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2011•Multinationals’ Corporate Social Responsibilities Problem Report

 

In recent years, the issue of Corporate Social Responsibility (CSR) on part of Multinational Corporations (MNC) has become an area of increasing scrutiny and debate. For instance, some MNCs pollute the ocean and soil, some manufacture unsafe machines and equipments, some produce unsanitary food and drugs, and others market their products as imitators of superior quality, thereby setting a price trap for consumers. Such behavior is not only a serious deviation from the commitment of social responsibility, but also a detriment to consumer interests and trust in MNCs. Even though deviant behaviors may not be all-encompassing, such clear lack of CSR negatively affects the corporation’s public image and is condemned by society.

 

China International Council for the Promotion of Multinational Corporations (CICPMC) specializes in the work of MNCs in China. More than 10 years since its establishment, CICPMC has operated under the tenet of “promoting exchanges and cooperation for the Chinese-foreign enterprises [and] impelling the growth and development of multinationals.” We greatly value the promotion of enterprise development and in doing so urge enterprises to not only implement social responsibility but become models of responsible behavior. . At the year’s end, we released the <2011·Multinationals’ CSRProblem Report>.

 

The report includes a large representative selection of 2011 MNC social responsibility issues in China. These issues include: damage to public interests, bribery, pollution and disruption of market order. The companies covered in this report are mostly the Global 500, and located in the developed countries such as USA, UK, Germany, France and Japan, and of course, China.

 

As a mainstay in the current global economic development, multinational corporations have significant influence on the economic environment and consumer life. In the early 1990s, after an American clothing manufacturers Levi-Strauss was exposed by news media for sweatshop, it developed the first copy of corporate production rule to save its public image. Under the pressure from labor unions, human rights organization, and consumers, many MNCs established their own production rules, which become referred to as “Enterprise Production Regulation Campaign”. These production rules were aimed to directly stimulate the enterprises to carry out their social responsibility.

 

However, the production rules established by the multinational companies have an obvious commercial purpose, and its implementation did not receive social supervision. Under the labor and human rights organizations, the non-governmental organizations promotion, this campaign by the corporation self-discipline and internal production rules is changed into social and external ones.

 

In 2000, the UN formally started the Global Compact plan; in 2004, the International Organization for Standardization created “ISO26000,” which actively promotes corporate social responsibility as an accepted trend for harmonious development of enterprises that function with societal conscience.

 

<2011·Multinationals’ CSR Problem Report> is the first release by CICPMC, and will be published annually. This report is aimed at promoting social and public supervision of MNCs to fulfill its obligations, reminding relevant MNCs that corporate life is not mutually exclusive from social responsibility, and encouraging organizations to lead exemplary roles for other enterprises as well for the public good of society.

 

The enterprises covered in the <2011·Multinationals’ Corporate Social Responsibilities Problem Report>:

 

Carrefour (France)

Wal-Mart (USA)

Toyota Motor Corporation (Japan)

Avon Products Inc (USA)

GlaxoSmithKline (GSK, UK)

ConocoPhillips (USA)

Procter & Gamble (P&G, USA)

Unilever (UK/Netherlands)

China National Offshore Oil Corporation (CNOOC, China)

PetroChina Company Limited (PetroChina, China)

Johnson & Johnson (USA)

Siemens (Germany)

China Grain Reserves Corporation (Sinograin, China)

China Guodian Corporation (China)

China Datang Corporation (CDT, China)

Inner Mongolia Mengniu Dairy (Group) Co., Ltd. (Mengniu Dairy Group, China)

 

Enterprises and Issues in 2011·Multinationals’ Corporate Social Responsibilities Problem Report

No.

Company Name

(Country)

CSR

Problems

Content (2011, in China)

1

Carrefour

(France)

Human rights

Damage public interests

In January 2011, the National Development and Reform Commission (NDRC), China's top economic planner, singled out Carrefour for either over-stating discounts by inflating pre-discounted prices or for charging prices higher than what was labeled or advertised. The NDRC has instructed the local price departments to deal with these issues seriously. The offending stores were each fined five times the amount of “illegal income” received by overcharging, or up to 500,000 yuan ($76,202.09) if the amount cannot be calculated.

The Carrefour group is one of the world’s leading distribution groups and the world’s second-largest retailer. It is a member of the Fortune 500.

2

Wal-Mart

(USA)

Human rights:

Damage public interests

In January 2011, the National Development and Reform Commission (NDRC), China's top economic planner, also singled out Wal-Mart for either over-stating discounts by inflating pre-discounted prices or for charging prices higher than what was labeled or advertised. The NDRC has instructed the local price departments to deal with these issues seriously. The offending stores were each fined five times the amount of “illegal income” received by overcharging, or up to 500,000 yuan ($76,202.09) if the amount cannot be calculated.

Wal-mart isa Fortune 500company and is ranked first among retailers. It was also tops in Fortune Magazine’s 2010 Most Admired Companies survey.

