Business Respect - CSR Dispatches No 82 - 16 May 2005

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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 Kazakhstan.

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/82.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

We're back! After a pause of some months - unprecedented in the four years or so the newsletter has been running - the Business Respect newsletter should hopefully reappear as a regular addition to your inbox. Many thanks to all those who sent queries in, wondering just why they hadn't seen one for a while. It's been a combination of circumstance, work pressure and just the need, after four years solid, for some sort of pause and re-evaluation.

A couple of weeks ago, Mallen spoke at a CSR conference in Kazakhstan - certainly a first for us. This issue, we share some reflections from that event.

Also, Mallen was interviewed for an internet radio programme called "Ethics - From Living Room to Board Room". It was a while ago now, but there is an archive of the interview at http://www.worldtalkradio.com/archive.asp?aid=3410 for any that might be interested.

But most of all, we're interested to hear about change agents. The website has featured since it was first set up the conviction that managers and workers throughout businesses can act as positive forces to help their company be profitable in a positive and responsible way. And yet, although there are many case studies about how companies have adopted policies, engaged stakeholders, and done great things as a result, there are precious few about the individuals who made a real change in their companies. The managers whose personal conviction helped to move a company further than it would otherwise have gone. Individuals who helped their company to achieve profitable change - perhaps against a wall of initial scepticism. They may have had the job title of CSR manager. But many will not.

Do you know of someone like this? We would be fascinated to hear from you, and to hear the stories of what has been achieved. Ultimately, of course, it would be good to get some stories that could be shared, although needless to say that won't happen until everyone has been consulted. Let us know.

The current vote on the website is now coming to the end of its time. Many of you will know it says:

When a world disaster strikes, business should consider whether to give support and conclude:

Extraordinary events call for extraordinary generosity 528 (65%)
Whether they should divert part of their existing community budget 134 (16%)
That it is shareholders' money and not theirs to give 152 (19%)

814 people voted in total - thanks to all of those that made their views known. The new vote will be on the website before the next newsletter.

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 16 May 2005

Unilever targeted over 'crisis in tea industry'

Action Aid have produced a report, 'Tea Break', targeted at Hindustan Lever, one of the Unilever companies, which it describes as profiting from worsening conditions for workers on plantations.

The group, which held a demonstration outside the company's annual general meeting, said that the company had benefited enormously from market conditions for tea, showing that "corporate social responsibility is not working".

According to the BBC, falling prices have led to plantations laying off workers and wages going unpaid - a trend which has seen a consequent increase in attacks against owners and managers. Reuters has said that at least seven plantation bosses have been lynched or burned alive in the last six months in Assam.

Action Aid has called upon Unilever to produce all of its tea in line with 'fair trade' principles.

China: Don't shield polluting companies, local officials told

China's State Environmental Protection Agency has warned local authorities not to interfere in a string of serious pollution cases involving dozens of companies.

The Agency says it is aiming to tackle a history of weak enforcement, leading to serious pollution arising from a number of industries, including paper, coking coal and iron alloy production. The move is the latest evidence of increasing focus on the problem, as the government has said that it plans to double the amount it spends on environmental protection over the next five years.

Hundreds of Chinese companies have been given an end of May deadline to meet environmental standards or to be closed down.

Australia: Virgin Blue fights sex and age discrimination claim

A flight attendant told a tribunal that Australian budget airline Virgin Blue's job interviews were little more than a 'cattle yard' for young blonde women.

The attendant, Theresa Stewart, said she was rejected for a job at the airline in spite of having nearly 30 years experience because her age and looks were not thought to fit the Virgin profile. She is one of eight women claiming discrimination.

Of the interview, she said: "They were after a certain look that appeals to Richard Branson. If you had two beautiful blonde girls, 25 and gorgeous, then they went to them like homing pigeons."

The company disputes the claim it employs only young and attractive staff despite evidence it hired just one woman over the age of 35 from a group of 760.

Iran: Iran Khodro car company accused of supporting brutality

The International Confederation of Free Trade Unions (ICFTU) has protested at violence at the Iran Khodro automotive construction company, including the detention and disappearance of a worker, Mr. Parviz Salarvand.

The violence is alleged to have arisen following protests by workers due to deteriorating working conditions, and the prohibition against the formation of a trade union. Mr Salarvand is said to have expressed sympathy for the protests, and to have been brutally interrogated and has now not been heard of for a month.

A founding meeting of a worker's union for the company was attacked by several hundred men, watched by security forces who filmed the incident but took no steps to intercede.

Wal-Mart asked to disclose information on pay

51 members of the US Congress have signed a letter calling on Wal-Mart to address gender discrimination and to disclose its wage data for Congressional review.

