Business Respect - CSR Dispatches No 100 - 30 Jul 2006

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An email newsletter with news and discussion focusing on corporate social responsibility globally, looking at the companies in the news and the emerging issues. Linked to the website at http://www.mallenbaker.net and produced every two weeks.

In this issue, we review the OECD tool for businesses in weak governance zones, and we celebrate 100 issues of Business Respect!

In the news:

Feature articles on the internet:

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Topics:

Want to read a hyperlinked version of this issue? You can find one on the website at http://www.mallenbaker.net/csr/nl/100.html.

Copyright 2006 Mallen Baker. All rights reserved. For information on how to subscribe, go to http://www.mallenbaker.net/csr/nl/subscribe.html

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Welcome

Welcome to the 100th edition of Business Respect! Nobody could be more surprised than me that it ever got this far. Apologies in advance that the editorial this time is consequently a bit longer than usual as I take a moment to reflect - if you can't bear it skip straight on down to the next bit.

The newsletters started going out way back in April 2001 - a full six years ago. I had become aware at that time that I needed something that would provide me with the incentive and discipline to keep up to date with researching what was happening in the wider world of CSR. In those days, my day job at Business in the Community provided very little that was international, issues focused or about core business activity - something that has considerably changed since - and it provided (and still does) a fast pace of activity that makes it all too easy to fail to invest in keeping knowledge up to date.

Having benefited from a number of good email newsletters on other topics over the years, it occurred to me that perhaps this would be a way to provide that discipline. The website had been up for a couple of years, and traffic had increased gradually. I had a go, producing an initial issue that would go up on the web, with an invitation to subscribe. After all, I reasoned, if there was no response I could take it down again in a couple of weeks and nobody would much be the wiser.

In that first two weeks, twenty five people subscribed. So issue 2 was sent out to email. The following two weeks another twenty five. And so it went. Now, there are 7,500 signed up subscribers, across over a hundred countries and from private, public and voluntary sectors. It has grown to a point where the system that has worked for some time is now truly creaking at the edges!

The website has a crude content management system designed to take the time consuming elements of producing the newsletter out of the equation. Every evening (when my time management is working!) I do a quick review and add a news story or two onto the site. At some point I will do the article that will be the main feature. When it's time to send out, I write the editorial, hit the button and the newsletter appears both in text, for the email, and formatted into html for the web page. Then I hit another button to produce the text file of the current mailing list from the web database, and the issue is produced by mailmerge via Word and the Mac version of Outlook, Entourage.

Wouldn't it be easier simply to automate the process so it is sent out directly from the webserver? Oh yes! But the current account for the website doesn't allow for mailing lists of 7,500. That would need a dedicated server which costs rather more, although the size of the operation is now starting to push inexorably towards. At that point, it may well be that my long editorial policy of not taking any kind of advertising / sponsorship to cover costs may have to be reviewed. So far, it has been a free service for the CSR community with all the space devoted to content. That is the way I would like it to stay!

However, I did think it was worth reviewing all this activity having hit the magical 100 number. For instance, quite a bit of the static content on the website has now been there for 6 or more years. Time for some of this to be refreshed and renewed, and I'll be looking at this over the coming month (guess how I'm spending my holiday!)

The most interesting bit is to come, however. I have often received requests from people wanting to promote their events either via the website or via the newsletter. The answer has always been, regretfully, no since if it is made available to one it should be available to all and there has simply been no space for that.

Within the next couple of weeks, however, I am hoping to launch a CSR Events calendar on the site that will enable exactly this facility. Events promoters will be able to submit their events (these will be moderated to prevent events not relevant to the CSR agenda or form spam from getting through) and have them appear on the site. Listing will be free, and visitors to the site will for the first time be able to register to get customised email updates or alerts focused on their area of interest. This is the first area that I hope now to explore where, without requiring extra input or burden on scarce free time, there may be additional resources provided that people may find useful.

Event organisers that want to be notified when the service becomes available, send me an email at mallen@mallenbaker.net. Others, watch this space!

Thanks to those that emailed with kind words to congratulate on the 100th issue. They all mean a great deal and help to keep the operation going!

Mallen Baker
mallen@mallenbaker.net

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CSR News 30 Jul 2006

Malaysia: Prime Minister calls on companies to boost corporate citizenship

Prime Minister Datak Seri Abdullah Ahmad Badawi has said that business needs to do more to improve its focus on corporate citizenship, particularly in order to help the underprivileged in society.

Speaking at the Kebab Penyayang summit conference, he said that businesses had already contributed, but needed to do more. They needed to manage their resources and distribute part of their wealth to the poor as part of their social obligation.

