Better governance for sustainable business*

Sustainable development is not against business interests. In fact, business can profit from it. 

Ten years ago at the Rio Summit, 50 business leaders pledged a commitment to sustainable development. That was the start of the World Business Council for Sustainable Development (WBCSD). Since then, we have trebled in size and hugely amplified the voice of business in widespread dialogue.

Business is good for sustainable development, and sustainable development is good for business. It should be at the heart of business thinking and government policymaking.

What does that mean? Well, it means tough choices and new thinking. For instance, you choose to work by a set of declared principles and to stick to them whatever the circumstances.

You say “no bribery of any kind”. You make sure it’s clear to everyone that you mean it and if anyone goes against it you ask them to leave. If you can’t win business without bribes you go without. If necessary you leave the country or you get out of joint ventures – even if there are short-term financial hits.

You set environmental standards and keep to them. If you have an important project that is likely to fail those standards, you tell your people “no go” unless they find ways to get the environmental element in line. You’ll be amazed at the innovation a challenge like that can unleash. If they can’t do it, you leave it.

You put people and communities in the frame. If you are working in a developing country and your staff take it for granted they will use the usual international contractors, tell them to think again. Make it the norm to find local firms, build local capacities.

I can hear you thinking “that’s the best way to lose business, to lose out to competition, that I’ve heard in a long time.” Not so, in the long run. Once people know you won’t bribe, once you make eco-efficiency standard practice, once you have developed local, more cost-effective, contractors, your competitive edge will be enhanced.

Care for the environment and social justice should be an integral part of the economic development that funds progress. Demonstrating this in action helps us meet societies’ expectations, and that is an increasingly important part of our commercial challenge. Being seen to share societies’ concerns attracts and motivates people to join and stay with a company. Equally, it boosts that company’s reputation with a range of interested parties who will often be opinion leaders.

In my view there is no doubt that economic, social and environmental improvement is best nurtured in open, competitive international markets where governments set stable and pragmatic frameworks for business investment. However, the benefits of markets must be extended further towards the world’s poor.

Briefly, one of the keys to sustainable progress in developing countries is foreign direct investment (FDI). But only about 5% of FDI goes to the 40 least developed countries. If that investment is to increase, especially in Africa, there must be an emphasis on establishing good governance, stable regulatory systems, pragmatic economic policies and accountability mechanisms.

But investment alone is not the answer. Linked to it is the challenge of developing Africa’s human and natural resources to the African peoples’ advantage with minimum adverse impact. We need partnerships for progress between business, governments and civil society here, and we need them urgently. For me, it’s just as urgent for business to take on board the essentials for pursuing sustainable development. Let me highlight a few of them.

We have to learn to change. We need to stimulate innovation that allows us to create wealth in ways that reflect changing concerns and deep-seated values. We should be taking on eco-efficiency as a management strategy – seeing how we can create more value with less impact in terms of energy and material. And we should be informing consumers about the environmental and social effects of the choices we offer them.

We have to demonstrate action to remain credible. That’s why the WBCSD is developing initiatives on sustainable mobility and sustainable livelihoods. And why we are partners in a project to make this summit “climate-neutral”.

Sustainable development isn’t an easy option. We need to support each other, to share problems, experiences and ideas. That’s the aim of two recent publications.

The first sets out the WBCSD’s blueprint for action. It’s called “Walking the Talk” and it illustrates the argument with 64 case studies. Ten years after Rio we know we are on a tough journey of continuous learning. WBCSD members see action to build a sustainable future as part of their commercial responsibilities. But we can pursue that most effectively in partnership with governments, political leaders, NGOs and international bodies.

The second comes from Shell and it’s a collection of sustainable development case studies from around the world – from working for biodiversity in Gabon to pioneering cleaner fuel in Thailand, from community development in Nigeria to reducing gas flaring in operations there. It is called “There is no Alternative”.

We need more initiatives like the partnership in China with the United Nations Development Programme (UNDP) on the West-East gas project. This project will be built by a joint venture with Chinese and international involvement.

The UNDP has carried out a survey to better understand the likely social impacts on people who live along the route of the pipeline. It will be part of the decision-making process. That kind of independent consultation gives invaluable input and helps avoid future, often costly, problems.

* This is an extract from a speech given during the Business Day at the World Summit on Sustainable Development in Johannesburg, 1 September 2002. Mr Watts has also participated in the OECD Round Table on Sustainable Development. More by Mr Watts can be found at

©OECD Observer No. 234, October 2002

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