Analysis - May 1st ... was it all worthwhile?
If nothing else May Day’s protest in the West End of London demonstrated once again that big business is continually in the firing line. But the key question is whether it was all wasted energy and whether business is listening to the protestors.
This year the City of London, eerily deserted on May Day morning, escaped unscathed while the protestors, as part of their monopoly game strategy, targeted a whole host of locations before finally focussing their attention on the huge Nike store at Oxford Circus.
Missiles were thrown and protestors clashed heavily with police prompting arrests. And all for what? Anti-capitalism, anti-globalisation, the mistreatment of third-world workers by western multi-nationals, streets and roads too congested for cyclists and pedestrians and pigeons banished from Trafalgar Square by Ken Livingstone. The causes may be right or wrong, but is anyone listening?
Without doubt there has been more activity in recent years among businesses trying to clean up their act than ever before. ACCA has pioneered awards for the best environmental reports, won this year by Shell. Environment secretary Michael Meacher has named and shamed several companies and threatened legislation that could make green reporting mandatory. A sizeable number of the FTSE100 companies are now completing, or have pledged to compile, environmental reports. All in all the pressure is on business, the screws are being turned, which begs the question whether the protestors have any reason to be out marching on the streets.
‘I think they’re influential but they’re only one of a number of influential factors,’ says Roger Adams, head of technical services at ACCA and chairman of the judging panel for the environmental awards. ‘It’s just one element in a much larger process that indicates that at a certain level a range of interested groups are expressing concerns that cannot be ignored.’
Adams says the public has now exerted so much pressure, including demonstrations like those in Prague and at Seattle, that companies have had to take note or risk undermining their own credibility. Companies like Rio Tinto, Nike and Shell have made enormous efforts to establish their credentials in terms of social and ethical responsibility.
Perhaps more telling though is legislation forcing pension funds to publish their ethical and social policy. If the pension funds, the biggest of all investors, have strict policies that they can only put money into companies with sound environmental reporting and sustainable policies, directors and managers are forced to act.
And if you are really concerned, some pressure groups are demonstrating that there are alternatives to demonstrations. Bizarre as it may seem environmental campaigners have been buying up shares in the very companies with which they take issue.
At Balfour Beatty’s annual general meeting last week members of Friends of the Earthgained access because they were shareholders and forced the company to talk about its involvement in a Turkish dam building project.
As a result FoE managed to muster considerable support behind a proposal that the company adopt tough guidelines on dam building. Even though it was defeated, the move attracted coverage from the national news media throwing the environmental spotlight onto the beleaguered construction company.
This is not the only example. Insurance giant CGNU recently faced similar tough question from shareholders concerned about asbestos in South Africa.
At another agm Greenpeace shareholders in BP tabled motions against fossil fuel extraction.
The truth is that activists are getting wise and they are learning about corporate governance. If you are the chairman of a publicly quoted company there’s no telling when someone will turn up to your agm asking hard questions about your attitude toward corporate social responsibility. The kind of protestors hemmed in at Oxford Circus may smash shop windows but they rarely turn up to agms after buying your company’s shares.
With alternative strategies available some believe that public demonstrations are completely devalued. ‘Banging drums in the street is the most ineffective way of making a point because it’s the militants who get the press attention,’ says Gerry Acher, a partner at KPMG and chairman of the government’s advisory committee on business and the environment.
‘The most effective ways are pressure from within the company, which demonstrates how important the issues are.
‘Demonstrations rarely achieve their aims, they so are easily hijacked. The media is more interested in a hard core rampaging on Oxford Street.’
More on the May Day protest at www.accountancyage.com/News/1121323
IMPROVING ENVIRONMENTAL REPORTING
If business social and environmental reporting is to be improved experts believe the key converts are not members of the FTSE 100 but SMEs.
Gerry Acher, a senior partner of KPMG’s London practice and chairman of the Advisory Committee on Business and the Environment, believes that though the big companies may come on board to produce environmental reporting, there will be no great improvements until in-roads are made into the much more numerous SMEs.
When ACCA held its Environmental Reporting Awards it revealed that the number of entries from SMEs was on the increase but that most of the advice for producing an environmental report is tailored for large companies.
There are two other problems. Firstly, most of the pressure from campaigners is on large companies, and secondly, larger companies have a proportionately greater impact on the environment and should therefore be held accountable for their actions.
In the report ACCA says: ‘Despite the number of SME-focused initiatives that have been developed, the number of SME producing environmental reports remains worryingly low.’