“There Is a Need for Globally Valid Rules for Business!”

Interview for the Bosch Environmental Forum

The subtitle of the report of the World Commission for the Social Dimension of Globalization, which you were involved in, is “Creating opportunities for all”. It also mentions the role of companies and of the UN Global Compact, which Bosch also joined in 2004. What opportunities and initiatives should companies be taking here?

v.W.: Companies should recognize and apply the ILO’s core labour standards also within the supply chain. Companies may wish to establish assessments of climate or environmental impacts and draw their customers’ attention to them. Global Compact companies may also get involved in efforts to achieve an international i.e. competition-neutral) control of CO2 emissions and of the resource consumption. Global Compact companies could instruct their own pension funds to focus on ethical or ecological investments.

When the Kyoto protocol comes into force in February, this will mean greater climate protection. Your view is that the country that manages to disengage its economic development most efficiently from its CO2 emissions will have significant competitive advantages. How can this advantage be achieved, and with what innovations?

Japan has developed a “top runner” programme that defines an efficiency standard for energy consuming vehicles and appliances. Products failing to meet that standard will be phased out in the long run. The EU should consider joining this programme. Climate targets should be developed and agreed for the period after 2012. They should help stabilizing temperatures at a level not exceeding two degrees Celsius above pre-industrial levels. For this, CO2 concentrations should rather not exceed 500 ppm.

In renewable energies, the German export industry is one of the world market leaders. China has announced that it will be generating 12 percent of its electricity supply from renewable energies by 2020. This ambition is underlined by its organization of a global conference on renewable energy in 2005, as a follow up to the “renewables 2004” conference in Bonn. Does that mean that German companies, with their know-how, can look forward to a good future in China as far as renewable energy is concerned?

Germany seems to have established itself as China’s preferred partner for renewable energies. This could mean major market opportunities for German companies.

At the beginning of this year you are publishing a new report to the Club of Rome. In the report, you deal with the “limits to privatization,” and conclude that the balance between public and private sector that more or less existed up to 1990 has been lost, and that the economy is now leaning more toward the private sector. What do you feel are the consequences of this, and where do you see the limits to privatization?

I co-edited the book “Limits to Privatization – How to Avoid Too Much of a Good Thing” with professors Oran Young (Univ. of California) and Matthias Finger (Lausanne, Switzerland). It features some 50 examples of privatization, both successes and failures, in every relevant sector. The book observes an increasing imbalance between the public and private sectors, – to the detriment of the public sector. The private sector must be aware that there are many “public goods” that markets will never produce or maintain. Among them are primary education, the legal system, certain infrastructures, long term environmental protection, and a minimum of social justice.

Governance and Corporate Social Responsibility stand for two approaches that are intended to contribute to a new balance between government, business, and civil society. What hopes do you personally place in the voluntary assumption of responsibility by companies, and where do you feel is the most urgent need for change in management structures?

There is a need for globally valid rules for business. There should be no incentive for companies to disregard minimum standards of human or ecological decency.Voluntary rules of Corporate Social Responsibility (CSR) are helpful but not sufficient. Governance and CSR are mutually complementary. CSR pioneers may enjoy first mover advantages as ambitious international rules are gradually emerging and are gaining broader recognition.