Strategic CSR - Unilever

The headline and opening sentence in the article in the url below suggests that we have discovered how to measure CSR, comprehensively:

 

"Unilever and Patagonia have cemented their position as the world's most sustainable brands, topping the list of sustainability leaders in a new report released Thursday."

 

In fact, the text should read that these companies are "perceived to be the world's most sustainable brands." The reason comes down to the question asked in the survey that generated the data on which the headline was based:

 

"The 2015 Sustainability Leaders Report, produced by think tank SustainAbility and research consultancy GlobeScan, asked 816 sustainability experts in 82 countries which company they thought best integrated sustainability into its business strategy."

 

When you are asking people "which company they thought best integrated sustainability into its business strategy," you are going to generate opinions rather than facts. This would be OK if the opinions were based on knowledge of what is actually going on inside these companies; instead, they are based on what people think is going on. The dangers of relying on perception-based understandings of reality are that, once a perception is formed, it (a) becomes susceptible to group think (i.e., I need to say what others are saying) and (b) becomes particularly difficult to dislodge (i.e., these companies are the best because they were the best last year). As a result, there is a great deal of inertia in lists like this:

 

"Unilever drew top honors for the fifth year in a row, while Patagonia ranked second, the same position it occupied last year. The two companies were followed, in order, by Interface, Marks and Spencer, Natura, Ikea and Nestle. … BASF is the only new company to make the top 11, while two companies – Walmart and Puma – fell off from last year's top 10 list."

 

The sorts of biases that infuse these kind of survey data become particularly apparent when you look at the regional breakdown of perceptions described in the article:

 

"In Asia, for example, India's Tata group is the fourth-highest regarded company, and Shell and Proctor and Gamble both make the top 10. In Africa and the Middle East, 5% of experts identified SABMiller as a top leader. Meanwhile, in Oceania, Westpac came in third, Tesla came in fourth, and HP, Siemens and Novo Nordisk all made the top 10. Unilever and Patagonia, in fact, were the only two companies to make the leader list in every region."

 

Until we are able to create a meaningful measure of CSR that allows us to capture all aspects of operations and compare across industries and cultures, this (no doubt profitable) industry of creating CSR/sustainability lists is going to be driven by anecdotes and perceptions (which is why companies like Enron and BP won so many CSR/ethics awards for so many years).

 

Take care

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/

 

 

Unilever, Patagonia cement their positions as the world's most sustainable brands, says new report

By Bruce Watson

May 28, 2015

The Guardian Sustainable Business

http://www.theguardian.com/sustainable-business/2015/may/28/sustainability-leaders-report-unilever-patagonia-ikea-nestle

 

Strategic CSR - Siemens

In December 2008, Siemens paid the largest penalty ever imposed under the Foreign Corrupt Practices Act (FCPA)—U.S. legislation designed to prevent bribes being paid to foreign government officials. The FCPA was passed in 1977 in response to the Congressional Watergate hearings that uncovered corporate slush funds that were being used by multinationals to secure overseas contracts. Siemens, a German company, falls under the jurisdiction of the legislation because it operates in the U.S. The fine Siemens paid was $800 million:

“It has also agreed to pay 596 million euros, or $839.4 million, to German authorities, including a 201 million euro fine levied by a Munich court in 2007.”

If this wasn’t enough, in July, the firm announced an agreement with the World Bank concerning additional bribery allegations. The article in the url below details the extent of the agreement and the culture of bribery that had become ingrained within the firm:

“Siemens AG reached a settlement with the World Bank over bribery allegations, agreeing to pay $100 million to help anticorruption efforts and to forgo bidding on any of the development bank's projects for two years.”

What is interesting is that these amounts are considered lenient—a response to Siemen’s efforts to rebuild its image, offering extensive cooperation in an attempt to resolve all its outstanding claims.

In spite of these large fines that have been levied against the firm, it would be interesting to see an estimate of how much Siemens benefitted from the bribes it was paying:

“Investigators have alleged that the German engineering conglomerate spent more than $1 billion in recent years bribing government officials in at least 10 countries to win contracts on projects ranging from supplying power and medical equipment to building refineries.”

Since Siemens was only likely paying these vast sums because it thought it was worth its while to do so, my guess is that the benefits it received were multiples of the bribes paid. In terms of World Bank projects alone:

“Siemens said it has generated roughly $160 million in annual revenue in recent years from World Bank-financed projects.”

Perhaps crime does pay!?

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

http://www.sagepub.com/Werther/

Siemens Settles With World Bank on Bribes --- Company Will Pay $100 Million to Help Combat Corruption and Forgo Bidding on Contracts for Two Years

By Vanessa Fuhrmans

568 words

3 July 2009

The Wall Street Journal

B1

http://s.wsj.net/article/SB124655953719287521.html

Strategic CSR - FCPA

The article in the url link below maps out the history behind the 1977 Foreign Corrupt Practices Act (Issues: Corruption and Bribery, p218), which, I didn’t realize, emerged as part of the fallout from the Watergate scandal and the fall of the Nixon Presidency:

“It is often forgotten that the Watergate scandal of the 1970s was not only about the misdeeds of the Nixon Administration. Investigations by the Senate and the Watergate Special Prosecutor forced companies such as 3M, American Airlines and Goodyear Tire & Rubber to admit that they or their executives had made illegal contributions to the infamous Committee to Re-Elect the President. Subsequent inquiries into illegal payments of all kinds led to revelations that companies such as Lockheed, Northrop and Gulf Oil had engaged in widespread foreign bribery. Under pressure from the SEC, more than 150 publicly traded companies admitted that they had been involved in questionable overseas payments or outright bribes to obtain contracts from foreign governments. … Congress responded to the revelations by enacting the FCPA in late 1977. For the first time, bribery of foreign government officials was a criminal offense under U.S. law, with fines up to $1 million and prison sentences of up to five years.”

In outlining how subsequent US Administrations dealt with implementing and enforcing the FCPA, the article argues that, rather than a deterrent, the legislation merely pushed bribery underground, a move that was aided by the unwillingness of successive US Administrations to ensure its adequate enforcement:

“Any illusion that commercial bribery was a rarity was dispelled in 2005, when former Federal Reserve Chairman Paul Volcker released the final results of the investigation he had been asked to conduct of the Oil-for-Food Program. Volcker’s group found that more than half of the 4,500 companies participating in the program … had paid illegal surcharges and kickbacks to the government of Saddam Hussein. Among those companies were Siemens, DaimlerChrysler and the French bank BNP Paribas.”

This has all changed in recent years, with the current Administration both pursuing investigations against US firms, as well as against foreign-based firms with a significant US presence. The author concludes, however, that the recent increase in investigations merely reflects the fact that corporate bribery continues unabated. In addition, the social stigma associate with such behavior has diminished markedly:

“Whereas the bribery revelations of the 1970s elicited a public outcry, the recent cases have generated little comment in the United States. Companies like Chevron pay their fine and go right on using their ad campaigns to present themselves as paragons of virtue.”

Take care
Dave

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

The New Business Watergate: Prosecution of International Corporate Bribery is on the Rise
by Philip Mattera
December 18th, 2007
http://www.corpwatch.org/article.php?id=14859