Lifeworth 2001 Review of Corporate Responsibility
Home | Introduction | January - March | April - June | July - September | October - December | Footnotes
---
April - June
Industrial relations goes global
---
Patients pending?
The most high-profile corporate responsibility issue in the first half of 2001 was whether pharmaceutical companies were helping or hindering the treatment of millions of HIV/AIDS sufferers in the South by their pricing and patenting of drugs. Early in the year there were signs that this issue was set to explode, with a number of intergovernmental, business and civil groups calling for action. The British development NGO Oxfam launched a 'Cut the Cost' campaign and challenged the largest pharmaceutical company, Glaxo-SmithKline, to address the issue of drug pricing responsibly. 1 Meanwhile, UN Secretary-General Kofi Annan repeatedly raised the issue of AIDS, and, at the World Economic Forum, the President of MTV, William Roedy, joined him in challenging the business community to become more involved in the fight against the HIV/AIDS pandemic. Roedy told Newsweek that 'business has been totally inadequate in its efforts'. He added that MTV, which can reach one billion people, could 'create passion among a complacent population'. Time magazine became involved, with a cover story on Africa's HIV/AIDS crisis. In their 'You Can Help' section, Time pointed readers toward Netaid.org, so they could donate money to AIDS projects. Joshua Cooper Ramo, Time's world editor, said: 'millions of people will die of AIDS in Africa in the next 15 years if the world doesn't start to do something about it. In addition to covering the story, Time has renewed its partnership with Netaid.org to deliver solutions that readers can get involved in. It's part of our ongoing commitment to global civic journalism.' 2 On 7 February The Boston Globe reported that the Indian pharmaceutical company Cipla had 'stunned the pharmaceutical industry' when it agreed to dramatically cut the annual price to Médecins Sans Frontières (MSF) of a year's supply of an AIDS drug cocktail to $350. Before the Bombay-based company dropped the price of its generic three-drug anti-retroviral package, the lowest price offered by companies that hold drug patents was around $1,000, while the same AIDS cocktail in the West would cost $10,400. MSF challenged the five pharmaceutical companies involved in the UNAIDS Accelerating Access Initiative to match Cipla's offer, make their prices public, and streamline the implementation process so that drugs can be delivered faster to patients. 3 One month later the global pharmaceutical company Merck announced that it would immediately cut the price of its HIV/AIDS treatments for patients in developing countries. Merck said that the new prices were the lowest ever for the developing world ($600 for Crixivan; $500 for Stocrin) and meant them forfeiting some profits on their sales. Merck President Raymond Gilmartin said their goal was 'to spur efforts to accelerate access to these life-saving medications in those developing countries where the HIV/AIDS epidemic has taken such a widespread and devastating toll'. World Health Organisation (WHO) representative Jon Liden welcomed Merck's move, and suggested it was partly in response to pressure from generic drug manufacturers (such as Cipla). However, criticism continued, with the director for international health research at the Center for International Development at Harvard University, Amir Attaran, arguing that the lowest-priced annual treatments were still more than the GDP per capita of many countries. There was a need for more companies to be producing AIDS drugs. Thus the focus shifted to patenting and the regulatory restrictions on the sale of copycat products. Former World Bank economist Joseph Stiglitz suggested that, by not taking action on patents, pharmaceutical executives were effectively saying, 'we don't care if people die; to us intellectual property rights are supreme'. Indian manufacturer Cipla threw the cat among the patents when it announced that it wanted the South African government to let it sell its generic version of eight HIV/AIDS treatments which were only permitted to be sold by the companies that held patents for them. The line had been drawn: patents or patients; profits or people? The question being asked was, 'Which side are you on?' "A line was drawn: patents or patients; profits or people? The question being asked was, 'Which side are you on?'" A fraught week passed when Bristol-Myers Squibb took a step across that line, announcing that it would no longer try to stop generic-drug makers from selling low-cost versions of one of its HIV drugs in Africa (the drug known as 'Zerit'). The company planned to make the