Sustainablog

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

12.3.05

Petroleum, Poverty and Profits: Changing Philosophies of Community Engagement: Speech by Peter Robertson, Vice Chairman, ChevronTexaco Corporation

Petroleum, Poverty and Profits: Changing Philosophies of Community
Engagement
Speech by Peter Robertson, Vice Chairman, ChevronTexaco Corporation, at
the Eradicating Poverty through Profit Conference, San Francisco, CA (13
December 2004)
I'd like to salute the World Resources Institute (WRI) for hosting this
conference, and each one of you for attending. Being here shows your
commitment to learning about, addressing and eradicating poverty.
This conference is a place to share the best practices we've learned as
members of governments, nongovernmental organizations and the private
sector. It can help us better understand the complex nature of poverty in
today's world.
Our concerns about war and terrorism notwithstanding, I believe poverty is
the single most important challenge we face in the 21st century. Poverty
spreads the world's worst diseases, erects the tallest barriers to
education and festers at the root of political instability.
It's a subject I care deeply about. I've seen some of the problems our
conference is addressing firsthand. I've seen not only the devastation of
poverty, but the hopeful steps that are being taken to combat it. So I'm
glad to be here, and to take part.
Thanks to WRI for holding our conference here in San Francisco. I'm
convinced the West Coast, as a center for high technology and innovative
thinking, has a special role in fighting poverty -- and one that will only
grow in the future.
Just a few blocks from this location, my company first opened our doors
125 years ago. Our ties to the international community go back nearly as
far.
Early in the last century, we sold kerosene in China, the Philippines and
Nigeria. We explored for oil and gas in the Middle East and Latin America.
And, we were one of the first in our industry to enter Indonesia. So, from
the beginning we've sustained successful economic engagements with the
developing world.
Looking ahead, we need to build on our efforts to sustain equally
successful community engagements.
Our productive portfolios of long-term oil and gas leases must be matched
by productive portfolios of long-term community projects -- projects that
improve lives and promote broad economic growth.
For my industry, this isn't solely a moral or ethical imperative. It's a
business imperative too – one that goes to the heart of our ability to
prosper and survive.
In the energy business, success is all about access – access to oil and
gas resources. To get that access, we must first be good at our business
and second distinguish ourselves by the way we behave.
It's the "how we do business" part of doing business: How we share
technology and expertise; how we open up our business to local workers and
entrepreneurs; and how we invest in the social fabric of our host nations
and communities.
Over the years, ChevronTexaco has learned that the best way to pull people
out of poverty is through economic growth. No real surprise there, but
we've also learned that just throwing money at big projects isn't the
answer. We've recognized – perhaps too slowly at times – that successful
community engagement starts by building the capacity of individual people
to help themselves. And we‘ve discovered that we can't do this alone.
Our community initiatives -- like our energy projects -- are almost always
undertaken in partnership. They target basic and compelling human
problems. They endeavor to improve health, education and the environment.
And they reflect the fact that economic growth is the key to social
progress.
Internationally, the energy industry faces different challenges than those
who seek solely to expand markets. To survive, we not only have to be
asked in, we have to be asked back.
Our business is a long-term undertaking. Our largest investments -- those
aimed at finding and producing oil and gas -- take many years.
The lifespan of a single well can be decades. A single field -- Kern River
here in California, for example -- can produce for a century.
Our capital outlays are vast. Over the next five years, for example,
ChevronTexaco and our partners plan to invest some $20 billion in Africa
alone.
So our partners magnify our investments. Then, in our host communities,
the dollars multiply again – rippling out to local suppliers and to
workers.
Earlier I said poverty and its wider impacts threaten industry. Winning
the fight against AIDS, for example, may determine in some areas of the
world whether my company will have an adequate future workforce.
That's why in Africa, Latin America and Russia, ChevronTexaco sponsors
HIV/AIDS education and awareness programs; blood testing equipment;
special hospitals; anti-retroviral drugs for employees and their families,
and other efforts.
We're proud of these projects. They not only help our operations, they're
the right thing to do.
Another basic need for our host communities and for ourselves is an
educated workforce.
So we're also proud that in Indonesia, in the past half dozen years, more
than 36,000 students have received company assistance with their
schooling. In Nigeria, each year more than 2,000 youngsters receive
ChevronTexaco-funded high school scholarships.
Elsewhere, ChevronTexaco has sponsored housing, job training and schools
for homeless children in the Philippines; orphanages in Venezuela; a
fully-equipped polytechnic university expected to enroll 5,000 students by
2010 and a master plan for economic development of Riau Province in
Indonesia; and an internationally recognized community foundation for
sustainable development in the rainforests of Papua New Guinea.
Increasingly, our community engagement emphasizes grassroots economic
growth, especially rural agriculture and micro-enterprise.
A couple of years ago, ChevronTexaco worked with a diverse group of
partners – many of whom are here today – to launch the $50 million Angola
Partnership Initiative (API). One API project we're particularly proud of
was brought to us by the United States Agency for International
Development. This year alone, it will provide seeds, tools, food and
technical aid to some 700,000 small farmers. That's about 8 percent of
Angola's population.
In another API project a few months ago, we helped launch a new bank to
make micro-loans to small businesses and low-income households. Plans call
for opening 10 more Novo Banco branches across Angola in the next five
years.
Such efforts go beyond our traditional company operating boundaries to
address issues affecting entire regions or nations. They also reflect a
profound shift in philosophy, from in Leon Sullivan's words, a "hand out"
to a "hand up."
They explain why, at ChevronTexaco operations in Angola, Nigeria and
Indonesia, most professional and managerial positions are held by national
employees. In addition, hundreds of other non-U.S. national employees now
serve outside their home countries in career-developing jobs with
ChevronTexaco.
Why we do this isn't a secret. We want the best employees we can get.
In Angola recently, I told one young student – he was about 19 – that I
was struck by his ability to pose a question in both Portuguese and
flawless English. As I was talking, ChevronTexaco's local manager came up
brushing past me and thrust his business card into the kid's hand. "Hey,"
he said, "you ever want a job, call me."
ChevronTexaco is just as aggressive in reaching out to local businesses.
Many of our international operating units now have a local content manager
who, besides handling contracts, also provides training and other services
to help build these businesses. We've learned that setting up companies to
supply us isn't just good community relations. It saves us money.
Let me emphasize: these aren't things we do in addition to our business.
They are organic extensions of our core business. They create an enabling
environment not only, as I mentioned earlier, for successful economic
engagement but for successful community engagement.
I believe three attributes are critical to the success of any attempt to
eradicate poverty. They are partnership, transparency and community.
First, we must be steadfast in our commitment to the concept of alliance,
especially public-private alliances that build human capacity as the best
approach to eradicating poverty.
Second, we must continue to advocate good governance as the true
foundation for social progress and economic growth.
Third, we must recognize, whether we are marketing to the "bottom of the
pyramid" or funding micro-loans for women entrepreneurs, that -- to
achieve any lasting solution to poverty -- the poor themselves must be
fully engaged. Fighting poverty should not be something we do to people it
should be something we do with them.
And, finally, one thing more.
We must forever eradicate the stereotype that business interests are
antithetical to the interests of the poor, that private enterprise is
incompatible with community and that profits create poverty.
On a recent trip to Huambo Province, deep in Angola's interior, I saw not
only the devastation of poverty but also of protracted civil war. I met
people with no memory of a normal life.
But in Huambo's fields where our Angola Partnership Initiative has helped
reopen the nation's only agricultural research institute and its only
graduate agricultural school, I saw the seeds of hope.
Someone once wrote that without action there can be no hope. I believe he
meant that only action can propel us toward achievement and, ultimately,
optimism.
And that's exactly what those sprouting fields told me was happening in
Angola.
What I saw was an unforgettable contrast between the relics of despair –
war trash – and actions that bring hope.
Huambo's empty buildings were still riddled with bullets, and the hulks of
abandoned tanks still littered its streets. But on the town's outskirts,
newly enrolled students were working in the institute's fields – fields
that waved with freshly planted corn.
You could look at that corn, you could watch the students work the soil
and you could see life coming back again. Today, I too harbor a hope.
My hope is that here at this conference one of my fellow multinational
corporations -- perhaps one of you -- will take action, that you'll offer
to partner with ChevronTexaco in the developing world.
If we work together, we can build the same kind of hope I saw in Angola –
again and again – all over the world.
Thank You.

10.3.05

Is ethics the new bottom line? In the wake of new rules, governance issues are in the forefront

Is ethics the new bottom line?

In the wake of new rules, governance issues are in the forefront, reports
JANE GADD

* E-mail this Article
* Print this Article
* Widen this Page

By JANE GADD

00:00 EST Tuesday, March 08, 2005

Advertisement

Hide advertisement

The high-profile business debacles of the past five years -- Enron,
WorldCom, Tyco, Parmalat and Hollinger, to name a few -- have set business
schools scrambling to revamp curriculums on corporate governance and
business ethics.

Students, regulators, investors and the general public are all demanding
more in the wake of the scandals, school officials agree.

Some schools have opted for highly visible rituals to broadcast their
commitment to above-the-board behaviour in business.

At the Richard Ivey School of Business at the University of Western
Ontario, for example, graduates and alumni can take part in a ring
ceremony, where they make a public oath to behave honourably and, in
return, receive an inscribed silver ring to wear as a reminder.

Some schools are adding new courses or modules on ethical business
behaviour, corporate social responsibility and investor relations to try
to ensure that graduates will be up to speed with new regulatory and
social pressures facing business leaders.

But a task force report last year by the school-accreditation body AACSB
International (the Association to Advance Collegiate Schools of Business)
found Canadian and U.S. schools wanting in the whole area of teaching
corporate social responsibility and ethical leadership.

"While a number of business schools have developed innovative strategies
for engaging students in the challenge of providing ethical leadership,
the assumption of many faculty and program leaders that the majority of
students are being adequately prepared in this domain is highly
questionable," the report said.

It added that schools must do more to "socialize students in the
obligations and rewards of stewardship, including the concerns of multiple
stakeholders, and the responsible use of power."

The exposure of high-level frauds at several big-name companies has
sparked both tighter regulations on financial accounting and disclosure
and a heightened interest in ethical leadership issues in general, says
Pat Bradshaw, an associate professor at York University's Schulich School
of Business.

Students want better courses on these topics and this has become an area
of competitiveness among schools, she says. "The context that's driving
these changes is the same profound shift. There's no way to avoid these
issues now."

Prof. Bradshaw is part of a team teaching a compulsory 13-week MBA course
titled Skills for Leadership and Governance.

"As future business leaders, students must learn that after they've
established a strategic direction for their company, they must step back
and make sure they are doing the right thing -- for their employees, for
society and for the environment," Prof. Bradshaw says.

At the Ivey School, meanwhile, associate professor Tima Bansal has
introduced a course module based on the documentary The Corporation into
the compulsory MBA course Individuals, Corporations and Society.

The premise of the film is that when a corporation is viewed as a person,
its personality can best be described as psychopathic. Students discuss
the repercussions for companies of unethical business strategies and
unethical behaviour by individuals.

Schools aren't in the business of teaching students ethical values --
those are embedded in childhood, Prof. Bansal says. But the module
highlights the interconnectedness of corporations and society and the need
to maintain public confidence in corporate leadership.

Prof. Bansal says business schools are struggling with how to teach the
ethical responsibilities of corporations versus the ethical
responsibilities of individuals who work for them. "It's a really messy
area. We haven't got our heads around what it is."

The University of Toronto's Rotman School of Management last year opened
an institute whose entire focus is to find ways for companies to become
more socially responsible without sacrificing profits.

The AIC Institute for Corporate Citizenship is writing case studies to
teach in ethics courses and developing some programs, including an MBA
major in corporate citizenship.

"It's becoming obvious that customers, employees, governments are all
saying we expect corporations to do more to be good citizens," institute
director and Rotman dean Roger Martin told U of T Magazine recently. "Yet
the message of what executives should do is exceedingly vague and
confusing."

At the University of British Columbia's Sauder School of Business,
associate dean Brian Bemmels says the school is in the process of adding
more ethics content to its undergraduate and MBA curriculums, not as a
separate course but integrated throughout. "We don't try to change
students' ethics," he explains, "we just give them the tools to analyze
ethical issues."

Prof. Jim Ridler of Queen's University School of Business, who has written
a series of reports on business-ethics education in Canada, says that
until recently the area was championed by a small number of dedicated
teachers.

"It has not been a high priority for school administrators in the past. .
. . Canadian business leaders in general didn't feel it was a strong
priority and the schools, to a large extent, respond to the demands of the
businesses that hire their graduates."

But administrators are coming around, Prof. Ridler adds. "There seems to
be a seeping in of [the thought that] perhaps we should pay more
attention. But it's not a mass conversion. And there is a tendency just to
use this as PR. There's a little bit of gilding the lily."

The AACSB's push for more ethics education has added to the pressure, he
added, because schools all want the group's accreditation.

Washington's 2002 Sarbanes-Oxley Act requires that all companies with
shares trading at U.S. stock exchanges have auditors approve their
fraud-prevention procedures and accounting practices, and that managers
certify the adequacy of their internal controls each year. Any Canadian
company wanting to raise capital in the U.S. has to comply with
Sarbanes-Oxley. Canadian regulators are poised to enact similar rules.

