Companies in Crisis

Companies in Crisis What not to do when it all goes wrong
Contents Student assignments Exxon Mobil Snow Brand Milk Odwalla Nestle BP Disney workers Enron Exxon Mobil and the Exxon Valdez Snow Brand Milk Odwalla and the E-coli outbreak Nestle & baby milk BP Disney workers
Student assignments Exxon Mobil Snow Brand Milk Odwalla Nestle BP Disney workers
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Companies_in_Crisis.doc
Case studies - Guidance

Study your case study. Together with your partners prepare a seminar presentation for the group which: Narrates the story of the initial problem Shows how the problem became a crisis Analyses the factors which caused the crisis Assesses the damage caused Identifies how the crisis could have been avoided
Do not assume that anyone else has read your case study.
The following questions indicate what you should include in the presentation. You will want to adapt them to your own case study. What was the original problem for the company? Outline the companys initial reaction to it Tell why you think the problem grew into a crisis How would you define the nature of the crisis (environmental, social, employment, human rights, management, etc) Why did you reach that categorisation? Assess the level of damage. Is there any long-term damage? What could have been done (1) to prevent the problem becoming a crisis? (2) to minimise the damage?
Enron
Summary
Following the company's collapse, Enron has become a by-word for corporate irresponsibility. The financial misrepresentation that covered-up the giant black hole at the heart of the company's finances have fuelled interest in how such corporations can be identified and held to account. This is made all the more challenging on account of that fact that - to some observers Enron was doing the whole "social responsibility thing" with its CSR reporting, environmental and community programmes.
Enron the company

In just 15 years, Enron grew from nowhere to be America's seventh largest company, employing 21,000 staff in more than 40 countries. Far from being a watchword for irresponsibility, the company was able to boast
Fortune magazine's Most Innovative Company in America six years running In the top quartile of Fortune Magazine's 100 Best Companies to Work For On the All Star List of Global Most Admired Companies
The company had published a social and environmental report, which looked at the moves it was taking with regard to its environmental impact, its employee relations, its anti-corruption and bribery policies, and its community relations programmes. In this report, CEO Kenneth Lay described how the company's behaviours were guided by its vision and values: specifically
respect: mutual respect with communities and stakeholders affected by the company's operations integrity: examining the impacts, positive and negative, of the business on the environment and on society, and integrating human health, social and environmental considerations into the company's management and value system Excellence: continuing to improve performance and encouraging business partners and suppliers to adhere to the same standards.
What are the issues?
The firm projected itself as a highly profitable, growing company - an image which quickly turned out to be an elaborate mistruth. Enron's statements about profits were shown to be untrue, with massive debts concealed so that they didn't show up in the company's accounts. Not only that, but the company was seen to have been extraordinarily active in political lobbying - with large numbers of legislators close to the company in one way or another. This fact had not been enough to save it, but raised questions about how appropriate such closeness between a corporate and the political system actually is. The question on many lips concerned just how the situation could have evaded detection for so long. The firm's accountants, Andersons, were involved in the shredding of documents relating to Enron's accounts - a fact which suggests a significant degree of complicity. From the point of view of the movement for corporate social responsibility, Enron represents a turning point in whether the movement can continue to take surface level assurances, and the apparent commitment to a responsible approach which applies to the peripheral issues without going to the heart of how the company does business.

What do the critics say?
It's hard to find anyone who's not a critic at this stage! Those who were critics before the facts came out suggest that the company has always been a poor corporate citizen, and that those who have been seduced by its community and environmental programmes have been duped. They pointed to the impact on Enron employees, many of whom had significant pension funds tied up in Enron shares, who had been unable to sell these shares as their value began to head south due to the company's obstruction. They also talked about the false valuation of assets, multimillion dollar crimes, and bogus deals. They point to the personal relationship between CEO Kenneth Lay and President George Bush, suggesting the company had more access to Vice President Cheney's energy policy process than any other single interest.
What does Enron say?