The letter to CEO Lee Scott follows a high profile campaign labelled 'Love Mom Not Wal-Mart' to coincide with mothers day and calls for the disclosure so that Congress can "understand why Wal-Mart pays its women associates less than men".

Over 20,000 people signed a pledge to boycott Wal-Mart's Mothers Day products until the company addresses the issues of gender discrimination.

Dow bullish in face of onslaught on environmental performance

Dow's President and CEO Andrew Liveris told a packed annual meeting that the company's success would continue, and shrugged off criticisms from campaign groups on environmental performance.

Shareholders voted against the proposal brought by Trillium Asset Management of Boston for a full report on Dow's production of toxic chemicals. The demand was partly prompted by the pending case in Texas brought by a group of peanut farmers that claim that Dow Agrosciences' herbicides damaged crops.

Amnesty International co-ordinated demonstrations at Dow facilities around the US timed to coincide with the AGM to call for the company to "stop evading its responsibilities for the consequences of the 1984 gas leak at the Union Carbide plant in Bhopal, India". The campaign group said that around 40,000 postcards, letters and petitions had been sent to Dow in the last six months.

Board of Directors Chairman William S. Stavropoulos responded to the issue by repeating the company's contention that it is not to blame, since the incident occurred when Union Carbide owned the Bhopal plant, which Dow did not acquire until 2001. Union Carbide had reached a $470m settlement with the Indian government that ended the matter.

Japan: Banks called upon to take more responsibility for card theft and fraud

A recent report on compensation for bank card-related fraud has been attacked by fraud victims for an inadequate response to the problems. The banks, they say, need to respond more effectively.

The report, released by the Financial Services Agency, would introduce different rules for compensation for forged cards and bank books and those withdrawn from ATMs with stolen cards, an approach which it defends due to the greater responsibility of face-to-face verification in the former.

Shoji Takamizawa, the leading lawyer for the vicitms group, said that the banks need to be more responsible for damage caused by card theft. Their neglect of the issue over decades has led to the rise of the problem, with cases of card forgeries surging in the past two years.

US business leaders told more tsunami cash needed

Government ministers from countries that suffered the effects of the tsunami have said that more cash is needed to repair the damaged infrastructure and economy.

Speaking to a meeting of CEOs in Washington, the ministers said more is needed to rebuild villages, towns and cities and to restore the economic lifeline for the region through tourism.

Former US President, Bill Clinton, attending the meeting, said that this was the most important time for the private sector to respond because the issue had fallen out of the newspapers.

General Re executive under fraud investigation

The US Justice Department has notified John Houldsworth, a senior executive of the General Re Corporation, that he is the target of a criminal fraud investigation, according to the New York Times.

The action follows an incident where records relating to a 'questionable' insurance deal with the American International Group were doctored. In the aftermath, A.I.G. acknowledged that the transaction had been improper and removed its chairman and chief executive Maurice R. Greenberg.

Other General Re employees have been given notice of actions against them, and speculation is now that the two companies may face a serious period of criminal fraud investigation that may affect their ability to do business.

12 million people victims of forced labour says ILO

The International Labour Organisation (ILO) has produced a new report suggesting that over 12m people are working in coercive, slave conditions and calling for a global alliance to tackle the problem.

The report, 'A Global Alliance against Forced Labour' says that 9.8m people suffering forced labour are working in the private sector, including over 2.4m victims of human trafficking. The largest number of forced labourers is in Asia, followed by Latin America. Children under 18 years old make up 40 to 50 percent of the total.

Industries using forced labour include agriculture, construction, brick-making and sweatshop manufacturing. The ILO also includes forced commercial sex workers in its figures.

ILO Director-General Juan Somavia said: "There is a critical need for devising effective strategies against forced labour today. This requires a blend of law enforcement and ways of tackling the structural roots of forced labour, whether outmoded agrarian systems, or poorly functioning labour markets."

Fortune 100 companies fail to achieve boardroom diversity

A survey of Fortune 100 board membership has found that women and ethnic minorities remain heavily under-represented. Under 17 percent of board seats are held by women and less than 15 percent by an individual from an ethnic minority.

The survey also found that the ethnic minority representation that does exist often consists of the same individuals sitting on multiple boards.

The review was carried out by the new Alliance for Board Diversity, a collaboration between three US organisations, Catalyst, the Executive Leadership Council and the Hispanic Association on Corporate Responsibility.

GM and Toyota explore hydrogen collaboration

According to the Financial Times, General Motors and Toyota are in advanced discussions to explore a joint initiative to speed the development of hydrogen-powered cars.

The two companies are said to be aiming to share the heavy costs of developing hydrogen power into a commercial proposition.

