Business Respect - CSR Dispatches No 130 - 22 Jun 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 new toolkit for marketers on CSR.

In the news:

Feature articles on the internet:

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Topics:

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Welcome

You will note in the 'news' section of this issue that Ethisphere have released their list for the 2008 'World's Most Ethical Companies'. It's no worse than any of the other lists that are produced across the world - put together by a respectable panel of people, gathering information from companies to feed into a final list. But there's something about the label that invites trouble. It is quite a hard one to live up to, and there are companies that were included in previous lists that have disappeared as controversies have conspired to knock them off that very lofty perch.

The thing is that if a company is a top 'sustainable' company, you can see that it is related to what it has done on environmental impact, possibly augmented by social impact as well. As they say in another context, past performance is no guarantee of future performance.

But to be called a 'most ethical' company is different - it is to say that the personality of this company is such that even when no-one is looking, it will always aim to do the right thing. Regardless of changes of leadership, regardless of the fact that across a large company of thousands of people you are only as strong as your weakest link. It's a heck of a label. It's no surprise that the comments section of the 'World's Most Ethical Companies' has its fair share of dissenters questioning the right of some of the companies to have made the list.

Perhaps this is a discussion I will be having on a few public platforms in the next couple of weeks, with a presentation on supply chain issues at a Retail Week conference in the UK, followed by a mini-tour of day-long workshops on CSR across the South Caucasus - Azerbaijan, Armenia and Georgia. With such a busy international itinery through the week before the next newsletter, it is just possible that next issue may be slightly delayed, although I will certainly aim not to let that happen.

Mallen Baker
mallen@mallenbaker.net

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CSR News 22 Jun 2008

Hong Kong: Sustainable fashion initiative launched by top textile firms

A new 'Sustainable Fashion Business Consortium' has been launched by a number of firms based in Hong Kong with the aim of promoting environmental certification, labeling and carbon emissions businesses.

The new group will work with firms in the textile and apparel industry, in conjunction with retailers and NGOs, to explore the way forward in achieving a greater commitment to sustainability in the broader fashion sector and to promote good practices across the supply chain. Founding companies include Ace Style, Fountain Set and Central Textiles.

Ethical behaviour tied to better financial returns

In the release of its most recent 'World's most ethical companies' list, Ethisphere has said that there is a clear premium of performance in the marketplace for those companies that have been acknowledged as having a superior track record on ethical management.

According to the organisation, the ethical leaders have seen a growth rate in value twice that of the S&P 500, having used a range of criteria covering ethical governance as well as research into controversies and track record to arrive at its list.

Ethisphere says that its "World's Most Ethical Companies" list identifies those which go "above and beyond legal minimums" focusing on areas such as carbon footprinting and ensuring that they keep to the spirit of the law not just the letter. It makes the far-reaching claim that "These companies ... won't be found next to the worlds 'billion dollar fine' in newspaper headlines any time in the near future.

Celebrated companies on the list included firms such as UPS, Google, Xerox, Starbucks, Aflac and Kao Corporation.

However, the list has attracted its fair share of dissent, with choices for some of the companies being hotly disputed by some in comments left on the website.

SRI investors support UN business and human rights report

A group of investors specialising in socially responsible investment (SRI) have written to the UN Human Rights Council supporting the recent report by the Special Representative to the UN Secretary General on Business and Human Rights, John Ruggie, and calling for his mandate to work on the area to be extended.

Professor Ruggie's third report "Protect, Respect and Remedy" was presented to the UN Council at the end of his existing mandate, and identified a framework for business responsibility in this area. It identified that key problems are created when there are governance gaps - Governments do not fulfill their duties in relation to human rights, and companies are therefore left without clear parameters and are able to take actions without immediate legal consequence.

The group of investors called for "significant and urgent" work by companies to review their own operations to identify risks of complicity in human rights abuses.

Honda begins production of next-generation fuel cell car

Honda says that it has taken a step towards moving zero-emission cars into the mainstream with its announcement that it will deliver about 200 fuel cell vehicles on lease in the US and Japan in the first three years of production, and it will set up the first network of sales dealers in the US for the vehicles.

