Business Respect - CSR Dispatches No 118 - 6 Jan 2008

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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 make predictions for the next five years, and we welcome our first corporate sponsor, the Change for Good network.

In the news:

Feature articles on the internet:

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Topics:

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Copyright 2008 Mallen Baker. All rights reserved. For information on how to subscribe, go to http://www.mallenbaker.net/csr/nl/subscribe.html

------- This issue of Business Respect sponsored in part by: ---------

The Change for Good Network: This is a network for people like you committed to change for good. It is brought to you by leading communications, campaigning and CSR company Corporate Culture.
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Welcome

A happy new year to all readers - I hope that the holiday has been good to everyone. 'Tis now the season for looking forward to the year ahead, and you will have read by now a fair share of "what does 2008 hold" type reflections in newspapers and journals. Well, it's been a while since I did the same - six years, in fact. But the difference is that the last time I did it I looked ahead to the coming FIVE years, not just one.

We are well overdue for a review of what did I get right, and what was hopelessly wrong. So that is combined in this issue with a new set of predictions for the next five years. Some of them are counter-intuitive, perhaps controversial. Hopefully they will spark some thoughts of your own, so feel free to share them and I will put some here.

Looking forward is something I have been doing a lot of recently, since from this point forward I go part time in my role with Business in the Community to allow me the space to develop this newsletter, the website, and my role in speaking, writing and providing strategic advice on CSR broadly. The website is overdue to be modernised and refreshed, and having spoken to a number of events, conferences and corporate in-house audiences in different parts of the world, I am now working on a more far-ranging definitive presentation about CSR that may pull together all those fascinating bits I have never previously had time to develop. More about this in due course.

All of which explains the announcement last issue that this newsletter would accept sponsorship and advertising for the first time, having previously had a policy not to.

And I am delighted to welcome Business Respect's first corporate sponsor. The Change for Good Network is a new initiative, masterminded by John Drummond and his firm Corporate Culture. It is all about bringing together individuals committed to change - which makes it an apt first sponsorship since that is a fair description of just about most of the readership of this newsletter in different ways. I hope you will give the initiative a look.

Discussions with several other potential sponsors are under way, and I hope to be able to announce at least the second sponsor in the next issue. Remember, sponsorships are set for a period of one year and the maximum number of sponsorships at any one time will be four, so if you think this might be an opportunity for you, it would probably be advisable to get in reasonably quickly.

I am also happy to welcome our first advertiser. As many of you will know, I produce a monthly column for Ethical Corporation. As well as the first class magazine, they also run conferences - see the ad below for information about one interesting forthcoming event. These one-off adverts are restricted to one per issue, so if you think there's something you're organising in the future that will be of interest to the readership, it will pay to book ahead.

Voting has been continuing on the current website vote. To remind you, it reads: Which of these groups has done the most so far to respond to the challenge of climate change?

The result currently stands at: Governments 203 (22%), Business 285 (30%), Citizens 447 (48%). Thanks to the 935 people that have voted so far. There will be a new vote next time, so this is now your last chance to be heard on this one!

Have a great 2008!

Mallen Baker
mallen@mallenbaker.net

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The Climate Change Summit 2008, 12-13 February, London. This summit is a one stop shop event for everyone who wants to keep up to date with cutting-edge climate change business strategies. Speakers include: HSBC, ASDA, BT, Lehman Brothers , Walkers, The Co-operative Group, British Gas, Tesco, Timberland, CEMEX, ABN AMRO, Bovis Lend Lease, The Carbon Trust, Royal & SunAlliance, Standard Chartered Bank, IBM, AXA Insurance.
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CSR News 6 Jan 2008

Intel pulls support from One Laptop Per Child organisation

Intel has said that it is withdrawing from the One Laptop Per Child educational computer organisation, which it joined last year. The initiative's aim of producing a $100 laptop was seen as a potential competitor for Intel and Microsoft in the developing world.

The One Laptop Per Child computer is based on the free Linux operating system, and is built with a chip made by Advanced Micro Devices. Intel said that although it shared the vision of the group, it had not been able to resolve what have been reported as "philosophical differences".

Whilst supporting the OLPC. initiative, Intel had continued to promote its own, more expensive, Classmate PC and had refused to end this support in favour of exclusive support for OLPC. OLPC executives had suggested that Intel had been more about undermining the group's initiatives in the name of competition than about helping.

Meanwhile, Intel was named as the Corporate Responsibility Officer (CRO) Magazine's Best Corporate Citizen for technology hardware companies. Also, Dave Stangis, director of corporate responsibility, Intel, was named to Ethisphere Magazine's 100 Most Influential People in Business Ethics list.

