Sustainablog

This blog will cover some news items related to Sustainability: Corporate Social Responsibility, Stewardship, Environmental management, etc.

8.10.04

Nine corporations form 'leadership network' on corporate citizenship

Nine corporations form 'leadership network' on corporate citizenship
Lisa Roner
15 Sep 04
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Nine global corporate leaders have formed an international network to
focus on world-class performance in corporate citizenship.

IBM, General Electric, FedEx, Cargill, 3M, Diageo, Omron, Manpower and
General Motors, representing more than $544 billion in annual revenues and
employing more than 1.4 million people worldwide, have united to form the
new Global Leadership Network.

The three-year research project is directed by The Center for Corporate
Citizenship at Boston College and AccountAbility, a membership
organisation. It is also supported by the Ford Foundation.

Each participating company will examine how companies can balance the
pressures of profitability against demands to be responsive to broader
societal needs.

?Crucially, these leading companies are identifying elements of their
corporate responsibility programs that not only improve but drive business
performance,? Simon Zadek, chief executive of AccountAbility says.

?Capturing and harnessing this valuable knowledge is one of the key
objectives of this unique business learning network.?

The companies aim to share their experiences with other companies,
especially those with fewer resources to launch corporate responsibility
initiatives.

Preliminary findings from group?s research are expected in early 2005.

Metro ends APP relationship over responsibility performance

Metro ends APP relationship over responsibility performance
James Rose
14 Sep 04
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German retail giant the Metro Group has announced it will become the
latest buyer to cease sourcing paper supplies from troubled
Indonesian-based Asia Pulp and Paper.

German retail giant the Metro Group has announced it will become the
latest buyer to cease sourcing paper supplies from troubled
Indonesian-based Asia Pulp and Paper.

Metro AG, Germany?s largest retail company and the fifth largest in the
world, has 2300 stores worldwide, which includes well-known chains such as
Cash & Carry, Real, Media Market, Saturn, Comet and Extra.

Its decision to terminate supply lines from APP follows an investigation
by the German-based environment group, Robin Wood, which found that paper
products under APP?s Sigma Universal brand were from mixed tropical
hardwood sources.

Metro was informed of this finding and then contacted APP asking for a
confirmation that the source material was not derived from illegal or
endangered timber. APP was unable to offer this guarantee.

According to a Robin Wood statement, which quotes from a letter received
by them from Metro management, "The Metro Group has taken the dialogue
with APP as an occasion to demand a written proof from all their paper
suppliers that the raw materials used do not originate from forest areas
worth protecting. In the future, this written proof of origin will be a
prerequisite for the suppliers to participate in any paper tenders. ?

Robin Wood says that APP will clear 180,000 hectares of Sumatran forest in
the next two years. It says its own investigations prove that APP ?is not
even able to guarantee that the wood originates from legal sources.?

The company joins other German companies Karstadt and Deutsche Post as
well as international companies like Home Depot and Ricoh in ceasing
supplies from APP. Since early this year, APP?s suppliers have been
targeted by WWF and other groups following the breakdown of a partnership
agreement between WWF and APP.

Companies ignore risk from environment damage

Companies ignore risk from environment damage
Financial Times, 27 September 2004 - Companies in the FTSE 100 are failing
to assess or manage the risk to their business from their impact on the
environment, according to a report published by Isis, the fund management
group.
The group, one of the UK's largest socially responsible investors,
estimates that 61 per cent of FTSE 100 companies in the sectors most
sensitive to biodiversity-risk are not adequately managing their exposure.

Maintaining biodiversity is linked to the sustainable development
initiatives being undertaken by some companies and governments. The report
warns of the severe long-term economic costs of damage to clean water
supplies or forestry, for instance, which could lead to greater
regulation, higher costs for companies and even fines.
Katrina Litvack, head of governance and socially responsible investment at
Isis, said the report - Is biodiversity a material risk for companies? -
should serve as an early warning to companies about the effects on
long-term shareholder value of failing to manage such risks.
"In time, this has all the hallmarks of becoming as financially sensitive
an issue for companies as their exposure to the problem of greenhouse gas
emissions, where regulators have begun to impose energy taxes and
controls," Ms Litvack said.
"As an investor we are concerned with the financial impacts of
biodiversity issues and, under current proposals for forthcoming UK
legislation, it may be a requirement for quoted companies to declare such
risks in an Operating and Financial Review," she added.
The report concludes that, while putting a financial value on biodiversity
risks is often not possible, where valuations can be reached they are
significant. It adds that the long-term nature of such risks means they
can take a long time to identify.


Lessons from Brazil in tackling deforestation

Lessons from Brazil in tackling deforestation
Jakarta Post, 28 September 2004 - Brazil, like Indonesia, is confronted
with serious deforestation of its tropical forests.Through years of debate
and experimentation, the country has now developed several good practices
and an action plan for combating deforestation in the Amazon that could
benefit Indonesia in its journey towards environmental sustainability.
The Amazon, spanning around 5.1 million kilometers with around 80 percent
being actually forest, covers some 60 percent of the Brazilian territory.
Twelve percent of Brazil's 175 million people lives there.It is the
largest rain forest biome in the world, with 50,000 known species of
plants, 3,000 of fish, 2,000 of birds.
The Brazilian Amazon is challenged by a wide range of issues, namely: The
lack of consensus about the rules of the game for development; the sheer
physical size of the region makes it difficult to provide social services
(health and education), infrastructure and transportation; unclear
property rights and ensuing land use conflicts; unmanaged expansion of
cattle ranching and agriculture.
The major cause of deforestation in the Brazilian Amazon is the unmanaged
expansion of cattle ranching and commercial agriculture, which have
rapidly expanded over the last 25 years. Since 1970, over 90 percent of
the additional deforested land has been converted into pasture.
One long-term study indicates that, if present trends continue, only 44
percent of the original forest cover will remain at the beginning of the
next century, with pasture and abandoned pasture becoming the dominant
land cover.
Despite the problems and dynamics of deforestation, Brazil has undertaken
several successful experiments to slow and even reverse environmental
degradation.Examples include:Giving private landowners responsibilities
and incentives -- private landowners in the Amazon are legally required to
keep 80 percent of their land as forest.In some states, they can trade
this requirement to allow more productive land to be developed. Landowners
can receive exemption from the rural property tax on land that they
establish as a privately protected area.
Using high technology for monitoring and control -- the federal government
has invested over US$1 billion to create a system of real-time satellite
surveillance of the Amazon, partly to monitor illegal logging and forest
fires.At least one state has combined this monitoring with an
environmental licensing system to enforce the legal reserve requirement
and fight fires.
Giving property rights to indigenous forest dwellers -- up to a quarter of
the entire Amazon forest in Brazil is being demarcated as reserves for
indigenous people, often by training and equipping indigenous groups.They
use a variety of traditional and modern techniques to manage and protect
forest resources.
Empowering local sustainable management -- forest communities are
empowered through the creation of extractive reserves where they agree to
use resources sustainably in exchange for property rights and
infrastructure, through financing of demonstration projects that support
sustainable community enterprises, and through soft loans in exchange for
protection of environmental services.
Building capacity -- environmental agencies in the nine states that
comprise the Amazon have been created and reinforced, including a)
negotiating ecological-economic zoning for critical areas, and b) hiring
and training more than 2,000 environmental police who engage in education
as well as enforcement.At the same time, a network of 600 NGOs has been
created to share knowledge and lobby for change.
Sustainable financing parks -- an endowment fund of over $200 million is
being initiated, with support from the Global Environment Facility, to
finance the creation and management of national parks in the Amazon in
perpetuity.
Supporting well-managed forestry -- funds have been provided to allow
private companies to experiment with sustainable forest management; a
training program and center on sustainable forestry have been created; and
certification for both buyers and sellers of tropical hardwoods has been
initiated.
Many of these innovations were pioneered by the Rain Forest Pilot Program,
a $450 million partnership of the Brazilian government, society,
international donors, and The World Bank Three recent developments are
helping Brazil confront its deforestation problem.
First, a deforestation action plan, developed by a task force representing
11 federal ministries, proposes 149 integrated actions in the areas of:
Land use management and tenure; environmental monitoring and control;
support to sustainable productive activities; and environmentally
sustainable infrastructure.This will involve partnerships between the
three levels of government, civil society and the private sector.
Expected results include: A reduction in the rates of deforestation and
illegal burning; a reduction in land speculation in sensitive areas; a
reduction in illegal logging; an increase in the prevention and control of
fire, pasture management and sustainable agricultural practices; an
increase in rural properties that respect the legal reserve requirements;
progress towards a more environmentally-sound model of agrarian reform;
creation of additional conservation and indigenous areas in critical
regions; and an increase institutional capacity to control deforestation
and support sustainable production.
Second, the Sustainable Amazon Plan, developed by the Ministries of
Environment and National Integration, proposes specific strategies for
three macro-regions in the Amazon: i) The densely populated zone --the
most deforested areas of the Amazon; ii) Central Amazon --the area
currently under threat from excessive development; and iii) Western Amazon
--virgin areas that are distant from roads.
Third, an offspring of both the interministerial work group on
deforestation and the Sustainable Amazon process has been the creation of
a group to prepare a land management and sustainable development plan for
the region that will be impacted by the final paving of the
Cuiaba-Santarim highway. The process will serve as a model for reducing
environmental impacts and increasing the sustainability of other major
federal investments that are anticipated for the Amazon region.
What can Indonesia learn from this story?Obviously, many of the Brazilian
experiences are specific to that country's history, environmental
conditions, culture, and political arrangements. However, there are some
generic lessons: Transferring resources, rights and responsibilities to
local communities has been a key to success; one size doesn't fit all --
approaches must be tailored to the degree of political will and technical
capability available; innovative pilots for managing tropical forests can
succeed and be scaled up; and this process can be financed at low or
no-cost with the involvement of international partners. Now, it will be
interesting to see what can be applied here... and what Indonesia has to
teach Brazil!


Spain may introduce triple bottom line reporting law

Spain may introduce triple bottom line reporting law
Tobias Webb
27 Sep 04
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Manuel Escudero of Institudo Empresa, a Spanish business school based in
Madrid, said today at a conference that the left leaning Spanish
government is considering bringing in accountability and transparency
regulation for listed companies by 2006.

Mr Escudero was speaking today on a stakeholder panel at the
Inter-American Development Bank's bi-annual conference on corporate
responsibility in Mexico.

He told the 700 delegates at the conference that the Spanish government is
currently setting up a multi-stakeholder forum comprised of employer
groups, trade unions, NGOs and companies to discuss what eventual
"accountability and transparency" regulation might look like.

Mr Escudero also said that the problem of the independence of auditing and
verification firms may well be tackled by the same draft rules, which will
be drawn up over the next couple of years.

He mentioned that these firms might have to be "registered" in order to be
able to do business with large companies as verifiers of social
responsibility performance claims.

This working group will culminate, he believes, in regulations for listed
Spanish companies in 2006, although he was vague when questioned by
Ethical Corporation over what the new rules might actually cover.

"The state must lend a hand" when it comes to driving corporate
responsibility in Spain, he said today.

Ethical Leadership Is Not For The Weak

Ethical Leadership Is Not For The Weak
Investor's Business Daily, 20 September 2004 - Doing the wrong thing is
tempting if there's much to gain and you can get away with it. That's why
the true test of an ethical leader occurs when no one's around.
Barbara Krumsiek passed the test.
When working for a financial services firm early in her career, she was
pitching her services to a potential client.
At one point, she was left alone in the prospect's office for a few
minutes with her competitor's file sitting on the desk in front of her.
"I could've easily looked in that file to see what I was up against," said
Krumsiek, president and chief executive of Calvert Group, a mutual fund
company in Bethesda, Md., that specializes in socially responsible
investing.
"But I was never told I could look at it, so I didn't think it was right
to do it," she added.
By starting from a base of what's right, rather than what's justifiable or
defensible, Krumsiek set an example of ethical behavior.
Over a 30-year Wall Street career, Krumsiek has learned that ethical
leadership requires a dose of bluntness. In the ongoing battle between
"being nice and being honest," she says that setting a high ethical bar
compels her to choose honesty.
"Being ethical doesn't mean always being nice," she said. "When dealing
with boards or clients, you have to be honest. Sometimes it's easier to be
nice. But getting people to trust you is more important than getting
people to like you."
To build trust, Krumsiek communicates in a clear, direct manner. She
models ethical decision-making for her employees by applying these tools:
Admit mistakes. Acknowledge when you're wrong and you can instantly earn
others' trust, Krumsiek says.
If you confront ambiguities head-on and make decisive decisions that are
aligned with your core values, then even if the results are unsuccessful
you can demonstrate ethical leadership.
Promote dialogue. If people act unethically, don't write them off.
Everyone has lapses. The key is working with them to improve. "We take the
attitude that there are no bad people, just bad behaviors," Krumsiek said.
"If you come up against bad behaviors, you get a dialogue going to
persuade the person to change."
Know your limits. It's impossible to impose ethics on people; they must
decide for themselves to do the right thing. By stepping back and giving
them the space to explore what's right, you enable them to make tough
choices and draw their own conclusions. "We can't write enough rules to
make every employee do the right thing," Krumsiek said. "So there's a
level of trust."


Pharmaceutical firms must do more to reduce ethical risk, says shareholder group

Pharmaceutical firms must do more to reduce ethical risk, says shareholder
group
Ethical Corporation, 21 September 2004 - Pharmaceutical companies need to
make a more convincing commitment to addressing current and future health
crises in emerging markets, according to the Pharmaceuticals Shareholders
Group.
In a report released on Monday, the Pharmaceuticals Shareholders Group
(PSG) highlighted that pharmaceutical companies should be doing more to
address public health crises.
The group also stressed that the sector needs to recognise the commercial
reasons for doing so.
PSG cited corporate license to operate and the protection of legitimate
pricing in mature markets as key reasons for large health-related
companies to get more involved in tackling global health issues.
An international grouping of institutional investors with significant
exposure to the pharmaceutical sector, PSG says it is deeply concerned by
the prospect of negative impacts for the pharmaceutical industry resulting
from ongoing public criticism.
The industry has come under fire in recent years over many prominent
issues, including drugs pricing in the US and allegations of misconduct in
areas such as clinical trials and marketing.
A key issue has been the sector?s response to the HIV/AIDS pandemic and
the wider public health crisis in emerging markets.
PSG has expressed particular concern over the impact that this issue may
have on long-term shareholder value.
Tim Breedon, chief investment officer of Legal & General (a PSG member)
commented that, given the lack of systematic and transparent disclosure on
risks associated with the public health crises, it is very difficult for
investors to know how well companies actually manage these risks.
He explained that companies should resolve to link their corporate
responsibility strategies to their core business plans in order for this
problem to be resolved.
The report suggested that key commercial reasons for taking a proactive
approach to CR included defending the ?social contract? between
governments, wider society and pharmaceutical companies.
The reasoning behind this is that intellectual property law and future
innovation depends on on-going trust.
Protecting company reputation and licence to operate with potential
impacts on pricing power in the US and other lucrative markets was another
key reason given by the Group.
The report also suggested that by playing a more active role, the
pharmaceutical industry would be better placed to limit the potential for
emerging market countries to opt out of or otherwise weaken international
patent treaties.
At present, according to latest reports, Malaria kills an African child
every 30 seconds.
The disease is responsible for 300 million acute illnesses and 1 million
deaths per year, with increasing resistance to existing treatments.
Of the 1,393 total new drugs approved between 1975 and 1999, only 1% (13
drugs) were specifically indicated for a tropical disease.
The United Nations Population Division forecasts that AIDS will kill 46
million people this decade.
This is forecast to rise to 278 million by 2050. Only 5% of those in the
developing world who require antiretrovirals (ARVs) are receiving them.


