OPENING REMARKS BY David Grayson CBE TO THE INAUGURAL CSR SUMMIT, SYDNEY, AUSTRALIA, NOV 30TH 2005

Today: I want to talk about three things:
- the future
- what it means for business
- and, particularly, therefore, for the way businesses embed Corporate Responsibility
-
1. THE FUTURE

We face vast increases in:

CONNECTIVITY

According to Vodafone there are now 1.8 billion mobile phone users around the world - shortly to rise to 2 billion - with perhaps 3 billion in 5-7 years time. China already has 300 million mobile phone customers - and that will be 500-600 million soon. 126million text messages "There is a fatal flu in Guanzhou" about the Sars virus were sent in three days (8-10 Feb 2003)in China before the Chinese authorities had made any announcement.

I was in Peru in May and visited the famous floating islands on Lake Titicaca on the border with Bolivia. Even there, solar panels now mean that people living on the floating islands can now watch TV!

Add to that, the growth in Internet users from 60 million in 1996 to 600m million in 2002 to a billion this year and a projected 1.35 billion in 2007- and you have an unprecedented degree of global connectivity - speeding still further the spread of information, ideas, fashions - and NGO campaigns.

COMPLEXITY

There will be a vast expansion of complexity. Dr Oliver Sparrow of The Challenge Forum explains this in terms of the volume of information produced each year: measured in exabytes. An exabyte = 1 million million megabytes (so if 1 megabyte covered an area one metre square, 1 exabyte would cover one million square kilometres). If the knowledge available to mankind could be expressed physically, then it would have covered the equivalent of the island of Mauritius in 1920, Madagascar in 1940, the Congo in 1960, all of Africa in 1980, all the continents by the Millennium, the whole of the planet now; and be on track, to cover 1700 planets every year by 2020. Information couples together and fuels all the other agents of change.
Source: Challenge Forum

ACCESSIBILITY

More of this knowledge becomes available to people anywhere in the world, thanks to the unprecedented degree of connectivity - but also now to the accessibility afforded by Internet search engines like Google. Google is just 5 years old and already has a market capitalisation of $84bn. EBay is not much older and has 8,700 employees around the world and a value of $57bn
EDUCATION - MORE "PEOPLE WHO KNOW"
All this extra knowledge and access to it, is especially significant because of a further revolutionary change: more educated people around the world - more people who know - who can make meaning of this knowledge and make something of it commercially. By 2025, there will be more graduates alive than there were people on the planet in 1900.
As the Microsoft Chairman Bill Gates put it: "The percentage of a population with a college degree is important, but so are sheer numbers. In 2001, India graduated almost a million more students from college than the United States did. China graduates twice as many students with bachelor's degrees as the U.S., and they have six times as many graduates majoring in engineering. The Microsoft Research Centre in Beijing (one of four in the world - the others being in Cambridge, Redmund and Palo Alto) is already as productive as the others - and the Chinese Government have given Microsoft the right to confer PhDs on researchers in the centre.

