Business Respect - CSR Dispatches No 104 - 8 Oct 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 issues of trust, and whether companies now face greater challenges with the rise of new social networks.

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/104.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

I've had a busier couple of weeks than usual this last period, with presentations and company meetings in Manila, Philippines, Hong Kong and Guangzhou, China. In particular, I would like to thank all of those that approached me during that week to comment on the newsletter - it was great to get some really useful and positive feedback.

I found myself co-emceeing the Asian Forum on CSR Awards, which was a fascinating experience. First of all, there were some really great examples of CSR in action across a range of issues. I would like to congratulate 3M and Unilever Philippines, who headed up the environment category for which I chaired the judging panel. There was a mix of home grown businesses and international firms, but these two showed very effectively that their commitment to sustainability was something that ran throughout their operations, not just something for the folks at head office.

Thanks to the British Consulate General and the British Council for supporting the extension of my visit so that I could do the meetings in Hong Kong and China. I think they were useful, and certainly there seemed to be some good feedback.

In addition to the globe trotting, I've been becoming more and more interested recently in how issues of trust for companies are being transformed by the growing importance of individual voices in the online social networks and the so-called blogosphere. The issues are explored in this issue's article.

This last week also saw the launch of the revised Global Reporting Initiative framework. The large number of people attending the event is certainly testament to the importance the GRI has now achieved within the CSR movement overall. We would welcome any thoughts from those of you that attended as to what your takeaway was, and how the revised GRI is being greeted in your organisation.

Mallen Baker
mallen@mallenbaker.net

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CSR News 8 Oct 2006

Coca-Cola Colombian bottling plant lawsuit dismissed

A US federal judge has dismissed a lawsuit against Coca-Cola bottling plants in Colombia that alleged that the company was complicit in the murder by paramilitary groups of labour union organisers.

The judge ordered the case closed on the grounds that the allegations were not specific enough as a case in law, and in any case the court does not have jurisdiction.

Coca-Cola has always denied the charges, and said that it was "gratified" by the outcome. The charges over Colombia have always represented the most serious of the attacks on the company, with 'Killer Coke' campaigns catching the imagination and the indignation of many. A third party investigation of the issues in Colombia is currently underway.

The initiators of the suit are currently considering an appeal.

US: Companies sign up for healthier snacks at school

Five companies have agreed to replace current offerings in school vending machines with healthier products under an agreement brokered by former president Bill Clinton and the American Heart Association.

The companies, PepsiCo, Mars Inc, Kraft Foods, Campbell Soup and Dannon have agreed to the measure as the latest move in the drive to include nutrition and health for school children in the face of growing levels of childhood obesity. It follows a previous move earlier this year, including Coca-Cola, Pepsi and Cadbury Schweppes that agreed that the companies would stop selling non-diet soft drinks in schools.

The AHA and the William J. Clinton Foundation said that they would begin monitoring performance amd will report on the impact of the guidelines at two year intervals up to 2011.

UK: Greenpeace gives rare praise to supermarkets on fish

Greenpeace has produced its updated league table for UK retailers on sustainable sourcing of seafood and has acknowledged that the supermarkets are leading a considerable movement of change.

The campaign group, which is calling for the supermarkets to stop selling beam trawled seafood, praised many of the companies for having made serious progress in dropping the sale of what it describes as desctructively fished species.

As in previous years, Marks & Spencer and Waitrose head the list, with their longstanding and developing commitment to sustainable sourcing. ASDA, which was placed at the bottom of the league table last year, was held to have risen to fifth place following Wal-Mart's commitment to seriously ramp up its sustainable sourcing of fish over the coming three years.

Greenpeace said that: "Supermarkets are in a prime position to drive forward the protection of the oceans. They should be praised for the considerable progress that they have made in the last year but even the best can do better."

The group has renewed its call for the ending of beam trawling, which it describes as indiscriminate and destructive. "Up to 70 percent of what is caught in the net is thrown away as waste".

Wal-Mart pestered over marketing to children

Wal-Mart has provoked a new storm over a new web-based marketing programme aimed at children promoting toys in the run-up to Christmas.

The new micro website features renegade elves "Wally" and "Marty" who encourage children to help them review toys, which can then be chosen by the children and a wish-list emailed to adults.

The campaign has angered childrens organisations, who have described it as the store putting itself between parents and their children and feeding the phenomenon known as 'pester power'. Many other retailers have gone to some lengths to be seen only to market such products towards adults, or to make approaches to children that require the consent of adults, in the light of sensitivities over the issue.

China and India companies 'most likely to bribe'

The latest update of Transparency International's Bribe Payers' Index, covering 30 exporting countries, has identified firms from China and India as being the most likely to pay bribes when abroad.

In addition, French and Italian companies were named as being the worst for paying bribes specifically in low-income countries, suggesting double standards between practices at home and abroad.

Transparency International chief executive David Nussbaum criticised OECD companies for continuing to pay bribes in order to do business.

The survey was produced using responses from more than 11,000 business people across 125 countries.

Switzerland and Sweden were named as the countries whose companies are the least likely to bribe.

