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Arguments against CSR and some answers
Definitions of Corporate Social Responsibility
Discussion
The Global Reporting Initiative - is it fit for purpose?
Translations
Companies in the News
Case studies of managing a crisis
Odwalla
Johnson & Johnson
and Tylenol
Exxon Valdez
Snow Brand Milk
Products
Emerging Issues
Drugs companies and AIDS
When to quit a bad country
BUSINESS RESPECT - CSR Dispatches#18/1-Dec-2001
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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/csr and produced every two weeks.
In this edition we look at CSR reporting and the new BITC website portal, we go back to the BSR conference with a report on the development of CSR in India and its surrounding countries. We also introduce a regular round-up of CSR feature articles on the internet.
In the news:
1. South African miners demand companies respond to AIDs crisis
2. Australia's first business philanthropy school launched
3. UK: Boardroom still no-go area for women
4. South Africa: Vantech makes poisoning inquiry "a mockery"
5. SRI funds grow faster in the US
6. Australian Alcoa workers demand safety action
7. European Socially Responsible Investment network launched
8. Tesco and Safeway have most comprehensive codes on labour rights
9. Russian business leaders talk CSR with the United Nations
10. Indian and EU businesses come together on CSR
11. New Social Label for Belgium
12. AT&T hit by discrimination charges
13. New Zealand: CommSoft Group supports responsible internet use in schools
14. US: 2001 sees increase in social activism amongst shareholders
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Topics:
Welcome
New on the website
CSR News 1-Dec-2001
CSR FEATURES from the internet
CSR Reporting - A new channel opens
BSR Conference - Scanning the World Part Two
This issue is also on the website at http://www.mallenbaker.net/csr/nl/18.html.
Copyright 2001 Mallen Baker. All rights reserved. For information on how to subscribe, go to http://www.mallenbaker.net/csr/nl/subscribe.html
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Welcome
Whoops - gone. The collapse of Enron has put into dramatic shape one of the conflicts at the heart of the developing CSR movement. To the naked eye, Enron was a socially responsible company winning awards for its approach to the environment, engaged in local communities, churning out statements on all the issues with a quantity that put them ahead of many others.
And yet, as the Financial Times recently pointed out, wherever it did business, it got into trouble. The fact is that CSR policies alone do not change the way a company does business, and they do not guarantee that the company is well managed.
In fact, Enron was a badly run company, with lack of control at the heart of the problem.
The more we look at the factors behind corporate citizenship and social responsibility, the more we tend towards the view that CSR is simply an indicator of good leadership, and good management. The health of the relationship between the company and its important stakeholders has always been a feature of management - but only in recent times has the pool of powerful and influential stakeholders grown and changed the business landscape.
That is why the financial institutions need to take account of real company performance in this area. It is one indicator of the health of the business, and for that reason they should take great interest in the question of what are the key measures of performance on managing stakeholder relationships.
CSR reporting has, so far, provided poor stuff for such assessments. The lack of any kind of consensus amongst businesses over what constitutes core data - data that can be used to manage the business as well as report to stakeholders - has led to general analyst indifference and scepticism.
Which brings us to CSR reporting indicators.
At this point, Mallen loses any veneer of impartiality, because we are now at the point of launch of the CSR reporting portal which will form a core part of the Business in the Community website, and which is the culmination of his work over the last year. The site is an attempt to bring CSR reporting to life, and to develop just that business consensus around a core of indicators. You can read more about it below - just accept our assurance that this is the best initiative ever!
On the serious side, the Enron case does point to the need - as we have said before - for a growing sophistication in how the management of CSR is rated. Enron went through the motions, and yet the health of their stakeholder relationships, and their real environmental performance, was not good. For the business case for CSR to survive, there need to be tools to move us away from the gratitude that anyone engages at all to a point where there are clear management guidelines about what constitutes a quality approach - and that analyses failures. This would simply bring this aspect of management into line with all the others.
A consensus around indicators for reporting would be a start - but it cannot be the end!
Finally, you'll notice that we've brought in a new feature for this issue, which we hope you'll find of value. Whenever we're researching the news stories for Business Respect, we invariably come across articles and discussion stories relating to corporate social responsibility which are not, in themselves, news items. From this issue on, we'll highlight the most interesting of these we've found, and provide a link direct to the story. Business Respect - your eyes on the web!
