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Arguments against CSR and some answers
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BUSINESS RESPECT - CSR Dispatches#23/9-Feb-2002
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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 issue we look at the outcome from the World Economic Forum in New York. We also review the assessment of General Motors, five years after signing up to the CERES Principles.
In the news:
1. Europe Ahead of US in Promoting Responsible Business
2. Loch Fyne Restaurants remove at-risk fish from menu
3. New Zealand: number of work-related deaths rising
4. Major companies targeted by Interfaith Center of Corporate Responsibility
5. Japan: Consumers forecast doom for Snow Brand
6. Kraft targeted in anti-biotech food campaign
7. UK Prime Minister attacks companies that exploit Africa
8. Fortune declares its list of 100 best places to work
9. Asian Development Bank targets poverty
10. Mitsubishi Motors hit by truck recall
11. Lorillard Tobacco threatens legal action against anti-smoking group
12. PR firm Ketchum launches CSR unit
13. New Africa Capital creates CSR index
14. European CSR Academy brings together leading business schools
Feature articles on the internet:
1. Refusing Reebok’s Human Rights Award - Feb 7th
From Working For Change
2. Russia regains its giving soul: Philanthropy had a bad name in Soviet times.
But many companies now support good causes - Feb 6th
From The Financial Times
3. Citizen CEO - The WEF's Corporate Moguls Debate Their Role as Unelected
World Leaders - Feb 5th From The Village Voice
4. Ford weighing the balance on profitable but gas-guzzling SUVs - Jan 2002
From The Car Connection
5. Disguised Corporate Advertising in the Media? - Self-serving PR raises
doubts about corporate ethics - Feb 4th From Straight Goods (Canada)
6. Setting a standard for corporate social responsibility - Jan 30th 2002
From The Earth Times
7. Ed & Avie's tribbles: The Broadbent-Bennett report may look cute and
cuddly but it fails to meet the three fundamental tests for responsible rule
making Jan 31st 2002, From The Financial Post - Canada
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Topics:
Welcome
New on the website
CSR News 9-Feb-2002
CSR FEATURES from the internet
World Economic Forum: Another conference, another charter?
General Motors and CERES - a five year assessment
This issue is also on the website at http://www.mallenbaker.net/csr/nl/23.html.
Copyright 2002 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
The Fortune "Best Company to work for" list has been produced for the year (see the relevant news story below). One of the interesting features is that so many of the top 100 have avoided - or even have a policy barring - downsizing over the last year.
There are certainly some who would argue that a socially responsible company should never downsize, full stop. Others would suggest that it's all down to the approach. Companies such as Group Danone have downsized with severance packages and support that would make an American CEO weep. And Agilent gets a rave review on the Fortune site for its approach.
We'd be interested to see your views on the matter. The new voting question on the website therefore is this: "A socially responsible company should avoid any downsizing unless its future is threatened by a financial crisis". What do you think?
The final figures for the previous question on whether environmental campaigners such as Lord Melchett betrayed their principles by going to work for the private sector came out as 19% agreeing, 73% disagreeing with 8% not sure. The number of votes was 62. Thanks to all those who took part.
Last issue, we relayed the heart-felt request of one would-be business change agent for guidance on how to persuade the senior ranks of sceptics in her company. Raymond Vles came back with these thoughts:
"In my experience, it is difficult to persuade people about a subject like CSR by facts, figures and arguments. Telling peers or superiors (or clients in my case) what they should do only works when they are ready to listen.
"To get them to the stage where they are ready to listen, you have to ask questions in a non-threatening way, you have to get people thinking in the right direction. People have to go through their own thought processes to come to their own conclusion. I have had experiences that show this approach works, however it takes patience, perseverance and some skill. (not to mention playing down your own ego!)". Thanks to Raymond, and to others who responded - the substance of which responses were all passed on to Jennifer.
Finally, the sharp-eyed amongst you will spot a small refinement in the formatting of this edition that hopefully is another incremental step towards making it easy to read - whatever your platform or email client. We always encourage suggestions for improving the formatting of the newsletter, or notice from any reader receiving their copy in a condition which in any way makes it harder to read.
