By Richard Heald

A speech given to the CII.

I would like to thank the CII for inviting me to speak on this exciting topic, to share the experiences of the UK and to cautiously outline some thoughts of CORPORATE GLOBAL CITIZENSHIP (CGC). I would like to thank the Department of Industrial Policy & Promotion of the Ministry of Commerce & Industry & Textiles as well as the Government of Andhra Pradesh for their foresight and support they have given to this conclave. I would like to thank Rajive Kaul for his Chairmanship for his comments and to my fellow panelists whose addresses I eagerly await as I am sure theirs will be more insightful that mine.

It is now some 4 years since President Obama coined the phrase - "Global Citizen" - in his memorable speech in Berlin.

It is pertinent that we should be examining Corporate Global Citizenship in the run up to the World Economic Forum in Davos as the WEF has been so vocal in promoting it the concept.

And it is particularly important that we should be examining the concept at a time when business leaders in almost every country and in every sector face challenging circumstances.

The pressure is on to maintain and indeed increase returns for shareholders. Expectations on businesses are high. It would be easy to say corporate responsibility is all too difficult, too "non-core" for me to divert resources and attention from the imperatives of cash or earnings generation.

However, it is just in such time, that corporates should be re-enforcing their role within the globalized business environment as leaders in citizenship. Efforts made now to take the initiative in governance, in the Big Society, in helping governments deliver growth, in fostering the public role of private sector or in stemming failures in corporate governance and ethics will all pay dividends during and post the current crisis.

CEOs have little choice but to respond to new pressures and deliver - not only in terms of credible performance but as a socially responsible company. Our shareholders and stakeholders demand it. Indeed, the increase in transparent and public measurement means that inaction is not an option.

All the more so since being a visible and active Corporate Global Citizen is increasingly becoming an entry ticket or method of recognised qualification into certain countries and certain classes of corporate activities.

So, what is Corporate Global Citizenship (CGC)?

There is no single, commonly agreed definition to describe this.

Many see it purely as Corporate Social Responsibility (CSR) Mark 2, CSR plus or CSR on steroids, call it what you will.

However, it is clearly more. Increased globalization combined with increased activism amongst the business world means that issues such as sustainability, social and environmental risks, the supply chain, climate change, fair trade, labour relations in developing countries have become integral to business and to CGC.

But it is a sophisticated concept. CGC measures inputs and impacts not merely outputs. As such, as CGC becomes embedded into the executive psyche and the Board room debates, it begins to affect corporate behaviors for the positive.

No longer are such programs viewed as attempts to "Save the World". Instead, increasingly, they are seen as catalysts for "Changing the World" in a sustainable way.

In today's closely interconnected business environment, the freedom to operate in an international market and to make profits entails a responsibility of being engaged within society across boundaries. Corporate Global Citizenship is about responsible business.

Given all the above, how can Corporate Global Citizenship be defined for the 21st century? (quoting WEF)

1. Corporate citizenship has to be part of a company's business model. An enterprise must balance the expectations of its wide range of stakeholders.
2. Businesses should take advantage of difficult times by investing in growth drivers and striving for a more performance-oriented corporate culture.
3. As such, transparency is critical in any engagement with governments and regulators at every level.

Second main point could be CGC in the UK and the role you see of UK companies operating in India and what you see as the factors they must consider

On 1^st December 2012, some 300 senior UK business leaders met in London for the AGM of the UK charity "Business In the Community". In the opening address, the audience was urged to reconnect the "financial with the ethical". To quote:-

"Yes, we need to build economic growth and prosperity and there is no shame in a business making a profit but today we are talking about making a profit in a responsible and sustainable way and using those profits to build and support growth in local communities"

Business in the Community…… and I recommend everyone to visit their website on www.bitc.org.uk …………..highlights UK companies that have had a positive impact on our environment and society as well as their business via the Business in the Community's Awards for Excellence and through their CR Index.

Let me give you some examples of the companies they have highlighted:-

Jaguar Land Rover. Jaguar Land Rover (JLR) efforts in environmental innovation were recognised. By integrating environmental strategy into the core business processes JLR is endeavoring to become a long term sustainable business, through increasing efficiency and reducing resource consumption, waste and costs.

IMPACT

The result of the program has been that carbon savings of 40pct have been achieved through optimization

• Reducing the temperature of hot water produced from boilers from 160degrees C to 145 degrees saved some 9,200 tonnes of CO2
• Replacing key components in the production line has saved some 200 tonnes of CO2
• Switching transport from road to rail wherever possible has saved some 1,000 tonnes of CO2

National Grid is another splendid example. National Grid is interestingly one of a few but increasingly common companies which have an independent published annual audit of their CGC looking at a 360 degree view of the impact of their efforts

To give one example of their efforts, National Grid has developed a four year strategy to provide a work environment where employees can flourish, improving health, engagement and wellbeing for themselves, their families and the organisation. The strategy has resulted in a significant reduction in sickness absence, saving the organisation £8.9 million over two years and increased employee engagement ratings by 8% in their annual employee survey with 95% of employees completing the survey.