Mallen Baker
Vanessa Wood
editors@mallenbaker.net
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NEW ON THE WEBSITE
News updated at http://www.mallenbaker.net/csr/CSRfiles/CSRNews.html
Redirect page added for CSR reporting portal
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CSR News 1-Dec-2001
1. South African miners demand companies respond to AIDs crisis
A major demonstration of miners in the Ingwe mines in Mpumalanga, owned by multinational giant Billiton, has focused on corporate policies towards AIDS. The workers are demanding that companies should make HIV/AIDS drugs available to all mine employees.
The marches show how HIV/AIDS has become a major industrial issue in South Africa, which has the world's highest known infection rates. Earlier this month, the Chamber of Mines agreed to the National Union of Mineworkers (NUM)'s call for a national industry summit on the crisis.
Strong feelings have been roused by what has been perceived as backsliding after a previously strong start. Anglo American, in particular, has provoked fury by allegedly going back on its pledge to provide anti-retroviral drugs free of charge to all of its South African employees who needed them. The recent announcement that preferential treatment would be given to "senior employees" has provoked charges of discrimination and racism from the NUM.
As previously reported here, Anglo American denies it had made a full commitment to give drugs to all workers. (ICEM)
2. Australia's first business philanthropy school launched
A new business school has been launched in Melbourne. The Asia Pacific Centre for Philanthropy and Social Investment seeks to raise awareness and practice of corporate philanthropy and community investment to the sort of levels found in the US and Europe.
Around $5.4bn a year is spent by Australian corporates in some form or another of philanthropic exercise. This is actually rather at the low end of corporate spending, although there is an increasing awareness of social and community investment. (ABC Australia)
3. UK: Boardroom still no-go area for women
The number of women directors in the UK's top 100 companies has dropped for the third year in a row, according to research by the Centre for Developing Women Business Leaders at Cranfield University. 43 of those companies have no women on the board at all, and only 2% of executive directors are women.
Marks & Spencer, Legal and General and Astrazeneca receive credit as companies which have been successful in getting women into the boardroom. Companies in media, tobacco and energy come out the worst. (BBC)
4. South Africa: Vantech makes poisoning inquiry "a mockery"
Vanadium Technologies (Vantech) has been accused of making an inquiry into its alleged exposure of workers to dangerous chemicals a mockery. According to the National Union of Mineworkers, the company has failed to pass on medical records from the affected workers, severely hampering any progress.
The initial stage of the inquiry was held in October and was postponed whilst documents were to be examined. The company allegedly exposed workers to 31 times more vanadium pentoxide than was allowed. The NUM stated that the mine's owners have sacked 120 workers on medical grounds since 1995 and that a further 160 workers had been diagnosed with chemical bronchitis and occupational asthma between January 1995 and October 1998. (African Eye)
5. SRI funds grow faster in the US
The US's Social Investment Forum has released its 2001 Trends Report, which shows that assets held within a socially screened portfolio grew at over 1.5 times the rate of similar non-screened managed funds.
Between 1999 and 2001, SRI funds grew by more than third to top the $2 trillion level for the first time ever. This 36 percent growth rate contrasts with the 22 percent rise for all investment assets under professional management in the US.
The Forum’s 2001 Trends Report found that total assets under management in portfolios screened for socially concerned investors climbed from $1.49 trillion in 1999 to $2.03 trillion in 2001. The portfolios include socially screened mutual funds and separate accounts managed for socially conscious institutions and individual investors. According to the 2001 Nelson’s Directory of Investment Managers, there is a total of $19.9 trillion in professionally managed investment assets of all types in the United States, compared to $16.3 trillion in 1999. (SIF)
6. Australian Alcoa workers demand safety action
Workers at Alcoa's West Australian Kwinana refinery have stages a walk-out over revelations of serious health risks at the plant which had not been revealed by the company. They have called for the company to fully disclose likely health risks and to introduce regular health checks.
The action was prompted by the information given to a parliamentary inquiry which suggested that Alcoa had known for over a decade that the emissions from its burners could cause a range of serious diseases.
The company acknowledged the presence of cancer-causing chemicals in the process, but suggested that they were not present at harmful levels. (Asia Pulse)
7. European Socially Responsible Investment network launched
The European Sustainable and Responsible Investment Forum (Eurosif) was launched at the Belgian Presidency Conference on Corporate Social Responsibility in Brussels.
