Daniel Suchenski 蛋蛋的西游记 a story of Sustainability

A Forgotten Policy Memo For A Forgotten War - 2008

2011-08-08T18:10:00.003-04:00

Photo By Daniel Suchenski

Policy Memo: Conditions for Democracy in Afghanistan

By Daniel Suchenski

While America’s war on terror rages in Iraq and occupies most of the United States

time, money and effort, it is not the only war America faces. To the East of Iraq lies the

larger and equally complicated situation of Afghanistan. Sometimes called the ‘forgotten

war,’ the war in Afghanistan faces the same problem of reconstruction and stability. While

it has been America’s stated intention to democratize and make Afghanistan free from

terrorist elements, establishing democracy is sometimes harder than some would like. The

military successes in Afghanistan have demonstrated the awesome technological prowess

of the U.S. military, however, as the campaign evolves into a nation-building operation,

America has found that our skills in the social and political arena do not match those of our

military. It seems clear that given the historical and current situations of Afghanistan, the

country is not yet capable or willing to embrace real democracy. It therefore seems clear

that the United States should reexamine its long-term commitments to the country and look

for more stable yet open minded government that is in time with the desires and needs of

the people of Afghanistan.

Historically speaking “Afghanistan has never had ruling elites who sincerely

advocated democratic principles.”1 This lack of support from the elites is part of the

unsuccessful story of democracy in Afghanistan. Even attempts at parliamentary

institutions by Zahir Shah in the 1960’s to “modernize Afghanistan’s educational system

and initiate political reforms.”2 Unfortunately the reforms that Zahir implemented “fell far

short of real democracy” because ultimate authority still remained in the hands of the king.3

This imbalance of power meant that the Zahirs parlimentary institutions lacked “the

decision-making authority of a truly democratic representative legislature.”4 Recently

President Karzai and leaders of at least some of the country’s main ethnic groups now

support democracy in principle.5 However, “tribal leaders and a large number of local

officials in Afghanistan’s provinces remain determined to uphold traditional laws and

customs, in contravention of democratic principles and Afghanistan’s new constitutional

order.”6

This is not the first time in Afghanistan’s history that tribal leaders and local

officials have stringently upheld traditional laws and customs and resisted change. In the

early twentieth century Amanullah Khan ascended the throne, a progressive leader

Amanullah Khan “gave Afghanistan its first constitution, placing the king under the rule of

law and establishing the legal equality of all citizens.”7 Taking his reforms further

Amanullah Khan “encouraged Agfhan women to study abroad and participate in public

life.”8 The reaction to Amanullah Khan’s social and educational reforms “triggered fierce

resistance throughout the socially conservative countryside”9 The resistance against the

reforms reached such an extent that Amanullah Khan and his government were unable to

suppress the revolt, and forced Amanullah Khan to flee abroad in 1929.10 More than forty

years later the resistance to reform from the tribal leaders and local officials that forced

Amanhullah Khan to flee from Afghanistan would once again be tested. A coup lead by a

radical faction of Afghanistan’s communist party and based on Soviet-inspired communist

principles took control of the country in 1978 and reform was once again on the minds of

the ruling elite. Hafizullah Amin, the leader of the coup and head of government began

changing Afghanistan so it could more closely resemble that of the Soviet Union. But the

“regimes attempts to change long-standing social customs provoked strong opposition from

Afghanistan’s tribal leaders and Islamic clerics.”11 The Afghan people’s reluctance to

embrace communist doctrine, should not be misconstrued to mean that they therefore more

favorable to democratic principles, rather that militia leaders, tribal leaders and local

officials are more concerned with wielding their own local power than anything else. This

historical reluctance to change and reform is one of the most principle obstacles that

President Karzai’s government faces. Local authorities unwillingness to cede power to the

national government in Kabul is proving to be a serious obstacle to the central governments

efforts to “extend the authority of the Afghan state’s new institutions over the entire

country.”12

Despite all the obstacles President Karzai and his government face toward national

unity, Afghanistan is not entirely without a semblance of democratic institutions that could

serve as an incubator of state legitimacy and a possible full-fledged democracy. The Loya

Jirga was a Pashtun tribal or village council.13 A more “important Grand Council, or Loya

Jirga, met in 1747 to choose a new king (shah) for Afghanistan.”14 In the years following

this Grand Council, “various Afghan monarchs periodically summoned a Loya Jirga to to

legitimize their authority or gain advice on important political decisions.”15 In the 1920’s

the Loya Jirga became institutionalized as the county’s highest representative body.16 But

despite the Loya Jirga’s importance as a ligitimizing device, its democratic authenticity

remained limited.”17 In addition to its limited authority, the Loya Jirga was also “rarely

inclusive: membership was usually overwhelmingly (and often exclusively) male, and

confined mostly to Pashtuns, the country’s largest ethnic group.”18

The U.S. vision for a postwar Afghanistan relies on the familiar recipes of democracy and massive

foreign aid. Unfortunately, neither is likely to work effectively.

Actually, Afghanistan might be in worse shape than Iraq. The American

intervention toppled the Taliban regime, but has left nothing to replace them. In fact

the war has returned the country to a medieval state of warlords and fiefdoms; a

situation that resulted in 25 years of factional fighting and civil war.

1 Sodaro, Michael. 2008. Comparative Politics: A Global Introduction. Third Edition. Boston: McGraw Hill. 246. 2 Sodaro, Michael. 2008. Comparative Politics: A Global Introduction. Third Edition. Boston: McGraw Hill., 246. 3 Ibid, 246. 4 Ibid, 246. 5 Ibid, 246.

6 Ibid, 246. 7 Ibid, 243. 8 Ibid, 243. 9 Ibid, 243. 10 Ibid, 243. 11 Ibid, 244. 12 Ibid, 246. 13 Ibid, 246. 14 Ibid, 246. 15 Ibid, 246. 16 Ibid 244. 17 Ibid, 246. 18 Ibid, 246.

Tom's of Maine: Business as Usual or CSR Champion - Examining Sustainable Niche Companies merging with MNCs (610-6-2)

2011-07-01T17:32:00.005-04:00

http://www.anderra.co.uk/blog/natural-body-care-takeovers/

Toms of Maine: History

Founded in 1970 by Tom Chappell and his wife, Kate, on their farm near Kennebunk, Maine. Tom, and his wife had moved to Maine from Philadelphia in 1968 after Tom quit his job as a benefits counselor at Aetna.[i] Intent on living closer to the land and raising their children in a more natural environment, “Tom Chappell worked for his father's industrial detergent manufacturing company, until he decided to explore an idea he had had for a non-polluting detergent.”[ii] Borrowing just $5,000 from a friend to start the new venture, the husband and wife team “soon began to manufacture the first phosphate-free liquid laundry detergent in the United States, which they called Clearlake.”[iii] Consistent with their philosophy that “their products would not harm the environment,”[iv] Packages of the detergent came with “prepaid return postage so that customers could send back the containers for reuse. The new firm, known as Tom's Natural Soaps, later added other products including a shampoo, cream rinse, and lotion.”[v]

By 1975 the small company had expanded into toothpaste as well. Created in “conjunction with a chemist friend, his toothpaste was free of chemical additives or artificial sweeteners including the suspected carcinogen saccharin, and was markedly different from the products made by industry leaders Crest and Colgate.”[vi] In keeping with the philosophy of the company, the flavoring for the toothpaste was derived from herbs and spices. According to the International Directory of Company Histories[vii] “Chappell's new product soon found acceptance within the post-1960's era anti-corporate, natural foods movement, and Tom's toothpaste became a staple item on the shelves of health food stores and food cooperatives, particularly in the New England area.”[viii]

In 1978 a line of fluoride toothpastes were developed. While potentially a risky move in the natural foods marketplace at the time, the new toothpastes, like its other products were made with natural ingredients and without animal testing. Ultimately the new toothpastes were a success and “sales of fluoride toothpaste eclipsed those of the original formula within two years, during which time Tom's toothpaste sales doubled.”[ix] In 1981 the company's name was officially changed to Tom's of Maine, Inc.[x]

Tom’s Natural Soaps continued to gain exposure and by 1983 the firm's “annual revenues were approaching $2 million. Recognizing that sustained growth would require new outlets for its goods, the company began to seek distribution to chain stores. The first one to take on Tom's products was Rhode Island-based CVS/People's, and others soon followed.”[xi]

