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BUSINESS RESPECT - CSR Dispatches#27/6-Apr-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 note the inauguration of the Global Reporting Initiative but wonder if the new GRI framework draft is really fit for purpose and we consider the new French law on CSR reporting. Also we celebrate our first anniversary - one year of Business Respect!
In the news:
1. Exxon in firing line for climate change science fix
2. South Africa: Second King report final draft published
3. Uganda: BATU committed to stopping underage smoking
4. Boise to reduce felling of old growth trees
5. South Korea: Fury over tobacco World Cup cigarettes
6. South Africa: Too few companies have strategy for AIDS
7. Global trends reshaping Business Strategy
8. US: Illegal immigrants denied employment protection
9. UK: Women say 'workplace is racist'
10. Companies under accusations of bribery
11. UK: Marks & Spencer offers work to the homeless
12. Canada: Enbridge to adopt human rights standards
13. Japan: Mitsubishi Chemical sets up medical ethics think tank
14. Games developers debate social responsibility
Feature articles on the internet:
1. A Win-Win Proposition - April 7 2002 FROM The Warsaw Voice
2. Civic Groups Condemn Abuse of Chinese Migrant Workers - April 2002 FROM The Korea Times
3. Leading Toward A Better World? Speech by Sir John Browne, Group CEO BP, Harvard - April 3 2002, FROM BP website
4. Starbucks Beans Not So Green - March 25 2002 FROM alternet.org
5. The New Accountability: Tracking the Social Costs - March 24 2002 FROM The New York Times
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Topics:
Welcome
New on the website
CSR News 6-Apr-2002
CSR FEATURES from the internet
The GRI - the will to succeed is not enough
Social Reporting Becomes Law in France
This issue is also on the website at http://www.mallenbaker.net/csr/nl/27.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
Welcome to issue No 27 of Business Respect - and for a fortnightly publication, that means welcome to our first birthday issue! It rather boggles the mind to think that we've been doing this now for a year - and that during that time the subscriber list for the newsletter has grown to around the 1,000 mark, with the growth rate for new subscribers going up all the time.
A year ago, Mallen initiated the newsletter as a way of creating a discipline to research international CSR news on a regular basis. He had already put some CSR information up on the website which had shown growing levels of traffic. So the first issue was duly produced, put onto the site with rather a strong expectation that then nothing would happen - it would be retired quietly the following fortnight and nothing would be lost (except the smallest smidgeon of pride!).
The very next day, the first subscription came in from Canada (from someone who remains a subscriber today). And then another. And by the time the next issue was due, it had 25 readers - a number whose rapid growth since has never ceased to amaze. Part of that amazement is that we have never really promoted the newsletter - you have to find the site yourself, or have it recommended to you to get it.
We produced our first ad just last issue, in fact, following an invitation from Toby at Ethical Corporation to do a "swap". This led us to review some of the kind comments we've had over the year complimenting the newsletter, and saying how useful it has been to some of you. We always appreciate these comments - Business Respect is produced in spare time around demanding day jobs - the encouragement that it is of value helps to make it all worthwhile.
But one year one, we thought it was time to get some serious feedback - the kind that really tells us what we're doing right, and what you'd like to see more / less of. So to mark the birthday, we're sending out separately our first reader survey. Please take just a couple of minutes to fill it in and feed back (hint: it'll be quicker for you and for us if you're able to fill in the online version at the website). You should have the survey in your email along with this newsletter. Thanks to you all in advance.
Finally, this issue welcomes a contribution from Darina Eades. Darina is a Programme Executive with Business in the Community Ireland and has been a subscriber for some time herself. She has contributed an overview of the recent french law on social reporting, and many thanks go to her.
As always, if you have any comments or thoughts about her piece, or indeed anything else in this issue (the GRI piece particularly may provoke some thoughts!) please do get in touch.
Mallen Baker
Vanessa Wood
editors@mallenbaker.net
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NEW ON THE WEBSITE
The current vote on the website is "I better trust the performance of a company which has achieved one of the social responsibility standards, such as SA8000 or AA1000". So far, the standards are getting a big thumbs-up with 36 (69.23%) people agreeing, and 8 (15.38%) people each disagreeing and declaring that they're not sure. The question will remain for the next two weeks, so if you want to add your view, please do.
