Red Bull and the wings of Icarus

This story, from the site news.com.au, tells of Cocaine being allegedly found in Red Bull Cola.

The 'energy' drink has long marketed itself as giving you wings.

The line is so popular that it is even referenced in Eminem's new album, though likely in irony somehow.

According to the article: "Six German states have ordered retailers to stop selling the beverage and more are expected to follow this week."

A brand with the wings of Icarus perhaps?

Not an image Red Bull would like I imagine.

The story also covers potential health fears around the product, here.

Corporate social responsibility in a recession, 10 reasons to keep doing it...

I dashed this piece off last year on our main website, and it's still quite popular, so I thought I'd put it up here too. Interested in reader comments.

It's designed with a sceptical audience for CSR in mind...

While many corporate executives are worried, rightly, about their budgets for next year, there are many good reasons for continuing efficient responsible business initiatives in 2009. Here's a few of them.

While I wouldn't claim to be an expert on pretty much anything. I have been out and about talking to some big companies about what may be going on next year in the world of responsible business.

Clearly, all in the world of business ethics are concerned about what they will be allowed to spend in the next year or so.

But smart companies will know that well-thought-out programmes can be worth the investment, given that, lets be honest, CSR is cheap compared to advertising spend, or paying staff more money.

While Matthew Bishop at the Economist calls CSR often "a cynical exercise in public relations", companies do it because it can deliver, despite the challenges in measuring impacts or progress.

Here's some reasons I have gleaned from talking to companies in the last month as to why the right CSR spend is still worthwhile:

1) It can be cheap. CSR that does not radically alter business models does not cost that much. And, as we all know, can save money. As anyone from Boots to Wal-Mart will tell you, going greener often saves money. CFOs will like that. Make the case to them, convince them that what you are proposing helps the bottom line. They may have forgotten and started thinking its all socialist plot again. Some stats on their desk might help.

2) Reputation and transparency are still key. In fact, they are now even more important. If you let people go, you need those you keep to understand why you did it. And how you did it in the best way possible. You still need talent, and talented people want to know you are well regarded.

3) Communities are feeling vulnerable. They are looking for local leadership on important issues. Your company may be able to help. Think about what you can do that's different, and that caters to their current concerns, not to your volunteering plan from last year.

4) Customers are worried. They are wondering who they can trust. Some readers may have seen the new Lloyd's TSB ads, which talk about how they are seen as solid (implying others are not). Help reassure customers with communications about anything from product safety to reliability and good service awards. These things matter. And yes, this is part of CSR.

5) Regulators are up in arms. Many are happy to use the business world as a scapegoat for their own poor regulatory incentives. Showing you are still focusing on a bit more than just sales and cost-cutting can help you reassure them that you care, and may help them stop over-reacting.

6) Green advertising has gone mainstream. People care about green if it delivers efficiency, particularly for them. So communicating well is still key, and a green/efficient message may still resonate well.

7) Newspapers are even hungrier for copy that sells. And companies provide excellent cannon fodder for editors. Ethics related cutbacks, poor customer service and extended payment terms will all start making the news. Keeping an eye on over-eager internal plans and how they might go against your values statements can help keep things consistent. No board wants to see panic, so re-iterating values in tough times may help keep things in check.

8) There is opportunity to gain trust. This is particularly true if others are cutting back. Showing you can treat your customers, suppliers and business partners fairly, even when times are right, may help you build that bank account of goodwill, useful when you really need it.

9) Think about the short term future. Recessions don't last long, usually. Imagine the benefits of NOT cutting back once all this is over. You'll be able to crow in your CSR report, that unlike others, you kept X and Y initiative going when times were tough

10) Trim the fat. Become more evidence-based in your approach without upsetting partners who may go to the media in better times. This time they may be more understanding. Being more rigourous will only help when things pick up again.

Anyone want to buy a ship? (a non-ethics posting!)

Whenever I read something odd and amusing via email I think of this quote from 1943 in a letter from Sir Archibald Clerk Kerr to Lord Pembroke at the Foreign Office:

"In these dark days man tends to look for little shafts of light that spill from Heaven. My days are probably darker than yours, and I need, my God I do, all the light I can get. But I am a decent fellow, and I do not want to be mean and selfish about what little brightness is shed upon me from time to time. So I propose to share with you a tiny flash that has illuminated my sombre life"

In Sir Archibald's case he was referring, in a casually racist way, to a new colleague's name.