Globe and Mail Supplement -- CORPORATE SOCIAL RESPONSIBILITY: 2ND ANNUAL RANKING

CORPORATE SOCIAL RESPONSIBILITY: 2ND ANNUAL RANKING
Steve Brearton
2444 words
25 February 2005
The Globe and Mail
42
English
All material copyright Bell Globemedia Publishing Inc. or its licensors.
All rights reserved.
3 critical issues
In an era when corporate power and production have become truly global,
the role of the corporation seems to be shifting. Unprecedented business
success has brought validation, but it has also fuelled greater
expectations and a more intense focus on the social costs of capitalism.
Those include the impact on the global environment, working conditions in
developing nations and the limited reach of regulations in any one
country.
Instead of following American free-market economist Milton Friedman's
admonition that the “social responsibility of business is to increase its
profit,” leading firms are expanding their role to broker ground-breaking
models for co-operation with local communities and First Nations, and to
consider environmental sustainability as part of their long-term business
plans.
Corporate social responsibility (CSR) is the public face of this trend.
Many business leaders now believe that doing good for others means doing
good for shareholders as well. Recent developments in three areas of CSR
show the extent of this fundamental shift.
1 Corporate Governance
In 1995, the Toronto Stock Exchange released an interim report on
corporate governance entitled Toward Improved Disclosure. The report
recommended that public companies, their officers and directors be more
accountable for the accuracy of information they provide to shareholders
and the public. Ten years later, many of the same issues remain
unresolved. Corporate transparency - or a lack of it - has been at the
root of recent Canadian business scandals that sheared billions off stock
valuations and shook investor confidence.
Shareholders, executives and corporate officers now understand there are
real costs associated with poor governance. Gone are laissez-faire days as
recent as 2000, when RT Capital Management Inc., then the Royal Bank's
pension-fund management arm, was found by the Ontario Securities
Commission to have a board that barely met - and a director who didn't
know he was on the board. The practices surfaced during an investigation
over stock-price manipulation by RT Capital traders. Board missteps now
routinely cause calls for reform, the firing of senior executives,
lawsuits and investigations by securities regulators.
In Nortel Networks' case, financial irregularities led to all four. In
April, 2004, the company announced it was restating financial results
dating back to 2001. Fallout from the scandal included an immediate drop
of 30% for Nortel's share price, multiple class-action lawsuits, and the
sacking of CEO Frank Dunn and several other senior executives. To shore up
investor confidence, the company hired former U.S. Navy admiral Bill Owens
as CEO. Nortel also reassigned 650 employees and hired dozens of
consultants to clean up the books. To date, the process has cost more than
$115 million (U.S.).
Conrad Black, the ultimate old-style imperial CEO, also fell hard in 2004.
He had long dismissed governance reform as a fad, but last year was rocked
by activist shareholders. Black, who had indirect control of about 68% of
the shareholder votes in Hollinger International, while owning just 18% of
the company's equity, is now the target of several lawsuits and
investigations in the U.S. and Canada following allegations of financial
mismanagement and fraud.
Another flashpoint is the independence - or lack thereof - of corporate
board members, an area in which Canada lags far behind the U.S.
A 2002 Globe and Mail survey of 270 S&P/TSX Composite Index companies
found that 29% of firms “lack most of the features of independent boards.”
Lack of board oversight has been at the centre of the scandal at Royal
Group Technologies, the Woodbridge, Ont.-based building supplies
manufacturer. Royal founder and chairman Vic De Zen, CEO Doug Dunsmuir and
the firm's chief financial officer were all dismissed last November
following allegations about their role in a land flip involving the
company. Through multiple-voting shares, De Zen controls nearly 80% of the
company, although he owns just 16% of its equity. The Royal Group board,
like Hollinger's, included a family member of the founder. Royal Group is
under criminal investigation and at least three lawsuits allege that
shareholders were defrauded.
Other companies embroiled in governance scandals over the past year
include CP Ships, which faces several shareholder suits after being forced
to restate financial results for nine quarters dating back to 2002.
Accounting and disclosure problems at Atlas Cold Storage Income Trust led
to charges by the Ontario Securities Commission. And Molson Inc. raised
the ire of shareholders by attempting to allow stock option holders to
vote on its merger with Coors.
Despite some high-profile hijinks, many companies are implementing
meaningful reforms. Many new senior corporate officers and directors at
major Canadian corporations now take training programs such as those
offered by the Institute of Corporate Directors and the Rotman School of
Management's ICD Corporate Governance College. Many corporations have
filed submissions to Industry Canada, the OSC and the Canadian Securities
Administrators suggesting new rules; they range from establishing stronger
proxy voting guidelines, to requiring that a majority of board members of
federally incorporated companies be independent.
While continuing governance reforms will buoy investor confidence,
corporate Canada was reminded recently that accountability goes beyond the
letter of the law. When Nortel hired a chief ethics officer to improve its
reputation, critics still jumped on the battered tech firm. The problem?
Susan Shepard could be eligible for 2005 performance bonuses of up to
$225,000 (U.S.), based on the company meeting revenue and earnings
targets, among other criteria - the same compensation system that kicked
in for executives who benefited from inflated profits. “It's quite
extraordinary,” says David Beatty, managing director of the Canadian
Coalition for Good Governance, “that such an in-built conflict would
persist in the compensation plan of a new chief ethics officer.”
Nortel is learning that it's more difficult to restore a reputation than
ruin one.
2 Reporting and Disclosure
When Talisman Energy bought a stake in oil producing operations in Sudan
in 1998, it couldn't have known the trouble it would bring. The company
would be accused of complicity in human rights abuses, watch its share
price suffer, face lawsuits and eventually be forced to divest itself of
its Sudanese assets.
It would also improve its reporting practices. In 2001, partly in an
effort to appease critics, the firm hired accounting firm
PricewaterhouseCoopers to audit its annual CSR report. Talisman also went
from reporting only on its Sudanese operations to disclosing information
on all of its global projects. In the process, it became one of the few
oil and gas companies to have its reporting independently verified.
As this case highlights, the root of many firms' strengthening commitment
to improved corporate social responsibility reporting is long-term risk
management. For companies that are solid social responsibility performers,
improved and expanded disclosure allows them to publicize positive efforts
to shareholders and other interested parties.
While the state of Canadian corporate reporting and disclosure has
improved in some areas, the majority of shareholders and other
stakeholders still find themselves poorly served. Those who continue to be
disappointed include the growing numbers who consider CSR perfomance when
making investment decisions, either to align their investments with their
values, or to reduce financial risk, or both.
The firms with the greatest disclosure and strongest CSR practices today
also tend to be concentrated in sectors that are either heavily regulated,
like banking, or in industries that invite the greatest public scrutiny.
These firms understand that social responsibility can add to their bottom
lines, and that it requires stewardship and reporting to stakeholders.
Large natural resources companies now typically report on their social and
environmental performance, and all of the Big Five domestic banks are now
legally required under the Bank Act to report on activities ranging from
small-business financing and involvement in community development projects
to branch closures and initiatives to improve access to banking services.
The efforts of these firms often go beyond the bare minimum required by
the regulations. Banks now make fuller disclosure on a larger range of
issues, including environmental policies and practices. (Calls for
increased disclosure on the social and environmental impact of loans and
investments, however, remain unheeded.) Efforts generally remain
voluntary, but one key initiative has attracted a lot of interest and is
raising the bar for disclosure and reporting. The Global Reporting
Initiative (GRI) was developed with the participation of business,
accountancy, investment, environmental, human rights and labour
organizations. It sets standards to help measure the “economic,
environmental and social dimensions of firms' activities, products and
services.” While the GRI does not set benchmarks for company performance,
many hope that improved disclosure will lead to improved CSR performance.
At present, only 23 Canadian firms are recognized by the GRI as having
used its sustainability guidelines, and among those firms exist differing
levels of conformity. Currently, only Suncor, Enbridge and VanCity are
reporting in accordance with the guidelines, while others, such as Alcan
and Talisman, participate at various levels of conformity.
The truth is that many firms don't have the internal management systems or
external auditors to guarantee compliance. Canadian firms have been slower
to embrace these efforts than companies in other nations, particularly
those in Europe. A 2004 study by the Conference Board of Canada found that
only one-third of Canada's 300 largest corporations reported their CSR
activities. Still, that's progress: In 2000, only one in 10 TSE 300 Index
firms published any sort of CSR information.
In the '70s and '80s, the failure of corporate social responsibility to
gain widespread acceptance reflected the belief that it was all right for
corporate power to be concentrated in the hands of a few individuals. As
the number of corporate shareholders and the influence of other
stakeholders increased over time, so did calls for greater transparency.
Central power was diluted, business became more accountable and the
process ensured continued calls for expanded disclosure and reporting.
CSR practices have become part of the business mainstream since 1989, when
Ben & Jerry's ice cream released the first real corporate social
responsibility report. That growth represents an increasingly shared
vision among business leaders and the rest of society. Today, at long
last, there's growing concensus that corporations are meant to do more
than just earn a buck for shareholders.
3 Public Presence in Corporate Decision Making
In 1989, under pressure from politicians and environmentalists to
eliminate polystyrene from its food packaging, McDonald's claimed its
commitment to the environment “goes back to day 1 - when Ray Kroc would
pick up whatever litter there might have been in the parking lot.” The
following year, after initiating a plastics-recycling program, the
fast-food giant cited consumer pressure when it announced that polystyrene
packaging would be phased out. By 1991, McDonald's had partnered with the
Environmental Defense Fund in an attempt to reduce waste, and today uses
some recycled packaging while it investigates the possibility of making
containers out of biodegradable polymers.
Denial, obfuscation, grudging recognition and, finally, acceptance have
often characterized corporate transitions from deadbeat to respectable CSR
performer - think Nike. What's more, firms have frequently started that
trek toward enlightenment through the pressure of activist shareholders,
consumer demand or even lawsuits and boycotts.
The resources and reach of global corporations make it difficult for
governments to regulate their behaviour. Within Canada, firms can make the
enforcement of regulations a ponderous affair. For instance, Imperial Oil
continues to resist the province of Alberta's efforts to make it clean up
the site of a former refinery in southwest Calgary that's now a housing
development.
While our government can't prosecute a Canadian garment manufacturer for
using sweatshop labour in China, non-governmental organizations, churches
and consumer groups can publicize a firm's misdeeds. Consumers can also
push for change. Last year, Frito Lay Canada spent just under $20 million
to remove trans fats from such popular brands as Doritos, Tostitos and
SunChips after widespread publicity about its potential negative health
effects.
A 2004 report by the Conference Board of Canada suggested that pressure
from external stakeholders has contributed to stronger CSR management and
reporting practices. Last year, outside pressure and negative publicity
affected changes in company policies or practices at a number of firms.
Among them was Montreal's Gildan Activewear, which faced controversy over
its firing of a group of Honduran employees, many of whom were union
supporters, in 2002 and 2003. Last December, following an outcry from
labour rights groups, Gildan offered back pay to those who were fired in
2003 and preferential hiring to all of the workers. The company also
committed to not discriminate against employees on the basis of their
union involvement.
The scope of lobbying efforts is expanding, and increasingly has the
potential to affect entire industries. In Canada's Far North, winter
temperatures are rising, animal populations are thinning and the
coastlines are eroding. Locals blame climate change and many scientists
agree. Later this year, 155,000 Inuit from nations spanning the Arctic may
ask the Inter-American Commission on Human Rights to rule that the U.S. is
threatening their existence by contributing to global warming. A stone
cast by an Arctic community can now create ripples that become waves that
eventually sink a company's share price.
A 2004 GlobeScan survey found that fewer than half of respondents believe
“companies communicate honestly and truthfully about their social and
environmental performance.” Skepticism aside, McDonald's switch from
polystyrene to paper for its packaging represents significant change. And
in the case of firms that make concessions only as a public relations
exercise - sometimes after a stick, a carrot becomes motivation enough.

CORPORATE SOCIAL RESPONSIBILITY: 2ND ANNUAL RANKING
Steve Brearton, Rob Gross, Kevin Ranney, Ian Bragg, Laurie Uytterlinde
Flood, Graeme Hussey, Heather Lang, Christie Stephenson and Ian Thomson
10720 words
25 February 2005
The Globe and Mail
65
English
All material copyright Bell Globemedia Publishing Inc. or its licensors.
All rights reserved.
automotive
The Industry
What it's doing right
The major auto manufacturers continue to develop models with higher fuel
efficiency and lower emissions. Hybrid models that combine gasoline and
battery power, such as the Toyota Prius, are already strong sellers. The
automakers have also reduced manufacturing defects and improved
performance and safety.
Much of the focus is now on what industry consultants such as J.D. Power
and Associates call “active” safety (helping drivers avoid accidents),
rather than “passive” safety (trying to protect them in accidents).
Stricter environmental regulations in Europe and Japan have also prompted
drastic changes in the dismantling and recycling of automobiles at the end
of their life cycle.
Still needs work
Safety and the environment remain the big problem areas, and a lot of the
concerns involve trucks and SUVs. Smaller cars are easier to handle and
are thus better for avoiding accidents, yet manufacturers can't resist the
higher profit margins on larger models. Big vehicles also guzzle more gas
and emit more pollutants, but it is unlikely that North American
automakers will begin large-scale production of greener vehicles any time
soon.
Regulators still have to push the industry. California has led the way for
decades, and in September, 2004, the state's Air Resources Board adopted
more stringent emission regulations. But those standards are being
challenged in court by the Alliance of Automobile Manufacturers, which
represents nine major North American, Japanese and German automakers,
including the Big Three, Toyota and Volkswagen.
The Bottom Line
The industry continues to focus on large, high-profit-margin vehicles and
lacks a commitment to developing and introducing fuel-efficient
alternatives.
CRITICAL ISSUE
Hybrid electric vehicles
Public demand and government regulation are slowly forcing automobile
manufacturers to address the environmental impact of their vehicles,
particularly their significant impact on climate change.
After reviewing its options, the consensus in the industry is that
hydrogen fuel-cell vehicles will eventually replace the internal
combustion engine.
The bad news: Fuel-cell technology won't be available in your auto
showroom for at least 10 years. You have to wonder about that long-term
prediction, though. Ford has already fallen short on a 2001 promise to
improve overall fleet fuel economy by 25% by mid-decade, and it's hard to
forget that GM is 25 years late on its plan to introduce a commercial
electric vehicle by the end of the 1970s.
Meanwhile, several companies have introduced less-polluting hybrid
vehicles powered by a combination of gasoline and electric batteries. As
of December, 2004, four automotive manufacturers were selling seven hybrid
vehicle models.
The recent introduction of SUV and pickup-truck hybrids by GM and Ford has
sparked a debate over whether it is more environmentally beneficial to
develop small hybrid models, as Honda and Toyota have done, or to develop
hybrid SUVs and other large versions. Although the GM hybrids reduce fuel
consumption by 20% and 27% for those models, they are still not the most
fuel-efficient vehicles in their class—or even the most efficient pickups
produced by GM.
Ford and GM argue that they are maximizing benefits by increasing fuel
efficiency in the vehicle classes that have the largest environmental
impact. But environmentalists say that argument is a non-starter, given
the negligible improvement that a limited number of hybrids will have on
overall fuel efficiency.
Toyota 59
Still the leader in hybrid engine technology (the Prius is the world's
most popular hybrid vehicle). Also a leader in safety technologies, such
as the headlights on the LX 470, which assist with cornering at night by
adjusting to the vehicle's speed and turning angle. However, Toyota and
six other companies, including the Big Three, were sued in the U.S. over
allegations they were attempting to stop the shipment of lower-priced
cars, originally exported to Canadian dealers, back to the U.S.
Volkswagen 56
Has one of the highest overall fuel efficiencies among automakers,
primarily because of its focus on diesel-engine vehicles. At the same
time, those engines are criticized because of their higher emissions of
some pollutants.
Nissan 55
Greater-than-99% industrial recycling rate is the highest among the
automotive manufacturers. Signed a technological co-operation agreement in
2002 with Toyota to help develop the Altima hybrid, which Nissan expects
to begin producing commercially in 2006.
Honda 55
Best overall fuel efficiency of any major automaker. Already sells three
hybrid vehicles, including the two-seat Insight hybrid, the most
fuel-efficient vehicle to date. Promotes sustainable transportation
through pilot projects with universities and transit authorities that
encourage participants to use hybrid vehicles together with public transit
and bicycles. A U.S. class-action lawsuit filed last year alleged that
Honda's finance arm discriminated against African-Americans.
Mazda 54
The most energy-efficient automaker set a goal of meeting the Japan
Automobile Recycling Act requirements of recycling 95% of each vehicle,
from its 2003 model year onward.
Ford 54
Recently introduced two- and four-wheel-drive hybrid versions of its
Escape SUV that are the most fuel-efficient vehicles in their class (they
decrease fuel consumption by 30% and 35%, respectively). Has been
embroiled in several safety lawsuits in recent years related to the Crown
Victoria sedan and the tires on SUVs.
Hyundai 53
Has one of the highest overall fuel efficiencies because it produces
smaller vehicles and has introduced seven electric car models, including
the Accent and the Santa Fe SUV. Has developed, but has not introduced,
Elantra and Verna hybrids.
DaimlerChrysler 49
As of early 2005, still had not introduced a hybrid vehicle for sale. The
company is concentrating on yet-to-be-proved hydrogen-based fuel-cell
technology in co-operation with Ballard Power Systems of Vancouver.
General Motors 49
Over the past five years, GM North America has reduced waste from all of
its operations by more than half, through reduction and recycling.
Introduced two new hybrid pickups, the Chevrolet Silverado and GMC Sierra,
in the 2004 model year.
HOW THE INDUSTRY RATES OVERALL
Effort demonstrates progress, but work frequently incomplete
(Graeme Hussey)
banking
The Industry
What it's doing right
Canada's large banks have a relatively high percentage of women in senior
management and on their boards. Banks continue to be leaders in corporate
philanthropy, with extensive charitable donations programs and strong
support for employee volunteer efforts.
Most banks have endorsed the United Nations Environment Programme's
Statement by Financial Institutions on the Environment & Sustainable
Development, which calls for environmental-management best practices and
recognition of sustainable development as part of sound business
management. Three of the Big Six domestic banks – Royal, CIBC and
Scotiabank – have also adopted the Equator Principles, a set of voluntary
social and environmental guidelines for financing projects in emerging
markets that were drawn up by the private-sector arm of the World Bank.
Still needs work
Executive pay at most banks is high compared with other sectors. Also, all
the major banks' brokerage arms have been formally disciplined by industry
self-regulatory bodies in recent years. In some cases, they have been
penalized by stock exchages and securities commissions as well. Last year,
the Investment Dealers Association of Canada levied record penalties of
$41.4 million against TD Waterhouse Canada, RBC
Dominion Securities and BMO Nesbitt Burns for helping speculators engage
in rapid in-and-out trading in mutual funds from 2000 to 2003.
One key social and environmental exposure for the sector is loans to, and
investments in, enterprises that cause social and environmental damage.
Despite public pressure, banks are not required to publicly disclose
detailed underwriting or financing information on individual loans and
investments.
The Bottom Line
While environmental reporting has shown improvement in this sector, there
is still work to be done on the reporting of the ethical, social and
environmental impact of loans and investments. Whatís more, regulatory
violations by bank brokerages are still common, and top bank executivesí
pay is high. Although three banks have signed the Equator Principles, it
remains unclear how that commitment will evolve into practice. On the
bright side, banks remain leaders in diversity and corporate philanthropy.

Citizens Bank 68
Founded by Vancouverís VanCity credit union, the bank has the highest
charitable donations as a percentage of pretax profits, and the highest
percentage of women on its board (35%).
Royal Bank 68
Has the highest percentage of women in senior management (33%), and has
adopted the Equator Principles. Received the highest score among the banks
for diversity programs and performance, and has excellent reporting
practices.
Bank of Nova Scotia 67
Scotia Capital, the bankís brokerage arm, ranks first for compliance with
securities regulations among the major banks, and has excellent employee
programs and benefits. The bank has the best overall customer record.
CIBC 65
Has a very strong overall record, having adopted the Equator Principles,
tying for highest donations as a percentage of pretax profits among the
major banks and providing excellent reporting. The one exception is
customers, where CIBC ranks last.
Its customer privacy safeguards were questioned last year after it faxed
confidential customer data to a wrong numberóa junkyard in West Virginia.
Bank of Montreal 61
Strong programs to encourage workplace diversity. However, its brokerage
arm, BMO Nesbitt Burns, is tied with CIBCís brokerage operations for worst
score for compliance with securities regulations.
National Bank 61
The only major Canadian bank that has not formally endorsed the United
Nations Environment Programmeís Statement on the Environment & Sustainable
Development. On the plus side, National has the second-highest percentage
of women on its board (33%).
TD Bank 60
Tied for highest charitable donations as a percentage of pretax profits
among the Big Six. Based on Jantzi Researchís valuation of executive pay
packages, TD CEO Ed Clark received the highest total compensation among
the banksí chief executives in fiscal 2003. As well, along with RBC and
CIBC, TD still faces lawsuits from investors over the Enron fiasco, and
the bank set aside $300 million last year to cover potential losses.
Laurentian Bank 45
Boasts the second-lowest CEO compensation in this group. Among the banks,
however, Laurentian also has the lowest percentage of women on its board
of directors (15%).
HSBC Bank Canada 44
The parent company has adopted the Equator Principles and was the worldís
first major bank to commit to going carbon-neutral. A private company,
HSBC Canada does not have the level of disclosure of its competitors.
COMPANIES THAT WERE EXCLUDED DUE TO LACK OF DISCLOSURE
Amex Bank of Canada
HOW THE INDUSTRY RATES OVERALL
Positive attitude; work much improved
(Christie Stephenson)
fast food
The Industry
What itís doing right
Known for their poor labour and environmental standards, fast-food giants
are now providing healthier menu options. Whatís more, itemized
nutritional information is featured on most company websites, and is often
made available upon request in restaurants.
McDonaldís was a leader in partnering with experts to develop
animal-welfare guidelines; Starbucks was one of the first among mainstream
coffee chains to source fair-trade beans. The industry supports
communities through cash and in-kind donations, and is cautiously pursuing
measures designed to improve resource and waste management.
Still needs work
Most of the achievements mentioned above have been in reaction to public
controversy. North American operations are lagging behind European
counterparts in environmental management, sourcing fair-trade products and
eliminating the use of genetically engineered ingredients, trans fats and
other harmful ingredients. Canadian chains remain laggards in most areas
of social responsibility.
People for the Ethical Treatment of Animals has resorted to targeting one
fast-food chain at a time (at the moment, itís KFC) in an effort to raise
the bar on animal welfare. Even companies that have committed to improving
their practices, such as Yum! Brands and McDonaldís, are not doing enough
to influence suppliers. More resources must be invested in training,
monitoring and auditing the supply chain. Another key issue: Fast-food
service employees enjoy minimal benefits, little job security and few
opportunities for promotion.
The Bottom Line
Though notable efforts have been made to improve customer health and
social responsibility, this industry is inherently unsustainable for our
society and for the environment. Implicated in the obesity epidemic and
cultural homogenization, the fast food sector has few rivals for
generating controversy.
Starbucks 53
Donated a generous 2% of pretax profits to community initiatives last
year. Although Starbucks has committed to buying certified fair-trade
coffee, where local producers are guaranteed a living wage, critics are
still pressuring the company to increase the quantity to 5% of all beans
purchased. Recently demonstrated its commitment to diversity by signing
the Calvert Womenís Principles, which promote gender equity and
empowerment; at the moment, thereís only one woman on the 12-person board.

