CSR and Charity

Some companies give generously to charity as part or even all of their contribution to social responsibility. But what authority do directors have to give away money, which belongs to their shareholders? The only answer must be that money given to charity has long term benefits to the fundamental purpose and objectives of the company.

In today’s economic circumstances with public sector budgets being cut and the funding of charities shrinking due to government funding cuts and pressure on donors purchasing power, the corporate role in charitable funding and volunteering has become much more significant. Therefore charities and companies must both seek to find common ground in the work that they do.

The means to do this is through aligning the company’s overall strategy and its CSR objectives with the purpose of the charity. This is best achieved not through one off donations or volunteering events, but by developing partnerships and sustainable relationships that benefit the community in which the company is located, providing facilities and services that enable people to lead more productive lives and feel proud of their work place.

There are many historical examples of companies that have thrived on these principles, Unilever, John Lewis, the Co-operative to name just a few, who have built on those successful traditions and continue to operate today under those same founding principles.

In our CSR work we have worked with a number of charities to help them create links with corporate responsibility objectives and focus their efforts on building relationships with companies that share a common outlook and objectives.

We are currently working with Demelza, a children’s hospice based in Kent and South London. Like all charities they are finding their resources stretched in the current environment and need to be able to say something different to a company that has many calls on its time and resources, to make them different and worthy of that extra attention. Focusing on CSR objectives has enabled them to establish relationships with a number of new donors.

We are also working with the Global Village Energy Partnership (GVEP) who are an aid agency working in Africa and Latin America to provide rural communities with access to energy. Over 1.3 billion people do not have access to electricity, so while we are quite rightly concerned about the price and security of supply, their everyday living is constrained by lack of something we all take for granted. Our role is to help them find exploration companies who are developing large infrastructure projects in these areas and want to provide facilities for their local communities. GVEP provide the skills and knowledge to enable local SME’s to set up business providing energy to their communities, backed by, but independent of, the international company running the development project.

These are just a couple of ideas of how companies can align their objectives with those of a charity, justifying the expenditure to their shareholders and creating long term value for all.

Think of them, not so much as charities, more as strategic business partners

Responsibility at News Corp

The News of the World is dead, but does the fallout stop there! Is this a crafty damage limitation exercise to curtail further investigation into News Corp practices?

Much has already been written about the disgraceful practices that News Corporation allowed at NoW and the total lack of accountability in its management hierarchy. Whilst the legal case and subsequent public enquiries will rumble on for years, there seems to be almost unanimous agreement that News Corp has acted unethically in its phone hacking of innocent victims and their families. Whether its politicians, bankers or journalists, plausible deniability seems to be the watchword. It may constitute a legal defence, but when will public figures learn that ‘I didn’t know, I’m as shocked as you are’ doesn’t really cut it anymore!

How quixotic that companies flourishing scarce advertising dollars, concerned for their brands, are the new arbiters of ethics, probably the only constituency that has any influence on News Corp behaviour. Well done Ford et al.

How bizarre also that News Corp should have a Code of Ethics for the CEO and Senior Financial Officers, but not one for the rest of the organisation! In the light of past events, it is quite clear why! No one wanted to restrict the questionable methods of those sent out into the murky twilight world of News of the World ‘investigative journalism’. Interesting also that ethics in the eyes of News Corp is only related to money and those who are responsible for it; values principles, responsibility seemingly have no part.

A tale of two cultures

Two tragic refinery accidents 6 years and 5,000 miles apart; mistakes were made and people died, but there it seems the similarity ends.

At Texas City it was a British accident caused by British management, that was engulfed in blame, recriminations and lawsuits, almost before any investigation had been carried out with countless pages of media fed hysteria that culminated in an independent commission of enquiry, amongst many others, on which, of course, only Americans sat.

In Milford Haven by contrast the people affected have behaved with quiet dignity and accept that things like this occasionally happen. There are no politicians on soapboxes at the refinery gates and no lawyers proposing no fee no win deals. But most of all no litany of blame and no story to report less than one week after the accident. Investigations are underway and will report in due course. In the meantime, no one is jumping to conclusions.

In the case of BP in Houston, the CEO visited within days and admitted liability; apparently, there has been no visit from Chevron senior management; the police advised them to stay away and they have complied. There has been no press release and no notice on their website. And the accident has received only cursory mention in the US press we have reviewed. Somewhat at odds with the response at Texas City.

