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UK: New Taskforce to Tackle 'Attacks' on Corporate Business

by Mark TranGuardian
July 6th, 2004

A leading business group today announced the creation of a taskforce designed to help companies respond to what it described as growing attacks on corporate behaviour.

The taskforce, to be chaired by Mike Clasper, chief executive of BAA, Britain's biggest airports operator, will bring together senior business leaders to lead initiatives amid a growing number of social issues around key products and services, such as mining, nuclear power, tobacco and alcohol.

The new body, the Marketplace Impact Taskforce, was launched at the annual conference of Business in the Community, that pioneered the idea of corporate social responsibility (CSR) in the UK. Most of the FTSE-100 companies are included in the organisation.

"Corporate responsibility is being put at the heart of a growing number of businesses as they realise that it is critical to their long-term license to operate, their reputations and to their positions in the marketplace," Mr Clasper said in a statement.

The creation of the taskforce comes amid a debate on "responsible marketing" by companies in such sectors as alcohol, tobacco and food. With obesity a subject of public preoccupation, for example, the government is looking into the issue of companies such as McDonald's and Cadbury targeting children in their advertising.

"When a company hits the headlines for the wrong reasons, it is increasingly about the safety of their product, the ethics of how they market it, or the damage caused when customers choose to misuse it. Businesses are already responding... but a body is now needed that will step aside from individual controversies, and try to work out what businesses can reasonably do in the face of serious issues over which they can only have influence rather than control," said Mallen Baker, development director of Business in the Community, who will be responsible for the work of the taskforce.

Mr Baker said the taskforce would produce a management framework for companies responding to issues such as those facing the food industry over obesity.

Earlier, the trade minister, Stephen Timms, outlined the government's voluntarist approach to CSR, as embodied in its proposed regulations requiring almost 1,300 quoted companies to complete an operating financial review (OFR) that includes reporting on the social and environmental impact of their operations.

But the government will leave to the companies themselves to decide on what specific issues they should report. Moreover, the OFR only covers issues affecting shareholders' interests rather than specific social and environmental impacts.

Some campaigners, particularly Core, the Corporate Responsibility Coalition, have criticised the government's light touch and have argued in favour of a tougher, regulatory approach. But, in front of a receptive audience, Mr Timms rejected what he called the "one size fits all solution" and said it was the government's job to set the right policy framework for environmentally and socially responsible behaviour.

The Department of Trade and Industry published its OFR consultation document in May. The objective is "to improve transparency and accountability by providing shareholders with better and more relevant information on the business, its performance in the past and its prospects for the future". The final regulations will come into force at the beginning of next year.

Businesses have welcomed the government's softly-softly approach, although they have expressed concern at the extra work and costs involved in the reporting requirements.

"Whether the costs are proportionate to the benefits remain to be seen," said Phil Hodkinson, the chief executive of insurance and investment at HBOS, the banking group.

Ben Verwaayen, the chief executive of BT, proclaimed himself an unabashed enthusiast for CSR. There was a strong business case for CSR, he argued, because companies were based on values and how those values were perceived by customers.

CSR was a tool, he said, to help BT create customer satisfaction and therefore loyalty.

"Holding on to customers is crucial," Mr Verwaayen told the audience. "There is a direct mathematical relationship between CSR, customer loyalty and the bottom line."





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