Business Respect - CSR Dispatches No 68 - 21 Dec 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 events in corporate social responsibility during the previous year.

In the news:

Feature articles on the internet:

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Topics:

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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

As the year comes to a close, we have done our traditional 'review of the year' article, which pulls into one place some of the highlights and lowlights on CSR during 2003. You only have to review the territory that has been covered to see just how much has happened in such a short period of time. Our only regret is not being able to have done justice to all the quiet victories, the impact on the ground, the examples of inspiring leadership that have been just as much a feature of the year. Sadly, such things often don't make the news.

Happy festivities to all those that are celebrating them!

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 21 Dec 2003

Russia: LUKoil to invest in environmental performance

Russian oil giant LUKoil has said it plans to invest around $1bn (34.5bn roubles) in a programme to improve the environmental performance of its core business operations.

The programme includes measures to address eight different areas: Clean Air; Clean Water; Waste;  Reclamation; Accident Suppression and Avoidance; Research and Experimental Activities; Ecological Management; and Ecological Monitoring.

The company said that its priority target is the improvement of waste management. It has already been awarded an iso 14001 accreditation for its environmental management system, which it intends to roll out to its subsidiaries.

LUKoil's action shows the growing profile of social responsibility in Russia, but the company has been the target of criticisms from the environmental movement in recent times, in particular for its drilling activity in the Baltic Sea next to a UN World Heritage site.

The company said, however, that its programme had already achieved huge improvements, with 3700 kilometres of pipeline repaired, a reduction by over 440,000 tonnes of waste stored at its facilities, and 1382 sludge tanks eliminated.

"Prevention of pollution by means of low-waste, environment-friendly technologies is the only way to achieve further significant improvement of the environmental impact of LUKOIL activities. This requires implementation of a clean production strategy, and such a strategy is now the basis of LUKOIL’s environmental policy" it said in a statement."

Dow AgroSciences fined $2m for misleading pesticide labelling

Dow AgroSciences, a subsidiary of Dow Chemical, has been fined $2m in New York for illegal safety claims that may have misled customers about the dangers inherent in the use of the products.

The company said it had settled the case in order to avoid the greater costs of a court case, but denied it had been at fault with its advertising. It said that a previous agreement prohibiting adverts promoting products on the grounds of safety had restricted the company's ability to defend itself, even though it believed all statements it had made were true.

A compliance programme also imposed upon the company will result in a review of all future adverts by Dow in New York leading to the removal of any safety claims.

Diageo to provide data on product labels

Drinks giant Diageo has said that it is to voluntarily print alcohol content and nutional data on the labels of its spirits and other beverages, including brands such as Guinness, Johnnie Walker, Captain Morgan and Smirnoff.

The company said that it would begin the initiative next year, initially providing information on its websites, but then following through with its print promotions and eventually on the product packaging itself.

The announcement co-incided with the action by a number of consumer groups in the US to petition the Treasury Department for a compulsory standard in this area.

Poland: Few firms yet publish environmental or social information

A new survey has shown that no more than 20% of the major banks, financial institutions or listed companies in Poland publish environmental or social information, putting the country firmly in the slow league of European countries in this regard.

The survey, produced by the Gdansk Insitute for Market Economics, reviewed Polish-language information available in the 2002 annual reports and websites of 31 banks, 32 financial institutions and all 201 companies listed on the Warsaw Stock Exchange.

According to the findings, 20 percent of companies state whether or not they comply with industry, national and / or international regulations on environmental standards. 18 percent of listed companies disclose employee development / employee benefit policies, and 16 percent disclose information on community involvement programmes or sponsorships.

The position was rather better with key governance informaiton, with 74 percent providing information on management board structure.

Kenya: Code of Conduct launched for the coffee growers

A new code of practice has been launched by the Kenya Coffee Growers and Employers Association aiming to avoid future boycotts of Kenyan coffee arising from growing ethical concerns.

Speaking at the launch of the code Tom Owuor, the executive director of the Federation of Kenya Employers, said that consumer groups and activists are paying increasing attention to the social standards of exporters, and top brand buyers can run scared if they believe they may be hit by negative publicity.

He said that issues such as pesticide residues, child or forced labour, pollution and labour rights had become a focus of attention, along with working conditins, HIV/AIDS in the workplace and sexual harrassment.

The new code promotes the right to association and collective bargaining, the elimination of compulsory or child labour and the removal of discrimination in the workplace.

