Business Respect - CSR Dispatches No 133 - 3 Aug 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 the new framework that measures the impact of business on society.

In the news:

Feature articles on the internet:

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Topics:

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Welcome

The Business Respect readers survey is now officially closed! Many thanks to the 400 or so people that took part - it is very much appreciated. We'll crunch some numbers and review the results, and give some feedback in September as to what you said, and what we'll do about it!

I'm expecting that half the readership is on holiday this week, and this edition will be swatted away by a horde of 'out of office' autoresponders. So probably not the time for big news. But hey, no time like the present.

After 13 years, I'm leaving Business in the Community in the middle of September. I decided that the time had come - even though I still think I had the best job in the place and it remains an organisation whose work I will promote and support.

For better or for worse, I've decided to expand Business Respect from being simply the name of an email newsletter into something that can provide real added value to the CSR community, at the same time as expanding the writing / speaking and occasional consultancy that I do. Expect to see changes, therefore, from mid-September onwards. Exciting times.

Working out what the impact of the new venture will be is tricky enough - but then working out the impact of any enterprise is harder than you think, and the larger the enterprise the harder the equation. The World Business Council on Sustainable Development (WBCSD) has released a new framework for measuring the real impact of a business - and that makes up the main feature for this issue.

Happy holidays all.

Mallen Baker
mallen@mallenbaker.net

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CSR News 3 Aug 2008

Vedanta Resources protests travel to London

Vedanta Resources endured an angry AGM as protesters questioned its commitment to sustainable development, and the concerns achieved greater profile as a campaign group lodged an application to demolish London landmark St Paul's Cathedral to draw a comparison with what it said the company was doing in India.

The controversy focused on the company's plans to mine bauxite from the Niyamgiri mountain, which is held sacred by the Kondh tribe. In addition to the tribal sensitivities, groups say that open-cast mining in the area will destroy local ecosystems and affect water sources. The bauxite is believed to act as a huge sponge for monsoon rains, releasing them steadily throughout the year and guaranteeing successful crops.

The company has denied the allegations, saying that it has high environmental standards and is aiming to ensure the development of the area. However, founder and chairman of Vedanta, Anil Agarwal, was pushed to justify the plans in the light of the company's commitments to sustainable development.

Peru: Government to make CSR focus of APEC summit

Peru's deputy foreign minister has said that corporate social responsibility will be tabled as a key element of globalisation when the country hosts the next Asia Pacific Economic Cooperation (APEC) summit in Lima in November.

Gonzalo Gutierrez Reinel said that the stark contrast between poverty in the Andes alongside international companies making billions of dollars from gold, silver and copper created a social problem.

He said: "If companies have a social element they can be accepted and considered a part of society". Peru has seen increasing discontent in recent years as the population have continued to endure high levels of poverty.

Investors called on to avoid tar fields

Investors have been urged to avoid controversial projects to extract oil from tar fields after evidence that the process creates up to eight times more carbon emissions than standard oil production, as well as bringing higher environmental costs in other areas such as water use.

The report, produced jointly by WWF and Co-operative Investments in the UK, focuses on tar sands production sites in Canada and the US, and said that such extraction brought unacceptably high reputational risks arising from the environmental harm caused - something which investors should be mindful of, as well as dangers from likely future legislation.

Most of the key oil firms, including Shell, BP and ExxonMobil, remain committed to projects extracting oil from tar fields.

UK: Supermarkets and food firms reducing packaging waste

The amount of waste packaging produced by UK supermarkets and food manufacturers has stopped growing, in spite of continued two percent growth in sales, suggesting that the sector is successfully meeting commitments to begin reducing levels from 2010.

The findings, announced by government-backed agency Waste & Resources Action Programme (WRAP), show that the sector is meeting its targets under what is known as the Courtauld Commitment - a voluntary agreement to reduce packaging waste signed three years ago.

The government welcomed the signs of progress, but underlined its continuing concern about levels of food waste, just a short time after Prime Minister Gordon Brown controversially called for the country to waste less.

South Korea: Plans for product carbon labeling unveiled

The South Korean government has announced that carbon labels will be introduced for certain an initial selection of ten products beginning January 2009.

The labels will record the amount of carbon emitted throughout the lifetime of the product, from manufacture to end of life disposal. Pilot products will include specific brand washing machines, heaters and LCD glass.

The Ministry statement said that the initiative followed similar actions taken in countires such as the UK where it provides a basis for companies to demonstrate their commitment to reducing their impact on climate change.

China: Wal-Mart reaches deal with unions

Wal-Mart, known for its tenacity in fending off unions in its home markets, has agreed collective bargaining arrangements with government-approved unions in two cities in China, Quanzhou and Shenyang.

The agreements secure specific pay rises for employees at Wal-Mart stores. Wal-Mart employs more than 48,500 people at more than a hundred stores across China.

Wal-Mart has said that it respects the law wherever it operates, and that in China collective bargaining is required by law. The retailer initially resisted the moves by the All China Federation of Trade Unions to unionise its operations.

