Business Respect - CSR Dispatches No 38 - 8 Sep 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 review the latest official Global Reporting Initiative guidelines for CSR reporting and we conclude the vote on socially responsible companies and damaging products.

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/38.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

In a recent edition, we commented upon the interesting ways of some of the content-scanners your companies have to protect your email boxes from offensive material. All fair enough - since we have email addresses published on the website a wide range of really rather extraordinary spam is a common feature of our inboxes, and we sympathise with anyone who seeks to lighten the load.

This fortnight took the prize, however! In response to the mailing of the last issue, we received the following bounce from a company based in the Republic of Ireland.

"The following email you sent was not delivered to the intended recipients as it had restricted contents in it! The restricted content present was "financing". Action taken: The email was Deleted."

If anyone has an explanation as to why a company would have such a policy, we would be fascinated to hear it! We send a query to the postmaster of the address in question - only to get the message bounce back for the same reason.

Sorry to start with such trivia - but it's got to be lighter and more interesting that to begin by dwelling on the Johannesburg summit. Suffice it to say that having begun against a backdrop of dismally low expectations, it just about managed to meet them. The participation of business in the summit was welcome - by and large the coverage seemed to convey the message that the business leaders present were the most focused on co-operation to achieve outcomes. But there is a long way to go to achieve any kind of meaningful plan that will even begin to address the ambitions of the summit.

Finally, we're coming to the end of the current vote on the website. The final tally goes as follows:

Can a company be socially responsible if its main product is harmful to health or the environment?

Yes, if it works to reduce the harm and to run all other aspects of the business ethically 133 (53.63%)
yes, but only if it aims to stop selling the harmful products and leave them to less responsible businesses 22 (8.87%)
no, under no circumstances 93 (37.5%)

248 total votes have been cast - with a significant - but not overwhelming - majority for the view that yes it can. Thanks as always to those who took part.

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 8 Sep 2002

Japan: Tokyo Electric Power Co. covered up nuclear plant problems

Tokyo Electric Power Co. (Tepco) division chiefs ordered the falsification of reports relating to structural problems at nuclear plants, according to company sources.

The managers involved in the cover-ups directly pressured inspectors to falsify reports about the presence of cracks by deleting information and via other means. Tepco has found false reports for five of the 10 reactors at the plants.

Tepco officials have said the coverups may have been motivated chiefly by an increased need to keep up with rising electricity demand during Japan's economic boom in the late 1980s and early 1990s.

Following the revelations, the gravity of the crime was underlined when Tepco shut down a reactor in Fukushima Prefecture after discovering a radiation leak.

The president and chairman of Tepco are likely to step down to take responsibility for the scandal. Formal announcements of the resignations are expected in mid-September.

Overall, the company is suspected of concealing 29 cases of damage at three nuclear power plants during the 1980s and 1990s. The most serious damage involved cracks in nuclear reactor shrouds. The other cases are not considered to pose safety risks.

Observers said Tepco probably decided on the personnel changes because of the harsh public reaction to recent corporate scandals, including the mislabeling of beef by a subsidiary of Nippon Meat Packers Inc. (The Japan Times)

Canada: Monsanto wins appeal GM canola

A federal appeals court in Canada has upheld a ruling that a Saskatchewan farmer infringed on Monsanto's patent on Roundup Ready canola.

Monsanto sued Schmeiser after the company discovered he had 1,030 acres of patented Roundup Ready canola growing on his farm without an agreement with Monsanto. Schmeiser said he had cultivated his own, conventional varieties of canola, saving seed from one crop to the next. Schmeiser said the Roundup Ready pollen must have blown over from other fields or seed flew from passing trucks. (AP / St Louis Business Journal)

Germany: Siemens backs away from "offensive" Zyklon trademark

Engineering giant Siemens has retracted its application to use the trademark name 'Zyklon' due to the vociferous reaction to the proposal from Jewish groups over the name's association with the Zyklon B poison gas used to kill millions in Nazi concentration camps.

