Business Respect - CSR Dispatches No#55 - 4 May 2003

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 consider the controversy around executive remuneration.

Welcome

It seems as though the occasion of the Annual General Meeting has now become one universally to be feared by business management. Whereas in the past one might have been unlucky enough to have a few marginalised protestors making ill-tempered interventions in a way guaranteed to provide a spectacle but little else, now companies are getting serious flak as concerns around social responsibility make the mainstream.

Not only are some of the shareholder resolutions around issues such as human rights and the environment now often getting respectable votes - of a size that would have caused a sensation in previous years. But more directly, some matters of governance are forcing their way onto the agenda - and as often as not passing irrespective of the board's recommendations.

Such a case, for instance, has been the move at Avon, passed with over 80 percent, to introduce governance reforms. So also, there has been a proliferation of motions concerning executive pay. This is one of the most difficult areas for socially responsible business practice. So few areas are so intuitively and obviously wrong as far as the population are concerned, and yet such an article of faith for those who aspire to business leadership. We touch upon some of these issues in this edition, and may come back to them in due course.

Just time left, then, to review the current state of the website - which in contrast is all about whether the fact of pricing goods low can be the principal tenet of a company's social responsibility. It currently stands as follows:

The most important social responsibility a company like Wal-Mart can observe is
Keeping its prices low 82 (16.3%)
Treating its employees well 132 (26.24%)
Minding its impact on local communities 289 (57.46%)

503 people have voted so far - which makes it the most popular vote to date. Still time to make your views known, however!

News

GlaxoSmithKline cuts AIDS drugs prices

Just days after Calpers, the California Public Employees Retirement Scheme, called for GlaxoSmithKline to cut its price of HIV/AIDS drugs for developing countries, the company has announced that it is to do just that.

Two million workers die each year

The International Labour Organisation has said that around 5,000 job-related deaths occur each day - around 2 million per year. In addition, employees suffer approximately 270 million occupational accidents. The figures also include some 12,000 child labourers who die from work-related causes.

Kuoni drops Myanmar travel under pressure

Travel group Kuoni has announced that it is to remove Myanmar from its 2004 travel brochure following protests from human rights campaigners in the UK.

BP and BAKU consortium attacked for breaching OECD Guidelines

A coalition of environmental groups has used the ministerial meeting of the Organisation for Economic Cooperation and Development (OECD) to issue a statement accusing the BP-led consortium of breaching the OECD guidelines of corporate responsibility in its push to build a pipeline between Azerbaijan and Turkey.

Sudan: Sweden's Lundin Petroleum pulls out

Just two months after signalling that it would not follow Canada's Talisman in withdrawing from the Sudan, Lundin Petroleum has finalised the sale of its interest in the Sudan to Malaysia's Petronas for $142m.

Enron: Broadband business was 'an illusion'

US Federal prosecutors brought indictments against eleven former Enron executives which included charges that the company's broadband business had been largely an illusion. The move brought to eighteen the number of people charged with crimes arising from Enron's business activities and introduced a shift in focus for the Enron scandal.

KFC to introduce animal-welfare standards

KFC, the US chicken restaurant chain, has announced new standards described as guaranteeing humane treatment for its birds. The company has also requested a federal government review of slaughthouse methods for poultry.

Australia: Fund managers hinder good corporate governance

The obsession of fund managers with short-term results and share prices is obstructing good corporate governance, according to Peter Costello, Australia's treasurer speaking of the impact of the HIH Insurance scandal.

Morgan Stanley CEO lack of contrition earns S.E.C. rebuke

The chief executive of Morgan Stanley, Phillip Purcell, has been criticised by the Securities and Exchange Commission (S.E.C.) for comments made to institutional investors where he downplayed the recent settlement of $50m. The settlement, made without admitting liability, followed charged filed by the S.E.C. for misconduct.

Avon shareholder governance motion passes with 80 percent vote

A shareholder resolution calling for the annual election of directors which had been opposed by the company's board has been passed at the company's AGM with over 80 percent of shareholders in favour - the largest vote of its kind.

Japan: Astrazeneca under fire for cancer drug deaths

Astrazeneca has said that it stands by its lung cancer drug Iressa in the face of growing controversy in Japan after authorities there said it had been linked to a further 69 deaths, bringing the total in Japan to 246.

Ecuador: ChevronTexaco fights $5bn oil pollution suit

ChevronTexaco's subsidiary Texaco Petroleum dumpted oil-laden water into unlined pits, estuaries and rivers in Ecuador between 1971 and 1992, according to a $5bn suit against the company. ChevronTexaco is due to begin its defence against the charge during the next few days.

ChoicePoint collects detailed information on foreign populations

ChoicePoint, a data-gathering company, is being paid millions of dollars by the Bush administration to collect personal information on the populations of foreign countries, according to The Guardian newspaper. The activity has created controversy, with some governments alarmed that the records may have been illegally obtained.

Article

Executive remuneration and Corporate Social Responsibility

Author: Mallen Baker, dated 4 May 2003

It seems that there has been something of a minor revolution in what shareholders are prepared to accept from business management. In particular, the protests about perceived excessive levels of executive remuneration have swept the recent round of AGMs like the corporate equivalent of SARS.

Previous edition - No 54 | Following edition - No 56

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Special Feature

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Social responsibility and finance - on the precipice

In a recent article, the BBC's economics editor Robert Peston highlighted the fact that in 2012 the chances are that the economy - punch drunk as it is from the various flavours of debt crisis it has been pummelled with over the course of the year - will be hit by the collapse of a major bank and / or government.