Tom Cannon Second Edition Second Edition Governance, compliance and ethics in a sustainable environment “This work is a comprehensive and accessible analysis of the contemporary challenges to the conduct and legitimacy of businesses Illustrated throughout with examples and evidence from research, it raises questions and offers new ways to think about these challenges It is the most engaging and readable work on the subject available.” Mike Rowe, University of Liverpool Management School Hardly a week goes by without some aspect of Corporate Social Responsibility (CSR) hitting the headlines One week it can be bankers’ bonuses, next it is the environmental impact of corporations or their approach to human rights Hardly an aspect of business behaviour or an area of corporate activity is excluded Along with the issues, the challenges proliferate not just around Wall Street and the City of London but from Sarajevo to Stockholm, Manila to Manchester Even the Financial Times talks about a crisis in capitalism with the corporation having ‘inherent failings’ that grow out stewardship failings because they are not ‘effectively owned’ This new edition of Corporate Responsibility starts with a fundamental shift in perspective from the previous edition by highlighting the change from corporate responsibility being a vital business issue, to being the vital issue facing business In the process, the author brings together a comprehensive guide to the subject by addressing contemporary developments in both theory and practice A distinct intellectual framework is developed that highlights the ways the issues at the heart of corporate responsibility hang together This links the ethics that underpin the values of corporations and their leadership to the way they exercise their responsibilities as stewards not just of their business but of the natural, human and built environment which they affect Latest research is integrated with case studies that allow the teacher, student and researcher to access the body of contemporary knowledge while responding to a rapidly changing landscape www.pearson-books.com Front cover image: © Getty Images Tom Cannon has held senior academic appointments in the USA, Australia, New Zealand, and is currently Professor of Strategic Development at the University of Liverpool Cannon The book has been restructured to allow: • Greater emphasis on the global challenges of corporate responsibility • Space for the policy initiatives that have emerged • New chapters on CSR practice internationally, codes of behaviour and the nature and evolution of corporate governance • Detailed examination of contemporary events such as the BP Deepwater Horizon oil spill, the Fukushima nuclear radiation disaster, the widening gap between CEO remuneration and that of others, and concerns about corporate tax avoidance • Essential material for the successful study of international business Corporate Responsibility Corporate Responsibility Tom Cannon Corporate Responsibility Governance, compliance and ethics in a sustainable environment Second Edition Corporate Responsibility Second Edition Corporate Responsibility Governance, compliance and ethics in a sustainable environment Tom Cannon Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearson.com/uk First published 1994 Second edition published 2012 © Pearson Education Limited 2012 The right of Tom Cannon to be identified as author of this Work have been asserted by him in accordance with the Copyright, Designs and Patents Act 1988 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS All trademarks used therein are the property of their respective owners The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners Pearson Education is not responsible for the content of third-party internet sites ISBN 978-0-273-73873-2 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Cannon, Tom, B Sc Corporate responsibility : governance, compliance, and ethics in a sustainable environment / Tom Cannon 2nd ed p cm Includes bibliographical references and index ISBN 978-0-273-73873-2 Social responsibility of business I Title HD60.C326 2012 658.4′08 dc23 2012001770 10 16 15 14 13 12 Typeset in 9.5/12.5pt ITC Charter by 35 Printed and bound in Great Britain by Ashford Colour Press Ltd, Gosport, Hampshire Dedication To Anita and Gordon Roddick v Brief contents Preface Publisher’s acknowledgements 10 11 12 13 14 Corporate social responsibility: the emerging agenda The corporate and social/economic challenge Defining corporate social responsibility The role and function of business in society Business ethics Codes of behaviour The nature and evolution of corporate governance Standards, safety and security The greening of economies and corporations – the sustainability challenge Sustainability – the opportunities and challenges Managing a sustainable business Embedding CSR practice The built environment Ways forward and conclusions Quiz: Who said this? (by company) Index xiii xvi 24 37 57 79 99 117 143 164 183 194 211 227 237 239 vii Contents Preface Publisher’s acknowledgements Corporate social responsibility: the emerging agenda From teapots to hot chocolate New institutions and novel challenges Questions Case study 1: John D Rockefeller, the Standard Oil Trust and his philanthropy: does the latter legitimise the former? References xiii xvi 1 The corporate and social/economic challenge Banking on responsible banking Trouble pours on oily waters An earthquake Good or greedy? Friedman and his critics Shareholder value Questions Case study 2: Mining sector: BHP Billiton by Erik Turner References 11 13 15 18 19 20 21 22 Defining corporate social responsibility Context, content and debate The first Industrial Revolution Industrialisation and ethics Philanthropy Foundations Questions Case study 3: McDonald’s and CSR References The role and function of business in society The social challenge Restrictive trade practices Markets and marketing Blowing the whistle Consumer action An oxymoron? Voluntary action and consumer action – a partnership 24 25 25 26 28 30 34 35 36 37 38 42 44 48 49 50 51 ix www.downloadslide.net Chapter 14 Ways forward and conclusions The long-term impact of courses in business ethics, environmental awareness and corporate governance highlight their strengths and shortcomings There is an active debate on the nature of the material