Business Respect - CSR Dispatches No 75 - 13 Jun 2004

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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 challenge some of the hysteria over the role of the corporate sector in the obesity debate.

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/75.html.

Copyright 2004 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

Corporate social responsibility has been at the source of a frantic debate over the last month - the focus of which has been the rising levels in many parts of the world of both child and adult obesity. What have the companies done to cause this? What should they be doing about it? To see recent coverage, you would think that it was all part of an evil masterplan of the burger and chocolate companies to destroy the health of the nation as the first stage of world conquest. We push back a little at the tone of the debate.

And we almost never do that, of course, without asking you what you think about it as well. So as of today, the website poll has now been updated to ask:

The rising obesity problems in many countries will best be solved by:

1. New legislation to force food companies to reform their ways
2. People taking personal responsibility for themselves and their families - we don't need people telling us how to live our lives
3. All organisations, public and private sector, working together voluntarily to change behaviour

Needless to say, these polls are just an indication of people's mood and interpretation - no poll this simple will capture all the available options!

That therefore brings the most recent poll to a close. You're remember, the question went: Why should businesses engage in corporate social responsibility?

The final tally is:

They should do only those things that are supported by a solid business case 100 (14%)
They should do a range of things relevent to their impact whether or not there is a business case 422 (60%)
They should only do things because it is the right thing to do - if there is a business case that's not CSR 188 (26%)

710 people voted and, as ever, thanks to all of you that took part.

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 13 Jun 2004

Vietnam: Top oil and gas executives arrested for corruption scandal

The deputy general director of oil and gas company Vietsovpetro, Duong Quoc Ha, has been arrested for corruption - becoming the sixth senior executive to be held in the affair.

Vietsovpetro, a joint venture between PetroVietnam and Zarubezneheft, allegedly saw millions of dollars disappear through fabricated oil rig housing contracts.

The arrest follows a number of others, including the deputy general director of PetroVietnam Nguyen Quang Thuong and the Interpret construction company chairman Tran Ngoc Giao.

According to Viet Nam News, the contracts were inflated by nearly $2m. More than 40 people are said to have been involved.

NGOs attack Equator Principles for being ineffective

The Equator Principles, the corporate responsibility framework for financial institutions for their project financing, has come under attack by a BankTrack, a group of nongovernmental organisations (NGOs) for having made little difference to business behaviour.

In a report timed to coincide with the first anniversary of the Principles, BankTrack said that the signatories to the Principles have not shown any degree of compliance with the set standards. The companies, it said, continue to finance projects that cannot be justified, and there is an ongoing lack of transparency about the implementation of the Principles.

Specific projects that come under criticism include the Baku-Tbilisi-Ceyhan (BTC) oil pipeline in Turkey where the authors said the 9 signatory banks supporting the project had patently failed the key tests laid out by the Principles. Key companies had also lobbied the World Bank to reject, according to the authors, pro-poor reforms.

The banks and the IFC, which created the Principles, have rejected the criticism regarding the pipeline. The IFC says on its website: "The banks involved in the financing evaluated the criticisms and conducted extensive due diligence on environmental and social issues with BP as well as with IFC and other agencies involved in the financing. As a result of their evaluations, eight banks which have adopted the Equator Principles concluded that the project had complied with IFC Safeguard Policies and the Equator Principles. Mott MacDonald confirmed this assessment. The IFC Board also concluded that its Safeguard Policies had been met. US Eximbank, which effectively applies IFC Safeguard Policies, came to the same conclusion, and the project was also approved by EBRD, OPIC and four other export credit agencies.

"BTC is the first major application of the Equator Principles. Because the Safeguard Policies referenced in the Equator Principles are processes and questions to be asked, they require significant judgment on the part of the banks. This means that, in spite of intensive work and good faith by all parties, people can differ on their conclusions. In this case, while some NGOs have a different view, the private-sector banks, the multilateral and bilateral agencies, the sponsors and the host governments all believe that this project incorporates significant measures to respect the environment and social concerns, and should go forward".

Canada: Zenon Environmental tops Corporate Knights list again

Canada's 'Corporate Knights' listing of the top 50 socially responsible companies has been released, and shows Zenon Environmental on top of the list again - the company has achieved the number one slot both years it has participated.

The other leading companies included MDS Inc, Alcan, Dofasco, Tembec, the Bank of Montreal, the Royal Bank of Canada, Transalta Corporation, Great West Lifeco and Suncor Energy.

Corporate Knights said it was proud to recognise Zenon's leadership position. "After all, the company’s business could not be any cleaner: they purify the world’s most essential resource - water - without using any chemicals. Maurice Strong, the don of Sustainable Development sits on its board of directors.