India: Coca-Cola ordered to stop extracting water in Kerala

The Kerala High Court has ordered Coca-Cola to stop extracting the ground water for its controversial bottling operations that have seen accusations that the company is draining the region's natural resources and despoiling the environment.

The ruling could end up forcing the plant to close, as alternative sources of the high quantities of water required will be difficult to envisage. It has been given one month to cease its extractions.

The move comes as a major victory for large numbers of local residents that have claimed the company's overconsumption of water was turning their agricultural land into a desert.

Justice K Balakrishnan Nair told the company that it owned the 40 acres of land upon which its plant stood, but not the ground water underneath it, which was a national resource belonging to the entire society.

He said: "Every landowner can draw a 'reasonable' amount of ground water which is necessary for its domestic and agricultural requirements. But here, 510,000 litres of water is extracted per day, converted to products and transported, thus breaking the natural water cycle."

Coca-Cola has continued to deny that it depleted the water reserves, and has said that it will appeal against the order.

The company also announced that it has set up an India advisory board under the chairmanship of former Cabinet secretary Naresh Chandra to guide the company on various issues including future strategies, corporate citizenship, social responsibility and corporate governance. This has led to the creation as well of a high profile India Environment Council, which will be headed by the former chief justice of India, BN Kirpal.

Ghana: President urges mining companies to be good corporate citizens

President John Agyekum Kufuor has called for mining companies to adopt strong principles of corporate citizenship in the way that they deal with the local communities where they operate.

The companies, he said, need to work assiduously with the government ministries and other stakeholders to establish positive outcomes for both the company's economic success and the health of the community.

According to Ghanaweb, the President's intervention was made during a visit from Wayne Murdy, Chairman and CEO of Newmont Mining Corporation, which is expected to invest around $450m in Ghana over the next four years.

Critics of Nike move into selling shoes

Anti-Nike activists are to take their protests about the company to the next level - by producing their own 'black spot' shoes to sell in competition with the famous global brand.

The journal Adbusters - which has for years criticised the corporate world and promoted the defacing of big corporation ads on billboards - is to produce shoes marketing as "being designed for one thing - to kick Phil Knight's [CEO of Nike] ass".

The activists' stated aim is to produce a 'black spot' brand that will be viewed as cooler than Nike. In contrast to ethical companies such as the Body Shop that aimed to create an ethical business model around a specific product sector, the aim and intent seems to be purely an anti-Nike one. The shoe is to be known as "the unswoosher".

The 'black spot' brand relates to the Robert Louis Stevenson invention for his book 'Treasure Island', where the black spot was given to someone that was destined to die.

The move has proven controversial with some of Adbusters' natural allies, who accuse the organisation of 'selling out' and are outraged at the fact that the shoes will be launched with a $250m advertising campaign - to be paid to the advertisers that have so often been the subject of attack.

Business Ethics awards winners announced

US-based Business Ethics magazine has announced the winners of its annual awards, which cover four separate categories covering environmental performance and social impact.

3M Co. won the Environmental Excellence Award. The magazine said the company has been committed to waste reduction for many decades and has taken its commitment into new areas, such as designing with the environment in mind.

Baxter Healthcare Corp. in Deerfield, Ill., won the Environmental Reporting Award, by not just reporting good news, but also admitting when it falls short of its environmental goals.

Organic Valley, a a provider of organic products based in LaFarge, Wis., was given the living economy award, which was designed to honour smaller firms.

The Antioch Co. in Yellow Springs, Ohio, received the Social Legacy Award for being an employee-owned firm, ensuring that its social responsible mission will continue even if the company's founders leave the business.

Malawi: Vice President launches Global Compact

Vice President Justin Malewezi has launched the Global Compact in Malawi, adding the country to the growing number of African nations that have built business networks around the Compact, including South Africa, Mozambique and Lesotho.

Speaking at the launch, he said: "There is no doubt that for Malawi to grow, we must develop economically, but we must be careful that in developing our economy, we do not do so at the expense of the soil on which we walk and plant our crops, the air that we breathe, the water that we drink and, most importantly, the well-being of the people on whom we depend."

Businesses will come together in a learning forum, and seek to build public and private sector collaboration on matters of sustainable development.

Responsible gambling promoted by casino bosses

The American Gaming Association, the industry association for US casinos, has launched its code of conduct for its members to target problems with compulsive gambling in a move that takes the industry's commitments beyond legislative compliance.

The code of conduct includes mandatory training in responsible gambling for new employees, information for gamblers on the probabilities of winning or losing at specific games, and exclusion programmes for known problem gamblers. It also includes a requirement that advertising for casinos should include a hotline number.