In his book "The World is Flat," (just voted the Financial Times Business Book of the Year), Thomas Friedman - the foreign affairs editor of the New York Times - suggests three waves of globalization: "Globalization 1.0 (1492 to 1800) shrank the world from a size large to a size medium, and the dynamic force in that era was countries globalizing for resources and imperial conquest. Globalization 2.0 (1800 to 2000) shrank the world from a size medium to a size small, and it was spearheaded by companies globalizing for markets and labor. Globalization 3.0 (which started around 2000) is shrinking the world from a size small to a size tiny and flattening the playing field at the same time. And while the dynamic force in Globalization 1.0 was countries globalizing and the dynamic force in Globalization 2.0 was companies globalizing, the dynamic force in Globalization 3.0 -- the thing that gives it its unique character -- is individuals and small groups globalizing. Individuals must, and can, now ask: where do I fit into the global competition and opportunities of the day, and how can I, on my own, collaborate with others globally? But Globalization 3.0 not only differs from the previous eras in how it is shrinking and flattening the world and in how it is empowering individuals. It is also different in that Globalization 1.0 and 2.0 were driven primarily by European and American companies and countries. But going forward, this will be less and less true. Globalization 3.0 is not only going to be driven more by individuals but also by a much more diverse -- non-Western, nonwhite -- group of individuals. In Globalization 3.0, you are going to see every color of the human rainbow take part."
SUSTAINABILITY
The growing world population intensifies the pressures caused by a further global trend - pollution and resource depletion which threatens the sustainability of the planet.
40% of agricultural land is degraded. Biodiversity loss is now running at 1,000 times natural rates of extinction. In recent decades: 20% of coral reefs have been lost and a further 20% degraded; 35% of mangroves have been lost; withdrawals from lakes and rivers have doubled since 1960; 25% of commercially exploited marine fish stocks are over-harvested and so on. These are not predictions, these are the facts on the current situation as assessed by world-class, peer-reviewed scientists (e.g. see http://www.millenniumassessment.org for a good summary of global indicators).
Taking the people living on US$1 per day to US$2 per day will consume the energy equivalent of the oil output of Kuwait, and cost about US$1 trillion in investment in infrastructure.
The WWF "Living Planet Report" 2004 estimates that humanity is currently consuming natural resources at a rate which is 22% above their renewal ability, and in some countries over five times the rate of renewal ability. Put another way: if all the world's population consumed at the rate of the rich West, we would need three planet earths to support us - and if all the world consumed at the rate of California today, we would need six planet earths.
And that is without the challenge of Climate Change. HRH The Prince of Wales, President of Business in the Community describes climate change as mankind's "greatest challenge."

"We should be treating the whole issue of climate change and global warming with a far greater degree of priority than is happening now."

As Dr James Baker, of the National Oceanic and Atmospheric Administration in the US, has said. "There's a better scientific consensus on this [climate change] than on any issue I know - except maybe Newton's second law of dynamics". {See: Scream Crash Boom. - Paul Gilding - Ecos-10th anniversary letter - May 2005 - Sydney -www.ecoscorp.com.au}
II.WHAT IT MEANS FOR BUSINESS
A. There are no hiding places. Information can be spread virally. Broadcast quality pictures can be transmitted from a mobile phone or a tiny secret camera. Think of those pictures of Kate Moss. It could have been photos showing child labour or poor health and safety conditions in a factory supplying a global brand. Today - assume everything is for the record. Trust in brands and businesses has to be earned and re-earned every single day. Opinion Leader Research describe this as businesses having to fight an election campaign every single day.
B. Competition for business is ferocious and global. Businesses in places like Britain or the US or Australia can't compete on cost. Nor, increasingly, will they have automatic advantages because of higher skills. Learning faster than the competition, securing better sources of creativity and innovation becomes the only source of sustained competitive advantage. And I will argue later that a genuine commitment to Responsible Business, can be an important such source of creativity and innovation.
C. Sustainable development becomes an important factor for business.
We are already seeing global oil companies take newspaper and magazine adverts to highlight the challenges of resource depletion and climate change.
Not surprisingly, this leads to a growing disparity internationally between heightened expectations of business performance globally and how business is currently seen to be performing - as the latest global survey by Globescan shows - Globescan 2005.
This is the "big picture" context in which debates about Corporate Citizenship, Responsible Business, Corporate (Social) Responsibility C(S)R rage. I understand those terms to mean a business which is seeking to minimise its negative environmental and social impacts and to maximise its positive impacts. It does seek to balance stakeholder interests so that the business is run for the benefit of Profit, People and Planet. Adrian Hodges and I argue that whatever the size of the business, Corporate Social Responsibility must not be a bolt-on to business operations but be built in to business purpose and strategy. We also argue that businesses should not just think of how this commitment can reduce risks - but also how a genuine commitment to Responsible Business can be a source of creativity and innovation - in short, Corporate Social Opportunity rather than Corporate Social Responsibility!

