Strategic CSR - Unilever

The article in the url below poses a great question:

 

“It's easy to identify the companies that are leading the way on climate change. But how many of them follow the same principles when it comes to their pension funds?”

 

If a firm believes in an issue or way or running a company, why would it not extend those same principles to the management of one of its largest assets/liabilities?

 

“We often think of European companies leading the way on good environmental practices. But a recent report by Independent Capital Management AG, took a closer look at the pension funds of a number of Swiss companies, all of which are listed on the global Dow Jones Sustainability Index. Not one fund it looked at adopted the same stringent investment policies as its sponsoring company.”

 

The dissonance extends to some of the leading CSR brands:

 

“Catherine Howarth, the chief executive of ShareWatch said: ‘In the UK there are a numerous examples of companies who have developed good corporate social responsibility policies, but their pension funds are not fully engaging with these issues at present.’ She said this applied to companies such as Unilever, GlaxoSmithKline and Kingfisher, which owns B&Q – all of which run substantial pension funds. … She added: ‘Unilever is a good example. Paul Polman [the chief executive] has talked seriously at company AGMs about the financial risks of climate change, and the business benefits of taking a sustainable approach. If it is in the best interest of the company to do this, then surely these same arguments apply to the pension fund?’”

 

Good point. In general, the way companies have treated the duty placed in them by employees regarding their pension funds leaves much to be desired. As a result, I would extend the CSR components of this issue. In addition to responsible asset management and investing principles, what about a minimum standard for the percentage of the pension that is funded (i.e., the percent of pension obligations to current and future retirees)? Also, what discount rate do firms use in calculating the annual funds paid into the scheme? And, at the most basic level, which firms still have defined benefit (rather than defined contribution) plans?

 

Have a good weekend and Happy Thanksgiving to those of you in the US.

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Do Sustainable Companies Offer Sustainable Pensions

By Emma Simon

September 19, 2013

The Guardian

http://www.theguardian.com/sustainable-business/do-sustainable-companies-offer-sustainable-pensions

 

Strategic CSR - GSK

The article in the first url below shows what is possible when one of a firm’s stakeholders holds that firm to account for its actions and responsibilities:

“Drug maker GlaxoSmithKline PLC agreed to plead guilty to criminal charges of illegally marketing drugs and withholding safety data from U.S. regulators, and to pay $3 billion to the government in what the Justice Department called the largest health-care fraud settlement in U.S. history.”

Specifically:

“Under the deal, which requires court approval, Glaxo will plead guilty to criminal charges involving three drugs—the antidepressants Paxil and Wellbutrin and the diabetes drug Avandia. … The guilty plea covers a range of behavior by the U.K.-based company, including illegally promoting the antidepressants in the U.S. for uses that weren't approved by the Food and Drug Administration, a practice known as off-label marketing, and withholding important safety data about Avandia from the U.S. regulator.”

In addition to these illegal activities, a pattern of practices was identified that resulted in this settlement, GSK’s fourth with the U.S. government in the past few years:

“Over a period of more than a decade, the government's latest investigation found, the company plied doctors with perks such as free spa treatments, Colorado ski trips, pheasant-hunting jaunts to Europe and Madonna concert tickets, Justice Department officials said.”

I firmly believe that there are two sides to the “responsibility” that we talk about when we discuss “CSR.” The first responsibility is the responsibility of companies to meet the needs and demands of a range of stakeholders, broadly defined. It is in firms’ best interests to do this because it helps secure the societal legitimacy necessary for long-term survival. The second responsibility, however, lies with stakeholders to hold firms accountable for their actions. This responsibility is equally (if not more) important than companies’ responsibility because I also believe that firms respond to market forces much more effectively than they can predict market forces (see also: ‘Why Aren’t We Stressing Stakeholder Responsibility?’). As such, if stakeholders are not willing to hold firms to account, only a small percentage of firms will alter their behavior sufficiently.

If we are going to talk about a corporate social responsibility (the responsibility on firms to act in accordance with stakeholder needs) and, in particular, if we are going to talk about the business case for CSR, therefore, we also need to be talking about corporate stakeholder responsibility (the responsibility on a firm’s stakeholders to hold that firm to account). Both sides of the responsibility coin are equally essential to the extent that, without one, we are unlikely to see enough of the other.

