Business Respect - CSR Dispatches No 97 - 18 Jun 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 newly launched International NGO Accountability Charter.

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/97.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

One of the ongoing grumbles between business and NGOs has centred on the validity of each other's business model. It is certainly the case that challenges to the corporate world have been many and various - and reported extensively here. What has been lower profile, but still persistent, has been the belief that NGOs also need to practice what they preach in terms of corporate accountability. Now the NGOs have taken the initiative - a number of the most influential groups have released an international NGO Accountability Charter. The Charter is reviewed in this issue.

Talking about accountability, the Forest Stewardship Council responded to the review in the last issue about World Rainforest Movement critique of FSC certification of companies in Uruguay. It restated the information given in my article that it is currently carrying out a policy review in relation to the certification of plantations. As for the specific allegations over the companies in Uruguay, it is looking into these and, hopefully, we will learn the results of its enquiry in a few weeks.

Although my request for a response from the FSC for that article was not responded to in time to be included (it was, to be fair, one of those fairly short deadline requests) they also added that the original report writers at WRM had not given the FSC the chance to input into the report at all before its publication. This is exactly the sort of behaviour, of course, covered in the NGO Accountability Charter!

I also received an email this week from Bert Balducci who had obviously tripped over an old news story on the website (from 2002) about 3M.

"Your report on 3M's removal of Scotchguard from the market a few years back is in error in giving the impression that 3M did this voluntarily ...

"As is made clear on a nonprofit watchdog site (www.chemicalindustryarchives.org/dirtysecrets/scotchgard/1.asp), 3M acted only after (1) years of evidence of environmental impact and (2) the EPA's informing 3M that if it did not act, the EPA would."

The news stories, of course, are not editorialised, but drawn from published sources at the time, so it's a perfectly interesting observation that there is an NGO out there that disagrees with the reported version of events (one could make the same point on a number of stories I'm sure). Sadly, Bert then spoils it by going into 'rant' mode.

"I'm new to your site, and have made no effort to view it in depth, for what seems to me good reason: given this difference between your report and the other, much fuller, one, I would expect to find--perhaps subtly woven in--little more than an industry spin as the underlying purpose of your reports."

It does seem to me that if you're new, you should take a little more time and care before accusing somebody of peddling 'industry spin'. Of course, documents headed 'dirty industry secrets' contain no spin of any kind! Never mind.

In case anyone missed this, what I try to do through this newsletter and the website is to provide information and news about what's happening out there - good and bad. I like to encourage corporate best practice, and provide independent commentary on what anyone's doing that seems to be important and interesting. The commentary brings a point of view which is pro-business AND pro-responsibility, but hopefully the facts are broadly the facts whether they support the view or not. And I respond well to communications that challenge or correct facts, or offer alternative points of view. I'm less fond of name calling of any sort.

I am however, fond of gardening, and a sunny day is calling. Enjoy your week!

Mallen Baker
mallen@mallenbaker.net

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CSR News 18 Jun 2006

HSBC given 'sustainable bank of the year' accolade

Global bank HSBC has been named as 'sustainable bank of the year' at the Financial Times Sustainable Banking Awards.

The bank was commended for an integrated approach to the 'triple bottom line' as well as its industry-leading move to go carbon neutral as part of its overall position on climate change.

Other categories saw ABN Amro Real awarded the 'emerging markets sustainable bank of the year', Citigroup and Banamex for 'sustainable deal of the year' and Credit Suisse for 'sustainable energy finance deal of the year'.

NGO BankTrak criticised the awards. In a statement, it said: "Handing out such awards to banks that might do some good here and there but remain ready to go out and finance the direct destruction of river systems and arctic oceans when there is a buck to be made is clearly the wrong signal."

Japan: Companies guilty of wartime slave labour, but suit fails

The High Court in Tokyo has dismissed an appeal brought by Chinese citizens against 10 companies that used them in wartime slave labour on the grounds that, although the defendants were guilty, the 20-year limit for filing a suit had long passed.

