Opening Remarks by H.E Bruce Cleghorn,
British High Commissioner to Malaysia
at the
Joint UK-Malaysian Corporate Social Responsibility Conference
“CSR: Creating Greater Competitive Advantage”,
Securities Commission, Bukit Kiara
21-22 June 2004

Yang Amat Berhormat Dato’ Seri Mohd Najib bin Tun Haji Abdul Razak, Deputy Prime Minister of Malaysia; Dato’ Md Nor Yusof, Chairman of the Securities Commission, Tan Sri-Tan Sri, Dato’-Dato’, Distinguished Guests, Ladies and Gentlemen.

It gives me great pleasure to join Dato’ Md Nor Yusof in welcoming the Honourable Deputy Prime Minister to the opening ceremony of the Corporate Social Responsibility conference “CSR: Creating Greater Competitive Advantage”, jointly organised by the Securities Commission and the British High Commission and sponsored by HSBC and BP. The Deputy Prime Minister’s presence today demonstrates very clearly the importance the Malaysian Government attaches to the issue, and I would like to thank him for so graciously agreeing to give the keynote address.

I also wish to offer my thanks to Dato’ Md Nor Yusof and Datin Zarinah Anwar and their staff at the Securities Commission for their sterling efforts in organizing and promoting this conference. I also thank Datuk Peter Wentworth of BP and M Z. Cama and Mr John Coverdale of HSBC for their sponsorship, and for the time and effort that they too have contributed. Our thanks go also to Professor John Zinkin of the University of Nottingham in Malaysia for contributing his expertise to the organization of the conference.

Let me start by answering an obvious question: why should the British High commission wish to organize a conference on this topic with the Securities Commission?

In recent years, the British Government has become increasingly conscious of the importance of CSR to its foreign policy objectives. The behaviour of businesses internationally has a major impact on global stability and prosperity and on efforts to achieve a better quality of life for all. It thus impacts both directly and indirectly on the well-being of the British people. In the UK, we believe firmly that CSR improves competitiveness and efficiency both for companies and in the wider economy. The conference’ title “CSR: Creating Greater Competitive Advantage”, reflects that belief. And, of course, the conduct of British companies has an obvious impact on Britain’s international image and thus on the ability of the British government to achieve its objectives.

But there are other reasons for focusing on this issue as an aspect of relations between our two countries. Malaysia and Britain are both major trading nations. Our joint bilateral trade was worth over 20 billion ringgit in 2003. And it is growing fast in both directions. As companies and investors on one side benefit, so do those on the other. The relationship between our two economies is thus an excellent example of the advantages which flow from an open, transparent an fairly-conducted trading system and what Tun Mahathir called “prospering thy neighbour”.

Corporate Social Responsibility is taken extremely seriously by major corporations in the UK. This is not just because they see good behaviour as a means to improve their brand image. Responsible corporate behaviour as a means to improve their brand image. Responsible corporate behaviour has a direct and beneficial impact on industrial competitiveness. CSR bears directly on a company’s profits and shareholder value. Companies benefit from CSR through productivity gains in areas such as the health and training of their employees, enhanced risk management, staff recruitment and retention, the ability attract and retain capital, and increased market share through an improved reputation among consumers and customers. Financial markets reward companies with good CSR records and put pressure on their competitors to do likewise. Increasingly investors are discerning and like to invest in companies that have a sound reputation for CSR and ethical business. Leading companies go further and identify socially responsible business niches as a means to develop and sustain competitive advantage.

In the UK, the Government and business have worked together to develop Corporate Social Responsibility. In doing this, the Government has started from the premise that efforts to enforce virtue by applying undue pressure through legislation and fiscal powers are unlikely to succeed, and that excessive legislation is more likely to stifle progress than to foster change.

Instead our approach has been to encourage, and provide incentives for, the adoption of CSR through guidance on best practice and, where appropriate, selective regulation and fiscal measures. For example, by requiring pension funds to report on whether they have policies for responsible investment; offering fiscal and investment incentives to support community development projects; and encouraging companies to consider health and safety issues at board level rather than delegating them. A similar approach – encouragement, rather than compulsion – is also being applied to corporate reporting on social and environmental issues. For example in 2000 our Prime Minister, Mr Blair, challenged leading UK companies to report on their environmental performance. By September last year over half of the top 250 were doing so.

The UK government’s objective has been to encourage companies to develop CSR, voluntarily going beyond legal minimum requirements, working from the presumption that CSR is not philanthropy but sound business going sense. Our aim throughout is to encourage – not compel – business and local communities to work together to create a more transparent and equitable, and therefore better and more efficient, business environment.

This approach has produced results. British companies are generally regarded as good performers by international standards. British multi-nationals, like BP, HSBC, Shell, Unilever, Standard Chartered and KPMG (all represented at this seminar by senior board members) are recognized as trend-setters in developing CSR policies. There is a vibrant CSR debate among NGOs in the UK. An NGOs such as Business in the Community (whose Head of International Development, David Halley, is with us today) and the International Business Leader’s Forum are among the leading promoters of change in business behaviour.

Because, like Malaysia, the UK is a major trading nation, we see CSR as an intrinsic part of our engagement with the rest of the international community. The government wants British companies to consider their economic, social and environmental impact on the countries within which they operate and to address the key sustainable development challenges which arise there. In March this year, the government published a draft international strategic policy framework and invited comment from companies, NGOs and other interested parties. The framework describes what the government expects of British companies working overseas. An it underlines the UK’s strong support for international instruments, such as the OECD Convention on Bribery, which makes it illegal for UK registered companies and individuals to bribe someone overseas. The Extractive Industries Transparency Initiative, launched in London in June last year with wide international support, has similar objectives. It aims to promote a fairer distribution of wealth by achieving greater transparency over payments by oil, gas and mining companies to host governments in countries heavily dependent on these resources. Guidelines have been agreed and will be tested in Nigeria, Ghana and Azerbaijan.

The application of CSR can make a real difference in the developing world. Many leading companies now recognize the key role they are able to play in making globalisation work for everybody. There is growing public interest in the impact of business operations in developing countries. This has helped achieve progress on issues such as child labour, corruption, human rights, and labour standards. By applying best practice in these areas, business can play an important role in reducing poverty, achieving sustainable development and promoting human rights. This was recognized by the UN in its Global Compact, launched by the UN Secretary-General in July 2000. This encourages companies to build core human rights, and labour and environmental principles, into their business strategies for the developing world.

Of course, the ethical assumptions behind CSR are not new. Nor are the objectives sought through CSR just the latest “Western” corporate fad. To underline this, today’s conference includes a strong Islamic theme. CSR incorporates ideas long embedded in Islam, and there are many lessons relevant to CSR which can be drawn from Islam. I am therefore delighted to welcome from the UK Lord Amir Bathia, who will speak about Islam and Social Capital, and Professor Haleh Afshar, who will talk about Islam and Human Capital including the role of women.

Let me conclude by saying how much the British Government welcomed the opportunity to participate in the organization of the conference, the aims of which reflect the ethical concerns which the Prime Minister of Malaysia, Datuk Seri Abdullah Badawi, has made central to his new government. I therefore wish you all a lively and successful conference, and I look forward to welcoming you to my Residence this evening.

May I again thank YAB Datuk Seri Najib for his presence here this morning. And may I thank you for listening.