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December 13, 2006
Retailers Improve on Keeping Violent Video Games Out of the Hands of Children
    by Bill Baue

An Interfaith Center on Corporate Responsibility report also identifies several areas where the seven companies examined stand to improve performance--predominantly on disclosure.

In the past year since the Interfaith Center on Corporate Responsibility (ICCR) first identified shortcomings in corporate practice on preventing sales to children of "M" (Mature) rated video games, retailers have made great progress. The Entertainment Software Rating Board (ESRB), the body that rates video games, assigns M ratings because the games can contain sexual and racist themes and graphic violence, and hence are prohibited from being sold to minors under 17. Despite the progress, these companies still have a way to go on disclosing these efforts to their shareholders, according to a new report from ICCR, a coalition of 275 faith-based institutional investors and socially responsible investing (SRI) firms with combined assets over $110 billion in assets.

"While we appreciate the productive dialogues that we've had with retailers and applaud the steps these companies have taken, retailers need to make even more progress in certain areas," said Julie Tanner, corporate advocacy coordinator at ICCR member Christian Brothers Investment Services (CBIS). "The most important omission by retailers is the lack of information on the implementation of and results of their policies."

"This information allows socially responsible investors like CBIS to evaluate the reputational risks facing individual retailers, and enables us to track company progress over time," Ms. Tanner added.

The report singled out Target (ticker: TGT) to praise for best practice in addressing all but five of the 26 criteria in the report. Target was the only one of the seven companies examined to include other means of identifying M-rated games than those categorized by ICCR--namely, it includes large "M" symbols in its circular advertisements, a particularly progressive and proactive practice.

Best Buy (BBY), which fulfilled all but six of the criteria, joined Target as the only two companies that included information about their video game policies in their corporate social responsibility (CSR) reports. ICCR highlighted Best Buy's progressive and proactive practices in excluding M-rated games from its television ads, auditing at least 100 stores per month for video game policy compliance, rewarding employees for compliance, and having a process to collect, analyze, and report data.

Other companies examined include Circuit City (CC), Wal-Mart (WMT), Sears/Kmart (S), Game Stop (GME), and Toys "R" Us (TOY).

All seven of the major retailers examined have video game policies to restrict access by young teens to M-rated games--except Sears/KMart, which reportedly has a policy in development. They all also displayed in-store signs about the ESRB rating system; conduct employee training programs and ongoing education on the rating system for employees; and have established a system to identify the age of the purchaser at the register.

The Retail Council of the ESRB will participate in a 'mystery shopping" program to verify if retail stores are upholding their policies of not selling M-rated games to kids. ESRB plans to disclose the results of this program on an aggregated and anonymous basis.

"This is an important action," the report stated. "However, shareholders that own stock in each of these companies deserve to see individual results, excluding confidential information."

The report met with praise from an unlikely front--gamers themselves.

"It's good to see a group taking this issue seriously and making recommendations that actually make sense," wrote Brian Crecente, editor of the Kotaku website on gaming, which is usually critical of such efforts. "In particular I think that the ESRB releasing the mystery shopper results by chain would help to dispell the belief by some that they are more concerned with protecting their members than the public."

The report went on to make a number of other recommendations. ICCR called on retailers to create ways to separate and differentiate M-rated games from other video games.

"While M-rated games have an 'M' in the lower left hand corner of the video game box, it is a small icon that can be easily overlooked," the report stated. "Retailers may want to evaluate ways that they can set apart M-rated from other video games."

"For example, M-rated games could be placed in a separate location in the video game area and/or brightly colored or enlarged 'M' stickers could be placed on the cover of M-rated games so that purchasers are aware that the game they are purchasing is for people 17 and older," it continued.

ICCR also called for tying compensation of store, district, and senior managers to compliance with video game sales policies.

"To date, no retailer has done a satisfactory job of communicating how their video game policies and procedures affect executive and staff evaluation and compensation," the report stated. "Addressing this issue can help to persuade investors that the risks associated with the sale to minors of violent video games are being adequately addressed."


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