The companies in the dock were Hazama Corp., Nishimatsu Construction Co., Tekken Corp., Nittetsu Mining Co., Japan Energy Corp., Furukawa Co., Ube Industries Ltd., Dowa Mining Co., Tobishima Corp., and Mitsubishi Materials Corp.

The companies, along with the Japanese government, were found to have forced people to work in slave conditions at construction sites and in coal mines without adequate workplace safety measures.

US: KFC faces suit over cooking fats

Fast food chain KFC is being sued for cooking its fried chicken in oil containing trans fatty acids which have been linked to raised cholesterol.

The suit, which is being brought by the Center for Science in the Public Interest, has been dismissed as 'frivolous' by the company. The suit's stated aim is to force KFC to either us different types of oil or to ensure that customers are informed about the dangers of the fat content.

KFC says it has provided nutritional information on its products for a long time, and it provides a wide variety of choices for customers. It has been reviewing options on oils, but has yet to find a solution that preserves flavour and meets other practical criteria.

Reporters without Borders criticise Yahoo for worst China censorship

The anti-censorship NGO Reporters without Borders has said that the Chinese portal for Yahoo! was the clear worst offender in terms of restricting access to sources not approved by the Chinese government.

The organisation carried out tests on the Chinese portals for Yahoo, Google, MSN and local competitor Baidu. Yahoo.cn was found to censor results as stringently as did baidu.cn.

The organisation disputed claims by Microsoft that it does not operate censorship by showing that results using its portal were broadly similar to those from Google, which does admit filtering content.

According to Reporters without Borders, Yahoo would also block access to its searches for over a hour if the searcher attempted to search on what might be considered to be 'subversive' terms, such as 'tibet independence'.

Apple investigating sweatshop claims on iPod

Apple Computer has said that it is investigating a UK newspaper report that claimed that workers at a Chinese factory manufacturing iPods were working 15 hour shifts for money that was half what should have been the going rate.

According to the report, the two factories had 200,000 workers living in dormitories on the site, being paid around $1.60 a day, jalf of which was then taken in rent and subsistence from them.

Apple has responded to the report, stating that the company is "committed to ensuring that working conditions in our supply chain are safe, workers are treated with respect and dignity, and manufacturing processes are environmentally responsible."

Apple has said that it is investigating the allegations, and that it will not tolerate violations of its supplier code of conduct.

Bill Gates to focus on charity

Bill Gates has announced that he is to end his day to day duties with Microsoft by 2008 to devote more time to the work of the Bill and Melinda Gates Foundation.

He will continue to operate as Microsoft Chairman, but will relinquish the role of chief software architect. There will be a two-year transition to ensure a smooth transfer of responsibilities.

Gates will focus on the global health and education work that has been the area supported by his foundation which is worth $29bn.

BP faces criminal inquiry into Alaskan oil spill

BP faces a criminal investigation in the US following its massive oil spill in Prudhoe Bay, Alaska.

The company admitted it had received a subpoena over the affair after internal emails were leaked. It said that the information it was to hand over would show that it had acted properly.

The spill, which BP blames on internal corrosion in the pipes, saw around 1m litres of oil enter the environment. The company denies it did not maintain the pipeline properly.

BP is already being investigated for the blast at its Texas refinery in 2005 which killed 15 people.

Norway: $200bn pension fund eschews Wal-Mart and Freeport

Wal-Mart and Freeport have been excluded from the Norwegian government pension fund on the grounds that the companies have been responsible for either violations of human rights or environmental damage.

In a statement, the Minister of Finance Kristin Halvorsen said that the companies had been targeted because their practices constituted an unacceptable risk of the fund ending up complicit in violations of accepted standards.

The state Bank of Norway, which runs the fund, said it had seen positive trends under way within Wal-Mart to improve social impact, but that there was still some way to go in addressing the various reports of violations in labour rights and human rights.