Singapore: One in four companies hit by fraud

Nearly one in four companies in Singapore have been hit by at least one incident of fraud, according to a new survey of directors of the top 1000 organisations.

According to the survey, carried out by KPMG, some fraud risks are increasing at an alarming rate, for instance technology or computer fraud which is three times more prevalent than it was four years ago. Around half of those affected by fraud had elements which were technology-related, suggesting that controls relating to computer systems are not keeping pace with the growing complexity of those systems.

The typical perpetrator of fraud is male, between 25 to 40 years old and employed by the company for two to five years. Although straightforward greed is the key factor, the pressure to meet performance expectations is also a strong factor. A fiercely competitive environment is leading to a greater likelihood that employees mis-report in order to cover up underperformance.

UK: Internet firms agree action to tackle piracy

Six of the major internet providers have agreed action with the music industry to address the widespread problem of online music piracy. The agreement, which was brokered by the government, involves letters going to large numbers of net users suspected of illegally downloading or sharing music.

Persistent breaches could see the service providers, BT, BSkyB, Carphone Warehouse, Orange, Tiscali and Virgin, reducing the quality of service those individuals receive, although they have refused to actually cut users off completely. The approach contrasts with that taken in the US which has seen large numbers of lawsuits brought.

Representatives of the music industry celebrated the outcome, saying that it had taken years to bring the providers to the view that they have a responsibility to deal with illegal file sharing on their networks.

Germany: Siemens sues former chiefs over bribery scandal

Engineering giant Siemens AG is aiming to get damages from its former CEO Klaus Kleinfeld and Chairman Heinrich von Pierer along with nine others for damaging the company's reputation by failing to deal with a bribery scandal in 2006.

The company announced its intention after a Munich court convicted one former executive of breach of trust after he had set up slush funds to divert 49m euros of company funds in order to bribe government officials and suppliers. Reinhard Siekaczek was given a two-year suspended jail sentence and a 108,000 euros fine.

The former CEO and chairman both deny wrongdoing.

Bahrain: CSR standards for Islamic financial institutions being produced

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has said that it is to develop a standard on corporate social responsibility that can be used by Islamic financial firms.

The standard aims to showcase the value of CSR from a specifically Islamic perspective based on the expectation that Islamic companies should make a positive contribution towards economic and social development.

The Centre for Islamic Finance said that Islamic financial institutions were already engaged across the world with socially responsible activities, but the standard would aim for greater consistency.

India: Companies behind in action on climate change

India's top companies are well behind some of their peers in taking action on reducing climate change emissions according to a recent report by KPMG.

The survey of 70 Indian chief executives saw a majority saying that they had a clear strategy, or were developing such, to reduce carbon emissions - but the vast majority had not yet followed such plans up with action. A number of those that had taken action were making relatively small steps.

India currently contributes around 4 percent of global man-made emissions, although its per head emissions are well below those of developed countries.

Rwanda: Rwacom justifies locking workers in factory overnight

According to the New Times, workers at Rwacom plastic industries have complained of poor pay and difficult working conditions where they are locked inside a warehouse for twelve hours at night. Management at the firm defended the practice saying that it was to prevent 'the theft of oil'.

According to the article, the company is prone to delaying the payment of salaries, causing hardship, and locking workers in at a premises where there is no toilet and the heat generated by the machinery is added to inadequate ventilation to cause real health problems.

The management told the paper that the policies were justified, with pay rates being appropriate for 'a casual labourer'. It also said that any of the employees were free to leave the company if they were not happy with conditions there.

CSR FEATURES from the Internet

The Audacity of Bill Gates - 31 Jul 2008 FROM Time Magazine

Bill Gates writes in this magazine that he wants big corporations to do more for the world's poor. He calls this "creative capitalism." Who could possibly object?

Actually, lots of people. After Gates outlined creative capitalism in a speech at Davos, Switzerland, in January, I started a website on the topic creativecapitalismblog.com) with the Tom Sawyer--ish intention of inviting distinguished economists, journalists and ordinary people to discuss their reaction to Gates' notion and then turning it all into a book. It has worked like a dream, and the book will be out by the end of the year. The remarkable thing is the variety of objections to what seems like an idea that's hard to dispute.

Read full story

CSR is still mostly PR for business - 21 Jul 2008 FROM Philippines Star

I have to congratulate the League of Corporate Foundations (LCF) for a successful conference on CSR last week. The Makati Shangri-La ballroom was full and an overflow crowd had to view the proceedings via monitors in the ballroom's anteroom. There were a lot of students and some notable CEOs too. But at the end of what they called CSR week, I am afraid there is still more lip service to the CSR concept rather than having it ingrained in the DNA of local business.

Read full story

Recent entries from Mallen's blog

No score for giving yourself top marks. - 29 Jul 2008

I'm not going to name names. The company concerned is not particularly worse than a number of others, but they just happened to catch my attention. Read more

When raving fans are not a good thing - 21 Jul 2008

I am a big fan and friend of Apple, a user of the iPhone and friendly towards O2, who provide the network in the UK. But even blind devotion has its limits. Read more

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So what's the real impact of your business?