As ever, the news database has been updated with stories from this issue.
CSR News 6-Apr-2002
Exxon in firing line for climate change science fix
Exxon Mobil has been implicated in moves to replace the current chairman on the Intergovernmental Panel on Climate Change - the body of respected scientists that has become the authoritative voice on global warming.
In a memo to the White House a year ago, a senior Exxon official urged the administration to remove Robert Watson, accusing him of promoting his own agenda. The document, which asks "Can Watson be replaced now at the request of the US?", was secured under a Freedom of Information Act request from the Natural Resources Defense Council.
Exxon senior environmental advisor, Randy Randol, wrote to John Howard, the assistant director of the White House Council on Environmental Policy. Mr Randol says he will visit the White House to discuss a team "that can better represent the Bush administration interests".
The Bush administration is supporting Watson's challenger, Dr. Rajendra Pachauri. There will be a vote in a few weeks.
"I've been hearing over the last month or two that a small vocal part of the energy industry has been putting a lot of pressure on the US government not to re-elect me," said Watson, who was the associate director for environment in the White House Office of Science and Technology during President Clinton's first term.
Separately, Amnesty International has taken its first stake in a major US corporation to enable it to introduce a shareholder resolution at Exxon's AGM in May. Amnesty is seeking to force the company to adopt policies based on the Universal Declaration of Human Rights with a view to influencing the company's conduct in countries such as Nigeria, Indonesia and Chad.
The move comes after a high-level meeting between Amnesty and the company failed to agree a commitment to adopt an official human rights policy. (Los Angeles Times / Washington Times / Guardian)
South Africa: Second King report final draft published
The second King report has been published, setting the terms for the accountability and responsibility of boards of directors towards both the shareholders and the stakeholders of a company.
Apart from reporting on purely financial issues, companies must also report on economic, social and environmental issues. The report will apply to all companies on the JSE Securities Exchange SA, banks, financial institutions and public sector enterprises.
There have been a number of changes since the first draft was published last year, including a recommendation that boards of directors should consider developing a code of corporate conduct that will address conflict of interest situations relating to directors and management.
Mervyn King said on the launch of the report "Great companies like Shell, for example, no longer report only on financial aspects. They include the social, economic and environmental. In fact, if you look at our great companies listed on the main board of the JSE Securities Exchange today, you will not find one reporting only on the statutory obligations of the financial aspects."
The King Report is a voluntary code, but it has potentially serious penalties - including suspension from the Johannesburg stock exchange - for firms that deviate from it. (Business Day / Hoovers / Reuters)
Uganda: BATU committed to stopping underage smoking
British American Tobacco Uganda has committed itself to end smoking by children with a campaign targeted at preventing minors from purchasing cigarettes. The statement was made by the outgoing BATU Managing Director, Mike Stevens, in the company's latest annual report.
According to Stevens, the company has launched its educational media campaign against youths smoking as a part of its commitment to social responsibility. In addition, BATU is one of the 15 British American Tobacco markets worldwide which is piloting social reporting. (The Monitor (Kampala))
Boise to reduce felling of old growth trees
Boise, the giant timber company, has suggested that it will no longer cut centuries-old trees in some undisturbed forests on public and private lands.
The move follows growing pressure on the business from several businesses and universities which had severed ties with the company. Kinko's, L.L.Bean and the University on Notre Dame had stopped buying paper from Boise.
Whilst acknowledging that customer pressure had played a part, Boise said that its decision was not a great sacrifice, since its reliance on old wood had shrunk to less than 1 percent of its business in recent years mostly because the ancient trees were in such short supply.
Business leaders welcomed the move. "There will always be companies that don't care where their lumber and paper comes from," said John Sterling, environmental director for Patagonia, a clothing company that canceled its paper contract with Boise last year. "But as their customers become more sophisticated about environmental issues, they're going to have to pay closer attention to the practices of suppliers that sell them wood products." (NY Times)
South Korea: Fury over tobacco World Cup cigarettes
The soccer governing body FIFA has reacted angrily to the news that the Korea Tobacco and Ginseng Corp plans to introduce a line of World Cup cigarettes.
