Business Respect - CSR Dispatches No 58 - 22 Jun 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 issue, we review the challenge facing corporate community involvement in Japan.

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/58.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

Sharp eyed readers will have spotted that there has been three weeks since the last issue, rather than the usual two. Having held the fortnightly timings for two years without pause, the need for a break finally catches up with us all! There will be another three week gap between this edition and the next, and then we will be back on track.

Last issue we talked about companies and political lobbying, and established a new vote on the subject. The results so far are as follows:

When it comes to lobbying on matters of public policy, companies should:

* Lobby away and / or pay donations - legislators are grown-ups
9 (9.28%)
* Lobby and / or pay donations - but they must disclose what they do
60 (61.86%)
* Do nothing - corporate lobbying should be banned
28 (28.87%)

97 people have voted so far, but still time to make your own views known! Thanks as always to those who have taken part.

We have had several requests recently for translations of some of the website content around corporate social responsibility. Any bilingual readers out there who would like to volunteer their services to produce different language translations of - say 10 key pages - would be welcome. Some time ago we tried some of the free translation engines out there - but these tools remain higher on entertainment value than they do on good communications!

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 22 Jun 2003

Florida Power & Light pollution reduction plans miss the target

Environmentalists have criticised the plans of Florida Power & Light for reducing emissions of soot from its plant at Port Everglades.

The company has announced the plans, which aim for a 70 percent reduction in the carcinogenic pollutant, and which have received the support of the state's Department of Environmental Protection.

Others are resisting the plan because it does nothing to address other key pollutants such as nitrogen oxide (NOX), and carbon dioxide (CO2) whilst effectively extending the life of the ageing plant. Critics have even suggested that the company's ability to pollute may increase with planned federal 'blue skies' legislation."

Boards 'not engaged' in ethics

81 percent of firms have carried out ethics and compliance training for some employees, but most still say that the board is not engaged enough with ethical issues according to a survey by the Conference Board.

The survey was carried out with more than 80 ethics, human resources and legal officers participating in The Conference Board's 2003 Ethics Conference in New York.

Around two thirds of respondents thought that remuneration for senior executives was out of control in their companies, with senior executives often rewarded for failure. Not only that, the companies will often put up with ethical lapses on the part of executives because of their good performance in other areas. Less than 8 percent would actually fire them.

UK: MP's Corporate Responsibility Bill would hit small firms

The British Chambers of Commerce has attacked a parliamentary bill on corporate responsibility tabled by the Labour backbencher Linda Perham MP.

David Frost, Director General of the Chambers said: "This Bill, should it pass into law, presents a threat to small and medium sized enterprises (SMEs). It does not adequately take into account the huge burden that this would place on SMEs who are already struggling under £21bn of extra regulation since 1997.

"Instead of a force for good as the MPs in favour of this measure believe the Bill would be, it would cost jobs as firms fold under the strain."

The Bill is being promoted by a coalition of NGOs, including Friends of the Earth and the New Economics Foundation. It has been tabled initially as a discussion bill that has no chance of becoming law. Although there is a route for backbencher bills to be able to get onto the statute books (The Private Members' Bill) it is thought that the campaign in this case aims to influence the development of the existing company law review.

Frost added: "Good businesses involve themselves in their community already in many informal ways. Our work in fostering this involvement, as well as that by other groups, achieves far more than compulsion through legislation would ever achieve. This move towards regulation will be self-defeating and we urge MPs to stop it immediately."

Nestle sued over Poland Spring Water

Nestle has been accused of misleading claims in its selling of Poland Spring bottled water by a class-action lawsuit. The sources, allegedly, come from areas surrounded by parking lots or otherwise at risk of contamination.

The complainants argue that the company has fooled consumers into thinking that the water in question arises from pure, natural sources whereas in fact it is neither natural nor spring water. In a statement, attorneys described it as "lesser quality than some tap water".

The suit seeks force the company to pay compensation to the general public and to have it banned from promoting water as 'spring water' if it does not meet the correct scientific definition.

The company has denied the accusations and said it will defend itself vigorously.

