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Business Respect - CSR Dispatches No 61 - 17 Aug 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 UN Draft Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises.
In the news:
1. Canada: Government sues J Reynolds and Japan Tobacco2. Unilever challenges shareholders who don't vote
3. Russia: Government adds to pressure on Yukos
4. India: Court orders further tests on Pepsi
5. GlaxoSmithKline launches cheap Malaria drug
6. France: Bove steps down as anti-globalisation spokesman
7. India: Monsanto attacked for 'bio-piracy'
8. Discrimination suit hits Reuters
9. Japan: Takeda Chemicals and Kirin Brewery collaborate on new medicines
10. Philip Morris wins cancer lawsuit
11. South Africa: Government calls on US to dismiss apartheid lawsuits
12. UK: Consistent polluters undeterred by fines
13. British American Tobacco 'frustration' at Burma calls
Feature articles on the internet:
1. Living with the enemy - 10 Aug 2003 FROM The Economist2. Corporate Citizenship: A Tax in Disguise - 5 Aug 2003 FROM Ludwig von Mises Institute
3. Private sector can transform Africa - 1 Aug 2003 FROM Business Day
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Topics:
WelcomeCSR News 17 Aug 2003
CSR FEATURES from the internet
Raising the heat on business over human rights
Want to read a hyperlinked version of this issue? You can find one on the website at http://www.mallenbaker.net/csr/nl/61.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
It's that time of year when the latest issue of Business Respect is met with a veritable avalanche of 'on holiday' auto-responders - but still we soldier on!
We rather assumed that the time of year would involve a considerable slowing of the website traffic, but were rather interested to find that it had in fact doubled since the previous week. The reason? The good folks at the American Graduate School of International Management have obviously taken to the case study on crisis management on Odwalla - so much so that they set their website to query the page every 4 minutes.
Flattered though we are, that's a lot of bandwidth on a page that doesn't change from month to month. So with some reluctance, we've blocked that internet address from accessing the page - an email sent to the web admin there offering to re-open access on a rather less intensive basis has received no reply to date. There you go. We're always open to ideas and suggestions about how people can use the resources at the website - but do speak to us first if implementing anything particularly resource-intensive!
Mallen will be speaking at the Asian Forum on CSR in Bangkok next month - and Vanessa will be in attendance also. Then Mallen will be going on to speak at the Ethical Corporation conference the following week in Singapore. We would be delighted to meet any Business Respect readers whilst we're in the region - feel free to email and let us know that you'll be around.
The website vote on lobbying rumbles on. You will recall that the question goes:
When it comes to lobbying on matters of public policy, companies should:
Lobby away and / or pay donations - legislators are grown-ups 20 (7%)
Lobby and / or pay donations - but they must disclose what they do 164 (59%)
Do nothing - corporate lobbying should be banned 93 (34%)
There have been 277 votes to date. Still time to make your thoughts known, although we'll probably be introducing a new vote soon.
If your autoresponder is on, we hope it's because you're having a great holiday. If not, we hope you find this issue of interest.
Mallen Baker
Vanessa Wood
editors@mallenbaker.net
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CSR News 17 Aug 2003
Canada: Government sues J Reynolds and Japan Tobacco
The Canadian government is suing RJ Reynolds and Japan Tobacco for alleged smuggling of cigarettes into Canada during the 1990s via tax-exempt US Indian reservations.
In a lawsuit filed in Ontario Superior Court in Toronto, the government said that "a scheme was devised and implemented to gain illicit profits from the smuggling trade in tobacco products, resulting in substantial revenue loss to the Government of Canada."
The suit seeks damages and interest totalling $1.5 bn dollars, claiming it lost the tax revenue when the defendants flooded Canada's market with tax-free cigarettes.
A previous suit was brought via a US court several years ago, but failed where the US Supreme Court said that US courts did not have jurisdiction to recover Canada's taxes."
Unilever challenges shareholders who don't vote
Unilever has requested - and received - explanations from 10 of its key investors who failed to vote at its last annual general meeting in a move that potentially turns corporate governance on its head and seeks accountability from the shareholders.
