Business Respect - CSR Dispatches No 114 - 14 Oct 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 industries that will have the hardest time adapting to climate change.

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/114.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

I forgot to mention in the editorial last time that some exceptionally kind, and to give them credit quick and well skilled, individuals stole my laptop recently. OK, it wasn't backed up as recently as it should have been, although recently enough not to be a disaster. However, I know for a fact that there were a couple of weeks of emails that hadn't all been answered yet, which I now can't recover. Apologies if you were one of those that emailed and didn't hear back from me.

One of the consequences of having lost some recent work however, was that I had to cancel my attendance at the Asian Forum on CSR whilst we were piecing things together again. My apologies to any that booked onto the breakout session there who then found me absent, and also to the organisers for not being able to do the citation for the awards. All the reports I had of the event were excellent, so it was obviously as well organised as usual.

OK - it really is time now to change the vote on the website. The current vote is as follows:

Recent announcements by the big supermarkets about environmental practices represent:
A real shift towards sustainable practice 375 (30%)
A small step only, with much more needed 551 (43%)
Nothing but cynical public relations 338 (27%)

Thanks to the 1264 people that voted!

The vote has now been changed to the following:

Which of these groups has done the most so far to respond to the challenge of climate change?
1. Governments
2. Businesses
3. Citizens

See what you make of that!

Mallen Baker
mallen@mallenbaker.net

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CSR News 14 Oct 2007

China: Reports on Foxconn abuses suppressed

The Chinese government suppressed news reporting of the allegations of poor working conditions at the Apple iPod factory run by Foxconn last year, according to a new report from Reporters Without Borders.

The report claims that tens of thousands of Chinese police monitor the activity of internet users and suggests that text messages are sent to editors and Chinese news outlets directing them about how they should handle certain stories.

According to Reporters Without Borders, this approach was used in the case last year where allegations were made about working conditions at Foxconn which became the subject of newspaper stories in the UK. The coverage prompted Apple to launch its own investigation and to require Foxconn to take remedial action.

Finland: CSR beginning to be influential on consumer behaviour

Corporate social responsibility is beginning to be a influencing factor in consumer behaviour in Finland according to a new TNS Gallup survey.

In particular, around three quarters of consumers believe environmental issues and employee treatment to be key areas that demonstrated good business practice. Thirty five percent of respondents said that a company's commitment to social responsibility would affect their decision to buy its products.

The poll was commissioned by the Finnish daily newspaper Helsingin Sanomat, and questioned over a thousand people.

Respondents named Valio, the dairy products company, as the one they believed to be most socially responsible.

Burma: Total resists pressure to withdraw

The CEO of Total, Christophe de Mangerie, has rejected calls from a variety of sources, including the French President Nicolas Sarkozy, to withdraw from Burma in the face of the recent violence there.

In an interview with French newspaper Le Monde, he said that the company would continue to operate its gas field in Yadana and rejected suggestions that the company was complicit in human rights abuses. He said that the company had invested in the country back in the 1990s and nothing had substantially changed since that time.

Other companies, such as Premier Oil, have in recent times pulled out of Burma. Companies said by the Burma campaign to still be investing in the country include Suzuki, AP Moller-Maersk and Hutchison Whampoa.

US: Toyota's green image in question

Environmental campaign groups have criticised what they see as resistance by Toyota Motor Corp to fuel economy proposals to be considered by the US Congress. Other companies, such as Ford and General Motors share the same public policy position, but Toyota has attracted particular attention because of its more progressive track record of producing greener cars, such as the Prius hybrid.

A lobbying campaign has been undertaken, with thousands of emails and faxes bombarding Toyota urging the company to support the objective of legislating for a 35 mile-per-gallon standard by 2020.

Toyota has said that the Senate bill would hurt the industry. It supports the alternative proposal which would still raise the standards by up to 40 percent and give motor manufacturers a more achievable timeframe.

Siemens fined 210m euros over bribes

Siemens has been fined following an investigation into payments of bribes to gain contracts. The company also is to pay 179m euros in back tax payments after having been found to have failed to declare payments properly.

Allegations around bribery and corruption have seen a number of key executives prosecuted and given suspended jail sentences or probation.

The company has said that it accepts the verdict from the Munich District Court, and will not seek further appeal.

China: Major companies focus on fewer human rights

A new survey of the human rights policies of 25 major internationally-focused Chinese companies has shown that the companies recognise fewer human rights and at a lower level than their global counterparts.

The survey, carried out on behalf of the UN Secretary General's special representative on business and human rights, John Ruggie, followed a similar, more broadly based, review of companies with English language information available on their policies. It was designed to fill in an acknowledged important gap - Chinese companies that are in the forefront of importance in terms of global business but which only have information predominantly in Mandarin.

Additional key findings included that Chinese companies, although recognising fewer rights, express more frequent support for the right to development than previous companies surveyed, and are more likely to recognise social and economic rights amongst non-labour rights.

Amongst the sample of Chinese firms, the nine state-owned enterprises recognise human rights at a higher rate than the others. Only two companies reference reporting on human rights - both of which have adopted the Global Reporting Initiative guidelines.

The most significant unknown factor related to the supply chain. Since none of the companies surveyed address supply chain issues, it is impossible to know whether these companies' commitments to human rights extend beyond their own operations.


A link to this report can be found in the resources section of the ww.mallenbaker.net website.

Canada: CEOs urge stronger action on climate change

A group of top Canadian chief executives has called for urgent action on climate change, describing it as the "most pressing and daunting" issue faced by the world today.

The group, acting through the Canadian Council of Chief Executives, has produced a report that calls for government, business and citizens to work together to make real reductions in emissions. It said that the 'significant cost' of action should be shared by all sectors.

