NGOs ask IFC to improve standard of its standards

A group of 94 civil society organisations from 38 countries are demanding that the International Finance Corporation should strengthen its environment and social performance standards for loans given to private sector.

IFC, which is under pressure to improve its environmental and social performance standards for project financing, is currently reviewing the standards.

In a joint submission early this month, the civil society organisations describes that IFC's lack of transparency and supervision, failure to recognize human rights, and inadequate climate change policies, undermine IFC's ability to achieve its poverty alleviation mission.

The civil society letter points to a number of cases in which IFC-investments have had devastating impacts on local populations.

"IFC is becoming more like a commercial bank, but failing to incorporate lessons learned from the financial crisis in its lending practices. Standards for its clients are less clear, monitoring and supervision is reduced, and benefits to local communities and countries questionable. This is not how public money should be spent," Anne Perrault of the Center for International Environmental Law, a Washington D.C.-based legal advocacy organization, says.

The letter says that the recent financial crisis underscores the need to provide clear expectations and standards for private sector actors, as well as adequate transparency, due diligence, and oversight procedures to ensure that risks are assessed and addressed fully.

The letter then adds that the approach assumed by IFC in 2006, prior to the crisis, to introduce greater flexibility in IFC standards and to shift monitoring and supervision responsibilities to private sector clients, is clearly inconsistent with new hard-learned lessons about how to deal with financial risks and poses problems for securing strong development outcomes.

The NGOs have also slammed the IFC for approaching only the private sector for feedback on the effectiveness of the IFC environmental and social performance standards.

"The failure of IFC management to interview a single community for the report, despite the opportunity to do so provided by the 182 projects that have been under IFC’s supervision for over a year, is a strong indication that IFC is not, in practice, committed to ensuring that the Policy and Performance Standards are implemented effectively to protect communities and the environment, as intended," the letter says.

Key concerns raised by the organizations include those related to environmental and social due diligence and oversight; accountability; development outcomes; human rights; biodiversity; climate change; financial intermediaries; and disclosure of information.

I wrote a feature on responsible project finance in Ethical Corporation's current issue which investigates the project finance practices, including that of IFC, commercial banks and export credit organisations, and gaps in responsibility.

IFC's own credibility is at stake. It has a good opportunity, while it's reviewing the standards, to honestly consult the civil society organisations and carry out independent impact assessments of current and past IFC funded projects in order to realign the performance standards that truly meet its stated objectives; benefiting the local communities and the environment.

If your are interested in reading more about responsible finance, here is a good resource.

A new break for printer speeds

If you have to choose between Printer A which promises 16 ppm and Printer B that offers 24 ppm and both have the same price, which one will you buy assuming both are equally respectable brands? If you said "B", you may end up with a printer which actually has a ppm lower than 16.

Many consumers were not even aware that several printer manufacturers were fooling them all this while using the ppm trick.

An average printer customer, I include myself in that category, would generally look at the ppm or Page Per Minute speed of the printer for comparison between two makes. Common sense would dictate buying the one which offers the highest ppm so that you can print faster. And how did customers came to know about the term ppm?

Well, ppm was the term that all companies were, and are, using to advertise their printers. And there was a competition to outspeed the rivals by promising relatively higher speed. The trick was to state the "maximum ppm". How did they do this?

Simple. They defined their own page. So, if a manufacturer defined his "page" included only 15 lines and no images, his ppm would appear relatively higher. If another manufacurer decided to act more ethical and assumed that a typical real world A4 page would have a text of 25 lines and would include at least one chart or a graphic, their resulting ppm speed would appear lower. That would be a competitive disadvantage. This is how a ppm-war started among the printer brands.

But now there is a speedbreaker in the form of a new ISO standard on printing speed. The ISO/IEC 24734 standard defines the ppm and ipm (image per minute) for back and colour prints in a default single sided mode. The ISO standard allows customers to do an apple to apple comparison.

Cannon, Epson, Kodak, HP and Lexmark were the companies that worked with the International Standards Organisation to develop the standard. ISO ppm was finalized last year.

