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Business Respect - CSR Dispatches No 117 - 23 Dec 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 review what happened in corporate social responsibility in 2007.
In the news:
1. UN Global Compact issues first report2. EU: Commission provokes ire of the car manufacturers with proposed fines
3. Canada: Consumer safety plan focuses on recall and fines
4. Victims of BP explosion say $50m fine not enough
5. Canada: Good trends on trans-fats in foods escape Burger King
6. China: Script for workers to fool ethical auditors put online
7. UK: Prime Minister calls on the world's big business to achieve millennium development goals
8. US: Most employees witness ethical misconduct
9. Philippines: CEOs drive the CSR agenda within businesses
Feature articles on the internet:
1. Boards learning to love CSR - 18 Dec 2007 FROM Management Issues2. Corporate Social Responsibility Should Go Beyond Cameras - 6 Dec 2007 FROM Times of Zambia
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Topics:
WelcomeCSR news 23 Dec 2007
CSR features from the internet
Recent entries from Mallen's blog
2007: A review of the year
Want to read a hyperlinked version of this issue? You can find one on the website at http://www.mallenbaker.net/csr/nl/117.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
20 years ago this month, Oliver Stone's movie "Wall Street" premiered. The film was particularly famous for its character Gordon Gecko and the passionate unscripted argument that "Greed is Good". Apparently a sequel in the progress. It should make interesting viewing, given the review of 2007 we have provided for this issue that would seem like very alien territory indeed to those following the Gecko philosophy. Watch this space.
As we reach the end of 2007, we are distinctly underwhelmed by the conclusion to the latest round of climate change negotiations. And yet, all around there is evidence that companies, citizens and other concerned organisations are waking up to a radical agenda with urgency that the world leaders struggle to match. There will be a lot more to be said on this through 2008.
Next issue, the first of 2008, will see the introduction to our first corporate sponsor. We have been delighted to welcome one, and we have sadly declined one - having established fairly tight criteria for sponsorship of Business Respect. We look forward over the coming year to gradually building the stable of supporters to enable us to continue to develop the quality of content for the newsletter to make it as relevant and useful to you as possible, and hope to find plenty of ways that those supporters will benefit by the association. If you think that one of those future supporters might be you, do let us know.
All that's left is to wish happy Christmas to those that celebrate it, and a great new year.
Mallen Baker
mallen@mallenbaker.net
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CSR News 23 Dec 2007
UN Global Compact issues first report
The United Nations Global Compact has issued its first report on its country-level activities in nearly 90 different countries.
The Compact, which in a number of companies is the sole network bringing companies together around an agenda of social responsibility, has produced the report to give an overview of the activities of the Global Compact Local Networks which aim to support the progress of individual companies in meeting the aims of the Global Compact.
Over the past two years, the number of networks has reportedly doubled, with recent launches in Korea, the Ivory Coast, Vietnam, the Dominican Republic, Turkey and the United States. The Compact says that it overall currently reaches 3,600 separate businesses in over 100 countries. They have all pledged to observe 10 universal principles pertaining to human rights, labour rights, the environment and combating corruption.
EU: Commission provokes ire of the car manufacturers with proposed fines
The European Commission has provoked a significant backlash from the motor industry lobby and its supporters with plans to fine car makers that fail to achieve radical cuts in carbon emissions.
German Chancellor Angela Merkel is amongst the heavyweight critics of the move - Germany's automakers stand to lose the most since they have more manufacturers catering to the luxury end of the market where fuel consumption is relatively high.
Europe has agreed a stretching target of an average 130 grammes of carbon per kilometre by 2012. The Commission has said that it expects the measure to prompt significant innovation in raising standards, and has refused to band the standards by class of vehicle. If they miss the targets, the Commission has proposed fining the companies 20 euros per gramme of CO2 over the limit from 2012.
Canada: Consumer safety plan focuses on recall and fines
The federal government has announced its new food and consumer safety action plan, which will see greater powers over product recalls, as well as higher fines for manufacturers when something goes wrong.
