Speech by Mr S Iswaran, Minister, Prime Minister’s Office and Second Minister for Home Affairs and Trade & Industry at the 3rd International Singapore Compact CSR Summit at the Singapore Grand Copthorne Waterfront Hotel

Ms Olivia Lum
President, Singapore Compact for CSR

Your Excellencies,

Distinguished Guests,

Ladies and Gentlemen,

A very good morning to all of you.

Introduction

I am pleased to join you this morning at the third International Singapore Compact Corporate Social Responsibility Summit, and I would like to thank Ms Olivia Lum and the organising team for their kind invitation.

Growing Importance of CSR

2. The global CSR movement has gained considerable momentum and prominence, especially in recent years. There are several reasons for this. One important contributory factor is the increased importance attached to sustainable development. In the broadest sense, it can be defined as development that meets present needs without compromising the ability of future generations to meet their own. Many countries have set out specific sustainable development targets in order to ensure continued growth in the longer term. These efforts underscore a heightened concern over the impact of human endeavour, and corporate activities, on the communities within which they occur, the natural resources they consume, and the environment that we share.

3. A second, and consequential factor, has been the increased attention paid to CSR by diverse groups of stakeholders, and their activism in this regard. Customers, investors, business associates, labour movements and international organizations increasingly expect business operations to be sensitive to their community’s needs, and sympathetic to the environment. It is an essential component of an enterprise’s core values, and one that is of growing importance to its pool of employee talent as well.

4. Thirdly, partly in recognition of these shifts, CSR has gained broad traction as an essential aspect of managerial accountability, and an integral component of corporate strategy – and it is by no means confined to developed economies. The Global Reporting Initiative (GRI) revealed that in 2010 there was an increase in CSR and sustainability reporting from developing countries and emerging economies. Of the close to 1,400 reports that were submitted, 308 had come from non-OECD countries and 143 reports came from BRIC economics – an increase of 33 and 22 percent, respectively, from the preceding year.

International Efforts to Promote CSR

5. The global regulatory environment has evolved in tandem with these shifts. In recognition of the importance of sustainable development, intergovernmental bodies such as the OECD, UN Global Compact and the Global Reporting Initiative (GRI) have embarked on international efforts to promote CSR and sustainability reporting.

6. For example, the OECD Guidelines for Multinational Enterprises encourage companies to contribute to economic, social and environmental progress through the adoption of responsible business practices. The guidelines encompass wide-ranging areas such as disclosure, environment, consumer interests, employment and industrial relations.

7. The Global Reporting Initiative (GRI), which drives sustainability reporting, has set goals for all large and medium-size companies in OECD countries and large emerging economies to report on their Environmental, Social and Governance (ESG) performance by 2015. It also aims to establish a generally accepted and applied international standard to integrate financial and ESG reporting by all organizations by 2020.

8. In addition, some governments have also taken steps to encourage CSR. In Denmark, the 1100 largest Danish companies, investors and state-owned companies are required to include information on CSR in their annual financial reports. The Danish government expects this statutory requirement to help improve the international competitiveness of its companies.

9. Closer to home, the ASEAN economies are also responding to this call for responsible and sustainable businesses practices. The ASEAN CSR network, which was launched at this event last year, aims to spearhead the promotion of CSR in the region. One year after its launch, the ASEAN CSR Network has worked with the ASEAN Foundation to:

a. Advocate CSR through information, education, and communication campaigns;
b. Build the capacity of ASEAN Member States in this field;
c. Engage in dialogues with various CSR groups to share knowledge and best practices; and
d. Explore collaboration with ASEAN stakeholders and Dialogue Partners.

Progress in the CSR Movement in Singapore

10. More recently, the Singapore Exchange (SGX) introduced a Sustainability Reporting Guide for its listed companies on 27 June 2011. This guide is the Singapore Exchange’s response to the call from global investors and other stakeholders for companies to espouse sustainability, and to report on practices. These guidelines, though not mandatory, are expected to cultivate the reporting of environmental and social impact as a good practice amongst Singapore companies.

