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This arcle is published in a peer-reviewed secon of the Utrecht Law Review

51

Four Case Studies on Corporate Social Responsibility:

Do Conicts Affect a Companys Corporate Social

Responsibility Policy?

Cristina A. Cedillo Torres,Mercedes Garcia-French,

Rosemarie Hordijk,

Kim Nguyen, Lana Olup*

hp://www.utrechtlawreview.org | Volume 8, Issue 3 (November) 2012 | URN:N BN:NL:UI:10-1-112903 |

1. Introduction

1.1. Background and objectives

Tis article will discuss the dierent Corporate Social Responsibility (CSR) issues that emerged withinour multinationals (Apple, Canon, Coca-Cola and Walmart). Tere is no clear denition o CSR. InCorporate Social Responsibility, Legal and semi-legal frameworks supporting CSR Lambooy gives anoverview o several denitions o CSR.1 Te European Commission denes CSR as the responsibilityo enterprises or their impacts on society.2 Tis is the denition which is the most suitable or the

context o the articles research question. As this article will ocus on companies rom the US and Japan,the authors also provide an overview o the ocus on CSR rom the US and Japanese perspective. In theUS there is no governmental regulation regarding CSR or business best practices. Instead, accordingto ndings rom Bennett American, companies have a marked tendency to use codes o conduct.3 TeAmerican CSR perspective could be described as ollowing a principles-based approach, with codes oconduct that prescribe values and principles which company members as a whole should aspire to ollow.In contrast, Japanese companies preer to ocus on areas where their contributions can be statisticallymeasured. Interest in social aspects o CSR is signicantly less pronounced than in other industrializedcountries.4 In Japan there are no specic provisions regulating CSR. However, the 1988 law that promotesspecic non-prot activities is o major signicance in this context. 5

Early notions o CSR on an academic level can be traced back to the 1960s. In 1991 Carroll presentedCSR as a multi-layered concept that consists o our interrelated aspects: economic, legal, ethical and

philanthropic responsibilities.6 Carroll proposed a pyramid that analyses the dimension o CSR. It starts

* C.A. Cedillo Torres MA, LLM, [email protected]; M. Garcia-French LLM, [email protected]; R.M. Hordijk LLM,

MA, is a researcher at the Molengraa Instute for Private Law, at Utrecht University School of Law, Utrecht (the Netherlands),

[email protected]; P.K. Nguyen LLM, [email protected]; L. Olup LLM, [email protected]. The research for this

arcle ended on 30 June 2012. For further informaon on this arcle please contact: Rosemarie Hordijk, e-mail: [email protected].

1 T.E. Lambooy, Corporate Social Responsibility. Legal and semi-legal frameworks supporng CSR, 2010, pp. 10-12.

2 European Commission, Communicaon from the Commission to the European Economic and Social Commiee and the Commiee of the

regions: A renewed EU strategy 2011-14 for Corporate Social Responsibility, COM(2011) 681 nal, p. 6.

3 C. Langlois & B- Schlegelmilch, Do Corporate Codes of Ethics Reect Naonal Character? Evidence from Europe and the United States,

1990Journal of Internaonal Business Studies 21, no. 4, pp. 519-539.

4 Japan: CSR, The role of CSR,

(last visited 15 June 2012).

5 Japan: CSR, Basic condions, (last visited 15 June 2012).6 A.B. Carroll, The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizaonal Stakeholders,


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Four Case Studies on Corporate Social Responsibility

with economic responsibilities; companies are created to provide goods and services to the public and tomake a prot. Tis is the oundation upon which the other three responsibilities rest. Te second layerconsists o the legal responsibilities o a company. Te ethical responsibilities are practices that have notbeen codied into the law. Societal members expect a company to do what is right and air. Lastly, at thetop o the pyramid companies have a philanthropic responsibility. Business organisations are expected tobe good corporate citizens and to improve the quality o lie.

Multinationals and their operations slowly began to be scrutinised by dierent segments o societyrom the beginning o 2000.7 CSR has evolved into a complex concept that is now a key component othe corporate decision-making o a number o multinationals that are considered to be the rontrunnersin integrating CSR. However, this evolution came with a cost that various corporations had to pay.Campaigns and public scandals involving issues ranging rom environmental pollution to child labourand racial discrimination resulted in unwanted media attention. Tis raises the question o whetherreputation damage is a main motivation behind the adoption o CSR policies by a multinational.

Due to the lack o public regulations regarding corporate best practices in most countries,sustainability reporting has become increasingly relevant. Although there is no specic regulation oCSR, according to the Modernisation Directive (2003/51/EC) large companies are obliged to includenancial and non-nancial key perormance indicators in their annual report. In this context an annual

report is considered a directors report. ogether with the balance sheet and a prot and loss accountit represents the annual accounts.8 Te annual report also includes inormation on environmental andemployee matters.9 According to the Securities Exchange Act o 1934, the US Securities and ExchangeCommission (hereaer SEC) requires public companies to disclose and report on certain types o businessand nancial data to the SEC and the companys stockholders. Te SEC has issued an interpretative releaseto guide US public companies on the disclosure requirements related to climate change. 10 ransparencyin corporate practices seems desirable or stakeholders.11

However, nowadays leading multinationals voluntarily prepare sustainability reports based on theGlobal Reporting Initiative (GRI) Guidelines.12 Te GRI Guidelines are a set o guidelines or businessescreated to stimulate socially-responsible corporate behaviour. Te GRI was initiated in 1997 by theUN Environment Programme (UNEP) and CERES. Te GRI has developed reporting guidelines or

companies to assist them in disclosing non-nancial inormation about the way they pursue theiractivities. Te guidelines address environmental and social conduct, but also include other subjects, e.g.corruption and human rights.

Tis article provides an overview o our case studies regarding dierent multinationals, namelyApple, Canon, Coca-Cola and Walmart. Tese companies have been involved in CSR conicts indierent areas. Tis article will investigate whether the conicts have aected the CSR policy o thesemultinationals and whether the companies subsequently set concrete targets. Coca-Cola, or example,has set a target to reduce its overall carbon ootprint by 15% by 2020, compared to its 2007 baseline.

wo Dutch researchers, Alex van de Zwart and Proessor Rob van ulder, o Rotterdam ErasmusUniversity, conducted a study into civil society campaigns.13 Teir research shows that companiesthat have been on thin ice usually become leaders in the business sector concerning CSR issues. Te

multinationals Apple, Coca-Cola and Walmart have been involved in environmental and social conicts.Coca-Cola was boycotted in India because the local communities were suering rom droughts . In 1992Walmart was caught using child labour in actories in Bangladesh. In May 2010 newspapers reported onthe suicides at Apples manuacturer or iPhones and iPads, Foxconn. Overall Canon has a detailed andclear CSR report and has not aced any major scandals such as Coca-Cola, Walmart and Apple.

1991 Business Horizons 34, no. 4, pp. 39-48.

7 See Lambooy,supra note 1, p. 33.

8 See Lambooy,supra note 1, p. 147.

9 Art. 46(1) Modernisaon Direcve (2003/51/EC).

10 Securies and Exchange Commission, Commission guidance regarding to disclosure related to climate change, 8 February 2010,

(last visited 31 March 2012).

11 See Lambooy,supra note 1, pp.147-168.

12 See GRI website (last visited 22 April 2012).13 R. van Tulder & A. van der Zwart, Internaonal Business-Society Management Linking Corporate Responsibility and Globalisaon , 2006.


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Cristna A. Cedillo Torres, Mercedes Garcia-French, Rosemarie Hordijk, Kim Nguyen, Lana Olup

1.2. Methodology

Te our cases will be compared by studying a CSR conict that each one o the multinationals acedand that became, to a certain extent, a turning point or the CSR policies o these multinationals. Each othe multinationals response to the conict will be analysed, how the company resolved the conict andwhether the company implemented specic CSR policies with measurable targets as a response to the

conict. Te research is based on desk research. Te article makes use o publicly available inormationon the companys website, online newspapers and non-governmental organization (NGO) reports, aswell as academic journals and books.

Te parent companies o the multinationals are based in dierent countries: Japan and the US. Tismeans that dierent legal systems and jurisdictions are applicable. Tis article will not look at the legalsystems o the US and Japan concerning the disclosure o annual reports and sustainability reports, sincethis exceeds the scope o the article.

2. Coca-Cola

2.1. Coca-Colas prole

Coca-Cola started its business in 1886 as a local soda producer in Atlanta, Georgia (US) selling aboutnine beverages per day. By the 1920s, the company had begun expanding internationally, selling itsproducts rst in the Caribbean and Canadian markets and then moving in consecutive decades to Asia,Europe, South America and the Soviet Union. By the end o the 20 th century, the company was selling itsproducts in almost every country in the world. In 2005 it became the largest manuacturer, distributorand marketer o non-alcoholic beverages and syrups in the world.14 Coca-Cola is a publicly-held companylisted on the New York Stock Exchange (NYSE).15

2.2. Coca-Colas CSR policies and reporting

In 2007 Coca-Cola launched its sustainability ramework Live Positively embedded in the system atall levels, rom production and packaging to distribution. Te companys CSR policy Live Positively

establishes seven core areas where the company sets itsel measurable goals to improve the businesssustainability practices. Te core areas are beverage benets, active healthy living, the community, energyand climate, sustainable packaging, water stewardship and the workplace.