drugs available under its existing ACCESS partnership programme with international agencies, including UNAIDS, the World Health Organisation, the World Bank, UNICEF and the UN Population Fund. John L. McGoldrick, executive vice president at Bristol-Myers, argued that the move was 'not about profits and patents ... We seek no profits on AIDS drugs in Africa, and we will not let our patents be an obstacle.' The move was welcomed, while some questioned why Bristol-Myers Squibb was going to the Pretoria High Court with 39 international pharmaceutical companies to challenge a South African law aimed at easing access to AIDS drugs. In its lawsuit, the Pharmaceutical Manufacturers' Association of South Africa contended that the law unfairly invalidated patent protections by giving the health minister broad powers to produce - and import more cheaply - generic versions of drugs still under patent. The fact that more than 4.5 million South Africans are currently infected with HIV, while five of the multinationals suing the government had global sales more than three times South Africa's national budget, was not lost on the world's media. 'It is indefensible for billion-dollar drug companies to take South Africa to court to stop it buying cheap essential medicines,' said Oxfam Policy Director Justin Forsyth. 'This court case demonstrates how powerful drug companies are bullying poor countries just so they can protect their patent rights on life-saving medicines.' It seemed to be a black-and-white story, in more ways than one. 4 The criticism mounted and within weeks the pharmaceutical industry dramatically dropped its case against the government. Corporate responsibility had become a major concern for the industry, to the extent that The Financial Times suggested the companies were fighting a price war as they sought to outbid each other and generic manufacturers to supply cheap AIDS drugs to Africa. This 'price war' reached a significant point when, in June, Pfizer Inc. announced it would offer an antifungal medicine at no charge to HIV/AIDS patients in 50 least-developed countries where HIV/AIDS is most prevalent. Cheaper drugs may help, but Dr Josef Decosas, director of the Southern Africa AIDS Training Program, warned that it would take a major co-ordinating effort to change the situation. 'Even if you make these drugs available for free, the systems to deliver them are not there ... they can't even distribute treatments for tuberculosis, which cost $1 a month', he said. 'HIV in Africa is contracted and spread through a web of causations - economic, developmental, social - and when you start focusing on a single solution, like anti-retrovirals, you fail.' As employers in Africa have existing administrative systems, it seems they could play a useful role. In May, companies began taking on this role, when the South African Chamber of Business backed a plan to make low-cost HIV/AIDS treatments widely available to company employees and families. The mining conglomerate, Anglo American, took the lead, saying that the estimated $4.5 million a year it will need to pay to treat its employees would be offset from savings due to fewer death benefits and less absenteeism. 5
Recognising the complexity of the problem and the new opportunity for action, UN Secretary-General Kofi Annan called on the pharmaceutical companies to join it, governments and civil society in the fight against AIDS by participating in a Global AIDS and Health Fund. The aim is to finance prevention measures and health services for HIV/AIDS patients in poorer countries, an endeavour estimated to require $7-10 billion annually.
However, an alliance of NGOs at the annual meeting of the WHO expressed concern that the new fund could serve the interests of the pharmaceutical industry instead of the needs of poor countries. The groups involved in the alliance - Health Action International, Health Gap Coalition, Act Up-Paris and Oxfam UK - argued that commercial interests should have no place in governing the fund. As the companies have no track record in tackling the AIDS problem, this scepticism is to be expected. Proving to be a positive partner for change on the ground is the only counter to the scepticism. 6
The dispute over AIDS could be the first high-profile battle in the 'war for drugs'. Some companies have realised that the issue of poor people's access to all drugs is 'in range'. Therefore, in a first step beyond AIDS drugs to other serious diseases, Swiss pharmaceutical company Novartis cut the price of a treatment for malaria - a disease estimated to kill around a million people each year. The company will sell Riamet to the WHO for $2 per treatment - about one-tenth of its price elsewhere, and around what the company states is cost price.