McDonaldís 48
Has made notable efforts to break from its dubious past image and now
leads its fast-food peers. It was the first major fast-food company to
develop animal-welfare principles, and the first to provide customers with
nutritional information. Recently, it introduced a number of healthier
menu options. Still, McDonaldís continues to generate unparalleled
controversy over its use of trans fats (which have been linked to heart
disease), marketing to children, unfettered global expansion and alleged
anti-union stance.
Cara Operations 43
A recently privatized family-owned business that owns some of Canadaís
favourite brands, including Harveyís, Swiss Chalet and Second Cup. Cara
ranks tops in diversity, with women representing two of seven senior
officers and two of nine directors of the board; however, without
animal-welfare guidelines and policies governing its supply chain, Cara
canít guarantee that its suppliers behave responsibly.
Wendyís/Tim Hortons 41
Owner of Tim Hortons, Wendyís International ranks high for its employee
and customer relations. The target of an aggressive campaign by PETA, it
adopted formal animal-welfare guidelines in 2001. Lacks progressive
policies governing sustainability and suppliers and is below average on
issues of human rights and the environment.
Mr. Submarine 39
A private Canadian company that eschews the aggressive franchising
practices typical of its sector. Although Mr. Submarine has generated far
less controversy than its peers, it has no progressive programs or
policies that relate to employees, the environment or animal welfare.
Yum! Brands 38
Although the owner of KFC, Pizza Hut and Taco Bell has policies on animal
welfare and supply-chain conduct, the company has been involved in
prominent industry scandals. Taco Bell has been the target of nationwide
boycotts for sourcing tomatoes picked by immigrant workers in Florida who
earn on average $7,500 (U.S.) per year.
Meanwhile, video footage depicting a KFC poultry supplierís inhumane
treatment of animals drew universal condemnation.
COMPANIES THAT WERE EXCLUDED DUE TO LACK OF DISCLOSURE
Burger King, Timothy's, Subway
HOW THE INDUSTRY RATES OVERALL
Poor concentration and lacking responsibility
(Heather Lang)
food and drug retailing
The Industry
What it's doing right
The industry is a significant donor to local food banks, and almost all
companies have community giving initiatives. Some firms have also
established modest green initiatives, such as the composting of organic
waste, and programs designed to increase the energy efficiency of new
stores. Most have responded to public concern over health and
environmental issues by introducing selective green and “healthier eating”
product lines.
Still needs work
All companies need to improve their public reporting and accountability,
and employee relations have been a perennial problem. For grocery store
employees, years of sustained downward pressure on wages, benefits and job
security—not to mention the increasing use of part-time workers and
“two-tier” collective agreements—mean that few employees entering the
industry will share the pay and benefits that those close to retirement
now have. Pressure to further reduce wages and benefits resulted in a
bitter strike at Safeway in 2001, and a controversial deal between the
union and management at Loblaw Cos. that allowed for lower wages and fewer
benefits at the company's newly opened Real Canadian Superstores in
Ontario. There is little evidence of any effort by retailers to establish
basic labour standards or to monitor conditions at their supplier
factories and farms. One company—Van Houtte—has taken a small step toward
addressing these issues by selling a line of certified fair-trade coffee.
The Bottom Line
No company in this industry could be called a CSR leader. Basic public
reporting on CSR is still weak, and labour rights and supply-chain issues
still fail to register. Improving the treatment of employees remains the
key challenge for this industry.
Sobeys 51
Consistently solid in most CSR areas compared with its peers, and rates
highest for corporate governance and health and safety performance. Room
for improvement in its diversity programs.
Van Houtte 51
Only company in the group to address some supply-chain issues, through its
line of organic and fair-trade-certified coffees. A small portion of
revenue from another line of coffees is donated to a project supporting
small coffee producers in Honduras. Good labour relations compared with
peers.
Shoppers Drug Mart 47
While programs for charitable donations and disclosure on charitable
initiatives are strong relative to its industry peers, Shoppers is an
average performer on most other CSR issues. Corporate governance practices
are poor compared with industry counterparts.
Loblaw Cos. 47
An industry leader in environmental management and performs well above the
industry average on employee relations. Has suffered from a number of
consumer-related fines, including penalties for the false or misleading
labelling of meat products.
Jean Coutu Group 46
The highest percentage of women on its board of directors and in senior
management positions. Also rates highly for its corporate governance
practices. Employee programs and benefits and environmental initiatives
are mediocre compared with its peers.
Great Atlantic & Pacific Tea Co. (A&P) 46
Notable for the relatively high percentage of women on its board of
directors and in senior management. The company has been fined repeatedly
for health and safety infractions.
Metro Inc. 45
Notably poor performance in corporate governance, having a dual-class
share structure, relatively high executive compensation and a relatively
low proportion of independent directors on its board.
Safeway 43
Leads in public reporting on CSR issues, despite the fact it no longer
publishes an environmental report. Scores poorly on employee relations
because of acrimonious union relations and numerous settlements relating
to alleged violations of labour laws.
Alimentation Couche-Tard 40
The laggard in the industry for disclosure on CSR issues. The company is
relatively weak in the area of corporate governance and does not report
having any environmental or health and safety initiatives in place.
COMPANIES THAT WERE EXCLUDED DUE TO LACK OF DISCLOSURE
Katz Group Canada
HOW THE INDUSTRY RATES OVERALL
Some improvement, but occasionally disruptive
(Laurie Uytterlinde Flood)
footwear and apparel
The Industry
What it's doing right
The industry reacted with denial, anger and disappointment after
allegations of sweatshop abuses surfaced in the early 1990s. The six
companies in this year's ranking can add acceptance to that
list—acceptance of their responsibility for working conditions in the
foreign factories that manufacture their products. To their credit, these
firms are now trying to remedy the situation. In addition, the leading
sports-shoe companies have begun to limit the use of toxic chemicals in
the manufacturing process.
Still needs work
The working conditions of most foreign apparel and footwear workers is
what really matters in this industry. The pressing issues: wages, working
hours, freedom of association and collective bargaining. The way in which
the industry deals with China, the world's largest exporter of footwear
and apparel—and a place where workers with limited rights can toil up to
90 hours a week—will be one of the defining social responsibility
challenges of the decade. Public reporting on factory audits also needs to
improve, as most reports ignore such crucial information as auditing
standards, factory locations and company initiatives to promote supplier
compliance.
Three Canadian firms were not included in the ranking due to an almost
complete lack of disclosure. Two of the three—Bata and Nygrd—failed to
report on any programs or initiatives to improve working conditions or
environmental impacts in their supply chain. The third, Roots Canada, has
posted a code of labour standards for suppliers, and reports that it is
developing a factory monitoring program, though no details are available.
The Bottom Line
Leading companies are finally developing a more mature approach to social
responsibility. International firms need to focus on instituting their
stated commitments to worker's rights and environmental stewardship
overseas. Canadian-based companies must evolve from the social
responsibility Stone Age.
Reebok 67
Last year became the first company to have its footwear factory monitoring
program certified by the Fair Labor Association standards. Reebok and
Adidas stand apart from the others for their environmental initiatives,
among them the implementation of green management systems in supplier
factories and reducing the environmental impact of transporting shoes over
long distances by avoiding airplanes—which cause more pollution—and using
ships.
Adidas-Salomon 66
Top marks for corporate governance and corporate employee practices.
Along with Nike and Reebok, Adidas-Salomon was a founding member of the
Fair Labor Association, an initiative that monitors working conditions and
reports factory audits.
Adidas has also promoted good environmental practices with its suppliers.
Gap 66
Produced its first social responsibility report last year, which detailed
conditions in its factories and won praise for its unvarnished openness.
Gap has adopted some of the industry's highest labour and ethics
standards. But the company dragged its feet in settling a major lawsuit
around sweatshops in the U.S. territory of Saipan. Women account for 30%
of Gap's corporate directors and 40% of its senior executives.
Nike 62
Once a poster child for sweatshop scandals, the world's largest sportswear
company has improved greatly. Nike expects to receive Fair Labor
Association certification of its footwear factory monitoring program later
this year, and underwrites programs for women and girls in developing
countries where its products are made. Still, the company has issued
retractions following protests from women's groups over its advertising
campaigns.
Puma 59
Became the fourth major sports-shoe manufacturer to join the Fair Labor
Association and adopt its workplace code of conduct and factory monitoring
programs following a major sweatshop scandal in Mexico in 2003. The
company has strong corporate governance policies and practices.
Gildan Activewear 54
North America's largest T-shirt manufacturer recently made peace with the
Fair Labor Association, which threatened to turf Gildan if it failed to
respect workers' rights.
Last December, Gildan offered a group of union supporters whom it had
fired preferential hiring at a new sewing plant the company will open
shortly. It has begun a major corporate governance overhaul, eliminating
its dual-class share structure and appointing its first independent
chairman.
COMPANIES THAT WERE EXCLUDED DUE TO LACK OF DISCLOSURE
Bata, Nygard, Roots Canada
HOW THE INDUSTRY RATES OVERALL
Effort demonstrates progress, but work frequently incomplete
(Ian Thomson)
insurance
The Industry
What it's doing right
Like the banks, most Canadian insurance companies provide comprehensive
reporting on their charitable donations, corporate governance practices,
and employee programs and benefits. However, again like the banks, their
environmental reporting remains limited. Canadian insurers continue to
feature both solid representation of women at the board level and
employment equity programs that are generally strong.
Still needs work
A key area of exposure to ethical, social and environmental risk for
insurance companies is their investment holdings, which could include
businesses with low social or environmental standards. But insurance
companies are not required to disclose information about investments that
would enable stakeholders and consumers to judge their merits based on
social and environmental criteria. Strangely, there has been little public
or investor demand for disclosure of these risks.
Another area of concern is the public perception of the sector. Rising
vehicle premiums combined with reduced coverage and record industry
profits has consumers and politicians crying foul. Despite the widespread
public outcry, a 2004 review by the federal Competition Bureau on possible
abuses among property and vehicle insurers found no cause for complaint.
The Bottom Line
While the industry's social and environmental impact appears to be
minimal, the level of exposure from investment holdings is unknown due to
a lack of disclosure.
Sun Life 63
Has a mixed record on employment equity—within this sector, has the
highest percentage of women on its board, but has none among its nine most
senior executives. Tied with Great-West for highest level of donations as
a percentage of pretax profit over the past three years.
Manulife 58
Earns high marks for employee practices, including the best work/life
programs among insurers. However, it also has the highest CEO
compensation, and no women in the ranks of its most senior executives.
John Hancock, with which Manulife merged, has to contend with a number of
lawsuits, among them a discrimination suit filed by a former agent who is
gay.
Great-West Life 54
Has demonstrated an industry-leading level of community support through
corporate donations. Only one of 21 board members is female. Subsidiary
London Life is involved in an ongoing class-action suit in which
homeowners were allegedly overcharged for closing out mortgages early.
Many other banks and insurers were also named in the suit.
Industrial Alliance 54
Has both a share-purchase plan for employees and pays a bonus to all
permanent non-management employees if profit targets are met. No women
among its most senior executives. In late 2004, the firm settled a
class-action lawsuit filed by home mortgage holders who were allegedly
overcharged.
SSQ Financial Group 45
Nearly one in three positions in senior management is filled by a
woman—the highest percentage in the sector. Although the company reports
having an environmental policy, it does not report having any systems or
programs in place to manage environmental issues and does not publicly
report any environmental information.
Atlantic Blue Cross 45
Ranked last among companies for diversity initiatives. Last year, in the
midst of an ongoing legal battle with a woman with multiple sclerosis, the
firm stopped clawing back certain CPP benefits from long-term disability
plans it administers for the province of New Brunswick.
HOW THE INDUSTRY RATES OVERALL
Effort demonstrates progress, but work frequently incomplete
(Christie Stephenson)
media
The Industry
What it's doing right
Media companies are generally good employers to their broadcast, print and
cable workers. They're above average for programs and initiatives that
encourage more representative work forces, and are also generally strong
in employee education and development, as well as work/life balance
initiatives. Most have strong community giving and charitable donations
strategies in place.
Still needs work
Firms have done relatively little to address their environmental impact.
Paper production is one of Canada's most polluting industries, and print
media, especially newspapers, have been slow to examine “greener” paper or
more innovative means of distributing content to reduce the estimated
12,000-plus tonnes of newsprint delivered to Canadians each week.
In a similar vein, media companies have done very little to reduce their
energy consumption and contribution to climate change. Most companies
could also publicly disclose far more about their CSR performance: Among
all the companies in this group, only CanWest Global has produced a report
on its community initiatives, and only CBC has posted its
government-mandated employment equity report on its website.
The Bottom Line
Strong on employee issues, weak on environmental ones. Media companies
should start turning the lens on themselves by reporting on their own CSR
performance.
CBC 61
Publishes several detailed statements on CSR issues, including its
advertising standards and environmental policies. CBC ranks first in
diversity, health and safety management, and the environment. Employee
relations have been strained recently, with four work stoppages in 51/2
years.
Alliance Atlantis 55
Scores relatively well on diversity and on wellness programs. Alliance is
the only company in this industry that has a formal policy statement on
community donations.
Cogeco 55
Ranks second for employee programs and benefits and is one of the few
companies in the group to have an environmental policy. That policy
extends to employees as well as suppliers and subcontractors, and commits
the firm to doing business without unduly exploiting the environment.
Rogers 53
Unique among its peers for creating a barrier-free work environment—all
facilities are accessible to people with disabilities, and initiatives are
in place to attract and retain people with disabilities. Corporate
governance practices lag behind most peers, however. And Rogers's CSR
record is further tarnished by its failure to ensure that companies
contracted to sell Rogers Cable products door-to-door paid their employees
(who said they wore Rogers badges and were trained by Rogers staff) back
wages owed to them.
Bell Globemedia/ExpressVu 52
One of the few in the industry to have, through its parent company (BCE),
a formal environment policy in place and to report on environmental
performance and initiatives. On the other hand, Bell Globemedia's
disclosure on its employee programs and practices lags behind that of its
peers. Also of concern is the number of times its broadcast holdings have
breached the Canadian Association of Broadcasters' voluntary code of
ethics.
CanWest Global 50
Above-average community performance and the only company in the industry
to have published a separate community report. Relations with employees
have suffered recently, as the company has moved to a more unified
approach to news reporting, including the imposition of a national
editorial policy that some journalists view as limiting freedom of speech.
These moves have prompted byline strikes at some papers.
Shaw 47
A laggard in CSR disclosure whose diversity initiatives are weak. Shaw has
the dubious distinction of being the only company in this category that
does not report having any environmental policies or programs.
Quebecor Média 38
Stands out for its poor CSR disclosure practices and relatively weak
community, employee and corporate governance performance. A recent bitter
work dispute at Vidéotron, now a Quebecor subsidiary, started as a
lockout, then became a strike.
It featured strike-breakers and vandalism that disrupted cable service to
customers.
HOW THE INDUSTRY RATES OVERALL
Effort demonstrates progress, but work frequently incomplete
(Laurie Uytterlinde Flood)
mining
The Industry
What it's doing right
“The mining industry is facing growing challenges to its social licence to
operate.” The majority of large mining companies have responded to those
words from the Mining Association of Canada by improving CSR reporting.
Most also recognize, at least in principle, that local communities are key
stakeholders who ought to be consulted.
The growth of metals recycling is another promising trend, from aluminum
cans to batteries and electronics. Although “recycled feed” still makes up
a small fraction of total production, companies like Alcan and Noranda are
increasingly important players in reprocessing waste, and reducing their
dependence on raw materials extracted from the ground.
Still needs work
Mining companies remain among Canada's leading polluters. Efforts to
reduce emissions, cut back on greenhouse gases and limit toxic discharges
could be stepped up. Ways must also be found to minimize both the toxic
aftereffects of acid drainage from closed mines, and the social trauma of
shutting down a town's primary employer once a mine closes. Although many
firms operate overseas, where environmental and labour standards generally
aren't as high as Canada's, they must adhere to the same stringent
performance standards as they do here.
Most importantly, the industry needs to become far more consistent in
community consultation and benefits sharing. In the process, it should
address power imbalances faced by affected communities by, for instance,
providing them with funding to hire legal experts to research a project's
impact.
The Bottom Line
Sustainable mining is practically an oxymoron. The industry should
continue to raise the bar on environmental performance and do more to put
principle into practice in its relations with affected communities.
CRITICAL ISSUE
Affected Communities
The way mining companies treat communities affected by their operations
has generated arguably more confusion - and conflict - than any other CSR
issue. Each stage of a mining project - exploration, construction,
production, closure and remediation - carries significant opportunities
and risks for nearby communities.
When a mining firm initiates a new project, locals are often divided over
the perceived economic benefits and potential environmental harm. In the
case of aboriginal communities, mine development may also undermine
traditional land use.
Companies that mess up in this initial stage often pay the price for
years. Noranda is a case in point. Soon after it announced plans in 1995
to build a Chilean aluminum plant and six dams to feed hydroelectric
plants, the project faced strong opposition. Residents of Patagonia feared
the Alumysa development would adversely affect the environment and such
local industries as ecotourism and salmon farming. Noranda put the project
on hold indefinitely after eight years of opposition.
Getting a mine into commercial production in a fair and timely manner
often means ensuring that local communities receive a reasonable share of
the economic benefits. To get its Raglan mine in northern Quebec into
operation, Falconbridge committed to profit sharing and hiring at least
20% of the mine's workforce from local Inuit communities.
Mining operations risk leaving communities with contaminated soil, lower
property values and residents with chronic health problems. Placer Dome
still faces controversy over the operations of Marcopper Mining Corp. in
the Philippines, which it partly owned and managed until 1997. The cleanup
of tailings from a major spill in 1996 has not been completed, and
according to a company-commissioned assessment, a siltation dam and
tailings impoundment are in danger of collapsing, which would cause
further damage.
All mines eventually close, but some extraction companies have softened
the blow by providing transitional support to those dependent on their
operations. Ten years before the closing of its Sullivan Mine in
Kimberley, B.C., Teck Cominco formed a public liaison committee to consult
with the town; it later provided land and financial support for golf
courses and a miningÊmuseum to help the community develop its tourism and
retirement industries.
Alcan 61
Continues to be recognized internationally as a CSR leader. Alcan is a
major processor and recycler of aluminum, though the company's record is
blemished by numerous workplace fatalities over the past five years.
It faces opposition in Orissa, India, where its 45%-owned Utkal Project
includes plans to construct a mine and refinery that will displace 147
families.
Cameco 58
Progressive employment and economic development initiatives with the
aboriginal communities living around its uranium mining operations in
northern Saskatchewan. And the fate of nuclear waste remains a stewardship
issue for the world's largest uranium miner.
Falconbridge 54
Has strong relations with aboriginal and Inuit communities in Canada
through benefit-sharing agreements. Bitter strikes at its Sudbury
operations in Ontario suggest that labour relations could be improved.
Through environmental programs, the company is working hard to meet
emission-reduction targets.
Teck Cominco 52
Has a good record in benefits sharing with local communities, including an
agreement with Inuit communities in Alaska and company-sponsored
transition committees for communities facing mine closures in B.C. Still,
has a bad name with U.S. environmentalists after decades of cross-border
pollution.
Placer Dome 52
Has a benefits-sharing agreement with aboriginal communities in Northern
Ontario, and is making a positive contribution to the fight against
HIV/AIDS in Africa. Placer Dome has adopted a health and safety charter in
response to its horrendous workplace safety record (over 30 fatalities and
$1.6 million in fines since 1999). The company still faces claims for
compensation after a major tailings spill in the Philippines in 1996, and
cleanup has still not been completed.
Noranda 50
Scores well for its corporate governance practices and charitable
donations.
Noranda has also provided assistance to former employees of recently
closed mines and smelters. The company has racked up a number of fines and
convictions for environmental and health and safety infractions in the
U.S. in recent years.
Barrick Gold 47
Has an HIV/AIDS prevention program at its African operations, and signed
on to a new international cyanide management code last year. Its public
reporting on environmental issues is good, but community relations need
more work, including the resolution of ongoing tensions surrounding its
gold mining projects in Tanzania and Australia.
Inco 44
Extensive public reporting on CSR issues, but remains one of the largest
polluters in the Canadian mining sector despite efforts to improve. The
company has finally established good relations with aboriginal communities
at Voisey's Bay in Labrador, although community relations are strained at
nickel projects in New Caledonia and Guatemala.
Fording Canadian Coal Trust 38
Provides little reporting on environmental, health and safety, and
community issues. Fording's new Cheviot coal mine on the border of Jasper
National Park, a joint venture with Teck Cominco, continues to face legal
challenges from environmentalists.
Sherritt International 37
Silence on social responsibility issues is deafening, although shareholder
democracy has improved since Sherritt decided to dump its dual-class
voting structure.
HOW THE INDUSTRY RATES OVERALL
Some improvement, but occasionally disruptive
(Ian Thomson)
oil and gas
The Industry
What it's doing right
Extracting, refining and burning oil and gas damage the
environment—there's no avoiding that. The process often leads to conflict
with surrounding communities as well. Despite all that, Canadian energy
companies are leaders in addressing social and environmental concerns. The
Canadian Association of Petroleum Producers, requires members to report
annual environmental, health, safety and socioeconomic data to an
independent third-party analyst. Most producers also voluntarily track
their greenhouse gas emissions.
There is progress on other fronts as well. Time lost due to injuries hit
an all-time low in 2003. Suncor, Nexen, Shell and Petro-Canada are
investing in alternative energy sources. Canadian producers are also
leaders in consulting with indigenous peoples. For the $7-billion
Mackenzie Valley pipeline, Imperial Oil and Shell Canada have formed a
consortium with local groups, giving them up to a one-third stake in the
project.
Still needs work
Conventional oil and gas reserves in the Western Canada Sedimentary Basin
are waning, so producers are looking to the Far North, the oil sands of
Northern Alberta and offshore British Columbia to sustain or increase
output. There are unique social and environmental risks in each of these
areas. Canadian companies with overseas operations in Colombia, the Middle
East and West Africa are also vulnerable to public backlash over
environmental and human rights issues.
The Bottom Line
As demand grows, producers will migrate to where new supplies are
available: the oil sands, the Arctic tundra and nations led by dictators.
Global warming is a critical issue, and companies should help speed the
shift to alternative and renewable energy sources.
CRITICAL ISSUE
The Oil Sands
Production in Alberta's oil sands has grown remarkably over the past
several years, and that growth will continue. There are more than 40 major
projects either planned or under way, and total output is forecast to
reach 1.8 million barrels of oil per day by 2010, up from an average of
920,000 barrels per day in 2003.
From both a social and environmental perspective, oil sands development
has some advantages. Production is relatively concentrated in a remote
region, rather than spread over more densely populated areas. Alberta's
north is also free of the serious human rights issues facing companies
working in zones of conflict such as Colombia and the Ivory Coast, or in
undemocratic countries like Syria and Libya. And while aboriginal people
have often suffered from the impact of resource extraction, oil sands
development - and the economic benefits it brings - has generally been
welcomed by local aboriginal communities.
Still, companies must use large quantities of natural gas and other fuels
to separate oil from sand. Technological progress is helping somewhat -
Suncor, which derives most of its revenue from oil sands production, has
reduced its greenhouse gas emissions by 17% over the past three years.
Further innovation and Kyoto Protocol requirements will likely spur other
companies to improve their performance as well.
Suncor 72
A world leader in investing in renewable energy. In its most recent
renewable energy project, Suncor and joint-venture partners began
producing electricity from an Albeta wind power project. The green energy
generated is expected to save the equivalent of 82,000 tonnes of
carbon-dioxide emissions per year—equal to taking about 12,000 vehicles
off the road for a year. On the negative side, Suncor was fined $325,000
for the death of a worker in 2003 at its Sarnia, Ont., refinery, despite
aggressive efforts to improve safety.
Petro-Canada 68
Has three women on its board of directors—the most among the major
producers—and scores well across the full range of CSR issues. The
company's record was tarnished by two oil spills from its Terra Nova oil
field off the coast of Newfoundland in late 2004.
Nexen 62
Emerged as a Canadian CSR pioneer in 1997 by helping to develop the
International Code of Ethics for Canadian Business. The company's
commitment to social and environmental issues will soon be tested as it
expands production in West Africa and begins development of its Long Lake
oil sands project in Alberta. Nexen also has a poor record when it comes
to flaring and venting solution gas.
Shell Canada 58
Has an extremely poor environmental compliance record and has been ordered
to pay more than $650,000 for various environmental transgressions over
the past five years. Still, Shell has developed impressive environmental
management and reporting systems.
Talisman 58
Sold its interests in the Sudan in 2003, but is still suffering the
fallout of a lawsuit filed in the U.S. alleging that Talisman and Sudan's
government collaborated in an ethnic cleansing campaign. The company
denies the allegations and claims it worked to promote peace and
development. Now has some of the strongest human rights policies and
management systems in the industry, plus a good environmental and
reporting record.
Imperial Oil 56
Has a strong record for containing greenhouse gases—only EnCana and
Talisman have lower emissions per unit of output. Imperial has also
performed well in health and safety. However, the company lags in social
and environmental reporting, and continues to resist the province of
Alberta's efforts to make it clean up the site of a former refinery.
EnCana 55
Boasts the lowest greenhouse gas emissions per unit of production of any
oil and gas company in this ranking. Still, the company loses marks in the
environmental category, as well as in community and indigenous relations
due to its interests in Ecuador, where it helped build a pipeline through
areas of a protected tropical rain forest. The company is now trying to
sell those interests, and its ranking will rise when it does.
Husky Energy 54
The only major integrated oil and gas company, aside from unranked
PetroKazakhstan, that does not release annual social and environmental
reports. Husky also has the second-highest level of greenhouse gas
emissions per unit of production in the industry, and no women among its
13 senior executives and officers.
Canadian Natural Resources 46
Despite working in Angola and the Ivory Coast, provides almost no
reporting on its human rights policies or other social and environmental
concerns.
In Alberta, the company flares and vents more solution gas than any other
producer.
HOW THE INDUSTRY RATES OVERALL
Effort demonstrates progress, but work frequently incomplete
(Ian Bragg)
paper and forest products
The Industry
What it's doing right
The industry recognizes the need to manage forests under its care in a
more sustainable manner. As a result, certification for best practices has
spread to more firms in the sector and is being extended to multiple
stages of the life cycles of products.
Companies are also becoming increasingly involved in broad-based
conservation initiatives. Since January, 2000, Canfor, NorskeCanada and
others have been involved in the Coast Forest Conservation Initiative, an
attempt by forest companies and environmental groups to collaborate on a
model for the conservation and management of coastal forests in British
Columbia.
The industry has had success reducing greenhouse gas emissions, primarily
through improved manufacturing processes. Between 1990 and 2000, as
industry output grew by 21%, it achieved an overall decrease in greenhouse
gas emissions of 22%.
Still needs work
Consultation at the community level is still a problem. Only Tembec has
formal consultation processes, and benefits-sharing agreements are the
exception rather than the rule. Disputes with First Nations communities
are all too common.
Emissions from pulp mills and manufacturing operations continue to be a
problem. Some sawmills still operate a type of wood residue burner that
was scheduled to be phased out in B.C. in 1998; that deadline was extended
to December, 2007. And finally, a number of firms that are starting
ventures in such places as China have no policies, systems or programs in
place to manage human rights issues.
The Bottom Line
While progress has been made, without a universally accepted standard it's
hard to predict how certification will contribute to the development of a
more sustainable industry.
CRITICAL ISSUE
Forest Management Certification
Early in 2002, the Forest Products Association of Canada entrenched forest
management certification as a condition of membership. There are three
competing forestry certification systems operating in North America: the
Canadian Standards Association's (CSA) Sustainable Forest Management
standard; the Sustainable Forestry Initiative (SFI) standards; and the
Forest Stewardship Council (FSC) standards. All three claim to be
performance-based and to provide third-party auditing, certified product
labelling, multistakeholder involvement and chain-of-custody procedures.
So which system is the best?
Currently, FSC is the only standard that is broadly supported by
conservation groups, and the preferred standard of major retailers like
Home Depot and Ikea. A 2003 report commissioned by Forest Ethics,
Greenpeace and Sierra Club of Canada concluded that, of the three
certification systems in North America, only FSC “represents a viable
system that delivers positive results on the ground and in the communities
where it matters most.” What's more, a 2004 study conducted by
non-governmental organization Forests and the European Union Resource
Network states that forest management certification schemes must be
performance-based, rather than systems-based, and claims that FSC alone
fulfills this criterion.
The U.K. Environment Ministry announced in November, 2004, that of five
forest certification programs it assessed, only the FSC and CSA standards
provide both assurance of legal harvesting and sustainable forest
management. It also stated that the SFI standard ensures that certified
forests meet U.K. government requirements for sustainable timber, but not
its chain-of-custody system.
While the goal of certification standards is to put in place sustainable
systems, the existence of competing schemes is a significant problem. It
has created confusion among consumers and retailers, and continues to fuel
an unproductive debate between non-governmental organizations, companies
and other stakeholders over which standard is the best. The sum effect is
to undermine the industry's efforts to improve its image and manage its
impact on the environment and communities.
Tembec 58
Continues to demonstrate a strong commitment to CSR and has elected to
obtain Forest Stewardship Council (FSC) certification for all forests
under its care by the end of 2005. In December, 2003, along with Domtar,
it became a founding member of the Boreal Leadership Council, whose goal
is to “sustain the ecological and cultural integrity of the Canadian
boreal forest region, in perpetuity.” Still, Tembec has been unable to
resolve ongoing effluent treatment problems at its mill in Temiscaming,
Que.
NorskeCanada 55
Has not had a worker fatality in the past five years, and has not been
convicted or penalized for occupational health and safety or environmental
violations.
Norbord 53
Formerly Nexfor, a perennially strong performer, the company ranks first
for corporate governance. Two significant (and uncharacteristic)
environmental penalties at U.S. mills in 2003 had a negative impact on the
company's environmental score.
Fraser Papers 52
Former subsidiary of Nexfor has the highest percentage of women on its
board of directors. The burning question: Will it adopt its former
parent's commitment to CSR?
Cascades 52
A significant provider of recycling services, and involved in alternative
energy production. In the coming years, the firm's unsystematic approach
to environmental management and reporting may see it fall behind the
industry's leaders.
Domtar 50
In November, 2003, the company announced that it intends to pursue FSC
certification of all its forest and manufacturing operations. Its record
is blemished by a legacy of contaminated sites, most of which it no longer
owns.
Abitibi-Consolidated 48
The largest collector and recycler of old newspapers and magazines in
North America, and the world's largest newspaper recycler. Remains
embroiled in a dispute with the Grassy Narrows First Nation over the
impact of its logging activities in Northern Ontario.
Canfor 48
Has the lowest lost-time injury rates in this group over the past three
years. Canfor's diversity record is mixed: It has three women among its
senior executives, but has implemented almost no formal programs to
encourage the advancement of women, visible minorities and other
under-represented groups.
West Fraser 45
Has an employment equity policy but has implemented almost no formal
programs to encourage the advancement of women, visible minorities and
other under-represented groups.
Interfor 37
Scores poorly in almost every major category, in part due to lack of
disclosure. The company's record with respect to working with First
Nations is mixed. It has several partnership agreements in place, but in
July, 2003, the Tla-o-qui-aht First Nations issued a “notice of eviction”
to Interfor, ordering the company to leave its traditional territory in
B.C.'s Clayoquot Sound.
HOW THE INDUSTRY RATES OVERALL
Effort demonstrates progress, but work frequently incomplete
(Steve Brearton, Rob Gross and Kevin Ranney)
retailing
The Industry
What it's doing right
In the wake of alarming reports about children stitching soccer balls in
Pakistan and young women toiling for long hours at sewing machines in
unsafe factories in China, the conduct of suppliers has become a touchy
issue for retailers. Leading chains have responded by making an effort to
adopt labour standards for their suppliers and monitor their compliance.
Some retailers also focus on the environment, favoring suppliers that
practise sustainable forestry, minimize waste and limit other harmful
practices. In general, women are better represented on retailers' boards
of directors and in senior management than they are in other industries.
Still needs work
Despite some progress on labour rights and supply-chain issues, most of
the companies in this group need to increase accountability and improve
public reporting. The industry has a lower percentage of unionized
employees and a higher proportion of part-timers than in most sectors, so
many workers are excluded from benefit programs.
Environmental initiatives also need more attention. Many retailers recycle
waste from stores and support community initiatives, but greenhouse gas
emissions could be cut by improving the transport of merchandise by, for
instance, moving goods by sea, rather than air, and by heating and
powering stores with greener technologies. On the customer front, some
companies have been caught using deceptive marketing practices.
The Bottom Line
Leading retailers are forging ahead with green sourcing, green power and
green transportation initiatives. Sweatshops still need greater attention
from all companies, especially as China becomes the source for an
increasing proportion of consumer goods.
Mountain Equipment Co-op 64
Best known for sustainable building designs, green suppliers and annual
donations to environmental initiatives and wilderness conservation.
Monitoring and reporting on labour issues in its suppliers' factories
exceeds all others on this list. A CSR leader. Could the high proportion
of women directors and senior managers be a factor?
Hudson's Bay 60
Monitors labour conditions in factories of suppliers, though public
reporting could be better. Works with department stores internationally to
develop an expanded factory monitoring system. Has also set clearly
defined environmental and health and safety targets for stores and its
transportation network. Strong corporate governance and employee
practices.
Ikea 58
Impressive CSR programs and reporting, especially considering it's a
private company. Sets environmental and labour standards for suppliers.
Promotes sustainable forestry and green transportation throughout its
supply chain, and contributes to the elimination of child labour through
its purchasing practices. Ikea is a founding member of the Business
Leaders Initiative on Climate Change.
Sears Canada 52
Well-developed charitable and community giving program, though not as
strong in the monitoring of, and reporting on, supply factories. Marks off
for a combined chairman and CEO. In January, the federal Competition
Tribunal ruled that Sears Canada had misled consumers with deceptive
marketing practices in 1999 and had violated the Competition Act.
Home Depot 52
Promotes sustainable forestry by avoiding suppliers that log ecologically
sensitive forests and, increasingly, by purchasing wood products certified
as environmentally friendly. Improvements needed in monitoring and
reporting on labour practices in its supply chain. Good employee benefits
and programs, including initiatives to promote employee volunteerism and
charitable giving.
Canadian Tire 50
Women well represented at senior levels. Good benefits and programs for
corporate employees, but most retail store staff are employed by
individual dealers.
Poor corporate governance marks for multiple-voting share structure.
Started to monitor working conditions in suppliers' factories this year.
Wal-Mart 49
Monitors working conditions in overseas supply factories, following many
sweatshop labour scandals, though reporting could be improved. Embroiled
in several U.S. class-action lawsuits and legal disputes over alleged
gender discrimination and unpaid overtime.
Costco 41
Strong labour relations record and good employee programs, but very little
reporting on environmental or supply-chain issues.
Forzani 39
Employee benefits include flex time, subsidized daycare and profit
sharing.
However, last year Forzani paid a record $1.7-million settlement after a
Competition Bureau investigation found that the company had engaged in
deceptive marketing practices.
Needs better programs for environmental and supply-chain issues.
Rona 36
Fairly good union relations, but has no reporting on formal programs to
manage environmental and supply-chain issues.
HOW THE INDUSTRY RATES OVERALL
Effort demonstrates progress, but work frequently incomplete
(Ian Thomson)
The Industry
What it's doing right
The manufacture and use of tech equipment often involves large amounts of
energy and water, and hundreds of hazardous substances. Responsibly
disposing of waste and old equipment can be very difficult. Fortunately,
the multinationals that top this group are global leaders in environmental
stewardship and in reporting. Hewlett-Packard, in particular, is working
to minimize environmental damage at all stages of its products' life
cycles.
Most tech firms have strong labour practices because of intense
competition for employees, but this competition has led to increased
outsourcing abroad in countries where the companies' own head-office
labour practices don't apply.
Still needs work
Many large tech companies have exposure to human rights issues through
overseas suppliers, and only a few industry leaders have addressed this
concern. A January, 2004, report by the Catholic Agency for Overseas
Development prompted the drafting of the Electronic Industry Code of
Conduct. Few companies have signed on to the EICC, which itself fell short
of expectations.
Canadian companies, such as Nortel, Celestica and ATI, are conspicuous by
their presence at or near the bottom of this industry ranking. Nortel, in
particular, continues to suffer from the fallout of regulatory misdeeds.
The Bottom Line
The best companies in the tech sector are global leaders in environmental
stewardship and reporting on corporate social responsibility issues. The
laggards, however, are far, far behind.
CRITICAL ISSUE
Electronic Industry Code of Conduct
In October, 2004, eight electronics companies developed the Electronic
Industry Code of Conduct, which outlines commitments related to labour and
employment, health and safety, ethics and protection of the environment
for the firms and their suppliers. It was developed in response to Clean
Up Your Computer: Working Conditions in the Electronic Sector, published
in January, 2004, by the Catholic Agency for Overseas Development (CAFOD).