The company sought information as to whether the abstentions had come about for policy reasons or for technical reasons - but according to the Financial Times was effectively 'discouraging investors from behaving like absentee landlords, collecting their dividends but neglecting to get involved with the broader life of their business'.
The excuses made by the investors varied - with a couple not voting as a matter of policy due to the diverse range of private individuals it represented. Some said that they had issued instructions to third parties to vote, but that these instructions were not carried out. The company is now carrying out an investigation of these cases, and has invited the UK's Department of Trade and Industry to observe at least one of these.
Russia: Government adds to pressure on Yukos
Yukos, the Russian oil company, suffered a further blow in the ongoing official inquiry into its activities, when armed police raided the offices of one of its key affiliates, Sibintek.
Sibintek was spun out of Yukos four years ago, and develops software for Yukos. It is owned by Yukos' holding company, Group Menatep.
Yukos dismissed the raid as a 'further direct attack', and promised a huge payout to investors after it buys Sibneft.
On the same day, the company was rebuffed by a Mosco court in its lawsuit against officials who searched the company's offices during the previous month. The company had alleged that the searches were carried out unlawfully. The court disagreed.
The investigation into Yukos began with the arrest of one of Yukos' top shareholders, Platon Lebedev, who was charged with defrauding the state in a 1994 privatization deal and tax evasion. Lebedev was closely linked to Mikhail Khodorkovsky, widely believed to be Russia's richest man.
India: Court orders further tests on Pepsi
The High Court in Delhi has requested that further testing of samples of Pepsi be carried out, following the drinks company's petition to restrain the publication of a report on pesticides in colas produced by the Centre for Science and Environment (CSE).
The report claims that both Pepsi and Coca Cola drinks contained levels of pesticides above the permissible limits. It has provided a huge knock to the reputation of each company - with products banned in Parliament, and demands for action from groups, such as the People's War in Bihar.
Pepsi argued that the government should be directed by the High Court that the conclusions of the report were dubious, and that it should not have acted on it without further verification.
The controversy is the latest of a series relating to toxins in food. Previously, research in Patna found high pesticide quantities in fish, largely arising from the use of DDT - a chemical whose use is now banned in many countries.
The further testing is due to take three weeks to report.
GlaxoSmithKline launches cheap Malaria drug
GlaxoSmithKline has announced that it intends to launch a new drug to tackle a virulent form of Malaria in sub-Saharan Africa.
The company announced that Lapdap will be made available at a cost of $0.29 per adult and half that amount for children, and will treat plasmodium falciparum malaria, the most life-threatening malaria parasite, which kills between one and two million people every year.
Professor Peter Winstanley, (Director of the Wellcome Trust Tropical Centre at The University of Liverpool), who has been closely involved in the development work, said: "Drugs used as first-line treatment in uncomplicated P.falciparum malaria ... are failing because of increasing parasite resistance. [Lapdap] can help us meet the urgent need for an affordable anti-malaria treatment for use in Africa, as it has been shown to work in cases where S/P has failed."
Lapdap was developed through a public/private collaboration between the World Health Organization and GlaxoSmithKline.
France: Bove steps down as anti-globalisation spokesman
Jose Bove, the French farmer who came to international fame following actions to destroy genetically modified plants and to attach fast food giant McDonald's, has said that he is to give up the post as spokesman of the Confederatin Paysanne union next year.
Bove told his intentions to a 150,000 crowd of protestors at a rally in Larzac. "In April 2004, I will stop being spokesman. That corresponds with the end of my mandate," he said, adding that the movement should go on to protest at the forthcoming World Trade Organisation summit in Mexico.
Bove first achieved notoriety for protesting against globalisation by vandalising a McDonald's restaurant. Since then, he has become a regular speaker at global rallies for protestors - in between spells in French prisons.
India: Monsanto attacked for 'bio-piracy'
Monsanto has come under fire for its patenting of wheat varieties derived from Indian varieties and products made from the soft milling traits that traditional Indian wheat provides.
