Amid Conservative backbench worries that David Cameron is ‘making policy on the hoof’, Briefing examines the thinking behind Tory CSR policy against the background of Labour government achievements and the appointment of its sixth ‘CSR minister’ in as many years.
With David Cameron’s newfound interest in corporate responsibility (not to mention his ‘hug a hoodie’ speech), the Conservative Party appears to be undergoing something of an upheaval.
Cameron has certainly upset a few Tory grandees with his recent pronouncements on CR, not to mention some household names, such as WH Smith (rapped for displaying cut-price Chocolate Oranges) and BHS (attacked for targeting the under-tens with ‘sexy’ underwear). The message the Tory leader wants to hammer home is that the government should not only stand up to big business (regulation where necessary), but also stand up for big business (creating wealth for all).
Set against Cameron’s career to date, all this seems somewhat bizarre. Insiders say Cameron displayed little interest in CR in his only major job outside politics – his seven-year stint as Carlton Communication’s director of corporate affairs in the 1990s.
Meanwhile things are looking decidedly wobbly at the DTI. The appointment of the sixth CSR minister in as many years (amid media reports that number five, Malcolm Wicks, was “bored” with the post) prompts some some serious questions over the Labour government’s commitment to CSR.
The Tories’ steering group, although somewhat limited in size and scope (two journalists from the same CSR publication, two MPs from the same party plus CSR veteran David Grayson) has been asked to conduct the mammoth task of conducting a “consultative process… to define a set of core policy issues” before June 2007.
The fact that the group is canvassing opinion from wide range of stakeholders and working closely with other policy forums, such as poverty reduction, environment and international development, is all well and good (we’ll leave the potential for conflicts of interest around journalists advising politicians for now!).
As with many of Cameron’s policy pronouncements (Home Office minister Tom McNulty recently referred to them as “wash and go” policies), the proof will be in the pudding. There are real limitations on the voluntary approach to CSR in a free market, with no market incentive for individuals to do the right thing, even though it may be in the collective interest.
While One Nation Tories are prepared to use the power of the state; Thatcherites aren’t. There is a real ideological battle still to be fought out behind the smiles and soundbites and ‘green-lite’ approach. For example, Conservatives tabled two amendments to a clause in the Company Law Reform Bill obliging directors’ to have regard to the impact of a company’s operations on the community and environment. Although the amendment was defeated, it appears that the parliamentary party is already at odds with Cameron’s resolve to “stand up to” big business.
What will really seal a sustainable future are not grand policy declarations but solid actions such as those backed by the procurement taskforce, one of the best initiatives to come out of Labour’s three successive terms. With the public sector accounting for two-fifths of total UK economic activity, there’s a good business case for improving procurement practice whichever party wins the next election.
All change at the Ministry
Margaret Hodge, UK industry and regions minister, has taken on responsibility for corporate social responsibility. Hodge, who joined the Department of Trade and Industry after the recent government reshuffle, is the sixth minister in charge of CSR in as many years, taking over responsibility from Malcolm Wicks, energy minister at the DTI.
“I am delighted to be taking on responsibility for CSR. I look forward to working with UK business to ensure that environmental protection and community cohesion are seen as an integral part of delivering sustainable economic growth and business prosperity,” Hodge said in a statement issued through the government’s CSR website. Critics have complained that the Wicks had taken a cursory interest in CSR since none of his eight speeches since he came into office in May 2005 has been about CSR and he is rarely seen at corporate responsibility events. Contact DTI 020 7215 5000 www.csr.gov.uk
Tory CR steer
The UK Conservative Party has set up a working group to develop a formal corporate responsibility policy and inform the party’s manifesto. The five-strong group, chaired by Alan Duncan MP, shadow trade and industry secretary, intends to seek the views of businesses, NGOs and other interested parties with a view to making recommendations before June 2007.
“The group will consider CSR policy in the context of legislative requirements and have a wider remit to look at the impact of companies on the culture of Britain,” Ed Staite, the Conservative’s Treasury press officer told Briefing. “The Conservative Party is a champion of CSR and we intend to work with companies and consumers in order to further the CSR agenda.”
Jonathan Djanogly MP, the shadow minister for company law reform, David Grayson, director of Business in the Community and Tobias Webb and Peter Davis, editor and politics editor respectively of Ethical Corporation magazine, are on the steering group.
The Conservatives produced a short background paper on CSR in May, saying they do not believe that regulation is the solution to encouraging companies to be responsible. “Not only does regulation frequently fail to achieve its aim, but it also places British companies at a disadvantage relative to their international competitors,” the paper says. The party should concentrate on how to help companies to integrate CSR into their operations and highlight the business risks of corporate irresponsibility, according to the paper. Contact Conservative Party 020 7222 9000 www.conservatives.com
Tories ‘reclaim CSR’
David Cameron, leader of the UK Conservative Party, said in May that he wants to “reclaim corporate responsibility for the political centre-right,” promising deregulated markets in exchange for improved corporate responsibility. “If we leave this agenda to the left, we will end up with left-wing responses that are bad for business and bad for society,” the leader of the opposition told an audience at the Business in the Community annual award ceremony in May.
Since his election as leader, Cameron has been quoted as saying he would “stand up to business” if he wins the next elections, surprising many in the business community. But in his speech to the BITC he qualified this by stating the Conservatives would also “stand up for business,” explaining that “profitable companies, large and small, are vital both for our economic prosperity and for our quality of life.”
Cameron said he has always “passionately believed in the dynamism of the free market and its power to do good. But, equally, I’ve never believed that we can leave everything to market forces. I’m not prepared to turn a blind eye if the system sometimes leaves casualties in its wake.”