The CAFOD report was critical of the labour conditions at Dell,
Hewlett-Packard and IBM manufacturing and supplier sites. Among other
things, it reported that Chinese workers were spending up to 11 hours a
day testing monitors in front of flashing screens.
Celestica, Dell, HP and IBM were all original signatories to the code, and
although it's an important step for the industry, it falls short of the
expectations set by CAFOD—specifically, the lack of detail on how change
will occur. CAFOD also cited the failure of companies to support workers'
rights to join an independent trade union and bargain collectively
(experience from the garment industry shows that an effective union can
have the greatest impact on working conditions). The code also demands
compliance with local laws, which are frequently less stringent than
international standards. If public campaigns against garment manufacturers
are any indication, the electronics industry will have to go beyond legal
compliance to ensure customer approval and achieve meaningful
improvements.
Hewlett-Packard 79
A world leader in developing systems to measure and reduce the
environmental impact of products and processes. Has developed criteria to
measure its suppliers' performance in such areas as the environment and
health and labour practices. HP will soon require suppliers to report
annually on compliance.
A strong contingent of women on the board and in senior management. Signed
on to the Electronic Industry Code of Conduct. Policies on suppliers'
labour practices still fall short of those of leaders in the footwear and
apparel industries.
Dell 69
Has an international program in place to take back and disassemble its
used products. Most new products adhere to the U.S. Environmental
Protection Agency's Energy Star requirements. Signed on to the Electronic
Industry Code of Conduct. In 2003, Dell returned some customer service
calls to U.S.-based operators from Indian call centres, following
complaints of long wait times and heavily accented English.
IBM 66
Products are designed to be upgraded, thus extending their life. Also,
many products are reused and recycled. Signed on to the Electronic
Industry Code of Conduct. Still in the process of remedying a chemical
spill first discovered in 1979 in Endicott, N.Y.
Siemens 60
Publishes a detailed annual CSR report on citizenship and the environment.
Also has comprehensive policies and programs in place to promote the
advancement of women and minorities. Progress marred by complaints of
sexual discrimination at a plant in Virginia.
Xerox 59
Has the highest level of charitable giving in the industry, and received
the top score for waste management. In 2002, Xerox treated 97% of its
hazardous waste through recycling, treatment or fuel blending. In the
U.S., the firm faces several race discrimination lawsuits, including one
for allegedly denying minority workers promotions and lucrative sales
territories.
Nokia 55
Strong supply-chain management program to reduce the environmental impact
of mobile phones. Unfortunately, supply-chain management of labour
practices is not as strong, and has not signed on to the Electronic
Industry Code of Conduct.
Celestica 55
Signed on to the Electronic Industry Code of Conduct, but ranks among the
worst in the group for environmental reporting.
Nortel Networks 52
Has implemented employment equity and workplace harassment policies in all
operations. Also, launched a program in 1980 to encourage subcontracting
to minority- and women-owned businesses. Has been plagued by controversies
relating to the restatement of its financial results. The cost of those
restatements: $115 million (U.S.) to date.
General Electric 47
Environmental reporting is among the best in the group—every week, each GE
facility completes an environmental and health and safety checklist.
Audits suppliers as well. Health and safety record is the worst in the
industry. Company also has the highest environmental penalty total in the
group.
ATI Technologies 41
Scores poorly on corporate governance. Share dilution rate from the
company stock option plan is the highest in this group. Chairman K.Y. Ho
has been accused by the Ontario Securities Commission of avoiding losses
by selling shares ahead of a profit warning in 2000. Also, ATI recently
settled U.S. shareholder class-action lawsuits.
HOW THE INDUSTRY RATES OVERALL
Positive attitude; work much improved
(Graeme Hussey)
telecom
The Industry
What it's doing right The telecom industry has made significant progress
in taking responsibility for the end use of its products by accepting back
for reuse and recycling products such as telephone directories, cellphones
and batteries. Relative to other industries, many firms boast
above-average numbers of women in senior positions, and most have made
progress in hiring minorities. Several companies are leaders in supporting
employees' charitable donations and volunteerism. Progress has also been
made recently in CSR reporting.
Still needs work Problems with employee relations and customer service
remain, and have worsened in some cases. Several telecoms, including Telus
and Aliant, have experienced a significant increase in labour tension in
recent years. Jobs used to be relatively well-paying and secure, but some
companies, such as Bell and Telus, have made deep job cuts lately, and a
number have sought to reduce employee benefits and weaken job security
guarantees. Nagging customer service problems include billing errors and
long waits for installations and repairs.
The Bottom Line
This industry is clearly divided between companies that have taken
considerable steps to improve their CSR performance and those that have
yet to take much—if any—action. However, even the industry's would-be
leaders risk undercutting their efforts by outsourcing much of their work
to firms that are CSR laggards.
Manitoba Telecom 55
Decent community, diversity and environmental initiatives coupled with
relatively few performance-related problems. With only an annual
environmental report, it is falling behind the CSR disclosure leaders.
Bell Canada 53
A leader in public disclosure, with annual reports on CSR and the
environment.
Bell's environmental sourcing policy and verification procedures are tops
in this industry, and it's a leader in supporting employee giving and
volunteerism. However, many former employees are doing essentially the
same jobs for less pay at new firms set up to take contracted-out work. A
12-year-old dispute over pay equity has been only partially resolved.
Aliant 50
Leader on community initiatives. New three-year agreement largely
preserving job security may improve labour relations following a bitter
five-month strike over pensions, benefits, job security and contracting
out.
Telus 47
Once a CSR leader, Telus has dug in its heels during a long and now-soured
collective bargaining process, and failed to meet CRTC-mandated minimum
telephone service standards for more than six months in 2004.
Rogers Wireless 43
Unique in the industry for creating a physically barrier-free environment
in all facilities. Also, the company has several initiatives in place to
attract and retain employees with disabilities. Environmental programs and
practices still lag behind peers.
Stratos Global 38
Falls far short of the rest of the industry on disclosure on CSR issues,
and is a poor performer on employee diversity. Corporate governance is the
company's one area of strength.
Telesystem International 34
Only firm in this group with no women directors. Continued poor disclosure
on all CSR issues.