Labelling the company's actions as 'biopiracy', Greenpeace and Navdanya has called on the government of India to take action over the company's patent of a variety of wheat incorporating material from the 'Nap Hal' land race of wheat - although doubts exist over the exact genesis of this material.
The groups said the government should analyze all native wheat varieties for the traits being claimed by Monsanto as their invention and identify the
actual source of the genetic material being claimed by the company.
Discrimination suit hits Reuters
Major media company Reuters is being sued for alleged racial discrimination at Radianz, a web development company it owns. The suit alleged constant abuse and discrimination against black employees that was tolerated by management.
The action is being brought by three current or former employees of the company who said that they had suffered constant abuse, including offensive messages and emails, and digitally altered photos depicting them in offensive situations.
The plaintiff's lawyers have suggested that the "public school" management-style of the firm's British executives had contributed to the problem.
Reuters has a majority stake in Radianz. Management at Radianz have disputed the merits of the suit. The company said that staff had been fired and disciplined appropriately for their participation in actions that are against the code of conduct for the company.
Japan: Takeda Chemicals and Kirin Brewery collaborate on new medicines
Takeda Chemical Industries and Kirin Brewery have announced a collaboration to develop new medicines using technology to support the human immune system - labelled 'antibody drugs'.
Takeda has discovered a number of 'antigens' that cause disease. Kirin holds a patent on technology to produce anti-bodies. The technology could potentially produce more effective remedies for cancer due to its inherent ability to produce drugs that target only cancer cells, rather than all cells.
According to the Daily Yomiuri, the two companies aim at start marketing the new types of drugs around 2010. The collaboration may extend to other types of diseases as well as cancer, including infectious diseases such as hepatitis.
Philip Morris wins cancer lawsuit
Philip Morris has been cleared by a jury in California of negligence and misrepresentation. The case marks the conclusion of the latest tobacco lawsuit brought by a smoker seeking damages arising from lung cancer.
The case involved Frederic Reller, a smoker of 48 years who blamed Philip Morris, makers of the Marlboro brand of cigarettes, for his cancer. The suit alleged that the company had misled the plaintiff by failing for many years to acknowledge that smoking is addictive and harmful.
The jury concluded that the company was not responsible for Mr Reller's smoking habit. He had only switched to the Marlboro brand in 1964, and packs had carried health warnings from only two years later.
South Africa: Government calls on US to dismiss apartheid lawsuits
The South African government has called upon the US court considering lawsuits aimed at extracting reparations from companies active in the country during the apartheid era to dismiss the cases.
The government argued that the action would hurt the economy and increase unemployment and crime by penalising international companies whose investment in South Africa was sorely needed to build a better future.
In a letter sent from Minister Penuell Maduna, he said: "If this litigation proceeds, far from promoting economic growth and employment, and thus advantaging the previously disadvantaged, the litigation, by deterring foreign direct investment, and undermining economic stability will do exactly the opposite of what it ostensibly sets out to do."
The comments were made after the Cabinet had reviewed the position extensively, he added.
UK: Consistent polluters undeterred by fines
The UK's Environment Agency has released its report on business environmental performance for the last year, and has highlighted companies its says are 'repeat offenders' for pollution.
The Agency said that such companies made up 20 percent of its list of poor environmental performers, and suggested that fines remained at too low a level in spite of a 36 percent increase.
Significant repeat offenders in 2002 include United Utilities (£327,500), Anglian Water Services Ltd (£285,000), Thames Water Utilities Ltd (£135,000), BP Oil (UK) Ltd (£60,000), TotalFinaElf (£54,000), 3C Waste Ltd (£17,000) and Tesco Stores Ltd (£10,000); all were top offenders in 2001 too.
In highlighting the companies, the Agency drew attention to the profile many on the list have had with regard to their corporate social responsibility.
Barbara Young, Chief Executive of the Environment Agency, commented: "Courts are getting tougher on environmental offenders – but fines are still small change for big business."
Steven Beaumont, spokesman for United Utilities said the company was "disappointed with our prosecution records" and highlighted the fact that it was spending £5m per day on environmental and water quality improvements.