In 1986 Tom enrolled in Harvard Divinity School, to which he would make a “twice-weekly, 90-mile commute. After five years of study, he earned a master's degree in Theology. Chappell, a frequent public speaker, went on to publish a book in 1993 called The Soul of a Business: Managing For Profit and the Public Good, which outlined his ideas on running a company with a strong set of personal ethics.”[xii] This search during the 80’s for a more values-based approach to business also led to a new look at the company's mission, which was examined over a year's time beginning in June 1989. “One unusual byproduct of the new mission was the decision to "tithe" 5 percent of Tom's of Maine's profits and donate the money to environmental, arts, and human needs causes. This figure soon became 7 percent, and then 10. In addition to public giving, the company also looked after the welfare of its employees, offering them retirement savings and profit-sharing programs, childcare benefits, and parental leave, and even free fruit to eat on the job. Factory workers rotated stations every hour to avoid fatigue and boredom, and all were encouraged to perform volunteer work in the Kennebunk community on company time.”[xiii]

In 1995, “after a seven-year effort, Tom's became the first natural toothpaste to win the approval of the American Dental Association (ADA), allowing it to put that organization's seal on its products.”[xiv] A crucial endorsement in its bid to compete against major competitors, the process “had taken far longer than usual because the ADA had no standards for natural products, and also because Tom's did not allow testing on animals, which meant new methods of testing had to be devised and certified… Sales for 1995 reached a record level of $20 million.”[xv]

In 2000 “Tom's raised $6 million for herbal product development and advertising by selling 12 percent of the company to a group of 15 outside investors, including Goldman, Sachs Chairman John Whitehead. Tom and Kate Chappell remained majority shareholders. The market for herbals was proving to be as difficult to crack as some critics had predicted. Sales for the company, which had been growing 20 to 30 percent annually, increased by only 7 percent during 2000, and a loss of $1.5 million was posted, only the second case of red ink in the previous 25 years.”[xvi] Despite this less than ideal outcome in the field of herbal products Tom’s continued to beat expectations. Indeed, the company's flagship line of toothpaste was the “dominant natural brand in the United States, and many other Tom's products were well-established with consumers who sought alternatives to chemical-laden, mass-marketed personal care goods.”

Colgate - Palmolive

In 2006 Tom’s of Maine made the controversial decision to partner with Colgate and allow them to have a 84% controlling majority in the company. According to a press release published on the Tom’s of Maine website for March 2006, “Colgate-Palmolive Company (NYSE:CL), as part of its strategy to focus on its higher-margin oral and personal care businesses, today announced that it has agreed to purchase Tom’s of Maine, the leader in the fast-growing Naturals market in the United States.”[xvii] Serving a niche market whose renown as a “socially responsible maker of natural products exceeds its market share -- is selling itself to Colgate-Palmolive Co. for about $100 million”[xviii] dollars. Concerning the acquisition, the Environmental News Network stated that, “Tom's of Maine has stronger gross profit margins than Colgate, making it an attractive prize. Colgate has narrowed its focus to highly profitable businesses such as oral care and personal care. However, with annual sales estimated at about $50 million, Tom's of Maine will be just a small addition to Colgate, which had $11.4 billion in sales in 2005.”[xix] Reuben Mark, Colgate's Chairman and CEO said, “"This strategically-important acquisition gives us access to a loyal, emerging consumer group and allows us to accelerate the growth of Tom’s of Maine by extending its reach in the U.S. and in Colgate's strong markets outside the U.S." Currently the US market for natural oral and personal care products, which is the most developed in the world, is valued at $3 billion and is growing at 15 per cent per year.”[xx] At the time, of the announcement the market responded favorably. According to Jessica Wohl “Shares of New York-based Colgate were up 61 cents, or 1.1 percent, to $57.61 on the New York Stock Exchange.”[xxi] Titled ‘an excellent fit’, the acquisition was portrayed by both sides as a win for both the consumer and the industry. Tom’s of Maine co-founders Tom and Kate Chappell said, “We chose Colgate as our partner because they have the global expertise to help take Tom’s of Maine to the next level. Just as importantly, we see Colgate as an excellent fit with our own cultural values. Colgate has a commitment to product excellence, to global efforts to promote oral health and has a 200-year history of caring for consumers and for giving back to the community. We are excited by Colgate’s desire to continue Tom’s of Maine leadership and heritage in natural care.”[xxii] Colgate President and Chief Operating Officer Ian Cook said in a statement that “Tom's of Maine has gross profit margins which are 10 percentage points higher than Colgate's margin, making it "a logical acquisition as we continue to prioritize our global oral and personal care categories." Colgate previously unveiled a target to reach gross profit margin of 60 percent by 2010. Its margin was 56 percent in the 2005 fourth quarter, excluding restructuring charges.”[xxiii]

Buying CSR

While the buying of niche companies that cater to the growing eco-conscience customer can certainly be attractive business acquisitions, some have argued that there is more than money behind the desire of MNCs to buy companies like Tom’s of Maine. Some analysts have viewed such acquisitions in recent years to be an attempt by corporations to ‘buy CSR[xxiv] These analyst’s cite other instances when major multinational corporations bought up smaller, model ethical corporations such as Unilever’s acquisition of Ben and Jerry’s, The Coca Cola Company’s buyout of Odwalla, Colgate-Palmolive Company’s takeover of Tom’s of Maine, and Dean Foods’ acquisition of Horizon Organics. Critics argued that these “model” corporations would find it difficult to continue the good work under their new parent.”[xxv] Additionally, authors Debapratim Purkayastha and Rajiv Fernando argue that, “The economic viability of an acquisition for such a reason is also a question mark, as generally, there is a public backlash after such acquisitions. As L’Oréal was not perceived to share the principles of Body Shop, Body Shop’s association with L’Oréal raised questions about the ethical standards of Body Shop itself. Its customer base was also affected.”[xxvi] Anderra, a website devoted to providing a guide to natural and organic living located in Farnham, UK compiled a list of the pros and cons of the partnership between Colgate-Palmolive and Tom’s of Maine. The pros according to Anderra are as follows:

“Pros

· Toms and Kate still have a minority ownership (16%) in Tom’s of Maine – Colgate Palmolive own 84% of the company rather than all of it

· Tom and Kate will continue to hold CEO and Vice President positions which means they still have a say in the way Tom’s of Maine is run

· Colgate-Palmolive are one of the leaders in oral care. Tom’s of Maine are the leaders in natural care, who also make oral care products. A winning combination?

· Ethical mainstreaming – Tom and Kate said that their decision to sell to Colgate was partly about broadening Tom’s of Maine’s reach, 

”We chose Colgate as our partner because they have the global expertise to help take Tom’s of Maine to the next level.” 

· Tom’s can use Colgate’s massive marketing and distribution network to sell their products in many more stores”[xxvii]

Anderra lists an additional seven cons that offer a very different perspective on the partnership. They are:

“Cons

· So far in relative terms, Tom’s of Maine products are in small demand – increased demand could call for shortcuts which could impact on the quality of the products

· It will be difficult to maintain small town values and standards in a big corporation

· Colgate are company that do not have any natural oral care lines or use natural ingredients in their oral care products

· Colgate don’t have a very good track record with animal testing. I emailed them twice to ask if they still test their products or the individual ingredients on animals and they said, 

“In 1999 we adopted a voluntary moratorium on all animal testing of our adult Personal Care products and the ingredients used in these products…Currently more than 99% of our safety clearance reviews are conducted without the use of animal tests”. 

· Some consumers used Tom’s of Maine products because it was small brand with big values – selling to a multinational like Colgate may alienate a loyal consumer base

· Tom’s of Main’s profit margins are 10 percentage points higher than Colgate’s – it’s a no brainer…

· According to founder Tom Chappell, maintaining ethical standards such as bio-degradability of ingredients and staying in Maine were ‘deal breakers going into the process’. However Colgate agreed to keep the business based in Maine,

“Staying here is smart from Colgate’s perspective” said Kate Chappell, who founded Tom’s with her husband in 1970. “They are respecting the fact that we have a unique approach to creating efficacy with natural ingredients and a total values approach to doing business.”[xxviii]

Ultimately, the decision is summed up in this seemingly catch 22 that niche companies of this sort have had to face many times of the years.