Not a great deal. The various senior executives most in a position to know what exactly happened have refused to testify, arguing that they have no chance of a fair trial. The company's surviving board has said rather little in turn, issuing a series of rather terse press releases dealing with practical matters. The nearest the company comes to making any kind of statement of regret is in the release which announces the completion of a report by its own Special Investigative Committee of the Board of Directors. "The report", says the company, "is an important step in the Company's effort to stabilise and reorganise its businesses, protect 20,000 jobs and embark on a productive future. "The report has made the Board aware of numerous past events for the first time. These events are deeply regretted by the Board."
Does anyone else support Enron?

Not that we've noticed.
So what about their CSR reporting?

On the one hand, this is easy. The Enron latest social and environmental report is rather light on the kind of measures that are increasingly being demanded. There is a lot of narrative, and a whole range of things that are at the early stages. The company was to take a comprehensive review of its stakeholders. The company was gearing up to address human rights and other issues. It did include a number of figures on environmental performance, and on health and safety records. But there is a bigger challenge here. The move towards more robust social and environmental reporting - whether it be on the Global Reporting Initiative model, the Winning with Integrity framework or whatever - will not quickly get to the point where its indicators pick up the deliberate actions at the top that typify this story. After all, what social reporters are trying to do is identify the core reporting data which will give a real picture of the health of the company - just like we already have in financial reporting. But financial reporting was not sufficiently transparent and robust to pick up on the Enron problem - how much more difficult for the hardto-define measures of stakeholder engagement and social performance? The main message from this is that expectations of company reporting need to be kept realistic. The CSR movement needs to be wary of promoting the achievements of companies when all they are doing is going through the motions.
Exxon Mobil and the Exxon Valdez

Many companies have faced a crisis during their history, whether due to external forces beyond their control, through their own failings or management problems, or a combination of the two. Only a few, however, come to personify corporate irresponsibility through one pivotal event. Such a one is Exxon's experience with the Exxon Valdez.
What happened
In 1989, the Exxon Valdez oil tanker, entered the Prince William Sound, on its way towards California. In spite of the fact that the weather and sea conditions were favourable and the Bligh Reef clearly marked on the maps, the ship ran aground and began spilling oil. Within a very short period of time, significant quantities of its 1,260,000 barrels had entered the environment. At the moment of the collision the third mate, who was not certified to take the tanker into those waters, was at the helm. The probably cause was established that the Captain and many of the crew had been drinking alcohol in considerable quantities.
What did the company do?

According to most observers, too little and too late. The action to contain the spill was slow to get going. Just as significantly, the company completely refused to communicate openly and effectively. The Exxon Chairman, Lawrence Rawl, was immensely suspicious of the media, and reacted accordingly. Shortly after the accident had taken place, and the world's media had piled in to begin extensive coverage, a company spokesman pointed to the existence of procedures to cover the eventuality - procedures which the TV shots showed were demonstrably failing. When asked in Rawl would be interviewed on TV, the response was that he had no time for that kind of thing. Meanwhile the operation on the ground was getting nowhere fast. Around 240,000 barrels had been spilled, with another million still on the ship. During the first two days, when calm weather would have allowed it, little was done to contain the spillage. This spillage spread out into a 12 square mile slick. Then the bad weather struck, making further containment almost impossible. After more than a week, the company was still giving no ground on the request for better communication. The media clamour became so hostile that eventually Frank Iarossi, the Director of Exxon Shipping, flew to Valdez to hold a press conference. It was not a success. Small pieces of good news claimed by the company were immediately contradicted by the eyewitness accounts of the present journalists and fishermen. John Devens, the Mayor of Valdez, commented that the community felt betrayed by Exxon's inadequate response to the crisis, in contrast to the promises they had been quick to give of how they would react in exactly this eventuality. Eventually, Rawl deigned to go onto television. He was interviewed live, and asked about the latest plans for the clean-up. It turned out he had neglected to read these, and cited the fact that it was not the job of the chairman to read such reports. He placed the blame for the crisis at the feet of the world's media. Exxon's catastrophe was complete.
Cost and benefit

The consequences for Exxon of its two-pronged disaster - the spill and its environmental consequences, alongside its disastrous communications - were enormous. The spill cost around $7bn, including the clean up costs. $5bn of this was made up of the largest punitive fines ever handed out to a company for corporate irresponsibility.

