Business Respect - CSR Dispatches No 131 - 6 Jul 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 look at what makes good leadership in CSR.

In the news:

Feature articles on the internet:

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Topics:

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Welcome

Thanks to those people in Armenia, Georgia and Azerbaijan who spoke to me and mentioned they were readers of this newsletter during my tour over the last week. It was great to discuss the issues facing businesses in the South Caucasus and to spend some real time getting into the detail of what corporate social responsibility could mean practically in some very different business environments.

The main feature this time has some reflections sparked by the tour - not on the details of CSR in those countries - but on one of the common themes that emerged from all three, ie. the importance of leadership in developing a CSR culture in a country.

Separately, I have a request. As most of you know, this newsletter has been produced for a number of years for the interest of a wide range of people who are focused in some way on corporate social responsibility. It is produced free of charge for anyone that wants it, and will continue to be so unless catastrophe intercedes.

Rarely have I asked for specific feedback from readers, however before the next issue goes out I will be emailing you an invitation to take part in a very short online readers survey. As I will be putting more time and focus into the website and newsletter going forward, I am keen to know what things you would like to have changed, what new things might really add value for you and so on.

I hope that you will feel able to take part. It will genuinely be quick and painless - but will provide really valuable information back to me to try to help turn this into something of real value for the largest number of people.

Watch out for the invitation. I am expecting to send them on Wednesday 16th July - a week and a half from now. And thanks in advance for your help.

Mallen Baker
mallen@mallenbaker.net

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CSR News 6 Jul 2008

France: Caisse d'Epargne launches sustainability labelling

French bank Caisse d'Epargne has launched a labelling system to rate the sustainability of financial products, with a plan to extend the scheme to insurance and loan products by the end of the year.

The labels use a similar approach to that taken by energy efficiency labelling for electrical appliances such as fridges and freezers, but uses factors such as climate impact and social and environmental responsibility as criteria.

The company has made its methodology, developed by consultancy Utopies, freely available for other institutions to adopt.

Austria: Former bank boss jailed for fraud

The former head of Bank Fuer Arbeit und Wirtschaft (Bawag) has been jailed for over nine years for fraud following the collapse of US firm Refco.

Helmut Elsner was one of nine who were convicted of breach of trust and false accounting following a trial that lasted a year. They were held to be responsible for a loss of 1.4bn euros. Elsner was ordered to repay 6.8m euros in pension benefits.

The other eight defendants included Bawag board members, the ex-supervisory board chief and the former secretary general.

UK: Tesco to stop sourcing from Zimbabwe

British retailer Tesco has said that it will stop sourcing products from Zimbabwe so long as the current political crisis persists there. The company currently buys around 1m UKP of goods from the country.

Tesco said it was looking for other ways to support workers in the country that had been its suppliers to date, but it could not ignore the escalating political crisis as Robert Mugabe claimed victory following a widely discredited election process.

The move followed a call by the British Government for UK firms to seriously consider ties that they might have with the country. The government welcomed Tesco's move, arguing that it should give a lead to other companies to freeze or suspend ties with Zimbabwe so long as it remained under Mugabe's reign.

British American Tobacco under fire for practices in Africa

A BBC investigation has alleged that British American Tobacco is breaking its own marketing code in selling single cigarettes, thought to be particularly attractive to under-age smokers, in Nigeria, Malawi and Mauritius.

The BBC programme, fronted by British businessman and TV personality Duncan Bannatyne, also says that BAT actively circumvents advertising bans. For instance, in Malawi it said that the company sponsored a music event which had no formal age checks on the door, in contravention to its marketing code.

BAT responded to say that, if the facts were as presented by the programme, it would be disappointing and not what the company would expect to happen.

Japan: Index to be introduced to rate companies on environment

The Ministry of Economy, Trade and Industry has said that it intends to introduce an Environmental Stock Index to evaluate business engagement with environmental issues within a year.

The Index will look at how companies are progressing in areas such as reducing greenhouse gas emissions, energy efficiency and recycling, as well as building environmental criteria into their products. Companies will be reviewed by a panel including Tokyo Stock Exchange officials, business people as well as other experts.

Punitive damages on Exxon Valdez slashed

The US Supreme Court has reduced a $5bn punitive damages award against Exxon Mobil relating to the sinking of the Exxon Valdez nearly twenty years ago to a figure close to $500m.

In commentary on the 5 - 3 ruling, one of the Justices said that in general terms punitive damages, certainly in maritime cases, should not exceed the amount of compensatory damages. The comment came in recognition of how figures for punitive damages against companies have soared in recent cases, whilst across the broader range of cases punitive awards have been lower than the compensatory figure.

The Exxon Valdez oil spill was the worst accident of its kind, polluting 1,300 miles of shoreline in Alaska, when the ship's captain, who had been drinking, left the bridge of the ship at a crucial moment.

