At CARE International UK we believe that it is of fundamental importance to the people we work with in developing countries that the BIS Department promotes social and environmental responsibility, particularly in supply chains, from being marginal voluntary activities to being embedded in core business activities. Therefore, we have just submitted our response to the consultation. After the recent UK Action Plan on Business and Human Rights, which we viewed as weak, we are hoping that this second bite of the cherry might be more effective.
We based our response on our work with companies, which shows that, far from responsible business being an additional cost or burden, there are significant benefits from investing in social sustainability to improve the effectiveness of supply chains:
- securing future supplies in a world where there is much greater competition for resources
- meeting the needs of consumers in rapidly growing developing markets
- reducing costs by improving resource usage and reducing waste
- improving their credibility with the growing number of UK consumers who expect companies to behave responsibly
- motivating their staff who expect employers to meet their responsibilities to wider society.
Yet these benefits, although understood by progressive companies (like Unilever) for some time have not been widely adopted. Many companies therefore need education and encouragement. The Government can play a positive role by highlighting supply chain, environmental and social best practice through BIS channels, emphasising that these are issues of core business for all companies. We have emphasised to BIS that corporate responsibility is not a “nice to have” add-on, but is a core requirement of all business operations and is not the preserve of major multinationals.
But comprehensive corporate responsibility also requires a stronger regulatory environment than currently exists and this requires action from the the UK Government. For instance, the Government needs to give legal effect to the UN Guiding Principles on Business and Human Rights. Further, even allowing for the Government’s preference for transparency and reporting (see the UK Action Plan), they need to set the framework within which companies must report to ensure that information is clear, consistent and comparable.
The Government needs to go much further than improving reporting. The relationship between investors and management needs to be reconfigured such that management are under less pressure to deliver short term targets.
Strikingly, the recently published UN Global Compact CEO Sustainability Survey report specifically highlights CEOs’ frustration at short termism: “Business leaders see sustainability reshaping their business environment and are committed to reorienting their companies to take advantage as they scale up their contribution to global priorities. But even as they make progress in embedding sustainability through their business, it is becoming increasingly apparent that they are constrained by market expectations”.
It seems then that for BIS even just to catch up with prevailing corporate sentiment, there is a need to revise the responsibilities of Directors within the Companies Acts to allow them to pay due regard to broad social and environmental requirements, and to pursue policies to promote a longer-term view on investments.
And the Government can further enable businesses, large and small by supporting joint learning by bringing together retailers, manufacturers, traders and importers with government and civil society, by underwriting commercial risk on innovative approaches (see for example DFID’s much-heralded early support for M-PESA in Kenya).
We believe that it is of fundamental importance to the people we work with in developing countries that the BIS Department promotes social and environmental responsibility beyond just marginal voluntary activities, to actually being embedded in core business activities. This approach isn’t just important to help improve the lives of those in developing countries around the world, crucially for those at BIS, it is key to the future survival and success of British businesses.