He cited the actions of US billionaire Warren Buffet, who recently pledged a significant part of his wealth to the health charity run by Bill Gates.

China: Wal-Mart gets its first labour union

The first labour union at a China Wal-Mart store has been formed after employees in Quanzhou voted to form one, according to the official Xinhua news agency.

The company has been lobbied over two years by the official All-China Federation of Trade Unions to allow its employees across 60 Chinese locations to be organised. It has accused Wal-Mart of obstruction.

The move is the latest in an ongoing campaign to see foreign companies operating in China accept official labour unions. So far, labour unions operate in 4 out of every 10 foreign company.

UK: Law may be used to target companies over obesity

UK Prime Minister Tony Blair has said that he is willing to use the law to encourage people to adopt a healthier lifestyle by targeting fast food advertising and requiring supermarkets to adopt government approved labelling schemes.

The Prime Minister said that successful anti-smoking campaigns and the drive to make school meals more healthy had changed his mind on the role of the state. He added that the national health service would suffer crippling costs unless people took responsibility for their own health.

For instance, he said, the resources used to treat diabetes - a disease that has a significant link to diet and lack of exercise - could double within the next few years.

He added that the government is working with the food and drinks industry on a code limiting advertising to children. If a voluntary code has not worked by next year, it will become mandatory.

Worldcom former boss loses appeal

Former Worldcom boss Bernie Ebbers has lost his appeal against conviction and 25-year prison term for fraud and conspiracy leading to the collapse of the company.

The appeals court upheld the guilty verdict from the original trial last year, which should result in Mr Ebbers beginning his prison term.

The judges said that Mr Ebbers had used methods that were "specifically intended to create a false picture of profitability" and that this had been motivated by Ebbers' personal financial position.

Brazil: Soya traders agree moratorium on deforestation

Multinational traders in soya beans have released a statement declaring a two year moratorium on buying soya from newly deforested land in the Amazon. The move follows action by some of the leading food retailers including McDonald's in response to publicity about the issue.

The group of traders, which includes Cargill, ADM, Bunge, Dreyfus and Amaggi, remain under pressure on the issue with Greenpeace having warned that the moratorium will be seen as a token gesture unless further real change is delivered.

Much of the soya produced in Brazil is exported to Europe to feed livestock.

Greenpeace acknowledged the role of the food companies inbringing soya traders to the negotiating table.

McDonald's said in a statement: "The two-year time frame set for the initiative is, we hope, indicative of the sense of urgency with which the soya traders wish to implement the governance programme and all of its conditions. We expect that should some of the measures take longer than the stated two years to implement, the moratorium would remain in existence until all commitments have been fulfilled."

BP focuses on tackling accidents

BP has announced that it is to boost its spending over the coming four years to upgrade safety at its US refineries and to replace pipelines in Alaska following a series of major incidents.

The company will now spend in the region of $7bn on the upgrade programme. The move is designed to prevent reccurence of the explosion at the Texas City refinery and the recent oil spill in Alaska.

BP chief executive Lord Browne said that the recent events had caused shockwaves within the company, and prompted it to look critically at achieving consistent operating standards.

India: 160 children rescued from child labour

Police rescued 160 children from a train that was taking them to work as child labourers at a plant run by the Oil and Natural Gas Corporation (ONGC).

The children were aged between 10 and 14, and had been brought by a private contractor to work at the plant. Police acted on a tip-off, but failed to catch two agents that were escorting the children to the plant.

ONGC, which features at number 13 in the list of India's most respected companies in the Business World survey, is a signatory of the Global Compact and states that it is committed to taking action against child labour.

GlaxoSmithKline focused on breakthrough over bird flu

GlaxoSmithKline has said that it believes it has developed a vaccine for the deadly strain of bird flu that may be able to be mass produced by next year.

The vaccine has produced optimism because it is effective at relatively small doses, which would assist efforts to produce the vaccine at speed should bird flu mutate, as is widely held, into a form that can be transmitted from human to human.

A number of governments have pre-advertised their intention to build stockpiles of effective vaccines to be able to innoculate populations in the event of a pandemic.

GSK said that it is talking to the Bill and Melinda Gates Foundation about ways in which the vaccine may be able to be made available to developing countries.

Ford to put £1bn into fuel efficiency in the UK

Ford Motor has said that it will spend £1bn on research and development in the UK to improve the fuel efficiency of its cars. The move is an indicator of the seriousness with which the company is now facing challenges over its progress to date.

Ford has reviewed its approach to environmental performance in recent months, with the ending of a commitment to produce large quantities of hybrid cars by 2010. Instead, the focus of investment will be improving ordinary engine efficiency and reducing the weight of cars through the use of advanced materials.

