These
days, companies that want to retain public favour and investment, and also
attract the best employees, need to show they are ethically and socially
responsible. Mark Jansen reports
Many
of the multinational corporations have philanthropic, social and environmental
projects they can point to and thus declare themselves good corporate citizens.
But are such projects mere window dressing or is there some real, hard evidence
that global capitalism is beginning to adopt a more human face?
Robert
Rubinstein, head of Amsterdam-based organisation Brooklyn Bridge, is an
optimist who believes a profound shift is taking place. Brooklyn Bridge
organises an annual international conference on "ethical investing"
and its implications for corporations around the world (see further information
box). Sponsors include the European Business Network for Social Cohesion, which
is funded by the EC Directorate for Employment and Social Affairs.
Rubinstein
is convinced that multinational corporations are coming under increasing
pressure to adopt a "triple bottom-line" approach to business –
striving for high environmental performance and high social performance, as
well as high financial performance. A key source of this pressure is the rise
of "ethical" and "socially responsible" investment funds.
These are becoming more and more popular with personal investors in the
developed world and look set to grow further, particularly as these personal
investors are increasingly being forced to set up their own pension funds
rather than rely on state provision.
Companies
that want a slice of this investment money will have to prove their social and
environmental credentials: "Over the next five to ten years, you’re going
to see tidal waves of money looking for companies that are operating according
to a triple bottom line," Rubinstein predicts. He adds that as consumers
become better informed, through the Internet and a broad range of other media,
companies have become more anxious to maintain a good reputation on
environmental or social issues. He claims that consumer hostility has forced
some multinationals to get rid of their interests in nuclear power, tobacco and
dam building, and adds that some banks now employ specialists to assess the "reputation
risk" posed by certain types of investment.
But
it is another source of pressure cited by Rubenstein – the need for
corporations to attract the world’s best people to come and work for them –
that is of particular interest to HR managers.
"Qualified
employees can work anywhere they want to," he proclaims. "And there
is a growing group of middle managers, future leaders and people of high
potential who want to work for companies that stand for something – not
companies that rape and pillage the earth. The HR issue is extremely
important."
The
notion that popular opinion is forcing companies to pursue social and
environmental objectives with as much enthusiasm as financial objectives is
obviously attractive. But others in this field are more sceptical than
Rubinstein. John Weiser is a partner in Weiser-Brody-Burns, a Connecticut-based
consultancy that helps both commercial and non-profit organisations to
implement social and philanthropic programmes. Past clients have included the
Bank of America.
Weiser
accepts the argument that ethical investment funds are becoming more powerful.
And he believes that some companies are responding to pressure from consumers
to adopt "more ethical and socially responsible behaviour". But he
insists that this movement is limited to those companies with high-profile
consumer brands – those that sell products and services to other companies,
rather than the public, remain largely anonymous and are under no such pressure.
For
example, Weiser points out, the oil company Shell faced a public outcry when it
proposed to sink its Brent Spar offshore oil platform rather than tow it back
to the mainland for dismantling when it became obsolete. But the supplier
company that built the platform for Shell remains anonymous and escapes public
pressure.
As
for the HR benefits of good corporate citizenship, Weiser accepts that a strong
social and environmental record "could be helpful" for staff
recruitment and retention. "It can be helpful in motivating knowledge
workers in particular – our understanding is that knowledge workers give you
the most output when they are inspired, captivated and feel aligned with the
values and mission of a company," he says. But to him it remains a fairly
peripheral issue: "There are lots of other ways to get knowledge workers
excited – like having indoor exercise areas and cafeterias. And the bottom line
is the compensation – if you get that wrong, these other issues won’t matter!"
Of
the three companies featured in our case studies – Nestle, Microsoft and autoparts
manufacturer Delphi – only Delphi reported that its corporate citizenship
programme had particular HR benefits. In Mexico, where Delphi employs around
75,000 people, the company is actively involved in getting its employees into
government housing schemes. Staff turnover, which is high in many Delphi
plants, is drastically reduced among staff who are homeowners. But both
Microsoft and Nestle said that the HR benefits of their social programmes were
either negligible or impossible to measure.
Nestle
Nestle
has around 5,500 employees and 16 factories in South Africa, making it the
company’s biggest African market by far. The country has enormous developmental
needs – poverty, illiteracy and unemployment are all widespread. Nestle South
Africa is involved in over 20 community development projects, often donating
money and sitting on the management boards of those that aim to provide
long-term solutions to such problems.
One
such example is Ecolink, a non-government organisation (NGO) which has taught
communities how to "harvest rainwater" with the use of guttering and
water tanks. Villagers are taught basic construction skills to build the water
tanks with the aid of a reuseable iron mould. There is as much rainfall in
South Africa as in England, but in South Africa, the rain tends to come all at
once. Four of these tanks can provide a school or a health clinic with water
all year round.
Ecolink
has also taught impoverished South Africans in some of the hottest parts of the
country to grow their own food with the aid of "trench gardening".
This involves digging a door-sized trench, which is then partially filled with
household waste before a layer of soil is placed on top. The waste helps to
feed and irrigate the soil and allows vegetables to be grown on top of the
"trench".
According
to Nestle’s corporate affairs manager, Jacky du Plessis, who also administers
the company’s social responsibility programmes and sits on the boards of
various South African NGOs, three trench gardens can feed a family for a year.
