Most Environmentally and Socially Controversial

Transcription

Most Environmentally and Socially
Controversial Companies in
January 2009
Zurich, February 10, 2009 / Charlotte Mansson
Welcome to the first 2009 edition of ECOFACT’s Most Controversial Companies report. We have added a
new feature to the report which we hope will give you even more insight into the scope of companies
criticized for environmental and social issues. While we will continue to publish the list for the overall most
controversial companies for any given month, there will be an additional section with the top five most
controversial companies for a particular sector, such as mining, or country, such as India. This month the
focus will be on Brazil, an increasingly important emerging market.
According to the reputational risk radar RepRisk, the top ten most environmentally and socially
controversial companies in January 2009 were: Peanut Corporation of America, Siemens, Exxon Mobil,
Royal Dutch Shell, Wal-Mart Stores, Tennessee Valley Authority (TVA), RWE AG, Alpha International,
Corybantes, and Echo Delta Holdings. Companies on the list have been severely criticized by the world’s
media, governmental organizations and NGOs for issues including human rights abuses, severe
environmental violations, impacts on local communities, corruption and bribery, and breaches of labor,
and health and safety standards. Rankings are based on the Reputational Risk Index (RRI), as measured by
RepRisk in January of this year. The RRI is directly derived from the negative press captured by RepRisk and
its calculation is strictly rule-based.
RepRisk does not measure a firm's overall reputation. Instead, by capturing criticism, RepRisk computes
the firm's exposure to controversy and therefore provides an indicator for reputational risk. RepRisk is
used by asset owners and asset managers, commercial and investment bankers, and supply chain
managers and corporate responsibility experts.
© ECOFACT AG 2009, all rights reserved RepRisk® is a registered trademark of ECOFACT AG
Page 1 of 9
Top ten most criticized and
controversial companies in
January 2009
Peanut Corp.
Siemens
Exxon Mobil
Shell
Wal-Mart
TVA
RWE
Alpha International
Corybantes
Echo Delta Holdings
40
The three environmental and
social issues for which the ten
companies were criticized most
were:
1. Impacts on
Ecosystems/Landscapes
50
60
70
80
90
100
2. Human Rights Abuses and
Corporate Complicity
3. Impacts on Communities
The RRI ranges from zero (lowest) to 100 (highest) and its calculation is based on the reach of news
sources, the frequency and timing of news, as well as its content, i.e. severity and novelty of the issues
addressed. The RRI is an indicator of a company's exposure to controversial issues and allows an initial
assessment of risks which are attached to investments and business relationships. It also allows the
exposure of an entity to be compared with that of its peers and permits risk trends to be tracked over
time.
The following pages provide a summary of the criticism to which the ten most controversial companies
have been exposed, as well as the environmental and social issues that have been associated with these
companies. The company’s ranking from the previous month is shown in brackets.
Please refer to page 9 for more details on methodology.
Page 2 of 9
Peanut Corporation of America, Rank 1 [New Entry]
Peanut Corporation of America is a new entrant in RepRisk and on the Most Controversial Companies list.
The company issued a major recall of peanut products, as several lots were found by the FDA to contain
salmonella strains. By the end of January, eight deaths and more than 500 people who had taken ill were
linked to the salmonella outbreak. Peanut Corporation is a supplier to several companies, including Kellogg
Company, King Nut Companies and McKee Foods Corporation, which have been pressured to recall their
products as well.
Top three issues:
1.
Products (Health and Environmental Issues)
2.
Supply Chain (E, S, L Issues)
3.
Violation of National Legislation
Siemens, Rank 2 [13]
Siemens was embroiled throughout most of 2008 in a major corruption and bribery investigation, which led
to the company being fined several hundreds of millions of US dollars. The investigation continues and has
this past month been extended into Nigeria via the company’s stake in the Bonny Island project, and to
Bangladesh where the company is accused of bribing government officials. In addition, Siemens was criticized
for proposing new compensation packages for its executives, and the company was also accused of
participating in illegal coltan trading in the Democratic Republic of Congo.
Top three issues:
1.
Corruption, Bribery, Extortion and Money
Laundering
2.
Human Rights Abuses and Corporate
Complicity
3.