My own example of little shafts of light, is slightly less amusing, but still made me chuckle. Some rather unlikely targeting, to say the least...

I wondered if the global recession had got so bad that I was being pitched to buy a ship for $18 million dollars or more.

Must hunt around down the back the sofa for this one:

"Subject: Ship for sale

Directly from our yard, we are please to offer you following for immediate transaction:

SECOND-HAND
- M/V TONG YU, 1002dwt Chemical Tanker (Built 1988 in Japan), USD 680,000
- M/V DONG HANG, 1600dwt Container General Cargo Vessel (Built 1993 in China), USD 850,000
- M/V ZI HANG, 1983dwt Gearless Cargo Vesse (built 1992, Japan), USD 1,000,000

IN POPULAR:
- 7,500dwt Oil Tanker (Built Nov, 2008 in China), USD 9,500,000
- 6740dwt Chemical Tanker (Built Nov, 2008 in China), USD 11,000,000
- 10,800dwt Bulk carrier(Built 2009 in China), USD 9,500,000

BRAND NEW FROM OUR YARD
- 9000dwt MPP (Built Sept, 2009 in China), USD 18,000,000
- 17,000dwt crude/product oil tanker(Built May, 2009 in China) , USD 23,000,000
- 19,800dwt Bulk carrier(Built May, 2009 in China), USD 17,500,000
- 23,800dwt Bulk carrier(Built May, 2009 in China), USD 23,000,000
- 32,000dwt Bulk carrier(Built May, 2009 in China), USD 28,000,000
- 38,000dwt Bulk carrier(Built May, 2009 in China), USD 35,000,000

Feel free to drop us an email or call for any question.

Best Regards,

AJ7 Global Group Co,.Ltd (Shanghai, China)
Mobile: + 86 135 6421 7233
office: + 86 21 5424 1474
Fax: + 86 21 6402 1958
Email: fortunatelyjudy@gmail.com"

Anyone wishing to pick up a Chinese ship, presumably at bargain prices, should contact Judy above, who will justify her name should you want your own ship.

More from the Economist on CSR

In a shameful journalistic episode in 2005, the Economist got CSR so badly wrong in a special report by the since-departed Clive Crook, insiders noted the paper received more letters than just about ever before on one topic.

We wrote a swift response in the magazine which was well received by many business readers. On re-reading, I now think, although right, it's a little pompous. Judge for yourself here.

Since then, however, the paper (and it is a newspaper, it says, not a magazine) has realised that some large companies, in many cases as much in action than rhetoric, are changing the way they work in response to the modern sustainability agenda.

In early 2008, the Economist went a long way to mending its reputation for responding to the responsible business agenda by publishing this special report, edited by Daniel Franklin.

We recently interviewed Daniel here.

Six days ago, another good article appeared, among others recently, on the Economist.com website.

Take a look at it by clicking here.

It's a decent piece, but I think on the current climate of spending cuts, its a bit more upbeat than the situation right now on CSR reflects.

I've heard about too many CSR team layoffs since January to be as enthusiastic as the Economist is about the prospects, at least this year, for CSR-related investments to be maintained.

My sense is that pretty much everything not related to this years immediate bottom line, with some notable exceptions among the more mature large firms committed to sustainability, is on hold in many companies.

Tell me I'm wrong...

The real meaning of shareholder value

I can't help agreeing with this statement every time I see a small shareholder in the news talking about how much money they have lost because the value of their shares in a particular company has gone down in the last year:

"...in order to believe that shareholder value makes sense, you also have to believe that if you buy a stock at $100 and it drops to $50, then you haven’t lost any money so long as you haven’t actually sold the stock. And there aren’t many people who really believe that."

The quote comes from this post, where Felix Salmon at Reuters looks at the history of the term "shareholder value" and concludes it actually meant long term ownership.

The argument is that shareholder value is very different from today's stock price.

Couldn't agree more.

Limits to legal liabilities of big companies are being tested

The Times has a fascinating story on its website, published yesterday, that rounds up some of the big cases set to grab media headlines, at least, on human rights and big business.

Check it out here .

The story covers both the alleged denial of climate change by business, and the ongoing Trafigura case from 2006.

The Trafigura case, which we covered here and here. A longer article is here .

The case against the oil companies, "alleging that they have funded false science designed to mislead the public as to the dangers of global warming", according to the Times, is clearly a public awareness campaign of sorts.