and its relevance to managers The proliferation of these programmes in recent years is a tribute to the successful advocacy of business leaders Their novelty raises questions about the values of the educational institutions which are now hurrying into the field Their diversity poses deeper issues about the nature of the discipline and the character of the intellectual paradigm that is emerging The professionalism of the area relies heavily on industry-lead bodies; specific, creative individuals; and a burgeoning network of practitioners Greater form to these developments and an increased sense of cohesion are the essential prerequisites of a move beyond anecdote and experience to a coherent body of knowledge Specialist staff require the support of top management This is essential for two key aspects of their work There is the internal management of the corporate responsibility function It has evolved to deal with the preparation of mission statements, ethic policies, responses to requests for support and tackling crises This portfolio has grown rapidly over the last few years as good business practice has become a measure of corporate quality Contributions from outside have highlighted the link between corporate or personal performance and corporate or personal pride It is evident that endorsement plays a much larger longer-term role Effective programmes are owned and implemented by and through line managers They need access to expert staff but the systems of reward and control which shape their wider management behaviour will need to mesh in with those which determine their response to issues of corporate responsibility Many of the basic principles are spelt out in the text Some have become watchwords for the standards by which industry regulates its behaviour Transparency is one of these Put bluntly, secrecy breeds suspicion while openness is the most public symbol of a clear conscience In many ways the private sector has made progress over the last decade that is scarcely matched in the public sector The recommendations of the Cadbury, Higgs, Walker, Greenbury committees go some way to tackle the more obvious problems, the need to return repeatedly to the issue raises major concerns about the approach A first, clear step towards transparency is achieved in the key recommendations of the corporate code There is, however, insufficient progress on the issue of shareholder rights The vexed issues of sources and numbers of independent directors, the disciplines imposed on directors, presentation of findings and other key features of corporate governance are only touched on The responsibility now lies with corporations in Britain to ensure that the report is implemented Preliminary evidence suggests that many corporations are implementing the recommendations despite initial media reservations Managerial integrity and independent directors with the courage to tackle colleagues and greater real diversity at the top are essential to a reform of behaviour The public sector faces a similar challenge to reform its behaviour to achieve transparency, eliminate cronyism and achieve a more fair system against a background of shrinking trust and major cutbacks Staff development, training and external scrutiny are integral features of this A strategic overview is seen as the best way to create the virtuous circle between doing the right thing and have right done to you Strategies are underpinned by programmes that allow decisions to be made and resources allocated These, in turn, provide a basis for evaluation and development These programmes need to be delivered locally, nationally and internationally 232 www.downloadslide.net The future an international dimension Many of the issues raised in the text require industrialists to look beyond their immediate environment Outside events have forced this Part of the wider contract with the international community is ensuring a profitable and successful future This poses many problems for commerce Some of the most committed supporters of corporate giving programmes concentrate their expenditure near to home The evidence from the USA suggests that there is a poor (but improving) link between the sources of the earnings of firms and the distribution of their corporate giving The superior quality of US data should not disguise the anecdotal evidence that the US pattern is replicated elsewhere This notion of transfer of earnings, sometimes from poorer countries to the rich, is increasingly hard to sustain while governments everywhere are looking for greater corporate involvement The type of internationalist perspective adopted by firms to their business development is increasingly important in approaches to corporate responsibility Internationalism is moving to the centre of the corporate responsibility agenda In part this reflects the global nature of some of the problems industry is asked to address Global summits are likely to be viewed as the start of an effort by governments, international agencies, industry and the wider community to tackle global problems from a global perspective Carlo Ripa di Meana, the former EC Environment Commissioner, pointed out that after Rio: We must now open new talks to arrive at additional protocols which will put flesh onto the bare bones of the climate convention These protocols will thus result in concrete decisions with binding obligations to achieve precise targets The mixture of power and responsibility that characterises the well-managed company gives industrial leaders a special role in shaping this agenda for development the future The challenge to respond to the needs of the environment is part of the wider issue of corporate responsibility Executives, corporations and policy makers work in a world which is increasingly accessible by people, money, products and services Access and understanding not necessarily go together Values, attitudes and acceptable behaviour shift over time and between cultures The need to adopt a stance based on a generalisable moral code does not change Part of the contract between the manager, the corporation and the community is an acceptance that neither office nor position give immunity from responsibility Policies need to be backed by actions inside the firm to ensure fairness across the firm and integrity in individual behaviour Business has a role in the local