One of the most persistent and challenging corporate responsibility issues for many global brands is how to manufacture products in contract factories in less developed countries while paying fair wages and maintaining acceptable working conditions for workers.

We recently wrote, for example, about the global giant Nike, whose three main product lines — footwear, apparel and equipment — are made in approximately 600 contract factories that employ more than 800,000 workers in 46 countries around the world.  In a corporate responsibility report published in January, Nike acknowledged that wage and working conditions issues remain problematic.

“While we can point to many examples of improvements, challenging issues remain for our company and our industry in systemically identifying and tackling how to affect long-term system-wide change,” the company said.

Now The New York Times reports in a lengthy feature story of a “high-minded experiment” at a factory in Villa Altagracia, Dominican Republic, that is a “response to appeals from myriad university officials and student activists that the garment industry stop using poverty-wage sweatshops.”

With 120 workers, the factory is owned by Knights Apparel, a privately held company based in Spartanburg, S.C., that is reportedly the leading supplier of college-logo apparel to American universities.  “Industry experts say it is a pioneer in the developing world because it pays a ‘living wage’ — in this case, three times the average pay of the country’s apparel workers — and allows workers to join a union without a fight,” according to the Times.

While that “living wage” is only $500 a month, the Times story reports on worker Santa Castillo, who says: “We never had the opportunity to make wages like this before…I feel blessed.”  Comparing this factory with others, union leader Maritza Vargas says, “the difference is heaven and earth.”

The experiment has been driven by Knights Apparel CEO Joseph Bozich, who, after being diagnosed with multiple sclerosis, decided that “I wanted to find a way to use my business to impact people that it touched on a daily basis,” according to the Times.

Another powerful factor has been Knights Apparel’s strong brand presence among college and universities, and a bet by the company that students will be willing to pay a premium for products made by workers that are treated well.

The economics of the business are illuminating.   Paying the 120 workers the “living wage” – or $500 a month – means the factory’s cost will be $4.80 a T-shirt, 80 cents or 20 percent more than if it paid minimum wage. Knights will absorb a lower-than-usual profit margin, selling the shirts for $8 wholesale, with most retailers marking them up to $18, according to the Times.

Knights Apparel developed its plan working closely with the  Worker Rights Consortium (WRC), an independent labor rights monitoring organization that works “to combat sweatshops and protect the rights of workers who sew apparel and make other products sold in the United States.”  The WRC has over 175 college and university affiliates.

Apparel makers Nike and Addias are board members of the Fair Labor Association, a collaborative effort that provides affiliated colleges and universities with information on the labor compliance programs of companies involved in the production of collegiate merchandise. The FLA says it has over 200 colleges and universities in the U.S. and Canada.

A Nike spokesman said his company would “watch with interest” the Knights initiative, according to the Times.

GlaxoSmithKline, Merck & Co. and Novartis are the top-ranked pharmaceutical companies in the second, and latest, Access to Medicine Foundation report.

The group's Index seeks to rank pharmaceutical companies based on their efforts "to enhance global access to medicines."

The Access to Medicine Index ranks 20 of the world's largest drug companies; the report said Gilead Sciences and Pfizer of the U.S. were "most improved" in the ranking while Bayer (Germany), Bristol-Myers Squibb (U.S.), Merck KGaA (Germany) and Novo Nordisk (Denmark) fell.

A separate ranking for seven generic drug makers was topped by Ranbaxy Laboratories and Cipla of India.  However, the generic analysis was hampered by "the general low level of disclosure and responsiveness to data requests," the report said.

The report is available here.

Wim Leereveld, chairman and founder of the foundation, said pharmaceutical companies since the earlier 2008 report "have shown far greater willingness to open up." And the greater openness "has brought to light increased implementation efforts."

The Index tracks 106 strategic indicators and seven technical areas. And it covers 33 diseases, up from 24 two years ago.

The rankings access performance in seven technical areas:
--general access to medicine management
--public policy and market influence
--research and development for index diseases
--equitable pricing, manufacturing and distribution
--patents and licensing
--capability advancement in product development and distribution
--product donations and philanthropic activities

Each technical area is then examined for commitments, transparency, performance and innovation.

