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Only a minority of common investment funds (CIFs) consider issues outside of the traditional 'sin stocks' of tobacco, alcohol, gambling, military and pornography, according to the EIRIS Foundation's latest report, the 3rd edition of the guide 'Responsible Investment in Pooled Funds: A guide for charity trustees', sponsored by CCLA.

However, compared to the 2nd edition of this guide in 2009, a higher number of the fund managers included in the EIRIS Foundation's survey in 2013 provided details of a clear policy on engagement, voting and / or integration. In 2013 there were also more examples of fund managers being transparent about their policies and demonstrating how they had responded to charities' requests and needs.

The EIRIS Foundation's guide 'Responsible Investment in Pooled Funds: A guide for charity trustees' summarises the responses from the providers of forty five CIFs on their responsible investment approaches. The report is a guide to CIFs for charity trustees considering how their environmental, social, governance (ESG) and ethical concerns could be incorporated into their charity's investment choices.

FTSE Group, the global index provider, has launched the FTSE ET100 index, adding to its FTSE Environmental Markets Series. Jupiter (one of the UK’s leading fund groups) is adopting the new index as the benchmark for its Jupiter Ecology Fund immediate effect.

The Environmental Technologies Index Series is designed to measure the performance of companies whose core business is in the development and operation of environmental technologies. To qualify, companies must derive at least 50% of their business from environmental markets. These include Renewable & Alternative Energy, Energy Efficiency, Water Infrastructure & Technology, Waste Management & Technologies, Pollution Control and Environmental Support Services, as defined by the FTSE Environmental Markets Classification System (EMCS). There are now 21 indices in the associated FTSE Environmental Markets Series including the Environmental Technology indices.

The FTSE ET50 index, the sister index of the FTSE ET100, was first launched in 1999 by Impax Asset Management making the ET50 the longest running environmental technology index in the world. FTSE has a partnership with Impax that began in 2007 and together they have developed an enhanced methodology and new governance structure.

Charlie Thomas, fund manager, Jupiter Ecology Fund, said: “The launch of the FTSE ET100 Index is a welcome development and a clear sign that environmental investing has come of age. Given the breadth of our holdings now, compared to 25 years ago when the Fund originally launched, it has become increasingly important to us to have this reflected in a more accurate and relevant index alongside our existing benchmark, the FTSE World Index. For this reason we were very keen to adopt the newly launched FTSE ET100 which so successfully captures the many different types of companies that are now involved in environmental technology.”

Picture credit: © Dana Rothstein | Dreamstime Stock Photos
 

Given that it is responsible for the production and distribution of over 2bn litres of soft drinks a year (and that’s just in the UK), it’s no wonder that Coca Cola Enterprises (CCE) has announced that it is taking a closer look at at-home recycling.

Joe Franses, director of CR & sustainability, CCE, told Ethical Performance that a major part of CCE’s sustainability strategy is about being a low carbon business. “We know that our packaging plays a big part in that. In fact 48% of our carbon impact sits in our packaging - not in our trucks, our refrigeration or our factories,” he explained.

CCE is teaming with the University of Exeter, which boasts a successful track record in work around consumer behaviour, to look at the politics of recycling at home. The study will seek to understand why recycling rates are so low, despite people expressing strong beliefs towards environmental behaviours.

University researchers will observe 10 households in both Great Britain and France over a six-month period to explore the dynamics that drive waste disposal and recycling in the home.

Research shows that 75% of French and 76% of British consumers claim to “always” recycle plastic bottles at home, and over 63% across both countries view recycling as “a moral and environmental duty.” However, actual at-home recycling rates do not reflect these intentions with only half of all plastic bottles currently collected for recycling, revealing a significant ‘value/action gap.’ Improving these recycling rates will enable manufacturers to boost sources of locally-available high-quality recycled PET and reduce their resource footprint.