In the hysteria of the US reaction has safety performance moved ahead? It seems unlikely as so much time and effort is and will be spent in the courts, where the only winners will be the lawyers.

It seems clear that the US reaction is stridently xenophobic, hysterical and litigious but much as I would hate to see the UK go further down this path, it seems that the British press has been rather supine in its acceptance and the politicians largely disinterested. For all those who complain endlessly about unnecessary Health and Safety, we should remember that this is why the legislation exists and why we must continue to get the balance right.

But we should also remember that this is a dangerous business, as the people of Milford Haven recognise, and that the US has no monopoly on Health and Safety.

Glencore flotation

There is something in all this that makes me feel profoundly uneasy. I have great difficulty reconciling the high risk profile of a trading organisation, albeit with some pretty substantial assets, with a major FTSE 100 company, particularly one that has a limited track record of transparency or external scrutiny and some fairly ‘unconventional’ history!

Trading companies have succeeded under private, mainly management ownership, because the owners were actively involved in and understood the risks being undertaken. They also succeeded because they were able to do things - sorry ‘take risks’ - that public companies were either ethically or legally prohibited from doing, and public reputation wasn’t seen as an issue. 

So at a time when responsible investment is growing, and sustainability and responsibility are moving up the corporate agenda, how do we find ourselves in a position where tracker and pension funds, almost by default, become investors in Glencore?

There must be cause for concern that the levels of transparency and disclosure required of a listed company might prove rather indigestible to oil and commodity traders, who are a buccaneering lot with a macho, short term, results driven culture, who have of course been extremely successful. And with that success and all that cash, what ensures their loyalty in a market where barriers to entry are access to finance and contacts, and transparency and disclosure impediments to profit?

It seems to me there will be an serious onus on Glencore to prove that it understands these wider concerns and Murray’s blithe assertion that there are no corporate governance issues at Glencore seems, how can I put it, optimistic. That of course was before he mentioned that women should not be in business, as was widely reported in the press.

Interestingly the new chairman says his role is just to ‘run the Board’; but how do you run a board who have all worked together for years and are almost all billionaires? This leaves a difficult job for the newly appointed non-executive  directors to  demonstrate that they are actively involved in challenging this newly floated company to behave in a way which commands the respect of both  the markets and the company’s large group of fund based shareholders.

THE BIG SOCIETY, SOCIAL RESPONSIBILITY & THE BOTTOM LINE

The Big Society consists of all the local communities. Social responsibility is government and companies taking responsibility for their impacts on the local community, on a day to day basis, and for new projects.

Taking social responsibility involves listening to peoples’ concerns, ideas and expectations. Government needs to listen, since many of its members have little experience of the real world. Companies need to listen, as the local community is a key stakeholder that can make a significant difference to their bottom line.

The Big Society idea is about delegating responsibility to the local level where the people debating, negotiating and resolving the issues are those affected by the outcomes. It recognises that “top down” management as employed in the armed forces doesn’t work in business or in everyday life – the MOD is a prime example of this. “Bottom-up” management has been successfully developed over the past 30 years in Business, led by unions and workplace committees in areas such as health, safety and the Environment. It has resulted in substantial improvement in standards and reductions in injuries, pollution and other costly losses. Similar opportunities for cost reduction are available within the local community, working together to exploit opportunities and avoid costly delays and disruption, for example during projects.

All Projects are “local” for the people living and working in the local community, and these are the people who have the greatest influence on the success of the project. Engagement and involvement of key local stakeholders in the workplace, marketplace, environment and community is critical to the success of every project.

By engaging the community the company gains “local knowledge” and an understanding of the local culture, the likes and dislikes, the sensitivities. The process identifies local resources and potential partnerships and synergies to exploit for mutual gain. It also uncovers risks and sensitivities that can be negotiated to reach a compromise acceptable to all parties – proactively, not as a reaction to an incident, delay or other setback.

So the message to Business is that the Big Society Idea is a wake-up call to the opportunities for added value and cost savings that are available in partnership with the local communities.

Irresponsible and unsustainable: the worst criticism ever!

A response to the Futerra blog........ http://www.futerra.co.uk/blog/921#

There are some valid criticisms to be made about the BP Sustainability report, but these are the wrong ones!

