Business knows best on real CSR

When leading for the Conservatives on the Companies Act 2006, I was unimpressed by the general lack of policy and coherence shown in the debates surrounding directors’ responsibilities and also the extent of non-financial reporting. We were therefore pleased with David Cameron’s request for a Responsible Business Working Group to report to the Conservative Party on this important area.

One of the basic things that our working group questioned was whether legislation and regulation are necessarily the best ways to institute improvements in responsible business practice, aka corporate social responsibility (CSR)? It was recognised that on the one hand there are many politicians, particularly in the Labour Party, that instinctively believe in the power of regulation. However there are, on the other hand, many in the business and political communities, who do believe in the desire of most businesses to promote responsible business, albeit on the basis of making profits.

The working group met with some 150 companies, investors, NGOs and business organisations. Our report was published on 17 March and can be seen in full on www.conservatives.com. We found that responsible business practice is almost inevitably the same as good business practice. Furthermore, whilst the Government should retain the role of co-ordinator and final arbiter, we found that promoting responsible business and having business significantly buy-in to CSR best practice, will almost always most productively come from business itself.

For instance, if we take British companies participating in AIDS projects in Africa – is it the companies who employ people in Africa and understand the issues on the ground or some civil servant in Whitehall who will best be able to evaluate the problems to be dealt with?

Another example given to us was the case of the British company that found one of its South American suppliers was using child labour. Rather than sack the supplier (which would have helped no-one), the supplier agreed to invest in its factory and end child labour in return for a five-year term contract. So everyone benefited.

So government has a role to play – but government will not always be the right entity to take a public policy type project forward.

The working group suggested a mechanism to assist the various stakeholders, including companies, to address issues of public concern – such as carbon emissions, obesity or binge-drinking. We called this the 'Responsibility Deal' and were delighted to hear that Cameron has since appointed Archie Norman to chair the first of these; to address waste.