Dave Stangis told Business Respect that Intel was disappointed at the outcome with OLPC. "We invested time, money, and resources over the course of six months in our work with OLPC. Our experience in the technology business for the last 30 years and serving emerging markets for many of those years has led us to believe that no single solution will be the answer worldwide. There are many solutions today trying to meet the needs of children in underserved or emerging markets. We are trying to help advance all of these solutions toward their goal. Focusing on only a single technology solution for the world's children would have forced us to abandon relationships we have with existing customers trying to meet those needs as well."

Alcatel-Lucent fined over bribery of Chinese officials

Alcatel-Lucent has agreed a settlement of $1m over allegations that Lucent Technologies had violated the federal Foreign Corrupt Practices Act by bribing Chinese government officials.

The company was accused by the US Department of Justice of spending millions of dollars on around 315 trips for Chinese government officials that included primarily sightseeing, entertainment and leisure. The company admitted that it had provided these trips, including "factory inspection" trips that were provided when the company had outsourced and had no factories left to inspect.

As part of the settlement, Lucent agreed to put in place new internal controls to improve its conduct. The company also paid an additional $1.5m to settle similar separate charges brought by the US Securities and Exchange Commission.

Philippines: Communist group attacks Xstrata mine

Communist group the New People's Army has raided the Tampakan mine, which is majority owned by Swiss company Xstrata. The group has said that it will carry out further attacks against what it described as "the destructive operations of big foreign mining companies".

The gold and copper resources are considered to be one of the largest in the region, and the mine is due to start output in 2013.

Several buildings were burned down in the attack, although there were no reports of human casualties. Nevertheless, the move raised the spectre of a serious disincentive to future investment in such projects in the Philippines.

Green issues hover around seasonal buying decisions

More holiday shoppers express a willingness to pay more for eco-friendly products and take note of the country where items are made, according to the 2007 Annual National Shopping Behaviour Survey carried out by KPMG.

74 percent of respondents to the survey said that they actively choose to buy environmentally friendly products, with 60 percent agreeing that they are willing to pay more for such goods. Retailers with a strongly green reputation were seen more favourably by 55 percent.

Whilst still a minority, the number of customers who said they checked the country of origin on potential gifts has gone up to 40 percent. Decisions not to buy from a specific country usually involved products manufactured in China, with toys being the product in question more than half of the time.

Moreover, money was tighter this year: Whereas an average of 36% of shoppers reported spending more each year during similar surveys from 2003 to 2006, just 30% of respondents in 2007 said they spent more than the preceding holiday season on gifts.

Such surveys have traditionally been viewed with some scepticism by marketers, who point to the gap between what people say they believe in regard to how they make their purchases and their actual buying behaviour. Nevertheless, it provides evidence that awareness of the key issues relating to products is going up consumers agenda.

Canada: First region legislates against trans fats

The Calgary region is to force a major reduction in the use of trans fats in foods sold in restaurants and by similar businesses. Trans fats are thought to contribute to the deaths of up to 5,000 Canadians a year through heart disease.

All margarines, spreads and cooking oils will be required by law to have a maximum trans fat content of two percent of the total fat content.

Many restaurants in Calgary have already voluntarily cut trans fat use, according to the Calgary Health Region. The federal government has said that it will create national limits in 2009 unless the industry makes faster progress on the issue.

Iraq oil for food allegations hit pharma companies

GlaxoSmithKline and AstraZeneca have been approached by the UK's Serious Fraud Office following allegations of bribes paid to secure contracts in breach of Iraq's oil for food programme.

Both companies deny any fault, and have said that they will co-operate fully with the inquiry. According to the UN, around 2,200 companies in 66 countries broke the rules by paying nearly $2bn in bribes to Iraqi officials to win oil contracts.

A Spokesman for GSK said that the company had gone to great lengths to impose anti-corruption measures during dealings with agents in Iraq at a time when things were at their most unsettled.

Japan: Toyota executive to advise on climate change

The Prime Minister Yasuo Fukuda has appointed Hiroshi Okuda, a senior advisor for Toyota, to become a special advisor to the Cabinet on the economy and global warming.

The move reflects official recognition of Toyota's leadership in the development of environmentally friendly cars, and the government's intention to show greater leadership on the issue of climate change. Okuda will attend conferences on a new international pact for action on climate change to succeed the 1997 Kyoto Protocol.