3

ToyotaMotor Corporation

(Japan)

Human rights:

Damage public interests

Toyota on Jan 26, 2011 announced a worldwide recall of 1.7 million vehicles because of various defects that may cause fuel leakage. China was not included in this recall. On Feb 24, the company said it would call back 2.39 million vehicles, mainly in the US market, but China was not covered in this recall. The General Administration of Quality Supervision, Inspection and Quarantine, asked the company to make a “full explanation and provide detailed technical descriptions." Closely following this request, Toyota said it would recall part of imported Lexus cars in China, and offer free repair and replacement of the gas pedal.

These defects may cause fuel leakage which could lead to sudden engine failure, leading to potentially serious consequences.

Toyota is the Fortune 500, and the world's No. 1 automaker.

4

AvonProducts Inc,

Avon

(USA)

Corruption

Business bribery

In May 2011, Avon disclosed to the U.S. Securities and Exchange Commission and the Justice Department that three of its Chinese executives were suspected of bribery and were thereby suspended.

While commercial bribery may not be a direct danger to the public, this behavior ultimately infringes upon general public interest, because the cost is borne by the ordinary people.

Avon stresses that the company initiated the current investigation. This bribery event is an example of foreign corruption in China.

Avon is the world’s biggest beauty product distributor.

 

5

GlaxoSmithKline,

GSK

(UK)

Human rights:

Damage public interests

June 17, 2011, the SFDA ordered GlaxoSmithKline to withdraw an antibiotic from China after trace elements of a banned substance were found in samples. The drug is amoxicillin and clavulanate potassium, a commonly used children’s antibiotic. SFDA tests of the drug showed small amounts of Di-isodecyl phthalate (DIDP), an additive used to make plastics more flexible.DIDPhas a large array of damaging effects, including liver and kidney toxicity and the potential for precocious puberty in the pediatric population.

GlaxoSmithKline is a Fortune 500 company and the world's largest pharmaceutical group.

6

ConocoPhillips

(USA)

 

Environmental protection:

Pollution

The joint venture between ConocoPhillips and CNOOC in the Penglai 19-3 oilfield in Bohai Bay began leaking in June, resulting in more than 700 barrels of crude oil and more than 2,600 barrels of oil-based drilling mud seeping into Bohai Bay. 

The State Oceanic Administration (SOA) and China Marine Surveillance requested that ConocoPhillips China, the operator of the oil field, investigate the leaking, and block up the leaking point thoroughly before August 31.

The oil spill has polluted over 6,200 square km of water in the bay since June. The leaking has led to a decrease in water quality from 1st class to 3rd to 4th class in the approximately 3,400 square kilometers surrounding areas. Likewise, the sea sediment quality declined from first class to third class.

The sudden change in water quality has killed a large number of the coastal shellfish, sea cucumbers, and prawns. The damage to local ecosystems has resulted in millions of dollars of economic losses for local fishermen.

ConocoPhillips is a comprehensive multinational energy company and a member of the Fortune 500.

7

Procter & Gamble,

P&G

(USA)

Human rights:

Damage public interests

July, 2011, P&G in China recalled 35,892 bottles of imported Oral-B mouthwash products as the company detected possible microbial contamination. The microbial level in these products might affect people who have serious immune system diseases.

However, consumers were required to complete a complicated refund process, to fill out application forms, mail bottles back, and provide bank accounts within a strict time limit.

Procter & Gamble (P&G) is a Fortune 500company with a wide range of consumer goods.

8

Unilever

(UK/Netherlands)

Society:

Disrupt market order

 

 

 

 

 

 

 

Human rights:

Damage public interests

1. March, 2011, Unilever had planned to raise prices on items including shampoo and laundry detergent to offset higher commodity costs. But the National Development and Reform Commission, China’s economic planning agency, criticised Unilever for allowing its spokesman to tell local media that detergent and soap prices might be raised. This message has caused social unrest and alarm among consumers. Chinese shoppers cleared supermarket shelves of soap, laundry detergent and shampoo.

The National Development and Reform Commission emphasized on Unilever had “intensified inflationary expectations among consumers” and “seriously distorted market order”. Unilever was fined Rmb2m (£188,000) for talking about price rises.

2. November 9, 2011, one of Unilever's Lipton tea varieties was found to contain unsafe levels of toxins. The General Administration of Quality Supervision, Inspection and Quarantine said Lipton's Tie Guan Yin tea was among 19 brands found to fall short of quality standards, with unsafe levels of rare earth metals, in a recent check of 58 different tea brands. Excessive exposure to these toxins will be detrimental to health. Unilever is a multinational company specializing in fast-moving consumer goods and a Fortune 500 company.

9

China National Offshore Oil Corporation,

CNOOC

(China)

Environmental protection:

Pollution

October 14, 2011, the China National Offshore Oil Corp Ltd (CNOOC) reported detecting a small oil spill in Bohai Bay's Jinzhou 9-3 West oilfield. Oil spills have also occurred in the company's Penglai 19-3 oil field, a joint venture with ConocoPhillips China (COPC) in the summer.

The China National Offshore Oil Corporation said a gas leak was found in a sub-sea gas pipeline of its Zhuhai Hengqin gas processing terminal. The platform shutdown will reduce the company's net production by 160 cubic feet per day. This was the third time this year that CNOOC has reported a leaking accident.