Coca-Cola has a Code o Business Conduct which aims at providing guidelines to its employeeson amongst other things competition issues and anti-corruption.16 Te company has adoptedinternational CSR guidelines such as Global Compact17 and Ruggies Protect, Respect and RemedyFramework (Ruggies Framework),18 but these guidelines do not seem to be integrated into the Code oBusiness. However, these CSR initiatives are included in other activities or policies o the company. Forinstance, the UN Global Compact principles are cross-reerenced in the companys annual SustainabilityReviews19 and Ruggies Framework is partly adopted in the companys Human Right Statement.20 Aer

14 The Coca-Cola Company, 2010 Annual Review, (last visited 1 December 2011).

15 Coca-Cola companys prole at the NYSE: (last visited 10 April 2012).

16 The Coca-Cola Company, Code of Business Conduct , (last

visited 2 December 2011).

17 Global Compact is an iniave created in 1999 under the leadership of the former UN Secretary-General, Ko Annan. It establishes ten

principles for conducng responsible business covering the areas of human rights, labour, the environment and an-corrupon. See


18 The Protect, Respect and Remedy Framework is an iniave devised by John Ruggie, Special Representave of the UN Secretary-General

on Human Rights and Transnaonal Corporaons and Other Business Enterprises. It lays the foundaon for a system for beer managing

business and human rights challenges. It is based on three pillars: the States duty to protect human rights, the corporate responsibility

to respect human rights, and access to an eecve remedy for breaches of human rights. See (last visited 29 March 2012).

19 The Coca-Cola Company, UN Global Compact, (last

visited 2 December 2011).

20 The Coca-Cola Company, Human Rights Statement, (last visited 6 October 2012).


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the conict in India, in 2007 Coca-Cola ormed a partnership with the World Wildlie Fund (WWF) 21and became a member o the CEO Water Mandate, as water is one o the companys main concerns.

Every year Coca-Cola publishes a directors report denominated Te Coca-Cola Company AnnualReport; the last one was published in March 2011 and comprises the companys activities during 2010.22 Inthis report there is a small section dedicated to CSR and it includes a brie description o the initiatives incommunity development and water preservation that the company has developed. Since 2001, Coca-Colaalso annually publishes a separate report devoted to CSR called Te Coca-Cola Company SustainabilityReview. Tese reviews, which are published every two years, are veried and assured by a third party,the sustainability rating rm FIRA Sustainability Ltd.23 Tis verication provides moderate assuranceon the reliability o the inormation reported by Coca-Cola. Both reports the annual company reviewand the sustainability reports are elaborated based on the GRI G3 guidelines, which were adopted bythe company in 2001.24 Due to its relevance to Coca-Colas business, the company also annually reportson the progress o the water stewardship programmes targets.

2.3. Coca-Colas conicts

Several campaigns and demonstrations ollowed the publication o a report issued by the Indian NGO Centre or Science and Environment (CSE) in 2003. Te report provided evidence o the presence opesticides, to a level exceeding European standards,25 in a sample o a dozen Coca-Cola and PepsiCobeverages sold in India.26 With that evidence at hand, the CSE called on the Indian government toimplement legally enorceable water standards. Te report gained ample public and media attention,resulting in almost immediate eects on Coca-Cola revenues.

Te main allegations made by the NGO against Coca-Cola were that it sold products containingunacceptable levels o pesticides, it extracted large amounts o groundwater and it had polluted watersources.27 Tese conicts will be discussed under 2.3.1 and 2.3.2.

2.3.1. Te presence of pesticides

Regarding the allegation about Coca-Cola beverages containing high levels o pesticide residues, theIndian government undertook various investigations. Te government set up a Joint Committee 28 tocarry out its own tests on the beverages. Te tests also ound the presence o pesticides that ailed to meetEuropean standards, but they were still considered sae under local standards. Tereore, it was concludedthat Coca-Cola had not violated any national laws. However, the Indian government acknowledged theneed to adopt appropriate and enorceable standards or carbonated beverages.29

21 T. Lambooy, Corporate Social Responsibility: Sustainable Water Use, 2011Journal of Cleaner Producon 19,p. 855.

22 The Coca-Cola Company, The Coca-Cola Company 2010 Annual Review, (last visited 28 November 2011).

23 The Coca-Cola Company, 2010/2011 Sustainability Report: Reasons to Believe, (last visited 30 March 2012).

24 See GRI, supra note 12. Also see more on Coca-Colas GRI reporng on The Coca-Cola Company, GRI Index, (last visited 10 April 2012).25 The CSE Report on pescide residues in so drinks in India used European norms on maximum admissible pescide concentraon, regu-

lated by the European Economic Communitys Direcve (80/778/EEC) on the quality of water intended for human consumpon. This

was the preferred standard by CSE because it sets a maximum admissible concentraon for individual pescides and related products in

drinking water at 0.1 g/L (0.0001 mg/L). Although the report menons the existence of other internaonal standards such as those of

the World Health Organizaon (WHO), the Food and Agriculture Organizaon (FAO) and the US Environment Protecon Agency (USEPA)

/ Food and Drug Administraon Act (FDA) the report is not clear on why EU standards are more adequate to make their analysis in

Coca-Cola beverages. See Centre for Science and Environment, infra note 26.

26 Centre for Science and Environment (CSE), CSE Study on Pescide Residues in So Drinks, 2003 Media Reports, vol. 1, pp. 12-14,


27 J. Hills & R. Welford, Case Study: Coca-Cola and Water in India, 2005 Corporate Social Responsibility and Environmental Management

12, p. 168.

28 A Joint Commiee (JC) is one of the highest ranking bodies which can be set up in India. In 2003 the Indian government decided to

convene a JC to look specically into the issue of dangerous levels of pescides in so drinks aer the CSE report had exposed the

results of studies yielding high levels of pescide content in beverages in India. See Joint Commiee on Pescide Residues in and Safety

Standards for So Drinks, Fruit Juice and Other Beverages, infra note 29.

29 Joint Commiee on Pescide Residues in and Safety Standards for So Drinks, Fruit Juice and Other Beverages, Report, 4 February 2004,Lok Sabha Secretariat, pp. 158-161.


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In 2006, aer almost three years o ongoing allegations, the CSE published its second test on Coca-Cola drinks, also resulting in a high content o pesticide residues (24 times higher than European Unionstandards, which were proposed by the Bureau o Indian Standards to be implemented in India aswell).30 CSE published this test to prove that nothing had changed, alleging that the stricter standardsor carbonated drinks and other beverages had either been lost in committees or blocked by powerulinterests in the government.31 Finally, in 2008 an independent study undertaken by Te Energy andResources Institute (ERI) ended the long-standing allegations by concluding that the water used inCoca-Cola in India is ree o pesticides.32 However, because the institute did not test the nal product,other ingredients could have contained pesticides.33

2.3.2. Water pollution and the over-extraction of groundwater.

Coca-Cola was also accused o causing water shortages in among other areas the community oPlachimada in Kerala, southern India. In addition, Coca-Cola was accused o water pollution bydischarging wastewater into elds and rivers surrounding Coca-Colas plants in the same community.Groundwater and soil were polluted to an extent that Indian public health authorities saw the need topost signs around wells and hand pumps advising the community that the water was unt or humanconsumption.34

In 2000, the company established its production operations in Plachimada. Local people claimed thatthey started experiencing water scarcity soon aer the operations began. Te state government initiatedproceedings against Coca-Cola in 2003, and soon aer that the High Court o Kerala prohibited Coca-Cola rom over-extracting groundwater.35 By 2004 the company had suspended its production operations,while it attempted to renew its licence to operate. Coca-Cola argued that patterns o decreasing rainallwere the main cause o the draught conditions experienced in the area. Aer a long judicial procedureand ongoing demonstrations, the company succeeded in obtaining the licence renewal to resume itsoperations.36 In 2006 Coca-Colas successul re-establishment o operations was reversed when thegovernment o Kerala banned the manuacture and sale o Coca-Cola products in Kerala on the groundthat it was unsae due to its high content o pesticides.37 However, the ban did not last or long and laterthat same year the High Court o India overturned Keralas Court decision. 38 More recently, in March

2010, a state government panel recommended ning Coca-Colas Indian subsidiary a total o $47 millionbecause o the damage caused to the water and soil in Kerala. 39 Also, a special committee in charge olooking into claims by community members aected by the water pollution was set up.40

Te long legal procedures against the Indian government that Coca-Cola had to ace were not theonly consequence o the conict. Te brand suered a great loss o consumer trust and reputationaldamage in India and abroad.41 In India there was an overall sales drop o 40% within two weeks aer therelease o the 2003 CSE report. Te impact in annual sales was a decline o 15% in overall sales in 2003

30 M. Burne & R. Welford, Case Study: Coca-Cola and Water in India: Episode 2, 2007 Corporate Social Responsibility and Environment

Management,14, no. 5, p. 301.

31 Down to Earth, The street ght, 15 August 2003, (last visited 21 March 2012).32 See Burne & Welford, supra note 30, p. 303.

33 TERI report says Coke should shut Rajasthan plant, Indian Express, 16 January 2008, (last visited 18 April 2012).

34 See Hills & Welford, supra note 27, p. 169.

35 T. Banerjee, Right to Water: Some Theorecal Issues, 2010 Contemporary Issues and Ideas in Social Sciences, p. 11.

36 See the case at Perumay Grama Panchayat v. State of Kerala, [2003] High Court of Kerala, (last visited 21 March 2012).

