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CSRNYC Update

Information, news and commentary on corporate social responsibility, especially in the New York City area. Linked to website www.csrnyc.com.
Maintained by John Tepper Marlin, Principal, CSRNYC.

Tuesday, December 16, 2014

Rabobank #1 on Human Rights, Citi Top U.S. Bank, Chinese Banks Zero Out

Top-Rated on Human Rights

Rabobank is the top-rated bank in the world in addressing issues relating to human rights, according to BankTrack, in Nijmegen, the Netherlands. Rabobank is based in Amsterdam, the Netherlands, and has a New York City office at 245 Park Avenue.

The only U.S. bank in the top ten of the the 32 commercial banks that were included in the report was Citigroup.

The study was based on the UN Guiding Principles that were initiated in 2005 by the UN Secretary General when he appointed a Special Representative on Business & Human Rights, John Ruggie.

Ruggie proposed a set of principles that were adopted and issued in 2011 by the United Nations Office of the High Commissioner of Human Rights as the Guiding Principles on Business and Human Rights, also called the "Ruggie Principles".

The same year, the Thun Group was formed to discuss these principles as applied to the banking sector. They issued a discussion paper in 2013. BankTrack has now attempted to measure how well banks are addressing human rights in their organizations and issued their report this year.

They selected 32 banks to study - mostly big commercial banks, plus those participating in the Thun Group, but no development banks. Their study, released earlier this month, concluded that of the banks studied, half were found to have developed human rights policies that include a clear commitment to respect human rights - the most fundamental requirement of the Guiding Principles. A majority (17/32) did not provide any reporting on human rights developments or impacts at the bank. BankTrack could not find any grievance mechanism in place at any of the banks - none had a clearly described process in place to remedy even those human rights abuses that the banks identified themselves.

The table below shows the overall ratings of the individual banks. The detailed rating criteria and numbers are in the study. The #1 bank, Rabobank, has a history of what we would today call social entrepreneurship. It was started as a community-based cooperative bank by Father Gerlacus van den Elsen. A Protestant cooperative bank was created in Utrecht and a Catholic one in Eindhoven. Their names were Raiffeisen (after an 1864 pioneer in coop banking, Friedrich Wilhelm Raiffeisen) and Boerenleen ("Farmers' Loans"). The first syllables of their first names were combined to create Rabo, and the Boerenleen name was subsumed in it. Rabobank is the second-largest bank in the Netherlands based on number of accounts. ING is the largest and ABN AMRO is the third-largest.

Nijmegen, where BankTrack is based, is the oldest town in the Netherlands, located in Gelderland. It is the home of a university created in 1923 as the Catholic University of Nijmegen. It has been renamed Radboud University.

Ratings of Banks on Human Rights
Bank
Total Score, Out of 12
1. Rabobank
8
2. Credit Suisse
7.5
3. UBS
6.5
4. Unicredit
6
4. ING
6
4. Citi
6
4. BNP Paribas
6
4. ANZ
6
4. ABN AMRO
5
10. Commerzbank
4.5
11. RBS Group
4
11. La Caixa
4
11. JPMorgan Chase & Co
4
11. Barclays
4
11. Banco Santander
4
11. BBVA
3.5
17. Goldman Sachs
3
18. Morgan Stanley
2.5
18. Crédit Agricole
2.5
20. Wells Fargo
2
20. Société Générale
2
22. Mizuho Financial Group
1.5
22. Deutsche Bank
1.5
24. Standard Chartered
1
24. HSBC
1
26. Sumitomo Mitsui Financial Group
0.5
26. Mitsubishi UFJ Financial Group
0.5
26. Ind. & Comm. Bank of China (ICBC)
0.5
26. Bank of America
0.5
30. China Construction Bank Corporation
0
31. Bank of China
0
32. Agricultural Bank of China
0

Tuesday, November 25, 2014

Dr. Huxtable and Mr. Cosby - The Role of the Media

Carr Says the Media Slept - "I was one"
David Carr in The New York Times today has an amazingly self-critical story on the multiple Bill Cosby drug-and-rape allegations. He says the story was broken by Philadelphia Magazine in 2006 but died until another comedian, Hannibal Buress, last month made an issue of the contrast between Dr. Huxtable and Mr. Cos.

Carr gives credit to "social media" for keeping the issue alive to the point where public opinion has crossed over into believing the many women who have come forward with claims that they were drugged and raped. They aren't looking for a reward, because of the lapse of time and the difficulty of assembling a case of this kind. Others have also come forward to weigh in on the contrast between the Dr. Huxtable character and the reality of Mr. Cosby backstage.

