Comment: Putting a human face to global markets

February 01, 1999

Addressing the World Economic Forum at Davos, UN Secretary General, Kofi Annan, challenged the international business community to enter a compact of shared values, to show the human face of global markets. In fact, some industries have already made a start

Merger mania continues apace, with the oil, pharmaceutical, motor and banking industries rapidly regrouping in the face of perceived competitive threats. Some, like the Deutsche Bank/Banker’s Trust take-over, throw up fascinating corporate citizenship issues – what responsibility is owed by today’s shareholders for the part their companies played in the unspeakable horrors of the Holocaust? Most mergers generate more mundane worries about job cuts and loss of national autonomy.

We have argued here before that globalisation has profound implications for community relations and wider citizenship. For example, its a fair bet (the data are not collected) that 80 or 90% of the contributions by US corporations we report above were spent in America, but much more than 10 or 20% of the profits were earned overseas. UK-based companies have a better record, but the disparity still exists.

Kofi Annan goes further than a fair share of donations, calling for companies to embrace a set of core values in human rights, labour standards and environmental practices. He says these are areas where a set of universal values have been defined by international agreements. And he warns that if companies do not act, the open global market is under threat and with it prosperity and corporate profitability.

FAIR LABOR PARTNERSHIP

The US clothing and footwear industry has reached preliminary agreement in November on a charter document for the formation of a Fair Labor Association. Working through the Apparel Industry Partnership with input from human rights organisations, consumer groups, the US government and worker advocates, the new association is intended to:

– accredit external monitors to conduct independent monitoring and inspection of participating companies’ factories;

– certify whether branded goods are produced in compliance with the association’s Fair Labor Standards;

– help to eliminate sweatshop practices;

– inform consumers about participating companies and the AIP’s monitoring principles and Workplace Code.

The board of the association is to have both company and not-for-profit members. Contact US Department of Labor on 001 202 219 8211 (www2.dol.gov/dol)

CODES OF CONDUCT

Levi Strauss, Gap, Phillips-Van Heusen, Reebok and Toys ‘R Us have come top in a survey of codes of conduct for working conditions. Conducted by the Council on Economic Priorities, only one in five of the 360 mainly American companies investigated had a code for basic workers’ rights. Fewer than half of these (44%) actually monitor the implementation of the guidelines.

CEP assessed the codes for basic workers’ rights, child labour, working hours, wages and monitoring. The New York-based pressure group is advocating companies adhere to the SA8000 international standard, arguing that:

– internal codes are expensive and inefficient to develop and monitor;

– individual codes lack consistency, making it hard for consumers to judge the weak from the strong;

– few codes are effectively audited;

there is often confusion whether local laws and customs take priority over corporate standards.

CEP now plans to include in the assessment of a company’s code of conduct an evaluation of monitoring practices, in order to produce an overall grade for corporate responsibility in sourcing. Contact CEP on 00 1 212 730 7007

CODE OF COMPANY CONDUCT

In January the European Parliament approved a resolution calling for an EU code of conduct for European enterprises operating in developing countries. Promoted by the British MEP, Richard Howitt, the code would incorporate existing minimum international standards on human rights, minorities, indigenous peoples, working conditions, the environment and anti-corruption measures, and be backed up by an inspection body. The resolution has now been forwarded to the European Commission, the Council of Europe, the ILO, the WTO, the OECD and the governments of member states for consideration. Contact European Parliament UK Office on 0171 227 4300

US CORPORATION CRITICISED

The American energy company, Enron, has been accused by the pressure group, Human Rights Watch, of complicity in human rights abuses in the Indian state of Maharashtra, where it is building the controversial Dabhol power project. A joint venture between Enron, as the principle shareholder and operator, General Electric, Bechtel and the Maharashtra State Electricity Board, the flagship scheme represents the largest single foreign investment in India. The allegations are made in an 166-page special report about the company and concern the treatment of demonstrators by the plant’s private security forces. Enron says the report is out of context and resurrects old allegations from four years ago. Contact Arvind Ganesan, Human Rights Watch, on 001 212 216 1251 (www.hrw.og)