Little hope of a satisfactory legal conclusion for the communities bringing the case, I would have thought.

But the Trafigura case has potential to run for years, and has already seen company executives imprisoned in Ivory Coast, where the pollution incident took place.

And the BBC has been dragged in, sued by the company involved for libelling them in a recent broadcast here.

This is a bad move by the company, despite feeling wronged.

It guarantees them hostile attention from the BBC for years to come.

Bob Monks on shareholder rights and conflicts of interest

"...shareholders as a class are no more worthy than employees, or customers, or suppliers, or communities in which companies live. It is simply that they are positioned to have money and to be able to take on a role".

So says legendary activist Bob Monks in a Yale online interview.

The Q&A is short and simple to read. It's here.

According to Monks, conflicts of interest are at the root of the financial meltdown:

"we've had this pattern over the last ten years of the institutional shareholders — the majority shareholders — essentially being silent because, in their capacity as banks, they had commercial relationships with the companies that were more valuable to them than the shareholder interests they represent, and there was no enforcement mechanism to require them to perform their legal fiduciary duty."

I met Bob and interviewed him for the Guardian a few years ago. The interview is here.

His blog is here. Bookmark it. The issues he writes about are two important not to keep up to date with.

A good interview on business and human rights

Here's a good, short, readable overview of the big picture on business and human rights at the moment.

It covers both John Ruggie's work as Special Representative of the UN Secretary-General for Business and Human Rights (which is very important), and some specific examples of how business can act more progressively on human rights.

For example, it covers BP in Indonesia.

It's worth a read.

Ethics and service go out the window at: AutoTrader, Three, HSBC and Lloyd's TSB

In last few months I've noticed big companies (many of them still profitable) behaving quite badly to me as a customer.

I'm assuming their service has gone out the window due to the recession.

So much for 'corporate values' eh?

Here's a few examples:

AutoTrader 'automatically' renewed my friend's car insurance, and without asking my permission, billed my credit card (I paid for it, my friend paid me back). When I have had car insurance in the past, this has never happened to me before. AutoTrader informed me it was all my fault and have been extremely rude. I am reporting them for fraud to my bank. I had not given them permission to take the money, after all.

HSBC refused to extend my overdraft, trying to force me to take a loan instead, over 12 months, at high interest, rather than give me £500 for two weeks (my previous estate agent is hanging on to my rental deposit after I moved for a few weeks while the person responsible for giving my money is on holiday). This is despite the fact I have banked with them since about 1986 and have an excellent credit score.

LLoyd's TSB are demanding that our holding company (firmly in profit, never in debt, with millions in cash in their bank) delivers monthly management accounts to them, or they may withdraw banking services.

(Update 18/05/09) I contacted Lloyd's CSR team about this, and they acted promptly by contacting our 'relationship' manager. Our 'relationship' manager at Lloyd's denied they've done this, but then admitted today that the credit department may have. We're still waiting for this to be resolved. Perhaps time to link up customer databases at Lloyd's?)

Three The mobile phone company with zero interest in CSR, sold me a mobile broadband dongle that doesn't work properly. They have failed to respond to letters of complaint about their service. When I went into one of their stores they told me I would have to get a lawyer to help me get out of the contract, even though they breached it, rather than me, by not providing the service promised.

This is disgraceful behaviour by these companies, at least two of which have "CSR" committments and ethical "policies".

Ethics means a lot less in a recession for some firms. They should be ashamed of themselves.

We'll be writing to their CEOs to detail the above. I will post any replies I get.

Will your suppliers blow the whistle?

Almost every large company has some kind of whistle-blowing system in place now.

Usually it's an external company. Anonymity is usually assured.

Despite the bad reputation and poor future career path public whistle-blowers have traditionally had, firms hope that anonymous calls are better than none.

It's one those ideas that's hard to argue with.

Cultural change is key, of course, in persuading people to make such systems effective.

But what about the supply chain?

We all know about the well-documented problems of economically squeezed Chinese supply companies fiddling with safe formulas to cut costs and raise their wafer-thin margins.

These margins are often imposed on them by companies with stated CSR goals.

And we know about the results of quality fraud. For both product safety, consumer faith and corporate reputations. Not to mention the cost of lawsuits, particularly in the United States.

One expert on the topic believes whistle-blowing systems in suppliers may be key to spotting cost-cutting and dangerous supply chain risks.