Freeport was included on the banned list due to issues over the impact of its mining in New Guinea. The company has responded by arguing that its operations are not polluting and the decision arose from a misunderstanding.

Insurance companies will become extinct unless they address climate change

Global insurance market Lloyd's of London has said that insurance firms face becoming extinct unless they begin to do a lot more to focus on the problems of climate change.

The message marked the release of a report by Lloyds that shows how environmental change will lead to serious consequences and cost for the industry. The insurance industry pricing models are not fit for the new realities.

The report recommends that the industry needs to take a new approach to underwriting by factoring in climate change scenarios rather than relying solely on historical data especially with extreme windstorm seasons set to continue.

Rolf Tolle, Lloyd’s Director, Franchise Performance said: "Although it’s almost two decades since the UN recognised that climate change was a catastrophic threat to earth, it’s clear that the insurance industry has not taken catastrophe trends seriously enough. As an industry we must work together to understand and manage these new risks, and to change our behaviour."

CSR FEATURES from the Internet

Can business be cool? - 8 Jun 2006 FROM The Economist

RUPERT MURDOCH is no green activist. But in Pebble Beach later this summer, the annual gathering of executives of Mr Murdoch's News Corporation—which last year led to a dramatic shift in the media conglomerate's attitude to the internet—will be addressed by several leading environmentalists, including a vice-president turned climate-change movie star. Last month BSkyB, a British satellite-television company chaired by Mr Murdoch and run by his son, James, declared itself “carbon-neutral”, having taken various steps to cut or offset its discharges of carbon into the atmosphere.

Read full story

Customers want it cheap, workers pay heavy price - 7 Jun 2006 FROM China Daily

SHANGHAI: As the quality control manager of Joyfaith, a company in suburban Shanghai that makes clothing for pets, Luo Guogong has two difficult choices: Either force workers to put in long periods of overtime, which could endanger their health, or fail to meet the deadlines of the company's clients.

What particularly bothers him was a report in Southern Metropolis Daily last month, which said a 35-year-old textile worker in South China's Guangdong Province died of exhaustion after she was forced to work excessive overtime for four days in a row.

Read full story

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At last - an Accountabiity Charter for NGOs

Article by Mallen Baker

Over four years ago, I wrote an article calling for some sort of charter for Non-Governmental Organisations (NGOs) - a suggestion that provoked some controversy at the time, but which proved merely an early expression of a theme that many others have taken up. Now, a group of respected international NGOs have produced just such a document.

The mere fact of the production of the International NGO Accountability Charter is a cause for congratulation. It shows an acceptance by some of the leaders of the NGO community that accountability needs to exist wherever there is power, and that the considerably greater trust that the public gives to NGOs represents power just as much as the financial resource gives to businesses.

The group that launched the charter includes heavyweights such as Amnesty International, ActionAid, Greenpeace, Oxfam, Save the Children Alliance and Transparency International. A serious group.

On its launch, Irene Khan, Secretary General of Amnesty International, summed it up by saying: "The legitimacy of international NGOs to act is based on universally-recognised freedoms of speech, assembly and association, on the trust people place upon us and on the values we seek to promote. NGOs are playing an increasingly prominent role in setting the agenda in today’s globalised world. This places a clear responsibility on us to act with transparency and accountability."

In that previous article, I identified five components that I thought should be included in any such charter. Needless to say, I was curious now that it has emerged as to whether those suggestions still seem relevant, and whether the actual charter does in fact address them.

My five were as follows:

* Accuracy of information: the NGO promises to its stakeholders that the information it promotes and uses for the basis of its campaigning will be accurate and up to date in terms of its factual content - whilst reserving the right to draw whatever conclusions from these facts it chooses.

* Dialogue and consultation: the NGO promises it will discuss allegations with the company concerned to ensure that there may not be additional information which would support the company's innocence of charges.

* Impact on stakeholders: the NGO promises it will monitor the effect its campaigning has on stakeholders, such as the employees of a target company, and will seek to minimise harm to innocent third parties by targeting pressure on parts of the company which have decision making capacity where possible.