“If you want to change what people consume on a grand scale, you have to penetrate mass markets. ‘And you can’t do that if you’re a small, specialist brand stuck in the organic or whole-food niche, even if that means you are on supermarket shelves. It is a familiar dilemma: stay pure and have a big impact on a small scale, or compromise and have a small impact on a grand scale.” -Roger Cowe[xxix]

The Next Chapter

As the pros and cons list from Anderra exemplifies, “corporate interest in natural companies is not a clear cut case of good or bad.”[xxx] Often times the fervor about such acquisitions dies down after a while and there is always the hope by many that large corporations will stay true to their word and leave the smaller niche company as independent entities. In the years following Colgate’s purchase of Tom’s of Maine one change sparked a backlash against Colgate and raised the question whether Tom’s was the same company it had always been or, as Andrea Whitfall calls them, just another cog “in the giant corporate wheel.”[xxxi] In an April 2011 article entitled, ‘Tom’s of Maine Ditches the Aluminum Toothpaste Tube’, author Jen Boynton discusses why Tom’s of Maine changed its long time packaging container. The much loved, and apparently, much maligned aluminum tube was changed to a more mainstream plastic laminate. While Tom’s of Maine had long maintained that “aluminum was the material of choice for toothpaste tubes because of its recyclability,”[xxxii] the author insists, “I’m pleased to report that Colgate-Palmolive had nothing to do with the change in materials. Rather, the decision came after a careful review of a decade of consumer comments and a reevaluation of the assumption that aluminum was the most environmentally friendly material available.”[xxxiii] When viewed in aggregate, “25% of packaging complaints about Tom’s products were related to the aluminum tube. Customers complained of cracks and splits that caused the product to leak. Parents complained that the tube was too hard for young toothbrushers to use; older customers had the same difficulties.”[xxxiv] While the author of the article seems convinced that the decision to change the toothpaste tube was purely a product of customer feedback and not overly significant, the decision by Tom’s of Maine to change the packaging ignited another debate about the new Tom’s versus the old Tom’s. One comment to Ms. Boynton’s article reads “Since the buyout by Colgate, the new changes to the toothpaste are revenue enhancements not product enhancements. The change from aluminum to plastic [has resulted in a further] reduction of quantity from 5.5Z(155.9g) to 4.7 OZ(133g) of product.”[xxxv]Another disgruntled commenter writes “The new tube is 14.5% smaller, for the same amount of money. This is [an increase of] 14.5% more revenue for the same cost.” And adds 14.5% more unrecyclable waste to the waste stream.[xxxvi]In response to the tube change, Harold Johnson posted an ‘open letter to Tom’s of Maine’ on Facebook. Disturbed by the toothpaste tube switch, Mr. Johnson decided to write the letter after discovering a half-decomposed aluminum toothpaste tube on the beach in Maine.

This is an aluminum toothpaste tube. It wasn’t littered by a beachgoer, or tossed out a car window. That’s not what happens to toothpaste tubes. It was thrown in the trash, and somehow managed to get into the ocean. That’s what litter does. Always has, always will. But notice: This aluminum tube is already disintegrating back to nature. It is becoming aluminum oxide, the stuff of soil that the world has evolved with over billions of years. In months it will disintegrate and be gone.

Your new plastic toothpaste tubes never do this. When littered into the environment -- as they will be -- they’ll persist. Nothing in nature knows how to return plastic to its building blocks. Your new tubes will run down gulleys, then rivers, eventually the ocean. There they will remain plastic. Even as they photodegrade into small bits, they’re still plastic. They will float, collecting in one of the massive gyres of plastic soup now swirling far from land. There, they will either get ingested by a sea animal, get stuck, and starve it to death... Or accumulate toxins to ~100,000 times background levels, killing more quickly... Or be spit back onto someone’s shore, perhaps distant, perhaps somewhere on the Maine coast, fouling it….

This has happened in just a couple generations. Under our nose and on our watch. Environmental studies claiming plastic as a better alternative are fundamentally flawed. They don’t account for pollution or persistence. Or the poor recyclability. Aluminum is melted down; impurities are easily skimmed off, and the aluminum can be back on the shelf in weeks. A truly closed loop. Plastic cannot be superheated to sterilize. It must be clean to be processed, which is why major recyclers don’t accept plastic toothpaste tubes. Your take-back scheme, though laudable, only downcycles the waste. And as few consumers will spend money to return your tubes to you, most tubes you sell have a one-way trip to the landfill... or the ocean.[xxxvii]

While the toothpaste container controversy is not, by itself, indicative of malignant wrongdoing by Tom’s parent company, It does call into question claims by some niche companies that they look forward to a partnership with a larger company so they can rub some of its corporate responsibility and sustainability on to the parent company. Mr. Johnson’s letter to Tom’s is poignant and heart-felt. It reflects the lingering sense of betrayal by former loyalists to companies like Tom’s as well as skepticism that changes made in the Colgate years are consistent with the original philosophy of Tom and Kate Chappell when the company was started with five thousand dollars and a belief in better business and natural products. Ironically enough, the Chappells have started a new venture called Ramblers Way Farm. Dedicated to the manufacture and sale of light, comfortable woolen clothing in America, this entrepreneurial effort may one day be faced with the same catch 22 that Tom’s of Maine faced. Perhaps with a different outcome.

[i] http://www.tomsofmaine.com/business-practices/heritage/early-history[ii] http://www.fundinguniverse.com/company-histories/Toms-of-Maine-Inc-Company-History.html[iii] Ibid.[iv] http://www.tomsofmaine.com/business-practices/heritage/early-history[v] http://www.fundinguniverse.com/company-histories/Toms-of-Maine-Inc-Company-History.html[vi] Ibid.[vii] International Directory of Company Histories, Vol. 45. St. James Press, 2002.[viii] http://www.fundinguniverse.com/company-histories/Toms-of-Maine-Inc-Company-History.html[ix] Ibid.[x] Ibid.[xi] Ibid.[xii] Ibid.[xiii] Ibid.[xiv] Ibid.[xv] Ibid.[xvi] Ibid.[xvii] http://www.tomsofmaine.com/press/releases/detail/colgate-purchasing-toms-of-maine[xviii] http://www.boston.com/business/articles/2006/03/22/colgate_will_buy_toms_of_maine/[xix] http://www.enn.com/top_stories/article/3915[xx] http://www.cosmeticsdesign.com/Business-Financial/Colgate-finalizes-Tom-s-of-Maine-deal[xxi] http://www.enn.com/top_stories/article/3915[xxii] http://www.tomsofmaine.com/press/releases/detail/colgate-purchasing-toms-of-maine[xxiii] http://www.enn.com/top_stories/article/3915[xxiv] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 535.http://docs.google.com/viewer?a=v&q=cache:KT1Ct_CJH0wJ:www.oikos-international.org/fileadmin/oikos-international/international/Case_competition/Inspection_copy_ICFAI2007.pdf+the+body+shop+social+responciability+of+sustained+greenwashing&hl=en&gl=us&pid=bl&srcid=ADGEEShyLm7S1Dj71wtLP3aLxNbrotyQ4sGmIzCn7Dh6SbqtvaLUvaDAK7Z9YpdMp-d7g_UhuoGg9uwVz9I8MkRGvNjBO_dC9w9wjCJXC2JWLfqvwHOols9m9-62YoQx_aKwdrPub5TQ&sig=AHIEtbTHYzxNGJf0yFoZXSRfQA5ifsAIyg[xxv] http://docs.google.com/viewer?a=v&q=cache:KT1Ct_CJH0wJ:www.oikos-international.org/fileadmin/oikos-international/international/Case_competition/Inspection_copy_ICFAI2007.pdf+the+body+shop+social+responciability+of+sustained+greenwashing&hl=en&gl=us&pid=bl&srcid=ADGEEShyLm7S1Dj71wtLP3aLxNbrotyQ4sGmIzCn7Dh6SbqtvaLUvaDAK7Z9YpdMp-d7g_UhuoGg9uwVz9I8MkRGvNjBO_dC9w9wjCJXC2JWLfqvwHOols9m9-62YoQx_aKwdrPub5TQ&sig=AHIEtbTHYzxNGJf0yFoZXSRfQA5ifsAIyg[xxvi] Ibid.[xxvii] http://www.anderra.co.uk/blog/natural-body-care-takeovers/[xxviii] http://www.anderra.co.uk/blog/natural-body-care-takeovers/[xxix] http://theoldspeakjournal.wordpress.com/2011/06/18/kashi-burts-bees-toms-of-maine-naked-juice-your-favorite-good-natural-socially-conscious-brands-owned-by-the-corporatocracy/[xxx] http://www.anderra.co.uk/blog/natural-body-care-takeovers/[xxxi] http://theoldspeakjournal.wordpress.com/2011/06/18/kashi-burts-bees-toms-of-maine-naked-juice-your-favorite-good-natural-socially-conscious-brands-owned-by-the-corporatocracy/[xxxii] http://www.triplepundit.com/2011/04/goodbye-toms-maines-aluminium-toothpaste-tube/[xxxiii] http://www.triplepundit.com/2011/04/goodbye-toms-maines-aluminium-toothpaste-tube/[xxxiv] Ibid.[xxxv] Ibid.[xxxvi] Ibid.[xxxvii] http://www.facebook.com/notes/the-flotsam-diaries/an-open-letter-to-toms-of-maine-re-plastic-toothpaste-tubes/230362173641131http://www.entrepreneur.com/article/219286

How can a company develop management systems to address environmental issues? - A Look at HSBC (610-6)

2011-07-01T17:28:00.003-04:00

http://tpgblog.com/category/guest-blogger/

Introduction

The United States Environmental Protection Agency (EPA) defines an Environmental Management System (EMS) as “a set of processes and practices that enable an organization to reduce its environmental impacts and increase its operating efficiency.”[i] Indeed, managing environmental impact as well as demonstrating a sense of eco-responsibility are becoming increasingly more impo

rtant business issues around the world.

