"Corporate sustainability today includes recognition of the leadership role that the private sector must take in ensuring social progress, improved equity, higher living standards, and stewardship for the environment," Wolfensohn said yesterday in a World Bank-sponsored workshop. "Corporate responsibility is not philanthropy—it is good business," he said.
Socially responsible investors are increasingly selecting investments that meet minimum standards for environmental and social criteria and are growing in shares and in volume. In the United States alone, assets in socially responsible investment funds (SRI funds) have grown to about $3 trillion. In Europe, enabling legislation, such as the UK requirement that pension funds disclose the social and environmental performance of their bond portfolios, provides a fruitful ground for SRI funds.
"But this type of investment is being done almost exclusively in the developed world and not in developing countries. It is important for international organizations such as the World Bank to assist their client countries in developing this capacity for them to be more competitive in the investment world," said Wolfensohn.
"I believe that we must transform the Bank into a global leader on social and environmental responsibility—for other development organizations and the private sector to follow," he added, committing the World Bank to the following points to become an even more socially and environmentally responsible organization:
- increase its ongoing push for green procurement and support certified products;
- reduce the ecological footprint of its physical facilities;
- set benchmarks for its social and environmental performance and report on progress, with independent verification;
- ensure that its own pension fund invests in a socially and environmentally responsible manner; and,
- demonstrate our concern for the local environment and community we live in.
"We are committed to transparency and accountability—to measure our progress on environmental and social issues; to hold ourselves to clear standards; and to communicate progress against these benchmarks to all concerned stakeholders," said Wolfensohn.
Corporate responsibility and a commitment to sustainability are not new to the Bank-they have been at the core of the Bank's mission for many years. Many international organizations and client countries consider the Bank's policies for safeguarding environmental and social concerns to reflect the highest standards in practice.
The "Corporate Responsibility: Perspectives from the Financial Sector Workshop", jointly sponsored by the Leadership Development Group, the World Bank's Environmentally and Socially Sustainable Development Vice Presidency, and the World Bank Institute, was attended by World Bank Group senior management and private sector executives. Wolfensohn emphasized that "In today's and tomorrow's interconnected and interdependent world, we can only succeed if development is done in a socially and environmentally responsible manner."
Peter Woicke, Executive Vice President of the International Finance Corporation (IFC), the arm of the World Bank Group that promotes private sector investment, said, "In a globalized economy, the corporate responsibility of the private sector is wide and deep. This is particularly true when operating in environments where international capacity and governance is weak, but also when dealing with difficult issues when political consensus seems unattainable. IFC, standing at the intersection of the public and private sectors, has an unprecedented opportunity to help harness the energy of the private sector in developing countries to deliver sustainable development by transferring knowledge and best practice alongside our financing."
Woicke laid out IFC plans to increase the environmental, social and corporate governance performance of its projects beyond IFC's social and environmental safeguard requirements through opportunity-driven incremental improvements. To assist in this, they are collating good practice from inside and outside the IFC, and will be considering in the months ahead how sustainability principles and key trends should influence their sectoral strategies, project selection and value propositions. Woicke elaborated on additional steps being taken to internalize sustainability, including:
- improving the skills of all staff in this area through a new training program;
- incorporating success in achieving sustainable outcomes at the project level into the investment officer performance appraisal process; and
- creating sector-specific "tool-kits" or a menu of options to help investment staff identify opportunities and work with clients to enhance the sustainable impact of projects.
Private sector presentations were made by Ray Anderson, Chairman and CEO of Interface, Inc.; Reto Ringger, Founder and CEO of SAM Sustainability Group; Robert Lake, Director of Strategy for Socially Responsible Investment; Otti Bisang, Environmental Advisor of Credit Suisse Group; David Williams, CEO of ShoreBank Pacific; and Carlos Joly, Senior Vice President International of Storebrand Investment.
Socially responsible investors are outperforming their peers. Ian Johnson, World Bank Vice President of Environmentally and Socially Sustainable Development, said, "With the Bank's commitment to poverty reduction and responsible globalization, we want the developing world to also benefit from this 'good' money. The World Bank Group has a role, working with these companies, with our government clients, and our NGO partners, in promoting a more enlightened private sector. We need to move fast to meet the expectations of the World Summit on Sustainable Development in Johannesburg in September 2002."