Business Respect - CSR Dispatches No 59 - 13 Jul 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 look at the lessons for CSR reporting from the final report of the Business Impact Review Group.

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/59.html.

Copyright 2003 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 has emailed over the last few weeks and is still awaiting a reply. The Business in the Community conference took place this week, and quite a few other tasks have been put on hold in the mean time!

Arising from that conference, this edition sees a return to reflections on the state of CSR reporting prompted by the final report of the Business Impact Review Group. The final report of the group - 20 companies committed to developing a business-led approach to CSR reporting - signifies a real challenge to some of the frameworks currently floating out there.

Last issue, we floated the fact that we would like to get some of the core pages from the website into different languages - the web is an international medium after all. The site has always been relatively well geographically spread in its usage (at least that's what the logfiles suggest) - and we have also noted a number of entries that suggest people are using online translation systems. Such systems can help you to glean the barest meaning from a site, but are generally most honoured for their entertainment value than anything else, so we are keen to get some of the core content into different languages.

This time, we can gratefully report that we have our first taker. We would like to thank Jeroen Hoff for offering to translate some key pages into Dutch! Now we just hope that we won't start getting some of the speaking engagements Mallen gets invited to from time to time making the assumption that he can present in any language on the website!

We would still be keen to get, in particular, French, German, Spanish, Japanese and Chinese versions!

Business Respect continues to gain subscribers at a rate varying between 50 to 80 per issue. In the interests of openness, you can now view the current number of subscribers from the index page of the site - at the time of writing it stood at 2514 - and that's following a fairly vigorous purge from the list of some of the bounces that begin to happen when people move on from their companies and forget to be tidy as they leave and unsubscribe from their mailing lists!

Should you need to unsubscribe for any reason, you can now do this automatically. Instead of the old email address, you can go to the unsubscribe page on the website (http://www.mallenbaker.net/csr/nl/unsubscribe.php) and remove your email address directly from the list. You will get an email confirmation that the address has been removed (which should also dissuade people from unsubscribing others without their consent!) and that is that.

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 13 Jul 2003

US and India: Coca-Cola faces trouble on two fronts

Coca-Cola has said that US federal prosecutors are investigating the company for allegations of fraudulent marketing and accounting, made by a lawsuit brought by a former employee.

In the lawsuit, a former manager for the company accessed Coke of falsifying the results of market testing in order to boost sales.

The company has acknowledged that some of its employees undermined a marketing test of Frozen Coke three years ago. Other accusations around the valuation of equipment had also been discovered to be well-founded.

Meanwhile, Coca-Cola has come under fire in India over continuing accusations that the company's operations are creating negative impacts on local communities. The accusations revolve around water scarcity and polluted water allegedly resulting from its bottling operations in Kerala, Varanasi, Tamil Nadu and Thane.

The Corpwatch India website has launched a series of case studies covering each area to bring greater profile to the issue.

The company denies the claims, and says that "local communities have welcomed our business as a good corporate neighbour."

UK: Airport operator urges government to tax air fuel

BAA, the UK airports operator behind Heathrow, Gatwick and Stansted airports, is to call on the government to introduce a system of environmental charges for airlines relating to their contribution to climate change.

The company is arguing that in order to become more sustainable, aviation now needs to meet the external cost of its activities. For many years, national governments have taxed fuels for their pollution potential, but in the absence of international agreement had always exempted aviation fuel from such taxes.

BAA is to argue that the new charge should lead to the ending of the airport tax currently levied on passengers.

The arguments are to feed into the production by the government of a 'white paper' - essentially a statement of policy - that will paint a vision of sustainable aviation for the coming decades. Air travel is targeted by environmentalists as one of the major contributors to climate change.

BAA stoked controversy recently when it recommended that there should be a third runway at Heathrow Airport, in direct contravention of promises made to local communities at the time of the public enquiry on a fifth terminal at the airport.

Carillion named as Business in the Community company of the year

Carillion, the construction company, was named as Business in the Community's Company of the Year at its annual Awards for Excellence ceremony. The company was praised for its overall systems and approach to managing its social responsibility.

Adnams plc, the Suffolk brewer, was named as the small company of the year - the first time such an award has been given at the BITC awards.

The categories were the highlight of an award ceremony that saw examples of excellence in over a dozen different categories, and which has contributed dozens of new case studies of good practice on different aspects of corporate responsibility and community involvement.