SEC chairman attacks companies for lack of ethical leadership

SEC chairman attacks companies for lack of ethical leadership
Ethical Corporation, 21 September 2004 - William Donaldson, chairman of
the Securities and Exchange Commission, has said that although corporate
governance has improved, many US bosses still fail to provide ethical
leadership for their companies.
In response to critics of over-regulation, Donaldson cites a lack of
progress in linking boardroom pay more closely to performance.
?You must have an internal code of ethics that goes beyond the letter of
the law to also encompass the spirit of the law,? he said this week.
Donaldson?s comments come amid growing backlash from business against
recent US regulatory initiatives, including requirements for independent
chairman of mutual funds and a proposal to force all hedge funds to
register with the SEC.
Donaldson says he is determined, however, to press ahead with the plan,
which he says is necessary to protect hedge fund investors and the rest of
the financial system.
Opponents of the plan, including Federal Reserve chairman Alan Greenspan,
argue hedge funds play an important role in providing liquidity in the
financial system.


Emissions will rise, not fall, under EU Emissions trading scheme, says new research

Emissions will rise, not fall, under EU Emissions trading scheme, says new
research
Ethical Corporation, 23 September 2004 - Emissions are set to rise because
permit trading markets have failed to generate adequate pricing
mechanisms, says a consultancy report.
The latest research from Enviros Consulting has shown that a high number
of reserve allowances entering the emissions trading market in 2006 will
undermined the price competitiveness of permits, rendering the trading
scheme toothless.
According to the research, the first phase of the scheme may actually
allow emissions to increase by up to 11% relative to 2000 levels, with no
real incentive for firms to reduce emissions in the medium term.
These increases are in stark contrast to the commitments of European
Member States under the Kyoto Protocol, which require a collective
reduction in emissions across all EU 15 countries of 8% by 2010 from 1990
levels.
Persistently low permit prices provide little incentive to firms to invest
in emission abatement technologies.
This is because if permit prices are low, it remains in the interest of
firms to continue with current production processes and spend a little
extra on purchasing more permits.
Permit prices need to rise significantly in order to make a business case
for firms to alter existing ?dirty? production processes.
However, the report suggests that even if allowances are tightened in
Phase II of the scheme (2008-2012) and allowance prices rise do
significantly, businesses may still fail to make the required investments.

This is due to the long asset lives of most capital assets in the energy
sector (up to 30 years) compared to the relatively short period over which
the EU European Trading Scheme (ETS) incentives will exist.
The perceived risks associated with tradable environmental instruments are
another factor hindering the functionality of permit trading markets.
Experience in the UK renewable sector, for example, shows that banks
rarely give any weighting to the revenue from the sale of ROCs (Renewables
Obligation Certificates) in their lending calculations for renewable
energy projects.
Assuming that countries will attempt to achieve their Kyoto targets, Phase
II of the scheme will require a marked restriction on permits.
As demand for emissions permits begins to exceed supply, permit prices
will increase over the period 2008 ? 2012.
The research suggests that if no new capital investment is made, then
prices could rise from their current rate of ?5/permit to as much as
?50/permit.
The problem is that even with high prices in Phase II, material reductions
in emissions across Europe may still not be achieved.
Subsequently, the report calls for policy commitments to reducing CO2 to
be backed up with clear and unchanging legislation that sets out reduction
targets for at least 15 years.
Only if this happens, says the report, can a stable forward market exist
in which investments in low carbon technologies can be financed.


George Bush and John Kerry approach the two issues very differently. Cheaper versus cleaner: big differences

Cheaper versus cleaner: big differences
Christian Science Monitor, 28 September 2004 - Consider two recent news
items: oil prices creeping up toward $ 50 a barrel and Antarctic glaciers
breaking up into icebergs at an accelerated pace, probably due to global
warming.
They may not seem related. And with war in Iraq and the economy topping
the list of election concerns, energy and the environment aren't exactly
front-page political news.
But the two overlap considerably. And while they may not rank as top-tier
issues among voters, they resonate deeply and personally for millions of
Americans - including many who've yet to make up their minds whom to vote
for.
George Bush and John Kerry approach the two issues very differently.
Mr. Bush leans toward loosening government regulations and favoring the
marketplace to reduce pollution, while opening federal lands to more
logging, mining, and especially oil and gas drilling. He's suspicious of
international efforts to address issues like climate change.
In his two decades as a United States senator, by contrast, Mr. Kerry has
become known as one of the strongest supporters of environmental laws
while advocating a faster pace toward renewable energy sources. He wants
the US to engage more fully with the rest of the world on environmental
issues that know no borders.
No issue symbolizes the contrast between the two better than the Arctic
National Wildlife Refuge in Alaska. Bush wants to open part of the coastal
plain there for oil drilling; Kerry has led the congressional fight to
preserve the area for caribou, polar bear, and other wildlife.
Drilling for oil vs. wildlife
The philosophical basis of the Bush administration's approach to the
twinned issues of protecting nature and moving toward energy independence
is that environmental progress cannot be achieved without economic
prosperity.
"We have made a national commitment to environmental improvement," says
Environmental Protection Agency administrator Michael Leavitt. But as Mr.
Leavitt, the former governor of Utah, also frequently says: "Nothing
promotes pollution like poverty." And that, he acknowledges, "creates an
undeniable tension between our environmental aspirations and our economic
desires."
In principle, Mr. Kerry would not disagree.
But while activists criticize just about everything Bush does regarding
energy and the environment, Kerry is seen as their champion.
Early in the primary season, Kerry was endorsed by the League of
Conservation Voters, one of the largest and most overtly political
environmental groups in the country. Describing him as "one of America's
premier environmental leaders," the league asserted that "on a range of
domestic issues - from clean air to clean water to public lands - Kerry
has repeatedly staked out pro-environment positions."
The Sierra Club - the other major environmental organization that
campaigns for candidates - has endorsed Kerry as well. "John Kerry's
record on the environment is impressive by any measure and reveals a
sincere personal passion for the issue," says Carl Pope, the club's
executive director.
The issue does seem to be personally important to Kerry, as it does to his
extended family. He met his wife Teresa at an Earth Day event in 1990, and
he was one of a handful of US senators to attend the 1992 Earth Summit in
Brazil. (Al Gore was there, too.)
Shared goal: cleaner fuel, air
Among Kerry's goals: Independence from Middle East sources of oil in 10
years and generating 20 percent of the nation's electricity from renewable
or alternative sources by 2020.
In part, this would be achieved by directing some of the government
royalties from oil and gas drilling on federal lands to the development of
cleaner energy sources.
Long an advocate of raising fuel efficiency standards for cars and light
trucks, Kerry also proposes tax credits for auto manufacturers and
consumers in order to spur faster development of advanced technology
vehicles. He would invest $ 10 billion in clean coal technology, and he
advocates tax incentives to construct energy-efficient buildings and homes
and retrofit older ones.
Depending on one's point of view, Kerry's proposals are either visionary
and bold or they would "weaken the economy ... and cause massive job
losses in key industries," as the Bush campaign asserts.
Bush, too, pledges to "reduce power plant emissions ... and help the
states meet tougher new air quality standards." The focus of his
clean-energy proposal is more government help to develop hydrogen-power
fuel cell technology for vehicles, homes, and businesses.
Bush would change clean-air laws to emphasize a market approach to
reducing such pollutants as mercury, nitrogen oxides, and sulfur dioxide.
Under a "cap and trade" system, cleaner businesses could sell the right to
pollute to other businesses unable to stay beneath their emission cap.
Environmentalists lauded the administration's new regulation reducing
diesel emissions from off-road vehicles used in agriculture and
construction. But they charge that Bush's proposals for other pollutants
actually make it easier for industries than under the existing Clean Air
Act by lowering the goals and giving them more time to reduce such
emissions. And they criticized the president for first pledging to
regulate emissions of carbon dioxide (the main greenhouse gas causing
global warming) and then deciding to make such reductions voluntary.
That Bush and Vice president Dick Cheney are both former oilmen (or that
Mr. Cheney refused to say whose advice he took in crafting the White House
energy plan) does not help the administration's image here.
Meanwhile, some of the traditional GOP base - like ranchers in the Rocky
Mountain West - have been joining environmentalists in opposing the steep
increase in oil and gas leases allowed there under the Bush
administration.
How does the public think about the environment?
A solid majority of Americans - 61 percent - describe themselves as
activists or at least sympathetic toward the environmental movement,
according to the Gallup organization. And by 58 to 34 percent, they think
environmental quality in the country is getting worse rather than better.
Generally speaking, most Republicans as well as Democrats think of
themselves as pro-environment.
But there's been a shift in recent years in public opinion - a development
that may give Kerry pause.
Shifting public attitudes
About the time Bush took office, a strong majority (70 to 23 percent)
favored environmental protection "even at the risk of curbing economic
growth," according to Gallup. Three years later, the gap had narrowed
considerably: Forty-nine percent still favored protecting the environment,
but 44 percent agreed that "economic growth should be given priority, even
if the environment suffers to some extent."
In other words, it seems, the public is moving at least in the direction
(if not to the extent) of the Bush position.
Still, the GOP knows it's on tricky ground here.
While the Bush administration and the Republican Congress have worked to
roll back some Clinton-era initiatives, ease government regulation, reduce
the economic impact of such landmark laws as the Endangered Species Act,
and open up more federal land to extractive industries, not all GOP
elected officials are fully behind them.
California Gov. Arnold Schwarzenegger (R) just signed more than two dozen
pro-environment bills addressing topics ranging from hybrid cars and
cleaner buses to new protections for the Sierra Nevada Mountains and the
Pacific Ocean. The state also is on a collision course with the White
House over California's proposal to regulate greenhouse gases from autos.
Other Republican governors - George Pataki of New York, for example - are
seen as much "greener" than Bush as well.
Meanwhile, scientific evidence continues to mount that man-made climate
change is occurring. Senator John McCain (R) of Arizona, one of the most
respected politicians in the country, is urging the president to do more
about global warming.
Voters may be making their decisions mainly for other reasons. But in a
confidential memo to elected GOP leaders last year, Republican pollster
Frank Luntz wrote, "The environment is probably the single issue on which
Republicans in general - and President Bush in particular - are most
vulnerable."
Proposals: from foreign oil to global warming
Bush
Supports oil drilling in Alaska's Arctic National Wildlife Refuge to cut
dependence on foreign oil. Has expanded options for natural gas drilling
in the West. Provide $ 4 billion in tax incentives for new energy
technologies and conservation.
Favors more logging on federal lands to create jobs and prevent fires.
Withdrew US from Kyoto Protocol to limit greenhouse-gas emissions, saying
it would hurt the economy.
Favors storing used reactor fuel from commercial plants in Nevada bedrock.

Seeks a "Clean Skies Initiative" to cut power plant emissions.
Kerry
Set goal of 20 percent of energy supplied by renewable sources by 2020.
Invest $ 10 billion in automobile fuel efficiency, $ 5 billion in hydrogen
research, and $ 10 billion in clean coal. Opposes oil drilling in ANWR.
Favors clearing brush and timber only around communities to prevent fires.

Voted against Kyoto Protocol, but wrote legislation to cut greenhouse-gas
emissions.
Favors keeping used reactor fuel at commercial plants.
Pledges tougher enforcement of air pollution laws. Would lead a "restore
America's waters" campaign to protect rivers, lakes, and reservoirs.
Sources: Campaign websites, AP


5.10.04

American companies' earnings are under pressure from a rising oil price. ?There are no circumstances under which rising oil prices do not hit profits?

Excess optimism
Sep 30th 2004
From The Economist print edition










American companies' earnings are under pressure from a rising oil price.
This is bad news, because American companies' prospects aren't that
healthy anyway
WHILE keenly aware of the instability of Nigeria and the precariousness of
its oil supplies, few in the oil industry, let alone anyone outside it,
are likely to have heard of the Niger Delta People's Volunteer Force. They
have now. News that this obscure faction had told oil companies to stop
production in Nigeria, the world's ninth-biggest oil producer, and that,
improbably, it was about to wage all-out war on the state, was enough to
send oil briefly over $50 a barrel this week. The price of crude has now
risen by more than half this year?and the sharp rise in the price of oil
for future delivery suggests that oil users think it likely to stay high.
That will probably start to prove a drag not just on the American economy
as a whole, the biggest consumer of oil, but also its companies, which in
recent years had seemed to have remade themselves into profit machines.
Low yields on government debt suggest that bond investors, at least, think
that a rising oil price, among other things, will slow economic growth.
Yet with a few exceptions, equity investors seem to think that companies
will be unaffected: American shares have fallen only a bit this year;
indeed, they are still valued as though American companies will take this
latest blow in their stride. That looks unlikely. Straws in the wind,
perhaps, but on September 29th the Bureau of Economic Analysis (BEA)
announced that corporate profits in America fell by 0.7%, after tax, in
the second quarter compared with the first.
The worst-hit industries are well known to the stockmarket, and for them
the rising oil price is just one more burden. Airlines are in a dreadful
hole. United Airlines and US Airways are already in bankruptcy; Delta is
teetering on the edge. So far this year, shares in airlines have fallen by
23%, and the International Air Transport Association said on September
27th that, partly because of higher fuel costs, airlines around the world
would lose up to $4 billion this year.
Car companies, too, have been hit hard. This is partly because the high
oil price has raised their manufacturing costs, but also because their
most profitable lines have been sport-utility vehicles, which guzzle even
more gas than the rest. Shares in carmakers are down by over a fifth this
year.
But autos and transportation account for only some $200 billion of the $10
trillion capitalisation of the American stockmarket. The puzzle is why
investors appear so unfazed by prospects for other firms. One reason, of
course, is that the profits of many of them?financial firms, for
example?appear unaffected by rising oil prices. And financial firms make
up 40% at least of all corporate profits, and probably more like half if
quasi-financial companies such as General Electric are taken into account.
(In 1980, by comparison, the figure was a mere 6%.)
In fact, suggests Jim Bianco, who runs an eponymous research firm, surging
oil prices are very likely to have an effect on financial firms' profits.
The single most important determinant of these is the steepness of the
yield curve?the difference between short- and long-term rates. When it is
steep, financial folk rake in profits. In the past few years it has been
very steep indeed. Last year, when it was at its steepest, banks made more
money than ever.
Now the yield curve is flattening for reasons that are connected with the
oil price. At the same time that the Federal Reserve is putting short-term
rates up to more normal levels, the fear of bond investors that the rising
oil price will contribute to a slowing economy has sent bond prices up as
well, reducing long-term yields and flattening the yield curve. Since the
yield curve is still very steep by historical standards, it is likely to
flatten further.








Profits elsewhere seem to have held up admirably. As the chart on the
previous page shows, since 2001 profits for non-financials have soared,
though only earlier this year did they exceed the level they reached in
1997. But growth is slowing. In the second quarter of last year pre-tax
profits were 14% higher than the quarter before. But in the latest BEA
survey, they rose by only 6%.
Andrew Smithers, a stockmarket consultant not known for his bullish views,
thinks profits will be hit as corporate cashflow falters. Both consumers
and the government are so indebted that they cannot save less and spend
more. So a slowing economy and higher oil prices cannot mean anything
other than lower profits. ?There are no circumstances under which rising
oil prices do not hit profits,? he says.
Even bullish analysts who think that the rise in the oil price will have
little effect on profits believe that profits will weaken nevertheless.
Ajay Kapur, a strategist at Smith Barney, a brokerage firm, thinks that
they will rise by 19.3% this year but only by 6% next year.
Flattening profits should draw attention to companies' still-suspect
finances. Corporate-debt markets have risen strongly, mainly because so
many investors have assumed that companies were using those bumper profits
to pay off debt and repair balance sheets ravaged by the excesses of the
late 1990s. In the round, however, companies have done very little to pay
off debts. Certainly, credit-rating agencies, which are supposed to notice
such things, are unimpressed. The average rating awarded by Moody's has
fallen by a notch over the past three years, from investment grade to
junk. This year downgrades have outnumbered upgrades.
It is true that some of this trend is explained by lowly rated companies
coming to the market for the first time, but the effect of this
development is small because so many American firms already issue bonds.
And in a sample of 175 big firms studied earlier this year by
CreditSights, a research firm, total debts were still 40% higher than they
were in 1999.
So if companies have not been investing much, what have they done with all
the money? Given it back to shareholders by various means. Share buybacks
are at their highest in some 20 years. In the second quarter, companies
repurchased shares at an annual rate of $159.5 billion, according to Mr
Smithers.
Alas, in the same quarter, American companies generated a financial
deficit rather than a financial surplus. For the first time since the
first quarter of last year, in other words, investment exceeded profits.
Although the deficit was quite small, it is likely to get larger if
profits and profit margins fall further. That seems very likely. Consumers
are too indebted, the trade deficit continues to widen, tax breaks are to
be scrapped and the price of oil is rising. The profits that people are
most likely to hear about are those of gloom.

