Globalization:
For Whose Benefit?
Remarks by
Hon. David Kilgour, MP for Edmonton Southeast
and Secretary of State for Africa and Latin
America
At The First Canadian Open Business Forum
on Building Corporate Social/ Environmental
Responsibility
Calgary, Alberta March 8, 2001
Is globalization
a 13 or a four letter word? Economists have
talked about issues of globalization for
decades even if the term itself emerged
only recently. Let me be candid from the
outset: I'm reasonably confident that many
Canadians fear globalization. They say it
brings the decay of social values, culture
and the environment. Too often the term
is thought of as synonymous with unbridled
capitalism, where any entrepreneur can raise
money anywhere in the world, make anything
and sell it anywhere else. I'd argue, however,
that the real challenge is not to decide
whether globalization is good or bad, but
rather to ensure that dismantling walls
provides more fulfilled lives in all parts
of the world.
Globalization
can be a force to create growth and opportunities.
It has opened markets and linked economies
and cultures. In empowering individuals
and groups as never before, it has also
led to demands for greater attention to
be paid to issues such as human rights,
environmental protection and labour standards
- the issues that form the core of the corporate
social responsibility (CSR) agenda.
Canada has
proposed that the Summit of the Americas,
to be held next month in Quebec City, would
be an appropriate time for governments of
the Hemisphere to consider initiatives for
engaging the private sector, the multilateral
development banks and civil society in a
dialogue directed toward practical outcomes
in support of the principles of good corporate
governance and social responsibility.
This follows
work Canada has done at the Organization
of American States [OAS], where we formally
introduced the concept of CSR last year.
Canada was then successful in securing a
commitment from the OAS to study CSR further,
through the adoption of a resolution at
the OAS General Assembly held last June
in Windsor, Ontario. In addition, last year
the OAS Working Group on Probity and Public
Ethics (the OAS body responsible for discussing
CSR) held meetings involving representatives
from the business community, governments
and non-governmental organizations [NGOs].
Canada believes that such exchanges are
essential to developing practical action
in support of CSR principles.
This is especially
relevant seeing as fully one third of Canadian
jobs today are tied to international trade.
The economies of 34 nations from North,
Central and South America and the Caribbean
represent 800 million people and more than
one third of all the goods and services
produced on the planet. Almost one half
of everything we produce in Canada is destined
for export. Fully 92 percent of that is
exported to our partners represented around
the summit table in Quebec City.
Balancing
corporate investment with community investment
is the way of the future. With growing public
interest and concern regarding the sustainability
of communities as globalization deepens,
it will be necessary to show that the nations
of the Americas are working together to
ensure that the activities of the business
community make a positive contribution to
the communities in which they do business.
Already an
increasing number of companies are recognizing
that globalization is transforming corporate
responsibility from a choice into an imperative.
A recent international inquiry into consumer
expectations concluded, for example, that
20 percent of consumers surveyed had avoided
products and services of particular companies
because of their negative ethical profile,
and a further 20 percent were considering
doing so. As my colleague, International
Trade Minister Pierre Pettigrew, said in
a speech in Vancouver last month:
The fact
is that 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.
CSR is generally
understood to be the positive role that
businesses can play in a host of complex
areas, including safeguarding employees'
core labour rights (to non-discrimination,
freedom of association and collective bargaining;
against child labour and forced labour),
protecting the natural environment, eliminating
bribery and corruption, and contributing
to respect for human rights in the communities
where they operate.
CSR is not
new to the international agenda; it has
been around for many years. It has been
gaining prominence and momentum worldwide:
conferences are held weekly, papers and
articles are published almost daily; new
and innovative partnerships are being developed.
There is reason for optimism. Even if we
look only as far back as the Battle of Seattle
in the fall of 1999, since then numerous
initiatives such as the OECD [Organization
for Economic Co-operation and Development]
Guidelines for Multinationals and the Global
Compact have been introduced, implemented
and, in some cases, refined and implemented
again.
The growing
international and domestic interest in CSR
stems largely from the concerns held by
many in every society about the real and
perceived effects of rapid globalization.
The interest has been reflected in the expectation
that globalization must proceed in a manner
that supports sustainable development in
all regions of the world. People insist
that the activities of corporations should
make a positive contribution not only to
the economic development and stability of
the countries in which they operate, but
also to their social and environmental development.