The company claims its aim is to promote the tournament, to be co-hosted by South Korea and Japan in the summer. It is expecting to produce around 10 million of the special edition packets of cigarettes.
"The fact that FIFA has not had a tobacco sponsor for the past 16 years and has signed an agreement of cooperation with the World Health Organization for a Smoke-Free World Cup in (South) Korea and Japan speaks for itself," said FIFA spokesman Keith Cooper in response to the move.
"Tobacco has no place in football nor in any other sport, and any involvement of any tobacco company is entirely unwanted and actively rejected." (The Daily Yomiuri)
South Africa: Too few companies have strategy for AIDS
The AIDS epidemic in South Africa is still being regarded by many businesses as a minor inconvenience, with only a handful of companies actually having a strategy to tackle it, according to David Blecher MD, commenting on the day the government announced the appointment of an AIDS minister. The tendency in boardrooms, he said, is to see it as a social welfare issue, rather than a corporate responsibility.
And yet the disease is already beginning to impact directly and indirectly on company profits. A case study using the Actuarial Society AIDS model, and based on figures for a company in Kwa-Zulu Natal with 500 staff, shows that cumulative AIDS related deaths by 2020 will be 206, assuming current infection rates.
Such figures will have major cost implications for group life and medical aid claims, lower productivity and rising replacement and training costs. Every business has a financial - as well as a moral - incentive to examine its risk profile, and to treat AIDS as a treatable chronic disease for which affordable medication and other interventions are available. (Business Day)
Global trends reshaping Business Strategy
Businesses that wish to survive and thrive in a global economy must respond to major social and environmental trends that are reshaping markets, says a report released today by the United Nations Environment Programme (UNEP), World Business Council for Sustainable Development (WBCSD), and the World Resources Institute (WRI).
The report, Tomorrow's Markets, details 19 significant trends that are reshaping global markets and changing the roles and strategies of corporations.
These include:
- Increasing non-renewable energy production
- The mushrooming growth of urban populations
- The shrinking working population in the developed world, and the rapidly expanding one in the developing world
Since the world economy depends on a base of natural resources that is being severely degraded, reducing consumption and waste creates new opportunities for businesses to grow through the innovation of less wasteful process and with life-enhancing goods and services, the report argues.
See the report at: http://www.wri.org/wri/business/tomorrows_markets_keymessages.html
US: Illegal immigrants denied employment protection
According to a Supreme Court ruling on Hoffman Plastic Compounds, illegal immigrants do not have the same rights as Americans if they are wrongly fired from their jobs.
Specifically, companies can not be forced to give back pay to illegal workers if they are mistreated. "Awarding back pay to illegal aliens runs counter to policies underlying federal immigration laws", the court stated.
The case involved Jose Castro, an illegal worker from Mexico, who lied to get a job at Hoffman's California plant, and was then fired - owed nearly $67,000, when he tried to start a union. Although the judgement went against Castro, Hoffman was described by one of the judges as being guilty of "a crude and obvious" violation of the labour laws. (Washington Post)
UK: Women say 'workplace is racist'
A majority of women believe the workplace is racist and that career choices are limited by ethnic background, according to a survey by the UK's Commission for Racial Equality (CRE).
Black and Asian women feel they face discrimination at work not only because of their gender, but their colour as well. Two-thirds of British women believe race can limit their career choice and promotion, according to the survey findings published in She Magazine.
Only half of those 1,100 women aged over 16 surveyed believed Britain was a society based on equal opportunity. (BBC)
Companies under accusations of bribery
An employee at Baker Hughes, the Houston oil field services firm, for nearly 25 years has filed a suit against the company alleging he was fired for refusing to participate in bribery.
Alan Ferguson claims he was sidelined and then fired after protesting a planned bribe to win a lucrative drilling contract in Nigeria with Royal Dutch/Shell. The contract was to be won by channelling funds to a Shell employee who would then make sure that Baker Hughes won the $70m contract.