The damage to the company's reputation was even more important, and more difficult to quantify. However, Exxon lost market share and slipped from being the largest oil company in the world to the third largest. The "Exxon Valdez" entered the language as a shortcut for corporate arrogance and damage.
Conclusion
The features that made Exxon's handling of the crisis a failure included the following: The company failed to show that they had effective systems in place to deal with the crisis - and in particular their ability to move quickly once the problem had occurred was not in evidence They showed little leadership after the event in showing their commitment to ensuring such problems would never happen again They quite simply gave no evidence that they cared about what had happened. They appeared indifferent to the environmental destruction.
Snow Brand Milk

One of the most feared scenarios for any food products company must be an outbreak of food poisoning associated with its products. For Snow Brand, Japan's premier dairy foods company, 2000 was the year when that nightmare came true, in fairly spectacular fashion. The company is still struggling to recover, and has suffered from further problems (see update at bottom of page).
What happened
Large numbers of people, mostly in western Japan, suddenly came down with food poisoning after consuming milk or related products made by Snow Brand. As events played out, it transpired that over 15,000 people had been affected. Bacteria has been discovered on the production line of a Snow Brand Milk Products Co. factory here that processed low-fat milk believed to have made nearly 5,000 people ill, the company's president said Saturday. The problem was traced to bacteria on the production line of Snow Brand's Osaku factory that processed low-fat milk. The bacteria concerned was staphylococcus aureus, and it was located in a valve which, although it should have been cleaned regularly, had not been. Inspections of the plant condemned hygiene standards as being appalling.

By all account, it initially sought to downplay the incident, and gave the impression of being more concerned for its reputation and standing than it was for the victims of the outbreak. For instance, the company made an attempt to limit the extent of the product recall it would have to make. The Osaka city public health centre issued a recall order for two products, whilst requesting that the firm voluntarily recall other products. This the company was reluctant to do. After the city officials pressed the point, the company grudgingly agreed to the recall, but then requested that the recall order not be announced, but the company could be seen to be doing it voluntarily. The city publicised both the recall and the request. The company was also held to have sought to cover up information about the full nature of the incident. Snow initially claimed that the valve where the contamination was found was used rarely - in fact it transpired it was used almost every day. They also claimed that the area of contamination was small, about the size of a 10 yen coin - subsequent examination found it to be rather larger than that. The overall impression - as judiciously reported by the media at the time - was that the poisoning was the end-product of a company rife with corporate arrogance. The President, Tetsuro Ishikawa tried in vain to win support, and was eventually admitted to hospital suffering from the stress of the incident. The end result was that he, and seven executives, resigned in atonement for what had happened.
Cost and benefit

The consequences for Snow Brand have been dramatic and awful. Sales for the company have plummeted as consumer confidence has evaporated. The company was pushed to close five of its factories - including the offending site from the poisoning - and has recently increased this figure to eight. The company's bottom line is grave testament to the impact it has all had. Snow Brand reported a consolidated net loss of 52.9 billion yen (about $430 million) for the fiscal year ending in March.

Snow Brand enjoyed a market share of around 45 percent before the incident. In the immediate aftermath, it plunged into single figures, and has gradually - with new promotions - recovered up to around 30 percent. It is still languishing well short of its previous level.
The fight back

