Business Respect - CSR Dispatches No 103 - 17 Sep 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 look at climate change as a key issue in corporate social responsibility.

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/103.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

Corporate social responsibility may mean different priorities for different kinds of businesses. However, the one issue that seems to apply to all is that of contribution to climate change. In this issue we review some of the current developments in this area.

It's been a bit of a miserable couple of weeks for Hewlett Packard, with the enquiry into the board level leaking of information resulting in the demise of the company's chair, and a series of stories that the founders of the HP Way would have found immensely depressing. The question that is often most relevant in establishing whether a company is genuinely a responsible business is whether its values would survive a change of leadership at the top. HP still retains the elements of a values based business that put it in as one of the case studies in the Collins and Porras 'Built to Last' study of enduringly great companies, but it has suffered from real problems of leadership in recent years. Here's hoping that the company can emerge again to show that values-based businesses can survive temporary episodes of difficulties at the top.

There will be another three week gap between issues next time around, due to the fact that I will be attending the Asian Forum on CSR conference in Manila, and then going on to do meetings in Hong Kong and China during the few days following. If you're going to be at the Manila conference, don't forget to say 'hi' if you see me around.

Mallen Baker
mallen@mallenbaker.net

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CSR News 17 Sep 2006

China: Procter & Gamble denies claims of harmful products

Procter & Gamble has said that claims the company added harmful materials to one of its high-end cosmetic brands, SK-II, are false.

The company was responding to accusations by China's General Administration of Quality Supervision, Inspection and Quarantine which said that it had found chrome and neodymium in a batch of imported SK-II products. These materials are banned in China for use in cosmetics.

According to Procter & Gamble, the company does not add these materials to its SK-II products, and all products have also undergone rigorous safety and quality checks.

Both chrome and neodymium can cause skin problems, as well as other effects if ingested.

Europe: Market for socially responsible investment worth 1 trillion euros

Up to 1 trillion euros are now managed through socially responsible investment (SRI) funds in Europe, according to a study by the European Social Investmnet Forum (Eurosif).

The figure represents around 15 percent of assets invested in funds across Europe, and increase of 36 percent over the last four years when the last study was carried out.

According to the research, the main reasons for the continued growth in SRI are growing confidence in the credibility of the business case, the growth in regulations requiring transparency by business on social and environmental issues, and the growing integration of SRI research into analysis used by fund managers.

Honda announces breakthrough on bio-ethanol production

Honda's research and development arm and the Research Institute of Innovated Technology for the Earth (RITE) have announced that they have succeeded in producing ethanol from soft-biomass, potentially increasing the supply of what is considered to be a carbon-neutral fuel.

Bio-ethanol is thought to be carbon neutral because the CO2 released when it is burnt is balanced by CO2 captured by the plants originally.

However, the limits to production comes because to date it has been produced from materials that are also used as food. Now, the basic technology has been developed that can produce the fuel from inedible leaves and stalks of plants such as rice. The new process could potentially represent a big leap forward for the practicality of using bio-ethanol as a mainstream fuel.

China: Disney suppliers criticised

A report by a Hong Kong NGO has suggested that three factories in southern China which supply Disney pay workers below the minimum wage and require overtime beyond the legal maximum.

The survey by Students and Scholars Against Corporate Misbehaviour is based on interviews with workers at the Huangxing light manufacturing and Qisheng candle factories in Shenzhen and the Jianlong toy factory in Zhuhai, all located near Hong Kong.

It claims that workers can be required to work up to 136 hours overtime per month, well over the 36 hours per month allowed under Chinese law.

Walt Disney said in a statement: "When factory audits, or information otherwise brought to us by third parties, reveal noncompliance with our code, we seek to work with the factory and, if appropriate, the vendor or licensee concerned to develop a remediation plan to bring its operations into compliance with our code".

Genocide lawsuit against Talisman Energy falls

A lawsuit targeting Canadian oil company Talisman Energy over alleged assistance to genocide in Sudan has been thrown out by a judge in New York after the church group behind it failed to find evidence that was able to be used in court.

