Business Respect - CSR Dispatches No 111 - 8 Jul 2007

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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 the issues around vulnerable customers to coincide with the launch of the All Party Parliamentary Report to take place later this month.

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/111.html.

Copyright 2007 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

This month, the All Party Parliamentary Group on CSR - a UK group of parliamentarians interested in the subject - will be launching the report following its inquiry into vulnerable customers. It is a project that I have provided the drafting input for, and constitutes one of the reasons amongst several this newsletter has been somewhat erratic in appearance of late. I am still trying to sort out the time management challenge on that one. In any case, the issue is a good one, so I thought I would break with tradition and use the same article here I have used for my Ethical Corporation column since it gives an overview of what the issues around vulnerable customers are about.

The vote on the website will be changed before the next issue, so just a week or so left to register your views. As things currently stand:

Recent announcements by the big supermarkets about environmental practices represent:
A real shift towards sustainable practice 224 (28%)
A small step only, with much more needed 354 (45%)
Nothing but cynical public relations 211 (27%)

Thanks as alwasy to the 789 people that have voted.

Mallen Baker
mallen@mallenbaker.net

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CSR News 8 Jul 2007

Nigeria: British American Tobacco faces accusations of targeting the young

British American Tobacco and other tobacco companies are being sued by four Nigerian states over allegations that they targeted young and underage smokers in Nigeria to increase smoking rates.

According to lawyers for the state of Kano, the companies sponsored pop concerts and sporting events, even in some cases giving away free cigarettes to entice minors to take up smoking. The state is aiming to win costs of treating smoking-related diseases, with damages in the region of just under $40bn.

Much of the evidence for the legal action is to come from tobacco companies' internal documents, released in the US in the 1990s.

BAT has described the allegations as completely unfounded. “We don’t market to children and we have never attempted to do so,” the company said. “We also actively lobby governments to raise the age at which people are allowed to buy tobacco to 18.”

Global Compact Summit: Leaders boost momentum for change

The Global Compact Leaders Summit has seen a range of initiatives and pledges aimed at boosting the momentum behind responsible business practice worldwide.

At the Summit, executives of corporations including Coca-Cola, Petrobras, Fuji Xerox, China Ocean Shipping Group and Tata Steel adopted a 21-point Declaration, which spells out concrete actions for business, governments and United Nations Global Compact participants.

The event also saw a raft of other initiatives launched.

The 'Caring for Climate' initiative saw CEOs of 150 companies worldwide, including 30 from the Fortune Global 500, committing to speed up action on climage change and calling on governments to agree post-Kyoto action as soon as possible.

'The CEO Water Mandate' brought together the CEOs of Coca Cola, Levi Strauss, Läckeby Water Group, Nestlé, SABMiller and Suez to urge businesses to take immediate action to address the global water crisis. They launched “The CEO Water Mandate”, a project designed to help companies to better manage water use in their operations and throughout their supply chains.

Also launched at the Summit, the “Principles for Responsible Investment” seek to disseminate the tenets of corporate citizenship among capital markets. The “Principles for Responsible Management Education” seek to take the case for universal values and business into business schools around the world.

UN Secretary-General Ban-ki Moon told participants that “through several groundbreaking reports, you have made it abundantly clear that market leadership and sustainability leadership go hand-in-hand. This will help us build the supportive measures needed to create more sustainable markets. And it will ultimately help improve the lives of many people around the world.”

UK: McDonald's turns cooking oil into biodiesel

Fast food company McDonald's has announced that the cooking oil it uses in its UK restaurants will be re-used as fuel for its fleet of lorries.

The company says that the move will cut its UK carbon emissions by 75 percent, which is the same as taking 2,400 cars off the road. McDonald's has already switched its fleet in Austria to biodiesel based on cooking oil.

The UK fleet constitutes 155 lorries, which are expected to be converted to biodiesel by the end of the year. The fuel will be made up of 85 percent used cooking oil against 15 percent pure rapeseed oil.

US: Kohl's withdraws Daisy Fuentes clothes over sweatshop attack

Kohl's has withdrawn some lines of its Daisy Fuentes clothing brand after one of its Guatemalan suppliers was accused of operating a sweatshop where workers are forced to work unpaid overtime.

The National Labour Committee in New York released a report detailing complaints by workers at the Fribo Factory. It alleged that employees worked 60 hours or more a week, with mandatory overtime and 6-10 hours per week of unpaid overtime. Workers also complained of working in hot factories with little access to drinking water, toilet paper or soap in bathrooms and having to endure humiliation by management. The company has asked its agent PA Group LLC to investigate the allegations and to seek changes to working practices to make them acceptable.

The company denied that either the company or Daisy Fuentes, a Hispanic television personality, were aware of the conditions or to blame for them. "Under no circumstances were Kohl's or Daisy Fuentes involved or consulted in the selection or approval of this factory," the company said.

Wal-Mart critics leave to join political campaign

Two of the key figures behind the anti Wal-Mart campaign are about to leave to join the presidential campaign of Democrat John Edwards, raising questions about whether the recent aggressive campaign approach will begin to lessen.

Paul Blank and Chris Kofinis of Wake Up Wal-Mart are likely to leave in a few days. The group most recently launched television ads attacking the company over the quantity of its product imported from China, with more attacks planned for the coming weeks.

The campaigners insist that Wake Up Wal-Mart will be unaffected by the move. In recent years, the organisation has organised large rallies and protests, as well as the 'Change Wal-Mart, Change America' bus tour that visited 35 cities. The group's 'constant campaign' attacked the company on different issues each month.

