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Business proposes partnerships for action

Opening Address, Multi–Stakeholder Dialogue Opening Plenary session by Lord Holme of Cheltenham
Vice-Chairman, Business Action for Sustainable Development , at the PrepCom IV – Bali, Indonesia – 29 May 2002.

The issue of governance is fundamental since it provides the indispensable framework and pre-conditions for sustainable development. Good governance applies to all levels and to all stakeholders, including governments and business. We all feel the need to be open, accountable and transparent.

Since this is the opening statement I should like to make a wider point on the Prepcom process. We welcome the combination of Type 1 and Type 2 outcomes, because we in business see so many opportunities for Type 2 initiatives which complement and implement the commitments which governments will make through the Type 1 process.

The reason we formed Business Action for Sustainable Development - - the global business network for the World Summit, is that we believe that Johannesburg should be more than a meeting of heads of government. It should also be a genuine coming together of the world’s stakeholders in common determination to improve our collective position of shared partnership for action.

We are rather disappointed with paragraph 3 in the Chairman’s text to see that implementation apparently always involves national governments. Civil society has a host of other players – unions, NGOs, universities, woman’s groups, companies and local authorities among others. If we wait for national governments, we could sometimes wait a long time for implementation.

I believe that alongside our proper pre-occupation with global governance we should be looking to good local experience as the basis for our new partnership paradigm. To this extent we will be hearing many good practical examples from business colleagues over the next 2 days.

Whatever business ownership may be, all business operations are ultimately ‘local’ - with local markets and customers, local employees and managers, local communities and neighbours. These are necessary local roots and this is one of our strengths. To this end, we feel that paragraph 10 of the Chairman’s text misrepresents the true situation. It discusses increasing the ties between industrial development and poverty alleviation. Business already does so much by outsourcing to local suppliers, developing local sub-contractors, training and developing local skills, and introducing new technology locally. Business also engages respectfully and openly with local communities on local issues – human rights, land rights, water use, local environmental issues and other. In this realm business works to create participation and long-term local partnerships for sustainable development, including the creation of sustainable livelihoods.

These local partnerships could provide a model for larger issues of governance and they are related. For instance, it is certainly true that the source of corruption in a capital city can prevent the proper benefits of tax and royalty revenues going to the benefit of the communities and regions where they were earned.

We need to find better synergies between Official Development Assistance (ODA) and Foreign Direct Investment (FDI) as envisaged at the Monterrey Financing for Development Conference. But even that will not work without good governance. Together, ODA, FDI and good governance form three sides of a triangle for sustainable development. This is why there is so much to welcome in projects such as NEPAD, which brings together all 3 and to which business has pledged to support.

Investors need rule of law, sanctity of contract and an informed decision-making process as to the governance of business itself. We welcome the language in paragraph 15(a) that encourages business to improve social and environmental performance through voluntary initiatives, and particularly the mention of ISO standards and the Global Reporting Initiative (GRI).

The best companies and many business sectors now fully accept that their responsibility is based on both thinking long-term and engaging locally. It is not simply the ‘lowest common denominator’ approach of checking bare compliance with whatever regulations governments decide upon, but rather on the highest common factor of “compliance plus”. It is through these means that companies are always connecting back to their principles; to their sector, their region and their locality in which they are engaged. They do so in order to report their performance realistically, openly and fully.

Reporting is a way for business to learn how to do better next time and practice continuous improvement. Mr Chairman, we in business look forward to dialogue with other groups and to finding greater levels of mutual trust through still more partnerships for action.