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Celebrating the Success of EIRIS's work

The Rt. Hon. Stephen Timms MP,  Former Minister of State for Competitiveness
Kings College,  11 December 2007

I am delighted to be at EIRIS’s celebration this evening, and to have the chance to congratulate this organisation on the achievements over what next year will be 25 years.

We have come a long way in a quarter of a century and I think we do need to pay tribute to the vision of those who took this initiative and decided to focus on this topic 24 years ago. Today everyone talks about CSR – companies compete for new talent on the degree of responsibility reflected in their practices. It wasn’t like that in the early 1980s. Today it is much easier to see how exciting are the possibilities that this topic holds out.

In the 1980s, we were being told that “Greed is good.” A director of one of our major construction firms told me recently that these days, when they have a new graduate employee induction seminar, 70% of the questions raised are about corporate responsibility. That is a big change in mood – a welcome and very heartening change, most striking according to employers among the most able young people – and this institution has been one of those contributing to bringing the change about. It gives companies who depend on being able to recruit the brightest young people a very strong motivation for having a strong programme of responsibility, alongside – of course – mitigating risks, strengthening brands and promoting innovation.

Corporate Responsibility is key to dealing with many of the big challenges we are facing today: poverty in the developing world; sustainable development; climate change; worklessness and disadvantage in Britain. The Government’s message is simple: responsible business is good business. And I want people around the world to be confident that if they are dealing with a UK company then that company will deal responsibly with them – for responsibility to be part of Britain’s brand.

It is vital that investors are properly informed when they make investment decisions. There is no better way for the economic importance of social and environmental concerns to be signalled than for investors to give them weight when choosing where to invest their funds. So I applaud the important work of EIRIS in providing a comprehensive source of independent information on the social, environmental and ethical performance of 2800 companies around the world.

Last year, we strengthened our arrangements in the UK for our National Contact Points for handling complaints of breaches of the OECD guidelines on multinationals. I want to take a further look at this in the New Year. And I hope the work of EIRIS will be strengthened by the Companies Act changes which came into effect at the beginning of October, requiring for the first time listed companies to set out in their annual business review information on social, environmental and supply chain matters which – in the view of the directors – are material to an assessment of the company’s prospects. And I would welcome hearing from you what more you feel Government should be doing to encourage and promote responsibility.

Institutional investors, asset managers, insurance and pension funds represent the savings of millions of individuals. Their role, on behalf of those individuals, should be to create wealth for them over the long term in a sustainable manner.

As Pensions Minister eight years ago, I introduced an amendment to the Pensions Act requiring pension funds to state in their investment principles the extent, if at all, they take into account social and environmental issues in the selection and retention of investments. We have seen since then welcome progress in the amount of information available – and increasing prominence of reporting and disclosure initiatives such as the Carbon Disclosure Project.

Financial institutions have responded to growing and increasingly sophisticated demand by providing a much wider portfolio of products. And investors have demonstrated successful engagement with companies to improve how they handle social and environmental challenges.

I am greatly encouraged by the increasing interest in responsible investment. At the end of September this year, the Investment Management Association reported an increase of nearly 600% in net new investments in ethical funds compared with the same quarter last year.

But there is still a lot more to do. I look forward to further mainstreaming of socially responsible investment practices, with London acting as a global leader in this area.

I am sure we will see further progress in the New Year. The UN Climate Change Conference is underway in Bali, launching negotiations leading to a post-2012 global agreement on climate change. A global carbon market is at the heart of the UK approach. We want to see the power of the market harnessed to set a global price for carbon, so incentivising and rewarding the most efficient and innovative action to tackle climate change.

But building a low carbon global economy will require a step-change in the way capital is allocated across the whole economy. The genesis of socially responsible investment emerged from religious movements in the late nineteenth century. We need a popular movement on a very large scale to deal with the defining challenges of the 21st Century.

EIRIS was the first independent research service of its type in the UK, and it has played an important role in the development of SRI in the UK. You have an important role in providing information and supporting further development and mainstreaming of SRI in the UK and beyond, and I wish you continuing great success as you look forward to your 25th anniversary next year.

Thank you.