The Index addresses the top 14 "Neglected Tropical Diseases," top 10 communicable diseases, and top 10 non-communicable diseases in the 88 countries classified as "Low and Medium Human Development Countries" at the United Nations.

The report cited particular problematic medical areas including:
--need for new pharmaceutical products to address neglected tropical diseases
--lack of viable markets for pediatric HIV/AIDS drugs
--need for more affordability of existing medicines
--need for more accessibility of existing treatments
--increasing health burden of non-communicable diseases including cardiovascular ailments, cancer and diabetes.

Here's a graph of the companies in the Index:

Access to Medicine Index 2010

Photo courtesy of the Bill & Melinda Gates Foundation / Brent Stirton

James Hyatt, a retired reporter and editor for The Wall Street Journal, has been writing about business ethics and social responsibility issues since 2005.

For many of us in the so-called developed world, the ability to turn on the tap for clean, fresh water to drink, cook and wash with is taken for granted.  However, for many others, access to a ready supply of disease-free water remains a distant dream.

The stark truth is that over a billion people have little choice but to use potentially harmful sources of water, causing 1.8 million people to die every year from diarrheal diseases, and contributing to the deaths of a further 1.3 million from malaria.

World Water Day

In an effort to tackle these serious and ongoing issues, the theme of today’s United Nations International World Water Day is “Clean Water for a Healthy World,”  reflecting the importance of water quality alongside quantity of the resource in water management efforts.

World Water Day is held annually on 22 March to focus attention on the vital importance of freshwater and promote the sustainable management of freshwater resources.

Global water quality is undergoing rapid decline, mainly as a result of population growth and rapid urbanization, as well as industrial activities such as the discharge of pathogens and chemicals into the environment.  This year’s campaign is aimed at raising awareness about sustaining healthy ecosystems and human well-being by encouraging governments, organizations, communities, and individuals around the world to actively engage in proactively addressing water quality.

Nestlé and Project WET

To showcase its efforts to increase awareness about water quality and sustainability, Nestlé Waters North America (NWNA) has chosen to mark this year’s World Water Day by highlighting its ongoing commitment to educate children about issues related to managing and protecting water resources.

NWNA is the largest corporate sponsor of Project WET, (Water Education for Teachers), an international scientific and educational program, aiming to educate children on the importance of water and the need to protect it.  The program uses hands-on investigations, demonstrations, science experiments, educational games and stories, to stimulate understanding of water resources.  Materials are used by schoolteachers to facilitate teaching their pupils on the topic and come in the form of "ready-to-go" teaching material.

Since 1997, NWNA support has enabled Project WET to train some 340,000 educators and reach more than three million children and 25 million students, in almost 50 countries, with education focused on important topics including water resource management, hydration and health, and environmental stewardship.

A "Water Neutral" Coca Cola?

Coca Cola and the U.S. Agency for International Development (USAID) used World Water Day to announce an additional joint investment of $12.7 million in their global partnership, the Water and Development Alliance (WADA), to support eight new multi-year programs throughout sub-Saharan Africa in Angola, Burundi, Ghana, Malawi, Mozambique, Senegal, South Africa, and Tanzania.  With the latest funding, Coca Cola said that a total of $28.1 million has been committed since 2005 to 32 WADA projects in 22 countries.

In 2007, Coca Cola pledged to become "water neutral" and return to nature all the water used by its bottling plants.  The pledge coincided with the announcement of a partnership with WWF to conserve and protect freshwater resources around the planet, including a commitment to help conserve seven freshwater river basins, support more efficient water management in the company's operations, and reduce the company's carbon footprint.

The company’s efforts focus on three main areas:

• Reducing the water used to produce its beverages;
• Recycling water used in manufacturing processes – returning all water used for global manufacturing processes to the environment at a level that supports aquatic life and agriculture by the end of 2010; and,
• Replenishing water in communities and nature – balancing the water used in its finished beverages.

In practical terms, the company says its partnership with WWF will see a Coca-Cola hydrogeologist working with a WWF scientist to design integrated watershed management tools and metrics to measure their impact.  It will also involve cooperation with a WWF expert on sustainable agriculture to support more efficient irrigation practices throughout its agricultural supply chain.

