NO HIDING PLACE FOR THE IRRESPONSIBLE BUSINESS

By Alison Maitland

The food industry is blamed for obesity. Mobile phone operators are challenged to protect teenagers from online pornography. Record companies are attacked when they sue music-lovers for sharing illegal files on Internet.

Big business is being asked to explain its approach to a growing number of social, ethical and environmental concerns.

“We`re facing the greatest demand for our assistance that we`ve seen in our nine-year history”, says Bob Dunn, Chief Executive of Business for Social Responsibility (BSR), a US non-profit advisory organization whose annual membership includes many top multinationals.

Microsoft, Lucent and United Technologies have joined BSR this year, as well as Altria, a more obvious target for pressure groups litigation, as the parent company of both Kraft Foods and Philip Morris.

Industries that until now had avoided the spotlight are finding attention is now focusing on them. Campaigners are beginning to show interest in working condition in factories in the developing world that make equipment for computer and telecommunications companies.

The financial sector has come under pressure over lending to controversial projects in the developing world. In June, a group of leading banks, including Citigroup, Barclays and ABN Amro, promised to avoid giving loans for socially or environmentally questionable projects.

Oil and mining groups have come under strong pressure this year from a coalition of investors, activists and the UK government to make public their payments in an effort to fight corruption.

Some of the word`s biggest footwear and clothing brands, including Levi Strauss, Nike and Reebok, have meanwhile taken voluntary measures through the US Fair Labor Association to increase the transparency of their supply chain. They published on the Internet the first independent audits of their supplier factories, along with the steps taken to improve often terrible labour standards.

Companies usually take action when they face a real or potential threat to their reputation, as when Kraft announced in July it would cut fat and sugar in its food, limit portion sizes and stop marketing in schools. A lawsuit against Kraft over fatty acids was rapidly withdrawn after it said it would address the issue.

A few companies are, however, taking a lead because they believe it will give them a competitive edge. Mr Dunn says the search for competitive advantage is one factor creating interest in corporate responsibility among companies in countries such as Russia, Poland, Turkey and South Africa.

In the UK, the trend is also reflected in the sharp rise in social and environmental reporting over the past two years. More than half the FTSE250 companies now produce annual reports, according to Directions, a study published this month by SalterBaxter and Context, two well-known UK consultancies.

Some sectors remain secretive, including hotels and leisure, and software and computer services. But they form a decreasing minority as investor interest, regulation and peer pressure combine to force greater disclosure.

When the fist non-financial reports came out more than a decade ago, they focused on the environment. Now 100 of the FTSE250 cover environmental, social and ethical issues. Forty of the fifty largest European companies also produce reports. In the US, however, only 22 of the S&P top 50 reported, the study found. But how much can companies be expected to achieve on their own? What is the role of government? Can consumers have it all, demanding such high standards of companies while refusing to change their lifestyle?

From the Financial Times

VII. In your opinion, do the following activities, several of which are not illegal, conform to the basic rules of society, or not? What would opponents (people who argue against) or proponents (people who argue in favour) say?

1. Bribing corrupt foreign officials in order to win foreign orders, on the grounds that where bribery is a way of life, you have no alternative if you want to win a contract.

2. Industrial espionage - spying on competitors' R&D departments with concealed cameras and microphones, bribing their employees, etc. — rather than doing your own expensive research and development.

3. Selling supposedly durable goods with 'built-in obsolescence', i.e. which you know will not last more than a few years.

4. Spending money on lobbying, i.e. trying to persuade politicians to pass laws favourable to your particular industry.

5. Telling only half the truth in advertisements, or exaggerating a great deal, or teeping quiet about the bad aspects of a product.

6. Undertaking 'profit smoothing', i.e. using all the techniques of'creative accounting' to hide big variations in profit figures from year to year, and threatening to replace the auditors if they object.

7. 'Whistle blowing', i.e. revealing confidential information to the police or to a newspaper, e.g. that a company is breaking health and safety regulations and therefore putting people's lives in danger, or illegally selling arms to foreign dictators.

VIII. Read and discuss, providing your own examples:

Date: 2015-12-17; view: 5580