"While Zenon scored almost perfect in all seven categories, it just takes one misstep to fall from grace. It’s not enough to just have a nice environmentally friendly product; you have to be good across the board. We are proud to have Zenon make top spot, as it goes beyond the standard we expect of a Corporate Knight to being part of the restorative economy, a company that instead of leaving footprints is filling them in".

Andrew Benedek, chairman and CEO of Zenon, said: "We are extremely proud to have been chosen twice for this distinction. There are many good corporate citizens in this country, showing that socially responsible companies can also be profitable ones."

Companies are scored across seven categories, five of which were sourced from Innovest Strategic Value Advisors, an internationally recognized research firm - Environment, International Stakeholder Relations/Human Rights, Product Safety and Business Practices, Community Relations and Employee Relations/Diversity in the Workplace.

For more info, see http://www.corporateknights.ca/best50/index.asp

South Africa: Anglo American disappointed with HIV support response

Anglo American has said that it is disappointed with a slow start to its programme of voluntary counselling and testing for HIV/AIDS offered to staff. In its latest social report, the company has said that only 1,500 staff are currently on the programme, even though there is an estimated one in four affected by the illness.

Anglo American corporate affairs director Michael Spicer said: "Where management has built up trust with unions and with the workforce, there has been a higher take-up level. Some coal mines, for example, have quite a high take-up level." Workers that undergo the treatment show around 90 percent return to work.

Estimates would place around 30,000 exployees onto a programme of drug assistance eventually.

The company said that, in spite of the initial difficulties, the programme remains "totally the right thing to do".

Colombia: BHP Billiton under fire on human rights

BHP Billiton has been attacked by a coalition of NGOs over its Cerrejon Norte coal mine in Colombia and, what the NGOs say is the imminent forcible displacement of inigenous communities.

The Mineral Policy Institute, Friends of the Earth Australia and United States NGO PressurePoint said that the company intended no compensation to Wayuu and Afro Colombian communities that would be moved to make way for the expansion of the mine.

PressurePoint said it had found systematic human rights abuses in addition to environmental destruction at the site.

Russia: Major companies struggle with social responsibilty

A corporate social responsibility seminar has been told that large Russian companies shoulder a "disproportionate" burden of social responsibility, with many being the only large employer in their towns and carrying a significant load in supporting essential services and infrastructure.

Alexander Shokhin, the head of the supervisory council at Renaissance Capital suggested that Russian companies were more responsible than many of the Western counterparts that made a great deal more of their activities.

Shokhin said that businesses needed to move away from a belief that social responsibility is defined by charitable activity. Russia had to embrace definitions that included environmental protection, human rights and support for the fabric of society.

Africa: Water Exchange project launched by World Economic Forum

The World Economic Forum has launched a new initiative to bring together public-private partnerships for the creations of water projects in Africa.

The project was launched by Mozambique's President Joaquim Chissano and Gugu Moloi, CEO of Umgeni Water, at the opening of the Africa Economic Summit.

Water project partnerships have been established in a number of African countries, such as Mozambique, Nigeria, South Africa, Malawi, Tanzania and Kenya. These include, for example, a major programme for 16 bottling plants in Nigeria and a water recycling project in industrial development zones in South Africa.

Companies leading the initiative include Alcan and RWE/Thames Water.

Travis Engen, CEO of Alcan said: "At Alcan, we now know that whether we are managing a watershed or a harbour, we have an inescapable duty to the larger community. Today no nation, no company, no individual has the right to create wealth at any cost."

Japan: Nippon Credit Bank executives found guilty of hiding losses

Three former executives of the Nippon Credit Bank have been found guilty of hiding around 159 bn yen in losses, but have escaped with a suspended sentence.

The guilty verdict, nevertheless, suggests that the former role of the government in supporting banks with bad loans has now come to an end.

The former chairman, Hiroshi Kubota was sentenced to 16 months in prison, suspended for three years for making false reports. He argued in court that the charges were unfair - he had taken the bank on at a difficult time, and government policy towards the handling of banking losses had changed rapidly from one of support to one of punishment. The bank finally collapsed in 1998.

GlaxoSmithKline faces charges that it withheld key product information

GlaxoSmithKline has been accused of misleading consumers and effectively committing fraud by keeping quiet about clinical studies that suggested that the company's antidepressant Paxil may have issues around safety and effectiveness.

New York state Attorney General Eliot Spitzer has filed a civil lawsuit, suggesting that the company kept back negative information that applied particularly when the drug is used to treat children. The company promoted the positive results that had come from a single study, but ignored four others.

In 1998, an internal document seemed to suggest that the company would control the release of information to avoid a negative impact on financial performance.

GlaxoSmithKline disputes the allegations, and says that it has acted responsibly throughout. It says that the memo in question does not reflect the company's position, either past or present.

