[03.01.2007] Liliana Anam
Climate change, ethics, finance, supply chain, CSR communication were key issues in 2007. What 2008 will bring? Read our article and find out.
Climate change
 2007 was dominated by climate change issues. IPPC report published in February, soon after Stern Report in 2006, then Peace Nobel Prize for Al Gore and IPCC, gave the background for the broad debate, which culmination was achieved at Bali conference in December.
Two important UN reports were published, GEO-4 and Human Development Report, both devoted to climate change. In June G8 leaders declared to halve CO2 emission. The companies committed to be carbon neutral, and introduced sustainability plans, e.g. Marks&Spencer plan A or Hitachi environmental plan.
Renewable energy market noticed a dynamic, two digit number growth. A research “New Carbon Beta” revealed a correlation between financial performance and climate change action. Consequently, it aroused the investor’s interest. They were equipped in new tools, like indexes, e.g. Meryll Lynch Carbon Leaders Europe Index or Barclays Index and Voluntary Carbon Standard, which aim is to increase a credibility on offset market.
Manufacturers followed the trend and introduced more eco-friendly products into markets. Moreover first ‘climate change’ labelling appeared. Biofuels were a controversial issue in the European Union, particularly their impact on developing countries. Besides, voluntary actions turned out not to be efficient and European Commission decided to regulate CO2 emissions from new cars sold in the EU area.
Investors in the spotlight
Individual investors finally spotted CSR and interest in SRI increased. Much more attention was paid to the role of investors in a conduct of investments. UNEP FI, initiative of the UNEP and financial sector become more important. UNPRI has started to promote responsible investments principles.
Also Equator Principles seemed to mature, as they become a point of reference for many banks. However, the report of BankTrack, showed some bad examples of Equator Principles’ signatories. The investments, which were not coherent with social and environmental goals, met more criticism; the society expectations in this matter grew.
Since the Peace Nobel Prize for Muhammad Yunus in 2006, there is a microfinance boom. New initiatives like Microplace were launched to help and encourage investors. Alongside with the development of financial products for the poor, new idea of microinsurance appeared.
Ethics, corporate governance and misconduct
 Although recent scandals like Enron or Worldcom brought more attention to key role of corporate governance systems and ethical conduct in the companies, 2007 revealed another example of misbehaviour.
January started with the corruption scandal in Siemens, followed by resignations of Paul Wolfowitz, World Bank, who promoted his girlfriend in organization and Lord Brown, BP, who lied in court about his relationship. Bad example gave Chiquita, who paid USD 25 mln fine for paying off military groups in Colombia.
PricewaterhouseCoopers’ report “Economic Crime: People, Culture and Controls” proved that control systems and rigorous regulation (e.g. Sarban-Oxley Act) are not enough to create a barrier for misbehaviour. The key is to create a culture of loyalty and responsibility in the company, in other words to introduce CSR into strategy.
Supply chain
Business mind was occupied by China and India, and sustainability issues in these countries gained more importance. The problem, which attracted the most attention were labour standards in factories, producing for the top western brands. Media wrote a lot about GAP problems in India, were the working conditions were bad and situation of child labour took place. After The Observer investigation, GAP declared to introduce a label “child labour free”.
Another company, who lost its reputation, was Matel. It recalled toys from the market three times during a year and at the end had to apologise its Chinese suppliers, when it came out that a flawed design was responsible for the problem with toys, not Chinese manufacturing process.
Standards and codes of conduct
 G8 encouraged to report according to Global Reporting Initiative G3 sustainability guidelines. GRI connection with Global Compact supported a dissemination of this reporting standard. Moreover, ISO made another step forward in building ISO 26000 standard, in Vienna meeting. Codes of conduct become more popular among companies in 2007 than ever.
Best CSR practices contra Greenwashing
CSR was present in key media channels. There was much more information on companies CSR performance, including communication to consumers. Increased awareness resulted in more critical view on companies’ actions. Empty declarations were noticed surprisingly fast. The whole situation with greenwashing and scepticism in CSR reflects the idea of launching Greenwashing Index, monitoring unethical and dishonest marketing practices.
What future will bring?
From CSR point of view 2007 was a good year. A perspective on companies’ responsibilities widened and CSR was treated as a strategic issue.
What will 2008 bring?
We should expect more government action, because it seems that voluntary approach not always is effective, further development of standards and growing popularity of SRI. Climate change will stay a number one issue, and the Bali Roadmap will determine the pace. In 2008 we also might observe a consolidation of initiatives around different issues or industries (e.g. cocoa).
Liliana Anam
liliana.anam@csrinfo.org
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