Keynote Address - Asian Forum on Corporate Social Responsibility

Ms. Claire Chiang, Co-Chair, Asian Forum on CSR 2008
Senior Vice President, Banyan Tree Holdings and President, Singapore Compact for CSR
Mr. Ramon R. del Rosario, Jr., Co-Chair, Asian Forum on CSR 2008
Mr. Washington SyCip, Chairman Emeritus, Board of Trustees, Asian Institute of Management and Founder of SGV & Co.
Dr. Anjan Ghosh, Director of Corporate Affairs for Asia Pacific Region, Intel Corporation
Excellencies, Friends, Ladies and Gentlemen,

It is a joy for me to be among all of you for this special occasion. I am deeply grateful to the Asian Forum on CSR for inviting me to deliver this keynote address and share my thoughts with you.

This evening we honour those who serve as outstanding examples of Corporate Social Responsibility. I would like to congratulate all the award winners this evening. You have shown that it is possible to be profitable, while being socially and environmentally responsible. You have demonstrated that in the inter-connected global economy that exists today, the long-term profitability and sustainability of business is directly related to the integration of environmental, social and governance issues into corporate policy and management.

This message is particularly relevant in the challenging times that we live in now. The world is facing the worst financial crisis in recent memory to add to the food and energy crises earlier this year, and the global economy is experiencing a severe downturn. There is a real fear that the progress that we have made in eradicating poverty and addressing inequalities could be lost, if we do not take action now. Public trust and confidence in business and the markets have been seriously eroded. At the core of this crisis is a collapse of trust in the capital markets. While lack of accountability, proper regulatory controls and transparency all played a role in this, the main problem appears to be the obsession of financial markets with short-term gains over long-term considerations. There has been insufficient respect for values that encompass ethical dimensions while addressing profitability.

What needs to be done if trust and confidence is to be restored?

The overriding priority at this stage is to restore confidence and trust in markets and the financial system as a whole, and shifting the focus from short-term profit considerations to long-term sustainable value creation, built around corporate responsibility and ethics. Some may feel that in times of crisis, business cannot afford to invest in CSR. However, I believe that the truth is just the opposite. This crisis will have a “cleansing effect” for corporate responsibility, by strengthening cross-cutting approaches. Issues such as corruption or human rights will not disappear because of the crisis, and a company committed to corporate responsibility by addressing all these issues as an integral part of its corporate policy, may gain competitive advantages when the economy recovers. At the same time we have to ensure that the financial crisis does not dampen the commitments of businesses to the climate change agenda, which if not proactively tackled now, could become the cause of the next major economic disruption. In today’s globalized world, the long-term value and success of businesses are inextricably linked to the integration of economic, social, environmental and governance issues into corporate management and operations. This integration in essence is Asia Pacific’s key challenge and the underlying principle of the work of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

Investors need to look beyond short-term financial performance and look into how businesses are run. Decisions on investment are not just about returns but are also about ensuring healthy, productive and sustainable economies and societies. As some experts point out, with this crisis comes an opportunity- to move towards responsible investment, where there is an incentive for a long-term vision than short term gains, and to reduce conflict of interest. As Mr. Ban Ki-Moon, the Secretary-General of the United Nations so aptly puts it: “We need business to give practical meaning and reach to the values and principles that connect cultures and people everywhere”

Let me now present to you the constructive role that could be played by the UN Global Compact. Launched in 2000, the United Nations Global compact has brought businesses together with not only UN agencies but with governments, trade unions and civil society to advance the ten universal principles in the areas of human rights, labour, environment and anti-corruption. With over 5,000 participating companies form more than 130 countries, the Compact is the world’s largest voluntary corporate citizenship initiative. This is indeed the power of collective action for a global, regional and national public good.