I reported on a presentation by Cosby biographer Mark Whitaker, last month, in which he noted that accusations were out there, and Cosby's handlers were not cooperating with the biography. David Carr says the media fell down on the job of investigating the allegations, and he includes himself.

It's good to have this positive report on social media from the Main Stream Media. Social media will not always be on the right side of every issue, but it's good to know it can happen.

Monday, November 10, 2014

Tribute to Alice Tepper Marlin, New York City, November 6, 2014

"Selfie" of Participants by Ian Spaulding (Elevate), partly visible front corner left. L to R, first row, 
Laura Rubbo (the Walt Disney Company) and Alice Tepper Marlin (SAI). Center: Badri Gulur (SAI) 
and behind him Christian Ewert (BSCI). Behind Rubbo: Mark Jones (Elevate). Others - behind Jones, 
Alex Katz (SAI). Left second row, Didier Bergeret (GSCP). If you recognize more people, please 
email john (at) cityeconomist.com.
This past week Business for Social Reponsibility met in New York City.

On Thursday evening, someone took the opportunity to convene a reception in Manhattan to honor Alice Tepper Marlin for her 45 years' work on behalf of better workplace conditions. The event was appropriately held on West 45th Street, at the Perfect Pint.

The event was convened by Hong Kong-based firm Elevate, formed in 2013 by a merger between Level Works and INFACT. (I am privately informed that there will be tributes by other hosts between now and Alice's retirement.)

Her work on behalf of better workplaces throughout the world was in two phases.

L to R: Alice Tepper Marlin, Ian Spaulding, Laura Rubbo. This and
next two photos by John Tepper Marlin.
Phase I, 1969-1996: Alice founded and headed the Council on Economic Priorities (CEP). CEP was the first organization to focus on research for social investment funds, and it pioneered in policy analysis on energy. It was a training ground for many leaders in the CSR arena.

It is probably most remembered for its best-selling book, Shopping for a Better World (CEP and Ballantine Books), which sold one million copies between 1988 and 1991.

CEP was even-handed, identifying corporations that did more than they were required to do by law, as well as the worst offenders.

As a centrist NGO, CEP dissatisfied some of those on the left who believed that there is no good corporation, and those on the right who believed that there is no bad one (the social responsibility of a corporate executive being, in their view, to make money and stay out of jail).

L to R: Tom Nelson (VF Corporation), Alice
Tepper Marlin, Mark Jones (Elevate)
Phase II, 1997-2015: Alice founded a new organization, Social Accountability International (SAI), to develop auditable standards for a decent workplace. Built on the principles developed by the  International Labor Organization, SAI created the nine-point SA8000 standard and in turn created Social Accountability Accreditation Services (SAAS) to ensure that auditors against the SA8000 standard were qualified.

The CEO of Elevate, Ian Spaulding, presented Alice with a huge bouquet of flowers. He told the group how Alice was one of the first to identify and use the multi-stakeholder model. She managed meetings of leading corporate executives, trade unionists and NGOs to arrive at a consensus on a shared mission for Human Rights at Work, developing the highly respected SA8000 standard. Ian attended the first meeting that established SAI.
L to R: Alice Tepper Marlin, Christian Ewert (FTA), Laura
Rubbo (Walt Disney Company).
Laura Rubbo of the Walt Disney Company described the successful SAI 100-day project, now named TenSquared, and the benefits that her company has enjoyed from being an SAI corporate member.

SAI worked with Disney to design its licensee program and it delivered the Social Fingerprint screening for companies seeking to qualify as Disney licensees.

Christian Ewert, newly appointed head of the Foreign Trade Association of Europe (FTA), shared his appreciation of the oversight services delivered to FTA's Business Social Compliance Initiative (BSCI) by SAAS, and of Alice's service on the BSCI Stakeholder Council.

He presented Alice with a box of premium Belgian chocolates, which I confess I have sampled and pronounce good. I went to check on the name - just the name, honestly - and I couldn't find the box. When Alice went off to California for SAI meetings, she must have hidden the box. Darn it... I can't tell you the name.

The IFC Agreement with Levi's (Comment)

The International Finance Corporation (IFC), part of the World Bank Group, announced an agreement last week with Levi Strauss & Company that was hailed as the first of its kind.

The IFC's interest is in ending poverty while respecting the environment and workers. It invests in the garment industry because manufactured goods are easier to transport than people, and the industry can provide many formal jobs for workers with few skills.

