LONDON - At Business in the Community’s annual ‘A Better Way of Doing Business’ conference July 10, Luc Vandevelde, Chairman of Marks & Spencer, gave the following keynote address entitled “Changing Fashion or Fashioning Change?”

Imagine you’re homeless and you’re looking for a shelter for the night.

Now imagine there are two sorts of shelter available. One will give you a bed, a wash and a change of clothes for free. The other will make a small charge.

Which do you choose?

I guess human nature being what it is, we’d all like something for free. But there’s strong evidence that the second sort of shelter – the one that charges - does more good in the longer term.

I learnt this when I met Sister Ellen at a BITC event last year. Sister Ellen is a Catholic nun who runs a charity for the homeless in London. She operates by encouraging people to take responsibility and to stand on their own two feet.

So instead of giving a homeless person a new shirt, she’ll charge 50p. That way, he or she has to make a choice. ‘Will I spend this money on a shirt or a can of beer?’ Those that choose the shirt often find it easier to make the next decision … and then the next … which may set them back on the road towards taking control of their lives.

It’s a tough philosophy, but it’s real. And it’s oriented to results.

Often, the real problem is not a person’s homelessness, but the fact that he’s lost control of his own fate – or thinks he has. Just giving money doesn’t address the issue. It may even make it worse. What you need to do is create the environment so that someone in this position can regain the confidence to start making his own choices again.

Which got me thinking about corporate social responsibility and the approach we should be taking at Marks & Spencer. In every other part of our business, we have an end result in mind and plan our strategy to achieve it. How do we therefore conduct ourselves in the social arena to make a real difference in the world?

The lesson from Sister Ellen is that change has to come from within. To get results, we need to create the conditions in which people can make their own decisions and be responsible for their actions. That applies both outside the company as we try to be a force for good in society – and inside the company as we motivate people to think and act in a socially responsible manner.

That’s my theme this morning – how to manage CSR to get the greatest possible results. Or to put it a different way – how to ensure that CSR is more than a changing fashion, but an instrument for fashioning change.

For this to happen, I believe companies must internalise the concept of CSR.

What does that mean?

It means bringing CSR into the mainstream of the business and integrating it with everything we do.

It means no distinction between what’s good for business and what’s good for stakeholders.

If there’s a CSR ethos at the core, your policies and practices will develop organically. They’ll flow from your basic values and the outcome will be good corporate behaviour.

That’s why legislating for CSR will always be difficult. You can’t impose it from the outside. CSR has to come from within as companies commit themselves to certain values and principles.

At Marks & Spencer, we certainly don’t claim to be leaders in every aspect of CSR – though I think we are in some. Nevertheless, we want to try to take a lead in this concept of internalising CSR and letting it work from the centre outwards.

Or perhaps I should say re-internalising CSR.

We’ve always been a socially responsible company and good corporate behaviour is part of our heritage. Just as we started our commercial recovery by going back to the fundamentals of our business, so we’ve looked again at our CSR heritage and tried to make it fresh and relevant to today.

Having listened to our customers to get our products right, we’ve also based our CSR priorities on what our stakeholders have told us is important.

So let me show you some of the ways in which we’re trying to place CSR at the heart of everything we do.

First, we’ve set the example from the top. I myself chair the CSR committee consisting of three executive directors and two non-executives. One level down we have a CSR Forum whose job is to turn the committee’s vision into action.

Secondly, we’ve gone to great lengths to understand our stakeholders’ views and to shape our CSR policies and practices by what they tell us. Like many of you, we have a range of mechanisms for listening and learning – everything from business involvement groups for employees, to monitoring the satisfaction of investors and suppliers.

One topical example of stakeholder engagement is the work we’re doing in Paddington prior to moving our head office there in 2004. Even now, we’re forging links in the community and holding events to get to know local people. Later this year, we’ll start a Seeing is Believing programme into Paddington so that managers and staff can start planning what they can do to be a force for good in the area.

Thirdly, as we try to place CSR at the core of the company, we’re allowing our business units to set their own CSR agenda. We, at the centre, establish the values and the framework. Our business units then work them out in practice. In due course, every business will have its own CSR strategy in support of our corporate objectives.

This exercise has focused our attention on three main areas where we need to concentrate our CSR efforts:

• Products and services;

• People;

• And communities.

I’d like to look at each of these areas.

First - our products and services.

This is all about assuring our customers that Marks & Spencer produces high quality products and services with care and responsibility.