“Currently in the UK and France we know that 50% of our bottles and cans are recycled. But that means 50% aren’t,” said Franses. We want to find out who are the champions of recycling in the home and if on-pack information helps. 30% of people don’t believe that what they put out for recycling is actually recycled.”

CCE hopes to report back in October and results shared with local authorities, NGOs and other businesses which are trying to influence environmental behaviours.

American FMCG giant Procter and Gamble (P&G) has delivered its 6 billionth litre of clean drinking water as part of its Clinton Global Initiative (CGI) commitment to save one life every hour by the year 2020.

The commitment, made in 2010 at the CGI Annual Meeting, entails providing 2bn litres of clean drinking water every year. To date, clean drinking water provided by P&G has saved an estimated 32,000 lives and prevented 250m days of diarrheal illnesses across 71 countries, says the company.

The 6 billionth litre was delivered in Myanmar, through a partnership with World Vision, by Dr. Greg Allgood, founder and director of P&G Children’s Safe Drinking Water (CSDW) Programme, and Chelsea Clinton, board member of the Clinton Foundation.

To mark the milestone and underline its commitment to Myanmar, P&G also announced a multi-year multi-programme alliance with USAID, which will focus on improving maternal and child health in the country and will include a provision of at least an additional 200m litres of clean drinking water in Myanmar alone, over the next two years.

• P&G has been providing clean drinking water in developing countries for nearly a decade through its award-winning P&G Purifier of Water technology. Each sachet of P&G Purifier of Water contains 4 grams of powder that can clean up to 10 litres of water. It removes more than 99.99999% of common waterborne bacteria (including those that cause cholera), 99.99% of common waterborne viruses (including those that cause Hepatitis A), and 99.9% of protozoa from contaminated water, helping to reduce diarrheal disease incidence in the developing world by up to 90%.

Written by Jeffrey Harrison & Andy Wicks, Darden Business School,
University of Virginia, US

Firm performance is a fundamental issue for scholars and practitioners alike. We need a way of understanding what it means to do well, and what indicates sub-standard performance or failure. Existing financial performance metrics used to determine performance are important, but they are often incomplete and oversimplify the value stakeholders receive.¹ Financial measures can be especially problematic when management makes efforts to meet short-term financial goals that reduce the desire of key stakeholders to support the firm and may simultaneously decrease the firms’ ability to create new value for stakeholders.

Instead of focusing primarily on economic performance measures, a stakeholder-based performance measure challenges managers to examine the broad array of ways their firms create value. Managers need to understand the stakeholder goals and aspirations, both as a way of attracting them to the firm, keeping them engaged and performing at a high-level.

Adam Smith provides two important perspectives on “value”to consider. First, individuals know what is best for them – value is something that individuals should define and not allow others to choose for them.² The emphasis of individual freedom and the individual differences in defining value are fundamental.³
Second, Smith emphasizes that healthy markets allow customers to choose: what they will buy, from whom and under what terms.⁴ The basics of markets say that people tend to make choices on what provides them the most value for what value they give up. When they can find a better deal, people tend to shift from their previous choice to this better deal over time. Financial performance is important, but it is not the only aspect of value that is important to stakeholders. Consistent with R. Edward Freeman’s idea that a firm should serve multiple stakeholders, firm performance can be defined as the total value created by the firm through its activities, which is the sum of the utility created for each of a firm’s legitimate stakeholders.⁵

A stakeholder-based perspective on firm performance is based on two ideas: that all of the firm’s legitimate stakeholders have customer-like power to engage with a firm, and the utility created for one stakeholder is dependent on the behavior of the other stakeholders.