Wal-Mart has drawn some of the sting from its critics in recent years with a partnership with Service Employees International Union (SEIU) on universal access to affordable health care, and a radical action plan on environmental issues. However constant criticism over labour issues has harmed the company.

Korea: Google to introduce age verification on searches

Google has conceded to a request by the South Korean government to introduce age verification on the results of certain searches via the Korean Google website.

Google will introduce a chekcing system for its Korean language searches in Summer this year.

Some has seen the company's action has taking new steps in protecting vulnerable customers, ie. children, from accessing harmful adult content. Searches that contain sex-related keywords will trigger the system. This will then be strengthened with SafeSearch applications, which is Google's conventional service to filter adult content on request.

Others however have criticised the company for taking actions that echo its agreement with the Chinese government to filter search results to suit the government's censorship objectives.

Potential danger from wholesale move towards biofuels

The UK investor Co-operative Insurance (CIS) has added its voice to concerns raised about the huge growth in interest in biofuels as part of the solution to climate change, suggesting that long-term impacts may be being ignored in the rush to embrace an easy solution.

The company has said that it will approach the companies in which it invests to ensure they are aware of the potential pitfalls if proper sustainability criteria are not built into their supply chains.

Production of key crops such as soya beans and corn has been boosted as the search for alternative fuels has begun. But environmental campaigners have highlighted the high cost of the product in terms of land space used, potentially at the expense of other environmentally important environments, such as rainforests.

The CIS statement follows a similar message from the United Nations the previous week about the potential down side of the expansion in biofuels.

CSR FEATURES from the Internet

Their dreams unraveled - 7 Jul 2007 FROM LA Times

It was a story of hope: a Central American sweatshop transformed into a unionized, worker-run apparel factory, thanks to nearly $600,000 in loans and donations, including help from retailers Gap Inc. and Lands' End and the AFL-CIO.

Boosters traveled to U.S. college campuses and church basements, touting the Just Garments plant in El Salvador as a company looking to do well by doing right by employees. Impoverished Salvadorans saw a chance to earn better wages and have a say in their future.

Read full story

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The invisible problem

Article by Mallen Baker

At first glance, you may not even see them, or notice them. But how you do business may do them desperate damage, or give them a lifeline. They are your vulnerable customers.

How do we define vulnerable customers? They are groups of customers who are especially vulnerable to some aspect of your product or service – unusually so and potentially therefore able to be overlooked. Treating them well goes beyond a simple duty of care to make sure that under normal circumstances your product does not cause harm.

The UK’s All Party Parliamentary Group on CSR recently concluded an inquiry into how companies deal with vulnerable customers and is due to report in July. The inquiry heard about children and how they can be protected from adult content on mobile phones and the web, people with addictive tendencies and how to help them avoid problems with alcohol and gambling, people outside the financial system and therefore excluded from basis services, and people with eating disorders and what can be done by the food companies.

There are different kinds of vulnerabilities, and each needs a different approach. There are vulnerabilities of personality – some inherent trait that may lead people into patterns of consumption that do them harm. There are vulnerabilities of experience or understanding – where lack of experience or barriers to understanding may leave people open to malicious or accidental harm. There are vulnerabilities of physical frailty or disorders, where unusual reactions to normal circumstances may lead to harm. Then there is vulnerability of access, where barriers to accessing basic essential services exist.

These are often issues that hit the headlines. When the UK Parliament’s leader of the opposition David Cameron made speeches attacking sexualised clothes for children, or special offers by retailers on large chocolate items, he was effectively highlighting vulnerable customer issues.

Ironically, they can nevertheless be issues that simply slip off the radar. There is nothing within, for instance, the Global Reporting Initiative to encourage or require companies that are consumer facing to report on issues relating to vulnerable customers. Many companies don’t report on such issues – indeed may not have thought at all about which vulnerable customers they have.

But there are approaches that can make a difference. It starts with the marketers, since the first tool of the trade comes from really understanding your customers. Market research into what makes your vulnerable customers tick, and what are the things that may give them problems, needs to become a much more common aspect of marketing. Are there business opportunities in providing tailored products specifically for the needs of this group? Is there an approach to marketing that can be effective that avoids the pitfalls?

Both Camelot and Cadbury, for instance, have utilised market research to better understand the triggers and problems in their respective vulnerable customer groups, and to reflect this knowledge in their approach to marketing. Other approaches to market research could be used to challenge certain assumptions that industry have around expectations of damaging practices – for instance the use of so-called ‘size zero’ models is so widespread in the fashion industry that you have to go to a specialised agency to get a model of size 12. The assumption that this is what the customer demands could usefully be challenged by such market research.

This approach is useful for vulnerabilities around personality. Other issues require different approaches.

Overall, however, the All Party Group report is likely to recommend that all sectors should at least review whether they have vulnerable customers or, in the case of business-to-business firms, whether their customers have vulnerable customers the issues for which should be addressed at their stage of the production process.

And it is likely to highlight that companies and policy makers need to tread with caution to avoid unintended consequences. For instance, Cadbury found that moves to seek to encourage people to eat smaller portions of chocolate in the face of problems of obesity could inadvertently stoke the problems with customers whose compulsions went to obsessive dieting.

Already you can see some of the evidence of action making its way into CR reports. Over the next couple of years this should become a standard.


This article was first published in Ethical Corporation.

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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