Business Respect - CSR Dispatches No 56 - 18 May 2003

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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 edition, we review the corporate social responsibility issues within the workplace.

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/56.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

Apologies to anyone who tried to send us an email or to unsubscribe in the couple of days following the last edition of Business Respect. A glitch with one of our two email providers meant that no messages got through during that key post-issue period. We usually get three or four unsubs immediately following distribution (compared to 60 - 80 new subs every fortnight, I guess we can live with that!). If you're reading this and you didn't expect to, please send us your request again. We've moved the email address to the other provider, and it should be ok next time!

In this issue, we focus on the workplace with a quick canter through the main CSR issues facing HR practitioners. Anything we've missed out? Let us know ...

We're also taking the opportunity to call time on the current website vote - which has been the most successful to date. The conclusion is as follows:

The most important social responsibility a company like Wal-Mart can observe is
Keeping its prices low 100 (16.08%)
Treating its employees well 156 (25.08%)
Minding its impact on local communities 366 (58.84%)

There were 622 total votes. Thanks to everyone who took part.

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 18 May 2003

South Africa: Gold Fields may face $5bn lawsuit

According to South Africa's Business Report, Gold Fields, the major global gold producer, is facing a lawsuit of $5bn for alleged negligence towards its workers.

The class action suit representing 500 miners, to be pursued in the US, argues that: "Tens if not hundreds of thousands of Gold Field labourers suffer from long-term effects from conditions they were forced to endure, toxic substances to which they were exposed and injuries they sustained."

The company said it had not been served with papers, and would comment when concrete information was received.

The move is the latest example of actions taken against companies in US courts, usually under the calculation that claims may be more successful. (Business Report)

McDonald's hits animal welfare milestone

McDonald's has announced that it has reached a significant milestone in its on-site animal welfare audits, with 500 audits of beef, pork and poultry processing facilities completed worldwide.

McDonald's began audits four years ago to cover the transportation, arrival, handling and entire processing of animals throughout McDonald's suppliers'facilities.

The independent auditor has kept track of audit data and trends since the program began with McDonald's U.S. suppliers in 1999. Since then, these audit standards have expanded to apply to all global meat processing facilities. Her analysis of 2002 can be found at: http://www.grandin.com/survey .

"Overall, we are pleased with our suppliers'performance," said Bob Langert, Senior Director, McDonald's Social Responsibility. "The vast majority passed the audit and in the small amount of cases where the audit was 'not acceptable,'corrective actions were taken within 30 days to bring the facility up to McDonald's standards."

Japan: Government sets up working group on CSR standard

The Ministry of Economy, Trade and Industry is to set up a working group to feed proposals into the International Standards Organisation's project to create a new standard on corporate social responsibility.

The group will be made up of around 10 experts and will be chaired by Iwao Taka, described by the Japan Times as a pioneer in corporate ethics research.

Corporate Social Responsibility has raised its profile generally in Japan following the recent scandals involving Snow Brand, Nippon Ham and TEPCO.

GlaxoSmithKline provokes fire from shareholders

GlaxoSmithKline is thought to be facing what the BBC described as "the biggest shareholder rebellion over boardroom pay ever seen in the UK" over a controversial 'golden parachute' pay package for its CEO.

Investors are due to vote on the pay deal for Jean-Pierre Garnier, valued at $35m, at the company's annual general meeting. The company is expected to have to rely on proxy votes in order to pass its motion for executive remuneration.

The company's plight was hardly improved by an intervention by its former chairman, Richard Sykes, who called for greater corporate responsibility. "That's not to say that they shouldn't be paying people to do a job... but some things are, I think, just too much. If the institutions believe that, then they should certainly vote against it", he said to the Sunday Telegraph. (BBC)

China: Prison sentences on worker rights activists denounced

The International Confederation of Free Trade Unionists has denounced jail terms imposed on two Chinese labour leaders who had been found guilty of subversion.

The men, Yao Fuxin and Xiao Yunliang, had led demonstrations last year in Liaoyang in protest at the laying off of millions of workers.

In a letter addressed to Chinese President Hu Jintao, ICFTU General Secretary Guy Ryder urged him to intervene to obtain the release of Yao Fuxin and Xiao Yunliang. “I am deeply concerned to hear of the harsh prison sentences handed down on Yao Fuxin and Xiao Yunliang, workers’ representatives in the four-year campaign against corruption and bankruptcy at the Liaoyang Ferro-Alloy Factory. I am particularly concerned that besides having been denied access to their lawyers during their detention, justice was further denied in that the trial was conducted in the absence of Xiao’s lawyer, Mo Shaoping, who was held up in SARS related quarantine by the Chinese authorities”.

