ECM Dec-Jan_Layout 1 10/12/2012 16:06 Page 1 Corporate reputation Transparency is the answer Alternative vehicles Is liquid nitrogen the low emission solution? Nike Sustainable can be cool December 2012 – January 2013 www.ethicalcorp.com The year that climate change hit Manhattan
ECM Dec-Jan_Layout 1 10/12/2012 16:06 Page 2 an Qu et a dg It’s Back! ote £2 EC 50 Ma dis g2 co 12TH ANNUAL 01 un 3 t! The Responsible Business V Summit 2013 HEAR FROM THE FOLLOWING INTERNATIONAL BUSINESS LEADERS: 7TH–8TH MAY 2013 THE NOVOTEL WEST, LONDON, UK INNOVATION BEST PRACTICE INTERACTIVITY FOCUSED DEBATE Daniel Franklin Executive Editor The Economist www.ethicalcorp.com/rbs Jeremy Darroch Chief Executive Officer BSKYB Corporate Focus Service providers and vendors will only be able to apply for John Sauven a number of passes at a higher cost. It’s your chance to network Executive Director with an audience of which a majority are corporate and NGOs. Greenpeace UK Build Key Relationships From the CEO of BSKYB to the Executive Director of Greenpeace to the Executive Editor of The Economist. No other summit brings Fiona Kendrick together so many high-level attendees. Build career and Chief Executive Officer knowledge-enhancing relationships with leading figures in Nestlé UK the corporate, NGO and media world. Key CSR Topics for 2013 From macro keynotes to in-depth practical breakout sessions, get the solutions your job requires. Several months of research Jane Griffiths with key stakeholders means we’ll deliver the most crucial topics. Company Group Chairman Janssen Active Participation Pharmaceuticals Live Twitter feeds, use of live polling, scenario-based discussion, ‘Question Time’-style debates and issue-based roundtables will ensure that you – not just the speakers – are at the heart of the discussion. FACT! 20+ unique workshops Emerging Markets Perspectives 50+ Speakers from Europe, New speakers from the UAE, Jordan, Hong Kong, Turkey, India and more. Learn from those at the vanguard of CSR in a rapidly Middle East, USA and Asia changing landscape. 500+ attendees Book your place NOW! Call 020 7375 7226 or email email@example.com
ECM Dec-Jan_Layout 1 10/12/2012 16:06 Page 3 Ethical Corporation • December 2012 – January 2013 Contents 3 Contents 5 From the editor EthicsWatch 6 HSBC Battered and bruised 7 Emissions trading Aviation cut out 8 People trafficking US toughens stance p22 Are there new alternatives? 9 Wind energy So much potential 22 Alternative vehicles Electric cars left behind 24 Cheat sheet 10 Mallen Baker Insight and analysis distilled p35 Sustainable products people want Options for GRI 26 NGOwatch Water risks addressed Review of the year Strategy and management 12 2012’s ups and downs 35 Sustainability commercialised Briefing: corporate reputation Nike’s big steps forward 16 2013’s potential 28 Stakeholders, crises and bad 38 Essay management Nature’s business solutions 32 Transparency and disclosure that works 19 Peter Knight American voters explained 41 China column 20 CRwatch Paul French has high hopes for China’s new How Sandy brought out the best premier Review 42 Report: Microsoft 43 Report: Symantec 44 New books 45 Academic news People 46 Recruitment Sector that bucks the trend 48 People on the move REUTERS/CARLO ALLEGRI 50 Toby Webb p11 Looking back, looking forward p27 Business bashing Give reporting some glitz
ECM Dec-Jan_Layout 1 10/12/2012 16:06 Page 4 One click access! Make sure you and your colleagues have access to all the latest CSR analysis at just a click of a button Ethical Corporation can now offer you and your colleagues hassle-free one click access to our 8000+ articles on business sustainability. You won’t need to login – All we require is your corporate IP address/range. You will benefit from: Knowing that everyone within your company receives and has access to all the latest sustainability analysis – at just a click of a button Enforcing your company’s competitive edge – everyone will have access to the world’s largest online CSR resource. Within seconds they can find analysis on issues, companies, best practice and more Having time to do the jobs that count – Every week we send out all the latest analysis from EthicalCorp.com. With just a click of a button anyone at your company can access that analysis § The ‘One-Click-Access’ subscription is basically a corporate license to access our content from any of your company computers. As a subscriber you know the benefit of subscribing to our analysis, why don’t you share this amongst your colleagues…. Call Harshi Joshi now on +44 (0)20 7375 7235 and receive a demo of how easy it is