UN study casts doubt on future of CSR reporting

An internal UN study suggests that company CSR reports will remain a minority practice, losing momentum and influence, according to the Financial Times.

The study suggests that such reports will remain a niche practice for transnational companies based in industrialised countries, and not reaching those functioning in emerging markets. It suggests that by 2020 only 11 percent of transnational companies will provide such information.

The leaked report, commissioned by UNEP, comes as the Global Reporting Initiative is due to launch its revised framework at its Amsterdam conference. It was based on interviews with people from companies, NGOs and other interested bodies.

India: Kerala ban against Coke and Pepsi overturned

Coca-Cola and Pepsi have won their attempt to get the ban on their products in Kerala overturned.

The court judged that the ban on sale and production of the drinks, brought in following the recent NGO claims that they contained high levels of pesticides, was harsh and unjust.

Coca-Cola and Pepsi said that their drinks were safe for consumption, and had criticised the NGO report for its methodology.

The main legal point that led to the ban being overturned was that the state government had exceeded its powers in ordering the ban. Such a ban can only be ordered by the national government.

China: Controversy over SK-II continues

Procter & Gamble has begun a recall of some of its SK-II products that have been accused of containing excessive traces of heavy metals, but only if customers agree to sign a statement recognising that the products are safe.

China has said that it will block imports of the products if problems of contamination with chromium and neodymium are detected in future batches.

Following the partial recall by the company, nine of the products have been withdrawn. Consumers can only return products they have bought if they sign a "safe product" agreement, otherwise the company says that the products cannot be withdrawn.

A representative of the Beijing lawyers association described the agreement as inequitable and encouraged consumers to refuse to sign it.

Profits from Virgin travel companies to go towards climate change

Sir Richard Branson has pledged $3bn to fight global warming, including all profits from his travel firms including airline Virgin Atlantic and Virgin Trains over the next 10 years.

The funds pledged will be invested in renewable energy development, according to Sir Richard, who made the pledge as part of the conference organised by the Clinton Global Initiative.

"We must rapidly wean ourselves off our dependence on coal and fossil fuels," Sir Richard said. He added that transport and energy companies needed to be at the forefront of developing business strategies to protect the environment.

US: California suing car manufacturers over climate change

The state of California is suing six car manufacturers over the costs associated with the impact from their cars in contributing to climate change.

The companies, General Motors, Toyota, Ford, Honda, Chrysler and Nissan, are being asked to pay compensation for the damage inflicted on health, economy and the environment by their emissions, which make up 30 percent of the emissions in the state.

The suit alleges a number of impacts on California, including a reduction of the snow pack which is a source of fresh water and raised sea levels.

The industry body, the Alliance of Automobile Manufacturers, called for the suit to be dismissed as a "nuisance" suit.

ExxonMobil caught in climate change row

ExxonMobil has found itself caught in a war of words with the UK's premier scientific academy, the Royal Society, which has written to the company and challenged it to stop funding misrepresentations of the science of climate change made up of outright denials of the evidence.

The move, unprecedented in the history of the Royal Society, was accompanied by a strong criticism of the company's public statements on global warming contained within its 2005 Citizenship report, which the Society said were "inaccurate and misleading".

ExxonMobil has provided funding for a number of policy groups which have produced materials aiming to raise doubt over the science of climate change. For example, the International Policy Network, which produced a report claiming that global temperature rises were not related to human activity.

Exxon has responded to the charges, and media coverage of them, with a statement denying the charge, and arguing that the Royal Society letter unfairly describes the company's position."Our views on climate change are clearly described in our company publications. We know that carbon emissions are one of the factors that contribute to climate change - we don't debate or dispute this. We agree with scientific assessments which conclude that climate change poses risks that may prove to be significant for society and ecosystems. Consequently, we should take, and ExxonMobil is taking, steps to reduce and minimize carbon and other greenhouse gas emissions from our own operations."

The company added that it is funding work at Stanford which aims to reduce carbon emissions through technological innovation.

CSR FEATURES from the Internet

To Buy or Not to Buy HP? A Question of Ethics - 27 Sep 2006 FROM The Washington Post

Few corporations deserve to be equated to Richard Nixon's White House or Enron, but Hewlett-Packard seems richly entitled to that comparison. And unlike those two arch-villains, HP awaits your judgment the next time you walk into any computer or electronics store. What do you do?

Read full story

Google: socially responsible or a villainous corporation? - 22 Sep 2006 FROM

Google's motto, informally, is "don't be evil". So it's fair to say that they aim to make their practices morally admirable. In fact, that's exactly what Google's Code of Conduct claims to set out to do: it is a "set of rules meant to inform all [Google's] actions" to which Google, as an employer, expects all employees, consultants, directors, and so on to adhere to. The core of the code, Google explains, is that, "being Googlers means striving toward the highest possible standard of ethical business conduct."

Read full story

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Holding your company in trust

Article by Mallen Baker

In an ideal world, you would be able to show that the growing interest in the social and environmental performance of business had resulted in a direct sales benefit for good behaviour. In spite of the growing number of successful ethical niche products, this is not something that can currently be done - but there is one important correlation and it comes down to trust.