Schwarzenegger v Bush? A chance for the governor to prove he really is a tree-hugger, after all

California and climate change

Schwarzenegger v Bush?
Sep 30th 2004 | NEW YORK
From The Economist print edition


A chance for the governor to prove he really is a tree-hugger, after all
IS THE Terminator bold enough to take on King George, slayer of Kyoto?
That is the chief question hovering round Arnold Schwarzenegger's
environmental record. The man who owns a fleet of Hummers has already done
some of the easier green things?appointing a few appropriately verdant
people to his administration, signing a few tree-cuddling bills and so on.
Now the global warming debate offers the chance of a nasty fight with the
president.
Mr Schwarzenegger inherited two explosive policies on climate change from
Gray Davis, his Democratic predecessor. First, California had joined other
states in a lawsuit designed to force the Bush administration to declare
that carbon dioxide, the principal greenhouse gas, is a pollutant. That
technicality would oblige the federal government to take action to curb CO
2?something that Mr Bush refuses to do. Mr Schwarzenegger has said the
state will pursue this lawsuit.
The trickier inheritance involves a state law, passed in 2002, that
demands sharp reductions in the emission of greenhouse gases from cars. On
September 24th, California's Air Resources Board (ARB), the state's top
air-pollution regulator, issued detailed rules for compliance. This is the
first such law in the country, and it could have a sweeping impact.
California, by itself, is one of the world's biggest car markets; and
other economies may well copy its rules, as they have often done with
air-quality standards. Seven American states, including New York, as well
as Canada, have hinted that they may follow suit.
Even before the ink was dry, lawyers from the car industry and the federal
government were ready to pounce. The car industry insists that the
technology required to meet the new rules is either unavailable or hugely
expensive. Its experts challenge the ARB's assertion that its new rules
will cost only about $1,000 per new car in 2016.
The Bush administration, for its part, argues that the state is
overstepping its legal authority. Uniquely among American states,
California has the right to set its own air-quality standards. But because
the production of greenhouse gases by cars is closely linked to the amount
of petrol burned, the federal government argues that California's new
rules are really fuel-economy standards. Only the federal government has
the right to set those.
Is Mr Schwarzenegger ready for a battle royal with both a big industry and
his own president? After their early love affair, greens have soured
lately on Arnie. A large task-force has just completed a 2,500-page review
of all the state government's workings; greens grumble that they were
barely consulted, while fat cats?notably from Chevron Texaco, a
Californian oil firm?sat at the top table.
It is hard to imagine a Republican governor opposing his president during
an election campaign. But once that is out of the way, he may prove the
cynics wrong. Despite a frosty reception from some business interests, he
has not renounced any of his green campaign pledges. And he has more
allies in his party than it first appears.
Other ?climate-friendly? Republicans include Governor George Pataki of New
York, Governor Mitt Romney of Massachusetts and Senator John McCain. The
latter received 43 votes the last time he proposed (against Mr Bush's
wishes) a mandatory ?cap-and-trade? bill to curb carbon emissions, and he
has vowed to pursue this bill as doggedly as he did campaign-finance
reform. At present America's climate policy is caught between a
hotch-potch of state-led initiatives, Mr Bush's do-nothing approach and
some fairly wild green ideas. In theory, a McCain-Schwarzenegger alliance
might be rather useful.

Corporate governance in an interconnected world

Corporate governance in an interconnected world
1,748 words
29 September 2004
The Independent Business Weekly
English
(c) 2004 The Independent Business Weekly
The scale and scope of modern corporations, coupled with increasing
globalisation and the growing awareness of the environmental and social
effects, make the moves towards more responsible capitalism distinct.
The northern European countries are often seen as leaders in adopting
responsible or "stakeholder" capitalism, but other nations such as
Germany, the UK, Australia and the US are increasingly represented. Asia
is less focused on these issues but there are notable exceptions. Japan
has emerged as a global leader in environmental management and reporting,
while corporate social responsibility issues are increasingly recognised
in Singapore and elsewhere.
The Asian Corporate Governance Association conference in late 2003
featured discussions dealing with corporate responsibility in the region.
Gary Coull, the head of leading Asia investment bank, CLSA Emerging
Markets, presented a strong case for a new, ethically driven style of
corporate governance.
The move towards increased social responsibility has not been without its
critics.
Many intelligent business thinkers believe environmental and social issues
should be handled by government and by the long-term play of market
forces. Some well-known theorists who support the primacy of shareholder
interests reject the idea of corporate social responsibility.
For example, the Nobel Prize-winning economist Milton Friedman famously
asserted: "the only responsibility of business is to maximise its profit."

For him, it is up to the owners of the business to choose to spend money
on environmental or social causes. If a corporation spends money in this
way, it amounts to an involuntary tax on the shareholders.
This kind of corporate "socialism" is, for them, a dangerous trend
undermining the basis of free capitalism.
"Ultimately, responsibilities can only be held by individuals.
Corporations should not be asked to play a philanthropic or social role.
Although Friedman's position may seem extreme, this view is widely
reflected in contemporary business and investment institutions.
It also lays claim to a venerable philosophical and legal tradition. For
example, John Locke's account of private property emphasises the earth is
common to all people but each individual has absolute "property" in his
own person.
He adds to this an account of how, if a person mixes his labour and work
with what is common property, it becomes his property. Similarly, John
Stuart Mill, a defender of individual liberty and a critic of the tendency
of people to form a "moral police," believed "the only freedom which
deserves the name is that of pursuing our own good in our own way."
Finally, Berle and Means, authors of The Modern Corporation and Private
Property, noted the historical purpose of the common law was "protecting
individual attributes of individual men - their right to property, to free
motion and locomotion, to protection of individual relationships entered
into between them."
These may seem like overly philosophical and antiquated concepts, but
their continued influence is hard to understate.
Despite the intellectual pedigree of the view claiming companies should be
managed solely for the benefit of shareholders, there is a compelling
argument that globalisation has fundamentally altered some of the critical
issues of corporate governance.
Peter Singer highlights a reason for this in his book, One World: The
Ethics of Globalisation.
He argues our ways of thinking about the world and of framing ethical
issues has yet to catch up with our increasing interconnectedness.
Historically, if someone harmed another person, it was simple to determine
who was responsible. But is this true of distant effects such as global
warming? If a consumer, a company, or nation emits a disproportionate
share of greenhouse gasses, is it obliged to do something about it?
Singer notes historical defences of private property were not absolute.
They stopped when property rights interfered with the rights of others.
Locke, for example, says there is an absolute right to ownership of self
and acquisition of what is available in nature, "at least where there is
enough, and as good left in common for others."
This suggests the freedom to run a business is circumscribed in relation
to actions harming shared global resources such as the oceans.
Legal tradition contains a similar distinction. According to Berle and
Means, the guiding common law principle has always been "use your own
property so as to not injure others."
In other words, people are accountable if they cause harm to others. In
light of this, does some scientists' belief that we are facing limitations
in the regenerative capacity of earth's natural systems change the freedom
of corporations to disregard their systems' effects in the pursuit of
profit maximisation?
The thinking of Locke and Mill and the common law tradition - which
supports liberty and economic freedom - limits freedom when other people's
interests or common property is at stake.
Because it is hard to determine what those interests or common resources
are in complex business transactions does not mean they can be ignored.
Increasingly, companies are being asked to uphold human rights in their
operations and in their sphere of influence.
Implicit is the recognition of what Berle and Means had earlier argued -
the scale and influence of corporations gives the corporation a state-like
character.
A precedent-setting case was Shell's public relations fiasco in 1995 over
its involvement in Nigeria. When the Nigerian government executed nine
activists who were protesting the environmental effects of a planned Shell
project, the company claimed it was just doing business and could not get
involved.
But global public opinion was quite the opposite. It insisted Shell's
political influence and economic clout made it responsible for not
intervening.
The aftershocks of this tragedy contributed to the formation of the United
Nation's "global compact," launched at the World Economic Forum in 1999.
The compact asks companies to honour nine basic business principles
derived from the universal declaration of human rights, the International
Labour Organisation's declaration on fundamental principles and rights to
work, and the Rio declaration on the environment and development.
It has been endorsed by almost 100 of the world's largest companies
including such leaders as HSBC, Cisco Systems, and Nokia.
These high-sounding principles may seem removed from day-to-day business
but even factory owners in the Pearl River delta are finding them
increasingly relevant.
For instance, any company supplying global brands is asked to follow
customers' guidelines about issues such as work conditions, product
quality and environmental management. If you visit a textile factory
manufacturing garments for Mark's and Spencer's or The Gap, you will find
it has the company's regulations displayed in the manufacturing area.
But it is more than foreign requirements driving social and environmental
issues. The Chinese government has acknowledged the freedom to run a
business is circumscribed regarding actions harming shared global
resources.
This is one reason the 2008 Beijing Olympics are officially billed as "the
Green Olympics."
Berle and Means say firms are increasingly complex "organisms" owing their
existence and success to multiple inputs, including that of employees,
suppliers, government, local communities, etc. This seems uncannily
prescient given the evolution of global network firms.
This issue is raised in a provocative book titled The Future of
Competition by management thinker CK Prahalad and Venkat Ramaswamy of the
University of Michigan. They discuss what is identified as the new
paradigm of business. It is based on "co-creating unique value" with
customers and other stakeholders.
This relational concept of competition leads Prahalad to call for
"building a new theory of corporate governance."
He says the traditional theory draws "a clear division between investors
and other stakeholders." But the emerging theory of governance "must
recognise how these roles are morphing and melding."
While The Future of Competition does not focus on broad environmental and
social issues, it raises questions about whose interests the corporation
is supposed to serve and how it should be governed.
The concept of stakeholder capitalism acknowledges shareholders have
legitimate claims on the company. These need to be balanced against other
groups' interests.
An accompanying phenomenon is the quickly growing "socially responsible"
investment movement.
It also recognises stakeholders have legitimate interests. In this case it
places the emphasis on shareholders' responsibility towards ensuring their
companies are properly governed, rather than questioning the nature of the
shareholder ownership.
This growing move towards responsible shareholding means companies wishing
to tap global capital markets for financing need to be aware they may be
confronted by investors asking difficult questions about labour practices,
environmental management and human rights policies and actions.
The question of whose interests should be considered in managing the
corporation and of which governance structures are most appropriate is one
unlikely to be fully settled.
But, as this article has tried to show, the nature of the expanding global
economy makes the narrow finance view of corporate governance seem out of
touch with the evolving social structures and their environmental
linkages.
This is not to say shareholder value is not an appropriate focus for
managers and directors.
There are far too many examples of inefficiently managed companies,
over-compensated executives or poorly treated minority shareholders to
suggest the focus on adding financial value can be dropped from
consideration.
Balancing vague social commitments in the face of urgent commercial
pressures is not easy. Berle and Means recognised this, acknowledging that
a method of calculating overall social benefits is far from developed.
But business is about moving forward in the face of uncertainty.
Increasingly, this requires what Harvard University professor Lynne Paine
has called a new standard for business excellence. It needs one that
combines excellent operational and financial results, with an attitude of
care towards the wider context that makes business and all of social life
possible.
The issues involved, and their challenge for corporate governance in the
21st century will not go away.
It is unclear if corporates will adopt a "stakeholder approach," one
closer to free market ideals or a new variant. But the need for
corporations to be part of a globalising process is increasingly apparent.

As Peter Singer puts it, "how well we come through the era of
globalisation (perhaps whether we come through it at all) will depend on
how we respond ethically to the idea that we live in one world."
Mishko Hansen is researching ethical issues in business as part of the
corporate environmental governance programme at the University of Hong
Kong, and is a visiting lecturer at the Hong Kong Polytechnic University.
This article was first published in Corporate Governance International
(Vol 7, Issue1, March 2004), copyright Sweet & Maxwell Asia

FT.com site : Top companies 'ignore risk from environment damage'.

FT.com site : Top companies 'ignore risk from environment damage'.
Paul J Davies
296 words
27 September 2004
Financial Times (FT.Com)
English
(c) 2004 The Financial Times Limited. All rights reserved
Companies in the FTSE 100 are failing to assess or manage the risk to
their business from their impact on the environment, according to a report
published by Isis, the fund management group.
The group, one of the UK's largest socially responsible investors,
estimates that 61 per cent of FTSE 100 companies in the sectors most
sensitive to biodiversity-risk are not adequately managing their exposure.

Maintaining biodiversity is linked to the sustainable development
initiatives being undertaken by some companies and governments. The report
warns of the severe long-term economic costs of damage to clean water
supplies or forestry, for instance, which could lead to greater
regulation, higher costs for companies and even fines.
Katrina Litvack, head of governance and socially responsible investment at
Isis, said the report - Is biodiversity a material risk for companies? -
should serve as an early warning to companies about the effects on
long-term shareholder value of failing to manage such risks.
"In time, this has all the hallmarks of becoming as financially sensitive
an issue for companies as their exposure to the problem of greenhouse gas
emissions, where regulators have begun to impose energy taxes and
controls," Ms Litvack said.
"As an investor we are concerned with the financial impacts of
biodiversity issues and, under current proposals for forthcoming UK
legislation, it may be a requirement for quoted companies to declare such
risks in an Operating and Financial Review," she added.
The report concludes that, while putting a financial value on biodiversity
risks is often not possible, where valuations can be reached they are
significant. It adds that the long-term nature of such risks means they
can take a long time to identify.
38033788

In pursuit of profit

In pursuit of profit
MARTIN WOLFE
1,398 words
29 September 2004
The Independent Business Weekly
English
(c) 2004 The Independent Business Weekly
Nobody would wish to defend corporate irresponsibility or suggest business
should behave antisocially.
So it is little wonder that corporate social responsibility (CSR) is a
popular notion. Yet the idea is not merely problematic but, in some
respects, dangerous.
Hostility to markets is sour old wine. What changes is the bottles into
which it is put. The collapse of communism destroyed the illusion that
abolishing private property would create a paradise. Yet this failure
barely touched the enemies of the market.
What has changed is their means.
Today's aim is not to eliminate private business but to transform the way
it behaves.
This lies behind the vogue for corporate social responsibility, argues
David Henderson, former chief economist of the Organisation for Economic
Co-operation and Development, in a thought-provoking study for the New
Zealand Business Roundtable, Misguided Virtue: False Notions of Corporate
Social Responsibility.
The arguments for corporate social responsibility can be reduced to the
following propositions: first, there exists a well-defined and generally
agreed notion of the wider public interest for companies to follow;
second, this notion of the public interest can be identified with the
pursuit of "social and environmental objectives" - the triple bottom line;
third, the "soft regulation" of corporate social responsibility serves as
a way of inducing corporations to promote the public interest; and,
finally, this body of soft company regulation should be developed further.

