Business Respect - CSR Dispatches No 135 - 31 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 ask whether companies can conduct business with integrity in Zimbabwe.

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/135.html.

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Welcome

A tricky question to ask of any individual. Would you ever quit your job because you decided your business was unsustainable or somehow unethical? Indeed, did you do such a thing? I was in a discussion recently with someone who did just that - see the blog posting later in this issue. I would be interested to hear from any others with your stories (anonymous if it helps!) about doing this, or knowing that you should have, but couldn't take the consequences.

One of the trickiest questions for a company is whether to stay working in a country when the government of that country follows policies that the rest of the world finds abhorrent. And it's especially hard if you've been there for many years. The issue was raised again in relation to British firms operating in Zimbabwe, and this provides the focus for this issue's main feature.

Whilst you've been enjoying your holiday, I've been working hard on the next phase for the website and the newsletter. I'm sure I'll get a holiday sometime soon ...

The big surprise when reviewing the results of the readers survey was just how large a percentage of people stated a preference for the newsletter to come in html format, with a little design to make it easier to navigate and more attractive. I knew there would be some, but I hadn't thought there would be so many.

On the other hand, others pleaded for the status quo. One respondent for instance, said 'I read this on my blackberry on the train - moving to html will make this harder to do'.

I'm surprised this was a big deal, because every single issue of the newsletter has a 'want to read this in html? You can here' link to the relevant page on the website. But obviously that's not done the business for most readers - which is why you ask readers what they want in a survey!

So change is coming - and it will be optional change, so those who like the status quo will be able to continue to get it. More about this soon.

One thing that I will announce though. Those who like instant notification can now follow the news updates on Twitter twitter.com/BusinessRespect and the blog updates as well twitter.com/mallenbaker. Twitter is very much a minority sport amongst the readership, but it has been the work of moments to set up an automatic feed when posts are added, so that's something to offer those that do.

Those of you with newsreaders who get headlines through RSS feeds probably already know that both the news stories and the blog have their own feeds.

News and articles are at:
http://www.mallenbaker.net/csr/xml/csrnews.rss

Blog entries:
http://www.mallenbaker.net/blog/xml/mallenblog.rdf

Lots of ways to make it easy to stay up to date. A lot more to come later, when everyone will be back from holiday!

Mallen Baker
mallen@mallenbaker.net

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CSR News 31 Aug 2008

Indonesia: Suit against ExxonMobil focuses on human rights abuse by Indonesian troops

A US federal court has ruled that ExxonMobil has a case to answer in a suit over alleged killings and torture by Indonesian troops acting to protect the company's property.

The suit, brought by 11 villagers, will go to trial and is expected to focus a new spotlight on the relationship between companies and the military in countries where they operate. It accuses Exxon of responsibility for acts of human rights abuse carried out by security forces which had been paid for by the company's subsidiary ExxonMobil Oil Indonesia.

The head of Indonesia's armed forces has said that the military never received funds from the company.

If the case were proved against the company, it could have implications for a number of other US firms that have been accused of complicity with abuses by military forces.

Malaysia: Government calls on corporate support for house building programme

Invoking corporate social responsibility, the Malaysian government has called on companies to contribute to the Amal Jariah programme, with matching grants provided for each contribution up to a budget of RM100m.

The Amal Jariah programme was launched last year with the aim of repairing the homes of the poorest in the country. So far, it has repaired nearly 5,000 houses, with an aim ultimately to reach 30,000.

The government has said that it aims to encourage greater private sector participation with a widening of the scope of community projects eligible for tax deduction to include poverty alleviation and environmental protection projects.

Canada: La Maison Simons pulls catalogue over 'too thin' models

Fashion retailer La Maison Simons has pulled its latest fashion catalogue following complaints that it used images of models that were unsuitable because of their extreme thinness.

The company president Peter Simons said that he had ordered the catalogue pulled, and that it had been approved whilst he was away on holiday. He said that the images were destructive to a more vulnerable portion of the population, and he apologised for their use.

The catalogue had a print run of about 450,000, and featured ultra-thin models sporting the company's Twik brand.

Simons said: "We are into social responsibility here. I'm fully aware of what it is and I'm taking full responsibility for it. It's my job to ensure that we are a constructive actor in the community."

Nepal: Relatives of killed workers sue US firm KBR for trafficking

A Nepalese man and the families of 12 others who were kidnapped and killed in Iraq are to sue KBR over allegations of human trafficking. According to the suit, the company made the men work against their will at a US air base in Iraq prior to the kidnappings taking place.

The men were recruited in Nepal to work in Jordan, but allegedly had their passports taken from them and were told that they would have to work at the air base in Iraq. When being transported inside the country, they were kidnapped and killed by extremists - an act which sparked riots in Nepal. The surviving man was not kidnapped, and worked in Iraq for 15 months before being allowed to return home.

