Business Respect - CSR Dispatches No 36 - 11 Aug 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 and produced every two weeks.

In this issue we respond to attacks on business involvement in the Rio+ 10 Earth Summit, and we review the Corporate Accountability Report of South African Breweries.

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/36.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

Every issue we send out, there are inevitably a few "bounces" that - for one reason or another signal that the email hasn't been received by its intended target. Sometimes people leave their company and forget to update us with a new email address. Sometimes a user has exceeded their storage allocation on their email set-up. Sometimes there is a technical problem at the other end.

Last issue we had something of a first though - one subscriber's company bounced Business Respect on the basis that it contained "dirty words" and had therefore been filtered out. Which dirty words managed to work their way into a CSR story, we still haven't identified. In fact, frankly, we're b**gered if we can work it out at all. Oh well.

For some people, of course, "business" itself is a dirty word.

As this issue is sent, the papers in the UK are carrying an attack on businesses who are sending senior business leaders in the delegation to the Johannesburg environmental summit. Certain NGOs - the papers name Christian Aid and Friends of the Earth - think that it's disgraceful that business leaders from Thames Water, Rio Tinto and Anglo American should go at all, and express concerns that changes to the draft agreement being concocted may have been unduly influenced by big business interests.

This is both predictable and extremely depressing. Since there can hardly be a solution to the challenges of sustainable development that don't include these companies - and many others besides - the fact of their attendance should be a cause for some celebration. So, too, should be the fact that - via the Business Action of Sustainable Development group - business has been better focused on the issues around this summit than most of the other players. There is real movement here.

Thames Water - part of the German RWE group - has made significant moves towards CSR reporting that reflects the committed work it is doing across the agenda. Rio Tinto has been engaged for some time in what it means to be a leader in its particular high-impact industry. Anglo American is featured in this very issue for its ground-breaking stance on supporting employees with AIDS. To suggest such companies should not be engaged in the agenda of the Rio +10 summit is frankly just absurd.

It doesn't mean everything's rosy. Each of these companies are in high impact industries, and need to stretch themselves to continuously improve their performance. All the more reason! More significantly, one could point to the fact that - although some leaders are engaged in the summit, rather more are not and should be.

But so long as we live in the comic book universe where sustainability will be brought about by "us" (decent, green-minded folk) from defeating "them" (nasty, selfish and stupid corporates) those other companies have every incentive to keep their heads down. And we will be a lot slower in building consensus around the common solutions that our common problems demand.

It is just frustrating that when - having promoted the cause of corporate social responsibility for some years, and seen companies increasingly paying heed - that positive behaviour is then punished by NGOs whilst the laggards (ExxonMobil notwithstanding) get off lightly.

On that note, Mallen is off for a holiday. Next issue's editorial should be suitably more mellow and refreshed!

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 11 Aug 2002

Christian Aid attacks business for influence at the Earth Summit

The earth summit has been hijacked by big business and the original goals of enhancing the lives of the world's poor are fast disappearing, according to Christian Aid.

The organisation has pointed to the fact that the Draft Plan of Implementation - the text which is being negotiated at the Summit - uses terms such as 'promote corporate responsibility and accountability and the exchange of best practices in the context of sustainable development'. Back in January, this read 'launch negotiations for a multi-national agreement on global corporate accountability'.

It blames this on specially formed lobby groups including Business Action for Sustainable Development (BASD), supported by the World Business Council for Sustainable Development and the International Chamber of Commerce.

Danny Graymore, policy officer for trade at Christian Aid, says: 'All we're asking for really is what several transnational companies, such as Shell and BP, say they are already doing. We just think for it to be effective, it needs to be compulsory.

As for regulation of corporate accountability, BASD said "It is up to individual governments to look at what is feasible, possible and desirable. NGOs have the best interests of developing countries and small and medium-sized companies at heart but they have not really thought through the consequences." (Christian Aid / Guardian)

Yahoo! urged to resist Chinese pledge on censorship

Yahoo! Inc. risks complicity in rights abuses if it remains a signatory to China's "Public Pledge on Self-discipline for the Chinese Internet Industry," the campaign group Human Rights Watch has said in a letter to Yahoo!'s CEO Terry Semel.

