Business Respect - CSR Dispatches No 121 - 17 Feb 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 ask whether the emerging CSR standards help or hinder companies wanting to create radical change.

In the news:

Feature articles on the internet:

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Topics:

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Welcome

IBM has released a report on corporate social responsibility, arising from a survey it carried out on 250 business leaders globally. Apparently, two-thirds of those surveyed said that they are focusing some of the CSR activities to create new revenue streams. However, this interesting insight is balanced by the revelation that fewer than 25 percent of them think that they actually understand what their customers CSR expectations are.

Believe it or not, I think this is a good sign. It is a good sign that so many are now starting to see the concept of CSR that goes towards their revenue streams. It is the beginning of putting it at the heart of the business, rather than on the periphery.

I would temper that insight slightly. One friend of mine who works for a comms agency said that they had experienced a number of companies seeking help to "do a Plan A" - the Marks & Spencer masterstroke of marketing. It is a masterstroke because it is based on a solid 100 point plan of concrete action. One small difference. It turned out that what they wanted was the marketing, but without the rather onerous trouble of creating the solid, company-wide commitment to action that went with it. I think there is still a long way to go before embedding CSR is the mainstream activity it needs to be.

On the other hand, it is no great surprise how few business leaders understand their customers CSR expectations. Stakeholder engagement remains a rather undeveloped art. I have seen it done a number of times. I have rarely seen it done well. Any company that has sent out a questionnaire or convened a panel and asked some pretty obvious questions - well, it's better than not doing it at all, but it's not going to deliver the real insights into how stakeholder engagement can help you be fit for the rapidly changing future expectations.

Have we too quickly settled into a rut about how we go about this business? If we need rapid change, will the emerging standards help us to get there, or will they actually hinder us by encouraging well managed incremental change instead? That is the question for this issue's main article.

Your thoughts, as always, will be welcome.

In the mean time, the vote on private equity has been on the website now for a few weeks. Out of the various things I wrote during 2007, I note that it was the piece on private equity that made it into Lifeworth's annual review of CSR this time around. It is obviously the hot topic of the moment.

As far as the voters are concerned, there is quite a strong view that PE firms have special challenges. As you recall, the question goes as follows:

Private equity companies are, by their nature, less socially responsible than plcs

Yes, they are less responsible 111 (49%)
No, they are more responsible 42 (19%)
There is no difference between them 73 (31%)

Many thanks to the 226 people that have voted so far. There is still time to make your own views known!

Mallen Baker
mallen@mallenbaker.net

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CSR News 17 Feb 2008

Shell calls for government intervention over climate change

Royal Dutch Shell has said there needs to be massive intervention by governments across the world to achieve sufficient reductions in greenhouse gases.

According to the company's chief economist Jeremy Bentham a carbon dioxide price of close to 100 euros per tonne would drive investment in carbon capture and storage schemes. This is more than four times the current price.

Shell made the comments around the launch of its energy scenarios to 2050. Its two key scenarios, which it labelled 'scramble' and 'blueprint' covered different possibilities of how the world may respond to the changing global situation.

In the 'scramble' scenario, nations and companies compete for resources whilst governments go for easy options. There is a crunch moment when growth in coal and oil and gas demand becomes unsustainable.

In the blueprint scenario, the world moves more quickly towards energy efficiency through early establishment of carbon pricing. Governments also need, says Shell, to achieve carbon capture schemes on a vast scale over the next 40 years.

US: Hewlett-Packard settles over spy scandal

Hewlett-Packard has brought the spying scandal to a conclusion through a settlement with the New York Times and BusinessWeek journalists.

The amount of the settlement has not been disclosed, and marks the end of the process that laid low a number of senior HP executives, including chairman Patricia Dunn. The executives had sought to locate leaks from board discussions by engaging private investigators who sought private records by pretending to be someone else.

The New York Times said that it had pursued its claim because "corporate misconduct aimed at silencing the press is not acceptable and will not be tolerated".

UK: Ryanair website taken off line over misleading prices

Ryanair, the budget airline, has had to take its website off line for three days after it missed a deadline to remove misleading prices.

The deadline was imposed by the Office of Fair Trading which required the company to include taxes and other charges within the fares it announced through its headlines.

The move is likely to cost millions, and follows an admission from the company that its profits are suffering.

Ryanair has said that its closure of the website is purely related to increasing the site's capacity. The company has a long history of aggressive responses to criticisms over misleading adverts, environmental impact or poor customer service. Most recently, the company was ordered to pay compensation after using a picture of French President Sarkozy and his wife without their permission for an advert.

Israel: Company tries to get tax exemption for bribes

A district court in Tel Aviv has turned down a request from a company, name withheld by the court, that had requested the right to deduct just under $900,000 paid in bribes from the company's tax bill.