Conservation efforts will focus on seven of the world's most important freshwater river basins: China's Yangtze; southeast Asia's Mekong; the Rio Grande/Rio Bravo in the US and Mexico; the rivers and streams of the south-eastern United States; the water basins of the Mesoamerican Caribbean Reef; the East Africa basin of Lake Malawi; and Europe's Danube River.

Pepsi’s Water Challenge

PepsiCo, meanwhile, today announced new global goals to provide access to safe water to three million people in developing countries by 2015 “and to continuously strive for positive water balance in company operations in water-distressed areas.”

Since 2005, PepsiCo says the company and its foundation have committed more than $15 million to organizations working to bring safe water to developing countries, including India, China and Africa.

In India, PepsiCo says its beverage operations reduced water use in manufacturing by more than 45 percent and conserved more than 3 billion liters of water since 2007, thereby “achieving positive water balance – giving back more water than the company consumed.”

Reduced water consumption practices are spurring new technologies involving other natural resources, PepsiCo says.  In the U.S., the company has begun cleaning new Gatorade bottles with purified air instead of rinsing with water.  In the U.K., PepsiCo Walkers' business has already reduced water usage at its largest potato chip facility by 42 percent between 2001 and 2007. One trick: capturing the water that is naturally contained in potatoes and using it to make manufacturing facilities more water self-sufficient.

UNSHAKEN

Today’s World Water Day also sees the launch of UNSHAKEN, a charity: water campaign to fund long-term water solutions for areas of greatest need in rural Haiti.  In tandem with local partners, charity: water, a non-profit bringing clean and safe drinking water to people in developing nations, has been funding safe water and sanitation projects in Haiti for two years.

Since the earthquake earlier this year, more than a million people have fled the capital Port-au-Prince to the countryside, where they have minimal or no access to clean, safe water.  charity: water says that whereas a third of the nation previously lacked access to safe water, the impact of the quake has made the situation even more devastating.  As the rural communities continue to swell, so does the risk of deadly waterborne diseases. charity: water is committed to supporting long-term water and sanitation solutions in Haiti.

UNSHAKEN aims to raise awareness of the plight of Haitian’s by telling the stories of eleven areas that have swelled with those displaced since the earthquake and now need long-term water solutions more than ever.  Each region's story, complete with photos and GPS coordinates, will be published on the campaigns’ website. In the coming months, the charity also plans to raise $1.3 million to supply more than 40,000 people in these areas with clean, safe drinking water.

Prior to today’s official launch, the campaign has enjoyed considerable support from companies, including retailer Urban Outfitters, which is selling a custom Haiti relief T-shirt, designed by eco-brand Apolis Activism, to fund clean water for at least 1,500 people.

Collaborations and Potential Conflict

Even though businesses are launching initiatives like these, they are likely to continue confronting the pressing challenges posed by inadequate water quality.

One key emerging theme in the process is the number of global companies that have chosen to work in collaboration with charities and NGOs to more effectively reach out to local communities.  The strategy lends credibility to initiatives and enables businesses to tap into existing networks of support.  If managed correctly, such collaborative approaches can also serve to enhance the reputation of the participating company, not least via an association with organizations that often possess unimpeachable social and environment credentials.

However, such high profile commitments and pledges do not come without potential downsides for corporate and brand reputation.  Coca Cola, for example, has been the target of campaigning in India, where communities located in the neighborhood of manufacturing sites have complained of water depletion and pollution.  In early March, a non-profit activist organization, India Resource Center, said Coca Cola’s continued operations of a plant in water-stressed Kala Dera in Jaipur, India, “are nothing short of criminal.”

(Update:  Following publication of this article, BBC News reported that Coca Cola has been asked by the Indian state of Kerala to pay $47 million in compensation for alleged environmental damage at a bottling plant that was closed in 2005.   Coca Cola has insisted that the charges are unfounded.)

The opposition shows that, unlike carbon, the concept of “neutralising” water use is not well defined and presents a major challenge for the partnership.  This is because CO² acts globally on the atmosphere.  If a company emits carbon in one area and then offsets it by planting trees in another, perhaps on the other side of the world, the net result to the atmosphere and climate is neutral.  However, since water is very much a local resource, villagers faced with an empty well will take no comfort from the fact that the same amount of water has been pumped into a river on the other side of the world, like, say, the Rio Grande, one of the rivers included under the Coca Cola/ WWF watershed programme.