So, when you buy a printer next time, find out if the brand has signed up to ISO ppm and follows ISO ppm guidelines to state the real ppm.

Will Nestle budge?

A Greenpeace campaign is in full swing against Nestle on palm oil sourcing. Greenpeace has released a report "Caught Red-Handed: How Nestlé's Use of Palm Oil is Having a Devastating Impact on Rainforest, The Climate and Orang-utans," which says "Nestlé is using palm oil from destroyed Indonesian rainforests and peatlands in products like PowerBar, Nestlé Crunch Crisp, and Coffee Mate, pushing already endangered orangutans to the brink of extinction and accelerating climate change."

Will Greenpeace succeed in extracting a commitment from Nestle on sourcing sustainable palm oil the way they did against Unilever two years ago?

In early 2008, environmental campaigner Greenpeace targeted Unilever over unsustainable sourcing practices of palm oil. The dramatic campaign, in true Greenpeace style, saw activists dressed as Orangutans and making jungle noises descended on the offices of consumer goods giant Unilever. The campaign coincided with Greenpeace releasing a damning report "How Unilever suppliers are burning up Borneo.”

The campaign brought Unilever on their knees within days. A deal was stuck. And Unilever committed buying all its palm oil from certified sustainable sources by 2015. The consumer goods giant also promised to have all palm oil it uses in Europe from certified sustainable sources by 2012. See the complete report here that I wrote for Ethical Corporation magazine then.

Unilever has since taken a leadership role on moving toward sustainable palm oil. Nestle, another company named in the Greenpeace report then, watched from the fence. Until then, Nestle had not even joined the Roundtable on Sustainable Palm Oil, a multistakeholder forum to develop a certification scheme for sustainable palm oil.

After securing a commitment from Unilever, Greenpeace then said they would turn their attention to other companies, one by one. So now it is Nestle' turn, it seems. This time, Greenpeace is using the power of social media to attack Nestle.

While Unilever responded to the crisis with a certain grace, Nestle has adopted a hostile approach. Within hours, Nestle got YouTube to remove the video that Greenpeace had uploaded as part of the campaign. Greenpeace now accuses Nestle of censoring the campaign advertisement.

Nestle' actions will be closely watched in the coming days and weeks. Will they act by committing to sustainable palm oil? or will they create a reputation mess and offer new lessons in mismanaging a crisis?

A word with Prakash Sethi

"Prakash is one of those slightly hidden gems in corporate responsibility," wrote Toby Webb, the founding editor of Ethical Corporation magazine, on his blog last week, referring to Prakash Sethi.

Prakash is president of non-profit think-tank Sethi International Center for Corporate Accountability, Inc. and University Distinguished Professor at Zicklin School of Business, Baruch College/CUNY, New York. He is also advisor to a large number of international organisations and companies.

Toby says he recently spent almost a day with Prakash discussing corporate responsibility, taped a podcast on 'the business case for NGO accountability' and asked him to talk to the class he teaches.

A couple of months ago I had the opportunity to speak with Prakash over the phone for my feature on ethics of takeovers for Ethical Corporation. It was a lengthy conversation, mostly listening to his beautifully articulated and passionate views on the ethical issues involved in takeovers (Kraft's takeover bid for Cadbury was the trigger).

But the conversation left me frustrated. I had a limit of 2,000 words for the feature. I was tempted to include every word Prakash said in response to my questions- what he said was so powerful. But couldn't. If I did, I would have ended up writing a mini-book on takeovers. So I had to reluctantly settle to using only some of his quotes, something that space-constrained mag writers often are forced to do. I haven't apologized to him yet. What a pity!

So, don't miss this podcast with Prakash Sethi. He is a rare thought leader on responsible business.

Indian companies should act on gender diversity

The upper house of Indian parliament has passed the historic Women's Bill which aims to reserve 33% of the seats in the parliament and state legislatures for women. People with any sanity should welcome this. And those who tried to stop the bill should be condemned.

It has taken over 10 years for the bill to reach this landmark no thanks to protests by male-dominated political parties. Now the bill needs to be passed by the lower house before it is sent to the president for signing into a law.