This view is elaborated by four factors that emerge from a focus on stakeholders and the value they seek through relations with a firm. The model incorporates the tangible value stakeholders seek and the process for distributing value.⁶ The factors are:

1. Stakeholder utility associated with physical goods & services
Perhaps the most obvious source of utility for stakeholders is found in physical goods and services provided by the firm, where physical goods include financial remuneration. A reasonable goal for the firm with regard to its customers is to create goods and services perceived to provide a highly positive ratio between the utility received and the value given up.⁷

2. Stakeholder utility associated with organisational justice
Researchers from a variety of disciplines have demonstrated that most people operate within norms of fairness and reciprocation and seek to work with organizations that do the same.⁸ A firm that treats stakeholders well would be considered interactionally just. Organizational justice is essential to value creation because people value being treated fairly, and they are capable of reciprocating.⁹

3. Stakeholder utility associated with organisational affiliation
Stakeholders receive utility from affiliating with organizations that exhibit behaviours they value. For example, if the firm embodies characteristics that are considered valuable by its employees, organizational affiliation (or identifying with the firm) can provide feelings of connectedness, esteem and empowerment. As employees invest energy, effort, time and attention in the firm they develop feelings of “ownership,” which provides a sense of responsibility, shared interest, and motivation.¹⁰

4. Stakeholder utility associated with Opportunity Costs
Embedded within each of the previous three factors is the notion of opportunity costs.¹¹ Utility is based on perception, and perception is influenced by whether stakeholders believe they are getting a good deal from one firm compared with other firms.¹² Stakeholders continually evaluate the value they get in each domain and compare it to other alternatives.

Practitioner Measures of Value Creation
The utility stakeholders seek is complex and pertains to more than just financial measures. Collecting non-financial information on performance enhances communication, learning and coordination within firms.¹³

Understanding the value stakeholders seek, and finding innovative ways to provide it, is a key task for managers – both in terms of our ability to determine who has done well, but also in terms of the ability of firms to create value in the future. Given the critical role of stakeholder support for firm success, understanding what stakeholders value and how to provide it is vital to firms.

Some scholars argue that there is a risk that too many performance measures will reduce the influence of measure that managers focus on.¹⁴ Neglect of any one stakeholder could set off a downward spiral for the firm as other stakeholders respond to what they observe. The real risk is that managers will become focused on too few objectives representing too few stakeholder interests, rather than too many. 

This article has been adapted from the journal article, “Stakeholder Theory, Value, and Firm Performance,” written by Andrew Wicks and Jeffrey Harrison in the January 2013 edition of Business Ethics Quarterly, Volume 23, Issue 1, January 2013, pp.97-124 (DOI:10.5840/beq20132314).

References
1 Barney, J.B. 2011. Gaining and sustaining competitive advantage. 4th Ed. Upper Saddle River, NJ: Pearson Education Inc.
2 Smith, A. 1776. An inquiry into the nature and causes of the wealth of nations. London: W. Strahan and T. Cadell.
3 Ibid.
4 Ibid.
5 Freeman, R.E. 1984. Strategic management: A stakeholder approach. Boston: Pitman.
6 Harrison, J.S., Bosse, D.A., & Phillips, R.A. 2010. Managing for stakeholders, stakeholder utility functions and competitive advantage. Strategic Management Journal, 31: 58-74.
7 Barney, J.B. 2011. Gaining and sustaining competitive advantage. 4th Ed. Upper Saddle River, NJ: Pearson Education Inc.
8 Becker, L. 1986. Reciprocity. Chicago: University of Chicago Press.; Cialdini, R.B. 1984. Influence: The psychology of persuasion. New York: William Morrow and Company.; Cropanzano R., & Mitchell, M.S. 2005. Social exchange theory: An interdisciplinary review. Journal of Management, 31: 874-900.; Fehr, E, & Gachter, S. 2000. Fairness and retaliation: The economics of reciprocity. Journal of Economic Perspectives, 14 (3): 159-181.; Rabin, M. 1998. Psychology and economics. Journal of Economic Literature, 36: 11-46.; Rawls, J. 1971/1999. Justice as reciprocity. In Freeman, S. (Ed.), John Rawls: Collected Papers: 190-224. Cambridge, MA: Harvard University Press.
9 Blau, P.M. 1964. Exchange and power in social life. New York: Wiley.; Simon, L. S. 1966. Industrial reciprocity as a business stratagem. Industrial Management Review, 7(2): 27-39.
10 Pierce, J. L., Rubenfeld, S. A., & Morgan, S. 1991. Employee ownership: A conceptual model of process and effects. Academy of Management Review, 16: 121-144.; Vandewalle, D., Van Dyne, L., & Kostova, T. 1995. Psychological ownership: An empirical examination of its consequences. Group and Organization Management, 20: 210-226.
11 Kerins, F., Smith, J.K., & Smith, R. 2004. Opportunity cost of capital for venture capital investors and entrepreneurs. Journal of Financial & Quantitative Analysis, 39: 385-405.; Spiller, S.A. 2011, Opportunity cost consideration. Journal of Consumer Research, 38: 595-610.
12 Barney, J.B. 2011. Gaining and sustaining competitive advantage. 4th Ed. Upper Saddle River, NJ: Pearson Education Inc.
13 Dossi, A. & Patelli, L. 2010. You learn from what you measure: Financial and non-financial performance measures in multinational companies. Long Range Planning, 43: 498-526.
14 Chatterji, A. & Levine, D. 2006. Breaking down the wall of codes: Evaluating non-financial performance measurement. California Management Review, 48(2): 29-51. 