AstraZeneca admits health care fraud

AstraZeneca has pleaded guilty in the US to health care fraud and is to pay $355m in settlement of accusations it took part in a scheme to inflate the prices paid to doctors by the government for use of its prostate cancer drug.

The company's staff were said to have provided free samples to around 400 doctors which were then billed to Midicare and other US federal health care programmes. Doctors were also given grants, paid as consultants, and provided free travel and entertainment.

Richard Andrews, first assistant US attorney for Delaware said at a news conference "We want doctors to prescribe what is best for their patients and not what is best for the doctor's bank account". He went on to say that there was no evidence that implicated the company's senior management in complicity with the fraud.

The company stated that it accepted responsibility for giving doctors free samples of the drug in question, Zoladex, although it disputed suggestions that it had given false pricing information to the government.

Court upholds Exxon overcharging case

A US appeals court in Atlanta has upheld a judgement that Exxon overcharged 10,000 gas station owners over a 12 year period.

The company will have to pay $500m in compensation for the overcharging, which began over twenty years ago with Exxon's move to charge dealers a 3 percent processing fee on petrol sales paid by credit cards. The charge was supposed to be offset by reductions in the wholesale cost of the fuel, but the reductions were ended after six months without notification.

The dealers realised what had happened in 1991, and they filed a class action suit against Exxon which was eventually won.

Bank of China announces fraud investigation into former CEO

The Bank of China has said that it is actively supporting an investigation into a potential fraud case involving former chief executive Liu Jinbao and loans made by the bank in Hong Kong and China.

The investigation was launched after complaints around a bridging loan facility, extended last year to Zhou Zhengyi - one of the richest men in China. There are also other potentially unauthorised loans.

Hong Kong's Independent Commission Against Corruption, last week arrested 20 people on suspicion of conspiracy to defraud.

Liu Jinbao is the highest-ranking banker to be investigated for questionable loans since last year's arrest of Bank of China's former president Wang Xuebing on charges of corruption. In this case, however, the scandal has the potential to embarrass senior government officials.

Ten leading banks sign up to social and environmental principles

Ten leading banks have announced that they have adopted a set of principles to govern how they manage social and environmental issues relating to the financing of development projects.

The Equator Principles are based on the policies and guidelines of the World Bank and International Finance Corporation (IFC). The banks received extensive advice and guidance from IFC, the private-sector investment arm of the World Bank, in drafting the Equator Principles.

The banks, from seven different countries, are ABN AMRO Bank, N.V., Barclays PLC, Citigroup, Inc., Credit Lyonnais, Credit Suisse Group, HVB Group, Rabobank, Royal Bank of Scotland, WestLB AG, and Westpac Banking Corporation.

In adopting the Equator Principles, the banks should provide loans only to those projects whose sponsors can demonstrate that projects have been developed in a socially responsible manner. The banks will apply the Equator Principles to all loans for projects with a capital cost of $50 million or more.

Unocal fights Myanmar charges

The US Appeal Court is to rehear arguments on the Unocal Myanmar case, which alleges that the company aided and abetted the military to undertake acts of brutality against villagers.

Acts included murder, rape and forced labour - allegedly meted out to villagers working on sites protected by the military. However, the case will focus on definitions of 'aiding and abetting' as different definitions apply within international law to that of US common law.

Unocal has said that neither definition applies, since it has no control over the actions of the Myanmar military. Its position has also received a boost from the Bush administration, which has filed a brief in the case suggesting that national interests in the war against terrorism are impacted if the case should go ahead.

Nike, Reebok, Levi Strauss et al disclose factory violations

The US Fair Labor Association has released a report detailing independent audits of seven major footwear and apparel companies looking at the protection of workers rights in their global operations on a factory by factory basis.

The audits purport to show every instance of non-compliance with the FLA code found by accredited independent monitors.

The companies included in this year’s report are adidas-Salomon, Eddie Bauer, Levi Strauss & Co., Liz Claiborne Inc., Nike Inc., Phillips-Van Heusen and Reebok International Ltd.

“This first round of audits shows that there is room for improvement at all of these companies and in all of these factories,” said Michael Posner, FLA Board Member and Executive Director, Lawyers Committee for Human Rights. “The companies deserve a lot of credit for trusting the public with the grit as well as the gloss, on an issue that will take persistence and struggle for many years to come.”

