Business Respect - CSR Dispatches No 120 - 3 Feb 2008

==================

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 ask what progress there has been in reduced harm tobacco products.

In the news:

Feature articles on the internet:

===================

Topics:

Want to read a hyperlinked version of this issue? You can find one on the website at http://www.mallenbaker.net/csr/nl/120.html.

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.
More info: http://www.mallenbaker.net/jump.php?Link=2

---- Help support Business Respect by supporting our sponsors -------

Welcome

So Davos has come again, and this year seemed to involve even more declarations of great intent by business on social responsibility than ever before. We have seen a number of business leaders calling upon businesses to work in partnerships to strengthen global governance - recognising of course that when businesses are asked to take quasi-governmental decisions somewhere in the world it is because there is a failure of the legitimate governance for that area.

At the same time, Innovest joined with Canadian journal Corporate Knights to launch the latest update to the Global 100 lit of the Most Sustainable Companies in the World. This saw companies such as Goldman Sachs and Google dropping out of the list, with Honda and L'Oreal emerging onto the list.

Bill Gates made headlines across the world with his speech calling for creative capitalism, which many interpreted as being purely about giving something back in the way he has done through the Bill and Melinda Gates Foundation, where really he was focusing on ways of making the market work for the poor.

And of course Bono was there, aiming to focus the business leaders on the achievement of the Millennium Development Goals.

As ever with such events, the biggest announcements and the loudest noise do not necessarily constitute the greatest breakthroughs. But nevertheless, such an enormous gathering point for world leaders is always an important occasion in that it can prove to be the catalyst for change under the right circumstances. These issues are not new to the World Economic Forum agenda, but clearly this year shows that they have continued to grow in importance, so that even the lengthening shadow of tough times ahead is not sufficient to push them backstage. That is an important early indicator of times to come.

In the mean time, attendance at a stakeholder consultation panel for a major tobacco company during the last fortnight turned my thoughts back to the issue of social responsibility in tobacco - a subject which I last wrote about in this newsletter years ago, looking forward to some focused investment in innovation in reduced harm products. It seemed timely to review the current state of action in that area.

Mallen Baker
mallen@mallenbaker.net

===================

CSR News 3 Feb 2008

Japan: Canon chief rejects Greenpeace demands to condemn whale hunt

Canon President and head of Nippon Keidanren, Fujio Matarai has declined a request from Greenpeace to make a statement publicly condemning the annual hunt to kill whales in the Antartic.

In a statement, the company said that opinion on whaling was divided amongst the Japanese people, governments and NGOs. It said that it was a topic beyond the scope of a single company.

Greenpeace has begun a campaign for Canon to reverse its position, calling on the company's customers to tell the firm to condemn whaling. They have not called for a boycott against the company. Canon has no direct association with whaling, but Greenpeace argued that because of the company's general environmental commitments it had a responsibility to speak out.

Australia: Business leaders doubt their own carbon figures

A new survey by PricewaterhouseCoopers of over 300 top business leaders in Australia has revealed that only 2 percent believed that their own company's stated greenhouse gas emissions were accurate enough to stand up to scrutiny.

In addition to lack on confidence in their own measurement, 70 percent of those surveyed felt themselves to be in the dark about the full extent of the risks of climate change on their business.

Andrew Peterson of PwC said that businesses wanted greater predictability from the government - through regulation if need be. The government should collect better quality emissions data to become the basis of a more robust emissions trading scheme.

European Commission introduces mandatory nutrition labelling to target obesity

The European Commission has announced new rules that will require all prepackaged food to display amounts of sugar, salt, fat, saturated fat, cabohydrates and energy on the front of packaging. It pulled back, however, from requiring a specific single system.

The rules were announced following lobbying from the food industry against the measures, and various campaign groups for a more prescriptive approach to use a single system, based on the "traffic lights" motif. Individual countries will be free to select their own display system.

Charities expressed disappointment, arguing that research has shown that the traffic light system is the most effective in changing people's buying behaviour. Opponents of the system, who mostly use an alternative 'guideline daily amount' (GDA) system argue that traffic lights can oversimplify the choices facing consumers, leading to generally nutritious food such as cheese being marked out as being bad.

UK: Food and drink companies target a cut in water use

Major food and drink companies have come together to pledge a reduction in their use of water as part of an overall package aimed at cutting environmental impact.

Currently, the food and drink sector accounts for around 10 percent of industrial water usage. The group of 21 firms, including Cadbury Schweppes, NestlŽ UK, Premier Foods and Tate & Lyle, said that they aimed to cut water usage by 20 percent over 12 years.

The UK government welcomed the initiative, which was brokered by the industry sector body, the Food and Drink Federation.

One of the companies, Mars Snackfood UK, said that the company had already been working hard to reduce its water usage, and had reduced water consumption in the last year by 40 percent.