Does your company consider encouraging or incentivising suppliers to do this?

In the long run, it might be cheaper than continually paying for product testing post production yourselves.

Here are some compelling reasons why you should think about it.

Are we now inherently suspicious of capitalism?

As so often, I'm caught in two minds this week.

After a great session at our responsible business summit on Monday, with Jeff Swartz of Timberland in inspiring form, I was feeling quite chipper.

If more companies had leaders like him, I felt, we could go further, quicker, towards sustainable capitalism.

Then I read the Financial Times supplement on the future of capitalism, in the FT this week. It's full of luminaries railing against a system many of them promoted relentlessly (Alan Greenspan and Jack Welch, for example).

And now, without so much as a nod towards their previous cheerleading, many such 'experts' are now railing against the poor regulation and institutions which led to the excess of greed which pushed the system over the edge.

It's depressing when you read people who have failed to take responsibility, failing to acknowledge their roles in the crisis.

Particularly true in the cases of Welch and Greenspan. If they can't even admit they played a role in the crisis of short-termism, is there any hope for others, I wondered?

After our conference on Monday and Tuesday, I headed over to Bratislava to speak at the Pontis foundation's CSR conference in this fine, pretty little city, close to Vienna.

Over dinner last night a Polish CSR executive, a thoughtful chap, was telling me that in Poland capitalism has always been regarded with suspicion.

Following, then so are philanthropists, who, he said, are regarded with the attitude that "they must have done something crooked to get that much money".

Quite how much this says about European attitudes to capitalism I am not sure.

But the two year old crisis we find ourselves in now, where 12 million poor factory workers have lost their jobs (at least), due to ethics failings in business, makes one wonder if everyone, everywhere, has lost faith in the market. I hope not.

With proper regulation, enforcement, and crucially, better and more effective institutions, more can be done to show the benefits of responsible capitalism.

Jeff Swartz is living proof that ethics and responsible business can go hand in hand.

The Economist on CSR in 2009

Had a quick chat with Daniel Franklin at the Economist on Monday morning about his views on CSR in 2009.

Daniel did the excellent special report on CSR, published in January 2008 by the Economist.

Check out the interview by going here.

UPDATE: The initial link I had here was incorrect. The correct link is now up.

More recent EC podcasts are here on our podcasts homepage.

IKEA's CEO on responsible business

On Monday I spoke to IKEA's CEO Anders Dahlvig about his views on sustainability amidst the recession. He went on to speak at our Responsible Business Summit shortly afterwards.

The interview, which is about five minutes long, is here.

Go here for more EC podcasts, available free on our podcasts homepage.

Why investors have been reluctant to take sustainability seriously - and how that's changing

I taped what I think is an interesting podcast with Matthew Kiernan last week.

It's on why investors have been less enamoured with green investing than they should have been, and how that's changing.

Have a listen to it, here.

New podcast on latest stories in Ethical Corporation magazine

Here is a new podcast we taped just last week on the highlights in our latest print edition. Click on the link to listen.

Should animals be doing more for the animal rights movement?

It's time for animals to take control of their future, say commentators.

More CSR-related analysis is here.

Biggest issues in CSR at the moment

According to who is attending certain sessions at our big annual conference next week, here are the most important issues for CSR managers and activists right now, if you count booking for conference sessions as an indicator:

1) Embedding CR in your company

2) Supply chain management

3) Employee engagement

4) Community Investment & NGO/Biz partnerships

5) Reporting & Sustainable Finance & convincing the board

Make of that what you will...

The Cosa Nostra goes green

This article in the Financial Times the other day is interesting.

The Mafia in Southern Italy, particularly Sicily, has got involved in the windfarm business.

More evidence for the business case for sustainability?

Somehow I doubt this will be quoted much in standard consultancy outfit "why sustainability is great for the bottom line" reports one sees touted so often.

The FT reports that:

"Italian and EU subsidies for the building of wind farms and the world's highest guaranteed rates, €180 ($240, £160) per kwh, for the electricity they produce have turned southern Italy into a highly attractive market exploited by organised crime."

The Green Mafia is a term sometimes ascribed to NGO groups by opponents. Now it seems they have some competition.

How do you deal with an unethical customer?

A friend of mine has an ethical dilemma. Kind of.

