Business sets the record straight on corporate accountability pre-Summit
This is the text of an article written by Richard Holme which was published 7 August 2002 in The Guardian newspaper.
7 August 2002 - With the Johannesburg summit's stated emphasis on "partnerships for solutions", it would be nice to get away from the cycle of mutual recrimination and concentrate on working together in the shared interest of a more sustainable world. Sadly, Tony Juniper's comment in this space last week sought yet again to portray business as the arch enemy of sustainable development.
Juniper, director designate of Friends of the Earth, called for one of the summit's key outcomes to be the creation of a "corporate accountability convention". As he described it, this would be "a treaty to enshrine in international law rights for affected citizens to seek redress from multinationals, introduce duties on big business to take account of social and environmental concerns and create a baseline for sound practices".
The stereotype he perpetuates is that business resists all regulation in the sacred name of free markets. This is untrue. Far from disagreeing with his call for greater corporate accountability, the International Chamber of Commerce (ICC), which he singled out for criticism, represents businesses that are, in general, strongly in favour of improved reporting and appropriate regulation.
Contrary to his assertion that the ICC has been instrumental in blocking international environmental conventions, such as those on toxic waste and biological diversity and the Kyoto protocol on climate change, the business community simply assesses the likely impact of these conventions and searches for realistic regulations which do not stifle innovation and enterprise - the very "animal spirits" which John Maynard Keynes identified as the wellspring of economic success.
Of course, no successful market has ever existed without rules and regulations. But in accepting the place of regulation, we should not do so at the expense of, or in competition to, the more powerful force of voluntary action and initiative.
Juniper complained that the UN's global compact with business - setting out nine basic principles of business social responsibility - is nothing but a PR opportunity for companies. Apart from being insulting to secretary-general Kofi Annan's leadership in establishing the compact, this fails to recognise its power to inspire companies to adopt a "compliance-plus" attitude and up their game.
More and more businesses are declaring their values, publicising their policies and setting out their standards. That is as it should be. The modern world rightly requires power to be accountable - we live in a "show me", not a "tell me", world - and large companies are powerful bodies.
There is an unanswerable case for proper reporting on economic, social and environmental performance - what is sometimes called in shorthand the "triple bottom line". But the main utility of accountability and reporting is to improve performance. It is not to provide a conveyor belt of juicy issues for campaigning NGOs, or to feed the blame culture of the media.
Robert Lovett, advising Robert Kennedy, once said: "Good judgment is the result of experience. And experience is frequently the result of bad judgment." If we want companies to do better in these important areas of sustainable de velopment, we must let them learn from their mistakes. After all, competitive emulation is a great stimulus to raising your own game.
There is, however, a strong case for common benchmarks and the global reporting initiative, supported by all stakeholders including many leading NGOs and trade unions, is designed to produce a framework for social and environmental reporting while remaining sensitive to sectoral and regional differences.
Fortunately, the Johannesburg summit is certain to show that it is possible for business, governments and NGOs to work together. Also fortunate is the fact that in the debate over corporate accountability, the majority view is held by people who maintain that job and wealth creation are essential and who want to ensure it is done more responsibly and equitably. So while some want to bind Gulliver hand and foot, so that he cannot move an inch, most want to ensure that he treads carefully - and that his giant footprint doesn't leave people squashed.
Lord Holme is chair of the ICC environment commission and vice-chair of Business Action for Sustainable Development
Sound leadership: UN's Kofi Annan.