Business Respect - CSR Dispatches No 95 - 21 May 2006

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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 progress and dilemmas for supermarket giants Wal-Mart and Tesco.

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/95.html.

Copyright 2006 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

For a long time, I had been very resistant to the notion of following the blogging trend. This newsletter, with its opportunity to reach an interested audience with opinion and analysis seemed to be a more satisfying way of creating content that might be genuinely of interest and value.

Still, all things change. The power of blogs is their role in allowing the passing reflection, the response to events, the ability to better represent the full range of interests and concerns of the individual. And there are some fairly inspiring examples out there of people that make this work well.

So I have come to the conclusion that some experimentation is called for. This has led to the creation of my own blog at http://www.mallenbaker.net/blog. Since I generally do my own geeky coding, these pages don't yet have a comment or trackback facility. The former will be added soon, the latter if it seems that the experiment has some value! However, the entries on the blog will remain separate from the content in these newsletters.

Those of you that use newsreaders, you can get an rss feed both for the CSR news stories and articles that make it into this newsletter and now, also, the blog. These are at:
http://www.mallenbaker.net/csr/xml/csrnews.rss
http://www.mallenbaker.net/blog/xml/mallenblog.rdf

The vote on the website has attracted some initial activity. The current situation is as follows:

Companies that trade on their ethics such as the Body Shop should:
Stay independent at all costs to preserve their brand 32 (27%)
Accept offers from responsible buyers that may help the company to move forward 73 (61%)
Operate purely by the logic of the market, it's a brand not a religion 15 (12%)

120 people have so far voted. Still time to make your views known.

One reader wrote in with the following thought: "I haven't voted in your survey, because 'Accept offers from responsible buyers that may help the company to move forward' does not take into account the history. And in the case of the Body Shop, that is important.

"L'Oreal test on animals. In the interview I saw with Anita Roddick, she talked about her hope that they could use L'Oreal's research and development (ie knowledge gained from animal testing) to move Body Shop products forward. But to use this knowledge is to go against everything that the brand stands for. L'Oreal can't unlearn or undo its testing."

Of course, this comes down to the tricky area of perceptions and definition. If you feel that L'Oreal, because of its history, does not constitute a 'responsible buyer' then that doesn't stop you from voting for the difference between accepting offers from responsible buyers (which in your view in this case wouldn't include L'Oreal) or operating purely according to the logic of the market.

These votes can only be a broad indicator of view in any case. There are always grey areas that cannot be covered by three choices. But the results do give some interesting insights.

Mallen Baker
mallen@mallenbaker.net

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CSR News 21 May 2006

ABN Amro shines on sustainable banking shortlist

The FT Sustainable Banking Awards have announced its shortlisted candidates, and revealed that ABN Amro has been shortlisted for every category.

The awards aim to recognise what are described as the most sustainable banks from around the world. They are run by the Financial Times in association with the World Bank's private sector organisation, the International Finance Corporation.

The top award, Sustainable Bank of the Year, has five shortlisted candidates overall: ABN Amro from the Netherlands, Bank Sarasin from Switzerland, HSBC from the UK, WestLB from Germany and Westpac from Australia.

US: Drummond faces charge of having Colombian union leaders killed

The head of the Colombian operations for Drummond made a payment to pay for the assassination of two union leaders, according to a statement made by a former intelligence officer.

According to the statement by Rafael Garcia, a suitcase of cash was handed over by the president of Drummond Limitada Augusto Jiménez to go to a paramilitary leader. Garcia is currently in prison on corruption charges.

The company denies the charges that it was involved in the murders of Valmore Locarno and Victor Orcasita in 2001. The trial is expected to start later this year under the US Alien Claims Tort Act.

France: Calyon criticised over support for Botnia papermill in Uruguay

Calyon, part of Crédit Agricole of France, has been attacked for allegedly violating its commitment to the Equator Principles in its support of Finnish papermill Botnia.

The complaint has been made by a coalition of organisations including various national branches of Friends of the Earth and the World Rainforest Movement. It follows the claimed success of a similar action taken against ING Group which withdrew its previously pledged support to Botnia.

The groups allege that Calyon, if it goes ahead with its support for the papermill, will be complicit in human rights and environmental abuses.

Australia: AWB admitted kickbacks to Saddam Hussein

A letter of apology drafted by former AWB managing director Andrew Lindberg has been released showing that the company had admitted that it had paid kickbacks to Saddam Hussein's regime.

