Business Respect - CSR Dispatches No 76 - 19 Jul 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 edition, we review the outcome of the recent Business in the Community awards and the controversy around Marks & Spencer being named 'company of the year'.

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/76.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

A passing reference to one particular industry sector in the last issue prompted a record number of 'bounces' from email filters on corporate firewalls! If you don't get a copy of the newsletter when you're expecting to see one, it may well be worth just checking the website to see the latest version on the site. Sadly, there's not much we can do about overzealous corporate policies on such matters.

The latest Business in the Community conference saw the announcement of the new Marketplace Impact Taskforce - a business leadership group that is being put together to review how businesses should respond to changing expectations around their core products and services. This is a project Mallen is particularly engaged upon, so things have been rather busy in the last few weeks!

Following on from last issue's lead article on obesity, the vote on the website has been attracting some activity. If you remember, it reads:

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

New legislation to force food companies to reform their ways 27 (12%)
People taking personal responsibility for themselves and their families - we don't need people telling us how to live our lives 76 (34%)
All organisations, public and private sector, working together voluntarily to change behaviour 123 (54%)"

226 of you have voted so far. There is still time to make your views known!

Thanks to those of you that made yourselves known as Business Respect readers to Mallen at the BITC conference. The next big event will probably be the Asian Forum on CSR conference in Malaysia in September. If you plan to be there this year, we would be delighted to hear from you! Sadly, Vanessa probably won't make the Asian Forum this year since she will most likely be moving from Bangkok just the week before!

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 19 Jul 2004

Australia: More companies producing CSR reports

More Australian companies are producing sustainability or CSR reports, according to a new study by the Department of the Environment and Heritage and others. Of 509 companies surveyed, 116 has a publicly available report.

The survey, 'The State of Sustainability Reporting in Australia', found that the manufacturing sector had produced the most reports, at just over 35 percent. Only a minority had their reports externally verified.

The majority of companies said that concern for their reputation was driving them to create such reports.

The trend was criticised by the Australian Shareholders Association, which said that companies must avoid taking on responsibilities that were the proper business of governments.

Malaysia: Deputy PM says business must help eradicate poverty

Datuk Seri Najib Razak, the Deputy Prime Minister of Malaysia, has said that the private sector must be involved in helping the government to eradicate poverty over the next five years.

Speaking at a dinner organised by the charitable foundation of SP Setia Berhad, he said that the government was committed to removing "hardcore" poverty, but it could not do this alone. More companies need to follow the example of SP Setia - not least because the reduction of poverty will ultimately provide a better environment in which to conduct business.

He said that companies should not regard CSR practices purely as acts of charity. On the contrary, effective adoption of CSR has the twin effects of improving both short- and-long term corporate performance.

Affluent Malaysians, he added, needed to ensure they didn't become so caught up in the race for success that they lose interest in their basic role as citizens in helping the needy.

Anti-corruption principle added to the UN Global Compact

The UN Global Compact, which frames 9 corporate commitments arising from basic globally held principles of the UN charter, has now added a 10th principle around the issue of corruption.

The principle, announced by UN Secretary General Kofi Annan at the UN Global Compact Leaders Summit in New York, commits the signatory companies to work against corruption and has been adopted following widespread consultation with the Compact's members and supporters.

Transparency International welcomed the move. TI chairman Peter Eigen said: "The overwhelmingly positive response of participants to the addition of an anti-bribery principle shows that companies are waking up to the need to fight corruption".

India: Tata Steel to insist on socially responsible suppliers

Tata Steel has said that it will not deal in the future with companies that do not reach a minimum standard of corporate social responsibility.

Speaking at the company's annual general meeting, Mr B. Muthuraman, managing director, said that the company had set the global benchmark for CSR, and now would measure suppliers by its own standards.

The guidelines for suppliers will be announced later in the year.

