The UK is the first European country to have appointed a minister for corporate social responsibility. Ethical Performance talked to Kim Howells about his early thoughts on the role of government in helping business promote CSR policies
Business ethics leapt up the policy agenda when Stephen Byers, the trade and industry secretary, announced in March that one of his junior ministers, Kim Howells, was to become minister for corporate social responsibility.
This new responsibility follows the recommendation of a team from the government’s Social Exclusion Unit, and will be shouldered by Howells in addition to his existing duties on corporate and consumer affairs.
In that existing role he has been a powerful voice for consumers, complaining publicly about anything from mortgage mis-selling to the price of soft drinks in pubs. But in his first statements since taking up his new duties, the minister has been at pains to calm any concerns in the business world that his job is to be an ethical policeman.
He does not even like the term ‘ethics’.
‘I am an enemy of the term ‘ethics,’ he says. ‘None of these subjects are easy – they are not arguments that are subject to facile solutions, still less to politicians standing up and saying what’s ethical.’
Howells cites Barclays’ recent branch closures as an example: ‘They made a business decision that could be described as ethical because they want to stay in business. They have a duty to their employees to remain viable, as well as to communities.’ And he adds that the overtly ethical Co-operative Bank was the first to leave the high street in his constituency town of Pontypridd.
The minister does not believe the state can do better than the market and says he will merely do his best to persuade companies it is in their own interest to look after employees, care for communities, reduce their impact on the environment and ensure children are not making their products in third world sweatshops.
Persuasion will be based on the by now well-worn message that corporate social responsibility (CSR) is good for shareholders because irresponsible companies will be exposed and suffer financially.
‘I believe there are good commercial reasons for CSR and the government can facilitate the case and publicise examples of good practice,’ says Howells. ‘But there is absolutely no point in us laying down rules if the net effect is to bankrupt businesses. You can’t force firms to behave more compassionately.
‘Ultimately they are commercial companies and will make decisions about the way they see [social issues] affecting their shareholders. But there is a wider community they have got to be concerned about.’
Despite his market orientation, Howells has a blunt message for those companies that believe business is most responsible when it concentrates on making money, leaving the government to look after social issues.
‘They are missing a trick,’ he says. ‘There is value to be added by being socially responsible.’
Reputation, rather than ethics, is the minister’s watchword. Using a story that he has already cited in a handful of public appearances in his CSR role, Howells talks about the damage caused by the revelation that child labour had been used to make rugby balls for the last World Cup. ‘That is not acceptable,’ he says. ‘Even hard-nosed rugby fans know it’s not right. And if businesses expect to ignore things like that they will be in big trouble.’
He stresses that he remains wedded to deregulation, rather than more demands on business. But he believes companies will face more demands from consumers for information on which to base buying decisions.
While he says he believes in transparency because it will allow people to vote with their feet and their money, he adds that transparency will also be left to market forces. Companies will not be forced to publish more information about their social and environmental affairs.
‘I don’t want to say companies must do it [publish information]. Instead I say to consumers: ask what companies are involved in. The more information they [consumers] have, the better the decisions they can take about the products and services they buy – including an understanding of what companies are doing in terms of social responsibility.’
The minister warns he will have vocal organizations such as Greenpeace on his side. ‘Life will be uncomfortable for companies that don’t care. That is the message I have to take around the country. But it’s a message that the most successful businesses know already.’