The challenge for IFC's goals is that in poor countries, laws and governance are weak. In the garment  industry, intense competition leads to shortcuts. In their quest for more orders from the brands, both companies and governments may disregard fire and building safety and worker rights. Consumer consciences are stricken with news of disasters. Resulting audits and supervision lead to a program for remediation, and then the rubber meets the road. The question is - who pays for the costs of fixing the problems?

This question has come up in Bangladesh, where the Accord and the Alliance are both trying to upgrade safety conditions in the factory - essentially doing a job that in developed countries is done through government laws and regulatory enforcement. The Triangle fire in 1911 was the American equivalent of the Bangladesh disasters, the Tazreen fire in 2012 and the Rana Plaza collapse in 2013.

Although maybe 2,000 factories are not covered by either the Accord and the Alliance, because they don't sell to the member brands, Bangladesh factories are being inspected and re-inspected at a rapid rate because of pressure from the brands.

Levi's, which pioneered in the creation of jeans as the iconic American work and play garment, is a $4.7 billion company, with 16,000 employees. Based in San Francisco, it is the 86th largest privately held American company, according to Forbes.

The Levi's brand is a well-recognized one in the garment and textile industry, which employs 60 million people globally. The industry is a well-worn path out of poverty in the world's poorest countries, especially for young women with little other chance to earn their own income and achieve social independence.

The problem arises when the factory owners are confronted with a need to remedy unsafe conditions:
  • What happens to worker salaries while the factory is closed for safety improvements?
  • Who pays for the improvements?
The Alliance members, as part of their commitment as members, have been contributing toward payments to workers while factories have been closed.

VF Corporation, a public company based in Greensboro, NC, with about $12 billion per year revenue and 58,000 employees, has already been doing something about the problem through a prior agreement with IFC.

Unlike Levi's, VF was not an early entrant in the CSR field. Its first sustainability report was in 2014. However, VF has been moving ahead into a leadership position since its acquisition in mid-2011 of Timberland for $2 billion. Timberland gave it access to the metrics that Timberland developed over many years to ensure that the company's sourcing was socially and environmentally responsible, and with the company came a staff with expertise in supply chain accountability issues.

VF has since taken a strong lead among brands buying from factories in Bangladesh, for example by helping to get money to factory owners to remedy safety flaws, and working with the government and vendors to lower the cost of installing fire doors and other safety equipment to Bangladesh factory owners.

VF gets money to the factory owner by guaranteeing IFC loans to pay for bringing factories up to safety standards expected by the Alliance and the Accord:
VF guarantees up to $10 million of loans that IFC makes to VF suppliers in Bangladesh to invest in fire, building and electrical safety upgrades so that factories can comply with Alliance and Accord safety standards.
The VF arrangement was already in place, but the Levi Strauss & Co agreement with the IFC is billed as something brand new. What is new about it? Three things:
1. IFC will offer lower interest rates for suppliers with higher environment and social performance ratings when they obtain working capital loans from IFC’s Global Trade Supplier Finance lending program. 
2. Levi's will share its Environmental and Social rating system with IFC. 
3. This program is worldwide, not just in Bangladesh.
For the first time, the IFC is offering lower interest rates as an incentive to improve environment and social standards in the ready-made garment industry through IFC’s $500 million Global Trade Supplier Finance program, which provides short-term finance to emerging-market suppliers and small- and mid-sized exporters.

This program operates on an electronic platform called GT Nexus, which can be used by buyers, suppliers, agents, cargo forwarders and other logistics providers to coordinate the flow of goods, funds and information.

Suppliers will also be able to differentiate themselves from competitors through an independent validation of their environmental and social ratings.

Interest rates will be lowered for suppliers that score higher on Levi's evaluation system for labor, health, safety, and environmental performance - the kind of ratings that were initiated in 1969 by the Council on Economic Priorities, the NGO that was the precursor to Social Accountability International (SAI). SAI, which developed the SA8000 workplace standard, has also generated industry handbooks for the IFC to help it meet its social and environmental objectives.

Comment

The IFC loan goes beyond Bangladesh and therefore provides a worldwide fallback position for financing workplace investments.

For Bangladesh, however, the value of loan availability will depend on how the Alliance and the Accord decide how to handle factory investments, including the extent of worker compensation during the period when the factory is closed for improvements. The range of possibilities includes the following:
  • The question is left to be resolved between the brand and the factory. If they can't agree on who should pay what, the matter is referred back to the Accord or the Alliance for action. A loan fund provides an option for the factory.
  • The brand is responsible for a specified share of the costs. The remainder is left to the factory to fund, for which a loan is available.
  • The brand is responsible for paying the entire amount, in which case the factory owner does not require a loan.
These issues are apparently still under discussion.