Shell has taken this idea far further than most.
It says adopting corporate social responsibility "demands a deep shift in
corporate culture, values, decision-making processes and behaviour."
Powerful objections can be made to such a broadening of corporate
objectives: it accepts a false critique of the market economy; it endorses
an equally mistaken view of the powers of businesses; it risks spreading
costly regulations worldwide; it is as likely to slow the reduction of
global poverty as to accelerate it; it requires companies to make
debatable political judgments; and it threatens a form of global
neo-corporatism, where unaccountable power is shared between companies,
activist groups, international organisations and a few governments.
So what can be said about the role, limits and dangers of corporate social
responsibility?
Behind the pressure to adopt corporate social responsibility too often
lies hostility to the profit motive itself. What is needed, critics argue,
is to put "people before profits."
The truth is the opposite. By seeking opportunities for profit, business
contributes to economic and social development.
Competitive businesses are forced to seek new markets and employ
previously under-used resources. In so doing they benefit customers,
employees and the countries in which they operate.
The 20th century could be regarded as the century of the modern
joint-stock corporation. It was also the most economically successful
century in human history: world population rose four-fold and world output
per head rose six-fold.
This is no accident. The private limited liability company has proved to
be the world's most powerful engine of innovation, large-scale
organisation and transmission of know-how across frontiers.
It is a responsibility of business to make this case clearly and
powerfully.
In its pursuit of profit, the corporation has the same moral obligations
as individuals. The precise content of moral behaviour is controversial.
But most people would accept the golden rule - do unto others as you would
be done by.
From this follow principles of honest dealing and voluntary obedience to
the law even where it may be possible to evade it.
Since companies are institutions set up to serve the interests of their
owners, they also have an obligation to be transparent in what they do.
The behaviour of CSR-driven companies may not serve the public interest.
Let me give just a few examples of behaviour that advocates of CSR might
consider to be in the public interest, but could well not be.
CSR advocates might recommend staying in a given locality, even if it is
not the most profitable place in which to produce.
What would such behaviour mean for the ability of up-and-coming regions
and countries to attract investment? What would such an obligation do for
the willingness of companies to invest in the first place?
CSR advocates might recommend that multinational companies pay workers in
developing countries above the opportunity cost of their labour. What
would be the benefit if these companies end up employing fewer people than
they would otherwise do?
CSR advocates might recommend multinational companies do not employ
children in poor developing countries. But what are the alternatives for
such children - school, prostitution or starvation?
CSR advocates might recommend activities be "sustainable." But how can any
resource-extraction industry ever be sustainable? What would happen if we
stopped all such activities?
Even if the public interest could be defined, why would a process of
bargaining between publicity-seeking, single-issue non-governmental
organisations and profit-seeking companies necessarily reach the right
outcome?
The process generating the commitments to CSR is, let us be blunt, one of
blackmail and concession.
To the extent companies feel obliged to operate with the same
environmental standards and terms and conditions of employment worldwide,
for reasons of reputation, they may harm the development of poorer
countries by ignoring differences that should operate in favour of less
economically advanced countries.
Similarly, to the extent companies accept excessively costly operating
practices, they are likely to be less competitive and less profitable, and
so make a smaller contribution to the economy.
If those costs are incurred in pursuit of socially worthwhile goals, that
is no problem. But if the costs are not justified by the gains, then the
result will not be an improvement in overall social welfare but a
reduction in it.
The notion of CSR coincides with the strange idea that activist groups
represent "civil society."
Since elected governments are wrongly deemed powerless, it is suggested,
instead, that only concerted action by companies, activist groups and
governments can achieve the global goals on which every right-thinking
person is supposed to agree.
But this is global neo-corporatism. As such, it is as subversive of
individual freedom and democratic accountability.
Behind the demands lies the oft-stated view that governments are impotent
before modern multinational businesses. The truth is the opposite of what
critics allege.
Governments remain potent local monopolists of coercion. Meanwhile,
international
economic integration has reduced corporate monopoly power, by enhancing
competition.
While companies may be willing to achieve objectives that support profits,
there is a strict limit on what they can do at the expense of profits.
The more competitive the industry in which they operate, the truer this
is.
A competitive company cannot afford costs that are not borne by its
competitors. For this reason, there will be great pressure from "socially
responsible" businesses to impose the costs they have accepted voluntarily
on their competitors, will-nilly.
The chief executive of an Australian mining company describes a
conversation with another chief executive. The latter said: "Don't you
understand? My organisation is run by Greenpeace today and it is my job to
ensure that Greenpeace is running yours tomorrow."
Business may well find that failure to implement the obligations whose
legitimacy they have accepted will lead to mandated corporate social
responsibility.
An approach taken to ward off greater regulation by governments at the
behest of so-called civil society is, consequently, likely to lead to
greater regulation.
This is because business will already have accepted these social and
environmental objectives. If so, how can it object to legislation that
impose those objectives on all business?
Private companies should behave morally. Companies may find it in their
interest to promote what is deemed socially rewarding behaviour. Such
behaviour may also further the public interest where that can be
satisfactorily defined.
Yet I would also argue the public interest is, in fact, difficult to
define and may conflict with generally accepted views of CSR.
Companies cannot save the planet by voluntary action. They should not
pretend they can. Making it richer is quite good enough.
Martin Wolf is the associate editor and chief economics commentator at the
Financial Times in London. He visited New Zealand as a guest of the New
Zealand Business Roundtable to give the 2004 Sir Ronald Trotter Lecture.
This article is based on an address to the Wellington branch of the
Institute of Directors on 1 September

Company CEOs Must Double As Chief Ethics Officer

Company CEOs Must Double As Chief Ethics Officer
1,133 words
23 September 2004
Business and Finance
English
(c) 2004 Business & Finance Magazine.
Immoral pursuit of the fast buck will eventually kill a firm. The
companies that survive the longest are those that are driven by good,
humanitarian ethics, writes DBM executive coach Kevin Conroy.
There is something refreshing about the "perp walks" - or the leading away
of crime perpetrators in handcuffs - of senior managers in American
business. One must admire how the principle of applying the rules has
convicted these fraudsters. Their names are regularly cited in the press
without fear of libel. For some reason there are no similar "perps" in
Ireland - and the rules were changed for the tribunals. However, while the
principle of applying rules without fear or favour is a post-hoc
necessity, it is insufficient for proactive ethical management.
Arthur Andersen, who died in 1947, walked away from millions of dollars in
a business deal rather than alter the books. At 28 years of age, he said:
"there's not enough money in the city of Chicago to induce me to change
that report" : The railway company involved later filed for bankruptcy and
Arthur Andersen's company became known as a firm to be trusted. So what
happened for the Arthur Andersen company to disintegrate in the scandal of
Enron? It had the "Andersen Way", ethics training and "Android values".
Their motto was "Think straight, talk straight."
Ethics in business are just the tip of an iceberg of meaning. That iceberg
of meaning is not the injunctions of free-market economists that brought
Enron and Worldcom down - short-term efficiencies and putting profit,
personal and shareholder value ahead of customers, suppliers and
employees.
Managers' meanings include long-term choices that consider obesity,
climate, fish stocks, allergies and, as Prahalad writes, the opportunity
to bring the world's billion poor into the global economy. Markets may be
"blind" but companies are entities with purpose and choice.
Ethics are symptoms of root causes - they cannot be controlled simply by
rules. Indeed, we admire people who break the rules. We dislike snitches
and whistleblowers.
In a recent poll, 83% of executives said that rule- benders are as
effective or more effective as those who obey the rules. Some 74% said
they bent them "for the greater good". Some 70% said "the rule was
faulty". But it takes moral judgement, motivation and character for the
"greater good" and "exceptions to the rule" to be defined in ways that are
not self-serving. A solution that simply makes new rules will not suffice
for these natural rule-benders.
Work by the eminent psychologist Kohlberg indicates that less than 20% of
adults display a moral development that is guided by principles of justice
and rights where a person independently chooses and follows through with
action. Most people need guidance. Most people are greatly influenced by
the norms around them and by authoritative figures. If the context they
work in is not supportive, most people will not stand up and "be counted"
- they are "conventional":
Back at Arthur Andersen's, the move from a rather straightforward audit
company to management consultancy exemplifies the increased complexity and
changing environment where its previous rules were no longer sufficient.
Satisfied clients and repeat business while dealing with the many "best
ways" of gaining business advantage needed to be matched with more than a
set of rules appropriate for an auditing business.
The development of moral intelligence is needed along with the
already-acknowledged need for improved cognitive and emotional
intelligences. By 1995, the Andersen people believed "we're ethical
people" and there was "no need to worry about this stuff: And Enron
resulted.
There are three types of dishonest business people.
Perhaps there are only a few like Al Dunlap who was weak both as a moral
person and as a moral manager. From being lauded as a turnaround expert,
he became infamous for emotional abuse of employees at Sunbeam and lying
to Wall Street. Denis Kozlowski from Tyco, Bernie Ebbers from Worldcom and
Richard Scrushy from Health-South are in a similar category.
Jim Bakker exemplifies the second type: the hypocritical leader. He showed
weak personal morals while expressing strong moral management messages. TV
preaching about the Lord's work while selling more memberships of his
Christian theme park than could be honoured, led him to eight years in
prison. Michael Sears, fired from Boeing for offering a job to an Air
Force procurement specialist during negotiations had released copies of
his book on leadership with a section on maintaining high ethical
standards.
Perhaps the third type - the ethically silent leader - is more common.
Such managers focus intently on the bottom line without a public
commitment to complementary ethical goals. Silence is perceived as not
caring how goals are met.
Over 70% of employees believe that senior corporate executives are
somewhat dishonest and untrustworthy. With such rampant cynicism, unless
leaders are seen to stand for ethical standards, the company inclination
will be towards weak moral management. It is commonplace in such contexts
that new rules, including the Sarbonnes-Oxley law where corporations must
have an anonymous system for employees to report unethical activities, are
used to trap whistleblowers and be a framework to be "got around somehow".

Thankfully, there are stories of leaders who are strong in their personal
and managerial morals.
James Burke, CEO of Johnson & Johnson in the early 80s is an outstanding
example. When Tylenol was laced with cyanide in Chicago, he recalled all
products at a huge cost. He demanded that managers subscribe to the J & J
Credo or "remove it from the wall". He followed it up with annual surveys,
recognition and other supportive actions.
Bill George, recently retired CEO of Medtronic talked, walked and followed
through as he has recorded in his book Authentic Leadership.
Both of these CEOs have demonstrated that ethics is good for sustainable
business. It is one of the secrets to creating lasting value. Indeed, as
long as Arthur Andersen was around, there was no chance of a decline in
integrity being tolerated, and the company prospered.
Moral development is about how rational intelligence or emotional
intelligence is applied. High emotional competency, for example - empathy
- is known to be a necessary ability for the most effective torturers.
Moral development deals with the meaningful values about "why we are in
this business": Without those, there can be no strategy, only tactics.
They elicit energy, pride and commitment. They allow a company to become
an important respected corporate citizen with attendant business
advantages.
Embedding ethics cannot be delegated. The CEO must also be the chief
ethics officer.
Kevin Conroy is director of executive coaching and organisational
development at DBM IRELAND. DBM is a leading global provider of innovative
leadership development and organisational change solutions.

Awful weather we're having: Why climate change could mean higher insurance premiums

Global warming and insurance

Awful weather we're having
Sep 30th 2004
From The Economist print edition




EPA





Why climate change could mean higher insurance premiums
FOR insurers as for Floridians, the recent pounding from four back-to-back
hurricanes, costing $20 billion or so, has been highly unusual, as well as
unwelcome. Not since Texas in 1886 have so many hurricanes struck one
American state in a single season. And Mother Nature seems to be fairly
bursting with surprises. In Europe, last summer was the hottest on record
and severe windstorms have been on the rise. On a ten-year view, the
frequency of weather disasters has tripled since the 1960s and insured
losses have risen ten-fold, according to Munich Re, the world's largest
reinsurer.
Some might ascribe all this to global warming. In fact, this is far from
being established?and hurricanes are especially hard to assess. Whatever
the cause, the world's insurers are counting the cost of more volatile
weather. ?Higher variability means more uncertainty means normally a
higher price,? says David Bresch of Swiss Re, Munich Re's biggest rival.
However, predicting climate change and its effects in the future is harder
than simply reacting to volatility today. The possibility that
temperatures might rise and, for example, cause more flooding in Europe
has not yet led most insurers to increase premiums and deductibles.
Since reinsurance contracts are renewed every year, adjustments can be
made speedily if necessary. And insurers are constantly updating their
disaster models. Swiss Re has already plotted out half a million possible
storms in North America and the Caribbean alone. On the upside, climate
change could make some areas less stormy. Munich Re has been studying
warming patterns for more than 20 years; it expects warmer weather in
Europe (more storms and flooding in winters, more heatwaves, severe storms
and wildfires in summer) and some of the same in North America. Gerhard
Berz, a meteorologist who heads the company's geo-risk research group,
says that more study of the oceans' role in climate change would be
especially helpful to scientists and insurers.
If insurers and reinsurers ever feel confident enough of climate change to
act, premiums and deductibles are likely to rise. Reinsurance prices are
normally calculated on the basis of losses in the past five to ten years,
according to Mr Berz at Munich Re, so if warming trends accelerate, price
increases could follow with a slight lag. Reinsurers would also be likely
to insist on stricter limits on their coverage.
Climate change could also increase demand for catastrophe (?cat?) bonds.
These are a form of securitised risk, offered by insurers or reinsurers to
limit their exposures. The investor receives a high rate of return (often
above 10%) in exchange for the risk of losing his principal if losses from
a hurricane, windstorm or terrorist attack exceed a certain level. (So
severe must the disaster be that even the recent storms have not been
strong enough to trigger payouts, though prices on the bonds have
wobbled.) Such instruments are getting more popular, with hedge funds
among the most eager investors: cat-bond issues totalled $1.7 billion in
2003, up 42% from 2002, according to Guy Carpenter, a reinsurance
brokerage firm. Cat bonds for other big risks such as flooding could be
introduced if climate change creates the need, according to Mark Hvidsten
of Willis, an insurance broker.
Some of the worst risks, though, are likely to be borne by governments.
American states such as Florida (for hurricanes) and California (for
earthquakes) are already involved in coverage for high-risk areas.
Governments are even more instrumental in prevention: insurers rely on
them to curb carbon emissions, fund climate-change research and build
protections such as flood defences. Perhaps governments and insurers
together could gently suggest to citizens that building new houses in
flood- or hurricane-watch areas is not always the best idea.

News Analysis: CSR trails ethical route to market

News Analysis: CSR trails ethical route to market
1,243 words
1 October 2004
PR Week
17
English
(c) PR Week, a Haymarket publication www.haymarketgroup.com, for more
information visit www.brandrepublic.com or email info@brandrepublic.com
CSR has a place in the lexicon of big business, but some bosses still
think consumers regard it as a small factor in purchasing decisions. Tom
Williams reports.
If corporate social responsibility was the corporate buzzword of the
'caring Nineties', the shine of its promise would appear to fading.
In a survey conducted by the Economist Intelligence Unit which Hill &
Knowlton published last week, only nine per cent of Europe's senior
executives mentioned CSR as important to customers and only four per cent
saw CSR as important to their customers.
Yet the ethical product market is booming. It was revealed in February
that the fair-trade market had grown by between 40 and 90 per cent over
the last decade and had annual sales of pounds 100m. Ethically-based firms
such as The Body Shop have prospered, while new players such as clothing
retailer American Apparel are capturing a strong foothold in what they
believe to be a lucrative market.
Other statistics show that a company's policies are still very much in
customers' minds. A 2000 MORI survey found that 41 per cent of those
interviewed believed CSR was important in their purchasing decisions,
while 16 per cent of the British public were CSR activists.
Why then, when faced with these statistics as to the power of the ethical
market, do so many executives seem to feel that it is not worth exploring?

