identified unemployed people who might benefit, an impressive training package was put together for delivery by Newham College and others and over three months this group of just over 100 people were intensively trained in using computers, dealing with customers, first aid and other topics. What was unique about it was that everybody getting through to the end of the training was guaranteed a job at the store when it opened, with no other hurdle to surmount. I was talking to a local journalist about this and she said: "Typical. With all these high powered jobs coming into East London, the only thing on offer to local people is jobs in a supermarket". But actually, that was not the response of the people who went through that training. The enthusiasm of those people on their training was remarkable – I visited a group of them at Newham College while it was under way. A young Asian man whom I did not know came in to see me at my surgery recently and asked for my help in securing a visa for his fiancée to come to the UK from India for their wedding. That was an unusual request – what usually happens is that the wedding takes place in India and an application is then made for the spouse to come to the UK. So I asked him why he wasn't getting married in India. He explained to me that was out of the question because he was on the Tesco training! At the end of September, I presented certificates to those who had come through the training and it was a very impressive occasion. They were proud of what they had achieved, and rightly so, because by far the best way out of poverty is through employment. They were also very appreciative of the effort that had been invested in them. Now in my view that is how responsible development in disadvantaged communities like mine should be carried out, with serious effort to make sure that the employment opportunities being created are taken up by people in the area. But, of course, that isn't why Tesco did it – Tesco set up that partnership because it has proved in a number of cases now a good way to recruit staff who then turn out to be more committed, more enthusiastic, than people recruited by more conventional means. And I think that illustrates very well the kinds of opportunities we need to be looking for in this field of Corporate Social Responsibility. It is an approach that gets away from the old idea that economic, social and environmental goals are always in conflict. What we need to work out is how progress on any one of those fronts can support progress on the others. We want to see businesses, the voluntary sector, local authorities and other public bodies all working together, not doing so grudgingly, but because each sees it as advancing its own key interests to do so, as well as the interests of others. There is an immense surge in interest in CSR:
CSR is in no sense a substitute for obeying the law. Trust in businesses is at a low ebb after the wave of US corporate scandals. It is paramount that all organisations comply with the law. CSR is a voluntary activity going beyond the requirements of the law where an organisation recognises its impacts in social and environmental terms and draws on its expertise and resources to address those impacts, often in partnership with others. It is very important that this activity is seen not as PR, nor just as philanthropy, but as mainstream to the business – justified not just by altruism but also on sound business grounds. Otherwise it will not survive. And in Government we want it to survive and flourish, because it can have such an immensely positive impact in addressing big challenges which are among the toughest we face. The question in my job is what can Government do to encourage those partnerships to form and to deliver because we don't want to rest on our laurels. I don't believe the answer is to pass laws to make it compulsory. Of course, there is a place for regulation. There are standards set down in law for environmental protection, health and safety, minimum wage and so on and every organisation is rightly compelled to comply with them. But what we are discussing today is organisations voluntarily going beyond those regulatory requirements, developing ideas which build on their own particular strengths and interests, and contributing as a result to social and environmental gains as well as to their own proper economic self interest. Again, in this voluntary sphere, I am not saying that there is no place for regulation. When I was the pensions minister in 1999 I introduced the requirement that pension funds should state whether or not they had a policy on socially responsible investment and if so what it was. That has been an effective, light touch intervention that has stimulated a great deal of work around the social and environmental consequences of investment. In the current consultation on company law reform we are looking at measures to improve corporate reporting on social and environmental matters. So we take the view that well framed regulation can play a helpful role. On fiscal incentives, we have boosted payroll giving by funding a £2million promotional campaign, backed by a special ten percent supplement on all donations that Gordon Brown announced last week was being extended. Payroll Giving has increased from £37 million a year to £72 million last year – well ahead of the campaign target – and a new target of £150 million has now been set. The budget this year announced a £20 million investment in a new Community Development Venture Fund, which was recently launched by the Chancellor. This is being supported by an important new Community Investment Tax Credit in this year's Finance Bill to stimulate business involvement in disadvantaged neighbourhoods. I think that is going to be effective in just tipping the scales of commercial viability in favour of socially valuable initiatives, which would have been marginal or slightly worse than marginal otherwise. The tax credit encourages private investment through qualifying Community Development Finance Institutions (CDFIs). Investments will attract tax credits worth 25%, spread over 5 years. An investor putting in £100,000 will be able to reduce their tax bill from other activities by £5000 per year for 5 years. The