“Unless shortcomings are addressed, the entire system risks falling into disrepute,” he said. Cameron likened being a good business to being a good neighbour, “whether you’re a small business like a pub or a newsagent, or a huge global business like Microsoft or Tesco.” It’s only reasonable to expect that you behave responsibly. The difference with big businesses comes in the range of areas where they have responsibilities. A company like Tesco has countless ‘neighbours.’ ” Contact Conservative Party 020 7222 9000 www.conservatives.com
Elusive reform
The Company Law Reform Bill saw its second reading on June 8 in the House of Commons amid criticism that the government had failed to give Members of Parliament sufficient time to scrutinise the bill. The bill has four key objectives, which include enhancing shareholder engagement and a long-term investment culture and ensuring better regulation. The government originally allowed only nine days to review the bill, which runs to 550 pages, has 950 clauses and received more than 1,600 amendments when it passed through the House of Lords.
But enthusiasm for reform appeared to be fading among Labour MPs. On June 22, MPs discussed cakes rather than company law because only seven Labour MPs made the 9am start of the debate, forcing Vera Baird, the constitutional affairs minister, to filibuster by discussing Eccles cakes to avoid losing a vote on a Conservative amendment. Business groups weren’t happy. “This sends the wrong signal to business. The bill needs proper scrutiny . . . ministers need to get their act together and make sure this is taken seriously,” said Stephen Alambritis, head of parliamentary affairs at the Federation of Small Businesses.
Meanwhile, campaigners have accused Conservative Party leader David Cameron of hypocrisy after he claimed to be “standing up to business”. The Trade Justice Movement are angry that the Conservative Party has opposed key parts of the bill, including the requirement for company directors to have regard to the impact of a company’s operations on the commuity and environment. Alan Duncan, shadow trade secretary told the Commons that the clause was “inflexible” and would cause “confusions”. The Tories have asked why six duties should be placed on directors in the bill when there are already 650 common law duties in existence.
Procuring change
Tony Blair was handed a detailed plan by business for using the government’s vast purchasing power to protect the environment and end the exploitation of third-world labour. Firms that bid for the billions of pounds worth of central or local government contracts say they want to be compelled to recycle more, contribute less to climate change, and avoid trading with suppliers who ignore basic human rights, as long as the same rules apply to their competitors.
The message was delivered on June 12 by the business-dominated Sustainable Procurement Taskforce, which has spent 12 months compiling its report, Procuring the Future. It is backed by a letter from the heads of 14 major businesses, calling for a minister to be appointed with special responsibility for changing the way in which public contracts are awarded.
Currently rules compel public officials to look for the cheapest way to get the job done. Public opinion, the taskforce said, has turned against the idea that the government should save money by buying goods or services produced at the expense of the environment or basic human rights. Contact Sustainable Procurement Taskforce, 020 7270 8098 www.sustainable-development.gov.uk
School of sustainability
Turning schools into models of sustainable development in their communities is the aim of a new framework for action launched by the Department for Education and Skills on May 15. Areas covered by the framework include:
the ethical sourcing of food and drink for schools
reducing costs and supporting markets for ethical goods and services at the same time
acting as a hub of learning and change in the local community
Consultation on the framework extends until September 1.
Oliver Wagg is managing editor of Corporate Citizenship Briefing
The role for CSR in regeneration policy
July 19 2006
by Dermot Finch
Leading regeneration expert Dermot Finch of the IPPR’s Centre for Cities argues that CSR efforts should complement business-led renewal, with one strategy for business-deprived areas and another for those hardest-to-reach areas.
Boosting enterprise in deprived areas has been a key goal of Gordon Brown’s Treasury. But the results of many enterprise programmes have been disappointing, with deprived areas tending to stay deprived.
Government enterprise policy needs to be a lot smarter. The Centre for Cities at think tank Institute for Public Policy Research has been looking into this. Our City Markets report proposes a new approach for the next phase of business promotion in deprived areas.
We have identified a group of 30 business-deprived areas with very low levels of business activity. Some of these are in London, but most are in the North West and North East of England, in places like St Helens and Sunderland. For most of these areas, we are calling for bigger interventions to boost demand for private sector jobs and investment.
A blanket approach to enterprise does not work. There should be fewer – but more strategic – interventions in deprived areas. So rather than focusing on all deprived areas, business-led regeneration efforts should treat business-deprived areas as a priority. And because each business-deprived area is different, they each require tailored strategies for business development.
We recommend a focus not on the hardest to reach – like Easington, in the North East. Or on those closest to success – like Bristol, in the West. But on business-deprived areas with the potential for business growth – like Doncaster, South Yorkshire.
Understanding the problem
Business-deprived areas are not all the same. Some suffer from local market failures, such as limited access to finance. Others face more fundamental problems such as population loss. Each business-deprived area needs to find out why it has low business activity.
Business-led regeneration should focus most on those business-deprived areas that have specific problems, but some assets too. Doncaster, for example, has the potential for more business growth – and has the advantage of very good rail and road connections.
Areas like Easington face serious structural issues as well as particular market failures. They have seen long-run population and jobs decline as well as poor health and education outcomes. Promoting start-ups here is likely to bring low returns. For business development to work in these areas, they first of all need to get the basics right.
Other business-deprived areas, like Lewisham, south-east London, have very few businesses – but they are part of wider labour markets and commuter areas. They function as residential locations, with many of their residents working outside the area.
Rather than lots of new businesses, Lewisham would benefit from improved transport and skills, so its residents are better connected to available jobs.
The role for CSR
So what does this mean for corporate social responsibility? CSR efforts should complement business-led regeneration, with one strategy for business-deprived areas where business is most likely to flourish and another for those hardest-to-reach areas. CSR practitioners have a role to play in both scenarios, but the role needs to be different – one helping to lever in business investment and jobs, the other helping to re-connect people and places to the wider economy.
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