For many corporate executives, says H&K corporate affairs head Andrew
Pharoah, CSR initiatives appear too often to be a leap in the dark that
appear to pay small dividends: 'We know that if something hits a company's
reputation, customers will walk away. What we don't know is to what extent
customers will reward a company for good behaviour.'
Ethical activities
While Pharoah and the EIU are working on a survey that he hopes will
examine this issue, he and others agree that companies need to do more to
shout about their ethical activities, though opinions differ about the
best way to do this.
It is interesting, for example, that brands that have used ethics to
define themselves do not always aggressively market themselves on this
angle, while brands such as American Apparel wear their ethical policies,
sometimes literally, on their sleeves.
Trainer company New Balance, for example, prefers to market itself as a
'Discovery Brand' whereby customers find out about its ethical policy of
sourcing most production in developed countries or through ethically
audited joint ventures. New Balance, whose mainline products include retro
versions of once technically superior running shoes, actually prides
itself on how little it markets itself while relying heavily on PR.
'If you market yourself as an ethical brand, you can lose that ethical
edge,' says New Balance EMEA general manager Alistair Cameron. 'Many
multinationals have consultants advising them on how to talk to their
consumers but consumers are more intelligent than that. We consciously
want our marketing to be quiet and try to reduce the noise level.'
Greg Sturmer, founder of London fashion label Romp, which is enabling
customers to trace the origin of all its products' components right
through the supply chain (PRWeek, 24 September), says that to talk about
companies like his as ethical is really missing the point.
'Customers only don't care because they don't know,' says Sturmer, who
points to changes in legislation that have already made the use of some
chemicals in leather production illegal as evidence that ethical
production is simply part of a wider evolution. 'The idea that you can
market with pretty girls something that is illegal as well as unethical is
going to die,' he adds.
Aspects of Romp's approach can already be seen in the CSR policies of
other, much larger, companies. DIY retailer B&Q's timber is labelled with
a Forest Stewardship Council badge to indicate that the wood has been
vetted independently, while Vodafone is in the process of kicking off its
own Code of Ethical Purchasing, designed to police the ethics of its
handset suppliers and assembly partners.
Supply chain
Pharoah says this is the kind of area where companies really need to be
aware, but is unsure of whether this can translate into something more
positive. 'If you have a long supply chain, you have to understand that is
where you will get into trouble. Whether you can use communications about
that supply chain to build brand preference is another question,' he says.

But the positive nature of the ethical offering, as the success of brands
such as the internet bank Smile and The Body Shop attest, is most
definitely there. If this power is growing it may be because ethical
business practice works better not as a policy that defines a business,
but is embedded in the very nature of the business. This approach, says
Good Business co-founder Steve Hilton, means that businesses have an added
dimension that they can show to customers in a market where rival
companies are increasingly homogeneous.
'I have never said that CSR policies are more important than the quality
and service you give to customers,' he says. 'But as quality and service
become easier for competitors to replicate, CSR has become more important
for companies to differentiate their brand.'
If this trend continues then it seems logical that ethical conformity and
good corporate behaviour itself will no longer be a selling point. It will
become part of what all consumers want and expect from the companies that
make the most desirable products.
In this way, the ethical company will cease to exist.
Senior executives are right when they say their customers do not care
about their company's ethical policies. They care about the products.
But getting consumers to feel good about choosing your product over
another brand is still a key way of shifting stock off the shelves.
'ETHICAL' BRANDS
American Apparel - Set up in 1994 by its Canadian senior partner, American
Apparel makes and sells unbranded 'classic American' styleclothing and is
the biggest maker of T-shirts in the US. The vast majority of its products
are sold wholesale but it has some retail outlets in the US and Europe
including a London branch in Carnaby Street, which opened three weeks ago.
Using the taglines 'Made in Downtown LA' and 'Sweatshop Free' the
company's garments are made by workers at its LA factory.
Romp - Founded by leather merchant Greg Sturmer, Romp's first collection
launches next February. The label enables customers to trace the origin of
all parts of its organic denim jeans, leather and pigskin products through
its various suppliers. Sales have reached pounds 30,000, which the company
says is 300 per cent ahead of its business plan.
New Balance - The world's fourth largest footwear seller and second only
to Nike in the US in terms of footwear sales, New Balance makes running
shoes at its five plants in the North-Eastern US and one factory in
Cumbria in the north of England. Although around 30 per cent of its shoes
are made in the Far East through ethically audited joint ventures in the
UK, the company promotes the First World sourcing of its products. It
claims 85 per cent of trainers it sells in the UK are made in the UK.

Corporate Watch Code of Ethics for financial executives

Corporate Watch Code of Ethics for financial executives
Amelia H. C. Ylagan
1,211 words
4 October 2004
BusinessWorld
5
English
(c) 2004 Business World Publishing Corporation.
"The financial executive holds a position of trust and confidence. This
fiduciary role should be paramount consideration in his dealings, both
internal and external. He must act with utmost fairness and according to
the highest moral principles, (which he must) consciously and consistently
pursue."
This is the guiding principle of the "Code of Ethics for the Financial
Executive," which embodies the ethical principles and rules of conduct for
738 of the top financial executives and CEOs of Philippine companies,
members of the Financial Executives Association of the Philippines
(FINEX). The Code of Ethics was first designed in 1986, when the euphoria
of the restoration of democracy by EDSA I effloresced exuberant pledges
for renewal of all things fair, honest and true in all dealings in the
country.
The Code of Ethics goes beyond parochial rules of conduct within FINEX.
When new members of FINEX pledge to this Code, they swear to act as
honest, prudent, professional and upright trustees of the funds and
resources of the particular organization they work for. This week, October
4-8, 2004, FINEX Week and Annual Convention, all members will renew their
pledge to the Code as they do each year. It is fitting reminder to all of
the serious fiduciary responsibility of financial executives in their
organizations and in society.
The Code speaks first of loyalty to the company that one works for. True
loyalty is defined not as blind following, but as a courageous concern
that the company will not be led to moral perdition by illegal or immoral
goals and objectives, principles and policies.
A financial executive cannot be passive when he believes strongly that the
company is not honest and upright. He must seek clarification of the
issues, rectify anomalous policies or directives within his authority, and
if he is unable to do anything in the face of a grave injustice or a
fraud, he must resign from the company.
Has this very stringent demand on the financial executive's devotion to
moral duty ever been tested? Surely there are a few good men (and women)
who have dissociated themselves from tainted organizations, but the pure
virtues of honesty and integrity logically come with pristine humility,
and so such moral courage is not usually publicized.
On the other hand, the dishonest thrive in secrecy and conspiracy, and
deception creates a web of more deceptions, and so such dishonesty is
likewise often not known. The FINEX Code or any code of ethics can only
verbalize what is proper, and prescribe a code of conduct, but at the end
of the day, the integrity of people and the leaders at the top is what
translates principles into action.
The standard responsibilities of a financial executive for accurate and
timely financial books and records, prudent management of funds and
assets, and independence of action without conflict of interest are
embodied in the Code.
In addition, prescriptions are given for relationships with employees,
emphasizing respect for human, legal and contractual rights, and stressing
personal professional development and social and civic involvement to
enhance the financial executive's ability to serve the organization and
society.
The financial executive is admonished to deal with creditors, customers,
suppliers and competitors and the public at large with honesty and
fairness, supporting clean, healthy competition and free play of market
forces.
An interesting adjunct to the FINEX Code of Ethics is the 2002 joint
resolution of the Membership and Ethics Committees concerning offenses
involving moral turpitude and transgressions of civility in the
interaction of financial executives with peers and other members of the
community.
Civility is a catchall defined as the "virtue or trait of not doing
anything to intentionally harm or cause harm to a fellow human being -
especially in word and deed. Simply put, civility refers to the act of
manifesting respect for a fellow human being... The observance of civility
strengthens the foundations of ethical behavior."
Respect for the other is a foundation value that reinforces the conviction
that honesty and integrity are the raison d' etre, most especially in a
financial career. His good name is a financial executive's most fragile
asset, his most basic tool of the trade, more important than wizardry in
creative financial transactions.
Credibility and trustworthiness is earned only from an unblemished
reputation of steadfast honesty in all things, big and small. Just as a
financial executive recognizes the paramount importance of a good name for
himself, he must respect another's honor and personal rights. Thus is
civility the mark of an ethically conscious person.
"Any member of FINEX in good standing may bring to the attention of the
Ethics Committee and Membership Committee any violation of the FINEX Code
of Ethics, Rules of Proper Conduct as well as non-observance of civility
by a member or members of FINEX."
Complaints from nonmembers are to be evaluated by the Ethics Committee,
which determines whether such complaint transgresses the Code of Ethics. A
jury of peers deliberates and must unanimously recommend sanction
commensurate to the offense. The Board may then adopt the recommendation
and execute punitive action.
An honor system of policing adherence to the Code of Ethics ensures that
the FINEX values prevail in the consciousness of members. Peer pressure
forces homogeneity of these values in the organization. Usually, before
any complaint is formally brought up, the erring member resigns in
anticipation of the embarrassment towards his peers. Those convicted by
the courts for criminal offenses before a formal complaint is filed or
investigation is completed in FINEX are automatically expelled from the
organization.
FINEX was founded in 1968 by a group of finance practitioners who simply
wanted to provide professional and social belonging to the growing number
of bankers, financial analysts, brokers, investment traders, corporate
treasurers and others in the banking and finance industry.
In its 36 years of existence, the organization has evolved into a
proactive voice in issues that affect the industry in particular and the
economy as a whole. It has become the self-appointed guardian of the
financial executive's honor, upholding the nobility of his profession by
the strict Code of Ethics that rules his professional and personal life.
When an organization makes its mind and heart public, like FINEX has, it
takes on the grave responsibility of adhering zealously to the values and
principles it proclaims. It lays itself open to exacting scrutiny and
measurement against the raised expectations of the rest of society. Its
members must suffer the pressure of living up to the ideals raised, and to
be models of honesty and integrity to the community.
Such idealism can be strained when times are rife with scandals and scams
of horrible financial deviousness and Machiavellian manipulation of facts.
In the in rash of highly publicized corporate crimes in the last four
years or so, the financial officer was often the factotum who made the
evil deeds happen. But the steadfast majority of honest financial
executives must prove the malefactors wrong by persevering in integrity
even these trying times. The dignity of surviving temptation is a reward
in itself, unlike the curse of a life of running and hiding after
scurrying away with other's wealth.
ahcylagan@bworld.com.ph

4.10.04

Adam Smith problem offers ethical answers

News
Adam Smith problem offers ethical answers
Tim Costello
1,239 words
25 September 2004
Australian Financial Review
First
62
English
© 2004 Copyright John Fairfax Holdings Limited. www.afr.com Not available
for re-distribution.
WEEKEND ESSAY
I am frequently asked the question: Can it be profitable to be ethical?
Usually, there is a desperate hope for a neat synergy that says: Yes
profit matches shareholder matches stakeholder. No conflict between them
and the question is answered.
Business has always been quick to sniff profit, and if it is profitable to
be ethical then great, let's get on with it. But it's not that simple, as
the past 20 years have borne out.
In the 1980s, Gordon Gekko and the mantra "greed is good" represented a
particular culture that virtually celebrated ruthlessness, without being
troubled by conscience or ethics.
In the 1990s, a new doctrine permeated business that business was morally
neutral, value-free.
And if business was morally neutral, there was no embarrassment in
maximising shareholder wealth not in an exaggerated '80s style with
machismo and shame, but as a proposition that moral neutrality can give us
a clear focus to maximise shareholders' wealth.
Based on this doctrine, there's no need for business to give its wealth
directly to the community. Maximise profit instead, so shareholders could
bestow it wherever they wished in the community.
In the late 1990s it became clear there was no value-free place to stand,
no neutrality for business. This is clearly illustrated by events at James
Hardie, facing community censure over its approach to limiting liability
for compensation to asbestos victims.
Like other companies found to have misled the community, James Hardie has
found there is no neutral place to stand.
Over the past few years a new doctrine has emerged the "triple bottom
line" as the key to a company's sustainability.
As John Elkington, who coined that phrase in 1991, said: "The other
stakeholders, mainly the community, society and the environment, are
profoundly important stakeholders, and their well-being is the only
context in which sustainable wealth is made."
This doctrine emphasises that business is part of the community. It is in
a relationship not just with shareholders, but with stakeholders.
Again, James Hardie illustrates the importance of this dual relationship
and the problems that arise when the well-being of community stakeholders
is disregarded.
There are five reasons this doctrine has emerged: the increasing
transparency of business affairs; improved communications in a global
world; extensive social change in the last decade; the increased role
played in the economy by the private sector; and the realisation that
global business is not something apart from society.
So there have been significant shifts over the past 20 years from greed is
good, to neutrality, to today, where business is no longer neutral but in
partnership with stakeholders.
We are in a different paradigm. But how committed is business to seeing
through what this paradigm implies?
Adam Smith, the father of laissez-faire capitalism, provided a framework
that I believe to be at the core of this paradigm: "Human beings are
simultaneously self-regarding and other-regarding."
Most who have read Smith have understood instantly what he means by
self-regarding. It covers the private profit motive, profit and
self-interest that is mediated through the brilliant mechanism of the
market, with billions of transactions every day. Indeed, no centralised or
other system of planning, allocating preferences and distributing
resources, can match it.
In picking up this part of Smith the laissez-faire principle we actually
understood the truth of his first limb, that is, that humans are
self-regarding.
Business understands this well and has led on this clearly.
But the second limb is where the great intellectual and personal challenge
is for the corporate sector. "Humans are simultaneously other-regarding."
The "other" being environment, community, attention to spiritual
non-visual materials, for instance. The other is the stakeholders referred
to earlier.
But can we still find help from Smith? Interestingly, he was a moral
philosopher before he was an economist.
In The Theory of the Moral Sentiments, written before The Wealth of
Nations, Smith says essentially that the foundation of a good society, a
virtuous society, is moral sympathy. Today we would recognise this as
empathy.
According to Smith, the foundation for a good society is a strong sense of
connection to and responsibility for one another. Markets will create
wealth, but they will not create a good society, or virtue.
Markets depend on a foundation of moral sympathy and sentiment,
connection, responsibility, which is spiritual and social. Those things
are the foundation because they are the "other".
Smith essentially says markets don't have morals. They will create wealth,
but they won't create it evenly, distribute it fairly, or create a
virtuous society.
Accordingly, corporations and businesses now need people who can balance
the other with the self people who cannot just conceptualise but who have
the authority to run their operations in terms of the other.
Philosophers since then have observed that the more Smith has been
emphasised in terms of the self, the faster is the fragmentation of the
other.
Many societies, as in the West, have solved the problem of supply but
found themselves faced with social dislocation: an epidemic of depression,
high youth suicide rates, drug addiction and marital breakdown.
Why is this? Philosophers call this "The Problem of Adam Smith" because
the more we emphasise just one limb, the more we risk fragmenting the
other. Individuals operating out of pure self-interest become atomised
individuals lacking in sympathy, connection and social sustainability.
This is where we have to see corporations in the debate. They are not just
the first limb of Adam Smith. They are beginning to understand that
sustainable business happens in communities that are not fragmented. They
need to be socially and environmentally aware of the context that
surrounds them, the stakeholder, which is the other.
This is very important, ethically. If it is simply self the financial
bottom line, whatever the other rhetoric there will be profound
disillusionment and, ultimately, damage to the bottom line.
When the price is low the ethics are simple. But when it is $10,000 or $1
million in a culture that only knows Smith's first limb, the ethics seem
to become a lot more complex. I don't think the ethical issue has changed.
What's changed is the price tag.
But I understand why people get confused, and I understand why business
which asks if it is profitable to be ethical when the price tag is high
finds it difficult to find the answer.
There are no prescriptive answers to these dilemmas, but there is an
answer is to be found in holding together both limbs of Adam Smith's
prose.
The challenge for the James Hardies of this world is to bring both limbs
together to provide for the other they have damaged while keeping the self
afloat. And ultimately the other will be further damaged if the self, in
this case, is unable to survive.
People whether they are corporate directors, finance managers or consumers
are simultaneously self-regarding and, to use Smith's words,
other-regarding self-seeking and other-seeking.
In that balance lie some of the answers to good corporate practice, good
business and good ethics.
Tim Costello is chief executive of World Vision Australia. The above is an
edited version of his address to the Institute of Company Directors on
September 3.