Commitment to Responsible Business as a source of Creativity and Innovation

There are a number of reasons why this might be so. A commitment to responsible business and sustainable development creates more pressure to find new solutions. It makes the business more receptive to 'out-of-the-box' thinking. It makes the company more receptive to approaches from NGOs, governments and academia with ideas for collaboration. A company genuinely practising CSR is more likely to have eclectic and effective stakeholder engagement processes in place -- so stakeholders will have better understanding of the company's interests and areas of expertise and where it might be particularly open to new ideas. Outsiders will be more likely to have the company on their radar screen as a potential collaborator and consider it more open to what at first might seem 'zany, crazy ideas' A company committed to stakeholder engagement will be more likely to have highly accessible and visible contact points that external stakeholders can approach and who in turn can link the external approaches to the most appropriate people inside the business. The company is less likely to have a 'not invented here' mentality -- rather, it will engage in what Tom Peters called 'creative swiping', being open to ideas not just from other businesses but also from other sectors. There will be a corporate culture that is not only willing to work with others but also widely known and respected so that outsiders want to work with it. It is more likely to have the right mind-sets for fair and equitable collaboration with other sectors and partners. By understanding sustainability it will be more alert to opportunities as an integral part of keeping costs down and value up.

By contrast, it may be that one of the reasons why employees may not be willing to share their ideas with their employers (Vodafone research quoted in The Financial Times- 28th June 2005) is that they don't identify with the organisation - whereas employees who feel that their personal values and the values of the organisation are congruent, may be more willing to go the extra mile and to share their ideas.
Business must be less defensive
So companies must genuinely embed and integrate Responsible Business; they must be prepared to explain their purpose and impacts; to defend legitimate business interests - and to engage in debate
"if businesses want to make good profits and to protect their good names, they must stand up and argue their case - for globalisation, for free trade, and for responsible corporate behaviour...." - Financial Times editorial - April 2001
The global managing partner of McKinsey and Co: Ian Davis, made a similar point in The Economist in May:
"Large companies must take the lead in explaining their contribution to society. They should define their ultimate purpose in a way that is more subtle than "the business of business is business" and less defensive than most current approaches to corporate social responsibility. ...It is time for big business to recapture the intellectual and moral high ground from its critics and to build social issues into strategy in a way that reflects their actual importance to companies." (May 28th 2005)
III. HOW DO COMPANIES REALLY BUILD CORPORATE RESPONSIBILITY INTO BUSINESS PURPOSE AND STRATEGY?
A recent World Bank survey finds that only 22% of over 100 leading multi-national companies report progress in mainstreaming corporate responsibility into their day-to-day operations . So today, I want to concentrate on what seem to be some of the most critical elements for businesses that truly want to be a Globally Responsible Business. You will find more detail in "Corporate Social Opportunity"
Namely:
1. VALUES AND LEADERSHIP
2. SCOPING WHAT MATTERS AND ENGAGING STAKEHOLDERS
3. MEASURING AND REPORTING AS A STIMULUS FOR CONTINUOUS IMPROVEMENT
VALUES
If we were writing "Corporate Social Opportunity" again now, I think one of the points I would give even more emphasis too, is the link between Values and Corporate Responsibility. Lord Browne of BP recently made the point that if you have an international business operating in different parts of the world, in market conditions which change incredibly fast, you simply cannot run such a business with every single, major decision having to be referred back to global HQ. You would go out of business because you would not be able to respond fast enough. So, you have to be able to trust people on the ground to make the right decisions: commiting the global business and potentially the global reputation of that business. He was arguing that the only way that you can do that and not fall flat on your face is if you have got people with a very strong set of common values. If you like, the kind of first principles that they can refer back to, if in doubt about the decision which they have to take on the spot.
Serco positions itself as 'the leading global outsourcing company'. Growth has come from trends towards privatisation and the contracting out of public services. The firm was established in the 1920s when it was the services arm of RCA, installing sound systems in cinemas when the 'talkies' began. Now it operates through eight main companies handling over 600 separate contracts -- 85% of which are for governments or government agencies around the world. These include most of the road traffic information used by the emergency services in the UK; maintaining the parking meters in San Francisco, running buses in Adelaide, bridges in Auckland, tunnels and hospitals in Hong Kong. Since its flotation in 1988, the company has consistently delivered increases in turnover and profits. It aims to win one out of every two new contracts for which it bids. It is currently enjoying a 62% success rate, and is renewing over 90% of its existing contracts.
Serco now operates in 36 countries, with 40,000 people. Chris Hyman - Serco's CEO gave the keynote speech to the BITC annual conference this July. Here is part of what he said -
"Being part of a values based company is important to me, as the Chief Executive, but also important to me personally. I believe that values are all we have, I believe it shows who you are, it distinguishes and defines individuals. ..

