Sustainablog

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

22.3.05

Corporate accountability in a time of war

Corporate accountability in a time of war
EC Newsdesk
10 Mar 05
Let’s hope that Bush’s recent efforts toward reconciliation with the EU
mark a watershed for more international cooperation, and with it will come
a more united and international view of the responsibility of
corporations, writes Dale Neef

Kyoto not the only point of difference
I have often written about how differently many in the US view the subject
of corporate social responsibility from their British and European
counterparts.

In the US, CSR discussions are generally framed in terms of a much more
domestic agenda: corporate governance and Sarbanes-Oxley, executive pay,
philanthropy and support for the local community.

After more than a decade, many fundamental tenets of CSR that are a normal
part of EU nation discourse – supplier monitoring, independent supplier
audits, non-financial reporting, SA8000, AA 1000, the ETI – are still
almost completely unknown among the majority of opinion leaders in the
press, politics, business, and academia in the US.

In fact, this focus on domestic CSR issues has meant that US companies are
woefully underrepresented in many of the key areas of CSR that remain
important to EU advocates.

US corporations, for example, account for only around 10 percent of
non-financial reports, and of Sustainability’s Top 50 reporting companies
in 2002, only seven were US-based. Only a handful of the more than 200
large multinationals that have joined the UN’s Global Compact are
American.

Similarly, the number of CSR conferences given each year in the US is a
small percentage of those offered in Britain and Europe. Were it not for
Business for Social Responsibility (BSR), there would be no significant
consultancies or think tanks dedicated to CSR in the US.

And unlike the many European and UK business schools that are members of
the European Academy for Business in Society, it is rare for a US business
school to have courses dedicated to CSR. In reality, few American
executives could even explain what the GRI or SA8000 are.

Never black and white

There are many reasons, of course – cultural, legal, economic – for such a
different interpretation of CSR. But one thing that is seldom considered
is how the preoccupation with security and war in the past four years has
contributed to the unique way in which companies, politicians, and the
press in the US view the subject.

It is certainly true that since 2001, corporate accounting scandals,
terrorism, politics, Tsunami, and non-stop war coverage have dominated the
US newsprint and airwaves. So much so, in fact, that it has been rare to
find an article or documentary about sweat shop labor, the GRI, or
Sustainability ratings in the mainstream American press.

This preoccupation with other grave issues of our time could, in part,
explain why broader CSR issues (particularly those involving social and
environmental activities of overseas farms and factories) have simply
never risen to prominence in the US the way that they have in Europe and
Britain.

Maybe the pathos threshold simply has been too high for commercial
television and their sponsors to air documentaries or news stories about
mistreated workers in El Salvador alongside executive trials or scenes of
the terrible suffering in Iraq.

But I suspect there is an equally plausible explanation as to why the CSR
agenda in the US has not followed Europe in expanding into these areas in
recent times. It has simply been too uncomfortable, and too “unpatriotic”,
for the media and politicians to focus, during a time of crises and
uncertainty, on how US companies mistreat foreign workers or despoil
foreign environments.

Keeping Sam safe

In short, lambasting American companies for exploiting overseas workers at
the same time US troops were involved in day-to-day street fighting in
Iraq (and while Halliburton and Bectel themselves were taking a pasting
for impropriety and exploitation), would have drawn too many loose
parallels.

It would also have been seen by the conservative media as both insensitive
and unsupportive of the war effort.

After all, as the post-war occupation of Iraq has run into difficulties, a
sense of patriotic retrenchment seems to have gripped the nation (a flag
in the back window of every SUV).

Whether boycotting French wines, decking the aisles of grocery stores with
American flags, or calling for Kofi Annan’s resignation, politicians and
businessmen alike have struggled to demonstrate that they are more
patriotic and more pro-American than their competition.

And by logical extension, these same opinion leaders tend to be less than
active in criticizing the way that an American business or the military
behaves overseas.

