Business Respect - CSR Dispatches No 84 - 7 Jul 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 look again at the emerging issue of corporate lobbying.

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/84.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

It is a sobering thing to be writing this editorial on the first train able to leave London to go to Norwich following the closure of the stations occasioned by the multiple terrorist attacks. Hopefully, none of our readers will have been personally touched by this awful tragedy and, in common with most people in the world, our hearts go out to those people that have been.

The attacks took place the day after Business in the Community's conference and awards, where we saw the coming together of business leaders and African leaders who were attending the Busines Action for Africa conference running at the same time. That was a powerful, optimistic event, celebrating the potential for Africa to achieve its potential, and the best practice of companies in responsible business practice. That, and the small matter on the Wednesday of the UK winning its bid to host the Olympic games in 2012 that had a few good folks very excited.

Now we have to go on, somewhat more grimly. We will not lose sight of the role that businesses can have in addressing world poverty. The Live 8 concerts have focused attention on the continuing tragedy and injustice of it all. They have made all of us, citizens, businesses and - perhaps even - politicians feel that we have tolerated poverty in Africa for too long and it is time to make a decisive start at a solution.

But terrorism reminds us of another reason for action - the ugliness of poverty and injustice provides an ideal breeding ground for extremism. Every person involved in the London bombings personally bears the responsibility of their actions - and we all hope they will be caught as soon as possible. But such extremism will continue to thrive so long as one third of the world lives at a level apparently unattainable by the rest. This should add impetus not only to discussions on Africa, but also climate change, and should spur companies on to address issues around how customers at the 'bottom of the pyramid' can be served.

From the sombre and reflective, to the practical and apologetic.

Technical problems with the last edition of the newsletter meant that its sending out was staggered over five days, and just under 2,000 subscribers didn't get it at all. Apologies for that - it would be too long and tedious to explain what happened. If you didn't get the last issue and want to read it, you can find it at http://www.mallenbaker.net/csr/nl/83.html.

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 7 Jul 2005

New Zealand: Companies under attack for sea-bed trawling

One of New Zealand's leading marine biologists, Dr Steve O'Shea, has added his voice to the controversial campaign by Greenpeace against deep sea trawling - a practice which accounts for something like 80 percent of fish caught in the area.

O'Shea criticised the companies undertaking trawling, saying that: "Bottom trawling is the most barbaric practise we have ever invented to catch fish.

"I do see the fishing industry, bottom trawlers, I see the practice as criminal. I would like to see these guys in prison. I would like to see certain high profile CEO type people within the industry in prison for lies, for deceit and for destruction".

O'Shea, who made his name studying the giant squid, said that the practice had begun to make locating the squid difficult, an indication of its impact on the overall marine life.

The criticisms have been dismissed by the head of Amaltal Fishing, suggesting these were extreme views that peddled "unsubstantiated claptrap".

Microsoft criticised for 'censorship' on Chinese portal

Microsoft has come under fire upon the revelation that its new internet portal in China, which allows users to set up internet 'blogs', blocks certain uses of terms deemed to be sensitive by Beijing, including words such as 'democracy' and 'human rights'.

Bloggers who enter such terms are given a message that reads: "This item should not contain forbidden speech such as profanity. Please enter a different word for this item."
 
Internet sites in China are required to meet conditions established by law over sensitive content, and have to be registered with the Chinese authorities or risk being shut down. Other internet companies such as Yahoo and Google have also had to face the challenge of complying with local laws that would be deemed unacceptable by many outside commentators.

The campaigning group Reporters Without Borders has criticised the companies, saying that policies to appease the Chinese government's demands for censorship were irresponsible.

China: Legislation will ban sexual harassment in the workplace

The Chinese government has begun moves to ban sexual harassment after surveys showing that Chinese professional women were widely experiencing problems.

A draft amendment to China's Law on Women's Rights Protection will outlaw sexual harassment, and require all employers to take measures against it.

A recently published survey showed that 79 percent of women at work said they had suffered sexual harassment. A separate review suggested that 40 percent of women working for private enterprises or foreign companies had experienced problems.

Shell defends against raft of NGO accusations

Global oil giant Shell has responded to attacks made by the UK's Friends of the Earth, disputing the claimed facts promoted by the group in its 'alternative Shell report'.

According to FoE, "Lessons Not Learned", the third alternative Shell report, catalogues how despite commitments made in previous years, Shell still shows a total disregard for the environment and the rights of the people living near its operations in many parts of the world.

Shell has responded with a robust riposte, disputing a number of claims made by the group, including:

* Rejection of any link to human rights abuses in Nigeria or elsewhere
* Disputing claimed increases of violence, tuberculosis and STDs in Korsakov, Sakhalin Island, associated with the company's activities
* Categorically rejecting claims that Shell staff have bullied locals or run roughshod over local communities.

