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Management

Media scrutiny focuses on FTSE 100 firms

Thursday, 17 April 2008

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Exploitation of immigrant labour

Other concerns include lack of robust health and safety systems and the violation of human rights. The latter was particularly raised in relation to mining companies and their operations in countries with oppressive regimes.

Supermarkets and retail chains were mainly criticised for their practices in their supply chain. There were concerns over sweatshops and child labour and the failure to pay the minimum wage in certain developing countries.

Allegations also focused on illegal practices in UK supermarket packing plants and the exploitation of immigrant labour by gang-masters.

Another area of concern was a number of anticompetitive practices among supermarkets, including allegations of price-fixing.

An issue that received specific attention was the treatment of suppliers themselves. Particularly smaller supplier companies were reported to feel ‘squeezed’ by supermarkets and retailers, making it nearly impossible for them to run profitable businesses.

Expected to have higher standards of business conduct

Not surprisingly, companies operating in these three sectors are among the ten companies most frequently accused by the media of malpractice. Other companies in the ‘top ten’ were from the pharmaceutical, media and defence sectors.

Eighty per cent of these companies are in the FTSE 100. The media may be prone to singling out the big players in order to point out ethical failures common to the whole of their respective industries.

On the other hand, because of the power that comes with high market capitalisation they are often expected to have higher standards of business conduct.

Any irresponsible behaviour on their part may be met with particularly fierce criticism.

The IBE said that it was of concern that all of the ‘top ten’ companies have a code of ethics, and yet they are accused of behaving in a way that does not only contradict a certain set of societal values but also sometimes their own standards and stated values.

It shows that companies have still a long way to go to truly live up to their stated values and principles.

“Media reports on corporate malpractice make for good headlines. They will affect public opinion and thus can cause a reputation problem for companies. Companies’ ‘licence to operate’ depends on the trust that the general public place in them,” a spokesperson for the Institute of Business Ethics said.

Recent figures collected by Ipsos-MORI indicate that trust in business people remains very low at 26 per cent.

Because of this, addressing and responding to ethical concerns and allegations of misbehaviour is in their own interest as well as being the right thing to do.

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