Impacts on Communities
Page 3 of 9
Exxon Mobil, Rank 3 [2]
Exxon Mobil was criticized for continuing to flare gas from oil fields in Nigeria after the expiration of a
government deadline. The company also came under fire for its licenses to explore and exploit oil and gas
reserves located in the Sulu Sea's Sandakan Basin in southwest Philippines. Critics claimed the company's
activities would affect fragile marine ecosystems, fishing-based livelihoods and food sources.
Top three issues:
1.
Impacts on Ecosystems / Landscapes
2.
3.
Global Pollution (Including Climate
Change)
Royal Dutch Shell, Rank 4 [4]
Shell Chemical Yabucoa Inc settled for USD 1,025,000 over water quality violation charges in Puerto Rico.
The company had released pollution above levels stipulated in an agreement with the EPA, and releases
had gone into restricted areas of local water bodies. In Barbados, Shell Oil Co was criticized for 15 years of
alleged pollution through the spilling of half a million gallons of kerosene. Local communities in Nigeria
have urged the state and national governments to pressure Shell Petroleum Development Company (SPDC)
into compensating the community after a spill from the company's pipeline ignited and destroyed
farmland.
Top three issues:
1.
Impacts on Ecosystems / Landscapes
2.
3.
Local Pollution
Page 4 of 9
Wal-Mart Stores, Rank 5 [1]
Wal-Mart Stores Inc was criticized for violations of labor standards at suppliers in South Africa, Kenya, and
Thailand. Allegations ranged from forced shifts, to extreme temperatures, and abuse of employees. The
Supreme Court of Canada is set to hear the case against Wal-Mart Canada brought by former workers who
recently unionized. Workers claimed the company was in violation of national labor laws and that it closed
the plant when the employees formed a union.
Top three issues:
1.
Violations of Labor
Standards
2.
Supply Chain (E,S,L
Issues)
3.
Human Rights Abuses
and Corporate
Complicity
Tennessee Valley Authority (TVA), Rank 6 [100]
A report published by the EPA criticized three plants operated by Tennessee Valley Authority (TVA) due to
concerns over pollution from the disposal of coal combustion waste. TVA came under heavy fire when leaks
and spills were discovered at two of its plants: A coal ash pond at the Kingston fossil plant recently burst
releasing a billion gallons of toxic waste into the environment; and a spill of up to 10,000 gallons of ashladen water at Widows Creek plant polluted the surrounding land. As a result, a judge has ordered the
company to install pollution controls at four of its plants located in Tennessee and Alabama.
Top three issues:
1.
Local Pollution
2.
Waste Issues
3.
Impact on
Communities
Page 5 of 9
RWE AG (Group Center), Rank 7 [50]
Environmentalists criticized RWE's Biblis Nuclear Power Plant after a leakage in a steam creator at the site,
arguing that the plant was poorly protected against that kind of incident and spoke of 17 safety flaws. RWE
was criticized for the highly controversial Belene power plant, and critics argue that the project is located
dangerously close to a quake-prone area.
Top three issues:
1.
Global Pollution
(Including Climate
Change)
2.
Impacts on Local
Communities
3.
Impacts on
Ecosystems /
Landscapes
Alpha International (Private) Ltd., Rank 8 [22]
Alpha International is one of several companies and institutions with British links that were named by the US
Department of the Treasury as being part of a blacklist of names who are allegedly the 'financial lifeline' to
the controversial Mugabe regime in Zimbabwe. The European Union also planned to add a number of
companies to its sanctions list due to the links with Mugabe's regime in Zimbabwe.
Top issue:
1.
Human Rights Abuses
and Corporate
Complicity
Page 6 of 9
Corybantes Ltd., Rank 8 [22]
Just like Alpha International (Rank 8), Corybantes is quite new to RepRisk. However, the company has come
under fire as it was also part of a blacklist of companies with dealings in Zimbabwe and links to the highly
criticized Robert Mugabe regime.
Top issue:
1.
Human Rights Abuses
and Corporate
Complicity
Echo Delta Holdings Ltd., Rank 8 [22]
Echo Delta Holdings Ltd. is active in real estate development, and is a Dutch subsidiary of Breco (UK) Ltd.
Echo Delta has been linked to business dealings with the highly controversial Mugabe regime in
Zimbabwe and was black-listed in a US government report together with other companies, for their
Zimbabwean involvement.
Top issue:
1.
Human Rights Abuses
and Corporate
Complicity
Page 7 of 9
Most Environmentally and Socially Controversial Companies: Brazil
Top Five Companies:
Top Three Issues in Brazil:
1. Grupo EBX
1.