Whilst businesses should rightly be applauded for any efforts they make to combat the appalling problems caused by inadequate access to clean and safe water, many campaigners would also point to the pressing need for them to be ever more mindful of the impact their activities can have on the natural environment and some of the world’s most vulnerable people.

Andrew Williams (TheGreenExpert@btinternet.com) is a U.K.-based freelance writer.

Photo: Walter J. Pilsak, Waldsassen, Germany, courtesy Wikimedia Commons

Apple Inc.’s latest Supplier Responsibility report indicates the company has stepped up its audits and training at a number of locations around the world.

The report says the company conducted on-site audits at 102 facilities in 2009, up from 83 in 2008, and trained 133,000 workers, supervisors and managers, a sharp increase from 27,000 a year  earlier.

“During most of our audits, suppliers stated that Apple was the only company that had ever audited their facility for supplier responsibility,” the report declares. Its audits have involved facilities in China, the Czech Republic, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand and the U.S.

Apple’s code of conduct for suppliers covers expectations in five key areas: labor and human rights, health and safety, environmental impact, ethics and management commitment.

And the company has issued standards on a number of topics including dormitories, juvenile worker protections, medical non-discrimination, pregnancy non-discrimination, prevention of involuntary labor, wages and benefits, and working hours.

Apple said previous audits have revealed “a complex recruitment process” which has sometimes resulted in workers paying fees in excess of legal limits, in part due to fees involving third-party labor agencies helping recruit workers from other countries.

The company said it requires suppliers to repay overpaid fees and workers have been reimbursed more than $2.2 million in overcharges over the past two years.  Apple says its standard limits recruitment fees to the equivalent of one month’s net wages.

"Management Commitment" Gets Lowest Rating

It said it has found problems with suppliers in Taiwan, where companies often use contract workers from countries such as the Philippines, Thailand and Vietnam, and has conducted training and other programs to improve hiring practices.

Apple said its audits of 102 facilities last year included 22 repeat audits and 80 first-time audits.  Its summary of audit results indicated that the category of “management commitment” had the poorest results, with a 61%  rating for both compliance and for systems in place.

“Ethics” fared highest, 95%  in compliance and 86% with systems in place; labor and human rights scored 72% in compliance and 67% in systems; health and safety, 76% compliance and 74% systems.

Apple said audits turned up 17 “core violations” in 2009, including eight for excessive recruitment fees; three for hiring underage labor;  three for improper disposal of hazardous waste; three involved falsification of records.

Apple audits found 55 facilities that did not have “dedicated personnel accountable for compliance with all categories of Apple’s Code,” and it has required formal training programs for both workers and managers.

The company said it will “continue to terminate business when suppliers have repeat core violations or their practices suggest that they do not take our Code seriously.”

Kris Gopalakrishnan, Chief Executive Officer and Managing Director, Infosys Technologies, India, says it's important for  business leaders to establish a corporate values framework.

“Every company must define a framework for values, a framework for ethics, a framework for behavior of its leaders," he says. "Leaders must walk the talk, leaders must lead by example.  There has to be zero tolerance for values violations.”

You can watch the video here.

The old business maxim that “what gets measured, matters” is overused but nonetheless powerful, especially when applied to corporate responsibility:  when information and metrics are combined with disclosure and transparency, corporate posturing on issues that affect society can be quickly replaced with fact-based analysis and discussion.

One current example is Nike Inc.’s newly-published Corporate Responsibility (CR) Report for fiscal years 2007 to 2009. It’s a slickly-produced multimedia display of data and information - in fact, Nike says, an independent panel of stakeholder advisers at one point concluded the volume of information contained in the 176-page written report was so “overwhelming” that it required a rewrite.

“This report is published at a tipping point. It’s time for the world to shift,” Nike CEO Mark Parker writes in the report’s introduction. “We see sustainability, both social and environmental, as a powerful path to innovation, and crucial to our growth strategies.”

That’s a huge change from the 1990’s, when Nike was a poster child for corporate villainy stemming from sweatshop labor practices in Southeast Asia factories.  Since then, the company has charted a very different course in corporate citizenship and, in many important respects, has succeeded.

