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Stephen Timms MPResponsible Corporate Engagement |
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| Thank you for inviting me today. I am delighted to be here and to have the opportunity to engage with such a distinguished group of interlocutors as I take on the ministerial brief for corporate social responsibility.
And it is a brief I am delighted to have. Because I am convinced that responsible corporate engagement is one of the best prospects we have for new and effective approaches making inroads on the big challenges which face us – of renewing our disadvantaged neighbourhoods, of improving the environmental sustainability of our economy and of reducing the massive disadvantage faced by so many in the developing countries. My conviction about the potency of responsible corporate engagement with neighbourhood renewal is based on my experience of now over 20 years as a political activist and a church activist in my constituency in the East End of London. There is here great potential for raising standards in education, for persuading young people who have given up to stay in education for longer, for finding ways to allow people whose families have endured three generations of unemployment to enter the workforce perhaps for the first time. A number of people in this room will be familiar with the work of Community Links, a very effective voluntary organisation in Newham in East London. When I became a Newham Councillor in 1984 it used to operate from a three bedroomed terraced house in East Ham, which was always overflowing with people and paper. And I was startled on my first visit there to find the door to the middle bedroom in this house bearing a plaque which read "The Marks and Spencer Room". It was for me a new idea that Marks and Spencer might have something to do with giving disadvantaged young people a chance which was the Priority for Community Links. Twelve years ago, I became Leader of the Council. One of the first things that happened was I had a visit from the then also new Chief Executive of the biggest private sector employer in the area, Tate and Lyle. He was in the process of establishing the East London Partnership, which has become the East London Business Alliance. The claim I am about to make may be a slight exaggeration, but if it is it is only slight. I think the relationship between the council and the company had been set in concrete in the 1950s when the Labour Party wanted to nationalise the sugar industry and Mr Cube was battling to defend free enterprise. The legacy of that ideological battle prevented a serious conversation between the two organisations for over thirty years. But once the conversation finally did start, the benefits were huge. I joined the Newham board of the Partnership, and I have seen immense benefits flow to the area which I now represent as MP through the corporate social responsibility exercised by that board. There have been benefits in lots of unexpected ways as well as in the ways that were originally intended. So in stating a commitment to corporate social responsibility I can draw on having seen the benefits over the past decade and more. And what I think I have learned from what I have seen is that responsible corporate engagement can bring ambition and imagination and good organisation into situations where previously there was just despair. It can bring new ideas and new approaches, new enthusiasm of the kind that gets things done. It can put talented people who care – of whom there are many – in touch with situations that need caring about, and there are certainly a lot of those as well. In the case I've been involved in, the partnership has made a big contribution to raising standards of education in our area. They used to be the worst in the country. They aren't any more – and the contribution of the partnership is one of the reasons. The partnership was able to pull together at least a million pounds worth of help in kind for the refurbishment of the old Canning Town Public Hall when it was taken over by Community Links. And when we were campaigning for improved transport links for the area – for example, for the international passenger station at Stratford on the Channel Tunnel Rail Link, which is now being built, it was the partnership whose heavy weight business backing made the campaign credible. I see Corporate Social Responsibility as offering an approach that gets away from the old idea that economic, social and environmental goals must necessarily always be in conflict. What we need to work out is how progress on any one of those fronts can support progress on the others – business, the voluntary sector, and 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. Businesses in increasing numbers as well as non-profit organisations accept the need for responsible behaviour as a matter of principle; but they also see it having other important benefits:
The key is that this activity is seen not as philanthropy, but as mainstream to the business – justified not just by altruism but on sound business grounds. Otherwise it will not survive. And we want it to survive and flourish, because it can have such an immensely positive impact in addressing deep-seated social and environmental and other challenges which are among the toughest we face. I came across what struck me as an exceptionally good example in talking recently to the Lattice Group which I know is represented here. It has a programme of training prison inmates to be gas engineers. Primarily that is because it needs to recruit more engineers than the conventional routes are providing, but the social benefits of doing that successfully could obviously be immense. And that's what we need to find – imaginative initiatives which make sense commercially as well as socially and environmentally. I want to take the opportunity of this seminar to ask you how we can most effectively do that. I am deeply sceptical of knee-jerk regulatory requirements in this area because of their potential to stifle the generosity and creativity, which have been the invaluable hallmarks of the corporate social responsibility that I have observed over the past twelve years. But I sense we are only really at the beginning of our discovery of the potential of this kind of activity, and there may well be further steps we can take in Government to encourage progress. We have identified two main ways that Government can help:
This is all treated in some depth in the Government Report – Business and Society: CSR Report 2002, which was published in May. Notwithstanding what I have said about regulation, responsible behaviour for any organisation starts with legal compliance. The UK benefits from a tried and tested framework of laws and regulations on social and environmental issues. To ensure it remains current, this framework is constantly evolving with the aim of making responsible behaviour normal practice in all types of organisations. But legislation and fiscal powers cannot compel virtue. Excessive intervention risks distorting or stifling progress rather than fostering innovation. So the prospect of legislation of any kind needs to be treated with great care. In 1999 I was the pensions minister and we introduced, from the then DSS, the requirement that funds should report whether they have policies on socially responsible investment, and if so to state what they are. This has been widely recognised as a very good example of the sort of legislation that is helpful, with similar approaches being adopted in France and Germany. We also have proposals within the current review of company law, which would also require companies to disclose significant social and environmental issues. Another example of light touch regulation is the recent enactment in UK law of the OECD Convention on Bribery, which makes it illegal for UK registered companies and individuals to bribe someone overseas. On fiscal incentives, we have boosted payroll giving by funding a £2 million promotional campaign, backed by a special ten per cent supplement on all donations for three years. David Roe from the Giving Campaign is with us. Payroll Giving has increased from £37 million a year and is expected to exceed the campaign target of £60 million a year earlier than projected. Half a million people are now taking advantage of these arrangements, delivering real value to a wide range of charities. The budget also 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 worked on the tax credit when I was a Treasury Minister and I believe it will prove to be a very effective measure 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 his or her 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. The Government produced new General Guidelines on Environmental Reporting last November. We encouraged CSR to help improve adult basic skills, which we have identified as a very important area with 7 million adults lacking these skills. It is also backing social enterprises, volunteering, and community arts projects (alone valued at £150 million last year); and there is a whole range of regional projects led by the Devolved Administrations and Regional Development Agencies all around the UK. To help small and medium sized enterprises (SMEs), the Government's Small Business Service has produced a handbook for SMEs and SME Advisors - as well as a benchmarking module to guide SMEs on good practice. We have also backed collaborative programmes with the British Chambers of Commerce, the Institute of Directors, and Business in the Community including the extension of schemes for "business brokers" and a "Community Mark", new research into SME motivations for responsible behaviour, and collaborative work with CSR Europe on a cross-European SME reporting toolkit. 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. 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. Of course, the European Parliament's Opinion favoured regulation in certain areas, such as reporting. The Commission intend to set up a Multi-Stakeholder Forum. It will be tasked with the aim of promoting transparency and convergence of CSR practices and instruments, through:
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. The UK welcomes the Communication Document. It is the next step forward for the CSR agenda, encouraging business and local communities to work together, to create a better society, and make a real difference. It will also help make real the vision set out in the Lisbon European Council conclusions of making the EU the most competitive and dynamic economy in the world. The UK is taking the lead on CSR within Europe - indeed of the 250 responses to the EC Green Paper; over 80 came from the UK. Our approach has been shown to work, and many of the areas for further work raised in the Communication are already being taken forward in the UK. We particularly welcome the recognition that the voluntary and business-led approach is the right one, and that more regulation is not the answer. The Government's goal for CSR is that organisations of all kinds in the UK should take account of the economic, social and environmental impacts of their activities, and should take complementary action to address the key challenges which arise from these impacts based on their core competences – locally, regionally, nationally, and internationally. Our strategy has five strands:
So we aim to:
A great deal remains to be done. I think we are only at the beginning of identifying the potential. Our aim is to maintain the momentum, recognising that CSR can contribute simultaneously to economic, social and environmental goals which all of us are concerned about. For me, this occasion is a chance to reflect on how we can most helpfully take forward the aims for this area, aims on which we would all in all likelihood be agreed, and I am looking forward to some discussion with you now. Thank you. |
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Other speeches by Stephen Timms MP
(the following are available from the archive) |
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