Exxon Mobil has said that it cleaned up the spill and compensated more than 11,000 Alaskans and businesses.

Switzerland: Campaign group demands investigation of Nestle 'spying'

An anti-globalisation campaign group has asked the Swiss authorities to investigate claims that global food giant Nestle hired an employee of Securitas to spy on the group at its private meetings.

According to the group Attac, the person attended its meetings between the end of 2003 and mid 2004, at a point when it was working on an anti-Nestle book that criticised the company's position on genetic engineering and other key public policy issues.

Nestle has said that it worked with the security firm in order to ensure the safety of its staff during a G8 summit of world leaders, but had done so within the law.

India: Rules on CSR disclosure to be produced

The Institute of Chartered Accountants of India (ICAI) has said that it is working on a new set of rules on CSR disclosure, inspired by the Global Reporting Initiative guidelines on reporting.

The ICAI has formed a committee to develop its framework in standardising approaches to sustainability reporting. It is expected to produce a draft in the next few months.

The move comes as Indian companies find themselves under growing pressure to account for their sustainability impacts as they seek to access global markets and to attract foreign investment.

US: Retailers falling short on sustainable fisheries

Grocery retailers across the US are universally failing to make significant strides towards sustainable buying of fish, according to a new report by Greenpeace.

Whole Foods, Ahold USA and Harris Teeter performed the best, scoring four out of a possible ten points on a scale that looked at how many endangered versus sustainably sourced varieties each offered for sale. Most retailers scored a miserly one out of ten.

The report predicts that the situation will improve, with some companies developing more sustainable policies, and with a growing market for seafood likely to force the pace in achieving sustainable practices.

CSR FEATURES from the Internet

Taking concrete steps with no carbon footprint - 27 Jun 2008 FROM The Guardian

Keith Clarke is an unlikely eco-warrior. As chief executive of consulting engineers Atkins, he is more likely to be building roads than campaigning against them and his company's best known underground involvement was as part of the failed tube contractor Metronet.

Read full story

Recent entries from Mallen's blog

Game set and match in CSR - 6 Jul 2008

I'm not sure what has been more exhausting - travelling across three countries in the South Caucasus running one day workshops on CSR in each over the course of a week, or watching the Wimbledon tennis final which has covered six gruelling hours of the most incredible skill, stamina and performance. Read more

Beginning the blame game - 27 Jun 2008

James Hansen, leading climate scientist, has told the US House Select Committee on Global Warming that the CEOs of fossil fuel energy companies should be tried for high crimes against humanity. If pointing fingers and casting blame could save the world, I guess this would be a great step forward. But it is the very opposite. Read more

Newsflash - everything and nothing has changed - 27 Jun 2008

A new study has confirmed the obvious - people are not yet changing behaviour in spite of concerns over climate change. Read more

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What makes for leadership in CSR?

Article by Mallen Baker

Having run three workshops on corporate social responsibility across three very different countries in the South Caucasus during the last week, the key theme again and again has been leadership. Unfortunately, to be precise, the lack of it.

It is always more difficult to get a head of steam behind CSR in business environments that are dominated by the activities of foreign multinationals. These companies will often have a well developed approach to social and environmental issues, developing top leadership responsibility, corporate policies and processes, measuring and reporting performance.

But these activities take place at head office. What happens then in each of the outlying countries on the ground is, hopefully, some evidence that the companies are generally well managed (that carries no label or tag whatsoever) and what they do under the name of 'CSR' is pretty much writing cheques to give to local community initiatives.

There is nothing wrong with local community initiatives, obviously. And giving strategically can make a huge difference. But it is not a process that the local business leaders will look at and understand that this is something to do with leadership - and that it goes to the core of how you do business.

The exam question for the week has been this: 'how do you build a CSR movement in a country that sees itself very much on the first rung of the ladder?' It is a difficult enough question to answer. So many people will tell you that the business environment is too difficult here, corruption too rife, people too selfish, the government too incompetent, whatever it may be.

The real need in these countries is to encourage the people - they exist in every society - who won't accept things the way they are if they need changing. The people who will build coalitions of support rather than simply look out for themselves. In a word, the people who have the capacity for real leadership.

By coincidence, I was reading during this week Allan Leighton's recent management book on leadership. Drawing from the lessons of a number of the most successful British CEOs, it draws together some key themes of what makes good leadership in business. Unsurprisingly, many of them are obvious in the absence in countries where CSR has yet to take hold.

I tried to pull out my own hybrid list, and came up with the following features of CSR leadership.

CONFRONTING THE ISSUES - There is no point in hiding from the truth, whether it relates to the state of the business or the state of the society on which the business depends. Honest appraisal of the problems is a pre-requisite to resolving them.