Awards were presented by the UK's CSR minister, Stephen Timms MP, who used the occasion to announce the government's response to the recent proposal to create a CSR Academy. Earlier, the BITC conference had seen Luc Vandevelde, chairman of Marks & Spencer argue that CSR had to become 'part of the corporate DNA' to be successful.

For more info, see http://www.bitc.org.uk/awards

Asian CSR Awards to be given in Bangkok

Business leaders, consumer groups and educational institutions have teamed up for the first ever Asian Corporate Social Responsibility awards, to be given out on September 19th in Bangkok.

The aim of the awards is to honour corporations for products, services and projects in four categories, including the reduction of poverty and environmental protection. The organisers said that the winning projects would show leadership, commitment to incorporate ethical values, compliance with legal requirements and involvement in the community.

Organisers include the Asian Institute of Management business school and Singapore's new Centre for Corporate Social Responsibility.

US: Top companies failing to address climate risk

Most of America's biggest corporate contributers to greenhouse gas emissions, including ChevronTexaco, ExxonMobil and General Electric, are not adequately disclosing the financial risks posed by climate change and are failing to deal with the issues, according to a new study of 20 of the largest companies.

The report provides a 14-point 'Climate Change Governance Checklist', covering areas such as board oversight, management accountability, executive compensation, emissions reporting and material risk disclosure. It was commissioned by CERES, a coalition of investor, environmental and public interest groups, and written by the Investor Responsibility Research Center (IRRC).

The study finds that despite the companies' governance actions on climate change, U.S. companies, in particular, are still pursuing business strategies that discount the global warming threat. By contrast, non-U.S. companies are more likely to report on the financial risks and undertake climate change mitigation strategies.

Oil companies show the widest disparity. BP and Royal Dutch/Shell have pursued all 14 items listed on the Climate Change Governance Checklist, positioning the companies to deal with emerging issues related to climate change, while ChevronTexaco, ConocoPhillips and ExxonMobil have pursued only four or five actions.

Mindy S. Lubber, Executive Director of CERES said: "We need leaders in the private and public sectors to support climate change policy solutions that achieve real emissions reductions. As responsible stewards, we can and must rise to this governance challenge."

British American Tobacco pressured to withdraw from Uzbekistan

British American Tobacco is facing pressure to withdraw from investments in the former USSR state of Uzbekistan following criticisms of the country's human rights record.

The move follows shortly after the UK government asked the company to fulfil the longstanding demand of campaigners by withdrawing from Burma following recent actions by the regime there. BAT has always argued that to withdraw from Burma would be counterproductive.

BAT has a joint venture in Uzbekistan with the regime of President Karimov, whose human rights record has been described as 'dire' by Amnesty International. The approach for the company to withdraw has come from the Hizb ut-Tahrir political party, which is repressed in the country.

BAT said it operated to high standards in Uzbekistan, and retained its belief that judgement over how countries should be governed was not a matter for business.

Rumours have spread that the company will, however, take action on the government's urging over Burma. BAT is the last UK company to remain there.

Pakistan: PKP Exploration signs up to conservation

PKP Exploration Ltd, the oil company, has signed an agreement for the conservation of the juniper forests in Ziarat and Zarghoon with the United Nations Development Programme (UNDP).

The move, which is the first of its kind in Pakistan, sees PKP committing to contribute $57,000 towards local irrigation schemes and the introduction of fuel-efficient technologies as part of a wider conservation project.

The project aims to introduce sustainable resource management to the juniper forests through partnerships between the company, communities and the UN.

PKP chief executive officer Patrick Bird said that PKP is committed to its role as a socially responsible organisation that invests in the conservation of natural resources in Pakistan. PKP also showed its social responsibility through working to support the development of communities in its areas of operations, principally in Balouchistan and Sindh provinces.

Canada: BC Lottery focuses on problem gambling

The British Columbia Lottery Corporation has said that it is aiming to tackle the issues around problem gambling.

The company's approach is to involve the use of experts to train the staff at casinos and bingo halls to spot the signs that a customer suffers from addictive or compulsive gambling.

The staff should be capable of providing support and assistance to people in such a state.

Gail White, the director of corporate social responsibility for B.C. Lotteries, told CBC that there was no particular increase in the incidences of problem gambling, but that the company had decided the move was simply the right thing to do.

European business groups attack proposed chemicals legislation

The European Chemical Industry Council and the main European business association UNICE have attacked proposed EU legislation on chemical safety regulations as dangerous to European competitiveness.

UNICE said that the moves would add red tape, increasing costs and reducing the incentive of companies to innovate. It also suggested that: "the claimed health and environmental benefits of this regulatory experiment are not clear."