A key component of the fight back has been for the company to revamp its approach to its social responsibility. In the first instance, the new President of the company, Kohei Nishi, has made clear statements of regret - acknowledging the mistakes of the past and the determination to move forward. Improving quality assurance is, needless to say, a key part of the restructuring plan. But at least as importance is a reform of the corporate culture. Steps to be taken in this area include:
Renew corporate philosophy - making the corporate charter a guarantor of more responsible corporate behaviour. Promote customer-focused management - particularly allowing for the two-way flow of information and feedback Enhance corporate governance - particularly to appoint outside directors and to increase the speed of decision making Restructure risk management function - and conduct practical training
Conclusion
The features that made Snow Brand's initial response to the crisis a failure was that they responded too slowly, failing to move quickly towards a full product recall and to communicate with the public. When it did communicate, it dwelt much more on the impact on financial performance, and not so much on the suffering of the people who had consumed its product. First, Snow Brand did not move quickly enough; it should have acted faster to assemble the facts and act on them, both in the form of moving toward a product recall and in terms of communicating with the media and the public. Three days passed before either of these happened, following numerous reports and inquiries from public-health centers. Second, Snow Brand had no structure in place to accurately respond to a crisis, including no method of getting information to top management. Therefore, management was unprepared when it finally did speak to the media and was not armed with all the facts. They also made the huge mistake of seeking to cover up the bad news. Once such a situation has arisen, all the facts will eventually be revealed, and early and voluntary disclosure by the company is the only way to move forward. Snow's reluctance in this area meant that not only did customers fear that the products would be unsafe, they also did not trust the company to seek to ensure that it would be otherwise. The message of the company is that it has learnt its lessons and is ready to move forward. History of other such incidents suggests that this will take some time, although the resignation of the previous leadership enables a line to be drawn to some extent.
Odwalla and the E-coli outbreak

What happened?
Odwalla (pronounced "odewalla") is the health-conscious juice company which began a couple of decades ago when Greg Steltenpohl, Gerry Percy and Bonnie Bassett began squeezing fresh oranges on a $200 hand juicer. The company was growing strongly with annual sales rising 30% per year and approaching $90m. The company had established a strong brand with enormous customer loyalty. On October 30, 1996, everything changed. Health officials in Washington state informed the company that they had discovered a link between several cases of E. coli 0157:H7 and Odwalla fresh apple juice. The link was confirmed on November 5. As the crisis played itself out, one child died and more than 60 people in the Western United States and Canada became sick after drinking the juice. Sales plummeted by 90%, Odwalla's stock price fell 34%. Customers filed more than 20 personal-injury lawsuits and the company looked as though it could well be destroyed.

Odwalla acted immediately. Although at the point where they were first notified the link was uncertain, Odwalla's CEO Stephen Williamson ordered a complete recall of all products containing apple or carrot juice. This recall covered around 4,600 retail outlets in 7 states. Internal task teams were formed and mobilised, and the recall - costing around $6.5m was completed within 48 hours. What the company didn't do was to avoid responsibility. On all media interviews, Williamson expressed sympathy and regret for all those affected and immediately promised that the company would pay all medical costs. This, allied to the prompt and comprehensive recall, went a long way towards satisfying customers that the company was doing all it could. Internal communications were key: Williamson conducted regular company-wide conference calls on a daily basis, giving employees the chance to ask questions and get the latest information. This approach proved so popular that the practice of quarterly calls survived the crisis. External communications were just as vital. Within 24 hours, the company had an explanatory web site (its first) that received 20,000 hits in 48 hours. The company spoke to the press, appeared on TV and carried out direct advertising with the website address. All possible attempts were made to provide up to the minute, accurate information. The next step was to tackle the problem of contamination. The company's entire approach had been founded on fresh unpasteurised juice because only juice which had been untampered with could have the best flavour. The company decided quickly that this had been wrong. The company moved quickly to introduce a process called "flash pasteurisation" which would guarantee that E-coli had been destroyed whilst leaving the best flavoured juice possible. Within months of the outbreak, the company had in place what some experts described as "the most comprehensive quality control and safety system in the fresh juice industry." On December 5, the company brought back its apple juice. Williamson's explanation of how the company found its way is instructive. "We had no crisismanagement procedure in place, so I followed our vision statement and our core values of honesty, integrity, and sustainability. Our number-one concern was for the safety and wellbeing of people who drink our juices." (Source: Fast Company)