Shell added, in a press statement: " We believe that inaccurate and misleading allegations only detract from the genuine concerns that local communities themselves raise - and that we are committed to resolving with them. The facts are given in our Shell Report. The latest issue includes major coverage of Nigeria and Sakhalin, plus Port Arthur and Norco in the US, SAPREF refinery in South Africa, and the Pandacan terminal in the Philippines - six of the nine locations selected by FOE. In all these locations, we report significant progress in improving our performance and in building relationships with the community - reflected by third-party comments that we also publish."

Tyco executives guilty of stealing $150m

The former chief executive and finance chief of Tyco have been found guilty of stealing over $150m from the company, which was used to fund lavish lifestyles.

The trial of Dennis Kozlowski and Mark Swartz was the second to take place, after the first collapsed when a juror was threatened.

The money was taken through 'secret loans' which were then forgotten, as well as through unauthorised bonuses.

In his defence, Kozlowski claimed that although his pay packet had been "almost embarrassingly big" he had not committed a crime.

Japan: Bank executives found guilty for concealing massive bad loans

A court in Tokyo has found three former executives of the failed Long-Term Credit Bank of Japan guilty of covering up massive bad loans that caused the firm's collapse.

The Bank's former President, Katsunobu Onogi was sentenced to three years in prison, suspended for four years. The other executives were sentenced to two years, suspended for three years.

LTCB was one of three banks which fell when Japan's economy slumped in the early 1990s. The findings confirmed a lower court ruling which had found the executives guilty of falsifying financial statements to undervalue the bank's bad loans and overstate profits.

Presiding judge Atsushi Senba backed a 2000 Tokyo District Court ruling, the spokeswoman said, which had found the officials guilty of falsifying financial statements to undervalue the bank's bad loans and overstate its profits to shareholders.

US: 40 years jail for sweatshop owner

The Korean owner of a garment factory in American Samoa has been sentenced to 40 years in jail for what prosecutors described as "modern day slavery".

Lee Soo-Kil was said to have held more than 300 people from China and Vietnam as forced labourers in his factory, using forced deportations and physical assaults to keep the workers in his power.

The court was even told that he had ordered the gouging of one worker's eye for complaining about living conditions.

UK: Christian group calls for boycott of UK's ethical bank

The organisation Christian Voice has called on all Christians to boycott the Co-operative Bank, widely known in the UK for its ethical policy, after being told to close its account due to the group's 'homophobic views'.

The bank sent a letter to the group saying that, due to "discriminatory pronouncements based on the grounds of sexual orientation" it was giving the organisation 30 days to move its account.

The group said that Christians should stop banking or shopping with the Co-op. He said: "Clearly, and on their own admission, the Co-op is not the bank for those who honour the name of the Lord Jesus Christ."

Christian Voice said it had originally chosen the Co-op because of its stand on fair-trade and opposition to oppressive regimes. Now it was showing hyprocrisy in discriminating on the grounds of religion.

In a response, the Co-op said: "The Bank believes in respect for all sectors of society and its approach to Christian Voice is based purely on the issue of diversity and not on the grounds of religion. Indeed, the Bank’s mission statement clearly states that: “it is non-partisan in all social, political, racial and religious matters.

"The Co-operative Bank respects everyone’s right to freedom of thought on all religious matters. What it cannot tolerate, and what its customers will not tolerate, is any form of discrimination, violence, harassment or abuse directed at any section of society."

Halliburton under fire again for 'war profiteering'

US Democrats have stepped up their attack on Halliburton over Pentagon audits that query over $1bn of bills for the company's work in Iraq.

Democratic leaders have said that the company is 'war profiteering', and said that the Bush administration has simply refused to hold it accountable. Estimates of excessive spending and improper billing have doubled from those of previous official reports.

The Pentagon had already publicly complained about excessive bills, but recent disclosures suggest that the disputes have been deeper than previously realised.

The company defended its record, and complained that it was being singled out for political attack. It said it had performed well under difficult conditions.

CSR reporting continuing to grow

There is continuing support for CSR and sustainabiity reporting by the world's biggest companies, according to a recent survey by international accounting firm KPMG.

Japan and the UK show the strongest lead in reporting, with a dramatic shift from purely environmental reporting to reporting that includes social, ethical, environmental and economic indicators. The financial sector in particular is showing a two-fold increase in reporting since 2002.

In the report's introduction, Mike Rake, Chairman of KPMG International and Chairman of Business in the Community, says: "The survey reflects the growing importance within the business community of corporate responsibility as the key indicator of non-financial performance, as well as a driver of financial performance. It also reflects the responsibility that business has to be transparent and accountable not just to shareholders but also to the wider community."