The letter was released after the company lost a court battle to keep it secret. The letter was written last year in the face of the inquiry over the allegations of corruption in the oil-for-food programme.

The letter says: "As a result of the Volker inquiry into the OFF program AWB accepts that in paying money for inland transportation and after sales service it paid money to the Iraq government in contravention of UN sanctions".

IBM partners on Global Pandemic Initiative

IBM is to work in partnership with twenty public health institutions, including the World Health Organisation, on an initiative aimed at tackling infectious diseases such as the feared bird flu pandemic.

The partnership aims to use advanced computer technology to help societies respond to potential outbreaks. IBM will contribute some of its advanced software elements to the open source community to help share information and create models that will improve predictions on how diseases will spread.

IBM's chairman and chief executive Samuel J. Palmisano said: "The threat of a pandemic is a definitively global phenomenon. Our response must be similarly global, and must rely - as with so many other major issues we face today - on open, collaborative innovation."

ISO under fire over CSR summit

Consumers International, a world collection of consumer organisations, has attacked the International Organisation for Standardisation (ISO) for what it described as blocking press access to the debates at its social responsibility summit in Lisbon.

The group said that it believed the action was the result of the business lobby that was 'forcing ISO' to ban the press.

Richard Lloyd, Director General of Consumers International, said: "Big businesses love to tell anyone who'll listen just how socially responsible they are. Yet when it comes to media access to discussions on a global guideline for Social Responsibility, they slam the doors shut. By restricting media access to decision-making, the ISO sends a message to everybody that transparency is not an issue that needs to be taken seriously. This is an irony that won't be lost on consumers."

Consumers International said that journalists had been deterred from entering a private room booked by the group, barred from using mobile phones in the foyer and finally ushered out of the conference centre.

The group conceded that it is standard procedure for ISO to restrict press access to working groups, but said it thought there should be more transparency where issues of social responsibility are concerned.

US: Top 100 polluters named

A new list has been produced naming the companies which emit the most pollution in the US.

The list, produced by the Political Economy Research Institute at the University of Massachusetts, names Du Pont, US Steel, ConocoPhillips, GE and Eastman Kodak as the top five polluters.

James Boyce, director of PERI's environment programme said: "The Toxic 100 informs consumers and shareholders which large corporations release the most toxic pollutants into our air."

The data for the list is taken from the US Environmental Protection Agency Toxics Release Inventory.

Gilead Sciences pursues generic deals on AIDS drugs

Gilead Science has announced that it is to pursue non-exclusive voluntary licensing of its AIDS drug Viread with generic manufacturers in India, a move which potentially makes the drug available on a much more affordable basis.

The company has said that it is committed to registering Viread in all developing countries as part of its Access Programme before the end of the year.

The AIDS Healthcare Foundation in the US welcomed the move and said that it would encourage further competition amongst generic manufacturers driving the price down even further. It called upon Gilead to follow the measure with similar action on its other important AIDS drugs.

In India, 150 people protested against Gilead on fears that moves to patent its drug Tenofovir in India would halt local production by generic producers.

DHL pulls out of Myanmar

According to the Burma Campaign, DHL is to end its five year joint venture with government-owned Myanma Posts and Telecommunications operating in Myanmar at the end of the year.

The move was announced in a letter to the campaign from DHL's parent company Deutsche Post.

The Burma campaign welcomed the move, calling it "welcome, but long overdue". Yvette Mahon, the campaign's Director said: "DHL have finally realised that it is not acceptable to have a military dictatorship as your business partner, especially one that is currently slaughtering its own population in a new military offensive against civilians."

Glamis Gold and Anglo American targeted by new gold campaign

Canadian multinational Glamis Gold and AngloGold Ashanti, a subsidiary of Anglo American, have been urged to give local communities a greater say over how gold is mined by a new report released by CAFOD.

The report focuses on environmental and social impacts arising from gold mining in developing countries. It says that cyanide and arsenic has made its way into the water supply of communities close to mining areas, and rather than being a harbinger of prosperity the presence of this precious natural resource actually leads to poverty.

The report signals the launch of a new ongoing campaign called 'Unearth Justice' that will aim to provide an ongoing focus on the impact that gold mining has in these fragile environments.

CAFOD director Chris Bain, noting the negative impact activities can have on local communities said: "Much of this can be blamed on the activities of multinational gold mining companies. We have to break this destructive pattern by challenging businesses to clean up their act and stop undermining the poor."

Business contribution to Millennium Development Goals celebrated

Ten companies have been celebrated for their contribution to the achievement of the UN Millennium Development Goals.