Cost and benefit
Odwalla made a rapid recovery. Much of the good will and trust it had built up over the years remained. Sales picked up again quite quickly. The company did exactly the right things to achieve this. For instance during the lean months, Odwalla refused to lay off any of its delivery people. They were sent out to maintain customer relations - an approach that not only earned the loyalty of the employees, but helped to secure the company's reputation with its customers. Even the most grievous victim of the crisis gave Odwalla credit. "I don't blame the company" the father of the girl who died said. "They did everything they could". The company did pay a large cost. Odwalla pleaded guilty to criminal charges of selling tainted apple juice and was fined $1.5m - the largest ever assessed in a food industry case by the US Food and Drug Administration.
So is everyone happy?
Not quite - the company still has some critics who say that it was not quite the victim it would have people believe. Jon Entine, for instance, says that 'investigators now contend that Odwalla had significant flaws in its safety procedures and citrus-processing equipment was so poorly maintained that it was breeding bacteria in "black rotten crud'. Before the outbreak, Odwalla had received letters from customers who become violently ill, but had not addressed the problem. "Resisting industry safety standards, Odwalla steadfastly refused to pasteurize its juices claiming it altered taste and was unnecessary. Yet, the year before the incident, the head of quality assurance, Dave Stevenson, who was aware of the dangers, proposed using chlorine rinse as a backstop against bad fruit. Senior executives who feared chlorine would leave an aftertaste overruled him. They decided to rely on acid wash although its chemical supplier had informed Odwalla that the wash had killed the E. coli in only 8 percent of tests and should not be used without chlorine."
Conclusion
The overwhelming feeling of people who dealt with the company at the time of the crisis was that here was a community of ordinary people who were devastated at the fact that they had created an episode of poisoning that ended in a loss of life. The company's values spoke of nourishing people - and when the crisis came it was an adherence to honest, straight talking and accepting responsibility that helped to get the company through. There are critics who refuse to credit the company with any integrity whatsoever - but even these will concede that as an exercise in crisis management, Odwalla stands as an example of best practice that few can match. The year after the crisis, Odwalla was voted "Best Brand Name in the Bay Area" by San Francisco Magasine. This was the first indication amongst many that Odwalla's reputation had survived.
Nestle & baby milk

ETHIOPIAN CONTROVERSY
Abstract Nestl was one of the most successful food-based companies in the world. Set up by Henri Nestl in 1867, in Vevey, Switzerland, Nestl grew over the decades by acquiring smaller companies to become the largest company in Switzerland by the 1960s. Nestls product portfolio included soluble and roast coffee, other beverages like tea and health drinks, several mineral water brands, dairy products, chocolates and confectionery, ice cream, frozen food, culinary products, breakfast cereals, infant food, pet care, pharmaceutical products and cosmetics. By the end of 2002, the company employed more than 250,000 people in 508 factories around the world. Although it was one of the most successful companies in the world, Nestl was frequently criticized for using unethical marketing practices to promote the sales of some of its products. The company was severely condemned by health agencies around the world for its marketing of infant formula in developing countries, by conveying the message that the formula was better for babies than mothers milk. There were also demands on the company to stop purchasing cocoa from the Ivory Coast, where bonded labor and children were used on plantations to harvest cocoa beans. Nestl also became mired in a controversy for selling genetically modified food in some Asian countries without labelling them explicitly. Pure Life, the mineral water brand the company launched in some Asian countries, was also criticized for being too high priced. "As a responsible food company, I don't like to have an image that I am unethically behaving." Peter Brabeck, CEO of Nestl in 2003
In late 2002, Oxfam , a relief group based in London, revealed that Nestl SA (Nestl), one of the largest manufacturers of food products in the world, was claiming compensation of $6 million from Ethiopia, one of the poorest countries in the world. Nestl was making this claim because, in 1975, the then communist government of Ethiopia had nationalized a company called the Ethiopian Livestock Development Company (ELDC), without paying compensation for nationalization. The ELDC was at the time, a subsidiary of a German group called Schweisfurth. Nestle had acquired the Group in 1986. The claim was widely reported in the media and Nestl came up for severe criticism from all quarters. People were shocked that one of the most successful companies in the world (profits in 2002 - $5.72 billion) would stoop so low as to demand compensation from a poor, needy country (per capita income in 2002 - $100). In addition, the nationalization had been undertaken by a previous government, and there seemed little reason for Nestle to rake up an old issue and demand such a huge sum. The compensation claim seemed to show that the company lacked a sense of social responsibility. Several relief agencies world over, called for a boycott of Nestl's products. The Ethiopian government offered Nestl the highest amount it said it could afford in settlement - $ 1.5 million, but Nestl persisted in demanding the full compensation. Nestl's obdurate stance generated a lot of negative publicity, which analysts felt, probably cost the company more than the compensation it had sought. In a rearguard action, Nestl announced that it would reinvest the entire amount it received as compensation in Ethiopia. Peter Brabeck (Brabeck), Nestl's chief executive said, "We do think it's important for the long-term welfare of the people of Africa that their governments demonstrate a capacity to comply with international law, but we are not interested in taking money from the country of Ethiopia when it is in such a desperate state of human need." However, many observers felt that this statement by Brabeck was just an eyewash, and that the