Anglo Dutch fmcg giant Unilever is now sourcing more than a third of its agricultural raw materials sustainably, having made significant progress towards its target of 100% by 2020. With 36% now sourced sustainably, it has exceeded the interim milestone of 30% it set itself in 2010 when launching the Unilever Sustainable Living Plan.

Significant milestones
The improvement was made against a backdrop of the company reporting annual sales of €51bn in 2012. Taken together, they represent significant milestones on the way to realising Unilever’s vision of doubling the size of its business whilst reducing its environmental footprint and improving its positive social impact.
“Climate change, water scarcity, unsustainable farming practices, and rising populations all threaten agricultural supplies and food security.?Half of the raw materials Unilever buys are from the farming and forestry industries, so ensuring a secure supply of these materials is a major business issue,” says Marc Engel, chief procurement officer. “However, sustainable sourcing is not only about managing business risks, it also presents an opportunity for growth, allowing brands to stand out in the marketplace.”

One example is how Knorr has supported sustainable growth. In September 2012 a new soup launched in France became the first Unilever product to promote an ingredient (tomatoes) as sustainably grown in accordance with the Unilever Sustainable Agriculture Code. This was made possible through the Knorr Sustainability Partnership Fund, which uses €1m a year to support vegetable suppliers on complex sustainable agriculture projects.

This development has boosted shelf standout and competitive differentiation and now Knorr plans to continue to label other products. For cocoa, 43% was sourced sustainably by the end of 2012. And 64% of cocoa for ice cream brand Magnum was sustainably sourced through Rainforest Alliance certification.

Farmer field schools
To achieve certification, Unilever has been working with supplier Barry Callebaut to run farmer field schools with 20,000 small farmers across West Africa. The schools work with local farmers to build skills and knowledge around sustainable cultivation practices. Then the farmers spread the knowledge through the community. Magnum also shares with its consumers why it works with Rainforest Alliance to source cocoa sustainably: to source high-quality cocoa beans, to increase the income of farmers and deliver social benefits such as improved health and safety practices.

Other examples of progress in sustainable sourcing include:

• Palm oil: All palm oil is now covered by GreenPalm certificates. Unilever is working towards the new commitment to 100% certified sustainable palm oil which is traceable back to the plantations on which it is grown.
   
• Sugar: Unilever has purchased its first ever Bonsucro sustainable sugar credits in Brazil, and has become the first ever Bonsucro member to obtain these worldwide. Working with Usina Sao Joao, Unilever purchased the first 3262 tonnes of Bonsucro sustainable sugar credits in Brazil when the credit platform opened for business in December 2012.
   