Chad and World Bank reach agreement on oil revenues

The government of Chad and the World Bank have come to a final agreement on the management of oil revenues following the controversy caused when Chad tore up a previous agreement that channelled money to serve the poor and the World Bank froze the release of moneys.

The two sides have signed a memorandum of understanding that will see the Chad government ensuring that in 2007 70 percent of revenues will go towards poverty reduction - a figure that incldues tax revenues paid by the oil companies led by ExxonMobil not just royalties.

Under the agreement, some resources can now be allocated to security - one of the key sticking points from the previous breakdown.

World Bank President Paul Wolfowitz said that the development marked the beginning of a process, with a long way still to go.

CSR FEATURES from the Internet

How can an ethics index give a tobacco giant top billing? - 28 Jul 2006 FROM Crikey

The corporate world's equivalent to the plastic surgery gawp show Extreme Makeover – the Corporate Responsibility Index – has been published for 2006. Coordinated in Australia by the St James Ethics Centre, it seems HIH, James Hardie and AWB had a few “problems” in recent years which kept them out of the top ten. But remarkably, British American Tobacco ranks as the eighth most responsible company in Australia.

Read full story

Expecting corporate kindness - 25 Jul 2006 FROM The Boston Globe

AS THE MEDIA hype around Al Gore's film, ``An Inconvenient Truth," begins to fade, the documentary ``Who Killed the Electric Car?" debuts, expanding the theme that business as usual can be hazardous to your planet.

The murder mystery parody investigates General Motors' 2003 cancellation of the EV1, its electric car, and the automotive industry's strangulation of the zero-emission initiative. The Detroit News describes the film as "depressing and hugely important," giving its struggling hometown industry a thumb in the eye rather than two thumbs up.

Read full story

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A tool for the companies facing the worst dilemmas in the world

Article by Mallen Baker

There are business opportunities all over the world. But some bring higher risks than others. How does a company best navigate dilemmas in countries where governments are unwilling or unable to fulfil their responsibilities in relation to some fairly basic, accepted norms? In an attempt to answer this question, the OECD has produced a tool for multinational enterprises operating in what it describes as 'weak governance zones'.

The Risk Awareness Tool (nobody has suggested it revert to its acronym - RAT) has been developed as a follow-up to the OECD Guidelines for Multinational Enterprises, a voluntary code of conduct for international business. It has therefore been designed to be consistent with the guidelines.

It is no fun doing business in a weak governance zone. Government failures lead to broader failures across political, economic and civic institutions that can create the conditions for endemic violence, crime and corruption. About 15 percent of the world's population are said to live in such areas.

The Tool consists of a series of questions for companies to ask of themselves when looking at investments in such zones. The questions cover a number of areas.

The first is that of obeying the law and observing international instruments.

Companies are, of course, expected to observe the law in these areas as much as any other. But in knowledge that international instruments covering areas such as human rights, corruption, labour standards and environmental protection may define acceptable behaviours far in advance of the local laws, companies need to reflect carefully on their position.

So, for instance, the company should ask how it can best inform itself about the positive and negative impacts of its investment in the host country. Does the company involve stakeholders in this process? Does it take steps to avoid situations where it might unwittingly aggravate existing problems? What steps can it take to mitigate any negative impacts?

Of course, being able to answer such questions positively is no guarantee of support and understanding. Companies that have operated in Myanmar have long argued that their presence, because of their commitment to community investment and ethical operating practices, benefits local people more than it would if they withdraw and allow their place to be taken by companies that care little for such things. These arguments have not prevented, one by one, those companies eventually being pressured so heavily that they have had to withdraw anyway. Think Talisman Energy. Think British American Tobacco. Think PwC.

The second section covers what is described as 'heightened managerial care'. Because of the greater risks in weak governance zones, management needs to accept a greater need for information intelligence, robust internal procedures, and use of external legal, auditing and consulting services in order to ensure compliance with legal obligations and international standards.

The questions in this section are focused on internal governance. For instance, do company policies adequately communicate the implications of relevant laws and international instruments for the company's business practices? Is there detailed guidance for employees that may be confronted by difficult dilemmas?

The third section focuses on political activities. The Tool acknowledges the legitimate and useful role that business can play in the political process, whilst noting that weak governance zones present special dangers that business may be tempted to use political activities to gain access to anti-competitive or improper advantage.

These temptations can be exacerbated by some of the features of a weak governance zone. These can include the absence of workable systems for promoting public and private sector ethics, excessive discretionary powers for public officials and the lack of robust tendering procedures.

In addition, there is the well worn scenario where companies are forced to forge political alliances with governmental figures - or even the family members of powerful leaders - in order to protect their investments.