"The dispute over AIDS drugs could be the first high-profile battle in the 'war for drugs'"
Also in range is the issue of regulating intellectual property in a global economy. The AIDS dispute illustrates the ethical dilemmas that can arise when knowledge and its application are held back from those most in need. This raises the question of whether corporate citizens should push for governments and the World Trade Organisation to formalise more rules on Trade Related Intellectual Property (TRIP), or whether they should lobby for the creation of more flexible rules. The current fervour for enforceable TRIP agreements looks certain to set corporations on a collision course with the poor, with civil society and, indeed, with our moral selves. A sustainable global trading system should support executives and investors in meeting their own moral bottom line. Otherwise, moral outrage could risk the very concept of patenting itself. 7
The increasing instances of companies deciding not to enforce their intellectual property rights for drugs in developing countries can be welcomed. However, this will mean pharmaceutical companies have even less of a commercial interest in such countries than they do at the moment. This is important as these companies finance the majority of re-search into drug treatments. Currently, only 10% of medicines in development are for diseases that afflict those in developing countries. 8
GlaxoSmithKline (GSK) announced in June that it intended to tackle these difficult issues. It published Facing the Challenge, a report summarising the company's emerging contribution and commitment to improving the health and wellbeing of people living in the developing world. 9
Calling for greater collaboration, Jean-Pierre Garnier, GSK's CEO, said, 'If the health of the developing world is to improve, then all sectors of our global society - governments and international agencies, as well as the private sector - must work together in new kinds of partnership, backed by significant funding.' The company has established a Corporate Social Responsibility Committee, which is chaired by Sir Richard Sykes, non-executive chairman, GSK, to advise the board on issues of significance in the relationship between the company and society, and will keep the company's policy on healthcare in the developing world under review.---
Just money?
Research published in May suggested that company performance on social and environmental issues was already holding greater sway on the decisions of investment analysts, although institutional investors still need some persuading. A report commissioned by the UK company-led group, Business in the Environment (BiE), showed that a third of analysts judge environmental factors to be 'quite or very important' when evaluating companies - a sizeable increase from 1994 when only a fifth claimed the same. The figures for social issues have increased by an even greater margin, from an eighth to a third of analysts seeing them as important over the same period. However, the report, Investing in the Future, showed that only a fifth of investors identified environmental and social factors when asked to consider specifically non-financial indicators. Derek Higgs, chairman of BiE, thought, 'this survey shows that an appreciation of corporate environmental and social responsibility has grown in the City, and that the integration of economic, social and environmental strategies is valued'. 10 A new toolkit for pension fund trustees and fund managers was launched in May, to provide advice on how to improve the impact of pension fund investment on people in the poorest countries in the world. Funded by the UK's National Lottery, Just Pensions sets out clearly how to design and implement a Socially Responsible Investment (SRI) policy through positive engagement between pension funds and the companies they invest in. Checklists of sample questions for trustees and fund managers, and useful answers to questions about the legal implications of SRI, are included. Project co-ordinator Duncan Green said there has been a desperate need for 'clear guidance on best practice in areas such as labour standards, human rights and corruption. Just Pensions is the result of collaboration between pensions professionals and NGOs specialising in development issues. Managed by War on Want and Traidcraft Exchange, with an advisory group of experts from the investment world and NGOs, it is the latest example of the 'new frontier' of relations between business and NGOs outlined by Rob Lake and Jem Bendell in the book Terms for Endearment. 