British American Tobacco 'frustration' at Burma calls
British American Tobacco has launched its second corporate social responsibility report and its chairman Martin Broughton took the opportunity to express 'frustration' with the UK government's urging of the company to withdraw from Burma.
The company, which pulled off a significant coup with its first CSR report in being awarded ACCA's 'Best First Time Reporter' award, has been under considerable pressure as the last UK company to retain a presence in Burma since the arrest and detention of opposition leader Aung San Suu Kyi.
Martin Broughton said that the company was still considering a formal request by the government for the company to withdraw, but believed that this was a matter for the government to decide. It was not, he suggested, for the government to refrain from putting in place sanctions against Burma but to then call for companies to take action instead.
Companies were responsible for human rights in the workplace and within their field of operations - matters of 'wider human rights' were a matter for governments.
The company's report, 156 pages long, covers all aspects of the company's approach to product responsibility, supply chain management, environment and workplace. It uncovers the company's broad framework for corporate social responsibility, which was produced in collaboration with the Institute for Business Ethics.
For more info, see http://www.bat.co.uk
CSR FEATURES from the Internet
Living with the enemy - 10 Aug 2003 FROM The Economist
Being the boss of a big company besieged by indignant activists is not much fun—though it is increasingly a fact of life. Mention, say, Greenpeace, to a typical boss and he will often turn apoplectic. Still, a growing number of executives are concluding that it is better to get along with the lobbyists than to attack them. Just look at the rapid spread of activist-friendly corporate social responsibility policies or listen to Lord (John) Browne describe how green nowadays is his firm, BP—even if it still makes its money selling oil.
Consider, too, the lengthening lists on the “Victories” pages of the websites of campaigning groups such as the Rainforest Action Network. Among its trophies is Citigroup. RAN campaigned to get the financial giant to adopt policies to reduce habitat loss and climate change, urging customers to cut up their Citicards and plastering the internet with nasty jibes against named executives. In April, RAN announced a truce, claiming that Citi had agreed to what it wanted. Not bad for a group with a dozen staff and a $2m budget.
Corporate Citizenship: A Tax in Disguise - 5 Aug 2003 FROM Ludwig von Mises Institute
Corporate Social Responsibility is the new field that has united a variety of campaigning groups, including environmentalists, poverty campaigners, third world charities, and unions in a collective call for business to support their agenda. More unusual, it even has prominent supporters within the business community.
Charitable giving by business has a long history, although in the case of large corporations with a diffuse shareholding it carries the moral hazard of executives buying social respectability (in England, even knighthoods) with their shareholders' money. The morally, and socially, superior position would be for shareholders to receive their full dividends and themselves support charitable action.
Private sector can transform Africa - 1 Aug 2003 FROM Business Day
The New Partnership for Africa's Development (Nepad) is a vision and strategic policy for African renewal. It lists sustainability as one arm of its three-pronged action plan. There is growing recognition of the key role business can play in sustainable development. The challenge for business is to ensure that it balances the bottom line without dumping on people at the bottom.
If the path to profitability leaves untold damage to the environment and the majority of people in poverty, the repercussions for business will be disastrous. The move towards "triple bottom line" reporting integrating economic, social and environmental aspects of management's stewardship of the organisation and its assets is becoming acceptable practice.
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Raising the heat on business over human rights
Article by Mallen Baker
On August 13th, the UN Sub-commission on the Promotion and Protection of Human Rights launched its document bringing together the range of codes and guidelines to which business should adhere - the 'Draft Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises'. On the one hand, the document covers some well trod ground. On the other, some business organisations have reacted with concern that this is the beginning of the slide towards compulsion on some rather difficult areas.
The resolution passed in support of the document called upon the UN to monitor business compliance with international treaties governing human rights, labour, environment, consumer protection and anti-corruption laws. Such a move would be the first step towards a global compliance framework.
For many areas covered by the document, the move merely makes real the responsibility of companies as corporate citizens to uphold some of the most fundamental and basic rights that have been agreed as accepted standards for nation states and individuals for decades.
