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The Rt. Hon. Stephen Timms MP, Former Minister of State for Competitiveness
National CSR Conference 2007, 27 November 2007
I am delighted to be here, and to be in my second stint as minister responsible for corporate responsibility – a position I previously held from 2002 to 2004.
When I was Minister last time around, I visited the new world headquarters of HSBC at Canary Wharf, not far from my constituency. They had just finished moving in 8000 people from a large collection of buildings in the City, and the move had required them to replace all their old furniture – over 2000 tons of it in total. Normally, HSBC would have paid someone to take the furniture away, and it would then all have been dumped at a large landfill site in Essex. But, prompted by their corporate responsibility policy, HSBC chose to adopt a more responsible approach. It worked like this:
HSBC gave Greenworks, a social enterprise, the contract to remove all the furniture. The cost to HSBC was a little more than it would have been if the furniture had just been dumped.
Greenworks worked in partnership with First Fruit, a church-based project, which provides training and employment to formerly unemployed people, including some of my constituents. They stored, cleaned and sold on all but the least attractive items of furniture – much of it was in excellent condition. The less attractive pieces were broken up and the materials re-cycled.
The furniture was sold at low prices to charities and other non-profit organisations for their own use.
HSBC could not afford to risk any delay to their move. Greenworks is a tiny organisation, so it took some courage on the part of HSBC to adopt this approach. Greenworks hoped that, if it could handle that contract successfully, it would be able to provide the same service to other major employers moving their operations into Docklands over the years ahead – and so it has proved, because Barclays in their subsequent move to Canary Wharf, and RBS in their major move in 2005, have used Greenworks in the same way too – in each case making an advanced payment to Greenworks so that it could take on a warehouse for the recycling work.
These are examples of Corporate Responsibility – of businesses partnering with the third sector – with clear social and environmental gains. Social gains through employment for unemployed young people and good quality equipment for hard pressed non-profit organisations serving their communities. Environmental gains through avoiding the dumping in landfill of thousands of tons of furniture.
But for the banks there is a business benefit too. It is increasingly important to major firms that they can demonstrate to their customers and to their staff and to others that they are behaving in a responsible way. And so it is worth the company's while to be a little more imaginative, to make a modest financial investment, and to be able to show as a result that it is behaving in a responsible way.
It might at first sight seem rather odd that corporate responsibility sits within the ministerial portfolio that I hold, which is around competitiveness in the Department for Business, Enterprise and Regulatory Reform. I am convinced that is the right place. Let me set out three reasons why.
First, CSR has become an important element in companies’ presentation of themselves – of the image in the mind of consumers of the brand of companies like HSBC, Barclays and RBS, their products and services. And that is key for competitiveness. And I want responsibility increasingly to be seen as part of the British brand, so that when consumers outside the UK see that a British company is selling to them, then they can be confident that that company will be behaving responsibly. It is a matter of national – as well as firm level – responsibility.
But secondly, it is clear that corporate responsibility today is very important in the armoury of the recruiter. People considering who to work for in the highly competitive market for talent are looking not just for the best financial rewards, but also for an employer practising responsibility. People – and especially the brightest young people – care about what is happening in the world and want through their work to be contributing to tackling the problems of climate change, of disadvantage and worklessness, of poverty in the developing world. And if one employer will not offer that opportunity to them then they will go and work for somebody else who will. I spoke recently to a director of one of our biggest construction companies who told me that, at new graduate induction sessions these days, 70% of the questions raised by new employees are about corporate responsibility. This is key to successful recruitment and so to competitiveness.
And third – the modern corporate responsibility movement is highly creative – especially when, as in our focus today – it entails partnersing with the third sector. Able commercial managers used to innovating to solve tough business problems coming together with unfamiliar people from the third sector who are not just bright but passionate and committed to their social or environmental goals – that is a very creative interaction which is good not just for staff development and for tackling the goals – but also for bringing new thinking to the business problems and for generating ideas for new products and services. In a globalised economy, with competition around the world increasingly fierce, innovation is key to our national competitveness. These kind of partnerships are transformative, both for the task in hand and also for the individuals involved. So I hope this conference will allow you to meet new people with whom you may be able to collaborate creatively in the future.
So corporate responsibility is a key issue for competitiveness, and my portfolio is the right place for it.
My role also includes other areas that touch on corporate responsibility - including our work on a new enterprise strategy for British business. While Britian does well at starting new businesses we are looking again at how we can support entrepreneurs to establish new businesses and make them successful.
I am working with Phil Hope at the Office for the Third sector in the Cabinet Office, your next speaker, to ensure we provide all the support we can to social entrepreneurs as well as to other entrpreneurs. Our Enterprise Directorate will continue to work with the Office of the Third Sector to deliver the help that’s needed.
