Oh Canada!

It comes to two years now that Crane and Matten have lived in Canada. We must say – it has been a great time. Mind you, not that we know too much about Canada, but Toronto is certainly a vibrant city and our new School is just fantastic.

And now, for the first time, even Canadian politics gets (a little) interesting! Who would have thought? Here is the deal (esp. for our non-Canadian readers): in the last election, the Conservatives came out the strongest party, but with only 40% of the votes, Stephen Harper could only become a prime minster with a minority government. A couple of days ago though, he presented a budget considered rather partisan and right wing – which to swallow was impossible for the Liberals (centre-right) and the NDP (leftish) – the two other main parties. So what they did, was to rustle up a Liberal-led coalition (including the Québec-only party Bloc Québécois) and attempt at replacing the minority government. For now, Harper pulled the plug on this by initiating the ‘prorogation’ of parliament until January to buy some time.

So here we are - a coalition. Why the fuss? Well, here is the thing. And from a (business) ethics perspective this is interesting. Technically, the Canadian constitution allows this and it’s done in many other democracies. But, in a Westminster-style parliamentarian system, this is not customary practice. In other words, the law allows it, but its still not considered ethical.

So, most commentators here are fuming. The coalition, so the argument goes, is ‘undemocratic’ because the Liberals and the NDP lost the last election – so they should not govern. Further - a very Canadian nettle to grasp – they need the support of the Bloc Québécois, a party whose main concern used to be to leave Canada anyway.

As born and raised in Europe, we watch this with amusement. What’s ‘undemocratic’ about a coalition? After all, 62% of Canadians did not vote for the conservatives. True, the liberals are in bad shape and have now replaced their leader Stéphane Dion – a guy toppled in charisma by any director of a provincial post office – with Michael Ignatieff, a Harvard professor who hasn’t even lived in Canada for the best part of his life. But fair enough, all this doesn’t make this coalition necessarily ‘undemocratic’.

It goes to show, how important ethical issues are, even in a context where the law gives clear directions. The legitimacy of the new coalition will not rest on whether it’s legal but whether it conforms with Canadians’ customary ethical views and practices. Secondly, it shows how contested core terms in political life are: what actually does ‘democratic’ mean? The majority of the popular vote? The majority of seats in parliament? ‘First past the post’? The contested nature of these concepts then points to the persistent need for ethical debate, reflection and decision making – not only in business, but as in this case, also in public politics.

Bailout – Who’s next?

So, you know by now that a little ‘Obamania’ has also infected Crane and Matten. But why not enjoy the honeymoon while it lasts. It might be over sooner than later. Among the many daunting tasks the new administration will have to face – the economy, Iraq, Afghanistan, Guantanamo, foreign relations – one of the most difficult animals for Obama to tame reared its ugly head last week: the American auto industry.

Now it makes perfect sense that at a time when Washington is handing out blank cheques to troubled banks, Detroit’s CEOs thought it worth a try to get next in line. And in fact their companies are in dire straits. Poor quality, fierce competition from the Far East and Europe, bad environmental performance of their products, high healthcare costs – these are just some of the issues which have led to the current situation. None of which is really new and good management could have addressed these problems years, if not decades ago.

But the appearance of the CEO’s of the big three on Capitol Hill last week points at a bigger issue Obama will have to face. It is good to see this in a broader context and to pull Stan Luger’s brilliant analysis of ‘Corporate Power, American Democracy, and the Automobile Industry’ from the shelf again. The book analyses the influence on political decision making by the US car industry over most of the 20th century. It puts the recent efforts of the industry in the context of longstanding direct political intervention, lobbying and coalition building.

Last week’s events then point to one of Obama’s biggest challenges, to deliver on bringing ‘change’ to Washington. And for a democrate President, this is no easy task. After all, car companies still are massive employers. Michael Moore’s ‘Roger and Me’ showed years ago what happens to towns in America’s industrial heartland when car companies close shop. In that sense then Obama’s success will in some way depend closely on creating jobs – which in fact is one of his big promises.

Here is the tricky bit: the political power of business in modern democracies is more than just lobbying or other ways of direct influence. In his book (p. 25) Luger quotes the sociologist Claus Offe on this point:

‘The entire relationship between capital and the state is built not upon what capital can do politically via its association […] but upon what capital can refuse to do in terms of investment.’