Mallen Baker
Vanessa Wood
editors@mallenbaker.net
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NEW ON THE WEBSITE
New link added in CSR resources section to the CEOs' statement from the World Economic Forum in New York.
Refinements have been made to the news page which limits selections based on issue type to 20 results per page (previously, depending on what you selected, you could get over 150 results on one page - not elegant!). Just more evidence of the raw code-crafting that goes into this site - no prepackaged solutions here!
News stories in this issue have been added to the database.
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CSR News 9-Feb-2002
Europe Ahead of US in Promoting Responsible Business
According to a recent National Policy Association study, European governments and businesses are substantially ahead of their American counterparts in developing public policies for responsible business practices.
The report, The European Response to Public Demands for Global Corporate Responsibility, identifies public policies to promote corporate social responsibility (CSR) developed in Austria, Belgium, Denmark, Germany, the Netherlands, Sweden, and the United Kingdom.
The authors note how the British linked pension fund rules to triple bottom line reporting. In addition, the British government was the first to create a Minister of Corporate Responsibility.
For their part, the Dutch linked the granting of export credits to the acceptance of the OECD Guidelines for Multinational Enterprises. The Danish government created The Copenhagen Center. (NPA)
Download the report from: http://www.multinationalguidelines.org/csr/boeckler_report.htm
Loch Fyne Restaurants remove at-risk fish from menu
Loch Fyne, one of the leading restaurant chains in the UK, has announced the removal from its menus of some of its most popular fish, following the growing signs of the damage that overfishing is inflicting on stocks.
Monkfish, swordfish and skate will no longer be served in the company's 17 restaurants. Monkfish is considered to be particularly vulnerable to overfishing, but there are realistic fears about all three in relation to their long term survival.
A representative of the Marine Conservancy Council commended the action. "The Loch Fyne companies have set a good example - a number of the fish we have highlighted as at risk are very popular in restaurants in the UK, so this is a big step".
Mark Derry, the managing director of Loch Fyne, said "We hope that by taking the lead and removing them from our menus others will follow suit before it is too late". (Guardian)
New Zealand: number of work-related deaths rising
Concern about the rising number of work-related deaths has been expressed by Occupational Safety and Health (OSH). 43 deaths have been recorded since the start of the year, more than recorded for the entire previous year.
OSH called upon New Zealand firms to improve their approach to safety in the workplace. It suggested that fatalities were occurring in all sectors, including construction, manufacturing and agriculture. (New Zealand Herald / NZPA)
Major companies targeted by Interfaith Center of Corporate Responsibility
The Interfaith Center on Corporate Responsibility has released a report showing details of 144 resolutions, targeted at around 100 companies, which take up issues such as sweatshops, global warming, GM food, human rights, product pricing and corporate governance.
Amongst the companies on the target list are BP, Bristol-Myers Squibb, Caterpillar, ChevronTexaco, Citigroup, Coca-Cola, ExxonMobil, General Electric, Johnson & Johnson, Merck, Pfizer, Philip Morris and Wal-Mart. (PR newswire)
Story link: http://www.iccr.org
Japan: Consumers forecast doom for Snow Brand
Seventy five percent of respondents to an internet survey carried out by Kyodo News and Yahoo have predicted that Snow Brand Milk Products will not be able to regain the trust of consumers. The plunge in confidence comes as the natural outcome of the recent admissions of unethical behaviour by its food subsidiary.
The scandal has led to the company announcing that the senior management of Snow Brand Food will receive 50% pay cuts this year.
Snow Brand Food, which already faces an investigation for mislabelling imported beef (see last issue) is facing new allegations that it asked a storage contractor to lie about how much beef was in a container to cash in on a government mad-cow subsidy.
A sub-contractor claimed that the company had demanded that an extra 1.4 tonnes of beef be recorded. The company has confirmed the figure and said that it is investigating the details.