Additional reporting on the GSK case is available in the article in the second url below.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Glaxo Sets Guilty Plea, $3 Billion Settlement

By Jeanne Whalen, Devlin Barrett, and Peter Loftus

The Wall Street Journal

July 3, 2012

B1
http://online.wsj.com/article/SB10001424052702304299704577502642401041730.html

Drug Firm Guilty in Criminal Case

By Katie Thomas and Michael S. Schmidt

The New York Times

July 3, 2012

A1
http://www.nytimes.com/2012/07/03/business/glaxosmithkline-agrees-to-pay-3-billion-in-fraud-settlement.html

Strategic CSR - Pharmaceuticals

I always find it fascinating that the pharmaceutical industry has such a bad reputation (Issues: Patents, p252). How is it that firms that specialize in producing drugs that save lives, reduce human misery and suffering, and increase longevity and general wellbeing can be criticized from so many quarters for their lack of social responsibility?

Why is it that:

“There is a special duty when you are selling medicine as opposed to pantyhose or hubcaps,”

but also that:

“On the one hand, we don't like it that markets are harsh and unjust, … But on the other hand, it's the power of the market that creates the therapies in the first place”?

The article in the url below goes some way to redressing this disconnect by outlining some of the good work being done by pharmaceutical firms and many of the challenges that prevent more rapid progress. Two aspects of the story jumped out at me: First, how much is being done and how far the industry has progressed toward responding to its critics. For example:

“Efforts to deliver cures to the world's poorest regions range from new research initiatives to Big Pharma donations of medicine. Last November, the World Health Organization unveiled an alliance with six firms that pledged to donate drugs for neglected tropical diseases. … Among the contributions was an unlimited supply of leprosy treatments from Novartis, and up to 200 million tablets a year from Johnson & Johnson to combat intestinal worms in children. … GlaxoSmithKline is sharing more than 800 of its patents with other companies working to find treatments for neglected tropical diseases. The company has also cut prices for more than a dozen drugs sold in the least developed countries -- such as Rwanda, Ethiopia and Cambodia -- to no more than 25% of the developed-world price. The treatments cover conditions that include asthma, malaria and hepatitis B.”

And, second, the prominent role of the Bill & Melinda Gates Foundation, which is mentioned in multiple examples in the article as partnering with specific firms to make a significant impact:

“Many such programs are modeled after alliances between drug companies, governments and non-profit organizations that have expanded affordable access to HIV/AIDS treatments in poor countries. Perhaps the most ambitious effort has been in Botswana, which in 2001 joined forces with Merck and the Bill & Melinda Gates Foundation to bring drugs to the impoverished African nation. Now 90% of Botswana's HIV/AIDS patients receive treatment, says Merck, compared with just 5% when the program began.”

No doubt many (if not all) of these initiatives are not widely known, however, and pharmaceutical firms will continue to score poorly in public perceptions of their social responsibility.

Have a good weekend.

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Profits and Social Responsibility: Chastened Drug Makers Step Up Efforts to Bring Affordable Medicines to Poor Countries

February 10, 2011

Knowledge@Wharton

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2710

Strategic CSR - Patents

The article in the url below profiles Yusuf Hamied, the CEO and largest shareholder of Cipla, a firm in India that breaks pharmaceutical patents by copying drugs and selling them at vastly reduced prices (Issues: Patents, p253). This business model has turned Cipla into one of India’s largest firms and “the largest supplier of antiretroviral drugs in the world”:

“To his supporters, Hamied has saved countless lives by making medicines affordable. But to his critics - above all the large western pharmaceuticals who first developed the drugs - he is a ''pirate'', an opportunist who has exploited others' intellectual property to swell his own profits. In the process, they say, he is undermining investment in future medicines, including the next generation of HIV therapies.”

The business model is extended across the board to hundreds of different kinds of drugs:

“We have more products than any (drug) company in the world,'' Hamied says. ''More than a thousand for humans, and a hundred for animals. That's because they are, in inverted commas, 'copy products'.”

Rather than a threat to the large western pharmaceutical firms, however, Hamied argues that he wants to collaborate with them to broaden the markets to which they can supply and for which there is overwhelming demand for pharmaceutical products:

“Hamied argues that western drug companies should - at best in exchange for modest royalties - allow generic producers to compete by making their medicines available immediately at the lowest possible cost, giving access to many more patients who would not otherwise be able to buy them.”

Needless to say, Cipla has run into significant resistance:

“''The first six months were absolute hell, as big pharma tried to run us down,'' [Hamied] says. Richard Sykes, head of Glaxo, denounced Hamied as a ''pirate'' and described the quality of Indian generic drugs as ''iffy''. Hamied fired back, saying that the company was a ''global serial killer'' for charging such high prices.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

The man who battled big pharma.
By ANDREW JACK
2829 words
29 March 2008
Financial Times
Surveys MAG1
Page 14
http://us.ft.com/ftgateway/superpage.ft?news_id=fto032820081826526065