Partners in Corporate Social Responsibility

Remarks by the Hon. David Kilgour,

Member of Parliament for Edmonton Southeast and

Secretary of State (Asia-Pacific) to the

10th FGL Civic Forum and Exhibition on Global Business Issues

Rozsa Centre , University of Calgary, November 28, 2003

    Check against delivery

Getting action

Earlier this year, I headed the Canadian delegation at a global anti-corruption conference in South Korea.  Much of the discussion focused around what Transparency International termed, "a world-wide crisis of corruption" and what is needed to improve the credibility of governments, parliaments and public institutions around the world. What also permeated discussions, however, particularly among delegates from Western nations, was an even broader malaise: a disturbing sort of crisis of confidence directed beyond the reach of government. 

Corporate accounting and governance scandals have captured public interest.  They invigorated discussions about ethics and responsibility and led to substantive changes in accounting standards and oversight rules.  And it did so because 'Enronitis' hit people where it hurt the most: in the pocketbook.

Therein lies a lesson for all of us who care deeply about Canadian business practices and ensuring that globalization is managed responsibly throughout the world. Few debate the merits of corporate social responsibility, but until it is turned into a competitive advantage in and of itself, we're unlikely to get the concerted mobilization needed. 

Corporate Social Responsibility

The reality we live in is that shareholder primary interests normally rest with 'the bottom line'.  If consumers were to reward businesses that operate in a manner consistent with the principles of human rights - to chose their products and services over those of less socially-conscious competitors - you can bet that the issues we're discussing today would take far greater prominence in boardrooms across every country. 

In today's connected world, there is no hiding place for poor corporate citizens and no excuse for poor corporate citizenship. Whether it is labour practices, environmental habits or human rights, companies today must be concerned about their global reputations because their actions can quickly become globally known. The Internet is both the great advertiser and the great tattler - it can open doors faster than you would believe. But it can also close them faster than you'd imagine.

Many businesses have recognized this. Not very long ago, the dividing line between business and society appeared to be clearly drawn. According to the economist Milton Friedman, "There is one and only one social responsibility of business: to use its resources and engage in activities designed to increase its profits." This view no longer prevails. In fact, according to a recent poll, there are few places in the world where this view would be well received today. In the findings of the Environics Millennium Poll, fully 88 percent of respondents in Canada felt that in order to build a better society, business should go beyond just making a profit.

Helping foster  corporate social responsibility requires co-operation among a wide variety of stakeholders. Improved dialogue between the private and non-government sectors is one positive pattern emerging. While early relationships were often characterized by mistrust and misunderstandings that fed a cycle of opposing actions and reactions, stakeholders today are increasingly recognizing the value of multi sector dialogue or partnerships to achieve substantive reform. Forward -looking companies and NGOs are working with their stakeholders and, in the process, are benefiting from the expertise of all involved. Responsible development brings major challenges, and no one stakeholder is capable of adequately responding to them alone.

Beyond voluntary measures

Of course I'm not so naive as to think that public awareness and voluntary participation by business alone hold all the answers.  As a government, we have a responsibility to reward and reinforce positive practices by Canadian companies and to develop policies that address Canadian corporate activity in zones of conflict and regions with weak governance.

As the respected journalist Madelaine Drohan writes in her new book, Making a Killing; How and Why Corporations use Armed Forces to do Business, "The only way to ensure that companies adhere to an international standard is to enact new laws that define what is acceptable behaviour and that stipulate penalties harsh enough to make corporate executives think twice."  She continues, "Smart corporations have already recognized that a wind of change is blowing. Now they must accept that real change is required of them and abandon their resistance to global regulation. Corporate leaders can join willingly or their participation could be forced by the sudden onset of a crisis of such magnitude and horror that the international community is forced to take action."

Nowhere has the process of creating a tight, international legal system, with enforceable and binding obligations, been more marked than in the area of international trade law.  The WTO agreement is regularly given to judicial interpretation. From 1995 to December 2002, the Dispute Settlement and Appellate Bodies considered 275 cases on 180 distinct matters. These decisions are for the most part binding and have a good record of compliance.      The effective enforcement mechanism of the WTO contrasts starkly with the non-existent enforcement of the United Nations Commission on Human Rights, or the voluntary compliance with International Court of Justice decisions. It's clear that the two legal regimes have developed divergently, with trade law reaching a level of effective implementation and human rights law depending on the good will of governments.

Elemental justice demands that human rights law develop equal enforcement powers and that the values of freedom and of liberal trade be equally enforced.

Canadians have been active in helping construct both an international trade/investment system and international law to protect and promote human rights. These are pillars of our foreign policy. The progress that we've made in creating a system of international law that recognises the inherent value of human rights has been dwarfed, however, in the last 20 years by the nature of the international trading practices we've helped build; ones where precedence has arguably been  given to the interests of investors over those of citizens. And so the challenge is how can we ensure that the two spheres of international policy and law evolve in a balanced and mutually supportive manner?

Conclusion

In conclusion, what many people on all sides of the political spectrum now accept is that liberalised trade and investment are positive things. To paraphrase Jeffery Sachs, in all of modern history, there has not been an example a country that has developed without engaging in trade and integrating into the global economy. However, while the rules that govern international trade are open to all, the outcomes demonstrate that the multilateral trading system still needs improvement. In Canada, we recognise this and are working to change the way the system works, and how we -- as members of the government, civil society, and the private sector -- work together to ensure that the system defends and promotes sustainable development and human rights much better than now.

In my mind, Canada should be the model of a socially responsible trading nation -- perhaps we're not quite there yet. Still, for most of the world, we are also a model of what a peaceful, accepting, plural society should look like. We're also a country where 45% of our GDP and 1 in 3 jobs is tied to trade. Indeed, we have a responsibility to ensure that both these features of our beacon country compliment each other fully.

I look forward to your questions.

Thank you. Merci.

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