The projects, selected from submissions by around 70 different companies from 33 countries, were:

Aaviskaar India Micro Venture Capital Fund, Africa Comprehensive HIV/AIDS Partnership (ACHAP); EcoLogic Finance; Global Alliance for the Elimination of Lymphatic Filariasis (GAELF); Health Care Logistics, VidaGás, VillageReach, Foundation for Community Development (FDC); Patrimonio Hoy, Cemex Mexico; Siwa Sustainable Development Initiative, Environmental Quality International (EQI); SOLO, Eczacibasi-Georgia-Pacific / Ipek kagit; Sustainable Banking, Banco Real / ABN AMRO; Tetra Pak Food for Development, Tetra Pak.

The nominations were assessed by an international selection panel drawn from different sectors and chaired by Mary Robinson, former President of Ireland. The awards are a collaboration between the International Chamber of Commerce, the UN Development Programme and the International Business Leaders' Forum.

For more info, see http://www.iccwbo.org/wba/id4031/index.html

CSR FEATURES from the Internet

The Next Level of Corporate Responsibility - 14 May 2006 FROM Women's Wear Daily

Major apparel brands and retailers are looking to go beyond their codes of conduct and cursory on-site factory audits to bring about a new era in corporate social responsibility.

The goal of such brands as the Gap, Levi Strauss and Nike lies in dispensing with what has sometimes resembled a dysfunctional parent-child relationship between brand owners and the factories that produce their goods. Now, these firms are looking to recast themselves as customers that do more than demand compliance, but provide the necessary resources and training.

Read full story

It's the Economics, Stupid - 9 May 2006 FROM Grist Magazine

Just as people sailing full-tilt into an iceberg zone can get distracted rearranging deck chairs, those of us advocating corporate responsibility may be guilty of spending too much time fiddling with the nuances of the language that describes our work. We do this even as abrupt climate change, pandemics, and other mega-trends float, quiet but menacing, in our path. But as people like the Inuit have long known and acknowledged via their kayak-loads of words for ice and snow, language can powerfully shape thinking -- and perhaps even influence our species' chances of survival.

Read full story

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The big supermarkets - now competing on price, quality ... and trust

Article by Mallen Baker

One of the latest cinematic blasts at business has just been released - Wal-Mart, the high cost of low prices - soon after the company unveiled its new focus on social responsibility. At the same time, the UK's dominant player Tesco has been attacked by the leader of the opposition in the UK Parliament in the same week as announcing a ten point 'Tesco in the Community' programme covering a range of significant CSR issues.

Something serious is happening here. Both of these companies achieved success through being fast moving, alert to the smallest signals in the marketplace whilst being stubbornly deaf to anything that might distract them or blow them off course. The fact that both of these companies are making serious moves shows is an indicator that the business mood is decisively shifting.

Neither has suddenly caught religion. When Wal-Mart declared that within the next three to five years it would be buying all of its wild-caught fish from Marine Stewardship Council-certified fisheries this was partially a recognition of increased awareness of the issue, but mostly the straight business recognition that unsustainable practices would soon mean no product at all.

Both of these companies achieved success by being very good at what they do, and by creating values-driven businesses. Wal-Mart focused on making things affordable for lower income families. Tesco has been driven by the relentless passion for whatever the customer cares about, as well as paranoia about the competition. When each company was smaller, these missions produced considerable customer satisfaction alongside some genuine social benefits.

Wal-Mart's efficiency and cutting out the middleman, back in the days when this was achieved by the hard dealing folksy Sam Walton driving around in his beaten up truck, improved the quality of life for millions of families. Tesco's relentless passion and focus led to an experience that eventually attracted more and more of the shopping public.

What neither company reckoned on, however, was just how much the rules of the game change once you achieve a certain scale. Once you have become one of the largest companies in the world, your leverage on suppliers and ability to invest in what might be described as ruthless efficiency suddenly means that unintended consequences kick in. Both companies are now most attacked for using their muscle to impose ruinously difficult conditions on their suppliers. In addition, they are hungry for retail space because they are caught on a growth treadmill in an increasingly saturated market, and their relationship with local government in their quest to obtain it can sometimes be a source of added conflict.

But mostly, once you get to become the leader in your market, you become a 'lightning rod' company that attracts criticism first. Campaigners are attracted towards what is immediate and visible, and you can't be much more visible than these companies with their huge high street presence and their place in the hearts and minds of the public.

