Global Conference on Social Responsibility

Vilamoura 16-18 February 2006

 

 

A draft report and recommendations to be incorporated in Vilamoura Action Plan

 

  1. In 1970, Millton Friedman, the famous economist said: “Few trends could so thoroughly undermine the very foundations of our free society as the acceptance of corporate officials of a social responsibility other than to make as much money for their stakeholders as possible”. The cockles of Milton Friedman’s heart would have warmed up had he participated in the Global Conference on Social Responsibility held in Vilamoura from 16-18 February 2006. Though named Global Conference on Social Responsibility, it talked about “inclusive capitalism” and consciously omitted the word CSR from the theme of the conference. The conference was addressed by almost one hundred experts, business leaders and policymakers from 27 countries on the practical steps that businesses can take to benefit the poor and raise profits. It ended up with an action plan designed to access poor markets to make as much profit as possible for each stakeholder of the business.

 

  1. CSR over the years has collected a lot of unwelcome baggage having become a contested ideological model advocating a universal solution for poverty and environmental degradation. The conference consciously avoided the familiar jargon and its ideological connotations to use the opportunity for a constructive dialogue among the representatives of the big business, NGOs and the government. 

 

  1. C K Prahalad, the keynote speaker, in his consummate address called upon corporations to make affordable world class products and services to tap the market of five billion customers at the bottom of the pyramid. He called for democratisation of commerce and building of inclusive capitalism to remove the asymmetry of power. He exhorted the corporations to co-create value with these new customers by giving them choice and dignity. He said affordability meant making products which are world class and yet cost one fiftieth of the current solutions and gave examples of Jaipur Foot and Aravind Eyecare in India.

 

  1. The Rt Hon Joe Clark, former Prime Minister of Canada, supported CK Prahalad’s observations. He said that the real growth of multinational business lay in the emerging markets. “Businesses in the resource and extractive industries especially have to go where their ore or their oil are. They don’t have the luxury of operating in safe and familiar places. Companies need to change their paradigms. We need to find out how companies can be encouraged to change the context and assumptions that guide their decisions.”

 

  1. Dr Giscard D’Estaing, the Founder & Chairman of INSEAD, observed that once companies get into the country they need to become active in the wider aspects of the community. He said it was time we levied a global tax on oil to fund global initiatives necessary to make globalisation work for the poor.

 

  1. Madhav Mehra, in his theme address, stated, ‘90% of the products in the year 2015 would be different from what they are today. Business has an opportunity to replace those products with the ones affordable by the five billion poor. But such a growth must not fuel consumerism. Instead conservationism and radical increase of resource productivity should drive the growth agenda. Advocating Poor Orientated Innovation and Sustainable & Ecofriendly Development (POISED) he said the corporations. Corporates must strive not to proliferate the products and clutter the environment while leaving the customers half longing and half spoiled.

 

  1. The Baroness Flather emphasised the particular needs of women and saying that all development effort should be gender biased in favour of women. “Women are the key to change. Yet, in many developing countries, they have little or no status and there are very few means by which they can improve their lives.”

 

  1. Dr Cobus de Swardt said: “Corruption hurts the poor most. National governments should take steps to make corruption a high risk business and adopt zero tolerance of corruption”.

 

  1. There was a significant participation from all three sectors – government, business and civil society. The conference discussed the need for aligning strategies and developing global networks. Rosemary Hilhorst, Director of the British Council Portugal, said that the 109 offices of the British Council could support such a network. Erika Mann MEP, from Germany, supported the idea and assured the support of the initiatives she chaired globally.

 

  1. It was felt that CSR provided a bridging mechanism that can bring governments, NGOs and businesses together in a nonadversarial way. All that was required was a continuous dialogue between them to identify and replicate models that had already worked in different countries, such as Amul and SEVA in India and Casa Bahia in Brazil. It was decided that the World Council for Corporate Governance should assume the temporary ownership of the platform for the creation of win-win models that can be scaled-up and translated into action.

 

  1. Here is the summary of recommendations:

 

                                                               i.      HE Jose Vieira da Silva, Rt. Hon. Joe Clark, Ola Ullsten, Dr Giscard d’Estaing, Erika Mann, Madhav Mehra, Peter Davies, Cobus de Swardt, Rosemary Hilhorst, Kathrin Bohr, S K Maini and K G Ramanathan.

 

                                                             ii.      A core group be formed to draw together the strengths and complementarities of business, NGOs and governments to move forward the gains of the conference.

 

 

                                                            iii.      This group should widen its net and get together more businesses, politicians, policy makers and civil society representatives by leveraging the strengths of existing networks such as British Council, UNDP, NORAD, SIDA, CIDA, Transparency International, EU and UNIDO.

 

                                                           iv.      The group should create an inventory of best practices right across the world apart from the ones mentioned by Prof. C K Prahalad such as Casa Bahia in Brazil and Jaipur Foot in India. This inventory should include what has worked and what has not worked.

 

                                                             v.      Media should also be involved in a dialogue with this group to ensure transparency of the process and dissemination of the dialogue to the wider public.

 

                                                           vi.      WCFCG should take the ownership of the group as a temporarily facilitator that would lead to the development of an appropriate models to suit different cultures and milieu. It is important that the models should emerge from the discussion within the group and not be prescriptive. 

 

                                                          vii.      The outcomes of Vilomoura be further discussed and refined at the upcoming events of the World Council for Corporate Governance such as in London on 11-12 May 2006 & in Palampur on 9-11 June 2006.The final outcome of these deliberations should become the focus of Vilamoura II.

 

                                                        viii.      The national governments should encourage formation of social enterprises on the lines of cooperatives such as Amul and Seva where profits are ploughed back to the community.

 

                                                           ix.      All development should be gender biased in favour of women. Indeed activating women groups would be the best way to drive the change

 

  1. The need for a culture change was emphasised. The transformation is unlikely to take place unless companies change the current paradigm of success at short termism, success at all costs and winner takes all. On the contrary, companies should be encouraged to admit mistakes and use failures as drivers of sustainable success. Participants were reminded the power of seven golden words in English language are “we are sorry, we made a mistake”.

 

  1. Board meetings and AGMs should provide occasions for constructive criticism and learning. They should particularly emphasise the importance of SEER “Social, Environmental and Ethical Risks”. Companies need to have special training programmes to embed the importance of these issues to use them as competitive differentiators in business transformation.

 

  1. Annual reports should faithfully track ups and downs of the company performance in their quarterly reports and relate achievements / failures to long term value creation.

 

  1. The 7th International Conference on Corporate Governance should provide an occasion to embed the above concepts into the board rooms especially in the selection processes, training programmes, appraisal processes, remuneration polices and reporting systems (STARR). In using the words of Rt. Hon Joe Clark this could be the vehicle for “connecting board rooms with villages”.

 

  1. The word CSR be replaced by something more inspiring such as BEST (Businesses for Economic and Social Transformation) for corporations to proactively participate in building more successful businesses by leveraging the power and ingenuity of five billion customers.

 

  1. It is recommended for that following be coopted as the founder members of the core group mentioned under:

 

HE Jose Vieira da Silva

Rt. Hon. Joe Clark

Ola Ullsten

Dr Giscard d’Estaing

Erika Mann

Madhav Mehra

Peter Davies

Cobus de Swardt

Rosemary Hilhorst

Kathrin Bohr

S K Maini

K G Ramanathan.