Monday, February 25, 2008

After the Oscars...

We hope you enjoyed watching the Oscars yesterday. And depending on what country and station you saw them in, we hope you were not driven quite as crazy as we were by the subjection to endless commercial breaks every two minutes (What do all these ads about skin care products tell us about the viewers of the show, btw.?). Anyway, good to see that two of the films we talked about last week actually made it: Tilda Swinton for best supporting actress in ‘Michael Clayton’ and Daniel Day-Lewis for best actor in ‘There Will Be Blood’ (which got another one for something we forgot…).

Meanwhile, in a similar vein, the Corporate Responsibility Officer (CRO) organization in New York recently came up with their very own list of ‘Oscars’. It’s awarding the most responsible companies in the US, the ‘100 Best Corporate Citizens’. In its ninth year by now, the list ranks the biggest US companies according to a wide set of criteria, such as climate change, environment, human rights etc.

It’s is an interesting read in many ways. First of all, for who is on it. Intel Corp. is No 1 – fair enough, they do all these neat and clean electronic gadgets - fine. Or John Deere (No 4), they produce all these nice green tractors, so why not. Nike is third – not bad for a company which is meanwhile staple food in business ethics classes with their struggle on working conditions in their plants in Asia. But, gosh, look further down the list and there is Dow Chemical (13)! No mention of Dow’s haphazard approach to assume responsiblity for Bhopal victims after taking over Union Carbide (which was responsible for the disaster). And go to 39th position: lo and behold, Lockheed Martin (39)! Obviously producing weapons of mass destruction is a very socially responsible business proposition. Gas guzzler manufacturers are on there (Ford, General Motors), as are Monsanto and Coca Cola, again, usual suspects in most business ethics courses.

But don’t lest rush to conclusions. This is not just a ‘greenwash’ list. CRO also has a ‘Penalty Box’, where companies end up which for some ethical infractions were not included in the ranking: ExxonMobil for Oil Spills in their Brooklyn factories, Mattel for the scandals with Chinese suppliers or Hewlett-Packard for the handling of their board room leaks. That is interesting: as we understand CRO’s rationale – its not a problem if you are a sinner, as long as you repent and mend your ways! CRO, for instance, explains why they kept GAP on the list: despite the scandal around their suppliers’ working conditions in India last fall, the company reacted swiftly, transparent and consequently implemented their standards and values to fix the problem.

Whatever we may think of individual companies on the list, we like it for making obvious one important thing: the world of business ethics is no black and white film, where angels and devils are easily separated. Business reflects broader societal imperatives: at times, a majority of Americans approved of Bush’s Iraq adventure – hence there has to be someone to produce the weapons for this. SUVs are a huge market – so companies supplying them are just one villain – among others - in the game. And so on. To make it on the list then basically means that a companies attempts at going about their business with some basic concern for key ethical issues. That’s fair enough, certainly it’s a start.

In this sense the list is in fact selective: only three companies have been on the list for all nine years of its existence, namely Starbucks, Intel and Cisco. We have commented on the latter company with regard to their role in China, selling censorship technology to the Chinese government. And Starbuck’s is on the agenda of many activist and NGOs as well.

So what do we make of the ‘100 Best Corporate Citizens’ list? Our stance would be that CRO, as an organization of managers responsible for ethical issues in the corporate sector, has a specific angle on the subject. From this perspective, their list could probably be better dubbed as the ‘100 Lesser Evils’ – which lists companies with still a lot of work to do but who at least are conscious of their responsibility and are demonstrating some effort to live up to ethical and societal standards. And that’s a good thing – compared to some of the alternatives at least …

Tuesday, February 19, 2008

And the Oscar for best business ethics movie goes to....

Those of you that have noticed the "Ethics on Screen" feature in our business ethics book, or that have come across the film series, Doing the Business that we were involved in starting up at Nottingham, will be well aware of our interests in exploring corporate responsibility issues at the movies. With the awards season in full swing, and Oscar night less than a week away, we thought we would reflect on a few of the films that have been released in the last year that have addressed business ethics issues in one way or another. Here, for starters, are four of our favourites...