The suit had accused Talisman of having had involvement in war crimes, killings, kidnapping and rape during its time operating in Sudan. The company was forced to exit the country in 2002.

Judge Cote said that the plaintiffs had repeatedly made allegations relating to the actions of Talisman which had, on further examination, proven to be the actions of some other body, or an employee of some other company.

Talisman Energy welcomed the move, and said that its position had been vindicated by the ruling.

India: Coca Cola and Pepsi fight back in Kerala

Coca-Cola and Pepsi have mounted a challenge to the state government of Kerala's ban on the production and sale of their products following recent controversies over pesticide residues.

The companies, which have seen a market of 30m people closed to them, said that the ban was based on flawed results in tests carried out on products by the Centre for Science and Environment. In their court action, they have argued that only the central government in India has the competence to ban food products, and so the state government acted beyond its remit.

Coca-Cola and Pepsi also argue that the ingredients used to make their product achieve high quality standards.

Germany: Lufthansa settles price fixing suit

Airline Lufthansa has agreed a payment of $85m to settle over allegations of price fixing, ending a series of class action lawsuits that were pending over the company.

Lufthansa is one of over a dozen airlines investigated over claims of price fixing in both the US and the European Union. The companies were accused of having colluded to fix surcharges for fuel, security services and insurance.

Other airlines that have admitted they have been contacted through the investigations include American Airlines, United Airlines, British Airways and AirFrance.

Wal-Mart introduces sustainable fishing label

Wal-Mart has said that it is to introduce Marine Stewardship Council labelling on ten of its fish products in stores across the US. The move represents the latest move by the retail giant since it declared its intention to embrace environmental concerns back in February.

The chief executive of the MSC has said that the company's action represents a major milestone for Wal-Mart, with volumes of sustainably sourced fish set to increase significantly over coming years. He said: "We hope that this commitment will encourage other fisheries to join the MSC assessment process and provide a powerful new route for consumers to support sustainable fishing."

The company has set itself the target of achieving the MSC standard for all of its fish within five years.

US: BP savaged at Congress hearing

BP has been attacked for having policies "as rusty as its pipelines" at a US Congressional hearing into the partial closure of the Prudhoe Bay oil field.

BP business leaders admitted that the company had fallen short of the high standards expected, and predicted that the Prudhoe operation could resume full production in the next month.

Both parties united in attacking the company for having failed to properly inspect pipelines that provided essential services to the US - Prudhoe Bay is responsible for around 8 percent of US oil supply. They said that the company's former reputation for good management and environmental action had been damaged by the recent incidents.

Rather than 'beyond petroleum', said one, BP now stood for bloated profits, and broken pipelines.

BP has said that it is to spend $550m on its pipeline network in Alaska, and will replace 16 miles of pipeline.

China: Foxconn drops libel case

Foxconn has dropped its libel case against the two Chinese journalists that claimed that workers at a plant producing iPods were subjected to difficult and degrading conditions.

Foxconn and the newspaper concerned, China Business News, released a joint statement expressing mutual regret over the problems caused in the case, and promising to work together to protect workers' rights.

The suit was largely seen as an own goal by the company, with public support overwhelmingly with the journalists, particularly when the original claim for damages led to their assets, including their homes, were frozen.

CSR FEATURES from the Internet

Corporate responsibility: Why don't they trust you with CSR? - 13 Sep 2006 FROM Brand Republic

Successful brands were once built around meeting a consumer need with the right product, at the right price and of the right quality. Today, the marketing agenda has been hijacked by a much more difficult to define, but impossible to ignore, beast: corporate social responsibility (CSR).

CSR should be an intrinsic part of modern brand management, which means marketing and CSR departments need to work together. But for many marketers, ethics may as well be a foreign language and in most companies, the marketing and CSR departments sit on opposite sides of business with little, if any, communication between them.