• Vanilla: A collaboration with Symrise, one of the world’s largest vanilla suppliers, has led to Unilever’s first Rainforest Alliance (RA) certified vanilla beans. Together through the partnership, Symrise has, trained more than 1,100 farmers – with almost 5,000 more set to benefit from the programme.
   
• Sunflower oil: In South Africa, Unilever has been working with supplier Ceoco to improve traceability in the supply chain. A farming community was identified in Limpopo with practices that could initially pilot the project. Unilever and Ceoco have since worked with the farmers by providing financial incentives to develop hybrid seeds with higher yields.

Comment
Simon Webley, Research Director, Institute of Business Ethics

There is little doubt that Unilever are serious in their ambition of sourcing 100% of their agricultural raw materials from sustainable sources by 2020.

This is involving considerable investment of time and money in assisting their supply chain (all over the world).

While this Case in Point concentrates on the company’s agriculture-based output, their Sustainable Living Plan operates throughout the business.

Its purpose is to improve the way of life of its many overseas suppliers, reduce water use, and environmental degradation.

It is using its major brands i.e. Knorr, Magnum, PG tips etc., to proclaim its environmental credentials and sees its Plan as good for the earth, good for people and good for the company.

What perhaps needs more explanation is how this Plan fits with the company’s other shared values: ‘honesty, integrity and openness, and with respect for human rights and interests of our employees’.

Simon Webley
Research Director

 

We’re living in a fast-changing world where the make-up of our communities is evolving like never before. So how is business responding and what is “encouraging diversity “ really all about? Liz Jones reports

Diversity in the workplace is one of the latest buzz phrases in business. The argument for it seems clear: a business made up of people from various backgrounds will thrive because diverse opinions and attitudes can identify more solutions to problems, think of more alternatives and innovations than a business of me-toos. James Suriekwi in his book, The Wisdom of Crowds, goes a little further and believes that groups have the potential to be smarter than individuals too.

We’re living in a fast-changing world where the make-up of our communities is evolving like never before. Demographically we are getting older too. Indeed, age discrimination is now being seen by City of London employees as a more widespread problem than sex bias, reports a leading recruiter.

Researchers said 33.5% of the City employees they interviewed felt their bosses were “very committed” to gender diversity but only 22% believed they had a commitment to age equality.

The discrimination was more likely in roles such as trading and sales than among middle and back office workers, said the survey conducted by Astbury Marsden, a London-based specialist in financial services recruitment.

Mark Cameron, Astbury Marsden’s chief operating officer, summed up the scenario: “The City is getting far better at supporting and developing female staff. The huge effort that London’s financial services sector has made to broaden its workforce is clearly reflected in positive feedback we have had from employees.

“While sex discrimination is on the decrease, negative attitudes towards co-workers on the basis of age and a lack of commitment to age diversity are seen as a wider problem.”

Cameron questions whether employees’ impressions are realistic. He observes: “We aren’t saying that the negative consequences of age discrimination are bigger than other forms of discrimination, just that employees see it as more prevalent.”

Looking ahead, he believes that, as life expectancy in the UK increases and later retirement is proposed by the government, age will continue to be a contentious subject in employment. “With people likely to have longer working lives in the coming years, this is an issue that is going to become increasingly important,” he said.

Employers’ fears
Business psychologist Cary Cooper was not surprised that City employees were complaining of age discrimination.

Cooper, who is professor of organisational psychology and health at Lancaster University Management School in northern England, said many employers worried that staff getting older in the job would qualify for bigger salaries. “A lot of them want to get younger people in because they’re cheaper,” he said.

Employers’ other fears were that older people could not handle modern business technology and might have more sickness absence as poorer health is regarded as accompanying age.