Siemens has said that it had not intended to offend anyone. Siemens technicians had suggested the name in reference to a technology that uses air currents and is most commonly found in vacuum cleaners. Siemens said that the name Zyklon would not be used in the US.

"Siemens should know better because it was directly complicit in the use of slave labour," Dr Shimon Samuels, head of the European branch of the Simon Wiesenthal Center, a Jewish human rights organization, told the BBC. (DW-World.De)

Australia: Rio Tinto promises to clean up uranium mine

Rio Tinto has vowed to clean up a contaminated part of its Jabiluka uranium mine and shelve plans to develop the area at Kakadu.

According to chairman, Sir Robert Wilson, the part of the mine containing contaminated water would be rehabilitated. The statement has helped to raise hopes amongst the traditional owners, the Mirrar people.

The company acquired the mine two years ago but announced within months there would be no development without traditional consent, a statement repeated this year but held in some doubt after suggestions work could be undertaken within a decade despite protests.

Sir Robert told the BBC "I am saying we won't develop it without their consent. Full stop".

Gundjehmi Aboriginal Corporation, which represents the Mirrar people, said Rio Tinto had not contacted them regarding the latest comments, made a week ago. "Is this just rhetoric for the sake of the earth summit at Johannesburg, or are they deadly serious about talking to all stakeholders and governments about putting these words into action and rehabilitating the area once and for all?" executive officer Andy Ralph said. (The Australian)

US: Tobacco companies win flight attendant case

A Miami jury has ruled that RJ Reynolds Tobacco Co, Philip Morris and other cigarette manufacturers are not liable in a suit filed by Suzette Ahrendt Janoff, a retired flight attendant who claimed to have developed chronic sinusitis and other injuries as a result of her on-the-job exposure to secondhand smoke.

Janoff claimed that she developed chronic sinusitis, asthma and other respiratory and pulmonary problems because of her exposure to secondhand smoke in aircraft cabins while she worked as a flight attendant from 1983 until March 1996 for American Airlines, but the claims were dismissed.

This was the fourth such case to be brought to trial. A jury ruled against the tobacco industry in the French case in June 2002 and for the industry in Fontana in April 2001. The other case, Queipo, ended in a mistrial in May 2002 and was subsequently dismissed. (Ananova / AFX News)

New Zealand: Commerce Commission cracks down on price-fixing

The Commerce Commission is about to take legal action in two cases of price-fixing as the start of a drive against "hard-core" cartels.

The competition watchdog has about 50 cases under investigation for possible breaches of the Commerce Act, commission chairman John Belgrave said, of which 5 to 10 percent were considered to fall into the most serious definition, involving collective price-fixing or collusion in bidding.

Authorities in Britain and Australia are also tackling price fixing. Australian Competition and Consumer Commission chairman Alan Fels said this week that it was investigating 20 to 25 cases of hard-core cartel behaviour and he expected to bring about four or five cases to court.

There have been several big cases in New Zealand in the past 10 years.

One was several meat companies colluding to put a ceiling on the prices they paid farmers for stock. Another was some Toyota dealers collectively agreeing to fix the level of discount on Toyota cars. (Stuff)

Japan: FSA promotes corporate disclosure

The Financial Services Agency plans to work out a package of measures to promote the disclosure of corporate information in the wake of scandals committed by leading Japanese companies, agency officials have said. The work is expected to lead to reform of Japan's auditor system.

The FSA's working group will discuss an expansion of disclosure requirements to include items such as cash positions and other vital corporate information, as well as chief executives' analyses of their companies' financial standings.

"Japanese companies have completely lost international trust" because continued scandals have revealed the absence of corporate governance at the firms, said Takaaki Wakasugi, a professor in the graduate school of economics at the University of Tokyo. (The Japan Times)

US: Possible community impact halts Hershey sale

The US chocolate maker Hershey has been forced to put plans to sell the company on hold following an injunction preventing the Hershey Trust from going ahead with the auction of Hershey Foods.

The injunction was requested on the grounds that the sale of Hershey Foods could cause irreparable harm to communities in central Pennsylvania including the confectionery maker's century-old hometown of Hershey. Around 6,200 people work for the company in this area.

