http://www.ttc-switch.com/dissertation_writing/ court (reportedly for some $30m) over allegations of complicity in abuses by government soldiers against villagers in Burma during the construction of a pipeline in the 1990s. However, the company denied any responsibility. Another oil company, Talisman Energy, discovered that being Canadian was no protection against a legal claim in the United States. It was facing a lawsuit by the Presbyterian Church of Sudan alleging complicity in genocide in Sudan, where Talisman had invested in the Greater Nile Oil Project--even though Talisman, under pressure from human-rights groups, had sold its stake back in 2002.
Time and again companies fail to see the problems coming. Only once they have had to deal with, say, a lawsuit or strong public pressure do they start to change their thinking. The CSR industry believes that a broader understanding of the world in which they operate can help companies manage these risks better (and, if they are lucky, grasp some opportunities too). "Much of the work we do is to get big incumbents to recognise a different future," says John Elkington of SustainAbility, a consultancy.
What might the next wave of trouble be? Corporate corruption, perhaps, speculates Toby Webb, the editor of Ethical Corporation magazine. In South Africa, for example, corruption is very much part of the CSR agenda. At two of Germany's biggest companies, Siemens and Volkswagen, heads have rolled because of corruption scandals. Mr Webb reckons this could become a much bigger trend over the next couple of years.
Chain reaction
For the moment, though, the biggest problem many companies have to deal with is something that has sprung from rapid globalisation. It is the risks associated with managing supply chains that spread around the world, stretching deep into China, India and elsewhere. For some, this is a challenge on a grand scale: Nike's contractor network, for example, involves some 800,000 workers.
Firms can set standards of behaviour for suppliers, but they do not find it easy to enforce them. Unscrupulous suppliers may cheat, keeping two sets of records, one for show, one for real. Others, under intense pressure to keep costs low, may cut corners--allowing unpaid overtime, for example, or subcontracting work to other firms that escape scrutiny.
And on top of the need to guarantee labour standards and product safety across an extended network, a new demand is starting to emerge: companies have to consider the environmental "sustainability" of their suppliers too. So inspection regimes are set to intensify, at a time when audit fatigue has already become a problem for suppliers. Surveys suggest that a typical garment factory may expect to be inspected 25 times a year. Levi Strauss, Timberland and others in the industry are starting to collaborate on inspections to reduce the burden on suppliers.#p#分頁標題#e#
Each industry has its own specific issues, but there are some common themes in how firms are approaching the risk-management side of CSR. One is to put in place proper systems for monitoring risk across the supply chain, including listing who the suppliers are, having well-established channels of communicating with them and auditing their compliance with ethics codes. Basic as it sounds, even many big companies fail to do this: 60% of the 2,000 large companies surveyed recently by Integrity Interactive, a risk consultancy, said they did not require suppliers to enforce a code of conduct. Only 42% regularly assessed ethics risk in the supply chain, and just 12% had a web-based portal for their suppliers.
Beyond the basics, prudent companies include a CSR perspective when considering new projects. In such cases CSR is not a public-relations exercise but part of systematic due diligence for new investments. The social and economic impact of the firm's existing operations is also closely monitored to reduce the risk of a backlash from local communities, activists or national governments.
Anglo American, a mining company, is among the most sophisticated in its approach to managing its social impact. It has developed a "socio-economic assessment toolbox" to identify local stakeholders, see how projects affect them and draw up plans to improve the outcome and develop trust. The company says this provides a better understanding of local interests and helps it to avoid potential conflicts. Last October Cynthia Carroll, Anglo's CEO, announced at the annual conference organised by Business for Social Responsibility in San Francisco that "as a contribution to spreading good practice" it would make the basic version of its toolkit publicly available.
Involvement in social programmes, especially in poor parts of the world, is an increasingly fashionable way for a company to burnish its brand and, with luck, protect itself from attack. Which self-respecting CEO these days wants to be caught doing nothing for Africa? But sometimes these programmes also have a clear business rationale. Anglo American, for example, says the $10m a year it spends on HIV testing and treatment in Africa is starting to pay for itself through reduced absenteeism and longer lives for skilled workers.