scheme is now in its final stage of development and aims to be operational in a few months, after obtaining state aids approval. CSR is important internationally as well as nationally. We have been supporting international efforts to address issues like worker's rights in producer countries, and the Ethical Trading Initiative whose corporate members include high street names with a combined turnover of almost £100bn – working together to bring international procurement in line with principles set out by the International Labour Organisation. Last week I hosted a seminar at the DTI with the Fairtrade Foundation to encourage major organisations to consider purchasing more fair trade produce. At the DTI now all our tea and coffee is fair trade and I know that many local authorities are moving in the same direction. In the Modernising Company Law White Paper, under the proposal for an Operating and Financial Review whose production would be mandatory for large firms, a company would be required to provide more qualitative and forward looking information and on a wider range of issues than have traditionally been covered by company reporting. This would include information about a company's relationships with its employees, its impact on the environment and on the wider community, where such information is, in the view of the directors, material to an informed assessment of the company. The requirement to publish an OFR would be limited to around 1,000 companies or groups, though we estimate that they account for a quarter of corporate economic activity in the UK. The European Commission has just published a communication document on CSR. The Commission has indicated that its approach will largely follow our own view – that it should be primarily a business driven agenda. The Commission has set up a Multi-Stakeholder Forum tasked with the aim of promoting transparency and convergence of CSR practices and instruments. It will report back to the Commission in the summer of 2004 with its findings and recommendations. The Commission will then evaluate those findings and consider if any further initiatives are appropriate to promote CSR. In the UK we have welcomed the Communication Document. We see it helping make real the vision set out at the Lisbon European Council of the European Union as the most competitive and dynamic economy in the world. Public sector procurement is an area with enormous potential for national and local Government to support sustainable and socially responsible objectives. A high level cross-government group has been set up to investigate that potential. Its findings will help inform the development of procurement targets and guidance within a framework for sustainable development on the Government estate. So beyond light touch regulation, what can Government do on promoting CSR? I am just going to make some tentative suggestions today and I will be interested in observations people might want to make about them – there is certainly no commitment at this stage on our part to proceed with any of them but they are ideas we are reflecting on. I think the key will be in helping with spreading the best ideas so that they can be developed as widely as possible across the country. We already support a variety of awards for effective corporate social responsibility and that is a good way to get the message across. Perhaps we should be looking at more regional awards to take advantage of the growing strength of the regional networks being gathered together through the Regional Development Agencies. There might be other things we should do on a regional level too, such as promoting networks or clusters of businesses that have made CSR work and are willing to spread the message. There might be a place for some form of CSR Academy, which would promote good ideas, link up the people working on them and contribute also to the professional development of people working in CSR. It would need to be a dynamic and perhaps a virtual institution different from a conventional educational establishment but I think there might be a role for such a thing. We could also look at CSR's place on the courses of business schools. I am pleased that Sue Slipman has agreed to chair a Working Group to look at these issues and report back to me in March of next year. The Governor of the Bank of England has expressed interest in the idea of hosting a gathering in London for representatives of cities around the country where there is interest in forming these partnerships between public, private and voluntary sector organisations to address social and environmental challenges – so that civic, corporate and community leaders could meet to compare notes and exchange ideas about what is working well in each of their areas. A number of corporate organisations have made the point to me that they are suffering from questionnaire fatigue – that there is a huge variety of different organisations asking them questions about what they are doing on social and environmental matters, all of them asking slightly different questions and posing them from a slightly different standpoint, and it would be very helpful for them if there was some kind of convergence to rationalise the amount of work they are being asked to do – and that might be an exercise in Government we could assist with. So those are a number of the ideas we are reflecting on at the moment in the Department of Trade and Industry. There is a great surge of interest in this area at the moment and it is for us in Government a resource which we need to tap into if we are to succeed as we are determined to in addressing the big social and environmental and economic challenges which face us in the months ahead. This is an area we are enthusiastic about working on with others to achieve our shared objectives. I particularly welcome the engagement of local government with these issues and let me conclude by making the point that where there is scope for local, regional and national agencies to collaborate to make the most of the potential here, we at the DTI are keen to pursue those collaborations. Thank you. |
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Other speeches by Stephen Timms MP
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