The move has been led by Mike Fisher, the attorney-general of Hershey's hometown who has argued he is seeking to protect the community of Hershey from "irreparable harm", including drastic job lay-offs, which he claimed that the sale would precipitate.

However, the attorney-general's move to scupper the sale has been viewed with scepticism by some Hershey residents who see it as mere political posturing in Mr Fisher's bid for the governorship. (BBC / Herald Sun)

India to press for Bhopal extradition

India is to press ahead with an extradition request against the former chairman of Union Carbide Warren Anderson over the 1984 Bhopal gas leak disaster that killed 3,000 people.

The move follows the rejection by an Indian court of a plea by federal police to reduce the charges from culpable homicide to a rash and negligent act.

The leak from a Union Carbide pesticide plant in the central Indian city was one of the world's worst industrial accidents and left many thousands of people with lifetime illnesses. Thousands more have died since the December 1984 incident.

Anderson faces a jail term of up to 10 years and a fine if found guilty of culpable homicide. He would have faced up to two years in jail or a fine if the court had reduced the charges. (Reuters)

UK: Working hours rise sharply

One in six UK company employees are working more than 60 hours a week in spite of recent legislation designed to reduce working hours, according to a recent government survey.

The survey also showed that 25% of workers would like a better balance between work and home, but believe that their career would suffer as a consequence. Many employees said that they would rather work shorter hours than win the lottery.

The position is made even worse by the fact that the majority of people are not rewarded for the extra hours they put in.

The companies seem to retain legitimacy in the eyes of staff, however. As many as 81% of workers say that their employers are right to put business goals first. Whether this sentiment ties in with the loss to British industry of £370m per year to stress-related sick leave is unclear. (BBC)

Japan: IT sector's CO2 emissions set to soar

Carbon dioxide emitted by industries involved in information technology in Japan could log a three-fold increase in the 10 years from 2000 to 2010, according to a recent study by Mitsui Knowledge Industry Co.

According to the report, carbon emissions from IT-related industries are expected to reach between 6.47 million and 11.08 million tons in 2010, or 1.8 to 3.1 times the levels of 2000. Carbon dioxide emissions related to computer and server management are likely to soar by three to 16 times by 2010.

The advance of Japan's information-processing capabilities, which enable computers and other equipment to maintain constant access to the Internet, is causing electricity consumption to rise. The Japanese government said that if the industry promoted energy-saving at the highest level, IT-related emissions of the gas could be canceled out. (The Japan Times)

CSR must move into a truly global agenda: UNIDO

Carlos Magarinos, the Director-General of the United Nations Industrial Development Organisation (UNIDO), has said that the task of the UN system is to turn corporate social responsibility from a Northern preoccupation into a truly global agenda.

CSR, according to UNIDO, the concept of Corporate Social Responsibility (CSR) must be adopted in both developed and developing countries in order to help alleviate poverty and therefore it calls for a global approach to tackling the role of businesses in fostering social value.

The comments came as UNIDO launched "Corporate Social Responsibility: Implications for Small and Medium Enterprises in Developing Countries" in connection with the World Summit for Sustainable Development in Johannesburg.

The report argues that there is a need to improve CSR involvement of SMEs and calls upon Transnational Corporations (TNCs) to assist this move through providing incentives and support along the supply chain. (Black Britain / UNIDO)

Czech Republic: Spolana factory head fired over chemical leak

Rodaslav Vek, the head of Spolena's chemical factory near to Prague, which became the worst environmental hazard during the recent flooding, has been sacked by the company's owners.

Spolana's management had been criticised for the way it responded to the leaks and informed the public. The action was taken by the board of the company's parent company Unipetrol. "Members of the board reached this decision mainly because it is necessary to change the style of management at Spolana," Unipetrol spokesman Tomas Zikmund said.

Hundreds of kilograms of chlorine, which was used as a weapon in World War One, leaked from the plant twice. Although there were no human casualties, nearby farmers had reported crop damage. (Reuters)

Australia: Companies embrace CSR in ignorance

According to a recent Ernst & Young survey, 71 percent of companies say they have strategies - or are developing them - to deal with ethical, social and environmental issues but only 9 percent said that they really understood how corporate social responsibility was relevant to their business.

