BROADER SOCIAL ROLES FOR BUSINESS WILL COMPLEMENT SEARCH FOR PROFIT, SECRETARY-GENERAL TELLS SWISS BUSINESS COMMUNITY

BROADER SOCIAL ROLES FOR BUSINESS WILL COMPLEMENT SEARCH FOR PROFIT,

SECRETARY-GENERAL TELLS SWISS BUSINESS COMMUNITY

Following is the text of an address made by Secretary-General Kofi Annan today in Zurich, Switzerland, to the Swiss business community:

Thank you for this wonderful welcome, and thank you, Councillor Deiss, for that very kind introduction.  It is very good to be back in Switzerland.  I have always felt at home here, ever since I was a student in Geneva in the early 1960s.  One of the great pleasures of my present job is that it brings me back to your country several times a year.

It was a special pleasure last year when I was able to come in August -- not on business, for once, but to spend some days walking in the Alps, under the expert guidance of your then President, Adolf Ogi. 

And it is a great pleasure for me now to come on an official visit to Switzerland, and to meet the leaders of business as well as politics.  I am especially grateful to Crédit Suisse for organizing and hosting this meeting.

For centuries, the Swiss people have been respected throughout the world for their success in defending their freedom and living together in peace, while agreeing to differ in language and religion.  If only that model had been as much imitated as it is admired! 

Prosperity is another word that the world has come to associate with Switzerland, and especially with this great city, which is an almost legendary centre of finance and industry. 

Of course, the Swiss were generous and hospitable long before they became prosperous.  But in recent times your prosperity has enabled you to be particularly generous to the United Nations -- both as a host country and as a major contributor to almost all our funds and programmes.  For this we are extremely grateful -– as, I believe, are the people of the poor and war-torn countries whom we are trying to help.  Indeed, I wish many of our Member States were as strong and reliable in their support of the Organization as you are.

Anyway, I have not come here to make the case for Swiss membership of the United Nations, or to interfere in the process by which you will take a decision on that subject next year.  Whatever my private hopes, I believe the Swiss people must make that decision for themselves, without any external pressure.  And I know

that, whichever way you decide, the United Nations will still be able to count you among its strongest friends.

No.  I have come here to say thank you again to the Swiss people for their generous support, and particularly to the Swiss business community, which has done so much to make that generosity possible.  And I want to suggest some ways in which the business community –- in Switzerland and elsewhere -– can help make this a better, safer and happier world for all who live in it.

Perhaps many of you will say that you already do that, since it is business enterprise that creates wealth.  And that is undoubtedly true.

Perhaps some of you will say that “the business of business is business”; meaning that your role is to make profits for yourselves and your shareholders, and that anything beyond that is the responsibility of elected governments.

And that too is true, or almost true.  Clearly business is about making profits, and public policy is the responsibility of States.  If the twentieth century taught us anything, it is that when one tries to do the other’s job, all sorts of things go wrong.

But there is an area in between, where business and government need to work in partnership. 

Most business men and women have long known that profits are not made in a social vacuum.  You need rules and standards that everyone accepts.  You need to be confident that your competitors will play by those rules and observe those standards, and that if they don’t they will not get away with it.

Business is hard to sustain in conditions of anarchy, rampant crime or political insecurity.  You need to have confidence in the police -- but also, ultimately, in the social order that the police are there to uphold.  If too many members of society feel they have no stake in that social order, it will sooner or later collapse, taking your investment with it.

You also need healthy customers, with money in their pockets.  And you need skilled workers.  You may be happy to train them yourself, but you expect that they will come to you with at least a basic education. 

Finally, if you hope to stay in business more than a few years you need a stable and sustainable natural environment.

All that, you may say, is the business of government.  But governments, on their side, have learnt that not all social objectives can be achieved by taxing and spending. 

And so governments are looking for partners -– not only in the world of business but also in what is sometimes called civil society, or sometimes the voluntary sector.  These partners come in many shapes and sizes -– charitable foundations, pressure groups, think tanks, universities, humanitarian relief agencies...  I’m sure you can think of others.  What they have in common is that they are neither State-controlled, nor run mainly for profit.  They are composed

of people who come together voluntarily to work for some common purpose, broad or narrow, in which they all believe.

In most countries, it is now quite normal for these three forces –- business, government, and the voluntary sector -– to work together to strengthen the local or national community.  Corporations are happy to contribute to this common effort, for three reasons:

-- it is good for their reputation – and so for their particular business;

-- they know a stronger community means a safer, more buoyant market for business in general;

-- and many have found that they get a whole new level of effort and commitment from their own staff, when individuals feel that their company is serving a cause that they themselves believe in.

If that is true at the national level, where there are well established governments with power and authority to enforce the rules and provide social services, how much truer it must be of the international community, which is cemented, and its rules upheld, mainly by voluntary cooperation.

Governments remain, for the most part, preoccupied with local concerns, while business and civil society are increasingly global.  It is up to you, who want to do business in a global market, to do whatever you can to create and sustain a sense of global community.

That may sound a bit abstract and theoretical.  In reality, it is very practical.

Large parts of the world’s population at this moment are to all intents and purposes outside the global market.  They hardly produce or consume anything.  Their needs are enormous, and their desire for goods and services is as strong as anyone else’s.  But at present they cannot pay for anything, because they are not in a position to earn anything.  They are crippled by hunger, disease, ignorance and isolation -– all of which are aspects of poverty.  In many places their very existence is threatened, either by violence or by the degradation of the natural environment.