A way of effectively showing a company’s commitment to e

nvironmental stewardship is to set up and manage an EMS. Performing and enforcing an effective EMS can significantly help eco-conscience consumers identify your company, and ultimately improve the bottom line. Additionally, planning for a successful environmental management system can help your company discover cheaper and more efficient ways to carry out your business activities.

Some of the key elements of an EMS are:

· Policy Statement - a statement of the organization’s commitment to the environment

· Identification of Significant Environmental Impa

cts - environmental attributes of products, activities and services and their effects on the environment

· Development of Objectives and Targets - environmental goals for the organization

· Implementation - plans to meet objectives and targets

· Training - ensure that employees are aware and capable of their environmental responsibilities

· Management Review[ii]

Case Study: HSBC

[iii]

A global banking and financial services company, HSBC, (as of 2011) is the second-largest banking and financial services group and second-largest public company in the world.[iv] While perhaps not the typical candidate for prominent EMS and Corporate Social Responsibility (CSR), HSBC has made significant strides in recent years to make banking greener.

“On May 30, 2007, HSBC announced a five-year, $100 million program to help reduce the impacts of climate change on the world's rivers, forests and cities. This ground-breaking initiative partners HSBC with four world-class environmental organizations—Earthwatch Institute, World Wildlife Fund (WWF), Smithsonian Tropical Research Institute (STRI) and The Climate Group—to inspire global action by individuals, businesses and governments worldwide. For each of our partners, HSBC's contribution represents the largest ever single corporate donation.”[v]

Furthermore, HSBC has been a “climate-neutral company globally since November 2005.”[vi] While still a bank and a multinational corporation, HSBC, seems to have done something others in its industry can only dream about. Given the focus on environmental management from HSBC, it is perhaps less surprising that HSBC has come up with a 10 step framework on adding an environmental management system to its website for others to design and implement their own EMS. The 10 step frame work chapter headings are presented below:

1 Understand what an ems is

2 How an ems can benefit your business

3 Understand the different types of ems

4 Working with external organizations

5 Review your business processes

6 Comply with environmental regulations

7 Plan your ems

8 Put your ems into action

9 Review and improve your ems

10 Integrate your ems into day-to-day processes[vii]

Conclusion

The world is changing. And while it may be surprising to some that the future may well see significantly more attention paid for environmental issues, CSR, and a company’s overall sustainability, for others, including some who have long dismisses such concerns, this future is inevitable. According to Deborah Leipziger, “we are in an age of accountability, where society holds companies and governments increasingly accountable for their actions. Hence one of the key challenges within the field of CR [Corporate Responsibility] relates to the issue of credibility and transparency.”[viii]

[i] http://www.epa.gov/ems/[ii] http://www.p2pays.org/iso/emsisofaq.asp#faq1[iii] Ibid.[iv] http://www.forbes.com/companies/hsbc-holdings/[v] http://www.hsbcusa.com/corporateresponsibility/environment.html[vi] Ibid.http://www.2009.annualreview.hsbc.com/annualreview/downloads/annual_review_2009.pdf[vii] http://www.knowledge.hsbc.co.uk/green+business/introduce+an+environmental+management+system[viii] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 535.

BP - Essential Elements for Repairing Reputation, Brand and CSR (610-5)

2011-07-01T17:21:00.003-04:00

http://bpoilnews.com/

Introduction

When examining the depth of damage to the BP name and brand as a result of the Deepwater Horizon incident in the Gulf of Mexico on April 2010, it is perhaps important to first look at the company’s history. According to United States Environmental Protection Agency (EPA), BP was the most polluting company in the US for 1991.[1] According to Natalya Sverjensky, author of ‘Beyond petroleum: Why the CSR community collaborated in creating the BP oil disaster’, BP’s “lack of attention to even the most basic forms of risk management and regulatory compliance continued throughout that decade and into the next.”[2] While this may surprise many who, before the Deepwater Horizon disaster affectionately knew BP by its brand name of ‘beyond petroleum’, it is clear that BP has a long and tainted history as a serious law and standard violator. As of June 2010, “BP has had 760 such OSHA fines for "egregious, willful" safety violations.” In contrast, fellow energy company Exxon Mobil has had just one fine.[3] Can a company with such a record ever recover from such a disaster as the one felt in the Gulf back in 2010?

Essential Elements for Repairing Reputation, Brand and CSR

Madhayi Tumkur, author of ‘Is BP’s ‘Beyond Petroleum’ image beyond repair?’, claims that all of the ‘essential’ elements of repairing a company’s image have been taken already. According to Mr. Tumkur, BP “has followed what every crisis communications rulebook would prescribe in such circumstances: taken full responsibility to the disaster, showed concern, apologized publicly and set out steps to repair the damage.”[4] Mr. Tumkur notes that despite all these efforts, BP has still failed to repair its reputation. Martin Roll, a brand and business strategist insists that “the BP brand must step up actively on the global scene, and take control of the crisis at a larger scale than any company has previously done.”[5]

Chances of Success

Some have argued that BP will never recover from this and previous incidents, others have contended that the public will forget in the near future and business will continue as usual. As tends to be the case, the real chances of success for BP to regain some if not all of its reputation may well rest on its commitment and depth of change. Simon Mainwaring, author of ‘Top ten reasons why BP’s advertising is a disaster’, offers a possible solution for success. According to Mr. Mainwaring, not only does BP need to “institute the preventative, preparedness and response systems that would ensure a tragedy of this scale never happens again, But if BP truly wants to repair its reputation it must do some comparable in scale to the crisis it created. Something so captivating that it converts the communities of critics.”[6] His suggestion, that BP “announce to the world that you will become the caretaker for the ocean and marine life in each of the regions in which you operate.”[7] While perhaps ideal in scope, Mr. Mainwaring makes a very good point. If BP does not take drastic action to rewrite its reputation, it may never again enjoy the brand and CSR recognition it had before April 2010.

Conclusion

Eleanor Bloxham, writing for CNN Money stated that the opening letter from BP CEO Tony Hayward to the BP Code of Conduct reads: "If you are unsure of what to do in particular circumstances or concerned that the code is being broken, you have a responsibility to speak up. The code explains the mechanisms to do this . . . and the protections to ensure that retaliation against those who do speak up will not be tolerated."[8] Cengage Learning has put forth that “It is now clear that BP’s code of conduct was not equipped to prevent the worst environmental disaster along the Gulf Coast. Regardless of the degree of comprehensiveness, ethical codes should always reflect upper management’s desire for compliance with values, rules, and policies.”[9] The report details how BP will try to work within existing codes of conduct set up by BP but that they should be communicated more effectively and frequently reinforced throughout the entire organization.[10]

[1] http://www.ethicalcorporation.com/content.asp?ContentID=7003[2] Ibid.[3] Ibid.[4] http://www.futurebrand.com/news/in-the-news/is-bps-beyond-petroleum-image-beyond-repair/[5] http://www.futurebrand.com/news/in-the-news/is-bps-beyond-petroleum-image-beyond-repair/[6] http://simonmainwaring.com/future/top-ten-reasons-why-bps-advertising-is-a-disaster/[7] Ibid.[8]http://money.cnn.com/2010/06/22/news/companies/bp_horizon_macondo_whistleblower.fortune/index.htm[9] https://docs.google.com/viewer?a=v&q=cache:WhHCO4Bpv8IJ:cengagesites.com/academic/assets/sites/4004/BP_1439042233_250174_WM.pdf+BP+efforts+to+Repair+Reputation+codes+of+conduct&hl=en&gl=us&pid=bl&srcid=ADGEESg6BeJp-NsmmZWbHicyzbLIz4brhsnfpL2vkzhuzhneWW9vJK8Y8SI2xhl0hWPlUYCdIJJUDV941hjQ2VaOvC4fhp4tWGIetJo9e6uOlth_35-b9Fm6k1az-4JldRXaQCDMosFK&sig=AHIEtbREeg67mrXukXl8_rhGrYefNXxLNw[10] Ibid.

Multinational Companies and the Search for Corporate Responsibility - Shell's Statement of General Business Principles (610-5)

2011-07-01T17:10:00.003-04:00

http://schema-root.org/commerce/corporations/petroleum/shell_oil_co/

1. Identify and discuss Shell's statement of general business principles

What is remarkable about Shell’s Business Principles is the degree to which Shell staff around the world are aware of the Principles and the values of the company. This is quite unusual.