The company, which is in a race for the new technology motor solutions with competitors, notably Toyota, currently has 35 fuel cell vehicles on lease contracts, but is looking towards newer technology and lower prices to bring more widespread appeal.

The key challenge with fuel cell vehicles so far has been the high cost of producing them, and the lack of any infrastructure to provide the hydrogen fuel that they will need.

Chinese interests could be targeted in Sudan

China must live up to the "disproportionate responsibility" it has in Sudan or its own interests in the country will suffer rebel attacks, a former expert with the US National Security Council has said following a visit to the region.

The Chinese government should put pressure on its allies in Khartoum to end the violence in Darfur and south Sudan, John Prendergast told reporters following a meeting with members of the UN Security Council.

He said that the south of the country was on the verge of another civil war as the terms which secured the 2005 Comprehensive Peace Agreement seem likely to be breached. He predicted that Chinese oil installations would be top of the list of targets should that come to pass.

India: Businesses warn about impact of AIDS

Business leaders have highlighted the potential impact of AIDS on competitive businesses in India as they saw large incidences of the disease amongst young people.

With India's key competitive advantage being skilled labour, it stands to suffer significantly from the impact of AIDS, according to speakers at a conference organised by the Confederation of Indian Industry.

Banmali Agrawala, executive director of Tata Power Company, said that the country was at risk of falling into complacency because figures had moved from 5.2 million to 2.5 million.

Leaders also spoke about the merits of pre-employment testing, and company-supported treatment centres.

Business leaders lobby for carbon cuts

Business leaders from 99 companies, including British Airways, Deutsche Bank, EDF, Petrobas and Shell are lobbying heads of governments to set targets for cutting greenhouse gas emissions and to help establish a global market for carbon.

The initiative is designed to target the G8 political leaders with a view to influencing the UN climate meetings that will seek to produce an agreement to take over from the Kyoto Protocol, which expires in 2012.

The CEOs called for 'responsible risk management' in relation to the issue which should lead leaders of both public and private sectors to take immediate and significant action. They want all major economies, including India and China, to be included in the new agreement, although richer countries should commit to deeper emissions reductions. By 2050, global greenhouse emissions should be halved.

UK: Primark cuts three suppliers following child labour claims

UK clothing retailer Primark has ended its contracts with three suppliers in India following allegations channelled through a BBC documentary that they used child labour to finish garments with embroidery and sequin work.

The company said that the work had been improperly sub-contracted against the company's code of conduct, and it had taken action accordingly. It said that the clothes affected accounted for around 0.04% of its product sourcing.

Primark's code completely forbids the use of child labour in its supply chain, whether directly by immediate suppliers or further down through sub-contractors, and has said that it is one area where it will take immediate action to terminate relations with suppliers if they are found guilty of substantive breaches and are unwilling to make quick changes.

One of the suppliers in question attacked the move, saying that the BBC coverage had painted a distorted picture, and would now damage livelihoods through the cancellation of orders. A Sakthivel, president of Tirupur Exporters Association, told Newindpress.com that a local NGO had dramatised the story for its own purposes. He said that the light hand-work had been given to a Sri Lankan refugee family at a camp in Bhavani to augment their income.

CSR FEATURES from the Internet

Investors pressure top firms on social responsibility - 13 Jun 2008 FROM CityWire

Ethical investors are driving improvements in corporate social responsibility among members of the FTSE 100, according to a recent report from Ethical Investment Research Services (Eiris) which also found a minority of companies persist with poor performance.

The biggest improvements were seen in environmental policy, human rights and supply chain management, although the report found progress had been slower in equal opportunities and board diversity.

Read full story

Recent entries from Mallen's blog

Ford goes for smaller vehicles too late - 21 Jun 2008

Ford has announced that it is to shift its focus to smaller vehicles and away from the big gas guzzlers. It is a real shame. Nobody will particularly celebrate this move. Nobody will use if for case studies. Nobody will give credit for it. It is followership. Making the move now is simply bowing to the inevitable, not leading the market. Read more

Following in the footsteps of the little green fella - 18 Jun 2008

Last night, I took part in a debate at the Oxford Union on the motion "corporate social responsibility will not survive a recession". I was slightly discomfited by the fact that speaking at the Oxford Union puts you in a line of speakers with the pedigree of Winston Churchill and even Mother Theresa. I was reassured, however, by the news that the line also includes Kermit the Frog. Since the key message of the evening was that 'it's not easy being green' I guess that was very much on the right note. Read more