The bribes were apparently paid to help secure a business deal in an unknown African country. The company argued that the bribes were necessary as part of the local business custom, and therefore should be tax exempt under Israili law.

The court rejected the petition, and said that companies had to reflect the values of its home state in the way that it carried out business abroad.

Office supply company drops Asia Pulp & Paper over environmental concerns

Office supply company Staples has announced that it is ending its relationship with Asia Pulp & Paper over concerns about its environmental performance.

Staples has said that there had been "no indication" that APP had made positive strides to address serious environmental issues such as unsustainable logging in rainforests. APP represents just under 10 percent of the paper stock carried by the retailer.

It is not the first time Asia Pulp & Paper has been in the firing line, with environmental groups singling it out for attack over its practices and a high profile partnership with WWF coming to an end when the group decided that APP was continuing with destructive policies. An application to use the Forest Stewardship Council logo for certain products was rejected.

Nigeria: Imports of old computers targeted

Nigeria is to work towards a ban on the import of old computers because so much of the spare parts are being dumped and causing problems of toxic waste.

The country's Information Minister John Odey said that the first step would involve putting duties onto such computers. Currently old computers attract no trade tariffs.

There remains a big demand for computers, and old machines are often shipped by companies wanting their redundant stock to provide a positive social benefit before being fully retired. However, the lack of a reliable system for electronic waste disposal is leading to big problems.

Venezuela: Government breaks links with Exxon Mobil

Venezuela's state oil company PDVSA has said that it is to stop sales of crude to Exxon Mobil following demands by the company for compensation for renationalised assets.

Venezuela's president Hugo Chavez has said that the company is no longer welcome in the country, bringing to an end its joint venture with PDVSA which provided around 2 percent of the company's supply. He said that Exxon had been engaged in plundering the nation's resources and linked this to what he described as an "economic war" being waged by the US.

The move was sparked by a recent court ruling which froze around $12bn of PDVSA assets in advance of arbitration.

Nokia attacked for failing to justify its environmental leader status

Nokia, which has just unveiled a fully recycled 'concept' phone, came under attack from Greenpeace which dropped the company from its number one position in its 'Guide to Greener Electronics' due to "ineffectual takeback" mechanisms.

According to the campaign group, Nokia representatives in the Philippines, Thailand, Argentina, Russia and India were not informed about their company's programme on takeback of products.

Technology journal EFY Times checked Greenpeace's claims and contacted one of Nokia's stores in Delhi which was advertised on the website as being a collection point. The manager at the store concerned denied that it was such a collection point for phone recycling.

Nokia responded to the story promising to take action. It released a statement saying that it accepted the evidence of gaps in its recycling programme, and it would be taking immediate steps to rectify the problem.

The company was trying to make positive headway with its showing of a phone made entirely from renewable and recycled parts. The phone does not yet make calls, and is a long way from being a commercially released product, but the company said that the product gave an insight into how it hoped to break new ground.

UK: Report questions how green are ethical funds

A new report has said that many ethical investment funds are extremely light on environmental issues, backing major oil companies such as BP and Shell whilst ignoring many of the new cleantech companies that are focused on producing solutions to climate change.

The study, produced by Holden & Partners, said that the top ten funds carried portfolios that differed only a little from other mainstream funds. It said that assumptions made by many investors that ethical funds and environmental funds would be largely the same are not borne out by the reality.

There is no suggestion that any of the funds concerned have sought to misrepresent what they cover, as they generally make explicit what their focus is, and what issues they screen for. However, there is confusion in the market because many investors are not investigating closely enough what the actual make up of funds really is.

Google says it will invest to support green technologies

Internet giant Google has said that it will invest hundreds of millions of dollars in alternative energy technology projects that would otherwise have difficulty getting funds.

The company has said that it aims to help promising technologies to achieve scale to help bring down the cost of alternative energy production. The action came about through realisation that the cost of developing real utility-scale generation from sources such as solar power required greater upfront investment than venture capitalists were prepared to put in.

Google has already committed $20m to start-up firms carrying out research on aspects of solar, geothermal and wind power.

CSR FEATURES from the Internet

Guided by Conscience And Keeping Pace - 17 Feb 2008 FROM The Washington Post

Planners and investment advisers are supposed to care about their clients' goals. So how come so many of them mouth off when someone asks about socially responsible investments?

They rant that SRI portfolios can't earn as much as Wall Street's standard, diversified fare. If you want to do good, they say, invest in winning stocks and write the charity a check. These advisers have a couple of wrong-headed ideas.

Read full story

From CSR to PSR - 6 Feb 2008 FROM CSRwire

One of the basic tenents of corporate social responsibility (CSR) is that how you do business is just as important as what you do. It underscores the belief that corporations have a responsibility, and indeed should be held accountable for the impact they have on people and the planet.

