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commentary

The price of a cup of tea

The BBC’s investigation of workers’ conditions on tea plantations in Assam makes depressing reading. The squalor and poverty behind one of the world’s favourite drinks is appalling.

It is striking that the response of Unilever, a company often held up as a beacon of responsibility and sustainability, is so weak. According to the BBC, Unilever knows there is more to do, but that ‘progress has been made’. Presumably that means that conditions were even worse in the past. And does Unilever measure the impact of its operations on tea workers at the bottom of the supply chain?

Also, the Rainforest Alliance that operates one of the more widely used certification processes admits that its audit process, which is based on annual inspections, is inadequate. Moreover many supply chain inspection processes are based on less than annual inspections. So the BBC investigation has the potential to undermine confidence in a number of  well-known certification processes.

The response to the Rana Plaza disaster was a legally binding commitment involving the unions. Is it time for something similar for the tea industry?

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announcements

What hope for corporate accountability

Here are some musings on the – rather sad – state of corporate accountability in 2015. It is a report of a conversation I had with the folk at the SustainAbility consultancy.

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commentary

The advantages of second sight

We all love a good Post Office,  I’m sure – but what happens when the Post Office goes bad?

A few days ago we learned that the continuing rumbles about the training for and the functioning of the Post Office’s key operational Horizon computer system, introduced in 2000, did have some foundation. Or at least I think so, but the Post Office will not release the report that it commissioned Second Sight to produce on the issue. That report apparently found failings with the Post Office and its handling of the affair. However while their report remains confidential, they are said to have issued a press release rebutting its findings. But at the time of writing at least one Post Office computer system did indeed seem to have failed: their website for press releases.

The issue is not mentioned on their social responsibility website. And there seems to be no mention of a whistleblower function there either. This all leaves those aggrieved by the affair in the cold. And overall it represents very poor social responsibility.

The Post Office seems to be painting itself into an ever-tighter corner from which there will be no escape without a little humility and a good dose of transparency. Failing that, having had a first look into the future, I predict there will be legal battles over cover-ups in years to come.

 

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commentary

The disappointment of mergers and acquisitions

Do mergers and acquisitions make sense?

Kraft and Heinz are to merge. Is that good or bad? The answer depends on who you are. But mergers and acquisitions rarely create shareholder value, according to received wisdom. Of course some (some shareholders, the advisers) are going to benefit otherwise they wouldn’t happen. But the businesses as a whole usually suffer.

And so do other stakeholders. Staff will typically suffer as one of the rationales for such deals is usually staff savings. Suppliers are similarly likely to suffer because the rationalisation of procurement is another driver. But such stakeholders are never consulted in advance of an agreement.

And the environment is rarely mentioned – when was the last time you heard about a big deal that was justified as necessary to preserve the environment?

Beyond the particular companies involved in any deal, through the consolidation of organisations of such scale the economic system as a whole loses diversity and resilience. With fewer participants and fewer, more controlled connections between them, the economy becomes more fragile and less responsive.

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commentary

What's wrong with finance?

Why are there so many scandals within the finance sector? From the many news reports the banking, finance and insurance sector across the world seems rife with malpractice.

Insurance seems to be commonly mis-sold – to those who don’t need it and to those who don’t care enough to shop around at the end of the year. Banking often provides poor service and finds it hard to justify its charges. (But it can help you avoid tax.) And then there’s finance. Apart from crashing the world economy, a surprising number of markets seem to have been rigged and operated for the benefit of the industry rather than the market participants.

It doesn’t look as though it’s a matter of a few rotten apples spoiling things. The entire barrel looks badly decomposed. It is tempting to think of the sector as a zombie – still out to get you even though it is clearly dead. But that would be wrong.

It is true that there are so many separate companies involved in all these scandals that it must be a systemic problem. And because finance is the life-blood of the economy, an infection in one part of a bank can spread everywhere.

Also, the typical reaction of the management of financial companies rarely helps. The response to a scandal is almost invariably a variation on this theme: “we’re sorry that [something] has gone wrong. This behaviour does not represent the ethics of the bank as a whole, it is the result of a few rogue individuals. However we have already put in place far stricter controls that will prevent this sort of thing ever happening again.” With a few changes, that could also have come from the mouth of the regulator.