In fact, despite George W Bush’s overtures toward reconciliation, the
reality is that cooperation with the EU (or for that matter, the UN or any
type of international contrivance from Kyoto to the International Criminal
Court, the Global Compact, or human rights standards set by the ILO), is
still seen by far too many in the US as just another example of dangerous
foreign entanglements.

Moreover, the recent lifting of quotas on Chinese textile and apparel
production along with recent moves by the EU to alter the embargo of
weapons technology to China, have alarmed many Americans on the right and
the left.

So to have the EU’s separate negotiations with Iran over nuclear
technology. All of these activities have added to the impression that
other nations – even those that were once friends – are increasingly
conspiratorial and competitive.

Even IBM’s rather innocuous attempt to sell its personal computer business
to the Chinese has raised hackles. Nearly four years after Bush’s infamous
assertion that “you are either with us or you’re against us,” there is a
palpable sense in the country of being a bruised and misunderstood nation,
more at odds with the world than at any time in recent memory.

Step change needed

In short, a protracted insurgency in Iraq, a “jobless’ economic recovery,
security fears at home, criticism by the world community, growing
competition from all quarters of the globe – has all made it much more
difficult to effectively argue in the commercial US press that American
executives and investors should be concerned about treating workers in
China or Thailand well in terms of wages or hours, health or safety.

At a time when politicians and unions are calling for tax penalties and
boycotts of US companies that “outsource” their labor needs by using
overseas workers, to believe in international brotherhood is to be labeled
as almost un-American. In short, it has simply not been the time to talk
about US companies behaving badly overseas.

Unfortunately, all of this has happened just when the key issues of human
rights and the global environment should be in the forefront of
discussions in the American business press.

As with Kyoto, given the dominance of US companies in the global market,
leadership, or at least endorsement, by US multinationals is crucial.

Let’s hope that Bush’s recent efforts toward reconciliation with the EU
mark a watershed for more international cooperation, and with it will come
a more united and international view of the responsibility of
corporations.

Dale Neef is a strategic management consultant and author of The Supply
Chain Imperative: How to Ensure Ethical Behavior in Your Global Suppliers.

www.neefescindex.org

The Last Word: Supply chain hot air: The current approach to managing corporate responsibility issues in supply chains does not work

The Last Word: Supply chain hot air
Peter Davis
16 Mar 05
The current approach to managing corporate responsibility issues in supply
chains does not work

“NGOs have, for a number of years, campaigned for companies to monitor and
manage the ethical performance of their suppliers.”

“The volume of goods that UK firms source from overseas markets where the
costs of production are lower has been steadily increasing for many
years.”

For anyone who has been around the corporate social responsibility debate
for more than five minutes, these comments would appear to be stating the
obvious. Not apparently for PricewaterhouseCoopers, from whose recent
report, “CSR and the Ethical Supply Chain”, these quotes are taken.
Written by PwC’s UK retail and consumer group, the report states its aim
is to “explore why companies are looking ever more closely at the wider
CSR implications of their sourcing practices”.

In this column a couple of months ago, I fulminated against the lack of
intellectual rigour in much that is published about corporate social
responsibility and, frankly, this report is precisely the sort of thing
that I had in mind. The development of corporate social responsibility as
a credible discipline and, more importantly, the provision of genuinely
helpful guidance to operational managers is not helped by the constant
appearance of “reports” that are as vague as this one.

The irony is that this particular report did not have to be like this at
all. The authors are highly experienced at working with companies on
factory auditing, and PwC has been at the forefront of the corporate
social responsibility debate for many years. With this sort of pedigree,
why publish something that reads like a marketing pamphlet instead of a
genuine contribution to the development of corporate responsibility
expertise?

At the heart of corporate responsibility

The ethical management of the supply chain is one of the most important
topics in corporate responsibility today. FTSE4Good announced its
procurement requirements a few months ago and the Make Poverty History
campaign has refocused attention on commerce in emerging markets. The
media too is once again talking about the link between free trade and
poverty. The BBC’s Panorama series, for example, has just screened a
programme examining wages and working conditions in the garment industry.