Article by Mallen Baker

If you pillage, you should make amends. Replace what you took out. People used to talk this way about corporate social responsibility - saying that the first reason you should do it was 'to put something back'. It begged the question - what is the real impact of a business on society? Was it a plus or a minus? It's a great question, with too few bothered to come up with answers.

It's not enough any more to run your business without a care to the social and environmental impact, and to argue that because it creates jobs there is an overall positive. But likewise, there's not much to be gained by taking the line that the jobs and the creation of wealth counts for nothing.

Most companies find it all too difficult - they're struggling as it is to measure the impact of their CSR programme, rather than simply reporting on whether they've put in place the policies they promised to.

But some have made pioneering attempts to gain greater understanding, and now the World Business Council on Sustainable Development (WBCSD) has released a well-considered framework to distill their learning and turn it into a method.

So which are the companies that are ahead here?

Unilever have carried out two impact studies, one on their operations in Indonesia and another in South Africa. The company wanted to understand what role it, and the foreign investment it brought, played in developing the economy there. They worked with Oxfam in Indonesia, and commissioned INSEAD professor Ethan Kapstein for South Africa.

They knew that the positive impact of the company would go beyond its own operations, feeding through its network of suppliers. But they were surprised at how much impact came from the retail channels, where they impacted almost twice as many people as in the supply chain. The message was backed up by the exercise in South Africa.

Anglo American has produced its Socio-Economic Assessment Toolbox (SEAT) to help it to understand how well it measures up against its stated aim of making a positive contribution to the communities that live around its operations.

The company has implemented SEAT at over 55 operations in 16 countries worldwide and trained more than 350 employees in its operation. Its most recent revision focused on the concept of the 'resource curse', whether or not development in some countries can actually be hampered by the presence of lots of natural resources.

Vodafone carried out a study into the socio-economic impact of mobile phones in Africa. The project looked at how phones are used in practice, with further studies going deeper into how mobiles support health care and micro-credit.

The results showed that the impact of mobile phones was far greater than the company had thought. The way that phones are shared between people and within communities was a surprise, and the impact went a lot further than the number of phone owners would suggest. The growth of phone use in villages has created thousands of jobs and some very successful small companies.

Other projects have included Alcoa's attempt to understand the real impact of a smelter in Iceland, StatoilHydro's review of its impact on small to medium sized companies round its operations, and the similar review around BP pipelines in Azerbaijan.

Drawing from all of this, WBCSD has identified a four step framework which captures the key process. The Framework is the outcome from a business-led working group. It aimS to be:

* Based on the reality of what business does - built to be a practical tool
* Moving beyond compliance with standard norms
* Encouraging stakeholder dialogue to help businesses understand the real needs of society
* Flexible - relevant to any business anywhere in the world
* Complementing existing tools - making use of what is helpful that is already out there, such as the Global Reporting Initiative.

In order to work this stuff out properly, you get into some pretty involved detail, but the WBCSD toolkit aims to make it as easy as possible, with well thought through documents, an excel spreadsheet template and an accompanying Powerpoint presentation.

The four steps can be summarised simply as:

1. Set boundaries - what sort of activities and where?
2. Measure impacts - direct impacts that are in your control, and indirect impacts that are influenced by you to some degree.
3. Contribution to development - working out what those impacts do to support what needs to happen to build the economy and society
4. Prioritise action - find what are the key risks and opportunities from what you've found and work out what you should do about them.

The real trick is that third point. Any old fool can come up with the equation that says 'companies doing good things is good, so doing even more good things is better'. But it's entirely possible to 'do good things' and make no impact at all, or considerably less than you should.

The WBCSD tool is smart because it really tries to put the company's action into the context of 'what contributes to development'. Really - what works?

If the definition of CSR is companies organising their business in order to make an overall positive impact on society - which is certainly my definition - then the WBCSD framework for the first time gives us a glimpse of how you begin to work out whether or not you are meeting the challenge, or just engaging in a series of well-meaning gestures.

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In the news from the latest issue

UK: Five companies to be prosecuted over oil depot fire

Nigeria: Chevron cleared of human rights abuses

Nigeria: Poisonous chemicals in teething mixture killed 28 babies

China: Kader settles labour dispute after violent protests

South Africa: Police investigating BAE Systems over bribery allegations

UK: Tiger Beer 'disrespectful ad' pulled

Greece: BP and Shell fined for anti-competitive behaviour

US: Bayer to settle bribery suit on diabetes drug

US: Fashion designers and retailers hit with fur lawsuit

UK: Primark pulls from PR Week event following protest threats

Germany: Former Siemens managers convicted in corruption charges

US: Environmental programmes provide financial returns for majority

Australia: Wool producers risk ban with change to mulesing promise

China: Baidu caught in scandal over false information

... more news stories

To make any comments / suggestions re. this site, please contact mallen@mallenbaker.net
Business Respect - most recent edition added on 24th November 2008