Sunday, November 2, 2014

More than 2 Million Employees at SA8000-Certified Facilities

As of June 30, 2014, more than 2 million workers worldwide were working in factories certified to SA8000.

The SA8000 Certified Facilities list as of mid-2014 shows 2.019 million employees at 3,388 certified facilities in 71 countries and 65 industries.

In addition, many facilities are seeking to qualify for the certificate.

To have a valid certificate, certified facilities must keep it up to date, which requires an audit visit to the facility.

 Total
 Number of Employees2,019,193
 Certified Facilities3,388
 Countries Represented71
 Industries Represented65 
 YTD2Q Only
New Certifications - 347
176
Recertifications - 225
91
Cancellations/Expirations - 252
126


Two-thirds (65 percent) of the facilities employ fewer than 250 workers and nearly one-third (28 percent) employ fewer than 50 workers.

 Workers EmployedNumber of Facilities % Total
1 - 50 
964
28%
51 - 250 
1,242
37%
251 - 1,000
760
22%
> 1,000
394
12%

Although 2 million workers is a huge number, the influence of SA8000 extends to many more millions of workers who are at factories that are seeking to comply with SA8000 standards.

Thursday, October 23, 2014

Bangladesh Factory Safety (Update)

Dhaka, Bangladesh factory disaster in April 2013.
The Alliance for Bangladesh Worker Safety has just contracted with the University of Texas Health Science Center at Houston for an independent assessment of its fire-safety training.

The Alliance provides a basic fire safety training for garment factory workers in Bangladesh.

The UT team is led by Dr. Hasanat Alamgir at the School of Public Health. He is associate professor of occupational health at the Program in Environmental and Occupational Health Sciences. The contract is for the team to:
...conduct a research study to yield valid and reliable results, collect data through randomized surveys and focus groups from workers, and ultimately deliver a detailed report on the effectiveness of the Alliance worker training. This report will help identify areas of improvement as the Alliance training programs continue and expand the in the coming years. Full statement here.
When this study is completed it will provide another opportunity for an update. So far, progress by the Accord and the Alliance (as of June) has been against a backdrop of government failures, some of which are being repaired. As the number of factory deaths in Pakistan, Bangladesh and India has continued to rise, public understanding of the causes and systemic problems has also grown and the ways that governments have failed to ensure or even promote safety have become clearer. The good news is that in some cases the counter-productive policies are being reversed:
  • All three countries lack national information on fire deaths. For example, no data on fire deaths from these countries are included in international comparisons, and no data appear on, for example, the website of the Bangladesh Bureau of Statistics.
  • The countries spend a tiny amount on government factory building inspections and enforcement.
  • More spending on inspections won't make a difference if inspectors and agents are unwilling or unable to enforce the law.  The building collapse in Chennai, India stemmed from the building not being constructed according to design specifications and law.
  • In Bangladesh, the government was itself a barrier to factory safety by imposing a high tariff on fire-safety doors and other safety equipment. This raised costs by a reported 60 percent. Through the efforts of the Alliance, the tariff was removed in May 2014.
The Alliance deserves credit for what it has achieved during the past year. It appears to have made greater progress than the Accord in financing safety upgrades in Bangladesh factories and paying workers while the facilities are closed for the upgrades. The Accord has reportedly been less successful than the Alliance in collecting dues from all of its its members. Some 2,000 factories are not covered by either organization. The options for the brands do not extend to helping these factories because they have no leverage over them. Safety issues for them will have to be addressed by the local or national authorities.

The general context of the factory disasters in Bangladesh is that the garment industry is virtually the country's only hope for the future. The projected impact of climate change is that much of the country will eventually be below sea level. It is already threatened by terrible floods. The two avenues for solutions are:
  • Foreign aid.  Gifts of foreign aid, or loans, are a useful contribution to developing countries, but all foreign aid added together is only about $115 billion and the top ten aid recipients together receive less than $35 billion. This is not enough to make much of a difference in the lives of the hundreds of millions of people living in poverty conditions in these countries.
  • Exports.  Exports make a huge difference to the number of people living in poverty. The World Trade Organization notes that China exports $2.2 trillion, out of total trade of $18.8 trillion. This has brought millions of Chinese people out of poverty. Exports are also driving Singapore, Mexico, China-Taipei, Brazil, Thailand, Malaysia, Indonesia - each of them exporting $200-$400 billion per year. The factory jobs - dangerous as they may be because of a lack of government oversight - are crucial for Bangladesh. 
Trade dwarfs aid in helping people on earth emerge from subsistence living.