The Prime Minister Stephen Harper announced the move at a Salvation Army toy depot, arguing that product safety regulation needs to be more rigorous to protect consumers.
Legislation will be introduced to enable forced recalls of products if, in the view of the government, companies have failed to act sufficiently on legitimate safety concerns. It will also aim to bring in better tracking systems for food products to cover imported goods.
The government argued that the plan would aid legitimate manufacturers, who currently struggle to compete with "fly-by-night operators".
Victims of BP explosion say $50m fine not enough
Lawyers for the families of victims of the explosion at a BP plant in Texas have said that the companies fine of $50m is too low, well within the range that the company might feel was "part of the ordinary cost of doing business".
The disaster killed 15 people and injured 180 in an incident that has been widely blamed on poor management oversight leading to deficient safety practices.
BP agreed the $50m fine in a plea bargain, and in addition agreed to admit that the circumstances leading to the explosion constituted a crime by the company.
In arguing that the settlement had been unduly lenient, the lawyers also called for BP to be required to create an ethics and compliance programme to monitor future operations. BP has said that it has already paid out more than $1.6bn in compensation to victims of the explosion.
Canada: Good trends on trans-fats in foods escape Burger King
The Canadian government has announced that its monitoring programme on the trans-fat content of foods has shown that most companies have taken the initiative to reduce the unhealthy fats in a number of foods. But Burger King was singled out for special criticism for failing to respond sufficiently to the agenda.
The monitoring was undertaken following a report by the Trans Fasts Task Force recommendations on how to reduce the trans-fat content of food, aiming to achieve guidelines of no more that two percent of all fat content in oils and margarine and five percent in other foods.
The government found that many companies had made significant progress in meeting the target. However, Burger King was found by the Heart and Stroke Foundation to have menu items between 4 to 9 times higher in trans-fats than the recommendations, with little progress achieved in bringing this number down. The organisation described the company as the "King of Trans Fat".
Burger King responded to the attacks by stating that the company aimed to reduce trans-fats in its food as "one of the highest priorities". It said that cooking oil used in its restaurants would be trans-fat free by the end of 2008.
China: Script for workers to fool ethical auditors put online
A script for Chinese workers of the Huadu Zhenghui to learn on how to fool auditors working for foreign customers has been placed on the internet. The document gives an insight into reports over the last year of how companies are learning to pull the wool over the eyes of companies concerned to protect their reputation.
The 'cheat sheet', labelled the VF Corporation investigation questionnaire, gives a series of answers to commonly asked auditor questions that workers are meant to memorise. According to reports, the workers were threatened with their wages being withheld when they could not answer correctly in tests.
Independent reporters that examined the questionnaire and reviewed evidence from the factory concluded that most of the answers scripted to the questions were false representations of actual practice. For example, the script suggests that workers at the plant have Sunday as a rest day, whilst observation supported worker contentions that Sunday was treated as a normal working day. (CSR Asia)
UK: Prime Minister calls on the world's big business to achieve millennium development goals
The UK Prime Minister is to use three set-piece events during the next year to call upon the world's largest multinational corporations, including Google, Wal-Mart and Vodafone, to focus on the crisis of poverty and to help put the international community back on track to achieve the UN millennium development goals by 2015.
The move comes after a UN report showed poor progress in meeting the goals. The events will include a conference in London in the spring, the G8 meeting in Japan, and a UN session in New York.
Ministers have been holding talks with companies looking to identify ways in which business skills can be applied to improve infrastructure, develop skills and inject capital into developing country environments. The Prime Minister Gordon Brown is thought to believe that a lack of enterprise is hindering the least-developed countries.
US: Most employees witness ethical misconduct
A majority of employees in US companies say that they have witnessed ethical misconduct at work during the past year.
Types of misconduct include conflicts of interest, lying to employees and abusive behaviour. According to the Ethics Resource Center, which carried out the research, incidents have climbed back to where they were before the publicity around the scandals at Enron hit.
56 percent of employees said they had witnessed some kind of misconduct. After Enron, the figure had dipped to 46 percent, still a high figure. Many of those that witnessed the misconduct, 40 percent, did not report it to management for fear of reprisals.