Following the previous revelations that the company sought to attract subsidies by mislabelling Australian beef as domestically produced, the company suffered a plunge in its stock price, and its parent company Snow Brand Milk has seen retailers pulling its products from the shelves. (Japan Times / SCMP)
Kraft targeted in anti-biotech food campaign
Kraft Foods, the largest US food maker, has found itself the target of calls from a coalition of campaign groups for the removal of genetically modified ingredients from many of its most popular products.
The coalition, Genetically Engineered Food Alert, claimed that an independent laboratory test had found that several Kraft products contained GM corn or soya beans. The strains used have been government approved (unlike previous finds of Starlink corn), although the groups argued that they had not been adequately tested for safety.
Kraft hit back at the attacks, saying that it had approval from a wide range of regulatory bodies, and that its products are safe. (Reuters)
UK Prime Minister attacks companies that exploit Africa
Prime Minister Tony Blair suggested at the start of a visit to Africa that the UK would clamp down on companies that fuel wars in Africa through their exploitation of natural resources, such as diamonds and oil.
He also stated that the G8 group of industrial nations should throw its full weight behind the OECD international guidelines for multinationals with a view to guaranteeing better business practice in conflict zones around the world. The guidelines focus on labour and environmental standards, corruption and consumer rights. (FT)
Fortune declares its list of 100 best places to work
Fortune's latest list of the 100 Best Companies to Work For has been released, giving the top slot to Edward Jones, the stockbroker.
Described as running on small-town values, Edward Jones has avoided lay-offs during a difficult year, and gave bonuses early to help traders hurt by trading decline. The firm's employees praised its ethics, with 97% saying that management is honest.
Other companies which managed the top ten were Container Store, SAS Institute, TD Industries, Synovus Financial Corp, Xilinx, Plante & Moran, Qualcomm, Alston & Bird and Baptist Health Care.
The approach to lay-offs was clearly a key feature this year. Interestingly four-fifths of the companies on the list avoided lay-offs during the previous year, with 47 of them reporting that they have an official policy barring layoffs.
Not that all the companies were able to achieve this. One profiled highly by Fortune is Agilent Technologies, which managed through its commitment to staff and its ethical approach to retain employee loyalty even after lay-offs had been made. (Fortune)
Asian Development Bank targets poverty
The Asian Development Bank has announced that it is working on a two-year $180m health, education, urban and rural drainage programme in Pakistan. This programme goes alongside an existing $200m devolution plan and $100m primary school management programme at the provincial and district levels.
The announcement came through a discussion with the Pakistan Finance Minister Shaukat Aziz, which focused on how the bank could support Pakistan's overall poverty reduction and growth strategy programme.
The Bank currently has committed over $1bn to support the pro-poor economic programme such as Khushal Pakistan, health, education, capacity building and infrastructure. (Dawn)
Mitsubishi Motors hit by truck recall
Mitsubishi Motors is recalling 38,626 trucks in Japan due to a variety of problems, adding the latest blow during a period when the company's reputation has been seriously damaged.
The combined cost of the recall is estimated to be around 1bn yen. Just under 1,000 further trucks with potential problems were sold in the US and the company is considering what measures to take. The announcement of the problems follows an offer of free inspections for trucks after a woman was killed when a wheel fell of a trailer near to Tokyo.
The company was hit by scandal in July 2000 when it admitted to hiding customer complaints for more than two decades, and recalled over 1.5m cars worldwide. (Reuters / SCMP)
Lorillard Tobacco threatens legal action against anti-smoking group
Lorillard Tobacco has said that it intends to take the American Legacy Foundation to court in response to what is claims is a campaign of vilification.
The Foundation, which was set up as part of the 1998 settlement between to tobacco companies and 46 states to run anti-smoking ads, has provoked the reaction through adverts which target the companies directly. Lorillard cites one radio commercial which involves Lorillard employees being surreptitiously recorded by a caller offering to sell them "quality dog urine" (urea is a chemical put into cigarettes).
The company contends that such approaches take the Foundation well beyond its remit to provide information about the health effects of tobacco. Following discussions with American Legacy employees, the company decided that it was "not concerned about educating parents and children but instead about vilifying tobacco companies and their employees". (NY Times)
PR firm Ketchum launches CSR unit
Ketchum, on e of the world's ten largest public relations agencies, has joined the likes of Burson Marsteller in creating products and services for clients specifically around the area of corporate social responsibility.
