Business Respect - CSR Dispatches No 122 - 2 Mar 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 review a report on what will be the new social taboos of the future.

In the news:

Feature articles on the internet:

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Topics:

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Welcome

It is getting hard to keep up with the rash of surveys, studies and statistics on CSR these days. Many of these provide useful and interesting insights - the recent Grant Thornton survey, for instance, showing what are the primary drivers for businesses getting involved in CSR. In many countries, from Australia to the US, the key factor remains the attraction and retention of staff - still tops in spite of the huge amount of action and publicity there has been over climate change in recent years.

In addition, IBM have produced a review which shows that companies that outperform the rest have a solid approach to CSR - this is the way round I prefer the interpretation anyway. The headline that 'CSR boosts competitiveness' is just not possible to prove from an attitude survey, and we should always beware of overclaiming. It is the case, however, that many of the demonstrably best companies in the world now take a smarter approach to CSR and sustainability. All the hungry success-oriented businesses in the world watch what these guys do, so that is not a bad observation in itself.

We shouldn't need a business case that proves that 'CSR works' - as though it is as automatic as pressing a button or pulling a lever. Nobody can prove that 'marketing works' on the same basis - it's not that you do it, it's how well you do it that determines the results.

The same goes for stakeholder engagement. Having seen plenty of poor quality stakeholder consultation, you have to say that the missing piece is usually the active interpretation, the real work to take raw input and to turn it into meaningful insight, rather than simply reporting opinions. It is hard for stakeholders to really answer some of the questions companies ask of them. It is this issue that we cover in the main feature this time.

Mallen Baker
mallen@mallenbaker.net

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CSR News 2 Mar 2008

CSR helps competitiveness, according to IBM survey

Corporate social responsibility helps companies to be more competitive, according to a survey of businesses carried out for IBM. The review said that 68 percent of companies said that focusing on CSR helped them to make money, and 54 percent said that CSR helped to give them a competitive edge.

Around three quarters of the companies agreed that they did not really understand their customers concerns around CSR issues. Around the same number said that they now provided more environmental and social information to shareholders and other interested parties.

The survey, which covered around 250 businesses world-wide, said that companies which outperformed their peers already showed a grasp of the benefits of a well planned, integrated CSR strategy. Such companies are more likely to collaborate to improve standards, understand their customers expectations better, and to have increased the amount of information they provide about the sourcing, composition and impact of their products, services and operations.

UK: Major sugar firm becomes largest to go Fairtrade

The largest sugar cane refiner in Europe, Tate and Lyle, has announced that it is to switch to Fairtrade certified sugar supplies in Britain to benefit farmers in poor countries.

The company, which sells one fifth of its sugar in the UK via retail stores, said that it would complete the move to Fairtrade by the end of 2009. It said that the move was the largest ever switch to Fairtrade sourcing of any major UK food or drink brand. It hopes to sell around 70,000 tonnes of Fairtrade sugar - ten times more than the current sales of the product.

The announcement was timed to link with the start of Fairtrade Fortnight, an awareness-raising set of events across the UK.

China: Companies need to show green progress to expand

The Chinese government has introduced a programme of 'green securities' to make it harder for polluting companies to raise capital without focusing on mitigation and to require them to provide more information about environmental performance.

The plan is part of the government's programme to decrease the environmental impact of China's expanding economy. The move follows previous 'green credit' and 'green insurance' initiatives.

Around ten companies last year found their plans to raise capital were impeded over inadequate pollution controls.

Some critics have said that China's increasing focus on environmental measures are leading to the erosion of the country's cost advantage for attracting business.

Pfizer pulls Lipitor ads criticised as misleading

Pfizer has said it will pull controversial ads that used artificial heart pioneer Robert Jarvik as a representative for its cholesterol drug Lipitor. The ad campaign had been accused of misrepresenting Dr. Jarvik's credentials.

The critics had suggested that the ads implied Dr. Jarvik was a cardiologist, which he is not. One ad also depicted him rowing skillfully across a mountain lake - the footage was taken using a body double since Dr. Jarvik does not row.

The company said that it regretted the misimpressions created by the ads, which have now been withdrawn. The company promised "greater clarity" in its advertising regarding the presentation of spokespeople.

Lipitor is protected by patent until 2010, but the cholesterol drug market is significant, and the assault from generic alternatives has already begun.

Microsoft fined after promises on software information doubted by EU

European Union regulators have fined Microsoft a further $1.3bn for abusing its global market dominance. The action came after the EU expressed doubts about the recent announcement by Microsoft that it would share more information about its technology to help third party software developers to make their products more interoperable with the Windows operating system.

The EC said that the companies' behaviour had harmed millions of offices in companies and governments around the world. The fine was the third successive levy against the company in its ongoing antitrust dispute.