company's behaviour was inexcusable. This was not the first time that Nestl had been embroiled in controversy. The company had been castigated several times for using unethical marketing practices to promote its products in developing countries, for selling genetically modified foods without appropriate labelling, and for supporting the use of child labor in some places. Most of these offences by Nestl had been committed in developing countries. BACKGROUND Henri Nestl, the founder of Nestl, was born in 1814 in Frankfurt, Germany. A merchant, chemist and innovator, he developed a formula for infant nutrition by experimentally combining cow's milk, wheat flour and sugar in different proportions. He called this concoction "Farine Lactee". The formula was meant to provide nutrition to infants whose mothers were unable to nurse them. In 1867, he fed the formula to a prematurely born infant whose mother was seriously ill. He was able to save the life of the infant, and subsequently, Nestl's popularity soared. Later in 1867, Nestl set up a facility in Vevey, Switzerland, to produce and market the formula commercially. This was called the Nestl Company.
BP
Summary
BP is one of the largest companies in the world - with a turnover dwarfing that of some nation states. As an oil company, it is directly linked with the use of fossil fuels linked with major environmental challenges on a global scale. No company has achieved a higher profile in its stated determination to completely re-orientate the business to adapt to the needs of a more sustainable society. With its major - and controversial - rebranding and commitment to becoming a sustainable energy company rather than simply an oil company - it has inspired and impressed some, and irritated others. Sir John Browne has established himself as one of the most thoughtful business leaders taking a lead in corporate social responsibility.
BP the company
BP Amoco is one of the world's leading oil companies on the basis of market capitalisation and proven reserves. Its main businesses are Exploration and Production, Refining and Marketing, and Chemicals. Exploration and Production's activities include oil and natural gas exploration and field development and production, together with pipeline transportation, natural gas processing and gas and power marketing. The activities of Refining and Marketing include oil supply and trading as well as refining and marketing. Chemicals activities include petrochemicals manufacturing and marketing. In addition, the Company has a solar energy business which is one of the world's largest manufacturers of photovoltaic modules and systems.
What are the issues?

There are very few aspects of how a company behaves as a corporate citizen that do not apply to a company of the size and nature of BP. The most significant of these are the sheer environmental impact - not simply of the extraction of oil and the energy use of BP's own operation, but more significantly of the impact on climate change of the actual use of all the oil by BP's customers. The state of current scientific evidence raises serious question marks over whether or not human society can actually afford to burn all the hydrocarbons whose existence we have already identified - never mind potential future discoveries. Twenty years ago, people worried that one day the oil would run out. Now, it is the case that the real issue has been identified as one of emissions. A company with such extensive operations in developing countries also needs to carefully manage its approach to human rights, and ethical business practices. BP will have significant impact on local communities - both as a huge employer and through the nature of its on-theground operations. It should expect to seriously seek to reduce negative impacts here, and to invest seriously in those communities. BP as a global player, is immensely powerful. It has no democratic legitimacy, but often is better able to lead on the social development of the planet than national governments. This is a dilemma it needs to handle carefully.
What do the critics say?

BP's move towards positioning itself as a sustainable energy company has been the proverbial red rag to a bull for some. They point out that BP's claim to be a global leader in producing the cleanest burning fossil fuel (natural gas) is an incremental improvement over oil at best, and a distraction from getting away from fossil fuels at worst. BP, they claim, has co-opted the language of the environmentalists without the real commitment to deliver.