The survey also found that only 8 per cent successfully engaged with stakeholders, despite the firms themselves identifying stakeholder pressures as key forces behind their focus on CSR.

Senior executives from 147 of the world's biggest 1000 companies from many industry sectors throughout Europe, North America and Australasia were interviewed for the survey, with Australia the first country to publish the results. (Sydney Morning Herald)

CSR FEATURES from the Internet

The Business Conclusion - WSSD - 4 Sep 2002 FROM Allafrica.com

Business welcomes the agreement reached at this Summit, and particularly the Implementation Plan.

Business is at its best when it has clear goals and practical targets. These give us a framework for entrepreneurial opportunities, long-term planning and partnership possibilities. So we are rolling up our sleeves to help make it happen.

We need to make sustainable development happen by generating economic growth with greater resource efficiency, minimizing environmental impacts and with maximum social well being for more people ...

Read full story

'People Have Lost Faith' - A key business leader on corporate responsibility - 2 Sep 2002 FROM Macleans Canada

Avie Bennett, publisher, real estate developer and York University's chancellor, has been involved in business for more than 40 years. In 2000, he donated 75 per cent of prestigious publishing house McClelland & Stewart Ltd. to the University of Toronto -- a move designed to secure the firm's future -- and stayed on as chairman. More recently, with former NDP leader Ed Broadbent, Bennett co-chaired a committee studying how to bring greater corporate social responsibility to Canada. After an 18-month probe, their report was released earlier this year. Bennett, 74, spoke with National Business Correspondent Katherine Macklem ...

Read full story

Business Key in Cutting Poverty, Saving Environment: Annan - 2 Sep 2002 FROM Allafrica.com

The economic development of the poorest countries is of fundamental interest to the global community, including the private sector, United Nations secretary-general Kofi Annan said on Sunday.

And, business had come to realise that their profits could only be sustained if social and environmental issues were effectively addressed, he said at a business conference on the fringes of the Johannesburg World Summit on Sustainable Development (WSSD).

Read full story

The vice is right - 1 Sep 2002 FROM The Independent

What with the plethora of socially responsible investment funds, companies as diverse as Shell and Royal Bank of Scotland producing reports on their commitment to sustainability, and alliances between big business and lobby groups such as Greenpeace and Christian Aid, there had to be a backlash.

And so it has come to pass with the launch of the Vice Fund, a US investment scheme that only puts its money in what it terms as "vice stocks" ...

Read full story

Building partnerships at heart of BMW philosophy - 1 Sep 2002 FROM Business Day

The company's social responsibility desk seeks to work together with local communities

Paulina Sethole's winning smile is well earned. She is the principal of Banerang Primary School in Atteridgeville, Pretoria which has benefited from a partnership with BMW, which has entered into a partnership through its Schools Environmental Education Development Project.

BMW's outreach effort extends to 60 schools in a community-centred environmental awareness programme. Under the banner of BMW, "Sustainability. It can be done," the corporation is proud of its achievements in the area of responsible corporate governance and the work it is doing to further the community interests of its employees and society at large. ...

Read full story

Business shouts loudest at start of Earth Summit - 28 Aug 2002 FROM Planet Ark

It's hard to cross the main square next to the Earth Summit without bumping into a huge inflatable globe sponsored by a German luxury carmaker which leaves surrounding cafes in the shade.

Business has come to Johannesburg in force and environmental groups fear the presence of firms such as carmaker BMW along with hundreds of other businesses threatens to dominate the meeting and hijack the final outcome ...

Read full story

Efforts afoot to protect whistle-blowers - 27 Aug 2002 FROM The Japan Times

Recent years have seen more and more whistle-blowers come forward to expose corporate wrongdoing, often to their own personal career detriment. Kabunushi (Shareholders) Ombudsman, a nonprofit organization working to promote corporate reforms, plans to create a center in October to support and protect people willing to speak up against their employers.