Signatories to the voluntary pledge agree to investigate all websites to which they provide links, block anything the Chinese government would consider "harmful information," and report those sites to Chinese authorities. The Internet Society of China initiated the pledge this spring. Hundreds of its members, including Chinese companies, universities, and government offices, have signed on.

"If it implements the pledge, Yahoo! will become an agent of Chinese law enforcement," said Kenneth Roth, Human Rights Watch Executive Director. "It will switch from being an information gateway to an information gatekeeper."

"Some Internet companies argue that they advance the cause of free expression simply by their presence in China," Roth said. "But if a powerful industry leader such as Yahoo! submits so readily to official censorship requests, it sells short the potential of this new medium to break Beijing's grasp on the free flow of information." (Human Rights Watch)

Xerox sued for 'blacks in a noose' discrimination

Xerox is being taken to court in Cincinnati by black employees who claim that black dolls with nooses around their necks were left in some of the company's branches. The move follows an equal opportunities finding against the company for discrimination.

The employees claim that nooses were almost a common sight, with one being hung outside a loading bay for six months, in spite of complaints. The lawyer acting for them, Mr James Vagnini, said that it did not matter how many black employees a company has, but how they are treated.

Xerox has denied the allegations, and said that it is one of the leading companies in the US advocating diversity. The company suggested that it had found no evidence of the black dolls and that the commission had made no mention of them in its findings. Bill McKee said "Diversity is one of our core values; it's part of the fabric of Xerox, rooted in our commitment to treat all people with dignity and respect." (Guardian)

Black drivers settle discrimination case with Danone

Black truck drivers who deliver bottled water for McKesson Water Products, owned by Groupe Danone, are to share a $1.2m settlement following allegations of racial discrimination.

The company had been accused of assigning African American employees to "ghetto routes" in poor areas which are less profitable than many others. As a result, black drivers made less money than their white counterparts because pay and promotions are tied to the profitability of the routes.

McKesson was bought in 2000 by Groupe Danone, the french company which has a long history of commitment to social responsibility. Danone has assumed responsibility for agreeing to the settlement, and has agreed to implement anti-discrimination policies.

"We look forward to moving ahead with Danone's culture and values to ensure that our company is a great place to work for all employees," said Michael Harrison, vice president and general counsel for Danone. (The Bakersfield Californian)

Japan: Nippon Food admits beef scam

Nippon Food Inc. has been caught ordering imported beef to be packaged as domestic so the company could receive government "mad cow disease" subsidies. Shunji Tanaka, chief of the marketing department at the company's Himeji branch, confessed that he had ordered the deception.

The admission came after the Japanese government had said that it would file a criminal complaint against the parent company, Nippon Meat Packers, in the event that the company was shown to have undertaken the scam. Tanaka stated that there had been no instruction from the parent company to act.

Nippon Food's products have already been removed from shelves as a result of the latest beef mislabeling scandal, which carries echoes of the controversy around Snow Brand Foods, which was wound up by its parent company in the face of widespread outrage.

Moody's Investors Service has placed Nippon Meat Packers Inc.'s debt rating under review for possible downgrade as a result of the scandal. (Japan Times)

Australia: Prime Minister warns about "corporate excesses"

Prime Minister John Howard has attacked business leaders who have been "getting away with murder" at a business lunch in Sydney, on the same day as the founder and former CEO of collapsed insurance company Ray Williams made his first appearance in the witness box at the HIH Royal Commission.

Howard argued that, although his government did not believe in a heavy handed approach, it was "naive" to think that nobody out there in the corporate sector was misbehaving. He argued that change needs to go beyond mere lip service to reform.

