Business Respect - CSR Dispatches No 85 - 29 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 edition, we note that CSR reporting is approaching a crossroads, and wonder which direction it will take.

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/85.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

CSR reporting remains a focus of interest for the social responsibility movement generally, and for this newsletter as well. And yet, although we are starting to see some movement by companies to address the challenges raised here and elsewhere in the past re. the format of reporting, there is a growing tension over how fit-for-purpose current modes of reporting are. We look at this in this edition's article.

Meanwhile, voting has begun on the vote placed on the website following last issue's focus on standards. The current status is as follows:

Management standards for CSR are generally:

A useful tool for my business - 129 (73%)
Something to refer to but not follow in full - 28 (16%)
Not relevant to our needs 20 (11%)

Thanks to the 177 of you that have voted. Still time to make your view known!

Tom Rotherham, from the International Institute for Sustainable Development asked us to point out following that article that the meeting referred to in the first paragraph of that article was not an ISO meeting, but a meeting hosted by an ISO member. The next formal meeting of the ISO working group on ISO 26000 is due to take place at the end of September in Bangkok. We are happy to make this clarification.

We expect that the launching of this edition will be met by an avalanche of auto-responders. Happy holidays to all that are enjoying them.

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 29 Jul 2005

Kenya: Tobacco advertising under fire

Tobacco advertising that aims to promote social messages has come under fire as a loophole being exploited for the advertising and promotion of tobacco.

Two recent advertisements in Kenya, placed by British American Tobacco, have led to accusations that the company was rendering the tobacco advertising ban ineffective. Under the regulations, companies can promote their corporate social responsibility activities so long as they don't seek to persuade people to smoke.

One of the adverts in question announced a competition and the second unveiled retail prices for the new Sportsman Light. The company defended the advertising, saying it was within the law of the land and did not seek to promote smoking.

Japan: Sony named as most responsible Japanese company

According to a new survey released by the business newspaper Nihon Keizai Shimbun, Sony is the company that is most active in promoting corporate social responsibility in Japan.

The survey evaluated companies using a questionnaire sent to major corporations. Sony topped the measure, followed by Matsushita Electric Industrial Co, Komatsu, NEC Corp and Toyota.

The review focused on stakeholder dialogue, and had criteria covering management strategy and corporate structure, compliance, social contribution, commitment to employees and commitment to consumers and suppliers.

Motor car fuel efficiency goes backwards not forward

According to an advance copy of a report from the US Environmental Protection Agency, fuel economy in motor vehicles has declined compared to the late 1980s. The message of the report is that the significant development and improvement of motor engines has largely been aimed at faster cars, not more efficient cars.

Part of the comparison reflects the rise in recent years of the sport utility vehicles (SUVs). But at the same time, there has clearly been little pressure on the manufacturers to really innovate in this area. The worst performers were Nissan, Hyundai and Volkswagen, whose performance had declined to at least a half-mile a gallon less fuel efficient than in the previous year. Nissan blamed its recent entry into SUV markets.

The companies that came out of the study relatively well were General Motors, Toyota and Honda, which showed increases in fuel efficiency in 2004.

US: Gunmakers look forward to protection from gun crime liability

Firearms manufacturers in the US are now confident in the passage of a bill in the Senate that will achieve their long-held ambition of protection from lawsuits holding them liable for gun crime committed with their products.

The measure would make it more or less impossible for a successful suit to take place, ending a period where the companies have felt themselves increasingly vulnerable as interest grows in holding companies accountable for the abuse of their products.

Critics of the industry complain that the Senate bill goes too far, and in attempting to block frivolous suits it completely removes accountability from the industry for occasions where the company is at fault.

Reebok disputes sweatshop claims

Reebok has described as 'inaccurate and unfair' accusations by the National Labor Committee that workers at its Honduras factory work in sweatshop condictions.

The NLC said that Reebok paid only 19 cents to workers for each $75 jersey produced and suffered other treatment such as required pregnancy testing for women workers, and sought to draw attention to its claims through a demonstration outside the National Basketball Association store in New York.

The company said in a statement that it would take further steps to assess workplace conditions at its Hansoll factory, but that it believed the claims were unjustified.

The exchange comes as Nike and Gap have recently produced social and environmental reports giving new levels of frank disclosure around problems in the companies' supply chains.