KBR and its subcontractor Daoud & Partners were held to have engineered the scheme that brought the men in to work as unwilling labourers on the base. KBR has not yet issued a statement about the suit.

US: Proposed Alaskan mine survives people's vote

A ballot question that would have prohibited a proposed gold mine from proceeding due to fears it will disrupt the key fishing industry, has been defeated.

The ballot, which saw one of the hardest fought campaigns in history, had been positioned as a choice between the mining and fishing industries, and had focused on national identity. The companies involved with the mine include Anglo America and Northern Dynasty Minerals.

If it had been passed, it would have had the effect of blocking the proposed Pebble Mine, which would have extracted gold, copper and molybdenum around Bristol Bay in south west Alaska. The area also happens to be one of the world's most lucrative salmon fisheries following a growth in interest in wild salmon.

The vote does not make it certain that the mine will proceed, since it still needs to get a number of local permissions.

Merck accused of dressing marketing up as science

A study carried out by Merck on its now withdrawn painkiller Vioxx that showed whether the drug was easier on the stomach than an alternative was actually conducted as part of a marketing programme by the company, according to a recent report.

The report, which draws from internal company memos and reports on the Advantage study, claims that the company's marketing department engaged in 'stealth marketing' by enlisting doctors in a study whose purpose was primarily to get the doctors used to using the drug and to encourage them to promote it via word of mouth.

The authors alleged that the company selected the most influential doctors. The company denied that the study had been motivated by marketing.

Australia: Business lobby group warns over carbon trading

Australia's key business lobby group, the Business Council of Australia, has said that plans for carbon trading would hit key company earnings and called on the government to provide more compensation.

According to the group, exporters in the refining, cement, steel and paper sectors would be hard hit by plans to introduce measures to curb the release of greenhouse gases, and would have their international competitiveness significantly undermined.

The BCA President, Greg Gailey, said that companies would have major challenges once a carbon price was reached of A$20 - well below the current European price of A$40.

Australia is the fourth largest carbon emitter in the world on a per capita basis.

India: Tata Motors threatens pull-out from West Bengal

Tata Motors has responded to the ongoing violent protests around the site of its proposed new plant in West Bengal by reflecting that it may pull out from the state and relocate its new Nano car elsewhere.

The site has been the focus of controversy since opposition groups accused the communist state government of taking the farmland by force, in order for the Nano factory to be built. The protests have already led to a delay in the launch of the car, which was due to begin being sold by now.

Group chairman said that the company was deeply concerned about the violence and the safety of the company's employees and equipment. He added that, "whatever the cost", the company would relocate if it was not accepted as a good corporate citizen in West Bengal.

The opposition have promised that ongoing protests will continue.

US: Climate change resolutions making impact on companies

Companies are responding to shareholder resolutions on climate change with increasing degrees of action, according to socially concerned investors coalitions Ceres.

Of 57 resolutions filed on the issue, almost half were withdrawn after companies including Ford and El Paso made commitments and took action on climate change. Other resolutions saw an increased amount of shareholder support in votes at AGMs. Of the 24 that went to the vote, they secured an average of 23 percent support, up six points from two years ago.

Whilst activist resolutions are generally defeated in AGM votes, companies have often responded when they have achieved a significant enough degree of support.

The year's highest profile votes took place at the ExxonMobil AGM, when climate-related resolutions attracted the public support of nearly all surviving members of the founding Rockerfeller family.

Japan: Details of carbon labeling confirmed

Japan is to introduce a range of carbon labels to be carried by a selected range of consumer products. The label will aim to make visible the amount of carbon emitted through the product's production and distribution.

The move is inspired by similar labels which have begun to appear in countries such as Britain and France.

Launching the initiative, the Trade Ministry gave an example of the carbon footprint of a packet of potato crisps. It was believed that the total amount of carbon emitted in the production of the snack was 75 grams, with 44 percent of this tied up in growing the potatoes, and 30 percent in processing. 15 percent is represented by the packaging, nine percent from the delivery and two from disposal.

Walkers potato crisps was one of the first products in the UK to carry the trial Carbon Trust label. It found scope once measuring its carbon for making savings throughout the process by, for instance, buying potatoes by dry weight and removing incentives for farmers to bulk up weight by adding water which then had to be burned off.

The project in Japan starts in April next year.

CSR FEATURES from the Internet

Business has a job to do – investing in public education - 24 Aug 2008 FROM The National (UAE)

Throughout the world there is a growing culture of corporate social responsibility (CSR) that could bring the private business sector into closer alignment with the needs of the community, including in education. According to the CSR vision, doing business is not just about generating profit; it is also about contributing to sustainable development in its widest sense.