Dissent is the CEO's friend - 13 Jun 2008

I heard today a fascinating reflection on the financial companies that have really struggled with the sub-prime crisis, and those that have ridden the storm well. Read more

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Storming the marketing bastille

Article by Mallen Baker

Here's one thing that marketers and investors have in common. I heard tell today of one company whose CEO began to tell a group of mainstream investors, in the middle of their quarterly meeting, "and now I would like to tell you something about what we are doing in terms of our corporate social responsibility." The investors interrupted him with a curt "Not interested thank you".

The same conversation could easily have involved the marketers inside any number of companies, although the language may have been more colourful.

At its annual general meeting this week, CSR Europe released a Sustainable Marketing guide - a communication aimed pretty much for the first time at that most sceptical of internal audiences. It is a good start.

The gulf is a wide one. By and large, marketers see the language of CSR as being about compliance, and CSR professionals as being the ultimate interfering 'can't-do' people. CSR professionals may feel that the marketers, on the other hand, are so focused on the behaviour of their customers as consumers that they lose sight of the fact that such behaviour is also shaped by their thoughts and fears as citizens. In any case, there needs to be something that brings the two together.

It is starting to happen. The climate change agenda is filtering into brand concepts and product design, and therefore also into advertising and other aspects of marketing. Sometimes this is smart, such as with the Ariel 'Turn to 30' campaign highlighted in a previous article.

Sometimes it is crass, with marginal benefits lauded with imagery such as flower petals coming from car exhausts. The point is, the marketing departments are beginning to engage with the agenda at some level. When poorly thought through campaigns take place, it simply highlights that value to be derived from the dialogue.

So the CSR Europe toolkit is a timely initiative. It is well designed, with key business case arguments sitting alongside a practical toolkit that gives a checklist of things you might like to consider along with a decision tree designed to make you think about the value of a proposed project.

And, of course, this being aimed at the cutting edge, there is an online game which was demonstrated live at its launch at the CSR Europe AGM. The game gives a 3D shopping mall experience where, playing the part of a time-poor consumer, you get to choose from a variety of different products with a bewildering range of different descriptions and product labels to give you clues as to their real environmental value. Assuming you finish in the time, you then get feedback on whether the choices you made were sound ones, or whether you were mislead by vague and misleading claims.

As a game, it will not put Nintendo out of business any time soon. But it is a clever way to encourage the marketers to do what people are generally very bad at doing - seeing how the world looks through the eyes of somebody else. It lacks the features of a web implementation that will 'go viral', but it is a smart way of enhancing the message of the document.

All of this is to the good, and it marks a real step forward. I do believe it only takes us part of the way there, though, for a couple of reasons. Firstly, the language used - simplified and well written as it is - is still the language of CSR and this is a barrier that some marketers will not get past. And the document is 28 pages - a good resource for the marketing manager who is already a committed convert and looking for a practical starting point, but probably a lot more than the unconverted will go through if they're not grabbed by the first couple of pages.

The second challenge is about where we think the focus for this dialogue should be. According to the Guide, it tends in the direction of the market for ethical consumption. Lots of the stats used are about the growth in ethical consumerism. The game makes a starting point assumption that the consumer is question is seeking the most sustainable purchasing decisions. The checklists and decision tree of the toolkit reinforce this as a starting point.

But the majority of marketers are not aiming at what they will see to be an ethical marketing niche. They are looking to the mainstream. Talk to them about what might build trust with their customers, and they may be interested. Give them a decision tree that says that unless you product is long-life and durable that you should reconsider it - it may be good ecology but it will not be seen as realistic business.

This is more a reflection of the scale of the challenge rather than shortcomings on the part of the document, and I personally think that it is one of the best documents produced by CSR Europe on the one hand, and the only one produced on the subject of CSR and marketing that makes a real attempt to talk to the heart of the marketer.

In years to come, it may be recognised as the first step in a long and hopefully meaningful dialogue that will get past the prejudices and preconceptions between two crucial departments in the business.

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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