Members of the Association are expected to comply with the code within the next year.

Although the industry has escaped the kind of profile recently meted out to food companies over allegations of promoting obesity, there have been some cases of gamblers filing lawsuits against casinos claiming that the company's knowingly encouraged their addiction.

The code has received a welcome from some groups concerned with the effects of gambling, although others have been more critical. The National Coalition Against Legalised Gambling said that the code did not go far enough in seeking to prevent addiction.

CSR FEATURES from the Internet

The business of social inclusion - 17 Dec 2003 FROM Crikey, Australia

“Who said profit was the only goal of an organisation?”
 
Gathered in a room on level 60 of Governor Phillip Tower in Sydney, the 60-odd attendees fell silent. This was obviously a question Anant G. Nadkarni had asked before. He looked expectantly, or perhaps hopefully, around the room. He delivered a follow-up.

Read full story

Investing in a reputation - 14 Dec 2003 FROM Herald Sun

IF you own shares, should your business be maximising profits or spending up big on generous maternity-leave payments, environmental initiatives and expensive corporate governance systems?

Or can companies treat their staff well, be environmentally friendly, run strong governance systems and still make lots of money? Noel Purcell, Westpac's group general manager of stakeholder communications, says yes.

Read full story

The Goal: 'Sweatshop Free.' The Problem: Defining It - 14 Dec 2003 FROM The New York Times

Shoppers buy vegetables that are grown without pesticides and order cappuccinos that promise a greater share of profits for the coffee harvester. But can that concern for the means of production translate into the way people buy clothing?

Since the beginning of 2002, three companies have been set up that promote their apparel as sweatshop free, on the assumption that tales of exhausted, underpaid workers making shirts and pants are repellent to many shoppers. But defining "sweatshop free" is not simple. Although there is talk of adopting industrywide standards, the solution now being used by companies that define themselves as sweatshop free is transparent production, which means making it clear where clothing is made, and how.

Read full story

Japan slow to pick up on ethical investment - 11 Dec 2003 FROM Forbes

Recent scandals -- from wiretapping allegations at Takefuji Corp, Japan's biggest consumer finance firm, to sales of tainted milk by Snow Brand Milk Products and falsified safety data at nuclear power plants -- have outraged the public and highlighted a lack of social responsibility at Japanese firms.

One problem may be the absence of shareholder pressure in Japan for so-called "ethical investments", in comparison to other developed countries where there are plenty of investors looking not just for good returns, but good returns from firms that do not damage the environment or harm society in other ways.

Read full story

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Corporate Social Responsibility in 2003 - A review of the year

Article by Mallen Baker

2003 has been a fascinating year for those of us involved in the movement for corporate social responsibility. There have been scandals and setbacks, controversy and debate, paragons of good practice, and innovation in tools to manage and benchmark progress. It seems that none of the energy or momentum for improvement has diminished. And yet there is a gradual growing maturity in how CSR is described and put into practice.

At the start of the year, the Nike v Kasky case got into full swing when the US Supreme Court agreed to review the California Court's decision. Opponents of the principle of the Kasky case - that corporate representations on issues around their conduct enjoyed less protection under freedom of speech than that afforded to the critics - were hopeful this move would lead to the case being thrown out.

Various companies watched nervously from the sidelines as a range of organisations that have championed the principles behind open disclosure weighed in to lobby for the case to be defeated. In the end, of course, the Supreme Court had tantalised to no great effect - deciding only to not decide for the time being. Faced with an extended process that could easily have seen a barrage of damaging publicity about past practice and mistakes, Nike settled - leaving the principles of the case wide open.

On the one hand, those concerned for future accountability retain cause for concern. In spite of the settlement, Nike are not going ahead with their public reporting. On the other hand, there has not yet been the unleashing of a flood of copycat actions targeting any and every challengeable public pronouncement. The key word in that last sentence is 'yet', of course.

Nestle settled its claim against the Ethiopian government, digging itself out of its hole by agreeing to take only $1.5m instead of the $6m it had initially demanded, and then immediately donating this sum to famine relief in the poverty-stricken country. The company had received a barrage of negative publicity for its action, although it stuck to its principle that a government should not be sent the signal that it can simply move in and nationalise a company's operations with no compensation whatsoever. It had a strong point - but lost the public sympathy nonetheless. It was not helped by yet another report, this time published in the British Medical Journal, that alleged continuing violations of codes of practice on baby milk substitutes.

