I would like to start by welcoming all speakers and participants to the beautiful city of Rotterdam. You have come from far and near and I hope your stay will be enjoyable and fruitful. Rotterdam is a entrepreneurial city with one of the biggest ports in the world. Goods from all parts of the world pass through it and so it is an apt location for today’s seminar.
I am pleased to see representatives from so many different stakeholders. The quality of the audience and speakers underline the importance of the topics we are addressing. I am particularly grateful to the OECD for carrying out the study on the subject of this seminar. And I am pleased to welcome Kees van der Waaij from Unilever, who will address the audience shortly.
To understand why we are here, we need to go back in time. Last year, I proposed to the OECD Trade Directorate a study on how businesses in various countries communicate with their consumers about the environmental and social conditions under which goods have been produced. The OECD is the right platform for this: in a globalising world, CSR is part of the international trade and investment equation.
The OECD’s draft report is the starting point of today’s seminar. By organising it, we aim to involve all stakeholders in finding ways to improve the flow of information to consumers. The fruits of your labour, the conclusions of today’s workshop, will be added to the final version of the OECD report.
[International level playing field/ playing by the rules]
Today’s seminar complements earlier attempts to create more clarity and consensus among a diverse range of stakeholders. After the failure of the negotiations on the Multilateral Agreement on Investment in the 1990s, governments felt an urgent need to involve a wider range of stakeholders in the debate and decision-making on globalisation issues. Both governments and companies realised that it would not be possible to create and maintain sufficient support for further liberalisation of trade and investment without addressing the wider implications of economic globalisation.
One of the first fruits of this new approach was the revision, in 2000, of the OECD Guidelines for Multinational Enterprises. They provide businesses, labour unions and NGOs with a global framework for responsible business conduct. These guidelines touch upon issues such as labour relations, the environment, accounting and disclosure.
The Guidelines are voluntary for business, but OECD governments have committed themselves to promoting their use. Mr. Manfred Schekulin, the Chair of the OECD Investment Committee, which developed the Guidelines, will tell you more about them later this morning.
[The roles of government and the private sector]
The OECD Guidelines are at the core of the Dutch government’s policy to promote corporate social responsibility. Our policy, which was finalised in 2000, focuses on people, planet and profit, fostering transparency and creating a multi-stakeholder dialogue.
The primary role of the Dutch government is that of catalyst. We create awareness about CSR through seminars such as this one, platforms such as the Agency for International Business and Cooperation and through the National Contact Point (NCP) for the OECD guidelines. And this month, we will publish six toolkits that will help companies to integrate CSR into their international trade and investments in emerging markets.
The Dutch government uses its clout in a more direct way as well. We have integrated CSR into our foreign financial instruments and I have challenged the lumber and travel industries on their dealings in Burma. And in addition to subsidising a number of sustainability projects, we set an example through our government’s sustainable purchasing policy.
So, our vision is one of a government that stimulates and enables CSR, rather than one that forces and demands it. The primary responsibility for implementing CSR rests with the private sector. Unless companies make CSR an integral part of their business, we cannot achieve our CSR policy goals.
Companies are finding the case for CSR increasingly appealing, though. Western consumers are attaching more importance to the responsible behaviour of the companies they buy products from. This is linked to a growing sense of concern and responsibility for the world around us. CSR is not a fad, it reflects the development of our culture. It is a sign of the times.
CSR is also about business: it can have a negative or positive impact on the bottom line, depending on how companies behave. Ideally, CSR enhances the reputation of organisations, which in turn strengthens a company’s appeal to customers, employees and investors. Companies like Ben and Jerry’s and the Body Shop had profited handsomely from their focus on CSR.
Consider what happened to Apple recently. It got into trouble over press reports that alleged that working conditions in the factories of one of its Chinese suppliers were sub-standard. While in the past such reports may have been shrugged off, both Apple and its supplier moved swiftly to investigate these claims. The influence of the press and the fear that consumers would boycott Apple products was real enough.
[CSR links into globalisation]
The OECD Guidelines have also been developed with the investment community in mind. Therefore, linking them to trade is a sensitive issue in the OECD. The National Contact Points (NCPs) that have been set up to deal with questions about the Guidelines, can only answers them if there is an investment link.
Still, in today’s world of outsourcing and increasingly complex production and supply chains we cannot afford to limit the promotion of CSR to investment. Trade and CSR need to see eye to eye as well. I strongly believe this issue needs to be addressed.
The fact is that respect for social values concerns the entire chain, including subcontractors and middlemen. There is a risk that a social vacuum will involuntarily involve businesses in missteps, particularly in countries where governments pay insufficient attention to human rights, the environment or social rights. This creates reputational, monetary and social risks that no one can afford to take.
Governments and companies around the world need to play by the rules. If a government forbids the formation of trade unions, for example, foreign and local businesses cannot allow them, even though international criteria stipulate differently. There is a clear need for effective monitoring and sanctioning by international institutions like the International Labour Organisation and the Human Rights Council.
And there would be more of a level playing field if the governments of and companies in emerging economies were be more dedicated to CSR. This is their own interest, because as I mentioned earlier, consumers in developed countries increasingly demand CSR compliance from producers and their foreign partners. Western companies that have outsourced production to China, for example, need to make sure that local working conditions are up to par.
I think that governments should support each other’s efforts in this regard. The UN Global Compact, for example, can contribute towards the adoption of CSR standards by non-Western businesses. The Dutch Ministry of Economic Affairs supports the activities of the UN Global Compact Office.
[Grassroots support for CSR and globalisation]
While CSR compliance is clearly in the interest of businesses around the world, individual citizens and consumers need to know where and how their products are made. Gaining in-depth knowledge of these needs and finding practical ways of serving them are in the interest of businesses and governments alike.
In the Netherlands and the European Union, for example, there is legislation that aims to secure the safety of food and other products. Provided consumers accept the quality standards behind such legislation and trust that businesses will be held accountable for complying with them, such legislation will engender trust. Environmental and social concerns are more difficult to address, as they originate in other countries and we cannot develop legislation that applies to sovereign nations.
What we can do, however, is to get consumers to make fully-informed purchasing decisions. No one wants to buy products that have been made by children or that were produced in Medieval working conditions. Likewise, we are no longer willing to tolerate deforestation or the depletion of fish stocks. Informing consumers about such practices means they can enforce CSR standards with their wallets.
The OECD report concludes that consumers are increasingly interested in finding out about social and environmental practices of companies. At the same time, they are finding it hard to make an informed purchase decision. CSR information does not always reach consumers and the information that does reach consumers is not always what they need. It is our joint responsibility to improve this situation and to enable consumers to play a more effective role in fostering CSR.
Government and the private sector need to co-operate to make CSR work. Closer co-operation by consumer, certification and standardisation organisations will provide consumers with the right information to make purchase decisions.
Today is an important step towards such closer co-operation. With so much expertise and vision present in a single location, I am sure we will be able to come up with practical solutions and ideas. These recommendations will be added to the OECD study, which will be more complete this way.
The OECD and its member states are responsible for distributing the study, but of course, printed paper alone cannot change the world. Once our work here is done, we need to go out and engage other businesses as much as we can and get them to communicate more transparently with consumers. I hope all stakeholders will want to get involved in this.
So let’s return to the business at hand in the dynamic city of Rotterdam. Enjoy the seminar and the surroundings if you have decided to stay a few days longer.