But their condition is curable. 

Our planet is blessed with the resources to feed its 6 billion people, and more.  Only at present, at least 1 billion of those people are going hungry, while surplus food rots in warehouses. 

The diseases from which so many people in poor countries are suffering and dying –- such as malaria, tuberculosis, even HIV/AIDS –- are preventable and treatable.  Only at present, less than 10 per cent of the world’s health research spending is devoted to them.  And poor countries can spend only $5 to $10 per

person on health each year, whereas they need to spend at least $60 to deliver even a reasonable minimum service.

      The same is true for education.  For an extra expenditure of $7 billion a year, we could provide primary schooling for all the children in developing countries who are now missing out on it.

The isolation of so many poor communities could be broken by an even smaller investment in new information technology –- from mobile telephones to internet access points.  Already, such technology is enabling rural women in Bangladesh to market their textiles, and fishermen in the Indian state of Kerala to get a better price for their products. 

But governments need to open the door to this kind of investment, by removing the bureaucratic obstacles and exorbitant charges that national telecommunications monopolies so often impose.

Neither governments by themselves nor business by itself is going to solve all these problems.  But working together, and with voluntary organizations, they can make a big difference.

It is the same with the environmental challenge.  Only governments can create and enforce environmental regulations, and devise more environment-friendly incentives for markets to respond to.  But the actual investment in achieving greater energy efficiency and developing more sustainable technologies will have to come from the private sector.

In the case of violent conflict, clearly the main responsibility lies with governments.  But corporations do have a responsibility to avoid fuelling or exploiting conflict for private gain.  And they sometimes also have opportunities to play a role in resolving or preventing conflict, for instance by acting as a discreet channel of communication between adversaries, or by matching their investments in oil production or mining with an investment in the social and economic development of the surrounding communities.

Most of you will have heard by now of the Global Compact between the United Nations, the private sector and civil society, which I first proposed at Davos in 1999.  Indeed, I'm glad to say that many leading Swiss companies have responded to my call and adhered to the Compact.  By so doing, they agree to incorporate universal principles of human rights, labour standards and respect for the environment into their corporate practice. 

In asking other companies to follow their example, I am not asking them to sacrifice their corporate interests.  On the contrary, I believe they will find that these principles provide the basis for an excellent corporate culture -- a set of values that employees from all over the world can identify with, and will be glad to see their company reflect.

One of the things we are trying to do, within the framework of the Compact, is to conduct policy dialogues on issues where living up to these principles in day to day business practice can pose real and difficult dilemmas.  And in fact

the first such dialogue, which we inaugurated in New York last week, is focused precisely on the role of the private sector in zones of conflict.

I do not pretend that solving these global problems is a simple matter.  Nor, once again, am I suggesting that the primary responsibility lies with corporations.  These problems will not be solved without resolute action by governments, both in the developed and the developing world.  They have to live up to the targets their leaders set themselves at the United Nations Millennium Summit last September. 

Many of these problems, indeed -– and I would cite the health problems of the developing world in particular -– will not be solved without a significant financial assistance from developed countries, on which only the governments and peoples of those countries can decide.

But it should be clear by now, to the leaders of any truly global corporation, that they have both a strong interest in solving these problems and an opportunity to help do so. 

Let me suggest four specific things which I believe corporations can and should do:

-- First, help us win the support of all companies for the Global Compact.  That means spreading the idea that, in today's world, corporate social responsibility means aligning yourself with the needs of the world's poor, and with the goals for humanity which were adopted by the leaders of all the States in the world, in last year's Millennium Declaration.

-- Secondly, those of you involved in health issues must play a bigger part -- working with governments, voluntary agencies, academic researchers, and us at the United Nations -- in finding and implementing comprehensive solutions to the great health challenges of our time.  HIV/AIDS is now surely the most urgent of these, but we can only tackle it successfully within the context of a broader effort to raise the overall standard of health care in poor countries.

-- Thirdly, set about building the markets of the future.  There are many poor countries which have made heroic efforts to attract investment, but have not succeeded because they lack the necessary infrastructure, or because their market is too small, so that to individual companies the risks and costs of investing seem to outweigh the potential gain.  In such cases you can act together, working with governments, to reduce those risks and costs, or to make the opportunities better known. 

-- Finally, make yourselves advocates of more enlightened government policies.  Your global perspective should enable you to break through the barriers of indifference, or narrow self-interest, and urge the merits of policies that would serve global interests -- those shared by rich and poor alike.  I mean, of course, policies such as opening the markets of rich countries to products from poorer ones, or granting more generous debt relief, and new aid in the form of grants, to countries that really commit themselves to improving the lot of all their people.

These broader social roles, of partner and advocate, are increasingly understood in the corporate world as complementing, and not contradicting, its primary aim of investing for profit.  More and more corporate leaders are coming to understand that a global market requires global corporate citizenship.

      Switzerland, by virtue of its size and geographical position, has long understood the need to combine national independence with an active interest in the outside world.  Its companies are global leaders in many important sectors.  I am sure, Ladies and Gentlemen, that you will also take the lead in global citizenship!  Thank you very much.

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