Both companies therefore have ongoing, vociferous campaigns against them by people for whom only their downfall will represent a satisfactory conclusion. Wal-Mart has several websites devoted to attacking its every move, and now its own piece of cinema. The UK anti-big supermarket campaign has called itself tescopoly.com - not much doubt of the major villain there. In some ways, these campaigns are a reflection of the mood that the companies are responding to. The fact that they will dismiss anything and everything the companies do as 'greenwash' makes them less useful however, because there are real changes happening here that are interesting and important.

Neither of these companies are run by evil or stupid people. And they have recognised seriously that the world has changed. The supermarket business has always been fast moving - one shouldn't underestimate how fast these companies can move once they make decisions.

Part of the problem has been the very blinkers that made the companies successful in the first place. If Tesco cares passionately about whatever its customers care about, then de facto it won't much care about things that they don't. So it cares about low prices and good quality. It cares about product being available when and where people want it. It cares about local schools - its Tesco Computers for Schools programme has been an enormously important builder of trust for it.

However, it hasn't much cared about the potential for human rights abuses in the supply chain. It is not in the eyesight of its customers, and although none of its directors would condone, for instance, child labour in its supply chain, it hasn't brought the same passion to rooting it out as it has in its core business. This was neither remarkable nor unique to Tesco, until suddenly one day it found it had grown to the size and iconic importance that it had.

People who carry out public opinion surveys in the UK on CSR have traditionally found that, unprompted, more people mention Tesco as being a socially responsible company than any other. CEO Terry Leahy's recent announcement of its ten point 'Tesco in the Community' programme is the reflection of a growing realisation that the trust implied by that fact is now beginning to be eroded away. Customers still seek out the Tesco shopping experience, but they are beginning to feel uneasy with themselves for doing so. That is a warning sign that any retailer aiming to survive and thrive will pay heed to.

In his recent speech, Leahy said: "The battle to win customers will increasingly be fought not just on value, choice and convenience but on being good neighbours, being active in communities, seizing the environmental challenges and on behaving responsibly." Once a company like Tesco fully internalises such a challenge, they will aim to excel in this just as much as they have done in other aspects of their business.

Tesco's ten point plan, typically, are focused on real substance and have targets attached to them:
* Halve energy use by 2010
* Double customer recycling by 2008
* Ensure all carrier bags are degradable by 2006 and carrier bag use cut by 25% over the next two years
* Introduce nutritional labelling on all 7,000 Tesco own-brand products by 2007
* Launch a healthy eating and nutritional education programme for families in deprived areas
* Get 2 million people running, cycling or walking in events in the run-up to the 2012 Olympics
* Reduce the frequency and noise of deliveries to Express stores
* Increase local community consultation before building new superstores
* Help small suppliers by holding open days across the UK
* Improve local sourcing by introducing regional counters into stores and improve labelling to highlight local produce.

Wal-Mart and Tesco set the pace in their sector, and by influence in other sectors as well. For all that the critics may point to some of the real things that remain wrong with the business model, the fact that they are now focusing on real action may make a real difference to those businesses for whom commitment to CSR has been about fine words and not much doing.

They will ultimately have to face the most difficult issues, because genuinely some of the unintended evils are the consequence of the business model. However one-sided and cynical the Wal-Mart film may be (you may well be ahead of the author in having viewed the film) the focus of its subtitle is absolutely right. With the best will in the world, low prices taken to the extreme inherently carry a social price. But when we, the shoppers, will desert Tesco or Wal-Mart the minute that their prices are undercut by the store down the road, it is by no means an easy dilemma for them to resolve. However all-powerful the critics would paint Wal-Mart and Tesco as being, neither company can force us to change our shopping preferences.

Part of the potential good these companies can do is in bringing sustainable products into the price bracket of lower income families. If Wal-Mart is to make all of its fish sustainable, then that immediately takes that product out of the 'premium price' bracket of the luxury of conscience for the well off. This is an important and valuable role the companies can play.

But the flip side is that they have to work out how to clean up their act and win back trust. The absence of trust also has a business cost. Communities fight harder to prevent them from entering. Wal-Mart recently had a costly court battle over its intention to move into banking services which its competitors had not had to face, because people did not trust the company not to use the opportunity to go head to head with the high street banks.

These are the fastest moving of businesses, that unlike some others that have grown, become disconnected and then declined, show every intention of responding decisively to the emerging realities. As they succeed or fail in finding their way forward in the intense spotlight of public scrutiny, it promises to be the most fascinating of journeys.

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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