Nestle
has also provided funds for South Africa’s Earthcare programme, which has,
among other projects, distributed polystyrene "wonderboxes". The
thermal properties of these boxes allow South Africans to make drastic savings
on the amount of firewood they use when cooking. This is significant in a
country where there is little electricity and people are forced to walk
ever-greater distances in search of trees to use as firewood.
In
urban Cape Town, Nestle is supporting War Against Malnutrition, Tuberculosis
and Hunger (WARMTH). This NGO teaches women how to run "community
kitchens", which offer low-cost, nutritious, soya-based meals. The
training includes financial skills and the women running the kitchens are
encouraged to make a profit, "so the more they cook, the more they profit
and the more the community eats," notes du Plessis.
She
recently met a woman who is using the profits from her kitchen to put her three
children through school and herself through night school, where she is learning
to read and write.
"I
think there’s a growing awareness that multinationals, in particular, need to
show a human face," muses du Plessis. "In today’s world, you can no
longer say you’re a good company just because you put out good products and
treat your staff well. You have to be seen as a stakeholder in the local
community and play a part in solving local problems."
As
for specific HR benefits, du Plessis is uncertain: "If you are showing
your human face, it has got to play a role in becoming a preferred employer.
But how would you measure it?" She adds, "Even academic institutions
are running outreach programmes. We’re certainly not the only ones out there.
All citizens, including corporate citizens, have to play a role."
Delphi
Delphi
Automotive Systems is the world’s largest manufacturer of auto parts and has
around 211,000 employees across the globe. Â
Many
multinationals have opened up manufacturing bases in Mexico in recent years,
and Delphi is no exception, having opened 55 plants there since 1978. In fact,
Delphi is now the second-largest employer in Mexico with 74,000 employees.
Over
the past five years, Delphi has been working in partnership with local housing
authorities to help its production workers save up for and move into government
housing projects. Delphi employs special staff to help workers with the
application forms; it also arranges for housing officials to come on-site to
explain the scheme to its workforce. In some cases, it has provided bridging
loans to help workers with their first down payment.
In
addition, thanks to a special agreement between Delphi and the housing
authority, the system of qualifying for this housing has been greatly speeded
up, with waiting times for Delphi workers reduced by up to 15 years in some
cases. The company estimates that it will have helped around 8,000 of its
workers move into government homes by the end of 2002.
Michael
Hissom, director of public relations for Delphi’s Mexican operations, says the
company’s motives are simple: "We want decent housing for our employees,
because it is the right thing to do." However, he admits that the
initiative also has important HR benefits.
In
many Mexican towns, the influx of multinational companies has led to zero
unemployment and, as Hissom notes, "It’s an employee’s market." So
the housing scheme makes Delphi an attractive company to work for. In addition,
it promotes stability in the workforce – with jobs relatively easy to come by,
Delphi has found that labour turnover in some of its plants can be as high as
10% a month. "But we have found that among employees whohave bought homes,
labour turnover falls to one tenth of one per cent a month," explains
Hissom.
Microsoft
Bill
Gates is one of the world’s biggest philanthropists, donating hundreds of
millions of dollars to worthy causes through his personal Gates Foundation and
also via the company he founded, Microsoft.
One
of the general aims of Microsoft’s corporate philanthropy (as opposed to Bill
Gates’s private donations made through the Gates Foundation) is the teaching of
IT skills to "disadvantaged groups".
This
goes on all over the world, from the company’s home state in the US to China to
everywhere else, and it aims to help these people improve their employment
prospects and thereby help the development of the communities they live in. The
company also provides free software and technical assistance to charitable
organisations.
Yet
while Microsoft teaches IT skills to disadvantaged people, international public
relations manager Ricardo Adame says there are few strategic HR benefits:
"We are not doing this so we can train people to become software
developers, which is our core business.
"We
really just train people to know how a computer works, how to do research on
the Internet and how to use computers to help run a business."
He
adds, "It would be fair to say we’re reinforcing our reputation in local
markets. It’s always been a part of company culture to give something back to
the community."
Further
information
–
The Global Business Responsibility Resource Centre: www.bsr.org/resourcecenter
–
Business in the Community: www.bitc.org.uk
–
The United Nations Global Compact Network: www.unglobalcompact.org/gc/UNWeb.nsf/
–
Business Leaders Forum: www.pwblf.org/
–
Bill & Melinda Gates Foundation: www.gatesfoundation.org
–
Microsoft: www.microsoft.com/giving
–
The Bank of America Foundation: www.bankofamerica.com/foundation/
–
Nestle: www.babymilk.nestle.com
–
Delphi Automotive Systems: www.delphiauto.com
–
Brody-Weiser-Burns consultancy: www.brodyweiser.com
Ethical
investing
–
Triple Bottom Line Investment (includes details of the 2001 conference
organised by Brooklyn Bridge, which takes place in Rotterdam on 18-19
November): Â www.tbli.org
–
UK Social Investment Forum: www.uksif.org
–
Ethical Investment Research Service: www.eiris.org
–
www.socialfunds.com contains many
surveys purporting to measure the social and environmental performance of
various companies
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Further
reading
Conversations
with Disbelievers: encouraging companies towards greater social engagement, by
J Weiser and S Zadek, can be downloaded free of charge from www.zadek.netÂ
and www.brodyweiser.com