Speaking after the announcement, Okuda said that the importance of the issue meant that the new role would receive energetic attention in advance of the crucial talks to come. Fighting over the global aim to reduce carbon dioxide emissions is expected to be fierce.

CSR FEATURES from the Internet

CSR - the new buzz word - 3 Jan 2008 FROM The Financial Express

Corporate Social Responsibility (CSR) has become the new buzzword and a key differentiator with research indicating a positive and statistically significant relationship between CSR and profitability, corporate heads said

"Corporate Social Responsibility is no longer just an addition, it is a key differentiator", Prasad Chandra, CMD, BASF South Asia, said at the launch of an Indo-UK project on CSR curriculum development in Bangalore on Thursday.

Read full story

Many rescued child laborers in India soon back at another dismal job - 23 Dec 2007 FROM San Francisco Chronicle

A group of child laborers recently rescued from a dank factory where they threaded sequins onto shirts to be sold by the San Francisco retail giant Gap Inc. finally went home last week.

But in a country long desensitized to minors toiling in iron ore mines, fireworks plants and textile factories, the majority of children freed in raids wind up at another job within months of their rescue, according to several children's activists.

Read full story

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Predicting a Riot - Looking five years forward and back

Article by Mallen Baker

Now is the season for predictions for the coming year. However, single year predictions are for wimps - most are simple extrapolations of existing trends which arrive at fairly predictable results. Back in 2001, I made some predictions for the next five years - how well did these stack up against the reality, and what might the next five years hold for the world of corporate social responsibility?

In the 22nd September, 2001 edition of Business Respect, I made nine predictions.

1. "There will be a growing emphasis on the quality of corporate social responsibility - not just whether you do it at all". I would argue that this was a hit, with a greater emphasis over the last five years on the measurement of impact and outcome. Benchmarks of quality process, such as the Dow Jones Group Sustainability Index and BITC's Corporate Responsibility Index have increased in rigour, and profile during the last six years. There is little credit to be gained these days through mere declarations of commitment or intent.

2. "CSR will increasingly be defined by core business issues, managed strategically across the business". A big hit this one - six years ago you could see this beginning to happen in discussion and debate. But in the intervening time, many companies have now created CSR committees which act as sub-committees of the board, and are chaired by the CEO. Across the world, CSR is now of growing importance to how businesses make their money, not just whether they give some of it away.

3. "Companies will become much more sophisticated about how they communicate with stakeholders". Partial hit - it would have been a bigger hit but for the inclusion of the word "much"! A number of companies are clearly on the quest - seeking ways of engaging direct stakeholders such as employees and customers. The implication that companies would move on from their expectation six years ago that such stakeholders would read the CSR report was certainly spot on - but the arrival at demonstrably successful alternatives is taking a while.

4. "The growing expectations on business will survive recession (and even war if need be)". As we now know, war was indeed part of the package. This prediction certainly hit the mark - although the financial slow-down that came since it was written was less severe than it might have been. It is always the fear of CSR proponents within business that a true economic crash will see this "nice to have" relegated to the back burner. But in the light of prediction number 2, it is hard now to see how that could happen. It is not a "nice to have" for most businesses, but an essential part of future success.

5. "How you downsize and what you make will become the two most significant benchmarks". Partially correct. There has been a growing focus on the product part of the equation. Downsizing, although it remains a major process that, for many businesses, involves them in negative publicity, has not been the big area of focus on the last six years it seemed it might. Offshoring has been the main focus instead - same principle, but different application.

6. "There will be a growing tension between business-led CSR and NGO demands for better globalisation." This was not seen as intuitive at the time of making - a number of the key NGOs were pro-CSR, although their definition was not the one that businesses were using. It has, however, been proved spectacularly correct. We saw Christian Aid produce "Behind the Mask, the real face of CSR" followed by other groups in the CORE coalition piling into CSR with thunderous rhetoric. We saw the NGOs attacking the outcome of the EU Multistakeholder Forum on CSR, and continuing the good fight on an ongoing basis.

7. "The business of social accountability is professionalising - there will be firmer standards in the future". Partially correct - the AA1000 series of standards has been extended and developed, and there has been a period of development and learning for those that provide assurance. But there remains a long way to go. Certainly, I think that I envisaged further progress with this prediction than has so far been achieved. If anything, there is now something of a gentle rolling back of the tide - a reaction against the assumption that all of this stuff can be put into numbers.

