Business Respect

Business Respect - CSR Dispatches No#115 - 28 Oct 2007

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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 consider the implications of the Soil Association's
move to restrict air-freighted produce from its organic certification.

In the news:

1. US: Action against companies over apartheid reinstated
2. BP fined for environmental crimes
3. Gap takes action over child labour allegations
4. France: Monsanto sues anti GMO activists
5. US: States lobby for Microsoft anti-trust settlement to be
extended
6. Japan: Alico warned over misleading cancer policy ads

Feature articles on the internet:

1. Big bucks, bad business - 22 Oct 2007 FROM International Herald
Tribune

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Topics:

Welcome
CSR News 28 Oct 2007
CSR FEATURES from the internet
The unnecessary suicide of the organic food movement

Want to read a hyperlinked version of this issue? You can find one on
the website at http://www.mallenbaker.net/csr/nl/115.html.

Copyright 2007 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

* Consumer labels can be important signals that shape buyer behaviour,
or they can be confusing and irrelevant. Such questions have been
raised in the last week by the action by the UK's Soil Association to
alter the basis on which its 'organic' certification is granted. The
dilemmas of this decision are explored in our article this time.

In the mean time, we continue to consider ways in which the internet
will develop new approaches to support the CSR movement's development.
Although the real phenomenon that is revolutionising the web is social
networking sites, we have yet to see this approach really make the
difference when it comes to corporate executives committed to social
responsibility. Busy execs still face the same barriers to
participation that they always have - time. They don't surf. They
don't browse. And now they don't chat, poke or twitter.

By and large, the web is still used in business as a transaction
medium or an information library. Web-based technology may provide
tools of the trade, for instance CRedit 360 and the other social
responsibility reporting tools. But we are still seeking the variation
on the technology that will create the extended community of
practitioners around the world who are committed to this as an
agenda.

At least we now see more CSR websites using some of the tools to make
it easier - newsfeeds, email updates and the like. These are smart
tools for the intended target audience since they are about making
information available with the minimum time commitment. But there must
be more. I would be interested in anyone involved with new
developments in the use of the web to create communities of interest
around CSR to talk about what they're doing - there is surely the
content of a future article there.

Speaking of social networking though, I finally relented to the lure
of Facebook a few weeks ago. I had had a few of those email
invitations to sign up before, but was surprised enough to get two in
one week from people I hadn't seen for 25 years to finally relent. It
is a great tool for building personal networks, but for all that there
are CSR-related groups on there, it remains underpowered for 'networks
with purpose'.

The new vote has gotten underway on the website. The current tally
is:
Which of these groups has done the most so far to respond to the
challenge of climate change?
Governments 29 (15%)
Business 61 (32%)
Citizens 101 (53%)

Thanks to the 191 people that have voted so far. Still time for you to
make your views known, although we won't keep this vote on for too
long, I suspect.

Mallen Baker
mallen@mallenbaker.net

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CSR News

* US: Action against companies over apartheid reinstated

A federal appeals court has reinstated some of the suits against
around 50 companies accused of having supported the apartheid regime
in South Africa.

The move was opposed by the US government, which said that such
litigation would interfere with South Africa's own due process on
reconciliation. During the earlier stage of the lawsuit, the South
African government had objected, saying that such cases under the
Alien Tort Claims Act interfered with its own jurisdiction.

The claimants in the case are made up of people who lived in South
Africa during the last fifty years. They originally filed separate
actions which were subsequently combined into the existing class
action.

* BP fined for environmental crimes

BP has been fined $373m by the US government for a number of
environmental crimes and fraud. The largest part of the levy relates
to price manipulation of propane over which four BP workers were
indicted.

Charges included failings leading up to the explosion at the Texas
city refinery and the pipeline leaks in Alaska.

BP America chairman said that the company admitted that its operations
had failed to meet the requirements of law. The government said it
would ensure that the company was monitored by an independent body for
three years to guarantee compliance.