So every politician needs business to thrive and to invest in order to secure jobs and tax revenue. To deal then with this crucial contribution of business from the political end is a much more complex job for Obama than it seems.

In this sense, with the bailout of the banking industry and potentially others we might witness a watershed in contemporary capitalism: a return of the government as a key player in business. The last three decades have seen the exact opposite with most governments privatizing large parts of the public service delivery and divesting from their business interests. In some ways the bailouts then might even have this one positive effect: corporations apparently have such an importance for the wellbeing of a society that the government has to ‘rescue’ them in a situation where their survival is threatened. Acknowledging this, and granting the government a controlling stake in these companies might actually reverse one important trend of the last years. Rather than accepting a growing influence of business on politics we might actually see the reverse: that we as citizens, represented by democratic governments, regain control of a corporate world which for too long has put shareholder’s and manager’s interests ahead of many legitimate interests of wider society.

Now that sounds a bit like a utopia. And the perspective of more governmental influence on corporations will make most hard nosed business people cringe – isn’t that what socialism was about? Not quite – but anyway: it is essentially what banks and automakers in the US and elsewhere are currently asking for!

Barack Obama to be a boost to CSR?

As many people have remarked, last week's election of Barack Obama to the US Presidency was a historic event. One of the questions we have been musing on though is what exactly an Obama Presidency might mean for business ethics and CSR in the future. The George Bush years are certainly finishing with a nasty bang in terms of the financial crisis and the legacy of ethical mismanagement, as we have discussed in previous blogs. That said, for better or for worse, the free market agenda endorsed by Bush has clearly provided plenty of scope for voluntary CSR initiatives ... and for a fair dose of corporate irresponsibility. So it is perhaps no coincidence that the last eight years have seen the issue of responsible business come to the fore like never before. Without regulatory oversight, business self-regulation has been the main game in town for those seeking responsible practice.

So what of the future then under Obama? Much has been made of the President-elect's commitment to climate change mitigation strategies (specifically cap-and-trade legislation). Andy Savitz, writing in Ethical Corporation recently, suggested that would be the area where he would be likely to make immediate impact:

"Climate change, one of his recurrent campaign messages, is the easiest and most dramatic way for president Obama to deliver on his promise of bi-partisanship at home and to show the rest of the world that we are back in the international relations business. The financial mess may slow it down, but we can expect to see a complete turnabout in Washington, with national cap and trade legislation and the emergence of the US as a leader in the global climate change negotiations."

But there are also many other areas where, we might see the change that Obama promises having an impact on CSR - from health care reform (where private sector responsibilities might be fundamentally reshaped), to labour conditions (where minimum requirements may be put on foreign imports), to clean technology and "green jobs" (where companies may face new incentives and disincentives to accelerate sustainability and oil independence).

So perhaps it was no surprise then that a survey conducted at last week's Business for Social Responsibility (BSR) conference reported that almost nine in ten of the survey's 400 or so respondents welcomed Obama's election as promising a positive impact on advancing CSR. But the scale of optimism was quite remarkable given the circumstances of the financial crisis. Plus, this anticipation of an Obama boost to CSR is matched by an increased expectation of business regulation. The same survey reported that an overwhelming majority (94 percent) anticipated increased government regulation of issues related to corporate responsibility, including climate change (86 percent) and corporate governance and financial transparency (83 percent).

So what's going on here? On the one hand, we see expectation of more CSR, which is typically associated with voluntary activity beyond that required by law. On the other, we're also seeing greater expectation of regulation itself - which according to many would be seen as an alternative to voluntarist CSR. Its an interesting confluence, which at some level is perhaps a reflection of an underlying conviction that the US could move towards an approach to CSR where different constellations of regulation, self-regulation, and voluntarism are developed at the industry level through multipartite initiatives. Certainly, one of the main areas that we see enthusiasm for Obama from the CSR movement is his commitment to a unifying agenda, which many see as promising a new era of collaboration between business, government, and civil society.

The first test of this will probably be in the automotive industry, where the failing "big 3" car companies are seeking financial assistance, and where Obama could potentially see millions of people lose their jobs in the first year of his presidency. At present the rhetoric is still about protecting ordinary workers and ensuring that the car industry remains both economically and environmentally sustainable within a broader agenda of reducing America's oil dependency (which for Obama appears to be more about developing renewable energy sources than military manoeuvring in the Middle East). But there are going to be tough choices to be made here, and it is uncertain yet whether the new administration will have the skill (or the time) to develop a sophisticated package that manages to simultaneously save the industry, protect jobs in the long term, AND turn the American car giants around into sustainable innovators. Whatever the outcome, it appears that we will be getting deep insight into Obama's real impacts on CSR sooner rather than later. Its going to be an interesting few months...