China: Eleventh richest businessman jailed for stock market fraud

Zhou Zhengyi, one of China's most senior business leaders, has been given three years in jail for stock market fraud following a secret trial.

Commentators immediately remarked upon the relative lightness of the sentence - some other corruption cases have seen the use of the death penalty - giving rise to speculation that some sort of deal has been done to implicate others that have also been involved.

Zhou was arrested last year on charges of manipulating share prices and falsifying registered capital reports. The charges followed an investigation into loans he procured from Bank of China worth 2bn yuan.

Other potential charges have not been pursued. For instance, a case had been brought by over 2,000 people last year alleging collusion between Zhou's company and local government officials to take over homes without adequate compensation to their owners.

Italy: Prosecutors seek to bring charges over Parmalat

Twenty nine individuals and three financial institutions potentially face trial over the collapse of Italian food company Parmalat.

Amongst those likely to be indicted is the company's founder, Calisto Tanzi, who has already confessed that he shifted money into family-controlled companies. Bank of America is also in the firing line, although the company denies any involvement in wrongdoing.

A previous attempt to indict the same people failed earlier this year when the judge decided that there was insufficient evidence to justify the case progressing. A closed-door hearing will now take place to decide whether the case should proceed.

CSR FEATURES from the Internet

CEOs heading to unique global summit - 3 Jun 2004 FROM Globe & Mail

Nexen Inc. of Calgary has been pumping oil out of Yemen for a decade without a single interruption -- and president Charles Fischer says that's no coincidence.

For Mr. Fischer, the unimpeded flow of 230,000 barrels a day is testimony to the Yemeni people's regard for his company -- and Nexen's determination to leave a legacy deeper than a hole in the sand.

Read full story

The Mosquito in the Tent - 2 Jun 2004 FROM Fortune

One way to gauge the impact of a pressure group is by the quality of the vitriol it provokes. By that measure, the Rainforest Action Network stands out. When RAN, as it is known, launched a campaign against Boise Cascade, the forest products company accused the group of using "harassment and intimidation" to advance a "lawless, radical agenda" that would "destroy business and halt economic development in the world's poorer countries."

Malcolm Wallop, a former U.S. Senator from Wyoming who leads a conservative think tank, says that RAN pursues a "utopian, pollution-free socialist world." Others have accused the group of coercion, blackmail, even terrorism. After RAN's opponents challenged the organization's tax-exempt status, a House subcommittee recently subpoenaed the group's financial records, documents, and e-mails relating to civil disobedience.

Read full story

Don’t mess with the locals - 26 May 2004 FROM BRW

Australian consumers are a discerning lot. They are cynical about marketing, can see straight through a phoney advertising message and, worst of all for marketers in big companies, have an intense mistrust of corporate Australia.

This bad news for companies was highlighted by recent research showing just how disillusioned Australians have become about the corporate sector. This year’s Grey Worldwide/Sweeney Research Eye on Australia study of the attitudes and aspirations of Australian consumers revealed the level of contempt in which the corporate sector is held.

Read full story

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Getting fat on a diet of righteous indignation

Article by Mallen Baker

Over the last month, particularly in the UK but elsewhere as well, a great deal of nonsense has been written about corporate social responsibility and obesity. It has been a debate that has shown many of the commentators at their worst.

On the one hand, there is clearly a shift in attitudes. People have become aware of a growing problem in many countries - including some developing countries - of obesity in children and adults. As a result, they are starting to question the kind of foods they eat, and how they are sold. That is all perfectly healthy. Times change, and companies will always seek to move with the times to provide what their customers want.

None of that explains the hysteria. Companies have been vilified by politicians and journalists for somehow forcing us to eat junk food and to stop exercising. Simon Caulkin, for instance, wrote in the Observer: "Why do their executives, who presumably don't beat their wives and want the best for their own children, pride themselves on devising viral marketing campaigns to persuade other people's kids to pester their parents to buy them food that makes them fat? Why do they lobby against regulations that would oblige them to accept the responsibility that they claim through CSR? Why, in short, do companies and individuals set out to damage overall welfare, doing things in business they would never permit themselves in private life?"

The recent UK Parliamentary select committee report on the subject used the highly emotive case study of a three year old child that died through gross obesity due to the fault of the parents. It was a great story, and turned the report into front page headlines. It was also completely false, of course. The child had a medical complaint. The parents were at the heart of a tragedy - they were not culpable in any way but they were nevertheless made to suffer the accusations.

For the food companies, this is heavy stuff - at least as bad as that thrown at tobacco, arms and porn merchants. No wonder some of the companies are feeling shell-shocked.

Where did this come from? There have been two trends over the last decade that have made a big difference. The first has been the fact that rather than engaging in sports or other activities, kids are increasingly leading sedentary lifestyles, with computer games and television significant drivers.