Any marketing director or CEO might be tempted to argue to bland statements to the effect that their business needs to adopt corporate social responsibility in order to attract more sales. Although there are countless surveys out there in which large numbers of consumers say they would rather by from companies that show good citizenship than those that don't, they know only too well that the percentage that really reflect this in their buying behaviour is tiny.

Even those surveys that invite people to indicate whether they have actively taken action on their beliefs give only a partial picture. Anyone that has boycotted one product for any reason at all will show up in those surveys - it is no indicator of a pattern of behaviour that should encourage companies to take action in the expectation of a direct return.

There are many factors that may lead a customer to consider buying your product. Price and quality remain the most significant. There may be some affinity with the brand, which may be based on a number of different factors. There's certainly a sense of peer approval, when certain brands are 'in' and others are not.

But one factor that even that CEO and marketing director would agree is a key component is trust. If the customer for whatever reason does not trust the company, or the brand, then it will damage the chances that the customer will purchase that product. Without trust, it is a much harder sell.

Likewise, an entire business sector may lose trust, which may be less immediately damaging to an individual company, but it is corrosive of the business environment, leading to more potential regulation and if there are problems no reservoir of public goodwill to call upon.

The best source of information we currently have on the component parts of trust is the Edelman Trust Barometer. This annual survey shows what are the component parts of trust, and also shows how, across the world, different business sectors are currently faring.

The most recent edition shows an emerging phenomenon which many of us would recognise. There is a gradual breaking down of trust in previously accepted authorities. Now, for the first time, "someone like me" - ie. a peer - is seen as the most credible spokesperson about a company. Indeed, this phenomenon is emerging in every country covered by the survey.

In this context, "someone like me" doesn't necessarily mean the ordinary person in the street - it is literally referenced to the level, the interests and the concerns of each person. Views have now become increasingly customised to the individual.

Brands are now much more driven by word of mouth, much more now than they are by advertising. Everything is becoming more tailored to the indivdual, whether it is choice in the build of your Nike shoes, or the exact specification of your computer ordered on-line. Therefore product recommendation is increasingly focusing on sources that are highly specific to your interests - rather than taking a one-size-fits-all model based simply on quality and price.

Of couse, what can work for product recognition can also work for corporate criticism. The growth in online social communities, bloggers and the like, means that the words of 'people like me' can become amplified across the globe. A recent white paper on the influence of bloggers by Market Sentinel, Onalytica and Immediate Future, gives the case study of how criticism of quality and service from Dell by an influential blogger sparked a series of "Dell Hell" stories that cross the globe and significantly damaged the company's image.

Jeff Jarvis bought a Dell laptop, and took at a more expensive service agreement that meant that the company promised to fix the machine at his house if it went wrong. It went wrong big time, but the company told him that if an engineer did go to his house, he wouldn't have the right parts, so he might as well send it in. Jarvis then posted a "Dell lies, Dell sucks" message on his blog, that began quickly to attract lots of other "me too" stories from similarly afflicted customers.

In a survey then of all stories focusing on Dell and customer service, the single source that had influenced the most pieces of writing about Dell's customer service in mainstream media and elsewhere was Javis's blog. This is an important point - the Edelman Trust Barometer shows that 'bloggers' as a whole are not especially prominent in the universe of trusted sources, but increasingly journalists and others that project into mainstream media are using bloggers as their information sources. This potentially turns the voice of a "blogger" into the story of "someone like me".

This phenomenon can focus upon any of those aspects which build or destroy trust in a company. According to Edelman, products and services remains the most important element of trust, but accompanied by aspects such as socially responsible activities, good employee relations and dialogue with all stakeholders.

A few years ago, we used to say that companies now had to pay closer attention to their social responsibilities across the world because an NGO in any part of the world could catch them doing something wrong and have the information beamed across the world in an instant. Now, the phenomenon has become even more powerful. The fact is that any individual, a staff member, a disgruntled customer, a chance witness, as well as those NGOs and journalists, can achieve the same.

The ability for companies to gain, and retain, trust in their brands is much more dependent on an ability to proactively manage the issues around their relationships with customers, employees, local communities, suppliers and third parties that may be impacted. The majority have yet really to understand the nature of the shift that is taking place.

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In the news from the latest issue

Apple suppliers in bribery charges

UK: Gap, Next and Marks & Spencer respond to Indian worker abuses

British court delays Yevgeny Chichvarkin extradition hearing

New integrated reporting coalition launched

Netherlands: Trafigura guilty of exporting toxic waste

Kazakhstan: Philip Morris suppliers used child and forced labour

US: Nestle to drop 'deceptive' health claims

China: Hang Seng launches corporate sustainability index

Monsanto GM seed ban is overturned by US Supreme Court

Bhopal trial: Eight convicted over India gas disaster

Nestle announces NGO partnership to verify palm oil

Macmillan faces World Bank ban over Sudan payments

Mining giant BHP Billiton admits it may have bribed foreign officials

Foreign firms pledge not to give bribes in Russia

... more news stories

To make any comments / suggestions re. this site, please contact mallen@mallenbaker.net
Business Respect - most recent edition added on 9th August 2010