community to ensure that talent, commitment and need are the keys to resources, power and privilege The motor of economic growth for most of the last 200 years has depended on members of out groups having access to opportunity so 233 www.downloadslide.net Chapter 14 Ways forward and conclusions that communities can be built, businesses develop and enterprise prosper through innovation and development The global nature of the business environment means that these responsibilities exist in those regions where businesses operate or seek to operate This is a global responsibility which lies at the heart of the business contract The economic function of business and its wider responsibilities are integral features of this contract Geoffrey Chandler asserted that: The analytical fog surrounding CSR provides a smokescreen for companies which proclaim their adherence to it while failing to adopt appropriate principles for the conduct of their core business It obscures the democratic deficit left today by governmental failure to respond adequately to the implications of a globalised economy and to demand accountability from companies within a national and international framework Companies are doing far less than they should legitimately do, but they cannot and should not be asked to fill the gap left by government – even in the face of government cuts, though in their unwisdom they continue successfully to resist government regulation which would help to underpin good behaviour and enable market forces to sort out the good from the bad The future of CSR, some say capitalism itself, lies in tackling these criticisms by business leaders who are willing to clear the smokescreen, address the democratic deficit, more than they need and help the communities who share these responsibilities ‘sort the good from the bad’ Questions The priority given to CSR in business according to Sir Geoffrey Chandler, is ‘a self-inflicted wound’ What does he mean by this? Human rights are the most important and most neglected aspect of CSR Discuss Outline the nature of carbon credits, how they work and the opportunities and drawback of the newly emerging markets for these credits Use illustrations to explain the workings of Sarbanes Oxley Outline why business in the USA has been so hostile and ways in which their different interests can be reconciled CSR remains on the periphery of university programmes in business and management – why is that? Internationalism is moving to the centre of the corporate responsibility agenda What does that mean and how can business respond? The media are often criticised for enjoying the crisis caused by failures in CSR far more than the solutions – how true is this and if true can it change? Spell out your views on the future of CSR – more of the same or real change? If the latter, what will shape the change? 234 www.downloadslide.net Case study Case study 14 Manchester City FC and corporate social responsibility Professional football is not usually associated with active programmes of corporate social responsibility More often the image is of super rich owners and increasingly rich players enjoying a hedonistic lifestyle Over the last decade, however, a number of clubs – initially the likes of Chelsea, Manchester City and Everton, but now most clubs – have developed programmes of corporate social responsibility with the active encouragement of organisations like the Premier League, the Professional Footballers Association and the Football Foundation John Hudson, PFA Director of Community, states: The PFA has been integral to the raising of standards across all 92 clubs, providing advice, guidance and support for clubs and players who have embraced this approach Player engagement has pushed new boundaries since Community Programmes were first established at Professional clubs back in the mid 1980s when the game was at its lowest ebb, and the PFA wants to emphasise the importance of Corporate Social Responsibility and genuine commitment to this work on a Local, National and at International level in 2010 Chelsea, for example, invested £4.39 million in its CSR strategy in 2006/7, 2.3 per cent of the company’s annual turnover This included raising more than £1 million for charity, the third consecutive year Chelsea has exceeded this mark Everton in the Community was formed in 1988 and became a registered charity in June 2004 It has won a host of high-profile awards including: l l l l l European Sporting Industry’s Community Programme of the Year for the development of Imagine Your Goals’ mental health scheme Merseyside Police Engagement Award for Community FA Charter Community Award – Disability Programme FA Charter Community Club Award – Mental Health Programme Fair Play Awards for ‘Kickz’ social inclusion project In the same vein, Manchester City has established itself firmly as a leader in corporate social responsibility with one of the largest such programmes of activity It has persisted with and developed these programmes over a number of years and through several changes of club ownership Its CSR programme is deeply embedded in the values and culture of the club The club’s CSR work focuses on the following areas: l l l The City in the Community initiative, which has contributed significantly to the community of Manchester since 1986 City in the Community Giving, a new programme designed to provide monetary grants to other notfor-profit organisations operating in the Greater Manchester area Responsible Corporate Citizenship, to ensure that MCFC contributes to the achievement of positive social, economic and environmental outcomes through all of our day-to-day operations The City in the Community (CITC) programme was founded in 1986, aiming to forge closer links between the ‘club and the local community’ It has a team of 20 full-time and 30 part-time staff CITC runs projects based around four key areas: Sport, Health, Young People, and Skills & Enterprise Every year this team engages with over 200,000 people of all ages and across all communities over Manchester, Tameside and Stockport Through staff donations and a contribution from the club for example, MCFC provided the Manchester Children’s Hospital with a £500,000 donation for the establishment of a specially designed children’s play area Through City in the Community Giving, local charities and not-for-profit