"The great bulk of company directors and business men and women in this country do behave ethically and correctly and they don't deserve a whole plethora of additional regulation that will only make their businesses less profitable and their life more difficult." he said. (The Canberra Times)

Italian seed companies probed over GMOs

10 seed companies are being investigated by an Italian court for allegedly using maize containing a genetic material in violation of the law.

The court in Turin launched the probe late on Tuesday after state seed agency Ense tested samples from seed companies for genetically modified organisms (GMOs) and found some of them to be positive, according to an unnamed official. The companies have not been named, although newspapers have suggested that they include Monsanto and Pioneer Hi-Bred International inc.

A spokesman for Monsanto Agricoltura Italia SpA said that the company marketed only conventional maize seeds in Italy, but that a minimal, accidental presence of GMOs was inevitable. (Reuters)

South Africa: BHP Billiton says nationalisation fear overplayed

BHP Billiton's executive director, Chip Goodyear, said fears about the fallout from the new South African mining industry charter on the industry have been overplayed.

BHP was pleased the South African government said this week the leaked document relating to the charter was not an official statement and that it remains open for discussion with the industry, he said.

The document appeared on the South African website, MiningWeb, suggesting the government thought groups representing black workers in South Africa should be given a 51% stake in all new mining projects within a decade, and up to 30% of any expansion of existing operations.

Goodyear pointed out the group embraced the idea of black ownership of mines and had sold its Matla and Glisa collieries in South Africa to the black worker group, Eyesizwe Mining, of its own accord in November 2000, helping to make the group the fourth largest player in the sector. (AFX News / Ananova)

US State Department seeks to puncture ExxonMobil human rights lawsuit

The US State Department is attempting to quash a human rights lawsuit brought by Indonesian villagers against ExxonMobil on the grounds that it could undermine the war on terrorism and create a "potentially serious adverse impact" on US interests.

The lawsuit, filed last year by the International Labour Rights Fund on behalf of 11 villagers in the Indonesian province of Aceh, alleges that ExxonMobil paid and directed Indonesian security forces that carried out murder, torture and rape in the course of protecting the company's operations in the 1990s. An ExxonMobil spokesman said that the charges are "completely without merit."

The suit was filed under a law that allows foreigners to use US courts to hold US companies accountable for violating international law. Mila Rosenthal, of the Lawyers' Committee for Human Rights, said the State Department's actioin suggest "that the war on terrorism is now going to be used as a cover for all kinds of corporate malfeasance."
(FT)

Anglo American to make AIDS drugs available to employees

Anglo American has announced that its operating companies are to make anti-retroviral drugs available to employees infected with HIV/AIDS at company expense.

The scheme is to be rolled out across the group using available health care facilities coupled, says the company, with "rigorous monitoring and evaluation". The initial piloting of the approach is being taken by the AngloGold/Union and Association agrement on HIV/AIDS signed at the end of last month.

Anglo American said that it expects to see benefits from its HIV programme through extending the lives of infected employees and containing future AIDS related costs, including absenteeism, medical expenses, pension benefits and the recruitment and training costs required to replace employees who have become too ill to work.

The company also reinforced its commitment to its education and prevention programmes. "One of the key benefits of a comprehensive strategy with an emphasis on voluntary counselling and testing is that it promotes the individual behavioural change that is essential to turn the tide of the AIDS epidemic" the company said.

Meanwhile, Andrew Sykes, the CEO of NMG-LEVY, has warned that South Africa's listed companies risk an Enron-type investor backlash if authorities allow them to fudge corporate HIV/AIDS reporting when guidelines on the issue are published early next year.

Sykes said "AIDS reporting could be our Enron, but the fallout will be worse because foreign investors won't simply reduce their SA exposure - they'll run away altogether." (Anglo American / News24)

Ex-Executive Says Dynegy Asked His Help to Cheat

Bradley Farnsworth, a former senior executive at Dynergy Corp, has filed a lawsuit alleging that his firm fired him last year after he refused to play along with a plan to manipulate the company's profits and losses in the summer of 2000.