CORPORATE SOCIAL RESPONSIBILITY: 2ND ANNUAL RANKING
Steve Brearton, Rob Gross and Kevin Ranney
3105 words
25 February 2005
The Globe and Mail
39
English
All material copyright Bell Globemedia Publishing Inc. or its licensors.
All rights reserved.
For the second year in a row, Report on Business magazine has partnered
with Jantzi Research Inc. to rank Canadian firms according to their
corporate social responsibility performance. Jantzi is one of Canada's
leading authorities on social investment and CSR issues. It provides a
full range of social investment research and consulting services to
institutional clients and financial professionals who integrate social and
environmental criteria into their investment decisions. Jantzi does not
provide consulting services to any of the companies in this ranking,
though it does sell its database and provide investment or
vendor-screening services to four of the listed companies: Citizens Bank,
Great-West Life, National Bank and RBC Investments.
Here, we provide a straight-talk explanation of how to read and interpret
the ranking.
How the firms were chosen
This year, we have increased the number of firms in the ranking to 109
from 67. Industries and firms were selected by Jantzi Research and Report
on Business based on their importance to investors and consumers. A
premium was placed on firms listed in the Report on Business Top 1000,
which lists Canada's top firms by profits each year, and on the S&P/TSX
Composite Index. Other companies, such as Mountain Equipment Co-op and
Citizens Bank, have been included because of their reputation as CSR
leaders in their respective sectors. We've also introduced some new
industries this year, based on their presence in the stock portfolios and
daily lives of Canadians. We will continue to add important industries to
the rankings in the coming years.
How individual firms were evaluated
Jantzi's research process begins with a thorough examination of all
publicly available information on the social and environmental performance
of each company. This includes the companies' public documents, media
sources, on-line databases, sources from government and NGOs, as well as
direct correspondence with key stakeholders. Each company also receives a
questionnaire on its CSR practices. For non-Canadian companies, Jantzi
made use of research conducted by its partners in the SiRi Network, which
comprises 11 socially responsible investment research firms in Europe,
North America and Australia.
How the scoring works
Company rankings are based on scores in six areas: community and society,
corporate governance, customers, employees, the environment and human
rights. Each area contains indicators related to management systems,
programs and performance, and each company is scored on between 55 and 100
indicators (see page 67). All indicators are scored, weighted and tallied
to create totals within each of the six broad areas. The total is the
weighted average of the score in each area. These final numeric scores are
noted on our main charts (page 40).
Why firms in different industries can't be compared
Each industry has varying levels of exposure to different social and
environmental issues. For instance, an oil and gas company has greater
exposure to environmental issues than a software company, while retailers
have greater exposure to customer issues than mining companies. As a
result, it isn't meaningful to compare total company scores from industry
to industry. It is, however, possible to compare scores across industries
in certain areas in which the exposure is similar. For example, oil and
gas companies and mining companies have similar exposure to community
issues, so their scores in this area can be compared.
Why there is no overall average score
Scores in each sector are relative only to other firms in those
industries. For instance, Alcan is a global leader in the mining industry,
although it scored just 61—think of it as an A grade, not a D. However,
not all firms that finished atop their industry are A-level performers.
That's because some industries rate poorly overall on CSR. We've made this
clear on the individual industry pages, which begin on page 46.
Why some well-known firms are not included
You'll notice that Burger King and Subway restaurants are not included in
the fast-food category. That's because, without their co-operation, we
couldn't generate enough information to fairly compare them with their
peers. Few private firms are included in the survey because few are
willing to disclose information about their social and environmental
practices. No publicly traded firms were dropped due to lack of
disclosure.
Multinationals operating in Canada
Most Canadian operations of international companies are inextricably
linked to their international parents. For that reason, our evaluation is
based on the performance of the foreign corporate entity. In fact, we
found only one case, HSBC Bank of Canada, in which the Canadian subsidiary
was autonomous, enough to be evaluated separately.
What's with all the different certifications? The business of certifying
best CSR practices in different industries has become a global industry in
itself—and an increasingly important yardstick for consumers. According to
2004 polling data produced for Environment Canada by GlobeScan, a public
opinion and research firm, four in 10 Canadians look to certification
labels on consumer packaging as their preferred indicator of CSR-friendly
practices. The industry certifications cited on the industry write-ups
represent meaningful measures of performance, unless otherwise noted.
The Rankings
Rank/Company (year-end)/Revenue ($000)/Employees/
/Overall/Community and Society/Corporate
Governance/Customers/Employees/Environment/Human Rights
Automotive
1 Toyota Canada Inc. Scarborough, Ont. n/a n/a 59 60 93 34 53 78 21
2 Volkswagen Canada Inc. Ajax, Ont. n/a n/a 56 41 54 54 61 64 33
3 Nissan Canada Inc. Mississauga n/a n/a 55 76 68 50 47 63 21
3 Honda Canada Inc. (Ma03) Toronto 14,096,800 4,600 55 62 74 48 36 74 21
5 Mazda Canada Inc. Scarborough, Ont. n/a n/a 54 42 86 57 37 69 21
5 Ford Motor Co. of Canada Ltd. (De04*) Oakville, Ont. 18,100,000 16,000
54 90 60 21 65 52 51
7 Hyundai Auto Canada Inc. Markham, Ont. n/a n/a 53 41 68 57 40 69 21
8 DaimlerChrysler Canada Inc. (De03) Windsor, Ont. 18,160,000 11,163 49 63
83 38 50 45 39
8 General Motors of Canada Ltd. (De03) Oshawa, Ont. 36,513,571 22,000 49
59 45 20 66 47 51
Banking
1 Citizens Bank of Canada (De03) Vancouver 80,786 n/a 68 79 97 50 61 48
n/s
1 Royal Bank of Canada(Oc04**) Toronto 25,204,000 62,566 68 79 76 45 70 73
n/s
3 Bank of Nova Scotia (Oc04) Toronto 16,497,000 43,928 67 71 72 56 72 55
n/s
4 Cdn. Imp. Bank of Commerce (Oc04) Toronto 16,705,000 37,281 65 79 69 41
67 66 n/s
5 Bank of Montreal (Oc04**)Toronto 13,208,000 33,593 61 67 68 46 65 56 n/s

5 National Bank of Canada (Oc04) Montreal 4,771,000 16,555 61 64 67 51 63
55 n/s
7 Toronto-Dominion Bank (Oc04***) Toronto 16,015,000 42,843 60 78 65 45 58
53 n/s
8 Laurentian Bank of Canada (Oc04**) Montreal 943,574 3,125 45 30 67 53 37
39 n/s
9 HSBC Bank Canada (De03) Vancouver 1,997,000 6,000 44 36 55 50 37 43 n/s
Fast Food
1 Starbucks Coffee Canada Inc. Toronto n/a n/a 53 67 59 35 43 67 52
2 McDonald's Restaurants of Canada Ltd. (De03) Toronto 777,9001 77,000 48
46 46 47 40 64 48
3 Cara Operations Ltd. (Ma03) Mississauga 1,133,202 39,000 43 45 58 46 38
54 14
4 Wendy's/Tim Hortons Restaurants of Canada Inc. (De03) Oakville, Ont.
934,8881 n/a 41 44 53 49 39 41 13
5 Mr. Submarine Ltd. Toronto n/a 2,534 39 48 55 40 32 37 18
6 Yum! Restaurants International (Canada) LP Vaughan, Ont. n/a n/a 38 42
39 37 34 53 22
Food and Drug Retailing
1 Sobeys Inc. (My04****) Stellarton, N.S. 11,046,800 75,000 51 56 84 52 35
62 8
1 Van Houtte Inc. (Ap04) Montreal 328,389 1,725 51 45 66 62 47 45 40
3 Shoppers Drug Mart Corp. (Ja04****) North York, Ont. 4,415,202 35,740 47
63 50 59 35 49 11
3 Loblaw Cos. Ltd. (Ja04****) Toronto 25,220,000 126,000 47 51 64 28 46 64
8
5 Jean Coutu Group (PJC) Inc. (My04****) Longueuil, Que. 3,027,1631 22,948
46 45 72 44 41 50 8
5 Great Atlantic & Pacific Tea Co. of Canada Ltd. Etobicoke, Ont. n/a n/a
46 42 68 51 43 45 8
7 Metro Inc.(Se04) Montreal 5,998,900 11,500 45 47 50 52 39 55 8
8 Canada Safeway Ltd. (Ja04) Calgary 4,043,4001 n/a 43 64 72 35 26 52 8
9 Alimentation Couche-Tard Inc. (Ap04****) Laval, Que. 5,872,394 34,000 40
39 52 48 35 44 8
Footwear and Apparel
1 Reebok Canada Inc. Aurora, Ont. n/a n/a 67 76 62 50 43 76 78
2 Adidas-Salomon Canada Ltd. Toronto n/a n/a 66 42 90 48 47 73 78
2 Gap (Canada) Toronto n/a n/a 66 63 54 50 47 65 83
4 Nike Canada Ltd. Thornhill, Ont. n/a n/a 62 82 58 48 39 57 75
5 Puma Canada Inc. Montreal n/a n/a 59 29 73 53 31 65 75
6 Gildan Activewear Inc. (Oc04) Ville St-Laurent, Que. 533,3681 7,400 54
48 72 50 28 61 60
Insurance
1 Sun Life Financial Inc. (De04)* Toronto 21,748,000 13,802 63 72 86 32 55
58 n/s
2 Manulife Financial Corp. (De03) Toronto 16,656,000 13,000 58 66 71 50 51
48 n/s
3 Great-West Lifeco Inc. (De03) Winnipeg 13,429,000 19,500 54 66 66 40 46
42 n/s
3 Industrial Alliance Ins. and Fin. Services Inc. (De03) Quebec City
3,351,700 2,467 54 49 78 50 45 44 n/s
5 SSQ, Life Insurance Co. Inc. (De03) Sainte-Foy, Que. 873,130 1,150 45 41
61 50 36 37 n/s
5 Atlantic Blue Cross Care Inc. (De03) Moncton 1,279,438 620 45 36 77 46
29 31 n/s
Media
1 Canadian Broadcasting Corp. (Ma04*) Toronto 508,618 7,422 61 83 61 63 55
72 n/s
2 Alliance Atlantis Communications Inc. (De03) Toronto 853,6002 580 55 60
54 63 52 47 n/s
2 Cogeco Inc./Cogeco Cable Inc. (Au04) Montreal 648,101 2,067 55 50 57 66
54 52 n/s
4 Rogers Communications Inc. (De03) Toronto 4,847,363 15,000 53 52 48 63
54 47 n/s
5 Bell Globemedia/ExpressVu (De04*, *****) Scarborough, Ont./Montreal
2,270,000 3,846 52 32 71 63 47 63 n/s
6 CanWest Global Communications Corp. (Au04) Winnipeg 2,113,034 9,270 50
73 60 48 30 48 n/s
7 Shaw Communications Inc. (Au04) Calgary 2,174,558 6,500 47 61 54 40 39
41 n/s
8 Quebecor Média Inc. (De03) Montreal 2,319,600 12,225 38 33 46 48 27 50
n/s
Mining
1 Alcan Inc.(De03) Montreal 13,640,0001 52,000 61 56 71 50 59 70 40
2 Cameco Corp. (De04*) Saskatoon 1,048,487 1,538 58 68 75 50 55 47 40
3 Falconbridge Ltd. (De04*) Toronto 3,070,0001 6,275 54 56 76 50 42 52 50
4 Teck Cominco Ltd. (De04*) Vancouver 3,428,000 7,225 52 64 73 50 43 39 40

4 Placer Dome Inc. (De03) Vancouver 1,802,0001 16,750 52 47 85 50 40 50 46

6 Noranda Inc.(De04*) Toronto 6,978,0001 15,000 50 40 88 50 46 45 50
7 Barrick Gold Corp. (De03) Toronto 2,006,0001 5,200 47 38 69 50 46 46 40
8 Inco Ltd. (De03) Toronto 2,474,0001 10,478 44 36 63 50 41 44 43
9 Fording Canadian Coal Trust (De04*) Calgary 1,167,500 2,775 38 23 56 50
33 46 40
10 Sherritt International Corp. (De03) Toronto 820,800 790 37 20 56 50 34
41 40
Oil and Gas
1 Suncor Energy Inc. (De04*) Calgary 8,618,000 4,261 72 87 82 50 63 76 50
2 Petro-Canada (De04*) Calgary 14,687,000 4,514 68 71 79 50 67 67 63
3 Nexen Inc. (De03) Calgary 3,476,000 2,875 62 57 80 50 60 60 70
4 Shell Canada Ltd. (De04*) Calgary 11,228,000 3,850 58 66 89 40 56 46 50
4 Talisman Energy Inc. (De03) Calgary 5,362,000 1,758 58 57 77 50 52 65 37