The problem is that the current approach to managing corporate
responsibility issues in supply chains does not work. Supply chain “best
practice” requires companies to collect vast rafts of information but does
not necessarily demonstrate that conditions in supplier factories are
improving. Let’s go into this in a bit more detail.

At the heart of the current approach is a standards-driven agenda.
Supplier factories are expected to comply with a prescribed set of
standards on labour conditions, health and safety and so on. Compliance is
then monitored through annual or semi-annual inspections.

But this approach does not guarantee that anything about the way a
supplier factory is run will actually change. It just guarantees that, on
the day that an inspection takes place, the inspectors will see what they
are supposed to see. Spot-checks make this less likely, but a factory
management team resistant to change can usually find ways around this too.

The other aspect of current procurement “best practice” is for companies
to send questionnaires to all their suppliers to collect “relevant”
information. Again, this approach is fundamentally flawed, for one simple
reason. Most of the information collected will be irrelevant – ethical
supply chain risks are specific to the supplier, the product and the
country. To collect the same information about every supplier simply
wastes everyone’s time. Suppliers have to fill in voluminous
questionnaires: their customers have to put together vast databases to
store the resulting information. Crucially, it may also mean that really
important issues get lost in this sea of information.

Focus on risk

The current model of ethical procurement needs to be changed. For a start,
it needs to be risk-based. Most of a company’s suppliers will not pose any
sort of corporate responsibility risk. Others will pose a significant one.
Developing a matrix to cross-reference the risk associated with the
country from which a product is sourced, the risk associated with the
product itself and the importance of that product to the purchaser allows
that purchaser to focus its efforts.

Second, it needs to be understood that real change will not come through a
rules-based process. Real change only comes from the development of a
relationship with the supplier through which it is possible to help them
understand the need to change. It also needs to be accepted that change
will not happen overnight, and that gradual, incremental steps are the
only realistic approach.

It is through their supply chains that companies have the possibility of
effecting huge change on corporate responsibility issues. The current
approach is broken and real effort needs to be put into developing a more
successful and durable one. This requires thoughtful and informed debate
and collaboration. It is a shame that PwC’s recent contribution missed the
chance to do this.

Nike Foundation to target welfare of developing world adolescent girls

Nike Foundation to target welfare of developing world adolescent girls
Lisa Roner
15 Mar 05
The Nike Foundation has announced it will focus its grants and use its
global reach to improve the lives and well-being of adolescent girls in
the developing world. This initiative is designed to help alleviate
poverty and gender inequality
The Nike Foundation's new development focus, announced in conjunction with
the celebration of International Women's Day last week, is to serve as a
critical link to help achieve the United Nations Millennium Development
Goals.

In partnership with organisations such as the United Nations Foundation,
the World Bank, the Population Council and the International Center for
Research on Women (ICRW), the Nike Foundation says it will support
projects that combine innovation with tested models.

A priority will be inspiring and mobilising support for girls' empowerment
and well-being through increased economic and social opportunities.

Positive effects

"Research has shown time and time again the ripple effect of positive
outcomes for girls and boys, communities, countries and the world when
girls and young women are provided with access to education and other
meaningful opportunities to participate more fully in life," says Maria
Eitel, president of the Nike Foundation and former Nike vice-president of
corporate responsibility.

Eitel says that, if given the chance, girls will play a critical role in
educating future generations, improving economic conditions and the state
of the world's health, as well as protecting natural resources.

Research and survey groups estimate there are more than 500 million girls
aged 10-19 in the developing world today. And more than 51 million aged
15-19 bear the burden of domestic responsibility, early sexual activity
and pregnancy.

Many face high rates of marital violence, unplanned pregnancies and
sexually transmitted diseases, including HIV/Aids. Poverty and cultural
norms, the foundation says, prevent many girls from gaining access to the
same education as boys.

To address these challenges, the foundation says it "will support
programmes in the areas of health, education and economic and social
opportunities through investment, advocacy and the development of 'safe
spaces' to help bring together and empower young girls while encouraging
freedom of expression, leadership and self-confidence".