37 The Rights to Water and Sanitaon, Case against Coca-Cola Kerala State: India, (last visited 21 March 2012).

38 Today in Business: Cola Ban Overturned in India, New York Times,23 September 2006, (last visited 18 March 2012).

39 India: Polluon Fine Sought Against Coca-Cola, New York Times, 23 March 2010, (last visited 20 March 2012).

40 SeeLambooy, supra note 1, p. 492.

41 For an anthropological perspecve on the brand image damage to and the loss of consumer trust in Coca-Cola products in India see

N. Vedwan, Pescides in Coca-Cola and Pepsi: Consumerism, Brand Image, and Public Interest in a Globalizing India, 2007 CulturalAnthropology22, no. 4, pp. 659-684.


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in comparison to prior annual growth rates o 25-30%.42 Tis highly publicised conict in India alsocaught the attention o consumers in the US. Aer a series o demonstrations by students who joined twoactivist groups in the US, ten American universities43 temporarily stopped selling Coca-Cola products attheir campus acilities.44

2.4. Coca-Colas CSR policies post-conicts

wo years beore the water conict in India in 2003, Coca-Cola adopted the GRI Guidelines and startedreporting on sustainability. By 2003, the company had already experienced a ew CSR-related conictsin other parts o the world.45 However, none o them had the grave consequence o a loss o trust in thecompany and its products by consumers and the public in general.

According to Pirson and Malhotra, the main reason why this controversy ended so badly or Coca-Cola lies in its response to the problem.46 Coca-Cola denied having produced beverages containingelevated levels o pesticides, as well as having over-exploited and polluted water resources. 47 By denyingall claims and trying to prove its integrity, instead o demonstrating concern towards the situation, Coca-Cola ailed to regain consumers trust.48 Te Indian population viewed Coca-Cola as a corporate villainwho cared more about prots than public health.49 In comparison, previous conicts experienced by thecompany in the US and Belgium were better handled because it included stakeholder engagement in itsstrategy.50

It appears that the company became aware o its mistake aer the controversy had been ongoing ora couple o years. In 2008 Je Seabright, Coca-Colas vice president o environment and water resources,recognized that the company had not adequately handled the controversy. He acknowledged that localcommunities perception o their operation matters, and that or the company () having goodwill inthe community is an important thing.51

Although Coca-Cola still denies most o the allegations, the reputational damage experienced aerthe controversy in India pushed Coca-Cola to take damage-control measures. Tose measures at rstconsisted o statements to conrm Coca-Colas integrity. For example, Coca-Cola dedicated a page in theCorporate Responsibility Review o 2006 to address the controversy. Te statement consisted mainly oproviding inormation supporting its good practices and water management o its operations in India.52

But this statement did little to combat the declining sales and increasing losses exceeding investments.

42 M. Pirson & D. Malhotra, Unconvenonal Insights for Managing Stakeholder Trust, 2008 Working Paper, Kennedy School of Government,

pp. 9-10.

43 University of Michigan, New York University, Rutgers University in New Jersey and Santa Clara University in California, among others.

44 U. of Michigan Becomes 10th College to Join Boyco of Coke,New York Times, 31 December 2005, (last visited 2 April 2012).

45 For instance, in 1999 four African-American employees led a suit at the District Court of Georgia making allegaons of racial discriminaon

(see Ingram et al. v. The Coca-Cola Company, Case No. 1-98-CV-3679 (RWS)). Also in 1999, the Belgian government banned Coca-Colas

products for ten days due to reports of more than 240 people in Belgium and France experiencing intesnal problems aer drinking Coke

(see Business: The Company File. Belgium bans Coca-Cola, BBC, 14 June 1999, available at

(last visited 20 March 2012)).

46 See Pirson & Malhotra, supra note 42, p. 9.

47 The Coca-Cola Company, Comment from the Coca-Cola Company on The Chrisan Aid Report, 20 January 2004, (last visited 20 March 2012)

48 See Pirson & Malhotra, supra note 42, pp. 9-10.

49 See Pirson & Malhotra, supra note 42, p. 9.

50 In the United States, even though the company seled and denied the charges in the selement agreement, part of the agreement was

the creaon of a panel, a Task Force, constuted to engage with Coca-Colas employees, to survey their discriminaon concerns in the

company, and to serve as a watchdog for 5 years to evaluate compliance with the selement agreement (see First Annual Report of the

Task Force, 2002, (last visited 29 November 2011)).

In Belgium, on the other hand, Coca-Cola took responsibility even though it was later proved that the reported health problems had

not been caused by Coca-Cola products. The company apologized and oered to cover the health-care costs of anyone who had been af-

fected by the incident. The company also launched a massive markeng campaign, and generally demonstrated concern for its customers

(see Pirson &Malhotra, supra note 42, p. 8).

51 Water Pressure, Time Magazine, 12 June 2008, (last visited

21 March 2012).

52 For instance, it stated that from 1999 to 2006 operaons in India reduced water consumpon by 35 per cent, and had also helped to

install more than 300 rainwater harvesng systems in 17 states. See The Coca-Cola Company 2006 Corporate Responsibility Review,

2007, p. 26, (last visited 21 March2012).


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Coca-Cola gradually changed its strategy to include damage-control measures that addressed the Indiancommunities grievances. In 2008 the company published its rst environmental perormance reporton operations in India, which covered activities rom 2004 to 2007. 53 It also created the Coca-ColaIndia Foundation, Anandana, which works with local communities and NGOs to address local waterproblems.54 But perhaps the most outstanding change o strategy by Coca-Cola consisted o launchingvarious community water projects in India. An example is the rainwater harvesting project, where Coca-Colas operations partnered with the Central Ground Water Authority, the State Ground Water Boards,NGOs and communities to address water scarcity and depleting groundwater levels through rainwaterharvesting techniques across 17 states in India. Tese techniques consist mainly o collecting and storingrainwater while preventing its evaporation and runo or its efcient utilisation and conservation. Teidea behind this is to capture large quantities o good quality water that could otherwise go to waste. Byreturning to the ecosystem the water used in its operations in India through water harvesting, the companyexpected that this project could eventually turn the company into a net zero user o groundwater by2009.55 In the 2012 Water Stewardship and Replenish Report, Coca-Cola stated that its operations inIndia have achieved ull balance between groundwater used in beverage production and that replenishedto nature and communities ahead o the global target.56

It appears that the controversy in India was a learning experience or the company, and that it motivated

the company to adopt a more proactive CSR policy on a global scale that ocuses on water management.In June 2007, Coca-Cola implemented a water stewardship programme and committed itsel to reduceits operational water ootprint and to oset the water used in the Companys products through locallyrelevant projects.57 o achieve those commitments Coca-Cola established three measurable objectives:

(1) Reducing water use by improving water efciency by 20% over 2004 levels by 2012. Te latest dataavailable rom 2010 shows a 16% improvement over the 2004 baseline.58

(2) Recycling water through wastewater treatment and returning all water used in manuacturingprocesses to the environment at a level that supports aquatic lie and agriculture by the end o 2010.By September 2011, the progress observed concerning this target was 96%.59

(3) Replenishing water used by osetting the litres o water used in nished beverages by 2020 through

local projects that support communities and nature (i.e. watershed protection and rainwaterharvesting).60 Currently, Coca-Cola reports that it holds a global portolio o 386 community waterpartnerships or community-based replenish projects.61 By 2011, about 35% o the water used innished beverages was replenished.62

It is noteworthy that Coca-Cola publishes, in addition and separate to the sustainability reports, anannual water report. In these reports the company publishes assessments o and the progress in its waterinitiatives. Some o the assessments are made by the Global Environment & echnology Foundation, anAmerican NGO experienced in acilitating the creation o public-private partnerships.63

Also in 2007, Coca-Cola entered into a partnership with WWF. Its core objectives are increasingunderstanding on watersheds and water cycles to improve Coca-Colas water usage, working with local

communities in various locations worldwide, and developing a common ramework to preserve water

53 Coca-Cola India, Towards Sustainability,2008, (last visited

14 November 2012).

54 See Anandana at (last visited 21 March 2012).

55 See Coca-Cola India, supra note 53, p. 12.

56 The Coca-Cola Company, The Water Stewardship and Replenish Report, 2012, p. 21, (last visited 3 April 2012).

57 A. Wright (Global Environment & Technology Foundaon), Quanfying Water Access Benets in Community Water Partnership Projects,

2009, (last visited

3 April 2012).

58 See The Coca-Cola Company, supra note 56, p. 27.

59 Ibid.

60 See Wright, supra note 57.

61 See The Coca-Cola Company, supra note 56, Appendix A.

62 Ibid., p. 2763 See Wright, supra note 57, p. 2.


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sources.64 Finally, and also in the same year, the company became a member o the public-private initiativeCEO Water Mandate, which is a public-private initiative that assists companies in the development,implementation and disclosure o water sustainability policies and practices.65

3. Walmart

3.1. Walmarts prole

Walmart Supercenters (hereaer Walmart) has a ull oering o groceries and general merchandise ina single store. Walmart oers to its customers a one-stop shopping experience and is the largest privateemployer in the US as well as being the worlds largest retailer.66 It has more than 10,130 retail units under69 dierent banners in 27 countries. Tey all share a common goal: Saving people money so they canlive better.67 Walmart employs 2.2 million associates worldwide68 and generated net sales o $ 443 billionduring the scal year o 2012.