Japan has no laws to protect whistle-blowers from unfair treatment by their employers, except for a 1999 revision to a law regulating nuclear reactors, and thus many company workers, if they detect improper activities by superiors or coworkers, are believed reluctant to reveal wrongdoing ...

Read full story

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The Global Reporting Initiative - Raising the Bar too high?

Article by Mallen Baker

The Global Reporting Initiative has released the latest version of its guidelines, drawing on the discussion draft of some months ago. It is published against a backdrop of some resistance to the framework from companies who see it as setting the bar unrealistically high. The draft introduced the move towards a larger number of core indicators, which companies seeking to report in accordance with the GRI are obliged to follow.

In our review at the time, we criticised the move the GRI had made, since the proposed draft indicators seemed to be a unique blend of measures that were onerous to collect whilst being uninformative, along with others that were not remotely to be described as performance information.

In the mean time, the GRI received quite a bit of feedback from both companies and other organisations. What shone through with the feedback was the continuing will amongst the various stakeholders that the GRI should succeed. There may be other games in town, but none with the same chance of setting a global standard for reporting for decades to come - a process which almost everyone sees as being essential.

So, for instance, Nike commented "The depth of the questions is overwhelming at times, however the flexibility allowed by the structure makes the GRI more digestible and tenable than most surveys. It can also serve as a useful catalyst in engaging internal leaders in substantive discussion around governance and triple bottom line accountabilities."

Deloitte Touche were more critical.

"We do believe that the core indicators required by the 2002 Exposure Draft are too voluminous and will discourage too many organizations from even attempting to report under the GRI Guidelines. Further, we believe that the required boundaries of a sustainability report should not exceed the reporting entity’s circle of control because it is unlikely that the reporting entity would have the ability to obtain the requisite information or determine its accuracy. Management may present supplementary, or additional, information on such matters, where relevant. We are concerned that the GRI is proceeding down a path of attempting to make a sustainability report be everything to everyone rather than focusing on how the reporting entity’s sustainability performance can be measured overall. While we recognise that the latter form of a sustainability report will not suit each and every stakeholder’s perceived needs, we believe it will result in a far more meaningful presentation."

Many other comments were made. Business inputs tended to stress the problems with the number and complexity of indicators.

So, that was the draft. How do the final guidelines stack up? It's fair to say that, without looking at the indicators, the GRI provides a useful piece of commentary on what makes a good report. Specifically, it covers a series of principles of reporting that - if followed - should improve dramatically the quality of reporting produced by many companies. These principles are:

Transparency

Full disclosure of the processes, procedures, and assumptions in report preparation are essential to its credibility.

Inclusiveness

The reporting organisation should systematically engage its stakeholders to help focus and continually enhance the quality of its reports.

Auditability

Reported data and information should be recorded, compiled, analysed, and disclosed in a way that would enable internal auditors or external assurance providers to attest to its reliability.

Completeness

All information that is material to users for assessing the reporting organisation's economic, environmental, and social performance should appear in the report in a manner consistent with the declared boundaries, scope, and time period.

Relevance

Relevance is the degree of importance assigned to a particular aspect, indicator, or piece of information, and represents the threshold at which information becomes significant enough to be reported.

Sustainability Context

The reporting organisation should seek to place its performance in the larger context of ecological, social, or other limits or constraints, where such context adds significant meaning to the reported information.

Accuracy

The accuracy principle refers to achieving the degree of exactness and low margin of error in reported information necessary for users to make decisions with a high degree of confidence.

Neutrality

Reports should avoid bias in selection and presentation of information and should strive to provide a balanced account of the reporting organisation's performance.

Comparability

The reporting organisation should maintain consistency in the boundary and scope of its reports, disclose any changes, and re-state previously reported information.

Clarity

The reporting organisation should remain cognizant of the diverse needs and backgrounds of its stakeholder groups and should make information available in a manner that is responsive to the maximum number of users while still maintaining a suitable level of detail.

Timeliness

Reports should provide information on a regular schedule that meets user needs and comports with the nature of the information itself.