Grappling with Issues

This latest report places a big focus on environmental sustainability, with Nike sharing its vision of “reaching a closed-loop business model where the goal is to achieve zero waste in the supply chain and have products and materials that can be continuously reused  – no pre- or post-consumer waste.”

What’s most interesting about the report, though, is that you can see Nike grappling, in public, with some tough choices.  The narrative demonstrates what can happen when a company begins reporting regularly and in-depth, and with an apparent commitment to intellectual honesty, about core issues.

For Nike, labor and human rights continue as a top priority and corporate worry.   The company’s three main product lines  — footwear, apparel and equipment — are made in approximately 600 contract factories that employ more than 800,000 workers in 46 countries around the world.  Nearly 60 percent of the work force is in North Asia, 31 percent in South Asia.  One major difficulty is that contract apparel factories generally produce for multiple brands, making it a difficult to maintain standards.

To listen to Nike, monitoring those contract factories for working conditions, wages and overtime – and a host of other issues, including possible unionization – is not easy.  “While we can point to many examples of improvements, challenging issues remain for our company and our industry in systemically identifying and tackling how to affect long-term system-wide change,” the company says.

“In evaluating where our targets fell short, we saw a consistent pattern: a focus on auditing against a set of criteria sometimes results in on-the-ground improvements for workers, but it rarely produces systemic change in the area of concern,” Nike says. “On further reflection, we realized that, if we want to make sustainable improvements for workers, we need to significantly change the way we engage and interact with our supply chain as a whole.”

One potential solution, Nike reports, is collaborating with other brands on factory audits and, maybe more importantly, working with competitors on developing remedies for labor problems as well as standardized codes. And then there are improvements that can be made by Nike alone.  Example: “Asking factories to manufacture too many styles is one of the highest contributors to factory overtime in apparel. We have an opportunity to reduce this pressure by reducing the number of apparel styles and partnering with the factories to improve efficiencies through lean production methods.”

Increased Reporting

There’s more detail in the Nike report than most any layman could digest and understand, and Nike critics – such as Oxfam’s Nike Watch, and a new activist initiative, TeamSweat – are likely to find weaknesses. That’s as it should be.  No one should be satisfied simply because the company has issued a report, even one chock-a-block with narrative, charts and bar graphs.

Some critics of corporate responsibility reports believe they can’t help but be self-serving.  And, in fact, more companies are reporting.  Sixty-six of the S&P 100 firms produced a formal sustainability report with performance data in 2008, a 35 percent jump from the 49 reports produced in 2007, according to a report from the Sustainable Investment Research Analyst Network (SIRAN), a working group of the Social Investment Forum (SIF). However, the SIRAN survey found that only six S&P 100 firms publish complete sustainability reports that meet the highest “A” level reporting standard set by the Global Reporting Initiative.

In the end, it’s difficult to see how more reporting can’t help, as long as it’s done well.  Nike’s latest effort is a good example of how the process can lead to data being gathered, metrics developed and performance benchmarks set.  The process grew out of Nike’s public floggings in the 1990s, says CEO Parker, when “we learned to view transparency as an asset, not a risk.”

As a teen in 1984 (in the waning days of the brutal and corrupt "Baby Doc" regime), I spent a day wandering near-blind through Port-au-Prince, Haiti, searching in vain for a pharmacy to replace the contact lens cleaning solution that was in my luggage that the airline had lost. It strikes me that most people's understanding of the socio-political complexity of Haiti (including my own) is about as clear as my vision was then: fuzzy at best. Yet we are all now confronted with the moral question of how best to respond to the January 12 earthquake (which measured 7.0 on the Richter Scale) that struck this already-vulnerable island nation.

I was there to visit the Hôpital Albert Schweitzer (HAS) in Deschapelles in the Artibonite Valley, the poorest region in the Western hemisphere, where my dad was volunteering on surgical rotation from Yale. There, I interviewed the hospital's founder, Larry Mellon of the wealthy Pittsburgh family, who in his 40s had forsaken his high-society life to attend medical school (along with his wife Gwen) so that he could tend to the "poorest of the poor" in Haiti. One thing he said imprinted itself deeply on my conscience: he insisted on charging all patients at least a nominal fee, not because the hospital needed the money (though it did), but primarily to allow patients to maintain dignity and self-empowerment, instead of submitting to charity.