Walmart was ounded in 1962, with the opening o the rst Walmart discount store in Rogers,Arkansas (US). Te company was incorporated as Wal-mart Stores, Inc. on 31 October 1969. 69 Tecompanys shares began trading on OC (Over-Te-Counter) markets in 1970 and were listed on theNYSE two years later.70

3.2. Walmarts CSR policies and reporting

Several authors have pointed to Walmart as an important emerging private actor in the transormationo lawmaking in the CSR eld, reerring to it as a global legislator.71 Tey highlight how Walmart isable to use its contractual relationships to regulate behaviour among its suppliers around the globe withrespect to product quality, working conditions or the suppliers employees, and ethical conduct.72 Since2007 Walmart publishes its annual report on its website. It was initially called the Global SustainabilityReport and later changed to Global Responsibility Report in 2011. Mike Duke, Walmarts CEO (ChieExecutive Ofcer), says Tis change reects the new social and environmental dimensions we haveadded to our eorts () We believe transparency and accountability are part o being a good andresponsible company.73 Walmarts annual report publishes its constant and progressive work towardssocial responsibility issues. Te Global Responsibility Report 2011 is divided into three main reportingparameters: Environment, Social and Goals.

Walmarts 2011 report covers every corner o CSR issues. It points out how its successul Sustainability360 model74 has helped Walmart to be the retail leader in the market. It also communicates the signicantprogress made by and the new reduction goals o greenhouse gas emissions o its supply chain by 2015.Walmarts nancial contributions in kind, such as investments in education, health, commitments to

64 SeeLambooy, supra note 21,p. 855.

65 The Coca-Cola Company, CEO Water Mandate, (last visited

28 November 2011).

66 B. Farfan, Global Powers of retailing Names Biggest and Best Retail Chains Worlwide, (last visited 30 November

2011).67 Walmart, Walmart Corporate, (last visited 4 December 2011).

68 Ibid.

69 Ibid.

70 Ibid.

71 The sample totalled a number of 2,200 companies including the Global Fortune 250 (G250) companies and the 100 largest companies

by revenue (N100) in 22 countries. The purpose of this survey was to track reporng trends in the worlds largest companies. KPMG

Internaonal, Survey of CSR Reporng 2008, p. 41, (last visited 23 July 2010). See also M.P. Vandenbergh, The New Walmart Eect: the Role of Private Contracng in Global

Governance, 2007 UCLA Law Review 54, p. 913.

72 It has been suggested that this transformaon challenges the regulatory monopoly of states and may contribute to the construcon of

a global system of customary law as powerful as the English common law was in its day. L. Cat Backer, Economic Globalisaon and the

Rise of Ecient Systems of Global Private Lawmaking: Walmart as Global Legislator, Symposium: Walmart: The New Superpower, 2007

University of Conneccut Law Review39, no. 4, p. 1739.

73 Walmart, Walmart Global Responsibility Report, 2011, p. 1, (last visited

28 November 2011).

74 The Sustainability 360 Model engages more than 100,000 suppliers, 2 million associates and hundreds of millions of customers aroundthe world to achieve Walmart goals. See Walmart, supra note 73, p. 9.


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ght hunger, support or local armers and access to healthier and aordable ood, can also be ound inWalmarts Global Responsibility Report 2011.

Walmarts current perormance, policies and nancial gures at rst sight portray Walmart as a rolemodel company on CSR.

3.3. Walmarts conicts

Walmart has aced many obstacles over the years. It seems that legal and social challenges have acted asimportant reasons or the development o its code o conduct and annual reporting. Tis statement canbe illustrated in two relevant cases: Walmart Stores Inc. v. Dukes et al.75 and the press reports accusingWalmart o using child labour.

3.3.1. Walmart Stores Inc. v. Dukes et al.

Walmart Stores Inc. v. Dukes et al. started a decade ago and is still being heard by the US Courts. Itcommenced as a national class action against Walmart. Plaintis Betty Dukes, Patricia Surgeson, EdithArana (plaintis), on behal o themselves and others similarly situated, allege that emale employees inWalmart and Sams Club retail stores were discriminated against based on their gender. Tey stated that

they were discriminated against regarding pay and promotion to top management positions, therebyviolating the Civil Rights Act o 1964 (42 U.S.C. 2000e et seq. o itle VII).76 In 2004, the US DistrictCourt or the Northern District o Caliornia certied a national class o emale employees challengingretail store pay and management promotion policies and practices under the Federal Rule o CivilProcedure Article 23(b)(2).77 Walmart appealed to the Ninth Circuit in 2005, arguing that the seven leadplaintis were not typical or common o the class.78 Walmart appealed to the Supreme Court in August2010 aer the US Court o Appeals or the Ninth Circuit upheld class certication.79 Finally, the situationchanged on 20 June 2011 when the US Supreme Court reversed the class certication.80

Te Court held that the nationwide class certication approved by the lower courts was not consistentwith the Federal Rule o Civil Procedure Article 23(a) governing class actions.81 Justice Antonin Scaliaconcluded that the millions o plaintis and their claims did not have enough in common:82 Withoutsome glue holding the alleged reasons or all those decisions together, it will be impossible to say thatexamination o all the class members claims or relie will produce a common answer to the crucialquestion why I was disavored.83

Dukes v. Walmart Stores, which in 2001 was estimated to comprise more than 1.5 million women,included all women employed by Walmart nationwide at any time aer 26 December 1998.84 It wouldhave been the largest class action lawsuit in US history.85

Despite the Supreme Court resolution, time, money and eorts invested up to this point, the casedid not end there. In October 2011, the plaintis lawyers led an amended lawsuit limiting the class to

75 Walmart Stores Inc. v. Dukes et al. [2011], Case No. 10-277, SUPREME COURT OF THE UNITED STATES, Certeorari to the United States

Court of Appeals for the Ninth Circuit, p. 1.

76 Dukes v. Walmart Stores,[2001],Case No. C-01-2252-CRB, PLAINTIFFS FOURTH AMENDED COMPLAINT, Ninth Circuit, p. 2.77 Ibid, p. 2

78 J.P. Putney, Women launch new discriminaon claim against Wal-Mart,Jurist, 28 October 2011 (last visited 3 December 2011).

79 Ibid.

80 The high court, issuing new guidelines for class acons and Title VII employment discriminaon cases, held that the naonal class could

not be cered, based on the facts it outlined in its opinion. The Supreme Court did not rule on the merits of the acon, but only ruled

that the class as cered could not proceed. It did not preclude prosecuon of a class that was consistent with its newly announced

guidelines and standards. See Dukes v. Walmart Stores, supra note 76, p. 2.

81 F.A. Fahleson, When At First You Dont Succeed New State Wide Class Acon To Test Dukes Standards, dritoday, 4 November 2011,


82 Ibid.

83 Ibid.

84 See Walmart Stores Inc. v. Dukes et al., supra note 75.

85 A. Silverman, Largest Discriminaon Lawsuit in US History Gets Green Light: Aer years of delay, female Walmart workers may get their

day in Court, Turner Strategies, 26 April 2010, p. 1. (last visited 21 March 2011).


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emale Walmart employees in Caliornia.86 Tis suit is expected to be the rst o many additional class-action lawsuits against the retailer at the state or regional level.87 Te new lawsuit, led in the US DistrictCourt or the Northern District o Caliornia, alleges discriminatory practices against more than 90,000women regarding pay and job promotion as well as requiring non-discriminatory pay and promotioncriteria.88

3.3.2. Walmart caught using child labour in Bangladesh

At the end o 2005, the Radio Canada programme Zone Libre made public the news that Walmart wasusing child labour at two actories in Bangladesh.89 Children aged 10-14 years old were ound to beworking in the actories or less than $50 a month making products o the Walmart brand or export toCanada.90

Reerring to Walmarts policy at that time consisting o cutting ties with suppliers when violationsoccurred, the NGO Maquila Solidarity Network said that cutting and running is the worst possibleresponse to reports o child labour or other sweatshop abuses.91 Critiques said that it only discouragesworkers rom telling the truth to actory auditors or ear o losing their jobs and encourages suppliers tohide abuses or to subcontract work to other actories that will escape inspection.92

Nevertheless, Walmart ceased business with the two actories immediately.93 Walmart alleges thatdespite its eort to inspect all actories, it is difcult to enorce its own corporate code o conduct withthousands o subcontractors around the world.94

3.4. Walmarts CSR policies post-conicts

Walmart developed its rst Code o Conduct (COC) Standard or Suppliers in 1992, 95 which mainlyocuses on quality standards or suppliers only. However, Walmarts rst general report (Report onEthical Sourcing96), which includes suppliers, customers and associates, was generated in 2006. Tisreport was elaborated aer the ling o the lawsuit by the emale employees in 2001 and the damagingcampaigns and press publications accusing Walmarts suppliers in Bangladesh o using child labour.Walmarts reporting culture was imitated by the rest o the companies in the market. Nowadays, Walmarthas been qualied as a global legislator in CSR policies.97

Te 2005 Report on Ethical Sourcing reported that Walmart had ceased to do business with 141actories, primarily because o underage labour violations.98 Te Report also contains a chart withthe main violations ound during the audits. Gender discrimination was not mentioned at any stagethroughout the whole document. Walmarts 2005 and 2012 COC Standard or Suppliers explicitlyestablish that Walmart would not tolerate the use o child labour.99 Te 2005 COC sets the age o 14 as theminimum age or suppliers and subcontractors to hire workers.100 It also species non-discrimination on

86 See Dukes v. Walmart Stores,supra note 76, pp. 2-3.

87 See Walmart Stores Inc. v. Dukes et al.,supra note 75.

88 See Dukes v. Walmart Stores, supra note 76.

89 Maquila Solidarity Network, Walmart caught using child labor in Bangladesh, 2005, (last visited 22 March 2012).

90 Ibid.91 The Maquila Solidarity Network (MSN) is a labour and womens rights organizaon that supports the eorts of workers in global supply

chains to improve wages and working condions and a beer quality of life. See MSN website < hp://en.maquilasolidarity.org/>

(last visited 1 October 2012).