Maybe it's time to take the learnings of CSR into the political arena and let candidates know that how they run will be key to their success. If we can successfully hold corporations to a higher standard, we can do the same with candidates -- let's call it Political Social Responsibility – PSR.

Read full story

Recent entries from Mallen's blog

A faster horse, please - 17 Feb 2008

A year ago, I got satellite TV, moving from the standard UK 5 channels to, well, more than I can be bothered to count. If you'd asked me ahead of the event how this new facility would be used, I would probably have said that it would be a mix of docu Read more

A taste of things to come - 17 Feb 2008

Anyone in the restaurant business should be paying very close attention to what's currently taking place in New York city, where new rules to require chain restaurants to give calorie counts on their menu are provoking something of a storm. Read more

United, but a little clueless - 15 Feb 2008

It was the annual conference for Business in the Community yesterday, and as I approached the conference venue was intrigued to see a giant chicken and others handing out leaflets. The BITC conferences attract demonstrations occasionally, on account Read more

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When the competent become the enemy of the good

Article by Mallen Baker

The challenge - our rapidly changing world is creating the need for businesses to make a step change in how they do business. The systems companies use to manage their social responsibility are maturing, and this is seen as a good thing that will help them to address the challenge. But what if that's wrong? What if those systems are becoming the enemy of change, not the mechanism for it?

Think about what it really means to make a step change. It means re-imagining your product into a totally different space. It means identifying what is the change that needs to happen in the world to enable you to be successful, and then seeking to bring that about.

That's what happened when Interface began selling carpeting services to corporate clients, not metres of carpet. It's also what happened years ago when UK firm B&Q was part of the founding of the Forestry Stewardship Council, because it knew that there needed to be an independent third party that could verify the sustainability of sourced timber.

Even those may come to be seen like baby-steps compared to what is required. Think about that.

I was pondering this recently as the good folk at Ethical Corporation persuaded me to take part in a debate which was initially pro / anti the Global Reporting Initiative. I was to take the 'anti' brief. I eventually agreed, but on condition that the brief was changed to focus on whether that system provided us with the framework for the future development of reporting or not. An altogether different, and more interesting, question.

The GRI is just one system. There is now a plethora - the indices, the management standards, the developing 'advisory' standards. All of them designed to do one thing, to try to bring some element of quality to the process of incremental improvement in CSR.

It's not that quality is a bad thing. After all, we first began to get into the realm of such systems decades ago when the buying public got fed up of finding that not everything was in the box that was supposed to be in the box, or that rattle in the bonnet of the new car was a spanner left there by an engineer. We imported quality principles from Japan that they had originally absorbed from Deming and we all learned about re-engineering, and total quality management and six sigma - all designed to reduce the numbers of defects.

Seth Godin, the writer on permission marketing, observes that such companies also do something else - they become filled with competent people. So? Don't we want competent people in our businesses?

Godin says: "Competent people have a predictable, reliable process for solving a particular set of problems. They solve a problem the same way, every time. That's what makes them reliable. That's what makes them competent".

Competent people are competent because they've learned to do something well. Generally, they are proud of the fact they do it well, and they become resistant to change precisely because change is the one thing that can threaten that competence. Does it sound familiar? Don't we now have a generation of CSR or sustainability managers that have taken the brief within their business, learned about the issues and the tools of their trade (the systems), and focused on getting good at using those tools?

For goodness' sake, there are heads of CSR part of whose bonus is dependent on how well the company does on the Corporate Responsibility Index. I have been part of the organisation that produced that Index, and I don't think that's a great idea! What kind of incentive is that to think big and different?

You can report against the GRI to the letter, and it won't make you a more effective communicator. Look at the GRI's own GRI report for confirmation of that.

You can implement iso14001 at every location you have, but never develop an innovative new product that will slash your customers carbon footprint.

It's not that we want to return to an era of incompetence, but leadership in business is about separating out the big strategic stuff from the day to day knitting.

Because ultimately, whilst we are professionalising corporate social responsibility, adding new impenetrable jargon and making it a place fit for experts, we are missing the real deal. This is not a specialist part of business per se, it is business as usual. And business as usual is what Darwin first described when he said: "It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change".

We are busy chasing the systems because we think we will bring a new rigour to the field. If only the systems can be made more objective, more third party audited, more based on numbers, then surely we can begin to really tell the difference between the good companies and the bad, so surprises like the BP failings of pipeline maintenance will never again emerge to surprise us.

Guess what? It's just not going to happen. And anyway, it's the wrong answer to the wrong question.

The real question is this: Just what is a company going to have to do to be successful in the fast-changing world in which we find ourselves? Whatever sector you're in, the answer to the question probably isn't the name of an Index or a quality system.

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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

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