At the same event, Mr Muthuraman dismissed recent attacks on steel companies that had suggested a price-fixing cartel, saying that with 1,500 producers across the world the industry was impossible to fit into a cartel.

Namibia: NamPower launches Black Economic Empowerment Policy

NamPower, the Namibian energy company, has launched a Black Economic Empowerment Policy to take a proactive approach to redressing imbalances in the country.

The policy framework, aimed at the company's significant supplier base, was launched at the NamPower Convention Centre in Windhoek.

The policy will include a rating system that will be used to evaluate potential suppliers, with Black Economic Empowerment measures making up 20 percent of the scores.

Matthew Shikongo, NamPower chairman said: "NamPower is committed to creating and maximising value for its customers, suppliers and shareholders, while ensuring the equitable access to the provision of its goods and services."

Switzerland: IBM lawsuit on role in holocaust to proceed

Five Gypsies have been told by the Swiss appeals court that they can proceed with a lawsuit against IBM about the company's role during the Nazi era when the company's products allegedly helped facilitate the holocaust.

The litigants claim that IBM helped the Nazis commit genocide by providing them with punch card machines that enabled the methodical tracking and killing of Gypsies.

A lower court had dismissed the case, saying that it had no jurisdiction given that the Swiss office of IBM was not the headquarters where decisions would have been taken. The appeals court has now over-ruled this, suggesting that there is evidence to suggest the company's Geneva office could have been aware that it was assisting such acts.

The decision seems the first move to take human rights litigation beyond the United States where the Alient Torts Claims Act has been used to hold companies to account for things they have done in other countries.

The case is being taken by five plaintiffs, all of whom had family die in the holocaust. Swiss law does not allow the large class actions that are now common in the US.

Finland ranked top for social responsibility

Finland is the best country for corporate responsibility, according to the 2003 CSR survey by the Copenhagen Centre, with Indonesia coming in as the poorest.

The countries have been ranked according to corporate governance, ethical business practices, progressive policy formulation, building human capital, engagement with civil society, contribution to public finance and environmental management.

Second to Finland was Switzerland, with the UK down at number 7. The US made 23rd place, with a number of Asian companies at the bottom, such as China (46th) and Indonesia (50th).

Asia Pacific: Citigroup promotes excellence in NGO sector

Citigroup Foundation, working with Resource Alliance, is promoting a series of Non-Governmental Organisation (NGO) awards in the Asia Pacific region in order to encourage excellence in the sector.

The awards will be presented in September in the Philippines, and are expected to draw entries from NGOs from Malalysia, Hong Kong, Indonesia, the Philippines, Singapore, South Korea, Taiwan and Thailand.

Citibank said that the awards aimed to "promote vibrant NGO or non-profitable organisation (NPO) community in the region that has mobilised resources strategically from their respective communities, demonstrated good management, transparency and accountability."

US: Kerry would bring in new era of corporate responsibility

John Kerry, the Democratic challenger to George W. Bush in the US Presidential election, will prioritise greater measures on corporate responsibility, according to his running mate in the contest John Edwards.

The promise followed the indictment of Enron ex-chairman Kenneth Lay, who has pleaded 'not guilty' to 11 charges over the collapse of the energy company. Edwards said that Kerry's approach would stand in contrast to the current administration, which had taken three years to finally take Lay to trial.

Kenneth Lay could face up to 175 years in prison if he is convicted. At a press briefing, the US Assistant Attorney General said: "Kenneth Lay is charged with abusing his powerful position....and repeatedly lying in an effort to cover up the financial collapse that caused devastating harm to millions of Americans".

De Beers to plead guilty to price fixing

De Beers, the global diamond producer, has agreed to plead guilty to criminal price fixing, according to a report in the New York Times. The move will bring to an end a case that has spanned over a decade.

The case focused on the fixing of prices for industrial diamonds, and was brought after a three-year investigation that concluded in 1994. General Electric was accused of conspiring with a subsidiary of De Beers to fix the prices for the diamonds in the early 1990s.