The action comes six months after Baker Hughes settled with US regulators over the company's alleged bribery in Indonesia in 1999.
Meanwhile, South Africa's Transnet has denied claims that South African Airways had paid bribes to Cameroon's national carrier CAMAIR in an attempt to win a lucrative maintenance contract.
The claims were made by United Democratic Movement leader Bantu Holomisa in Parliament alleging over R26-million in bribes. (NY Times / Reuters / Business Report)
UK: Marks & Spencer offers work to the homeless
Marks and Spencer has announced that it will make available around 600 work placements to get homeless people off the streets of Britain and into permanent jobs.
The initiative is believed to be the biggest so far by any one company came as a result of the company's involvement in Business in the Community's Business Action on Homelessness campaign - an initiative which currently has the support of around 90 companies.
The £280,000 programme will see two-week work placements offered in M&S stores in 12 UK cities and Dublin over the next two years, following a successful trial with 8 homeless people in London. (FT)
Canada: Enbridge to adopt human rights standards
Enbridge Inc, the major energy company, has said that it will adopt a set of voluntary standards on human rights and that it will discuss implementation of the standards with interested shareholders.
The move follows a shareholder resolution from Real Assets Investment Management Inc. and Meritas Mutual Funds which called on the company to take measures to avoid complicity in human rights abuses in Colombia. Enbridge owns 25 percent of Colombia's most important oil pipeline. The motion has been withdrawn following the company's statement.
The proposal was the first involving social responsibility issues to be filed under the recently revised Canada Business Corporations Act. (Straight Goods)
Japan: Mitsubishi Chemical sets up medical ethics think tank
Mitsubishi Chemical Corp. said Wednesday it has set up Japan's first private think tank, the Centre of Life Science and Society, to specialise in the ethics of life and medical care.
The company said it believes that ethics will become increasingly important as bioscience research progresses and raises new questions.
Shohei Yonemoto, president of the think tank, said it plans to conduct specialised studies into the ethical problems associated with genetic research and reproductive medicine. (The Japan Times)
Games developers debate social responsibility
The Game Developers Conference in California has shown how the industry is exploring the different aspects of corporate responsibility.
Problems that were considered included issues of gratuitous violence in games and quality of information for parents. The portrayal of ethnic stereotypes was also discussed.
However, one of the most knotty problems is that of game addiction. Although many participants acknowledged the problem, and the fact that good game design should not rely on addictive behaviour, solutions to the problems were less forthcoming.
Game designer Steve Meretzky summed it up. "Even if you accept that we have a social obligation here, what do you do? I don't think anyone would stand for it if they were playing a game and a window popped up saying 'You've played for three hours--that's it.'" (ZDnet)
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CSR FEATURES from the Internet
A Win-Win Proposition - April 7 2002 FROM The Warsaw Voice
Instead of looking for companies willing to provide one-off donations, William Chasey, a U.S. entrepreneur who has been operating in Poland for years and has created a network of Polish Red Cross (PCK) partners, wants to encourage them to commit to permanent cooperation by supplying PCK with a set percentage of their income in exchange for the right to place the PCK logo on their products ...
http://www.warsawvoice.pl/v702/Business07.html
Civic Groups Condemn Abuse of Chinese Migrant Workers - April 2002 FROM The Korea Times
Civic groups in South Kyongsang Province gathered yesterday in Pusan to denounce a local tire manufacturer accused of violating the basic rights of Chinese migrant workers through unfair contracts.
"They are not slaves," the groups chanted, referring to the Chinese workers employed by Dong Ah Tire & Rubber Co., Ltd ...
http://www.koreatimes.co.kr/kt_nation/200204/t2002040417220241110. htm
Leading Toward A Better World? Speech by Sir John Browne, Group CEO BP, Harvard - April 3 2002, FROM BP website
http://www.bp.com/centres/press/s_detail.asp?id=150
Starbucks Beans Not So Green - March 25 2002 FROM alternet.org
By the end of the year, Starbucks will increase its ever-growing empire by opening a coffee shop in Mexico City -- the first Starbucks in Latin America. Ironically, Starbucks will soon be selling gourmet coffee to the very people who are under-paid for harvesting coffee beans.