In trying to take the lead in this area, we have a natural advantage in that Marks & Spencer controls its supply chain one hundred per cent. When customers walk into our stores, they know that every product is there because it satisfies Marks & Spencer’s values. That’s a powerful differentiator.

Let’s look at some of the ways in which our values have influenced the products we sell.

• In 1997 we became the first major clothing retailer to adopt an Environmental Code of Practice covering all the chemicals used in the dyeing, printing and finishing of our fabrics – so banning potentially harmful chemicals years ahead of legislation.

• Since September 2002, all the eggs that we sell or use in our products have been free range. So 700,000 birds are now living in free range conditions and customers get a better product.

• Following the clear wishes of our customers, we now use non-GM ingredients in all our foods.

• Last month we became the UK's largest user of organic beauty ingredients when we launched our organic extracts beauty range ... all made from at least 70% organic ingredients.

The second of our big CSR themes is people – those who work directly for us, and those involved in our supply chain.

One feature of our recovery was creating an environment that allows people to be at their best and to take responsibility for their own progress. We believe this adult-to-adult relationship between the company and its employees makes Marks & Spencer a better place to work and produces superior results.

In the same way, we’re looking to engage our suppliers in building a responsible business.

There’s a good example in Morocco, where one of our suppliers is working with the government to provide literacy training for its workforce. Given that only 45% of Moroccan women can read and write, that’s a vital service. The approach is not to provide the training directly, but to set up the environment that enables local people to do the job. That’s very much the Marks & Spencer philosophy and one we try to encourage in our suppliers.

The benefits are enormous. As well as helping Moroccan society, a literate workforce is able to produce better goods more efficiently. This increases sales and feeds back into greater employment opportunities for Moroccan workers.

Thirdly, a look at what we’re doing in the community.

I’ve already said that we’re trying to create an environment within the company in which people can take responsibility. We’re now extending the same principle to our community activities under the general philosophy of helping others to help themselves - an echo here of Sister Ellen.

You may have heard of our Ready for Work scheme. It’s the centre-piece of our community programme and I’m delighted to say it’s one of the finalists in tonight’s BITC Awards for Excellence. We wanted to focus on where we could make the biggest difference, so we chose to take a lead in the area of employability.

Under the Ready for Work programme, we’re offering two-week placements in our stores to 600 homeless people to help them break the cycle of no home, no job, no home.

It’s now been going for a year and we’ve so far offered placements to around 300 people. Of the 200 who’ve either finished the programme or are currently being trained, about 25% have been offered permanent employment at Marks & Spencer or elsewhere.

Take Gary, who found himself homeless and living in a hostel after his relationship broke up. He went on a two-week Ready for Work placement in our Cambridge store and made a big impression on the staff by working out how the backstage operations could be improved. He’s now permanently employed, acting as mentor to others on the programme and on course for a management position.

Ready for Work has further advantages for our own staff. Each participant has a Marks & Spencer buddy whose job is to make them feel part of the team. Our buddies have told us that Ready for Work is a real help in developing their personal skills.

Furthermore, nine out of ten of our customers say they support our work with the homeless in this way.

Businesses are like people – they behave according to their personality. That’s why it’s not enough just to tick the CSR boxes and say we’ve complied. To be really effective, CSR must be part of the corporate DNA and integral to everything we do. As I said at the start, it has to be internalised.

At the same time, we’re also trying to externalise our CSR. For many years there’s been a Marks & Spencer tradition of not drawing attention to our CSR activities. That’s why many people have a general impression that we do good things, but couldn’t tell you what they are.

We’re now communicating much more vigorously – which is why we’ve just produced our first-ever CSR review. We’re proud of what we’re doing and we want people to know it. Which in turn is good for business - which in turn allows us to do more as a force for good.

That said, we’re still learning. Our thinking on CSR is evolving. Progress is sometimes painful and we’re bound to make mistakes. Nevertheless, we’re absolutely committed to conducting our business in a way that achieves solid results – both commercially and socially.

“The main prop of our organisation is the goodwill of our public.” Those are not my words but those of a former Marks & Spencer Chairman, Lord Sieff, as long ago as 1933. Then as now, business is nothing without society’s confidence.

Companies must win the trust of their stakeholders by effecting real and permanent change. That’s the only route to a long-term, sustainable and profitable business.

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The above is the text of a keynote speech given by Luc Vandevelde at Business in the Community’s Annual Conference on 10 July 2003. For further information, please contact: Clair Foster, 020 7268 8323; clair.foster@marks-and-spencer.com

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