Statement by Paul Wolfowitz on corporate social responsibility

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Thank you.

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I really appreciate this opportunity to speak to you, if only by video.

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And it's a special personal pleasure for me to be able to thank the former President of the Republic of the Philippines, Corazon Aquino, who was in attendance.

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Missus Aquino, we all remember the great role that you played in restoring democracy to your country, and we're all in your debt for that great leadership.

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Also want to thank Mr.

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Francis Estrada, the President of the Asian Institute of Management, and Mr.

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Ramon del Rosario Junior, the Chairman of the Board of Advisors at the Institute's Centre of Corporate Responsibility.

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Your support for this conference is greatly appreciated.

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We are here today because businesses are critical partners for the World Bank Group in the fight against poverty.

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Corporate social responsibility is where the interests of business and the interests of society converge.

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Today, for every dollar of official development assistance, there's another $4.00 in private sector flows to developing countries.

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That means more than $300 billion per year in debt and equity go to developing countries.

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In addition, 90% of jobs come from the private sector.

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That makes private sector jobs the most promising path out of poverty.

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These facts put businesses in a position to transform society by creating opportunities for people to lead productive lives and provide a better future for their children.

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And that's why corporate social responsibility, or CSR, is attracting increased attention in both the business and the development communities.

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Practices that promote corporate social responsibility respect culture, protect the environment, and they strengthen communities.

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And they also help the bottom line.

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When Companies Act responsibly, they reduce costs and risks, they enhance brands, and they become more appealing to potential employees.

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We have seen Brazilian coffee exporters and the Vietnamese footwear industry use the fair trade label to compete internationally for exports and to maintain their profitability.

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But corporate social responsibility is not simply about profit.

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I hope most of you see it foremost as a human concern and a moral imperative.

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Businesses do have to make money.

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You can't create the jobs that enable people to escape poverty without good profits.

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But businesses also have a responsibility to make money the right way.

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Corporate social responsibility is about being a good corporate citizen.

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If corporations evade or underpay their taxes, or if they engage in corruption or bribery, it undermines investor confidence.

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It increases the cost of doing business, and it hurts private sector growth.

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At the World Bank Group, we are committed to better understanding the root causes of corruption in order to develop effective policies for addressing this obstacle to development.

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That's why we've partnered with the Center for Strategic and International Studies in Washington to establish the Hills Governance Center at the Asian Institute of Management.

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And I want to thank my friend Rod Hills for his great contribution to that effort.

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This centre conducts research on corruption and the role that the private sector can play in combating it.

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The World Bank Group has also been supporting the efforts of businesses and implementing corporate social responsibility.

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In 2003, the private sector arm of the World Bank Group, the International Finance Corporation, helped to develop a voluntary set of guidelines.

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They were called the Equator Principles.

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These standards are aimed at ensuring that IFC finance projects are socially and environmentally responsible.

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This July, under IF CS Leadership, 41 financial institutions adopted a revised version of the 9 Equator Principles.

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Under these expanded principles, financial advisors will need to evaluate the environmental and social impact of projects in the design phase rather than wait until financing is secured.

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In the Philippines, the bank group helped Manila Water Company publish a sustainability report on its performance, environmental and social issues and in corporate governance, the report earned awards, but more importantly, it helped raise awareness of corporate social responsibility and caught the attention of the investment community.

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The bank group also worked with bamboo farmers in Tanwa, one of the poorest provinces in Vietnam, to help them learn new sustainable techniques to plant, grow and harvest bamboo.

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These farmers are now able to sell their bamboo to IKEA, a Swedish furniture retailer with global reach, to support that firm's large demand for eco friendly bamboo.

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So they're doing the right thing for the environment, and at the same time, they're increasing their revenues with a 50% increase in the price that farmers earn for their bamboo.

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Corporate social responsibility allows businesses to be both fiscally wise and a powerful force for creating opportunities that benefit the poor.

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The World Bank Group looks forward to partnering with some of the businesses, governments, and civil society organizations represented at this conference to help the poor transform their lives and determine their own future.

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I want to thank you all for participating, and I hope you have a very successful conference.

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Thank you.