Ruling Congress party and the main opposition party BJP as well as the leftist parties supported the bill. Most likely the bill will see through the lower house.

India already has such quota for women in village councils which has improved the governance of these councils. But women in India face severe discrimination in other spheres of life. Last year, India ranked the 114th among the 134 countries in The Global Gender Gap Index computed by the World Economic Forum.

What it means for businesses?

While politicians have taken the step to bring more women in the mainstream of governing the country, what are companies doing to improve gender equality? Women remain largely unrepresented in the middle and senior management in businesses in India, except, perhaps, in the IT outsourcing industry. Women are rarely included in the governing boards of Indian companies.

Once the Women's Bill becomes law, the focus will be on businesses to introduce policies to ensure gender diversity. With 33% of lawmakers being women, businesses will have to rethink their attitude toward women. Business groups will also need to develop new skills and managers for effectively lobbying with female lawmakers.

If companies don't take proactive measures to enhance gender equality and diversity across organisation and supply chains and vigorously protect women's rights, new women lawmakers may push for a regulation for a similar reservation for women in private employment.

Should companies wait for the government to pass a bill to ensure women are fairly represented in companies' management? Or should they voluntarily, and sincerely, start promoting gender equality and gender diversity at all levels in the company? The choice is theirs. We all know voluntary action is the smart thing to do.

Asia's economy rising but women falling behind

Asia Pacific is rapidly turning into an economic powerhouse with a vibrant growth story in spite of the global recession which has crippled the conventional economic powers in the west. But when it comes to the development of women and protecting their rights, Asia Pacific continues to be at the bottom of the pile, according to a new report by the UNDP.

The report titled Power Voice and Rights: A Turning Point for Gender Equality in Asia and the Pacific , says that discrimination and neglect are threatening women’s very survival in the Asia-Pacific region, where women suffer from some of the world’s lowest rates of political representation, employment and property ownership. Their lack of participation is also depressing economic growth.

The Report focuses on three key areas —economic power, political decision-making and legal rights— to analyse what holds women back, and how policies and attitudes can be changed to foster a climb toward gender equality. Asia, the Report asserts, is standing at a cross-road and by putting the right policies in place now, countries in the region can achieve positive change.

Some of the major challenges women face include lower pay than men for the same work, forced to accept lowly paid jobs that men don't want to undertake, widespread illiteracy, poor representation in politics and legislatures, shorter life expectancy, female infanticide, domestic violence, low ownership of property and inadequate laws to protect their rights.

The report recommends removing barriers to women’s ownership of assets, such as land; expanding paid employment; making migration safe and investing in high-quality education and health to address the problems women face in the region.

While the local governments have to accept much of the responsibility to actively promote the well-being of women and protect their rights, businesses too can play a significant role in the development of women.

Non-discrimination in employment, ensuring gender diversity, protection from sexual harassment, protecting rights of migrant women workers, reasonable maternity benefits, work-life balance policies, training and career growth opportunities and developing women managers are some of the things companies can do to contribute to the development of women.

At the community level, companies can consider actively investing in women education which in turn will ensure more number of educated women are available for jobs.

Apple Computers find labour violations in supply chain; sets new benchmark for disclosure

In its 2010 Supplier Responsibility Progress Report, Apple Computers has disclosed that their auditors continued to find serious labour violations in supplier factories around the world last year.

Apple audited 102 suppliers in 2009, up from 83 in 2008. Eighty of these were audited for the first time while the remaining 22 were repeat audits. The computer giant requires its suppliers to comply with the Apple Supplier Code of Conduct.

The report says: "In 2009, our audits identified 17 core violations: eight violations involving excessive recruitment fees; three cases where underage workers had been hired; three cases where our supplier contracted with noncertified vendors for hazardous waste disposal; and three cases of falsified records provided during the audit."

Then the report goes on to inform what remedial actions Apple has taken to correct these violations. For example, audit findings led to reimbursement of $2.2 million to foreign migrant workers who had paid the sum to middlemen in illegal recruitment fee over the past two years.