92 Maquila Solidarity Network, Caught using child labour, Wal-Mart Cannot Run Away From its Responsibilies, Say An-Sweatshop

Groups, 5 December 2005, (last visited 29 June 2012).

93 Walmart to cut es with Bangladesh factories using child labour, CBC News, 30 November 200, (last visited 22 March 2012).

94 Ibid.

95 Walmart, 2005 Report on Ethical resources, 2011, p. 8, (last visited

28 November 2011).

96 Ibid., p. 30.

97 See KPMG Internaonal, supra note 71.

98 See Walmart, supra note 95.

99 All labor must be voluntary. Slave, child, underage, forced, bonded, or indentured labor will not be tolerated. See Walmart. 2012

Standard for Suppliers, (last visited 23 April 2012).100 See Walmart,supra note 95, p. 29.


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the basis o gender and other personal characteristics or belies. It is important to highlight that genderdiscrimination was not given any special treatment in the 2005 COC or in the general report.

Walmarts zero tolerance policy or underage workers was changed in 2005.101 I a single underageworker was ound in a actory, Walmart ceased business ipso facto. At the beginning o 2005, i twounderage workers were ound, the actory would receive a warning and had to change and correct inthe ollow-up audit.102 I more than two underage workers were ound or the company did not makecorrections, the actory was permanently banned rom Walmarts production. Tis decision was basedon NGO advice rom the Bangladesh case mentioned in the above section. I Walmart cuts business withthese actories, many workers could be laid o or lack o production, suppliers will hide abuses andworkers will not tell the truth to auditors in order not to lose their jobs. Walmart has a strict corporatecode o conduct in the industry but according to investigations Walmart is not able to enorce its code indeveloping countries.103

Currently, Walmart publishes a ull and complete report on CSR issues called Global ResponsibilityReport which covers the three dimensions o People, Planet, Prot.104 Tis report emphasizes genderequality and a diverse workorce.105 Walmart has a Gender Equality and Diversity gender policy thatcan be ound in its Global Responsibility Annual Report. In 2009, Walmart took the commitment onestep urther with the incorporation o the Advisory Board on Gender Equality and Diversity. Te board

is aimed at providing equal and enhanced opportunities or all in top leadership roles. 106 Tese policieshave generated an increase in emale ofcials and managers rom 23,873 employees in 2005 to 25,246employees in 2010.107

Walmart has also committed itsel to achieving three goals in its Sustainability Report: using 100%renewable energy, creating zero waste, and selling products that sustain people and the environment.Tese criteria are established and measured by Walmart at the end o the 2012 report. Walmart indicatesevery year its completed goals and the progress in the ones that have not yet been achieved. An exampleo quantiable measures is creating a zero waste Walmart by eliminating landll waste rom US stores by2025.

Although Walmart does not ollow the GRI Guidelines, it has measurable targets on audits. Forinstance, Walmart requires its suppliers who produce toys in China to sign up to the ICI CARE

Process.108 Te ICI CARE Process was created by the international toy industry to achieve a sae andhuman working environment or toy actory workers worldwide. In addition, Walmart conducts internalvalidation audits by Walmarts Ethical Sourcing team. Tese validation audits ensure that the ICI CAREprocess is properly implemented and that it meets Walmarts Standards or Suppliers.109

4. Apple

4.1. Apples prole

Apple Inc. (hereaer Apple) was established in 1977 and is registered on the NASDAQ Global SelectMarket exchange.110 According to its Form 10-K111 Apple designs, manuactures and markets mobile

101 Ibid., p. 24.

102 Ibid., p. 24.

103 G. Milovanovi et al., N. Barac & A. Andjelkovi, Corporate Social Responsability in the Globalisaon Era, 2009 Economics and Organiza-

on 6, no. 2, p. 92.

104OECD-ILO, Overview of Selected Iniaves and Instruments Relevant to Corporate Social Responsibility, OECD-ILO Conference on CSR,

Employment and Industrial Relaons: Promong Responsible Conduct in a Globalising Economy, Paris, 23-24 June 2008, pp. 5-6.

105 The Walmart Global Responsibility Report 2010 devotes special aenon to the importance of women for Walmart.

106 Walmart, Walmart Global Responsibility Report : Social,2011, p. 40, (last visited

28 November 2011).

107 Ibid.

108 The ICTI CARE Process allows buyers and suppliers to reduce their own auding of labour standards and redirect their resources toward

factory development and capacity building. Retrieved from Walmart Responsability Report 2011, p. 79. The ICTI Care Process policy can

be found at (last visited 29 June 2012).

109 Ibid.

110 Apple Inc., Form 10-K, (last visited 26 March 2012).

111 According to the US Securies and Exchange Commission a Form 10-K provides a comprehensive overview of the companys businessand nancial condion and includes audited nancial statements. Although similarly named, the annual report on Form 10-K is disnct


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communications, media devices, personal computers and portable digital music players, and sells avariety o related soware, services, peripherals, networking solutions, and third-party digital contentand applications.112 Its products are sold through Apples retail stores, online stores and third parties.

Apple is a world leader in producing innovative electronic goods and technology. In 2011 Applesnet sales were estimated at $108.2 million. Its net sales in 2011 increased by 60% compared to 2010. 113Apple worldwide employs 60,400 ull-time people and 2,900 temporary employees and contractors. Tecompany utilizes outsourcing through the manuacturing o its products overseas; most o the actoriesare located in Asia.

4.2. Apples CSR policies and reporting

As required by the SEC, Apple has made the Form 10-K annual report available on its website. Te Form10-K contains amongst other things inormation on Apples business strategy and organisation, thecompanys risk actors, legal proceedings and nancial data. It also includes the business conduct policyo Apple: Apple conducts business ethically, honestly and in ull compliance with all laws and regulations.Tis applies to every business decision in every area o the company worldwide.114 Furthermore, thebusiness conducts deals with corporate governance, inormation disclosure, non-corruption and bribery,environmental health and saety.

Apple has considered the GRI G3.1 indices relating to the economy, the environment, human rights,society and labour or its publication on Governance, Product Environmental Reports, Recycling andFacilities Environmental Report and Supplier Responsibility. For Supplier Responsibility, Apple, orexample, has taken into account the indicator which reports on measures it has taken to contribute to theelimination o child labour. With regard to Product Environmental Reports, Apple has used the EN26perormance indicator,115 and sets out initiatives to lessen the environmental impact o its products. Appledesigns its products with the aim o being as energy efcient as possible, and it is the only company thatcan claim all electronic goods are Energy Star qualied.116 Apples products have become more powerulwhile, at the same time, ewer materials are used and ewer carbon emissions are generated.

Almost all o Apples products are outsourced or manuacturing overseas. On its SupplierResponsibility website Apple states: Apple is committed to the highest standards o social responsibility

across our worldwide supply chain. We insist that all o our suppliers provide sae working conditions,treat workers with dignity and respect, and use environmentally responsible manuacturing processes.Our actions rom thorough site audits to industry-leading training programs demonstrate thiscommitment.117

Te Supplier Code o Conduct (Supplier Code) outlines Apples expectations or the suppliers itdoes business with.118 As a condition or doing business with Apple, suppliers have to commit to theSupplier Code. For the Supplier Code, Apple has adopted the Electronics Industry Code o Conduct(EICC),119 the guidelines and standards or the electronics sector. Trough onsite audits Apple ensuresthat suppliers comply with the Supplier Code. Te nal assembly manuactures are audited every year and

from the annual report to shareholders, which a company must send to its shareholders when it holds an annual meeng to electdirectors, (last visited 26 March 2012).

112 See Apple Inc., supra note 110.

113 From 2010 to 2011 the unit sales of the iPad increased by 334%, a number of 32.4 million. In 2011, 72.3 million iPhones were sold;

compared to 2010, this was an increase of 81%. These numbers show an increase in demand for iPads and iPhones and are relevant in

relaon to the suicides at Foxconn, the manufacturer of iPhones and iPads.

114 See Apple Inc., supra note 110, p. 1.

115 EN26 Indicator Protocol: (last visited 16 June 2012).

116 Qualicaon for the Energy Star cercate can be found on: (last

visited 26 March 2012).

117 Apple Inc.,Apple Supplier Responsibility, (last visited 26 March 2012).

118 Apple consulted the following references in preparing the Code: Eco Management & Audit System, ILO Internaonal Labour Standards:

, ISO 14001: , OECD Guidelines for Mulna-

onal Enterprises: , United Naons Convenon Against Corrupon: , United Naons Global Compact: , Universal Declaraon of Human Rights: , (last visited 26 March 2012).119 Apple Inc., Electronic Industry Code of Conduct. (last visited 23 April 2012).