organisations are invited to apply on an annual basis for the club’s support for projects designed to have a lasting and positive impact on the Greater Manchester area City in the Community scheme has lent its support to a range of initiatives that recognise members of the community who make a real difference to the neighbourhoods they live in The club has introduced the Connell Awards, a series of awards which will recognise outstanding contribution to urban sport in East Manchester This builds on the club’s earliest history when in 1894, the club originally known as ‘St Mark’s’ was founded and eventually evolved to become Manchester City FC 235 ➨ www.downloadslide.net Chapter 14 Ways forward and conclusions Case study 14 (cont.) The Connell Awards are named in honour of the family of Arthur Connell, the first rector of St Mark’s Church in Gorton The family is credited with creating a great many services for the local community, including a soup kitchen, a penny savings bank and a ragged school ‘The community spirit which the Connells brought to East Manchester remains the cornerstone of the club’s new CSR strategy.’ Pete Bradshaw, Head of Responsible Corporate Citizenship for Manchester City, said: Manchester City recognises the responsibility we have to our loyal supporters, stakeholders, sponsors, staff and the wider community, and is committed to building them a successful and sustainable football club for the future As we continued to build on a well-earned reputation as a club at the heart of its community both near and far The City in the Community programme is an embodiment of the club’s integrity and authenticity We’ve always been about more than just photo opportunities and one-off events We want all of our programmes to leave a lasting legacy on the individuals, organisations and communities we work with The club spent the year fundraising through a variety of events and the players and the manager were not slow to join in CITC Managing Director, Sarah Lynch said: ‘As a football club we are very proud to come from Manchester and of the club’s place at the heart of the community Through CITC the club helps thousands of people a year.’ Questions Why have football clubs become committed to such CSR programmes? What are the benefits that a club like Manchester City can gain from its CSR work? Compare the work at Manchester City with either another sporting club or a business References Chandler, G (2003) ‘The Curse of Corporate Social Responsibility’, New Academy Review, 2(1) Casson, M (1993) ‘Ethics Mark East–West Divide’, Guardian, 13 September Morrison, J (2003) ‘Business and Human Rights – the Start of a Long-Term Relationship?’, New Academy Review, 2(1), Spring Dunn R and Cramer, A (2003) ‘Why Business Should Care about Human Rights’, New Academy Review, 2(1), Spring Williamson, J (2003) ‘Labour Rights Are Human Rights’, New Academy Review, 2(1), Spring Lake, R., Scott Thomas, K and Sullivan, R (2003) ‘Why Should Investors Care about Human Rights’, New Academy Review, 2(1), Spring Toffler, A (1980) The Third Wave, New York: Bantam http://carboncredits.co.uk/ 236 www.downloadslide.net Quiz Who said this? – (by company) The quote The company For example ‘Exercising sound corporate responsibility is fundamental to the way we operate.’ BOC For example ‘How our societies choose to move people and freight will be an increasingly complex – and important – set of issues We’re engaging more directly on the issue through research, policy development, demonstration projects, and partners.’ Ford ‘Our ordinary business operations include management of transportation used for logistical purposes – ensuring optimal routing and minimising environmental impact.’ ‘Companies seeking to generate sustained corporate value require a business policy that takes account of the future needs of society.’ ‘The Board remains committed to the principles of sustainable development and to those of the UN Global Compact We recognise their importance and are keen to continually learn from our own and others’ experience.’ ‘As a large multinational organisation our environmental footprint is complex and far reaching.’ ‘A survey in 2003 showed that our own use of conference calls saved over 20,000 tonnes of CO2 per annum.’ ‘We stress creativity and imagination in everything we While recognising that the old way may still be the best way, we constantly strive to find a better solution to a client’s problems.’ ‘We have corporate policies and procedures that conserve environmental resources at our facilities and in our products, packaging, and supplier operations.’ ‘We are constantly seeking to reconcile a strategy of profitable growth with the social and environmental dimensions of sustainable development We believe that positive financial results, environmental protection and closer ties with all stakeholders are key to the success of our group.’ 237 www.downloadslide.net Who said this? – (by company) The quote ‘In addition, all operations and activities are to be conducted in a manner that protects our natural environment Only when we are successful in these pursuits can we meet our business goals of achieving superior financial performance, delighting our customers, and rewarding our shareholders.’ 10 ‘The environment is one of the most precious commodities we share.’ 11 ‘In environmental care, we consider the monitoring and reduction of our operations’ environmental impact, as well as the environmental performance of products throughout their lifecycles, to be of fundamental importance.’ 12 ‘We will not compromise on our Principles of Corporate Social Responsibility.’ The companies Airbus BT Cisco Systems Crédit Suisse First Boston EADS Goldman Sachs International ICI Johnson & Johnson Microsoft Ltd Renault Stora Enso TRW 238 The company www.downloadslide.net Index ABC Textiles 54 accidents see also disasters and environmental protection 176–9 Account Ability 151–2, 194 accountancy firms 50–1 adaptive functions of businesses 37 affinity cards 33 Africa 197–8, 215 AIG 10 Alaska 177–8 Alliance Boots 3, 17–18 Alliance for Research on Corporate Sustainability 196 Allied Irish Banks 10 aluminium recycling 146–7, 154 Amazon 47 American Express Business Travel 180–2 AmericanShareholders.org 102 AON apartheid 198 architecture, urban 220 Armstrong Holdings Inc 126 Arthur Anderson 50–1 Arveda 15 asbestos claims 126 Asia 10, 32, 196 AstraZeneca 17 Australia 196, 222–3 Aviva 17 Banco Espirito Santo SA 10 Bangladesh 196 Bank of Credit and Commerce International Bank of Ireland 10 banks 228 anger towards 104 Asia 10 behaviour 1–2 cost of PPI settlements 126 decline in trust 63–4 executive pay 100 failures 9–11 fraud 133 Malaysia 112 monopoly 44 USA 100 Barclays 15, 17 Barings Bank 100 BAT 17 BBC 108 BCCI 16 Bear Sterns 10 behavioural codes see codes of behaviour Beijing 25, 26 Ben and Jerry 185 Bentham, Jeremy 69 Bhopal (Union Carbide) disaster 117, 118, 133–5 BHP Billiton 21–2 Bill and Melinda Gates Foundation 28 Blackstone Blair, Tony 218 Bluefin Tuna 42 BNFL 15 BNP Paribas 10 Body Shop 91, 151, 185, 195, 217 Boots 3, 17–18 Boston, USA 214 Bourneville 28 boycotts 41–2 BP 11–13 boycott 42 Deepwater Horizon disaster 12–13, 122, 123, 126, 128, 131, 228 costs 13, 118 share price 13, 168 shareholder value 19 Texas City disaster 12 Bradford and Bingley shareholders 102 Branson, Richard 34 BRE Trust 223 British Airways 130 British Energy 15 British Land 30 Bruntland Report 157 Bruntwood 30 BT 17 Buffet, Warren 28 Buick factory buildings, disposability of 220 built environment cities growth of 215–17 and industrialisation 211–14 importance of 224 management 221 and new technologies 221–2 and smaller communities 221–4 and social economy 218–21 vision 217–18 Burma 42 business connection with community ecosystem 184 functions in society 37–8, 227 implementation of CSR 232 intervention 33 new structures 229 performance and CSR 189–90 reduction of environmental impact 149 social challenge 38–42 sustainable see sustainable business management business case for CSR 199–201 business contract 111–12 Business Council for Sustainable Development 169 business development see also industrialisation and environmental protection 143–59, 164–7 business ecosystem 184 business ethics 50–1, 57–8 challenges and dilemmas 58–9, 62–3, 73–4 climate change 71–2 and codes of behaviour 84–6, 88–9 decline in trust 63–4 definition 74–5 239 www.downloadslide.net Index business ethics (continued) and industrialisation 26–30 influences 65–6 innovation and change 66–71 marketing 63 ownership and control 60–1 religious views 64–5 taxation 72–3 Business for Social Responsibility 196 Business for Social Responsibility (USA) 24 business in society challenges 38–42 consumer action 49–50, 51–2 ethics 50–1 markets and marketing 44–8, 52 and restrictive trade practices 42–4 role and function 37–8 whistleblowing 48–9 Business in the Community (BITC) 17, 18, 24, 84, 89, 194 Business in the Community (BITC) (UK) 11 Business in the Environment 11, 169 business leaders’ personal responsibility 2–3 business management see management business schools 58–9, 86 business success see success business-led organisations supporting CSR 195 Cadbury 3, 17, 28 Cadbury Report 16, 92, 101, 232 Cairo, Egypt 215 CajaSur 10 Calcutta, India 215 Cambodia 70 Camelot 17 Cameron, David 40 car industry and environmental protection 171–2 France 132 carbon credits 229–30 carbon dioxide, rise in 146–9 Carbon Reduction Commitment (CRC) 149 carbon taxes 171 Caribbean 111, 196–7 Carnegie, Andrew 28, 29 240 Carnegie Steel Company 28, 29 Carroll’s pyramid of CSR 29, 198 cartels 43 Caux Principles 85 Cayman Islands Ceres 85 CFCs 126 Challenger disaster 128–9 challenges for business in society 39–42 to corporate governance 99–101 of CSR 9–20, 202–3, 233 of ethical dilemmas 58–9, 62–3, 73–4 of sustainability 143–59, 164–79 change and business ethics 66–71 in environmental protection 168–9, 188–9 industrialisation 26–7 personal to impersonal 27–8 chartered companies 27 Chelsea FC 235 Chernobyl 130 Chevrolet 58 child labour 124 China 15, 118, 156, 196 Christianity and business ethics 64–5 Circle Health cities architecture 220 business activity 222 growth of 215–17 and industrialisation 211–14 population 26, 211, 213, 215 Citigroup 17 City Challenge 221 Civil Service Code 89 clean technology companies 156 Clifford Chance 47 climate change and business ethics 71–2 Tufts University 160–2 closed shops as restrictive trade practice 43 clothing manufacture 54, 68 Club of Rome Report 154 coal-mining see mining industry codes of behaviour corporate 83–5, 92–5 and communities 89 corporate governance 16–17, 97, 102, 107, 109–10 coverage 86–90 definition 80–1 embedding of 85–95 failures 104 government intervention 79 management 83–92, 94 occupational and professional 82–3 types 81–2 codes of practice see codes of behaviour Cologne 221 commercial parks 223 Commerzbank 10 Committee on Climate Change (UK) 143 communities business connections with and corporate codes of behaviour 89 and industrialisation 216–18 smaller impact of new technologies 221–4 competition lack of 44–7 social and political 39–40 compliance Corporate Governance Code 109–10 costs 79, 169 with Sarbanes-Oxley Act 230–1 concentration of power 44–7 Confucianism and business ethics 65 Conoco 168 conservation 27 Constantinople 26 consumer action 49–50 boycotts 41–2 and voluntary action 51–2 consumer pressure and CSR 200 contract 62–3 business 110–12 ethical 110 between industry and society 227–8 control and business ethics 60–1 Co-operative Bank co-operative movement 217–18 corporate codes of behaviour 83–5, 92–5 and communities 89 embedding of 85–92 corporate financial performance (CFP) 199–200 corporate giving in USA 233 www.downloadslide.net Index corporate governance challenges 99–101 codes 16–17, 97, 102, 107, 109–10 committee 92 costs 112 definition 99 and entrepreneurship 113 in Europe 102–5 international dimension 110–13 and religious views 112–13 and remuneration 106–10 self-regulation 113–14 and shareholders 101–5 Corporate Governance Code (Germany) 107 Corporate Governance Code (UK) 16–17, 97, 102, 109–10 Corporate Governance Committee 92 Corporate Governance Green Paper (EU) 104 corporate philanthropy 29–34 Corporate Responsibility Index 11 corporate social performance (CSP) 25, 199–200 corporate social responsibility (CSR) in Africa 197–8 business case 199–201 Carroll’s pyramid of 29, 198 challenges 9–20, 202–3, 233 commitment 18–19 and consumer pressure 200 definition 24, 61, 84 development of 25–34 and education 232 embedding best practice 194–203 emerging agenda 1–4 expenditure 60 failure 9–20 and financial performance 189–90 football clubs 235 future 19–20, 233–4 