The report has 7 pages relating to the Gulf of Mexico disaster and it spells out in some detail the amounts of money paid out and what it is doing, much of that with named local NGO’s and scientists. Would we really fell better informed if there was a broad range of numbers of barrels of oil spilled; except, of course, that it would have to be in gallons, because that’s a bigger number! The number, in any case, is meaningless; what’s important is the impact and that is very complex to assess. However, as the report says, significant funds have been made available to understand the implications more fully; we should be ensuring that BP report on these issues promptly and that BP help commentators to understand them.

But this is not an argument about facts, it’s emotional. You talk about sustainability as if it’s possible to sustain anything without fossil fuels and then rubbish an investment of $1 billion, which is quite a lot of money, particularly when invested in long term projects, with no guaranteed rate of return. Yes, I understand the environmental implications, but there is disagreement about what the objectives are and how they might be achieved.

 There are 8 pages in the report, which describe BP’s view of the energy future and what they are doing, which in simple terms seem to revolve around energy supply, efficiencies, sequestration  and renewables; how much of each you may not like, but don’t deny it’s there!

The third party voice given most space is not a third party at all, but the company that ‘assures’ the report, so one would expect comment. It would be more relevant to challenge the use of auditors to fulfil this role, than simply to describe them as BP’s auditors!

There is no denying that this was a dreadful accident and much remains to be done to ensure that it doesn’t happen again and we should all be wary of the risky nature of oil exploration, but more regulation is not the way and carping criticism does not get you listened to, except by your own constituency. The Gulf of Mexico is one of the most heavily regulated oil provinces in the world; those regulations and the regulators also failed; more won’t help.

In the aftermath of the disaster, BP acted with commendable speed and commitment, whilst saying some pretty dumb things; and I hope the chairman has a torrid time on Thursday. But we should consider that no government or insurance company would have paid out so much, so quickly as BP did. This does not by any means excuse what happened, but they took responsibility and action and for that they deserve some credit!

As one of my colleagues said ‘A blind bat could criticise BP after last year’s disaster’, we should be more constructive than that.

In the interests of transparency, I am a BP pensioner and shareholder.

The Ethics of Internships

As Nick Clegg drives forward a new policy to end unpaid internships I find myself reflecting on the ethics of internships.  

As I fast approach a year’s worth of internships, both paid and unpaid, there is no doubt in my mind that there is great experience to be gained, invaluable lessons to be learnt and hopefully a step further to be taken in finding that dream job..   

However, as Clegg has now started to acknowledge, the reality is that unless you are supported through an unpaid internship it is very difficult, near impossible to take advantage of the various job placements that are available.

Is it therefore ethical for companies to exploit the market by abusing the free labour which is available to them?

The competitive nature of interning means that companies can demand a great deal when they are advertising for an intern, more often than not for a graduate, with a good degree, from a good university and in some cases with relevant experience and background. It goes without saying that they must be willing to work full time, unpaid, from anywhere between one month and six.

If the job the intern gets is one worth doing, then by definition it is adding value to the company;  value that would ordinarily be paid for but is not as a result of the thousands of jobless graduates ‘willing’ to work for free.

Regardless of the pressure put on the government to produce some guidelines on unpaid internships it has taken until now for them to start thinking seriously about subject.

Prior to Clegg’s changes, the House of Commons were offering the following guidelines to its members:

"As soon as they [interns] are expected to be at work at specific times or to complete specific work, they are no longer volunteers but employees and some employment legislation will apply, such as the minimum wage." Which seems very confused and unclear.

To add to the confusion, the guidelines contradicted the ‘work for an mp’ website (http://www.w4mp.org/) where several unpaid internships were advertised to work full time for a period of around three months. It will be now interesting to see whether Clegg’s new rules of travel expenses and lunch of up to £5 for lib dem interns will make a real difference to opening up opportunities.

An intern is not an employee, but nevertheless and an employer still has a duty to take care especially in the current climate when it is so difficult for graduates to find full time employment. If the employer is looking to enhance its reputation by providing opportunities for young people it should treat them fairly; in the end they will be positive advocates for the company.

What it will come down to is whether Clegg’s push to end unpaid internships will be powerful enough to facilitate real change.