11 Formerly with the NGO Traidcraft Exchange but now working with the investment company Henderson, Rob Lake is one of many NGO staff who have been taking positions in the financial sector as SRI grows. An established player in SRI, the Domini Social Equity Fund caused a stir when it sold all of its 1.2 million shares in the retailer Wal-Mart. Firm president Amy Domini said that Wal-Mart was removed primarily because the company has refused to implement a monitoring system for the overseas factories that supply its inventory. A report from Domini states that the firm, along with a coalition of investors from the Interfaith Center on Corporate Responsibility (ICCR), approached Wal-Mart's management about using a third-party monitoring system for its factories, and Wal-Mart finally rejected the idea. FTSE, the UK-based stock market index firm, introduced four new indices that 'may help establish a global standard for socially responsible investments'. The four indices, named FTSE4Good, will consist of a tradable and a benchmark index for each of four geographical areas: the UK, Europe, the US and the rest of the world. The UK and European indices went live in June. According to FTSE, FTSE4Good is grounded in the principles put forth by global conventions on business conduct. Examples of such conventions include the Coalition for Environmentally Responsible Economies (CERES), the UN Global Compact and the Organisation for Economic Co-operation and Development (OECD) Principles for Multinational Enterprises. 'We want it to be a step towards encouraging companies to adopt socially responsible principles', said Mark Makepeace, FTSE Chief Executive, at a news conference. Makepeace also announced that licensing fees from the indices, estimated to be $1 million in the first year, would be donated to the United Nations Children's Fund (UNICEF). FTSE will evaluate a company's commitment to social responsibility by examining performance in three areas: minimising damage to the environment, supporting and protecting human rights, and fostering good relations with a full range of stakeholders. 12 For a number of years groups concerned about corporate responsibility issues have tabled motions at annual general meetings that call on the company to explain or abandon existing policy. One recent such case came when Friends of the Earth took its campaign against the Ilusu Dam in Turkey to the boardroom by purchasing US$43,000-worth of shares in the construction company Balfour Beatty in order to submit a resolution challenging the company's board to show that they care about their reputation and about their environmental and social performance. 13 Resolutions such as this rarely pass, and often campaigners regard 10% of shareholders voting in favour as a success. Yet these tactics seems to be having an increasing effect, behind the scenes. SocialFunds.com reported that many companies have been responding to shareholder resolutions on social and environmental issues, even before they reached AGMs. This year shareholder resolutions concerning equal opportunities and other employment issues have been particularly successful. These included resolutions on the disclosure of employment data, sexual orientation-based discrimination policy, glass ceilings, workplace violence, and policies concerning employees with disabilities. "Shareholder resolutions concerning equal opportunities and other employment issues have been particularly successful" For example, Walden Asset Management filed a resolution with American International Group (AIG), an insurance and financial services company, on policies to eliminate bias based on sexual orientation. The resolution was withdrawn when AIG agreed to adopt and implement a written equal employment opportunity policy barring discrimination on the basis of sexual orientation. 14 A resolution regarding glass ceilings was filed with Newell Rubbermaid, by Calvert Asset Management, but was withdrawn because 'Newell has committed to promoting women and minorities from within, and is now considering publishing a diversity report that would illustrate all of the company's programs', explained Nikki Daruwala, a Senior Social Research Analyst at Calvert. 15 Calvert was also in the news for its work with the World Resources Institute (WRI). Referring to the WRI report, Coming Clean: Corporate Disclosure of Financially Significant Environmental Risks, they called on the US Securities and Exchange Commission (SEC) to strengthen its enforcement of rules intended to protect investors. Currently, the SEC's guidelines and rules require companies to report not only information about current conditions affecting the firm, but also any known risks and uncertainties that are likely to have future significant financial effects. 'Few companies do a good job of reporting on environmental liabilities and risks. Our research shows that companies with significantly different environmental performance and risks are often indistinguishable from each other when evaluated by their annual reports. This lack of transparency could pose a heightened risk for investors', said Dr Julie Fox Gorte, Calvert's senior environmental and technology analyst. 16 more