indicators 11, 105–6 and Industrial Revolution management 201–2, 231–2 Middle East 198 and profitability 194 support for 194–8, 232 ways forward 227–34 Corporate Social Responsibility (EC White Paper) 87 corporate vulnerability to environmental protection 167–74 corruption and global financial crisis 10 costs of BP Deepwater Horizon disaster 12–13, 118 of compliance 79, 169 of disasters 118 of Fukushima nuclear radiation disaster 14–15, 126 of government intervention 79 of international corporate governance 112 country responsibilities 157 credit cards 33 CSR Asia 196 CSR Europe 24 CSR wire 194 Cullen Report 135–6 customer-giving initiatives 30 dangerous jobs 118 dangerous products 47–8 DanskeBank A/S 10 deaths Deepwater Horizon disaster 12 from nuclear failures 117–18 Texas City disaster 12 Deepwater Horizon disaster 12–13, 122, 123, 126, 128, 131 costs 13, 118 Delhi 215 development of CSR 25–34 Dexia SA 10 Dijon, France 214 disasters 12–15, 117–18, 126, 133–6, 169 see also accidents and industrialisation 120–1 and legislation 122 natural 128 disposability of buildings 220 diversity and codes of behaviour 89 London 223–4 DLA Piper 47 Doha Round 63 Dortmund 221 Dow Jones 85 Du Pont 128, 168 EABIS 196 Earth Summit 155, 156 Easterhouse Partnership 217 EBS Building Society 10 Eco-Management and Audit Scheme (EMAS) 149 economic tasks of businesses 37 ecosystem of business 184 EDF Energy 15, 17 education and codes of behaviour 86–9, 94 on corporate responsibility 232 and sustainable business management 187–8 electric-vehicle charging stations 171–2 employees see also people and safety standards 132–3 and sustainable business management 187–9 Enron 1, 50–1, 83 entrepreneurship and corporate governance 113 environment and business success 183–5 and industrialisation 211–14 and sustainable business management 183–5 environmental, social and governance (ESG) 202–3 environmental advisory board 176 environmental audits 149 environmental concerns and organisational processes 145 environmental disasters 12–13 see also disasters environmental excellence 172 environmental groups 41 environmental impact analysis 151 of companies 149 environmental improvement and industrialisation 217 environmental management information requirements 177 environmental management information systems (EMIS) 172–6 environmental management system (EMS) 149–50 environmental protection and accidents 176–9 and business development 143–59, 164–7 change 168–9 corporate vulnerability 167–74 information 172–6 241 www.downloadslide.net Index environmental protection (continued) and marketing practices 170–3 natural processes 146 environmental regulation 149 environmental responsibilities and codes of behaviour 89 and support of financial institutions 189–90 environmental standards 149–52 Essen 215 ethical contract 110 ethics see business ethics Europe bank failures 9–10 commercial parks 223 corporate governance 102–5 supporting organisations for CSR 196 European Commission 148 Corporate Social Responsibility (White Paper) 87 European Shareholders Rights Directive 2007 102 European Union restrictive trade practices 43 whistleblowing system 49 Euroshareholders 102 excellence, environmental 172 executive pay see remuneration expenditure on CSR 60 Exxon 71, 168 Exxon Valdez oil spill 168, 176–9 factories abuses 45–6 and built environment 221 factory workers, risks to 124 failure banks 9–11 in codes of behaviour 104 in CSR 9–20 Fairtrade 187 Figaro Coffee Company 204–8 Fannie Mae 88 Federal Housing Finance Agency (FHFA) 87–8 FIFA 203 Figaro Coffee Company 204–8 Figaro Coffee Foundation 206–7 finance and environmental protection 189–90 financial crisis see global financial crisis 242 Financial Reporting Council 16, 114 Flint, Michigan Florida Power and Light 174 food industry and environmental protection 171 football clubs CSR 235 Ford 3, 31, 180 Pinto 47, 69, 127 forests, annual net change in 144 Fortnum & Mason 17 Fortune ‘most admired companies’ 10, 11 Forum for the Future 195 foundations 30–4 Foxconn 125 France car industry 132 corporate codes of behaviour 93 investment funds 202 fraud, banks 133 Freddie Mac 88 Free Burma Coalition 42 freedom of information 132 Friedman, Milton 18, 60 FTSE4Good 10 Fukushima nuclear radiation disaster 13–15, 118, 121–2, 169 future of CSR 19–20, 233–4 G77 group of Third World countries 156 General Electric (GE) 15, 17 General Mills 30 General Motors 4, 58, 69 geographical mobility 69 Germany corporate codes of behaviour 93, 107 Herstatt Bank failure 10 nuclear strategies 15 planning 221 remuneration 106–7 ‘supervisory board’ 16 Glasgow 217 Glitnir Bank 10, 133 Global Environmental Outlook (GEO-3) 164 global financial crisis 1, 9–11 Goldsmith, James (Sir) 82 Good Companies Guide 10 goodwill investor’s view of governance see corporate governance government intervention 87 and codes of behaviour 79 and corporate governance 102 costs 79 Green Climate Fund 156 Green Consumer Guide 51 green marketing 185–6 Greenbury Report 16, 232 grocery market in UK 46 group think and risk and responsibility 127–8, 131 groups and corporate governance 113 guild system as restrictive trade practice 42 Gulf of Mexico 13 Hampel Report 16 Hanes 45 Harvard Business School 196 Haywood, Margaret (Nurse) 76–7 HBOS 10 Health and Safety at Work Act 1974 119 health and safety regulations 119 health promotion 139–41 health standards see safety standards hedge funds impact of acquisition by Herald of Free Enterprise 128 Herstatt Bank 10 Hewlett Packard 31 Higgs Report 232 High Pay Commission (UK) 106 higher education role in social economy 219–20 Hinduism 113 Hippocratic oath 82 Hitachi 15 Hong Kong 196, 214 Hub, The 89 human rights 228–9 and climate change 71–2 Hypo Real Estate 10 Iacocca, Lee 127 ICI 57 IKEA 32 impersonal enterprises 27–8 income see remuneration incorporation business model 28 www.downloadslide.net Index India child labour 124 nuclear strategies 15 individuals codes of behaviour 81–2 and corporate governance 113 philanthropy 28–9 responsibility of 1–3 Indonesia 192 industrial disasters see disasters Industrial Revolution 25–6 and cities 211 and CSR industrialisation 120–1 see also business development and communities 216–18 and conservation 27 and disasters 120–1 and ethics 26–30 impact on natural environment 158, 164–7 and urbanisation 211–14 industry contract with society 227–8 influences on