Business Respect - CSR Dispatches No 67 - 30 Nov 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 state of corporate social responsibility in South Korea following its recent International Symposium.

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/67.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

A slight one-day delay in getting this issue out - not because Mallen was returning from South Korea this weekend, where he'd been speaking at the International Symposium on Strategic Approaches to CSR there - that was all planned and accounted for. But because of the crumbling, disgraceful transport infrastructure in the UK meaning that the original plan to finish off with the main article for this issue on the train could not be done - since said train was actually a replacement bus!

As for the event itself, it was interesting to get a sense of where things stand for businesses based in South Korea. The Beautiful Foundation, the organisers of the event, were excellent and attentive hosts, and had a really impressive story to tell in terms of the work they have been doing to introduce a sharing culture into Korea. More about this event in the main feature for this issue.

Meanwhile, as you will see in the news stories, PwC have joined the list of companies pulling out of Burma. Funnily enough, by an overwhelming majority on the website vote as it currently stands, you don't think they should have. The current position is:

In countries like Burma or Sudan where there are huge human rights challenges, companies should:
Withdraw - no company with a conscience should do business there - 138 (24%)
Do business there - but use its influence to try to make things better - 396 (69%)
Do business there - and keep out of interfering in politics - 40 (7%)

574 people have voted in total.

In the mean time, we still haven't managed to get our first translated pages actually up onto the website. The things are going at the moment, it may well turn out to be an investment of time over Christmas that does it!

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 30 Nov 2003

China: Government to clean up fireworks industry

The Chinese government has said that it will take measures to improve practices in its fireworks industry, which this year has seen a spate of accidents.

According to the official Xinhua news agency, the government will shut down dangerous factories and those employing under-age workers. It blamed an increase in the illegal production of fireworks for the increase in accidents. So far this year, 209 people were killed in fireworks explosions.

There has been an unsuccessful campaign to improve safety in the industry following the explosion two years ago that killed 42 people, mostly children.

The responsibility for the lack of improvement is being placed on grass-roots officials who often protect local industry."

HSBC launches fund for victims of Istanbul tragedy

HSBC has launched a US$1 million staff welfare fund to help the families of staff who were bereaved or injured in the Istanbul bomb blasts. The Group is also establishing a community relief scheme to help local businesses.

Three members of HSBC staff died in the blasts in Istanbul and a total of 43 were injured.

The HSBC Turkey Staff Memorial Fund will raise money to support the families who have lost loved ones, fund education for the children who have lost parents, and help staff who were injured, some seriously, in the bomb blasts. HSBC will make a donation of US$1 million to launch the fund, which will also be available to donations from employees of the Group worldwide and the general public.

HSBC in Turkey is also establishing a Local Community Relief Scheme for businesses in Istanbul that have been devastated by the bomb blasts. The scheme will help to support repair work, re-stocking, and other issues associated with the loss of custom that these businesses have suffered.

Group chief executive Stephen Green said: "HSBC remains fully committed to developing its business in Turkey. For the business there to be operating at near-full capacity is an outstanding achievement and a testament to the incredible courage and commitment of our colleagues. I would like to thank them on behalf of everyone at HSBC."

Japan: Former Chinese slave labourers to sue Mitsubishi Corp

Ten Chinese people who were forced to work as slave labourers by Japan during the war are to sue Mitsubishi Corp, as well as the Japanese Government.

The suit asks the company to acknowledge the fact that the labourers were maltreated, to apologise to the victims and their relatives, and to pay compensation.

The ten were forced to work in coal mines owned by the company, along with around 800 other Chinese civilians of whom 96 died of overwork and 27 were killed by the Nagasaki nuclear bombing when they were thrown into jail in the area.

According to Beijing News, the victims said they had lodged complaints with Mitsubishi last year, but the company rejected their claim saying it bore no responsibility since it was national policy to employ Chinese labourers.

PricewaterhouseCoopers joins the retreat from Burma

PricewaterhouseCoopers has withdrawn from interests in Burma joining the growing list of companies that have pulled out from the regime, according to the Burma Campaign UK.

The move was confirmed in a letter to the campaign from PwC that said that a member of the PwC network of firms had held an ownership interest in Burma's PricewaterhouseCoopers Hla Tun Consultants Ltd, but that this stake has now been divested.

"This is excellent news," said John Jackson, Director of the Burma Campaign UK. "Foreign investment has played a key role in keeping Burma's dictatorship in power. With PwC pulling out yet another potential source of revenue for the regime has been cut off."