* Respect for safety and privacy: the NGO promises it will not publish information or make statements that will encourage any breach of the personal safety or privacy of people at whatever level in the company targeted.

* Aims and objectives: the NGO promises to publish its aims and objectives with regard to a campaign against a company - and to account for whether those objectives are commensurate with the issue or problem attributed to the company.

Of course, these five are very much framed with campaigning NGOs that target businesses in mind. Any broader based charter would include a number of other key elements that are not covered here. The NGO charter carries statements that make clear the extent of the legitimate role for NGOs, and mapping out their broader stakeholders. The NGO charter states that its signatories will maintain their financial independence, that they will not practice discrimination and that they are committed to openness and transparency and good governance. These are basic provisions that indicate the willingness of the organisations to behave in the way that they would advocate for others, and they are important statements it would be all too easy to take for granted.

But what about the provisions above? The Charter gives a list of 10 different types of stakeholders for the NGOs. One of these is indeed 'those whose policies or behaviour we wish to influence' which, in the event of corporate campaigns, must include businesses. So far, so good.

The Charter establishes a principle of Responsible Advocacy. This principle states that "We will ensure that our advocacy is consistent with our mission, grounded in our work and advances defined public interests. We will have clear processes for adopting public policy positions, explicit ethical policies that guide our choices of advocacy strategy, and ways of identifying and managing potential conflicts of interest among various stakeholders."

This goes to the spirit of some of the points above, but is expressed in such a general sense that one couldn't be wholly confident that on its own it would guarantee that any one of them would be explicitly fulfilled.

The Charter does explicitly address the point around accuracy of information. It says "We will adhere to generally-accepted standards of technical accuracy and honesty in presenting and interpreting data and research, using and referencing independent research."

There is also a strong nod in the direction of the point about dialogue and consultation. "We will ... encourage inputs by people whose interests may be directly affected." This is an important area. One of the most common complaints by companies targeted by NGOs is that they are not consulted when these groups draw up aggressive reports that criticise the company's activity. Arguments such as those used in the past (for instance by Christian Aid when it said it didn't have the resources to enter into any dialogue with British American Tobacco as it wrote its detailed report attacking them) should have no place under this clear and welcome provision.

There is also a specific point about public criticism, specifically: "We will be responsible in our public criticisms of individuals and organisations, ensuring such criticism amounts to fair public comment." This is a welcome statement, but it does introduce a concept which remains vague. What constitutes responsibility in public criticism? If an NGO published the home addresses of directors on its website with exhortations to complain to them, does this activity contravene this provision? If an NGO attacks Nike in an area where that company is actually the best in its industry, and as a result people lose their jobs, was that responsible criticism because the arguments may have been true, or irresponsible because they were not well targeted at those that we most at fault?

And that is the main problem with the NGO Accountability Charter. It is very difficult to be clear about what behaviour will be ruled in or out as a result of an NGO signing it.

The points in my original piece that do not seem to be covered at all are the ones that cover unintended consequences in the form of harm to innocent third parties (although one might infer this to be covered in the general statements about responsible advocacy), respect for safety and privacy, and making clear aims and objectives in relation to any campaign against a company.

That being said, this is a first attempt, and any business-led equivalent goes through a number of iterations to improve upon its initial framing. I believe the NGO Accountability charter is to be welcomed. Businesses should congratulate those NGOs that sign up to it, and encourage them to reflect its spirit in their dealings. After all, lack of integrity in anti-corporate campaigns damages everybody. Those businesses that have suffered some of this damage now, to some extent at least, have respected NGOs as allies in addressing the problem. Businesses will have to continue to endure fair comment - and ask themselves what they need to learn from the experience in order to improve their future performance. But let's work together to weed out the lazy, the vindictive, the unfair and untrue anti-corporate attacks that do so much damage to the reputations of both business and NGO alike.

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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

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Business Respect - most recent edition added on 17th August 2008