Apple's simple to read, and understand, annual report sets a new benchmark for reporting on supply chain responsibility. Something that fashion retailers have failed to do. And other electronics peers have not bothered to match.

Apple started paying attention to supply chain responsibility after several high profile cases were reported highlighting labour and human rights violations in its supplier factories in Asia. Though the electronics industry has introduced Electronics Industry Code of Conduct, a voluntary initiative, the uptake has been frustratingly slow.

While the mainstream media has taken interest in exposing bad working conditions in fashion retailers' supplier factories, electronics supply chain has generally remained off their radar. But Apple's report, as well as several other reports by activists, indicate that electronics supply chain potentially poses serious social and environmental risks which must be managed effectively by the brands to prevent reputational damage.

Here is an interesting report "Silicon Sweatshops" which alleges poor working conditions in supplier factories of some of the largest electronics brands.

Happy Holi!

To all my Indian readers, a VERY HAPPY AND COLORFUL HOLI! But please play with eco-friendly colors. Here is the environmental side of Holi.

To non-Indian readers, just in case you want to know more about Holi- the festival of colors-here is the link.

Human rights risk in Myanmar

A new report by human rights campaigner Amnesty International says that the government of Myanmar continues repression of political opponents, activists and ethical minorities. The report casts doubt if the elections in Myanmar later this year will be free and fair at all.

Myanmar has said it would be holding national and local elections this year, the first since 1990. But human rights campaigners say the country's military regime has embarked on repressing opponents to eliminate any potential challenge during the elections.

Myanmar's 50 million people suffer extreme poverty and lack of access to health care. The country had a dismal per capita GDP of $239 in 2007. About 35% of the population are ethnic groups who face greater threats from the military regime's repressive tactics.

The report authors want the Myanmar government to lift restrictions on rallies and political assemblies, release political prisoners, remove restrictions on media, and stop harassment of ethnic and religious minorities.

The report also asks China, India and ASEAN to press Myanmar to respect internationally agreed human rights principles. The report also recommends that China should conduct full human rights and environmental impact assessments of all Chinese investments in Myanmar, particularly with a view toward minimizing human rights violations of ethnic minority groups.

Thailand, India, China, Japan and the United Kingdom are the main destinations for Mynamar's exports. The country mainly imports from China, Singapore, Thailand, Republic of Korea and Malaysia.

Amnesty's new report suggests the companies hoping to enter Myanmar after this year's elections may need to use extra caution in assessing human rights risks in Myanmar.

Messing up, the Toyota way

World's number one car maker Toyota's handling of the crisis has produced a new case study that will be discussed in B-Schools and by corporate responsibility professionals for years to come.

When the company started receiving safety complaints from customers in the US last year, it decided to play it down. The company executives refused to accept that Toyota cars could have safety lapses. Arrogance? Soon there were fatal accidents involving Toyota cars, allegedly because of faulty brakes and accelerators. The company still did not budge.

Then the US Highway Safety Officials took up the matter with Toyota's US-based executives. Nothing happened. Then, the US officials even made a visit to Toyota's head office in Japan to convince the company that some of their models may have faulty components resulting in fatal accidents. After a lot of effort, the company decided to announce the first recall late last year. The US Transport Secretary called Toyota "a little safety deaf" referring to their feet dragging over the issue.

Even then, there was no clear statement from Toyota on the problems. Soon, more models were discovered having safety problems. More recalls followed, totalling to 8 million cars, roughly the same as the number of total cars sold by Toyota in 2009.

Somewhere, in between, the company attempted to imply that the problem lied with its American component supplier CTS Corp. But CTS promptly denied any responsibility by saying that it had produced the component exactly to the design and specification provided by Toyota.

Then, the company made an interesting decision. It decided to repair the faulty components rather than replacing them, apparently to save costs. There was customer outrage. The company was then forced to change its position and agree to replace the faulty components.

But no statement from the company management was forthcoming to reassure million of Toyota car owners worldwide. And then there was a statement by senior executives, not by the head of the organisation, that only cars in the US and Europe were affected. Customers in the rest of the world need not worry.

Very soon more models were added to the recall list affecting the entire world. Even Toyota Prius, the celebrated hybrid car, was added to the list.