A client of his, whose CEO has decided, retrospectively, that a signed contract isn't worth the money, wants to renege on an agreed deal and pay less for the same product than agreed.

My friend is under internal pressure within his company, to force the client to deliver the full amount agreed.

So he is caught in the middle.

He is trying to figure out the best course of action.

We all want to keep customers happy.

And we all want to get paid what we think we're going to get paid, especially with a signed contract in place.

But when a customer tries, with no real reason that's related to the contract, to go back on the deal because the CEO now decides he doesn't like the deal in the recession, surely that's unethical.

What should the response be?

My friend doesn't want to get into a legal fight with the customer.

He could, and he would probably win.

The paperwork is on his side.

But a 'legal' fight will mean no more future business with this customer.

Equally, he doesn't just want to roll over and accept a smaller amont of cash for the product, when he expected a larger sum.

It's difficult because giving in means setting a dangerous precedent for other deals.

If this customer gets a discount just because they want it after they sign, what about all the others?

The customer is behaving badly.

He has a choice: Let them get away with it, for a guarantee that 70% of the contract will be paid.

Or stand up to the client, and force contractual compliance.

How do you react when the customer behaves in such an unethical manner?

Amid green gloom, some good news...

It's all too rare we see a 'good news' environment story.

But even sceptical editors at the Guardian had to let this one through:

Plastic bag charge hailed as a huge success

The Guardian says that the Waste & Resources Action Programme claims that the "total number of bags in UK circulation fell from 13.4bn in 2006 to 9.9bn last year".

That still represents 400 per household. Hell of a lot isn't it?

The success of the 5p Marks and Spencer bag charge, (although in smaller stores you see lots of small bags still handed out for free, since they have little choice) shows how taking a leadership position on sustainability really can reap rewards.

Tesco have taken a different approach, offering one Green clubcard point for every bag reused. They say bag use is down 50% since August 2006 (that sounds like a LOT), unless the Guardian has got it wrong.

Stories like this in the media are incredibly important. They show how big companies can make a major difference to the environment, and demonstrate to consumers that they too, can be part of the change.

Time to get into the energy efficiency business

"CO2 reduction ‘not a business priority' in face of unrealistic targets and financial pressures", runs the headline in npower's online media centre, dated 29 April.

According to the media release:

"More than eight out of ten businesses say Government targets to reduce CO2 emissions are unrealistic, while significant numbers do not see the benefit of a small carbon footprint and are relegating carbon reduction measures to concentrate on managing costs."

It seems blindingly obvious that energy efficiency that cuts costs and does not require significant capital investment is the only area in climate change that will attract major interest at the moment.

Out of the 300 companies surveyed by npower, 200 are SMEs (with "significant energy use"), and the other 100 were large "major" energy users.

Particularly worrying is the npower claim that "the majority of businesses (83%) said the target to reduce CO2 emissions by 80% by 2050 was unrealistic".

It seems that SME's will only take action either due to tough, enforced regulation or massive incentives. Not much of either happening this year.

The good news is that "the importance attached to energy efficiency at its highest level since 2005".

Given how much energy we waste at the moment, in inefficient buildings alone, perhaps the recession is helpful to business and the environment, in that it focuses minds on practical action.

Two degrees of global warming would be great

That's got your attention.

I say this because, as DEFRA's chief climate advisor said at a meeting I attended a month or so back, four degrees looks like the minimum we face.

And it's not just Bob Watson at DEFRA who is saying this.

A few days ago the FT ran this extraordinarily gloomy headline "Climate scientists warn of looming disaster".

Given that it looks very much like just about any climate scientist worth his or her salt is saying this, it seems rather likely.

After all, if 99 from 100 doctors told you you had a specific ailment, you would believe them, wouldn't you?

Two questions then immediately raise themselves:

1) What will governments do this year and next to recognise this? Given that they are dealing with a recession many don't quite understand and know what to do about (they may not be able to do much), what chance is there of, say OECD administrations turning climate change belief into real action that actually does something major?

Idealism aside:

2) Secondly, if carbon capture and storage is such a major part of the 'answer', (hmm) why on earth is the level of debate about it so poor?

I don't understand why the mainstream media still only really covers it in a cursory, almost disinterested fashion?

Can anyone enlighten me?

UPDATE: 05/05/09: This news about Australia's year long (at least) delay to limiting carbon emissions does not bode well. One hates to end a post on a depressing note, but it's hard not to, in this case.