The sentences come two months after the International Labour Organisation called upon the Chinese authorities to release any Liaoyang workers still in detention and to drop all charges.

Major shareholder pushes ExxonMobil on global warming

Institutional Shareholder Services (ISS) has recommended that shareholders should vote in favour of two proposals on climate change at the AGM of ExxonMobil in the face of opposition from the board.

The move makes ISS one of the most mainstream groups to have applied pressure in this kind of issue.

One proposal calls upon the company to report on risks to its operations, finances and reputation arising from climate change, and to explain how it will mitigate those risks. The other requests an explanation from the company relating to its approach to renewable energy.

Exxon has rejected the motions, arguing that they are unneccessary in the face of an already clearly articulated policy. ISS has disagreed, saying that the proposals will provide key information to shareholders that will help to assess future financial risk.

Italy: Roche to appeal cartel fine

Roche Holding AG has said that it will appeal a $10m fine in Italy for alleged antitrust activity on diabetes tests. The company - one of five fined - insisted that it had not been engaged in wrongdoing.

The company has blamed a healthcare reimbursement scheme for the similarity in prices given by providers, saying that the system encouraged many of the regional administrations to set a ceiling for the price of the diabetes tests.

Other businesses involved included Bayer AG and Ortho Clinical Diagnostic SpA, an arm of Johnson & Johnson. The regulator said that the companies had arrived at "a single strategy aimed at eliminating price competition for tests".

Tobacco companies settle over price fixing

Philip Morris and other tobacco companies have reached a $200m settlement over a lawsuit from American tobacco farmers that alleged the companies fixed prices paid to growers at auction.

The companies were said to have rigged bids at tobacco auctions, leading to artificially low prices for leaf tobacco and therefore affecting the livelihoods of growers. The class action lawsuit was brought on behalf of over 400,000 growers.

Companies included in the suit in addition to Philip Morris included Lorillard, Brown & Williamson and RJ Reynolds. RJ Reynolds refused to accept the settlement, arguing that it had not taken part in any misconduct and would take its argument to trial.

Philip Morris said that in reaching a settlement it was not admitting the allegations.

US: gun industry survives legal challenge

Handgun manufacturers and distributors have been cleared by a federal jury of allegations that their marketing practices have fueled gun crime, although the final decision still rests with the judge.

The verdict found the major gun makers Glock and Colt Manufacturing not liable for how their guns are used by criminals. The lawsuit, brought by the National Association for the Advancement of Colored People, contended that the industry knew that corrupt dealers were providing their products to criminals and did nothing to stop it.

The companies had argued that it was unfair to hold manufacturers liable for the criminal use of a legal product and that it was down to legislatures to set the standard for how gun sales should take place.

The jury did not reach a decision on other defendents, including Smith & Wesson.

European Parliament seeks full corporate liability for pollution

The European Parliament has approved legislation that would force companies who pollute the environment to pay for the full costs of clean up. It would also require companies to take out insurance to cover the new liability.

The assembly meeting in Strabourg voted 310 to 177 in favour of the bill. It has to be agreed by the European Commission and the constituent governments before it becomes law - and the current expectation is that it will be watered down before this happens.

One of the areas of contention centred around the requirement for companies to take out environmental liability insurance. Critics of the bill have predicted that this would lead to debilitating insurance premiums and punish all businesses - not just polluters.

The measure is intended to prevent clean-up costs falling onto the public purse when a company goes bankrupt.

ILO: Discrimination continues to plague the workplace

While the most blatant forms of discrimination at work may have faded, many remain a persistent and daily part of the workplace or are taking on new, more subtle forms that are cause for growing concern, according to a new study by the International Labour Organisation (ILO).

The report suggests that discrimination is still a common problem in the workplace. "While some of the more blatant forms of discrimination may have faded, many remain, and others have taken on new or less visible forms", the report says. "For example, the combined effect of global migration, the redefinition of national boundaries ... and growing economic problems and inequalities have exacerbated problems of xenophobia and racial and religious discrimination." More recently, new forms of discrimination based on disability, HIV/AIDS, age or sexual orientation have become cause for growing concern.

