COMMISSION ON SUSTAINABLE DEVELOPMENT CONSIDERS ROLE OF INDUSTRY, HEARS KEYNOTE STATEMENTS ON RESPONSIBLE ENTREPRENEURSHIP
Press Release
ENV/DEV/467
COMMISSION ON SUSTAINABLE DEVELOPMENT CONSIDERS ROLE OF INDUSTRY, HEARS KEYNOTE STATEMENTS ON RESPONSIBLE ENTREPRENEURSHIP
19980421 Corporate responsibility could not exist without accountability, Jagit Kaur Plahe of ECO News Africa of Kenya, a non-governmental organization (NGO), told the Commission on Sustainable Development this morning, as it began its discussion on the role of industry in sustainable development.Voluntary initiatives by industry to improve their business practices should be assessed by governments, she told the Commission, as one of five keynote speakers on the issue of responsible entrepreneurship. Voluntary initiatives lacked credibility because they had been relied on in place of regulations. Governments should conduct comprehensive reviews of practices in all industries to help promote sustainable development and correct poor business practices, she said.
Following the keynote statements, a general discussion on the topic was held, including representatives of industry, trade unions, NGOs, interest groups and Member States.
A representative of industry said it was ironic to think of regulating voluntary initiatives. On the other hand, such initiatives often became regulations later on. A trade union representative said that in developing such initiatives, industry needed more input from workers and members of the general public, who also had a stake in business practices and played a substantial role in ensuring that industry contributed to sustainable development.
Governments and industry should work together in creating standards for sustainable development, one delegate said. While there were occasional conflicts between them, both must realize that viable economic performance, eco-efficiency and safety was beneficial to all. In developing a policy agenda for sustainable development, governments should act as facilitators rather than as regulators, he said.
Statements were also made by Nitin Desai, Under-Secretary-General for Economic and Social Affairs, and by Commission Chairman Cielito Habito (Philippines).
The Commission will meet again at 3 p.m. today to continue its consideration of the role of industry in sustainable development.
Commission Work Programme
The Commission on Sustainable Development met this morning to consider the role of industry in sustainable development. It had before it a report on the subject by the Secretary-General (document E/CN.17/1998/4 and Add. 1-3) and by the Intersessional Ad Hoc Working Group on Industry and Sustainable Development.
The report of the Secretary-General states that over the past decade, consensus had been reached that sustainable development depended on governments and non-State actors making greater efforts to integrate economic, social and environmental goals into industrial policy and decision-making. The report examines the role of industry, emphasizing such specific sub- sectors as steel, paper and chemicals in terms of such issues as complementarities and conflicts between economic, social and environmental goals. It also examines the main challenges posed by industry for national and international policies, and the effect of those policy changes on sustainable development. In addition, it addresses the role of industry in policy formulation and standard-setting, both at the national and international levels, and reviews industry's support for sustainable development goals through voluntary measures.
An addendum to the report, on industry and economic development, states that industrialization is a major economic driving force and that the developmental impact of manufacturing is not limited to the production of material goods. Through its human resources and its organizational and infrastructural requirements, the manufacturing sector involved the development of other sectors, such as education, utilities and physical infrastructure, as necessary complements to its growth. The challenge for sustainable development was to maximize the impact of manufacturing on development, by raising living standards and minimizing the impact of production and consumption on the environment.
Effective policy-making required dialogue between governments, the business community and other major players in society, the addendum states. Increasingly, the dialogue had to be at the national as well as regional and local levels. At the international level, policy challenges included the need for multilateral arrangements to support international competitiveness, build up domestic capacities and stimulate the development of individual industrial activities. International action to overcome impediments to industrial development must focus on capacity-building, the promotion of competitiveness and the promotion of natural resource-based industries in areas where countries had a competitive advantage.
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Another addendum to the Secretary-General's report, on industry and social development, states that social development is a multifaceted concept involving creation of employment, social protection of workers, improvement of the working environment and investment in human capital. Profitability was a condition of economic sustainability, and industrial development was unsustainable until it provided both work and protection. Profitable industrial growth was one of the best ways to support development, and it was up to the State to create and maintain a level playing field, since market forces did not necessarily provide incentives for attending to social development.
