Business Respect - CSR Dispatches No 127 - 11 May 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 consider the plight of the Olympic Games sponsors.

In the news:

Feature articles on the internet:

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Topics:

Want to read a hyperlinked version of this issue? You can find one on the website at http://www.mallenbaker.net/csr/nl/127.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

GoodCorporation conducts cutting edge audits of best business practice, taking companies beyond CR reporting and into sound business management. We have worked for over 250 organisations in 40 countries.
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---- Help support Business Respect by supporting our sponsors -------

Welcome

For companies, working out just how they should respond to the changing expectations on them can be a bewildering affair. On the one hand, there are times when they need to hear the mood music in the distance and move quickly to shift their business model to meet a challenging new environment. Sometimes it can be as simple as listening to what key stakeholders are saying, learning and absorbing.

Often, it is not so simple.

Some campaigning issues have equally passionate stakeholder advocates on both sides of the argument. And sometimes the stakeholders concerned simply have no interest in the situation the company is in, and its interest on behalf of its employees, its customers, its shareholders (including all those pension funds) in finding its way through the morass - they just want the company to act as a vehicle for their campaign objectives.

Arguably, that is the position that the Olympic sponsors find themselves in. It's a high temperature, controversial area at the moment, but one well worth exploring with this issue's main feature. Let your views be known if you disagree!

In the mean time, I am delighted to welcome Business Respect's second corporate sponsor, who joins us from this edition onwards. Good Corporation was founded in 2000 in order to help companies to measure their impacts in a credible way. Good Corporation is not a consultancy, and therefore doesn't gain anything by identifying weaknesses in its clients' business practices. But it has set one of the de facto standards in CSR business practice, and carries out assessments for companies across the world.

They also hold topical debates on key emerging issues - I carried an article recently on the discussion at the UK's House of Lords focusing on the fairness or otherwise by the banking sector. I hope to cover more of these over the year. Give them a look.

Other sponsor news - the Change for Good network, our first sponsor - has changed its name to the Social Marketing Network. Starting from next issue, we will be making individual insights from the network available to readers of Business Respect. Having attended several of the London network meetings so far, I can recommend them, and the network in general, as a gathering point for individuals committed to making a difference.

The support of sponsors enables us to continue to produce Business Respect as a free resource to the CSR community, so we encourage you to support them.

Mallen Baker
mallen@mallenbaker.net

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CSR News 11 May 2008

China: Sino Gold attacked via TV programme

Mining company Sino Gold has found itself the target of official criticism via the China Central Television (CCTV) which accused the company of poisoning water, running roughshod over the concerns of local people and enjoying tax-free profits as a result.

The attack, which has been broadcast several times, and the transcript for which has appeared widely on internet news and blog sites, was criticised by the company for being "hugely biased" and being riddled with large numbers of "gross inaccuracies". For example, it answered the claim that it had failed to contribute anything to the local economy by observing that it had invested 46m yuan in local programmes.

Other companies active in China have expressed the fear that the biased programme may reflect an emerging official campaign to keep foreign mining companies out of China and to favour local firms instead.

EU: Airlines breaching consumer rules on websites

The European Commission has said that it intends to take action against airlines that continue to mislead customers with their websites as to the real cost of flights.

According to the Commission, one in three European consumers are being misled as they purchase tickets online, with around half of 137 websites breaching EU consumer rules.

A review of sites last year found that the 137 had breached rules on clear pricing, availability of offers or clear contracts. Many have failed to rectify the failing since. The main failing is that many airlines separate out components of the cost to suggest cheaper fares than is actually the case, stripping out charges such as airport taxes, booking fees or credit card payment charges.

Germany: Adidas boss criticises Olympics protestors

Herbet Hainer, the CEO of Adidas, has said that he does not regret sponsoring the Olympic Games, and criticised pro-Tibet protestors that tried to disrupt the progress of the Olympic torch.

In an interview with Spiegel, he said that although protestors had every right to proclaim their political views, he did not believe they had the right to disrupt the torch procession or to try to extinguish the flame. Adidas is sponsoring 16 national teams for the Olympics, including China.

"The Olympic Games have been a part of our brand for years," he said. The company would resist the effort made by campaigners to drag the company into politics.

Asked about whether the company had suffered damage to its reputation, he said "We've had more e-mail complaints in recent days about the use of kangaroo leather in our shoe products than about China."

New Zealand: Major companies criticise climate change bill

Fonterra, Solid Energy and Todd Energy joined together to criticise the government's Climate Change (Emissions Trade and Renewable Preference) Bill on the grounds that it would disadvantage New Zealand business without achieving its environmental goals.

According to the companies, whose criticisms echoed previous comments from business organisations, the legislation would benefit government through windfall taxes, but would hit companies that had limited ability to make changes, such as the dairy industry and methane emissions from cattle.

