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CyberActivism

Click here to tell 'em what you really think

Julie Macken reports in the The Australian Financial Review, June 2000. Includes quotes from Sean Kidney.


In this cyber age, companies that ignore public criticism do so at their peril. For the internet has made it possible to organise campaigns of global protests and boycotts with far-reaching results.

In the 21st century, there's nowhere to run and nowhere to hide.  As far as Corporate Australia is concerned, the news from the battle for Seattle is all bad. Those dreadlocked hippies, eco-warriors and union bad boys who brought the World Trade Organisation talks to a standstill aren't going anywhere. And, as the saying goes, ``They know who you are, and they saw what you did".

Unfortunately, while the cyber counter-culture steps up its campaign of global protests and consumer-led boycotts, and the union movement becomes au fait with shareholder activism, Australia's corporate community is keen to dismiss these new forms of protest as minor blips on an otherwise clear radar.

However, according to several strategists and financial experts, companies maintain this fantasy at their peril. They argue that the good old days of closed-door negotiations, conducted in a value-free environment, are over for good.

For the past 10 years, the corporate sector has been playing with the notion of corporate social responsibility biting off the easy bits of the bottomline agenda, while avoiding the issue of transformation. Yet transformation is the only option available if business wants to maintain access to free trade and its licence to operate, according to Sean Kidney, director of Social Change Media.

``Corporations used to work hard to control the flow of information about themselves, their practices and their products," Kidney says. ``As a result of the internet, this is now impossible. Every company is porous, every organisation leaks. If a company is behaving badly, behaving with ignorance, they will be found out and they will become a target for activists." That kind of targeting could take several different forms, ranging from the direct action seen in Seattle last year chairs through windows and graffiti-daubed exteriors to the relatively civilised approach now taken by unions and environmentalists as shareholders in publicly listed companies. However, variations include ``flamming" internet chat rooms, ``spamming" company internet sites, or creating websites to publish information about a targeted company.

A local example of the latter form of protest was seen recently when a small business proprietor launched a site at www.pacmark.com. Chris Moloney, director of The Minister For Chocolates, had been unable to make headway in his log of claims against Nestle, a company with which he had been doing business for some years. When mediation broke down, he posted his story, along with documentation of the dispute, on the internet. When the media stumbled upon it, Nestle executives began fielding calls about the nature of the dispute. Within a week the company had settled with Moloney. Having endured a grassroots word-of-mouth campaign against it during the 1980s and 1990s, Nestle is a company that knows all about consumer boycotts. Its move to introduce evaporated milk into several developing countries led many women to stop breastfeeding their babies and use Nestle formula milk instead. Due to a lack of sterilisation facilities, a number of children died from gastro infections. An informal, though widespread, boycott of Nestle's products ensued.

While that boycott took years to gain the critical mass necessary to make the company take action, the internet now makes that possible in a couple of months.

Any search for Coke, Nike, Gap, McDonalds, UNACOL, Shell or Starbucks on the internet will call up the companies' official websites along with the protest sites, invariably called ``What Coke/Nike/Gap etc don't want you to know". In this way, a company's investment in its own site is subverted, and would-be customers or clients are able to link up with protest sites, opening a Pandora's box of potential activity.

This level of connectivity in turn creates electronic tribalism. Given that the above brands attract consumers by offering a lifestyle and attitude as much as a sneaker or soft drink, activists co-opt this dynamic by offering the consumer an anti-brand lifestyle and attitude. For the advertising literate and cynical youth of the first world, hip becomes everything the major brands are not.

Nor is this form of protest easy to combat, as the now infamous McLibel case demonstrates resistance can be less than futile. Closer to home, this month's appearance of Nike in the Federal Court for an alleged breach of the clothing workers' award will once again bring into question the company's employment practices. Annie Delaney, outwork co-ordinator for the Textile Clothing and Footwear Union of Australia, says the charge centres on Nike being accountable for those who carry out its work and the conditions in which they work. ``We will be asking the court to impose substantial penalties on Nike for their [alleged] breaches and a financial penalty as a deterrent to other companies," she says. ``There are over 300,000 outworkers in Australia who are grossly exploited."

Whatever the outcome of the case, Nike will be forced to fight a rearguard action on the public relations front an action that is already costing it millions in marketing and advertising.

While the courts have been the union movement's traditional place of contest, and strike action their modus operandi, recent forays into the world of shareholder activism have already produced results.