Kazakhstan: Government calls for greater corporate social responsibility

The Kazakhstan government is encouraging business and social partners to create a new business social responsibility code as part of a process of boosting understanding and support for the concept within Kazakhstan.

The President of Kazakhstan, Dina Yermaganbetova, said that entrepreneurs and business leaders should adopt the principles of CSR within their business.

The Labour and Social Protection Minister called for the creation of the code, adding: "Socially responsible behaviour means a way of doing business that is consistent in the face of market fluctuations". He said that their target was to achieve standards of CSR that matched those of those countries where CSR has been longer developed.

Japan: Paper Association to tackle recycled paper fraud on consumers

The Japan Paper Association has said that it will set criteria for how companies provide information to consumers about recycled paper products following the scandal of the top six companies having been discovered to be routinely falsifying the information displayed on their products.

The Association has said that it will form a panel to agree the criteria for what amounts of recycled content must be present in products described as recycled, and to agree the way that information is presented to consumers.

In a statement, the Association said that a lack of mandatory definitions had led the companies to produce products containing only tiny percentages of re-used paper and describe them as being recycled. The companies together constitute around 80 percent of paper output.

The Association will report the details of the actions of the companies to the government once they are required to disclose data for their products. One of the companies, Oji, admitted that it had used around 5 percent recycled content in paper described as being 50 percent.

US: Enron case thrown out

An appeal by Enron investors aiming to hit investment banks involved in financing deals has been rejected by the US Supreme Court.

The judges refused to hear arguments in the class action suit, which targeted companies such as Merrill Lynch, Barclays and Credit Suisse.

The outcome followed a prior ruling that limited the ability of Enron shareholders to pursue third parties. Lawyers have said that they will have one more go at seeking to show that the banks misled the public on Enron's financial status.

China: Companies named and shamed for pollution

The State Environment Protection Administration has named three major companies for what has been described as frequent incidences of pollution.

SEPA said that the companies had come to attention following detailed scrutiny of 130 international companies that had previously been on an environmental blacklist. Whereas most of the companies have improved their performance, the three - Omnova Decoration Material (Shanghai), Shanghai COSCO Kawasaki Heavy Industries Steel Structure, and Jinmailang (Chengdu) - remain mired by frequent breach of environmental laws.

A SEPA spokesman said that it was a lack of corporate social responsibility that had led to the poor environmental performance of the companies.

CSR FEATURES from the Internet

Davos adopts the caring face of capitalism - 25 Jan 2008 FROM news.com.au

Corporate responsibility rather than profit was set to take centre stage in Davos later today, as the annual get-together of business chiefs turns its attention to issues of health, aid and development.

Rock star activist Bono, billionaire philanthropist Bill Gates and UN chief Ban Ki-Moon were to steer the conversation away from the global economy and geopolitics, towards issues such as malaria eradication, poverty alleviation and climate change.

Read full story

Thinking beyond grey pinstripes - 23 Jan 2008 FROM The Times

Corporate social responsibility (CSR) is high on the business agenda, or at least high in the annual report, but a new management mantra is threatening to take over ö sustainability. Is this just CSR by another name?

Read full story

Recent entries from Mallen's blog

Tomorrow's Green Marketing - 30 Jan 2008

This morning I attended what I think was my third Tomorrow's Company event in about the space of two months - this one focused on an area of increasing interest - green marketing. It should have been real brainfood from one of the most thoughtful pro Read more

=================================

Reduced harm tobacco - is it just smoke and mirrors?

Article by Mallen Baker

The debate on socially responsible tobacco has not moved on much in the last six years since BAT produced its first CSR report. At that time, I wrote that the real test was on product harm reduction - and that remains the message today. What progress have we seen in whether the promise of reduced harm products is any closer?

When I first noted the amount of investment that companies like BAT and Philip Morris said they were sinking into reduced harm products, I very much envisaged a smokeable product that was genetically engineered or chemically altered to reduce the numbers of harm-causing chemicals. However, in the last couple of years the focus of attention has moved to an alternative product - the Swedish tobacco pouch known as snus.

Snus is not smoked - it is like a small 'tobacco teabag' that is inserted between the teeth and the gum, and kept there for half an hour or so whilst the body slowly absorbs the nicotine. It is massively popular in Sweden, and illegal in most other parts of the European Union.

The irony around its legal status is that it is demonstrably a lower harm product than smoking tobacco. A review by of its health effects found that the reduction in harm is around 50 percent for cardiovascular diseases, 30 percent for pancreatic cancer, and for lung cancer and chronic obstructive pulmonary disease possibly 100 percent. That this version should be illegal, whilst full blown harmful smoking should not is one of those twists of history. It is a reflection of course that if tobacco were to be discovered today, it would never be licensed for sale. All well and good, but the question now is whether banning the reduced harm product is a counter-intuitive action likely to create public harm rather than public good.