In the Arab region, CSR is barely recognised as a feature of corporate life, more often being taken as merely an act of charitable donation. However, in the United Arab Emirates, things seem to be changing. CSR culture is making significant breakthroughs in government, corporate and community spheres.

Read full story

Recent entries from Mallen's blog

Should I stay or should I go - personal edition - 31 Aug 2008

I had a conversation recently with someone who has just quit their job over a social and environmental issue. It is certainly a step that shows your convictions are deeply held. I quote ... Read more

Nike fumbles the baton at the last hurdle - 25 Aug 2008

There is no better example of how a company can so quickly and effortlessly snatch defeat from the jaws of victory than what Nike just managed to achieve with the Olympics. Read more

Looking for authentic communications - 18 Aug 2008

The companies that are producing corporate social responsibility reports are trying to reach the people that might care about what their business does. Their customers. Their employees. A whole bunch of others who mostly have one thing in common - they immediately distrust something that is too slick. Read more

Employee empowerment saves energy - 18 Aug 2008

A new survey has found that employees are much more likely to take action on green issues in the workplace if they work for smaller companies than if they work for the corporate giants. The reason? Simply that in the larger firms the staff feel there are too many barriers to change and too little incentive to make the attempt. In other words, it's a management problem. Read more

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Can you conduct business with integrity in Zimbabwe?

Article by Mallen Baker

British companies doing business in Zimbabwe were asked by the UK Government to sign up to an ethical code to ensure they were not giving support to Robert Mugabe's regime. The companies said no.

The fact of this has come to light following the release of a number of emails under freedom of information measures. It would be easy to jump to conclusions, of course. Turning down a specific proposed code isn't only done by companies that actually want to behave unethically. The code may have been geared too much to government priorities - it might have been badly thought through. We don't have the details.

How do companies operate with honour inside countries run by controversial regimes? Or is the answer always to pull out?

It matters. If companies pull out, there may or may not be impacts on the regime in question, but there certainly will be on the people whose jobs depend on those companies, and who are customers. Barclays has 1,200 employees and 187,000 customers in the country. It should not be done lightly in the cause of empty gestures. But the argument that it should never be done at all is also hard to sustain.

Barclays has a clear, if terse, position. "We have been there for the best part of 100 years and a lot of people depend on us, for their food, if nothing else." In turn, Anglo American has said that whilst events in Zimbabwe had been abhorrent, if it pulled out "livelihoods of hundreds of people would be threatened".

WPP saw that the line had been crossed when it found that the agency it part owned, Imago Young & Rubicam, had advised President Mugabe on ads for the election campaign. It offloaded its stake in the company and forced a name change to remove any link with its brands.

Does that make WPP right, and Barclays wrong? Maybe. But the consequences of WPP's action were fewer, since their exit didn't end people's jobs. When Tesco said it would no longer source food from the country, it probably had more economic impact.

But there are real questions over where complicity begins and ends. It is hard to operate in Zimbabwe without providing support to the regime - the regime requires it. So, for instance, banks have to surrender part of their foreign currency to the government. Earlier this year, Mugabe signed a Bill requiring companies to give a majority stake to black Zimbabweans, and he may well have had a few in mind.

The biggest focus is the fact that Barclays lent substantial sums of money through a programme to boost farm productivity. It sounds like a great scheme, until you realise that in many instances these are farms that were seized forcibly from their owners by people who knew nothing about farming - hence the dive in productivity.

A number of Mugabe's ministers and supporters, some named in European Union sanctions, were given chunks of this land, and have benefited directly from the money.

Barclays was required to pay into the loans as part of a set of conditions laid down by the govement. No play, then that long history ends here.

The company has said that it audits its Zimbabwean operations to check no sanctions have been breached. At least one source disputed this, having claimed to have seen paperwork for one of the sanctioned ministers.

If this seems cut and dried to you, consider this. A number of companies operated in South Africa during the times of Apartheid. When activists sought to sue them after the event, South Africa told them to butt out - it needed the companies as part of the rebuilding process. What's more some - only some - of these companies had run their firms during that time in a way that tried to break through the barriers of discrimination and to encourage black participation in business. And none of those were much in a position to shout about what they were doing at the time - to draw attention to it would have been to end it.

Maybe there is a way to operate nobly in difficult situations, and to do so quietly. But we're talking about actions of energy, deliberate policy and courage. Not simply a fig leaf to defend a profitable status quo against something as inconvenient as massive human rights abuses.

Given that sooner or later all dictators fall, any company should wonder how they will look when the emails, the minutes and the policies become public property. Only then will we know whether or not they were doing the right thing. They, of course, know that now. The privilege of pre-emptive action is entirely theirs.

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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