Bill Baue

Mellon's words returned to me years later, reading Tracy Kidder's Mountains Beyond Mountains about another doctor committed to caring for the poorest of the poor in Haiti: Zanmi Lasante (or Partners in Health in Haitian Kreyol) founder Paul Farmer scorned the practice of charging these destitute patients (though he didn't name Mellon or HAS): "I'm going to build my own fucking hospital. And there'll be none of that there, thank you." And Clinique Bon Sauveur was born in Cange in 1985, thirty years after the founding of HAS and the damming of the Artibonite River, a "development" project that effectively diverted water needed in the Artibonite Valley to Port-au-Prince.

In the current state of emergency and disaster, donations of cash and vital resources are now imperative for humanitarian relief - the United Nations called for $562 million for humanitarian operation in Haiti. In a Miami Herald op-ed, Paul Farmer urged donors to prioritize cash donations, and limit in-kind donations to those supporting vital aid functions, such as water, medical supplies and personnel, and, perhaps most importantly, coordination support.

The corporate community is stepping up to fill these needs, with $83.2 million donated by January 19. For example GE pledged $2.5 million, Becton, Dickinson $1.2 million, and Avon, UPS, Royal Caribbean, Abbott, and PepsiCo each pledged $1 million. In addition to giving cash, many of these private sector donations include much-needed resources, such as medical supplies from BD and Abbott, transportation and logistics from UPS, supply delivery from Royal Caribbean, and water from PepsiCo. The nonprofit sector is similarly stepping up - for example, AmeriCares airlifted $6 million in medical aid, along with a team of relief workers, PSI (Population Services International) shipped millions of liters of safe drinking water, and National Nurses United deployed 7,500 registered nurses to Haiti for disaster relief.

Companies are shifting their normal operations in order to help by providing cash and on-the-ground resources and coordination. For example, CSRwire, PR Newswire and Marketwire waived distribution fees for news releases related to the Haitian earthquake, Cablevision extended free calling to Haiti, and Visa is scaling back its income from donations for Haitian earthquake relief by donating revenues from these contributions directly to the American Red Cross, and also waiving interchange fees on donations made to certain charities.

Such actions expose companies to criticism. For example, MoveOn.org launched a petition for credit card companies to waive all fees on charitable donations, and Cory Doctorow pointed out the irony that Royal Caribbean delivered not only 40 pallets of relief supplies, but also a boatload of tourists to frolic at Labadee, a private beach leased from the Haitian government that is sixty miles from the earthquake's epicenter. The company contends that the tourism brings much-needed revenue to Haiti, and the company is further donating all its proceeds from the visits to the relief effort.

Which brings us back to the thorny question of the role of charity in solving endemic problems. In the face of such a disaster, all charity plays a key role in relieving the acute suffering - the main question is, how best to coordinate donations for the most effective, targeted outcome. As necessary as it is to focus our vision closely on the immediate scene, though, what happens when we step back to look at the bigger picture? In a New York Times op-ed, David Brooks widened his perspective to point out that the 1989 San Francisco quake (which likewise measured 7.0 on the Richter Scale) killed 63, while up to 50,000 are feared dead from the Haitian quake. Accordingly, he called the Haitian earthquake less a "natural disaster story," and more of a "poverty story."

His solution? Not international development, which Brooks likens to "throwing money" at the problem, nor even micro-aid, which he considers effective though limited in reach - but ultimately, he throws his weight behind what he calls "intrusive paternalism," where benevolent local leaders adopt "middle-class assumptions, an achievement ethos and tough, measurable demands." This "father knows best" approach seems to suffer from the same tunnel-vision of solutions imposed on Haiti since time immemorial, this time viewing the problem through red, white and blue colored glasses. UN Special Envoy to Haiti Bill Clinton seeks to support Haiti to "build back better" after the earthquake. The question is whether this effort will give room for self-empowered Haitians to identify and redress systemic, symptomatic problems, or whether it will continue to wander near-blind through the haze, or perhaps worse yet, gaze through lenses obscured by benevolent paternalism.

Bill Baue is Executive Director of Sea Change Media, and Executive Producer/Host of Sea Change Radio, a nationally syndicated show with a global podcast audience.  This article was first published on CSRWire.