While the company's recall list was growing by the weeks, no apology was forthcoming. Finally, after much PR disaster, the president of Toyota who is a grandson of Toyota's founder, called a press conference in Tokyo to publicly apologise. And when he did it, he did so in Japanese, even though all the affected customers were in the US and Europe. When a few journalists asked him to speak in English, he only offered a few broken words of English. Hardly a confidence inspiring gesture by the head of one of the world's largest companies who is trying to address customer concerns in the US and Europe.

The president appeared the second time to apologise within weeks after the Toyota Prius recall, mainly because this recall affected the Japanese customers as well. Before this, the company maintained that cars produced in Japan had no quality problems, a PR pitch implying that the company only had quality problems in overseas plants. In a way, saying that the employees and suppliers overseas are not able to meet the stringent quality parameters that the company maintains in its home country.

In his apology appearances, the company president tried his best to instill confidence. He asked customers to have faith in Toyota and believe that Toyota has customers at the centre of business model. Talking about the brake-failure problems in some of the models, he suggested that the driver should not panic if the brakes are not behaving. The driver, he advised, should continue to press the pedal and eventually the car WILL stop.

The US Congressmen want the Toyota president to attend a hearing in the Congress on the issue. This was a great opportunity for the company to honestly explain what had gone wrong and how they planned to fix it. But the company told the US Congress that the president is not available and can travel to the US only in April. The company instead offered to send some other executive for the hearing. This again attracted huge criticism, including by US politicians and Japan's transport minister. Finally, after some flip-flop, the president has agreed to attend the hearing. Wonder who are his PR advisers!

Even US president Barack Obama has issued a statement asking the company to fix its problems quickly. Perhaps, it's the first time that a US president has singled out a foreign company to express concerns.

It is being speculated that Toyota's recalls have not ended and there may be more recalls in the pipeline. There are also rumors that the company has been hiding the problems for a long time. Already, Toyota's sales figures have plunged. The stock price has crashed. The company is even considering closing down US plants for a few weeks to prevent an inventory pile up. It also faces potential law suits in the US, including class action, and penalties by the authorities. The company, which prided itself for quality superiority, is now a laughing stock.

There are people who say Toyota will eventually recover from the mess. But the company has not shared, or demonstrated in anyway, how it plans to come out of it. It is still trying to figure out how they landed into this mess in the first place. Most believe that ambition to become number one led to "growth at any cost" approach. And Toyota lost control over quality. Now they are losing market share, every hour.

So, the largest market share does not mean a company is sound and sustainable. The Toyota incident (or should we call it a scandal?) has also raised several new questions about the way the automobile industry operates. More on this later.

Disclosure: I drive a Toyota and I don't know if my car is safe.

American supplier let Toyota down

The world's largest carmaker Toyota (yes, they left GM behind in 2008) is in trouble in the US after some of its models were found to have faulty accelerator pedals. Last week, the problem forced Toyota to recall 2.1 million vehicles in the US market. The carmaker has also suspended sales of eight models in the US which used these pedals. It has halted production in five plants in the US for a week to fix the problem.

Last year, Totota had to recall 4.2 million vehicles due to a risk of pedals getting trapped in lose floor mats.

The interesting bit here is that the faulty accelerator pedals were produced by an Indiana-based US company called CTS Corp, a key supplier to Toyota since 2005. Wondering what would have been the reaction if the faulty part had been produced by a Chinese manufacturer in China? But as the fact of this case is, the crazy pedal (it tends to accelerate on its own!) was produced in the US by a US company. So, everyone is now blaming Toyota for quality and safety failure. See, this is what happens when you stop buying GM and run after the Japanese cars, they seem to be saying.

Toyota shares are down on stock markets and so are the stocks of its partner suppliers. While Toyota nurses its wounds, GM, Volkswagen and Honda Motors are likely to benefit.

A market growth at break neck speed may have caused quality lapses at Toyota. But now they have hit the speed breaker. This episode has only added to an already growing belief that quality of Japanese products is not the same what it used to be. Japanese companies will have to work harder to protect their image. Their market-share leadership will be short-lived if they ignore safety, quality, and business responsibility (yes, they are mostly laggards in CR).