Certainly, Allan Leighton when he and Archie Norman first took on failing UK retailer ASDA spent a lot of time visiting different parts of the business, talking to people on the ground, and doing their best to build an honest picture of just how bad things had really got. They were shocked at what they found, but it was a necessary first step. Leighton then did the same when he took on the Royal Mail, confronting at an early stage the fact that the company had only 20% of staff staying that they felt valued by the company, with 25-30% of the staff saying that they felt bullied or harrassed. Not a pleasant finding, but very important to know.

There were certainly some frank discussions about what the issues were in society, but at least in some places this did not seem to be expected. There was some doubt expressed whether it would be acceptable to raise the issue of corruption, but at one session it became the dominant them with delegates returning to it again and again.

In one country, I was advised not to mention that I had visited one of the other countries. I mentioned it anyway, and astonishingly the roof didn't fall in. The presence of unmentionable issues should be an early target for a group that wants to develop a real dialogue on CSR.

And, just as the best leaders believe in getting onto the shop floor and seeing where the problems are for themselves, so there is a real value in business leaders getting to see some of the societal issues that affect them at first hand. Arrange visits to the local schools, for instance, to talk to the people on the ground as to what the real problem are. Find out whether the generalisations that people make ("lots of our teachers take bribes") really match the reality.

BELIEVING IN THE POSSIBILITY OF CHANGE - 'Things don't work like that around here' is a phrase that has been translated at some time into every single language in the world. Its essential message is that the person arguing for a different way of doing things is outside the loop, and those on the inside know better. It is an argument made either through powerlessness and despair, or through the vested interests of those that benefit perfectly well from the present, thank you very much.

It takes an entrepreneurial spirit - to be found in all cultures although its exact appearance may differ - to break this one. Successful leaders in CSR will see possibilities, and take on the challenge of bringing them about. This is a quality that has long been associated with successful business anyway.

TAKING ON THE RESPONSIBLITY OF CHANGE - The phrase "it's not the role of business to worry about that" is one of the biggest barriers.

It is an understandable one, particularly in small countries that are dominated by big government. And it's not that there are no boundaries here - businesses do not, for instance, have democratic legitimacy and that ought to constrain some of the activities they could potentially make that would affect the governance of a country.

Nevertheless, if the state of education is producing a business problem, as well as a societal one, business should be pragmatic enough to believe it can take an important role in addressing that problem.

GET THE BEST PEOPLE AROUND YOU

In turning a business around, this is about building a strong management team, obviously. I sometimes wonder what people think this means. There are certainly leaders I know that would make this one of their top three management tips, and certainly aim in principle to attract top talent to their organisation. But then they brook no dissent. They expect people to buy into their vision, and argument even in the privacy of the boardroom is somehow a problem. But leadership is strongest when it's proposals and plans are tested by different visions and different perspectives. It's why having diversity within the organisation is a good idea.

In terms of building a CSR movement, it is about bringing together some of the top leaders, as well as those with primary responsibility for some of the CSR functions in their businesses, to look at how they might collaborate to build the movement. You can, of course, have individual companies anywhere that decide for themselves to create a business based on values. A Tata, or a Cadbury, both companies which started their lives as beacons of light in a pretty difficult status quo. But if they aim to for business to be a real agent of change for good, then it has to achieve scale.

STEAL GREAT IDEAS SHAMELESSLY

When Leighton was running ASDA he spent a lot of time looking at other people's stores. The targets of his interest started, naturally enough, with companies that looked like ASDA. He spent a great deal of time, for instance, in Wal-Mart in the US, applying their best ideas then in ASDA in the UK (which made life very easy when Wal-Mart eventually bought ASDA). But he also visited other sorts of shops - because good ideas that might transfer into his context could be found literally anywhere.

Another flavour of the argument that says "you don't understand how things work here" is the one that says "give us local case studies, only local case studies will be accepted as valid". And yet business is inherently an international institution. They exist to make profit. The logic of the marketplace tends to be remarkably similar wherever you are - it's not that there are no differences, but the similarities are at least as important.

Anyway, you can often learn more and better by looking beyond the obvious. If all the retailers compare what each other does, and they all copy, then they will all end up the same. When Steve Jobs created the Apple Mac computer, he wandered retail stores looking at home consumer items - he wanted to design something that would change the context of his industry, not something that would match the standard boring boxes of his competitors. If you want to be remarkable, you need to accept ideas from wherever they can be found.


I don't imagine this to be an exhaustive list, but it's certainly a starting point. The key question is how develop such leaders in business environments where businesses are often not that entrepreneurial, and certainly when leaders look around at this thing called 'CSR' all they see is community affairs managers writing cheques.

It should be the distinguishing feature of the advanced multinational that where they operate abroad, they do two things not one. The first thing by all means can be to write cheques. The second - play a leadership role in bringing together local heads of business to inform, educate and inspire those people about the value of corporate social responsibility.

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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