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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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