So, for instance, the document says that businesses should not engage in, nor benefit from, war crimes, crimes against humanity, genocide, torture, forced disappearance, forced or compulsory labour, hostage-taking and other international crimes against the human person.
Equally, security arrangements for businesses should observe international human rights as well as the laws and professional standards of the countries in which they operate.
Businesses should not use forced or compulsory labour, or child labour.
No company is likely to dispute these - and it doesn't take a UN document to point out that acting to the contrary would be condemned by all whenever discovered.
However, there are grey areas here as well. whilst stressing the primary responsibility of States to respect human rights - and ensuring that corporations active on their territory do so - the document says that corporations themselves have the obligation within their respective sphere of activity and influence to respect, ensure respect for, prevent abuses of, and promote human rights recognised in international as well as national law.
The definition of 'respective sphere of activity' is one that will focus a great deal of attention. When Talisman was attacked for its activities within the Sudan, the main argument was that its presence provided indirect support and funding for a military government engaged in human rights abuses. The company argued its presence played a constructive role, and it was not directly implicated in any abuses. Eventually it left, making way for the Indian state energy company to enter. Under the wording of this clause, Talisman could have found itself forced to more actively promote human rights or act to intervene 'within its sphere of influence'.
British American Tobacco is currently resisting the push to remove itself from Burma. Similar situation. Same arguments. When politicians have not declared international sanctions against a country, how dare they urge companies to lead the charge by voluntarily pulling out. Could the phrasing of the document as given above - whilst nodding towards the primacy of nation states - nevertheless be used as a tool to force them to be more proactive or suffer the consequences.
Other ticklish areas exist. According to the draft, transnational corporations and other business enterprises 'shall compensate workers with a remuneration that ensures an adequate standard of living for them and their families. Such remuneration shall take due account of their needs for adequate living conditions with a view towards progressive improvement'.
The point of the clause is clear, and should attract widespread support. If the Naomi Klein's of the world are to be proven wrong, the globalisation of business must - over time - lead to an improvement of the living standards of the world's population. Legislating for this to happen is the tricky part. This simple phrase focuses on the outcome - the quality of life for the recipient. One may take for granted that there is an unspoken common-sense clause that says these applies to a full-time job equivalent - rather than suggesting that any part time job should provide a salary calculated to provide for the worker's full needs. But who defines what does or doesn't constitute a living wage is a notoriously controversial question. An obligation on companies to track whatever cost of living increases might occur could easily produce the incentive and rationale for certain players to artificially boost prices knowing the increases would need to be met.
As soon as you start to unpick the process, you end up with apparently absurd situations. But when there are plenty of groups who will hold up wage disparities as being inherently wrong - all the time quoting developing country salaries in a meaningless dollar comparison figure - it should be clear that such a clause will need much better definition to be helpful rather than obstructive.
This does not have the force of law as things stand. According to the commentary with the Draft Norms, "the UN Commission on Human Rights should consider establishing a group of experts, special rapporteur or working group of the commission to receive information and take effective action when businesses fail to comply."
The question is whether or not this is an area where there is a basic question of minimum standards - as opposed to best practice - that should be drawn as a line below which business should not be allowed to fall. There are large parts of the document where that could be answered in the affirmative, although some would argue that those parts are already effectively covered by the fact that nation states that have signed the international treaties have the primary responsibility to enforce them on the companies active in their areas.
But the inclusion within the document of some of the grey areas neither provides decisive and considered answers to the debates that have raged across these areas in recent times nor do they make a new case for why and how minimum standards can be enforced. Sadly, that will simply provide yet another false debate where campaign groups who don't have to work out how to make the guidelines work in practice will embrace them - as they have largely already done - and business organisations who have no place to hide will be put in the position of being perceived to resist human rights - with the implication that they do so because really they want to make a profit by abusing them.
The resolution around the Draft Norms goes to the 53-nation human rights commission in March next year. Expect to hear rather more about them then.
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Business Respect - most recent edition added on 17th August 2008