Philippines: CEOs drive the CSR agenda within businesses
A recent survey carried out by Newsbreak has identified that CEOs in companies in the Philippines most often initiate CSR programmes for their businesses, and although more than half of companies say that it is then public relations or corporate communications that take the lead, the number that CSR as part of the company's strategy is growing.
The research was designed to identify how well embedded CSR has become in terms of structure and leadership, funding and logistics, and reporting and assessment, and included results from 54 of the top 100 companies.
For the majority, the entry point into CSR activity comes through traditional routes of community involvement and PR and CEOs were the initiators 77 percent of the time. The key stakeholders targeted are the community and employees.
For more info, see http://www.newsbreak.com.ph/csr
CSR FEATURES from the Internet
Boards learning to love CSR - 18 Dec 2007 FROM Management Issues
Corporate social responsibility once used to be little more than encouraging employees to rattle tins on high streets or do some volunteering.
But the past five years has witnessed a profound change, with corporate reporting becoming an integral part of the financial landscape, so much so that eight out of 10 of Britain's top companies now formally report on how they are maintaining their community, social and ethical record.
Corporate Social Responsibility Should Go Beyond Cameras - 6 Dec 2007 FROM Times of Zambia
Over the past few years, one of the most over-used terms by the corporate world has been corporate social responsibility. It has blossomed as an idea, if not as a coherent practical programme.
Almost every time some company is making a donation to some charity or indeed any other cause for that matter, they will talk about how they are fulfilling their corporate social responsibility. With the festive season on, just watch how so often this phrase will be used by the corporate world.
Recent entries from Mallen's blog
Impact in the Lake District - 13 Dec 2007
Interesting time up in one of the most beautiful parts of the country, talking with a dynamic, energetic and increasingly international training company. Read more
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2007: A review of the year
Article by Mallen Baker
A lot happened in the world of Corporate Social Responsibility during 2007. Did the year really represent a 'tipping point' as some have suggested? Have all the arguments been won? Or is there still a long way to go?
The year started with climate change at the top of the agenda - a place it has never looked in serious danger of relinquishing. We have numerous groups of business leaders from across the world coming together to send messages to political leaders about the need for real action, and we have seen individual businesses making their pitch for leadership on the issue.
In the UK, for instance, Marks & Spencer began the year with the announcement of their 100 point plan, entitled with a marketing flourish as 'Plan A'. Elsewhere, companies such as DuPont, Alcan and IBM, as well as BT and Norske Canada, have all demonstrated the ability and the will to reduce emissions by 60 percent on 1990 levels. Companies seem to be well on the front foot.
Of course, the big climate change debates have focused on two areas - the growing numbers of company declaring themselves to be 'carbon neutral' due to reductions plus carbon offsetting, and a big focus on the impact of products.
Carbon offsets have been controversial. The basis for campaigners' scepticism on the subject was inadvertently summed up by one senior business executive who declared at a screening of Al Gore's film 'An Inconvenient Truth' "of course, the great thing about off-setting is that you can continue to drive your Jaguar". It seemed to most people's eyes too much like a 'get out of jail free' card to be real.
The debate continues, because even when offsetting schemes can be proven to be of good quality, their impact may be temporary and difficult to scale up. For example, the Guardian newspaper found that an offsetting scheme it had invested in, which distributed low energy light bulbs in one specific region, became redundant when after the event the local authority decided to distribute such light bulbs to the whole of the locality, wiping out the benefit of the scheme in terms of emissions that would otherwise not have been reduced at a stroke.
There were more interesting debates on products. The airline industry found itself targeted, from campaigners camping outside airports, through to policy makers considering carbon charging schemes. Elsewhere, the cement and steel industries, both responsible for significant contributions tied to economic development across the world, began to meet together to establish a way forward in meeting the challenge. Expect more from both in 2008.
We also saw the first carbon labels, with information provided on carbon content embedded within certain products by PepsiCo, Alliance Boots and Innocent Drinks. Whether this represents the future, given the cost and relative consumer incomprehension, remains to be seen.
