This snapshot taken on 04/06/2007, shows web content selected for preservation by The National Archives. External links, forms and search boxes may not work in archived websites.
Douglas Alexander MP - Former Minister of State for E-Commerce and CompetitivenessHRH The Prince of Wales's Business & the Environment Programme |
 |
|
| (Left DTI 29/5/02) | |
| Delighted to be here today, to contribute to what looks a fascinating programme. I have to say I would have been interested to hear yesterday speakers such as Simon Zadek and James Jones, but then again we had quite an interesting speech in Westminster yesterday (the Budget).
In the limited time available I'd like to cover: 1. The Political Context Political Context Less than two years ago the Prime Minister said "it is time to reawaken the environmental challenge as part of the core of British and international politics. Certainly it is a political reality that millions of people around the country are "green" in their actions, their beliefs, what they care about. They want the air they breath to be fresh. They want the countryside they live in or visit to be protected. They have respect for the world around them - hate cruelty to animals, hate the destruction of natural beauty. They want their neighbourhoods to have parks and be free from litter, graffiti, kids with nothing to do, and crime. Millions recycle, more would like to. Millions of children care passionately about the environment. That is their politics". Yet in politics both ideals and ideas shape developments and many of you will recognise the old and familiar political paradigm, which depicts fundamental choices has to be made between a fairer society and promoting a dynamic economy. Between progress and the environment, you know the script - that caring for the environment costs jobs. Or that low or no growth is good for the environment and high economic growth bad. As a Government, we reject these old sterile ways of thinking as a means of approaching real and pressing challenges. For such a discourse offers no answer to the international challenges of Third World debt, environmental degradation or terrorism. And the view of politics that says "Government has no role other than to abolish itself", it is all but useless for determining how to lock in economic stability, rebuild a health service raise standards in schools or deal with the threat of crime. For as the sessions at this important conference have evidenced of transformations in trade, technology, communications and culture have changed the world and the nature of the economy profoundly. This demands new thinking and responses from both policy-makers and businesses. Recognising that by achieving our environmental objectives we can also boost competitiveness, open up new job opportunities and improve quality of life. That the policies we need for social justice are the same policies that we need to create a successful modern economy. That human capital is the prime source of wealth creation in Britain. Investment in people is an economic necessity rather than a social cost to be borne. Such an understanding of the modern economy does not argue that government has no role. Rather it argues that the appropriate intervention of government, be that through setting market frameworks, addressing market failures or incentivising environmentally and socially responsible behaviour is vital to the effectiveness of the modern economy. So I believe we have the opportunity to now build a constructive partnership - government, business, the green movement and the public. A partnership not where we always agree - that would be an impossible demand, but where we have at least some common aims and understanding of each other's necessary contribution to them. And the basis of this partnership would be agreeing a set of core principles:
So I believe this conference is so timely because we now have the opportunity to move the debate on. We should not kid ourselves. There will be some areas of professional disagreement and others where there are hard choices between ideals and realism, but real progress can be made. The Business Case Now the case for sustainable development can be made on a number of grounds. But what is the underlying business case? In a nutshell: it can help sustain long-term business success. Environmental and social issues are already having an increasing impact on shareholder value. During the five years before August 2001 the Dow Jones Sustainability Index clearly outperformed the Dow Jones Global Index. While the DJSI had an annualised return of 15.8%, the DJGI increased by 12.5% in that period. Yet as well as this financial metric, from a consumer viewpoint it is simply no longer acceptable for a company to make beautiful furniture for the homes of rich families in the west but leave a devastated forest landscape in Brazil. And it is clear already that businesses have come to understand the very considerable corporate risks involved in such actions. Shell encountered enormous public concern over its activities in Nigeria regarding the Ogoni people and the death of Ken Sarawiaa, as well as over Brent Spar. While both Nike and Gap have suffered as a direct result of conditions that were exposed in the factories run by some of their sub contractors. But for those businesses pursuing sustainable development, it's not just about minimising risks. It is also about creating new opportunities to innovate, differentiate and enhance reputation. They have focussed on two issues:
Improving resource productivity Now it is certainly true that Government and business have traditionally focussed on raising labour productivity. We now need to give renewed priority to improving resource productivity. And while the UK – like the rest of the world - faces a massive challenge, innovation and new technology are pervasive in the modern economy, and this is creating unprecedented opportunities to combine economic growth with less environmental impact. It is not just about using cleaner, leaner and renewable technologies – although this will be important. It is also about re-thinking business models and practices to find new, smarter and more resource efficient ways of production and consumption. Improving the way goods and services are designed, made, delivered and used – providing choice, value and performance for the consumer as well as making them greener. We urgently need to realise this potential and turn the environment into a driver for prosperity and jobs. That is why the Prime Minister himself has said we must become a leader in the coming green industrial revolution. We can become richer by becoming greener. The business benefits of such a strategy are evident from this department's work, every year the joint DTI/DEFRA Envirowise technology transfer and best practice programme saves British business £100 million through waste minimisation. The low carbon economy also offers opportunities to those businesses that constantly innovate and raise productivity. In the past, the UK has missed opportunities. We are determined this does not happen again. To put Britain in the lead internationally on low carbon technology and innovation we have established the Carbon Trust. Government backed but business led it brings together for the first time in Europe a fully integrated programme of incentives worth up to £150m annually. And with 180 countries signed up to the Kyoto Protocol there is a huge potential market overseas - a very real prize for countries and companies that get ahead of the game. That's why we have set up the Climate