Les nouveaux gardiens de l'éthique et du développement durable

Hommes et Stratégies
Les nouveaux gardiens de l'éthique et du développement durable
1,831 words
30 September 2004
La Tribune
French
(c) 2004 La Tribune. Not to be redisseminated except as permitted by your
subscriber agreement.
Les entreprises doivent satisfaire à de nouvelles exigences sous la
pression de l'opinion, des actionnaires et des contraintes liées aux
nouvelles réglementations. Chartes et autres codes de bonne conduite
fleurissent. Les directeurs de développement durable et les "déontologues"
sont en première ligne, mais toutes les strates de l'entreprise sont
concernées.
Aristote, le père de l'éthique, serait étonné d'apprendre qu'il a été
l'inspirateur d'un des plus importants changements dans le monde du
management : l'avènement de la morale dans les affaires, et la vertu dans
l'économie. N'en déplaise à Milton Friedman, l'économiste américain, qui,
dans les années 70, posait comme doctrine que la seule morale de
l'entreprise, c'est de ne pas en avoir. Le constat est unanime, la
responsabilité sociétale des entreprises occupe une place de plus en plus
grande dans les états-majors. Pas une fonction, pas une enseigne, pas un
secteur d'activité ne résiste aux sirènes du développement durable, devenu
le modèle qui aujourd'hui se vend le mieux. Même si, derrière ce vocable,
on met pêle-mêle l'environnement, la responsabilité sociétale, l'éthique,
la transparence...
En première ligne, on trouve donc le directeur ou responsable du
développement durable, fonction qui a aujourd'hui pignon sur rue dans la
plupart des grands groupes - Total, SNCF, Essilor, La Poste, Air
Liquide... Alors que quelques autres en sont restés à une dénomination
plus traditionnelle de directeur de l'environnement.
Stratégie de long terme
Il est vrai que le développement durable embrasse un champ bien plus vaste
que l'environnement. Y sont associées des notions de bien-être au travail,
de dialogue social, de citoyenneté que ne briguaient pas les
traditionnelles directions de l'environnement. La fonction s'est ancrée
dans une stratégie de long terme, dans la foulée des nouvelles
dispositions de la loi NRE obligeant les entreprises cotées à présenter
dans leur rapport annuel l'impact sur l'environnement de leurs activités.
Ces postes sont confiés à des professionnels d'expérience qui viennent
d'univers parfois très différents, alliant parfois le double profil
d'ingénieur et de communicant. Ainsi, chez Carrefour, les compétences des
directeurs de qualité ont été élargies aux domaines de l'environnement et
du social.
Pour que la responsabilité sociétale des entreprises (RSE) ne soit pas
qu'une coquille vide, ils doivent la faire vivre au quotidien. Ces
responsables ont un rôle d'initiateur, de coordinateur et de sentinelle
dans le domaine de la sécurité, de la santé, de l'environnement. Comme l'a
expliqué Jacques Khéliff, ancien syndicaliste et directeur du
développement durable de Rhodia, il faut conjuguer l'environnement, le
social et le profit, bousculer les habitudes de l'entreprise.
Car souvent, il faut commencer par s'imposer aux autres directions, et les
convaincre du bien-fondé de certaines démarches... Pour y parvenir, les
directeurs de développement durable s'appuient souvent sur un réseau de
correspondants situés dans les différentes unités, ou entités de
l'entreprise. Comment parler d'une professionnalisation du métier sans un
cursus dédié ? Justement, ils se développent : le Ceram Sophia-Antipolis,
HEC et l'université Paris-IX Dauphine proposent un diplôme de troisième
cycle dédié au développement durable.
Cette montée en puissance du développement durable et de la responsabilité
sociale n'est pas sans effet sur des professions qui se trouvent à la
périphérie comme, par exemple, les spécialistes de la gestion des risques
de l'audit et du contrôle interne, mais aussi de la communication et des
ressources humaines. Tous étant appelés à davantage travailler avec les
autres métiers. Ils leur revient - parfois sur des registres différents -
d'identifier, d'analyser les dangers que peut courir (ou faire courir
l'entreprise) et d'évaluer la façon dont elle se positionne par rapport à
la société, et de proposer des solutions.
Le développement durable irrigue différentes strates de l'organisation, en
partie les fonctions environnement. On sait que les carrières liées à ce
domaine attirent de plus en plus de jeunes. Selon l'Apec, on compte
environ 350.000 postes de métiers liés à l'environnement.
Des Écodesigners
C'est ainsi que l'ingénieur en développement durable, en charge d'évaluer
les facteurs d'impact environnementaux et les exigences réglementaires
dans les étapes de la conception du produit, trouve sa place dans le
paysage des métiers émergents. Intégrer ces contraintes dans la conception
du produit devient un passage obligé. Ces métiers s'épanouissent dans
l'univers du marketing où l'on voit apparaître des écodesigners qui gèrent
cet aspect dans le design du produit ou de son packaging.
Le cursus "environnement" sera- t-il la panacée des années à venir ? C'est
ce que laisse entendre François Petit, directeur des troisièmes cycles et
du mastère spécialisé "management de l'environnement" à l'Ecole supérieure
de commerce de La Rochelle. En effet, la certification ISO 14001 de mise
en conformité à la réglementation environnementale a connu une progression
spectaculaire, et génère un appel d'offres sur ces métiers à
l'environnement mais aussi à la qualité. Sur une centaine d'élèves en
maîtrise et en DESS à l'Institut d'administration des entreprises de Caen,
près d'un tiers des élèves sont recrutés à des postes de responsables
qualité.
Qu'il s'agisse de communication de l'entreprise vis-à-vis de son
environnement immédiat, du management des ressources humaines, des
rapports avec les clients et fournisseurs, ou qu'il s'agisse du marketing
et de l'attention portée au consommateur, les chartes éthiques, règles
déontologiques et autres codes de bonne conduite sont devenus peu ou prou
un langage commun. Comme l'annonce, de manière très directe, l'intitulé
d'un séminaire de l'Institut des cadres dirigeants : "L'éthique, c'est le
marché qui l'impose, les actionnaires qui l'exigent, les salariés qui la
réclament, et les consommateurs qui la plébiscitent."
Stimuler la responsabilité
La motivation des entreprises n'est donc pas angélique ou morale, elle est
pragmatique : obtenir la confiance. Paul Dupouey, consultant spécialiste
de l'éthique chez Insep Consulting, est clair : "L'incitation à une
démarche éthique dans une entreprise ou une organisation à caractère
économique ne vise pas une intervention morale sur les consciences mais le
progrès du professionnalisme individuel et collectif" (1). Pour
l'Observatoire de la responsabilité sociétale (2), les donneurs d'ordres
ont même avantage à stimuler la responsabilité sociale de leurs
sous-traitants, ne serait-ce que pour des raisons d'efficacité.
A la frontière du juridique et des ressources humaines, le déontologue a
pour mission de mettre en place les codes éthiques dans l'entreprise.
L'augmentation des affaires judiciaires impliquant des responsables, la
reconnaissance de la responsabilité pénale des dirigeants, les effets de
la loi Sarbanes-Oxley et de la loi sur la sécurité financière poussent les
entreprises à anticiper les problèmes pouvant survenir en matière de
droit.
Fonction encore méconnue mais en devenir, elle ne se limite pas au seul
respect de la conformité à la loi et elle n'est pas non plus une illusion
publicitaire. On peut distinguer trois types de profils de déontologues en
entreprise. Les premiers sont issus des banques où cette fonction est une
obligation légale. Les deuxièmes sont des anciens magistrats qui apportent
leur expertise de juriste dans les entreprises. Les troisièmes sont des
hommes du sérail de l'entreprise, anciens dirigeants de filiale qui
connaissent bien l'entreprise, ou même secrétaire général.
Une bonne maîtrise du droit du travail, des questions de concurrence, de
blanchiment, de corruption de procédure pénale, ces gardiens du temple
doivent être dans une position qui garantisse leur esprit d'indépendance.
Dans le domaine des ressources humaines, ces déontologues ont aussi pour
tâche de suivre les programmes de vigilance sur la mixité dans
l'entreprise pour éviter la discrimination au travail, par exemple
l'égalité hommes-femmes.
La garde avancée
L'éthique dans les entreprises concerne aussi bien les questions
d'environnement ou de pénibilité du travail que ce qui a trait à la
finance car il s'agit d'impulser des règles efficaces. L'objectif est de
conjurer toute tentation de manoeuvre à la frontière de la légalité
notamment sur le plan du droit des affaires, de la fiscalité, des
pratiques commerciales, des transactions financières. Sur ce point, les
déontologues des banques, ou compliance officers, sont en quelque sorte la
garde avancée de la déontologie financière. Il revient aussi au
déontologue de superviser la mise en place des fameuses procédures
d'alerte et de dénonciation des fraudes, ou whistle blowings, comme le
prévoit la loi Sarbanes-Oxley.
En matière de déontologie informatique, les chief privacy officers
commencent aussi à faire parler d'eux. On n'en comptait qu'une
cinquantaine aux Etats-Unis en 2000. Il y en a maintenant plus de 1.000.
En France, ces cadres chargés de veiller au respect de la vie privée des
salariés, face à l'intrusion parfois intempestive d'Internet, font leur
apparition (voir ci-contre).
Versant "ressources humaines", la déontologie trouve aussi un prolongement
dans le rôle très nouveau de médiateur en entreprise, un arbitre entre les
salariés et la hiérarchie. Existant dans de très rares entreprises comme
chez SFR-Cegetel, ce nouveau métier s'intègre dans une stratégie de
marketing social qui identifie très en amont les tensions et les solutions
à trouver. Chez SFR, 4.000 managers ont reçu un document leur expliquant
la mission de ce médiateur. Ce dernier peut recevoir des doléances
individuelles et les traiter sur mesure en tenant compte de la position de
la partie adverse. L'objectif est d'éviter la lourdeur d'un traitement
social collectif souvent standardisé. L'univers de la finance et de la
comptabilité est évidemment concerné. Les nouvelles exigences de la part
des parties prenantes quant à la transparence financière, à la
"comptabilisation" des externalités sociales et environnementales...
ouvrent le champ à de nouvelles compétences. Ainsi celles réunies sous la
dénomination d'"attest", audit - interne ou externe - consacré à la
certification des informations entrant dans le cadre de la RSE.
Nouvelles compétences
L'Orse (Observatoire sur la responsabilité sociétale des entreprises)
parle même de "révolution" à venir. Avec l'application de la loi NRE, les
hommes des chiffres doivent désormais s'appuyer sur des expertises
nouvelles. L'audit et la certification des questions environnementales et
sociétales commencent à être sous-traités à des structures spécialisées
telles que les ONG. "On irait ainsi vers une ?double labellisation de
l'entreprise? : labellisation économique et financière du commissaire aux
comptes, fondée sur des standards comptables éprouvés d'un côté, et de
l'autre une labellisation sociétale, encore incertaine car ne reposant
pour l'instant sur aucun système de certification clairement reconnu",
souligne Yves Médina, vice-président de l'Orse.
Yan de Kerorguen et Estelle Leroy
(1) "Ethique et formation". Insep Consulting. 1998.
(2) Etude "L'accompagnement des PME par les TGE dans le cadre d'une logi-
que de développement durable". Orse. Octobre 2003.

NICE VS. VICE

NICE VS. VICE
By MARY JO FELDSTEIN Of the Post-Dispatch
1,005 words
3 October 2004
St. Louis Post-Dispatch
Five Star Lift
G01
English
Copyright 2004, St. Louis Post-Dispatch. All Rights Reserved.
* Investing in sin grows popular amid a stagnant market
For more than a decade, a growing number of investors have chosen to put
money in do-good companies that protect the environment or treat workers
well. These socially responsible investments range from mutual funds for
Catholics, Muslims or Mennonites to funds that focus on companies with
liberal values, such as benefits for same-sex partners.
Now, there's a new trend: investing in sin.
Tobacco, alcohol and gambling companies capitalize on bad habits. Some
investors on Wall Street want to share in the profits of pleasure.
For example, the Vice Fund puts about a quarter of its money into each of
three sectors: defense, gambling and alcohol. An additional 15 percent
goes to tobacco companies.
Two years after its inception, the Vice Fund has average annual returns of
about 14 percent. But it's year-to-date average monthly returns as of Aug.
30 were only 3 percent.
Vice Fund creator Dan Ahrens said the beauty of investing in vice is that
no matter how the economy's doing, people will continue to smoke, drink
and gamble.
"There's just a great deal of uncertainty in the markets right now, and
that creates more of a need than ever for some type of all-weather
portfolio," Ahrens said.
Some finance experts say the fight over good versus evil is a battle of
value versus growth.
In the world of investing, value stocks are companies with relatively
higher net assets compared to the market values of their stocks. Growth
stocks are the opposite.
For example, the market could undervalue a stock like Altria Group Inc.,
the parent company of Philip Morris USA, because of litigation risks and
image problems. But it could overvalue the technology stocks prominent in
many socially responsible funds by investing in them more for their
promise than for their profits.
"Rather than calling them vice and virtue, how about defensive and
cyclical or high-risk and low-risk, and now you're back on very familiar
terms," said Brian Betker, a finance professor at St. Louis University.
He said several academic studies have shown that value stocks, which are
common in vice funds, outperform growth stocks over time.
Yet, he and other finance experts said, the Vice Fund's relatively
constant performance can be one of its problems.
"The sin stocks are going to perform the same no matter what," said
Jonathan Taylor, an assistant finance professor at Washington University
in St. Louis. "They're not going to fall as much when the stock market is
down, but on the other hand, they're not going to rise as much when the
economy goes up."
Greg Carlson, a mutual fund analyst with Morningstar Inc., isn't convinced
that the Vice Fund is recession-proof.
"Nearly half of the fund is in what we call consumer-goods companies,"
Carlson said. "When those sectors do well, then I guess they'll perform
well, but then the flip side should be true."
Taylor gives similar cautions for socially responsible investors. He said
investors should not project future performance based on past returns
because socially responsible funds benefited greatly from being heavily
invested in the soaring technology stocks of the late 1990s.
There's a broad range of socially responsible investments. Some, like
Domini Social Investments, adhere to strict specifications on company
policies. Others are more lax, looking for the most socially responsible
company in a sector, and they're willing to improve the company through
shareholder advocacy, Carlson said.
As with several of the socially responsible funds, the Vice Fund has
received top marks from firms like Morningstar and Lipper, a fund-ratings
firm operated by Reuters.
But there's a wide range of returns, so it's not fair to lump them
together, said Jeff Tjornehoj, a research analyst at Lipper. Though his
firm rated the Vice Fund among its top picks for 2003, he sees it more as
a marketing scheme.
"I think they sense there are some people out there that are resentful
that some of the well-known brands in the United States are morally
bankrupt in the eyes of socially responsible investors," Tjornehoj said.
Regardless of the merits of an individual fund, investors should
diversify.
"You cover your bases if you diversify," Betker said. "None of us has a
crystal ball to see what will happen in the next 10 years."