ECM Dec-Jan_Layout 1 10/12/2012 16:06 Page 5 Ethical Corporation • December 2012 – January 2013 From the editor 5 Welcome to the December 2012 – January 2013 issue t’s been quite a year. As ever, the focus for our final issue of activism, which carefully and effectively identifies corporate I 2012 is to reflect on the events of the past 12 months, and try to analyse where the progress has been made and where targets, companies need to be nimble and engaging. They need to demonstrate that they know where their corporate the new challenges have come from. behaviour needs improvement, and that they are doing While many parts of the world have for some time been something about it. Transparency is the key, of course, and an experiencing seemingly more-frequent extreme climate ability to accept there are problems – and that there will be in events, there’s no doubt that Hurricane Sandy sweeping the future. And as the recent corpo- through the eastern United States in the autumn focused rate tax scandals – not least attention on the issue. Ironically – and despite a severe involving Starbucks – show, simply drought this year in many crucial grain growing regions else- operating within the law is often where in north America – climate change was hardly not enough. mentioned for much of the US presidential election. It really Elsewhere this time we examine was all about the economy (stupid), despite the fact, of course, the future for electric vehicles, and that climate impacts may well be the most serious economic explore some potentially much issue over the coming years. better alternatives. And in the next Is the game up already? As Penny Shepherd, chief execu- of our sustainability commercialised tive of UKSIF says in our 2012 review, this past year may well series, we focus on Nike’s leader- become regarded as the time when everyone involved in the ship in the apparel and footwear climate debate concluded that the 2C “safe” temperature rise sector in the drive for radically more sustainable products. In target that the UN’s climate panel have set is in practice addition we have reviews of the latest reporting from unachievable. Microsoft and Symantec, and the usual roundups and We’ll review next time how far the Doha climate talks analysis from our columnists. addressed these thorny issues. But, one thing the experts We’ll be back with our February issue. Until then, many from the Ethical Corporation advisory panel agree on is that thanks from all of us at Ethical Corporation for your feedback business is taking the lead on the climate and other sustain- and support during 2012, and best wishes for a successful ability matters that are so pressing. Chris Wille from the 2013. Rainforest Alliance sums it up well, pointing out that as we all share the responsibility for a sustainable future, everyone has to do something. There are no surprises that, increasingly, the companies that are seen to be doing their share are also winning in terms of corporate reputation, the focus of this issue’s management Ian Welsh briefing. In the age of interconnected stakeholders and smart Editor Publisher: Toby Webb Contributors: Rob Bailes, Oliver Balch, Mallen Baker, firstname.lastname@example.org Jeni Bauser Yaghoubi, Elaine Cohen, Jon Entine, Editor: Ian Welsh Paul French, Stephen Gardner, Phoebe Hayes, email@example.com Giles Hutchins, Peter Knight, Claire Manuel, Sam Phipps, Rikki Stancich, Toby Webb Contributing editor: Mallen Baker Sub editors: Sarah Burton, Gareth Overton Business Intelligence for Sustainability People on the move Advertising and sales: Oliver Bamford Design: Alex Chilton Design firstname.lastname@example.org email@example.com | +44 (0) 20 7375 7518 firstname.lastname@example.org | +44 (0) 20 7042 6340 7-9 Fashion St, London E1 6PX UK Subscriptions: +44 (0) 20 7375 7575 Editorial: +44 (0) 20 7375 7213 Subscriptions Corporate subscription Ethical Corporation is printed by Four Way Print Ltd on Green Coat plus paper, which ISSN 1758-1575 email@example.com | +44 (0) 20 7375 7575 packages from £495 comprises 80% recycled and 20% Forest Stewardship Council certified source material.