For Asia, the future is green!

This week’s blog comes from Bangkok where CSR Asia is organizing it’s 2008 CSR Summit. It is a long time since Crane and Matten were in Bangkok at the Greening of Industry Network Conference in 2001 – which incidentally was their first joint conference appearance. What back then seemed a rather western idea and topic, parachuted into lovely Thailand to give some academics the excuse to travel to an exotic country on expenses, is now a living practice among Asian businesses.

More than 300 delegates, mostly from companies and NGOs, all over Asia gathered this week in Bangkok. For us it is a brilliant opportunity to check the pulse on business ethics and CSR in one of the most dynamic marketplaces globally. What is fascinating is to see how responsible practices begin to change in this part of the world. CSR in Asia started out very much as a supply chain driven idea, making sure that products manufactured in this part of the world were put together under acceptable conditions – from an ethics perspective.

Now though the tides turn slowly. The biggest issue seems to be the rapid decrease in water and air quality, decline in biodiversity etc. The Environment is highly on the agenda, making CSR a topic much more driven by local stakeholders in these countries. In many places in Thailand, China and Bangladesh, the impacts of global warming in terms of water supply from Himalayan glaciers, rising sea levels or d shifting weather patterns are really palpable. There was a fascinating session on business responses to climate change today – which not only highlighted the urgency of these issues but also showed a fascinating degree of creativity in corporate responses.

In the current, 2nd edition of Crane&Matten we started to include the Asian perspective, next to the North American and European one. We are just getting our act together for the 3rd edition – and one thing is sure: the Asian perspective will not only stay, but become more prominent. More Asian cases seem particularly challenging. If you have any material or suggestions, please join the conversation!

A step forward for technology companies and internet freedoms

If you've been following, as we have, the story of internet companies being implicated in human rights abuses around privacy and freedom of expression - see one of our earlier blogs here - then you'll be interested to see that Yahoo, Microsoft and Google, three of the companies most in the firing line on these issues, have launched a new multi-stakeholder program, the 'Global Network Initiative' aimed at tackling the problem.

This has come in a little under the radar, as there has not been much news of these developments in the business press leading up to the launch, but it appears to have arrived as a pretty well worked out program. With a tagline of "Protecting and Advancing Freedom of Expression and Privacy in Information and Communications Technologies", the initiative is a partnership between tech companies, human rights groups, academic institutions, and other institutions involved in media and communications freedoms. It has a set of principles, guidelines on implementation, including a commitment to human rights impact assessments, and a built-in review process. Most importantly, there is also a commitment to institute independent monitoring of companies' compliance with their commitments (though not, as far as we can tell, a commitment to report publicly).

It is, it has to be said, a difficult area to navigate for technology companies. Dealing with overseas governments can raise a host of problems that they are ill prepared to deal with, especially when they are operating overseas through a subsidiary or joint venture. So the initiative is certainly welcome. It establishes a clear framework for action that should make a meaningful difference to decision makers inside the organizations concerned. Of course, the devil will be in the detail of how such principles will be realized in practice. Especially interesting in this respect for us are the commitments to actively lobby governments to shift their expectations and demands:

"Participating companies will encourage governments to be specific, transparent and consistent in the demands, laws and regulations (“government restrictions”) that are issued to restrict freedom of expression online.

Participants will also encourage government demands that are consistent with international laws and standards on freedom of expression. This includes engaging proactively with governments to reach a shared understanding of how government restrictions can be applied in a manner consistent with the Principles.

When required to restrict communications or remove content, participating companies will:

• Require that governments follow established domestic legal processes when they are seeking to restrict freedom of expression.
• Interpret government restrictions and demands so as to minimize the negative effect on freedom of expression.
• Interpret the governmental authority’s jurisdiction so as to minimize the negative effect on to freedom of expression."

There are so many tricky details in that one passage alone, but it is heartening to see that the participants seem to be fully aware of the complications. As the Wall Street Journal blog, China Journal, put it:

For the most part, however, members decided not to include specific rules on issues such as where to host servers — outside servers can keep data out of problematic territories — because they felt that fast-changing technology might make them quickly irrelevant.