6 Imperial Oil Ltd. (De04*) Toronto 21,144,000 6,256 56 55 69 50 58 52 50
7 EnCana Corp. (De03) Calgary 10,216,0001 3,854 55 47 69 46 60 54 54
8 Husky Energy Inc. (De04*) Calgary 8,440,000 2,899 54 50 85 50 55 46 47
9 Canadian Natural Resources Ltd. (De03) Calgary 5,972,000 1,671 46 28 72
50 53 47 40
Paper and Forest Products
1 Tembec Inc.(Se04) Montreal 3,553,400 10,000 58 60 83 50 50 54 50
2 Norske Skog Canada (De04*) Vancouver 1,878,200 4,000 55 46 80 50 48 55
50
3 Norbord Inc. (De04*) Toronto 1,486,0001 6,500 53 46 83 50 47 49 50
4 Fraser Papers Inc. (De03) Stamford, Conn. 873,0001 3,850 52 40 74 50 50
54 50
4 Cascades Inc. (De03) Kingsey Falls, Que. 3,227,000 15,000 52 45 71 42 36
62 50
6 Domtar Inc. (De04*) Montreal 5,115,000 11,000 50 38 72 46 46 50 50
7 Abitibi-Consolidated Inc. (De04*) Montreal 5,751,000 16,000 48 35 68 50
51 49 36
7 Canfor Corp. (De03) Vancouver 2,095,500 5,478 48 28 75 50 45 50 50
9 West Fraser Timber Co. Ltd. (De03) Vancouver 1,508,147 4,000 45 31 71 50
39 44 50
10 International Forest Products Ltd. (De04*) Vancouver 795,997 3,000 37
28 49 50 31 38 36
Retailing
1 Mountain Equipment Co-op (De03) Vancouver 169,605 1,000 64 86 75 50 45
74 65
2 Hudson's Bay Co. (Ja04) Toronto 7,400,051 70,000 60 64 82 44 48 73 59
3 Ikea Canada LP Burlington, Ont. n/a n/a 58 37 55 54 39 78 76
4 Sears Canada Inc. (Ja05*) Toronto 6,230,500 47,973 52 74 72 43 43 63 39
4 Home Depot of Canada Inc. Toronto n/a n/a 52 50 62 48 46 76 42
6 Canadian Tire Corp. (Ja04) Toronto 6,552,800 45,000 50 66 54 48 57 51 37

7 Wal-Mart Canada Corp. Mississauga n/a n/a 49 66 72 39 26 56 46
8 Costco Wholesale Canada Ltd. (Au03) Ottawa 7,583,397 14,578 41 44 63 35
42 41 30
9 Forzani Group Ltd. (Fe04) Calgary 968,078 9,681 39 39 55 44 52 43 17
10 Rona Inc. (De03) Boucherville, Que. 2,710,268 15,000 36 37 62 50 34 38
17
Technology
1 Hewlett-Packard (Canada) Co. Mississauga n/a n/a 79 75 66 50 87 90 72
2 Dell Canada Inc. Toronto n/a n/a 69 58 74 43 71 81 66
3 IBM Canada Ltd. Markham, Ont. n/a n/a 66 63 56 48 75 78 51
4 Siemens Canada Ltd. (Se03) Mississauga 1,492,544 6,200 60 58 78 43 56 75
47
5 Xerox Canada Inc. (De03) North York, Ont. 1,216,722 4,100 59 85 60 50 68
69 25
6 Nokia Products Ltd. Ajax, Ont. n/a n/a 55 54 57 33 54 69 50
6 Celestica Inc. (De04*) Toronto 8,839,8001 40,000 55 53 69 50 52 62 47
8 Nortel Networks Corp. (De03) Brampton, Ont. 10,193,0001 35,160 52 46 65
50 57 65 21
9 General Electric Canada Inc. (De03) Mississauga 2,552,031 5,333 47 56 64
18 53 52 33
10 ATI Technologies Inc. (Au04) Markham, Ont. 1,996,7171 2,787 41 37 66 50
45 40 25
Telecom
1 Manitoba Telecom Services Inc. (De04*) Winnipeg 1,524,900 3,418 55 58 69
55 64 74 n/s
2 Bell Canada (De04*) Montreal 16,787,000 51,369 53 68 73 48 55 75 n/s
3 Aliant Inc. (De04*) Saint John 2,033,415 8,200 50 73 73 48 48 64 n/s
4 Telus Corp. (De03) Vancouver 7,146,000 24,719 47 72 69 45 43 57 n/s
5 Rogers Wireless Communications Inc. (De03) Toronto 2,282,203 2,360 43 47
57 59 46 49 n/s
6 Stratos Global Corp. (De04*) Bethesda, Md. 367,7531 600 38 28 74 59 30
45 n/s
7 Telesystem International Wireless Inc. (De03) Montreal 967,0851 3,334 34
28 61 48 28 45 n/

how we scored the companies
2550 words
25 February 2005
The Globe and Mail
67
English
All material copyright Bell Globemedia Publishing Inc. or its licensors.
All rights reserved.
how we scored the companies
Jantzi Research used a hierarchy of social and environmental indicators,
grouped under the following areas: community and society; corporate
governance; customers; employees; environment; and human rights. These
“Level 1” indicators represent the most general categories used to assess
social and environmental performance. The next level of indicators is more
specific and designed to assess management systems, programs and
performance outcomes. From here, a third and, in some cases, fourth level
of indicator measures even more specific aspects of performance. In the
charts that follow, “yes” or “no” shows which specific indicators apply or
don't apply to our 13 industries.
Each indicator was given a scoring range (determined by the best practices
for each industry) as well as a weight (to reflect the importance of that
indicator for the industry). Each company received a score for each
indicator. The weighted average of the scores at the lowest level in the
hierarchy was calculated to produce a score for the next level up - and so
on up the hierarchy, yielding a total score.
Please note that certain industries have poor reporting practices on
issues of corporate social responsibility. This had a negative effect on
scores. What's more, companies that failed to respond thoroughly to the
questionnaire missed an opportunity to gain points for positive practices.

Indicators
Automotive/Banking/Fast Food/Food &Drug Retailing/Footwear &
Apparel/Insurance/Media/
By Industry
Mining/Oil & Gas/Paper & Forest Products/Retailing/Technology/Telecom
COMMUNITY AND SOCIETY
Public Reporting
l the company publicly reports on its community involvement yes yes yes
yes yes yes yes yes yes yes yes yes yes
Charitable Donations Program
l policy statement on community donations no yes yes yes yes yes yes yes
yes yes yes no yes
l donations as a percentage of pretax profits yes yes yes yes yes yes yes
yes yes yes yes yes yes
l programs to support employee giving and volunteerism no yes yes yes yes
yes yes yes yes yes yes no yes
Community Relations
l policy statement on engagement/consultation yes no no no no no no yes
yes yes no no no
l managerial structure and responsibility no yes no no no no no yes yes
yes no no no
l mechanisms of community engagement/consultation no no no no no no no yes
yes yes no no no
l impact on/relations with local communities yes yes yes no no no no yes
yes yes yes no no
Aboriginal Relations
l policy statement on aboriginal relations no no no no no no no yes yes
yes no no no
l managerial structure and responsibility no no no no no no no yes yes yes
no no no
l mechanisms of engagement/consultation no no no no no no no yes yes yes
no no no
l benefits-sharing agreements and joint ventures no no no no no no no yes
yes yes no no no
l impact on/relations with local aboriginal communities no no no no no no
no yes yes yes no no no
Impact on Society
l policy statement on bribery and corruption yes yes yes yes yes yes yes
yes yes yes yes yes yes
l involvement in bribery and corruption yes yes yes yes yes yes yes yes
yes yes yes yes yes
l controversies over impact of marketing yes yes yes yes yes yes yes yes
yes yes yes yes yes
l impact/initiatives related to marginalized groups yes yes yes yes no no
no no no no no yes yes
l tax- or trade-related controversies yes yes yes yes yes yes yes yes yes
yes yes yes yes
CORPORATE GOVERNANCE
Management Systems
l statement of social responsibility, principles or values yes yes yes yes
yes yes yes yes yes yes yes yes yes
l code of business conduct yes yes yes yes yes yes yes yes yes yes yes yes
yes
l board independence no yes yes yes yes yes yes yes yes yes yes yes yes
l separate chairman and chief executive officer yes yes yes yes yes yes
yes yes yes yes yes yes yes
Other Governance Data
l share structure yes yes yes yes yes yes yes yes yes yes yes yes yes
l compensation of highest-paid executive no yes no yes yes yes yes yes yes
yes yes yes yes
l termination agreements no yes yes yes yes yes yes yes yes yes yes no yes

l stock option plan dilution yes yes yes yes yes yes yes yes yes yes yes
yes yes
l governance controversies yes yes yes yes yes yes yes yes yes yes yes yes
yes
CUSTOMERS
Impact on Customers
l safety of product/service yes no yes yes no no yes yes yes yes yes yes
yes
l treatment of customers/clients yes yes yes yes yes yes yes no no no yes
yes yes
l illegal/controversial business practices yes yes yes yes yes yes yes yes
yes yes yes yes yes
l marketing practices yes yes yes yes yes yes yes yes yes yes yes yes yes
EMPLOYEES
Employee Programs and Benefits
l employee needs assessment/employee satisfaction surveys no yes yes yes
yes yes yes yes yes yes yes no yes
l employee education and development yes yes yes yes yes yes yes yes yes
yes yes yes yes
l work/life balance yes yes yes yes yes yes yes yes yes yes yes yes yes
l ownership program yes yes yes yes yes yes yes yes yes yes yes yes yes
l profit-sharing program no yes yes yes yes yes yes yes yes yes yes yes
yes
l redeployment, retraining and/or outplacement services yes yes yes yes
yes yes yes yes yes yes yes yes yes
l other programs/benefits no yes yes yes yes yes yes yes yes yes yes no
yes
Diversity
l diversity management systems and programs
l policy on diversity/employment equity yes yes yes yes yes yes yes yes
yes yes yes yes yes
l managerial structure and responsibility yes yes yes yes yes yes yes yes
yes yes yes yes yes
l public reporting on diversity issues yes yes yes yes yes yes yes yes yes
yes yes yes yes
l employee training and communication yes yes yes yes yes yes yes yes yes
yes yes yes yes
l performance objectives and targets yes yes yes yes yes yes yes yes yes
yes yes yes yes
l recruitment/retention/promotion programs yes yes yes yes yes yes yes yes
yes yes yes yes yes
l maternity/parental benefits yes yes no yes yes yes yes yes yes yes yes
yes yes
l other diversity initiatives/benefits yes yes yes yes yes yes yes yes yes
yes yes yes yes
l diversity data
l percentage of women on the board yes yes yes yes yes yes yes yes yes yes
yes yes yes
l percentage of women among senior officers yes yes yes yes yes yes yes
yes yes yes yes yes yes
l diversity controversies yes yes yes yes yes yes yes yes yes yes yes yes
yes
Health and Safety
l formal occupational health and safety mgmt system yes no no yes no no no
yes yes yes no yes yes
l policy on occupational health and safety yes yes yes yes yes yes yes yes
yes yes yes yes yes
l managerial structure and responsibility yes no no yes no no no yes yes
yes yes yes yes
l certification no no no yes no no no yes yes yes no yes yes
l systems to measure and monitor health and safety performance yes no no
yes no no no yes yes yes no yes yes
l health and safety audits/inspections yes no no yes no no no yes yes yes
no yes yes
l performance objectives and targets yes no no yes no no no yes yes yes no
yes yes
l employee training and communication yes yes yes yes yes yes yes yes yes
yes yes yes yes
l substantial public reporting on health and safety yes no no yes no no no
yes yes yes no yes yes
l occupational health and safety programs yes yes yes yes yes yes yes yes
yes yes yes yes yes
l employee wellness programs yes yes yes yes yes yes yes yes yes yes yes
yes yes
Health and Safety record
l lost-time injury rate no no no no no no no yes yes yes no no yes
l recordable incident rate no no no no no no no yes yes yes no no yes
l number of fatalities over the last five years yes no no yes no no no yes
yes yes no yes yes
l health/safety convictions over the last five years yes no no yes no no
no yes yes yes no yes yes
l health/safety penalty total over the last five years yes no no yes no no
no yes yes yes no yes yes
l health/safety incidents and impacts yes no yes yes yes no yes yes yes
yes yes yes yes
Union Relations
l no. of strikes/lockouts in the last five years yes yes yes yes yes yes
yes yes yes yes yes yes yes
l description of relations yes yes yes yes yes yes yes yes yes yes yes yes
yes
Other Employee Data
l employee controversies yes yes yes yes yes yes yes yes yes yes yes yes
yes
ENVIRONMENT
Management Systems
l formal Environmental Management System (EMS) yes no no yes no no no yes
yes yes no yes yes
l environmental policy yes yes yes yes yes yes yes yes yes yes yes yes yes

l certification yes no no no no no no yes yes yes no yes yes
l managerial structure and responsibility yes no no yes no no no yes yes
yes no yes yes
l systems to measure and monitor environmental performance yes no no yes
no no no yes yes yes no yes yes
l audits yes no no yes no no no yes yes yes no yes yes
l performance objectives and targets yes no no yes no no no yes yes yes no
yes yes
l employee training and communication yes no no yes no no no yes yes yes
no yes yes
l management review of EMS yes no no yes no no no yes yes yes no yes yes
l sourcing practices yes no no yes no no no yes yes yes no yes yes
l life-cycle analysis yes no no no no no no yes yes yes no yes yes
l systems to manage environmental issues no yes yes no yes yes yes no no
no yes no no
Public Reporting
l substantial environmental reporting yes yes yes yes yes yes yes yes yes
yes yes yes yes
l the company's environmental reporting includes:
l its environmental policy and/or a description of its EMS yes no no yes
no no no yes yes yes no yes yes
l information on environmental programs and initiatives yes no no yes no
no no yes yes yes no yes yes
l performance data yes no no yes no no no yes yes yes no yes yes
l compliance data yes no no yes no no no yes yes yes no yes yes
Impact and Initiatives
l resource use
l energy yes no no yes no no no yes yes yes no yes yes
l materials yes no no yes no no no yes yes yes no yes yes
l water yes no no yes no no no yes yes yes no yes yes
l resource and energy use no yes yes no yes yes yes no no no yes no no
l pollution control
l emissions and discharges yes no no yes no no no yes yes yes no yes yes
l waste management yes no no yes no no no yes yes yes no yes yes
l accidents, spills, other incidents yes no no yes no no no yes yes yes no
yes yes
l waste management no yes yes no yes yes yes no no no yes no no
l land use, biodiversity and/or remediation yes no no yes no no no yes yes
yes no yes yes
l other impact or initiatives yes yes yes yes yes yes yes yes yes yes yes
yes yes
Regulatory Compliance
l environmental penalties over the last five years yes yes yes yes yes yes
yes yes yes yes yes yes yes
l number of convictions over the last five years yes yes yes yes yes yes
yes yes yes yes yes yes yes
l incidents of non-compliance yes yes yes yes yes yes yes yes yes yes yes
yes yes
Environmental Impact of Product/Service
l product/service with environ. benefits or reduced environ. impact yes no
no no no no no yes yes yes no yes no
HUMAN RIGHTS
Management Systems
l human rights policy/code of conduct yes no no no no no no yes yes yes no
yes no
l policy/code of conduct governing the supply chain yes no yes yes yes no
no no no no yes yes no
l managerial structure no no no yes yes no no no no no yes yes no
l monitoring mechanisms no no no yes yes no no no no no yes yes no
l external verification no no no yes yes no no no no no yes yes no
l systems/programs to manage human rights issues no no yes yes yes no no
yes yes yes yes yes no
Public Reporting
l the company publishes human rights information yes no yes yes yes no no
no yes no yes yes no
Impact and Initiatives
l working conditions and the supply chain yes no yes yes yes no no no no
no yes yes no
l implication in the abuse of human rights yes no no no no no no yes yes
yes no yes no

9.3.05

Developing best wood tracking practices to verify legality of wood origin in Latvia: WBCSD and WWF pilot project