8. "Governments will largely refrain from legislation on CSR". Again, correct. This was by no means a foregone conclusion at the time of making - the NGOs were agitating for more laws, and the EU was at the beginning of its process of considering its position. But time and again they recognised that CSR is a process which is about initiative and best practice, not about minimum standards. One or two exceptions prove the rule, of course, such as Indonesia which added a requirement for CSR to its revision of business law. This is not an example others are queueing up to emulate.

9. "Political lobbying is a landmine waiting to explode". Wrong - at least for that six year period. We have seen political lobbying emerging as an issue, with a rash of reports focusing on it as an issue, and it has been added as a compulsory component of the Corporate Responsibility Index - but that hardly constitutes an explosion. It remains a latent issue, that will possibly emerge during the next period.

All in all, that's not a bad record from the initial predictions. What about the next five years? And the aim here, again, is to seek to identify predictions that are by no means foregone conclusions, and some of which will be highly contentious or surprising. Well, I have seven new predictions of what will happen within the world of CSR by 2013.

1. The focus for CSR will shift from the process of how things are managed to leadership actions by companies that significantly change the business environment. So, at the moment tools such as the CR Index that focus on process profliferate, and will continue so to do in the short term - but as such processes become completely standard, the focus will shift to strategic actions by individual businesses that are about leadership, vision and risk-taking - some of which will be successful and some of which won't. This does not mean that companies won't implement the process points, simply that these will become routine.

2. There will be a crisis in CSR reporting - one serious enough to pose a real challenge to its current form. It may come in the form of current leadership reporting companies challenging its value, or in the collapse of the GRI, or the creation of a significantly different alternative. It won't be a crisis that undermines the demand for information, and so it will be about adapting, simplifying or re-rationalising corporate communications, not about ending CSR reporting per se.

3. At least one current CSR champion will suffer a scandal serious enough to add weight to the CSR sceptics. We are not talking about an Enron - Enron had all the environmental and community programmes that a company might expect to have, remember - we are talking about a real CSR champion. To qualify, a company would have had to have been a sector leader for the Dow Jones or a regular award winner for its reporting or other aspects of its programmes. Why the pessimism? I just don't think that existing measures are able to tell the full story about the depth of commitment of a company - some of the champions are just not as good as we think they are. It would, of course, not be a prediction at all to state that, separate to this, there will be future business scandals. That, sadly, is so mundane as to be obvious. No, we are talking a particularly surprising calibre of company here.

4. The entry of global Chinese and Indian corporations will challenge commonly held assumptions around what constitutes a consensus in CSR. China, in particular, will continue to enter the stage bigtime. The current assumption is that, in time, Chinese companies will acquiesce to the consensus of what constitutes CSR, and that this is an entry price into corporate membership of the big boys club. I think that they will arrive with greater confidence in their own priorities and values, and will actively challenge these assumptions. They will redefine CSR and it will be an active and angry debate at times.

5. The growing expectations on business will survive the next recession, but there will be a sharper conflict with countries where people may see CSR as a barrier to trade / jobs. The economic circumstances in the next five years will be tougher than the last five, recession and the inflationary effects of higher energy and food costs. Demands for CSR will survive these, for all the reasons given for the prediction six years ago. But the new factor is going to be the growing tension now as environmentally motivated decisions impact negatively on developing country environments. Expect trouble in Africa and South America focused on jobs and trade that will target CSR approaches explicitly.

6. In five years time, corporate social responsibility will still be the most commonly used term to describe this agenda, although every year some will proclaim it to be dead. You can see one example of this in the Financial Times' predictions for 2008, for instance.

7. Two of the global leading-light CSR companies will be private equity owned firms. At the moment, private equity is seen as one of the last bastions of irresponsibility, with an assumption by many that the immensely well paid PE bosses care little for social responsibility and purely want the short term profit. On that basis, you would assume that private equity will remain in the spotlight in the next five years in a negative sense, and will be forced to make further concessions. That, however, is easy to predict. I actually think that we will be surprised by seeing real leadership and achievement here. Why? Some of the top guys are ferociously smart - and add that to a growing acquisition portfolio that includes well known public facing brands - I think they will realise that being faster and smarter on this agenda will play to their benefit, without damaging the need to create value from previously undervalued companies.

If anything, these predictions are even more challenging than the original nine - they are more specific, and often quite counter-intuitive. I stand by them, but if you choose to put money on them you do so at your own risk!

I would have added a prediction about how climate change action will have become so utterly commonplace in five years time that what is currently seen as leadership will have become minimum standard stuff - but I think that is so obvious an outcome that I wouldn't even make it a prediction.

Likewise, with my 9th prediction, that by the time we are due to review these predictions to see whether they came good, Business Respect will be approaching its 250th edition!

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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