Services will range from strategic communications (internal and external), brand and reputation management, stakeholder dialogue, organisational structure and crisis management.
CEO Raymond L. Kotcher said "Corporate Social Responsibility is the 21st century management philosophy that advances commercial and financial success by demonstrating respect for ethical values, people, communities, and the physical and social environment. In this way, corporate social responsibility helps companies reach their business objectives while meeting society's rapidly expanding expectations of the private sector."
Ketchum was one of the first professional services companies to sign up to the UN Global Compact. (Ketchum)
New Africa Capital creates CSR index
New Africa Capital has developed an "empowerment index" to measure progress in the areas of employment equity, corporate social involvement, skills development and control.
The tool - described as a "barometer" - was created by an in-house team with the participation of various stakeholders and is currently being piloted within the group. It aims to measure actual results that have been achieved within companies rather than aspirations or goals.
Nathi Chonco, the empowerment officer at the company said that there should be an independent body to take the index forward and to manage the assessment process. (SAPA)
European CSR Academy brings together leading business schools
A new European Academy on Corporate Social Responsibility is to be launched during July this year, which sees the coming together of some of the continent's leading business schools. The participants are ESADE (Spain), INSEAD (France), Cranfield Business School, Ashridge Business School (U.K.), Copenhagen Business School (Denmark), The College of Europe and Vlerick Gent Management School (Belgium).
The initiative brings the business schools together with some of the key multinational corporations to foster the concepts around CSR. Companies such as Novo Nordisk, Shell, and Johnson & Johnson are in the lead, and the programme has been co-ordinated by CSR Europe. (CSR Europe)
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CSR FEATURES from the Internet
Refusing Reebok’s Human Rights Award - Feb 7th From Working For Change
Right till the end of January, Dita Sari, an Indonesian in her late twenties, was preparing to fly from her home near Jakarta, Indonesia, to Salt Lake City. She would bask in the admiration of assorted do-gooders and celebrities mustered by the public relations department of Reebok for the thirteenth annual Human Rights Awards on Feb. 7, overseen by a board including Jimmy Carter and Kerry Kennedy Cuomo.
Dita Sari's plan was to accept the ticket from Reebok, proceed to the podium in the Capitol Theater in downtown Salt Lake City, where the world's winter athletes are now assembled, and then, when offered the human rights award by either Desmond Tutu or Robert Redford, reject it ...
http://www.workingforchange.com/article.cfm?ItemId=12779
Russia regains its giving soul: Philanthropy had a bad name in Soviet times. But many companies now support good causes - Feb 6th From The Financial Times
After a decade of seizing assets during Russia's first post-Communist decade, the owners of the country's largest businesses are starting to think about how to give something back.
Russian Aluminium, the largest aluminium producer in an industry with a murky reputation, last month announced that it would be the principal sponsor of the Russian Olympic team, in a deal that is likely to cost several hundreds of thousands of dollars ...
http://globalarchive.ft.com/globalarchive/article.html?id=020206001730
Citizen CEO - The WEF's Corporate Moguls Debate Their Role as Unelected World Leaders - Feb 5th From The Village Voice
This Magic Moment, This Moment in History, This Time of National Vulnerability, This Time of Growing Ethical Consciousness. Carpe diem fever raced through the World Economic Forum last weekend as CEOs and government leaders vowed that "now is the time" to eradicate poverty, defuse the rage that breeds terrorism, and make profits being good corporate citizens. As WEF attendees enjoyed a private Elton John concert (courtesy of Lehman Brothers), hobnobbed at the New York Stock Exchange, set up business meetings out of the public eye to discuss public-private partnerships, they resolved to remember the needy. Just Do It ...
http://www.villagevoice.com/issues/0206/todaro.php
Ford weighing the balance on profitable but gas-guzzling SUVs - Jan 2002 From The Car Connection
Profit or pollute? That’s the perplexing challenge — and startling concession — outlined by Ford Motor Co. Chairman William Clay Ford Jr. during the automaker’s annual shareholders meeting.
