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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Ethics: Report slams US tobacco child labour

C. HUYGENS - Wednesday, May 14, 2014
Companies producing tobacco products have come to terms with society; in exchange for contributing to the tax bases of the reigning authority and relative transparency into the health effects of their products, they are accepted as commercial members in good standing. Alas, beyond safety, there are five other key issues that matter. One of them is ethics - child labor to be exact.

According to the Financial Times, a Human Rights Watch report on the US and the world’s biggest tobacco companies discloses young children are working 12 hour shifts in dangerous conditions. "The report highlights an area of reputational risk for an industry that is already spending billions of dollars a year complying with a patchwork of national and international regulations."

For companies now investing $millions into compliance solutions, the Human Rights Watch compliance standard should be disconcerting. Mere documentation of compliance standards is not good enough. Fostering conformance with compliance standards is, well, the new standard. “The burden falls on [the companies] to say that this isn’t happening on their farms.”

The report is not pure opprobrium, and credit is given for good effort. According to the Financial Times, "Human Rights Watch cited Philip Morris International, which sells Marlboro, L & M and Parliament outside the US, with creating 'the most detailed and protective set of policies and procedures' on child labour."

The credit given by HRW appears to mirror credit given by Philip Morris' other stakeholders. As shown in the reputation metrics below, the firm's Reputation Premium relative to its peers is top of the heap with the firm ranking #1 out of 13 companies in the Tobacco peer group. Not that PM should be complacent. The relatively high Consensus Trend indicates not all stakeholders are sure they know the company or agree on its reputation value. Some, perhaps not being used to compliments from HRW, may fear the news is too good to be true.

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