The CEOs said that businesses have already taken a lead in making their operations more energy efficient, but government would need to show that they would not be penalised for making key investments to cut emissions and improve productivity. Positive government intervention could come in the form of emissions trading systems, such as that created by the Kyoto Protocol.

CSR FEATURES from the Internet

Winds of change beginning to blow - 12 Oct 2007 FROM Financial Times / WBCSD

The world's biggest retailer is to ask all its suppliers to measure their greenhouse gas emissions. One of the biggest supermarket chains is to label all the products it sells to show how much carbon went into their manufacture.

More than three-quarters of the biggest companies globally now monitor and report regularly on their climatic impact, though no regulation forces them to do so.

Read full story

Is CSR for real? - 5 Oct 2007 FROM ABS-CBN

For the last few years, one popular business concept that has taken the corporate world quite by storm is corporate social responsibility. To those of us who had been around the block a few dozen times, we couldn’t help being a little skeptical that a) it is really that new; b) it is here to stay and c) the big guys who are endorsing it at Davos and other top level management conferences really know what it is or could even truly care less.

Read full story

Recent entries from Mallen's blog

Still arguing over the language - 9 Oct 2007

I had a lunch today with the recent author of one of those newspaper articles that attacks the concept of CSR because - even though you could cut the author's argument either way - the fact is that if you can position your piece as anti the consensus Read more

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Climate change: A frontier made of cement and steel

Article by Mallen Baker

So, to the delight of some and the irritation of others, Al Gore has been given the joint honour of the nobel peace prize, alongside the IPCC. Both have had a huge part to play in raising awareness. Awareness, however, is the easy part.

Last week the US Treasury Secretary Henry Paulson met with a group of CEOs that have come together over support for a mandatory programme to reduce greenhouse gas emissions. The companies, part of a coalition of 27 major companies including General Electric and General Motors, have been arguing for a pollution trading programme. The Bush administration, of course, is opposed to mandatory measures to reduce greenhouse gas emissions. But even the Bush camp is seeing movement.

The corporate lobbying does not end there. GE's Jeffrey Immelt and Duke Energy's Jim Rogers were amongst the CEOs that attended a separate session at the White House with Bush's top environmental advisor James Connaughton reportedly covering a wideranging discussion. It is just another reflection of a factor we have seen before - the business community is now ahead of many policy makers when it comes to seeing the need for action.

In a number of areas, the environmental campaigners got there first. But increasingly now the campaigns are distracted by highly visual symbols (such as the airlines), or by anti-corporate sentiment.

So, shortly after eco-warriors camped outside the UK lead airport Heathrow to protest against the growth in flying, CEOs of the cement industry - a sector which produced more than 5 percent of the world's man-made climate change emissions and more than the aviation industry - quietly convened to review what they could do.

Cement is a key material - with soaring demand across the world and therefore increasingly a huge challenge to the achievement of a sustainable world economy. The material is inherently carbon intensive. Its manufacture depends upon high temperature kilns, and also contains chemical processes which lead to the release of carbon dioxide.

Cement factories globally are expected to produce almost 5bn tonnes of carbon dioxide every year by 2050.

There is no easy win here. Demand for cement is used for the roads, schools, sewers and other infrastructure much needed by developing countries in particular. Likewise, the carbon intensity is inherent to the process - spectacular cuts are hard to envisage. But public awareness of the sector is very low. The majority of people are probably not even aware that cement production produces CO2.

Cement companies are beginning to take steps to do what they can. Some, for instance, burn waste products alongside coal, whilst others have tried to make plant more energy efficient. The companies that came together, who have formed the Cement Sustainability Initiative, are working to standardise such techniques and to share best practice.

Big obstacles remain. China has become the largest single source of cement-related emissions with the rapid growth of the sector there. No Chinese cement companies have accepted invitations to join the initiative. That said, neither have the US equivalents, and the somewhat newer plant in China is generally more efficient than the older US versions.

The other sector that remains particularly intensive is the steel industry, which also accounts for around 5 or 6 percent of global man-made greenhouse gas emissions, just slightly ahead of cement.

Steel is necessarily produced through furnaces, either a primary blast furnace method or the electric arc furnace. Modern plant is certainly more energy efficient that the old steel mills that until relatively recently were still in operation, but it remains inherently a polluting process. As with cement, the material output shows no sign of being less important to future development.

Industries where there are few apparent opportunities to make energy efficiency improvements are a challenge for public policy making. So, for instance, the European companies covered by the EU Emissions Trading Scheme see their future operation constrained by the policy. The early years of the ETS have had little impact, since emission permits were over-allocated. In future, the allocation will be stricter. Companies say that without the ability to make their processes more efficient, this will simply mean that the sector's growth will be artificially constrained, and this will encourage a surge of imports from countries where such constraints are not a factor. This will produce neither sensible business outcomes, nor will it do anything to address what is a global environmental problem. Indeed, it would be likely to make them worse.

Ultimately, companies say that public policy should be designed to ensure all companies follow existing best practice. The best global gains would be gotten by upgrading plant in Russia - not by using policy devices that might actually encourage imports from Russia instead.

At the same time, they recognise that innovation is needed to make the next step jump. The International Iron and Steel Institute is pursuing the Ultra Low Carbon Steel product which has the ambitious target of developing a solution that will reduce the process emissions by 50 percent.

What all of this is about is leadership. Companies that see the writing on the wall, and engage governments to sharpen up their response. Industry sectors that, relatively out of sight of the campaigners, understand their shared ownership of the problem and have focused on initiating now the innovation that will be needed tomorrow.

What it is not about, however, is easy wins producing easy solutions. Whilst the campaigners focus on invoking guilt in the frequent flyers, nobody can argue that the steel and the concrete that is so integral a part of building infrastructure in countries that need to escape poverty can be dealt with in such an easy fashion.

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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