Minister Suvi-Anne Siimes at the OtaEco

Ladies and gentlemen:

I am pleased to welcome you to Helsinki, to the third OtaEco congress, entitled 'Ethical Management, Investment and Finance'. This is the largest and most important event in Finland concentrating on environmental and social responsibility issues. I am convinced that the congress will be a success. I should, of course, also like to thank the speakers, and those contributing to the discussion and chairing the sessions.

Over the last 15 to 20 years, sustainable development has come to be seen as a key global challenge. It is commonly viewed as having three closely interrelated dimensions: the economic, social and environmental.

According to demographic prognoses, the world's population will grow by 2 billion people over the next 30 years, almost solely in the developing countries. At the moment there are an estimated 2? to 3 billion people living in developing countries on less than 2 dollars a day. The main challenge facing sustainable development is to find more productive work for these people, thus raising their living standard permanently. A substantial increase in output and productivityis needed specifically in the developing countries in order to overcome their poverty and tackle their problems with population growth. This faces their own governments and authorities with enormous challenges, because before developing countries can boost production and economic growth they must have credible, well-founded economic and social policies of their own to create the preconditions for long-range investment and production. If sustainable development is to be possible, the industrialized countries in turn must eliminate trade barriers and agricultural subsidies that are harmful to developing countries.

The vital issue for sustainable development is how to reconcile the necessary economic growth with nature's own limitations. Growth and nature do not have to be opposites. At the moment, poverty is forcing developing countries into action such as widespread destruction of their forests, which results in desertification. The economic growth that eliminates poverty then tends to place excessive burdens on the environment and reduces natural resources.

As well as reducing poverty, another key goal must therefore be to change production and consumption patterns. But slowing economic growth, and consequently technological development, in the industrialized countries is no way of overcoming poverty and conserving natural resources in the developing world. Achieving sustainable economic development and social well-being demands joint efforts by both developing and developed nations to promote more just and more wisely conceived economic growth.

We face enormous challenges related to our use of natural resources, and of course from climate change. Science and technology will play a crucial role in solving these problems. Society must create conditions that promote the rapid commercialization of their findings and innovations. The essential thing is to find means of social control that will reduce the burden on the environment while placing minimal strain on economic sustainability.Ultimately, the adoption of environmentally sound technologies depends on businesses having both the will and the ability to utilize them.

Corporations depend on society and are an integral part of it. They have also shaped their operating cultures in response to changes in society. In the early days of industrialization, companies provided many social services for their workers, such as education, daycare, housing and meals. Businesses were profitable when their employees were contented.

Today, the responsibility for basic services has shifted mostly to society. The individual company's responsibility is no longer so perceptible, and has in fact started to become blurred. From their own point of view, companies pay taxes and various charges to society in compensation for their employees' welfare. This sharing of responsibility makes companies integral elements in society - elements with an important role to play.

In an ideal situation a company cooperates and interacts with the society within which it functions. This is a win-win situation. One sustainable development problem is what we should do about companies that are not a distinct element in any particular society. Multinational corporations often 'float' somewhere outside existing societies. They operate in many countries without necessarily committing themselves to furthering the prosperity of any country in particular. The problems and benefits of ethical and responsible operation are also difficult to see clearly from inside such organizations; in other words, they get no feedback.

Thus while globalization faces governments and their policies with new demands in their efforts to promote sustainable development and social responsibility, it faces responsible businesses with new demands, too. In fact, these two areas have to work hand in hand, for sustainable development cannot be achieved if global enterprises do not show commitment to public policies and good governance.

The situation is already betterthan it was a few years back as far as the rules that business procedures follow are concerned. For instance, the ethical principles embraced by businesses and their emphasis on environmental protection, together with the spread of approaches that underline the public good, all show that corporations, too, are interested in the future of the planet. It also indicates that the best businesses are trying to understand more fully the impact of their own actions on the environment and on social groups and their own responsibility for it. Indeed, some corporations can be seen as pioneers and true partners, especially in seeking solutions to local problems wherever they operate.

It is therefore important to coordinate corporations' operations with the specific cultures and conditions concerned, so that they can really support their local communities. A monolithic production concept implemented in the same way all over the world does not usually serve this target.