However, Cooper emphasised the principle that employment should be determined by job suitability, not influenced by age, gender or race considerations.

Linda Bellos, one of the UK’s leading equality law specialists and former leader of Lambeth Council (the UK’s first ever equal opportunities employer), agrees and feels the term ‘diversity’ has pushed equality off the agenda.

“Employers want to be seen to be ticking boxes, employing their quota but then not offering any training of staff, so the culture of the company doesn’t change,” Bellos said.

“The target has become numbers when what the business should be looking at is the quality of the products or service that it provides.”

To be an ethical company in Bellos’ view is to know your market and that is a simple case of asking some pretty fundamental questions, she says. “An ethical employer thinks about the skills they want to recruit. There should be criteria for filling vacancies – you don’t hire on a hunch. Equality is recruiting the best person for the job, not about quotas.”

Businesses need to be fair and learn how to interview properly and how to write job descriptions and have applicable criteria. Criteria that can be challenged and is rational, Bellos maintains.

Bellos doesn’t believe that diversity is complex. “It’s pretty straightforward,” she says, adding that the manoeuvring to address minority groups means that a lot of talent goes to waste – especially in the middle and lower ranks of an organisation.

She admits personal recruitment biases exist but she also says that people can learn not to act on them. “I don’t like people who eat with their mouths open, but I’m not going to let my personal foibles get in the way of recruiting that person. We can learn to overcome personal biases,” she says.

Bellos is sceptical of certain ‘diversity practices’. For example, flexible working is a good thing “as long as it is not a detriment to women, as it currently is, and is applicable to all employees” and mentoring schemes are ok as long as they are for everyone. “Even 45 year old white males may want mentoring,” she points out. “Equal opportunities apply to everyone.”

However André Flemmings of Rare Recruitment believes targeted mentoring schemes definitely have their place. Rare’s mentoring programme, Articles, for minority students who are aspiring lawyers has been awarded the UK Diversity Legal Award for ‘Attracting Talent’ to the industry, and its Civil Service Summer Diversity Internship Programme has won several accolades including one from Race for Opportunity and recognition from Rate My Placement.

Rare also developed Google’s mentoring programme to attract more female computer scientists to go into coding, known as CodeF and it is currently working on the Top Black Talent mentoring scheme for Google and its own Target Oxbridge; a free programme that aims to help black students and students of mixed race to increase their chances of getting into the Universities of Oxford or Cambridge.

What seems clear is that it’s not just businesses that are unsure about diversity. Candidates too labour under a number of misconceptions.

Flemmings, manager of Rare’s bank and finance programmes, says among certain ethnic groups, workplace falsehoods abound. “There’s a lot of unpicking of myths to do,” he said. Many undergraduates from ethnic minority backgrounds have misconceptions about what some employers want. “I’ve been through it,” he explained [Flemmings hails from a single parent, Afro-Caribbean background who won a local private school scholarship]. “Even as a German/Philosophy graduate from Oxford, I never thought that a banking institution would want me. It’s about challenging those misconceptions and helping those who lack the confidence and the knowledge.”

Many British African students, in Flemmings’ experience, tend to believe that in order to be a lawyer you need to have studied law; to be a banker you need to have studied finance and accounting. “It’s simply a case of just not knowing that in the UK you can study what you like and it doesn’t necessarily impact on your choice of career. You can study one thing and then take a conversion course, to become a lawyer, for example. “Diversity means you have as good a chance as anyone but you need to be able to play the game,” he said.

Leveraging the talent pool
While companies may regard their work opportunities as obvious, it isn’t always regarded in the same way from the outside. Businesses need to look at their recruitment practices and acknowledge that they may not be appealing to people from non-traditional backgrounds, said Flemmings. “Companies need to leverage the talent pool and to address what people from non-traditional backgrounds need. They need to point out the opportunities so that they can be taken.”

