Business Respect - CSR Dispatches No 86 - 18 Sep 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 ask whether companies that make products that kill can ever be socially responsible.

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/86.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

Welcome back to all of you that have been enjoying the holiday season over the last month. Not everyone has been so lucky, of course, and our support goes out to those of our readers affected by the hurricane damage in New Orleans.

Mallen was disappointed not to get to the Asian Forum conference this year in Jakarta. Hopefully, he will be back next year when the Forum moves to the Philippines - home of what is almost certainly the longest established CSR intermediary organisation in the world, Philippines Business for Social Progress.

This issue we look at one of the most difficult ends of the social responsibility debate - that involving whether or not companies whose products kill can ever be considered to be socially responsible. We know this will be an area where there are strong views. Feel free to share them! You can always send us an email, or we have now changed the vote on the website to read "Companies that make products that kill can be socially responsible ... " 1. If they seek to reduce harm and manage their other impacts, 2. If they diversify out of harmful practices, 3. Under no circumstances. Let us know what you think!

That means we are closing the previous vote. The final position on that one stands at: Management standards for CSR are generally:

A useful tool for my business 250 (71%)
Something to refer to but not follow in full 60 (17%)
Not relevant to our needs 43 (12%)

Thanks to the 353 people who voted.

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 18 Sep 2005

Tax havens 'rob Third World'

Christian Aid has attacked offshore tax havens that the organisation says are helping to cheat the developing world of much needed tax revenues.

In a new report, the charity estimates that tax evasion and offshore banking secrecy cost third-world governments up to $500 billion a year in lost revenues.

The report's author, Andrew Pendleton, said the UK government had a particular responsibility. "Of the world's 72 tax havens, 35 are British territories or Commonwealth members. Tackling global evasion will take a lot of international co-operation, but it would be fitting for Britain to take the lead."

Oil companies overriding human rights says Amnesty

Legal agreements with African governments by a consortium of oil companies led by ExxonMobil have come under the spotlight from Amnesty International, which says that the companies are potentially over-riding the human rights of local populations in Chad and Cameroon.

Amnesty says that the agreement requires the national governments to give priority to the oil company interests over and above those living in the vicinity. The organisation said that there had already been abuses in these areas with farmers displaced and refused compensation.

ExxonMobil said that the accusations were false, and that the company has a good record of condemning human rights violations.

UK: Reed Elsevier under fire from its own journal for arms link

The medical journal The Lancet, owned by Reed Elsevier, has launched an attack on its parent body for its part in organising an arms fair in London.

The event showcases new military technology and is held in conjunction with the UK's Ministry of Defence. The journal said that the association was against the Lancet's values, which are about honouring human life.

Reed has defended its involvement, saying that all exhibitors are strictly regulated, and that the defence industry plays a vital role. It also said that technology on display was designed for a wide range of uses, including civil use, such as air ambulances and fire-fighting equipment.

China: Yahoo attacked for helping put journalist in prison

The campaign group Reporters Without Borders has attacked Yahoo for allegedly helping the Chinese authorities to identify and convict the journalist Shi Tao, who has been sentenced to 10 years in prison for 'divulging state secrets abroad'.

In a statement, the organisation said: "We already knew that Yahoo! collaborates enthusiastically with the Chinese regime in questions of censorship, and now we know it is a Chinese police informant as well".

Referring to the argument made by Yahoo and other internet groups that they are required to conform to the laws where they operate, they went on to ask: "Does the fact that this corporation operates under Chinese law free it from all ethical considerations? How far will it go to please Beijing?"

Shi Tao worked for the Dangdai Shang Bao daily newspaper, and was convicted of sending out the text of a message sent to the paper by authorities.

Japan: Asahi Shimbun executive resigns over scandal of made-up story

Shinichi Hakoshima, Asahi Shimbun's executive advisor, has resigned his post following the revelation that a fabricated report had been published in the company's daily newspaper.

The scandal, which is only the latest of a series affecting the company, "tarnished the trust and honour of journalism as a whole" according to Mr Hakoshima.

The Asahi Shimbun has said last month that it had carried an incorrect story about a meeting between two leading figures to discuss founding new political parties. The company fired the reporter, and issues and apology for the story.

At the beginning of the year, Asahi Shimbun was involved in the leaking of its reporters' interview records for an article about NHK.

Canada: Nine out of Ten Canadians want climate disclosure

A recent survey of public opinion has found that an overwhelming majority of Canadians (89%) want companies to be forced to talk about what they are doing to reduce greenhouse gas emissions.

According to the survey, carried out by the Tremblant Forum on Corporate Responsibility and Sustainability, the majority was strong across all groups, studied by sex, location, age, profession and income. Students, manual labourers and Canadians with middle incomes were the most strongly in favour.