---
Reporting rights
One notable success for shareholder activism was when the board of the Canadian oil company Talisman agreed to commission a social report on its activities in the Sudan. The East African country is caught in a civil war, and there has been criticism of government attacks on the south of the country, which Christian Aid argues is motivated by their desire to control the oil reserves there. A variety of human rights groups have criticised the oil companies Talisman, TotalFinaElf, OMV, Lundin and BP (via PetroChina) for aiding the government's military effort through their direct or indirect involvement in oil exploitation in Sudan. 17 This year Talisman published its social report on Sudan to mixed reaction. Using an approach pioneered by The Body Shop Values Report in 1995, Talisman published comments from a range of stakeholders, both positive and critical. The comments were chosen by consultants from PriceWaterhouseCoopers (PwC) as reflecting the views of stakeholders. For example, on the key issue of whether Talisman should pull out of the Sudan, two opposing views were presented. A Church leader, from the capital Khartoum, was quoted as saying: 'we the churches actually feel that the oil exploration should be suspended until peace is achieved'. As counterweight, the Director of a Nairobi-based International NGO operating in Southern Sudan was quoted as saying: 'If you pressure Talisman to leave Sudan then will the remaining actors take any action to address these critical issues? At least Talisman have taken notice and responded.' Representing stakeholder views in this way is an interesting device, although it raises the issue of the legitimacy of the quoted stakeholders, in terms of their own accountability and independence from commercial interests. In the specific example quoted above, the level and nature of community embeddedness and responsiveness of a Church group and an international NGO would be different. Presenting opposing views in this way gives the impression that there is a legitimate debate, so it is not a neutral device. More information on the stakeholders is required. "Presenting opposing stakeholder views that there is a legitimate debate, so it is not a neutral device. More information on the stakeholders is required" Talisman's report chronicled some important social development work. However, in May, Amnesty International (AI) released a statement criticising the report for 'underplaying the serious violations being perpetrated' and thereby 'not accurately reflecting the overall human rights situation'. They pointed to confirmation that, in spite of Talisman's advocacy against the use of oil infrastructure for offensive military purposes, there were four instances of non-defensive usage of the airstrip at Talisman's operations in Heglig, in 2000. An independently funded investigation in April by journalist John Ryle and the international human rights lawyer Georgette Gagnon concluded that military usage had been 'considerably higher' - and that it continues. The investigation determined that at least two of the governments' helicopter gunships are based at Talisman oil facilities in Heglig. 'Defecting soldiers from the Government of Sudan army base in Heglig and civilian victims of gunship attacks testified to investigators that gunships have flown regular sorties from Heglig to attack civilian settlements', they report. The key issue for many critics is whether the companies should continue operating in the country when the revenues the government obtains from oil operations are funding their war effort. Talisman respond that 'the expenditure by a sovereign government of its revenues is an issue that the company has limited ability to address', and cite some examples of their advocacy efforts to encourage the government not to use oil revenues for military purposes. However, groups such as Christian Aid and AI argue that all oil companies should freeze their Sudanese operations now, as they believe this will make the government listen to calls for peace. As the companies involved have yet to respond in this way, the NGOs have called for more action by governments where the multinational corporations are headquartered, in order to make them act on human rights. In June US House of Representatives passed the Sudan Peace Act [H.R. 2052]. The Act requires companies wishing to raise capital in the US for operations in Sudan to enhance their reporting requirements, specifically to disclose their relationship to violations of human rights in Sudan. Africa Subcommittee Chairman Ed Royce explained: 'This report will be a valuable tool in alerting American investors to the nature of their potential investment. This should serve as a deterrent to foreign companies raising money on US markets for oil development activities in Sudan.' more