The full audit results are available on the FLA website.

New Zealand: Survey finds business good only if socially responsible

A new survey carried out on attitudes to business amongst New Zealanders has found that very few believe that business is a good thing - with nearly half seeing it as a 'necessary evil'. However, social responsibility made the difference, with nearly 90 percent saying that business is good if it contributes to the well-being of communities.

Only 44 percent thought that the main function of a business might be to make profits for shareholders.

The concern with social responsibility also came through in the choice of the country's most admired business leaders. Stephen Tinall, founder of The Warehouse was picked by around 25 percent, and Dick Hubbard of Hubbard Foods was next.

The survey was carried out by Industry New Zealand as part of a programme to boost the image of entrepreneurs amongst the general public. It polled the opinions of 1001 people, with interviews additionally being carried out with 120 teachers.

(Stuff / New Zealand Herald)

CSR FEATURES from the Internet

Corporate Social Responsibility a Key Aspect - 18 Jun 2003 FROM Business Day (Johannesburg)

AN IMPORTANT measure of an MBA's value is its relevance in the business arena.

Leadership, entrepreneurship and global perspectives continue to govern performance, and are therefore likely to remain on the MBA curriculum, says Prof Nick Binedell, director of the University of Pretoria's Gordon Institute of Business Science.

Read full story

Corporate Social Responsibility a Key Aspect - 18 Jun 2003 FROM Business Day (Johannesburg)

An important measure of an MBA's value is its relevance in the business arena.

Leadership, entrepreneurship and global perspectives continue to govern performance, and are therefore likely to remain on the MBA curriculum, says Prof Nick Binedell, director of the University of Pretoria's Gordon Institute of Business Science.

Read full story

Getting tough on Ford - 13 Jun 2003 FROM San Francisco Chronicle

As Ford Motor Company celebrates its 100th anniversary, it joins the ranks of corporations opting for expediency over integrity and environmental responsibility. CEO William Ford Jr. has backpedaled on his pledge to protect the planet, and environmentalists are fighting back. The pressure will mount this weekend with demonstrations and national advertisements calling for a boycott of Ford.

Why are environmentalists unhappy? At a Greenpeace conference in London two years ago, Ford touted his company's pledge "to go beyond the requirements of the law to preserve and protect the environment," and added that "corporations should be a major force for resolving social and environmental concerns in the 21st century."

Read full story

Beware the three horsemen of the corporate apocalypse - 8 Jun 2003 FROM The Calgary Herald

The three horsemen of the corporate apocalypse -- Ralph Nader, Don Tapscott and Maurice Strong -- landed in Toronto Wednesday to participate in a ritual burning of the modern corporation. At a corporate social responsibility conference staged by the Corporate Knights Roundtable, the three men delivered the message: Corporations are killers.

Literally. In the words of Nader, who has long wanted to make corporations into arms of the state: "We're dealing with multinational corporations that have homicidal tendencies." They cause cancer, pollute, produce dangerous products and turn children into slaves of "low-grade addictions and sensualities."

Read full story

Business must sharpen up its bad image - 6 Jun 2003 FROM Personnel Today

Business has to improve its appalling image to a disaffected public angry at senior execs whose daily purpose, it believes, is to “rip off” workers, shareholders and customers, Digby Jones, director general of the CBI, told a high-ranking HR group in London.

At the same time Michael Portillo, Tory MP, warned the UK was suffering a “deficit of idealism” that needed to be injected back into the country and into business. He said many within the middle classes were now shut out from the process of wealth creation. They were badly disaffected because they believed companies were socially irresponsible, and instead, were out to wreck needy populations and developing countries. Both charged HR with playing a pivotal role in changing these perceptions.

Read full story

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Corporate Community Investment in Japan

Article by Mallen Baker

According to a recent report, commissioned by Cable and Wireless, there is an urgent need for a revolution in how Japanese companies approach corporate community investment in response to rapid social change and the relatively late rise of the non-profit sector.