- Gemma Crijns, Nyenrode University and Amnesty International Business Group

Self proclaimed as one of the first global companies to state and share its beliefs, the Shell Oil Company published its ‘General Business Principles’ in 1976.[1] Constituting what Deborah Leipziger calls a ‘living document’ that has and will continue to evolve, the Principles are “derived from values of honesty, integrity and respect for people.”[2] A telling aspect of the Shell’s Principles can be found of in the ‘responsibilities’ section. In this section, Shell details its five key stakeholders. They are: shareholders, customers, employees, those with whom Shell does business, and society. Under ‘responsibility’, Shell states that “It is the duty of management continuously to assess the priorities and discharge these inseparable responsibilities on the basis of that assessment.”[3] The importance of society as a stakeholder and the never overstated inference that business should be conducted by corporations as a responsible member of society, is the hallmark of better business. Having such a widely understood sentiment helps Shell “comply with applicable laws and regulations, to support fundamental human rights in line with the legitimate role of business, and to give proper regard to health, safety, security and the environment.”[4]

The eight Principles that make up the crux of Shells General Business Principles are as follows.

Principle 1: Economic

Principle 2: Competition

Principle 3: Business Integrity

Principle 4: Political Activities

Principle 5: Health, Safety, Security and the Environment

Principle 6: Local Communities

Principle 7: Communication and Engagement

Principle 8: Compliance[5]

Principle 1 says that “Long-term profitability is essential to achieving our business goals and to our continued growth. It is a measure both of efficiency and of the value that customers place on Shell products and services. It supplies the necessary corporate resources for the continuing investment that is required to develop and produce future energy supplies to meet customer needs. Without profits and a strong financial foundation, it would not be possible to fulfill our responsibilities. Criteria for investment and divestment decisions include sustainable development considerations (economic, social and environmental) and an appraisal of the risks of the investment.”[6]

Principle 2 states that “Shell companies support free enterprise. We seek to compete fairly and ethically and within the framework of applicable competition laws; we will not prevent others from competing freely with us.”[7]

Principle 3 states that “Shell companies insist on honesty, integrity and fairness in all aspects of our business and expect the same in our relationships with all those with whom we do business. The direct or indirect offer, payment, soliciting or acceptance of bribes in any form is unacceptable. Facilitation payments are also bribes and should not be made. Employees must avoid conflicts of interest between their private activities and their part in the conduct of company business. Employees must also declare to their employing company potential conflicts of interest. All business transactions on behalf of a Shell company must be reflected accurately and fairly in the accounts of the company in accordance with established procedures and are subject to audit and disclosure.

Principle 4 says that “a. Of companies Shell companies act in a socially responsible manner within the laws of the countries in which we operate in pursuit of our legitimate commercial objectives. Shell companies do not make payments to political parties, organizations or their representatives. Shell companies do not take part in party politics. However, when dealing with governments, Shell companies have the right and the responsibility to make our position known on any matters which affect us, our employees, our customers, our shareholders or local communities in a manner which is in accordance with our values and the Business Principles. b. Of employees Where individuals wish to engage in activities in the community, including standing for election to public office, they will be given the opportunity to do so where this is appropriate in the light of local circumstances.”[8]

Principle 5 states that “Shell companies have a systematic approach to health, safety, security and environmental management in order to achieve continuous performance improvement. To this end, Shell companies manage these matters as critical business activities, set standards and targets for improvement, and measure, appraise and report performance externally. We continually look for ways to reduce the environmental impact of our operations, products and services.”[9]

Principle 6 reads, “Shell companies aim to be good neighbors by continuously improving the ways in which we contribute directly or indirectly to the general well-being of the communities within which we work. We manage the social impacts of our business activities carefully and work with others to enhance the benefits to local communities, and to mitigate any negative impacts from our activities. In addition, Shell companies take a constructive interest in societal matters, directly or indirectly related to our business.”[10]

Principe 7 says that “Shell companies recognize that regular dialogue and engagement with our stakeholders is essential. We are committed to reporting of our performance by providing full relevant information to legitimately interested parties, subject to any overriding considerations of business confidentiality. In our interactions with employees, business partners and local communities, we seek to listen and respond to them honestly and responsibly.”[11]

Principle 8 and the last of Shell’s Principles states that very concisely that “We comply with all applicable laws and regulations of the countries in which we operate.”[12]

2. What are the key areas of agreement between a multinational company and its global union federation?

Ms. Leipziger states that while most sectoral agreements develop “as a result of intense media pressure,”[13] sectoral agreements from media pressure are not enough to meet global needs. According to Ms. Leipziger “corporate responsibility will live or die based on the ability of codes and standards to address industry-specific concerns. To date, much work has been done to build global initiatives within a general context, but more work is needed to build expertise on sectoral and regional dimensions of corporate responsibility.”[14] In general sectoral agreements help “forge partnerships and networks that can build trust and awareness.” [15] Additionally, because they are specifically focused, sectoral tools can “achieve a greater depth than can the more aspirational standards and can achieve a greater sense of cohesion and common purpose.”[16] That is not to say that sectoral agreements are always helpful, indeed, at their worst, “sectoral codes may serve the lowest common denominator within an industry body.”[17] Such a situation is obviously not in keeping with the longevity and growth of any industry.

In an interview that Ms. Leipziger conducted with Jane Nelson, a scholar at the John F. Kennedy school of Harvard University, Ms. Nelson notes that sectoral codes are “becoming more and more significant.”[18] This assertion is based on the specific nature of sectoral agreements. They “cover a more narrowly defined group, regional and sectoral initiatives can develop common protocols, accreditation and certification systems, product labels and cases of best practice. The specificity of sectoral agreements can lead to standards that are prescriptive and specific.”[19]

An example of a sectoral agreement is Responsible Care. First conceived in Canada in 1985 to address public concern about the manufacture, distribution and use of chemicals, the focus of Responsible Care in the US is to “minimize by addressing environment, health and safety issues in an industry characterized as high-risk from a social and environmental perspective.”[20] Approved by over “50 national chemical manufacturing associations – and through them, thousands of chemical sites around the world – Responsible Care forms an essential part of ICCA’s contribution to the United Nations’ Strategic Approach to International Chemicals Management (SAICM).”[21] As the world’s “leading voluntary industry initiative and has been adopted in 60 countries whose combined chemical industries account for more than 70% of global chemicals production”[22], Responsible Care has positioned itself as an important and powerful sectoral agreement that has global implications.

3. Are there measures an industry can take to promote corporate responsibility? What type of mechanisms can institutionalize these measures such as reporting requirements, etc.?

There are countless international frameworks and case studies in various industries that speak to the power and ability of various industries around the world to share in and promote efforts toward greater corporate responsibility. In 2005 United Nations Secretary-General “invited a group of the world's largest institutional investors to join a process in developing the Principles for Responsible Investment.”[23] The Responsible Investment Initiative (PRI) is a network of international investors working together to put the six Principles for Responsible Investment into practice. Devised by the investment community, the principles reflect the view that environmental, social and corporate governance (ESG) issues can “affect the performance of investment portfolios and therefore must be given appropriate consideration by investors if they are to fulfill their fiduciary (or equivalent) duty. The Principles provide a voluntary framework by which all investors can incorporate ESG issues into their decision-making and ownership practices and so better align their objectives with those of society at large.”[24] The six Principles of the PRI are:

1 We will incorporate ESG issues into investment analysis and decision-making processes.

2 We will be active owners and incorporate ESG issues into our ownership policies and practices.

3 We will seek appropriate disclosure on ESG issues by the entities in which we invest.

4 We will promote acceptance and implementation of the Principles within the investment industry.

5 We will work together to enhance our effectiveness in implementing the Principles.

6 We will each report on our activities and progress towards implementing the Principles.[25]

The fourth Principle is perhaps very important as a measure for promoting corporate responsibility within the investment industry. While the PRI program is voluntary, Ms. Leipziger notes that PRI “has been very transparent, providing data on how the PRI signatories are implementing the principles.”[26] While the PRI does not have binding reporting requirements, it also does not exclude or divest companies that are not socially and environmentally responsible either. The initial focus of the PRI is on innovation, collaboration and learning by doing.[27] Toward that end, all signatories must report on progress made toward innovation, collaboration and learning by doing. Notably, the PRI’s “structure allows for a wide range of complementary and innovative ventures.”[28]

Overall, the PRI provides an “excellent example of how a voluntary initiative can allow for systemic change and how principles can provide clarity and momentum. The PRI have beneficiated from the experiences of other initiatives and created a very good model for change management within a sector. It provides an excellent example of how an initiative can deliver results through collaboration by pooling resources and sharing pest practices. Engagement across a wide spectrum of investors is far more effective than within a country or sector.”[29]

[1] http://www.shell.com/home/content/aboutshell/who_we_are/our_values/sgbp/[2] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 410.[3] https://docs.google.com/viewer?a=v&q=cache:N1HIp8DQTZgJ:www-static.shell.com/static/public/downloads/corporate_pkg/sgbp_english.pdf+Shell's+statement+of+general+business+principles&hl=en&gl=us&pid=bl&srcid=ADGEESj-UtUeeQxL1tKrgxST9Y82lCeP2Gy9lwbksljj07KiTIGk5ZkcecHPEZhLHu4kegCStQ9Dsu_qTAXmaOSwBKGcqCUYbackCNL-UFju5VVMmu7bpIRdnFbK_3tjXb4hfRbBggdx&sig=AHIEtbQgX4kbIWAOrXZQ9r-aRD3ZHMSZXA[4] Ibid.[5] Ibid.[6] Ibid.[7] Ibid.[8] Ibid.[9] Ibid.[10] Ibid.[11] Ibid.[12] Ibid.[13] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 436.[14] Ibid.[15] Ibid. Page 437.[16] Ibid.[17] Ibid.[18] Interview with Jane Nelson, John F. Kenedy school, Harvard University, Cambridge, MA, 9 April 2003.Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 437.[19] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 437.[20] Ibid, Page 441.[21] http://www.icca-chem.org/en/Home/Responsible-care/[22] http://www.icca-chem.org/en/Home/Responsible-care/What-we-do/[23] http://www.unpri.org/about/[24] http://www.unpri.org/about/[25] http://www.unpri.org/principles/[26] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 458.[27] Ibid.[28] Ibid. page 458.[29] Ibid.