The great-grandson of the company’s founder, Bill Ford noted that as some of the most popular products on the road, SUVs are incredibly profitable — with the big Ford Excursion carrying margins of $15,000 or more apiece. But there’s an environmental trade-off, Ford acknowledged: sport-utility vehicles guzzle gas, spew toxic emissions — and pose a danger to drivers in smaller vehicles ...
http://www.thecarconnection.com/?article=1917&n=156,175&sid=175
Disguised Corporate Advertising in the Media? - Self-serving PR raises doubts about corporate ethics - Feb 4th From Straight Goods (Canada)
Four full pages of advertising in the February Report on Business Magazine, distributed at the end of January with the Globe and Mail, began with the message, taking up the whole first page, “Ethics and Corporate Social Responsibility — If You Think It’s Just About Better PR...Think Again.”
Well, I did think a lot about the advertisement, and I concluded that it was PR. Whether it was “better” or not cannot be decided without knowing the basis for comparison. I would have to say it was bad PR, though, since, for reasons that follow, it struck me as unethical.
http://www.straightgoods.ca/ViewMediaFile.cfm?REF=147
Setting a standard for corporate social responsibility - Jan 30th 2002 From The Earth Times
Companies work hard to build a strong brand image, but just one blitz of bad publicity, especially regarding mistreatment of labor, can be impossible to overcome. Nike is still struggling to shake off charges from the mid-90s that its products are made in sweatshops. Consumers, the media and even companies have begun to care about working conditions, and Social Accountability International has created a system to help these companies realize their goals ...
http://www.earthtimes.org/jan/davos2002settingjan31_02.htm
Ed & Avie's tribbles: The Broadbent-Bennett report may look cute and cuddly but it fails to meet the three fundamental tests for responsible rule-making Jan 31st 2002, From The Financial Post - Canada
The Canadian Democracy and Corporate Accountability Commission delivered its report yesterday.
The commission's feel-good corporate social responsibility agenda brings to mind the late 1960s Star Trek episode that saw warm and cuddly little creatures called tribbles brought on board the Enterprise. They were instantly likeable and welcomed by the crew. The tribbles, like regulations, however, turned out to be prolific little creatures that multiplied so rapidly they clogged the air ducts ...
http://globalarchive.ft.com/globalarchive/article.html?id=020131003305
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World Economic Forum: Another conference, another charter?
One should not read too much into the contrast between this year's World Economic Forum and its predecessor. Last year, the focus of the world's media was on the demands for greater corporate accountability outside the conference. This year, rather more attention focused on the commitments made to greater corporate citizenship inside the conference.
But if the protests were muted, it is simply because the act of trashing New York would have been such a remarkably stupid thing to do that even most of the vociferous minority realised it. And if the comments inside carried more weight, it was only in comparison to the relative silence outside - discussions about corporate citizenship are not new, indeed have been regular features at Davos.
So what we had this year was a statement, signed by a sprinkling of reasonably impressive individuals, recognising the following three starting points for CEOs.
1. First and foremost, our companies' commitment to being global corporate citizens is about the way we run our own businesses.
2. Our relationships with key stakeholders are fundamental to our success inside and outside our companies.
3. Ultimate leadership for corporate citizenship rests with us as chief executives, chairmen and board directors.
This statement was accompanied by a Framework for Action, which is promoted as a step approach for CEOs making the commitment to move forward. Rocket science it ain't. It uses four general steps:
1. Provide leadership 2. Define what it means for your company 3. Make it happen 4. Be transparent about it
One might be forgiven for thinking - in this CSR world where one of the most frequent complaints is about a "plethora of codes and standards and guidelines" - that the last thing we needed was a WEF-inspired addition. But the nature of the document is rather different to others. It does not define the range of issues you must cover, and the level of performance you must attain. It does not create a badge against which you can be audited and accredited.
Rather it encourages CEOs and chairmen to step up to their leading responsibility, which is to lead their company successfully through the minefield - and it gives a simple generic action plan for achieving this. It is an appropriate message to come out of WEF as it represents peers talking to peers.