The second trend has been overall for a decline in family meals, and an increase in eating out - and therefore often eating out at places where the food is fast and the calory count invisible. We are a strange society, it seems, where more people watch cookery programmes and buy cookbooks than ever before - and at the same time we do a great deal less cooking.

So since we have also become a society addicted to blame, where should that blame lie? The fact that kids now are leading less active lifestyles is a real problem. Surely, all of us should be encouraging a change in this. Parents should be limiting the time their kids spend with their computers - and making active pursuits part of how the family spends time together. Schools should be making sure that sports activity is an essential part of the curriculum. Even food companies could help - by appropriately promoting active lifestyles, perhaps by encouraging the purchase of sports equipment for schools.

But wait - as it happens that's exactly what Cadbury, the chocolate company, did. They took part in a cause related marketing campaign that encouraged the purchase of sports equipment for schools. It probably wasn't the most brilliant campaign ever, but it was conceived after the company looked at the evidence of the problem for itself and decided that it should play its part. Their campaign was in the same vein as numerous others by similar companies. Such associations had not been controversial in the past - as indeed they still aren't in many countries.

Suddenly, it all changed. Since then they have been attacked by Parliamentarians and the media in terms similar to the quote given above. This is a proud company - proud of its extremely long heritage of being a company that cares about society and plays its part. It is impossible to overstate the sheer horror for Cadbury of finding itself held up as a pariah company, when all it has done is promote chocolate - a food which most of us enjoy.

It may well be that societal attitudes will change so that advertising to children per se will be considered unacceptable. Personally, I would rather educate children at an early age to make sense of advertising and treat it critically - key skills for later life. But ten years ago nobody thought it was controversial for parents to smack their own children - now in some countries it is illegal. Times change, and whether we agree with the changes or not, we will adapt.

But retrospective vilification serves nobody any good. The food companies have an interest in providing the food that we want, and their creativity and innovation is potentially a powerful ally in seeking solutions that will stick. How do we persuade and entice people to change? You can't legislate to stop someone stuffing burgers in their face twice a day every day. If someone's going to tell me that they'll decide for me whether I can have chocolate today or not they'll get a robust response. It's the wrong approach. We need something that is much more considered, and involves all the interested parties. The power of companies to promote alternatives is something that should be positively engaged as part of the solution.

It's difficult to achieve positive engagement if you're suggesting that the companies, in Caulkin's words, "set out to damage overall welfare, doing things in business they would never permit themselves in private life?". There is no evidence that this describes most of the companies involved in this debate. It certainly isn't my experience of the individuals I've dealt with from some of those companies.

Recently, Tesco announced that it would adopt a new labelling approach for food sold in its stores, based on the 'traffic light' symbol. Other approaches to food labelling have generally not been successful since the majority of shoppers find the complexity of information utterly bewildering. Something as simple as green for go, amber for caution and red for alert is something everyone can understand. This is not something the company decided to do overnight - it is the result of careful consideration of the trends and the issues.

It is some indication of how things should probably go. New ways to provide people with information that they are best able to interpret and understand. But still, the option for people to make their own choices. There is simply no answer to the obesity problem that doesn't engage the personal responsibility of the individual over his or her own lifestyle. The sooner people realise that, and start looking for people to help rather than someone to blame, the better.

That doesn't mean, of course, that there is no responsibility agenda for the companies. They have responsibilities in terms of their own product - and many have started to change the ingredients in their foods to reflect the new demands. There's no point in us being all righteous about the fact they're only just doing this - after all, most of us have only just now started to ask them to. And if there are new rules about the acceptability of advertising to children, we'd better work out what they are pretty quickly and begin to take that into account.

But it's difficult to innovate when you're in crisis management mode. The politicians who have jumped upon the bandwagon to vilify good companies for programmes that were introduced to promote active lifestyles have a lot to answer for. Being a professional public policy decision maker should mean that you know all about your subject. You should know how to evaluate issues. You should understand what makes good legislation. You should understand how to build consensus across a range of sectors around a proposed course of action. If our companies were as bad at their core business as the knee-jerk politicians that have dived in to vilify them over obesity, they would not have stayed in business long enough to sell anything to anybody.

It really is time for a grown up debate on solutions. A coalition to make a difference to this problem would include public policy makers and consumer groups, but also food companies, computer game manufacturers and TV companies to look at how they can begin to use their products to encourage activity not inactivity. Parent have to be involved as well - bringing back some of the responsibility for providing sound nutrition to the home. Again, the companies can be allies in this.

The alternative is that we do none of that, but we create a new pariah industry out of the food industry. Somebody will need to explain to me exactly how that scenario delivers the results.

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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