It's a little bit like dumping leftover pork chops into the pig trough ...
http://www.alternet.org/story.html?StoryID=12691
The New Accountability: Tracking the Social Costs - March 24 2002 FROM The New York Times
The Enron-Andersen debacle has cast an unforgiving light on corporate bookkeeping, but the growing demand for accountability could extend far beyond financial statements. Pressure from investors, customers, consumer activists and even some governments is pushing more companies, particularly multinational ones, to report their nonfinancial performance, detailing the impact of their businesses on the environment and human rights ...
http://www.nytimes.com/2002/03/24/business/yourmoney/24PERF.html
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The GRI - the will to succeed is not enough
In case you managed to miss it, the Global Reporting Initiative was inaugurated last week at a luncheon at the United Nations in New York. The New York Times and the Financial Times were both prompted to carry good pieces on CSR reporting, and the importance of the event was marked by many in the CSR world.
The GRI was originally convened in 1997 by the Coalition for Environmentally Responsible Economies (CERES), along with the United Nations Environment Programme (UNEP). But the recent event marked the formal launch of GRI as a permanent global institution. Almost coincidentally, the latest draft of the GRI guidelines was released for comment.
As the press release says, "the GRI was established to develop, promote, and disseminate a generally accepted framework for sustainability reporting -- voluntary reporting on the economic, environmental, and social performance of corporations and other organisations. Its mandate as an international standards body is to make sustainability reporting as routine as financial reporting while achieving the highest standards of consistency and rigour."
There is no doubting the importance of this mission. What bedevils current CSR reporting is the lack of any agreed framework. Even if financial reporting post-Enron has been revealed to be no panacea, nevertheless financial analysts understand where the core data lies within financial reports that enables them to make judgements about the health of the company in question. There is no such consensus relating to CSR reporting - people simply don't yet agree what constitutes core data with this kind of report.
As a result, there are still too many reports being produced which contain photos of happy smiling children and not much else. The easy part is to say that this needs to be improved.
At the launch UN Deputy Secretary-General Louise Frechette said "Let me praise the Global Reporting Initiative for successfully bringing together actors from all sectors of society in a coalition for change." This summarises the strength of the GRI - it has been a wide ranging collaborative effort, bringing together businesses and a broad range of other stakeholders across the world. It has spawned committees and subcommittees with a mission to ensure everyone's voice is heard - no-one doubts the legitimacy of the forum and there is a large will for it to succeed in many, many quarters.
Just one small problem. Given the ambition behind their creation, the GRI guidelines are a long way from being fit for purpose. At a recent presentation by someone close to the process, he suggested there would be another couple of consultation - publication iterations before there was a "mature" set of standards - which is a kind way of saying that what's there now just doesn't come up to scratch.
There are, in the new draft, 57 proposed core indicators. There are then a number of further voluntary ones. This is an improvement on previous drafts for sure, which had over 100 indicators and no clear view of what should apply to all.
The indicators are split into economic, environmental, social, human rights and workplace. For the GRI ambition to be realised, they need to do three things:
1. Describe factors which are genuinely about the health of the business and its relationship with various stakeholders.
2. Cover all the different aspects of how the business has significant impacts on society.
3. Contain measures of performance, not just management process.
Nobody is pretending these are easy to achieve - particularly the latter. As the old saying goes, one shouldn't make important the things that are easy to measure - rather measure the important however hard that may be.
But from all of these counts, the current GRI crop fares poorly. Much of the information requested is of only passing relevance to the impact or health of the business - and for a list of 57 indicators there isn't room for dead weight. All of these measures will take considerable company resources to gather - if some of the indicators are ill-conceived it runs the risk of bringing the whole CSR reporting imperative into some disrepute.
Most of the economic indicators fall into this. What information do I get from knowing the percent of purchasing spent per supplier and main invoicing country? Even if I get a list of subsidies received broken down by geographical region, how am I meant to interpret that in the context of social responsibility?