But it is all rather first base stuff. Given the history of Davos, and the number of business leaders who have either led, or had cause to grapple with, CSR issues during the last few years, we might have expected a framework that went rather beyond a beginner's guide. And indeed, we might have expected such a statement to attract more names than this one did on launch.
Is it a sign that we are still a lot less further forward than we might hope - in which case the initiative was right in being a starting point for the uninitiated? Is it a misfire, because the agenda has moved so far beyond its simple premises it doesn't yet give the lead that a world gathering such as WEF should provide? Or is it just a platitude - a statement of good intent ultimately signifying nothing?
The codes and the standards tend to be expositions of what the outside world - or segments of it in any case - demands and expects of private sector enterprises. The WEF statement could have been the global CEOs vision and perspective of the role of business, a redefinition of the mission of the private corporation within the 21st century - something that would build a post-Friedman consensus that redefined the landscape. Such an ambition is surely not beyond the forum of the most powerful players in the world.
The WEF statement will stand as a statement of intent, and a useful source for some to use. It is unlikely to represent a major step in the history of the development of corporate citizenship.
To download a copy of the statement, go to the CSR resources part of the website.
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General Motors and CERES - a five year assessment
In February 1994, General Motors Corp. became the first Fortune 50 manufacturing company to endorse the CERES Principles (derived from Coalition for Environmentally Responsible Economies). The original expectations on the company in taking this step including continuous improvement in public accountability and disclosure, stakeholder engagement and environmental performance.
Now CERES has produced a report on how the company is doing, and looking forward to the challenges ahead. It comes at an interesting time - with various groups criticising the UN Global Compact for including no mechanism for monitoring and compliance - it is an example of how adherence to a code can result in an active, fluid dialogue for change.
Following a review process which spread over 16 months, and included interviews with over 65 internal and external stakeholders, the report concludes that GM has performed at or above expectations set at the time of the CERES endorsement with one important exception.
On public accountability, GM has published eight annual environmental reports which have - over time - expanded the scope and range of what they cover to represent good practice within the field of such reporting. GM is also a leadership company in promoting the Global Reporting Initiative.
On plant performance, GM has improved environmental performance in terms of the reduction of air pollutants, energy use, greenhouse gas emissions, toxic chemicals, and waste.
It is product performance which remains the fly in the ointment. GM committed to continuous improvement in fuel economy, however since 1994 the fleet's fuel economy has not improved, as GM has responded to market demands by shifting the composition of its fleet to more trucks and sport utility vehicles (SUVs). Tough call. Fuel emissions of the product in use must represent one of the biggest impacts GM has (albeit indirectly) on the environment. At the same time, with SUVs hugely popular, and even environmental champions such as Bill Ford agonising about the issue (see news story this issue) it would be a brave, suicidal? CEO who refused to supply them.
On stakeholder relationships, the company gets warm praise. GM has increased the amount and diversity of engagement with external stakeholders. Government and NGOs were engaged on a wide range of environmental and / or technology issues. But where the company is perceived to be strongest, one wonders if there may not be weaknesses in CERES' approach.
The main questionmark over the report comes down to the range of stakeholders interviewed for the review process. As one would expect, environmental NGOs, regulators and activists are well represented. There is a sprinkling of union people. But notable by their relative absence are the customer, the shareholder and the supplier. No company will ignore these stakeholders - no review of progress should do either.
But then this is not a CSR audit of General Motors. It is an environmental audit - informed by the opinion of expert environmental stakeholders. As such, it is well done, and makes interesting reading summarising the measures the company has taken to date, and the genuine commitment it has clearly brought to its leadership role.
But the gap between this report and the CSR reports of today is quite large - and it may perhaps stand as a challenge to CERES as to how far the assumptions that they bring to such a process should be exposed as well to the scrutiny of the larger stakeholder groups with whom the companies need to deal.
In any case, General Motors is to be congratulated on a robust performance, in most areas, against its commitments.
You can download the report from: http://www.ceres.org/pdf/five_year_gm.pdf
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