Over the summer, several multinationals had the confidence, to defend their shareholders’ interests by engaging vigorously with the wider community. In the UK, the Hampel Committee missed the point.
BOOT OUT CONTRACTORS
International sports goods company, Nike, has for the first time terminated contracts with overseas manufacturers because of failure to comply with its code of conduct on wage levels and working conditions. Announced at the annual meeting on September 22, one Indonesian factories had paid below the national minimum wage level and was sacked despite having obtained special government exemption, while another had unsafe working conditions.
Earlier in September, Nike began distributing pocket-sized cards in 11 languages to 100,000 footwear contract workers in Asia, detailing the code of conduct and offering health and safety tips. Provision of posters and training for managers and employees are also underway. Now the world-wide audit will include a check on how well workers, as well as managers, understand the code. Contact Nike on 00 1 503 671 6453
STORMY WATERS
BP began legal action for damages against Greenpeace and four of its officials during August, claiming losses of some £1.3 million from the pressure group’s eight-day occupation of the Stena Dee oil rig in the north Atlantic. On August 19, the company won an interim interdict from the Court of Session in Edinburgh, banning Greenpeace from interfering in operations, together with an order freezing its bank accounts. BP then offered to suspend proceedings for damages, provided the pressure group promised to abide by the court order and cease interference. Faced with bankruptcy, on August 21 Greenpeace agreed. Contact BP on 0171 496 4000
SUSTAINABLE REPORTING
BT has published its 1996/97 Environmental Performance Report, A Matter of Fact, containing key data and targets, with an independent verification statement by the company’s auditors. Accompanying it for the first time was a report on sustainable development, A Question of Balance, which looks at the ways in which BT and the telecommunications industry as a whole affect progress towards the creation of a society which is sustainable economically, environmentally and socially. Under these three headings, it gives examples of the positive and negative impacts of activities such as teleconferencing and e-mail, teleworking, and information technology used in schools and healthcare.
A Question of Balance repeats the commitment to produce a fully-fledged BT Social Report, which is likely to measure and evaluate performance against a set of values. It predicts that within a decade such reports will be as common as environmental reports today.
BT has also published a report on its Community Partnership Programme, entitled BT Cares, detailing projects supported especially in information and communication technologies. The report includes an evaluation following the new London Benchmarking Group standard, with its total community contribution valued at £27.6 million, compared to £15 million on traditional Per Cent Club ‘philanthropic’ definitions. An Internet version is also being prepared. Contact BT Environment Unit on 0171 728 8430 or BT Community Partnership on 0171 356 6677 www.bt.com
ACCOUNTABLE RELATIONS
The preliminary report of the Hampel Committee on corporate governance, published at the start of August, has disappointed those calling for companies to have a specific duty to involve stakeholders other than shareholders. Chaired by Sir Ronald Hampel, chairman of ICI, the Committee wants to move away from the so-called ‘tick box’ approach of checking compliance with rules, instead seeing corporate governance as part of the wealth creation process, with boards concentrating on enhancing shareholder value but operating within a set of principles. However the Committee’s recommended principles only relate to shareholders, with accountability extending only to financial reporting.
The Committee has adopted the CBI’s view that directors are responsible for relations with stakeholders but accountable to shareholders. Good relations with employees, customers, suppliers, credit providers, local communities and governments are a matter for management, having regard to the overriding objective of preserving and enhancing shareholders’ investment over time. Contact John Healey, Hampel Committee, on 0171 797 4575
comment
On Hampel, let’s say no more. Instead look at what global companies are really doing. Nike has been held to account by consumers in its most lucrative market – and decided it has to act. Drawing up codes of conduct and telling managers about them is no longer enough. Audit, enforce, empower workers, even those in remote contractors. Time to get tough with wayward suppliers.
BP has got tough too, but with a pressure group. However this is not gung-ho management, trying to roll back the frontiers of disputed territory. BP was able to defend its operational interests precisely because it has a good story to tell on corporate citizenship and is happy to be held to account. Getting that right gave it the confidence to act firmly when necessary. John Browne has been careful to open up a dialogue on sustainability and renewable energy, engaging in debate directly with Greenpeace.
Long a big corporate donor, BT is now going much further. Becoming more ‘transparent’, as it move forward toward some form of comprehensive social audit, it opens up the information NGOs could use to attack, but again its track record gives it the strength to engage with confidence.
Managers of large companies may not like it but most know that the community can place enormous constraints on what business can do there is more. there is more to running a successful company than keeping the shareholders happy.
On Hampel, let’s say no more. Instead look at what global companies are really doing. Nike has been held to account by consumers in its most lucrative market – and decided it has to act. Drawing up codes of conduct and telling managers about them is no longer enough. Audit, enforce, empower workers, even those in remote contractors. Time to get tough with wayward suppliers.
BP has got tough too, but with a pressure group. However this is not gung-ho management, trying to roll back the frontiers of disputed territory. BP was able to defend its operational interests precisely because it has a good story to tell on corporate citizenship and is happy to be held to account. Getting that right gave it the confidence to act firmly when necessary. John Browne has been careful to open up a dialogue on sustainability and renewable energy, engaging in debate directly with Greenpeace.
Long a big corporate donor, BT is now going much further. Becoming more ‘transparent’, as it move forward toward some form of comprehensive social audit, it opens up the information NGOs could use to attack, but again its track record gives it the strength to engage with confidence.
Managers of large companies may not like it but most know that the community can place enormous constraints on what business can do there is more. there is more to running a successful company than keeping the shareholders happy.
COMMENTS