In May Premier Oil also published a social report on its operations in Burma (Myanmar). This is a country under a military regime where, according to The Burma Campaign (UK), eight million people, including children, are used as forced labour each year, with the threat of torture, murder and rape, and where one million others have been forcibly displaced from their homes. 18
The leader of the elected government, Nobel Peace Laureate Aung San Suu Kyi, under house arrest for years, had asked Premier and other companies to leave the country, in order to cut funding to the military dictatorship. Her call was backed by the UK government, where this relatively small oil company is headquartered. In a similar fashion to Talisman, the company downplays this issue, with their manager of corporate responsibility Richard Jones arguing that 'it's not our company's role to question the money going to the government or what use it makes of it'. Instead, the report, researched and written by the consultancy EQ Management, and reviewed by Warwick Business School's Corporate Citizenship Unit, focuses on the impact of the company on communities living near the oil pipeline - who were consulted by researchers hired by the company. Warwick's review argues that the repressive environment 'unavoidably compromises the ability of Premier Oil's community stakeholders to be fully expressive'. more
The business case for social reporting stems from its place within a process of building positive stakeholder relations. By ruling out the key issue of funding dictatorships on the one hand, and attempting dialogue with threatened communities on the other, this report might not facilitate this goal. Instead, the report has brought renewed attacks on the company, in the mainstream media such as The Financial Times. Premier's efforts do not appear to satisfy the principles of inclusivity and relevance, nor uninhibited stakeholder dialogue, set out in the Institute of Social and Ethical AccountAbility's (ISEA), AA1000 standard. 19 However, the media attention attracted by these contentious reports should concern the wider social auditing and reporting community, as it risks the reputation of the emergent profession. Professional bodies such as ISEA will need to show leadership in communicating what is and what is not acceptable in this field, and rapidly implement procedures for accreditation, peer review, complaints and, if needs be, sanctions.
"The business case for social reporting stems from its place within a process of building positive stakeholder relations"
Unfortunately, Sudan and Burma are not unusual as countries where profits are being used to fund conflict (directly or via tax). In May, Global Witness announced that recent investigations have found that profits from the Liberian timber trade have been financing the conflict in Sierra Leone, and called for an embargo (China and France are the top importers of Liberian timber). 20 This follows the controversy surrounding the diamond trade with Sierra Leone, and the campaign by Amnesty International for the industry leaders Hoge Raad voor Diamant of Antwerp and the DeBeers group to take effective measures to develop a tamper-proof system to prevent 'conflict diamonds' from entering the international market.
The seriousness of these issues makes it important that the UN Global Compact has prioritised work on business in conflict zones. In addition, UN Secretary-General Kofi Annan has asked Undersecretary General for Africa Ibrahim Gambari to work with oil firms to push the peace process forward in another war-torn country, Angola. 'What we are saying [to them] is be an ally in the peace process', Gambari said in a Reuters interview. He said oil companies operating in Angola could contribute to peace efforts because they have 'leverage on the government', adding that 'the government will listen to them.'
Governments have also been encouraging oil companies to take a lead on these issues, although not through regulation, as the NGOs Christian Aid and Amnesty International have been calling for. One initiative involved seven leading oil and mining companies signing a voluntary code of conduct on human rights issued jointly by the UK Foreign Office and the US State Department. The principles, which seek to curb abuses at facilities in developing countries, require companies to observe the UN Declaration on Human Rights, to recognise the importance of business support for human rights, and to be open about their actions and experiences.
