Industry News Roundup October 2012

October 26, 2012

Finance & Banking

Studies show marked growth in responsible investment

Reports released in October by both the European Forum for Sustainable Investment (Eurosif) and its British counterpart, UKSIF, showed a boost in ethical investments. Eurosif’s study outlined strong market growth across Europe, primarily driven by demand from institutional investors. Norms-based screening – the screening of investments against international standards – was the fastest-growing SRI strategy across Europe, growing 137% from 2009-2011 to boast €2.3 trillion assets under management. UKSIF’s report showed that responsibly-invested assets managed in the UK have now passed €1 trillion for the first time and represent over 18% of the total European responsible investment market. Penny Shepherd, UKSIF’s chief executive puts the rise in both consumer and institutional investor demand down to “a summer of banking scandals”.

New research from YouGov also supports the findings, showing that 46% of British people with investments want to put at least some of their money into 'impact investments' such as social enterprises, which produce both a financial and a social or environmental benefit. (CSR Europe, Huffington Post, Edie)

Natural Resources

Companies warn UK Government to firm up green energy policy

At the beginning of October, some of the UK’s best known companies, including Microsoft, Pepsi-Co and Marks and Spencer, warned the chancellor, George Osborne, that mixed signals on green energy policy risked undermining investment. More than 50 companies, investors and industry bodies wrote to the chancellor ahead of his speech at the Conservative party conference urging greater clarity on the Coalition’s commitment to a lower-carbon economy.  Leading energy companies joined this call, by warning the government not to delay its decision to extend its system of green subsidies. RWE Npower and SSE, two of the so-called ‘Big Six’ energy companies, voiced these fears in anticipation of proposed reform to the energy bill due to come before parliament in November.  (Financial Times*, Times*, BBC)

Shell appears in Dutch court on pollution charges

October saw the beginning of the case against Royal Dutch Shell, brought by four Nigerian farmers and the Dutch branch of Friends of the Earth. The case is being heard in the Netherlands, and marks the first time a Dutch multinational has been put on trial in a civil court at home in connection with damage caused abroad. Shell is accused of polluting villages in the Ogoniland region of Southern Nigeria with oil spills from its pipelines in the area. Shell also faces legal challenges in the UK and the US, which, combined with the Dutch hearing could set precedents for how multinational companies are sued for environmental damage in developing countries. The company faced similar claims against its subsidiary the Shell Petroleum Development Company of Nigeria (SPDC) in the UK earlier this year, and  in the US in early October.(BBC, Guardian, Reuters, Financial Times*)

Textiles & Apparel

Puma pushes case for green shoes

The German sportswear company, Puma, has called for an end to outdated import duties on synthetic materials that make it more expensive for companies to switch to making greener shoes and clothing. Puma has released internal research, which showed that the environmental impact of making its conventional suede sports shoe was nearly one-third higher than for a cotton and linen alternative that has no leather and a biodegradable plastic sole. However, the greener shoes were €10 more expensive than the suede version, Puma said, partly due to higher import duties on the biodegradable plastic used in the shoe, than for less environmentally friendly leather. The company’s chairman, Jochen Zeitz caused a stir in June when he told the Financial Times that due to the high environmental impact of leather, Puma was seeking to phase it out from its supply chain. (Financial Times*)

Technology

Foxconn hit by strikes and claims of underage workers

There was more trouble for Foxconn, the Taiwanese manufacturer of many Apple products, in October when it emerged that it had employed interns as young as 14 at one of its factories in China. The discovery was revealed by the company itself, which said that it was “not only a violation of China’s labour law, it [was] also a violation of Foxconn policy”, pledging to conduct a full investigation into the finding. This follows a series of labour rights issues experienced by the company in 2012. A Foxconn plant in Zhengzhou, central China was hit by strikes at the beginning of October, when between 3,000 and 4,000 workers refused to work in protest at the poor working conditions and increasingly tough quality controls for production of the new iPhone 5. (Financial Times*, New York Times, Reuters)

Food & Beverage

UN warns of rising food costs after year’s extreme weather

A report from the UN has warned of increasing meat and dairy prices in the wake of extreme weather in the United States and across large parts of Europe and other centres of global food production. According to the Food and Agriculture Organisation (FAO) in Rome, global wheat production is expected to fall by five percent in 2012 and yields from many other crops grown to feed animals could be 10 percent down on last year. Prices for wheat have already risen 25 percent in 2012, maize 13 percent and dairy prices rose seven percent in the month of September. The warning came as some British supermarkets said they were struggling to keep shelves stocked with fresh produce and the National Farmers Union (NFU) reported that UK wheat yields have been the lowest since the late 1980s as a result of abnormal rain fall. (Guardian)

Starbucks accused of avoiding tax

A report by Reuters released in October found that Starbucks has avoided paying tax on £1.2bn of UK sales since 2009. The Reuters investigation showed that Starbucks had been telling investors its UK business was highly profitable, while telling the authorities it was lossmaking and therefore not liable for tax, in order to avoid paying millions of pounds to the UK tax authority, HMRC. The contradictions highlight legal tax-avoidance tactics used by multinational companies and have drawn strong criticism from pressure groups and MPs. As a result of calls from high profile figures such as the Labour MP Margaret Hodge, Chair of the Public Accounts Committee, two parliamentary committees are due to launch an investigation into Starbucks’ tax affairs. Companies such as Ikea and eBay also face scrutiny over their tax arrangements.

(Reuters, Guardian, BBC)

Consumer Goods (FMCG)

UK grocery stores and brands cut supply chain waste by 8.8%

UK retailers including Sainsbury’s, Marks and Spencer and Tesco, and brands such as Coca-Cola Enterprises and Kraft Foods, have reduced their supply chain waste by almost nine percent compared to 2009, putting them ahead of a three-year target of five percent, according to the Waste and Resources Action Programme (WRAP). In October WRAP released the latest results of the ‘Courtauld Commitment Phase 2’, a voluntary pledge to cut packaging and food waste. Some 53 retailers and major brands have signed the pledge. Targets include reducing the carbon impact of grocery packaging by 10 percent, cutting UK household food and drink waste by four percent and reducing product and packaging waste in the grocery supply chain by five percent. (Environmental Leader)

Ikea airbrushes women from its Saudi catalogue

Ikea faced controversy about its foreign operations after it emerged that the group removed images of women from its annual furniture catalogue in Saudi Arabia. The news has prompted questions over the company’s ability to keep its culture intact as it expands globally.  Ikea currently has three stores in Saudi Arabia, run as a franchise operation, and is looking to expand operations worldwide by up to 50 percent in the next eight years.  The company said that it regretted the airbrushing and that it did not “accept any kind of discrimination”. (Financial Times*, Independent, The Daily Telegraph)

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