Combating Bribery of Foreign Public Officials in International Business Transactions - The Case of OECD (610-4)

2011-07-01T17:04:00.004-04:00

http://faculty.caldwell.edu/borourke/Jlavelce/oecd.htm

1. Discuss the outcome of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business transactions.

[1]

When trying to understand the Convention, it is important to first understand The Organization for Economic Co-operation and Development (OECD). The mission of the OECD is “to promote policies that will improve the economic and social well-being of people around the world.”[2] An international economic organization, the OECD consists of 34 countries. Founded in 1961 with the intent to stimulate economic progress and world trade, the OECD defines itself as a forum of countries committed to democracy and the market economy, providing a platform to compare policy experiences, seeking answers to common problems, identifying good practices, and coordinating domestic and international policies of its members.[3]

The outcome of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business transactions was that it defined key terms and developed a “legal framework for addressing bribery” around the world.[4] Launched in 1999, the OECD Convention on Combating Bribery has been ratified by all “30 members of the OECD and by a growing number of nonmembers as well.”[5] While the OECD is not a legal body and cannot force laws on its member countries the Convention does require the member countries

Establish the bribery of foreign public officials as a criminal offence under their laws; and to ensure that the attempt and conspiracy to bribe foreign public officials shall be criminalized to the same extent as the bribery of national public officials.[6]

It is important to note that, while the Convention is intended to deter bribery and it does criminalize offering and/or paying bribes, it does not criminalize soliciting and/or accepting bribes.[7] Additionally, the Convention “covers only the bribery of foreign officials and not private-to-private corruption.” Perhaps most controversially, the Convention “allows ‘small facilitation payments’ to low-ranking officials.”[8]

The Convention works by including monitoring provisions based on a “peer review system common within the OECD framework. The OECD Working Group on Bribery in International Business Transactions reviews the implementing legislation of all the countries that have ratified the Convention.”[9] In a secondary phase, the Working Group on Bribery in International Transactions “examines the structures in place to ensure that the legislation is effective.”[10] Additionally, the OECD encourages “a greater role for non-governmental organizations (NGOs), such as Transparency International, in the monitoring of the Convention.”[11]

2. Which parameters are useful for companies seeking to develop their own internal systems for combating corruption?

The International Anti-Corruption Conference held in Prague in 2001 concluded that:

1. Businesses have an important role to play in improving corporate governance. Good corporate governance is a critical arm in the fight against corruption. It goes beyond the appointment of directors and reaches deeply into the internal workings of companies and into the way companies manage their diverse relationships with the societies in which they operate.

2. Making good corporate governance and anti-corruption practice meaningful and effective in large multinationals with thousands of employees straddling dozens of companies is a major management challenge. In relation to corruption, the current challenges for business include: the definition of corruption and the codification of business standards, practices and procedures that help make this definition meaningful for the day-to-day running of a business; and to ally itself with the broader efforts in the fight against corruption (by governments and civil society).

3. There is a need to build successful partnerships to improve governance standards. These partnerships will involve business, multilateral agencies, civil society and governments.

4. Some of the most telling problems with privatization or restructuring experiences can be traced to a lack of sound regulatory structures and governance practices. This allowed unwise or dishonest business practices to flourish.[12]

Taking the conclusions at their word that ‘businesses have an important role to play in improving corporate governance’, an examination of General Electric and their efforts to fight corruption and bribery seemed appropriate. General Electric (GE) was ranked at the number one spot by the Global 100 as the ‘most sustainable company’ in the world.[13] As the most sustainable, it made sense to look and see how GE approached the issue of corruption. In 2008 GE signed up for the United Nations Global Compact (UNGC). The UNGC’s mission is both as a “policy platform and a practical framework for companies that are committed to sustainability and responsible business practices. As a multi-stakeholder leadership initiative, it seeks to align business operations and strategies with 10 universally accepted principles in the areas of human rights, labor, environment and anti-corruption and to catalyze actions in support of broader UN goals.”[14]

Not only did GE sign up for the UNGC in 2008, that same year, GE Foundation “funded a three-year grant to the Foundation for the Global Compact, which aims to enhance understanding of human rights dilemmas for responsible business, thereby contributing to global thought leadership and best practice especially in emerging markets. This project, Human Rights Dilemmas for Multi-national Corporations (MNCs) in Emerging Markets, will produce extensively researched, in-depth case studies of human rights dilemmas considered from the perspective of different stakeholders, as well as a set of practical solutions to these dilemmas from different stakeholder viewpoints.”[15] In developing its own internal controls, GE, a leader in sustainability and corporate responsibility, made the decision as early as 2008 to follow international and universal principles to fight corruption and bribery. GE knows, as the world becomes ever more globalized, the need for global conventions, rules, codes and laws will only become more necessary and important. It is no longer enough to focus exclusively on the corruption or wrongdoing near at hand.

3. Identify and discuss the commonwealth corporate governance principles.

Businessdictionary.com defines corporate governance as “The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders (financiers, customers, management, employees, government, and the community).”[16] Deborah Leipziger author of The Corporate Responcibility Code Book asserts that corporate governance is “a theme that is inherently linked to corporate responsibility.”[17] She goes on to say that “as corporate responsibility drills deeper into companies, the linkages between corporate governance and corporate responsibility are becoming more pronounced. As managers develop mechanisms for embedding social and environmental issues into the structure and ‘DNA’ of companies they will need to interface with issues of corporate governance.”[18] It is Ms. Leipziger’s opinion that, to institutionalize corporate responsibility, companies will need to consider issues of corporate governance, including:

· What are the responcibilities of the board of directors in terms of social and environmental issues?

· How can the company develop reporting that makes it more accountable?[19]

Toward encouraging good governance of corporations, The Commonwealth Business Council (CBC) and the Commonwealth Association for Corporate Governance published the Principles for Corporate Governance in the Commonwealth: Towards Global Competitiveness and Economic Accountability. The publication lists fifteen principles that a board of a corporation should do. They are:

Principle 1 – exercise leadership, enterprise, integrity and judgment in directing the corporation so as to achieve continuing prosperity for the corporation and to act in the best interest of the business enterprise in a manner based on transparency, accountability and responsibility;

Principle 2 – ensure that through a managed and effective process board appointments are made that provide a mix of proficient directors, each of whom is able to add value and to bring independent judgment to bear on the decision-making process;

Principle 3 – determine the corporation’s purpose and values, determine the strategy to achieve its purpose and to implement its values in order to ensure that it survives and thrives, and ensure that procedures and practices are in place that protect the corporation’s assets and reputation;

Principle 4 – monitor and evaluate the implementation of strategies, policies, management performance criteria and business plans;

Principle 5 – ensure that the corporation complies with all relevant laws, regulations and codes of best business practice;

Principle 6 – ensure that the corporation communicates with shareholders and other stakeholders effectively;

Principle 7 – serve the legitimate interests of the shareholders of the corporation and account to them fully;

Principle 8 – identify the corporation’s internal and external stakeholders and agree a policy, or policies, determining how the corporation should relate to them;

Principle 9 – ensure that no one person or a block of persons has unfettered power and that there is an appropriate balance of power and authority on the board which is, inter alia, usually reflected by separating the roles of the chief executive officer and Chairman, and by having a balance between executive and non-executive directors;

Principle 10 – regularly review processes and procedures to ensure the effectiveness of its internal systems of control, so that its decision-making capability and the accuracy of its reporting and financial results are maintained at a high level at all times;

Principle 11 – regularly assess its performance and effectiveness as a whole, and that of the individual directors, including the chief executive officer;

Principle 12 – appoint the chief executive officer and at least participate in the appointment of senior management, ensure the motivation and protection of intellectual capital intrinsic to the corporation, ensure that there is adequate training in the corporation for management and employees, and a succession plan for senior management;

