Sustainablog

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

19.2.05

Exxon chief calls for Kyoto reality check: Lee R Raymond, the chairman and chief executive, caused outrage among environmentalists with his comments

[Sometimes you wonder if time travel does not already exist. Exhibit one:
a 19th century oil CEO in 21st century North America... -JFB]

================



Exxon chief calls for Kyoto reality check
The Independent, 18 February 2005 - The head of ExxonMobil, the world's
biggest oil company, has warned Europe that "a reality check" is needed
over its commitment to the Kyoto treaty on climate change.
Lee R Raymond, the chairman and chief executive, caused outrage among
environmentalists with his comments, given in a speech in London to an oil
industry gathering. He declared that the targets to reduce greenhouse gas
emissions set by Europe, which is leading the world in the implementation
of Kyoto, would prove very difficult to achieve.
Mr Raymond also took a swipe at the British Government's tax policy for
North Sea operators. Exxon extracts 15 per cent of the oil and gas
supplied from the UK continental shelf in the North Sea. Speaking at a
dinner on Wednesday night at the Grosvenor House Hotel in London, to mark
the International Petroleum Week conference organised by the Energy
Institute, a trade body, Mr Raymond said the UK's tax and regulatory
regimes needed to be more competitive. He said the costs of operating in
the UK continental shelf were among the highest in the world.
"We have only to look back to the tax changes made in the UK North Sea in
2002 to see the interruption that subsequently took place in exploration."
In the 2002 Budget, an extra 10 per cent tax was applied to oil companies
operating in the UK part of the North Sea. Mr Raymond said that, to those
calling for windfall taxes to be applied to the multi-billion pound
profits now being made by oil majors, "I would remind them that ours is a
long- term business and that project lives often exceed 20 years".
Exxon, which also trades as Esso in this country, has never accepted the
mainstream science on global warming that led to the signing of the Kyoto
treaty in 1997. The company points to "uncertainties" in the science and
funds a number of think tanks and academics that have questioned the
research. The EU has committed itself to reducing greenhouse gas
emissions, which are blamed for global warming, to 8 per cent below 1990
levels by 2012.
Mr Raymond said: "I also think there will be a need to be realistic about
environmental targets. While the political commitment to the Kyoto process
and targets is quite strong in Europe, attaining those targets is going to
be very challenging, given the energy supply and demand realities. That is
why a reality check may be needed regarding the attainment of those
targets."
He said the world will experience a dramatic rise in energy demand - equal
to an extra 100 million barrels per day of oil by 2030 - more than 10
times the current output of Saudi Arabia, the world's leading producer. He
said fossils fuels remained the only way of meeting those needs, in
particular from new sources of gas. Mr Raymond predicted wind and solar
energy would provide just 1 per cent of global requirements in 2030.
Unlike Shell and BP, Exxon opposes the Kyoto treaty - many saw its hand
behind the decision taken by the Bush administration in 2001 to pull out
of Kyoto. But Exxon insists it is taking practical actions to reduce
emissions. A spokesman said that Kyoto would "impose dramatic economic
costs in the developed world" while failing to tackle the emissions from
the developing world. He said the company believed that "it is time to
move beyond Kyoto" and focus on developing technologies to reduce
emissions.
The dinner Mr Raymond addressed was disrupted by protesters, who labelled
him "the number one climate criminal".
Even in Mr Bush's Republican Party and in the US oil industry, some
leading voices have called for America to adopt a Kyoto-style system for
reducing greenhouse gas emissions. US Senators John McCain and Joseph
Lieberman introduced the Climate Stewardship Act 2005 earlier this month,
but Exxon said that it opposes the move.


16.2.05

McDonald's to Pay $8.5 Million in Trans Fat Lawsuit

McDonald's to Pay $8.5 Million in Trans Fat Lawsuit
Mail this story to a friend | Printer friendly version
USA: February 14, 2005

SAN FRANCISCO - McDonald's has agreed to pay $8.5 million to settle a
lawsuit over artery-clogging trans fats in its cooking oils, the company
said on Friday.