Supported by the European Commission, various non-governmental organisations, investment institutions, and five European SRI Forums, the creation of the network responds to the recent growth of interest in Socially Responsible Investment (SRI).
Eurosif says that it will enable the exchange of information and expertise and will act as a platform for all actors in Europe interested in sustainable and responsible investment. (Eurosif / CSR Europe)
8. Tesco and Safeway have most comprehensive codes on labour rights
Tesco and Safeway have been recognised by the Local Authority Pension Fund Forum as having the most comprehensive codes on labour standards. All other companies ignore at least one of the core Labour standards of the International Labour Organisation (ILO).
The recognition came as the Forum, which accounts for £40 billion's worth of funds, produced a review of the codes of conduct of the retail groups in the UK's top 100 companies. This review looked at the effectiveness of codes on issues such as child labour, freedom of association and freedom from forced labour.
LAPFF chairman Councillor Bob Sowman chair of the £4 billion West Yorkshire Pension Fund, said "our survey shows codes are often unsystematic and weak. We will be pressing these major companies to extend coverage and demonstrate effective implementation. This is an important risk management issue".
The Forum has enjoyed success in the past. Four major companies previously targeted as having no policy whatsoever - Boots, JJB Sports, WH Smith and Signet - have all now adopted an overseas labour standards policy or are about to do so. (LAPFF)
9. Russian business leaders talk CSR with the United Nations
Some of Russia's top business leaders met with Louise Fréchette, the UN First Deputy Secretary General, to discuss corporate citizenship. The meeting, organised by the influential Union of Industrialists and Entrepreneurs, was the first UN Global Compact meeting to take place in Russia.
Fréchette called on business to establish a network of public-private partnerships, to include government, non-governmental organisations and trade unions, to address issues of social need.
Arkady Volski, the president of the RSPP, committed the organisation to seeking to recruit as many companies as possible to the Global Compact. He was speaking after Interros became the fourth Russian company to sign up. (Moscow Times)
10. Indian and EU businesses come together on CSR
The heads of top Indian and European companies have made a joint declaration establishing their commitment to corporate social responsibility. The 'India-EU conference on CSR: a cross cultural perspective' saw the clear view that CSR had to become a mainstream part of business strategy. "Social responsibility can no longer be treated as charity" suggested the president of the Federation of Indian Chambers of Commerce, Chirayu Amin.
Laurance Argimon-Pistre, the head of unit for the European Commission stressed the importance that the EU attaches to corporate social responsibility. There were lessons to be learned, he suggested, from the increasing number of companies are promoting corporate social responsibility strategies.
Following on from this, the 'India: Changing Paradigms' conference is now taking place - organised by the World Economic Forum and the Confederation of Indian Industries. The summit, due to be attended by over 500 business leaders from 28 countries will include discussions on population, human capital and corporate social responsibility. (Financial Express - India / AsiaPulse)
11. New Social Label for Belgium
A new Social Labelling system for products from developing countries has been approved by the Belgian Chamber of Representatives.
An independent body will test companies applying for the label on their social rights performance. Companies who are then awarded the label will be able to apply for subsidies from the Belgian Department for Overseas Development, while the government will promote the label among consumers.
A similar scheme is being considered in France, and some are arguing that the social label will eventually grow to become EU-wide. The precedent of the EU's Eco-Label for environmental products is not, however, a happy one. (Financieel Economische Tijd / CSR Europe)
12. AT&T hit by discrimination charges
Twelve AT&T employees have filed complaints accusing the company of discrimination, and these may be just the first of a group of around 150. Accusations of sexual harassment, unfair treatment for people with disabilities, and other areas of discrimination around age, sex or race are included in the list of complaints.
According to the complainants' solicitors, complaints have surfaced in at least nine states, suggesting that poor practice is endemic within the company, rather than restricted to a minority of sites.
The company has denied knowledge of the charges. A spokeswoman for the company stated that "AT&T has a very strong, longstanding commitment to workplace diversity". (NY Times)
13. New Zealand: CommSoft Group supports responsible internet use in schools
The Auckland-based software company CommSoft Group is working within New Zealand schools to share education resources with schools about responsible internet use. The company makes internet monitoring software that lets staff distinguish between material that is, and is not, appropriate.
The company is giving software free to primary or intermediate schools. They need to be nominated by a secondary school that has purchased the software.