Mr. Farnsworth, who was the controller and chief accounting officer at Dynegy from 1997 to early 2001, says in the suit that he was pressured to alter the company's accounting standards so as to hide energy trading losses and bolster profits.

Dynegy has suggested that the accusations in the lawsuit are baseless, and has said that it will vigorously contest the claims.

However, Dynegy's accounting and trading practices are already under investigation by the Securities and Exchange Commission over similar suspicions. The company's chairman and CEO Charles Watson resigned earlier this year after the questions first arose. (NY Times)

GE resists penalty for alleged air pollution

General Electric Co. yesterday said Ohio environment regulators were seeking $4.3 million for alleged clean air violations that were reported more than five years ago.

The company called the penalty, sought for allegedly constructing processes which led to new emissions without going through the appropriate procedure, "inappropriate and unreasonable" because the matter had been disclosed to the authorities more than five years ago.

"The matter involves conditions identified by the company and voluntarily disclosed to the state more than five years ago which the company proactively addressed with the concurrence of the state," GE said.

The company is also being pursued by the state of New York for failing to comply with the state's clean water regulations. (Reuters)

Jamaica: Hoteliers encouraged to reinvest in the environment

The recent crisis of corporate governance is encouraging US investors to move their money into socially responsible investment (SRI) funds, according to a new report by fundtracker Lipper.

The key to successfully tackling the issue of sustainable development is how the business community responds - and hoteliers have a key role to play in this, according to Karen Fletcher, director of the International Hotels Environment Initiative.

Speaking to the annual environmental awards luncheon organised by the Jamaica Hotel and Tourist Association (JHTA) and Environmental Audits for Sustainable Tourism (EAST), she said that hoteliers need to incorporate policy and action on environmental and social responsibility into their mainstream hotel and tourism operations - they need to become the norm, not the exception.

The IHEI is a programme of the London-based The Prince of Wales International Business Leaders Forum.

"The tourism industry has an incredible opportunity to make a significant contribution to sustainable development because of its worldwide scale, scope and influence on people," she said. (Jamaica Observer)

US: Socially responsible funds boosted by corporate crisis

The recent crisis of corporate governance is encouraging US investors to move their money into socially responsible investment (SRI) funds, according to a new report by fundtracker Lipper.

SRI fund assets grew by 3 percent in the first half of this year while US diversified funds endured a 9.5 percent fall in total assets.

In June, when the S&P 500 lost more than 13 per cent, SRI funds experienced net inflows of $47m, while US diversified funds suffered from net redemptions of nearly $13bn, according to Lipper.

"The market faces a real crisis of credibility caused, in part, by a seemingly endless procession of corporate scandals," said Tim Smith, president of the Social Investment Forum. (FT)

CSR FEATURES from the Internet

A Blind Faith In Capitalism is Being Rocked - 7 Aug 2002 FROM St Petersburg Times

Today, capitalism is under attack for the first time since the fall of communism. Three reasons are mainly, and coincidentally, responsible. First, bear markets rule in the three main stock exchanges of the world. Whenever a lot of people lose a lot of money, they blame business. Second, a wave of scandals has hit the United States, affecting some of its best-known companies - Enron, Tyco, WorldCom. Scandals and bear markets are connected: Dubious accounting practices that are submerged in a tide of prosperity are ruthlessly exposed when the tide recedes ...

Read full story

Industry is building on sand if it cannot implement meaningful empowerment strategy - 4 Aug 2002 FROM Business Report

Nearly two years ago, following the watershed Black Economic Empowerment Commission (BEECom) conference in Johannesburg, this column predictably lamented the fact that it was always a stressful moment when South Africans tried to find lasting solutions to the country's transformation objectives.

Last week listed mining firms tumbled after the government's draft empowerment charter for the mining industry was leaked. Of course it was mostly foreigners who dumped the shares, but local mining executives rubbished the charter as "malicious", "unacceptable", and "effective nationalisation" ...