The new code was the product of 18 months of discussions between the companies, NGOs and the two governments, making it the first instance of the three sectors agreeing a code for ethical corporate conduct. The seven include US oil companies Texaco, Chevron and Conoco, and BP Amoco and Shell from the UK. ExxonMobil, the largest oil producer, has yet to endorse the principles. Mining groups Rio Tinto and Freeport-McMoRan have also endorsed the principles. Amnesty International welcomed the development, but said only mandatory codes would ensure compliance. It added that 'companies need to recognise that guidelines like this are only credible if they are enforceable'. However, John Bray, a consultant at security specialists Control Risks Group, said NGOs could be expected to enforce the code. 'If companies publicly subscribe to these principles, then they can be held accountable', he said. 21
---
State-of-the-art reporting
To those who have been observing the move towards social and environmental reporting over recent years, the name of Novo Nordisk will be familiar. This Danish company has taken a lead on corporate social responsibility practice and reporting. Now de-merged into Novozymes and Novo Nordisk under the overall Novo Group, the company has released its year 2000 report, Values in a Global Context. 22 Novo Group's approach to its social responsibilities begins with its Charter that 'company activities, practices and deliverables are perceived to be economically viable, environmentally sound and socially fair.' There were two types of assurance given for the report. First, there was assurance by Deloitte & Touche that the quantitative statements are correct. Second, there was a type of 'civil assurance' for the relevance, completeness of the report and the process behind its production, given by Simon Zadek, chair of ISEA. Key points of contention could relate to Novo's biotechnology work, its use of animal experimentation, and its position as a pharmaceutical company. (see above)
However, when reading the report these issues seem buried. Although the company consulted with stakeholders, it is difficult to see who was contacted, how they were contacted, who refused to participate and what the range of views on controversial subjects was. Although the company refers to the concept of 'accountability' throughout the report, one could argue that the accountability of those who give assurance could be open to some question.
While Novo Group might be satisfying the few experts in the emerging field of social reporting, this report does not appear to satisfy the dual objectives of risk management and innovation through dialogue. Could an investor be sure that Novo Group is well placed to reduce the risk to its reputation by satisfying stakeholders, or well placed to innovate products and processes by having positive relations with these stakeholders? It is not certain from this report. As social and sustainability reporting continues to evolve, what is not included in such reports is likely to be a source of growing debate.
"As social and sustainability reporting continues to evolve, what is not included in such reports is likely to be a source of growing debate"
Although a number of criticisms can be made of Talisman's and Novo's reports, the fact that they have reported on social issues is a major step forward - a step that the vast majority of companies have not yet taken. The UK-based Industrial Society estimated in their report, Corporate Nirvana: Is the Future Socially Responsible?, 23 that only 4% of FTSE 350 companies report on their social performance.
The need to mainstream social and environmental reporting highlights the importance of the Global Reporting Initiative (GRI). As the earlier news about pharmaceuticals and AIDS, oil companies and conflict illustrates, many corporate responsibility issues are highly contentious. Therefore, reporting protocols need to be developed in a way that satisfies a wide range of stakeholder views. The GRI's multi-sectoral approach has been hailed as key to its progress. In Nairobi, Kenya, at the opening session of the Governing Council of the United Nations Environment Programme (UNEP), UNEP Executive Director Klaus Töpfer told national representatives, including ministers and senior government officials from more than 150 countries, that the United Nation's relationship with CERES and the rapid progress of the GRI should be viewed as leading examples of how successful partnerships with civil society can create international change. 24 more
How might governments support voluntary corporate responsibility initiatives? A first step is to specify them in their contracts with companies. GRI recently reported what it believed to be the first specification of its Guidelines in a legal contract. Wisconsin Electric (a private US utility) and the Wisconsin Department of Natural Resources (a government agency) signed an Environmental Co-operative Agreement which, among other things, requires Wisconsin Electric to prepare an annual environmental performance report in accordance with GRI's Sustainability Reporting Guidelines. As part of the agreement, Wisconsin Electric must demonstrate measurable improvements on a variety of criteria, and in return will benefit from more flexible regulation. 25
---
Industrial relations goes global