Impact

• sickness reduction has resulted in £8.9 million savings over 2 years (2008 - March 2011)
• the reduction in absence days has equated to 35,000 absence days over 2008 until March 2011
• an increase of 8% of employees taking part in the annual employee survey, with 95% of employees now completing the survey
• 61% of employees are electing to have health screenings
• 57% of employees are tracking their health metrics via kiosks

Responsible business is not for big businesses alone.

Maloney's Retail Stores - an independently run family owned business operates stores that are a vital part of their local community. Their concern for the environment has seen them become anchor stores for their community, working with schools, community groups and their suppliers. Since the implementation of their community plan they have seen a 10% increase in sales across their stores and this initiative has won them excellence award.

And we are not solely talking about the manufacturing sector - Eversheds, a legal firm, PwC and Ernst and Young, the accounting firms and Barclays Bank all feature prominently in the awards.

We at the UKIBC urge British companies operating in India to practice good corporate governance and engage the local communities. Indeed, UK companies which apply best practice domestically - and many encourage their supply changes to do similarly - easily and migrate these practices internationally and into India.

Third if CSR is domestically orientated and CGC focuses on cross border practices, should a company operating outside their home market focus their main thrust be on different areas than what they usually focus on at home?

Clearly, there are subtleties. Issues in one environment are not the same as those in another. One size does not fit all. But if the mindset- the corporate philosophy - is embedded, CGC can be adapted.

Currently in Britain, social challenges are mainly jobless growth and the impact of economic slowdown. In India, the societal needs are different - social mobility, availability of skills, eco-sustainability, access and affordability of essential products and services remains key business agenda - especially, access to essential medicines, for example, has become a key debating point for activists with regards to the EU-India FTA trade.

Many UK companies have successfully and commendably done just that. JCB is a good example which has used its extensive Indian base and its position within the infrastructure market to actively campaign to get better health and safety standards in the Indian construction sector as well as to train to cover both in company and 3^rd party needs.

But Indian businesses have a long track record of philanthropy and social commitments. At the same time, they are nothing if not innovative, making products and services accessible, to many similar markets abroad.

Like the Victorians in Britain, many Indian businesses and their owners have been at the forefront of developing community-facing strategies. We all know the excellent work being done across by Indian companies in many sectors…………..and I refrain from naming them in the knowledge that I will offend those I will naturally miss out.

But there are new strands to these strategies - elements of sustainability, of capacity building and, dare I say, of social activism which are increasingly and commendably coming to the fore. The stand taken by the corporate sector to improve corporate governance, to recognise the need of sustainable business models and critically, to assist in the fight to stamp out corruption is a sign of growing self-confidence. We have heard that India and its business will increasingly occupy a prominent position in 21st century. The attitudes of Indian industry have much to be commended and we in the West can learn much from you.

The challenges are many, but now is the time for every company to have an integrated corporate global citizenship strategy in place.

Let me quote from the British author, pamphleteer and revolutionary Thomas Paine in "Rights of Man":

" My country is the world, and my religion is to do good."

But how do you embed that into the corporate philosophy of the company.

A good Corporate Global Citizen sees itself as a stakeholder alongside government and the civil society.

As such, it is important to have your employees on your side, to win their confidence and engagement. Staff should understand and support the core values that the company so that each employee becomes an ambassador for the firm. But to do so it must be the Promoter and the Board where the buy-in has to first occur and frankly it is important to demonstrate tangibly what is in it for them.

There are some initiatives such as the Publish What You Pay Campaign, supported by financier George Soros, the UK Government's Extractive Industries Transparency Initiative and the USUK Voluntary Principles on Security and Human Rights, have all raised awareness of the strategic business importance of these issues and have been actively supported by leading companies.

But we need more.

I made reference earlier to Business in the Community's CR Index. This provides in the UK a robust, independent and transparent measurement of four elements:-

1. the impact within corporate strategy of CGC;
2. how this is organized;
3. how companies manage their performance in the four areas of Community, Environment, Marketplace and Workplace; and,
4. finally, Performance and Impact.

The Index has evolved into both a management tool and a performance tool.

Moreover, it acts as an independent bench market to objectively measure a company's commitment to the core values which underpin being recognised as a Corporate Global Citizen………….

In other words, in the UK, the CR Index is evolving into "an accreditation" as it were.

Let me suggest that as corporate activities in many areas become increasingly sensitized to environmental, social and sustainable issues, businesses will promote their Corporate Global Citizen credentials to underscore their qualifiuactions to participate in socially impactful projects.

In time, and perhaps sooner than we expect, the universal adoption of such an index by the global business community, as a whole, and acceptance of what it says would go a long way to ensure that the core values are embedded into the system, are recognised as a business tool and can be highlighted as an advantage versus the competition.

In conclusions, let me make one final observation. In October 2011, research was undertaken between Business in the Community and IPSOS Mori to test the assertion that there is a link between corporate responsibility and improved share price performance. Based on evidence of some 33 FTSE companies which had all taken part in the CR Index for each of the past 6 years, the research found that the more a company measured its environmental and social impacts, the less volatile its share price.

In fact, amongst the sample those companies taking part in the CSR Index outperformed their FTSE 350 peers on total shareholder return by between 3.3 and 7.7pct through the period 2002 -2007.

THANK YOU.

For a pdf version of the speech click here