Read full story

Not So Bad at Do-Gooder Funds - 1 Aug 2002 FROM Business Week

With all the worries surrounding corporate scandal and volatile markets, investors are scrambling to figure out how to spot unethical companies. They might want to take a cue from socially responsible investing funds (SRIs). After all, stock-pickers' traditional screening methods, such as scanning the financials, reading annual reports, and relying on audits, have proven insufficient.

Morningstar lists some 148 funds under the SRI umbrella. Typically, they steer clear of companies that are polluters, make nuclear weapons, or offer alcohol and tobacco as products. But they also tend to keep a closer eye on board independence, options expensing, executive pay, and independent auditing ...

Read full story

Business And NGOs Must Seize the Day - 29 Jul 2002 FROM Business Day (Johannesburg)

AN UNEXPECTED convergence has emerged suddenly in the often stormy courtship between SA's nonprofit and business sectors. The findings of a recent research report suggest that it is time the two sectors seek co-operation in the interests of sustainable development and business growth.

The report comes at a time when SA's corporates are grappling with the implications of the second King report, which suggests a social responsibility framework for business in terms of the "triple bottom line" of financial, social and environmental accountability ...

Read full story

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South African Breweries - Corporate Accountability Report 2002

Article by Mallen Baker

"In the complex, fast-changing global economy of today, well run, responsible business can be a tremendous force for good." Graham Mackay, Chief Executive, SABmiller

South African Breweries has long been a name to conjure with in the context of corporate social responsibility. It has now entered its fifth year as a CSR reporter, at the end of a year that has seen its acquisition from Philip Morris of Miller - hence the renaming as SABmiller.

The latest report has just been released and is available - with some perseverance and ingenuity - to download from the company's website (for some reason, our downloads seemed to grind to a halt after a while - make sure you're using a browser that can pick up where it left off if a download is interrupted).

The SABmiller report has been produced according to the GRI guidelines and has followed the structure faithfully, reporting against economic, environmental and social impacts. Information is clearly narrated, with a mix of policies and principles and performance information.

SAB has operations in 25 countries and directly employs 33,230 people, with many thousands more in associate companies - 25,000 in China alone. Taking into account the 'value chain' of suppliers, contractors, distributors and retailers, well over a million people are dependent on the business for their livelihoods.

In terms of its approach to customers and products, the company has the following guiding principles:

SAB provides brands and services of consistently high quality and value.
SAB provides brands and services of consistent high quality and value, to meet the needs and standards of its consumers and industry customers worldwide.
SAB is committed to providing products which are safe for their intended use.
SAB advertises and promotes its products in an honest and ethical manner, which respects the values of its consumers' societies.
SAB aims for continuous improvement at all levels in the group by encouraging employees to be creative, innovative and open to new ideas.

In terms of measuring the full range of its economic contribution, SAB uses the "cash value added" system - reviewing where the money it makes actually goes. On this basis, it reports that the wealth it has created as been distributed accordingly:

Employees (19.3%), State Treasuries (40.5%), Lenders (5.3%), Shareholders (12.7%), Community investment (0.3%), Retained to invest in future growth (21.9%). How significant is it that, at 0.3%, the amount put into community investment is on the low side? The balance of distribution highlights the various ways in which the company contributes to society - wealth to employees, cash to governments in the form of tex receipts, etc. The answers, of course, are difficult to arrive at purely from aggregate figures such as this.

Of course, a key test for a company such as this is how well it engages with the potential negative impacts of its core product - in this case, alcohol. Sure enough, the company covers the issue of responsible drinking in its report.

During the year, SAB has reviewed and formalised its groupwide policy on alcohol. This sets out the standards each operating company should adhere to in promoting responsible drinking and in helping to combat alcohol abuse.

According to the report, the majority of SAB companies are actively engaged in public awareness activities at national level. These tend to resolve around contributions to drink/drive campaigns and alcohol abuse programmes.