. I believe it give meaning to lives, it gives you the confidence to react naturally, in good or bad times. I believe it is our only defence in challenging situations and often our strongest weapon in moving forward. It is vital that we have people with the same values in our organisations, otherwise one of us is living a lie.

We have spent a lot of time at Serco taking time to understand what our values are, as a business, ..we call them our governing principles. We take time to explain them in real down to earth terms where people can recognise them and use them in every day lives, not just at work.

...the first one of our four governing principles, we talk about is fostering an entrepreneurial spirit. What do we mean? It means we expect people to deliver. Yes we are in business. I am saying that corporate social responsibility is part of doing business. We thrive on generating and encouraging new ideas, we embrace change as an organisation. The second one, building trust and respect. It means we never compromise on safety, we are always ethical and responsible. We treat others as we wish to be treated and we listen. Thirdly, delivering our promises. We mean that we are clear about what we need to achieve, personally and as an organisation. We only promise what we can do and we preach that from the time, to every person in the organisation. And if we make mistakes we don't always get it right, if we make mistakes we tell our customers about it, we tell each other about it, and we put it right. And finally the fourth one, enabling our people to excel. It means we are responsible for each other, something that businesses today often find it embarrassing to talk about, but it is true, we are responsible for each other. We can expect support when it is most needed. We recognise and harness the power of individuals and we expect people to achieve more.....

So if we start with values we get people doing what they are passionate about, then generally you get them doing the right thing, and folks, I believe if you get people doing the right thing, then corporate social responsibility is simply an outcome. And you will probably find the business impact, isn't too bad either."

Chris Hyman is right! -A 2005 survey of senior executives in 365 companies in 30 countries carried out by Booz Allen Hamilton and the Aspen Institute for Business in Society revealed that companies that outperformed their peers were more likely to include ethical behaviour and integrity in their values statements, and they were more successful in linking values to the way they run their companies.

In his BITC speech, Hyman went on to argue that employees "don't just expect it, I think our employees want it. All of our employees, regardless of background, like to have an emotional belief in what it is we do, the delivery of public services grounded in values. Tell someone they are building a back office system and that is exactly what they will do and that is exactly what you will get. Tell them that the work they are doing enables a youngster on an at risk register to get urgent support, when he or she turns up at a homelessness unit and what you get is something quite different, we find, you get service delivery with a passion. Something that goes beyond and doesn't watch the time clock."

Ian Davis - the Managing Partner of McKinsey and Co worldwide -made a similar point in the "By Special Invitation" piece in The Economist back in May - about the need for business to define its purpose as something more than shareholder value, if it is to inspire and truly engage.

Serco's Hyman also talked about how the Serco senior team embed their values:
".. I talk about these at every event I attend. It is difficult sometimes but I do, I make sure I talk about it at every event. I discuss them personally at every staff meeting. I openly use them to guide decision making in the company. It is clear throughout the organisation that I believe in the values, and that is very important. As leaders, that is one message I can give you today, make sure you believe in the values and then preach them. I don't communicate governing principles, I evangelise about them in our business. I am passionate about our values and I make sure that everybody knows it."

Serco also rewards and celebrates performance based on the Governing Principles. All 250 managers of the senior leadership team, are assessed in terms of their bonus award, not just on performance, that is the what, but also on the how how they achieved. employing and implementing the values in the business. The link to executive compensation is still in its infancy but there was a recent study by fund managers Henderson on the topic.

Hyman asked "how do we make CSR work, how do we bring such a diverse and disparate workforce together behind a single set of beliefs? Well, we don't talk about CSR in the business, we don't even talk about culture, we talk about values. ... Don't hire, select. If you want a values based organisation, select the people who will fit in. If their values don't fit with ours, we don't take them. We don't rate people so intelligent and so experienced that we can throw away the values, the values come first. Sometimes it is hard to do, but it pays every time. Get the people who have the same beliefs as you, folks, and you won't have to spend money, time, energy, kick starting a CSR programme every quarter." You can find the full Chris Hyman speech on bitc.org.uk and it is well worth studying carefully.
Credit card company MBNA Europe similarly hire for values.

