Business Respect - CSR Dispatches No 113 - 30 Sep 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 consider the current state of play in corporate social responsibility across the world.

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/113.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

We're back - after a rather extended leave of absence. Thanks to all those who emailed and pointed out that they had noticed the absence of the Business Respect newsletter in their email boxes. And apologies to those that emailed and never got a response - some kind souls stole a laptop computer with a number of these emails on not yet answered, so they were lost for good.

There has been a rash of research being published about current opinions or trends on corporate social responsibility. One of these is the focus of this issue's article. Another was the one covered in the news stories about the ongoing scepticism of the general public and MPs about whether businesses really mean it when they get involved with CSR.

To be honest, I have always felt those sorts of opinion polls pose questions rather than answer them. When there is such a variance of views about WHAT CSR is about, about WHY companies should involve themselves in it, and HOW this commitment should be expressed, then one is never really clear what the opinions are really saying. Because the people that wrote the questions put their own perspective at the heart of the subject. Still, it is always interesting to get snapshots of the public mood, even if it is filtered through a particular lens.

Mallen Baker
mallen@mallenbaker.net

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CSR News 30 Sep 2007

Colombia: Government to seek Chiquita Brands extraditions over death squads

The government of Colombia has said that it will attempt the extradition of executives from Chiquita Brands if they have broken local law in paying off paramilitary groups responsible for atrocities and massacres.

The statement came in response to a deal struck at a US court whereby Chiquita pleaded guilty to paying protection money to the United Self-Defence Forces of Colombia and was ordered to pay a $25m fine. Colombian Vice President Francisco Santos said the deal was outrageous and the proceeds from any fine should go to the victims of violence.

The foreign ministry said in a statement: "If the conduct of executives at the banana company Chiquita Brands constitutes any crime in Colombia, then we will ask, with the help of the attorney general, for those people to be extradited".

Burma: UK Campaign criticises companies that invest in Bura

The Burma Campaign has challenged 150 companies that it says currently invest in Burma with the argument that "if there is a crackdown and the regime opens fire, you have paid for the bullets".

According to the campaign, there is a total of 1.2bn uk pounds investment in Burma through the travel, timber, gems and clothings sectors, including from a number of UK companies. It alleged that businesses doing business in Burma are predominantly motivated by employment conditions such as cheap salaries, the absence of unions, limited health and safety laws and a minimum working age of 13.

One of the companies on the campaign's list, Rolls Royce, has defended its work in Burma. According to the company, its operations are restricted to engine overhauls for two airlines designed to ensure safe operation for the benefit of passenger safety.

Wal-Mart pledges more environmental measures

Wal-Mart has announced that it is to only sell concentrated liquid laundry detergent as part of a move to encourage change in the retail industry and reduce materiels usage. It is also to measure carbon emissions in the supply chain across seven product categories.

The move was publicised at the third annual meeting of the Clinton Global Initiative.

Wal-Mart sells a quarter of all liquid detergent sold in the US, and the move is expected to be powerful with the top laundry manufacturers. The company will begin the programme next month, with a phased roll-out going through the subsequent six months.

According to the company, its initiative should save over 400 million gallons of water, 95 million pounds of plastic resin and 125 million pounds of cardboard.

Business leaders: CSR importance grows in spite of gloomy business outlook

A survey of business leaders has found that belief is growing in the ability of corporate social responsibility to increase profits, as well as the conviction that having good environmental management is more than purely public relations-driven.

The survey, carried out on behalf of Grant Thornton, predicted that there would be an increase in corporate funding for CSR issues, particularly the environment, in spite of the fact that this is against a backdrop of a slump in general business confidence.

According to the survey, nearly a fifth of companies have appointed a specific person to be responsible for their CSR programmes. They felt that customer pressure was the key factor now driving developments forward, aided by growing shareholder interest. Obstacles included short-termism focused around quarterly results, difficulties in measuring the success or return from initiatives, and challenges with what Grant Thornton described as "non-supportive corporate cultures".