So how can businesses ensure they’re doing their utmost to encourage diversity in their organisations? Sandra Kerr, director of Race for Opportunity at the BITC, says there are number of positive actions to be taken. “We’ve found that companies with active outreach programmes – going out into their communities, speaking at schools, colleges, etc – have better representation. Show yourself that you are oriented towards your community.”

Companies also need to actively monitor its recruitment process and question it if it is falling short. Companies that monitor get better results, she maintains. “Business needs to be encouraged to think about training with regards to recruitment too, to ensure that personal characteristics do not stop the recruitment process.”

Currently in the UK, some sectors have made successful inroads into diversity via better recruitment practices and demographic shifts. “More sectors are showing a closer representation of their communities than ever before,” Kerr said.

And how does she respond to critics who say diversity in the workplace is about ticking boxes? “You do hear that kind of thing. But the world is changing. One in four primary school children in the UK comes from an ethnic minority; one in eight of the workforce and one in 16 at senior level (and that number is flattered by international appointments). Businesses need to recognize this.”

Indeed, Kerr sees this as the main test for business. “Recognising that things are changing and that you have to do things differently is a big challenge,” she said.

Businesses also need to promote training within their organisations and be aware of the culture within their organisation. “The world is changing and you need to connect with it. In-house surveys can help with managing the workplace culture and helping to make all people feel welcome,” she said.

The third challenge is for business leaders to take responsibility. “We need to action plan for the future we want,” she said. “It calls for a top down approach. Leaders that walk the talk are an absolute necessity.”
 

US retailers Sears, Gap Inc and, the world’s biggest, Walmart have no plans to sign the fire and building safety agreement backed by some of Europe’s biggest clothing brands - including H&M, Benetton, Topshop and Primark - aimed at trying to prevent another Rana Plaza disaster that killed more than 1,100 workers in Bangladesh in April.

Sears says that it is in preliminary discussions about an alternative proposal with retail trade associations in North America. Gap maintains that it won’t join the European pact without changes in the way conflicts are resolved in the courts and Walmart has laid out its own safety inspection plan, which is believes will yield faster results. It has plans to inspect 279 factories within six months and has already asked the Bangladesh government to suspend production at two sites.

The factory collapse is the worst disaster in the history of Bangladesh’s $19bn garment industry, and came just five months after a major fire at a garments factory near Dhaka, in which 112 workers lost their lives. It also follows the collapse of a garments factory in Baipail, in Savar, eight years ago which left 73 workers dead.

“It’s unbelievable that brands still refuse to sign a binding agreement with unions and labour groups to stop these unsafe working conditions from existing. Tragedy after tragedy shows that corporate-controlled monitoring is completely inadequate,” commented Tessel Pauli from Clean Clothes Campaign.

Outsourcing and offshoring expert Professor Michael Mol from Warwick Business School believes retailers could use NGOs to report on working conditions at factories they are using in countries like Bangladesh. He believes that there is no way back for the garment industry, and expects them to carry on outsourcing to countries like Bangladesh, but maintains they can do more to help improve working conditions: “One way out of this dilemma might be to give independent monitors, like NGOs, full access to assess the working conditions in these factories and to allow them to report this.”

Mol told Ethical Performance: “I think the main advantage of involving NGOs is that it would create a level of transparency and openness. You will not get that when tackling this problem inside the company or working with the Bangladeshi government or local labour unions, because they all have their own interests in mind.”

“As far as the US companies are concerned, I suspect their lack of willingness to play along and their insistence on sorting this out internally is driven by the weaker consumer response in the US and by the more laid-back approach of the government, in comparison to the European parliament and the various national governments in Europe. So these companies feel they can get away with it.”

“I do believe that this internal solution is even less likely to lead to improvements in labour conditions than the pact the European retailers have chosen. If these American firms think it will work well, then why has it not worked at all so far?”