For the tobacco companies, who hope for a legal market in a low or no harm product (which is not a description of snus, but no-one says that snus is the end goal), this would constitute progress. If a significant number of current smokers could be moved from smoking to the use of snus, this would have positive affects from the status quo.

The Scientific Committee on Emerging and Newly Identified Health Risks carried out a review published towards the end of last year for the European Commission that effectively made this point. In the unlikely scenario, it said, that tobacco smoking was banned and snus was legalised as the alternative, the public health benefits would be significant.

But if that scenario is, to put it mildly, unlikely, how does it play out if snus is legalised? According to the Committee it depends very much on how the product is marketed. If it is successful in providing an alternative avenue for existing tobacco users, and for young people starting up who would otherwise have started smoking, then it will be an effective contribution to better public health. However, if it simply lowers the threshold in a way that makes existing smoking abstainers take up tobacco consumption motivated by perceptions of lower risk, then it may even have a negative impact.

In Northern Sweden, a study on self-reported lifetime use of cigarettes and snus supports the belief that the availability of snus may have an impact on smoking, particularly amongst men. However, there are important cultural factors in Scandinavia, not least a history of aggressive tobacco control in the past, that makes it difficult to understand whether those facts would be replicated in different countries, with different cultures and history.

It remains a strikingly bizarre fact of legislation, however, that we will struggle ever to find out. It is an indicator of the size of the challenge for any company seeking to become a socially responsible tobacco company that the law prohibits most of the things that it would make sense to do. Never mind snus, if a company is successful in producing a reduced harm smoking product - which could potentially revolutionise the world-wide market - it would probably not be allowed to market it as being better than the standard. And yet this has to be the future.

Otherwise, we remain in an unsatisfactory situation at best. The challenge for tobacco companies that seek to define responsible marketing around their existing product is that the market rewards go wholly in the opposite direction. You sell more cigarettes, you make more profit. The chairman of the company can have on his wall that it's all about fighting over existing market share, and not about seeking to increase the numbers of people smoking, but at country level the managers are rewarded for hitting their numbers and it would be a pretty remarkable set of people that didn't find that the brutal logic of numbers took over all the niceties.

However, if the industry is allowed to compete vigorously on reduced harm products, then potentially you set the market logic in favour of a real beneficial change to the status quo. In that scenario, legislation could be utilised to help rather than obstruct. We have just seen how the raising of legislative requirements on fuel efficiency for motor vehicles - against a howl of industry protests - can be used to push standards up and to force innovation to a positive end. Why not seek to achieve a similar thing here - with requirements on the companies to meet a higher, but achievable, standard on reduced harm by a date 10 years in the future. This would provide a deadline for innovation, and provide material rewards to the companies that meet it. The industry might howl at the start, but it might be the one process that will eventually take them out of the hole they are currently in.

For many, of course, the debate remains the same today as six years ago but from a totally different reference point - you cannot have a socially responsible tobacco company, period. Their products kill, so de facto they cannot be socially responsible. There is no suggestion at the moment that zero harm products are in sight, so that is that.

The logic of this view is that governments should ban all tobacco products tomorrow, and then seek to enforce this ban to deal with the inevitable black market that would spring up. Personally, I would be up for this - it is intellectually honest and would undoubtedly produce public health benefits. It would produce some significant negative economic consequences, but so did the abolition of slavery. It would certainly create a debate about freedoms versus government mandate, but that is an ongoing debate. If you want it that much, and you believe in the benefits, you understand there are costs attached.

However, this does not seem to be a scenario coming any time soon, notwithstanding the light interference some are running, such as banning smoking in public places. Instead we have the status quo where governments endorse the legality of the market whilst demonising the companies that then fulfil this legal market demand. It is the worst of all worlds.

Snus may be part of the answer, but it is not the whole answer. Whilst making continued progress on some of the other key aspects of social responsibility, such as tackling child labour in tobacco production, the companies need to be searching for a real leadership position that explicitly commits them to actively seeking to reshape their market around reduced harm. Any tobacco company that could produce tomorrow a genuinely attractive (to the smoker) reduced harm cigarette could potentially set the standard that the rest of the industry would be forced to follow. The economic benefits for the company would be outweighed only by the public health benefits.

But for the moment, so long as the market logic rewards higher sales of the product that kills, nobody will believe in the counter-intuitive case for the socially responsible tobacco company - whether it exists or not.

=================================

All content may be quoted with appropriate acknowledgement by any non-profit or non-commercial organisations. Others please contact mallen@mallenbaker.net. No guarantees are made to the accuracy of any articles. This electronic publication is independently produced, and should not be taken as representing the views of any organisation.

Send comments and editorial contributions to mallen@mallenbaker.net

To unsubscribe go to http://www.mallenbaker.net/csr/nl/unsubscribe.php

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

To make any comments / suggestions re. this site, please contact mallen@mallenbaker.net
Business Respect - most recent edition added on 17th August 2008