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the components suppliers are audited arbitrarily. Apple obliges its suppliers to respect the human rightso its workers, to inorm the workers o their rights, and to treat them with dignity and respect. Applerequires rom its suppliers that they prevent discrimination, involuntary and underage labour, excessiveworking hours and that they pay workers with wages and benets in accordance with the applicable lawsand regulations.

4.3. Apples conicts

Te limited transparency o Apples supplier sustainability policy has oen been criticized in the media.120In February 2010 Apple also turned down two shareholders sustainability proposals to establish asustainability report on Apples environmental policies and the impact that climate change has on thecompany. Te other proposal was to establish a board o directors sustainability committee. 121

4.3.1. Labour and human rights

A well-known conict involving Apples suppliers is the suicides at Foxconn.122 It is the largest contractedelectronics manuacturer in the world, with dealings involving Dell and Sony.123 Foxconn is themanuacturer o iPhones and iPads and employs over 900,000 workers, o whom 420,000 employees

work at the Foxconn Shenzhen plant. Tis plant covers 15 actories, including dormitories, a hospital, abank, a grocery store and restaurants. Te workers live and work inside the complex.In 2006 the Chinese local press reported on the excessively long working hours and the discrimination

o mainland Chinese workers by aiwanese superiors. In May 2010 several media sources reported severalcases o suicide at Foxconn.124 From 2009 to 2010 a total o 13 workers had committed suicide. Terst worker, Sun Danyong, committed suicide aer he had been interrogated on the loss o an iPhone 4prototype that he had in his possession.125 When the ormer CEO Steve Jobs was asked about the suicidesat Foxconn, he responded: Foxconn is not a sweatshop.126

During an undercover investigation it was discovered that the reason or the multiple suicideswas related to internal management.127 Te acilities o Foxconn are ne, but the management is poor,revealed Zhu Guangbing, who organised the investigation. According to Audrey sui,128 a proessor atthe National University o Singapore Business School, Foxconn maintains a military-style managementapproach. Te workers were not allowed to interact with each other. Workers who violated the rule werepenalized with a ne or were held to be in contempt by the manager.

Te weekly working hours o workers were up to 70 hours, ten hours above the maximum hours setby Apples Supplier Code. Te Foxconn actory has good acilities. Te workers have access to swimmingpools and tennis courts. Foxconn organises activities such as chess clubs, mountain climbing or shingexpeditions. But with a 70-hour workweek, employees did not have any time to enjoy these acilities.129

120 T. Branigan, Workers killed in blast at China plant of iPad maker Foxconn, The Guardian, 20 May 2011, (last visited 27 March 2012). T. Culpen, Apple supplier Wintek may Boost Compensa -

on for poisoned workers in China, Bloomberg, 23 February 2011, (last visited 27 March 2012). D. Barboza, Group cricizes Apples

environmental record in China, New York Times, 1 September 2011, (last visited 27 March 2012). P. Svensson, Independent group inspecng

Apple suppliers, USA Today, 13 February 2012, (last visited 27 March 2012).

121 During the shareholders meeng Al Gore was re-elected to the board. Supporters say Gore needed to urge Apple to do more in seng

public environmental commitments and reports. D. Schatsky, Apple Shoots Down Two Shareholder Sustainability Proposals, 26 February

2010, (last visited

27 March 2011).

122 A subsidiary ofHon Hai Precision Co. Ltd. Taiwan.

123 Foxconns latest CSR report 2010 can be found on its website (last visited 1 October 2012).

124 M. Moore, Inside Foxconns suicide factory,The Telegraph,27 May 2010,, (last visited 27 March 2012).

125 A. Tsui, Building resilience at work, Centre for Strategic Leadership, Naonal University of Singapore, 21 October 2010.

126 Steve Jobs says Foxconn in China not a sweatshop aer worker deaths, The Guardian, 2 June 2010, (last visited 27 March 2010).

127 See the documentary by Dreamworks China: (last visited

27 March 2012).

128 CV Audrey Tsui: (last visited 27 March 2012).129 See Moore, supra note 124.


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However, interviews with several Foxconn workers by Dreamworks China revealed that not all theemployees were dissatised. Some believed that the working conditions at smaller actories are worse.One o Foxconns workers stated that employees at Foxconn thought the media had exaggerated thesuicides regarding their connection to Foxconn and that possibly some suicides had a sentimental orromantic cause.130

In February 2011, the media reported the child labour issues had worsened at the suppliers orcomputers, iPods and iPhones.131 Apples Supplier Responsibility Report 2011 revealed 91 underageworkers at the suppliers.

4.3.2. Workers health and safety

Concerning workers health and saety conditions at the suppliers, in May 2010 two workers were killedand sixteen employees were injured during an explosion at Foxconn. An Apple spokesperson stated:We are deeply saddened by the tragedy at Foxconns plant in Chengdu, and our hearts go out to thevictims and their amilies. We are working closely with Foxconn to understand what caused this terribleevent.132 In the same month, Te Guardian reported that workers rom Wintek had been poisoned byn-hexane, a toxic chemical used to clean the touch screens o iPhones. Te employees complained thatthe compensation Wintek oered or the health damage was not sufcient. Te workers who did receivecompensation were asked to resign rom their jobs.133

4.4. Apples CSR policy post-conicts

Apple makes sure that suppliers comply with the Supplier Code by conducting audits. Te audits coverworking and living conditions, health and saety but also environmental practices at the acilities.According to Apples Supplier Responsibility Report 2010, Apple conducted 102 audits in 2009. In 2011Apple conducted 229 audits, an increase o 80% compared to 2010. An audit is conducted by an Appleauditor and supported by local third-party auditors.134

In the Supplier Responsibility Report 2010, published in February 2011, Apple included a paragraphresponding to the suicides at Foxconn.

In the Supplier Responsibility Report 2011, Apple reports that during inspections Apple discoveredten acilities with underage labour violations. One o the acilities had a large number o underageworkers. Because the management did not want to address the problem, Apple terminated businesseswith this acility.135 Where underage labour has been discovered, suppliers are required to pay educationalexpenses, living stipends and lost wages or six months or until the worker reaches the age o sixteen.

In November 2010, Apple set up a training programme to prevent the uture hiring o underageworkers. Te human resources managers are trained in Chinese labour law. raining human resourcesmanagers, however, will not solve child labour issues. When the costs o labour, energy and raw materialsrise and there is a shortage o labour, actory owners are orced to cut costs or to nd cheaper labour.Child labour can easily be hidden by providing ake wages and work schedule data. Also, it is difcultto prevent child labour when underage workers want to work to provide or their amilies. Te SupplierResponsibility Report o 2012 states that suppliers are obliged to return underage workers to school and

nance their education through Apples Child Labour Remediation Program.136 Regarding abolishingunderage labour, im Cook, the CEO o Apple, stated: We would like to totally eliminate every case ounderage employment. We have done that in all o our nal assembly. As we go deeper into the supply

130 See the Documentary by Dreamworks China, supra note 127.

131 M. Moore, Apple child labour issues worsen, The Telegraph, 15 February 2011, (last visited 27 March 2012).

132 See Branigan, supra note 120.

133 Chinese workers urge Apple to react on n-hexane poisoning, The Guardian, 22 February 2011, (last visited 27 March 2012).

134 See Apple Supplier Responsibility, supra note 117, p. 5. Informaon on Apples audits.

135 See Moore, supra note 131.

136 Apple Inc., Apples Supplier Responsibility 2012 progress report, p. 10, (last visited26 March 2012).


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chain, we ound that age verication system isnt sophisticated enough. Tis is something we eel verystrongly about and we want to eliminate totally.137

In the Supplier Responsibility Progress Report o 2011 Apple addressed the issue o the use on-hexane. Apple obliged Wintek to stop using n-hexane and required Wintek to repair its ventilationsystem and to work with a consultant to improve its environmental health and saety systems.138

In order to take action it is important or companies to be transparent about their supply chain.In February 2012 Apple announced it would be the rst technology company to join the Fair LabourAssociation (FLA) as a participating company.139

5. Canon

5.1. Canons prole

Canon Inc. (hereaer Canon) was ounded in 1937. Its headquarters are in Japan and the company islisted on the NYSE. Although the digital camera is the most well-known product to consumers, Canonalso produces devices or ofce and industry use.140 Canon is planning to invest more in medical imagerecording equipment and ophthalmic devices.141 Canons regional headquarters are established on

every continent and, together with other companies, they orm the Canon Group. Canon has a globalnetwork o more than 200 companies and employs more than 160,000 people worldwide. Canon Inc.alone employs more than 26,000 people.142 It is dedicated to advancements in technology and commitsapproximately 10% o its total revenue each year to Research & Development. Canon is consistently oneo the top ew companies to be granted the most number o patents over the last 18 years.143 In the year2010 Canon Groups net sales were estimated at $45,764 million.144

5.2. Canons CSR policies and reporting

It seems that Canon invests a great deal o eort into its CSR reporting. It publishes a separate sustainabilityreport. Apart rom that, a lot o inormation regarding its compliance with dierent standards and itspositive role in society (und raising and other activities) can be ound on its webpage. Te company

introduced a CSR strategy based on the Kyosei philosophy in 1988.