The case against GE was eventually dismissed through lack of evidence, and De Beers was not able to be prosecuted at the start because it is a foreign company and refused to recognise the jurisdiction of an American court. Now, however, the company is keen to re-enter the US market, and clearing the case out of the way is seen as providing a route in.

Philip Morris settles smuggling claims for $1.25 bn

Philip Morris International has agreed a $1.25bn settlement with the European Union over accusations of collusion with cigarette smuggling.

The EU had said the company had evaded taxes and custom duties through its activities - a claim which the company continues to deny. The money to be paid will go towards the fight against smuggled tobacco over the coming decade.

The company, in common with other major tobacco firms, was said to have sent large quantities of cigarettes to countries with low excise duties in the knowledge that significant quantities would then be smuggled into higher duty areas of the EU. The EU has estimated that the illegal trade gives rise to an annual loss of more than 1bn Euros per year.

US: Pharmaceutical industry issues guidelines for research disclosure

The Pharmaceutical Research and Manufacturers of America (PhRMA) has launched new guidelines that call for the release of data from clinical trials, regardless of whether the results are favourable to the company commissioning the trials.

Clinicians undertaking the trials should also be properly paid rather than given stock options to ensure there is no conflict of interest.

The move comes after New York State Attorney Eliot Spitzer's lawsuit against GlaxoSmithKline which alleged that the company withheld information from trials on Paxil giving negative results - to an extent that constituted material fraud.

Critics have suggested that the guidelines, although welcome, do not go far enough in ensuring that information about all trials - whether or not the product eventually makes it to market - is made available.

For more info, see http://www.phrma.org/publications/publications//2004-06-30.1035.pdf

Corporate governance is now 'a top priority' for Execs

Eighty five percent of senior finance professionals say that the greater focus on corporate governance is here to stay, according to a new survey of nearly 150 companies in the UK, the US, France, Germany and the Netherlands.

The research, carried out for CODA Group, used a definition of enterprise governance that included performance management and corporate social respnsibility. 80 percent of those polled agreed that CSR was the major component of governance

The survey also found that real change is taking place in business practice, with 60 percent saying that they are making real and significant changes to their business processes in order to achieve better governance.

Ford unveils new hybrid SUV

Having frankly admitted last year that it had not made the progress it wanted to on the environmental performance of its vehicles, Ford has released a new gasoline-electric hybrid sport utility vehicle (SUV). It is the US public's fondness for SUVs that has led to the deteriorating performance of the transport sector in terms of emissions.

The chairman and chief executive officer, Bill Ford, launched the new vehicles in Washington by handing over the keys to the first few Escapes to the Secretary of the Interior Gale Norton.

The company said that the Escape would deliver over 35 miles to the gallon, an improvement over non-Hybrid fuel efficiency of 50 percent, whilst still delivering the strong performance that SUV customers expect.

The cars are expected to go on general sale later in the year.

CSR FEATURES from the Internet

Building an ethical business - 15 Jul 2004 FROM The Financial Gazette (Zimbabwe)

By virtue of their size and the intensive competition they face in the business world, small businesses face strong pressures to act unethically in their business conduct.

The pressures of building a business bring in so many temptations to compromise ethical business practices.

Read full story

Warning to Executives: Honesty Is the Best Policy - 10 Jul 2004 FROM The New York Times

Read full story

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What's in an award?

Article by Mallen Baker

The annual Business in the Community awards, which took place on July 6th, saw the usual crop of examples of best practice from a range of areas relating to responsible business practice and community involvement. It was however the first time a CSR award made it onto the front page of the Financial Times, with the choice of Marks & Spencer as BITC's Company of the Year just as the takeover battle for the company was reaching fever pitch.

It was always going to be a controversial award. Marks & Spencer, having slumped and then revived, have been widely seen to have slumped again and there were certainly some who expressed the view that it was unhelpful to have a company celebrated as a CSR 'company of the year' when it was not financially performing.