As far as companies' internal rules and codes of behaviour go, however, there is still the question of how binding such rules remain in practice if the company's financial interests conflict with them. After all, such rules are not binding legally - ethical principles rarely are - and have merely been adopted as internal principles. Even so, I believe that we are on the right track. The emergence of production-related problems in developing countries will at least alter the operating approaches of companies that want growth and profitability in the long term as well. On transparent global markets, corporate images and reputations are assets that are worth real money. I don't think this means the companies are any more moral or any less greedy, but they do respect what the market dictates.

In today's world, where corporations' social responsibility rests on a voluntary basis and is considered merely a way of improving on the minimal legal stipulations, ethics have shaky foundations. So a genuine commitment from companies to sharein developing the societies where they operate by setting real binding standards for ethical operations would be more than welcome. This would really reduce greed and raise morals. If this goal is ever to be reached, we need cooperation and determination from international organizations.

Partnership agreements between companies, NGOs and governments have started to take shape in various parts of the world. There was considerable talk about what are called 'TYPE II' partnership agreements at the Johannesburg meeting. It is encouraging that such cooperation is spreading and that international agreements will in future mean more than only treaties between states. In order to promote as wide a range of initiatives as possible and to yield benefit from them, these new partnerships must retain a sufficient degree of flexibility. They must also be compatible with the goals of sustainable development and bring results that meet the measurable targets set for development. However, partnership agreements must not displace current development efforts made by governments or provide an excuse for governments to shirk their responsibility for global development.

I personally believe that more knowledge and understanding, and more collaboration between different parties, will in the long term play a key role in achieving sustainable development. A press article that I read a couple of weeks ago makes a good example of the length of the process and of how the information available to us can be contradictory. According to the Indian economist Sirjit Bhalla, the percentage of poor people in the world has fallen dramatically in the last twenty years, from 44 to 13 per cent. This estimate diverges radically from the figures put forward by many researchers and, for instance, the World Bank. The main discrepancies concern China and India. According to Bhalla, rapid economic advances in these countries in recent years have substantially reduced the number of poor.

If Bhalla's calculations prove correct,the world is on the whole a much better place than we thought. But such discrepancies in the calculations also show that problems with the environment, poverty, social responsibility and equality cannot even begin to be solved sustainably before we have exact information about them.

Though the facts we receive about environmental issues may seem mutually contradictory, that does not lessen one particular issue related to our responsibility for the environment. It is undeniable that energy and resources are used wastefully and inefficiently by the global economy. Improving eco-efficiency is therefore a crucial approach in preserving well-being. When we can generate more well-being using less resources and energy, the load on the environment will automatically be less.

In any case, I consider it essential for international organizations, governments, citizens and businesses to jointly establish rules of play for sustainable development that they all have to comply with. This is also essential to ensure equal preconditions for businesses. It would be ethically unthinkable if specifically the most responsible companies had to forfeit their price competitiveness.

Companies that show proper care for their environmental responsibilities often avoid paying various environmental taxes. The prices of their products are still competitive, and at the same time society can guide consumption in a direction that places less stress on the environment. It strikes me that perhaps similar 'damage taxes' should also be levied on companies that operate unethically. This would follow the same logic as pure environmental taxes, that is, use financial instruments to discourage operations harmful to society.

Achieving the common goals may well demand more than merely expressing ethically acceptable opinions. We need more practical development action based on comprehensive analyses, especially in the poorest countries of all. The keys to a real desire for development are always in a country's own hands.

Recently compiled data show that our efforts are not in vain. According to the indicators, which were developed to measure progress towards the Millennium Development Goals, or MDGs, of the UN, poverty can be and has been reduced. Less people than before are today deprived of their minimum economic and social subsistency. More children learn how to read and write, and girls are empowered to participate in public life and contribute to development.

Ethical management, investment and finance may be seriously developed only in democratic societies that are responsive to civil society and the needs of coming generations. It is a welcome fact that never in history has such a large proportion of the world's population been ruled by democratically elected governments. It also appears that never in history has such a broad constituency of economic, political and private actors been so aware of their own stake in common responsibilities. This trend provides a good basis also for global action towards the UN's MDGs, our commonly agreed development goals for the new millennium.

Ladies and gentlemen, I should like to finish at this point and hand the floor over to our first speaker. Again, I thank you sincerely for coming here today. I wish you very interesting and stimulating discussions, and look forward to hearing about the results of the third OtaEco congress.