business ethics 65–6 information and information systems and environmental protection 172–6 freedom of 132 infrastructure 216, 217, 222 ING Groep NV 10 injuries at work (UK) 118 innovation 169–72 and business ethics 66–71 Inside Job (film) 10 Institute for Global Labour and Human Rights (USA) 45 Institute of Directors 82, 101 Institute of Personnel and Development 83, 91 insurance risk and responsibility 123, 124–6 Intergovernmental Panel on Climate Change 143 International Classification of Nonprofit Organizations 41 international dimension codes of behaviour 93 of corporate governance 110–13 and future of corporate responsibility 233 International Labour Office (ILO) 119 internet and built environment 222 campaigns 49 intervention by business 33 by government 79, 87, 102 investment socially responsible 202 view of goodwill Irish Life & Permanent 10 Islam 113 and business ethics 65 resistance to change 70 ISO standards 149, 152 ITV 17 J P Morgan 30 Japan corporate codes of behaviour 93 dangerous jobs 118 remuneration 106 resistance to change 70 supporting organisations for CSR 196 job-creation schemes and industrialisation 217 Johannesburg Summit 85, 155 John Brown & Company’s Steel and Iron Works 124 Johnson & Johnson 31, 32 joint stock companies 27 Jordan factory abuses 45–6 Kaupthing Bank 10 Kellog 31–2 King’s Cross fire 130 Koch brothers’ foundation 31 Kohl’s 45 Korea 15, 196 Kraft Kyoto Protocol 156 labour, child 124 Labour Government 218 Land Rover 113 Landsbanki 10 large ventures development 27–8 Latin America supporting organisations for CSR 196–7 leadership see also business leaders’ personal responsibility and responsibility 97 Leeds 216 Leeson, Nick 100 legal profession 47 legislation and disasters 122 and safety standards 119, 131–2 Lehman Brothers 10, 19 Lever Bros Leverhulme, Lord 2–3, 28 Levis 214 Li Ka Shing Foundation 32 Linklaters 47 Liverpool 67, 68, 214, 216 Liverpool and Manchester Railway 28 Lloyds TSB 10, 17, 19 location impact of business growth London 222–4 population 26, 215, 223 riots 216 London Underground 130 Los Angeles, USA 215, 216 Luddites 66 Macy’s 45 maintenance tasks of businesses 37 Malaysia 112, 196 management 228–9 codes of behaviour 83–92, 94 of CSR 201–2, 231–2 and industrial developments 221 perception of codes of behaviour 90–2 pressure on 80 responsibility for others 90 revolution of risk 128–9 and safety standards 136–7 of a sustainable business 183–91 tasks of business 37 Management of Health and Safety at Work Regulations 1999 119 Manchester 216, 219 Manchester City FC 235–6 markets and marketing abuse of power 44–8 and business ethics 63 and environmental protection 170–3 practices and social criticisms 52 and sustainable business management 185–6 Marks and Spencer 4, 115 McDonald’s 35, 132 McKinsey and Co 19 243 www.downloadslide.net Index MEGTEC 21–2 Menier company 28 Merrill Lynch 10, 19 methane gas 21–2 Mexico impact of oil spill 13 Mexico City 213, 215 wages 111 Microsoft 28, 31 Middle East 198 Mill, John Stuart 69 Milton Keynes 222 mining industry 21–2, 66, 125 disasters 120–1 Mirror Group Newspapers 16 mission statements 149 Mitsubishi UFJ Financial Group 10 Mitsui & Co Ltd 10 Mizuho Corporate Bank, Ltd 10 mobility geographical 69 of industry 187 monopoly 44–7 Montreal Protocol 157 morality see business ethics multinationals and CSR 203 Mumbai, India 214 Mumsnet 51 Murdoch, James 97 Nasdaq and executive pay 16 Natixis 10 natural disasters 128 see also disasters natural environments impact of industry 164–7 threat of industrial development 158 natural processes in environmental protection 146 negligence 126 Nestlé 3, 62 Netherlands foundations 32 New York 214 population 26, 215 Rockefeller family New York Stock Exchange and executive pay 16 Newcastle 216 News Corporation 85, 97 News International 17, 40, 61, 97 NHS 91 Nigeria 198 244 non-government organisations (NGOs) 40 supporting CSR 195 Northampton 124 Northern Rock (UK) 10–11 shareholders 19, 102 NPower 17 nuclear industry 13–15, 169 nuclear radiation disaster deaths 117–18 Fukushima nuclear plant 14 occupational codes of behaviour 82–3 embedding of 85–92 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 111 OECD Principles of Corporate Governance 110–11 Office of Technology Assessment (US) 154 Offshore Safety Act 1992 122 oil industry 5–8, 12–13, 177 Open Society Foundation 31 operations and sustainable business management 187 opportunities and success 183–4 organisation of CSR 201–2 organisational processes and environmental concerns 145 organisations supporting CSR 194–8 Owen, Robert 217–18 ownership and business ethics 60 ozone depletion 166–7 packaging 150, 185–6 paint industry 154 Panorama 76–7 Paris 25 paternalism 2–3 pay see executive pay Pearson 195 people see also employees and industrialisation 216–17 and risk 129–31 and sustainable business management 187–9 perception of management of codes of behaviour 90–2 personal hygiene market 185 personal responsibility of business leaders 2–3 Petropolis 211–12 philanthropy 28–34 corporate 29–34, 84 foundations 30–4 individuals 28–9 Rockefeller Foundation Philippines 204–8 ‘phone hacking’ scandal 40, 60–1, 97 Pilkingtons 32–3 Piper Alpha disaster 122, 128, 131 safety standards 135–6 planning and industry 221 Platts Oils 192 political process, business in 39–40 political tasks of businesses 37 pollution 154–5, 158, 164–7 Mexico City 213 and sustainability 146–51 pollution control 151 ‘Pollution Prevention Plus’ (3M) 187 Polly Peck 16 Pompier Engineering Works 225–6 population in cities 26, 211, 213, 215 growth 152–4 structure 183 UK Black and Minority Ethnic 223 Port Sunlight 2–3, 28 poverty co-existing with wealth 25 power concentration 44–7 PPI settlement costs 126 pressure from consumers 200 on managers 80 pressure groups 40–2 PricewaterhouseCoopers Iceland (PwC) 133 private sector remuneration 106–10 Procter and Gamble 186 product development for environmental protection 169–72 production tasks of businesses 37 professions accountancy firms 50–1 behaviour of members 50 codes of behaviour 82–3, 90–1 embedding of 85–92 dominance of legal 47 www.downloadslide.net Index professions (continued) restrictive trade practices 42–4 trust 63 profitability and CSR 194 PRONED 101 prospect theory 128 public sector and future of CSR 232 and industrial developments 221 remuneration 108 Pugh family Pullman, George 