There Will Be Blood
First up, and top of many people's list come Oscar time, is this quirky epic about the early days of the oil industry in the US. Tracing the fortunes of the oil man Daniel Plainview (played by Daniel Day-Lewis), the film provides a fascinating account of the emergent social compact wrangled out between industry and the local community. Day-Lewis plays a hard-grafting, hard bargaining, and ultimately hard headed prospector who pushes the ethical line in his somewhat underhand negotiations for drilling rights. But in an early manifestation of what some might recognise now as a shaky form of CSR, albeit of a decidely self-interested variety, Plainview's investment in the community sees one small town start to flourish as a result of its oil reserves, with a new church and other infrastructure coming to the once impoverished community. Most notable here is the battle between capitalism and religion that frames the film, as Plainview fights against the local preacher for power, control, and for the rich rewards from the precious resources that we are still fighting over today. In the end, it has to be said that the film's message, if it has one, about corporate responsibility is rather opaque. But there is lots of fun to be had poring over some of the allegories, especially at a time when companies such as ExxonMobil and Shell are breaking profitability records on both sides of the Atlantic, and when issues of oil, religion, and capitalism continue to dominate the debate about the war in Iraq.

Michael Clayton
Another Oscar nominated feature, this time staring George Clooney as a fixer in a corporate law firm. Here's what Warner Brothers say this one is about - as you can see, it is classic business ethics territory:

"...Michael Clayton is an in-house fixer at one of the largest corporate law firms in New York. A former criminal prosecutor, Clayton takes care of Kenner, Bach, & Ledeen's dirtiest work at the behest of the firm's co-founder, Marty Bach. Though burned out and hardly content with his job as a fixer, his divorce, a failed business venture, and mounting debt have left Clayton inextricably tied to the firm. At U/North, meanwhile, the career of litigator Karen Crowder rests on the multi-million dollar settlement of a class-action suit that Clayton's firm is leading to a seemingly successful conclusion. But when Kenner Bach's brilliant and guilt-ridden attorney Arthur Edens sabotages the U/North case, Clayton faces the biggest challenge of his career and his life...."

Like many films before it, including movies such as The Insider, Boiler Room,and Glengarry Glen Ross, Michael Clayton is all about how our personal ethics intertwine with the harsh realities of corporate ethics, and the choices we sometimes have to make in navigating between them.

Up the Yangtze
When programming the 'Doing the Business' series, we always struggled to find good quality Asian movies that dealt seriously with business ethics issues. With rapid economic transformations in India, China, and elsewhere though, a number of excellent movies have started to come out that chart some of these developments. Up the Yangtze is one of these - a sharly observed documentary about a luxury tour boat on the famous Chinese river that provides us with a unique view of the massive Three Gorges megadam project. The film traces the experiences of one of the workers on the boat and her role in the Chinese 'economic miracle'. Assembling insights from villages flooded by the dam project, the burgeoning tourist trade, and the brash urban elite, the movies provides a kaleidescopic view of a country undergoing enormous social and economic transformation - and the ethical issues and problems that inevitably come in their wake.

It's a Free World
Many of Ken Loach's films have provided a harsh but realistic picture of those at the bottom of the economic pile - the immigrant cleaners (Bread and Roses), railworkers (The Navigators) and others that are invariably the losers in the casino of capitalism. His latest, It's a Free World, explores the underworld of migrant workers in London, and the firms that recruit them. It focuses on Angie, a hardworking and determined recruiter who has suffered some some of the injustices of the flexible labour market herself, and is now to prove a point by starting up on her own. As Loach's film production company, Sixteen Films, puts it:

"... Angie sets up a recruitment agency with her flat-mate Rose, working in a twilight zone between gangmasters, employment agencies and the migrant workers they place. This is a tale set against the reality of the Anglo Saxon miracle of flexible labour, globalisation, double shifts and lots of happy, happy, happy consumers: Us."

It is not, it has to be said, a happy film. But as a gritty, realistic, and clear sighted view of a slice of the labour market that most of us rarely catch much of a glimpse of, it is hard to beat.

Monday, February 11, 2008

Mining is bad! Or is it…

This last Saturday, there was the annual ‘Business and Human Rights’ conference of Amnesty International in Toronto. It was an inspiring event. The turnout of 150 activists and interested citizens was quite amazing (given it was a Saturday, with piles of snow and freezing temperatures in Toronto…) and was vivid proof of business ethics issues being at the core of what ‘normal people’ worried about this day and age.

The day focused on the mining industry, one of the strongest part of the Canadian economy. Canada has the biggest number of mining companies in the world most of which are active in developing countries. Amnesty International (AI) is in no short supply to provide examples of blatant environmental disasters and human rights abuses committed by these So it came to no surprise that our panel, next to a Schulich professor, featured an activist from a Canadian group, Mining Watch, and Ulises García from Peru whose father was assassinated six years ago while leading a campaign against a project by the Canadian mining multinational Manhattan Minerals Inc. (check out his movie 'Tambogrande - Mangos Murder Mining').