145

At that time this philosophy wasnot yet widely used, but in recent years the philosophy has come to be commonly used in Japan, inbusiness, politics and in daily lie.146 It is used to imply a range o concepts and meanings. Canon reersto kyosei dened as living and working together or the common good.147

Currently, Canon has a CSR policy and a CSR mission statement.148 It has Canons Global Codeo Conduct.149 Canon ollows the GRI Sustainability Reporting Guidelines 2006150 and its CSR report

137 P. Gupta, Apple reveals supply chain, details condions, Reuters,13 January 2012, (last visited 27 March 2012).

138 The Supplier Responsibility Progress Report 2011 stated that Apple will re-audit Wintek in 2011; however, the Supplier Responsibility

Progress Report 2012 does not publish any results of the Wintek audit.

139 Fair Labour Associaon, Apple Joins FLA, 13 January 2012, (last visited 3 April

2012).140 Canon, Corporate Info, Corporate Prole, (last visited 21 March 2012).

141 Canon, About Canon, New business domain, (last visited 27 March 2012).

142 See Canon, supra note 140.

143 Canon, Singapore Printer Brands Launch First-Ever Joint Recycling Iniave Project Homecoming, (last visited 27 March 2012).144 Canon, Canon Now, (last visited 27 March 2012).

145 Canon, Social and cultural Support Acvies, The Philosophy, (last visited

27 March 2012).

146 The Dialogue Instute, KYOSEI A Concept that will lead the 21st century, p. 1, (last visited 30 June 2012).

147 Ibid.

148 Canon, About Canon, Kyosei: Canons Corporate Philosophy, (last visited

27 March 2012).

149 Canon, Environmental Acvies, Policy and Structure, (last visited 27 March

2012).

150 Canon, Environmental Acvies, GRI Guidelines implementaon, (last visited27 March 2012).


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is examined by an external auditor.151 Tese external commentators are asked to use a part o the G3Sustainability Reporting Guidelines as the basis or developing their opinions, namely our reportingprinciples relating to dening the content o the report.152

Canon is listed in dierent sustainability indexes, such as the Morningstar Socially ResponsibleInvestment Index (Japan) and the Ethibel Sustainability Index Global (Belgium).153 On Canonswebsite inormation is included about its attempt to reduce CO2 emissions, setting up a consultationprocess with stakeholders and conducting environmentally-riendly manuacturing. Te CanonGroup Environmental Charter addresses the theme o maximizing resource efciency rom the dualapproaches o environmental assurance and economic activities. It considers overall product liecyclesand sets environmental assurance activities or the entire group.154 Relie activities and und-raisingcampaigns are carried out in regions aected by sudden disasters (earthquakes, heavy snowall, oods,typhoons, res).155 Te company is also active in recycling. For example, in Singapore it recently joinedother companies in a cartridge recycling project.156 A Cradle-to-Cradle philosophy was used to designthe newest generation Energy Star-compliant Canon devices which consume signicantly less energyin their manuacture, transportation and use. Te result o this is a smaller total carbon ootprint. 157Tese technologies have reduced CO2 emissions by approximately 11,000,000 tons and saved consumers350 billion Japanese Yen in electricity costs rom 2003 to 2010.158

5.3. Canons conicts

5.3.1. Stress-related illnesses

When trying to analyze the companys behaviour it was difcult to nd reliable independent articles.Nevertheless, one article rom 2007 deserves attention.159 In Canon Denmark a problem o stress-related illnesses occurred. Tese illnesses were the result o changes in the organization and increasingpressure to perorm. As this caused many problems or business managers, human resources (HR) andincreased the workload or other employees, Canon Denmark started to develop a policy to reduce stressin the workplace. While it was carrying out research or that policy, the government o Denmark alsostrengthened the anti-smoking legislation and the works council was demanding changes to a number oexisting policies. Te company realized that a specic stress-reduction policy was not enough and startedto examine not only its own, but the European and global Canon policies as well.160

5.3.2. Employees not allowed to sit down during working hours

Internet research also presented a couple o articles related to Canon Electronics Inc., a company basedin Japan, orcing its employees to stand during their work and demanding that they walk at a specicpace. As it was not possible to nd an NGO report on this topic or any other completely reliable source,this research is based on blogs and comments by alleged employees. In Hisashi Sakamakis theory(Representative Director o Canon Electronics) orcing employees to stand not only saves money butincreases productivity and enhances employee relationships.161 It can be called into question whether

151 Canon, Environmental Acvies, Third-Party Opinions, (last visited 27 March2012).

152 Ibid.

153 Canon, Environmental Acvies, External Corporate Assessments, (last visited

27 March 2012).

154 Canon, Environmental Acvies, (last visited 27 March 2012).

155 Canon, Social and Cultural Support Acvies, Humanitarian Aid and Disaster Relief, (last visited 27 March 2012).


157 Canon, Canon Business Soluons, (last visited 27 March 2012). See also W. McDonough & M. Braungart, Cradle to Cradle, 2002.

158 Canon, Environmental acvies, Reducing CO2 During Use, (last visited

1 April 2012).

159 Canon, Canon Denmark Health & Safety Policy and Iniave, (last visited 21 March 2012).

160 Ibid.

161 Canon, Canon Employees Are Forbidden to Sit Down, (last visited 21 March 2012).


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removing chairs enhances productivity in the long run. It is air to assume that people eel under pressurewhen they are not allowed to sit down or when they are orced to walk at a prescribed speed. Te previouslymentioned Canon Denmark case clearly showed that work-related stress has a negative eect on thewhole working process and that good management ocused on preventing stressul situations is crucial.Good practices rom one company should apply to the whole group. Te annual report should provideinormation on the way the company ollows best practices in its worldwide operations and this shouldwell exceed legal requirements.162 Clear conclusions on how this case was addressed, i addressed at all,cannot be made due to the non-ability o the author o this article to understand the Japanese language.But at the same time it points to a lack o transparency in reporting on this issue. An ofcial report romthe company would be appreciated as it is difcult to assess the situation rom an European point o view.

5.4. Canons CSR policies post-conicts

Tis chapter o the article ocuses on comparing Canons sustainability reporting on employee mattersbetween the years 2007 and 2010. Since its ounding, Canon has promoted Health First as one o itsGuiding Principles. Even in the Canon Inc. sustainability report o 2007 it can be read that Canon tookaction in preventing liestyle-related diseases. With the government enactment o health-promotingpolicies and laws, such as Health Japan 21 and the Health Promotion Law, liestyle checks and tests areperormed during periodic medical examinations. Based on these examination results, all Canon Groupcompanies in Japan have set common numerical targets with the aim o preventing liestyle-relateddiseases. Teir ocus was (and still is) on cholesterol and smoking rates.163

Canons experience in managing stress, rom the previously mentioned Canon Denmark case, hadconvinced the company to ocus on prevention, rather than the treatment o problems. A clear shi romreactive to proactive management was made. When looking through its webpage, this is now clearlyseen. Canon also took the opportunity to develop action-based policies. In August 2007 Canon launcheda new policy that covered topics such as: Work-lie balance, aging workorce, health and saety, stressmanagement, respect and tolerance, smoking, alcohol and substance abuse, nutrition and exercise. Someo these policies can also be measured. o ensure an appropriate work-lie balance excessive workinghours were constrained through the strict implementation o a no-overtime day. During 2009, an average

in-house ratio o 80% adherence to prescribed working hours on no-overtime days was achieved andthe number o total overtime hours worked per employee or that year was down by approximately100 hours rom 2008.164 On no-overtime days in 2010 the same 80% average o employees le workat the designated time as the year beore.165 Data can be ound or cholesterol and smoking targets andperormance. From 2004 to 2006, smoking rates dropped rom 33 to 30%, exceeding the goal o 31%.Te target o a 10% decrease regarding high cholesterol was not achieved; the report stated that it haddropped rom 11.7 to 11%.166 In 2010 the smoking rates dropped to 27.5% and high cholesterol to 9.2%.167For the aging workorce, Canon implemented a system or re-employing retired employees until the ageo 65. In 2006, 73 o the 211 who had reached retirement age chose or re-employment, and by the endo that year 177 were working under this system.168In 2010, 139 o the 234 employees who had reachedretirement age chose or re-employment, with 451 working under this system by the end o that year. 169

Te initial ocus o the policy in 2007 was stress management or all employees. It developed a series oseminars or employees on the topic. Concerning this issue it increased its ocus on so (i.e. non-cash)benets and managers competence coaching and leadership, it decreased the long-term absence rates,

162 See Lambooy, supra note 1, p. 151.

163 Canon, Canon Sustainability Report 2007, (last visited 21 March 2012).

164 Canon, Canon Sustainability Report 2010, (last visited 2 April 2012).

165 Canon, Respecng Human Rights and Creang Opportunies for Success, (last visited

2 April 2012).


167 Canon, Health Management, (last visited 2 April 2012).

168 Ibid.169 See Canon, supra note 165.


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it allowed HR to ocus on strategic workorce planning and development issues, it developed HR andmanagement competences, and it structured the approach to deal with stress. 170

Te sustainability report o 2011 mentions that Canon organised seminars or managers in Chinaand Vietnam and intercultural training seminars at operational sites in Europe. 171 In addition, researchshows that there has been a shi rom reporting on basic needs to reporting on intellectual improvement.Te Canon Europe Sustainability Report 2010-2011 shows its active encouragement or employees tohave a healthy work and lie balance.172 But greater emphasis is given to education, development andperormance. As almost three-quarters o the employees expressed their overall satisaction with workingor Canon,173 apparently Canon met their needs and it is time or Canon to set higher goals.

o sum up, in the case o Canon and CSR it is about meeting the legal requirements and alsoexceeding the minimum CSR standards. Tis brie overview has ocused on employee matters as problemsin other areas o CSR were not addressed in the available resources. Te case study presents a changein Canons CSR reporting rom a reactive to an active approach. Te Canon reports mainly emphasizeenvironmental reporting; however, that exceeds the scope o this article (as it does not mention issues).As Canon meets CSR standards it should be encouraged to go even urther as this is the area o the lawthat brings prosperity to society. Canons development should thereore never be nished.