“The idea is that we believe the guidelines will need to be reviewed, and we will have to revise them as we take into account the actual experience,” says Sharon Hom, the executive director of Human Rights in China, which also helped develop the framework over two years. “It envisions an ongoing process of learning and sharing best practices,” she says.

So, there is still a lot to work out as the initiative unfolds. Let's just hope that Microsoft, Yahoo and Google can stay friends long enough to do all that mutual learning and sharing before they fall out with one another again...

Corporate engagement through CSR blogs?

One thing we've been taking a look at recently is the development of CSR blogs written on behalf of companies, usually by a senior CSR executive or team. Although there do not appear to be a large number of them about (or at least if there are, no one's reading them and they're not appearing in our not-very-scientific Google searches), the phenomenon does seem to be gaining some momentum. Probably the most well known is the McDonald's blog 'Open for Discussion' which launched back in 2006, but CSR blogs have probably been most conspicuous amongst technology companies, with the likes of Intel, Sun Microsystems, and Lawson Software all launching CSR blogs of one kind of another. Although IT companies may not be the most prominent in the CSR and sustainability world, especially compared to fast food companies like McDonald's, there are clearly a whole range of responsibility issues that the industry is having to deal with. The interesting thing though is that they are choosing to use their technology focus to develop new ways of engaging with stakeholders through the medium of blogs.

OK, so in reality, the CSR blog is not a major breakthrough in the development of stakeholder communication, but it does represent an attempt to connect with people about responsibility issues in a potentially more personalized and interactive way than corporate reports, press releases and TV commercials. As Intel claims, it is an "intent to create greater transparency through open dialogue". Or, as McDonald's puts it: "Get personal perspectives on the issues, hear open assessments of the challenges we face, and engage in civil dialogue with the people behind the programs at the Golden Arches."

Clearly the rhetorical emphasis here is on dialogue, although according to our reading, there doesn't seem to be too much real conversation going on. Much of the content in these is mainly about presenting the corporate position on CSR issues, but simply using another channel of communication to do so. The titles of two recent McDonald's blogs on "What my little league days say to me about the root causes behind obesity" and "An alternative perspective on larger-scale agriculture" won't leave anyone guessing that the answers are in any way in doubt - i.e. fast food is not to blame and big agriculture is good for us.

Other CSR blogs take a different approach - the law firm Addleshaw Goddard, for example sets out "the mental meanderings of our CSR Manager" as more of a diary for its CSR programme than anything else. And the Lawson "Frankly CSR" blog is also somewhat idiosyncratic, but actually says relatively little about the firm's program. It focuses more on what the VP is currently finding interesting in the CSR world.

So there are clearly different ways if going about this. Our view is that the more corporations simply use CSR blogs as another vehicle to "get their message out", the less successful they will be. We already hear enough about what they are doing. So it is not exactly surprising that most CSR blogs, even for major corporations like McDonald's, seem to get relatively few comments. As Bob Langert, the company's VP for CSR said in response to a comment on the blog recently: "I wish we received more comments". But from our perspective, this isn't likely to happen so long as Langert persists in thinking that :

"Poor perceptions of McDonald's are frequently the result of a lack of information. People need easy access to information about our social and environmental policies and progress so that they can draw conclusions based on facts. "

People are not looking for more information, and corporations suffering from "poor perceptions" should not be deluded in thinking that more information will solve their problems. Corporations need to engage with people in a different way - a way that treats their concerns seriously, that seeks to find common understandings and solutions, and that, yes, genuinely engages in dialogue. CSR blogs hold some potential for this, but at the moment, it is not being realized effectively. A change in mindset is required, not simply a change in communication channel.

But don't go thinking that we don't see anything positive in the current CSR blog phenomenon. There are some interesting discussions starting to happen out there. And perhaps most of all, what is pretty refreshing is to get a real person, an individual with a name and a face, writing about a company's CSR activities. With personalization, with a "moral face" even, there is greater potential for a meaningful ethical shift than with the bland bureaucratic messages of the faceless corporation. Plus, they tend to have a lot more fancy technological finery than our rudimentary efforts...

Hope or despair for CSR in China?