Fonterra said that the proposals would cost it $500m a year, enough to make it lose its competitive edge, but with no benefit to the economy overall.

The three companies have called for implementation of the legislation to be put on hold whilst problems are resolved. The government has said that it disagrees with some of the possible scenarios the companies have painted.

Unilever commits to traceable palm oil by 2015

Unilever, one of the biggest consumers of palm oil, has announced that it would back a moratorium on further palm oil related deforestation in Indonesia, and it commits to using only fully traceable palm oil by 2015.

The company, which made the announcement at an environmental summit hosted by the UK Prince of Wales and the Prime Minister organised by Business in the Community, uses the material in many of its products and has led attempts to address sustainability in palm oil over recent years.

Unilever CEO Patrick Cescau said that the company would focus on its suppliers, getting them to certify the palm oil from their own plantations as well as the oil that they buy in from elsewhere.

The move was preceded by the company being singled out by Greenpeace campaigners who dressed up as orangutans and scaled the firm's London headquarters. Environmental campaigner Jonathon Porritt said that the company had been planning its action for a number of months and the move had not been prompted by the Greenpeace action, which he felt unfairly targeted a leading company on the issue.

France: Alstom denies bribery investigations

Engineering giant Alstom has seen its staff approached by Swiss regulators as part of an investigation into bribery, but the company has denied reports that suggested it was the target of the investigations.

Alstom said in response to reports in US papers that "no legal procedure has targeted the company in the matter of corruption". It said that a number of employees were being questioned as witnesses.

The Wall Street Journal had said that Alstom was suspected of paying bribes to win contracts in Asia and South America, a suggestion that the company dismissed as speculation.

Singapore: Drug companies urged to market responsibly

The Health Sciences Authority in Singapore has urged drug companies there to practice responsible marketing in how drugs are promoted to the public.

According to CSR Asia, the companies have been told to stop running adverts positioned as being educational when they fall short of the expectations of such material.

An advert run by GlaxoSmithKline on cervical cancer was named in example. The ad does not list the symptoms of the disease or mention risk factors, and it simply uses fear to promote its drug.

The company denies using fear as a promotional tool.

UK: Shell pulls from huge wind farm project

Shell has provoked criticism from environmental groups when it announced that it would pull out of a project to build the world's largest wind farm, the London Array scheme. The company said that it wanted to focus on wind power in the US where government incentives offered more competitive returns.

Shell was one of three equal shareholders for the project, which may now be in doubt, alongside Eon and Dong energy.

The UK government's Environment Secretary Hilary Benn said that people would struggle to understand why the company had taken this action in a week when it had announced record profits.

The company said that its decision was purely economic and reflected no lessening of its commitment to wind power. Costs for the London Array project had doubled over the last five years.

Exxon Mobil, Lukoil, CNOOC at the bottom for transparency

According to a new report by Transparency International, Exxon Mobil, Lukoil and CNOOC are all in the bottom group for transparency amongst the oil and gas majors. The result came from a survey carried out of 42 such firms.

The report found that others, including Shell, BHP Billiton, Petrobas and Talisman Energy scored highly in the transparency stakes, with BP coming in amidst the middle group.

According to Transparency International, lack of transparency in how companies operate, particularly in countries with weak standards of governance, can cause corruption and harm the poor. The organisation has said that oil companies should report more detail around moneys paid to governments for oil rights.

Exxon said that it rejected the report's conclusions, and that it disagreed with the methodology used to come to the final results.

CSR FEATURES from the Internet

Is There Any Way to Stop Wal-Mart & Co. from Sweatshop Profiteering? - 29 Aug 2008 FROM Alternet

I remember one particularly bad factory in China. It produced outdoor tables, parasols, and gazebos, and the place was a mess. Work floors were so crowded with production materials that I could barely make my way from one end to the other. In one area, where metals were being chemically treated, workers squatted at the edge of steaming pools as if contemplating a sudden, final swim.

Read full story

What does CSR really mean? - 7 May 2008 FROM Business Daily (Africa)

The late Milton Friedmann once argued that “in a free enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers.

That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both of those embodied in law and those in ethical custom.

Read full story

Virtue’s reward? Companies make the business case for ethical initiatives - 27 Apr 2008 FROM The Financial Times

In Unilever's London headquarters, Gavin Neath, the consumer goods group's head of sustainability, takes a plastic contraption out of its cardboard box and places it on a table. It looks like a small and semi-transparent version of the vending machines that dispense drinks to office workers.

The device is called a Pureit – and it is a drinks dispensing machine of sorts. Developed by Hindustan Unilever, the company's Indian subsidiary, the Pureit provides drinking water from any source, however polluted, purifying it with a series of meshes, parasite and pesticide traps and a germ-killing battery kit, without the need for boiling and without the use of mains electricity.