China: Mattel apologises for toy design flaws

Beleaguered toy firm Mattel has issued an apology to China admitting that recent recalls of toys on safety grounds have been the company's own responsibility due to design flaws. Recent coverage had made the assumption that problems had been caused by poor standards in China.

The apology was delivered by Mattel's executive vice president for worldwide operations, Thomas Debrowski, at a meeting with reporters, company lawyers, and the Chinese head of product safety Li Changjiang. Li had accused Mattel of having weak safety controls.

Debrowski said that the company apologised to the Chinese people, as well as all the customers who received the toys. He said the recall had not been caused by any manufacturing flaw in China's manufacturers. Around 65 percent of the company's products are made in China.

FTSE4Good deletes Toyota, Honda, Agilent and others from index

FTSE4Good - one of the leading ethical indices - has announced that some of the best regarded names in responsible business practice are to be dropped from its index as having failed one of its criteria.

Toyota, Honda and Agilent Technologies - all of which have been seen as leading businesses in terms of environmental or CR innovations - have been removed for not having met the FTSE4Good human rights criteria, with Agilent also marked down for not meeting provisions around countering bribery.

The FTSE4Good inclusion criteria change over time, a process intended to provoke continuous improvement in the listed companies.

Whilst being dropped from FTSE4Good for failing human rights criteria, Agilent Technologies has pointed out that the Human Rights Campaign Foundation has awarded the company a 100 percent rating in its sixth annual Corporate Equality Index.

Vietnam latest country to set up Global Compact network

A new UN Global Compact network with more than 100 businesses has been launched at Ho Chi Minh City by the UN and the Vietnam Chamber of Commerce and Industry.

The launch makes Vietnam the latest to create a business network focused on the principles on human rights, labour standards, environmental protection and anti-corruption.

Doan Duy Khuong, Chamber of Commerce and Industry vice president, said: "It is important to promote a transparent debate on CSR in Vietnam, and it is even more important to understand the implications and positive benefits it can bring to companies and to Vietnamese society as a whole".

Vietnam is now one of over 60 countries that has an active network. Its launch coincided with the annual Asian Forum on CSR conference taking place in the city, celebrating the growth and development of CSR thoughout Asia.

UK: Consumers and MPs sceptical about CSR

According to new research, nearly half of the general public and two thirds of members of the UK parliament believe that corporate social responsibility is more about enhancing company image than its claimed social benefits.

The research, carried out by BPRI and BMRB, suggests that only 11 percent of the public believe that companies genuinely care about helping their local community. At the other end of the scale, 10 percent believe that it is only about providing reassurance for shareholders.

BPRI described the research as "a wake up call" for companies to stop exploiting CSR purely for the purposes of media coverage in ways which might trivialise genuinely good motivations for undertaking CSR.

CSR FEATURES from the Internet

Ethical Evangelists - 28 Sep 2007 FROM Management Today

With the stark realities of global warming ever more evident, the public is fixated on finding sustainable ways of living and consuming.

The anxiety is being picked up by leaders keen to be seen to be Doing the Right Thing, their saintly fingers crossed in the hope that it won't hit profits. A new chapter opens in the CSR story.

Read full story

Why doing good means doing well - 28 Aug 2007 FROM Daily Telegraph

The world's largest 800 non-financial companies account for as much economic output as the world's poorest 144 countries. While companies are not tasked with the responsibilities of governments, their scale and influence necessitate their involvement in coping with environmental problems such as greenhouse gas emissions and other social problems, including epidemics and urbanisation.

Read full story

Recent entries from Mallen's blog

Robert Davies 1951-2007 - 20 Aug 2007

I learned with sadness today that Robert Davies, the chief executive of the International Business Leaders Forum, sadly lost his recent battle against cancer at the weekend. Read more

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So what is the state of responsible business in the world today?

Article by Mallen Baker

You've heard the hype, and the theory. But where is corporate social responsibility really strongest across the world, and which companies are really doing what? New analysis published by research firm EIRIS goes some way towards answering the question.