McDonald's said it will donate $7 million to the American Heart
Association and spend another $1.5 million to inform the public of its
trans fat plans.
The settlement is the result of litigation from a San Francisco area
activist who has been seeking to raise public awareness of the health
dangers from the trans fatty acids (TFAs) in hydrogenated or partially
hydrogenated oils.
Trans fats are used in thousands of processed food products, often giving
the crunch to French fries, cookies, and cereals.
They are created in processing vegetable oils and have been found to be as
unhealthy as pure cholesterol. The latest official US nutrition
recommendations suggest limiting their intake.
"McDonald's has reached an agreement to further notify our customers about
the status of our ongoing initiative to reduce TFAs in our cooking oil,"
the company said in a statement.
Stephen Joseph, a lawyer who founded BanTransFats.com, sued McDonald's
over complaints the firm did not properly inform the public that it had
encountered delays in plans to lessen the trans fats in its cooking oils.
Joseph said his site would receive $7,500, as would another plaintiff in
the case.
"McDonald's has been successful in reducing TFA levels in our Chicken
McNuggets, Crispy Chicken Sandwich and McChicken Sandwich," the fast food
firm said. "McDonald's continues to work hard on our initiative to reduce
TFAs in our cooking oil."
British-born Joseph first gained publicity for his cause by suing Kraft
Foods two years ago to highlight the trans fat content of much-beloved
Oreo cookies. The company has since moved to remove trans fats from its
snack foods.
"While there is a difference of opinion regarding whether McDonald's gave
effective notice to its customers that the oil was not changed, McDonald's
deserves recognition and credit for having achieved a reduction in the
trans fat levels in its chicken products and for working diligently over
the last two years to test additional cooking oils," Joseph said in a
statement.
Dunkin' Donuts, a unit of Britain's Allied Domecq Plc, and other companies
have in recent months introduced new products free of trans fats.


The Last Word: The need for greater rigour in corporate responsibility research

Comment:
The Last Word
Peter Davis
9 Feb 05
The need for greater rigour in corporate responsibility research


Study time needed
Corporate responsibility remains short on credibility. In most companies
the official line is that ?corporate responsibility provides tangible
commercial benefits?.

However, scratch the surface and one finds a high degree of cynicism about
corporate responsibility, and a widespread belief that it is a costly,
public-relations-focused activity that adds little to the business.

The reason is simple. Despite varied attempts to apply a quasi-scientific
approach to the topic, most corporate responsibility case studies still
lack any degree of intellectual or academic rigour.

As a result, many of the claims made for the commercial, environmental or
social benefits of corporate responsibility cannot be legitimately
substantiated.

There are some notable exceptions to this rule. For example, Shell?s
studies of its impacts on its ?fence-line? communities ? those close to
its oil instillations ? are thorough and insightful. International Alert?s
work on the relationships between companies and conflicts is also
thoughtful and analytical.

Pseudo-science or waffly anecdotes

However, most corporate responsibility literature ? be that company
reports or external assessments ? falls unhappily between two stools.

As a lawyer friend of mine put it, ?it?s either the pseudo-science of
numbers or waffly anecdotes?.

To start with: the quantitative. As a recent British government paper on
strategic decision-making stated, ?a love affair with numbers has tended
to dominate certain decision-making processes leading to attempts to
reduce all analysis to a process of mathematical calculation?.

The increasing number of corporate responsibility benchmarks, codes,
indices and guidelines fall squarely into this tradition ? the belief that
nothing can be demonstrably true unless it is can be expressed as a set of
numbers.

To be sure, for some aspects of the corporate responsibility agenda, this
quantitative approach works perfectly ? environmental factors such as
waste emissions for example.

However, the usefulness of quantitative analysis in corporate
responsibility, as in all other areas of social research, is limited.
Consider, for example, health and safety.

How relevant is a statistic that tells us that X% of a company?s workforce
has received health and safety training? Not very. What is important is
not that people have had the training but that they have understood it and
have incorporated the lessons into their daily working practices ? is it
part of their ?mental furniture?. Numbers will not, indeed cannot, tell us
about these things.

The complexity of the social and political world cannot usefully or
meaningfully be reduced to a set of numbers.

