Business Respect - CSR Dispatches No#146 - 2 Feb 2009

An email newsletter with news and discussion focusing on corporate social responsibility globally, looking at the companies in the news and the emerging issues. Linked to the website at http://www.businessrespect.net and produced every two weeks.

This web page provides news stories and articles from the newsletters. Newsletters also include links to features on the internet, Mallen's blog, and other resources.

In this issue, we ask what really makes shareholder value, and is it really destroyed when the share price goes down.

Welcome

Eight years ago, I was finalising chapter headings for Business in the Community's "Winning with Integrity" report. At that point there was a chapter on ethics. A small amount of consultation with the membership soon expunged that title (not the content). You couldn't use the 'E' word and retain the attention or credibility of the board, we were told.

This, of course, was pre-Enron, pre-Parmalat, pre-Satyam. And pre-credit crisis as well, come to that. Today, top executives are expected to be able to talk the language of ethics, not just the language of business opportunity.

Talk is cheap. Any company will know that its reputation is dependent on the behaviour of its broader staff base. It's no good pleading that the CEO has a strong sense of personal ethics, if that's not reflected in how your business behaves - every customer transaction, every bid for new business, every difficult dilemma.

So it's not enough to have an ethics programme, with codes of conduct, you have to really make it effective. That's why I'm delighted to welcome Ethical Corporation Institute programme as an advertiser in this issue, with its new Best Practices in Ethics Programmes. The more people we can move from ticking the boxes with 'me-too' statements to really investigating what makes an effective programme to instil an ethical culture the better. Have a look at their ad further below, and check out the website.

Meanwhile, I have been fascinated by much of the to-ing and fro-ing on executive pay. The billions being paid out in bonuses by companies that have received taxpayer bail-outs have lead to a massive reaction, solidifying the image of the executives concerned as unreformably greedy.

But are the solutions being proposed the right ones? A number of companies are now agreeing that they will subject their remuneration plan to a shareholder vote. The main feature this time asks the question as to whether that might not be the wrong solution. It goes to the heart of the key questions of business and ownership - interested to hear your thoughts.

News

China: Death penalty handed out in tainted milk scandal

One of the men convicted of endangering public safety over the contaminated milk scandal in China has been sentenced to death.

New Zealand: Fonterra defends role in China milk scandal

Fonterra has defended itself from blame in the tainted milk scandal in China which killed six babies and led to 300,000 becoming ill. Last week, the chairman of Sanlu - the company in which Fonterra holds a 43 percent stake - was sentenced to life imprisonment.

India: PriceWaterhouseCoopers accused of Satyam cover-up

Police have said they believe that two auditors working for an Indian department of PriceWaterhouseCoopers assisted the chairman of Satyam in altering the company's accounts to cover up the ongoing fraud.

Norway: State investment fund shuns Textron and Barrick Gold

Textron, which owns plane manufacturer Cessna, and mining firm Barrick Gold, have become the latest companies to be blacklisted for ethical reasons by the $300bn Norwegian state investment fund.

Pakistan: Union campaign targets Unilever's Lipton Tea

The plight of 700 contract agency workers at a Unilever tea factory in Pakistan has been highlighted by a union campaign to get the workers granted permanent job status.

US: Suit over Pfizer's Nigerian drug testing reinstated

Lawsuits alleging that Pfizer tested drugs on Nigerian children without the consent of their families have been reinstated by the federal appeals court in the US. The court's ruling overturned a previous decision that said the case should be heard in Nigeria, not the US.

India: Thousands protest Vedanta bauxite mine

A ten mile human chain has been formed by thousands of protestors against a proposed bauxite mine to be operated by multinational Vedanta.

Article

What's the real value of a good business?

Author: Mallen Baker, dated 2 Feb 2009

Supposing I offered you a job, where at the end of the year I flip a coin and if it comes down 'heads' you get a huge bonus, and if it comes down 'tails' you get blame, shame and the sack. Would you be OK with that?

Previous edition - No 145 | Following edition - No 147