Hydrogen power is widely seen as the ultimate future for motorised transport, but considerable technical obstacles remain to be overcome in exploiting it. In addition to the costs associated with perfecting the application of the technology within the cars themselves, huge investment will also be required to create distribution facilities alongside the existing petrol station network.

Business showing leadership on climate change

General Electric and Morgan Stanley have joined the list of companies pledging serious action to tackle the growing phenomenon of climate change.

GE has announced a new climate change policy that will see the company aiming to reduce greenhouse gas emissions by 1 percent over the next seven years, as opposed to the 40 percent growth in emissions expected without any kind of controls. Achievement of the policy will see the company's energy efficiency increase by 30 percent.

The company is also to begin reflecting its environmental focus in its products. GE is to aim to exploit growing markets in environmental technologies.

Meanwhile, J.P. Morgan Chase has said that it will aim to develop financial products that support the reduction of greenhouse gas emissions and to lobby for a coherent national approach by major carbon emitters.

CSR FEATURES from the Internet

Corporate social responsibility in China - 13 May 2005 FROM Xinhau

The past quarter of a century has seen Western businesses investing heavily in China, all striving to adapt their business models to this huge market, while bringing capital, technology and management know-how to the country.

Today, China is probably more integrated into the international community than at any point in its history, and the competitive economic landscape is changing rapidly. For multinational companies that take social and environmental responsibilities seriously, unprecedented opportunities abound for them to turn the corporate social responsibility (CSR) fad into a real opportunity for social change.

Read full story

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Corporate Social Responsibility in Kazakhstan – a reflection

Article by Mallen Baker

How far as the movement for CSR penetrated into the consciousness and activity of companies based in Kazakhstan? A conference for business practitioners focusing primarily on community involvement that took place in Almaty reviewed some of the evidence.

In advance of the conference, a survey had been carried out with a number of companies to assess attitudes. These included private, state and international companies.

81 percent of private firms, 49 percent of state firms and 89 percent of foreign-owned firms agreed that there were familiar with the term ‘corporate social responsibility’. This in itself showed the remarkable degree of penetration the basic language has made in this business environment, with rather little difference between local and international private companies. However, when it comes to practice, the picture changes.

Only 53 percent of the private companies said they had a CSR policy (21 percent for state companies, 71 percent for international). These numbers dropped to 35, 12 and 47 percent respectively when asked if the policy was accessible.

The focus for business community investment tended to be on some of the obvious issues around health, the environment and economic development. Rather little was focused to any degree on building or supporting civil society in Kazakhstan.

33 percent of private companies said they had policies for managing what was termed as philanthropic activity. 16 percent of state companies said the same, with the numbers being made up by 49 percent of international companies. Evidence seemed to suggest that there was some real distinction between local and international companies in where this activity was managed. For international companies, they had relatively low-level managers in charge of community programmes. For local businesses, they had mid-level managers taking this responsibility, in addition to other activities.

The conference reviewed a number of themes and case studies through its two days. I was struck how much of this was focused on the process of companies giving cash to support programmes. For sure, there was a real interest in making such investments in a strategic way. There was great interest in learning how to choose the best partner for your programme, and how to measure the real community impact of that programme.

Case studies included Exxon’s funding of the project Partnership: Health of the Capital’s Children’, with training being provided by the Kazakhstan Association of Family Physicians to primary care doctors in management of childhood illnesses at home. The company talked about how it had moved away from ‘give away’ programmes to ones where the impact and the results were a more serious focus.

USAID shared its learning about the process of monitoring and evaluation and the distinction between the measurement of outputs and impact.

The main example of a case study that went beyond community investment was the local stakeholder engagement carried out by AES in constructing an ash disposal area, which led them to build a drinking water supply for a nearby village, and to provide at-cost coal.

But by and large, the main message was that in Kazakhstan CSR development is currently being defined by international companies (mostly oil and extractives, the main business investments creating wealth in the country at the moment) giving cash. There is no senior business networks of local businesses taking a lead on responsible business. Not even a broader scope on the mechanisms for community involvement that might introduce some of the key business case benefits around business reputation, and employee engagement.

It’s not that such factors, suitably designed for Kazakhstan’s distinctive business environment would not work. It is that the running is made through international companies whose debates and broader engagement is mostly done in their bases in developed markets. Since the main activity therefore visible to local businesses is the process of giving away money, it isn’t surprising this hasn’t led to a strong, home-grown focus for business leadership.

It really does seem to me that, if the international companies want to make a really significant impact on their host communities, it should start with a process of trying to nurture, inspire, and inform the local business community with the examples of what can be achieved when you get senior business engagement with how you succeed at business by maximising positive impact on society. This at least could be the beginning of a real, sustainable legacy that the companies leave behind once the time has come to move on.

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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