ECM Dec-Jan_Layout 1 10/12/2012 16:06 Page 6 6 EthicsWatch Ethical Corporation • December 2012 – January 2013 EthicsWatch Banking boost Britain’s Green Investment Bank has By Stephen Gardner opened for business. The Edinburgh- HSBC under fire, aviation cut from EU emissions trading, US people trafficking rules based GIB officially opened its doors tightened and the wind power dilemma at the end of November, with initial state backing of £3bn. The bank has GORDONBELLPHOTOGRAPHY/ISTOCKPHOTO.COM Analysis: HSBC Tom Picken of Global Witness says: “HSBC also made its first investment, placing have tried to deflect the seriousness of this by £8m into a project to construct ‘World’s local bank’ stating almost all of their clients are ‘compliant Britain’s biggest anaerobic digestion accused over or near-compliant’. They won’t, however, explain what ‘near-compliant’ means.” logging clients Global Witness suggests that while HSBC’s forest policies are more progressive than those of other banks, it has failed to monitor and By Rob Bailes implement those policies. Embattled British bank HSBC finds itself Picken adds: “It is deeply disappointing embroiled in yet another scandal that HSBC have still not agreed to a meeting with Global Witness at a level higher than ust when you thought things couldn’t get simply fielding HSBC’s sustainability people – J any worse for HSBC, a report published by Global Witness in November accuses the British this suggests they are not taking these matters seriously.” Green bank will boost energy, says Cable financial giant of bankrolling unsustainable logging companies in Sarawak, Borneo. A new low plant (for conversion of waste into According to the Global Witness investiga- The Global Witness report represents a new biogas), in Teesside. The bank’s tion, a number of HSBC’s Sarawak clients have nadir for the embattled bank. In July 2012, a 12- contribution is matched by £8m in been engaging in illegal logging and unethical month US Senate investigation found that private funding. The GIB will “place practices, violating the bank’s 2004 forest HSBC’s compliance culture had been “perva- the green economy at the heart of sively polluted for a long time” our recovery and position the UK at after years of poor anti-money- the forefront of the drive to develop laundering controls allowed billions of dollars green energy”, according to business to be laundered through its US and Mexican secretary Vince Cable. Some of the banking operations. bank’s powers, including its freedom A Senate subcommittee concluded HSBC to borrow from the capital markets, had “exposed the US financial system to money remain to be clarified, however. laundering, drug trafficking, and terrorist financing risks” through a systematic failure to Sweet success enforce internal controls. HSBC says: We are The self-declared “pre-eminent actively engaged in discussions with US author- player in global snacking”, Mondelez ities to try to reach a resolution, but there is not International, formerly known as yet an agreement. Kraft Foods, and the owner of brands The bank is currently preparing itself for such as Cadbury’s, has celebrated the fines from the US authorities that could reach launch of its new name with a plan Stakeholders kept in the dark as much as $1.5bn – one of the largest ever to invest $400m over 10 years in a imposed in the financial services industry. For Cocoa Life sustainability programme. policy – and earning it $130m. comparison, Standard Chartered recently The scheme will help cocoa farmers, HSBC’s 2004 forest policy required the bank received a fine of $340m from US regulators for especially in Ivory Coast, where to drop clients unlikely to achieve Forest Stew- its alleged role in illegal banking transactions $100m will be invested to double the ardship Council or equivalent certification for with Iran. productivity of 75,000 smallholders. 70% of their operations, by 2009. Global If money laundering and bankrolling of Money will also be spent on commu- Witness says that as of 2012, none of HSBC’s unsustainable logging companies weren’t nity, youth and environmental Sarawak forestry clients analysed in the report enough, last month HSBC also found itself projects. Cocoa Life is the scaling up hold an FSC or equivalent certification, repre- looking into evidence that criminals and tax of the Cadbury Cocoa Partnership, senting a 100% compliance failure over an evaders were using offshore accounts at its which has run projects in the eight-year period. Jersey operations following a leak from a Dominican Republic, Ghana and Responding to Ethical Corporation, the bank whistleblower. India. In Ghana, it helped partici- says that “99% of our customers in the forestry While it is not the responsibility of the bank pants increase their household sector are compliant or near compliant with our to police the tax affairs of its account holders, incomes by 200%, according to the policy” and that it is ending its relationships HSBC shareholders, regulators and the public company. “It’s about empowering with the “remaining 1%”. will surely be very concerned. I cocoa communities,” Mondelez senior vice-president Bharat Puri says.