South Africa: Environmental law to make mining more expensive

The cost of mining in South Africa is set to increase significantly, with companies likely to need to pay for insurance cover for directors who are now at risk of personal liability claims against them for environmental offences by their company.

The new measurs will come in under the Mineral and Petroleum Resources Development Bill, expected next year. It proposes that directors should be held 'jointly and severally liable for any unacceptable negative impact on the environment'.

According to Business Day, the law may find application through the courts somewhat difficult, and there are a number that will initially dispute whether the controversial clause is constitutional.

However, it reported that the minerals and energy department's chief director, Jacinto Rocha, said the legislation was in line with best practice and was a warning to companies that they "won't get away if they mess up the environment".

Australia: Top companies not yet complying with risk management rules

Most top companies have failed to embrace the new risk management guidelines introduced by the Australian Stock Exchange, according to Deloitte Touche Tohmatsu.

The statement was made as the Group of 100, which is constituted of Australia's top finance executives, launched a guide to risk management procedures that should help companies to turn the broad principles set out by the ASX corporate governance council into formal practice.

At their first financial result after December 31, the chief executives and chief financial officers of listed companies will have to vouch that their firm has procedures that can identify and manage financial, strategic, legal and other risks, when they sign off on the company accounts.

According to 'The Australian', the ASX goes further than its US equivalent Sarbanes-Oxley in requiring that CEOs and CFOs vouch for risk management over the whole year and requires the inclusion of joint ventures and other associated companies in a firm's risk management procedures.

UK: Work-life balance employers of the year announced

Companies ranging from a small engineering company through to the Central Scotland Forest Trust have been named as Employers of the Year in the 'Parents at Work' awards. The awards are designed to reward innovation and creative thinking in work-life balance.

The winners are:

The BT Carers in Employment Award, in association with Carers UK - Telford and Wrekin Borough Council
The Ford Motor Company Driving Diversity Award - The Birmingham and Solihull Job Centre Plus
The Lloyds TSB Scotland Scottish Award - Central Scotland Forest Trust
The NSPCC Family Friendly Award (joint winners) - Happy Computers and Telford and Wrekin Borough Council
The PARENTS AT WORK Innovation Award (joint winners) - Citigroup and Farrelly Engineering & Facilities

Work-life balance at the Central Scotland Forest Trust has seen a new working culture at the Trust and work-life balance is now firmly embedded throughout the organisation. Everyone - from the management team to the cleaning team - uses the highly flexible working patterns.

Citigroup's Symmetry suite of work-life balance options include emergency back-up childcare, flexible working, multi-faith rooms and four CitiDifference diversity networks.

No one is allowed to start work before 8.30am or work later than 5pm at Farrelly Facilities & Engineering Ltd. Employees are not allowed to take work home with them either. These rules are just part of Farrelly's extensive work-life balance policies which they say have drastically reduced staff turnover and contributed to sales figures which more than doubled last year. They make a clear link with customer service: "employees who are treated well, will treat customers well," says Gerry Farrelly.

London computer training company Happy Computers pride themselves on never having turned down a flexible working request. One employee has all the school holidays off, another - a father - works a seven day fortnight so he can share childcare with his wife.

Jobcentre Plus in Birmingham and Solihull has found that its 'Diversity with Purpose' strategy, which includes a comprehensive range of work-life balance policies, has helped it to attract and recruit a diverse workforce which is more representative of its customers, as well enabling new opening hours.

At the Borough of Telford & Wrekin the workforce has become mainly part-time since flexible working was introduced. This has led to increased service provision and 3% staff turnover, as well as increased flexibility for carers and parents alike.

US; Alcohol companies targeted for under-age drinking lawsuit

Major drinks companies Brown-Forman and Diageo have said that they intend to vigorously contest a class-action lawsuit alleging that they have deliberately marketed to under-age drinkers.

The suit has been filed in the Washington DC Superior Court by plastic surgeon Ayman Hakki, and seeks punitive damages equivalent to all sales to under-age drinkers during the past 21 years.

The suit says that alcohol use by children has reached 'epidemic proportions' - and much of this is attributable to advertising campaigns that target them seeking to establish early brand loyalty.

Brown-Forman pointed out that the model in the advert quoted by the suit was over 30, and was in a magazine predominantly read by its real target group, 24 to 39 year old professional women.