As for BP's assertion that it is now the largest producer of solar energy in the world, they point out that achieving this number one position was trivially easy for BP. It cost them $45m to buy the Solarex solar energy corporation - a minute fraction of the $26.5bn spent on buying ARCO to increase oil capacity. In fact, the company spent more on its new eco-friendly logo than it has so far on solar energy.
What does BP say?

BP states that it recognises the significant environmental and social challenges faced by the world in the 21st century. It believes it can, and should, play a part in addressing and resolving many of the issues associated with sustainable development. It also accepts that while the company can be part of the solution, it cannot and should not be the whole solution. Governments, companies and civil society must fins effective ways of working together. Alongside the standard financial figures, BP reports its own greenhouse gas and other emissions, oil spillages, employee satisfaction, days lost through injury at work, and community investment across the world. On the question of the impact of oil usage, Sir John Browne argues that hydrocarbons are crucial to the economic success of the world. Renewable energy holds great long-term potential. For the moment, however, there are no viable substitutes for hydrocarbons. Those companies, he continues, that can supply the resources the world needs, and do so in ways that meet public concern about the environment, are well placed to deliver exceptional returns to their shareholders.
BP's policy statement commits the company to ambitious and wide-ranging business principles. The company's reporting seeks to illustrate how the company is meeting these commitments in a manner that supports the profitability of the business.
Disney workers
ActionAid Space writer Ramona Boban-Vlahovic reports on labour abuses in Chinese factories owned by Disney as Disneyland Hong Kong opens its gates. At the end of August, the National Labor Committee (NLC) made some disturbing news public. They released a report alleging the horrifying way in which workers are treated by their superiors in Hung Huing Printing company owned by entertainment giants Disney. Workers claim to be insulted by their superiors, to endure poor food and living quarters quality and most troublingly tell of poor safety precautions which cause terrible injuries. The report coincides with the opening of Walt Disneyland Hong Kong, a 1 billion (pound) venture which most Chinese, with an average monthly income of 70(pounds) will be unable to afford to go. While there was no mention of the allegations on the Walt Disney website, according to an article in The Guardian, Disney is taking the report very seriously and have asked a non profit organisation Verite to investigate. NLCs report alleges that: Firstly, working conditions are dreadful. Workers are forced to work, untrained, with constantly running machines where injury is an everyday issue. Many workers had their fingers or even hands trapped and cut off in cover pressing machines or in the glue applying machines. The temperatures are often very high and the ventilation is inadequate. Secondly, workers are paid 33 to 41 cents an hour for 13 to 15 hour shifts (which include 2 one hour breaks for lunch) 6 to 7 days a week. These amounts are below the legal minimal regional wage. In peak season, they work for over 100 hours a week, sometimes even in 30 hour shifts often without a day off afterwards. Thirdly, the accommodation and food provided by the company is very bad. Dormitory rooms have 4 to 6 bunk beds for 8 to 12 people. Each room has a shared toilet also functioning as a shower stand. Hot water is supplied in a particular building where workers have to go get it. New workers, who live outside the factory, are not reimbursed for their rental expenses. Finally, workers claim that audits are a well orchestrated sham because they are announced well in advance and workers are thought what to say if asked any questions. Also, workers claim that a different labour contract is shown to audits than the ones they signed (if signed at all), two sets of time cards are kept, so they never show more than the legal amount of overtime. It is unclear if Disney was aware of these facts, but decided to ignore them in order to increase profit. What is clear is the stark clash between Western capitalism and Chinas fast developing economy. Questions remain: What is there to gain from abusing and tormenting helpless workers desperate to get whatever money they can to help their families far away?
Companies in Crisis What not to do when it all goes wrong As the worlds biggest entertainment company opens the gates of Americana to a once staunchly Communist country, one wonders whether its just ideology which is being trampled.
By RAMONA BOBAN-VLAHOVIC, 18, ACTIONAID SPACE WRITER (all our writers give their time for free)

Companies in Crisis

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Companies in Crisis What not to do when it all goes wrong