Let me also mention the creation of the new joint Trade Policy Unit with the Department for International Development and our own Fair Markets group, which will bring together trade and development experts to ensure UK competitiveness and market access and better support for those wishing to trade themselves out of poverty. It will bridge the two Departments, tapping into the best skills, networks and resources available at home and internationally.
So we want responsibility to be part of the British Brand. A recognition that business is not just about making a profit, vital though that is, but also about the context and impact of the business – social and environmental as well as financial.
As the Prime Minister has said: “corporate responsibility goes far beyond the old philanthropy of the past – donating money to good causes at the end of the financial year – and is instead an all year round responsibility that companies accept for the environment around them”.
And as the Prime Minsiter reminded the CBI yesterday, it will be long term investments, including in things like education, skills and training, that will ensure British business remains competitive into the future.
I want to build upon my previous work, and on the work of my other ministerial predecessors, in helping develop further our contribution to and encouragement of corporate responsibility.
Previous major contributions have included the influential Chatham House study setting out what Government and business should be doing. We responded with the document ‘Corporate Social Responsibility – A Government Update’ in 2004, and with the follow up publication in 2005 on the ‘International Strategic Framework’.
So what is going to change and what direction are we heading in? Our aim still is that private and public sector organisations should take account of their economic, social and environmental impact, and to take action to address them, drawing upon their own expertise and resources.
It entails companies going beyond compliance with the requirements of the law, working out for themselves how they can contribute to social and environmental goals: partnering with third sector groups, trade unions, consumers; innovative approaches and policy frameworks that promote and share best practice.
I want to make a new push to gather together the different threads of activity into a coherent whole. Too often it can seem as if Government activity is piecemeal.
I have therefore asked my officials to look at how we can pull together and co-ordinate good work across Government – and amongst business and other organisations – and make more explicit how that supports our future strategy.
I hope we can engage business leaders and other stakeholders in that activity. I want then to refresh the Government’s approach and support, to show what has changed and clarify our current priority areas.
On 24th July, the Prime Minister hosted a breakfast for City leaders to explore new ways in which they might utilise the particular talents and expertise in the financial services sector to help address key social challenges and strengthen leadership in the third sector. The challenge was to move beyond old models where financial experts spend a day painting the walls in a community centre, to harnessing their professional expertise for social and environmental goals.
The model for that discussion the International Finance Facility for Immunisation, for which the first bond issue was launched just a year ago. Long-term, legally binding commitments from donors are converted into immediate resources from the capital markets. This will deliver an extra $4 billion to the Global Alliance for Vaccines and Immunisation over the next ten years, helping to immunise an extra 500 million children and save 10 million lives. It was technically a highly complex exercise, carried out as part of their corporate responsibility commitment by Goldman Sachs.
At the breakfast we discussed early intervention to reduce the risks of costly later life outcomes; how to finance social interventions by unlocking future savings; how to strengthen charities with the greatest social impact. Those discussions are continuing, and I hope we shall identify key opportunities for partnering as a result, harnessing highest level corporate expertise for social and environmental goals.
Corporate Responsibility is a demanding, developing and innovative area in which to work.
Businesses perform better, and are more sustainable in the long term, when they have regard to a wider group of issues in pursuing success. It’s a common-sense approach. Companies interact with customers and suppliers; they make sure that employees are skilled, motivated and properly rewarded; and they think about their impact on communities and the environment. It makes good business sense.
On 1 October, we implemented key provisions in the Companies Act 2006 – another part of my portfolio – relating to directors’ duties. In the Act, we took the view that long term success is linked with care for the people who work in the company and in its supply chain, and with the wider community and environment. Pursuing the interests of shareholders and recognising wider responsibilities are complementary.
So quoted companies must now include information on environmental, employee, social and community issues, as part of their annual Business Review, where in the view of the directors the information is material to an assessment of the company’s future prospects. It has been an important step in improving corporate reporting, and I hope the improvement will give a further boost to the corporate responsibility movement as quoted companies publish their business reviews and as good practice develops over the next few months.
Collaboration between businesses and third sector organisations over the last few years has been one of the best sources for the innovation that social and environmental challenges depend on, just as much as businesses. The corporate responsibility movement has benefited from vast energy and imagination. It has been an extremely fruitful interaction, and I hope today’s conference will create new opportunities and partnerships, and identify new opportunities for profitable working together.
And I look forward over these coming months to working alongside everyone here in maximising the contribution from Government to the success of these partnerships which hold out so much promise for all of us.
Thank you.