ECM Dec-Jan_Layout 1 10/12/2012 16:06 Page 7 Ethical Corporation • December 2012 – January 2013 EthicsWatch 7 Gender balance At least 40% of non-executive board- Analysis: international aviation national aviation emissions. “Our concern was member positions in European Union that by putting international aviation into the publicly listed companies should go to women, the European commis- Aviation falls EU emissions scheme, policy-makers were putting off difficult political decisions around sion says. Under proposals published in mid-November, the quota would from emissions UK airport capacity and expansion,” says Wyatt. have to be met by 2020. Commission vice-president Viviane Reding says 11 trading scheme There is, however, scepticism that ICAO can deliver. “The track record of ICAO in terms of EU countries, including France, Italy By Rob Bailes delivering real emissions reductions is poor,” and Spain, have introduced some The ICAO has a year to come up with a adds Wyatt. “That’s why aviation needs to be kind of rule on gender balance in framework for aviation emissions, as the part of a global deal.” boardrooms, and other countries EU suspends international flights from its should follow suit. However, trading scheme Stung into action although it would be binding for Addressing greenhouse gas emissions from n November the European commission international aviation has long been a countries to take measures to meet the goal, no sanctions would be applied to companies missing the I unexpectedly announced it would freeze the application of the EU emissions trading headache for international policy-makers. Excluded from the 1997 Kyoto protocol target if it could be shown that scheme to non-EU flights for a year. because of difficulties in determining how to suitable candidates were not avail- According to climate commissioner Connie allocate emissions to different countries, able. The proposal must survive Hedegaard, the decision by the EU will enable responsibility for reducing emissions has examination by the European parlia- the International Civil Aviation Organisation instead rested with the ICAO. ment and EU member state (ICAO) time to develop a global framework for Now, ICAO appears to have been pressured governments before becoming law. a market-based emissions reduction scheme into action. In mid-November it announced relevant to international aviation. JORDIRAMISA/ISTOCKPHOTO.COM Local tariffs for local Industry experts say the EU’s people climbdown is a result of pressure People living close to wind farms from aircraft manufacturers and might have less of a not-in-my- overwhelming global opposition backyard attitude if they receive a to the EU’s decision to pull inter- bonus via their electricity tariff. Good national aviation into the EU ETS. Energy, which provides renewable Countries such as China, India power, is offering a 20% discount to and the US have consistently opposed the EU ETS decision on TIMMY/ISTOCKPHOTO.COM the grounds that any agreement on international aviation emis- sions must be global and come through ICAO. Most recently, a new US law was enacted that shields US Can aviation avoid a bumpy landing? airlines from the EU ETS. While the move will have no immediate effect in light the formation of a special high-level group of the EU’s decision it could affect future rela- charged with investigating the feasibility of a tions between the US and EU, should ICAO fail global market-based measure and a global to develop and agree a global framework. policy framework to guide its application. According to the Aviation Environment According to ICAO’s secretary-general, Local generation can turn back the clock Federation, opposition to the EU ETS has been Raymond Benjamin, a draft resolution on a one of political principle rather than any global policy framework will need to be people living within 2km of its wind fundamental rejection of the scheme itself. produced in time for the organisation’s annual farm in Delabole on the north Cornish “Disquiet towards the EU’s decision is not general assembly in September 2013. Putting in coast, in southwest England. The so much based on how it will impact in terms place a global market-based scheme may take scheme is the first of its kind, of cost, but more in terms of the principle – much longer, however. according to the company. An extra that the EU was looking to impose measures “We don’t have to come to that general bonus depending on how much elec- beyond its borders,” says Cait Hewitt, deputy assembly with a global scheme. We have to tricity the wind farm produces could director of the federation. come with a global framework and an answer bring the net benefit for local resi- Environmental groups have tentatively to the question about the feasibility of a global dents up to £150 a year. The local tariff welcomed the decision as positive. According scheme,” says Benjamin. “The objective would “put renewables at the heart to Vicky Wyatt of Greenpeace UK, the EU ETS remains carbon-neutral growth of the aviation of the community,” says Good Energy was never a panacea to the problem of inter- industry by 2020.” I chief executive Juliet Davenport.