Fully-inclusive support

But, Eitel stresses, the foundation's focus on girls does not exclude
boys. "Field results show that investing in girls also helps boys and
mobilises societies to everyone's benefit, so that, together, they can
seek positive change in the world around them," she says.

Projects totalling more than $5 million have already been selected for
funding in countries the foundation has identified as having the greatest
need, including Ethiopia, Bangladesh, Brazil and Zambia.

One of the group's first grants is more than $600,000 to the Bangladesh
Rural Advancement Committee to support the organisation's Employment and
Livelihood for Adolescents programme. The pilot project is using learning
centres to provide nearly 45,000 girls and young women in 1,500 rural
communities across Bangladesh opportunities to socialise and access
information on personal finance, life-skills and reproductive health.

Nike's annual contributions to its foundation are targeted at 3% of the
preceding year's pre-tax income. Nike has already given the foundation
more than $20 million over the past three years for its work.

The foundation says that because it knows its contributions will be
relatively small compared to the investments of larger foundations,
governments and international institutions, it will not "go it alone".

"Our model is based on injecting our human and financial assets where we
have the best potential for partnership and leverage to achieve scalable,
sustainable impact," Eitel says. "Today, we cannot predict the outcomes,
but we can say that we are willing to take risks and learn in order to
succeed."

An evolutionary step

Nike founder and chairman Philip Knight says the Nike Foundation is a step
in the evolution of Nike as an "engaged global corporate citizen" with a
focus on further investment in "human capital" not just where Nike does
business but "where there is the greatest need".

Nike, Knight says, believes the foundation's investments "will spark a
positive cycle of development", complementing the company's efforts to
improve its fundamental business practices.

The foundation's work will complement the community investments made by
the company, mostly through NikeGO, a global programme designed to use
sport and physical activity to bring positive change for young people,
Knight says.

Eitel says Nike has learned, through its corporate responsibility efforts,
the importance of its influence and "the need to use it effectively for
positive impact".

'A mature, ethical organisation'

The foundation, Eitel says, will publish annual activity reports, updating
its progress using monitoring and evaluation systems developed by its
partner, ICRW.

As a "new player in the field of international development," Eitel says
the group is "humble" in its expectations, but not "daunted" by the
challenges that it knows lie ahead.

"Nike has overseen significant improvements to the health and safety
conditions in its contract factories since the mid 1990s, for which it is
rightly commended," says Denis Arnold, a philosophy professor at the
University of Tennessee, Knoxville, and an author and frequent speaker on
the ethics of global capitalism.

"This new effort on the part of the Nike Foundation to support the UN
Millennium Development Goals suggests that Nike is evolving into a mature,
ethical organisation that is willing to be an active partner in the global
battle against poverty in a manner consistent with its global stature,"
Arnold says.

21.3.05

The end of the office affair? Boeing is particularly sensitive to embarrassment at the moment.

The end of the office affair?
Mar 10th 2005
From The Economist print edition

Harry Stonecipher and the perils of office romance

AFP

Get article background
LAST month, America's National Law Journal told its readers that
“employment lawyers are warning lovestruck co-workers to take precautions
in the office before locking lips outside”. The advice came too late for
Harry Stonecipher. The boss of Boeing was forced to resign last
weekend—for reasons that will strike many outsiders as absurd—after his
board were told of an affair that the 68-year-old married man had been
conducting with a female employee “who did not report directly to him”.
Inevitably, as the week rolled on, details of the affair rolled out. The
other party was reported to be Debra Peabody, who is unmarried and has
worked for Boeing for 25 years. The couple were said to have first got
together at Boeing's annual retreat at Palm Desert, California in January.
After that much of the affair must have been conducted from a distance: Mr
Stonecipher's office is at Boeing's headquarters in Chicago; Ms Peabody
runs the firm's government-relations office in Washington, DC. They
exchanged e-mails, it seems, as office lovers tend to do these days, and
therein probably lay Mr Stonecipher's downfall.