McDonald's lawyers at it again

Another interesting episode of McDonald's lawyers going after someone who tries to use the prefix Mc. I came to know of this after Elainecohen's tweet this afternoon.
While McDonald's has the right to protect its brand and trademark from unscrupulous potential rivals, legal action against any and everyone who tries to use the prefix Mc even for things totally unrelated to burgers and fries may be called harassment.
But McDonald's lawyers are not always successful. For example, McDonald's was not lucky in Malaysia. A humble McCurry won the battle against McDonald's.

How to rile both Google and China with one click

A fake YouTube site created by a Chinese young man is challenging both Google and Chinese authorities. Interesting piece on The Christian Science Monitor "Want to rile Google as well as China? Create a fake YouTube site." That is some example of putting pirated intellectual property to some good use!

McDonald's Says "Sorry"

American fast food chain McDonald's has said sorry to Singapore for excluding the pig toy from its collection of 12 animals from the Chinese zodiac. The company apologised in an advertisement published in a prominent local newspaper and said the pig toy will be available soon for buying.

McDonald's had replaced the pig- one of the 12 animals in the Chinese zodiac- ostensibly out of respect to Muslims. Its outlets in Singapore are Halal Certified, meaning the food served is in compliance with the Islamic code. The company presumed -without consulting key stakeholders -that offering a pig toy will annoy its Muslim customers. But the gesture offended some Chinese customers who thought the pig was an integral part of their zodiac and should not be removed. Worse, McDonald's replaced the pig toy with a Cupid thinking that offering Cupid will make a great marketing move as the Valentine Day coincides with the Chinese New Year. Chinese customers were not pleased. They started writing letters to local newspapers and soon various social media forums were buzzing with criticism of the company. Finally, McDonald's realised it had bungled. And ended the controversy with a public apology. The right thing to do.

Companies can avoid making this kind of costly mistake by injecting corporate responsibility into the DNA of the organisation. Embedding corporate responsibility throughout the organisation can equip functional managers to think holistically when making choices or decisions. Corporate responsibility should not be run like a show by the PR guys who have no idea what corporate responsibility is. Going beyond writing cheques to charities or PR generating sponsorships takes more than spin skills. Hiring a competent CR professional may be the first important step companies serious about responsible business should consider. Commitment and support from the top executive and the board are of course pre-requisits.

Google's threat to China not surprising

Wondering why people are surprised by Google's threat to withdraw from China. Agreed, the open threat is unusual given their past feet dragging on privacy issues. But what Google has done now is very much what they committed to doing when they signed up the Global Network Initiative, a multi-stakeholder initiative launched in October 2008 to protect online freedom.

I wrote a feature in Ethical Corporation (Strategy & Management section, Sept 2009 issue) on GNI which is worth revisiting now to understand where Google is coming from and what future course of action it might consider. The feature mentioned examples of what Google, Microsoft and Yahoo (the three first companies which signed up) are doing to implement the GNI principles.

Also worth reading is GNI's statement on Google's new approach to China. The statement begins with "Google’s decision to reconsider its business in China is an indication of the tough choices information and communications technology companies face around the world where respect for human rights is at risk."

Vedanta not out of the woods yet

Vedanta is allegedly illegally constructing structures in the reserved forest area for bauxite minining in India. If true, this can be disastrous for their reputation. The company has not been given a license yet.

The environment and forestry minister says the mining license to Vedanta will be considered only if the company complies with the forest rules and respects the rights of local people.

Conc solar power can solve MENA's water woes

In recent decades,fast-growing demand for water in the Middle East and North Africa MENA)region has translated into a heavy reliance on seawater desalination plants. The resulting increase in energy consumption from fossil fuels is, simply put, unsustainable.

Compared to nuclear, concentrating solar power provides a more effective solution to resolving water, energy and environmental issues in the Middle East and North Africa region.

Read more here.