Principle 13 – ensure that all technology and systems used in the corporation are adequate to properly run the business and for it to remain a meaningful competitor;

Principle 14 – identify key risk areas and key performance indicators of the business enterprise and monitor these factors;

Principle 15 – ensure annually that the corporation will continue as a going concern for its next fiscal year.[20]

[1] http://www.thebusinessage.com/2009/09/08/oecd-forecasts-social-benefits-from-recession/[2] http://www.oecd.org/pages/0,3417,en_36734052_36734103_1_1_1_1_1,00.html[3] http://www.oecd.org/pages/0,3417,en_36734052_36734103_1_1_1_1_1,00.html[4] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 331.[5] Ibid. Page 332.[6] International Monetary Fund (2001) OECD Convention on Combating Bribery of Foreign Public Offcials in International Business Transactions (prepared by the Policy Development and Review Department; approved by J. Boorman; Washington, DC: IMF, 18 September 2001).[7] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 332.[8] Ibid. page 332.[9] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 332.[10] Ibid.[11] Ibid. Transparency International Canada Inc. (1998) ‘The Convention against Corruption in International Business Transactions: Checklist for Monotoring Implementation of OECD Convention’, www.transparency.ca, accessed 2011.[12] https://docs.google.com/viewer?a=v&q=cache:3oULbN4m6DgJ:iacconference.org/documents/10th_iacc_workshop_Corporate_Governance_An_antidote_to_corruption.doc+General+electric+against+corruption&hl=en&gl=us&pid=bl&srcid=ADGEESiPtnnddXFUFYrAxEOXp7-zkziSBfwLmCZHaGrmVrfp_0v_1k29XAZramOLZoxM6hhaSNy6IirLStiZeISilKDpnHjzF3RvdKAgbZqIbO3oHnFgZdVXS1lkxGgDfnmX1TKgtmB5&sig=AHIEtbQMCSQwxrIW9fyNmgSEUAYLb3LhGg[13] http://www.global100.org/annual-reviews/2010-global-100-list.html[14] http://www.ge.com/citizenship/reporting/un-global-compact.htmlhttp://www.unglobalcompact.org/[15] http://www.ge.com/citizenship/reporting/un-global-compact.html[16] http://www.businessdictionary.com/definition/corporate-governance.html[17] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 363.[18] Ibid. Page 363.[19] Ibid. page 363.[20] http://www.ecseonline.com/PDF/CACG%20Guidelines%20-%20Principles%20for%20Corporate%20Governance%20in%20the%20Commonwealth.pdf

International Efforts Toward Sustainability - A Survey of the Rio Deceleration & the Natural Step (610-3)

2011-07-01T16:57:00.004-04:00

http://www.eoearth.org/article/United_Nations_Conference_on_Environment_and_Development_(UNCED),_Rio_de_Janeiro,_Brazil

1. Identify and discuss the Rio Declaration on Environment and Development.

The Rio Declaration on Environment and Development, sometimes called the Earth Summit, was the culminating document that came out of the The United Nations Conference on Environment and Development that took place at Rio de Janeiro from 3 to 14 June 1992.[1] Consisted of 27 principles intended to guide future sustainable development around the world, the Rio Declaration reaffirms the Declaration of the United Nations Conference on the Human Environment, adopted at Stockholm on 16 June 1972, and seeks to build upon it.[2] Recognizing the integral and interdependent nature of the Earth, our home, the Rio Declaration’s first principle is both the overall statement of intent as well as a powerful statement for the whole of the international community. It states that, “human beings are at the centre of concerns for sustainable development. They are entitled to a healthy and productive life in harmony with nature.”[3]

The remaining 26 principles of the Rio Declaration are:

“Principle 2

States have, in accordance with the Charter of the United Nations and the principles of international law, the sovereign right to exploit their own resources pursuant to their own environmental and developmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction.

Principle 3

The right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations.

Principle 4

In order to achieve sustainable development, environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it.

Principle 5

All States and all people shall cooperate in the essential task of eradicating poverty as an indispensable requirement for sustainable development, in order to decrease the disparities in standards of living and better meet the needs of the majority of the people of the world.

Principle 6

The special situation and needs of developing countries, particularly the least developed and those most environmentally vulnerable, shall be given special priority. International actions in the field of environment and development should also address the interests and needs of all countries.

Principle 7

States shall cooperate in a spirit of global partnership to conserve, protect and restore the health and integrity of the Earth's ecosystem. In view of the different contributions to global environmental degradation, States have common but differentiated responsibilities. The developed countries acknowledge the responsibility that they bear in the international pursuit to sustainable development in view of the pressures their societies place on the global environment and of the technologies and financial resources they command.

Principle 8

To achieve sustainable development and a higher quality of life for all people, States should reduce and eliminate unsustainable patterns of production and consumption and promote appropriate demographic policies.

Principle 9

States should cooperate to strengthen endogenous capacity-building for sustainable development by improving scientific understanding through exchanges of scientific and technological knowledge, and by enhancing the development, adaptation, diffusion and transfer of technologies, including new and innovative technologies.

Principle 10

Environmental issues are best handled with participation of all concerned citizens, at the relevant level. At the national level, each individual shall have appropriate access to information concerning the environment that is held by public authorities, including information on hazardous materials and activities in their communities, and the opportunity to participate in decision-making processes. States shall facilitate and encourage public awareness and participation by making information widely available. Effective access to judicial and administrative proceedings, including redress and remedy, shall be provided.

Principle 11

States shall enact effective environmental legislation. Environmental standards, management objectives and priorities should reflect the environmental and development context to which they apply. Standards applied by some countries may be inappropriate and of unwarranted economic and social cost to other countries, in particular developing countries.

Principle 12

States should cooperate to promote a supportive and open international economic system that would lead to economic growth and sustainable development in all countries, to better address the problems of environmental degradation. Trade policy measures for environmental purposes should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade. Unilateral actions to deal with environmental challenges outside the jurisdiction of the importing country should be avoided. Environmental measures addressing transboundary or global environmental problems should, as far as possible, be based on an international consensus.

Principle 13

States shall develop national law regarding liability and compensation for the victims of pollution and other environmental damage. States shall also cooperate in an expeditious and more determined manner to develop further international law regarding liability and compensation for adverse effects of environmental damage caused by activities within their jurisdiction or control to areas beyond their jurisdiction.

Principle 14

States should effectively cooperate to discourage or prevent the relocation and transfer to other States of any activities and substances that cause severe environmental degradation or are found to be harmful to human health.

Principle 15

In order to protect the environment, the precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.

Principle 16

National authorities should endeavour to promote the internalization of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution, with due regard to the public interest and without distorting international trade and investment.

Principle 17

Environmental impact assessment, as a national instrument, shall be undertaken for proposed activities that are likely to have a significant adverse impact on the environment and are subject to a decision of a competent national authority.

Principle 18

States shall immediately notify other States of any natural disasters or other emergencies that are likely to produce sudden harmful effects on the environment of those States. Every effort shall be made by the international community to help States so afflicted.

Principle 19

States shall provide prior and timely notification and relevant information to potentially affected States on activities that may have a significant adverse transboundary environmental effect and shall consult with those States at an early stage and in good faith.

Principle 20

Women have a vital role in environmental management and development. Their full participation is therefore essential to achieve sustainable development.

Principle 21

The creativity, ideals and courage of the youth of the world should be mobilized to forge a global partnership in order to achieve sustainable development and ensure a better future for all.

Principle 22

Indigenous people and their communities and other local communities have a vital role in environmental management and development because of their knowledge and traditional practices. States should recognize and duly support their identity, culture and interests and enable their effective participation in the achievement of sustainable development.

Principle 23

The environment and natural resources of people under oppression, domination and occupation shall be protected.

Principle 24

Warfare is inherently destructive of sustainable development. States shall therefore respect international law providing protection for the environment in times of armed conflict and cooperate in its further development, as necessary.

Principle 25

Peace, development and environmental protection are interdependent and indivisible.

Principle 26

States shall resolve all their environmental disputes peacefully and by appropriate means in accordance with the Charter of the United Nations.

