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Sun, July 20, 2008 06:11:09 PMFrom:
Business Respect
Subject:
Business Respect - CSR Dispatches No#132 - 20 Jul 2008
Business Respect - CSR Dispatches No#132 - 20 Jul 2008
==================
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 look at the gap between CSR programmes and ethical
behaviours, and we review surveys of how staff really feel about the
values of their company.
In the news:
1. US: Post-Enron legislation may be dealt major blow by court ruling
2. Wal-Mart joins programme to eliminate illegal logging
3. Botswana: Mine Workers Union dismisses Tati Nickel's approach to
CSR
4. India: Pharma firm Ranbaxy denies quality defects
5. South Korea: Ex-chairman of Samsung guilty of tax evasion
6. UK: Tobacco price fixing fines for six firms
7. Iran: Total sees too great a risk following missile tests
8. EU: European Parliament agrees tighter rules against misleading
air flights advertising
9. Coca-Cola defends Olympic sponsorship
Feature articles on the internet:
1. CSR not just for good times - 18 Jul 2008 FROM Sun Star
2. Corporate Social Irresponsibility - 8 Jul 2008 FROM Business Week
===================
Topics:
Welcome
CSR News 20 Jul 2008
CSR FEATURES from the internet
Recent entries from Mallen's blog
Making employees into alliesCan you have social responsibility without
ethics?
Want to read a hyperlinked version of this issue? You can find one on
the website at http://www.mallenbaker.net/csr/nl/132.html.
Copyright 2008 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
* To some, the question about whether corporate social responsibility
has become removed from business ethics is a pretty dry, academic
debate. At the recent debate held at the UK's House of Lords courtesy
of Business Respect sponsor Good Corporation, it was certainly
anything but - and I thought it was worth just looking at the
remarkable fact that, whilst many of the top companies have very
active CSR programmes, they nevertheless end up in headlines
associated with malpractice. The key difference is between programmes
designed to have an outcome, and day to day behaviours. This is the
focus for the lead article this time.
In case that's still too theoretical for you, there is a second
article this time around two recent surveys which have looked at the
impact of CSR on employees, and MBA graduates.
In case you missed them, the invitations to take part in the Business
Respect readers survey went out last Wednesday, as promised in last
issue's editorial. If you're reading this, then you didn't get around
yet to completing this, or if you started you didn't yet finish. It is
genuinely really helpful to the future development of the website as a
free resource that will hopefully meet your needs if you could take
the ten minutes it would take to fill in. In case you lost the email
(or an aggressive corporate policy filtered it out!) here's the link
again:
http://www.mallenbaker.net/newsite/survey.php?surveyid=78nTP0LJ833087171
There will be one last reminder on Wednesday next week if you haven't
quite managed to get around to it yet - I hope you won't mind this
gentle attempt to make it as easy as possible for those that are
willing to take part to do so.
The analysis of the results, by the way, is being carried out by
Userviews - which normally carries out participation and consultation
with the users of public services in the UK, specialising in hard to
reach groups. Perhaps one of your stakeholder groups falls into that
category? If so, you can see their website at
http://www.userviews.co.uk and thanks to them for their support.
The vote on the website will close soon. It has been one
of the closest I've run, between the real optimists and the kinda
optimists! The current state of play:
In the face of an extended economic recession companies will:
keep CSR as a priority - 402 (39%)
cut budgets, but still focus on key issues - 437 (43%)
drop CSR as an unaffordable luxury - 187 (18%)
Thanks to the 1026 people that have voted so far. Next time, a new
vote. Happy holidays to those that are due to take them before then!
Mallen Baker
mallen@mallenbaker.net
===================
CSR News
* US: Post-Enron legislation may be dealt major blow by court ruling
A challenge to the Sarbanes-Oxley Act that was introduced to set in
place more stringent financial accounting rules following the demise
of Enron, has been described as likely to succeed in bringing the
measure grinding to a halt.
A decision is expected soon from a federal court to rule whether or
not the Public Company Accounting Oversight Board that was created as
part of the Act is constitutional. If the court rules that it is not,
the judgement will bring the entire law down.
Sarbanes-Oxley has been criticised by many firms for increasing the
costs of compliance on corporate governance to an unreasonable degree.
However the legal challenge to PCAOB has been made on a technicality
on the mechanism for the appointment of board members.
* Wal-Mart joins programme to eliminate illegal logging
Wal-Mart has said it is to work with the Global Forest and Trade
Network in a programme to avoid products created through illegal and
unsustainable logging for all of its own brand furniture.