A spokesman for the company suggested that it is committed to making sure the internet is used safely and responsibly in schools. (stuff.co.nz)
14. US: 2001 sees increase in social activism amongst shareholders
This year has seen more shareholder social activism, according to research by the Investor Responsibility Research Centre, with 158 social issues proposals going up for proxy vote. Support for social policy resolutions has grown, rising one percent to 8.6 percent.
The number of proposals receiving more that 10 percent support has also grown significantly, with almost 28 percent crossing this threshold. 10 percent is the level needed to achieve continued resubmission of a proposal.
Many of the issues responsible for the current rise in shareholder interest have been around for some years, slowly gaining support. Global labour standards, genetically modified organisms, and board diversification are the current hot topics. (socialfunds)
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CSR FEATURES from the internet
Curse of the ethical executive - Nov 15th 2001 From The Economist print edition
Why “corporate social responsibility” is not a welcome fashion
It is more than 200 years since Adam Smith observed that people enjoy their daily bread thanks not to the benevolence of their baker, but to his selfish pursuit of profit. In that observation and its implications lies the case for market capitalism. In their economic lives, people behave as though they had no regard for the public good. Yet the outcome, through the operation of the invisible hand, serves the public good better than any social planner could ever do ...
http://www.economist.com/finance/displayStory.cfm?Story_ID=863487
Crisis of conscience - Corporations are finding social responsibility boosts the planet and the bottom line - Nov 22nd 2001 From The San Francisco Chronicle
Corporate social responsibility is creating more buzz in the boardroom these days.
Increasingly violent protests against globalization at world trade and other international meetings from Seattle to Genoa have put big businesses on guard ...
Multinational firms above the law, say rights activists - Nov 23rd 2001 From The Jakarta Post
Multinational companies have the potential of abusing the basic rights of local people in their operational areas, mostly in the developing countries, amid the absence of a mechanism to hold them accountable.
In a public discussion held by the National Commission on Human Rights on the issue, rights activists pointed out that the companies' private status had given them impunity to avoid accountability ...
http://www.thejakartapost.com/yesterdaydetail.asp?fileid=20011123.G03
When a Workplace Dispute Goes Very Public - Nov 25th 2001 From The New York Times
On a warm, clear morning last Sunday, on the Pebble Beach golf course in Carmel, Calif., 40 professional and 40 amateur golfers were in the final round of the Callaway Golf Invitational when a small plane began circling the long, narrow course beside the Pacific. It towed a banner that read "Merrill Lynch Discriminates Against Women."
The plane created an hour long distraction for the event, sponsored by Merrill Lynch, the latest in a series of protests by a vocal group of women, former and current brokers, who were part of a class-action lawsuit the firm settled three years ago ...
http://www.nytimes.com/2001/11/25/business/25MERR.html?
todaysheadlines
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CSR Reporting - the opening of a new channel
According to CSR network's most recent review of the global top 100 companies, over half are now engaging in some form of social and environmental reporting. What is striking to any observer though, is just how inconsistent this reporting is, and how little agreement there is about what constitutes core data.
A financial analyst looking at the annual report will know where to find the essential information, and how to interpret it. CSR reporting, on the other hand, is so often a mish-mash of narrative and figures, replete with photos of happy smiling children but with no solid data set that communicates in real terms what is the health of that organisation.
On Tuesday 4th December, Business in the Community will be launching a new website CSR reporting channel, which brings together 20 major UK companies to report against a common framework of CSR indicators. The site is designed to be easy to use, flexible according to the type of data the companies need to report, and to encourage a range of non-reporting companies into the field for the first time.
The indicator framework is the one which was launched last year in "Winning with Integrity", the final report of BITC's Business Impact Taskforce. It is designed to represent the "irreduceable core" of social and environmental indicators against which all companies of a certain size should report. Over the coming two years, the group of 20 companies - the Business Impact Review Group - will be testing by doing to see whether the framework really fits that brief. The group will produce interim and final reports which will share some of the learning in this.
Who are the site's intended audiences? The kind of information given here should be of interest to businesses, to legislators and regulators, and also to NGOs and actively engaged consumers. It is not designed as a standard consumer portal, which would help someone to locate an ethical supplier of a certain product. It is essentially a company reporting channel - something designed to act as a first port of call for anyone looking for information about how a company performs in terms of its CSR.