Read full story

Recent entries from Mallen's blog

Food companies - hear the sound of the oncoming train and get out of the way! - 6 May 2008

A few years ago, I remember hearing the reaction of certain food companies to the suggestion that rising levels of obesity in the population were going to be an issue for them. That reaction was abrupt, aggressive and fearful - as though the mere suggestion might bring it to pass. I fear that the same reaction might come about with the inevitable focus that will come onto them with the growing global food crisis. Read more

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Playing games with the Olympic sponsors

Article by Mallen Baker

Unpopular though it may be, I feel compelled to pitch a defence on behalf of the corporate sponsors of the 2008 Olympics. The battering they have taken has been very little to do with corporate social responsibility, and it's time the debate moved on.

Let's start off with the event itself. The Olympic games are a good thing. It is a symbol that has had powerful resonance through the ages, and is about fellowship and friendly competition and so on. It is good that companies sponsor the Olympic games and help to make them happen. If companies stayed away, it would be to the detriment of the world community.

No government has suggested that this year's games should be cancelled. No country has, to date, said that it intends to boycott the games. If they did, they would suffer relatively lightly. Disappointment for that country's athletes, of course. Some grumbling from the Chinese government, inevitably. But governments provoke such grumbling whenever they meet the Dalai Lama, and the business of government goes on.

So far, we have heard that a few country leaders have diary commitments that make it impossible to attend both the opening and closing ceremonies of the games, none of whom are attributing this to anything related to human rights. Wow.

The companies are being asked to sacrifice so much more – and the campaigners dismiss such suggestions far too lightly.

China is one of the biggest growing markets in the world. Any global company wants to be a part of the business community that serves that growing market. Those that didn't might well find that their next, and most powerful, new competitor would spring out of the space they had left. See Google's discomfort at the growing successful force of Baidu, the home grown search engine company.
As things currently stand with Chinese politics, a company that calculatedly insults the Chinese government will effectively lose its licence to develop that market, and the Chinese government’s definition of an insult is pretty broad – it can easily include a public statement by the company relating to China and human rights.

Does that mean that standing against the Chinese government can never be justified? Of course not. If your company is being seriously expected to be complicit in activities that go against your corporate values, you have to find a way through. This was the challenge facing Microsoft and Yahoo when it was suggested that their response to the legal requirements for information about people who posted messages on their servers would be active facilitation of the abuse of those individuals' human rights.
That is not the issue here. These companies are being asked to make pretty symbolic statements. Such statements will not affect China’s policy in relation to Tibet one iota. Really. But the price to be paid for this empty gesture will be to damage access, if not lose it altogether, to over a billion potential customers.

No government is making this sacrifice. Neither is anyone else.

The campaigners are picking on the Olympic sponsors because they can. They can picket the local stores, or offices – they can do spoofs of the logos. Their efforts will distribute via Youtube and elsewhere because bashing companies is both easy and fun. But it has nothing to do with really changing things on the ground in Tibet, therefore it simply joins a long roll-call of campaigning targets which is more about the self-indulgence of the campaigners than it is about any clearly delineated strategy to achieve campaigning goals.

If Coca-Cola, or McDonald's, or Johnson & Johnson, were forced to withdraw from China, there is no evidence whatsoever that those that would spring up to fill the vacuum would be as committed as those companies are to social responsibility.

Of course, as I often tell companies you can win the science and lose the argument. The companies may eventually be forced into actions regardless. Or they may get through the Olympics, but only by suffering significant reputational damage at home that people quote against them as a case study for years to come. At the moment, I hope that they get through the process intact. That is not the same as a blank cheque to do whatever they need to in coming years in order to stay in favour with the Chinese government, by the way.

But it is recognition that reluctance to indulge in futile gestures is not the same as corporate irresponsibility.

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In the news from the latest issue

UK: Tesco to stop sourcing from Zimbabwe

British American Tobacco under fire for practices in Africa

Japan: Index to be introduced to rate companies on environment

Punitive damages on Exxon Valdez slashed

Switzerland: Campaign group demands investigation of Nestle 'spying'

India: Rules on CSR disclosure to be produced

US: Retailers falling short on sustainable fisheries

Hong Kong: Sustainable fashion initiative launched by top textile firms

Ethical behaviour tied to better financial returns

SRI investors support UN business and human rights report

Honda begins production of next-generation fuel cell car

Chinese interests could be targeted in Sudan

India: Businesses warn about impact of AIDS

Business leaders lobby for carbon cuts

... more news stories

To make any comments / suggestions re. this site, please contact mallen@mallenbaker.net
Business Respect - most recent edition added on 22nd June 2008