* Gap takes action over child labour allegations

Gap has said that it takes allegations of child labour in its supply
chain "extremely seriously" following an investigation by the UK
newspaper the Observer.

The newspaper said that it had found children as young as 10 making
clothes in a sweatshop in India in conditions that resembled slavery.

The company said that it would end its relationship with suppliers
that did not meet the company's standards. It has stopped working with
23 suppliers during the last year due to violations of its policy.

The company has ordered the garments in question to be withdrawn from
sale and has begun its own investigation into the claims. The company
said it was unaware that clothing for its Christmas sales had been
improperly subcontracted to a company using child labour.

* France: Monsanto sues anti GMO activists

Biotechnology giant Monsanto has filed a suit against unidentified
activists who, according to the company, destroyed three test sites of
genetically modified crops.

Under French law, suits are able to be brought against unknown
transgressors. The action comes as a result of a string of attacks
during the last year which have been described as having done real
damage to the process of scientific research.

The controversy has echoes of previous actions in Europe, particularly
in the UK, when Monsanto - which had won public opinion broadly in its
home markets - underestimated strength of feeling overseas.

Campaigners argue that it remains the company's tactic to seek to
flood the world with genetically modified crops which then cannot be
retrieved or stopped.

* US: States lobby for Microsoft anti-trust settlement to be extended

Ten US states have called for an extension of the government oversight
of Microsoft agreed as part of its antitrust settlement. Florida,
Louisiana, Maryland and New York - which had supported the terms of
the original settlement - have joined six others in arguing that the
action, due to expire next month, should run through to 2012.

The states have made the case that continued oversight is still needed
because the software giant still has more than 90 percent of the
market in computer operating systems.

So far, the Justice Department has indicated that it does not believe
that such an extension would be justified.

* Japan: Alico warned over misleading cancer policy ads

The Fair Trade Commission has told American Life Insurance to pull
newspaper adverts for a cancer insurance product which it has
described as 'misleading'.

Alico Japan had run the adverts at the beginning of the year,
promising payouts to cancer sufferers without disclosing that these
could only be received under certain circumstances - specifically if
the patient is hospitalised for an operation to have the neoplasm
removed. Such operations usually do not require hospitalisation.

This now makes the second time that the FTC has stepped in over claims
made on life insurance. Nippon Life Insurance received a similar order
four years ago.

CSR FEATURES from the Internet

* 1. Big bucks, bad business - 22 Oct 2007 FROM International Herald
Tribune

With annual growth at over 7 percent, Russia's is one of the fastest
rising economies in the world. Russia has been transformed, apparently
overnight, from a "transition economy" receiving support and aid from
the West to an emerging energy superpower.

The country's business reputation, however, does not match its
economic success. World Bank governance indicators place Russia near
the bottom of the pile compared to countries with similar credit
ratings. In a survey by the Economist Intelligence Unit, the main
concerns on the part of Western executives were the lack of corporate
governance, transparency and business ethics.

http://www.iht.com/articles/2007/10/22/opinion/edhorowitz.php

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* The unnecessary suicide of the organic food movement

Article by Mallen Baker

The UK's Soil Association has announced that it will remove its
organic certification from any foods which have been transported by
air freight except for those whose production meets Fairtrade
requirements. The move has created huge controversy, and with
justification.

The organisation had been considering a blanket ban on any
air-freighted goods, but had also heard the pleas of some of those
that pointed out the impact a blanket ban would have on developing
countries, where organic produce is a significant component of
processes for economic development.

Unfortunately, the move suffers a similar downside to a number of
policy initiatives taken at speed in the face of outside pressure,
which is the potential for serious unintended consequences.

It is what happens when campaigns become focused on a symbol - such as
air travel has become for the climate change campaigners - rather than
the real issue which in this case is the overall contribution to
climate change emissions produced by the product in question.

There are a number of good examples.

New Zealand butter, for instance, sold all the way round the world in
the UK, has less carbon emitted per kilogram of butter than English
butter, even taking its shipment into account. How can this be so?
Because New Zealand cows are able to eat grass, which grows all year
round. In the UK they eat artificial feeds for part of the year, and
are kept in heated accommodation.

