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Lord Sainsbury of TurvilleFORGE 2 Guidelines launch |
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I am very pleased to be here today to help launch the FORGE 2 Guidelines. I congratulate all those concerned that have worked together to produce this guidance. Corporate Social Responsibility demonstrates the real worth of partnerships in action. Therefore, I am delighted that both the private and public sector have worked together so successfully in order to help engage others in the financial services sector. The FORGE 2 Guidelines build upon the foundation set by the FORGE 1 Environmental and Reporting Guidelines. Those Guidelines have evidenced considerable interest across the world and have led to further seminars and training on implementation of the Guidance. And of course, the BBA distributed them to all of its members and they are also available on the website. I think this underlines the point that CSR is international and that the United Kingdom is right at the forefront of this agenda. The Government sees CSR 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. A lot of 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 helping build brand value, foster customer loyalty, motivate staff, and contribute to a good reputation among a wide range of stakeholders. We see it as essential that this activity is seen not as philanthropy, but as mainstream to the business – justified not 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. It is of course paramount that all organisations comply with the law: recent events have highlighted the importance of exercising responsibility abroad as well as at home. The Government sees CSR as going beyond legal minimum requirements –and I would stress that it is not a substitute for legal minima. A recent survey showed that 68% of consumers do not trust companies. And in the USA, since Enron, there has been a 15% fall off in consumer confidence in business in the USA. The Government published the Modernising Company Law White Paper recently. I believe that the White Paper will help to modernise and simplify company law and renew trust in business. It is the most fundamental review of company law in 150 years and contains new proposals that will cut red tape and save small businesses around £170 million a year. The White Paper reflects the changes that have taken place over recent years and includes plans to: firstly, simplify the law and reduce burdens on small firms; secondly, improve transparency to increase confidence in business; and thirdly, improve governance to encourage and support responsible business. We are encouraging as many organisations and small businesses as possible to participate in the consultation process. Within the White paper, there are certain questions that have been posed and I hope that many of your organisations will respond and give us your views. The consultation process will end on 29 November 2002. On the wider picture, it is interesting that research conducted by NOP recently shows that 9 in 10 Chief Executive Officers across Europe see innovation and creativity as key to a competitive organisation and 2 in 3 believe that responsible business practice can promote such innovation by increasing learning from outside and promoting a broader perspective within the organisation. The fact that responsible business practices can be a catalyst for innovation and creativity and impact on the attraction and retention of staff emerges as a significant justification for integrating such practices into the business mainstream. 92% of CEOs accept that it is their responsibility to drive through these policies and practices. CSR is clearly having a profound effect on our society. For example, the Heart of the City initiative demonstrates that one third of City businesses have community programmes involving 27,000 staff and providing voluntary support valued at £337m. Of the FTSE 250: 50 companies reported for the first time in 2001/2, 103 produce stand alone reports, 95 include ethical and social information in their mainstream reporting and 36 have independent verification. The value of ethical investment portfolios worldwide is estimated at about £1 trillion. So within this overall framework, the FORGE 2 Guidelines has an opportunity to provide real help and advice for the financial services sector to understand and respond to the CSR agenda. It provides systematic structured advice from a business perspective. I am pleased that the Group has identified that this is not the "definitive" advice and that we may in time have FORGE 3. The CSR agenda is active and changeable and therefore we need to be able to revise our strategy regularly. It is one of the reasons that I am 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 we have observed over the past few years. 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. However, we recognise that in certain circumstances "light touch" regulation is useful and can help to accomplish our policy aim. In 1999 my colleague, Stephen Timms, 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. I would be very interested to hear your views on the difference that particular piece of legislation has had on the investment market. 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. So although I am sceptical about over-regulation is the field of corporate social responsibility, I do accept that there are times where regulation is apposite. I am particularly pleased that Dominique Bé, from DG Employment at the European Commission is also speaking today. The UK has welcomed the EC Communication Document on CSR. 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. I am pleased that the UK takes a lead in Europe on CSR and I am sure that we will continue to do so. A recent report "Getting Down to Business" written by the DEMOS think tank, challenges government and all sectors to go further and deeper in ensuring that mainstream CSR practice reflects the real quality of best existing work. The report exhorts the Government to take on a more proactive role and I believe that we have made a good start already. For example, currently 98% of civil servants work in organisations that have Investors in People accreditation; all Government Departments have "Green Ministers" to champion sustainable development; 10 departments are now fully certified to the ISO 14001 standard of environmental management; since 2000, all departments have taken up the Prime Minister's challenge to give staff the equivalent of 1 day's paid time to volunteer per year. And of course the whole area of government procurement is one that has enormous potential for the Government to support sustainable and socially responsible objectives. Currently a high level cross-government group has been set up to investigate these issues. Its findings will help inform the development of procurement targets and guidance within a framework for sustainable development on the Government estate. The Government's aim for CSR is that private and public sector organisations in the UK should take account of their economic, social and environmental impact, 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:
Encourage innovative approaches and good practice; So we aim to:
In conclusion, I would like to re-iterate my challenge to get involved in CSR. The FORGE 2 Guidelines is a practical toolkit but in itself cannot accomplish anything. Your involvement is crucial and I would challenge you and the organisations that you represent to consider what your individual responses should be to the issues highlighted. |
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Other speeches by Lord Sainsbury of Turville
(the following are available from the archive) |
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