China National Offshore Oil Corporation is the largest offshore oil and gas producer in China and a Fortune 500 company.

10

PetroChina Company Limited,

PetroChina

(China)

 

Environmental protection:

Pollution

July 16, 2011, PetroChina shut down a 200,000 barrel-per-day crude distillation unit at its Dalian refinery after a fire on July 16. The accident happened just two weeks after the CDU was restarted after being shut down for around 40 days for maintenance. A similar accident happened exactly one year ago on July 16, 2010.

August 29, 2011, a fire broke out at a diesel tank at PetroChina’s Dalian refinery, the second fire to hit the major oil plant in less than two months. A diesel tank storing about 800 tonnes of fuel was ignited.

In a short period of time, the oil company encountered two accidents and is therefore maintaining an unsafe production line a reflection of the safety and management issues surrounding this oil company.

11

Johnson & Johnson

(USA)

Human rights:

Damage public interests

Recently, the United States’ “Campaign for Safe Cosmetics” report, which was published in the official websites in China, Canada, Indonesia and Australia, suggests that baby shampoo still contains as many as 15 toxic substances, including carcinogenic dioxane and formaldehyde released from quaternary ammonium salt.. This November, Johnson & Johnsonbaby shampoo reoccurrence of cancer-causingmaterials accused of double standards. Two years ago, Johnson & Johnsonproducts were found out the carcinogenic substances.

Currently, there are 25 environmental protection and medical groups urging Johnson & Johnson to give up using cancer-causing chemicals in their healthcare products.

Johnson & Johnson is the most comprehensive health care product manufacturers and service providers, and a member of the Fortune 500.

12

Siemens

(Germany)

Human rights:

Damage public interests

In September, consumers complained that they were having trouble closing the door of many Siemens refrigerators. Siemens refused to recall the problematic refrigerators as demanded by those consumers, as Siemens claimed there were no design flaws. However, December 4, 2011, Siemens China president Roland Gerke, in a statement on the company website, apologized to customers for problems recently encountered with a number of Siemens refrigerator doors and promised to resolve the matter through a free visiting repair service.

Siemens is a global powerhouse in electronics and electrical engineering, operates in the energy and healthcare sectors, and is a member of the Fortune 500.

13

China Grain Reserves Corporation

(China)

Corruption:

Business bribery

Since May 2011, the China Grain Reserves Corporationsystem, have had many bribery cases:

May, 2011, the former head and party secretary of the administration, the Grain Administration of Henan Province, was held and investigated on suspicion of corruption according toShuanggui investigation(an extra-legal form of detention used on Communist Party members); In September, in the Anhui branch, a former General Manager was investigated; In October, a branch director misappropriated public funds; In December, the General Manager in the Henan branch of the China Grain Reserves Corporation was investigated in Shuanggui.

China Grain Reserves Corporation is subject to the State Council, is a large state-owned enterprise and one of the most important China's top 500 companies, so the corruption will injure the public interests.

14

China Guodian Corporation

(China)

Environmental protection:

Pollution

From March to May 2011, The State Electricity Regulatory Commission (SERC) set up working groups on energy-efficient supervision and inspection of emission reduction.

SERChas punished relevant power plants for violations of the law on control of sulfur dioxide emissions, a main indicator for measuring air pollution. China Guodian Corporation Shuangliao and Honhyanchi companies were punished for excessive discharges of sulfur dioxide at 50% and 75%, respectively.

China Guodian Corporation is one of the state-owned power generation enterprises, is a Fortune 500 company.

15

China Datang Corporation(CDT)

(China)

Environmental protection

Pollution

From March to May 2011, The State Electricity Regulatory Commission (SERC) set up working groups on energy-efficient supervision and inspection of emission reduction, and it has punished those power plants for violations of the law on control of sulfur dioxide emissions, a main indicator for measuring air pollution. China Datang Corporation was punished for excessive discharges of sulfur dioxide at 67% and for polluting the environment.

China Datang Corporation (CDT) is an extra large scaled power generation enterprise group, and is a Fortune 500 company.

16

China Mengniu Dairy CompanyLimited

(China)

Human rights:

Damage public interests

In recent years, Mengniu Dairy has been noted several times to have quality issues. December 24, 2011, the special checks were launched by the General Administration of Quality Supervision, Inspection and Quarantine(AQSIQ), and reported that two batches of milk products made by two separate domestic dairies, including heavyweight Mengniu Dairy Group, were found to contain high levels of the cancer-causing toxin Alflatoxin M1. The level of Aflatoxin M1 in the tainted milk was more than double the national standard.

M1, as a musty toxin is highly toxic and a substance linked to liver cancer. Since this toxin is heat-resistant even at temperatures over 280o, as long as it is in the milk the toxin will not be removed through routine heating. Mengniu Dairy is China's biggest dairy company, is the first listed on overseas Chinese dairy enterprise; UHT milk is on global sales No.1; liquids, ice cream is with the first position in China; the export and the countries/regions is  first. There is more than 35% of domestic market share. Therefore, its product quality problem has had a huger damage and vast influence.

 

 



 
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