There are plenty of other examples - this is not a one-off. Italian
tomatoes are less carbon intensive than British tomatoes outside of a
fairly short season, when the British tomatoes need to be in a heated
greenhouse. Likewise, Kenyan flowers may be better than similar
flowers grown in Holland, and so on.

The disappointment is that a good, rigorous certification symbol that
covered how foods were grown, has now been rendered completely
unrigorous by taking in outside factors in a poorly considered way.
Just what is the organic certification now supposed to mean?

The aim, of course, is that it would become a single more
all-encompassing green label, enabling consumers to establish that the
produce they are purchasing has the best performance in terms of its
environmental impact. Many people who buy organic food, the argument
goes, do so not just because of the health issues around pesticides on
food, but because they care about the environmental impact.

But the new criteria now fail to do that. Produce is not rated on its
carbon emissions, but on an arbitrary measure of how it has been
transported. People conscious of their health may find that food that
has no pesticides will not carry the label. People conscious of the
environment may find that produce that may have had a higher
environmental impact will carry the label. In one dramatic move, the
label has been rendered all but useless for its original, and its
claimed new, role.

In addition, the unintended consequences include real hardship for
some of the poorest people in the world. A study by the Danish
Institute of International Studies found that the poorest countries
make up just under 80 percent of imported organic foods air-freighted
into the UK. Many of these will not fulfil the technical requirements
of Fairtrade certification, and so will have lost their selling
power.

The depressing thing is that some of the other certification schemes
around the world may now follow suit. The glimmer of hope is that the
Soil Association will be holding further consultations during the
coming year, with changes taking place in January 2009. That gives
time for a change.

What should happen instead? First of all, we need to be clear what the
different policy devices are for. Food labels have only one role which
they can fulfil well, that is to give the consumer clear information
on the basis that there is a choice. The current organic label fulfils
that function well - it is about food grown naturally without
pesticides. Likewise, supermarkets such as Tesco and bodies such as
the Carbon Trust have begun looking at how carbon labelling could be
introduced onto products to give relevant and useful information about
the real impact of products. Each of these should be supported as a
means to helping identify impacts, and build capacity for
alternatives. But they measure separate things, and they should be
kept separate.

Ultimately, of course, there are certain consumption patterns that may
become seen as non-valid choices. We are some way away from this yet,
but as the consensus for reduced carbon impacts grows, it may be that
legislation will be used to set standards for different products, in
the way that the European Commission is doing on car emissions. Or
certain products may even become banned, because the impact is too
great. These are areas that need to be well considered, and well
flagged in advance.

When governments around the world agreed that chlorofluorocarbons were
such potent destroyers of the ozone layer that they would all sign up
to the Montreal Protocol phasing them out, companies were given notice
that they had a few years to work on better alternatives. Such
pressures, applied through a consensus of action, can spark innovation
through necessity. Undoubtedly, such action will become a feature of
the response to climate change as well.

What simply does not help, however, is knee-jerk action clutching at
symbolic gestures. Confusing labels (information) with regulation
(banning or restricting) on the basis of popular reactions to one
single factor (air-freight) is as good an example of this as we have
seen. The consumer is confused, developing world producers are denied,
and the environment is not protected.

It is all very well to say, as the Soil Association has, that it is
better for developing world farmers not to be encouraged to depend on
markets that require air freight. There is nothing to stop anyone from
working to achieve such aims, provided that this is done on a basis of
rigorous analysis of the best and worst environmental options. But
denying the organic label to properly produced organic food is not the
tool to do it.

It is to be hoped that the Soil Association reconsiders its position
during the coming months. Otherwise, someone will simply have to
invent a new label that did what the old one did for those consumers
who still need the information it provided. That will seem like a
colossal waste of time and energy when there are more important
battles to be won.

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Business Respect - CSR Dispatches No#115 - 28 Oct 2007