Take-Two in trouble over hidden scene in Grand Theft Auto

Take-Two Interactive Software has announced that it is being investigated by the Federal Trade Commission following the recent revelation that a locked scene in its best selling computer game Grand Theft Auto violated the rating classification awarded to the game.

The existence of the locked 'mini-game' was brought to attention when enthusiasts began distributing a piece of software called 'hot coffee' that unlocked the scene, which was never intended to be viewed by the playing public. The company has confirmed that the scene, the existence of which has led to the game being reclassified as 'adults only' and subsequently cleared from the shelves of a number of companies, including Wal-Mart, was added by its own programmers.

The company is producing a revised version of the game which it hopes to have on shelves later in the year. In the mean time, it has informed shareholders that the problem has led it to reduce its expected profits for the year.

This is the first time classifications have been altered due to third party modifications that have been produced, raising a number of questions for the industry.

BHP Billiton under pressure over dam explosion

BHP Billiton has been called upon for greater transparency by the Australian Shareholders Association following the death of a mine worker in an explosion at Olympic Dam.

The cause of the blast, which killed mine worker Karl Eibl is not yet known, but the company has been criticised for not disclosing information about the incident to the Australian Stock Exchange or releasing a public statement.

The Australian Shareholders' Association director Ian Curry said that investors expected better.

The company has said that it has adhered to disclosure guidelines, which only require information about circumstances that will have a material effect on the value of the company's shares.

BHP reported the number of workplace deaths for this year at 17 - a number that chief executive Chip Goodyear had declared 'unacceptable'. The company is seen as making progress on social responsibility and in London, where the company is also listed, was last month made Business in the Community's 'Company of the Year'.

Lawsuits brought on child labour in chocolate

Three companies, Nestle, Archer Daniels Midland Co and Cargill Inc. are being sued under the US Alien Claims Tort Act over claims that they are involved in trafficking, torture and forced labour of children on Ivory Coast cocoa farms.

The suit is being brought by the International Labor Right Fund and follows the July 1st deadline imposed by federal law for the adoption of protocols to remove child labour from the cocoa supply chain. The Fund criticised the industry for its reluctance to allow some of its "massive profits" to provide a proper return for farmers.

In response, Nestle said that it strongly supported moves to make sure cocoa is grown responsibly without abusive labour practices.

The case is the latest to be brought under the Alien Torts Claims Act. Other recent cases include the one brought against Unocal for actions taken in Myanmar.

Worldcom's Bernie Ebbers jailed for 25 years

Former Worldcom boss Bernard Ebbers has been sentenced to 25 years in jail for fraud and conspiracy for his part in the $11bn accounting fraud at the company three years ago.

Mr. Ebbers, aged 63, begins what is effectively a life sentence at a federal prison near his home in Mississippi.

The judge said that Ebbers "was clearly a leader of criminal activity in this case." and that "A sentence of anything less would not reflect the seriousness of the crime."

The collapse of Worldcome saw around 20,000 workers lose their jobs, while shareholders lost about $180bn.

Japan: Asbestos health problems a 'quiet timebomb'

Japan is seeing a rise in asbestos related disease amongst workers, with more and more companies producing lists of those that have died or are receiving treatment, according to an editorial in the Japan Times. Nearly 400 people at 30 businesses have died, and more are expected to follow.

The material was used in significant quantities in buildings during Japan's boom growth period, and is now starting to get some sense of the price as the long incubation period of asbestos-related diseases is beginning to come to an end.

The use of the most poisonous asbestos was only banned in Japan in 1995, with white asbestos following last year. At its peak, Japan was importing around 350,000 tons of the substance.

The chairman of Nippon Keidanren, the Japan Business Federation, criticised the government for moving too slowly, since the symptoms had been known for many years.

CSR FEATURES from the Internet

In Good Company - 20 Jul 2005 FROM Financial Director

Most organisations would like to be thought of as a good corporate citizen. After all, no operation wants to be classified as a rogue company and no plc can afford to thumb its nose at public opinion. So where does this leave corporate social responsibility?

Is it enough for a company to simply be seen as doing something socially responsible? And when a company actually does CSR, is it then distracted from its core mission or does CSR enhance that core mission? If it enhances the core mission, is it unreasonable to expect to see some correlation between a strong commitment to CSR and a strong bottom line?