The EU proposals aim to move the responsibility for the testing of chemicals from regulators to the companies themselves. Companies would have to prove that a chemical was safe before it could be licensed, with regulators simply verifying data provided. The requirement would, over time, be applied retrospectively, with all chemicals manufactured in significant quantities being required to have been tested.

German chemical company BASF AG said that it estimated its own share of the costs would run to over 550m euros.

Environmental campaigners have backed the new laws, and accused the companies of 'scare-mongering'. However, the companies' concerns were backed up by the US Government, that submitted its own objections to the plans on the basis of the impact on transatlantic trade.

Russia: Yukos raided by police

Russian oil giant Yukos has been raided by armed police, following the opening of investigations against a key shareholder.

Platon Lebedev, who is close to the company's CEO Mikhail Khodorkovski, is being held in detention under charges of theft of state property. Khodorkovski, generally held to be Russia's richest man, was questioned by police in connection with the affair.

The charges relate to the privatisation of a fertiliser company nearly ten years ago. They have left investors nervous about many of the companies formed in the 1990s from similar privatisation deals.

So far, President Putin has made no direct intervention in the case, although he made some general comments in a speech at the Kremlin to being opposed to the use of jail for the suspects of 'economic crimes'.

Tyco takes action on 'golden parachutes'

Tyco International has announced that it is to take action to limit the highly criticised 'golden parachutes' feature of its executive remuneration policy.

The company, which achieved notoriety when its former boss Dennis Kozlowski was charged with stealing more than $170m, is to limit top executive severance to twice the value of base salary and bonus. Former executives would be prevented from getting special consulting contracts, use of company planes or other privileges.

The company has declared that Kozlowski will receive no severance payments, suggesting that his resignation as a result of the indictment against him rendered him ineligible.

India: Court confirms gender discrimination is lawful

India's supreme court has set aside a previous judgement raising the flying age of air hostesses with Air India from 50 to 58 - confirming in the process that a differential retirement age applied between men and women. The move is likely to be met with dismay by around 70 air hostesses affected, whose income will halve without the significant flight allowances.

The judgement applies solely to Air India, with similar staff working for Indian Airlines retaining a retirement age of 58. The Air India Cabin Crew Association is currently meeting with lawyers to consider its next steps.

The move immediately follows a separate gender discrimination controversy to hit the company when it grounded four women cabin crew members after quarterly weight checks found them to be overweight, whilst seventeen male crew members overweight by equivalent amounts were allowed to continue flying.

The company defended itself against charges of discrimination, suggesting that working conditions for men and women differed, and the criteria was fitness, not weight.

Nike v Kasky: Supreme Court ducks free speech ruling

The US Supreme Court has refused to rule on the issues around commercial speech and free speech at the heart of the Nike v Kasky trial, and have ordered that the California Court hearing can proceed.

The judgement, a disappointment to Nike that had hoped to have the original case stricken out, means that there will now be a trial on whether statements made by the company on its human rights performance were truthful and accurate.

The fact that the court hasn't ruled means that should Nike lose, it will then be able to appeal using the freedom of speech arguments again.

Six out of the nine justices had chosen to refer the matter back, leaving three saying that they would have resolved the case now.

The proceedings began when Marc Kasky, a Californian activist, accused Nike of lying in statements it made in letters and press releases relating to overseas labour practices. The company said that these statements are protected by the First Amendment.

CSR FEATURES from the Internet

Fast-food companies, experts arguing over obesity in U.S. - 11 Jul 2003 FROM Montana Forum

There’s no doubt the U.S. population is growing increasingly obese. But who is to blame? That debate is heating up in courtrooms and boardrooms around the country, as the battle over America’s waistline moves to center stage.

The latest volley came from the U.S. Chamber of Commerce with a report claiming that the fast-food companies can’t be held responsible for the nation’s increasing obesity problem. The day before, Kraft Foods – the maker of Oscar Mayer Lunchables and Oreo cookies – announced it will cap portion sizes at healthier levels and eliminate in-school marketing.

Read full story

Ensuring workers' rights results in increased profitability - 10 Jul 2003 FROM Hi Pakistan

In order to compete in the world market, compliance with Social Accountability 8000 (SA-8000) is a must as the customers worldwide, specially in the developed countries, have become much more concerned about workplace conditions.

This was the main theme of a training seminar on "Awareness to SA-8000" arranged here on Saturday by the Pakistan National Accreditation Council (PNAC) in collaboration with the All Pakistan Textile Mills Association (APTMA).