The history of industrial relations has, in many parts of the world, been characterised by confrontation. In the last couple of years, however, the possibility of a new era of collaborative global industrial relations has come into view. New framework agreements are being signed by multinationals and international federations of trade unions. These agreements allow unions to deal with corporations at a global level on the basis of common principles, including fundamental workers' rights that are incorporated in the core conventions of the International Labour Organisation. Among the international union organisations that have reached such agreements are the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF), Union Network International (UNI), and the International Federation of Building and Wood Workers (IFBWW). "A new era of collaborative global industrial relations has come into view" One of the earliest agreements was signed between the oil company Statoil and the International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM) This was renegotiated this year to incorporate principles contained in the UN Global Compact. Statoil operates in 23 countries worldwide, and employs about 16,000 people. The pact with ICEM 'makes good business sense', said Geir Westgaard, a Statoil vice president. Complying with and furthering the Global Compact in co-operation with trade unions 'is part of securing our "licence" to operate internationally', he said. 'If you are in business in challenging areas of the world, you absolutely want and need to act ethically, sustainably and socially responsibly.' Reflecting on the huge challenge of integrating values and principles into everyday business practice across the globe, he noted that 'the unions as well as the NGOs are globe-spanning knowledge-based organisations… They give us early warning of problems we should be aware of, and allow us to take early action to mitigate risks.' Jim Baker, director of the Department of Multinational Enterprises Organising and Recruitment at the International Confederation of Trade Unions (ICFTU), noted that, 'in a little over a year, we have gone from two framework agreements between international trade secretariats and multinational companies to nine'. Suggesting that this is the beginning of a new collaborative era of global industrial relations, Mr Baker said that, 'just a few years ago, only a few corporations would have been willing to seriously discuss anything with unions at the international level.'
---
Earth summit preparations
In April the Chairman of Shell, Sir Mark Moody Stuart, launched a new initiative aimed at rallying the collective forces of world business in the lead-up to next year's Earth Summit, which is taking place in Johannesburg ten years after the first summit in Rio de Janeiro. 26 At a press conference in the United Nations, Sir Mark unveiled 'Business Action for Sustainable Development' (BASD) - a new initiative he said would provide a focal point for business preparations. He said that 'many of us in business believe we have come a long way since [the First Earth Summit in] Rio. We want to now take a seat at the table, listen to what other members of society have to say and discover what role we have to play in the development and delivery of a sustainable future.' The BASD is a joint initiative of the International Chamber of Commerce (ICC) and the World Business Council for Sustainable Development (WBCSD), which was established for the first Earth Summit by Stephan Schmidheiny. Not everyone welcomed this news; there were those concerned that companies with interests in fossil fuels might undermine the process. The NGO CorpWatch warned that the BASD would be scrutinised and monitored by NGOs concerned with corporate influence at the UN. 'These are the same discredited companies that attempted to greenwash themselves at the first Earth Summit in Rio, and have been slowing environmental progress ever since', said Kenny Bruno, UN Project Co-ordinator for CorpWatch. Sir Mark recognised that there would be some scepticism, and suggested that, 'by acknowledging that a future built on sustainable development is very much in the interests of business, people will realise that there's an element of self-interest and hopefully a lot of the suspicion will flow away.' With the Kyoto agreement now in hot water following the Bush administration's decision to refuse ratification, climate change will be a primary concern for the Earth Summit. The fact that the business contribution will be headed by an oil executive won't help convince critics that business will support the action needed. 'It is especially ironic that a Shell executive is taking this role, because through its actions Shell became a symbol of environmental destruction and complicity in human rights violations in the 1990s', said Victoria Corpuz, Executive Director of Tebtebba Foundation, an indigenous organisation based in the Philippines. Kenny Bruno said: 'If they want us to believe they have become part of the solution, they will have to prove it.' 27 While Shell's leadership on social and environmental issues raises questions, another company's lack of leadership has placed it on the hit-list of groups concerned about climate change. Seen as a major funder and influencer of the Bush presidency, Exxon is being blamed for the US administration's refusal to ratify Kyoto. While George Bush witnessed protests from climate activists across Europe in June, the groups Greenpeace, Friends of the Earth and People and Planet jointly launched a boycott of Esso (the consumer brand of Exxon in Europe). Will the impact of StopEsso.com make companies aware of their wider responsibilities before making political donations in the future? "Will the impact of StopEsso.com make companies aware of their wider responsibilities before making political donations in the future?"