Diageo was criticised, amongst other things, for using the image of 'the Captain' to promote its Captain Morgan rum brand. The company said it had always acted responsibly towards the issue.

The lawsuit seems unlikely to succeed, since the premise of the case that there has been a deliberate strategy on the part of the industry would be extremely difficult to prove. The publicity around the case will likely still damage the industry's reputation, however.

UN Global Compact responds to BHP Billiton collective bargaining issue

The UN Global Compact has given a general indication that it supports the points made by labour unions about BHP Billiton's approach to collective bargaining, and is encouraging the company to resolve the issue. The UN has also offered to send representatives from the International Labour Organisation to advise.

The move follows the recent highlighting of the issue by labour unions during the company's AGM. They have argued that BHP Billiton's use of individual employment contracts puts it in violation of the UN Global Compact, which they have signed.

The Global Compact's George Kell has now implicitly supported the move, saying that collective bargaining and freedom of assocation are core principles of the Compact, and need to be observed. He said that a letter had been sent to the company outlining this.

The UN Global Compact has been controversial amonst some NGOs for being perceived to lack teeth and being a purely voluntary agreement. This case is the first real test for the Compact as to how it may be used to pressure companies to act according to its principles.

Petro-Canada urges slower Kyoto implementation

Ron Brenneman, the chief executive of Petro-Canada, has said that the incoming prime minister Paul Martin should slow Canada's implementation of the Kyoto Protocol on greenhouse gas emissions.

According to the Toronto Star, Brenneman raised the issue during a speech to a Canadian Club lunch in Montreal, saying that in recent discussions with Martin he had formed the view that there was a clear understanding 'how critical it is to foster private-sector innovation ... to address these daunting challenges'.

Brenneman went on to criticise the approach to the issue taken by Jean Chrétien for being overly prescriptive. Companies such as Petro-Canada are being required to reduce emissions within a tight timescale. Instead, he said, companies should be allowed to find more creative solutions.

Chevron Nigeria wins US State corporate excellence award

Chevron Nigeria has won the US Secretary of State's Award for Corporate Excellence for what is described as "it's exemplary commitment to the well being of the people of the Niger Delta and dedication to the ideals of corporate responsibility".

The award aims to promote the activity of multinational US companies in pursuing an active corporate citizenship agenda. 48 companies had been nominated overall this year.

In making the award, Secretary of State Colin Powell said: "We applaud Chevron Nigeria's commitment to its employees and to the people of the Niger Delta. More than a good corporate citizen, Chevron Nigeria is a good neighbour, and a role model of excellence and trust".

The company was particularly commended for its approach to HIV/AIDS in Nigeria, and other programmes, such as the airlifting to safety of thousands of villagers during the Niger Delta conflicts earlier this year.

European Commission to produce white paper on CSR

Following the recent 'green paper' on corporate social responsibility, the European Commission has announced that it will produce a 'white paper' - firming up policy proposals - in November next year.

The white paper will be produced after evaluation of the results of the EC multi-stakeholder forum are published in the summer. It is likely to stir once again the concerns around how far the EC is intending to go along the road to European-wide legislation imposing further controls on the activities of business.

The green paper took a fairly hands-off approach, advocating voluntary action rather than new regulations. However, a determined body of anti-business campaigners are expected to focus on the move to make progress in arguing the case for greater controls.

Japan: Business federation opposes carbon tax

Nippon Keidanren, the Japan Business Federation, has told the government that a proposed carbon tax designed to help Japan meet its Kyoto Protocol targets would have an adverse effect on business.

During a meeting between Hiroshi Okuda, chairman of the business group, and the Environment Minister Yuriko Koike, Okuda said that the new tax would knock the economy back just as it is starting to show signs of recovery.

The carbon tax would be imposed on fossil fuels whose carbon content adds to the emissions of greenhouse gases that are believed to lead to climate change. It would be charged to importers and processors of fuel, making it easier to collect. The charges would almost certainly be passed on to end consumers in higher prices.

Japan has promised a reduction of emissions of 6 percent below 1990 levels within the next few years.

CSR FEATURES from the Internet

Capitalism with a human face - 27 Nov 2003 FROM The Indian Express

In the past few years there has been much talk about ‘corporate social responsibility’ (CSR). It has become a leading topic at World Economic Forum meetings. Economist Adam Smith, who wrote the bible of capitalism, Wealth of Nations, more importantly also wrote A Theory of Moral Sentiments. In it he emphasised sympathy and a proper regard for others was the basis of civilised society. Mahatma Gandhi believed in the trusteeship model, whereby the wealth you create has to be ploughed back for the benefit of society.