A lesson in responsibility

A lesson in responsibility
By Datuk Mustapa Mohamed
1,586 words
16 September 2004
Malaysian Business
14
English
(c) 2004 New Straits Times Press (Malaysia) Berhad
CORPORATE social responsibility (CSR) is fundamental for sustaining the
life of a highly commercialised society. Corporate organisations cannot
just look after their respective bottom lines. They must also take care of
the contributors to that bottom line, namely the rest of the society and
the natural environment itself.
A corporate organisation that ignores this does so at its own peril.
Indeed, if the social and environmental costs are high, and if these costs
are ignored, then it would be a matter of time before their operating
environment takes a turn for the worse.
For example, if timber companies cut down forests without replanting, or
even at a pace that is faster than replanting, it is a matter of time
before the forests disappear. If the big trawlers drag the seas without
giving consideration to the location of breeding grounds or the age of the
catch, soon the marine resources will be depleted. If our rivers are so
easily polluted by the inconsiderate disposal of waste and effluent, where
would our eco-tourism potential be? The broad and long-term view that
corporate organisations must take, if they are to survive the long haul,
is to take care of their bottom lines as well as the primary factors that
contribute to those bottom lines. CSR, therefore, is not simply operating
standards to which businesses must comply, but standards that they must
internalise into their corporate strategy as the most effective way to
long-term sustainable growth.
Corporate responsibility, to my mind, extends beyond CSR. It encompasses
corporate governance and accountability, transparency, minority and
stakeholder rights and general fairness all round.
The Government can be a pivotal force, providing sustainability to the CSR
of the business sector. In other words, CSR is not only a subject for
business and civil society to discuss and debate. In fact, the Government
also has a significant role to play. Surely the Government can influence,
motivate and facilitate the social responsibility of business.
I believe the Government can and should influence the other driving
forces, altruism, economics, values and NGOs. The Government should be a
partner in the process, not just the watchdog or the legislator. The
Government can contribute by setting the policy framework, raising
awareness of the importance of CSR and of best practices, as well as
providing incentives where appropriate.
It is important for the Government to be explicit and clear about its
development policies and strategies. The Government should also indicate
the role it sees for the business sector, promote complementarities where
necessary and put limited resources to best use.
The Government can also assist in promoting corporate responsibility by
defining standards of corporate behaviour and responsibility, while
providing appropriate incentives and motivating corporate entities to move
beyond the minimum standards set.
The present administration, under Prime Minister Datuk Seri Abdullah Ahmad
Badawi, is fully committed to its role with respect to partnering the
business sector with its socially responsible activities. I am also
delighted that many Malaysian companies are beginning to take up the Prime
Minister's call for more corporate responsibility. Many are adapting
admirably, and I applaud them.
A recent study by the International Centre for CSR, Nottingham University
Business School in the United Kingdom, presented at the Ethical
Corporation Conference in Singapore in September 2003, showed that 42% of
Malaysia's Top-50 companies complied with CSR reporting. This percentage
is higher than those in the Philippines (38%), South Korea (32%),
Singapore (30%) and Thailand (24%).
We believe corporate entities can be part of the solution to some of the
challenges faced by the nation. We have been successful in engaging the
corporate sector in addressing several social issues. Many corporations
have worked hand in hand with the Government in achieving our socio-
economic agenda.
I am glad to note that a number of companies continue to engage in poverty
alleviation programmes, providing educational incentives or scholarships,
as well as achieving the distribution and equity objectives.
The corporate sector is also contributing innovatively towards providing
educational opportunities, as well as increasing accessibility of
telecommunication facilities to underserved areas, thereby bridging the
digital divide.
The corporate sector's contribution to the addressing of certain social
ills such as HIV/AIDS and drug abuse has been quite significant.
Additionally, corporate entities have also contributed enormously to the
development of sports. However, the public continues to clamour for
corporations to be more socially responsible by being actively engaged in
community and social activities. In other words, the message is quite loud
and clear that more needs to be done. And if more is done, the private
sector will be accepted as a genuine partner in socio-economic
development.
In Malaysia, we have the concept of Masyarakat Penyayang, which is to
promote care for society at individual, corporate, community and national
levels. This concept, initiated a decade ago, has gathered momentum and
has now become an accepted responsibility. We see well-to-do individuals
and families adopting orphans and children from poor families; companies
providing amenities for community use and scholarships for needy students;
and communities providing for themselves through the age-old practices of
gotong-royong and neighbourhood watches to prevent crime.
Several years ago, I recall the initiative of the Government in extending
grants to NGOs that participated in the socio-economic uplifting of the
poor and under-privileged. There was also a move by the Ministry of Rural
Development in 1996, the formation of an assistance fund with
contributions from the private sector to further enhance rural development
called BAKTIDESA (Bantuan Korporat Tingkatkan Kualiti Desa).
Although it started very well, the programme was very much affected by the
Asian financial crisis in 1998-99. Under BAKTIDESA at the time, companies
either contributed funds, expertise or in kind, to families, schools,
villages or projects of their choice. I would very much like to see this
effort revived with the current momentum of the economy.
Businesses, as we all know, spend so much on their brand names and
reputation. Reputation takes years to build, yet can be damaged, sometimes
beyond saving. On the other hand, a good CSR image is becoming a big plus.

These are the traditional arguments for CSR.
I would like to propose a way forward. To me, the key to making CSR work
for you is to make sure that it is voluntary. If a business wants to do
the right thing for the country which gave it an opportunity, then CSR
needs to be voluntary. If the business sector wants to make maximum gains
by building a good reputation with the public for its products and
services, it needs to make CSR voluntary. The outreach is then seen as a
genuine desire on the part of the business community to participate in the
social agenda of the nation.
If businesses can weave CSR into their value systems, then it can make its
CSR activities truly voluntary. It is important to make it voluntary
because the public can tell the difference between manipulation and
sincerity. In the end, it is the stakeholders that will welcome the
volunteers and shun those who are insincere.
It is, therefore, only logical that the corporate sector take up the
challenge of accepting CSR voluntarily. Once the corporate sector, as a
whole, has come on board, I believe great synergy will be created when
businesses, society and the Government work together to maximise the
resources business allocates to voluntary CSR activity. If we can channel
all the energy spent on pressuring and persuading on one side, and
resisting the pressure and the persuasion on the other, think of the power
that will be released as CSR becomes voluntary.
I would like to reiterate a few key points. Firstly, that the CSR movement
is moving full steam ahead globally. Conferences geared more towards
educating businesses are the way forward. Our neighbours, such as Thailand
and the Philippines, have long gone ahead. Thailand, for instance, started
T-BIRD (or Thai Business Initiative in Rural Development) more than a
decade ago whereby companies, through various approaches, assist the Thai
villages in the socio-economic uplifting of many a Thai village. Yet, it
started as an initiative in family planning! Secondly, CSR as defined is
for businesses. Businesses should practise corporate responsibility
because it is the RIGHT thing to do. The fact that there are real benefits
to reputation, attracting investors, gaining strong employee commitment
and so on, should be secondary considerations and not the driving forces.
For example, in the Philippines, the business sector contributes a certain
percentage of its yearly profits to a special fund, also to uplift the
socio-economic status of the poor and underprivileged, as part of its
business initiative.
Thirdly, the Government needs to be a driving force. If we are to look at
nation building and creating synergy, the Government should be a partner
in the process. This is, after all, an extension of Malaysia Incorporated,
and is also very much in sync with the concept of Smart Partnership and
Strategic Alliance.
And fourthly, the business sector, civil society and Government must take
CSR as a given and utilise their energies and creativity to create CSR
synergy. They should not waste their energy in pressuring and persuading
each other, as is the current approach. In short, CSR should be a
voluntary activity by the business sector, in support of the social and
developmental role of Government.
Datuk Mustapa Mohamed is Minister in the Prime Minister's Department.

Entreprises, avez-vous donc une âme ?