The company announced that it would eliminate wood from illegal or
unknown sources within five years, and would also end the use of wood
from any forests judged to be of 'critical importance' if they could
not be certified as well managed.
Wal-Mart is the first US retailer to join the initiative, and will be
joining Carrefour, Ikea and Procter & Gamble.
* Botswana: Mine Workers Union dismisses Tati Nickel's approach to CSR
The Botswana Mine Workers Union (BMWU) has attacked Tati Nickel for
applying corporate social responsibility as window dressing designed
to cover up corruption and mismanagement at the firm.
The Union handed a petition to the company's management and to the
Ministry of Minerals, Energy and Water Resources, arguing that whilst
the company gave money to the community, it did not treat its own
employees well, for instance requiring employees to pay for their own
medical treatment.
Tati Nickel launched its CSR programme two years ago aiming to address
urgent social issues in the communities affected by the mine's
operations, and focused on boosting support to small enterprises and
to social services, such as a mobile clinic.
* India: Pharma firm Ranbaxy denies quality defects
Indian drug firm Ranbaxy has hit back against allegations by US
prosecutors that the company lied about the quality of its low-cost
drugs, including those aimed at treating HIV.
Ranbaxy CEO Malvinder Singh said that a big global pharmaceutical
company was behind the attacks, and was aiming to sabotage a deal
between the Indian firm and Japanese company Daiichi Sankyo, which had
recently agreed to buy a controlling stake in Ranbaxy for $4bn. He
suggested the move was actually about innovator companies trying to
blow low-cost generic drug makers, although he declined to name the
firm he believed to be responsible.
The US Department of Justice has called upon the company to hand over
documents relating to drug testing procedures which it believes will
show that test results were faked in order to gain US approval for
drugs.
* South Korea: Ex-chairman of Samsung guilty of tax evasion
Lee Kun-hee, the former chairman of Samsung, has been found guilty of
tax evasion and given a three year suspended jail sentence and a 110bn
won fine. He was cleared of another charge of breach of trust.
The conclusion brought to an end an extended investigation into
corruption at Samsung, which is South Korea's largest conglomerate.
The case has attracted a lot of attention in the country, as Samsung
has been seen as one of the most respected institutions, accounting
for nearly one fifth of all exports.
* UK: Tobacco price fixing fines for six firms
Six companies including retailer Asda Walmart and tobacco firm
Gallaher have agreed to pay fines of up to 173 UK pounds following a
probe over unlawful pricing practices. An inquiry into other major
companies is ongoing.
According to the Office of Fair Trading, some of the companies had
asked for leniency, and had been providing early co-operation over the
charges, which saw information on future tobacco pricing being swapped
with allegations of an understanding that pegged prices of certain
tobacco products to those of competitor products.
Asda Walmart, Somerfield, First Quench, TM Retail, One Stop Stores and
Gallaher have agreed to the fines.
* Iran: Total sees too great a risk following missile tests
The head of French oil company Total has said that it would hold off
on further investments in Iran in the short term because of the
growing political risk following the country's test-firing of a series
of missiles.
The company had been committed to act as a partner in the development
of the huge South Pars gas field, but it has suggested that this will
now not go ahead, threatening Iran's ability to increase gas exports
significantly in the short term.
CEO Christophe de Margerie said that the company's reputation could
suffer if it were to go ahead on the basis of its memorandum of
understanding with the state-owned National Iranian Oil Company to
develop phase 11 of the field. The company has said that Iran still
represents an attractive strategic area, but that improved
relationships between the country and its neighbours and a resolution
of tensions over its nuclear programme needed to take place.
* EU: European Parliament agrees tighter rules against misleading air
flights advertising
The European Parliament has agreed with proposals to ban airlines from
giving headline fares in advertising that fail to include additional
charges, such as taxes or baggage charges.
The new measure, which will come into force by the end of the year,
has been welcomed by the Association of European Airlines in the face
of ongoing concerns about misleading ads by certain companies and
increasing numbers of complaints from passengers.
Lowcost airline Ryanair has been the focal point of a number of
accusations around lack of transparent pricing, charges which it has
vigorously rejected.
* Coca-Cola defends Olympic sponsorship
The chairman of Coca-Cola has hit back against critics of the Olympics
games sponsors in an interview with the BBC, where he said that Coke
supported the credo of the Olympic movement which was a good thing for
the world.
Neville Isdell said that the company agreed sponsorship deals over the
Olympics well in advance of knowing where the games would be held, and
such sponsorship was not a support for individual governments but for
an international institutions which is about bringing people
together.