Chinese authors challenge Google

As an author, Google's arrogant assumption that they have the right to copy any author's work for free to their digital library (Google Books) worries me. Unsurprisingly, Google's action is being challenged everywhere.

In the latest case, Mian Mian, a famous Chinese author has sued Google for an alleged copyright infringement in a Beijing court. She has accused Google of illegally copying her novel Acid Lovers into their digital library. She is seeking $8000 in compensation.

Google is already under attack by the Chinese authors' association who are accusing the search giant of illegally adding hundreds of thousands of Chinese-written books to Google Books, a highly controversial digital library project.

Publishers and authors in the US, Germany, France and other countries have also objected to Google's plan to digitize millions of books for free. Google reached a settlement with the US authors in 2005 when it agreed to pay $125 million to resolve pending cases and agreed to pay part of the revenue to authors and publishers from advertising and sales resulting from their books included in Google Books.

This followed, last year, by a very controversial step by Google where it declared that it will unilaterally digitize books unless the respective authors decide to opt out. In other words, the onus lies on the author or publisher to opt out. If the author does not opt out, his/her book will be digitized by Google without consultation or permission. And Google went ahead with this plan devised by its lawyers.

China Written Works Copyrights Society, a non profit group for protecting authors' rights, has challenged Google's heavy handed approach to digitize books in this fashion. The Society wants Google to apologize and pay compensation for copying its members' books. Google has had multiple rounds of negotiations with the Society to resolve the matter, the latest meeting scheduled for coming Tuesday. If the Chinese group manages to force Google to pay compensation, that will encourage writers associations in other countries to sue and seek a rightful compensation.

Critics of Google's scheme say that rather than automatic Opt In, Google should have adopted an automatic Opt Out plan. In other words, it should not copy a book to its library unless it obtains a written Opt In from the author or the publisher, depending on who owns the copyright.

Google is not the only company which is using automatic Opt In trick to further its own cause. There is a growing trend among companies to use this as a short cut to shore up their profits and undermine the consumers or other stakeholders.

What is ethical way of doing it? What is the right thing to do? Automatic opt in OR automatic opt out?

McDonald's pig in a poke

An unfolding controversy involving McDonald's in Singapore indicates how important it is for multinational brands to have corporate responsibility managers with deep local insight on the ground.

McDonald's rolled out a promotion in the run up to the Chinese New Year, an important sales period for eateries.' The promotion included offering a collection of 12-character Doraemon set representing the animals of the Chinese zodiac calendar. A clever idea from the marketing perspective, indeed. Chinese love collecting the zodiac animal toys, especially during the Chinese New Year. McDonald's offered these collectibles at two dollars a piece if the customer buys a meal.

Somewhere in the middle of the campaign, Chinese consumers discovered that the collection had one animal missing- the pig. The collection would be incomplete without the pig. McDonald's had replaced the pig with a cupid. This upset the Chinese consumers. But McDonald's says it decided to exclude the pig to respect the sensitivities of its Muslim customers. All McDonald's outlets in Singapore are halal certified and the company thought offering a pig toy would be inappropriate.

But it seems McDonald's assumed a bit too much. It has now ended up annoying Chinese consumers. Local blogs and media reports are questioning McDonald's insensitivity toward the Chinese consumers. To make the matter worse, a number of media reports have quoted Muslim consumers and scholars who say there is nothing wrong with offering a pig toy in a halal certified outlet. After all, it's a toy, they explain.

McDonald's lack of cross-cultural understanding points to a common trend among multinational companies who often neglect to deploy corporate responsibility managers with local insight in Asia even though their significant growth comes from the region. Majority of them have left poorly-defined corporate social responsibility functions in the hands of public relations managers who don't view it beyond charitable giving or public relations gimmicks.

What McDonald's should have done was to engage with the Muslim community's leadership to discuss the promotion and the dilemma it faced. It should also have understood that an incomplete collection of zodiac toys will offend the Chinese customers. But an organization can think like this only if it has corporate responsibility drivers on the ground and principles of responsible business integrated into the day to day working of the organisation.

CSR Training Workshops

Here is the link to high quality CSR Training Workshops, launched by Ethical Corporation