Comment

Those involved in trying to improve safety conditions are naturally frustrated by the continuation of unsafe conditions. Those directly involved may properly feel righteous indignation about the dangers to workers, especially if the remedies seem to be available and are simply not utilized because of the failure of governments to act.

David Brin has recently posted a comment on such indignation. With a Ph.D. in space science, he had Fellow status in 2010 at the Institute for Ethics and Emerging Technologies. He helped establish the Arthur C. Clarke Center for Human Imagination at UC San Diego. He serves on the advisory board of NASA's Innovative and Advanced Concepts group and consults as a futurist.

Brin is also a well-regarded sci-fi writer, and in his writing warns against reasonable indignation slipping into more extreme self-righteous indignation - for example, by pinning the blame on the people who have devoted their lives to trying to fix the problems. He poses as a question whether people are drawn to indignation through a form of self-addiction. They could be "wallowing" in a "pleasurable mental state" of self-righteousness.

Update November 5, 2014

By his choice of words Brin implies that self-righteous indignation is not a useful mental state. He ties it to the dysfunctional nature of U.S. politics in recent years. Fury on both extremes of the political spectrum gets in the way of action. I have worked in Washington for seven years and I have seen it up close.

The results of the election yesterday suggest that both extremes lost yesterday, moving the country more tightly to the center and away from the apoplexy of the extreme right and left. That gives me a reason to think that more will get done in the 2015-2016 Congress - and, to extend the optimism, steady progress will be made in the amelioration of intolerable workplace conditions overseas.

Monday, October 20, 2014

Alice Tepper Marlin Announces Retirement as SAI's CEO at End of 2015

Alice (in light blue jacket and pink hat) marching with CEP's 
Steve Moody and Nobel Laureate George Wald at the 
Washington peace march on January 20, 1973, the day of 
President Nixon's second inauguration. Photo: Leon S. Reed.
The President of Social Accountability International (SAI), Alice Tepper Marlin, today announced her planned retirement as CEO of the organization she founded in 1997.

This retirement will take effect at the end of 2015. The Board of Directors of SAI has expressed its appreciation for having a full year to select a new CEO.

Emails and social media posts have arrived testifying to the power of her work with SAI and its predecessor organization, the Council on Economic Priorities, which she founded 45 years ago.

In 1990 she won the Right Livelihood Award, sometimes described as the "Alternative Nobel Prize". She was also the first woman to be named to the Ashoka Global Academy.

We were married in 1971. I am posting below highlights from some of the public (posted) expressions of appreciation of her life's work.

Leon S. Reed, author of Military Maneuvers (CEP, 1975), about the interchange between the Department of Defense and military contractors:
Alice, as your first full-time professional (if that's what I was) employee, I wanted to thank you for giving me a great start on my career as well as the skills and values I needed to carry that career on. Your legacy will include not just the great work you have done personally, but also the dozens, probably hundreds of young people you inspired.
Craig Murphy, Professor of Political Science at Wellesley College:
Alice, Wow. What an important transition. You and Eileen have done so much to advance the most important human values to the global level. It will be a very hard to fill those shoes. 
Ann Medlock, Founder of the Giraffe Heroes Project:
Memo to the Search Committee: Finding the right person to succeed someone who's given her entire adult life to changing things for the better--that's a tricky business. If you choose someone who is merely a competent and experienced executive, without the passion, devotion and determination of Alice Tepper Marlin, the life-force will go out of SAI. Thus speaks this octogenarian who's watched Alice work since the 1960s!
Sridhar Rajagopal, CSR Consultant in Bangalore, India
Dear Alice, what a humongous contribution yours has been. Mind blowing passion and commitment to make a difference. Hats off to you. I am sure you will continue to add value to the society in a different role.
Laurie Sheridan, former Executive Director, Boston Workforce Development Coalition:
Congratulations on stepping down, and on all the wonderful work you have done for so many years! I do know that as founding mother, it can sometimes be hard to leave. Glad it will be in good hands.
Marcio Viegas, Founder and Managing Director at SUST4IN, Madrid:
As a modest early contributor to the global SA system I can attest that, among other SAI initiatives, SA 8000 remains as the best practical tool to implement social responsibility/accountability globally and at levels. Thank you and all the best to you and to SAI.
Kelly-Jo Potts, Global Marketing Specialist, Responsible Sourcing, Underwriters Laboratories
My first intro to the CSR industry took place at an MFA Forum dinner in NY when I got the pleasure of sitting next to you. I was in awe of your leadership, insight, and thanks to influential people like yourself have continued my professional career in CSR. Well done and best of luck to SAI with their search for a new Leader.