This week, we are hosting a long-time colleague, Wayne Visser, here in Toronto. Wayne, who co-edited the A-Z of CSR with Dirk and completed his PhD under Andy's supervision, is now at the University of Cambridge and has launched a new social enterprise CSR International - a knowledge and networking organization for CSR professionals. We've been talking lots about CSR and sustainability issues and Wayne has just posted an interesting blog on CSR in China that we think you'll enjoy reading:

CSR in China: Cause for Hope or Despair?

This article looks at some of the mind-numbing facts and recent developments in CSR, as it wrestles with the question of whether to feel hopeful or depressed about the future of China and world. Let us begin with the facts...

CSR and the financial crisis: so things can only get better?

We are trying (without too much success) to avoid getting too obsessed about the current financial crisis. But it is kind of hard to ignore, especially as it clearly has a lot of significant implications for issues of business ethics and CSR. Anyway, we thought we'd make just a few quick remarks about our last poll which saw more than 60% of our respondents siding with the idea that the crisis should lead to more CSR - and only 14% believing it would lead to less.

It's an interesting, and optimistic result, which, to be honest, we were a little surprised about. Clearly many of our readers are seeing this as a watershed moment that may create a whole lot more momentum towards responsible business practices. It is difficult to predict, but at the moment, most of the discussion seems to be more about how to better regulate business (and markets) rather than how to encourage responsibility (the assumption apparently being that business, and the finance industry in particular, is led by greedy, self-interested fat cats with little concern for the public good).

Some of the soundings we are getting at the moment are not too promising, it has to be said. There are a lot of people talking about the need to "tighten our belts" in readiness for an upcoming recession. Plus, it should be remembered that the recent drive towards CSR is also a part of the movement towards deregulation and liberalisation in markets that has got us where we are now. So its good to see that the CSR movement (or at least the part of it that reads our blog) remains optimistic about reform. Only time will tell...

The Oscars of Corruption

One of the most important rankings in the world of business ethics was updated and released last week: the ‘Corruption Perception Index’ (CPI) of Transparency International. Founded by the former UN aid worker Peter Eigen the Berlin based organization regularly collects extensive data on how countries in the world are perceived with regard to corruption in business and politics.

Sweden, New Zealand and Denmark top the list while Iraq, Myanmar and Somalia come out at the very bottom. But it is not just a list where rich Western industrial democracies win while poor developing nations lag behind. It’s interesting to see who went up and who went down. Britain took a hit, as did France and Germany – all due to high profile corruption cases in recent years. We talked about the BAE scandal in the UK in this blog which appears to have led to a drop in the UK's rating – in particular the government’s decision not to pursue the case due to ‘national security concerns’. Endemic corruption at one of Germany’s biggest companies, Siemens, arguably contributed to a drop in the ranking for Europe’s biggest economy. The US comes out 18th – just before St. Lucia – largely perhaps because of dubious campaign finance practices and special interest lobbying in Washington.

You might by now have noticed that one of the recent ‘pet theories’ of Crane and Matten focuses on the political role of the firm. Seen through the lens of the CPI the collusion and non transparent role of business in politics is interpreted as a form of corruption. And the fact that by no means all democratic countries lead the ranking and some of the them even dropped can be seen as an indicator that the political role of the corporation is on the rise.

So what is the solution? Clearly, there is still a role for strong government. The top countries, in particular Sweden and Denmark, are long standing democracies with a strong welfare state where the spheres of business and politics are reasonably held apart. Georgia, Nigeria, South Korea or Turkey – all countries which improved their ranking – did so mostly through improvements in the political governance of these countries.

But generally, we would argue that the CPI reflects the rise of private business in influencing politics, both for better or for worse. One way of addressing this then might be to just tackle these issues from the business angle. Some of the most creative approaches to eradicating corruption focus on business-government relations, such as the Extractive Industries Transparency Initiative (chaired by Eigen). Creating more transparency, clearer accountability and new forms of democratic control, both for governments and powerful corporations can be effective in addressing corruption. After all, corruption is not just an ethical issue: a one point improvement in the CPI coincides with 0.5 percent increase in GDP and a 4 percent rise in average income of a country. In particular in the global south, corruption translates into a matter of life and death for ordinary people...

Will the financial crisis lead to more or less CSR?

As the turmoil in financial markets continues unabated, some of those in the responsible business arena are considering what the likely effects of all this are going to be on the practice of CSR. The last decade or so has seen a seemingly unstoppable rise in interest, attention, and action on CSR issues, at least from some quarters of the business community. But with recession around the corner (or apparently already arriving for some countries), what is the prognosis for responsible business when times are hard?

