From JournalNow.com, The Winston-Salem Journal, Richard Craver, 8 May 2011.
The annual shareholders meeting for Reynolds American Inc. serves as the intersection where capitalism and society meet, and often collide, for the company.
Groups protesting Reynolds’ policies typically buy shares to be able to speak to management.
As Reynolds evolves into becoming “a total tobacco company,” the meeting has gone beyond just reviewing the previous year’s performance to serving as a platform.
In recent years, Reynolds has discussed its stance on tobacco regulation, corporate social responsibility, annual board elections, marketing strategies and innovative smokeless products.
Reynolds has made stunning acknowledgments, such as in 2007 when it said “smoking causes serious disease” and that “no tobacco product has been shown to be safe.”
Overall, it’s a recognition that as fewer Americans smoke cigarettes — and the company’s revenues and workforce decrease accordingly — society and consumers are playing an increasing role in shaping Reynolds’ future.
For example, Reynolds’ decision to back off plans for high-end smoking lounges came after more communities instituted smoking restrictions in public places.
The decision to offer new smokeless tobacco products is Reynolds’ way to “meet the adult tobacco consumer where they are in society today,” said Maura Payne, a spokeswoman for R.J. Reynolds Tobacco Co.
The latest reflection of societal influences came Friday when Reynolds pledged to move forward on two initiatives related to the working and living conditions of the people who pick tobacco for suppliers.
Reynolds still stands firm behind a stance that since farm workers are employed by growers, not the company, Reynolds could not play a negotiating role.
Still, Thomas Wajnert, the chairman of Reynolds, said the company “understands the concerns to move quickly” on addressing worker conditions.
The first pledge is to use an independent, third-party monitor to assess the working conditions at U.S. tobacco farms that supply product to Reynolds.
The second is company support of a council involving tobacco manufacturers, growers, the N.C. Labor Department, agricultural scientists, farm workers and their representatives, such as the Farm Labor Organizing Committee, and possibly other stakeholders.
According to the N.C. Growers Association, FLOC represents about 2,000 farm workers in North Carolina.
The multi-party approach, previously suggested by Reynolds, also was promoted by Oxfam America in its recent report on the stark conditions facing some workers on state tobacco farms.
“We believe that Reynolds and FLOC can’t address unilaterally these conditions because they are broader than each group,” said Daniel Delen, who became Reynolds’ chief executive and president on March 1.
The reasoning: Without having regulatory and enforcement officials at the table, there may be no effective oversight of the standards on which the groups agree, and no real legal consequences if growers don’t adhere to the standards.
Reynolds has said growers must be certified with the Good Agricultural Practices training program before the company will buy their tobacco. Among the program’s features are guidelines on hiring practices, adequate housing for migrant and seasonal workers and practices on how to use pesticides safely and how to avoid green-tobacco sickness.
“We remain committed to doing our part in addressing the issue,” Delen said. “It’s the right thing to do.”
Stephen Pope, an industry analyst and the managing partner of Spotlight Ideas in England, said the effort to create the council could “cultivate good relations up and down their supply and value chain.”
“Reynolds and its peer group face so many pressures downstream in their value chain as they deal with the consumer and the regulator,” Pope said. “I see any progress as actually being a big statement from them.”
The company, however, remains willing to go only so far with its societal involvement.
For instance, management didn’t jump on the invitation of FLOC organizer Justin Flores to go visit North Carolina tobacco farms in its supply chain. The company again refused to enter into collective bargaining agreements for the farm workers.
“Every day of delay is a day when workers will be needlessly sickened because of the lack of safety equipment or of adequate clean drinking water, when workers will continue to be paid illegal sub-minimum wages, when they will have to endure squalid, unsanitary housing,” Flores said.
“Instead of being able to speak up to change these conditions, they will continue to be silenced by fear. This is an emergency that shames the entire tobacco industry.”
Pope said, “Of course, there will be parties that insist big business goes further and faster. However, sometimes in commerce a sequence of little steps can — given time — be as effective, and not as jolting, as a quantum leap.”
Pope said Susan Ivey, the company’s recently retired top executive, likely was aware of the initiative but probably didn’t make it a priority. “Delen has the blessing of a clean canvas, and so it is natural that he wants to have an active hand in this.”
The Rev. Michael Crosby, representing the Interfaith Center on Corporate Responsibility, said it will be “a huge effort” to get all the pertinent stakeholders on board, including other tobacco manufacturers. “Reynolds has committed itself to making it happen,” Crosby said.
“It’s up to us to keep their feet to the fire.”