TRAIN FOR VALUES: As Chris Hyman stressed, values only count if you constantly promote them and empower employees to understand how they relate to their own work. 3M has a Leadership Development initiative that includes a module on ethics in which employees are trained on how to employ 3M's values. 3M executives present real examples from 3M's past, when the company had to make tough decisions - decisions where business gain did not align with the company's values. Employees then discuss what they would have done in the specific situation, which they can then compare with the actual decisions made and resultant outcome for the company. Participant discussions are lively and serve to bring everyone to a common understanding of how company values have been and should be applied in various situations. In their feedback on this topic, participants indicate it is one of the most highly rated ones for their development as leaders. In addition, ethics topics, using actual and hypothetical examples, are included in quarterly executive meetings to maintain a consistent 'tone at the top'. Together these efforts provide clear alignment of values and ethics across levels of management as well as embedding them in the next generations of leaders .

I was in Silicon Valley earlier this year and heard Dan Warmenhoven who is the chief executive officer of Silcon Valley HQed Network Appliance, Inc. Network Appliance has been ranked as one of Fortune magazine's 100 Best Companies to Work for in America for the past three years. He personally lectures on every induction programme for new staff about the ethical values of the business.

LEADERSHIP

Dan Warmenhoven, Chris Hyman, John Browne - they are demonstrating leadership, individual and organisational. The Booz Allen and Aspen Institute for Business and Society Report I quoted earlier on the link between Corporate Responsibility and values, found that the role of the CEO in promoting values is by far the single biggest factor in whether they are successful.

The Globally Responsible Leadership Initiative is a new project started by the UN Global Compact and the European Foundation for Management Development - EFMD - involving a number of leading business schools around the world such as INSEAD, IESE and LBS, and some leading multinationals. They published their first report - an invitation to join - on October 17th. They define

"Globally responsible leadership is the global exercise of ethical, values-based
leadership in the pursuit of economic and societal progress and sustainable
development. It is based on a fundamental recognition of the interconnectedness
of the world."

They suggest that such leaders have a number of key characteristics:

- they embrace the global view and global ethics - such as those reflected in the principles of the UN Global Compact and the Millennium Development Goals;
- they value human development and natural resources as much as financial and structural capital;
- they trust in people and process as much as systems and structure;
- they have a global consistency in their general principles and standards, yet are sensitive and flexible to each local context;
- they accept that international policies are failing to keep up with the pace of globalisation and that there are additional responsibilities above and beyond the law, since legal requirements often trail technological innovation and global development;
- they recognise that business has the creativity and resources to address, and make a big contribution to, many of the most important social and environmental challenges before us;
- they recognise that, beyond their responsibility for creating value at company level, they also have responsibility to contribute to a broader, common good locally and globally;
- they seek to balance business, family and community obligations;
- they balance and contextualise paradoxes and manage contradictions;
- they actively engage stakeholders not only to communicate how a business is demonstrating its globally responsible leadership, but also to understand their expectations and concerns and to identify solutions to problems and opportunities;
- they commit to life-long learning.

To their list, I would add that such leaders aspire:
- To lead and to serve - in Ghandi's beautiful phrase: "to be the change that we want to see in the world" - creating a vision to inspire the souls of others
- To Sensitivity and empathy - Patience/serenity humility - an ability to learn and a willingness to learn - to be "truth-seeking missiles!"
- To inspire, engage, facilitate - to be walking /talking / breathing symbols of Corporate Responsibility with strong Ethical values
- To being tuned in to dialogue and listening rather than just communicating- an Influencer - who builds/adds to ideas

There is a role for CR professionals in helping leaders in their company to explore what such leadership requires. At Business in the Community, HRH The Prince of Wales's Seeing is Believing Programme is an opportunity for busy business leaders to reflect on some of these issues. We are now developing an alumni programme.

Businesses too have to take leadership positions - as BP has done on Climate Change; or Anglo-American on HIV/AIDS; or RWE Thames Water with sustainable water.

(2) SCOPING WHAT MATTERS

Businesses that have really embedded Corporate Responsibility also scope the key CR issues relevant to their business. They do so regularly because new issues are emerging as older ones are successfully handled and embedded in standard business practices. Some of the most recent Sustainability and CR Reports like Vodafone or Cooperative Financial Services, provide good summaries of how individual businesses scope what are the priority topics they face.