“I believe companies should move away from viewing poor conditions as a source of competitive advantage, because it is neither desirable nor sustainable. There should not be anything worth hiding from the competition, or from the world, when it comes to labour conditions – wages are another matter.”

The aim to get the ethos of sustainability embedded into the production of all TV programmes is behind the launch of Albert +, a new sustainability tool from the BBC.

Nick Leslie, who runs the initiative at the British broadcaster, told Ethical Performance that the BBC has been piloting the tool over the last few months.

Programmes trialling the tool include ‘Springwatch’, ‘Jonathan Creek’ and the recent documentary, ‘Goodbye Television Centre’. So ‘Springwatch’, for example, used renewable energy sources for its non-broadcast power requirements (eg its on location production office and its catering facilities) and the documentary ferried ‘big name stars’ around in low energy vehicles (such as the Toyota Prius).

“It’s about getting producers to think holistically and giving them ideas on how to improve what they are currently doing,” explained Leslie.
“We’ve found that going in at executive producer level gets real success and gets everyone involved thinking about the issue.”
The tool acts as a sustainability checklist and builds on the BBC-developed programme production carbon footprint calculator called Albert.

The calculator is now used industry-wide and Sky, for example, will not greenlight a programme unless it meets Albert criteria.
Once Albert + has been proved to be a robust model, both internally and externally, Leslie hopes that programmes made using the tool may eventually be able to sport an Albert+ badge in its credits. “It could act as a kitemark for sustainable production,” he said.
 

TV game show-wise I’ve always been more Mastermind (general knowledge round of course) rather than University Challenge, so when ITV broke new ground with Who Wants To Be A Millionaire, I was hooked. Well, for a short time. How did this brilliant format fall from my grace? It hoodwinked me, that’ s how. I’d been watching gleefully unaware that the show wasn’t broadcast live. When the host said “we’ll find out after the break” whether the hapless contestant had won - or lost - a huge amount of money, I’d believed that they were waiting too… Then my sister who works in TV put me straight. It was all pre-recorded! Naïve perhaps? But what a disappointment. It was never the same watching it after that. The enjoyment of the suspense had gone forever.

I know it’s not quite the same as realising the burger you’ve been enjoying contains rather a lot of Dobbin but the sense of disillusion is the same. As human beings we innately understand the meaning of trust and once it’s gone, it is very difficult to get it back. So businesses need to be wary. Very wary.

According to a study by BBMG, GlobeScan and SustainAbility, trust is no longer in a company’s own hands. Indeed, social sources of trust like consumer reviews, blogs and message boards (28%) as well as friends, family and co-workers (27%) now rival traditional sources like certifications (40%) and media reports (31%) as consumers’ most trusted sources for determining whether a product is socially and environmentally responsible.

According to the study – Re:Thinking Consumption: Consumers and the Future of Sustainability – consumers in emerging markets (Brazil, China and India) are more than four times as likely as those in developed markets (UK, USA, Germany) to turn to social media platforms like Facebook, Twitter and LinkedIn as a trusted source of information (22% to 5% respectively).

“Simply put, companies no longer own their brands. They are co-owned and co-created by consumers whose experiences, ideas and opinions are now shaping brand perceptions and trust,” says Raphael Bemporad, co-founder of brand innovation consultancy BBMG. “Companies that cultivate honest and collaborative relationships with consumers will be best positioned.”

Readership Survey - the results are in!
Thank you to all of you who completed our recent Readership Survey. Rest assured we’ll be taking note of all your suggestions for improving Ethical Performance. For the many who asked for more on SRI, you’ll see our new and improved Fundwatch section on pp18-19 with analysis from former FT mandate, Roger Aitken, together with a new investment column by respected SRI commentator Oliver Wagg.

Congratulations go to Dr Sean Axon from Johnson Matthey, who was the first name out of the hat for a free iPad mini.
liz.jones@ethicalperformance.com

PS Check out the new-look Ethical Performance website that’s now live!