Questions asked in this section include for instance: what steps can the company take to ensure it refuses improper involvement in political activities, including illegal contributions to candidates or parties? How can it make sure that its contributions comply with public disclosure requirements? What steps can it take to ensure that its political contributions don't aid criminal or corrupt activities?

The next section covers clients and business partners. In particular, there is a heightened risk that potential employees, clients or business partners may damage the company's reputation or put it at risk of being complicit in law breaking.

Questions here include whether the company has used heightened care in identifying whether prospective partners or clients have had roles in criminality, corruption or violent conflict? How does the company ensure that its dealings don't lead to funds being channelled through off-shore financial centres?

The penultimate section talks about how the company relays information on wrongdoing, such as crimes, human rights violations and corruption. Weak governance zones often have few institutions that may be able to collect and channel information. In the course of their business, companies sometimes are able to acquire such information and share it with home or host governments, international organisaitons or the media. Of course, such activity carries real and serious risks, in the form of threats to the security of employees and assets. Many businesses, for purely pragmatic reasons, will see this as a step too far.

However, there are questions that the company can ask. What channels exist for sharing information or speaking out? Does the host government have a whistle-blowing facility? Could the company use such channels, or enter into discussions with other host country actors?

The final section involves a very thorny question indeed - how much should businesses involve themselves in seeking to influence the development of better governance. After all, the ideal scenario is that nobody expects businesses to bother themselves about issues of corruption and human rights because sound frameworks of law are in place wherever they operate. How much legitimacy does business have in actually playing a role in seeking to bring this about?

The OECD has carried out some consultations on possible roles for companies in promoting institutional reform. Unsurprisingly, it received reportedly mixed views. Some said they would welcome such involvement, seeing business as a powerful and important player. Others were strongly opposed, fearing that such activity would simply legitimise inappropriate involvement by companies in the business of government.

Questions for this section include: does the company use its influence positively to avert conflict and promote broader reform? Does the company use its partnerships with host governments through joint ventures etc. to advocate respect for good policy practices? If large tax payments are made into weak fiscal systems, what possible risks are there that the money will be diverted or channelled into areas that will lead to greater damage?

So the question is - how useful is the tool for businesses that find themselves operating in weak governance zones?

On the one hand, it provides a useful, fairly comprehensive checklist of questions that a company should check against to ensure they haven't missed important implications. However many companies - especially bearing in mind that the OECD says that the Tool should also be relevant to small to medium sized enterprises (SMEs) - will find that there is not a great deal of guidance to help themselves to find answers to some of these questions.

Some businesses will certainly fear that the comprehensive nature of the Tool now raises expectations beyond where anyone is really sure they should be raised. Should companies really be encouraged to undertake energetic whistle-blowing in situations that may put their people in danger? Should they really be seeking to tell host governments that they should be reforming their governance in areas such as human rights and environmental protection? At what line does the company cross over into assuming responsibilities that are the sole responsibility of governments?

This starter for ten from the OECD asks useful and interesting questions for the company to consider, but there is a lot more work to be done before some of these fundamental issues are resolved. To some extent, that is understandable. This is not the definitive statement of OECD view of how to resolve issues in weak governance zones. It is advice to those socially responsible businesses that want to do the right thing when operating within those zones.

It does not deal with the primary role that host governments have to play. It does not examine the fact that some of the businesses attracted to weak governance zones are so attracted precisely because they have no interest in playing by the rules, and have identified an opportunity to get away with this. It does not deal with the commercial disadvantage to socially responsible businesses created when such others are better able to compete because of the unfair advantage they buy.

The Tool is useful for companies aiming to find their way. More work now needs to be done at addressing some of these more difficult questions.


You can download a copy of the OECD Risk Assessment Tool for Multinational Enterprises in Weak Governance Zones from the Resources section of the website http://www.mallenbaker.net/csr/CSRfiles/Resources.html

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In the news from the latest issue

Nepal: Relatives of killed workers sue US firm KBR for trafficking

US: Proposed Alaskan mine survives people's vote

Merck accused of dressing marketing up as science

Australia: Business lobby group warns over carbon trading

India: Tata Motors threatens pull-out from West Bengal

US: Climate change resolutions making impact on companies

Japan: Details of carbon labeling confirmed

Canada: Wal-Mart has union contract imposed

India: Rising protests against factory building

US: Fraud will cost firms $994bn this year

US: American Airlines accused of safety breaches

Ghana: Call for companies to help clear up electronic waste

US: Disneyland demonstration over hotel worker benefits

Uzbekistan: Major retailers call for end of child labour in cotton

... more news stories

To make any comments / suggestions re. this site, please contact mallen@mallenbaker.net
Business Respect - most recent edition added on 17th August 2008