Alcoa says aluminium industry carbon neutral by 2017

Aluminium giant Alcoa has said that it is now forecasting that the industry will be carbon neutral by 2017. According to its president of Primary Metals Development, Randall Overbey, its greenhouse gas emissions will be offset by the amount of emissions saved by the use of aluminium in the transportation industry.

According to Greenbiz, the announcement came at The Conference Board's 2005 Business and Sustainability Conference in the US.

Mr Overbey said: "As Alcoa leads this change, we will share our learnings with others as part of our climate change initiatives so that we can leverage the knowledge. The company has already met and is maintaining its 2010 goal of reducing GHG emissions by 25% from 1990 levels."

Italy: Parmalat executives to stand trial

16 former executives and three financial institutions have been formally charged over their role in the collapse of diary company Parmalat following a major financial scandal.

The executives, including the company's founder Calisto Tanzi, have been accused of market rigging and false auditing. The financial institutions are the Bank of America, Deloitte & Touche and the former Italian affiliate of Grant Thornton.

The scandal hit the headlines when it emerged that the company had a fictional holding of nearly 4bn euros in a bank account. Eventually it emerged that the company had net debt of over 13bn euros.

CSR FEATURES from the Internet

Corporate social responsibility in Peru - 27 Jun 2005 FROM Enter Stage Right

The day I visited the Peruvian mountain village of La Oroya , I watched Mayor Clemente Quincho lead a noisy demonstration involving thousands of marchers. Their loud slogans and emotional chants would remind anyone of the protests that have long characterized environmental and civil rights activism. In many ways, that’s exactly what this was.

But this wasn’t your ordinary demonstration. These vocal townsfolk were demonstrating in favor of the continued operation of an 80-year-old copper and lead smelter – both because it’s the lifeblood of the town and because they support the company, Doe Run Peru, in its efforts to improve social and environmental conditions in the region.

Read full story

A New Kind of Company - 26 Jun 2005 FROM Newsweek

A new kind of multinational corporation is emerging out of India, the hot newcomer in the global economy. It is the Tata Group, a family conglomerate that has gone professional without losing a distinct set of old-school values. Forged from both India's struggle for independence from Britain and the influence of early-20th-century Fabian socialists, Tata is a ferocious competitor with a very liberal touch. Consider: one of the largest of its 32 businesses, Tata Steel, has cut almost half its work force in the last 15 years to become the lowest-cost competitor in this brutal industry—yet has kept its promise to pay all laid-off workers full salary until retirement.

Read full story

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Corporate lobbying - Rising up the CSR Agenda

Article by Mallen Baker

Anyone with an eye towards where are the emerging issues in corporate social responsibility will have registered the question of corporate lobbying of governments. Indeed, it wasn't that long ago that we last dealt with the question here. Since then things have continued to move significantly.

One of the growing messages within Corporate Social Responsibility over the last couple of years has been that CSR is about how you create wealth, not just how you spend it. Of course, there are already a lot of rules that govern how companies are, and are not, allowed to create wealth. There is no such thing as a really free market. Legislation to ensure minimum standards of protection for the consumer, and good conduct on the part of companies, has been a part of the landscape for centuries.

Equally, companies have always sought to influence governments in the nature of these rules. This is entirely legitimate. After all, any stakeholders in a piece of legislation ought to be able to make representation. That's how you get good legislation.

Now, the issue about how companies lobby, and for what, is increasingly being drawn into the CSR microscope. Recently for instance, the Institute of Business Ethics produced a report laying out some of the challenges that exist.

Such challenges appear in a number of areas. The easiest target for campaigners is where a company's stated values or CSR positions are directly contravened by the objectives and conduct of its lobbying activity. Environmental campaigners recently slammed BP for opposing a piece of legislation in the US related to climate change, a position that totally contradicts its stated commitment to action on climate.

Charges of hypocrisy aimed at CSR leaders is the easiest news copy there is. As the business editor of the Uk's Sunday Times said at a recent CSR event, "when you get a company that proclaims its environmental credentials getting caught out polluting - it doesn't get much better than that for people like me".

Of course, it's not often as simple as that when it comes to lobbying. Just because there's a piece of proposed legislation, it doesn't make it necessarily a good piece of legislation that would actually achieve its desired aims. BP would draw attention, for instance, to the fact that there were three different versions of legislation on offer on climate change in that instance - they supported the one that they thought would work with business, and opposed the one that was basically anti-business. One has to beware of campaigners whose argument follows the "something must be done, and this is something, therefore this must be done" line. BP, after all, has probably done more in terms of effective pro-active action than most others.