On March 8, a campaign by a global coalition of union shareholder activists was launched simultaneously in London, Washington and Sydney. Their target was the mining giant Rio Tinto.

At the company's AGM last month, the unions were able to get almost 20 per cent of the votes to support their resolution calling for changes to Rio Tinto's board structure to increase the power of non-executive directors. Another 17.6 per cent of shareholder proxies were cast in favour of the union's resolution that would have required the company to commit to observing International Labor Organisation conventions.

According to John Maitland, national secretary of the Construction Forestry Mining and Energy Union, the success of this campaign has guaranteed the continued use of such tactics.

``This kind of activism has been going on in the [United] States for some time, and our American comrades assure us that we have secured an impressive result," he says. ``As president of the Federation of Chemical Energy Mine and General Workers Union, an international body that represents over 20 million workers, I guarantee that everyone will see a lot more of this kind of activity in the future."

However, the union movement is not the only organisation of concern for corporations.

On June 14, the United Nations Development Programme announced that it had cancelled plans to create a Global Sustainable Development Facility. The GSDF was to be a partnership between the UN and 15 global corporations, including Dow Chemicals, Rio Tinto, Novartis and energy conglomerate ABB. The UN plans were derailed after a year-long campaign by activists and non-government organisations such as the Transnational Resource & Action Centre. According to Joshua Karliner, executive director of TRAC, criticisms of the GSDF included, ``associating with bad corporate players, an over-emphasis on the free market ideology of globalisation and development, the danger of `bluewash' by corporations hoping for public relations benefits from wrapping themselves in the UN flag. And a failure to abide by the agency's own guidelines in associating with private companies". Nor will this be the end of the matter as far as the activists are concerned, according to Karliner. ``Even with the end of the GSDF, we will remain vigilant in tracking other UN corporate partnership programs. We will also continue to advocate for the UN to monitor corporate behaviour rather than partner with these transnational giants."

While the sharemarket has long been seen as the ``Evil Empire" by environmentalists and unions, the emergence of ethical investing or screened investments has challenged this preconception. According to the US-based Social Investment Forum, screened investments are ``an approach to investing that integrates personal values and societal concerns into the investment decision-making process".

In the US, socially responsible funds make up 13 per cent of total US funds invested and are valued at $3.5 trillion. In the UK, they're valued at $6.3 billion. However, with changes to the UK Pension Funds Act coming into effect on July 1, this figure is set to climb. These changes include a demand that all funds declare their ethical framework or the lack of one. According to one financial investor, UK fund managers are scrambling to claim the high moral ground in the light of such disclosure.

For example, UK fund manager Prudential is set to introduce screening on its £140 billion ($350 billion) investment portfolio. This portfolio represents a sum approximating 85 per cent of the total pool of Australian superannuation savings.

Australian fund managers have traditionally seen ethical investments as a marginal issue of little value to the bulk of their clients. However, with the HESTA superannuation fund leading the field with its environmental investment product, Eco Pool, both AMP and Westpac are now considering the development of similar products.

According to research by Erik Mather, senior manager of screened investments at Westpac, environmentally screened investments have the potential to be an asset class of high return potential, with a risk level similar to that of Australian shares.

Ecos Corporation

In 1998, Ecos Corporation conducted a survey of environmental performance for 150 Australian companies. The questionnaire sent to companies included 19 variables, covering areas such as environmental policy and programs, eco-efficiency, products and services, and stakeholder engagement. Ecos then ranked these as ``good", ``fair" and ``poor" environmental performers. Westpac back-tested the portfolio and found that from 1990 to 1998, the 21 stocks ranked as ``good" outperformed the All Ordinaries Index by 4 per cent.

According to Mather, the reason for this is simple.

``If a management team has thought through the consequences of its actions on the environment, it makes sense to presume they're in the habit of thinking through their actions on all levels. In short, they're probably a very good management team."

Mather and Kidney agree that ethical investments will assume even greater importance when the changes to superannuation are passed through parliament and employees are able to nominate the super fund of their choice.

``This is not just about employees being able to vote with their dollars," says Kidney. ``It's also a wake-up call to corporate Australia. If they want people and super funds to invest in their business, they had better make sure their business is on the side of the angels, or the money just won't follow them."

First published in the The Australian Financial Review, 19 June, 2000.
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