The big drugs companies, for their part, were greatly embarrassed by accusations of ignoring the needs of Africans dying from HIV/AIDS, so GlaxoSmithKline and others decided to make HIV drugs available for no profit. Merck has entered an innovative partnership to fight AIDS with the Bill & Melinda Gates Foundation and the government of Botswana, where the proportion of sufferers being treated is now the highest in Africa. Since 1987 Merck has also donated 1.8 billion tablets to treat river blindness, reaching more than 60m people a year in Africa, Latin America and the Middle East. All this helps to quieten the critics. The involvement in emerging markets may even prove a good investment in future growth.#p#分頁標題#e#
Novo Nordisk, a Danish company that supplies a big share of the world's insulin, has written the "triple bottom line"--that is, striving to act in a financially, environmentally and socially responsible way--into its articles of association. It reckons that having the creed anchored so firmly is making it more alert to both risks and opportunities.
Comfort in numbers
But risk management can be a lonely business. Mattel's monitoring of its suppliers is said to have been state-of-the-art, but that did not save it from costly embarrassment in China. With the best will in the world and the most energetic efforts to create codes, talk to stakeholders and support hospitals and schools, companies can still find themselves uncomfortably exposed, especially as what is expected of them can vary so much from country to country.
The answer, many have decided, is to spread the risk. Groups of them are getting together to agree on codes of conduct--usually within a particular industry, but also across industries and in consultation with governments, UN agencies and NGOs. This has become one of the most striking recent trends in CSR.
The mining industry, for example, has joined with governments in the Extractive Industries Transparency Initiative (EITI), launched in 2002 by Tony Blair, then Britain's prime minister, to tackle the problem of government corruption in resource-rich countries. Britain, America, Norway and the Netherlands, together with a number of NGOs and big energy and mining companies, have signed up to a set of Voluntary Principles on Security and Human Rights. The finance industry has adopted the Equator Principles, a benchmark for managing social and environmental issues in project financing.
There's more. Diamond producers encouraged the Kimberley Process, a certification scheme to combat trade in blood diamonds. The Forest Stewardship Council provides certification for the forestry industry and its products. A group of companies that want to find pragmatic ways of applying human rights in global business have formed the Business Leaders Initiative on Human Rights (BLIHR), which now has 14 members. Technology companies in America are working on a code of conduct on human rights, not least to avoid the sort of trouble that Yahoo! encountered in China. In Britain the Ethical Trading Initiative brings together retailers, trade unions and NGOs to support corporate codes that improve working conditions across global supply chains.
Such "multi-stakeholder initiatives" tend to involve companies that have elevated CSR to a strategic level. Some initiatives will not work: sitting down with competitors, let alone NGOs, is not easy. But the effort can be worth it. When Gap encountered a problem over child labour in India last October, the damage proved a "two-day wonder", according to Mary Robinson, the president of Realising Rights: The Ethical Globalisation Initiative. She reckons this was due to Gap's swift response and its involvement in initiatives like BLIHR (which she chairs). When Gap joined BLIHR three years ago it admitted it had some problems--and found itself winning praise for transparency rather than being pounced on for its transgressions.#p#分頁標題#e#
Whether these initiatives always serve wider interests (as opposed to those of particular firms) is harder to tell. Some companies may benefit more than others: for De Beers, for example, the Kimberley Process reduced a threat to the industry and if anything increased its own brand's dominance. The introduction of more humane conditions for textile workers in places like Bangladesh risks losing them their jobs unless productivity can be improved at the same time, stresses Alex MacGillivray of AccountAbility, a think-tank involved in a multi-stakeholder initiative called the MFA Forum. As for the EITI, there is some evidence that it has reduced corruption in Nigeria, according to Mr MacGillivray, though it may be just shifting the graft to other ministries. Some NGOs would prefer hard law rather than the "soft" rules involved in many of these initiatives.
How committed are companies to the rules they claim to live by, whether their own or an industry-wide code? "What concerns us," says Daniel Feldman of Foley Hoag, a law firm with a CSR practice in Washington, DC, "when most corporate-responsibility effort is on PR and communications, is that we don't know whether firms are actually implementing the rules." Is there a reporting requirement? Is the CEO keen?
For a few companies that want to be leaders in the world of corporate citizenship, the answer to those questions is clearly yes. And even if such companies first discovered CSR the hard way, by suffering a knock to their reputation, many now see it as more than just a tool of risk management; they are convinced that it can be a competitive advantage and a source of growth in its own right.
Nike, for example, came to the subject in defensive mode: it was attacked in the early 1990s, when the idea of corporate responsibility had barely surfaced. Now Hannah Jones, the vice-president of corporate responsibility (who reports to the chief executive), talks of "return on investment squared": to investors and to the community. She sees corporate responsibility as providing a fresh source of innovation. She no longer bothers to attend CSR conferences full of other corporate folk; these days she prefers to network with social entrepreneurs. And like many in the CSR world she has high hopes for more emphasis on "sustainability".
GRAPH: The business case
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