Read full story

Middle East workplace safety culture under the spotlight - 27 Nov 2003 FROM Ame Info

Middle East managers and board directors are being urged to bring credibility to the region's neglected workplace safety culture.

In the new era of corporate governance everyone from the plant level superintendent to the chairman or president of major corporations should be questioning the soundness - or even existence - of their safety programmes.

Read full story

Why capitalism is always suspected - 26 Nov 2003 FROM Desert Dispatches

Few people who criticize corporate crime mention that we hardly have a genuine free market in place anywhere on earth. So, business corporations operate, as does the rest of commerce, in a mixed economy, with substantial government intervention -- taxation, regulation, protection -- thoroughly diluting the free-market process.

Indeed, it is nearly impossible to tell whether a corporate crime amounts to something really wrong or something merely displeasing to those who have managed to get laws and regulations passed favoring their special agenda or to those who have learned to depend too much on regulators to look out for their own lot. And business corporations are operated in large measure by making deals not with customers and fellow businesses but with government bureaucrats.

Read full story

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Korea explores the beauty of corporate community investment

Article by Mallen Baker

Corporate Social Responsibility in South Korea remains predominantly defined by philanthropy. The focus of the International Symposium held by the Beautiful Foundation, the fast emerging leading not-for-profit organisation in Seoul, certainly reinforced this.

There is now some research to try to identify what the top Korean companies are doing. From a survey of 45 large companies, 41 said that they were involved with philanthropic activity to a significant extent. 34 percent of them actually had established a department to manage these community donations – although generally of less than three people.

The majority of this activity is sponsorship. Many donate to charitable institutions. By and large, the support given is quite short term – under one month. Strategic partnerships with community organisations are the exception rather than the rule.

That isn’t to say it doesn’t happen. Ongoing partnerships with not-for-profits have been formed by a number of Korean companies – notably Cheil Industries, LG Evergreen FD, Yuhan Kimberly, AmorePacific, CJ, Kyobo and Hanwha. Hyundai and Samsung are frequent names that crop up in such discussions also.

58 percent said that they engaged in some form of employee volunteering, although it seemed likely that the scale of this activity remains rather small in many of the companies. 48 percent of the companies said they had ‘at least one’ volunteer team. Management participation in such activity was seen as being rather light – at less than 10 percent involvement.

Why do the companies get involved? The three top reasons given are:

1. To fulfil what they perceive to be their social responsibility
2. Through a wish to help the needy
3. To promote solidarity amongst employees

The main obstacles to involvement are ones that will be recognised by community affairs managers across the world – namely limitations of budget, and difficulties of getting top level buy-in within the organisation.

The average amount donated by companies came between 5 and 9bn Korean Won. However, it was noted that in some instances, companies were prone to mark down the payment of bribes as gifts or grant, which makes the true figure hard to establish.

One example of the kind of work companies are doing is Kepco’s involvement in the ‘Missing Child’ campaign. Korea Power Corporation (Kepco) is Korea’s biggest public utility company. The company responded to a difficult problem, whereby children that have difficulty expressing themselves or with a disability often become long-term missing children. Kepco has been working since 1999 with the Korea Welfare Foundation to address this.

Photos of 3 missing children and contact information are printed on the company’s monthly electricity bills, as well as in its bi-monthly magazine. As a result of the high profile achieved with this approach, 65 children out of 153 have been returned to their parents.

Another case in point is Citigroup, which participates in a broad range of community building activities, including the financing of affordable housing, micro lending programmes, supporting financial education and helping to boost the robustness of the management of NGOs. The latter included a financial management camp for 200 NGO female leaders, covering basic accounting, financial management, tax law and working with private business and government.

The organisers of the Symposium, the Beautiful Foundation, are clearly determined to ensure that the CSR agenda is driven forward in Korea. The organisation is showing energy and innovation in the way that it brings an agenda for greater sharing in Korea generally, such as through its charity shops The Beautiful Store, which are the first such shops in Korea. Its focus currently is that of community involvement – ‘spending money in a beautiful way’. But some of the themes around the conference show that it won’t be long before CSR is also moving onto the territory of ‘making money in a beautiful way’ too.

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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