Lewis Platt, Boeing's chairman, said that Mr Stonecipher broke a company
rule that says: “Employees will not engage in conduct or activity that may
raise questions as to the company's honesty, impartiality, reputation or
otherwise cause embarrassment to the company.” Having an affair with a
fellow employee is not, of itself, against company rules; causing
embarrassment to Boeing is. It seems that the board judged that the
contents of the lovers' e-mails would have been bad for Boeing had they
been made public. Gone are the days when a board considered such matters
none of its business, as Citibank's did in 1991 when its boss, John Reed,
became the talk of Wall Street for having an affair with a stewardess on
Citi's corporate jet.
At Boeing, a whistleblower is said to have forwarded the messages to Mr
Platt. In general, e-mails are encrypted and not accessible to anyone who
does not know the sender's password. But many firms install software
designed to search electronic communications for key words such as, er,
“sex” and “CEO”. A study last year of 840 American firms by the American
Management Association found that 60% of them check external e-mails
(incoming and outgoing), while 27% scrutinise internal messages between
employees. Sweet nothings whispered by the water cooler may travel less
far these days than electronic billets doux.
Boeing is particularly sensitive to embarrassment at the moment. Mr
Stonecipher was recalled from retirement only 15 months ago, after the
company's previous boss, Phil Condit, and its chief financial officer,
Michael Sears, had left in the wake of a scandal involving an illegal job
offer to a Pentagon official.
Just a couple of days before Mr Stonecipher's resignation, Boeing had been
allowed by the US Air Force to bid again for rocket orders after being
banned for several years following the discovery that former employees had
stolen documents from a rival. In recent years, the company has become
increasingly dependent on defence contracts as it has been overtaken in
the commercial airline market by Airbus. Mr Stonecipher, a crusty former
number two at Boeing, was brought back specifically to raise the company's
ethical standards and to help it be seen in its main (and affectedly
puritanical) market, in Washington, DC, as squeaky clean. Verbally
explicit extra-marital affairs are inconsistent with such a strategy, it
seems, though they are not yet enough to bring down future kings of
England.
In corporate life, such affairs are hardly unusual. One survey found that
one-quarter of all long-term relationships start at work; another found
that over 40% of executives say they have been involved in an affair with
a colleague, and that in half of these cases one or other party was
married at the time. Many a boss has married his assistant and lived
happily ever after. Boeing apparently used to accept this: Mr Condit's
fourth wife was a colleague before they married.

Let him cast the first Stonecipher
It is only a slight exaggeration to say that office romance got a bad
name, like so many things, from Enron, where loads of intra-office sex
came with the territory for its masters of the universe. Jeffrey Skilling,
its chief executive, had an extra-marital affair with Rebecca Carter, an
Enron accountant whom he promoted to company secretary with annual pay of
$600,000. To avoid such scenarios, which can lead to claims of
favouritism, sexual harassment or discrimination, firms are increasingly
devising official policies on how to handle relationships in the
workplace.
Few try to ban them altogether, much as some corporate lawyers and
human-resources staff might like to. But many firms insist on relocating
one of the employees involved if they work in the same department. Some
ask employees who start such a relationship to sign a contract. Called
“cupid contracts” or “love contracts”, these bind signatories to behave
reasonably and follow the company's formal complaints procedure should
their affair break down. The headline to last month's National Law Journal
article was “Workplace ‘love contracts' on the rise”.
The Harvard Business Review (HBR) once published a case study of a
fictitious company called Glamor-a-Go-Go whose chief executive, Joe Ryan,
cheated on his wife with, among others, a 24-year-old called Kimberly
Crogan. Ms Crogan started her career in the office postroom but rose, via
the boss's bedroom, to become a factory supervisor. Commentators on the
case po-facedly pointed to the way in which bad behaviour in one area of
life is likely to reflect bad judgment in others.
The article, entitled “A Question of Character”, was written in 1999 by
Suzy Wetlaufer, later editor of the HBR and party to one of the most
notorious CEO extra-marital affairs of recent years. Ms Wetlaufer is now
the third wife of Jack Welch, for many years Mr Stonecipher's boss at
General Electric.