NGOs: dialogue or refusal to engage?
Many external bodies strongly endorse the way our social reporting is centred on engaging with stakeholders in dialogue. The dialogue is certainly bringing us valuable insights into what stakeholders expect of us in living by our Business Principles – Mutual Benefit, Responsible Product Stewardship and Good Corporate Conduct – and it is helping us to focus on what really are the key issues in managing our business responsibly.
This year I joined the dialogue, getting to grips with supply chain topics in Kenya. I believe everyone present felt it was constructive to extend the UK dialogue overseas, so that both UK and local stakeholders could explore things ‘on the ground’ from all perspectives. I was impressed by the willingness of the many stakeholders who took part to engage candidly, to build two-way learning and to seek solutions.
I am therefore disappointed that some of our most vocal UK-based critics continue to decline invitations to dialogue. I appreciate that dialogue takes time and effort, which NGOs can find hard to commit. But I question whether it is always wise for NGOs to refuse dialogue, yet commit the resources they do have to attacking multinational companies – often the very companies that are working hardest to address their concerns.
Some of these criticisms seem to stem from an ideology that big business can rarely, if ever, do any good. Yet as Kofi Annan, the UN Secretary General, said about achieving sustainable development: “It is only by mobilising the corporate sector that we can make significant progress.”
I agree that alienating business is not the pathway to sustainable development, and I speak as someone with a fair understanding of – and passionate interest in – the development issues facing Africa.
I am sure that everyone here today would agree, as I do, that it is right and necessary to address poverty, lack of skills, lack of social infrastructure and lack of opportunity – huge problems for many developing countries. However, this vast and complex challenge needs an integrated range of constructive inputs – from governments, communities, NGOs, development organisations and, of course, from business. Contributions of multinational business
It is often overlooked that the presence of multinational businesses in developing nations is making real contributions to local development goals. It is helping governments to build on all three pillars of sustainable development – economic, social and environmental. A lasting way to tackle poverty is by steadily creating employment, economic security and self-sufficiency. Ultimately, only economic growth can provide the means to pay for environmental improvements and social progress.
It is frequently multinational companies that introduce skills, training and international standards, for example in labour practices, reducing environmental impacts, improving workplace safety and providing community support.
For example, British American Tobacco’s programmes with farmers in 22 countries – from whom we buy two thirds of our leaf – aim to help them become skilled farmers overall, not only skilled tobacco farmers. We provide training in crop management, safer ways of working and good environmental practice, and pay farmers promptly at prices that aim to ensure them a fair profit.
In Sri Lanka, our business has pioneered a pension scheme for farmers, where none previously existed. The British American Tobacco Nigeria Foundation is working to reduce poverty through community projects to build sustainability. We helped to establish the Elimination of Child Labour in Tobacco-Growing Foundation, now making real inroads against child labour in more than ten countries. Our Biodiversity Partnership with four major NGOs is supporting community conservation projects, and is also helping us to enhance our own management systems in biodiversity conservation and forestry. Confrontation or co-operation?
The key point is that few companies seeking to embrace today’s changing ideas of corporate responsibility can do so without constructive engagement, dialogue and partnerships. May I therefore thank those NGOs who do come to dialogue and who work alongside us in projects on the ground, recognising that they can help companies in many ways.
That’s why our door is open, including to our critics. We genuinely seek to listen and find solutions. Like any large organisation, I am sure we deserve criticism from time to time. We take well-founded rebukes seriously and work to put right things that really are wrong, and where we have a mandate to do so.
To those who criticise yet refuse to engage, I ask: is your insistence on confrontation rather than co-operation really the best way to achieve your own goals?
I find it ironic that companies that do embrace CSR are not only criticised by some NGOs, but also by serious business commentators who argue that the only proper goal of companies is the honest and legal pursuit of profit. It has been argued that the most important book on corporate responsibility is Adam Smith’s 18th century ‘Wealth of Nations’, in which he wrote: “it is not from the benevolence of the butcher…or the baker that we expect our dinner, but from their regard to their own interest”. In other words, the case is strongly put that business achieves far more for society by being left to pursue enlightened commercial self interest than by attempting to embrace any other ways of serving society.
Getting CSR right is therefore not easy, especially for businesses like ours in controversial sectors. However, criticisms will not deter us from working to balance our responsibilities to all our stakeholders, including our shareholders, who have entrusted us with the management of their business.
The real risk is that frequent and sometimes ill-founded attacks on large and committed companies will scare off those companies with limited resources and who fear that they can only lose by embracing CSR. Yet it is often smaller businesses, and local businesses in developing countries, that should focus most on raising standards.
There may be some anti-business campaigners whose agenda is not served by business acting responsibly. But I cannot believe that this is what those who really seek progress actually want. Harm reduction
There is one further topic I would like to touch on briefly before ending.
We are often asked by stakeholders: can you make a cigarette that causes less harm? We are certainly pursuing this actively in our research and development work on reduced-exposure products.
However, the scientific challenges are considerable, and they require constructive engagement with governments and their regulatory advisors, not least about how measures of reduced harm might be established.
Some regulators are concerned that encouraging such products may discourage consumers from quitting. Some are simply reluctant to engage in discussions with the tobacco industry.
However, we are starting to see some emerging scientific and regulatory opinion that reduced-exposure products should be encouraged.
We therefore seek to work constructively with governments and their external advisors to help set new standards for tobacco regulation that focus on harm reduction, while preserving informed adult choice and a competitive business environment. Current trading and prospects
Finally, turning to what traditionalists would consider to be our real business, the AGM usually presents an opportunity for comment on our prospects for the current year. Given that we will be announcing the first quarter’s results next week, it would not be appropriate for me to make any comments today on our prospects for 2005.
Let me assure shareholders, however, that our long term goal remains to grow earnings per share, on average, by high single figures and to pay out at least half our earnings in dividends. We look forward to the future of your company with confidence.
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