The only thing perhaps missing in this list - alluded to in the Deloitte Touche comments - is a clear view of quality indicators covering those areas of performance that are wholly in the company's own control. This might be implied from some of the above, but it could do with being clearly articulated.

However, the serious disappointment is that the indicators are not much improved from the draft. And if the GRI is to gain common currency at all, it will be for the power of its framework of indicators, not for its general commentary on the art and science of reporting.

The GRI now has 50 core indicators - which is by no means too many given the range of issues that could be covered. But it is disappointing just how many of these indicators miss the mark. For instance, out of those 50, no less than 16 - nearly a third - ask merely for a policy and / or a process to deal with an issue. How such an indicator translates into performance that can be tracked year on year is anybody's guess. Once again, as we have said before, most external stakeholders wanting information about a company's performance on child labour will be more interested on whether the company has actually in reality employed children anywhere in its supply chain rather than whether it has a policy on the subject.

The basic structure of the indicators promises a lot of useful information. Economic, environmental, social - covering a broad range of potential stakeholders. But then it is by no means clear what some of the resulting measures are actually for.

For instance, on the economic area, there are a number of measures which measure monetary flows. How much the company has paid in terms of payroll and benefits. The cost of all goods and services purchased. The geographic breakdown of markets. Net sales. The percentage of contracts paid in accordance with agreed terms.

Each of these gives a nugget of information that could - by extraction - be held to reflect some reality that has a bearing on the company's social responsibility. And yet, you could gather all of them together and still not have a picture that anyone could reliably suggest indicated good or bad performance one way or the other. The flow of money says nothing about the sustainability of that flow, nor of the benefits measured against needs of the people who receive it.

Likewise - when downsizing is one of the highest profile actions that a company can take to place itself at risk of the disapproval of key stakeholders, one would expect a more useful indicator than one which - again - asked for "policy and procedures involving information, consultation, and negotiation with employees over changes in the reporting organisation's operations (e.g., restructuring)". How about some simple narrative to explain what you have done during the past year, and what you did to make it better? For an example of how this can look, take a look at the recent Danone report.

Take another example - that of political lobbying. It may be vaguely interesting to know about a company's policy, procedures/management systems, and compliance mechanisms for managing political lobbying and contributions. It may also inform this to read the company's (voluntary) report on how much money it spent on this. I must admit that, as a stakeholder, I would be most interested to know what the positions were that the company was seeking to influence public policy over. A lot of money spent on lobbying may be a good or a bad thing - depending on whether I agree or disagree with the cause. But this measure is not there.

So the next year or so will now tell. Will the GRI - in its current form - begin to make greater headway as the pressure for reporting grows. Or will its difficulties lead to a growing backlash - by stakeholders who see GRI-compatible reports that still don't tell them what they want to know, and by businesses who see the cost of the exercise spiralling out of all proportion because of the requirement to jump through a series of hoops devised by a plethora of committees whose starting point was not always the needs of successful businesses.

The only thing that is for sure is just how high the stakes are.

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In the news from the latest issue

US: Diageo pulls funding from climate change denier institute

US: Walmart shares dip over Mexican bribery cover-up

Brazil: Chevron head threatened with 30 years jail over spill

Canada: Tobacco class suit seeks billions for smokers

US: Bill Gates urges SEC to ignore corporate lobbying on corruption

France: Monsanto found guilty of chemical poisoning

Indonesia: Nike supplier to pay $1m unpaid overtime to workers

Netherlands: Walmart blacklisted by major pension fund

UK: Warning that lean business models present huge national risk

France: EDF fined for illegal spying on anti-nuclear campaign

US: Surveillance firms attacked for 'we sell to anyone' attitude

UK: Olympics ethical sourcing code attacked for choosing Dow

Japan: Tepco failed to act on risk assessment of tsunami

WHO chief says tobacco firms using dirty tricks to keep people smoking

... more news stories

To make any comments / suggestions re. this site, please contact mallen@mallenbaker.net
Business Respect - most recent edition added on 21st February 2012