Mr Isdell said that the Beijing Olympics would help China to open up
to the world and bring about change. He added that the Olympic torch
was seen as a symbol of peace, as it was from the very beginning when
the Greek Olympics were carried out to stop the warring between
different factions.
CSR FEATURES from the Internet
* 1. CSR not just for good times - 18 Jul 2008 FROM Sun Star
Corporate social responsibility (CSR) is more vital when there is a
slowdown in the economy.
Jose Antonio Aboitiz of the Philippine Business for Social Progress
(PBSP) Visayas Executive Committee said CSR programs should not be
limited only to "times of plenty."
http://www.mallenbaker.net/jump.php?Link=40
* 2. Corporate Social Irresponsibility - 8 Jul 2008 FROM Business Week
When companies forsake their broadly defined social responsibilities
or use spin to construct a deliberately overinflated image of their
corporate citizenship, the end result is a private sector and a civil
society out of balance.
Too prevalent today are heavily promoted, self-generated snippets
designed to show how businesses are meeting their obligations to
society. Paid advertisements that wave banners about how companies
address global warming, curb health-care costs, or improve public
education often are smoke screens to hide a troubling trend: the
significant falloff in corporate charitable contributions.
http://www.mallenbaker.net/jump.php?Link=39
Recent entries from Mallen's blog
* Tipping the balance - 20 Jul 2008
The UK's Independent newspaper has been carrying a front page
campaign against the restaurant chains - and independent restaurants
too, of course - who have a policy of snatching the money given
towards a service charge to pay for the minimum wage salaries of their
serving staff. It's an excellent example of how public scrutiny will
eventually catch on to the kind of lack of integrity that you think
you can get away with because it's a small issue, nobody's looking,
and nobody thinks it's important.
http://www.mallenbaker.net/blog/post.php?id=83
* Wii Fit or Wii Fat? - 18 Jul 2008
I have a great deal of sympathy with Nintendo over the furore that
has accompanied the promotion of their Wii Fit game. It shows one the
one hand how computer games companies are grappling with their share
of responsibility for growing levels of obesity, but on the other the
primary importance in these matters to get the detail right.
http://www.mallenbaker.net/blog/post.php?id=82
==============================
* Can you have social responsibility without ethics?
Article by Mallen Baker
For some people, corporate social responsibility is about programmes.
Stuff that you do where you can describe what you're trying to
achieve, what approach you've taken to achieve it, and whether it
worked. But it needs to include the other aspect - how you and your
staff behave on a day to day basis. You could label this element
straight business ethics - my version is that it's about what you do
when you think that nobody's looking.
The UK's Institute of Business Ethics reviews accusations that appear
against companies in the news headlines - around 300 stories for last
year. Of these the largest number involved issues affecting customers.
For instance, product safety issues, misleading advertising or
overcharging. The next largest group covered market abuses, such as
anti-competitive behaviour or bribery. Third then came a wider group
of environmental and human rights issues.
It's a lot of stories about malpractice. No wonder public trust in
businesses remains at a low 26 percent.
The trouble is that it's very corrosive. Businesses that try to build
trust with customers by running green programmes don't succeed unless
the public is convinced that the action is sincere. It doesn't have to
be pure altruism - people don't expect businesses to behave like
charities. But if they feel it's all just for show they will be more
negative, more cynical than if the company had done nothing at all.
After all, Enron ran perfectly good programmes.
The sectors most often at the sharp end of complaints about bad
practice are the banks and financial service sector, the retailers,
and the energy or extractive sectors. In different ways, they all
prove the point.
The financial services sector is most criticised for its treatment of
customers, with accusations of excessive fees, mis-selling and
misleading advertising. Why particularly these stories? Because almost
nobody really understands the majority of financial services. The
incentives all go one way. If you can persuade a gullible and confused
public to buy a products which is more expensive than it needs to be,
or yields a smaller return that they think, then you make more profit.
On the other hand, if you give better service - produce simpler
products on smaller margins - then you probably get no reward in the
marketplace - because people still don't understand the products, and
therefore don't even realise that its a better value proposition. You
just make less profit.
At this stage in the discussion, somebody usually pipes up that it is
a dreadful affront to insult the intelligence of the great consumer.
It's not the issue. I'm not stupid, and I don't understand most of
these products. And at least one senior director of a financial
organisation was (confidentially) pretty explicit about the phenomenon
in a recent discussion.
So if the customers suspect that the banks make their money at their
expense, the fact that they may have some nice community programmes
isn't going to make the difference. And it's not just down to the
chairman, or the chief executive. It's down to the individual who's
looking you in the eye and selling in the branch. Day in, day out.
