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January 19, 2007
From Competition to Cooperation: Companies Collaborate on Social and Environmental Issues
    by Bill Baue

Collaborative initiatives bring together companies, investors, and activists to address issues such as online freedom of expression, climate change, and labor rights in the global supply chain.


Competition may drive capitalism, but cooperation is gaining ground as an important business strategy for addressing social and environmental issues that impact companies across the board. Increasingly, companies are joining forces not only with business competitors, but also with human rights and environmental activists (formerly considered enemies) as well as socially responsible investors (SRIs), academics, and governmental organizations.

Yesterday saw the announcement of just such a collaboration with the banding together of two coalitions initiated last year to address the issue of global online freedom of expression, particularly in repressive regimes. One, facilitated by Business for Social Responsibility (BSR), consists of companies facing intense criticism over complicity with suppressing online free speech in China. This coalition includes such big names as Google (ticker: GOOG), Microsoft (MSFT), and Yahoo! (YHOO). The other, facilitated by the Center for Democracy and Technology (CDT), gathered together socially responsible investing firms such as Boston Common, Calvert, Domini, and Trillium, and human rights advocates such as Amnesty, Human Rights Watch, and Reporters Without Borders.

Exemplifying the problem is Yahoo's handing over of personal information for Shi Tao, a journalist who forwarded to foreign journalists a message from Chinese authorities warning against overplaying the 15th anniversary of the Tiananmen Square protests, which resulted in a ten-year prison sentence. The combined group is developing principles to guide company practice when it comes to online free speech and protecting privacy rights, as well as a framework to implement the principles. The group, which plans to complete its process later this year, also seeks to hold signatories accountable and provide ongoing learning.

"Thanks to the extraordinary commitment of the companies and other participants in this process we've already learned a great deal about the obstacles we face and the ways business and other stakeholders can join forces to address those challenges," said Aron Cramer, CEO of BSR. "This important dialogue reflects a shared commitment to maximize the information available via the Internet on the basis of global principles protecting free expression and privacy. "

Other collaborative initiatives cast a broader net across social and environmental issues. In 2004, information and communication technology (ICT) companies started developing the Electronic Industry Code of Conduct (EICC), a program also facilitated by BSR that promotes responsible supply chain management. EICC maintains a formal memorandum of understanding (MoU) with the Global e-Sustainability Initiative (GESI) facilitated by the United Nations Environment Programme (UNEP), which has overlapping membership as well as a similar mandate of promoting sustainability in the ICT sector.

"EICC has learned from collaborative initiatives in the apparel, footwear, and toy industries, and it's looking at better ways to interact with stakeholder communities," said David Schilling, program director on human rights for the Interfaith Center on Corporate Responsibility (ICCR.) ICCR is a coalition of more than 275 faith-based institutional investors and SRIs that conduct shareowner advocacy. "We try to figure out how to not only work with leaders to move the ball forward but also how to raise the floor for laggards who have modest programs that are not particularly substantive."

Reverend Schilling appreciates the fact that EICC includes not only major ICT companies such as Apple (AAPL), Cisco (CSCO), Dell (DELL), IBM (IBM), Intel (INTC), and Microsoft, but also smaller contract manufacturers such as Foxconn, Flextronics, and Sanmina.

"It's good to have both sets in the room in terms of getting a critical mass and getting more deeply involved in the factories with assessments and remediation," Rev. Schilling told SocialFunds.com.

Momentum is gaining on collaborations. Early next week, the United States Climate Action Partnership--a group of ten major companies including Alcoa (AA), Duke Energy (DUK), DuPont (DD) General Electric (GE)--intends to announce a push for carbon regulation in the US. The move is timed right before President Bush's State of the Union address. The partnership, which grew out of discussions last year between GE and the World Resources Institute (WRI) and Environmental Defense--seeks to reduce greenhouse gas (GHG) emissions by 10 to 30 percent over the next 15 years through a carbon cap-and-trade system.

Last week, the world's four largest retailers--Wal-Mart (WMT), Tesco (TSCO.L), Carrefour (CARR), and Metro (MEO.F)--announced the formation of the Global Social Compliance Programme (GSCP) to draft a code covering workplace standards in their global supply chains. The group is developing the new labor standards, which cover health and safety, child labor, racial and sexual discrimination, and fair pay, in collaboration with Migros, the largest Swiss retailer. While the initiative intends to implement monitoring by independent auditors, it has been criticized for failing to include stakeholders in the development process.

Late last year, the Automotive Industry Action Group (AIAG) announced the launch of a collaborative project on responsible supply chain management in the auto sector, including companies such as DaimlerChrysler (DCX), Ford (F), General Motors (GM), and Honda (HMC). With the support of a $185,000 grant from the US State Department, Business for Social Responbility is also involved in facilitating this initiative, which originated in October 2005.

"This project is a good beginning," said Rev. Schilling of ICCR, which has worked closely with Ford on this issue for five years. However, he and other ICCR members note the lack of major Japanese and European car companies.

"We are disappointed that Toyota is currently not a part of this collaborative initiative," said Steven Heim of ICCR member Boston Common Asset Management. "While Toyota has the reputation of being a leader on environmental issues, the company has a long way to go on workplace human rights."

"We urge Toyota to reconsider participation in the AIAG project, he concluded.


Disclosure: Bill Baue is writing Wal-Mart's 2007 sustainability report.

 

 
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