The report states that at the macroeconomic level, sustainable social development is achieved with economic growth, while at the private business level, sustainable improvement in working conditions is achieved with value- added increases to avoid any threat to competitiveness. Thus, social development provided the foundation and preconditions for both economic growth at the macro-level and competitiveness at the industrial enterprise level, which made it a precondition for competitiveness in an increasingly global economy.
The service and informal sectors were the greatest growth areas for employment, the report states. Policy challenges for government and business focused on supporting those sectors in the small and medium enterprises through microcredit, improved working conditions and social protection to help the cross-over into the formal sector. Other policy needs included establishing preconditions for markets to function in the long-term interest of the population by emphasizing partnership between the State, the private sector and civil society, and ensuring a supportive macro-environment to prevent a compromise of efficiency in an atmosphere of increasing competitiveness. Recommended policy-related actions included the use of clustering to support capacity-building for collective access to services and the removal of barriers preventing women from entering the labour force.
For the international community, the central concern with respect to industry is a growing and increasingly visible range of disparities, the addendum states. Policies should centre on global expansion of productive employment and reduction of unemployment, enhancing social protection and reducing vulnerability for the poorest groups. For employment-related policies, the international community should ensure that international trade and trade agreements did not halt the creation of employment on a global scale and that core labour standards are followed.
An addendum on industry and environmental protection considers the interplay between development, production and the environmental impacts which occurred with varying degrees of risk along the industrial life-cycle and appeared as local, regional, transboundary and/or global environmental
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problems. The report emphasizes the partnership between business and industry in achieving sustainable development since they had the technology, know-how, resources and entrepreneurial spirit to innovate in achieving environmental goals and objectives. While both industry and governments had responded to challenges, efforts had remained localized, particularly in multinational corporations and developed-country governments. A concerted effort had to be made to encourage full participation in line with key conclusions about the impact of industrial activities on the environment.
Environmental consequences of industrial emissions and discharges on air and water were related, the report states. They were rarely localized in one medium. However, government policies tended to be medium-specific, transferring pollution from one medium to another. An integrated, holistic approach to environmental policy was needed. In addition, the scale of environmental impacts was increasing, particularly in the lengthening of the time-lag between emission, impact and ultimate consequences.
Impact assessments, control standards, regulations with corresponding compliance and enforcement schemes, as well as economic instruments, were policy tools for tightening cooperation towards sustainable development and environmental protection, the addendum states. Policy measures at the international level involved cost-effective assessments of resource consumption, dissemination of information to increase worldwide awareness of the need for cleaner production, price reforms, development aid and continued international, regional and multilateral environmental agreements for prevention and/or efficiency activities to mitigate global environmental problems.
The report of the Ad Hoc Working Group states that Agenda 21 and the Rio Declaration on Environment and Development provided the fundamental framework for further policy on matters relating to industry and sustainable development. Poverty eradication was central to sustainable development strategies, and industry played a key role in that respect. Sustainable industrial policy encompassed a variety of interrelated economic, social and environmental objectives. In order to achieve them, governments needed to integrate economic, social and environmental concerns into their policy and regulatory frameworks, and industry needed to promote sustainable development through sustainable consumption and production, as well as by promoting responsible entrepreneurship, in accordance with country-specific conditions.
Further action was needed to adjust policy approaches that had unintended adverse environmental or social effects, the report states. The policy framework had to foster sustainability, including encouraging companies of all sizes and in all sectors to integrate sustainable development into their business strategies, planning and operations. Governments should encourage domestic private enterprise and economy-wide competitiveness through
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improvements in infrastructure and in educational, financial and legal institutions. It should encourage research and development, while facilitating exports and the liberalization of domestic markets. Those reforms would encourage investment, innovation, diffusion of technology and more efficient use of resources.