In a situation like this it becomes overly obvious that there are no easy answers to most business ethics questions. The activist’s presentations left little doubt that the ethical record of the mining industry is pretty dismal. It appears, that most of the commodities extracted within the last decades from, in this case, Latin America have been dug out largely without any concern for the environment, property rights, health, economic development and safety of local communities. So, the diagnosis was pretty clear, but what were the solutions presented?

The predominant feeling in the room appeared to be that mining is intrinsically bad and should be stopped – period. However, to call for this sitting in a spanking new and shining conference centre in Canada most of which is in some way or the other a result of mining is somewhat, say, daring. It is certainly elitist, given the fact that most of the living standard of countries in the Global North is based on mining in some way or the other. Refraining from mining then would not only be somewhat impractical but would also deny any economic development to the Global South, where mining often is the only potential source of income for local communities.

Ulises’ suggestion was to allow mining only if the mines are wholly owned by the workers. As brilliant as it sounds, this is ridden with problems as well. After all, mining is high tech business and – loathe it or hate it – multinational mining companies are the only ones who have that technology. This became overly clear in the context of the newly elected Bolivian president attempting at expropriating western oil multinationals a couple of months ago. So corporations – as in many other areas such as pharmaceutical research or environmental technology, have a role to play.

But which one? Here comes the point where you always feel a bit flaky as a business ethicist. In a complex, globalized world there are no easy solutions! For starters, NGOs like Amnesty and others are vital in drawing attention to what corporations do and to put them under pressure. Without this pressure, nothing will move and we need more of it. It is encouraging to see how multifaceted their approach is – from direct action, over shareholder activism up to global education and campaign initiatives: there is an entire arsenal of approaches to address these issues. We also need more aware and socially conscious managers; many of these corporate decisions are taken at office desks in the Global North without any awareness of the ethical, social and environmental impacts on the ground.

But we also still need strong and accountable governments. It is frustrating to see how little, for instance, the Canadian government seems to care about regulating and holding to account their domestic companies. It is very unlikely that these companies will leave Canada if the government stepped up its regulation – the more it is incomprehensible why the government acquiesces in this situation. And there need to be more pressure on host country governments, as many of these ethical problems often occur because local governments are corrupt and disregard the interests of their people.

There are many more things which could be done. Why dont you tell us your ideas on this issue!

Tuesday, February 5, 2008

Crisis management - European style?

Our more longstanding friends, i.e. those who have worked with the first edition of our Business Ethics book, will remember that its success was very much predicated on the proposition that it was the first text book to talk about business ethics from a European perspective. OK, we toned it down for the second edition, but still the main focus of the book is to provide an account of business ethics beyond the Anglo-American version of capitalism – which still is the backdrop of most textbooks in the field.

There has been some debate about whether – and if so, how – a specific European perspective on business ethics is warranted. A good way to learn about these things is to look at how different economies deal with ethical scandals (e.g. Ethics in Action 6.1 in our Business Ethics book). A newspaper article in the Canadian Globe and Mail discusses the recent scandal in France at the bank Société Générale in the context of the Enron case and comes up with some really striking comparisons.

We talked about Jérôme Kerviel in one of our latest blogs and it is indeed fascinating to watch how the French public, rather then seeing him as a villain and a crook, views the bank and its managers as the ones who are responsible for what happened (you can give your own assessment here, see the box on the right). The general mistrust of capitalism and big corporations still seems pretty entrenched in Europe. On facebook, there are now numerous support networks for Kerviel. For instance the group “Jérôme Kerviel should be awarded the Nobel Prize in Economics" has no less then 2,517 members! Could you imagine this happening to Ken Lay or Jeff Skilling in the wake of the Enron disaster…

It is also conspicuous to see the reactions. While the US government took a fairly hands-off approach to the actual downfall of Enron, incl. the plight of many employees who lost jobs, savings and pensions, Nicolas Sarkozy’s government is anything but ‘laissez faire’. Worried about a foreign takeover of Société Générale it appears that the French government has now elected to micromanage the case and has even considered a fairly unrealistic bail out. While the magnitude of this case probably will not allow for this, European governments have a longstanding history of becoming directly involved in managing these issues. And this even at a time where we would expect newly wed Sarkozy to have other things on his mind…