The company said that it would look at the decision, but that the fines were about issues that had now been resolved. It pointed to the fact of its recent announcement that it will give away documentation and relevant computer code to make applications work with Windows and its Office suite. In the past, it made information available only for a charge.

The regulators however said that there had been four similar Microsoft announcements of this type before, and what was needed was robust action. It said that the company had not touched on its monopoly abuse in the past, nor the allegations that it is trying to undercut rivals by bundling its web browser with the operating system.

It will still charge companies patent license fees for any software that is sold using the information.

Wal-Mart and Toys 'R' Us release safety measures on imported toys

Wal-Mart and Toys 'R' Us have announced a new series of safety checks to be applied to imported toys, following the series of damaging recalls that dented confidence in the industry.

Wal-Mart has told suppliers that they need to meet enhanced safety standards for all new toys that will be sold through 2008. Separately, Toys 'R' Us have introduced third-party testing of toys and required a significant reduction in lead content used in paints. These requirements will be in place after March 1st.

In addition, Toys 'R' Us has said that its products will prohibit any use of the controversial chemicals phthalates, which have been linked to possible reproductive problems. Wal-Mart stipulates that toys cannot have more than 0.1 percent phthalate content.

Virgin Atlantic flies first biofuel powered flight

A Virgin Atlantic passenger jet has flown from London to Amsterdam with one of its fuel tanks filled with a fuel blend including biofuel made from nuts picked in the Amazon rainforests.

The jet was a trial run, according to Virgin founder Richard Branson. Future commercial exploitation of alternative fuels will almost certainly not be based upon the babassu nut source used in this case, since the wild growing nuts would not be a scaleable and sustainable source.

Virgin has committed all of the profits from its transport-related businesses to developing environmentally sustainable alternatives. It has committed that biofuels will not be drawn from sources which provide competition to food crops in terms of land use.

The fuel blend used contained 20 percent biofuel and 80 percent ordinary jet fuel.

UK: Tesco calls for government action on cheap alcohol

Tesco has said that it is keen to work with the government on framing legislation that would restrict the sale of cut-price alcohol in the UK.

The company said that it would be "commercial suicide" for any company to act alone, since the lure of cheap alcohol brings many customers into the store. But equally, an action by the retailers to agree common principles relating to price would be counted as illegal price fixing.

The call came some months after the retailers were fined for having agreed higher milk prices several years ago - a move which had been praised by the government at the time for meeting the needs of a dairy industry under pressure, but which was subsequently followed up as a legal breach.

There is likely to be a lively debate to come around drinking, with the British Medical Association expected to lead calls for stronger government policies to reduce drinking and a government review due to report on the issue of what role cut-price offers by supermarkets plays in feeding the incidences of binge drinking. Particular focus has been attracted because a number of the retailers now sell alcohol below cost, so important is it seen as a lever to get customers into the shop.

China: Factories moving away from coast to escape pollution scrutiny

Many Chinese companies are moving their most polluting processes away from coastal regions into areas where environmental scrutiny is lighter, according to the Chinese campaign group the Institute of Public and Environmental Affairs (IPE).

Companies are coming under growing pressure in China due to government interests in reducing pollution and the growing public pressure around the worst excesses.

According to the IPE, companies are being drawn to parts of the country where rules are hardly enforced by the local authorities, allowing companies to largely escape scrutiny.

China is seeing tensions arise for the first time in its rapidly growing economy, with environmental measures and other rising costs leading to thousands of factories to relocate.

CSR FEATURES from the Internet

What makes ethical people do unethical things? - 28 Feb 2008 FROM Business Day

If you have an interest in the collection of oxymorons then no doubt the terms "business ethics" and "ethical management" have long been in your collection. Yet the development of the corporate conscience is no laughing matter. Billions are spent each year by corporations determined to convince employees, customers and shareholders that they can be trusted.

Why then is business in SA being forced to acknowledge that it doesn’t know the difference between right and wrong?

Read full story

Corporate responsibility: Still a foreign concept - 20 Feb 2008 FROM The Jerusalem Post

Israel lags far behind other Western countries when it comes to local businesses fostering philosophies of social responsibility, and reporting civil activities - according to global standards - is extremely scarce, a survey conducted by private consultancy firm Arkada reported Wednesday. The report came one day ahead of the second Israeli Conference on Corporate Social Responsibility (CSR) to be held Thursday at Tel Aviv University.

Assessing how large corporations based in Israel presented their programs of social responsibility compared to businesses in other countries, Arkada CEO Liad Ortar found that Israel was on par with nations such as Romania, Kuwait, Nigeria and Algeria, but fell far behind Portugal, New Zealand and Chile.