6. Comparing the diferent case studies

Tis section will provide a comparison o the companies response to the conicts studied and whethersuch conicts had an eect on their CSR policy.

In order to compare the companies CSR policies it is important to recognise the distinction betweenthe our companies. Te parent companies o Apple, Coca-Cola and Walmart are based in the US, whileCanon is situated in Japan. Because the parent companies are based in dierent countries, dierent legalsystems and jurisdictions apply. However, the multinationals are US-listed companies on the NASDAQ(Apple) and NYSE (Canon, Coca- Cola and Walmart).

6.1. Reporting according to sustainability guidelines

Coca-Cola, Canon and Walmart have an extensive CSR report. Unlike Coca-Cola, Canon and Walmart,Apple does not publish a separate sustainability report but publishes inormation on the environment andsupplier responsibility on its website. Coca-Cola has committed itsel to a series o quantiable targetson which it reports on an annual basis. Te company reports using GRI G3.1 guidelines. Te report isveried by a third party. Although Walmart has a large sustainability report, it is the only company thatdoes not ollow the GRI Guidelines. Despite the act that Walmart does not have its sustainability reportexternally veried as a whole, the greenhouse gas emissions inventory and targets are veried by theEnvironmental Resources rust.174 For the publication on governance, the environment and suppliersresponsibility, Apple has also considered the GRI G3.1 Guidelines. For its Supplier Code Apple hasadopted the EICC guidelines, which provide guidelines on Labour and Human Rights, Health and Saety,Environmental Impact, Ethics and the Management System. Canon, on the other hand, is not a member

o EICC. For Canons sustainability report and the extensive inormation on its website, Canon has alsoadopted the GRI Guidelines. For a review o and comments on Canons sustainability report, Canon hasasked the external experts to ollow the GRI Guidelines.


171 Canon, Canon Sustainability Report 2011, (last visited 21 March 2012).

172 Canon, Canon Europe Sustainability Report, (last visited 21 March 2012).

173 Ibid.

174 Corporate Governance and Climate Change: Consumer and Technology. Retrieved from (last visited 22 June 2012).


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6.2. Te companies response to the conicts

As was illustrated in the case study on Coca-Cola, the company reacted slowly to the conict in India. Teinitial reactions o the company were limited to attempting to prove that some o the allegations againstit were wrong. Tus, Coca-Colas strategy was ocused on establishing a corporate image o integrity andon regaining consumer trust by, or example, addressing the conict and justiying its position in the

companys Corporate Responsibility Review o 2006. However, the damage that Coca-Colas operationshad caused was too severe to be solved through statements or attempts to be transparent about theconict. Even though some o Coca-Colas actions did not result in a violation o Indian laws such asthe claim that Coca-Colas beverages contained illegal levels o pesticides the reputational damage wasdisconcerting. Losing access to such an important market and allowing a stained reputation to aect thecompanys business in other locations (or example, at various University campuses in the US) overridethe costs o implementing a comprehensive CSR policy such as the one it now has.

According to legal analysts, Walmart is the most oen sued company in the US with an estimatednumber o 8,000 lawsuits being led against it so ar. 175 Such conicts have had adverse eects onWalmarts reputation. In 2004 McKinsey & Company prepared a condential report or Walmartstating that 2 to 8% o Walmarts consumers have stopped shopping at Walmart because o the negativepublicity.176 Also, when NBC News announced its report on Walmarts suppliers using child labour,Walmarts shares decreased by $2.375 in just two days.177 Te class action lawsuit o 2001 against Walmart,alleging gender discrimination in the workplace, received a lot o media attention. Despite the act thatthe lawsuit, i successul, would have been the largest o its kind in US history, Walmart responded tothe conict by ghting back and contesting the charges. But the Dukes v. Walmart Stores case did notproceed when the US Supreme Court reversed the case or being inconsistent with the legislation onclass actions. Nonetheless, Walmart took some steps to implement CSR measures and policies to preventdiscrimination. However, Walmarts emale employees have taken separate lawsuits against Walmart andhave led them in various states in the US that are still in progress.

In 1992 the media exposed the act that Walmarts suppliers in Bangladesh were using child labour.Undertaking audits on oreign actories was a corporate practice o the multinational. In its 2005 Reporton Ethical Sourcing, Walmart reported having increased audits rom 8 to 20% o the total audits. Tis

report also nds an increase in workers age violations by suppliers actories. Te company claimed inthe same report that the increase in violations was due to Walmarts adoption o more rigorous standards,including an increase in unannounced audits, and a reclassication o violations strengthening theirseverity although the rating criteria to determine what a minor and moderate oence are is not reportedby Walmart. Te company pledged to be using the audits on its suppliers to improve working conditionsin actories by, or instance, giving suppliers the opportunity to remedy the underage-related violationsinstead o breaking the business relationship. However, many still criticise the act that Walmartscorporate ideology consisting o oering low prices everyday is part o the source o the child labourproblem not only in Bangladesh, but along its entire supply chain. It is argued that Walmart, in its eortsto maintain operations costs as low as possible, is paying its suppliers too little to meet even minimalstandards.178

Te medias reports on the suicides at Foxconn, the underage labour and the poisoning o workers byn-hexane also had adverse impacts on Apples image. On 30 March 2012, the day aer the FLA publishedthe results o its investigation into Foxconn, Apples shares dropped by 1.69%. Apples response was toaddress these issues in a separate paragraph in its annual Supplier Responsibility Progress Report 2011.Regarding the underage labour, Apple stated that it demands that suppliers take instant remedies tosend the children back to school, to pay or their education, and to prevent the uture hiring o children.

175 T.A. Hemphill, Rejuvenang Wal-Marts reputaon, 2005 Business Horizons 48, pp. 11-21.

176 M. Barbaro, A new weapon for Walmart: a war room, New York Times,1 November 2005, (last visited 29 June 2012).

177 T.C. Hayes, Walmart Disputes Report on Labor, The New York Times,24 December 1992, (last visited 27 June 2012).

178 Nu Wexler, spokesman for Wal-Mart Watch, cited in Wal-Mart nds more violaons at foreign plants Internaonal Herald Tribune,

New York Times, 28 September 2006, (last visited 26 June 2012).


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Concerning the poisoning by n-hexane, Apple required Wintek to discontinue the use o n-hexane andto repair its ventilation system.

Te case studies o Apple and Walmart show that both companies suppliers were caught usingunderage labour. However, the companies had, at the time o the conicts, dierent policies on childlabour. According to Walmarts Code o Conduct Standard or Suppliers 2005, the minimum age oremployment or work shall be ourteen years o age. On the other hand, Apples Supplier Code sets a morestrict minimum age or employment. Te workers have to be een years o age, or the minimum age oremployment that is set in that country or the age or completing education in that country, whichever ishigher.

Canon appears to be a company with the least amount o problems. Although due to the lack osufcient inormation no strong conclusions can be drawn, there are three observations that can be madebased on what was ound. Firstly, in this research it became evident that, rom the our multinationalsstudied, Canon is the company with the longest history o implementing what we now reer to as CSR.Canon appears to be a company that is true to its Japanese origins with the corporate philosophy okyoseias part o its global corporate plan.179 Canons case could then be seen as ollowing a reverse path towardscorporate responsibility in comparison with the other three companies here studied. Instead o arguingthat conicts have a relevant eect on a companys CSR policies, it could be said that Canons long-

established ideology okyosei as part o Japanese culture is an important actor which drives responsibleconduct and prevents conicts. Tis hypothesis, however, would require urther research to nd ananswer and is beyond the scope o this article.

Secondly, it was ound in Canons case study that, even though the ew problems ound were notsevere, Canon seemed to be serious about the case o stress-related illnesses in Denmark. Canons approachto that issue appears to be more proactive in comparison to the other companies studied. Whereas othercompanies would have viewed stress-related illnesses as an insignicant issue, Canon viewed increasingemployees well-being as an opportunity to improve its policies both in Denmark and in its globaloperations; perhaps because reducing stress improves productivity. Tis could be a good example ohow having higher standards when assessing problems can prevent them rom becoming greater, or cansimply improve the company as a whole including its employees. However, we shall not try to claim

too much based on this single case. It is important to keep in mind that such a proactive approach wastaken by a subsidiary o Canon located in one o the richest and most politically-advanced countriesin the world. Perhaps such socially-responsible behaviour is not being observed by other subsidiarieso Canon in developing countries, where regulations and law enorcement are less stringent. But evenwhen taking such a precaution, it is still not clear why Canon has not experienced lawsuits or scandalousmedia attention like the other multinationals studied here have done. Tese puzzling observations couldbe an interesting topic or urther research that can potentially nd

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