There is always a roll call for some of the companies that made mistakes, were caught out, or otherwise became famous for the wrong reasons. Everyone was surprised that BP had joined this list, concluding the parade of troubles when Lord Browne, its highly regarded CEO, resigned following an appearance in court where he lied about a relationship. This step too far followed a year of problems following breakdowns in basic safety procedures in some of the company's sites.
Elsewhere, the chairman of Hyundai Motor Company Chung Mong-koo was jailed for three years for embezzlement. Christophe de Margerie, the chief executive of Total, was been placed under judicial investigation as part of a review of alleged corruption involving the company in Iran. Purdue Pharma, which makes painkilling drug OxyContin, pleaded guilty to charges that it misled doctors and patients over false claims that the drug was less able to be abused than other similar substances. Chiquita is fined $25m for paying protection money to paramilitary groups in Colombia. Takafumi Horie, the former boss of internet firm Livedoor, was found guilty of fraud following a high profile trial that saw the company dubbed 'Japan's Enron'.
And, of course, Mattel had a less than sterling year, with confidence in its products dented by a series of recalls of toys made in China, followed by an apparent apology to the Chinese when the implication was given that problems which had been caused by design flaws on the part of the company had been taken as the fault of Chinese producers.
Even one of the poster children of the social responsibility movement found that it had some things to explain. Organic supermarket Whole Foods Market suffered a blow to its image of corporate integrity by revelations that its CEO posted anonymous messages on web bulletin boards attacking Wild Oats, the company that became an eventual takeover target.
The high cost of being a 'lightning-rod' company was confirmed when Wal-Mart backed down over its attempts to create an in-house bank. The company's plans, which it said were only to enable it to offer relevant services to its customers, were fiercely resisted by a consortium concerned that the company planned to use its muscle to take on the high street banks. Eventually, the cost of pursuing the application in the face of opposition - a cost that its competitors rarely have to bear to the same extent - became such that the company decided to throw in the towel.
Other 'lightning-rod' companies also had interesting times. Starbucks reached a deal with the Ethiopian government over attempts to trademark specific coffee varieties in an attempt to boost prices to Ethiopian farmers, ending a period when the company had been accused by Oxfam of seeking to profit at the expense of the poor - a charge which the company strenuously denied.
On the plus side, a number of companies moved to be very much on the front foot on social responsibility issues during the year.
Green Mountain Coffee topped the CRO Magazine '100 Best Corporate Citizen' list for the second year in a row. Wal-Mart announced that it would be banning trans fats in its food in Chinese stores. Tata Group sought to break the deadlock over Dow Chemical's Bhopal site by offering to pay for, and clean up, toxic waste left at the site by the 1984 disaster - a move which was attacked by certain campaigners proving some of the people you can't please any of the time. The UK's private equity industry introduced a voluntary code on disclosure following growing unease about its progress in buying up significant high profile public firms.
Rolls Royce announced that it would join the list of companies withdrawing from Sudan following worsening humanitarian conditions in Darfur. Apple announced a move towards stopping the use of toxic and hazardous chemicals in the manufacture of its products. In Singapore, the gaming industry introduced a Responsible Gambling Code of Practice. Gap showed that it was willing to take robust action over child labour in its supply chain, and flagged the possibility of a 'sweatshop free' label for its products.
Most of the above represents the continuation of a trend, with new faces and actors stepping into the fray. The list of heroes and zeroes may change, but the key themes of growing expectations in business conduct, and increasing success in bringing the debate to the boardroom table, is in line with where we have been over the last few years.
The thing that has really kicked the scale of ambition way up the scale is climate change. The growing body of scientific evidence, amplified through credible communicators - particularly Al Gore - has led to a number of CEOs looking at their business with a careful eye to evaluate just how radically they will need to change, with an unprecedentedly high number concluded that the answer is a deal more profound than they could ever have imagined.
2007 was the year that there could no longer be any doubt that corporate social responsibility arrived as a strategic issue for business. That fact alone makes the prospect for 2008 very interesting indeed.
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