Some of the Emerging Management Issues generally now include:

- The under-funding of pensions
- Healthy ageing
- Boundaries of corporate responsibility for the use (and misuse) of products
- Social and environmental performance along the supply chain
- Electronic monitoring of employees
- speed in achieving and ambition of, targets for minimising negative environmental and social impacts - and for maximising positive impacts;
- encouraging good governance (public and private) or conniving in corruption
- transparency of lobbying - both directly and through membership of trade associations - a new survey of British Parliamentarians' views on Corporate Responsibility was published in London last week by the All Party Parliamentary CSR Group. Significantly, almost half the parliamentarians surveyed believe that companies should be entirely free to lobby but that they should expect to be held to account for any inconsistencies between their lobbying and stated positions on corporate responsibility
- responsible tax - there is an interesting new paper just published from fund managers, Henderson - including a useful checklist of questions for companies to ask themselves about their tax strategy.

ENGAGE STAKEHOLDERS

Of course, one of the crucial techniques for scoping what matters, is regular, intense stakeholder-engagement (NB not just stakeholder-management!)

In "Corporate Social Opportunity," we summarise ten common mistakes in stakeholder-engagement - and 10 Critical Success Factors such as being clear about the scope of any dialogue, putting your best people into the discussions, and being mentally prepared to change corporate activities if stakeholder-engagement convinces you that this is appropriate.

In "Profits with Principles" Ira Jackson and Jane Nelson give a number of examples of how businesses are now trying to engage stakeholders: eg Dupont Community Advisory Panels and their Biotech Advisory Panel (Pages 100-1) and Dow's Environmental Advisory Council (page 231)

The Center for Corporate Citizenship at Boston College and Accountability are supporting a Global Leadership Network on Corporate Citizenship of 10 top multinationals including GE, FedEx, 3M and Diageo. They speak of "Engaged Learning" which they define as

"At the root is an engagement with stakeholders, which promotes learning and innovation that drives impact and performance. Such 'engaged learning' goes beyond the traditional notion of high technical quality in stakeholder engagement to that which focuses on outcomes - inside and outside of the company."

(3) MEASURE AND REPORT - Another crucial element for businesses that are really embedding CR now is that they measure and report on their impacts - not as a PR vehicle but as a critical tool for evaluating progress and engaging stakeholders to learn and go further. According to a forthcoming report from the UK-based Corporate Citizenship Company, of the FTSE 100 companies, 91 now produce a CSR report, as do 69 of the Fortune global top 100 companies and 38 of the Fortune top 50 European companies. But Corporate Citizenship argue "a backlash is under way." In their study The Corporate Citizenship Company say, "if today's identikit CSR reports fail to deliver more value to the business, they face being cut as a superfluous burden on cash-strapped companies." My Business in the Community colleague, Mallen Baker has suggested "there is a growing crisis in environmental and social reporting." Mallen rightly suggests that one of the key problems is that companies are not thinking of the audiences for their sustainability reports.

BITC / ADL have produced an excellent "Director's Guide to Corporate Reporting" which you can download for free from the BITC website. The Director's guide tells you what you need to know to make some difficult decisions involved in developing and implementing a strategic approach to Corporate Responsibility reporting. It makes the point that content and channels for communicating the content need to meet the needs of the particular company. I heartily agree. I think there has been too much emphasis on producing a Sustainability Report per se, rather than thinking about the needs of different target audiences - and how best to meet those needs. BHP Billiton - BITC's Company of the Year 2005 - include a handy index highlighting issues likely to be of most interest to particular stakeholders and in place of the 75-page documents of the past, a 20-page Summary Report has been printed that signposts readers to http://sustainability.bhpbilliton.com, a full online report which features exhaustive performance data..
Vodafone innovatively links CSR with internal communications. Employees are treated to a short publication that adapts the key content of the CSR report and packages it as a colourful, attractive brochure. And in financial services, both HSBC and Lloyds TSB took CSR to their customers with short information pamphlets to pick up during visits to a branch.
Groupe Danone's 2005 Sustainability Report uses a product lifecycle chart to illustrate each stage its products pass through: including raw materials, production and packaging, distribution, consumption and disposal. At each point of the chart, which uses clear and attractive line drawings, text boxes are used to list what Danone considers to be its main impacts and responsibilities. Nick Jones of Corporate Citizenship Company argues that "This lifecycle approach is .... applicable to a range of sectors from food ('from farm to fork') to oil ('from oil well to petrol pump'). Where there is contention over where the company's sphere of influence ends and those of governments, consumers and others begin; it can help bring clarity to where responsibilities lie."
Unilever has just produced a ground-breaking Impact assessment report on their operations in Indonesia. Incidentally, also I believe, meeting that Financial Times and that Ian Davis / McKinsey plea for business to be more articulate about the positive impacts it does have.