28 purchase power, abuse of 45–6 railways development 28 Rawls, John 74 RBS 10, 17 Reckett Benckiser 17 recycling aluminium 146–7, 154 packaging 185–6 regulation and codes of behaviour 87 environmental 149 health and safety 119 religious views 25 and business ethics 64–5 and corporate governance 112–13 remuneration 106–10 executive pay 15–17, 100, 115 income share 100 wages 110–11 research bodies supporting CSR 195 respect for others and codes of behaviour 89 responsibility see also corporate social responsibility (CSR) of countries 157 and leadership 97 restrictive trade practices 42–4 ribbon developments 222–3 Rio Summit 164 risk management 128–9 and responsibility 122–8 specific cases 128–31 Robert Wood Johnson Foundation 32 Rochdale Pioneers 218 Rockefeller family Foundation John D 5–8, 28, 81–2 Roddick, Anita 29 Roger and Me (film) role of business 37–8 Rolls-Royce 152 Rome 25, 26 Rose, Stuart (Sir) 115 Rowntree 1, Royal Mail 17 Royal Society for the Prevention of Accidents (RoSPA) 130 Sachsen LB 10 safety standards 117–37 employees 132–3 and legislation 119, 131–2 risk and responsibility 122–8 Union Carbide 133–5 Sainsbury’s 220 Salt, (Sir) Titus 28 Saltaire 28 Sao Paolo 215 Sarbanes-Oxley Act 49, 87, 230–1 and executive pay 16 Schutzgemeinschaft der Kapitalanleger (SDK) 102 science parks 221 sectors and codes of behaviour 90 Securities and Exchange Commission (SEC) and executive pay 16 Seimens 15 self-interest and corporate philanthropy 33 self-regulation 33, 50 and corporate governance 113–14 Shanghai, China 215 shareholder value 19–20 shareholders and corporate governance 101–5 and future of CSR 232 Sheffield 216 Shell 13, 198, 228 Shinhan Financial Group Co Ltd 10 Shinto 113 Silent Spring 143 silk-making 124 Singapore 196 situational awareness 128–9 Sloan, Alfred P 58 smaller communities and built environment 221–4 social challenge for business 38–42 social economy 217–21 definition 218–19 role of higher education 219–20 society contract with industry 227–8 Soros, George 31 South Africa 15, 198, 203 Southern Cross 3–4 specialisation in business roles 37–8 Spelman College 82 Sri Lanka 196 stakeholder theory 24, 38–9, 65–6, 184 Standard Life Healthcare 139–41 Standard Oil Trust 5–8 standards corporate 59 environmental 149–52 organisations supporting CSR 195 safety 117–37 steel industry 66 stewardship collapse of 100–1 definition 99, 114 Stewardship Code 3, 16 Stichting Ingka Foundation 32 Stockholm Environment Conference 190 Strategy for Sustainable Growth (UK) 68 success and codes of behaviour 91–2 and environment 183–5 and sustainable business management 190–1 Sullivan Principles 112 Sumitomo Mitsui Banking Corporation 10 supporting organisations for CSR 194–8 sustainability challenges 143–59, 164–79 and codes of behaviour 89 opportunities 164–79 Sustainability Advisory Group 198 sustainable business management 183–91 sustainable development strategy 156 Sweden foundations 32 Syngenta AG 10 3M 132, 187 Tailton 225–6 Target 45 Tata 113 245 www.downloadslide.net Index taxation avoidance of corporations 17–18 and business ethics 72–3 Tea Party protests 72 Teapot Dome technological change and business ethics 66–8 and environmental concerns 143, 146 and risk 122, 125 technology and built environment 221–2 clean 156 and environmental protection 154–5 risk 129–31 Teheran 215 telecommunications and built environment 222 Tesco 30, 34, 45, 46, 49 Tescopoly Alliance 49 Tetley 113 Texas City disaster 12 Thames Water threats and success 183–4 Tokyo 215 Tokyo Electric Power Company (TEPCO) 13–15, 121–2 costs to insurers 126 Tomorrow’s Company 114 total environmental management (TEM) 152 total quality management (TQM) 152 Toyota Prius 128 trade unions as restrictive trade practice 42–4 transparency and future of corporate responsibility 232 Transparency International 196 transport and the built environment 223 trust 126 abuse of 100 decline in 63–4 Tufts University 160–2 246 UBS 10, 19 UK corporate codes of behaviour 92 executive pay 15–17 foundations 32 income share 100 injuries at work 118 nuclear strategies 15 remuneration 106 resistance to change 70–1 supporting organisations for CSR 194–5 tax avoidance 72–3 UN Global Compact 1, 11, 12, 14, 85, 200 Unilever 3, 17 Union Carbide (Bhopal) disaster 117, 118, 133–5 United Biscuits United Nations 164 United Shareholders Association 101 United Utilities 17 universities and social economy 219–20 supporting CSR 195, 196 urban villages 223 urbanisation architecture 220 and the environment 211–14 and industrialisation 211–14 US Business Roundtable 84 US Congressional Research Service 50 USA banks 100 corporate codes of behaviour 93 corporate giving 233 corporate responsibility 87 dangerous jobs 118 environmental protection 177 executive pay 15–17, 100 foundations 30–4 government intervention costs 79 income share 100 leadership of Union Carbide 133–5 nuclear strategies 15 remuneration 106 ribbon developments 222–3 shareholders 101–2 supporting organisations for CSR 196 taxation 72–3 wages 111 wealth and poverty 25 whistleblowing system 49 Viacom Valdez principles 178–9, 189 victim support 136 Vietnam 196 Virgin Unite Charity 34 vision and the built environment 217–18 Vodafone 17 voluntary action 33 and codes of behaviour 83 and consumer action 51–2 and safety standards 132 voluntary controls and corporate governance 102–4 vulnerability to environmental protection 167–74 wages see remuneration Walker Report 232 Walmart 45 waste reduction 146, 154, 186 wealth co-existing with poverty 25 and industrialisation 26–7 Wellcome Trust 32 Wellington Boots 124 Westinghouse nuclear plans 15 whistleblowing 48–9, 76–7, 178 women 104–5, 113 Wood Group 15 workers, risks to 124–6 Workplace Giving (USA) 30 World Bank 157 World Cup 203 Xerox ... book is available from the British Library Library of Congress Cataloging -in- Publication Data Cannon, Tom, B Sc Corporate responsibility : governance, compliance, and ethics in a sustainable environment. .. discouragement and discrimination Not only are rates made to favour the Standard refining points and to protect their markets, but switching charges and dock charges are multiplied Loading and unloading... wife Fran had the original idea for this book and helped me to shape and develop my thoughts Robin and Rowan played a special part in formulating my ideas, while Finlay, Oonagh, Jude and Gabriel