A way forward is to recommit to the UN Global Compact’s mission of an inclusive and sustainable global economy. There are five ways in which a commitment to the UN Global Compact could make a significant contribution to dealing with the effects of the crisis:

1. Restoring trust by demonstrating a commitment to the principles of the UN Global Compact.

2. Emphasizing the continued relevance of voluntary initiatives, while acknowledging the role of increased regulation.

3. Advancing the business case for CSR.

4. Advancing development assistance and Public-Private partnership.

5. Advocating against protectionist measures that may harm the poorest nations.

Therefore, while a section of business is at the core of the present problem, business has to be an important and essential part of the solution. Indeed, a new term has entered the lexicon of finance: “ESG”, for environmental, social and governance. Significant ESG issues affect over 50% of the FTSE All world Index. Environmental, social and governance issues are now understood as real factors in the long-term viability and success of business. It is just a matter of time before markets more systematically reward companies for managing such risks.

This is a time of opportunity to do things differently and to explore new avenues. In the Asian and Pacific region alone, there are over 640 million people still living in extreme poverty; some 4million children die before they reach the age of five; and some 250,000 women die each year from childbirth. To ensure the prosperous and peaceful future of Asia and the Pacific, it is most essential that all sections of society benefit as inequities and inequalities breed social tensions. This is not only a concern for Governments. Individuals, civil society organizations and businesses all have a role to play. Indeed, many businesses are partners in development and are contributing to efforts to reduce poverty, ensure environmental sustainability and provide decent living and working conditions. There truly is much that a company can do within the realm of its daily business to make this world a better place!

Excellencies, Ladies and Gentlemen,

It is clear that none of the Millennium Development Goals can be achieved without the active involvement and engagement of business. At the same time, there is increasing realization within business that it cannot survive or thrive if societies fail or if people feel that their security is threatened. Building healthy and inclusive societies, sustainable markets, combating corruption and safeguarding the environment is just as important for Business as it is for the United Nations and its member governments.

Corporate Social Responsibility is a broad subject – from community relations to sustainable development. However, for me there is one principle that lies at the core of CSR. It is the principle of conducting business in an economically, socially and environmentally responsible manner, and weaving this principle into the intrinsic fabric of every company. If every company and business refused to pay bribes, implemented fair labour practices and adopted environmentally, economically and socially responsible practices then our world could be transformed to be more balanced, more just and more sustainable.

Of course, the ethical assumptions behind CSR are not new. Nor are the objectives sought through CSR just the latest corporate fad. Although CSR may be seen by some as an agenda of the West, it has strong roots I Asian values and it is therefore not surprising at all that it is really taking off in our region. Over the years the Asian Forum on CSR has been held, it has attracted an increasing number of delegates and as we have seen tonight, Asian companies are taking the lead in CSR, to the benefit of themselves and the societies they are operating in. Forums like the Asian Forum on CSR are very important platforms for promoting this new way of doing business and demonstrating that it could be a win-win proposition for business and society.

CSR is also increasingly appearing on agenda of Governments in the region. One example of this is of course Singapore, where the Government has taken on the role of promoter and practitioner of CSR, and which stands out for its tripartite approach involving the government, private sector and labour movement in driving the CSR agenda.

Another example is the Government of China which has provided instructions on CSR in relation to the operations both in China and abroad of its state-owned enterprises. The Government of China is now also looking into providing guidance on CSR to foreign companies operating in China.

Excellencies, Ladies and Gentlemen,

In order to ensure that the principles of the Global compact are taken to the country level, Global compact Networks have been established in many countries in the region, of which the Singapore Compact-a key co-organizer of today’s event – represents one.

I urge you all to show your commitment to making our one and only world a better place by signing up to the Global Compact, implementing its principles in the day-to-day business of your company, telling the world how you do this, as well as helping others learn to do it by sharing your experiences within the Global compact networks in your respective countries.

The Economic and Social Commission for Asia and Pacific, the regional arm of the UN, stands ready to support you in this effort. ESCAP is helping to grow the Global Compact country networks into business-driven, vibrant and sustainable networks that provide an active platform for network members to share experiences and to learn from each other. In doing so, we are working closely with the Global Compact office in New York, as well as with the focal points of national networks, including with the Singapore Compact. Let me end by emphasizing that we can make a difference by working together to achieve common prosperity, social progress and stability in our region.

I wish you great success and very pleasant evening.

Thank you.