Read full story

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Looking for business solutions on CSR reporting

Article by Mallen Baker

The recent Business in the Community annual conference saw the beginning of a fascinating exploration of how companies deal with their marketplace issues, as well as the launch of a whole new series of best practice case studies associated with the BITC awards.

But for me, the most significant part of the conference was the launch of the end conclusions of the Business Impact Review Group (BIRG) - the report of the group of 20 companies I was privileged to be able to set up two years ago to explore business responses to the reporting agenda.

Having passed the BIRG project on to colleagues to bring to a successful conclusion in its second year, I remained nonetheless utterly convinced of the importance of the exercise in the face of real confusion in the marketplace as to the purpose, value and audience for CSR reporting. Now the group has produced its final report, "Indicators that Count" - and the work it has done represents the first example of businesses collaboratively coming together to report against a common framework, to share the learning and develop the framework of indicators amongst themselves, and to then report publicly via a website and make recommendations to the rest of the business community based on the group's experiences.

The work started three years ago, with the publication of BITC's 'Winning with Integrity' report. With that document, we sought to identify an irreducible core of indicators for business that measured the factors relating to the health of the business and its real impact on society. These were performance indicators - not the 'have you got a policy' questions that often feature in frameworks for reporting. They were grouped into three levels, reflecting expected growing degrees of sophistication required to address them. And they were developed to be relevant to external stakeholders, but mostly to be useful tools in managing the business.

Having published the original document, the most obvious thing was to seek to put this indicator framework into practice. Twenty member companies of Business in the Community came together to seek to report against the framework. These companies included BAA, Orange, BUPA, GUS, HBOS, Sainsbury's, Severn Trent, Jaguar, Carillion, LE Group (recently renamed EDF Energy), Thames Water, Coca-Cola GB, Marks & Spencer, United Utilities, CIS and Zurich Financial Services. One small company, Flag, was included. Several others joined later - namely Powergen and Nestle.

Several of these - particularly BAA and United Utilities - were old hands, having won awards for their CSR or sustainability reporting. But mostly this was a group of leading companies for whom the agenda was rapidly rising, but who had not yet produced a full CSR report.

Recruiting the companies was no trivial matter. The project called for serious commitment. Even what appears to be a trivial indicator, such as workforce ethnic origin breakdown, for some companies represented a serious logistical challenge to collect information for which systems did not currently exist. Add to that the inherent risks of disclosure and you had a long protracted process of consideration before some pretty brave companies agreed to go ahead.

But go ahead they did, and the group met regularly to share experiences, to discuss and debate the merits or demerits of particular measures, and to consider the overall future of CSR reporting as it applied to them.

As a result, they dropped a number of indicators that were considered to be hard to measure but of relatively little value. They added one or two where obvious gaps came to light. And they realised that - although the quest for a single irreducible core of indicators that would apply to all businesses was a seductive goal - many of the key measures were so industry specific that the quest for a one-size-fits-all could lead to real disparities in the value of information provided.

Some of the indicators were seen to have real management value, but carried significant issues relating to the preparedness of companies to actually disclose the results. Indicators that covered marketplace activities and workplace statistics were particularly sensitive, for instance. Employee turnover - clearly a key indicator - was one of the ones considered too sensitive for disclosure by some companies.

The project was set up to run for a two-year lifespan. The final report gives therefore the recommendation of this revised set of indicators to the business community - as tried and tested by a cross-sectoral group of businesses. The framework has received the most methodical testing of any comparative framework, and there are certainly a number of UK businesses who were not members who have indicated that the areas covered fit their business needs rather better than the higher profile Global Reporting Initiative, and other frameworks.

Where we still have a long way to go, however, is moving to the next stage of really engaging with audiences. There is a growing - but still minority - audience for real CSR information amongst a section of the financial community. And one can see the value of such indicators to that community if people can really begin to understand their value as supporting evidence in the assessment of quality of management.

However, for most other stakeholders of the business, CSR reporting has yet to make its mark. Customers do not read reports. Precious few employees do either. Local communities almost never. How companies improve their communication, dialogue and accountability with their real stakeholders is the next, greatest challenge. Agreeing what might constitute core data is the first step, and the Business Impact Review Group has made a real contribution to that. Popularising the value of that information, and opening up channels for its communication - that is the key next step the achievement of which will either define CSR reporting as a passing phase or an enduring feature of good business.

It is much too early to tell which it will be.


'Indicators that Count. Social and environmental indicators - a model for reporting impact' is available from Business in the Community. See http://www.bitc.org.uk/corporate-impact for contact details.

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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