The retailers are the point of focus for two reasons - suspicions of
collusion between each other to the detriment of the customer (price
fixing), and labour rights abuses in the supply chain. Very rarely is
the former proven, but the suspicion persists. The truth is that it's
very hard to get away with much in retail - there's almost never a
time when you can persuade yourself that nobody is looking.
But the intensity of competition is precisely why you get these
issues. It's about trying to expand wafer thin margins, by squeezing
the bottom (he with the leanest supply chain wins) and expanding the
top. The retailers have the closest relationship with their customers
- there's not much confusion over buying a tin of beans.
The energy companies in the UK have been opened to competition, and
yet still sell energy across the same fixed lines to customers - a
situation where differentiating from the competition is harder than
usual. Again, there has been the development of a range of different
tariffs, often with hidden layers of complexity.
The point is this - if the stories that illustrated a lack of business
ethics within business were just down to small numbers of rotten
apples and the personal integrity of certain individual leaders, you
wouldn't have such strong trends in terms of certain sectors
registering so much higher on the scale of malpractice. Not when
business leaders hop from business to business on a pretty regular
basis, many of them changing sector as they do so.
The fact is that the business models of some sectors have more
incentives to cheat than others. The market rewards bad practice, or
the rules make it very difficult to play along whilst being successful
if others aren't.
The answer isn't to treat companies in these sectors like dangerous
dogs that must be muzzled - we still need thriving successful
businesses here, and by and large they are not run by evil or stupid
people.
But it is a serious challenge, both to regulators but also to business
leaders to look carefully at the business model that applies to each
of these businesses.
80 percent of the companies that have been hit by these stories over
the last year are amongst the top 100 listed companies. Nearly all of
these firms are committed to CSR, and have codes of ethics. So why
isn't it making the difference?
The point is having a policy, and having a code, is not the same as
achieving consistent and reliable behaviours in line with that policy
and that code. If you mean it, you have to really drive it through the
business so that the person in the call centre knows the values of the
business and what they mean for how they should behave when faced with
a dilemma. It is not a question of the integrity of the people at the
top that means that the big companies fail in this - but it is a
failure of management nonetheless not to achieve better results in
consistent behaviours.
If your business operates in one of those sectors that yields more
temptations than most, it is even more important.
* Making employees into allies
Article by Mallen Baker
According to a new survey of employees, most are enthusiastic about
the principles of corporate social responsibility, and they are keen
to work for a company that shares their values. But they are finding
barriers at work to finding ways to express this enthusiasm.
That's only part of the story. A separate study has confirmed earlier
findings that the talented MBA graduates that will make money for
businesses in the future are similarly enthusiastic. They surpass
expectations as to the amount of salary expectation they might be
willing to forego in order to work for a values-led company.
Since so many business leaders routinely identify the impact on their
own staff morale and loyalty of CSR programmes, none of this should be
a surprise. It is important, of course, to see that the phenomenon
seems to be holding up in the early stages of more difficult financial
times.
The employee research, produced by Fresh Marketing and based on a
survey of 129 employees from a number of large and small companies,
found that employees felt that management in their companies was
indifferent at best in supporting staff to gain the knowledge to
address sustainability issues. Likewise, the companies were thought to
be particularly bad at communicating their message to shareholders.
But they did feel that it was getting easier to talk to management
about the issue of sustainability. Only one in ten currently say that
they feel completely prepared to address the relevant social and
environmental issues on the job.
The student survey covered a larger sample, 759 graduating MBAs at 11
top business schools. These business leaders of tomorrow ranked
corporate social responsibility high on their list of values. The
survey, carried out by Stanford Graduate School of Busines, found that
a reputation for ethical conduct and caring policies towards employees
was held to be as important as a job with intellectual challenge and
level of salary by over 75 percent of respondents.
The researchers found that the students would be willing to make a
financial sacrifice of up to just under 15 percent of their expected
salary in order to work for a company that exhibited all the aspects
of social responsibility.
Neither survey breaks new ground - we know that employees like the
idea of working for a socially responsible company. What we haven't
seen is much evidence that companies have translated this interest
into giving high priority to internal programmes to empower employees
to contribute to CSR activity, or that they have yet achieved the
quality of internal communication that lets employees really know what
goes on.
There has been a great deal of focus on CSR reporting as a primary
means of how companies communicate about their social resposnibilities
- it would be interesting to know how many, on reflection, might admit
that their focus on such reports meant they had taken their eye off
the ball in terms of communicating to one of their most important
stakeholder groups.
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