ECM Dec-Jan_Layout 1 10/12/2012 16:06 Page 8 8 EthicsWatch Ethical Corporation • December 2012 – January 2013 Prototype published Analysis: supply chains workforce agencies and educators. Integrated reporting of financial and This would help ensure that “victims are non-financial results has come a step Anti-trafficking always treated as victims and not criminals,” closer according to the International measures go federal he said. Integrated Reporting Council (IIRC), which has published its “prototype” Now for action framework. Paul Druckman, the IIRC By Sam Phipps Human rights NGO Stop The Traffik has chief executive, says the prototype While the US government is targeting praised Obama’s adoption of the California framework will help companies dip human trafficking, companies must take law on a federal level but cautions against their toes in the waters of integrated ultimate responsibility for their supply complacency. reporting. “We are encouraging busi- chains “It is excellent that anti-human trafficking is nesses to start testing the principles on top of the agenda for President Obama, as of integrated reporting and evalu- new executive order from the US presi- this will inspire others to also make it a A dent, Barack Obama, requires all US government contractors and subcontractors to priority,” says Jantine Werdmuller von Elgg, global project officer at Stop The Traffik. ating their relevance and applicability,” he says. Feedback is welcome, though the prototype ensure they do not engage directly or indi- But she argues that putting legislation in framework is not part of the IIRC’s rectly in forced labour. The measures mirror place won’t necessarily bring about change. “It formal consultation process. The final laws passed in California two years ago with is only employees taking action in a company framework is expected at the end the purpose to “provide consumers with infor- that will disrupt the global trade in people.” of 2013. mation regarding [companies’] efforts to Von Elgg also cites imminent UK legislation eradicate slavery and human trafficking from that has much the same thrust as the US law. Adding fuel to the fire their supply chains”. The proposed Transparency in UK Company The European commission has infu- “Our fight against human trafficking is one Supply Chains (Eradication of Slavery) Bill is riated environmental groups by of the great human rights causes of our time,” expected to resume its second reading debate listing as “sustainable” palm oil Obama said, announcing the order shortly in January 2013. certified by the Roundtable on before his re-election. More than 20 million Obama also announced more resources for Sustainable Palm Oil (RSPO). The people around the world are ensnared in traf- services and legal assistance to victims of traf- listing means that biofuel produced ficking, according to the White House. ficking, including the launch of $6m in special from RSPO palm oil can count The executive order reinforces an existing awards – with support from the Goldman towards a legally binding European zero-tolerance policy on trafficking in govern- Sachs Foundation – for local communities to develop collaborative and comprehensive RZELICH/ISTOCKPHOTO.COM solutions to help trafficking victims. EDSTOCK/ISTOCKPHOTO.COM Laurel Bellows, president of the American Bar Association (ABA), also welcomes the exec- utive order and says she expects a uniform law against trafficking to apply in the US from next July or August 2013, covering the whole private sector as well as the state. More than 100,000 US citizens are in slavery today, and that excludes “tens of thousands of men, women and children who are brought over our borders and subjected to captivity for sex or labour for the profit of their captors,” Green fuel greenwash? Bellows says. In Chicago alone 16,000 underage girls are Union target for 10% of transport Officially zero-tolerant on people trafficking forced into prostitution each year, though fuels to come from renewable sources Seattle and Atlanta are the main hubs, Bellows by 2020. Friends of the Earth and ment contracting and requires compliance says. Greenpeace say that the decision measures for overseas contracts and subcon- “We have to make certain that every single amounts to “greenwashing” of palm tracts of more than $500,000. These include an employer in this country incorporates into a oil, the production of which can drive employee awareness programme, a process to handbook or short presentation a basic plan destruction of tropical forests as areas report violations without retaliation, and for all employees to sign off when they join are cleared for plantations. The RSPO recruitment and housing plans. and at the end of every year: how do you says the decision was “critical in Obama has pledged more training and identify a victim and what’s the hotline making real progress towards the guidance to federal prosecutors, law enforce- number to call if you think you have.” supply and demand of sustainable ment officials and immigration judges, as well Bellows concluded: “Americans have to commodities” and that certified palm as to commercial transportation officials, state understand that they all have a job they can do oil does not “contribute to the and local law enforcement partners and state on this issue.” I sustained destruction of valuable tropical forests”.