Companies, in turn, could enable consumers to make more informed choices, the report states. They could do that by providing reliable and accurate information on the conditions of production, the quality of products and services and through marketing and advertising activities, environmental reporting and improved stakeholder dialogue. For the international community, the principles of transparency, mutual recognition and non-discrimination, which served as building blocks for the multilateral trading system, should also serve as basic principles in such areas as sustainable development. Environmental standards, voluntary codes of conduct and eco-labelling should be viewed as facilitating tools to ensure the fulfilment of environmental objectives, rather than as necessary elements to be checked for the achievement and measurement of sustainability.
The relevant international organizations should study the different voluntary schemes formulated with regard to industry, the report stated. The effect of technologies and the prospects for introducing them elsewhere should also be studied. These studies should create a framework to support the strengthening of efforts by industry. In addition, the guidelines for sustainable consumption should be extended to reflect new understandings about the importance of sustainable development and of the links between consumption and production patterns and the environment.
Statements on Responsible Entrepreneurship
DOMINICK BAUSANO, Manager for Quality and Responsible Care for the Huntsman Corporation, United States, also representing the International Chamber of Commerce and the World Business Council for Sustainable Development, said Agenda 21 recognized the critical role industry played in development. While industry had been an engine of economic and social development, it had also been a source of negative environmental impact. Industry was continually improving its performance, and that improvement required a dialogue between industry, workers and governments.
Responsible entrepreneurship benefitted workers and assisted the continued economic and social development of nations and peoples, he said. It was a market-driven response of the private sector to the needs and concerns of the public. One specific initiative had been the Chamber of Commerce Business Charter for Sustainable Development, meant to foster innovation and flexibility, reduce risk and complement rather than replace existing programmes.
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Another voluntary industry initiative was Responsible Care, a chemical industry programme whose goal was the continued improvement of environment, health and safety performance. Its stakeholders were workers, businesses and the general public. Through that initiative, industries were seeking establishment of the best management practices and environmental improvements. Companies that sought to compete in the global marketplace must address those factors and must adapt to their surroundings, rather than adopting a one-size- fits-all strategy.
BERND HEINS, of the German Mining, Chemical and Trade Unions and Union of Chemical Workers, said the trade union movement he was representing had a worldwide membership. It aims were to protect the natural environment through efficient use of resources, to increase the standard of living without detriment of the environment, to form new partnerships in meeting sustainability targets, to help industry meet its commitments and to tighten the monitoring of targets and deadlines.
The fundamentals of responsible leadership for change were embodied by the specific goals of the trade unions, which were involved in industry the world over, he said. The Trade Unions wanted to help establish and carry out responsible business practices. They wanted to ensure that sustainable development targets were based on conclusive analyses of employment impacts and transit measures, that responsible practices paid off and that environmental and social clauses were prominently featured in international agreements and codes of conduct. They also wanted to ensure accountability through target-setting and reporting and get recognition for the role of workers in seeing that industry contributed to sustainable development.
JAGJIT KAUR PLAHE, of ECO News Africa, Kenya, said responsible entrepreneurship meant taking necessary risks to do what was right -- not just for profit, but to sustain the community and environment. It was ironic that business and industry were noted for creating external risks to the environment, and it was a mistake to lump all companies into one group; some were responsible and some not. In looking at business practices, it was necessary to look beyond public relations departments.
Voluntary initiatives lacked credibility because they had so often been relied upon in place of regulations, she said. Thus, discussions of sustainable development were hampered by the lack of credibility when it came to voluntary initiatives. To increase the credibility of such measures, auditing practices had to be improved, information had to be made available, and the question of how much information should be made available to the public had to be determined. There were many issues to clarify and examine, involving the need for transparency, independent verification, standardization and stakeholder involvement with companies.
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Voluntary initiatives were not an excuse for hiding practices from the public, she said. Non-governmental organizations (NGOs) sometimes claimed that voluntary initiatives did not work, but most NGOs would agree that companies should be encouraged to take those initiatives. The answer was that corporate responsibility could not exist without accountability. The relative weaknesses and effectiveness of companies and voluntary initiatives had to be assessed by governments through comprehensive reviews of practices in all industries, from travel through the environmental sector. That would enable the development of an approach to curing the problems of unsustainable development.