But it is one of the biggest no-win propositions for a company to be faced with legislation the aims of which are unarguably desirable but the quality of which falls far short of its aspirations, and which would damage the company for no real societal gain. The company is obliged to oppose the legislation, and the campaigners have a field day suggesting that company X is showing it is against human rights / environmental sustainability or whatever the issue is.

There are some companies that are hearing the message that this is now an area that calls for disclosure. The UK's Co-operative Bank won the ACCA best sustainability reporting award, with commendation for the Bank's approach to disclosure on lobbying.

There are also certainly some leading businesses who have aimed to lobby the political process in order to help achieve socially beneficial solutions. BP's endorsement of the climate change levy, for instance. Electrolux supporting producer responsibility on electrical goods is another example, as is Marks & Spencer's call for more legislation on the use of chemicals.

But a friend of mine who works with one of the largest PR firms carrying out corporate lobbying services is very clear about the nature of the beast - at least in the UK. Companies lobby on matters affecting the bottom line. Ultimately, every piece of legislation that could hurt is scrutinised, and positions formed accordingly. Many of his colleagues, he said, saw the Institute of Business Ethics document and dismissed it as being generally naive and unrealistic.

This should not be a big surprise. The corporate communications people who deal with corporate lobbying will follow the logic of their calling, just the same as so many others do. Purchasing managers, for instance, have very rarely been able to square the CSR aspirations of their companies with the on-the-ground pressure to get the best possible price and terms from suppliers. The best companies have to find a way to strike a balance - still putting pressure on their buyers (after all, without good prices they will become uncompetitive, and the company which goes bust in the pursuit of CSR is really not very responsible at all) but also letting them know that there is a red line they should stay the right side of.

There hasn't been much of a debate where that red line is in regard to corporate lobbying. After all, there is nothing wrong with companies lobbying to benefit the bottom line. Unless, of course, by so doing they are resisting some effective and necessary piece of legislation enforcing good principles. But then it's a judgement as to whether that's the case.

At the very least, it seems fair enough to say that businesses should expect that their attempts to influence legislation should be in line with their corporate values and CSR positions. It is also fair to say that companies should disclose the aims and objectives of their lobbying.

It is unrealistic to expect companies to disclose each occasion when representations have been made. Some companies will feel that disclosing such information might give advantage to competitors in certain situations. Others will feel that the burden of documentation would far outweigh any public or business benefit.

The truth is that there is no way to really audit or confirm whether what a company said about its lobbying was correct. Of course, when companies send in formal written submissions on legislation it is on the record. But the quiet word at a charity event, the brief conversation in the Wimbledon enclosure, these will always take place and be unrecorded. Indeed, a burdensome process of formalising lobbying activity would only drive more of it into such informal arenas.

And attitudes to certain aspects of lobbying differ enormously in different countries. In the UK, payments associated with lobbying would be seen as corruption. In the US, they have been part of the price of doing business. Even after the McCain-Feingold campaign finance reform bill banning corporate donations to political parties became law two years ago, major loopholes have ensured that the expectation that companies will 'pay to play' is finding other avenues of expression.

We shouldn't be expecting the introduction of a regime whereby corporations can be audited or policed on how they seek to exercise influence. It is, however, seeking to join up in the mind of the CEO, the CSR department and the corporate communications department, the realisation that lobbying, like every other aspect of corporate behaviour, should accord with values and responsible business practice. And that if it doesn't, at some point the disparity will be exposed. And for the companies that aspire to be leaders in social responsibility, that could be one of the most damaging incidents of all.

This issue is now already advanced enough in perceptions on CSR that it is beginning to enter the benchmarks. Canada's Corporate Knights Top 50 responsible businesses list, for instance, includes transparency and progressive intent in corporate lobbying amongst its criteria.

But lobbying is big business, and we shouldn't expect that the edifice will be easy to reshape. There are, for instance, something like 15,000 lobbyists in Brussels, goodness knows how many in Washington. You can even study for an MBA certificate in corporate lobbying covering areas such as 'principles of successful lobbying', 'lobbying/campaigning for business today', 'interest representation and public policy', 'corporate lobbying strategies' and 'negotiation skills and practice'. Not yet a module on lobbying and social responsibility.

Equally, we should be clear sighted about the lobbying that is carried out one stage removed from the individual businesses. Companies that don't lobby on an issue that would not be seen as socially responsible, but which tacitly supports its industry association to do it on their behalf should expect to be found out. Increasingly, the campaign groups are focusing on such associations. The socially responsible corporation should be able to show real leadership in the positions it promotes, both to legislators and to its respective trade bodies. It is an area that is due to get increasing scrutiny.

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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