After all, if we believe our business case arguments, good CSR should go hand in hand with commercial success. Celebrating a company where the performance is seen to be weak runs the risk of praising a model that is ultimately unsustainable, as well as handing a gift to some of the CSR critics that will seize upon the act as an example of lack of realism.

It's a tough call. When the company hit problems before, they realised that the one asset they had retained was that they had a high degree of respect and trust from the British public. They knew that turning the company around needed to happen in a way that retained that asset - which for a while it seemed it had.

It was a false dawn, and now a new management - led by Stuart Rose - has the chance to make its mark. But it has already made clear that it will do so from within the company's solid commitment to its values.

There is an argument that, if you have real faith in them, you stand by your friends when things get tough. Is it more impressive that a company that suffers no problems embraces CSR, or that one that is in the thick of real difficulty does so? As in most things relating to the process of management, it all comes down to skill in execution.

If the new management are able to tackle some of the fundamentals of the business, there remains a lot of good will amongst the public that wants the company to succeed. If they can do that and show a consistent unwavering dedication to socially responsible values, we will all be quoting the case studies and singing the praises. But anyone can be wise after the event. If we think the management deserve a fair wind, and are likely to pull it off, they should be supported through the tough times not just at the end. It is no more of a gamble than when an analyst looks at the figures, sets them alongside the track record of the company, and decides whether to buy or sell. Will the CSR movement invest in M&S futures or not?

Whatever the detail of who said what to whom, it was interesting that commitment to social responsibility became a part - albeit a small part - of the debate around what might happen should Philip Green be successful in his attempt to take the company on. It wasn't yet a mature debate, informed by a widespread acceptance that the company's current and future reputation were part of the equation when considering likely performance. But it was there - which was something of a first for these kinds of takeover battles.

So why did they win the award anyway? The company showed the judges the pivotal role that its values played in how it makes day to day decisions. For instance, it is supporting an innovative approach to fisheries management. Called Invest in Fish, based in the South West of England, which brings together all stakeholders (fishermen, NGOs, communities and those who sell fish) to develop a shared vision of a successful and sustainable fishery.

It is the only retailer that has been able to engage civil liberties groups on the complex issue of using microchips to track products in supply chains and address their concerns about a potential loss of consumer privacy. It is also a world leader at managing labour standards in supply chains by working with suppliers to develop a mutually beneficial approach.

It also has attracted a lot of attention for its flagship community programme, Marks & Start, which is the biggest work experience programme of its kind in the UK. This programme is an extension of its collaborative work on homelessness, which was also commended in the BITC awards. Marks & Spencer pledged to offer homeless people 600 work placements nationally, and this effort came together with an initiative with KPMG and Barclays to develop a training module to precede placements in order to boost the chances that trainees would be able to stay the course. The programme starts with Ready to Go, a two-day business-supported training programme preparing homeless people for both a work placement through Ready for Work and long-term employment.

Of course, there were over a dozen other categories with different winners.

Other categories included the cause related marketing award, which was won by BT and Childline. Launched in October 2002, the ‘Am I Listening?’ campaign aimed to ensure that every phone call to Childline by a child in need is able to be answered. BT undertook a range of fund-raising initiatives to meet this target, including running a competition to find a child that would then go on, for one week, to become the voice of the famous Speaking Clock. More than 2 million people called to hear 12-year old Alicia Roland’s Scottish accent, raising £200,000 for ChildLine.

Freshfields Bruckhaus Deringer (Freshfields) was recognised for its community involvement programme called ‘Freshfields in the Community’ (FITC), in London. The FITC programme now includes international community projects designed to enable the company's lawyers to develop friendships and strengthen team working which will benefit their ability to work together on professional client work.

There are a host of others, which can be viewed on the BITC website. But the event overall will be remembered for its bold step into the business mainstream.

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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

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Business Respect - most recent edition added on 17th August 2008