CSR in the Textile Industry

Saw this very interesting article in the China Daily, which highlights steps taken by the top Chinese textile firms to improve their CSR practices and reporting. From this report, it does appear that it's not just window-dressing, as sometimes these things tend to be, because the steps indicated--improvement in working conditions, fairer wages, more efficient use of energy--all are substantive initiatives that clearly show the integration of CSR within operations.

Interesting to note that not a single Pakistani textile firm has signed up to the UN Global Compact (UNGC) network. While membership in the UNGC is not the ultimate test of commitment to CSR, it is a telling indicator.

Will Pakistan's textile industry take note of what their Chinese counterparts are doing?

Souring the Deal? CCP Claims Existence of a Sugar Cartel

Fresh from the traumatic ups and down suffered at the hands of the government as mentioned in a previous post, and smack in the middle of a perennial sugar crisis, the Competition Commission of Pakistan (CCP) appears to be back in full swing, claiming in a report submitted to the Supreme Court of Pakistan, that the preliminary results of its investigations into the sugar crisis pointed to 'collusive behaviour and prima facie cartelisation'. Snippets of the report can be read in this news story in the daily Dawn.

Interestingly, the CCP website also carries a Policy Note on the alleged Price Fixing Agreement between the government and the Pakistan Sugar Mills Association (PSMA), allowing the fixing of prices at certain rates. In this Note, the CCP advises the government to scrap the Agreement since it amounts to 'legitimization of practices prohibited under law' and urges it to 'not provide any patronage to anticompetitive practices and measures that in effect promote and encourage collusive behaviour'.

All this brings three questions to the fore:

1. How responsibly are the Boards of the sugar companies, almost all of whom are listed companies on the country's bourses, acting?

2. What role has the Securities & Exchange Commission of Pakistan (SECP) played so far in reviewing corporate practices that another regulator is tagging so publicly as inappropriate and illegal?

3. With all and sundry apparently wanting to sweeten the deal for the sugar barons, will anyone in government pay heed to the CCP's advice?

Paying the Price of Confronting Pakistan's Cement Cartels?

I am thankful to Salman Naveed Khan, CEO of One Tree Hill, an integrated solutions firm based in Lahore, for pointing out to the news about the recent judgment of the Competition Commission of Pakistan (CCP), which concluded that 20 cement companies had formed a cartel; a heavy $77m financial penalty was also imposed by the Commission on the guilty companies.

Almost immediately--and somewhat predictably--after the judgment was announced on 27 August 2009, the Chairman of the CCP, Khalid Mirza, was sacked. The Prime Minister himself has denied that the judgment itself was the reason for the ouster and in a fairly bizarre move, overturned the order of termination of Mr. Mirza's contract and restored him for one month. This is the second time that Mr. Mirza, an ex-World Bank senior manager, has been shown the door because of what appears to be a principled and professional stand; his stint as Chairman of the Securities & Exchange Commission of Pakistan was also cut short, despite improvements he brought about in the institution.

Without going into details of this flip-flop decision making, the incident does send a poor signal to the regulators and also reflects on the immense political influence that the business community wields. As indicated in the judgment (click here to download it or go to www.mca.gov.pk--makes very interesting reading on how the business operates to the detriment of consumers) the cement industry has been notorious for its tendency towards cartelisation and has been found guilt twice before: in 1992 when the CCP's predecessor, the Monopoly Control Authority (MCA) found that cement companies had formed a cartel in the wake of the post-floods reconstruction; and in 1998, when the MCA determined that a cartel was formed to hike the price of cement by nearly 100%. This history aside, the fact that the regulator was willing to confront the business community for engaging in uncompetitive practices was an act that needed to be backed by the government. I am willing to believe that by appointing a professional like Mr. Mirza, the intentions of the government were nobler than they might appear to be in the wake of the recent charade, but commitment requires appropriate action to give it credibility; when put to the test, the government seems to have balked. The government would also be bucking the global trend, which has witnessed regulators eschew liberal, unregulated-economy models for a more balanced, stronger regulatory regime.

If the government does indeed back down and the judgment is not enforced or a compromise arrived at with the cement industry, aside from Mr. Mirza, it is the consumer who will be paying the price of confrontation. Wonder if the government ever considers that when taking such politically motivated decisions?

Participant's Death in Unilever's Reality TV Show: Who's Responsible?

The sad and tragic death of Saad Khan, a 32 year old contestant in a branded Reality TV Show that was intended as a promotional tie in for Unilever's Clear Shampoo, raises questions of where corporate responsibility begins and ends. The TV show, managed by media agency Mindshare and apparently produced by Mumbai-based production house Working Hands Production, was being filmed in Bangkok, when Saad drowned in a pond while performing a diving stunt, on August 19th.

The news of the death was first broken by Aarpix, an online ezine. In the aftermath of the anger, sadness and outrage that poured across the internet against Unilever Pakistan, the company's response was slow and predictable. Claiming that they had no role in the production of the show (which is true) and thus distancing themselves from any liability as regards the participant's death, Unilever did state that they were is in discussions to provide for Khan’s wife and four children ‘out of rightness.’ My old friend Fareshteh Aslam is the External Communication Manager at Unilevers and I'm confident that she will see this expressed commitment through. However, I do wish that her official response had been couched in more sensitivity than it appeared to be. I'm also disappointed that there was nothing on their website about this event. Ditto with the Pakistan Advertising Association and Mindshare.

Since all facts relating to the incident (for e.g. what legal documentation and safety precautions were in place) are not yet known, it would be unwise to speculate over what happened. What is clear though, is that the unfortunate event brings to the fore issues of responsible advertising, with the argument of sponsors--in this case Unilevers--being equally responsible for what their agencies and production partners do. To draw an analogy with the manufacturing industry, if Nike can be held responsible for ensuring good and decent work practices down their supply chain, why shouldn't sponsors of ads or branded TV shows be held similarly accountable?

Will follow this story as it unfolds and report here, but there is a need to build up public pressure for ensuring disclosure on the event. I've created this online petition which you can sign. Spread the word.

Meanwhile, spare a thought for the family of the departed and if you want to, visit this online condolence book set up by Aarpix.