"Every day, around the world, discrimination at work is an unfortunate reality for hundreds of millions of people", said Juan Somavia, the ILO Director-General. "This new report, aptly entitled 'Time for Equality at Work', shows decisively that unless we take action, that time is still a long way off."

UK: Airports group provokes extra runway controversy

The UK airports company, BAA, has provoked a storm of controversy with its recommendation that a third runway be considered for London Heathrow airport - in spite of a previous promise to the local community.

The company was responding to a government consultation on airport expansion, and has recommended three different sites - Stansted, Gatwick and Heathrow.

Previously, the company faced the longest ever public planning enquiry over a fifth terminal at Heathrow. As part of its campaign to win the trust and support of local residents, it promised that it would oppose any proposals to extend the airport further with a third runway. It is the breaking of this promise that has outraged local campaign groups and environmentalists.

Originally, the company said: "BAA would urge the government to rule out any additional runway at Heathrow, and BAA would support a recommendation by the inquiry inspector in his report that the government should rule it out. Indeed BAA invites the inspector to make such a recommendation."

BAA has sought to deflect cricitism, pointing out that ministers have the final say. That has not stopped the claims of betrayal from the various campaign groups.

CSR FEATURES from the Internet

'Pay for Destruction', Indigenous People Tell Corporations - 18 May 2003 FROM IPS News

Indigenous leaders gathered at the United Nations to discuss ways to protect their culture and environmen are demanding that multinational corporations accept legal responsibility for their policies that destroy indigenous lands and lifestyles.

''Rather than bringing development they have brought more poverty and misery to indigenous people,'' says Victoria Tauli of the Indigenous Peoples Caucus on Sustainable Development.

Read full story

Sino Gold digs itself a hole in Tibet - 17 May 2003 FROM Times of Tibet

Sino Gold chairman Nick Curtis has a thick wad of letters from Australians concerned about his company's plans to mine for gold in Jinkang, near the village of Shuajingsi, in China's vast Sichuan province.

"I don't like getting them," says Curtis. "Some get very personal, with personal accusations. Many are factually inaccurate. So it's less comfortable but it's part of the process. The one calling me 'robber baron' was a good one."

Read full story

Cigarette Company Documents Outline Strategy to Derail Global Tobacco Treaty - 16 May 2003 FROM Center for Public Integrity

With the first global treaty to regulate tobacco set to be debated next week, newly released internal company records reveal a key tobacco industry player’s sophisticated campaign against the proposed accord.

British American Tobacco, the world's second largest tobacco company with 2002 revenue of about $40 billion, considered a two-pronged strategy: projecting a public image of corporate social responsibility while simultaneously working to prevent the enactment of a tough worldwide treaty, the documents show.

Read full story

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Managing CSR in the workplace

Article by Mallen Baker

One of the last bastions of resistance to CSR programmes within corporates often seems to be the HR department. Given the significant range of issues owned here, that can be a real disadvantage. What are the corporate social responsibility issues that need to be managed in the workplace?

The relationship between a company and its employees can have a big impact on that other key relationship - that between the company and its customers. After all, whether the customer trusts and values the company is likely to hinge on the impression created by its human face. If the employees are disgruntled or cynical this will lose no time in communicating itself to others who deal with the business.

So the first question comes down to how employees are dealt with, and whether they feel a sense of motivation and pride in working for the company. Traditionally, this has come down to areas such as the following:

* Remuneration: does the company pay a fair wage (the concept of a 'living wage' in developing countries is a point of some dispute, but the basic point being that paying industry norms that do not provide enough to meet basic living requirements is not good enough)?

* Employee development: does the company invest in training and development for its staff? Is employee development a consistent part of the appraisal process?

* Is the employee consulted about policies and procedures that may affect the working environment?

* Work-life balance: does the company enable working arrangements that suit the individuals need through approaches such as home / flexi working, provision for religious observance, support for carers etc.

* Health and safety: does the company comply with all applicable health and safety legislation? Does it go beyond this to show a genuine care about the health and well being of its people?

* Diversity: does the company respect all current and potential employees by valuing them for themselves, and avoiding placing artificial barriers or distinctions based on any aspect of the differences between them?

* Consistency across different working environments: does the company apply basic minimum standards - the respect for human rights and dignity - in all countries where it operates and does business? Although local working conditions may vary depending on the culture and practice of the country concerned, do the core values still apply in how the company responds to these?