In the UK, Business in the Community launched the results of the first Corporate Responsibility Index, ranking 122 participant companies into quintiles based on their management of social responsibility. The Index made an immediate impact, with a number of high-scoring companies celebrating their good performance with references on their website and in their subsequent reports. On the other side, some companies that found themselves less highly placed were shaken into response - either to promise to improve, or to attack the index methodology (the latter generally from media companies, who claimed that the benefit to society of their core activities was not properly captured).

The Ethical Trading Initiative saw a little turbulence when Littlewoods - a founding member - dropped out of the initiative following a management takeover. The NGO heads involved with the ETI immediately raised questions about the risk of taking part in such programmes when they immediately and publicly attacked the company rather more vociferously than they had ever attacked companies that had never been supporters in the first place. Littlewoods survived the assault just fine - although the experience probably won't lead them to review their decision any time soon.

The momentum against companies associated with the growing problem of obesity increased, with a second lawsuit against McDonald's where some of the overweight citizens of New York decided the company's advertising had mislead them into believing its burgers were healthier than they really were. The case was thrown out - but the concept of corporate responsibility for obesity had been planted in the mind of the public, and generated a series of articles, comments and threatened legislation in different parts of the world.

Having held out for some time, companies joined a growing retreat from some of the most dubious countries for human rights violations. First of all, Saks Inc announced a policy against sourcing products for its ten major retail chains from Burma. Then, Lundin Petroleum - having said for months that it would not follow Talisman Energy out of the Sudan - did just that. Travel group Kuoni announced that it would remove Burma from its 2004 travel brochure. JJB Sports said it would withdraw stock manufactured in Burma. Eventually the highest profile hold-out of them all, British American Tobacco, caved to the pressure and said that it too would pull out of Burma. Ironically, according to the Business Respect poll, 68 percent of people thought that all of these companies should have stayed and tried to use their influence to make things better!

Needless to say, there was a steady stream of stories on the tobacco front. Pakistan Tobacco shocked and annoyed its critics by announcing that it was to voluntarily halt its advertising in electronic media in order to meet the 'reasonable expectations of society'. Too little too late, said the critics, as they did later when Philip Morris International began to include extra, detailed information on the health impacts of smoking in its packaging. BAT provoked outrage when it donated money to the University of Capetown - mirroring a similar situation the previous year when the lucky recipient had been the department of corporate social responsibility in Nottingham University. The companies continued to get hammered by lawsuits, with Philip Morris in particular facing at one point an astonishing $10bn penalty for failing to effectively communicate risks attached with 'light' cigarettes. Such figures have generally been reduced on appeal, and yet provide a spectre that hovers over the industry.

Companies also stepped up to the challenge of HIV/AIDS in Africa, with companies such as Gold Fields, Anglo American and others extended their initial support in providing anti-retroviral drugs for their employees to the families of those employees, and increasingly out into the local communities as well. The pharmaceutical companies made further concessions as well. GlaxoSmithKline, for instance, reduced the price of Combivir by nearly 50 percent to 90 cents per day.

On the downside, companies found themselves constantly in hot water over the issue of Executive Remuneration, with grumbles about inflated pay and benefits deals rising to a steady roar, and culminating in the UK in the first ever instance of such a deal actually being voted down at the AGM - that dubious honour going to GlaxoSmithKline.

Governance generally saw considerable focus around the world. Sarbanes-Oxley continued to have reverberations in how US corporations conduct themselves. In the UK, the Higgs Report on the role of non-executive directors was met with controversy, but the main principles made it nonetheless into the revised Combined Code. In South Africa, listed companies were told that they had to comply with the King 2 Report. Unilever, however, managed to turn the debate on its head by complaining that shareholders needed to be more active - urging more of them to actually vote at its AGM.

In amongst these, there were lawsuits flying around thick and fast, companies that joined the roll-call of corruption and bad practice, and to balance that hosts of awards that saw companies celebrated for good practice. This included the first year that the Business Ethics Awards saw a host of small companies honoured, and the inauguration of the Asian Forum on CSR Awards. Construction firm Carillion became Business in the Community's Company of the Year, and Westpac topped the bill at just about everything it took part in.

More companies produced social and environmental reports this year than in any previous year - and the debate about the future of reporting started to seriously question whether the existing model was really a sustainable activity for business. New tools and standards appeared, or are promised, with the UN Norms on business and human rights and the iso standard on CSR being two cases in point.

So that was the year that was. The real question of interest must be what all this says about what is likely to happen next ...

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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