11. Singapore Compact for CSR plays an important role in driving the local CSR movement. You encourage companies to embrace CSR, and help them through training sessions on the GRI reporting framework. With support from partners such as National Trades Union Congress (NTUC), Singapore Business Federation (SBF), Singapore National Employers Federation (SNEF) and the UN Global Compact, Singapore Compact for CSR has also been engaging stakeholders through platforms such as this Summit. Your partnership with City Developments Limited (CDL) to launch the Young CSR Leaders Award is another example of a platform that the Singapore Compact has built to promote CSR amongst students and SMEs in Singapore.

12. Today, as we celebrate the efforts of the winners of the Singapore Compact CSR Awards, and the CDL-Singapore Compact Young CSR Leaders Award, I would like to commend Singapore Compact and all your partners on your good work in promoting CSR in Singapore. I urge you to continue diligently in your efforts to reach out to companies, help them appreciate the benefits of CSR, and guide them on how to integrate CSR into their business strategy.

Incorporating CSR into Business Strategy

13. Companies around the world have come to realise that good CSR is also smart business. Peter Vosser, CEO of Royal Dutch Shell, puts it succinctly – it is not that companies are not interested in profits. But they also realize that responsible behavior and profitability go hand in hand. Shell established the Shell Foundation as its CSR arm in 2000. Today, the Foundation runs programmes to tackle pollution in developing world cities, as well as to create jobs and improve livelihoods within the local communities in their countries of operation. The Shell Eco-Marathon encourages youths around the world to think about sustainable mobility by challenging them to design and build energy-efficient vehicles. CSR is Shell’s way of giving back to the community, and in turn, a strong CSR culture has enabled Shell to continue to attract and retain top talent.

14. But, CSR is not the province of MNCs and large companies alone. Smaller companies too can embrace and benefit from CSR. Origin Exterminators, a pest management company, is a case in point. It is an SME that strongly believes in CSR which has been embedded in its operations. Instead of traditional methods, which release large volumes of insecticides and other chemicals into the environment, Origin consistently innovates to develop new pest control solutions that reduce damage to the environment.

15. In turn, such sound business practices that promote sustainable development have won Origin support from the more discerning customers, at home and in the region. Origin’s CSR activities have also earned the loyalty, and fueled the passions, of its staff. For example, Origin’s involvement in the Kreta Ayer-Kim Seng Stop Pest Project as a technical consultant elicited enthusiastic support and volunteers from the members of its staff.

16. Clearly, well-considered and implemented CSR programmes can help companies engender confidence and goodwill among diverse stakeholders, strengthen brand equity, and enhance their standing as preferred employers.

17. Under the 2009 Sustainable Singapore Blueprint, our 2030 targets include a 35 percent improvement in energy efficiency from 2005 levels, a 70 percent recycling rate, as well as a reduction of fine particles in the air and sulphur dioxide levels. Our aim is to encourage greater community ownership and participation in building a clean, green and resource-efficient Singapore. I therefore encourage all our companies to seriously think about how you can incorporate CSR in your business plans and contribute towards sustainable development in Singapore and other countries that you operate in.

Conclusion

18. CSR is evolving and it is important that we have opportunities to learn from best practices around the world. I think it is particularly important that Singapore plays a catalytic role in this context. As a highly urbanised city-state and natural resource-poor economy, we have good domestic reasons to pay heed to the sustainability of our economic activities. Also, the CSR initiatives of Singapore-based companies will take on added significance as the footprint of their operations grows regionally. I therefore congratulate Singapore Compact for CSR on organizing this International Summit which will serve as an excellent platform for the exchange of views and ideas on this important subject. I wish all of you a productive and fruitful time at this Summit.

17. Thank you.

Source: Ministry of Trade & Industry