Developing best wood tracking practices to verify legality of wood origin
in Latvia: WBCSD and WWF pilot project
Violations of Latvia’s forestry act are not the main problem facing the
local logging industry, but rather other illegalities related to national
and international laws. The WBCSD and the WWF, under a collaborative
framework agreement, have come together in a joint pilot project to define
a wood tracking system for Latvia.
Executive Summary
Background
Recent institutional and legal reforms, greening legislation, capacity
development and the rapid development of forest certification characterize
forest sector trends in the Baltic States. At the same time, problems
related to weak law enforcement, the weak organization of private forest
owners, insufficient corporate responsibility and money laundering in the
timber trade remain.
Under its Collaborative Framework Agreement ( 947 kb), the WBCSD and WWF
undertook a joint pilot project on wood tracking practices in Latvia. The
project in Latvia was also launched to support The Forests Dialogue (TFD)
process on illegal logging, which is seeking to raise stakeholder
awareness of the problems at an international level, discuss proven and
practical solutions and promote their wider adoption.
While the pilot project has allowed project partners to develop a better
understanding of the scope and magnitude of the problem in Latvia, the
project’s conclusion – outlined below - can also benefit other actors in
Latvia, as well as other industries and countries.
Conclusion and recommendation
The WBCSD & WWF pilot project in Latvia proposes that all companies in
Latvia implement and use an effective system to track wood origin by
identifying where and how the wood was harvested. The wood tracking system
includes three main parts:
A commitment to ensuring the legality of harvested wood, addressed in
supplier agreements;
The collection of wood origin data based on the supplier’s cutting
license;
Verification or auditing of the delivered wood origin information and
forest management practices.
Third party verification of wood origin tracking systems is recommended in
order to increase credibility and transparency.
The most important challenge in Latvia is ensuring a legal business
environment in the forest sector. To ensure fair competition in the
market, more attention needs to be paid to preventing phenomena such as
tax evasion, money laundering, etc. This can only be solved by the Latvian
government, using a combination of measures, in cooperation with private
sector and non-governmental organizations.
The WBCSD and WWF pilot project in Latvia is a good example of how the
forest companies together with NGO's can work at regional level to reach a
common goal.
Context - Latvia
Latvian State Forest Service statistics for 2003 show that violations of
Latvia’s forestry act concern 0.8% of the total volume of timber on the
market, or 103,000 m3. This is a 30% decrease from 2002. In 2003
violations concerned felling trees without a license, damaging trees and
improper forestry practices.
These figures indicate that violations of Latvia’s forestry act are not
the main problem facing local industry, but rather other illegalities
related to national and international laws. WWF/WB Alliance studies in
Latvia suggest that defaults on social charge payments affect 6,000-10,000
forest workers and an estimated loss in revenues of US$ 15-30 million each
year. Illegal practices lower costs by 15-20% compared to legal
operations. Several reasons lead companies to illegal practices, the most
important being illegal cash flow in the market. The offer of illegal cash
creates or provokes the chain of all other illegal activities, including:
forged bills of lading, bookkeeping irregularities, tax evasion, false
forest inventory data and information, and the manipulation of forest
ownership rights.
These illegal activities represent economic, social and reputation risks
for all actors in the forest sector. They can cause losses of export
markets and investments, as well as distorted competition. Therefore,
private and public sector measures are needed to improve the situation.
Given this situation the WBCSD and WWF have joined together to work on a
project in Latvia which aims to build awareness of different aspects of
the forestry and timber trade and demonstrate best practices for the
benefit of the forest sector, local government and society.
Pilot Activities
To help define the issues that concern the local forestry sector, the
pilot project team carried out a study on wood tracking from July to
September 2004. Information was collected through a questionnaire
distributed to the 11 main wood harvesting and processing companies in
Latvia, seven of which responded . The questionnaire asked the following
questions:
What requirements and activities do you use to track and verify wood
origin at various procurement points?
What documents do you require to track and verify wood origin?
What requirements do you include in wood procurement agreements regarding
wood origin?
The project team analyzed the information supplied by respondents and came
to the following conclusions regarding legality verification and wood
origin tracking.
Results
All seven respondents have their own wood origin tracking system. Some
companies included wood tracking systems in their third party verified
management systems (for example ISO 9001, ISO 14001). Almost all
respondents have also Forest Stewardship Council (FSC) and/or the
Programme for the Endorsement of Forest Certification Systems (PEFC)
certified chain-of-custody systems in place for certified wood. Wood
tracking systems require companies, contractors and suppliers to take
additional voluntary actions to track and verify wood origin information
in addition to the legal requirements.
Most respondents based their system on:
transportation waybill;
Agreement with supplier;
Cutting license;
Supplier and forest audits.
1. Wood transportation waybill
A Wood transportation waybill (WTWB) is a legal shipping document issued
by the authorities that must accompany every load or transaction of wood
and contains information about cargo owner, specification and volume,
place of loading and unloading. Wood volume and value are verified after
wood is delivered and measured.
2. Agreement with supplier – Environment clauses
All respondents use agreements with suppliers stating the specific wood
origin and delivery information required by the buyer, such as:
Wood is procured in a legal way;
Data on origin of wood is available in a database or archive and can be
presented on request;
Wood origin information can be verified;
Special requirements for wood from protected areas must be met and may be
verified;
The supplier takes responsibility for the activities of sub-suppliers and
contractors;
The supplier has an environmental policy and it is available for review;
The rejection of non-acceptable wood discharges the buyer from the
delivery contract.
3. Cutting license
The cutting license (CL) is a legal document that is issued by the State
Forest Service to the forest owner and allows cutting to begin. It also
requires post-cutting reporting to the authorities. The State Forest
Service issues cutting licenses if forest conditions and status meet legal
requirements. The license indicates forest owner and property name, land
register number, felling area and location information, logging type, main
tree species and volume.
Companies purchasing wood verify the cutting license to determine that
logging in a particular area was legitimate. It also allows companies to
locate the area where the wood was cut and check logging conditions. It is
a key element in wood tracking systems for all respondents.
4. Auditing of suppliers
Audits by the purchasing company verify the information delivered by the
supplier, including wood origin, forest management practices and the
supplier’s compliance with agreements. Respondents use different types of
auditing systems to assess the data on origin and legality:
The way supplier collects and files wood origin data;
The reliability of the stored data;
The buyer's own wood origin data filing system;
Forestry practices in logging area (legislation and instructions);
Biodiversity aspects in logging area;
Supplier’s legal status;
Authenticity of the cutting license.
5. Wood origin documents - Summary
The wood transportation waybill, agreement with suppliers and cutting
license, combined with the audit function comprise supply chain management
to verify the origin of wood. Additional company requirements exceeding
the law are:
Clauses in wood purchasing agreement ensuring origin of wood is known and
the purchase and harvesting operations are legal;
Proof of wood origin and legality in the wood cutting license based on
physical copy of the cutting license and inclusion of CL number on all
WTWB;
Inclusion of CL number on all WTWB.

Pilot project team
Norske Skogindustrier ASA
Pasaules Dabas Fonds
Silva / Thomesto Ltd, Metsäliitto Group
Stora Enso
UPM-Kymmene
WWF International
World Business Council for Sustainable Development
About WWF

WWF is one of the world's largest and most experienced independent
conservation organisations, with almost 5 million supporters and a global
network active in more than 90 countries. WWF's mission is to stop the
degradation of the planet's natural environment and to build a future in
which humans live in harmony with nature by:
Conserving the world's biodiversity;
Ensuring the that use of renewable natural resources is sustainable;
Promoting the reduction of pollution and wasteful consumption.
For many years WWF has actively promoted the protection, good management
and restoration of the world’s forests. WWF is a science-based
organisation which aims to use good science to support its conservation
agenda.
Further information
Download the complete case study ( 152 kb/ 855 kb)
WWF International

7.3.05

Clearing the Roads: You don't have to own a well to get water or a generator to get electricity. Must you own a car (or two or three) to drive?

Clearing the Roads
Time Magazine, 21 February 2005 - Grace Kim refuses to own a car. But at
least once a month, the Seattle architect drives 30 miles to the suburbs
to visit her mother. If she's in the mood, she'll cruise out to the
airport to pick up friends. Occasionally, she wants a car to lug home
groceries in bulk or try a new restaurant across town. And when clients
need to visit a building site, Kim is at the wheel.
All that's possible because Kim and her husband, architect Michael
Mariano, are members of Flexcar, one of more than a dozen car-sharing
companies revving up across the U.S. As such, the pair have only to jump
on the Internet or call a local number to reserve one of several vehicles
parked in their neighborhood. They can choose between a Honda, a Lexus, a
minivan for carting equipment or, for a jaunty weekend outing, a silver
Mazda Miata. They can enter the car any time of night or day with a
security-coded electronic card, get charged by the hour thanks to an
in-car transmitter, and receive the bill at the end of the month. "We're
ecstatic," says Kim.
You don't have to own a well to get water or a generator to get
electricity. Must you own a car (or two or three) to drive? "You can join
a mobility plan, like you join a cell-phone plan," says Dan Sturges, a
transportation researcher for WestStart, a nonprofit based in Pasadena,
Calif. "It is self-service, on-demand, pay as you go. And you get
different vehicles for different needs."
It's a new way of thinking for the U.S.'s gridlocked cities--hassle-free,
hourly rental, a concept that has been popular in Europe for two decades.
For every vehicle in a car-sharing fleet, transportation planners say
about 10 cars are taken off the roads. Moreover, when drivers pay by the
hour, they tend to drive less. They walk more, take the occasional bus or
clump their errands together in one trip. While car sharing is now
available in nine big cities and a score of smaller towns, in many places
the operations are still seedling, with just a few cars. Expansion is
under way, however, and car-sharing companies plan to bring the service to
more than two dozen major metropolitan areas--a trend that could
eventually remove tens of thousands of cars from the highways, reducing
pollution, energy use and congestion.
Cities love the idea and are actively encouraging it. In Seattle, the
municipal government runs a "One Car Challenge," doling out $ 50 a month
in free Flexcar use for a year to people who can prove they sold their
family's second car in favor of car sharing. In Portland, Ore., people
whose automobiles fail emissions tests get $ 500 worth of free Flexcar use
if they junk their cars. Outside Washington, the Virginia suburbs of
Alexandria and Arlington pay membership fees for any residents who want to
join a car-sharing plan. In Greenbelt, Md., the city leases a vehicle from
Zipcar, a Massachusetts-based car-sharing firm, stationing it at a
senior-citizens complex and renting it to elderly residents for only $ 1
an hour. And in Philadelphia, officials are auctioning off 329 vehicles
from the municipal fleet and using PhillyCarShare, a local nonprofit, as
an alternative. Projected savings: $ 1 million a year.
How revolutionary will this be? If car sharing is to have a national
impact on congestion, it must surmount a basic paradox: everyone hates
traffic and smog, but few people are willing to give up their cars. In the
U.S., as the saying goes, you are what you drive. And a half-century of
highway subsidies has only fueled the sense of entitlement. According to a
poll on traffic by TIME, ABC News and the Washington Post, only 10% of
those surveyed who have access to mass transit actually use it regularly.
"There's a stigma to not owning a car," says Kim, the Seattle architect.
"People say, 'Hey, you're wearing a nice jacket--can't you afford a car?'"
Now car-sharing firms are out to prove that their communal approach offers
its own attractions: freedom--and even convenience. As a Zipcar ad put it,
"350 hours/year having sex. 420 looking for parking. What's wrong with
this picture?" In Boston, New York and Washington, almost all of Zipcar's
32,000 customers are within a seven-minute walk of a company car. "Our
members are savvy," says CEO Scott Griffith. "They don't need to own a car
to enjoy mobility."
Convenience aside, car-sharing firms are betting that their growth will
come from people looking to save money. Consumers, they hope, will figure
out that they could save enough for an annual vacation in Hawaii if they
just switched from owning to sharing. Or merely gave up that second or
third car. The American Automobile Association estimates that it costs an
average $ 703 a month to own a modest vehicle--what with payments,
depreciation, insurance, maintenance and gasoline. Yet government surveys
show that most cars are driven only about an hour a day. Those same 30
hours a month would cost less than $ 300 in a car-share program. Zipcar
and Seattle-based Flexcar, the industry leaders, charge an annual
membership fee of $ 25 to $ 50 and an hourly rate of $ 7.50 to $ 10,
depending on the user's monthly driving plan (drive more, pay less). And
that hourly charge includes insurance, parking, maintenance and fuel (a
company credit card in the glove compartment is available for when you
fill the tank). Traditional rental cars, by contrast, typically require
more paperwork and are usually available only by the day, at fees that
range from $ 25 to $ 150 but don't include insurance or gas. "It is a
dollars-and-cents equation," says Flexcar CEO Lance Ayrault. "Do the math
and ask yourself, 'Why do I own that thing?'"
For Fran Trowbridge, 72, a retiree, the answer was easy. Two Flexcars are
stationed in the garage of a Seattle high-rise next to hers. A month after
joining Flexcar, she sold her Ford Taurus. Insurance had cost her more
than she pays for 10 hours of monthly car-share fees, which is all she
needs to shop and visit friends. "And I sure don't miss the maintenance
and lubing part," she says. Similarly, for the Steelquists--a two-job,
two-kid, two-car family--price was a motive. "We wanted to dial back on
expenses and also reduce our impact on the environment," says Joan
Steelquist, who works for a Seattle nonprofit group. After enrolling in
the city's One Car Challenge last summer, the Steelquists downsized to a
single 1989 Chevy Geo. Joan uses Flexcars to get to her part-time teaching
job once a week. And she can drive her son Reuben, 11, to Boy Scout
meetings on Thursday nights--and grocery-shop while she's at it--while her
husband is off somewhere else with the Geo. Moreover, she adds, "sharing
cars with others gives me the good feeling of being part of a community."
Worldwide, 280,000 people belong to car-share programs, nearly
three-quarters of them in Europe, according to Susan Shaheen, a researcher
at the University of California, Berkeley. The idea spread to the U.S. in
1998, with the opening of a small company in Portland, Ore. Since then,
the movement has grown to 14 firms with 62,000 members in 14 states and
the District of Columbia. The firms range from ambitious outfits like
Zipcar and Flexcar, which are each adding as many as 1,000 members a
month, to modest start-ups like the Dancing Rabbit Vehicle Co-operative in
Rutledge, Mo., and Roaring Fork Vehicles in Aspen, Colo. Zipcar and
Flexcar, zealous rivals, both say they will break even for the first time
next month, even while they are preparing to expand into new markets from
Chicago to Denver and Minneapolis. Across the U.S., car-sharing membership
and revenues are expected to grow tenfold over the next five years. Says
Shaheen: "A lot of innovative people are passionate about car
sharing--because it makes sense."
Among the enthusiasts are transit officials desperately seeking to boost
ridership on buses and trains. Car sharing is not designed for traveling
from home to work and back--the cost would be too high for a 10-hour day.
But, stationed near office buildings and along rail lines, shared cars
offer "mobility insurance" for workers who avoid mass transit because they
just might need a car for a midday errand. The message: If you must own a
car, leave it in your garage at home. Washington Metro officials have
placed 107 Flexcars and Zipcars at 66 city and suburban stations. And
downtown Seattle has 35 Flexcars so that members can scoot across town for
lunch or a parent-teacher meeting. "Car sharing is not a silver bullet,"
says Ref Lindmark, a transportation planner for King County, Wash. "But it
gives people another reason to ride the bus." And, he adds, it is a lot
cheaper than building million-dollar parking lots and billion-dollar
highways.
Increasingly, businesses are seeing car sharing as a way to cut costs on
their fleets: Corporate accounts now make up at least 40% of Flexcar and
Zipcar revenues. Some companies even offer access as a perk to employees
by allowing use of the cars for personal errands--much as they might
subsidize a gym membership. In downtown San Diego, 14 corporations share a
fleet of 10 Flexcars, thus reducing their need to buy company cars. In
Seattle, URS Corp., an engineering firm, sold five of its nine fleet cars
after signing up with Flexcar, saving $ 12,000 a year in parking fees
alone. And in Manhattan, Elan Ackerman, who runs a small events-marketing
firm, uses Zipcars to pick up disc jockeys at the airport ("They like to
be pampered") and deliver cases of Tiger Beer, his main client. His
car-sharing bill amounts to $ 150 a month for both personal and business
errands. "It's become essential," he says. "Parking alone in Manhattan
would cost me $ 400 a month."
So far, sharing cars works best in dense city neighborhoods, where people
can easily walk to them. Last year Flexcar had to scale back temporarily
in Los Angeles, after scattering its 30 vehicles too widely among the
city's vast low-rise neighborhoods. Eventually, if car sharing makes
inroads in the suburbs, it would probably be in urbanized pockets, where
office complexes and subdivisions would see it as an extra amenity.
Wellesley College, in the Boston suburbs, makes Zipcars available to all
its students, and a score of other universities have also partnered with
car-sharing groups. In the end, however, convenience is fundamental. Even
Berkeley-based Shaheen, the acknowledged guru of car sharing, isn't a
member of the Bay Area's City CarShare because, so far, none of the
company's 85 vehicles are close to her home. "They'd have to put one at
the bottom of my hill," she says.
And then there is another small matter: Will animal lovers give up their
SUVs when they discover that car-share companies require Fido to be kept
in a pet carrier? "Leave the car cleaner than you found it--no hair, no
pee, no odors, no quills or feathers or yolks," warn Zipcar's rules. In
Seattle, the Steelquists are grappling with the issue, as their Australian
shepherd, Loki, takes a dim view of confinement. "Maybe someday they'll
have dog-friendly cars," says Joan, wistfully.

Tread warily, you deer-watchers: Turning nuclear sites into wildlife refuges isn't that easy

Tread warily, you deer-watchers
Feb 24th 2005 | DENVER
From The Economist print edition

Turning nuclear sites into wildlife refuges isn't that easy

AP

Bambi is enriched

ROCKY FLATS is as well known for its radioactivity as for its mule deer.
The 6,250-acre (2,500 hectare) swathe of prairie just east of the Rocky
Mountains was home to a secret factory that made nuclear-bomb triggers for
36 years until the federal government shut it in 1989 for safety reasons.
Now the government wants to make the site an example of environmental
regeneration. Rocky Flats is being cleaned up, at a cost of $7.2 billion;
in 2007 it is due to reopen as a wildlife refuge.
This happy conclusion, even under the government's plan, comes with a few
asterisks and caveats. The new refuge will exclude a central portion of
around 1,000 acres, which is too heavily laced with plutonium to be open
for anything. And, under a new conservation plan from the federal US Fish
and Wildlife Service, the whole area will still be relatively inaccessible
for humans. For the first five years, access for walkers will be limited
to a one-mile trail; after that, they will get 16 miles for hiking.
Hunters will also be restricted.
?It will be safe,? insists Joe Legare, who runs the local Department of
Energy office, as he walks along one of the ?hot spots? where workers are
cutting up and removing radioactive underground pipes. Rocky Flats is
supposed to be a model for other such sites. Another example, a little
closer to Denver, is the Rocky Mountain Arsenal, which last year became a
17,000-acre wildlife refuge.
From the government's point of view, turning nuclear sites into nature
reserves is thrifty environmentalism. It would cost a fortune to clean up
the site so that people could live there permanently; but making it safe
for ?wildlife-dependent? public use (meaning walkers, cyclists and
hunters) is more affordable. The law that backs the current clean-up was
sponsored by Congressman Mark Udall, a Colorado Democrat and a keen
outdoorsman himself.
Other locals are not so sure. ?Close it, fence it, pave it over,? a local
environmental engineer pleaded at a forum in Boulder last year. ?We should
declare this site a national sacrifice zone. Rocky Flats is America's
Hiroshima.? In January, Jon Lipsky, the FBI agent who led the 1989 raid on
Rocky Flats, claimed that there had been a cover-up by the energy and
justice departments about illegal contamination at the site; he has also
given warning that, even after the clean-up, the site will still be too
dangerous for hikers and cyclists.
Much is made locally of a study last year by the Fish and Wildlife Service
that found traces of plutonium, americium and uranium in two of 26 deer
culled from the ?buffer zone? around the weapons-production area. But the
service, which will run the refuge once it is cleaned up, insists the
traces were not significant. ?I'd certainly eat them,? says the local
manager, Dean Rundle.
In theory, fears about the clean-up will be answered by the General
Accounting Office, the investigative arm of Congress; it expects to issue
its final report by August. The grand-jury investigation into past
environmental mess-ups at the site has yet to reveal its findings. A
continuing problem for the government is the lack of trust among local
people, which dates back to the original testing.
The first person to testify before the grand jury was Jacque Brever, who
worked for a decade in plutonium recovery in one of Rocky Flats' most
dangerous areas. She suffers from thyroid cancer, which she blames on her
work, and has received scant medical compensation. ?The Energy Department
is just sitting around waiting for us all to die,? she says, insisting
that the refuge should remain off-limits to the public forever, except for
research.
The Department of Energy is not exactly paralysed. While cleaning up Rocky
Flats, it is thinking of building a new factory somewhere else to produce
a new generation of plutonium bombs.

