Stephen Timms MP

BITC Annual Conference

I sense a growing agreement, not least on the part of businesses themselves, that they do have a vital role in helping to tackle the big challenges we face. There is increasing focus on CSR internationally, for example at the World Summit on Sustainable Development, where Governments signed up to promote corporate responsibility and accountability, and just a fortnight ago at the UN Global Compact Summit hosted by Kofi Annan in New York, where over 100 companies were represented.

It is for us in Government a source of commitment and innovation in addressing challenges which stretch and test us. Some people will quite reasonably ask, given that this is all about what businesses themselves do to address their social and environmental impacts, whether there is any role for Governments to play. I believe there is and I see it as helping to provide the right conditions and policy framework to maximise that business contribution.

But I can't plausibly ask for a generous business contribution just on the grounds of altruism - simply because it is the right and ethical thing to do. CSR which is going to be more than a flash in the pan, which is going to have an enduring and substantial impact, needs to be characterised by businesses operating in their own competitive interests.

I see many companies making a superb contribution, including smaller companies and those I meet at the BiTC awards for Excellence. And the best approach - in my view, the only effective approach - will continue to be essentially voluntary in character rather than regulatory. Our role in Government is to set the appropriate policy framework, using the right mix of tools to boost socially and environmentally responsible performance.

There is support in some quarters for a more legislative approach to CSR, demonstrated recently by a widely supported private members bill on company reporting, concerned with accountability and transparency. I share those objectives - I want businesses operating to the highest possible standards, including taking account of the social and environmental impact of their activities. But I do not believe that a blanket regulatory approach will achieve that goal.

CSR must start with compliance with the law. We have effective and necessary regulation on corporate activity - health and safety, employment, environmental protection, more recently around bribery and corruption. And as standards change, we need to keep it under review to ensure it is still achieving its objectives and that it is the right approach.

But the regulatory framework represents the baseline for company behaviour. Wherever that baseline is set, companies will be able to make a great deal of difference by the choices they make beyond it. CSR is what companies do voluntarily beyond minimum legal standards. We want to encourage companies to raise their performance.

CSR encompasses a very wide range of issues. Some will be more critical for some companies than for others, depending on their size, the nature of their business and where they operate in the world. The environmental issues facing an extractives company will be different to those for a financial services company. There simply is no "one size fits all " solution. And where regulation can help, and sometimes it can, it needs to be well designed and focused.

That is the approach we are taking with the OFR proposals currently out for consultation which Phil has been speaking about. The Operating and Financial Review is a narrative report that will play a key role in putting financial statements into the context of a broader discussion and analysis of the business. It will place a strong emphasis on the future prospects of the business, and on the factors and developments that might affect them.

It was at last year's conference that Patricia Hewitt announced our proposals for company law reform including the introduction of the OFR. The OFR concept recognises that companies should be run in the collective best interests of the shareholders. And, in those best interests, companies should recognise the need for good relationships with employees, customers and suppliers and the need to maintain their reputation and to consider their impact on the community and the environment. Good working conditions, productive employees, successful relationships with a wide range of outside interests are important assets for stable long term performance and shareholder value.

But each business is different and the factors that affect it will vary. The OFR will provide a balanced and comprehensive analysis. Along with core information applicable to all businesses, our proposals ask companies to report on employees, environmental matters and social and community issues to the extent that these are necessary to understand the business. The consultation on the OFR runs until 6 August - do make a contribution.

We are also consulting currently on our draft framework for international CSR, picking up a remit from the World Summit on Sustainable Development, and we would welcome further input on that. Its on the DTI website.

Last year, at the Awards for Excellence gala dinner, I announced that I was setting up a Steering Group to take forward proposals for a CSR Academy to support the development of the skills for socially responsible practice in the mainstream of business management.

So I'm very pleased this year to be able to report that the Academy was launched last night at Lancaster House. I am very grateful to Clive Mather of Shell UK who has made a huge personal contribution through his chairmanship of the Steering Group, and he will be speaking about the Academy later this morning. I am also very grateful for the very widespread help and support we have received.

The Academy will be a one-stop information source for those who want to learn about CSR. It will be a catalyst for embedding responsibility into day-to-day business practice, helping with the support of Government to champion a CSR approach. We need the skills for CSR to be spread across the entirety of a business. The message is: this is not just a job for CSR specialists, nor is it a topic just for big companies.

I look forward to the Academy stimulating more of the inspiring creativity that so many businesses are applying to the social and environmental challenges that face us all. Do look at the Academy website and the material on display here today.

I hope we can continue to work together to renew confidence in business, to put the ethics back into the work ethic, and to make the most of the potential which the CSR movement holds out to us: of building our competitiveness, strengthening our society and enhancing our environment.