Whilst I am wading through these, and a host of similar details relating to cashflows - what I am not getting so far is any kind of assessment of the impact on society of the company's core products or services - which is rather a grievous omission. I may personally believe that society must make space for the possibility of a socially responsible tobacco company, but I would expect such a one to report fully on the current impact of the product - something not required by the core indicators of the GRI as framed here.
But the biggest problem is that once you get past the economic and the environmental indicators, the GRI gives up the ghost on performance measurement altogether, and falls back on describing policies and practices. The existence of a policy to prevent this, the existence of a procedure to ensure that. But no performance measurement.
If the company has a policy to exclude child labour, personally I would like verification that neither it, nor its key suppliers, employs children. Call me picky. If it has policies to evaluate human rights performance in its supply chain, it must be relevant to look at how that is evaluated, and how performance is communicated.
Of the 57 core indicators, no less than 22 simply ask for policies or procedures. The ability to track over time how such policies play out in terms of performance is highly questionable.
It does seem that the GRI has been pulled in several directions at once, and will end up pleasing nobody unless the main intellectual content of what it has been set up to do is sorted out. Its indicators are not business-led enough - there is a huge demand on companies to collect information the value of which to them will be rather questionable. But then on the side of the other stakeholders - those with an interest in the activity of companies - the preponderance of measures relating to policies being in place rather than performance means that these will be unsatisfying from the point of view of disclosure.
The committees and the subcommittees have been formed. The rites of institutionalisation have taken place. There is a huge will all round for the GRI to create a global consensus on what constitutes core data for social reporting. Now it needs to deliver the goods. If it doesn't do this - and doesn't do it quite soon, it will weaken the power and role of social reporting immeasurably.
You can download the latest draft for comment from: http://globalreporting.org/GRIGuidelines/2002/DraftSRG2002.pdf
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Social Reporting Becomes Law in France - by Darina Eades
The speculation on whether social and environmental reporting will ever become part of legislation has finally come to an end. On February 20, 2002 the French Parliament published a new law making it mandatory for French corporations to report on the sustainability of their social and environmental performance. This piece of legislation requires corporations to disclose information on human resources, labour standards, community and environmental issues and data is being sought for the 2003 annual report and accounts.
HR data includes recruitment procedures, contract-types, remuneration, training, working hours and diversity (integration of women and those with disabilities). While internal social reports have been mandatory for some time in France, the new law will put this information in the public domain. Corporations are also being asked to report how their international subsidiaries respect and promote the International Labour Organisation's core labour conventions.
Community issues include stakeholder engagement with environmental NGOs, consumers and educational institutions. Environmental reporting covers issues such as air, water and ground emissions as well as energy and raw materials consumption.
Arese, the European organisation that provides services for investors concerned about corporate sustainability and socially responsible investment, has commented that the new law is one of the most important initiatives in sustainability reporting to date and will present a model for other countries to follow and better. However they are critical that the law fails to adequately define specific indicators and perimeters (geographical or otherwise) of the reporting requirement and have commented that there is no defined process by which a company must audit or validate the newly required information. The new law also makes no mention of sanctions for failure to comply with the reporting requirements.
Despite these misgivings, Arese recognises the law as an important milestone in the promotion of corporate sustainability and triple bottom line reporting and believes it will play a constructive role in encouraging companies in France to develop comprehensive and global reporting systems.
Whether the spread of compulsory reporting to other EU countries will follow is another matter. UK Green MEP Caroline Lucas recently put a proposal to the European Parliament's Industry Committee for a European directive for companies to report on their CSR actions. This was rejected on the grounds that reporting should be on a voluntary basis.
According to Lucas, such MEPs are mistaken in the belief that they are protecting the interests of business. "Many companies see the writing on the wall that CSR is an issue and they are starting to respond".
Craig Bennett, Friends of the Earth Corporate Campaigner is also critical of those who believe that calls for voluntary reporting has any effect on business. "The evidence is clear that this approach is failing" he says. He predicts that demands for compulsory CSR reporting are likely to dominate the World Summit on Sustainable Development in Johannesburg in September.
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