But a few weeks later, it happens again…

Which matters because we have little choice in where to put our money. True, crowd-sourced finance, local money schemes and friendly societies are beginning to push the mainstream finance sector out of the way. But can this disintermediation spread beyond smaller ventures? As a result, trust in a fundamental institution of our economy is falling away. The final result may be increasingly ‘irrational’ behaviour by all of us that will make the smooth functioning of the economy – and of our lives – increasingly difficult.

The question remains, however – why is the finance sector in particular in this state?

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commentary

What are corporate citizens to do when there's an election?

The answer isn’t to vote – unless of course you are based in the City of London when the number of voters you can appoint for local elections is proportional to the number of your staff.

But there’s a general election coming up, so what can a corporate citizen do?

Businesses have a great interest in the way the country is run, so they care about the results. Some – like media companies – can influence the electorate directly. (This is lobbying more or less hiding in the plain light of day.) But others have two main routes to influence the democratic process: consultations and lobbying. Consultations require arguments to persuade civil servants. While a lot of this goes on behind the scenes, at least there is also an official audit trail of the process.

Lobbying is a lot murkier and includes politicians as targets. This will also be the first UK general election since the Transparency of Lobbying Act became law, almost exactly a year ago. One part of the Act sets up a register of lobbyists. The mechanics of this is very weak – and still out to consultation. The other part limits campaigning within 7 1/2 months of an election, if it could conceivably be seen as influencing an election result. That might seem sensible – but the sting in the tail is that campaigning by all organisations, including charities and unions as well as for-profit companies, is affected.

It will be interesting to see what difference the new Act makes to this year’s election.

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announcements

The social case for value

How does an organisation find out whether it is doing its part to justify its licence to operate? See my guest blog here.

 

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commentary

Why is it so taxing?

Starbucks was recently accused of paying almost no tax in the UK. In fact it claims it won’t be doing so for several more years. The fact that this has gone on for about 16 years is surely not a testament to the incompetence of its management but to the commitment Starbucks has to the UK, where it can make a lot of money without paying much tax.

At any rate it is no doubt currently entirely legal. But the Chancellor’s statement promises a tax on such ‘diverted profits’ (the ‘Google tax’), so that it could be less worthwhile. At the moment the details of the proposals are not at all clear. But it will have to rest on far more transparency over where profits are made and tax is actually paid. At the moment this information is very hard to come by.

Yet that does not mean it is hard to produce. Vodafone has done this. So whether the tax on diverted profits flies or fails, it will be down to the relative strength of two forces: political will versus commercial won’t.

 

 

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commentary

Unilever has such a nice image

But is it complicit with the TTIP process?

Articles like this one in the Guardian have celebrated the virtues and actions of Unilever in both environmental and social fields. And it is true that they have done a number of positive things and Paul Polman, their CEO, seems personally committed to sustainability. You would have thought that Unilever would therefore not be in favour of a process like the TTIP which threatens food safety and democracy on a large scale.

But it looks as though either he does not really have a grip on the organisation or he is a very cynical manipulator. The fact is that large food companies and other agri-business corporations are amongst the most active lobbyists involved in the TTIP process. True, it is very difficult to find out exactly what is going on, but certainly Food and Drink Europe (which represents the likes of Nestle and Unilever) seems to be one of the most active lobbyists.

Is Food and Drink Europe properly representing Unilever’s views? Is Unilever happy with the whole thrust of the TTIP process? There appears to be nothing on the Unilever website that  mentions TTIP.

So I wonder what is going on?

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commentary

Asda: discounting women?

It may not be quite two women for the price of one man, but Asda appears to have a problem with equal pay. The wider Walmart group, of which Asda is the UK arm has a long history of troubled labour relations – but you might expect a better outcome in the UK, since it is the only country in the world in which the company recognises unions.

On this issue of equal pay, the normal PR approach appears to be unraveling. Despite the prominent news coverage of the group action against the company, there is no press release on its website relating to the issue. Moreover the company response to the issue seems to be confined to this statement: “A firm of no-win, no-fee lawyers is hoping to challenge our award-winning reputation as an equal opportunities employer. We do not discriminate and are very proud of our record in this area which, if it comes to it, we will robustly defend.”

It is sad to see that what the company is concerned with is just its reputation, not its actual equal opportunities performance. The logic of this is that if it continues to perform well in good employer rankings, all is well, irrespective of any suffering on the ground.

There is a lesson in this for all those companies that are driven by reputation: if you focus on reputation, you will fall on your face; if you work on your performance, you may be graced with a better reputation.