Human Rights Violations and Corporate
Complicity
2.
Supply Chain (E, S, L Issues)
3.
Impacts on Ecosystems/Landscapes
2. Petroleo Brasileiro SA (Petrobras)
3. Acucar Guarani SA
4. Agropalma Group
5. Banco Fator
Grupo EBX, Rank 1
Grupo EBX has come under fire due to its relationship with MXX, a metallurgic firm of Grupo EBX. MXX is
accused of involvement in a scheme to illegally exploit vegetable coal. The firm is accused of encouraging
suppliers to engage in illegal deforestation and supporting their widespread slave-labor practices. Another
Grupo EBX firm has been denounced by regulatory bodies for supposedly presenting inappropriate
environmental impact studies, allegedly bribing indigenous groups to build a port on protected land, as well as
potential irregularities in the licensing of thermoelectric plants.
Petroleo Brasileiro SA (Petrobras), Rank 2
Petrobras officials were accused of accepting bribes from a US-based valve manufacturing company, Control
Components, a subsidiary of UK-based IMI, in exchange for contracts.
Acucar Guarani SA, Rank 3
Acucar Guarani SA is a Brazil-based company active in planting sugarcane, commercializing and producing
sugar as well as transforming sugar-cane into ethanol and electric energy. It has been criticized for its
involvement in agrofuel, including palm oil, production in Latin America. NGOs claim that working conditions
on some plantations in Brazil are seriously below standards.
Agropalma Group, Rank 4
The Agropalma Group is involved with palm oil and palm kernel oil production and extraction activities in
Brazil. The company has come under fire from NGOs because of the controversial nature of palm oil
production.
Banco Fator, Rank 5
Banco Fator is a Brazilian bank, which has been criticized for its investments in agrofuel production, which
NGOs claim leads to deforestation, human right abuses, and threatens food sovereignty. NGOs also claim that
working conditions on some plantations in Brazil have been classed as modern slave labor.
Page 8 of 9
Methodology
RepRisk objectively monitors the level of criticism to which a company is exposed. All data is collected and
processed by a strictly rule-based approach; it is not the result of an assessment, rating or verdict from our
analysts.
The "Most Environmentally and Socially Controversial Companies" report was compiled using information
from the RepRisk database, which consists of negative news on companies’ environmental and social
performance. The RepRisk database currently covers more than 9,000 companies and holds news from
thousands of sources, ranging from commercial newspapers and on-line media to NGO websites, blogs
and newsletters. Once the negative news has been identified with advanced search algorithms and
analyzed for its novelty, relevance and severity, risk analysts enter it into the database and link it to the
companies in question. No news is entered twice unless it has been escalated to a more influential source
or higher-profile media outlet. This helps to ensure the balanced and objective rating and weighting of
the negative news, and thus the company’s RRI. The RRI measures the risk to a company’s reputation, not
its actual reputation in general. Each report is compiled by taking the ten most criticized companies in our
database of more than 9,000 companies.
For more information about the "Most Environmentally and Socially Controversial Companies" report,
please contact Charlotte Mansson at [email protected], tel: +41 44 350 6022, or visit our websites:
www.reprisk.com or www.ecofact.com.
RepRisk®
RepRisk is a web-based tool that provides insights into environmental and social issues that present financial
and reputational risks to a bank, company, or investment portfolio. It facilitates the identification and
assessment of controversial issues associated with specific companies and business relationships.
RepRisk's assessment of the environmental and social performance of a company is based on the company's
activities in the field as observed by independent third parties, and is not derived from information provided by
the company itself.
Every day, RepRisk captures the reactions of print media, more than 650 NGO websites and newsletters, news
websites, blogs and other online sources on controversial issues relevant to financial institutions, other
companies, and projects.
RepRisk covers controversial issues ranging from employee and community relations to resource availability and
efficiency, environmental footprint and product portfolio-related risks. In particular, it addresses all of the
principles of the UN Global Compact.
ECOFACT
ECOFACT is a leading provider of reputational, environmental and social risk management solutions in the
financial industry. ECOFACT is based in Zurich and leverages a global network of sector and issue specialists.
Our client base consists of asset managers, pension funds, commercial and investment banks, the leading
development banks, insurance companies, and governmental agencies.
ECOFACT AG was founded in 1998 as a spin-off from a leading Swiss bank and is a fully independent
corporation.
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Most Environmentally and Socially Controversial

Transcription

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