BALWAJ BHANOT, Deputy Director General of the Indian Ministry of Industry of India, said most businesses in developing countries were owner- driven and technologies were used for the benefit of companies which paid little attention to the environment or the society around them. Many businesses in developing countries were engaged in creating products that had been abandoned by the developed world because they were polluting and harmful. While industry in the developed world had grown responsive to the public and to environmental concerns, companies in developing countries found it difficult to adopt the ideal of accountability to the public and shareholders. Those companies were beginning to adopt such practices and might come to an understanding of what it meant to be eco-friendly. There must also be restraint from the developed world, which should halt the export of technologies which were not eco-friendly and generated risk.
PHILLIP WARD, Head of the Energy, Environment and Waste Directorate in the Department of Environment, Transport and Regions of the United Kingdom, spoke on behalf of the European Union. He said that responsible entrepreneurship was for all stakeholders, small and large alike. Such entrepreneurship was creating eco-efficient companies and was likely to cause sweeping changes in production and consumption. However, eco-efficiency did not necessarily address the social dimension of sustainable development.
Creating an environment for responsible entrepreneurship was a challenge facing Governments, he said. While there might be occasional conflicts between industry and government, both must realize that viable economic performance, eco-efficiency and safety were beneficial to all. Industry should commit to sustainable development and comply with international labour conventions and other instruments, imposing high environmental standards both at home and abroad. More work should be done by Governments to develop a policy agenda for sustainable development with social and environmental themes. Governments would have to act as facilitators rather than regulators in that effort.
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Discussions
In a subsequent discussion, the Commission heard views from representatives of industry, trade unions, NGOs, interest groups and Member States on the question of responsible entrepreneurship. Much discussion focused on the issue of voluntary initiatives by industry and the need for governmental monitoring of the impact of industry on the environment.
A trade union representative supported a review of voluntary initiatives, stating that such initiatives must not be seen as substitutes for regulations. A representative of industry said there was irony in the idea of regulating voluntary initiatives but he considered the proposal interesting and worthy of further discussion.
Responsible entrepreneurship meant a joining of industrial, environmental and social interests, an industry representative said. Another said there was agreement among members of the business community on the need for transparency and public accountability.
One speaker said it had been demonstrated that profitability was not incompatible with responsibility. Another said the fact that small companies in developing countries could not always afford to adopt eco-friendly practices was a problem that should be addressed. Sustainable development must include economic development, the Commission was told.
A government representative said that such core labour standards as freedom of association, the right to bargain freely and worker safety did not represent a threat to business freedom; rather, they encouraged good and successful business practices. Another stressed that the best business practices must be applied all over the world, not just in the enterprise's home country.
One trade union representative said that change in industry was not a gift sent from heaven but the result of strong pressure by the public and Governments to improve practices; such pressure must continue. Another stressed the importance of pursuing the dialogue with industry.
An industry representative drew attention to the situation in the non- ferrous metal industry, where there was a new trend to adopt environmental standards that went far beyond what was required by law. That industry had found that openness, transparency and stakeholder meetings were the way to advance.
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Concluding Statements
NITIN DESAI, Under-Secretary-General for Economic and Social Affairs, said that when the Commission was set up, there was a question of whether the word "responsible" or "sustainable" should be used in the title. The answer was determined by the consideration that the former implied too much regulation.
There were economic, ecological and social dimensions to sustainable development, he said. It was possible that national processes were needed for industry to be more involved in sustainable development, but that required careful consideration of what kinds of processes would be involved at the national level and what issues they would address. Integration of the Commission's work with that of other relevant United Nations bodies could be useful in such an analysis.
CIELITO HABITO (Philippines) said the issue of voluntary initiatives had become as important as legislation. There was a problem with those initiatives, because they were unquantifiable, but their purpose was to be helpful. Voluntary initiatives provided flexibility, but obviously there was more to be done before industry became more fully involved in sustainable development.
The question of how medium-sized and small businesses could become more involved in sustainable development remained open, he said. Efforts should focus on identifying partnerships. All the development tools should be considered, including government regulations, market incentives and monetary inducements. Distinctions should be made clear, for example, between the situation in developing and industrialized countries, as well as between responsible and irresponsible companies.
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