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The Rt. Hon. Patricia Hewitt

Awards for Responsible Capitalism

The Rt. Hon. Patricia Hewitt

Marlborough House, London


Wednesday, November 27, 2002


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Thank you to Lord Dahrendorf for that introduction. I'm delighted to be here.

My congratulations to Sir Robert Wilson for winning this year's award. Robert has integrated responsible capitalism into the heart of Rio Tinto. Not as an add-on or an optional extra – at the centre of the business planning process. This has taken a culture change.

Robert has also worked closely with us in Government. The Foreign Secretary appointed him an "Ambassador for British Business" in 1999. He was also one of the business leaders on the WSSD delegation.

My congratulations to him.

My congratulations also to First Magazine for developing these awards. Within just three years, the event has become one of the key dates in the CSR calendar. With an increasingly high profile, respect and recognition.

Award ceremonies like this are really important.

  • First, because it's important we celebrate success – and we're not very good at this in Britain. It sometimes seems that someone can go into a shop, buy a scratchcard, win a million and receive public adulation. Whereas if someone uses hard work and commitment to set up a business from scratch - and makes a million – they'll receive no credit whatsoever. Tonight let's be unashamed about the fact we're celebrating success and excellence amongst our business community.

  • The second reason these awards are so important - they give us an opportunity to send out messages to the wider community.

And tonight the message is clear. A responsible business is a successful business.

Rio Tinto is making profits of around one and a half billion a year. But has won this award for ethics and responsibility.

Wherever they are in the world, they work with their hosts to respect laws and customs, minimise environmental impact and ensure there is a transfer of benefits.

Proving that profits and responsible business practice are not in conflict – they go hand in hand.

There is still a small minority of businesses who give business a bad name. The ugly faces of capitalism. Enron and WorldCom are just two examples that spring to mind.

But these are the exception. More and more businesses are coming to recognise that the key to business success is winning the hearts of their stakeholders.

Not their short term custom. Or a relationship built on convenience or contracts.

A relationship based on trust, commitment and even passion.

As Sir John Egan said at CBI on Monday

"Reputation matters. Reputation for reliable performance attracts investors. Reputation for fairness guarantees good industrial relations. Reputation for quality and value for money wins customers."

Instead of exploitation, business relationships now are about

  • courting customers;

  • wooing workers;

  • enriching the environment.

Taking these areas one by one.

Customers

Consumers are becoming more demanding as markets become more competitive.

Businesses are now finding they have to win their customers hearts as well as their minds.

This isn't just a cliché. Scientific research proves that the brain's limbic system, which governs feelings, is far more powerful than the neocortex that controls intellect.

Take a company like Harley Davison, which inspires such brand loyalty that their customers get their corporate logo tattooed on their arm!

Or, if you take your car to the garage for an MOT, and when you get it back they've not only done your MOT, they've cleaned the car as well. That garage has probably found itself a customer for life.

Businesses need support and customer loyalty to succeed.

Employees

And the same with employees.

With a tight labour market, and a war for talent going on, companies need to find new ways of getting the best people in.

Knowledge, skills and creativity are key assets for any companies. And they aren't like plant and machinery. These assets come in bodies and put on their coats and go home every evening.

In July, I announced that I would be setting up a group to look at what best practice in human capital reporting should look like and which companies are most likely to need to give these reports.

Tonight I can announce that Denise Kingsmill has agreed to chair this group. I hope to be in a position to announce further members of the group shortly.

Environment

The tightening labour market is also causing a wider rethink of business attitudes.

A new breed of graduate is coming out of university. They're not just happy working for a company that pays well - they want to work for companies that give something back to society, the community, the environment.

And companies are recognising this.

As part of a joint venture in West Kazakhstan, BG Group has built a new secondary school for almost 800 pupils in Zachagansk; refurbished a polio clinic at Uralsk Oblast Hospital and built a cultural centre in Uralsk.

This is just one example. I'm sure the many Ambassadors and High Commissioners here tonight will have similar stories they can tell.

The important point is that in the modern economy, more and more businesses are finding that - to succeed - they need the trust, commitment and devotion of not just their customers - their employees and communities.

My congratulations to Robert again – for his excellent work – recognised in this award. My congratulations also to the other excellent businesses in this room who are also, I know doing tremendous work in a wide range of fields.

The key to staying ahead of the game is innovating. Finding new ways of reaching out.

As John Paul Getty said

"No one can possibly achieve any real and lasting success or "get rich" in business by being a conformist."

I look forward to continuing to work with all of you as we innovate, get even better at what we do – and create not just a stronger economy, but a stronger society as well.


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