New York Stock Exchange criticised for listing delay on animal rights extremist fears

The sudden and unexplained postponement of listing on the NYSE for Life Sciences Research has been criticised for apparently caving in to fears of harrassment by animal rights extremists.

LSR owns the British company Huntingdon Life Sciences, which has been hounded for years by some of the most direct and violent attacks by animal rights activists ever seen. The company was eventually forced to move its listing to the US when a campaign targeted at financial institutions in any kind of relationship with the company proved to be highly successful.

The campaigners protest at what they say are the company's animal testing methods, which they believe to be cruel. The company denies the claims.

The NYSE move has prompted concern as a potential precendent that could encourage more widescale attacks of a similar kind against other companies. US Senator James Inhofe described it as "potentially disastrous" that the NYSE should give in to threats by extremists.

Wal-Mart gets praise for response to hurricane Katrina

Wal-Mart has attracted praise even from some of its critics for its fast organisation in the face of the devastation wrought by hurricane Katrina in New Orleans. In the first few days, the company delivered $20m in cash, 100 truckloads of free merchandise, and food for 100,000 meals. The company also promised a job elsewhere for every one of its workers affected by the catastrophe.

The contrast has quickly been drawn with the criticisms attracted by the response of federal and state officials, whose operations and disaster planning have been widely seen to have fallen well short of what was required.

Former presidents Bush and Clinton praised the company during a press conference, and a number of commentators have made the observation that had the authorities been as well organised there would not have been such a crisis.

This comes at a time when Wal-Mart has been under fire from a number of quarters for issues around its supply chain practices and employee wages. But the company's scale and renowned efficiency is now proving to be exactly what is needed.

UK: Wetherspoon squeezed both ways on drinking and smoking

UK pub chain Wetherspoons has suffered falling profits having been hit by the stigma of binge drinking on the one hand, and the impact of a unilateral smoking ban introduced by the chain on the other.

Wetherpoons has taken action on perceived encouragement of binge drinking by ending 'two for one' promotions and similar price incentives to drink more. However, the chain said that unfavourable media coverage had hit customer numbers in town centres.

The company broke ranks with many of its peers when it decided to introduce a smoking ban at some of its pub in advance of expected legislation. The move has resulted in a 7% drop in turnover and a decline in profit margins in the pubs affected.

Talisman Energy to face genocide lawsuit

A US District Judge has resisted pressure from the governments of the US and Canada to have the lawsuit against Talisman Energy for genocide dismissed. The case is to proceed.

Canadian oil and gas company Talisman Energy has been accused of association with killings, kidnapping and rape arising from its time of operation in Sudan. The company, it is alleged, collaborated with the Sudanese government on a plan to keep the oil fields secure, actively co-ordinating military strategy with the government.

Talisman eventually gave in to pressure to leave Sudan, having argued for years that its presence was a benefit to the local communities where it operated, and that the companies that would take over would be less committed to social responsibility.

India: Coca Cola ordered to close Kerala plant

The Pollution Control Board of Kerala in India has ordered Coca Cola to close its major bottling plant with immediate effect. The move comes after several years of protests against the plant by local campaigners.

Villagers in the nearby areas had accused Coke of depleting local groundwater, and producing other local pollution. The controversy has received considerable coverage and become a cause celebre for anti-corporate activists.

The village council president, A. Krishnan said "We are happy that the government is finally giving justice to the people who are affected by the plant".

CSR FEATURES from the Internet

America's big-hitters must stop playing hardball - 4 Sep 2005 FROM The Independent

Consumers around the world care more and more what big corporations do.

A recent Harvard Business School study across 12 countries found that a consistent 13 per cent of the variance in consumer preferences among global brands was down to perceptions of their corporate social responsibility (CSR).

Read full story

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Can companies that make products that kill be socially responsible?

Article by Mallen Baker

Killing people is wrong. That's one of the earliest principles established by any civilised society. So how can a company be considered socially responsible if its products - used as instructed - result in loss of human life?

There are some obvious contenders in this category. Immediately the armaments and tobacco companies spring to mind. There are other industries where there are some tricky grey areas around the potential for lethal consequences if products are abused (alcohol, for instance). But let's not go into those grey areas, let's just stay in the land of black and white for just a moment.

Five years ago, there wasn't much discussion on such points. Corporate social responsibility was largely defined as what companies do to "put something back" and companies that killed tended not to be visible in that broader movement.

Since then, there is a growing agreement that corporate responsibility is rather more to do with how the company creates wealth rather than simply how it spends it. At the same time, tobacco and armaments companies have joined the fray, producing social and environmental reports and even winning awards for them.