The best companies probably go beyond this, and succeed in making their employees understand the value of their work in terms of the bigger picture. Nobody wants to be just a cog in the machine. Good companies communicate their game plan throughout the workforce, and how each individual is helping to achieve the goal. The line here, as is often the case, between CSR and plain good management is rather blurred.

The second area is more difficult - how the company handles the implications of hard times for the workplace. There is no immediate consensus on what constitutes good practice in this case.

Do compulsory redundancies need to take place at all? Certainly, research by the International Labour Organisation has suggested in the past that many of the redundancy programmes of major companies fail to achieve the projected savings hoped for - largely because of the impact of losing mature, talented people who know the business. However, although some companies have done extremely well through a high profile 'no compulsory redundancies' route, there is certainly no consensus that such a position is the only port of call for the socially responsible company.

So if compulsory redundancies do occur, how can they be handled in an open, respectful and supportive manner? Some companies have undertaken such exercises with active employee placement services, counselling, retraining and generous redundancy terms.

The key factor not to forget is how you deal with those people left behind. It's easy to focus solely on the people who leave - but the business is most often damaged by the extremely low morale of the people left. The process of downsizing may have fundamentally shaken the employees' faith in the company. They may be struggling to cover a significantly increased workload. They may well fear that it is simply a matter of time before they are next. As ever, good communication and consistent engagement is the key.

The third area involves the role that employees have to play in ensuring that the company stays true to its values, and delivers on its CSR programmes. This would involve such features as:

* A statement of values: giving clear direction on how employees are expected to behave.

* A code of conduct: explicitly giving direction on avoiding situations contrary to the company's values - such as those involving the taking of bribes or other forms of corruption.

* A clear set of processes: good communication and training supporting a solid management framework to achieve organisational objectives, such as reducing or recycling the amount of workplace waste, and enforcing basic health and safety rules.

* Provision for, and the protection of, whistleblowers.

Finally, there are some rather important grey areas - issues that are held by some to be highly contentious.

For instance, although everyone may agree in principle that stakeholder consultation is a mighty fine thing, opinions are much more mixed of the European development of employee councils - where employee representatives become an integral part of the decision making of the organisation. Certainly the extent to which there is a mechanism for genuine employee consultation and involvement is something for which there is no single clear view on what constitutes good practice.

Also, there are issues such as privacy. Some companies routinely monitor employee use of email and the internet. Others believe that such an open lack of trust fundamentally damages the relationship. But likewise, it can be a sound part of due diligence by a company that deals with sensitive matters seeking to reduce risk for its customers.

One of the other factors of CSR in the workplace comes down to how the company responds to extraordinary circumstances. One of the most high profile instances of this is the companies operating in South Africa who have adopted active policies to seek to support employees who have contracted HIV/AIDS. It may also include how the company responds to situations where employees are at a heightened risk of terrorist or otherwise dangerous situations. For example, concern for the welfare of employees led many companies to sever links with the animal research firm Huntingdon Life Sciences following threats and assaults against staff by animal rights extremists. On the one hand, this may be seen as socially responsible, since the safety of the employee comes first. On the other, the action is extremely problematic, since it feeds and reinforces the aggressive tactics which become seen as being successful tools to attack target companies.

At the end of the day, how a company relates to its own people will be make or break in terms of its reputation as a corporate citizen. The issues affecting the workplace are wide-ranging and significant. Addressing them can go some way towards bridging the gap between the rhetoric of being 'an employer of choice' and the reality. Alternatively, having the HR Director as the last one on board for a company's CSR programme is a sure-fire recipe for failure.

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In the news from the latest issue

Nepal: Relatives of killed workers sue US firm KBR for trafficking

US: Proposed Alaskan mine survives people's vote

Merck accused of dressing marketing up as science

Australia: Business lobby group warns over carbon trading

India: Tata Motors threatens pull-out from West Bengal

US: Climate change resolutions making impact on companies

Japan: Details of carbon labeling confirmed

Canada: Wal-Mart has union contract imposed

India: Rising protests against factory building

US: Fraud will cost firms $994bn this year

US: American Airlines accused of safety breaches

Ghana: Call for companies to help clear up electronic waste

US: Disneyland demonstration over hotel worker benefits

Uzbekistan: Major retailers call for end of child labour in cotton

... more news stories

To make any comments / suggestions re. this site, please contact mallen@mallenbaker.net
Business Respect - most recent edition added on 17th August 2008