Read full story

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Creating the climate for change

Article by Mallen Baker

It's been out for a while in the US, but in the UK we have just had a first pre-screen viewing of Al Gore's 'An Inconvenient Truth'. It has been a timely reminder of how much the issue of climate change continues to dominate a key aspect of the agenda for corporate social responsibility.

Business in the Community, in conjunction with several other organisations, had invited business leaders to attend the pre-screening, with the proviso that they also brought along with them a son or a daughter - those presumably who would be most inclined to put pressure on them to get on with the job. As it happened, both generations of audience were charmed and inspired by the show.

One thing that was notable, however, for a European audience, was just how much of the narrative was taken up with a lengthy rebuttal of the climate sceptics. This is a distinctively US debate, by and large, and there was some frustration that there wasn't a great deal more on solutions.

Every now and then, new reminders come along just how vocal and visible some of those sceptics have become. We now have a 'CSRWatch' website, devoted to shrill viewpoints about how corporate social responsibility is a plot by left wing NGOs to bring the free capitalist system to its knees. Indeed, I was even slightly startled to find myself quoted on such a website recently. "Mallen Baker says there is no business case for CSR", it said. A little out of context, that one.

It would be funny if it wasn't so obvious that, although the language used on these websites is at the extreme end, the basic viewpoint being espoused is shared in some fairly important places in the US.

In the mean time, others are just getting on with it. Businesses are now taking the lead, with some of the financial institutions beginning to explore what it means to be 'carbon neutral', and with a number of them having announced their achievement of this interesting state. Meanwhile, some of the States, most notably California recently, have begun to take the lead that is still lacking at the federal level.

These are important initiatives. The best way to rebut the argument that environmentally responsible management is bad for business is to show successful businesses taking the lead - and remaining successful. Gore, of course, illustrates this point tellingly in his film by drawing the contrast between the fortunes of Toyota, which has led on environmentally better technologies for motor cars, and GM and Ford which have resisted the raising of fuel efficiency standards and pinned their hopes on the biggest gas guzzlers.

I read one newspaper review of the film where the reviewer argued that it was a bit much to claim that this difference in financial performance was all down to the Toyota Prius. But that wasn't the argument - it is certainly clear that the action on environmental performance by Toyota hadn't HARMED its financial success. The argument doesn't need to prove cause and effect - there are a lot of reasons why Toyota has done well and most of them come down to good quality of management.

There are questions to be asked, however, about just how much of a panacea the condition of 'carbon neutrality' is. If every company decided tomorrow to offset its carbon, it would quickly become obvious that the mechanisms currently used are not really scaleable, and ultimately we will need to confront the processes required to achieve much lower energy intensity to maintain the lifestyles that people will want to preserve. This is not easy. The challenge was rather underlined at our pre-screening event when one senior executive declared that the beauty of carbon offsetting was that it meant you could continue to drive your Jaguar and just pay a little extra to have the carbon offset.

It is no accident that it is largely financial institutions and other low carbon emitters that are currently embracing carbon offsetting. If a BP or a Shell sought to achieve the same, we would find very quickly that for higher impact industries the cost goes up a lot higher as the easy offset options are exhausted. Ultimately, it is not that cheap to remove carbon from the atmosphere. Individual offsetting is no alternative to strategic energy use planning, product innovation and lifestyle adaptation to achieve what the science currently tells us we need to achieve - significant reductions to the tune of 60 percent worldwide.

However, what the carbon offsetting move by these businesses does achieve is that it shows organisations beginning to seriously engage with the challenge of what it means to be a genuinely sustainable business. Even if we haven't yet achieved the answer, the seriousness with which the question is being put is encouraging.

Ultimately, however, there is such a thing as too late in this game. The consequences of global warming already being felt across the globe are serious enough to think that we may already have passed that point - certainly that we need to redouble the sense of urgency with which we are taking action. That is why it is so important that Gore, and the more progressive members of the Republican party, triumph over the sceptics.

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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

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Business Respect - most recent edition added on 17th August 2008