In Poland, for instance, campaigns by Kompania Piwowarska include "Don't sell alcohol to teenagers" messages addressed at shop assistants and the free distribution of alcohol level meters.

The range of activities across the group suggests genuine commitment - although it is probably the case that the programmes does not yet feature as being as visible or as well focused as some that would be considered to be best practice. Camelot's action on vendors who sell to underage gamblers comes to mind - as does the move by some brewers to promote responsible drinking on bottles.

The company has an even greater challenge on the question of HIV/AIDS. As it notes in the report "South Africa is experiencing an HIV/AIDS epidemic. In 1990, according to the Medical Research Council (MRC), the prevalence was less than 1%. By 2000, the level had reached 25%, one in four of the population, and the MRC (www.mrc.ac.za) has estimated that in the decade after 2000, some four to seven million people will die as a consequence."

SAB describes its AIDS strategy as "comprehensive", and quotes in support the example of Alrode brewery, which "launched its new HIV/AIDS programme by using 'industrial theatre' to gain the attention of employees. The 45 minute performance highlighted the effects of the disease on peoples' lives and provoked a question and answer session afterwards with clinical staff. The company's approach is based on raising awareness, offering education and monitoring illness. Employees and pensioners, who are members of the SAB Medical Aid Society are entitled to support, information, medication including antiretroviral therapy and hospitalisation where necessary."

There is no doubt the company has been as proactive as most of its contemporaries in addressing the issue. Whether it will feel itself - now that Anglo American has taken its position in providing retrovirals for all affected employees - pushed to go further will be a point of some interest.

Expectations on the company are doubtless higher because of its excellent reputation to date. For instance, SAB was named the 'best company to work for' in South Africa, in a study by the leading business weekly, the Financial Mail, in November 2001. SAB reports that it receives around 11,000 unsolicited CVs each year in Johannesburg alone - the company employs some 5,500 in South Africa.

On the environmental side, the company continues to improve its performance in most areas. It is improving its efficiency in terms of electricity and water consumption, and in terms of its effluent discharge. There have been group systems introduced to measure the use of carbon dioxide waste and recycling, and it is steadily undertaking a programme to implement the environmental management system iso14001 across its sites.

Throughout the report, the policies and guiding principles of the company are given in relation to each issue, and prove to be a model of straight forward aspirations and commitments.

Nevertheless, the report is not as fully satisfying as it could be. Although it covers many of the indicators of the GRI, and provides an indicator index to help you locate each by page number, data and narrative are often mixed together in one flowing text, and it is not so easy to pull out what have been the trends in performance over the recent years. The company could do more to provide useful context to the information it gives, which would help to understand the facts that it reports.

Also, it doesn't convey the same target-driven push for continuous improvement that many other reports of this kind do. The publishing of performance against targets, targets for the next year and their rationale, would be very welcome.

That being said, SAB is clearly one to watch. As the largest brewer to serve markets in developing countries, its commitment to CSR may be an important driver in setting standards.

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In the news from the latest issue

US: Obama lobbied over internet censorship

Japan: False labeling in the spotlight again for Nippon Meat Packers

OECD anti-bribery convention largely not enforced

Novartis nears swine flu vaccine but won't donate any to developing countries

Bangladesh: Factories required to control pollution by 2010

UK: Alliance Boots leaves Ethical Trading Initiative

Saudi Arabia: Tobacco companies face compensation suit from smoker

Indonesia: New eco investment index launched

Nigeria: Shell pays $15.5m to settle Saro-Wiwa suit

US: Mattel fined $2.3m for lead on toys

Netherlands: Shell will compensate shareholders for reserves scandal

UK: British business targeted in US bribery investigations

Brazil: Products of Amazon destruction still widely consumed: Greenpeace

Colombia: Drummond disputes accusations over paramilitary support

... more news stories

To make any comments / suggestions re. this site, please contact mallen@mallenbaker.net
Business Respect - most recent edition added on 30th June 2009