This is where qualitative analysis should come in. Historians and social
scientists have long managed to make sense of complicated human endeavour.
Yet this is apparently beyond most of those writing corporate
responsibility studies.

We are all familiar with the structure of a typical corporate
responsibility ?case study?: a brief description of the activity; quotes
from admiring participants; local officials saying how valuable the event/
investment/ activity was; all accompanied by pictures of smiling people.

Such case studies are perfectly valid and are useful as illustrations of
the type of thing companies get up to. But there their value ends. Without
any coherent, rigorous and systematic analysis, no reliable, replicable
conclusions can be drawn.

It doesn?t have to be this way

It is not as if the methodologies do not exist. The world of academic
social science has produced tomes upon tomes to enable researchers
rigorously to analyse qualitative data.

There are a number of factors that need to be taken into account. The
following are a few of the more important ones.

First we need to know the point of view of a study?s author. No one can
ever be totally objective. Sociologist Anthony Giddens says: ?Unlike
objects in nature, humans are self-aware beings who confer sense and
purpose on what they do.?

Second, case studies must take into account the views of a true
cross-section of those involved. Arbitrary quotes from interested parties
are not sufficient: we need to know how these people fit into the universe
of project stakeholders. It may not always be possible to interview a
proper sample ? in a war-zone for instance ? but in these cases this
should be made explicit.

Third, interviews and the gathering of information should be as neutral as
possible and the questions asked need to be made explicit in any write-up.
This also requires careful consideration to be given to factors that might
prevent people from giving open, frank and truthful responses ? fear of
oppression for instance.

Finally, if comparisons are meaningfully to be drawn between different
case studies, then the methodology used needs to be comparable ? we need
to know that we are not comparing apples and oranges.

Corporate responsibility does not need to become over-academic ? it always
needs to remain a practical discipline. However, it does need to become
more professional and intellectually rigorous.

If not, the gainsayers cannot be refuted. More importantly, operational
managers on the ground around the world will not have access to reliable
guidance on leveraging corporate responsibility to improve their business.

Peter Davis is a contributing editor to Ethical Corporation.

GRI Walks the Talk on Sustainability Reporting

GRI Walks the Talk on Sustainability Reporting
Source: Ethical Corporation
NEW YORK, Feb. 9, 2005 - The Global Reporting Initiative has published its
first sustainability report for the year 2003-4. GRI, the institution that
develops sustainability reporting guidelines for corporations worldwide
calls its report, ?It?s not enough to just BE.?

The theme of the report emerged from the GRI?s realization that though it
was dedicated to sustainability reporting, it had neglected to ensure the
development of the organization itself involves what it calls a
?systematically sustainable? system.

So, while the GRI?s guidelines on sustainability reporting preach
reduction in emissions by companies, the group felt it was not doing
enough itself.

As a result, GRI says it has now been prompted to think about why it has
thus far ignored telephone conferencing as a substitute to air travel for
meetings.

?We (were) less focused on GRI as an organization. We were and still are,
externally focused,? Ernst Ligteringen, chief executive of GRI says.

Ligteringen says that the Global Reporting Initiative has to be much more
rigorous with itself in its approach to measurement and management of
social and environmental issues in order to produce an exemplary report in
future.

Two Kinds of Reports

This, Ligteringen says, is the reason why the organization has not been
able to report in accordance with all its 97 key performance indicators in
the areas of sustainable development.

The Global Reporting Initiative framework allows companies to report
either ?in accordance with? or ?with reference to? their indicators.

GRI has been proactive in engaging members of its international
multi-stakeholder network in the production of its first report.

These stakeholder groups include NGOs, companies, trade unions,
inter-governmental organizations and consultants in the ethical business
field.

In August last year, GRI issued a call to its stakeholders to comment on
their expectations for the organization?s first attempt at reporting.

GRI also employed the services of three independent assurance providers
mid-way through the report to review the process.

Mark Line from U.K.?s csrnetwork, Jennifer Iansen-Rogers from KPMG
Sustainability and Vic Thorpe from Switzerland-based Just Solutions spent
two days analyzing the draft report and providing their input.

Some of the observations made by them at the midway stage were:
The Global Reporting Initiative needed a more formalized sustainability
policy and related management and reporting systems.