Failure to respond to such an agenda satisfactorily
will contribute to increased social tensions,
environmental degradation and political
upheavals. Good corporate conduct makes
an important contribution to sustainable
development in any community and thus goes
a long way toward responding to the concerns
that globalization raises.
Many companies
and business associations have recognized
the importance of CSR. 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. In the findings of the Environics
Millennium Poll, 53 percent of respondents
in China felt that in order to build a better
society, business should go beyond just
making a profit, paying taxes, creating
jobs and obeying laws. The corresponding
figure was 63 percent in India, 67 percent
in Argentina and 64 percent in Indonesia.
In Canada and the United States it was 88
percent, demonstrating that Canadians feel
especially strongly about this point.
The CSR agenda
is a complex one, requiring co-operation
among a wide variety of stakeholders to
be addressed effectively. Improved dialogue
between the private and non-governmental
sectors is one positive pattern emerging
from recent corporate social responsibility
trends. While early relationships were often
characterized by mistrust and misunderstandings
that fed a cycle of opposing actions and
reactions, today stakeholders are increasingly
recognizing the value of multi sector dialogue
or partnerships to achieve substantive,
long-term reform. Such a dialogue can facilitate
a better understanding of the expectations
and concerns of key stakeholders, and it
can also act as a forum where debates over
differences are more about identifying mutually
acceptable solutions and practical implementation
steps than reiterating entrenched, non-retractable
positions. 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.
The international
community has policy tools to influence
business activity within and between nations,
and to help ensure that globalization proceeds
in a way that benefits all. These tools
include legislation and regulatory frameworks,
voluntary compliance with an agreed set
of standards monitored by a third party,
or self-regulation by businesses, often
in conformance with voluntary codes of conduct.
In Canada, we are exploring new ways to
address these issues, including roles for
industry, non-governmental organizations
and multilateral organizations.
At the Department
of Foreign Affairs and International Trade,
our focus has been on voluntary initiatives
at the domestic and multilateral levels,
and on encouraging private sector dialogue
based on a three-pronged strategy:
• Promote
the concept of CSR through dialogue, partnerships
and information sharing with civil society
groups and business, and within government.
• Support
the development of voluntary standards both
domestically and internationally, and work
with stakeholders to translate them into
practice.
• Work
with like-minded countries to build greater
support for the principles of CSR internationally.
The need
for partnership between the private sector
and NGOs is more important now than ever
before. For example, in 1997 a group of
Canadian companies led by Nexen Inc. (formerly
Canadian Occidental Petroleum) of Calgary
developed a code of ethical principles covering
community participation and environmental
protection, human rights, corruption and
bribery, in addition to employee rights
and health and safety. Nexen deserves much
praise for its leadership around the world,
perhaps especially in Nigeria and Yemen.
Several companies, including Alcan, Cambior
and Shell Canada, have signed on. While
this was an important step, it has been
criticized for not being more inclusive
and for not having an independent monitoring
mechanism.
Voluntary
initiatives are evolving. Initiatives of
yesterday consisted of self declarations
or statements of principles; they were vague,
with minimal compliance and verification.
Today there is increased recognition of
the need for effective monitoring and verification
systems that can involve third parties,
such as NGOs, and that significantly raise
the credibility of standards. This is important
as it is only by effectively addressing
environmental, human rights and labour standards
that companies will be able to meet new
social challenges.
Canada is
also working to promote CSR through support
for the development of multilateral standards,
which can be a framework for interaction
with Canadian companies. The OECD Guidelines
for Multinational Enterprises are recommendations
addressed by linking governments to multinational
firms operating from their jurisdictions.
The recently revised guidelines were adopted
by OECD Ministers at their June 2000 meeting;
they set out voluntary principles of responsible
business conduct in areas such as environmental
stewardship, human rights and labour standards.
As a signatory, Canada has established a
National Contact Point to promote the guidelines
and contribute to the resolution of problems
that arise.
Globalization
is already a force for great change, not
simply a spectre on the horizon. Through
technology, communications and economics,
globalization and our increasing interconnection
are inevitable. Time, distance and geography
are disappearing: globalization is a reflection
of that reality. In this environment, companies
can and do make an important contribution
to sustainable development in communities
where they operate. Certainly progress has
been made in some areas. But we must temper
our optimism with the awareness that there
is still much to be done and many challenges
for us to keep in mind as we strive to ensure
that globalization is for the benefit of
all people, in all countries of the world.
In conclusion,
I'd like to remind you that each of us has
an important role to play and a stake in
this agenda. Governments need your involvement
and expertise.
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