The globalisation of its economy and a shrinking and ageing population has, say the report's authors, brought a period of social discontinuity in Japan. The miracle growth economy that turned the country into the post-war economic phenomenon of the world was, until recently, supported by a highly centralised system of government. Now problems are besetting that system from every angle. Some of the dynamics that served it well in the past simply cannot cope with some of the new realities.

Some of the patterns of behaviour of the past, particularly migration from the regions to the cities, has resulted in a serious erosion of the sense of traditional communities that had been so strong. Expectations around life-long employment and seniority pay, around which all sorts of societal values and assumptions had been formed, have vanished quickly.

Companies have had to respond to this situation. Having swept world markets with the efficiency of their manufacturing practices, they have found themselves struggling to cope with prolonged recession and a gradual erosion of the competitive advantage on which they had come to depend. The first step has been to come to terms with their own contribution to the problems.

For instance, the shift from jobs-for-life now means that there is around an average of 5 percent unemployment in Japan - the highest it has been. Although that figure may seem a moderate figure to some countries whose history has seen far higher percentages in their recent history, those countries rarely share the extreme stigma attached to unemployment as exists in Japan. Traditionally, if you were unemployed it meant you were lazy and incapable. Those attitudes may have to change to fit the new circumstance but, as always, attitudes change slowly. As a result, commuter train services in Tokyo and Osaka are regularly disrupted by people jumping to their deaths from platforms.

In addition, the higher unemployment rate amongst young people, just under 10 percent for the under 24 year olds, is leading to a situation of greater disenchantment with societal values which - in the absence of alternatives, is leading to an increasing withdrawal from society on the part of many. This then results in, amongst other things, increasing crime and insecurity and truancy in school-age children.

Companies also have to deal with their responsibility for barriers to women in employment. There has been gradual change over the last 20 years, since the 1986 Equal Employment Opportunity Law was introduced. However, there remains a long way to go. Just under 60 percent of people believed that men are given priority when it comes to promotion. Lack of support for women in the workplace who have children has made it difficult for those women to balance their responsibilities, particularly given that the shortage of nursery places means that authorised nurseries can have extensive waiting lists.

Of course, companies have also had to wrestle with falling public trust following a spate of high profile corporate scandals. As reported here over the last few years, the Snow Brand Milk poisoning episode - that resulted in the sickening of over 13,000 people - not only was a catastrophe for the company concerned but impacted on levels of trust for the food sector as a whole. This was then compounded by further scandals from Snow Brand and Nippon Meat Packers, as well as from other corporate sectors, such as the nuclear plant cover-up at Tepco. The fallout from such incidents has prompted many companies to look seriously at how they boost their demonstrable commitment to good corporate citizenship - and how they define this commitment more broadly than simply 'putting something back'.

Outside the areas where there is a direct responsibility of business, the picture is also one of disintegration. There is a growing known level of domestic violence and child abuse and the old societal attitudes of the position of women and children are challenged by the rising aspirations of individuals. There are strong pressures from the rapidly ageing population, with support services failing to keep up with the changing demographics.

The big driver for change has been the simple fact that the central system of government has been unable to cope with the factors giving rise to all this change. In response, businesses are having to change their view on their own role. Likewise, there is a significant emergence of civil society organisations that are beginning to take a role in community development, relief, gender equality and environmental protection. These organisations, struggling to survive in an environment that does not yet support or nurture them, make potential long term partners that businesses can work with to begin the process of investment in the community.

Things are at a very early stage. Although some global companies such as Pfizer and Microsoft have community programmes, the amounts involved are generally considerably below what might be seen from the same companies in different societies with more highly evolved expectations.

However the signs are there that Japanese companies are beginning to respond. Kirin Brewery, for instance, has taken a strong lead in promoting the responsible use of alcohol. Nissan's NPO Learning Scholarship Programme aims to develop the Non Profit Organisations in the belief that they will become a significant area of employment growth in the future. Also, Japanese companies have now attained the highest rate of environmental and social reporting in the world, with something like 70 percent of top companies producing such reports.

Corporate Community Investment in Japan - produced by SustainAbility and the Centre for Active Community. Supported by Cable and Wireless.

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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

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Business Respect - most recent edition added on 17th August 2008