Read full story

Milk, shoes and scandals - 18 Jul 2005 FROM China Daily

Things have turned sour for China's dairy industry in recent times: Shoddy milk powder caused widespread alloplasia, and some deaths, among babies in Anhui Province last year; Bright's Zhengzhou subsidiary was found reprocessing expired milk last month; and even multinational giant Nestle was in May accused of using excess iodine in formula milk.

Public trust in big brands such as Bright and Nestle has been eroded in the wake of the scandals; and the declining confidence extends to big foreign and domestic brands in other industries.

Read full story

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CSR Reporting faces its next challenge

Article by Mallen Baker

There is some discussion that a number of the people in the leading companies - the pioneers, the CSR enthusiasts, the committed - are getting pretty fed up of being on the hamster wheel of churning out annual CSR reports. They spend most of their time collecting data, and not coming up with new ways to improve business practice. Revolt is in the air.

Not that there is due to be an out and out assault on the principle of performance measurement and disclosure. But the current form of CSR reporting is simply not proving its value. It needs to evolve and fast to show that it can meet real needs.

As it stands, vast amounts of money and time go into reports and it is known only too well by the people carrying out this investment that the stakeholders at whom the reports are aimed largely don't read them. Sooner or later, businesses begin to question a process where the standard rules of communication are routinely ignored, and the business value is slight. It is easy to say that no-one will be spending half a million dollars on reports that no-one reads in ten or twenty years time. It is harder to work out what will happen in the next three years.

On the one hand, there is a growing interest amongst report writers to reach those elusive audiences. So the recent Centrica report, for instance, as well as being produced in conventional form, is having a separate edition produced for employees. It is based on the same information, but in much more of a 'magazine' format to make it more attractive to that audience. Different reporting channels for different key stakeholders is a very real possibility. Some of these may look nothing like reports at all - and it will be interesting to see how fast the CSR industry, which has certain expectations of its reports, will recognised and reward such approaches.

On the other hand, there are moves to try to standardise the information that reports carry to make them easier to interpret. The Global Reporting Initiative, for instance, is now heavily into its '3rd Generation' development for its guidelines, aiming to produce something that shows real value.

I have been one of the people critical of the GRI framework in the past. As it currently stands, it has been a struggle to explain why a report produced against the existing framework provides information that could communicate to the board why their company is committed to sustainability or social responsibility. A performance framework must be just that - the current draft with its one third of questions focusing on the existence of policies - falls well short in terms of quality of impact measurement.

But its mere existence encourages legislators to lean on it. The South African Stock Exchange (JSE) requires companies to report against it. When campaign groups lobbied for compulsory reporting in the UK, the answer to the question "report against what?" was the GRI - more because it was there and a convenient answer than because it was the right answer.

This will mostly be good, healthy stuff if there is a common framework that genuinely captures the core of what companies should be disclosing on social responsibility - telling a real story to the financial community, to employees and to customers. If, however, the framework is misconceived, then it will potentially do a lot of damage. I applaud, and have high hopes for, the revision of the GRI framework currently going on. This really is the last chance in some ways. If it can't be gotten right now, with the accumulated experience of reporting that has grown up in recent years, then it should probably be dropped as being an impossible task. Obviously, it would be better if it succeeds.

Of course, part of the problem is that we have unrealistic expectations of what these reports can tell us. After all, the financial reports of the company give us something which is much more concrete. Figures are figures and, properly gathered and represented, they don't lie. And yet we are quite used to the fact that we expect a number of financial analyst experts who know the industry context, have an assessment of the quality and track record of the leadership, and bring these into an interpretation of what the figures are actually telling us. Why do we imagine that CSR reports, which deal with much more intangible matters, should be self-evident and not at all requiring interpretation or context setting? Who currently provides such interpretation? Nobody. It is a rare event when the content of a CSR report makes it into the news sections as an indication of how a company is doing.

As a result, we get reports with lots of photos of smiling children which try simultaneously to present data and to tell stories. The company becomes its own interpreter - and that is why so much of the focus on reporting remains on the quality of the report, rather than on what the report is actually telling us.

There needs to be a revolution in reporting. Reports needs to be clear about their target audiences, and to select information that is relevant to that audience. They need to be used to drive performance improvement, and therefore to streamline the actual process of gathering data.

And we desperately need an informed, critical group of interpreters to give us the real story behind the reports. Only then will the money spent of them really begin to provide the value that it should.

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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