Saturday, April 08, 2006
Fantasies in Green
April 4, 2006
From Global Echo Britain’s non-governmental groups will be joining forces this week to call for new laws to protect people and the environment from the impacts of big business. But why are we bothering to do that when so many companies tell us that they’ve gone green and are helping to end poverty?
If you listen to some corporations, you’d be forgiven for thinking that the normal rules of business have been suspended. Instead of simply being concerned with making profits, companies are now also interested in helping development and protecting the planet. Phew, that’s a relief then.
The impression of a change taking place in the priorities of business has been nurtured through the new fashion of so-called corporate social responsibility – or CSR. This process is meant to examine a company’s impacts, and set out actions to deal with them. Crucial to success is transparency and honest reporting by firms.
CSR is voluntary, however, which means companies don’t need to do it if they don’t want to. Even if they do, the standards employed are highly variable. After many years of campaigning, it is has become clear to me that the firms who most enthusiastically embraced CSR were those with something to hide. But shouldn’t we at least welcome CSR as a start?
Consider this. Of some 60,000 multinationals in the world today, only 3% even bother to do a social and environmental report, let alone take any action to reflect its findings. What about the 97% who don’t do a report at all? Even those that say they have embraced CSR as a management tool there is a great deal to be concerned about.
Shell is a well-known CSR proponent, famously claiming that there is no choice between profits and principles and yet the reality of its social and environmental impacts just won’t go away. That company has also misled its shareholders, inflating its oil and gas reserves, which had the effect of increasing the value of the company to investors. Right now, Shell is involved in operations that are likely to hasten the extinction of the last population of western Pacific grey whales. It is illegally flaring gas next to communities in Nigeria and is aggressively seeking out the new fossil fuels that will accelerate climate change. If that is CSR, I shudder to think what they would be up to if they were irresponsible.
Tesco, along with many other UK companies, uses palm oil in a wide range of products. This is a vegetable fat derived from oil palms. Plantations of this crop are being aggressively expanded into areas of pristine rainforests across south-east Asia, including through the last frontier regions of Borneo and Sumatra. The rapid loss of the forests that is directly caused by palm oil expansion is leading to the extinction of many species. The orang utan is one species that will disappear if something isn’t done soon to tame this rapacious industry. Palm oil expansion is also causing conflicts with forest people and human rights abuses. Some palm oil is produced in a more sustainable manner, but Tesco and other high-profile CSR advocates who use it in their businesses couldn’t tell you where theirs comes from. Surely having basic information about the source of palm oil would be a basic first step for a food company embracing CSR?
I think its fair to say that, despite CSR having become highly fashionable, a very great deal remains wanting to ensure that companies do not pursue profit at the expense of the greater good. That’s why at Friends of the Earth we are campaigning for new laws to require company directors to take steps to minimise their environmental impacts. We also want to give people new rights to challenge irresponsible firms in the courts here in the UK if there is no access to justice in countries outside the UK and where people are being affected by British-based firms. We also want the government to reverse its recent decision to cut back on the official environmental reporting requirements for companies. We are not alone; the Trade Justice Movement and Corporate Responsibility Coalition have joined forces on this agenda, uniting many millions of supporters of the country’s leading environmental, development and human rights groups.
The response from the government and bodies like the CBI are quite predictable. They say that companies should not be bound with more red tape, and that it is up to the market to determine what ethical, environmental and human rights standards should be adopted by companies. The market means you and I. Fair enough, up to a point. But what point?
Think for a moment about the palm oil trade that is annihilating the rainforests. When you go shopping, how will you decide which products have sustainable palm oil in them compared to the stuff that has been produced with environmental damage and worker abuses? Palm oil is in soup, bread, cakes, crisps, shampoo and a great range of other everyday buys you make at the shops. You can walk round Tesco all day trying to find out what are the best ethical buys, but only a tiny minority of products give you any information: a few fair trade lines, some energy efficiency information and some low-profile sustainable timber labelling is about it. What about the thousands of product lines without any environmental or social impacts information?
The logic that suggests we should use our purchasing power to secure the environment is very strange indeed. If we can’t tell what the impact of a particular product is, how can we avoid it? In any event, if we were told the market should decide on health and safety standards there would be an outcry. In that case, companies have quite rightly been given a broad duty to ensure consumer health and safety. Why not a similar responsibility toward the environment and human rights?
We have been lulled into a dream-world where it is claimed that corporations will be good to the environment and people as a matter of voluntary choice, and when they are not they will be punished by you and I as we make consumer choices. What absolute tosh.
It is time to leave the dream-world behind and to embrace reality. The place to do that is in the new company law reform bill that is now being put through parliament by the government. We want to see new legislation introduced to this bill that sets out duties that will elevate looking after people and the environment to the same level as making profits. There is already provision in the bill to make it clear that it is the legal duty of company directors to maximise profits for shareholders, and that needs to be matched with comparable duties to protect the environment we all depend on, and to safeguard the interests of people affected by a company’s operations.
When Sir Phillip Watts misled the shareholders of Shell about the company’s oil and gas reserves, he fell on his sword. When the company’s directors create a mistaken impression about its environmental and social performance, well that’s just a normal part of doing business. Because business won’t change on its own, the law must change to require it. If you agree, join the campaign for company law reform. The governments bill is the place to campaign for real solutions to corporate abuses of people and the planet. We won’t get another chance like this for decades, so let’s make the most of it.