EIRIS is a not-for-profit research organisation that supports socially responsible investment with research into the social, environmental and governance track records of large numbers of companies. It supports the FTSE4Good index, which is one of the best known investment-focused benchmarks covering this area. Now it has published some analysis drawn from its immense data store of corporate activity - "The state of responsible business: Global corporate response to environmental, social and governance (ESG) challenges".

The report contains a number of key messages that confirm suspicions, as well as a few that challenge assumptions.

Across the world, corporate social responsibility is evolving into a core business concern, rather than something which is centred purely on philanthropic matters. Of course, there are different themes for different countries, but everywhere the trend is towards greater focus on factors that affect the businesses' ability to execute its core function.

Europe is furthest ahead in this trend, although that generalisation itself belies the huge diversity within Europe with regard to themes and understandings of the role of business in society. According to EIRIS this relatively advanced progress is explained by a more mature Socially Responsible Investment (SRI) market, a history of pressure from campaigning non-government organisations (NGOs) and a strong regulatory environment.

On matters of environmental management and innovation, Japanese companies dominate, with European firms close behind. Over 90 percent of high impact companies in Japan and Europe have basic or advanced policies for managing environmental impacts. US and non-Japan Asian companies fare pretty poorly.

In the area of human rights, there is a mixed story. 75 percent of European companies operating in countries with a high risk of human rights abuses have policies to cover these aspects of their operations. This compares with 40 percent of North American companies, and less than a sixth of Asian companies. According to EIRIS, the low percentage ratings for US companies is largely because of their frequent omission of the principles of collective bargaining and freedom of association from human rights policies.

One of the most consistently poor areas, however, is that covering supply chain management. With increasing numbers of companies operating global supply chains, particularly in Asia, there is a real gap in coverage here. With the exception of Europe, the majority of companies show little evidence of having developed basic or advanced supply chain policies. Even in Europe, the figure only gets as high as 50 percent.

Equal opportunities is another challenging area in quite a few parts of the world. Most companies in North America, Europe, Australia and New Zealand have basic or advanced equal opportunities policies. Just over 50 percent of Japanese companies do, and the rest of Asia is the poorest at just over 25 percent. The UK is the only country to have more than 50 percent of companies having advanced policies.

The report is useful in giving some real data, and analysis, to illuminate trends in the development of responsible business practice. However, it raises a number of questions as to its omissions.

First and foremost, one has to ask just where the heck is any information or insight here about the conveniently forgotten continent - Africa? The report mentions in its commentary a couple of times the rising SRI scene in South Africa, and the importance of HIV/AIDS policies there. But none of the statistical analysis includes African companies in scope. One suspects that some of the generalisations that say that various factors are most poorly developed in non-Japan Asian countries would be different if they did. And it would be particularly interesting to see the current state of play with South African companies, affected by recent requirements by the JSE in the wake of the King 2 report. It is a serious omission.

Some caution also needs to be applied to separate out the assertions that are reasonably derived from the statistical analysis, and those which are not. For instance, EIRIS's version of what has driven more advanced development of CSR in Europe - SRI markets, NGOs and regulation - is not apparently derived from research into what the companies say has been their main motivating factor, or what triggers led to what changes. It is well-informed but debatable opinion.

This is a shame. This fascinating presentation of facts whets the appetite for some real insight and understanding behind the figures. So WHY is Japan so far ahead on environmental management, whilst being relatively behind elsewhere? What are the factors that led to that being the case, and which might be replicable in some ways, and which are the product of the extremely distinctive Japanese culture? The report's one-sentence explanation - strong encouragement of iso14001 by the Japanese government - is presented as a throwaway theory without research backing to support it. One suspects the truth to be more complex and interesting.

But these reservations notwithstanding, EIRIS has performed a great service by making some of its statistical data available to the wider world to be able to observe some of the trends relating to corporate social responsibility. Having given some of the factual input, it is probably reasonable to see this as a challenge for others to take up to develop well-considered explanations of why these trends are taking place, and what are the factors that have made the most difference. Some of these exist already, others now must surely follow.


A link to the full report has been placed in the Resources section of the www.mallenbaker.net website.

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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