6.3.05

Transparency, communications and trust key to successful partnerships with NGOs

Transparency, communications and trust key to successful partnerships
Ethical Corporation, 24 February 2005 - While NGOs and business do not
speak the same language, accurate translation of shared aims and
willingness to compromise is vital for any kind of working arrangement,
said experts this week.
A former director of sustainability and stakeholder engagement at
controversial firm Asia Pulp and Paper discussed lessons learnt from a
failed partnership at a conference in London on Tuesday
Arian Ardie, who recently parted company with the firm, explained what
went wrong with Asia Pulp and Paper's much publicised engagement with
nature conservationists, the World Wildlife Fund in Indonesia that ended
early last year, leaving APP with a tarnished image alongside its already
shaky finances.
WWF announced then that APP had failed to satisfactorily address its
commitment to stop illegal sourcing of timber for paper manufacturing
within the six months time it was given.
Drawing from APP's experience, Mr Ardie advised his peers from the
corporate sector, that transparency and trust are key to a successful
partnership with the not-for-profit sector.
"Disclose all, give specific numbers, if you don't they will make them
up", Ardie warned.
He also stressed on the need to follow through commitments and promises
made at the start of a partnership that should be laid out in as detailed
and transparent a language as possible.
"NGOs and companies don't speak the same language", Mr Ardie pointed out.
He said that while NGOs speak with "aspirational" language, companies are
more concerned with what is achievable in the realistic sense, making it a
very sensitive issue that needs urgent resolution.
Arian Ardie added it is crucial that companies and non-governmental
organisations clearly "define relationships". Speaking from APP's
experience, he said that the paper manufacturer suffered as it had not
entered into an agreement with the right WWF authorities, which became
evident later to the company.
Jonathan Wootliff, an independent engagement expert, blames NGOs for this
confusion.
"NGOs need to clarify and improve chains of command", he says. He adds
that NGOs usually send along "kids" to high-profile meetings who have a
tendency to "speak their mind" rather than represent their organisation's
standpoint.
Wootliff is currently involved in helping another Indonesian paper
manufacturer, April improve its sustainability track record and engage
better with campaigners like the WWF itself.
Most experts at the conference agreed that to sustain a healthy
partnership between businesses and non-governmental organisations, the
commitment has to come from the top on both sides. The knowledge of this
commitment when agreed upon should then be disseminated throughout the
organisation, especially the mid-management level.
Jonathan Wootliff added some more tips to these at the conference.
He warned companies from underestimating NGOs. He said that instead of
using partnerships as mere public relations opportunities, companies
should actively engage NGOs in their decision-making processes.
On the other hand, NGOs, Wootliff suggested should avoid making
accusations or pointing fingers at companies without checking the facts.
"Understand corporate cultures and politics, understand how business
works", he said.
Experts at the conference unanimously confirmed that both business and
NGOs stand to gain from partnerships, if there is mutual trust and respect
on both sides.

Greening Bush: An unusual, but sensible, suggestion for the homecoming president

Greening Bush
Mar 3rd 2005
From The Economist print edition

An unusual, but sensible, suggestion for the homecoming president
LAST week, George Bush made a great display of changing his tone on
Europe. Now that he is back on American soil, he might consider changing
his tone on an even bigger subject?the environment. Embracing greenery
would be good for Mr Bush, good for the Republican Party, good for
relations with Europe, and, above all, good for the environment.
This does not mean signing up to the Kyoto protocol tomorrow. That would
be too much to ask, and, given the incompetent design of the agreement, it
would also be wrong. But it does mean going out of his way to recognise
the importance of the subject. He should make it clear that his
disagreements with Kyoto are more about means than ends. And he should be
much noisier in championing his own brand of environmentalism?one that
regards market mechanisms as the best way of improving the environment,
and that treats economic growth as a long-term friend of greenery.
For many people, the idea of Mr Bush repositioning himself as an
environmentalist may sound ludicrous. This is a man who made his career as
an oil man and who sub-contracted his energy policy to his cronies in the
energy industry. These days, Republican environmentalism is usually
associated with preppie north-easterners such as Christine Todd Whitman.
Steven Hayward, a green conservative at the American Enterprise Institute,
points out that the environment is for conservatives what defence is for
liberals: they don't feel comfortable with it.
Yet Mr Bush has a surprising amount of credibility with Main Street
America on the subject. A recent Gallup/CNN/USA Today poll found that 49%
of Americans approve of his handling of the environment. Moreover, the
balance of power in the conservative movement may be changing. Some
neo-cons worry about America's over-dependence on such an unstable region
as the Middle East. Some fiscal conservatives worry about the impact of
America's appetite for imported oil on the dollar. And some evangelical
Christians worry that mercury pollution is damaging the unborn, and
pointedly ask what Jesus would drive. Support for strict environmental
regulation among evangelicals has jumped from 45% in 2000 to 52% last
year.
In fact, today's cool relationship between conservatism and
environmentalism is odd. Surely conservatism has something to do with
conserving things? Conservatives like to think that they are second to
none in their love of God and Country. But what could be more Godly than
good stewardship of the environment? (Just consult Genesis 2:15.) And what
could be more patriotic than keeping America beautiful?
Many of the founding fathers of modern conservatism were
environmentalists. Teddy Roosevelt expanded the national parks. Barry
Goldwater was a member of the Sierra Club. Senator James Buckley, Bill
Buckley's brother, was a leading supporter of the Endangered Species Act.
Ronald Reagan is often remembered for blaming trees for pollution. But he
was a notably green governor of California who warned that America could
no longer afford the ?bulldozer mentality?.
Environmentalism also makes good political sense for Mr Bush. It fits in
with his philosophy of ?big-government conservatism??his belief that
conservatives should use government to promote conservative values. It
helps his war against terrorism, by potentially helping to wean America
from its dependence on Middle Eastern oil. And it fits in with his
ambition to create an enduring Republican majority. The Republicans have
successfully branded themselves as the party of growth: 97 of the 100
fastest-growing counties in the country voted for Mr Bush. But why not
modify the brand to include smart growth? Plenty of suburbanites are
worried about sprawl and pollution.

Clean air, clear skies
Capturing this issue from the Democrats will not be easy. But three things
suggest that it is more than a fool's errand. First, the Republicans have
a much better story to tell on the environment than they are given credit
for, even by themselves. Gregg Easterbrook at the Brookings Institution
points out that George Bush senior's 1990 Clean Air Act pioneered the use
of ?cap-and-trade? rules to reduce the amount of sulphur dioxide that
coal-fired power plants emit. (Cap-and-trade rules establish targets for
reducing pollution, but leave companies to decide how to meet those
targets, including trading permits.) The result has been a substantial
decline in emissions of the harmful chemicals. Mr Bush's Clear Skies Act
proposes to use this cap-and-trade approach to cut the amounts of sulphur
dioxide, nitrogen oxides and mercury emitted by power plants by 70%.
The environmental establishment thinks little of the Clear Skies Act. But
it is in a sorry state. The Democratic Party is in danger of becoming
associated with ?command and control? legislation that is hard to enforce
and subject to time-wasting litigation. Younger environmentalists want the
movement to stop acting as a single-issue pressure group (which makes
sense) and start making common cause with the wider ?progressive? movement
(which could be political suicide).
Mr Bush should also recall that Richard Nixon had an even harder-boiled
image. Yet he was quick to embrace the new green cause. He created the
Environmental Protection Agency, passed a slew of environmental
legislation such as the Clean Air Act, and created more than 600 parks.
Perhaps Mr Bush can learn from Mr Nixon's dexterity.
The emergence of a Republican environmentalism would not only be good for
the party, but for the environment. The current monopoly of the subject by
the Democrats is a triple disaster. It institutionalises policymaking
gridlock. It marginalises environmental concerns. And it stultifies useful
thinking. The greening of conservatism is a revolution waiting to happen.

Greenpeace hails China's first renewable energy law

Greenpeace hails China's first renewable energy law
Agence France Presse, 1 March 2005 - China has passed its first ever
renewable energy law, drawing praise Tuesday from environmental campaigner
Greenpeace which said it had the potential to become a world leader in
sustainable development.
China's top legislature, the Standing Committee of the National People's
Congress, approved the law Monday as the nation battles acute energy
shortages and heavy pollution brought on by its rapid economic
development.
The law, which takes effect next year, requires power grid operators to
purchase resources from registered renewable energy producers, the China
Daily said.
It also encourages oil distribution companies to sell biological liquid
fuel, and offers financial incentives, such as a national fund to foster
renewable energy development, and tax preferences for renewable energy
projects.
The aim is to build up non-fossil energy sources such as wind, solar and
thermal power.
"The development and use of renewable energy has special importance
because China is a developing country with severe energy shortages," said
Standing Committee member Li Congjun.
Greenpeace applauded the legislation.
"China could and should be a world leader in renewable energy
development," said Yu Jie, Greenpeace energy policy advisor in Beijing.
"This law has been long anticipated by the global renewable energy
industry.
"If the definition of renewables and the details are right then the
international community will get behind China and support its ambition to
become an international clean energy powerhouse."
At the Bonn conference on renewable energy last June, China pledged to
increase its installed renewable energy generating capacity to about 60
gigawatts by 2010, about 10 percent of total power capacity.
The amount of renewable energy it currently generates is less than one
percent of the total.
Despite the efforts, China faces a challenging situation.
The world's most populous country relies on coal for about 75 percent of
its energy and coal-fired plants account for most of its pollution.
China is now the world's second biggest producer of carbon dioxide
accounting for a seventh of the global total. Only the United States is
worse, according to the International Energy Agency.

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

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.

Peter.b.davis@hotmail.com

Is the MBA responsible for moral turpitude at the top?

School for scandal
Feb 17th 2005
From The Economist print edition

Is the MBA responsible for moral turpitude at the top?

SEVERAL of the corporate scandals that took place in the early years of
this decade are currently being replayed in courtrooms from New York to
Alabama. The trials of top executives at HealthSouth, Tyco International
and WorldCom are reminding the public how unethical was the behaviour of
some of the nation's top managers only a few short years ago.
The finger of blame for this behaviour is sometimes pointed at the MBA,
the degree offered by business schools from Harvard to Hawaii. Perhaps
this is not as odd as it sounds. After all, MBAs lay as thick on the
ground at Enron as managerial hubris, and disinterested outsiders are not
alone in asking whether there might have been some connection.
In an extraordinary mea culpa, Sumantra Ghoshal, a respected business
academic who died last year, argued in a paper to be published shortly
that the way MBA students are taught has freed them ?from any sense of
moral responsibility? for what they subsequently do in their business
lives. This, he believed (and other respected academics, such as Jeffrey
Pfeffer of Stanford, are carrying his argument forward), is because
management studies have been hi-jacked intellectually by the dismal
science of economics.
A stout defence of the virtues of economics from a publication called The
Economist would hardly be a surprise. But, in fact, this is not necessary
to refute the claim that business schools are responsible for moral
turpitude at the top of corporate America. As it happens, most of the
erstwhile corporate leaders currently appearing in the dock never went
near one (see article), whereas many acknowledged champions of business
ethics, such as Lou Gerstner at IBM, did.
What's more, many of the top business schools have taken steps to offset
any ethically desensitising influence there may have been in their MBA
coursework. They have greatly expanded their teaching of business
ethics?some by introducing special courses, others in more memorable ways.
Tuck School of Business, for example, persuades an ex-convict to come
every year to tell its MBA students of his regrets.
The dubious claim that business schools are responsible for the moral
failures of their graduates decades after graduation does, however,
highlight one widespread misunderstanding about the role and purpose of an
MBA.
Mr Ghoshal and his supporters are right that top business schools strive
for academic respectability, and that this has led them to rely heavily on
economic theory. But they are wrong to criticise this. As long as schools
are teaching academic degrees (and, after all, the letters MBA stand for
Master of Business Administration), they have to teach the most compelling
business theories around. It may be a pity that these are mostly to be
found in economics. But that is the fault of other disciplines for not
coming up with ideas to rival, for example, agency theory or the
maximisation of shareholder value.
The real problem arises when students, or their new employers, believe
that an MBA is, somehow, a qualification for business leadership. It is
not, nor could any academic degree provide this. Law or medical degrees
are necessary but not sufficient for the making of outstanding lawyers or
doctors. In a similar way, a good MBA degree can help provide a student
with analytical skills and theoretical knowledge useful to a business
career. But becoming a successful leader of men and women in a turbulent
business world requires maturity and wisdom. Happily, there is no degree
programme for those.
Bad for business?
Feb 17th 2005
From The Economist print edition

Getty Images

Business schools stand accused of being responsible for much that is wrong
with corporate management today
THIS is the time of year when MBA students run not from classroom to
classroom but from interview to interview as they try to get the
high-paying job that they expect their qualification to deliver. It seems
that the demand for MBAs is now strong again, after four decidedly weak
years. ?The big eaters of MBA talent have regained their hiring appetite,?
says Ken Keeley, director of career opportunities at Carnegie Mellon's
Tepper School of Business in Pittsburgh. At New York's Stern School, close
to Wall Street, the number of jobs offered to this year's MBA class by the
beginning of this month was double that at the same stage in 2004. Better
still, average starting salaries in investment banking for Stern graduates
were?at $95,000?up by $10,000 from a year ago.
But just as the market value of an MBA is reviving, its academic
credibility is being attacked. In a forthcoming article to be published
posthumously in Academy of Management Learning & Education, Sumantra
Ghoshal argues that many of the ?worst excesses of recent management
practices have their roots in a set of ideas that have emerged from
business-school academics over the last 30 years.?
Mr Ghoshal was just such an academic, a professor at London Business
School until he died 11 months ago at the age of 55. He believed that the
desire of business schools to make the study of business a science, ?a
kind of physics?, has led them increasingly to base their management
theories on some of the more dismal assumptions and techniques developed
by economists, particularly by the ?Chicago School? and its intellectual
leader, Milton Friedman. These include supposedly simplistic models of
individual human behaviour (rational, self-interested, utility-maximising
homo economicus) and of corporate behaviour (the notion that the goal of a
firm should be to maximise shareholder value). These assumptions, though
in Mr Ghoshal's view badly flawed, were simple enough to allow
business-school academics to develop grand theories of management
supported by elegant mathematical models and empirical analysis that
appeared scientific, and thus earned their subject academic
respectability, but were, in fact, a pretence of knowledge where there was
none.

Fight fiercely, Harvard
Mr Ghoshal's article is particularly critical of the management theories
associated with two prominent Harvard Business School professors: Michael
Jensen, whose development of agency theory has encouraged business schools
to teach ?our students that managers cannot be trusted to do their jobs?;
and Michael Porter, whose ?five forces framework? has been presented to
?suggest that companies must compete not only with their competitors but
also with their suppliers, customers, employees and regulators.?
A particularly worrying feature of these theories, says Mr Ghoshal, is
that they have no ?role for human intentionality or choice?. And not only
do such theories falsely claim to be scientific, teaching them can make
them self-fulfilling. Business-school students learn that managers cannot
be trusted?so when they become managers their behaviour is of the
untrustworthy sort. Students have been freed ?from any sense of moral
responsibility?. Hence scandals such as those at Enron, where
business-school educated executives were prominent. And hence, perhaps,
future Enrons yet to be created by this year's much-in-demand crop of
MBAs.
Mr Ghoshal is not the only heavyweight academic to have come out with such
a mea culpa. Jeffrey Pfeffer of Stanford University's Graduate School of
Business, writes in the same journal that Mr Ghoshal ?if anything
understates the potential downside to the inculcation and acceptance of
economic language, assumptions and theory.? In support he refers to a
study in 2000 which found that a link between corporate size and the
number of citations for violating health and safety regulations became
stronger as the percentage of a firm's top managers holding an MBA rose.
In a book published last year, ?Managers not MBAs?, Henry Mintzberg, a
Canadian business professor and a long-time critic of the degree, wrote
that ?the MBA trains the wrong people in the wrong ways with the wrong
consequences?.
Not surprisingly, many business schools reject these claims. While Enron
was well stuffed with MBAs and led by Jeffrey Skilling, a man who liked it
to be known that he was near the top of his Harvard Business School MBA
class, the clutch of top executives currently on trial for corporate
corruption are notable for their lack of business-school qualifications.
Richard Scrushy started life as a humble hospital worker. His trial on 58
charges of fraud involving billions of dollars when he was boss of
HealthSouth, a health-care provider, is under way in Birmingham, Alabama.
?He didn't have a CPA accounting degree or an MBA in business
administration,? said his lawyer recently in mitigation. The jury has
heard a tape on which Mr Scrushy says to some of his staff: ?I'm gonna
talk, talk to y'all just real. This conversation did not take place. OK??
followed by: ?They ain't got nothing. They didn't ask me nothing about the
numbers.? This is not the sort of strategy taught even in the best
business schools.
Bernard Ebbers, the former chief executive of WorldCom, who is currently
on trial in Manhattan on nine charges of massive fraud and is often
described as ?an ex-milkman?, has no formal business qualification. Dennis
Kozlowski, the former boss of Tyco International, also currently on trial
in New York on charges of fraud and grand larceny, would like to have an
MBA. He once claimed one in his entry in ?Who's Who in America?. But the
truth is that he completed a few evening classes in business studies at
Rivier College, a little-known Catholic school in Nashua, New Hampshire.
He did not stay long enough to collect a qualification.
It is also hard to square Mr Ghoshal's claim that recent scandals were the
result of managers too eagerly trying to maximise shareholder value with
the fact that shareholders have been some of the main victims of their
actions. Nor for that matter is it true that everything taught in business
schools is presented as scientific: Harvard's method of discussing
corporate case studies, for example, is anything but scientific. And while
there is some validity to criticisms of using simplistic economic
assumptions?even the University of Chicago is losing its faith in homo
economicus?it is easy to see why recent high-profile corporate-governance
failures have mostly been viewed as evidence for, not against, agency
theory.
Yet judged by their recent behaviour, at least, many business schools
believe there is some validity to the criticisms levelled at them. Harvard
and Stanford are among those to have introduced ethics classes into their
MBA courses. At Tuck, a top-ranking school at Dartmouth College, MBA
students are taught case studies of moral dilemmas by members of seven
different faculties, including marketing, strategy and finance. In 2003,
the Association to Advance Collegiate Schools of Business (AACSB), a
standards-setting body which has all the top business schools among its
495 members, introduced new rules on teaching ethics in their curriculum.
Some business-school academics want the AACSB to go further and make
teaching a course on business ethics compulsory for accredited
institutions.
Certainly, such efforts in the classroom may help business schools to
repel the current attack on their reputation. This year's class of MBAs is
coming from more ethics-conscious schools and, indeed, is being hired by
more ethics-conscious businesses than any of its predecessors. But will
that be enough to make firms, or their managers, more ethical?