ECM Dec-Jan_Layout 1 10/12/2012 16:06 Page 9 Ethical Corporation • December 2012 – January 2013 EthicsWatch 9 Deforestation down Some rare environmental good news: Analysis: wind power the IEA. If these subsidies were removed the rate of Amazon deforestation today, greenhouse gas emissions would be 6% was down 27% in the year to 31 July Blowing hot and lower by 2050 (according to OECD analysis), 2012, and the lowest rate since records began in 1988. Andre Correa cold and renewables such as wind and concen- trated solar power would be cost competitive do Lago, Brazil’s head negotiator at By Rikki Stancich in Hong Kong with, if not cheaper, than coal and gas, says the United Nations climate conference More commitment to wind power could Greenpeace’s renewable energy expert, Sven mean hitting global emission reduction Teske, a co-author of the GWEO report. RICARDOAZOURY/ISTOCKPHOTO.COM targets. But it’s looking unlikely Within reach ovember was an important month for According to the report, the power sector is N climate change mitigation. The Interna- responsible for more than 40% of all CO2 emis- tional Energy Agency made a historic first, sions from burning fossil fuels, and about 25% initiating dialogue on climate change. It of total greenhouse gas emissions. This makes advises that to achieve the goal of keeping any a compelling case for installation of renewable global temperature rise to 2C, only one-third of energy generating capacity. proven reserves of fossil fuels can be With political commitment, the 2030 emis- consumed before 2050. sions goal can be met and even exceeded, All eyes then turned to COP 18 in Doha, stresses the report. In a best-case scenario, and the UK’s Department of Energy and wind energy could meet roughly 24.8% of total Welcome cut in cutting Climate Change’s long-awaited energy bill. electricity demand. The latter signals a switch away from coal Since 2009, however, growth in the wind in Doha, Qatar, says measures to towards nuclear and renewables, sector has slowed significantly. According to curb illegal logging had had an particularly wind, but with consumers facing the report, “recession in most of the OECD, the impact, and that emerging countries higher bills to pay for new power installations. lack of EU ambition to ‘fix’ its emission trading could do more on deforestation and With the window of opportunity to stave system, fickle policy in the US and elsewhere”, other carbon-related issues if rich off runaway climate change SHAUNI/ISTOCKPHOTO.COM nations provided more funding, narrowing, the stakes are higher including to address poverty. than ever. Even so, “the politics Despite the improvement, more don’t look very good”, says the than 4,600 square kilometres of latest Global Wind Energy the Amazon rainforest was lost in Outlook (GWEO) report. 2011-12, an area nearly twice the To rein in climate change, size of Luxembourg. annual global emissions must be pared down from the IEA’s How to avoid 2020 business-as-usual scenario corruption of 56bn tonnes of CO2, to a Executives hoping to avoid large fines 44bn tonne goal. Today, or even prison sentences should they however, there is already a get caught up in corruption in foreign “gap” of 10bn tonnes of CO2 countries should read a 120-page per year between current guide to the United States Foreign confirmed national emission Corrupt Practices Act, published reduction targets and that recently by the US government. The 2020 goal. Still untapped potential guide includes case studies, details “Even if the pledges made in on the scope of anti-bribery provi- Copenhagen and confirmed in Cancún are have undermined the sector’s growth poten- sions, definitions of terms such as met in full, a gap of 6bn tonnes per year tial, according to the GWEO report. “corruptly” and “wilfully”, defences remains,” notes the GWEO report. Meanwhile, Growth is likely to pick up again around that might be accepted and the global emissions continue to rise. 2014. But the Global Wind Energy Council’s penalties that might apply to wrong- Unless market corrections such as efficient secretary-general, Steve Sawyer, argues it is doers. Because of the damage done carbon pricing and removal of fossil fuel subsi- unlikely that the best-case scenario can be by corruption, enforcement of the dies are made now, the current opportunity to achieved. Instead, he says it is more likely that Foreign Corrupt Practices Act is a contain global warming will be missed, 760GW will be installed by 2020, meeting 8.3% “continuing priority at the Depart- according to IEA projections. of electricity demand, with annual CO2 ment of Justice and the Securities However, governments continue to back savings of around 1bn tonnes. As the report and Exchange Commission,” the the wrong horse. Subsidies to fossil fuels are concludes, this is “not sufficient for wind guide said. The act’s provisions can now 30% higher than in 2010 and six times the energy to play its full part in combating the extend to non-US, as well as US, amount received by renewables, according to climate crisis”. I companies.