In a victory for activists focused on the genocide in Darfur, TIAA-CREF said it had sold $58 million in shares of four Asian oil companies -  PetroChina, CNPC Hong Kong, Oil and Natural Gas Corporation and Sinopec - while maintaining its investment in PETRONAS, a Malaysian oil and gas company that has agreed to continue talks with the investment firm about conditions in Sudan.  "Our decision to sell shares in these companies culminated a three-year effort to encourage them to end their ties to Sudan or attempt to end suffering there," said Roger W. Ferguson, Jr., TIAA-CREF's chief executive.

The divestment is likely to put pressure on other large asset managers to take similar action.  In March 2009, as the result of pressure on the firm by its own shareholder activists, TIAA-CREF announced plans to intensify pressure on the five companies that maintained business relations with the government of Sudan.

"TIAA-CREF is the first large, mainstream financial services company to take a public stand supporting the overwhelming majority of Americans who do not want their savings and pension funds connected to genocide," said Eric Cohen, chairperson of Investors Against Genocide, a non-profit group. "TIAA-CREF's commitment to act sets a higher standard for the entire financial services industry."

Cohen contrasted TIAA-CREF's actions with those of Vanguard, another asset manager which also announced a human rights policy in March 2009.  According to Cohen, Vanguard's holdings of PetroChina and CNPC have increased since the announcement.  "While TIAA-CREF honored its commitment to divest when the problem companies did not show significant progress to help end the genocide, Vanguard promoted a toothless policy which gives them the appearance of doing the right thing while actually doing nothing," said Cohen.   Other large shareholders in PetroChina include American Funds, Franklin Templeton and Fidelity, according to Investors Against Genocide.

TIAA-CREF said its corporate governance policies set a "high bar" for divestment, including "the gravity of TIAA-CREF's concerns in Sudan, the likelihood of successful dialogue with target companies and a conclusion that divestment would have an insignificant impact on the financial performance of participants' portfolios."

Since the conflict in Darfur, western Sudan, began in 2003, an estimated 300,000 people have been killed and 2.6 million displaced from their homes, according to Amnesty International.  The U.S. government has said the Darfur conflict constitutes genocide.   In December 2007,  President George W. Bush signed the Sudan Accountability and Divestment Act, which authorizes state and local governments to divest assets in companies that conduct business operations in Sudan and prohibits U.S. government contracts with such companies.

Microfinance has emerged in the last half century as a powerful force for economic development. According to the World Bank, microfinance institutions serve about 160 million people in developing countries.  The theory is simple: with even extremely small loans, the poor can develop income-generating businesses and take steps toward self-sufficiency.

But now there comes a warning: microfinance may be experiencing a credit bubble, with serious consequences for the very people it is intended to help.

The warning comes from Oikocredit, an organization that provides loans to about 500 microfinance institutions in some 70 countries around the world.  In a news release, Oikocredit warns:

The threat of poor entrepreneurs taking on too much loan debt is a growing reality, and a genuine threat to the rapidly expanding microfinance sector. At Oikocredit’s annual staff and board meetings, regional managers who operate in almost 70 different countries, raised concerns over the rate of over-indebtedness in some countries. Those working in the field have witnessed that cases of over-indebtedness are becoming more common

The scenario is akin to the one that's been played out in the developing world, with disastrous economic results over the past year.  Like banks and financial firms in the developed world, microfinance organizations need to grow to be sustainable - and that has led to unhealthy competition, Oikocredit says.

In some cases, especially with the entrance of profit driven actors, this leads to an increase in competition and results in institutions reaching out to the same clients in the same (often urban) areas. Oikocredit Regional Directors reported stories of clients with loans by more than two, three or even five different microfinance institutions. The over-indebtedness of clients, and sometimes abusive collection practices, can often be a consequence of this multiple lending.

“Credit is a stepping stone out of poverty - as long as repayment is possible. If repayment becomes an insurmountable burden, a client becomes over-indebted. We do not want MFIs and their clients to fall into this trap. Organizations providing funds have an extremely important responsibility,” said Oikocredit Managing Director Tor Gull.

Oikocredit said its staff was taking a number of steps to address the issue, including contacting leading national and international organizations and networks. "The negative consequences of competition can only be effectively solved through agreements on a national level and joint initiatives," Oikocredit said.