Read full story

Recent entries from Mallen's blog

GM and a total crock - 25 Feb 2008

Bob Lutz, the straight talking Vice Chairman of General Motors has caused something of a stir, when he was quoted as having said at a dinner party that "global warming is a total crock of shit". Now he has followed that up by complaining on his blog Read more

Gambling on a responsible approach - 21 Feb 2008

A compulsive gambler is suing William Hill, the bookmakers, for allowing him to burn millions of pounds that he didn't have in an orgy of ridiculously large bets. It promises to be an interesting test case of just how far the gambling firms have to t Read more

A snapshot of the future? - 19 Feb 2008

Lieca have released a new digital camera, the Leica M8 which could give a glimpse of the sustainability model of the future. It comes with a perpetual update programme. It means that you can take your camera in to be updated with the latest refinemen Read more

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In search of tomorrow's citizen and consumer

Article by Mallen Baker

Any marketer knows that his or her first duty is to understand the customer. Right? But the customer is not just a consumer. The customer is a citizen, and owns a whole bunch of confusing and conflicting impulses. How on earth can you get to grips with this - and particularly get to grips with how life for your business is going to change in the future?

Looking into the future is hard. Ask your customers what they think today and you may get the right answer - unless of course you ask whether they like 'new Coke' better, or would they buy the loaf with a picture of baked beans on the wrapper (well known case studies of focus groups giving the wrong answer).

But ask them about the future, and you will really struggle. Henry Ford said that if he had asked his customers what they wanted they would have said that they wanted a faster horse. You can see the point. People don't know that they want what they've never seen.

Two years ago, were customers imagining the iPhone and telling Apple that was what they wanted? Likewise, do we think that citizens have an easy time imagining what a carbon-constrained world will look and feel like? What kind of tools might become available to help them to get fitter, better informed, better loved or entertained?

So you need to understand the customer as a citizen and what this means for the future. But how?

There is no one answer to that, but there is an interesting new perspective that has been outlined by a new report produced by Ledbury Group, a thought leadership consultancy in the UK. They took a series of questions about what will be the new social taboos to a panel of just under 1,500 people aged over 18. If you can't get to visions of a complex future, you can at least begin to tease out some of the shifts in attitudes that will affect that future.

Some of the behaviours that respondents were asked to rate included things like using an outdoor patio heater, allowing children to have computers and / or TVs in their room, serving children non-organic food etc.

If you split the results into themes, you get the top future social taboos to be the following:

Retail and food producers: Eating eggs and meat from caged chickens (49%).
Leisure, travel and tourism: Using the car to get to local shops or school (47%)
Home and personal finance: Throwing out as rubbish items that can be recycled / re-used (58%).
Child well-being: Children not playing sports and being physically active (53%).

The chicken answer should not be a great surprise - the UK has just screened an influential series of programmes by celebrity chefs / food writers on the cruelty of the caged chicken industry.

Another interesting feature is how some of the age groups differ. So most of the top results above were common to all age groups, along with using a sun-bed and children being obese. Younger age groups were particularly exercised about taboos that applied to younger people. Counter-intuitively, they thought it should be a taboo for children to be using networking sites, for people to drink alcohol in front of kids, for kids to own mobile phones and for people to give kids fizzy drinks or sweets. Presumably, they were quite happy with these phenomena when it was their turn! But recent adulthood has made converts of them to an impressive degree.

The older age group, the over-55s, are more exercised by things that are just wasteful and in poor taste. Owning 4x4 vehicles or using an outdoor patio heaters features strongly here.

This is interesting, but by no means conclusive. After all, it is still an exercise in projecting the emerging concerns of today into the future. But even so, a large percentage of UK adults see these issues becoming more of a daily feature, not passing as fads.

It may not be a straight message about the markets of the future, enabling you just to write down the lessons and apply them in the form of changed behaviour. Guess what - it's never going to be that easy. You have to consider, add to the attitudes an assessment of how these will change in the light of easily predictable changes in the environment, and then make a judgement.

And then you have to look for the imaginative solutions.

So you sell cars - why not become advocates for responsible car use, in the way that alcohol and gambling companies have to? Do you think you will sell fewer cars by telling your companies that it is OK to use them less?

Suppose we were to imagine an even more radically different future? Suppose Ford and Toyota sold mobility services, not cars. Instead of having a profit model based on shifting as many vehicles as possible, imagine they instead promised to get you to where you were going in the best way possible, and profit rested on doing so in the most efficient way. And that could still include the pleasure drive - nobody has yet conclusively proven that the sustainable world of the future has to be a world without fun. But even better you can take your pleasure drive in a car you ordinarily couldn't afford, and refrain from something else to make space for it in your carbon budget.

Maybe that's getting too wild and whacky - but if Henry Ford asked his customers today what they want, they would probably say a more environmentally friendly car. That might be no more the real vision of the future than the proverbial faster horse.

Charles Darwin observed that the species that survived in the natural world were not necessarily the strongest, nor the most intelligent, but those most adaptable to change. Think about that.

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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