This hands-on approach contrasts significantly with the US, where the main reaction of the government was to issue new legislation with the Sarbanes-Oxley Act, setting tighter rules for the game, rather than trying to become a player in the game itself. It is also interesting to see differences within Europe here. The Globe and Mail article refers to how Gordon Brown has dealt with the recent collapse of a major British bank (Northern Rock): While Brown was actively (as it were, European-style) involved in protecting the savings and mortgages of millions of British working men and women, the solution was in the end left over to the market: brokering the takeover of Northern Rock by Richard Branson’s Virgin empire appeared the best solution, showing strong reliance on markets and free enterprise in the running of the economy – something we can associate more strongly with the Anglo-American system of capitalism.

It will be fascinating to watch how the personal fate of Kerviel will develop over the next couple of weeks. He will hopefully not end up as Enron’s vice chairman John (Clifford) Baxter who committed suicide, unable to deal with the personal shame about his role in the scandal. But it will also be fascinating to watch the further fate of Société Générale. Our money is on a take over by another French bank, brokered in some backroom of the Elysée Palace!

I'd like to teach the world to .... eat?!

Probably the title of this post is lost on some of our younger readers, but it refers to a classic ad by Coca-Cola, where a multicultural bunch of young people with bad haircuts (well, it was the 70s) sing about peace, love and understanding in the guise of selling more soda, all to the tune of "I'd like to teach the world to sing". Beautiful. I don't know about you, but it gives Crane and Matten an urge to go grab a couple of cold ones from the cafe here just thinking about how much our friends at Coke have contributed to racial understanding and that great one-world vibe. Well, not counting the record breaking court fine for racial descrimination in 2000, their problems with water use in India ... oh and the fact that here we have a Pepsi-only exclusive concession!

But anyway, we digress. The point of the post is not actually to talk about Coca Cola, but about one of the other great giants of American global branding - McDonald's. Anyone that has read our Business Ethics textbook will know that we always like to see what's going on in the world of Ronald McDonald - there is always a meaty story or two to get our teeth into (if you'll excuse the pun). This time round, we are curious to explore what exactly it is that McDonald's hopes to teach the world. Probably not, as in the Coke ad, to teach the world to sing, but one thing is for certain, everyone's favourite fast food company is not content to leave the teaching to mere teachers.

First up, from this side of the Atlantic, news that McDonald's is pulling its ill-fated sponsorship of elementary school report cards in Florida (thanks to Ryan for pointing that one out to us). Yes, that's right, McDonald's was giving away happy meals as a reward for good grades, complete with a beaming picture of Ronald McDonald holding up the golden arches on the report card envelope. You couldn't make this stuff up. Critics rightly questioned whether McDonald's was sidestepping its own pledge not to advertise in elementary schools, whilst the firm countered that this was "not advertising". Oh, right, well that's OK then.

Only last week, we blogged about some of the issues around food companies self regulating their marketing to children, and this looks like a particuarly good example of where a stronger system is necessary to prevent companies breaking their own rules. As it turns out, the issue caused such a stink that the initiative was quickly dropped by McDonald's, who probably couldn't believe all the fuss since they had just taken over from Pizza Hut who had a similar promotion on report-card jackets for about 10 years. Perhaps the real question is how Pizza Hut managed to get away with it so long, but that's another story.

Not content with providing "incentives" to American kids for getting A's, from the other side of the Atlantic comes news that McDonald's is going to be offering high school qualifications to its staff in the UK. With the British Government looking to provide more practically oriented qualifications, as well as hoping to leverage some of the massive investment in company training into nationally recognized skills awards, McDonald's is one of three UK companies slated to run pilot programmes that will result in A' level qualifications for eligible staff.

Given that even the British Prime Minister himself, Gordon Brown, has said that the McDonald's A' level will be a "tough course", we clearly should have nothing to worry about. After all, he expects them to be ultimately suitable for entry into university. But even though we don't have a problem at all with complementing school education with practical training, there are clearly dangers here in equating a rather narrow company specific training course - however good it may be - with a decent high school education. Corporations quite naturally train people to work in the company's best interests, and unless students are also given the tools to put this training into a wider context, there is not much prospect for developing well rounded educated individuals. It is not that a McDonald's training scheme couldn't be part of this, but it would need to be effectively and imaginatively embedded into the curriculum to ensure that students are not short-changed by a government simply contracting out the educational process to "socially responsible" corporations. Maybe they should offer some free happy meals to anyone who makes a good suggestion for how to do this....