WHERE WILL THE INNOVATION IN RESPONSIBLE BUSINESS REALLY COME?

My own view is that it will be in small and medium-size businesses around the world, that we will see the most exciting developments in responsible business practice over the next few years. The Babson Centre for Entrepreneurship in the USA reckons that in the last one hundred years, 95% of the significant innovations in products and services came first from firms with less than 20 employees. If that statistic is even broadly accurate, then expect to see small firms pointing the way when it comes to successfully integrating responsible business practice.

Why? Because it is these businesses which probably see the "Built to Last" philosophy of the "genius of the 'and' rather than the tyranny of the 'or.'" A strong commitment to values and strategy in combination will produce the corporate social opportunities. John Hayes, CEO of Axis Europe - BITC's Small Business of the Year 2005 - stresses this in his Top Ten Tips for small firms which you can find on wwww.smallbusinessjourney.com: "ethical and business case: These two go hand in hand so try and establish early on what they both are."

Owner-managers - if they "get it" - can commit their business faster and more easily (whereas for multinationals it can be like turning an oil tanker mid-Atlantic i.e. with operations in may be 50 or even 100 countries, operating in many different cultures, it can be hard to communicate why / what / how of CR).

In smes where everyone knows each other, it is much easier to get full buy-in to responsible business and understanding of what the commitment means in practice.

It is the nature of successful entrepreneurs and of the businesses they run, that they are ingenious and resourceful in finding solutions.

If we can really track the Responsible Entrepreneurs and what they are doing on CR / corporate social opportunity - it could substantially improve the quality and quantity of innovation in Responsible Business that we can promote to businesses of any size - especially for how you combine "passion and purpose" i.e. embedding in Values and Strategy. I shall be discussing this further in the Summit workshop on Friday afternoon on small businesses and CSR.

CORPORATE SOCIAL OPPORTUNITY

I have picked out several of what seem to be the most vital elements for successfully integrating and embedding Responsible Business. You will find more detail in the Seven Step Model we describe in "Corporate Social Opportunity."

Our argument is that if properly integrated, and if a business sees the commitment as a source of creativity and innovation and emphasises opportunity, then this "Corporate Social Opportunity," mindset is more likely to lead to produce new products and services, access to new or underserved markets, or new business models. The Innovation High Ground 2005 Report by consultants Arthur D.Little makes a similar point.

Interestingly, since we published the book fifteen months ago, there have been a number of other books and reports on how to integrate Responsible business - all emphasising how important this is - both for business and for the world. I have already referred to the Ian Davis / McKinsey Economist piece; to the Boston College/Accountability "Global Leadership Network" and to the ADL Innovation High Ground 2005 Report and my friend and colleague: Jane Nelson's excellent book: Profit with Principles.
There is also Stu Hart's Capitalism at the Crossroads; and, of course, "Fortune at the Bottom of the Pyramid" by C.K.Pralahad.

We sometimes use slightly different language or conceptual frameworks - but the core elements are all remarkably consistent. In other words, we know what needs to be done. The challenge now is to get this learning far more widely understood and applied. This is crucial if we are to ratchet up from the only 22% of multinationals reported in the World Bank Study as making progress in integrating Corporate Responsibility in their business.

CONCLUSION

My argument today has been that the vast increases in connectivity, knowledge and people who know all make the case for responsible business even more urgent and compelling. If business is to respond fast enough and effectively enough, then the emerging practices of the leading-edge businesses must become the common practice. Corporate Responsibility must move from being a bolt-on to business operations and become built-in to business purpose and strategy.

© David Grayson November 2005