Entreprises, avez-vous donc une âme ? (suite)
Laurent GUEZ, Bruno JACQUOT
Laurent GUEZ, Bruno JACQUOT
4,380 words
4 October 2004
Le Figaro
13 13-17
French
(c) Copyright 2004 Le Figaro.
Management SIX GRANDS PATRONS NOUS LIVRENT EN EXCLUSIVITÉ LEURS
CONVICTIONS SUR LA ?CULTURE D?ENTREPRISE?.
MARTIN BOUYGUES ?C?est une éducation?
Pour le PDG du groupe Bouygues, la culture d?entreprise permet de répondre
aux questions : Qui sommes-nous ? Comment devons-nous nous comporter ?
Connaissez-vous des sociétés sans culture ?
Martin BOUYGUES. Je dirais plutôt qu?il y a celles qui ont une forte
culture et les autres. Les premières ont eu un fondateur totalement
convaincu qui a transmis des règles, une déontologie, des principes, une
tradition orale et écrite (le fait d?écrire est une composante
essentielle). Nous avons eu cette chance chez Bouygues. Une entreprise,
c?est avant tout une aventure humaine : les problèmes de process,
d?organisation ou d?argent sont secondaires. Je constate que,
généralement, les entreprises qui n?ont pas ou ont peu de culture sont
celles qui l?ont en fait perdue. Et c?est souvent un désastre. Si vous
prenez la liste des sociétés cotées, vous verrez que celles qui créent de
la valeur pour l?actionnaire ont une personnalité très forte : Air
liquide, Axa, Danone, Decaux, Essilor, L?Oréal, Michelin...
Quelle est votre définition ?
La culture d?entreprise, c?est un ensemble de points de repères. Ils nous
aident à répondre aux questions : Qui sommes-nous ? Comment devons-nous
nous comporter ? Ce discours à usage interne c?est du reste la première
fois que j?accepte d?en parler à l?extérieur se développe année après
année. Il sert à défendre et à valoriser notre collectivité. La culture
d?entreprise est une éducation. Si vous voulez une comparaison avec
l?autre « culture », il y a d?un côté celle que l?on trouve dans les
livres, relativement facile à apprendre, et de l?autre ce que les parents
transmettent à leurs enfants et qui passe par une longue pratique. Cette
éducation n?est pas un vernis, elle crée des obligations. Quelqu?un qui,
chez nous, ne respecterait pas ses collaborateurs ou n?aurait pas
d?éthique posera un problème, problème qui devra être réglé par la
hiérarchie. Il y aura des sanctions. Ce n?est donc pas un discours
forcément « gentil ».
C?est donc au dirigeant de la définir ?
Le patron donne l?impulsion mais il s?agit d?un travail individuel et
collectif qui débouche sur des idées directrices fortes et partagées. Peu
ou prou, il est vrai que les cultures peuvent se ressembler d?une société
à l?autre. Je n?en connais pas qui soient aux antipodes des nôtres :
respect de soi, des autres, éthique, partage...
Si tout le monde dit la même chose, à quoi bon ?
Tout le monde ne dit pas la même chose ! Chez nous, la valeur fondatrice
est que l?entreprise a pour but de servir ses clients. C?est même son seul
but. Si l?on pense que l?entreprise sert à gagner de l?argent ou à fournir
des emplois, on confond l?objectif et la conséquence.
Chez Bouygues, on trouve un exemple intéressant avec les Compagnons du
Minorange...
Notre culture d?entreprise ne se résume pas au Minorange ! Cet ordre, né
il y a plus de quarante ans, incarne dans nos activités de construction la
reconnaissance de l?individu, la noblesse de l?effort et du travail bien
fait, en équipe, le souci de la sécurité et bien d?autres choses encore.
Cette reconnaissance a une dimension sociale, mais elle concerne aussi les
conditions de travail, la formation, la rémunération. En France, en Chine
ou en Afrique, les Compagnons en ont tiré des satisfactions, le groupe
Bouygues aussi. Le Minorange a été copié des dizaines de fois, mais la
démarche était toujours teintée de marketing, donc inefficace. Francis
Bouygues et moi-même avons toujours respecté cet ordre en le protégeant et
en cherchant à le développer.
Votre filiale TF 1 a-t-elle la culture Bouygues ?
Il y a dix-sept ans, TF 1 était une entreprise publique et n?avait pas
vraiment de culture propre. Aujourd?hui, elle en a une, très forte, qui
concerne tous les collaborateurs, à tous les échelons hiérarchiques. Il
est vrai que l?influence du groupe Bouygues a été considérable. C?est le
principe des vases communiquants : le plus rempli pèse davantage.
De façon générale, lorsqu?une entité rejoint le groupe, ce n?est pas un
affrontement. Soit elle a déjà une solide culture, et cela nous rassure :
il faut simplement s?accorder sur le langage. Soit elle n?en a pas et ses
salariés sont alors très heureux d?en trouver une. Si quelqu?un n?y adhère
pas, il peut se retirer. La culture est librement consentie, de façon
informelle.
Quand on arrive chez vous, la perception est-elle immédiate ?
Souvent, les nouveaux collaborateurs que je rencontre me disent : « Vous
n?êtes pas du tout comme j?imaginais. » Mais ce qui compte, ce n?est pas
la perception qu?a une nouvelle recrue en arrivant. C?est ce qu?il ressent
un an après.
Souvent, les nouveaux collaborateurs que je rencontre me disent : « Vous
n?êtes pas du tout comme j?imaginais. » Mais ce qui compte, ce n?est pas
la perception qu?a une nouvelle recrue en arrivant. C?est ce qu?il ressent
un an après.
PIERRE BELLON ?J?avais défini la culture Sodexho avant même sa création?
La philosophie de Sodexho, selon son PDG, Pierre Bellon ? C?est la
croissance interne, car elle concilie les intérêts des clients, des
salariés et des actionnaires.Comment la culture de Sodexho s?est-elle
formée ?
Pierre BELLON. J?ai fondé Sodexho assez tard, puisque j?avais 36 ans. Le
marxisme était encore très présent. L?affaire familiale, à Marseille,
était spécialisée dans l?avitaillement maritime. J?étais très marqué par
la chute des chantiers navals, contraints à des licenciements massifs. Je
militais au Centre des jeunes patrons. J?avais envie de créer ma propre
société et je me demandais : « À quoi ça sert et pour quoi faire ? » Je me
suis dit qu?une entreprise, c?est des clients, des hommes et des femmes,
et des gens qui mobilisent de l?argent. Aujourd?hui, on dirait : des
clients, des salariés et des actionnaires. Il y a entre ces trois publics
des contradictions. Par exemple, les clients demandent des repas cinq
étoiles au prix d?un sandwich. Quant aux actionnaires, ils se manifestent
rarement pour dire : « Gardez les dividendes. Il faut réinvestir ! » J?ai
alors pris la décision de créer une entreprise de croissance, avant même
de déposer ses statuts ! La croissance interne est en effet la meilleure
façon de concilier les intérêts de chacun : ceux des clients (pour les
garder et développer l?activité, il faut les satisfaire), ceux des
salariés (lorsque l?entreprise se développe, ils sont rassurés et peuvent
progresser), et ceux des actionnaires (qui apprécient tout
particulièrement les valeurs de croissance). Avec une ambition : «
Améliorer la qualité de vie au quotidien. » Notre philosophie est
celle-là, depuis le début.
Quelle constance ! Et vos valeurs ?
Nous sommes 320 000 dans 76 pays, dont 93 % sur le terrain, dans les
restaurants d?entreprise, les écoles, les établissements de santé, les
bases-vie, etc. Il faut que nos valeurs soient comprises par tous. Nous en
avons défini trois, l?esprit de service, l?esprit d?équipe et l?esprit de
progrès, et les avons inscrites sur des cartes en plastique, au format de
cartes de crédit. Elles s?appliquent à toutes nos activités, et entrent
dans les critères de promotion et de recrutement.
Ne s?agit-il pas d?une culture propre à la restauration collective ? Vos
concurrents ne développent-ils pas un discours analogue ?
En 1973, une anthropologue du CNRS a proposé de nous étudier, histoire de
voir si nous étions comparables à une tribu africaine... Elle est restée
trois ans et ses conclusions étaient passionnantes ! Sodexho était déjà
implanté dans plusieurs pays. Or, dans nos restaurants à Lyon, certains
salariés croyaient travailler dans une entreprise régionale ! Nous avons
compris qu?il n?y avait pas de culture Sodexho, mais une culture du
métier. Cela a bien changé depuis. Cette culture du métier, nous l?avons
rencontrée lorsque nous avons procédé à des acquisitions. Le britannique
Gardner Merchant, par exemple, avait de nombreuses caractéristiques
communes avec nous. Mais aussi de profondes différences : la société
n?avait pas de culture financière, car tout son cash remontait chez son
propriétaire, le groupe Forte. Idem chez l?américain Marriott, dont
l?activité de restauration collective était un département du groupe, et
n?établissait donc pas de bilan spécifique.
Lorsque le patron est le fondateur, la culture est-elle plus forte ?
Je pense que oui ! Quand le fondateur disparaît, que la succession est mal
préparée, ou quand l?entreprise est absorbée, vous avez un risque de perte
de culture. Sauf si elle est largement partagée. Comme vous le savez, j?ai
annoncé le 15 septembre que, le 1er septembre de l?année prochaine,
j?abandonnerai ma fonction de directeur général pour ne conserver que la
présidence du conseil d?administration, la direction générale étant
confiée à cette date à Michel Landel. Il adhère à 100 % aux valeurs de
Sodexho ! A tous les échelons, nous recrutons les gens en fonction de
leurs comportements.
Comment savoir, au moment d?une embauche, si cette adhésion à vos valeurs
est bien sincère ?
Nos salaires sont plus faibles que ceux de nos concurrents ! Nous ne
voulons pas de mercenaires. Les processus de recrutement sont toujours
difficiles, mais nous avons une certaine expérience, car nous employons
énormément de monde... La vérité d?une personne est souvent inscrite dans
son passé. Vous voyez vite si quelqu?un a un ego surdimensionné ou si, au
contraire, il a une véritable humilité. Cela ne nous empêche pas de
commettre des erreurs : il nous est déjà arrivé de mettre à la porte des
collaborateurs qui ne respectaient pas nos principes éthiques, la loyauté,
le respect de la personne, le respect de la concurrence. Vous savez,
depuis le début, j?ai voulu mettre l?économie au service des hommes et des
femmes.
La culture doit-elle évoluer ou constituer une référence immuable ?
Il faut éviter de la perdre, notamment à la suite d?une OPA. Un
actionnariat stable garantit, de ce point de vue, une certaine pérennité.
C?est le cas chez nous grâce au pacte d?actionnaires : avec ma famille,
nous contrôlons près de 40 % du capital et mes enfants se sont engagés à
ne pas céder d?actions pendant dix ans. Cela dit, bien sûr, la culture
doit évoluer. Je prendrai deux exemples. Le gérant de restaurant, chez
Sodexho, est un personnage très important. Au début, c?était un
producteur. Puis, nos fournisseurs sont devenus très performants, avec des
légumes ou des crudités prêtes à l?emploi, par exemple. Il s?est alors
transformé en gestionnaire. Aujourd?hui, il doit être un vendeur, et
développer notre chiffre d?affaires sur son site. Autre exemple : nous
avions coutume d?affirmer, chez Sodexho, la « culture du sou ». Car dans
ce métier les marges sont très faibles, et on a vite fait d?être dans le
rouge. Il a fallu passer de cette culture du sou, qui témoigne d?une
vision à court terme, à celle du profit. Aujourd?hui nous avons une taille
mondiale, c?est une force par rapport à nos concurrents.
Il faut éviter de la perdre, notamment à la suite d?une OPA. Un
actionnariat stable garantit, de ce point de vue, une certaine pérennité.
C?est le cas chez nous grâce au pacte d?actionnaires : avec ma famille,
nous contrôlons près de 40 % du capital et mes enfants se sont engagés à
ne pas céder d?actions pendant dix ans. Cela dit, bien sûr, la culture
doit évoluer. Je prendrai deux exemples. Le gérant de restaurant, chez
Sodexho, est un personnage très important. Au début, c?était un
producteur. Puis, nos fournisseurs sont devenus très performants, avec des
légumes ou des crudités prêtes à l?emploi, par exemple. Il s?est alors
transformé en gestionnaire. Aujourd?hui, il doit être un vendeur, et
développer notre chiffre d?affaires sur son site. Autre exemple : nous
avions coutume d?affirmer, chez Sodexho, la « culture du sou ». Car dans
ce métier les marges sont très faibles, et on a vite fait d?être dans le
rouge. Il a fallu passer de cette culture du sou, qui témoigne d?une
vision à court terme, à celle du profit. Aujourd?hui nous avons une taille
mondiale, c?est une force par rapport à nos concurrents.
CLAUDE BÉBÉAR ?un ensemble de réflexes communs?
Sans culture d?entreprise, il n?y a pas d?entreprise, selon le fondateur
et président du conseil de surveillance d?Axa.
Vous portez au revers de votre veste une épinglette Axa. Cela fait-il
partie de la culture-maison ?
Claude BÉBÉAR. Ce n?est pas une obligation mais c?est, de ma part,
l?affirmation d?une certaine fierté et d?une volonté d?appartenance à une
entreprise et d?adhésion à ses valeurs, à sa culture. Car sans culture
d?entreprise, il n?y a pas d?entreprise. Celle-ci n?est pas seulement un
groupe de salariés, c?est une équipe qu?on doit mobiliser sur une vision
et un objectif. Cela exige de lui faire partager certaines façons de voir
les choses, de travailler ensemble et de Y Y développer des réflexes
communs. Tout se passe exactement comme dans une équipe de rugby. Si j?ai
le ballon, il faut que je sache où se trouvent untel et untel et comment
ils vont réagir. La culture d?entreprise consiste à développer ce type de
ciment et elle passe par une connaissance du code de fonctionnement des
autres.
Quel est le rôle d?un patron ?
Il est majeur. Au début de ma carrière, quand j?ai pris la direction de la
Mutuelle d?Elbeuf, nous étions sept. Nous avons défini les objectifs de
l?entreprise et quels comportements étaient appropriés pour les atteindre.
Nous avons aussi découvert qu?il y avait entre nous des divergences
fondamentales ! Il est donc nécessaire de bien formaliser et expliciter la
culture d?entreprise. Dans une PME, elle se forme naturellement car tous
les salariés sont proches du patron. Dans un grand groupe, il faut définir
cette culture pour convaincre les gens de travailler ensemble en
respectant certaines règles. On ne peut pas dire : tous les coups sont
permis. Dans une entreprise mondiale comme Axa, si un salarié fait une
bêtise dans un coin, elle peut rétro-agir ailleurs dans le monde. Cela est
toujours possible. Les hommes sont les hommes : ils peuvent déraper s?ils
ne sont pas assez briefés ou s?ils sont... hypocrites. Il faut sanctionner
les fautes volontaires mais il faut aussi donner le droit à l?erreur pour
les fautes involontaires.
Éviter les dérapages, s?assurer de la loyauté des collaborateurs ? Ce sont
des valeurs assez simples...
Oui, il s?agit souvent de valeurs basiques et concrètes qui forment un
substrat. Il y a quelques années, j?avais loué une voiture aux États-Unis
chez Avis, dont le slogan est We try harder. J?ai eu un problème avec mon
véhicule et l?employé, visiblement, n?avait pas très envie de se
décarcasser pour le résoudre. À bout d?arguments, j?ai fini par lui dire :
« Do you try harder ? » Il a été piqué au vif et il l?a résolu. Dans son
esprit, la formule We try harder était plus qu?un slogan publicitaire.
Chez Axa, quels sont les objectifs de la culture d?entreprise ?
Tout simplement de maintenir un juste équilibre entre trois parties
prenantes : offrir le meilleur rapport qualité/prix aux clients, motiver
les salariés et verser des dividendes aux actionnaires. Quand arrive une
catastrophe, comme le 11 Septembre, la tentation est alors de faire des
économies sur les clients ou sur le personnel pour se focaliser sur la
rentabilité. La culture de l?entreprise est alors biaisée mais une telle
rupture de l?équilibre entre clients, salariés et actionnaires doit être
temporaire.
L?évolution du marché du travail ne compromet-elle pas un tel équilibre ?
Il y a encore quinze ans, l?Europe avait encore une tradition d?emploi à
vie, comme au Japon, même si on ne le disait pas. Le paternalisme, qui
pouvait présenter bien des défauts, permettait aussi aux gens de vivre
ensemble. Les conflits sociaux étaient violents mais ils traduisaient une
appartenance forte à l?entreprise. Aujourd?hui, les salariés se demandent
si leur emploi ne va pas être délocalisé, tandis que les entreprises se
demandent, avant de recruter quelqu?un, si elles peuvent lui faire
confiance.
Une conséquence est que les jeunes développent une culture de mercenaire
et cette dérive à l?américaine est accentuée par la dévalorisation du
travail. Avec les 35 heures, on ne se réalise plus dans son job mais dans
les loisirs. La culture d?entreprise doit évoluer pour tenir compte de ces
changements. Si l?entreprise ne peut rien garantir à long terme, elle doit
quand même prendre des engagements et les tenir, par exemple faire tout ce
qui est en son pouvoir pour recaser les salariés dont elle se sépare.
Une conséquence est que les jeunes développent une culture de mercenaire
et cette dérive à l?américaine est accentuée par la dévalorisation du
travail. Avec les 35 heures, on ne se réalise plus dans son job mais dans
les loisirs. La culture d?entreprise doit évoluer pour tenir compte de ces
changements. Si l?entreprise ne peut rien garantir à long terme, elle doit
quand même prendre des engagements et les tenir, par exemple faire tout ce
qui est en son pouvoir pour recaser les salariés dont elle se sépare.
XAVIER FONTANET ?La confiance dans la personne humaine?
Pour le président d?Essilor, les valeurs de son entreprise sont
universelles.
Votre définition de la culture d?entreprise ?
Xavier FONTANET. Une entreprise n?est pas une machine à faire du profit, à
exploiter les employés ou tromper le consommateur par de la publicité
comme on le laisse trop souvent entendre dans de nombreux milieux. Une
entreprise est une communauté d?employés et d?actionnaires en relation
quotidienne avec ses fournisseurs et ses clients.
Mais, pour nous, la réalité de l?entreprise va beaucoup plus loin. Une
entreprise c?est aussi une histoire, un métier, un projet, un risque et
des valeurs ; ce quelque chose de plus, difficile à exprimer, est pourtant
fondamental, c?est le ciment de l?entreprise. Si Essilor est une société
où la tradition orale prédomine, comme dans beaucoup d?entreprises
européennes, la culture n?en est pas moins très forte.
Concrètement, quelles sont les valeurs que vous défendez ?
Je voudrais vous citer un court texte fondateur dans les statuts de
Valoptec, l?association des actionnaires travaillant dans Essilor ou
retraités d?Essilor : « À la base de tout, la confiance dans la personne
humaine et sa capacité à se comporter de façon responsable même en
situation de risque ; ensuite la participation au capital : chaque
employé, en possédant des actions de son entreprise, la comprend plus
profondément. »
Nous tenons beaucoup chez Essilor à l?actionnariat du personnel : il est
même essentiel. Nous pensons et constatons tous les jours qu?il développe
la personnalité, qu?il apprend à chacun à assumer les conséquences de ses
actes, qu?il développe aussi le sens de la communauté car le risque est
partagé. Aujourd?hui, la communauté Valoptec est le premier actionnaire
d?Essilor avec 15 % des droits de vote. Bien sûr, tout le monde ne peut
pas mettre toutes ses économies dans son entreprise, mais y avoir au moins
une part significative permet de mieux comprendre ce qu?elle est et la
conséquence réelle des investissements.
Essilor s?est formidablement développé dans le monde. Nous avons
maintenant des employés parmi pratiquement tous les peuples de la terre et
la valeur essentielle, la confiance dans la personne humaine, son talent,
son unicité, est comprise partout dans le monde, c?est une valeur
universelle ; la formulation générale du principe lui a permis d?être
compris partout.
La culture d?Essilor a-t-elle évolué au cours du temps ?
Elle a formidablement évolué. Comment n?évoluerait-elle pas dans une
entreprise qui se développe de 10 % par an depuis des décennies ? Mais
comment garder une communauté internationale unie s?il n?y a pas un
ciment, une valeur commune ? Les anciens voient les valeurs évoluer mais
ils perçoivent aussi ce que les nouveaux apportent. Quant aux nouveaux,
ils se sentent à l?aise dans le cadre qui leur est offert. Ils s?y
retrouvent et savent aussi qu?ils peuvent le faire évoluer.
Essilor vit bien la mondialisation, réussit très bien ses acquisitions et
ses joint-ventures, c?est même devenu un avantage concurrentiel. La
culture ouverte, quasiment familiale, y est sûrement pour beaucoup.
Essilor vit bien la mondialisation, réussit très bien ses acquisitions et
ses joint-ventures, c?est même devenu un avantage concurrentiel. La
culture ouverte, quasiment familiale, y est sûrement pour beaucoup.
LINDSAY OWEN-JONES ?C?est un peu notre ADN?
Adhérer à une culture, c?est d?abord partager une même vision, estime le
PDG de L?Oréal.
Pouvez-vous résumer la culture L?Oréal ?
Lindsay OWEN-JONES. L?Oréal est pour moi tout d?abord « une magnifique
aventure ». La passion pour un seul métier, la cosmétique, et la capacité
de développer l?entreprise et nos marques dans plus de 130 pays au cours
des années, tout en respectant les différences culturelles et les attentes
des femmes et des hommes du monde entier, sont les deux aspects essentiels
de cette aventure. Notre culture est d?autant plus forte que nos 50 000
collaborateurs partagent ce même rêve, cette même passion pour leur
métier, cette même ambition pour leur entreprise.
Comment se forme une culture d?entreprise ? Les dirigeants la
définissent-ils vraiment eux-mêmes ?
Adhérer à des valeurs, à une culture, c?est d?abord partager une même
vision. Bien souvent, celle-ci émane du fondateur de l?entreprise, celui
qui a eu une idée simple et qui, à force d?acharnement, a réussi à
l?imposer. La culture se forge souvent à ce moment-là, dans les
soubresauts des débuts. C?est un peu l?ADN de l?entreprise. Chez L?Oréal,
parce qu?Eugène Schueller était chimiste, parce qu?il a créé une rupture
technologique dans la coloration des cheveux, la foi dans la recherche et
dans l?innovation est chevillée au corps. C?est notre credo fondateur.
L?impact d?un président sur la culture et les valeurs de l?entreprise, est
d?autant plus important qu?il reste suffisamment longtemps en place.
L?Oréal n?a connu que quatre présidents en presque 100 ans et tous les
dirigeants du groupe y ont fait la majeure partie de leur carrière.
Les valeurs écrites correspondent-elles aux valeurs réelles, celles que
découvre par exemple une nouvelle recrue ?
Chez L?Oréal, la culture orale nous a toujours permis d?avoir la
flexibilité indispensable pour exercer un métier où tout bouge en
permanence. Nos nouvelles recrues ressentent dès leur intégration la très
forte culture du groupe, même si celle-ci n?est pas écrite. Très souvent
jeunes (près des deux tiers des recrutements concernent des jeunes à la
sortie de leurs études ou ayant une courte première expérience), ils
comprennent que s?ils ont été retenus, c?est qu?ils pourront facilement
s?intégrer, adhérer à la culture.
Parce que nous sommes à la fois poètes et paysans. Poètes parce que nous
savons rêver, avoir de la sensibilité, de l?imaginaire. Paysans parce que
nous aimons toucher les produits, organiser les gens, les motiver, vendre,
exercer toutes les métiers classiques de l?industriel. La culture se
transmet d?abord lors de nos réunions, par oral. C?est l?expérience qui
prime. L?association systématique de jeunes managers dans tous les
meetings importants, par exemple dans la présentation d?un nouveau produit
leur permet de se frotter immédiatement à notre culture, presque de
manière instinctive, dans l?action, sur le terrain. Par ailleurs, une
grosse partie de notre effort de formation est centrée sur la transmission
de la culture de l?entreprise.
Les jeunes recrues participent à des stages spécifiquement dédiés au
partage de nos valeurs, de notre vision.
L?Oréal essaye toujours de recruter des personnes avec du talent, des
personnalités fortes et de toutes origines culturelles. Nos parcours de
formation se définissent et durent dans le temps. Nous essayons toujours
d?identifier les talents de chacun, et de leur permettre de les exprimer
au mieux dans un parcours qui soit adapté et personnalisé. J?aime penser à
L?Oréal comme une flottille. Pour naviguer les règles de base sont certes
les mêmes, mais par contre chaque bateau a son propre capitaine, avec ses
responsabilités ainsi que sa propre liberté. Le succès de l?entreprise,
son excellence dépendent beaucoup de la réussite de toute la flottille.
Y a-t-il un lien entre les valeurs d?une entreprise et celles du pays où
elle opère ? L?Oréal promeut-il les mêmes valeurs aux États-Unis, en Inde
et en France ?
Les valeurs de l?entreprise sont, en tout cas au début, certainement
imprégnées de la culture de son pays d?origine. Mais certaines
transcendent les barrières géographiques ; au fil de son expansion
mondiale, ses valeurs s?enrichissent de l?expérience accumulée à travers
les différents continents. Aussi l?attachement de L?Oréal à ses salariés
et sa préférence pour la promotion interne sont plus proches de certaines
cultures nationales que d?autres, mais finissent par s?imposer partout.
Quelle est la contribution de la culture à la pérennité d?une entreprise ?

La culture est un motif de pérennité donc de motivation et facteur de
rassemblement, donc d?unité d?action. Les deux réunis sont de puissants
moteurs de développement. Plus l?affaire est internationale, étendue, plus
la force d?unification de la culture est importante. Pour que l?entreprise
dure, il faut d?abord croire en son métier. Je pense que si L?Oréal a
connu une telle stabilité c?est justement parce que nous y croyons, nous
sommes persuadés qu?il est utile.