The thing you cannot do with the site, is use it to produce rankings. The kind of performance data it gives (for example, CO2 emissions, or workforce profile) are not ones where there is any basis for comparability between different types of business. And given the fact that all companies are on a journey in this area, different companies are starting from different places - and gaps in the data cannot be short-term taken as a lack of commitment.
What we do have, however, is an initiative which takes the rather grey area of social reporting and starts to bring it to life. Real company reporting - brought together and made simple. The site is expected to grow, with more participation as time passes, and certainly within the UK it should become the starting point for company visibility on CSR on the web.
From 10.00am Greenwich Mean Time Tuesday 4th, you can see the site by going to http://www.mallenbaker.net/csr/CSRfiles/iosreporting.html.
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BSR Conference - Scanning the World Part Two
CSR in India and surrounding countries
India is a country just 50 years out of colonisation. It has an ancient civilisation, is home to three great religions and around one third of the world's poor. Around 1.5bn people live there overall. In a stratified society, with high levels of inequality, the private sector wields considerable influence over public policy formulation. This provides the context for how CSR is developing in this part of the world.
In Nepal and Bangladesh, the process of corporatisation is at an early stage. Small businesses and sole traders dominate. As a result, the strong traditions of business involvement - which have been largely religion-led - express themselves through very philanthropic and personalised activities.
Broadly speaking, corporate social responsibility is understood as:
- philanthropy - writing cheques
- focused on communities at large
- compliance with the law
In practice, it tends to be determined by the CEO, adhoc and non-strategic.
However, the potential for development within India and its neighbouring countries is quite strong. A recent survey of business leaders found that:
- 86% agreed that companies need to be socially responsible
- 70% described themselves as already being involved in some way
- donations to charity were the most common approach to corporate involvement
- 11% had some sort of written policy relating to social responsibility
- 90% mentioned employees, shareholders and customers as beneficiaries of their activity
- 87% were implementing their own programmes, independent of any co-ordination or initiative by non-governmental organisations (NGOs).
The body of literature on what has been done is not large, but there are nevertheless some instructive case studies.
For example, Waste Concern Bangladesh, which has sought to address the problems of high waste volumes in Dhaka. The city generates around 3,500 million tonnes of waste, around 70-80% of which is organic. Waste Concern Bangladesh has initiated door to door waste collection with the purpose of diverting the organic waste into a composting process which can produce valuable fertiliser. The company is working with Alpha Agro Ltd to market the end product, and literally turn rubbish into cash.
Titan Watches formed a partnership with the NGO IRDT in order to find sourcing solutions that would help to empower communities in the locality. As a Gandhian company it wanted to ensure that its wealth creation processes were contributing to the common good. When the company decided it needed to outsource its strap-fitting operation, it looked for local solutions. The partnership therefore created a unit that fits straps onto the watches which employs around 60 people with disabilities. The company provides the work, and significant training, whilst the NGO actually manages the unit. Ultimately, the intention is that the unit will be employee-owned.
Lotus Holdings in Nepal was set up by an ethical Nepali carpet manufacturer. It supports small entrepreneurs through: * funding * managerial support * technical support * other backstopping activities
The deal is that those companies who receive its support then put aside 1% of their turnover for social investment. In this way, it hopes to build a base of successful businesses committed to investing in the community. The process is independently audited by an NGO, and currently 3 out of the 13 companies so far helped have reached the point where they can begin to contribute. It is early days, but it could well provide a model that others will be keen to follow.
Saga Sports in Pakistan is the world's leading soccer ball manufacturer. It initially focused its social responsibility efforts on providing facilities to employees that went beyond what was required by law, in areas such as wages, working conditions and medical facilities. However the company soon recognised the need to go beyond focusing solely on their own workers, and to begin to engage with the communities. They began to look at how they could support areas such as infrastructure (roads and bridges) and microcredit. The benefit to the company of its strong profile with community programmes has been strengthened linkages with some of the big US customers, such as Nike and Adidas, who now partner with them in those programmes.
The Sri Lankan Tea Company paved the way by taking a sustainable approach to its practices. It used waste paddy husks as fuel and saved energy costs as a result. It promoted tree planting for fuel needs for the local community - which not only met the immediate needs, but played an important part in preventing soil erosion. This approach, pioneered by the company, has now become a norm within Sri Lanka's tea industry.
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