CONTAINING CORRUPTION

Clear ‘conflict of interest’ regulations, monitoring the assets of decision makers, and freedom of information legislation are needed if unacceptably high levels of public corruption are to be combated, according to two studies published by Transparency International on December 3. Augmenting the TI Corruption Perceptions Index, the studies show that eight of the ten countries with the best scores in the index have effective legislation granting public access to government files. There is no such workable legislation in any of the ten countries with the lowest scores. Contact Jeremy Pope, Transparency International, on 0181 748 7405 (www.transparency.de/documents)

WORLDAWARE BUSINESS AWARDS

The tenth WorldAware Business Awards were presented on January 14, with seven winners. Bangladesh-based tea producers, James Finlay, received the Rio Tinto Award for Long-term Commitment in particular its staff welfare and environmental policies. The Shell Technology for Development Award went to Smart Application Systems, for its electronic credit and payments system in Swaziland. The Cable & Wireless Award for Effective Communication went to specialist export bookseller, Library Supply International, and the Lawrie Group Award for Social Progress went to Hindustan Lever, for schools on tea estates for disabled children. Contact WorldAware on 0171 831 3844 (www.worldaware.org.uk)

COMPANY GIVING RISES

Large companies in the US donated 0.8% of their pre-tax profits in 1997, up slightly from 0.7% the year before. A survey of 211 companies, published by The Conference Board at the start of December, identified giving worth 62.5 billion, which is about a third of total US corporate donations. A quarter of the contributions (24%) are non-cash, valued at cost using the US tax definition. The main beneficiaries are health (35%), education (29%) and civic and community affairs (13%). Culture and the arts receive 10%. Contact Conference Board on 00 1 212 759 0900 (www.conference-board.org)

> NEWS BRIEFS

Canon USA launched a new equipment donation programme in November, with 4,400 combined word processors and printers given away to non-profit organisations by the December deadline. Contact Russell Marchetta, Canon USA, on 001 516 328 5145 (www.usa.canon.com)

In December, Bill Gates, founder of Microsoft, announced a donation of 6100 million to the Program for Appropriate Technology in Health (PATH), which works for speedier delivery of vaccines to children in developing countries. The donation comes from the William H. Gates Foundation, to which he contributed 61 billion in October, placing it among the top 25 grant-making bodies in the US. Contact Microsoft on 001 425 882 8080 (www.microsoft.com)

Glaxo Wellcome has donated ?120,000 to complete construction of the Arpana Hospital in Madhuran, Northern India, which was officially opened in November. Funded through the Arpana Charitable Trust (UK), treatment is now available to some of the poorest people in the area. Contact Elizabeth Liddell, Arpana Trust, on 0171 586 2308

Comment

Merger mania continues apace, with the oil, pharmaceutical, motor and banking industries rapidly regrouping in the face of perceived competitive threats. Some, like the Deutsche Bank/Banker’s Trust take-over, throw up fascinating corporate citizenship issues – what responsibility is owed by today’s shareholders for the part their companies played in the unspeakable horrors of the Holocaust? Most mergers generate more mundane worries about job cuts and loss of national autonomy.

We have argued here before that globalisation has profound implications for community relations and wider citizenship. For example, its a fair bet (the data are not collected) that 80 or 90% of the contributions by US corporations we report above were spent in America, but much more than 10 or 20% of the profits were earned overseas. UK-based companies have a better record, but the disparity still exists.

Kofi Annan goes further than a fair share of donations, calling for companies to embrace a set of core values in human rights, labour standards and environmental practices. He says these are areas where a set of universal values have been defined by international agreements. And he warns that if companies do not act, the open global market is under threat and with it prosperity and corporate profitability.

Corporate Citizenship Briefing, issue no: 44 – February, 1999

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