Change Projects Office, to help British business take advantage of new opportunities and markets from low carbon technology. But the reality today is that not enough businesses are investing in resource productive innovation. That is why Government has an important role to play. Creating the conditions and support to overcome market failures and other barriers. By using the tax system to reward resource productivity and penalise waste and pollution. By promoting a flexible, outcomes based approach to environmental regulation at EU level - giving business clear signals about longer-term environmental objectives and priorities, sufficient time to develop competitive solutions, and the flexibility to achieve environmental objectives in the most cost effective way. Such an approach is geared towards stimulating innovation so environmental problems are solved sooner and at less cost. That is why DTI with its responsibilities for promoting innovation and science and technology has an important role to play. And that is why Patricia Hewitt as Secretary of State has made it clear DTI's role - driving-up productivity and competitiveness - encompasses labour, capital and resource productivity. Greater Corporate Social Responsibility The centrality of the conduct of such organisation, company actions can hardly be overstated of the 100 largest economies in the world today, 51 are corporations. Indeed the top two hundred corporations today have sales equivalent to one quarter of the world's total economic activity. So the broader challenge beyond solely the issue of sustainability to the wider issue of CSR is to build a common view as to how corporations can make a positive contribution at local, national and international level. Yet the debate tends too often to be polarised as one of your earlier speakers, Simon Zadek, has convincingly argued. On the one hand between narrow cynicisms, which doubt private enterprise, can ever make a genuine contribution to the general good. And evangelical optimism which suggest that CSR will be the answer to every problem. To try to find a way through such divergent views, we need first to be clear as to what is meant by CSR since it is a developing and diverse categorisation. While there is no single definition, I believe a company pursuing this approach does three things:
It turn this approach to working can bring clear benefits to business by reducing risk, enhancing brand value, opening doors and creating goodwill, and by improving staff moral and efficiency. Ironically the strength of the business case has led some to be sceptical about the CSR, with critics seeking to condemn it simply as self-serving publicity, corporate window dressing, or green wash. Yet such criticism misses the point. A more fruitful approach is to look constructively at the ways in which business, Government and wider society can work together on issues of joint concern. In this regard Government faces two connected but separate challenges in promoting CSR – certainly to increase the sheer number of businesses engaged in CSR, but also to deepen that engagement with CSR – into something which informs all business activities instead of simply being an afterthought or an add on to the businesses activities. This reflects my own view that CSR should be understood as a journey on which businesses engage, rather than merely a justification for a business' activities. Government's approach The Government has an ambitious vision for CSR. Our aim is to create the conditions in which private and public sector organisations in the UK take account of their social and environmental impact, and take complementary action to address the key challenges based on their core competences – locally regionally and internationally. But this does not mean taking a prescriptive, overly burdensome "one-size fits all" approach which risks stifling innovation and will often be impractical given the enduring differences between businesses. So what then has been the Government's response? During our first term we took the lead on this debate with the first appointment anywhere in the world of a Minister for Corporate Social Responsibility – my predecessor Dr Kim Howells. Kim became a champion and advocate for CSR both within and outside Government. At the domestic level the Government:
There is much of which we can be proud within the voluntarist approach to CSR that has developed in the UK, whereby businesses engage in action to promote the welfare of the communities in which they operate. But Government can - and has - done more than celebrate business success. You will be aware of the Occupational Pension Schemes Investment Regulations, which require pension scheme trustees to state their policy regarding the extent to which social, environmental or ethical considerations are taken into account in the selection, retention and realisation of investments. Looking ahead, Patricia Hewitt has announced that shareholders are to be given the right to an annual vote on directors' pay. New legislation will be introduced to ensure greater transparency, improve accountability and strengthen links between performance and pay. And looking further ahead, you will all be aware that we are currently closely examining Final Report of Company Law Review, including the new Operating and Financial Review – or OFR proposals. International The UK is also playing a leading role in pushing forward CSR objectives internationally, I am pleased that many UK businesses have been keen to join the Ethical Trading Initiative. As you know, the ETI is an alliance of companies, NGOs and trade unions, that is identifying and promoting good practice in putting employment standards into action and is working to improve conditions of employment in the supply chain of goods delivered to consumers here in Britain. This private sector led approach is underpinned by Government action. The UK has played its full part in developing various international conventions and codes, some of which – such as the UN's Universal Declaration on Human Rights – are of general relevance to business activity. Other - such as the OECD's guidelines on multi-national enterprises are more specific and are important in setting standards against which companies operating abroad can assess their performance. While the European Commission published their Green Paper on CSR in July 2001, and we held a major consultation during the second half of last year. The consultation demonstrated a uniform agreement that partnership building is vital to CSR, and is an area that UK business takes a lead. Indeed, of the 250 responses that the Commission received, over 80 came from UK organisations. Our response to the Green Paper centred on three main areas:
So I hope my remarks today have affirmed that sustainable development, improving resource productivity and CSR have key place in Government's vision of the kind of dynamic market economy, fairer society and healthy environment – at home and abroad – towards which the Government is working. To achieve our aims we need to forge an effective partnership between Government, business and other sectors of society to fulfil this potential and secure prosperity for all and a better quality of life for everyone, now and for future generations. Thank you very much. Can I wish you well for the remainder of your deliberations and I look forward to discussing some of these issues with you. |
|
|
|
|
Other speeches by Douglas Alexander MP - Former Minister of State for E-Commerce and Competitiveness
(the following are available from the archive) |
|