The draft report was ?extensive? and ?ambitious? and covered what GRI
?could? report than what it ?should? report.

Future sustainability reports should be more ?closely linked to
stakeholder information needs.?
Assessing the report after its completion, the three assurance providers
concluded that GRI has taken on board most of their suggestions but has
scope for much improvement.

For example, they say, GRI might try and report less extensively but focus
on key issues, such as those expected from other small and medium-sized
enterprises.

The GRI intends to put their report in a handbook they produce on
sustainability reporting for SMEs.

Lacking Some Numbers

Adrian Henriques, professor of accountability at Middlesex University,
points out that the GRI?s first sustainability report lacks some of the
hard, environmental information related to water and energy.

Henriques was involved in preparing the 2002 GRI guidelines for companies
and other organisations.

He notes that the report could have done better in laying out more clearly
the opinions of the various stakeholders that contributed to the process.

Mr Henriques points out that stakeholder views on GRI?s governance are
?hidden.?

He also comments on the navigation of the report, which, he says, makes it
impossible to access all sections of the report with ease.

But despite these criticisms, Henriques commends the Global Reporting
Initiative?s first attempt at sustainability reporting.

?They (GRI) are honest about the state that they are at. People shouldn?t
expect them to be reporting experts simply because they provide the
guidelines,? Professor Henriques concludes.

The GRI has seen the number of corporate sustainability reporters who use
its guidelines increase hugely in the last few years.

So far over 600 companies have made reference to the guidelines in their
corporate ethical and social/environmental reports.

However, some companies have referred to the GRI guidelines in a vague and
inconclusive way in some past ethical reports.

Critics have suggested the rules may need tightening to prevent companies
that do not use the guidelines significantly, from claiming that they do.

In response to criticisms from some companies that the 2002 guidelines are
too complex and time consuming to report ?in accordance with,? the GRI
aims to simplify them in future.

The organization is also gradually introducing sectoral-based guidelines
for reporters, as many industries share common indicators.

So far such supplements have included the mining and metals industry,
automotive, financial services, and telecommunications.

Forthcoming sector supplements include sectoral guidelines for public
agencies.

The new, revised GRI guidelines are due out in 2006.