This has provoked a certain degree of disquiet. The campaigners have dismissed any claims to responsibility on the part of such companies, drawing attention to the worst impacts of the use of their products. Likewise, some on the CSR movement have felt uncomfortable about their newly discovered allies, and would really wish they would go away and play their role of corporate villain with a little more conviction.

The tendency to damn the tobacco and arms firms is entirely understandable. It is often fueled by real outrage over the very real human consequences of these products. And yet such a position almost certainly creates unintended consequences.

The first question is whether the industries concerned can ever be legitimate. This is not a question that any individual company acting on its own can answer - it is in the gift of a broader society to establish that something is legitimate or not. If the people of the world believe that, for instance, tobacco is a product that simply should not be allowed, governments can act to simply ban it. There is no doubt, after all, that if tobacco had been discovered for the first time today it would never be allowed to go on sale if its full health consequences were revealed.

Governments seem rather disinclined across the world to actually ban tobacco. Presumably because the approximately 1bn people across the world who smoke would be rather cross at the prospect. So the official line has been in most places that this is an adult product, and that it was an area for legitimate informed choice.

That being the case, we then have an option on how that informed choice is met. We can have unscrupulous companies, very happy to sell as much as possible with little care to the consequences. Many would agree that such a description certainly fits some of the tobacco companies historically.

Alternatively, we could see a different type of company. One that seriously invests in research to develop reduced harm products. One that manages its environmental impact carefully, and treats the people in its supply chain with respect. One that supports on develops its own people, and which aims to improve society through that process of "giving something back".

That would surely be the definition of a socially responsible tobacco company. You might still not think that any existing company actually meets this definition. But a number of those companies are now stating that these are all things that address, or aim to address. If we agree that it is important how these companies operate, we should welcome the aim and then judge them by their actions.

The alternative is that we say that we don't care whether these companies ignore the harm caused by their product, despoil the environment and treat their suppliers and staff badly - because we think they are so far beyond the pale already.

Of course, that's all very well for tobacco. At least there's informed choice behind the consumption of their products (or could be). The armament is slightly different, of course. In that case, the use of the company's products will generally result in the loss of life of people who did not choose to enter a contractual relationship with the company!

Sadly we have not yet achieved the kind of world that can do without weapons. Writing as someone who would generally believe that for most crisis situations there are non-aggressive options which could be fully exploited, nevertheless a cursory glance at the history of humankind shows that states have often needed to defend themselves from aggression. This remains the case. So it is not the fact of weapons, but their potential use that is the issue.

This is an area fraught with problems. Companies are not in a position to decide the legitimacy of states to act in their own defence. Of course, where there are international sanctions in the face of a major breach of international law the position is pretty clear. Often, this is not so simple. Even a non-armaments company such as Caterpillar can get caught up in this - a target of protestors because its generally useful bulldozers were being used by the Israeli military to bulldoze Palestinian homes.

On the one hand, of course, innovation in the sector has led to a considerably different profile for major wars fought in the modern age. The recent Gulf war - whatever one thinks of the politics of the whole affair - was one where there was generally an expectation in the international community that the use of 'smart' weapons should lead to a minimum of civilian casualties. Compare this to the vast loss of military and civilian life in the first and second world wars. In principle, socially responsible production of weapons should mean that the nasty business of war, whilst never being desirable nor to be quickly entered into, can be operated according to more civilised rules of engagement.

I know this is tricky stuff. When I made this argument at a recent event in Vienna, the chair turned to me with polite incredulity and said "so you advocate killing people more nicely"! But the point is that, as with all these industries, there are choices to be made about how products are developed, to whom they are sold, and how they are ultimately used which means that we have an interest in seeing armaments companies working through what this means for how they run their business.

The challenge with all of these arguments, of course, is when market logic works against socially desirable outcomes. At the end of the day, the Chairman of a tobacco company may genuinely believe that it is about informed choice, and growing market share not the overall number of people smoking, but country-level managers will know that their remains one simple equation. More cigarettes sold = more profit. Likewise, the problems of arms companies selling to undesirable states or intermediaries is fed by the same market logic. To break that logic in the face of shareholder expectations would take the vision of a Mandela - and such people are frankly in short supply.

That is why the companies that kill will struggle to persuade the world that they can be trusted. The various stakeholders around the industry need to review how the logic of the market could serve socially desirable outcomes rather than the opposite. After all, we have seen damaging products, such as leaded petrol, phased out in some countries through the use of tax incentives, or through announced bans to follow in a given period of time, leading to real innovation in acceptable alternatives. It will take action this strong to really shape the market.

In the mean time, we at least need to encourage the view amongst the companies whose products kill that they need to strive to address these problems - and that means accepting the principle that they can be run as socially responsible companies.

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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