Principle 27

States and people shall cooperate in good faith and in a spirit of partnership in the fulfillment of the principles embodied in this Declaration and in the further development of international law in the field of sustainable development.”[4]

According to Deborah Leipziger, “although the Rio Declaration is addressed to nation-states, it introduced key concepts that are echoed in many” of the international tools including the Global Compact. Furthermore, the Rio Declaration defined two key principles – the precautionary principle and the polluter-pays principle – that are key elements of many environmental standards.”[5]

2. Identify and discuss what is meant by the Natural Step.

According to the Natural Step website, the organization is “a not-for-profit organisation dedicated to education, advisory work and research in sustainable development.”[6] Founded in Sweden in 1989 by scientist Karl-Henrik Robèrt the Natural Step has “worked with thousands of corporations, municipalities, academic institutions and not-for-profit organisations that have proven that moving strategically toward sustainability leads to new opportunities, reduced costs, and dramatically reduced ecological and social impacts.”[7] Following a national consensus about “what is in principle needed to sustain the human civilization on earth,”[8]

In a paper that Dr. Robert wrote in 1991 entitled ‘Educating A Nation: The Natural Step’, The Natural Step is described as a “network of experts from various fields who are attempting to find out how much can be accomplished by using scientific consensus as the basis for decision-making in human society. The network includes scientists, economists, teachers, environmental activists, politicians, business leaders, artists, and others who are all contributing to a mutual effort for a future based on respect for natural laws.”[9]

The Natural Step approach to sustainability begins with four simple scientific observations:

1. Matter and energy cannot be destroyed (the 1st Law of Thermodynamics)

2. Matter and energy tend to spread spontaneously (entropy, the 2nd Law of Thermodynamics)

3. Biological and economic value (quality) of matter is in its concentration and structure

4. Net increases in material quality on Earth are generated almost entirely by the sun-driven process of photosynthesis[10]

Putting the two laws of thermodynamics together and applying them to the global environment, the following facts become apparent:

1. All the matter that will ever exist on earth is here now (First Law).

2. Disorder increases in all closed systems and the Earth is a closed system with respect to matter (Second Law). However, it is an open system with respect to energy since it receives energy from the sun.

3. Sunlight is responsible for almost all increases in net material quality on the planet through photosynthesis and solar heating effects. This flow of energy from the sun creates structure and order from the disorder.[11]

Following the four simple scientific observations, The Natural Step developed Four System Conditions of Sustainability In a sustainable society, nature is not subject to systematically increasing:

· concentrations of substances extracted from the earth's crust;

· concentrations of substances produced by society;

· degradation by physical means; and, in that society. . .

· human needs are met worldwide.[12]

Mr. Robert then worked out a first version of system conditions for sustainability and a planning method that later evolved into and became known as The Natural Step Framework (or the Framework for Strategic Sustainable Development). In general, The Natural Step Framework takes people beyond the arguments of what is and is not possible; or what may be politically left or right wing. Instead, the Framework builds on a “basic understanding of what makes life possible, how our biosphere functions and how we are part of the earth’s natural systems.”[13] Rather than get lost in abstract definitions and causes, The Natural Step “builds on a platform of basic science and is designed to allow true interdisciplinary, cross sector cooperation for concrete and measurable change towards sustainability. After all, if you want to achieve ‘success’, you have to first understand what this means in real terms before you can then take strategi

[1]http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=78&ArticleID=1163&l=en

[2] Ibid.

[3]http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=78&ArticleID=1163&l=en

[4] http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=78&ArticleID=1163&l=en

[5] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 308.

[6] http://www.naturalstep.org/en/our-story

[7] Ibid.

[8] http://www.naturalstep.org/en/our-story

[9] http://www.context.org/ICLIB/IC28/Robert.htm

[10] http://www.brightworks.net/pages.php?id=naturalstep

[11] http://www.thenaturalstep.org/en/our-approach

http://www.brightworks.net/pages.php?id=naturalstep

[12] http://www.brightworks.net/pages.php?id=naturalstep

[13] http://www.naturalstep.org/en/our-story

ime� #w R � xq� -fareast-language:EN-US'>fire safety

· working hours

· wages

· freedom of association[22]

Because H&M does not have any factories of its own, the H&M code of conduct is applicable to all suppliers, their subcontractors and other business partners that do business with H&M. H&M’s Code of Conduct states that,

This Code of Conduct specifies what we require from our suppliers, their subcontractors and other business partners in order to fulfill our commitment to our Board of Directors, to our employees, to our customers, to our shareholders and to other stakeholders. It is the responsibility of H&M’s suppliers and other business partners to inform their subcontractors about H&M’s Code of Conduct and Policy for Homework, and to ensure that these are implemented in every factory and workplace that produces, finishes packs or otherwise handles goods or performs services for H&M[23]

While not legally binding, H&M’s codes are an effort by the executives of the corporation to provide the best possible product given that many of the actual processes are conducted outside of H&M’s direct control. It is unclear how successful this approach is but it is at least commendable that time and effort has been taken by H&M to try and influence, if not require, its participants along the supply chain to conform to company and international standards.

H&M fulfills several of Ms. Leipziger’s characteristic requirements. While the codes could be more concise, H&M’s codes seem to fit characteristic’s one, two, three, four and five reasonably well. The codes are very clear. They lend themselves to being flexible and dynamic, they are clearly written with the hopes of implementation in mind. Unlike GE and PG&E, H&M’s codes reference international standards in addition to applicable national and international laws. Part of the introduction for H&M’s codes reads, “we [H&M] base our requirements mainly on internationally agreed standards such as the Universal Declaration of Human Rights, The UN Convention on the Rights of the Child and applicable ILO Conventions, as well as national legislation.”[24] Because the codes are essential in how the company conducts its business with its stakeholders throughout the supply chain, it is reasonable to assume that stakeholder support is present. The H&M codes fall short with regard to ‘mechanisms for addressing complaints and resolving disputes’, as well as the seventh characteristic that requires a ‘genuine desire to change’.

Conclusion

Through the examination of these four companies many of the assumptions/hopes that one might conjure up for a company listed at the top of the global 100 most sustainable companies hold true. These four companies are likely better than most at achieving the ‘outstanding’ classification that Ms. Leipziger’s characteristics help quantify. Without a more thorough analysis of how the global 100 determines ‘most sustainable’ and how those definitions compare to Ms. Leipziger’s definitions the picture is still unclear why the fourth ‘most sustainable’ company as part of the global 100’s rankings seemed to rank the highest as it relates to its codes of conduct when compared to Ms. Leipziger’s characteristics. Overall, the four companies of GE, PG&E, TNT Nv, and H&M seem to rank favorably, both as the top four most sustainable companies in the world, and as companies that have sufficient codes of conduct to facilitate greater corporate responsibility and therefore sustainability. As corporate responsibility measures grow in the future, perhaps these various metrics for sustainability will continue to grow more harmoniously intertwined, only time will tell.

[1] http://www.global100.org/annual-reviews/2010-global-100-list.html[2] http://www.businessweek.com/interactive_reports/g100.html[3] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 48.[4] Ibid. Page 49.[5] Ibid. Page 49.[6] Ibid. Page 49.[7] Ibid. Page 49.[8] Ibid. Page 49.[9] Ibid. Page 50.[10]http://docs.google.com/viewer?a=v&q=cache:V9nYz32z6K0J:www.ge.com/files_citizenship/pdf/TheSpirit%26TheLetter.pdf+codes+of+conduct+general+electric&hl=en&gl=us&pid=bl&srcid=ADGEESjq30bpUFODSHJmjaQIGL98HiGPg9RI5icpAG8t2N-fDbM5HnwR-xQPtnvlJhpPcbCXnsQsW1rhylavFCA0f7PCNyVNwXD8OmmVBSO7pYP_VteP3UgG7KlhOPzjAYywluPW1RbO&sig=AHIEtbSxyUilTcrXOhCHWnxMF58YM8qtzA[11] Ibid.[12] Ibid.[13] Ibid.[14] Ibid.[15] Ibid.[16]http://docs.google.com/viewer?a=v&q=cache:V9nYz32z6K0J:www.ge.com/files_citizenship/pdf/TheSpirit%26TheLetter.pdf+codes+of+conduct+general+electric&hl=en&gl=us&pid=bl&srcid=ADGEESjq30bpUFODSHJmjaQIGL98HiGPg9RI5icpAG8t2N-fDbM5HnwR-xQPtnvlJhpPcbCXnsQsW1rhylavFCA0f7PCNyVNwXD8OmmVBSO7pYP_VteP3UgG7KlhOPzjAYywluPW1RbO&sig=AHIEtbSxyUilTcrXOhCHWnxMF58YM8qtzA[17] http://www.pgecorp.com/aboutus/corp_gov/coce/our_values.shtml[18] http://www.pgecorp.com/aboutus/corp_gov/cocd.shtml[19] http://www.commissiecorporategovernance.nl/page/downloads/DEC_2008_UK_Code_DEF__uk_.pdf[20] http://www.postnl.com/about/governance/index.aspx[21] Ibid.[22]http://www.hm.com/dk/corporateresponsibility/supplychainworkingconditions/supplychainmonitoring/ourcodeofconduct__monotoringarticle1.nhtml[23]http://www.hm.com/filearea/corporate/fileobjects/pdf/en/RM_DOWNLOAD_CODEOFCONDUCT_PDF_ENGLISH_1150269822085.pdf[24]http://www.hm.com/filearea/corporate/fileobjects/pdf/en/RM_DOWNLOAD_CODEOFCONDUCT_PDF_ENGLISH_1150269822085.pdf