15.2.05

Study: Corporate Values Linked to Financial Success, But CEOs Still Unconvinced

Study: Corporate Values Linked to Financial Success, But CEOs Still
Unconvinced
GreenBiz.com, 9 February 2005 - A new study by the Aspen Institute and
management consulting firm Booz Allen Hamilton has found that companies
routinely identify values as a top agenda issue, and public companies that
report superior financial results also report greater success in linking
values to operations in areas that foster growth, such as initiative and
innovativeness. However, most corporate executives do not see a direct
link to growth, and the joint study also revealed that most companies are
not effectively measuring their "Return on Values" in areas important to
their business strategy.
The survey examined detailed responses by 365 senior executives from
around the world, representing a broad range of industries. The results
were revealed at a recent roundtable discussion on "Deriving Value from
Corporate Values," at the Harvard Club in New York.
The study found that ethical behavior is part of a company's license to
operate. Eighty-nine percent of companies studied have a written corporate
values statement, and 90% of these specify ethical conduct as a principle.
Other business values commonly included in formal statements are
commitment to customers (88%) and commitment to employees (78%).
"Ethics-related language in formal statements not only sets corporate
expectations for employee behavior -- companies are using it as a shield
in an increasingly complex and global legal and regulatory environment,"
said Chris Kelly, vice president at Booz Allen.
In contrast, some of the values often closely associated with revenue or
earnings growth are found less often in values statements, such as
innovativeness (60%), initiative (44%), and adaptability (31%). Commitment
to diversity appeared in 41% of values statements studied.
Among financial leaders -- public companies that outperform their industry
averages -- 98% include ethical behavior/integrity in their values
statements, compared with 88% for other public companies. Far more of
these financial leaders include commitment to employees (88% vs. 68%),
honesty/openness (85% vs. 47%) and drive to succeed (68% vs. 29%).
Forty-two percent of the financial leaders emphasize adaptability in their
values statements, compared with a mere 9% for other public companies.
Financial leaders also appear to be doing a better job than other
companies of linking corporate values to corporate operations. Nearly all
(94%) say they have practices in place to ensure that their values are
aligned with those of their suppliers, distributors and partners, compared
with 64% for other public companies. Seventy-five percent of financial
leaders say their management practices are very effective in fostering
teamwork and trust, compared with fewer than half the other public
companies. Approximately 60% of the financial leaders say their practices
are very effective in promoting initiative, adaptability, and
innovativeness and entrepreneurship, compared with about 30% for other
public companies.
In addition, the financial leaders believe social and environmental
responsibility have a positive financial impact. Nearly half (49%) said
that both environmental and social responsibility have a positive impact
on financial performance in the short run, compared with 34% for the other
public companies. "Clearly, many companies are successful in turning their
corporate values into a competitive asset," said Judith Samuelson,
executive director of the Aspen Institute Business & Society Program. "As
a result, they are better positioned to take advantage of the relationship
between values and performance."
The study found striking regional differences in companies' approach to
values. Ethics are addressed in the values statements of more North
American companies (95%) than firms in Europe (84%) and Asia (85%).
Environmental responsibility features more prominently in corporate values
statements in Europe (55%) and Asia (56%), than in North America (34%).
Some performance-related values normally associated with American culture
are more esteemed outside the U.S. For example, almost three-quarters of
European companies value innovativeness and entrepreneurship; only half of
U.S. companies articulate these principles.
The study also found strong regional variations in the way companies apply
values related to their broader role in society. For example, 63% of Asian
firms say, "listening to diverse perspectives helps us to avoid strategic
and operational mistakes"; only 49% of North American firms agree.
Conversely, while 81% of North American companies have employees volunteer
in the community, less than half of Asian and European companies do so.
How do these companies align values and strategy so that executives can
make decisions that support their corporate values? The most important
factor is the behavior of the CEO. Eighty-five percent of the respondents
say their companies rely on explicit CEO support to reinforce values, and
77% say it is one of the "most effective" practices for reinforcing the
company's ability to act on its values. However, companies have less
confidence in the effectiveness of other management practices used to
support values: only 34% of respondents identified training as a "most
effective" practice, 32% cited internal communications and 30% identified
incentive compensation.
More than two-thirds of companies report that they collect some form of
information for assessing the long-term financial impact of upholding
values. However, there is little common ground among the types of
information that companies collect. Moreover, it is striking how few
companies are actually measuring how values affect business performance in
the areas where they say values matter. Although nearly two-thirds of
respondents agree that a corporation's values can strongly affect customer
loyalty, less than one-third of companies use customer preference data
regarding their company's values or social impact.
Study Methodology
Beginning in July 2004, 365 executives completed print or online surveys
to understand how companies are dealing with the challenges of managing
values. More than three-quarters of the respondents are top leaders in
their companies. CEOs and managing directors comprise nearly one-fourth of
the sample (24%), with other C-level executives comprising another 22%.
Board members comprise 7%, and general managers and heads of departments
and divisions represent 32% of the respondents. Sixty-five percent of the
respondents are from companies with annual revenues exceeding $1 billion.
Nearly half of the respondents (47%) are based in North America with
another fourth (27%) representing companies based in Europe, and a fifth
(24%) representing companies based in Asia/Pacific. Respondents represent
many industries: financial services and manufacturing lead at 26% and 25%,
respectively, followed by technology and consumer-related companies
(including consumer products, media and retail), each at 11%. Utilities
(7%), transportation (7%) and energy (5%) comprise the balance along with
8% in miscellaneous or unclassified industries.
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license to operate. Eighty-nine percent of companies studied have a
written corporate values statement, and 90% of these specify ethical
conduct as a principle. Other business values commonly included in formal
statements are commitment to customers (88%) and commitment to employees
(78%).
"Ethics-related language in formal statements not only sets corporate
expectations for employee behavior -- companies are using it as a shield
in an increasingly complex and global legal and regulatory environment,"
said Chris Kelly, vice president at Booz Allen.
In contrast, some of the values often closely associated with revenue or
earnings growth are found less often in values statements, such as
innovativeness (60%), initiative (44%), and adaptability (31%). Commitment
to diversity appeared in 41% of values statements studied.
Among financial leaders -- public companies that outperform their industry
averages -- 98% include ethical behavior/integrity in their values
statements, compared with 88% for other public companies. Far more of
these financial leaders include commitment to employees (88% vs. 68%),
honesty/openness (85% vs. 47%) and drive to succeed (68% vs. 29%).
Forty-two percent of the financial leaders emphasize adaptability in their
values statements, compared with a mere 9% for other public companies.
Financial leaders also appear to be doing a better job than other
companies of linking corporate values to corporate operations. Nearly all
(94%) say they have practices in place to ensure that their values are
aligned with those of their suppliers, distributors and partners, compared
with 64% for other public companies. Seventy-five percent of financial
leaders say their management practices are very effective in fostering
teamwork and trust, compared with fewer than half the other public
companies. Approximately 60% of the financial leaders say their practices
are very effective in promoting initiative, adaptability, and
innovativeness and entrepreneurship, compared with about 30% for other
public companies.
In addition, the financial leaders believe social and environmental
responsibility have a positive financial impact. Nearly half (49%) said
that both environmental and social responsibility have a positive impact
on financial performance in the short run, compared with 34% for the other
public companies. "Clearly, many companies are successful in turning their
corporate values into a competitive asset," said Judith Samuelson,
executive director of the Aspen Institute Business & Society Program. "As
a result, they are better positioned to take advantage of the relationship
between values and performance."
The study found striking regional differences in companies' approach to
values. Ethics are addressed in the values statements of more North
American companies (95%) than firms in Europe (84%) and Asia (85%).
Environmental responsibility features more prominently in corporate values
statements in Europe (55%) and Asia (56%), than in North America (34%).
Some performance-related values normally associated with American culture
are more esteemed outside the U.S. For example, almost three-quarters of
European companies value innovativeness and entrepreneurship; only half of
U.S. companies articulate these principles.
The study also found strong regional variations in the way companies apply
values related to their broader role in society. For example, 63% of Asian
firms say, "listening to diverse perspectives helps us to avoid strategic
and operational mistakes"; only 49% of North American firms agree.
Conversely, while 81% of North American companies have employees volunteer
in the community, less than half of Asian and European companies do so.
How do these companies align values and strategy so that executives can
make decisions that support their corporate values? The most important
factor is the behavior of the CEO. Eighty-five percent of the respondents
say their companies rely on explicit CEO support to reinforce values, and
77% say it is one of the "most effective" practices for reinforcing the
company's ability to act on its values. However, companies have less
confidence in the effectiveness of other management practices used to
support values: only 34% of respondents identified training as a "most
effective" practice, 32% cited internal communications and 30% identified
incentive compensation.
More than two-thirds of companies report that they collect some form of
information for assessing the long-term financial impact of upholding
values. However, there is little common ground among the types of
information that companies collect. Moreover, it is striking how few
companies are actually measuring how values affect business performance in
the areas where they say values matter. Although nearly two-thirds of
respondents agree that a corporation's values can strongly affect customer
loyalty, less than one-third of companies use customer preference data
regarding their company's values or social impact.
Study Methodology
Beginning in July 2004, 365 executives completed print or online surveys
to understand how companies are dealing with the challenges of managing
values. More than three-quarters of the respondents are top leaders in
their companies. CEOs and managing directors comprise nearly one-fourth of
the sample (24%), with other C-level executives comprising another 22%.
Board members comprise 7%, and general managers and heads of departments
and divisions represent 32% of the respondents. Sixty-five percent of the
respondents are from companies with annual revenues exceeding $1 billion.
Nearly half of the respondents (47%) are based in North America with
another fourth (27%) representing companies based in Europe, and a fifth
(24%) representing companies based in Asia/Pacific. Respondents represent
many industries: financial services and manufacturing lead at 26% and 25%,
respectively, followed by technology and consumer-related companies
(including consumer products, media and retail), each at 11%. Utilities
(7%), transportation (7%) and energy (5%) comprise the balance along with
8% in miscellaneous or unclassified industries.