Out here in the blogosphere a range of opinions are circulating. One post that has gotten quite a lot of attention came from Adam Jones of the Financial Times, who was among the first to raise the issue, and ended up somewhat hedging his bets:

"I suspect there are lots of Milton Friedman-reading managers in the private sector who grumblingly tolerated CSR programmes during the boom and would now love to get rid of them on similar cost grounds. Instead of throwing the money changers out of the temple, it would be a case of throwing the CSR priests out of the marketplace. But that would be a pretty dumb move at a time when the public mood is for more accountability and regulation, not less."

Reenita Malhotra, writing on her "Inspired Economist" blog, focused on the specific effects on CSR in the investment banking industry, arguing that such enterprises should be protected exactly because of their positive social benefits:

"A high return on investment has enabled many of the investment banks to show a solid to commitment to corporate social responsibility in the last few years"

Taking an opposite point of view, Nic Paton at the online resource Management-Issues suggested that a lack of attention to genuine CSR was actually to blame for the crisis in the first place:

"While many companies believed they were engaging in corporate social responsibility, they were in fact missing the point. Truly responsible business, rather than chasing a fast buck and in the process taking overly dangerous risks, would have considered the interests of all those who had a stake in their business."

Finally, Mallen Baker, writing for Business Respect, has taken a similar line, but has also sought to move the debate forward by looking at what this should mean for practicing CSR in the future

"Bear Stearns produced no CSR report of any sort. Lehman Brothers did not produce a CSR report, but they produced a philanthropy report. Even if they had gone further, it seems unlikely that the complex nature of how they created wealth would have been a feature. Now it needs to change. If anything is to come out of this, it has to be that corporate social responsibility once and for all leaves behind the philanthropy tag, and we see clear focus on two areas:

* How we create a different ownership structure for businesses where responsibility for consequences is a more real feature of share ownership.
* That the oversight and accountability demanded of companies now goes into the detail of how they make their money - and what are the consequences of their actions.

Two months ago, such concepts were unthinkable. Now they are essential."

Pretty profound stuff. But the prognosis for CSR is, as far as we can see, far from clear. Changing ownership structures for businesses seems a long way off, unless by this Baker means the movement into public ownership of banking institutions in the UK, US, Iceland and elsewhere. But somehow we doubt that's what he is getting at.

So, really, it's probably too soon to say for sure what will happen next on the rocky road of CSR. But hopefully our poll at the top of the page will give some indication of where our readers think it should be heading....

‘Are we all France now?’

That’s what Jon Stewart asked his guest Bill Clinton on the Daily Show a minute ago. They were discussing the proposed 700 billion (!) bailout for the financial industry proposed by the Bush administration today.

This is inspiring stuff. Who would have thought that the government most committed to reinstall freedom of markets, low taxes and ‘small government’ is now intervening directly in the economy in an unprecedented way. We blogged about similar cases in the UK and France recently – but what the US government intends to do here eclipses all the others.

We find it interesting from two perspectives. First, it is one of the classic examples of an ethical problem. On the upshot, yes, the financial industry is in trouble and the effects of further bank collapses would be massive - for the economy in general, but more concretely for jobs, home owners and ‘hard working’ Americans (and beyond). But on the other hand, why bail out an industry which has enjoyed fairytale profits in recent years, not to talk about bonuses and executive salaries far beyond imagination?

From a ultilitarian perspective (see Chapter 3 of Crane & Matten) maybe everybody would be better off by the bailout. But what about fairness and justice - providing healthcare for children has been anathema for the US government so far, yet would have cost much less. Or from another perspective, what about the consent of taxpayers to spend what amounts to $5,000 each in tax dollars for this massive bailout package?

The second aspect hints at the political role of private corporations. To have enough to live of in old age (i.e. pensions) and having a roof above your head (i.e. homes/mortgages) are obvious issues: access to these for a long time was considered a basic civic entitlements of citizens. That’s why welfare states in Europe still provide (or tightly regulate) access to these commodities. The US though has been at the forefront of creating markets for these things. As we see, the corporations in charge have failed at administering them – maybe because they shouldn’t have been in charge of these issues in the first place. And that’s why the government now feels it has to step in. The bailout now is an attempt to help out as a one-off. But it raises the general question we have discussed at length in our just published recent book: if corporations are now responsible for administering basic entitlements of citizens would it not be just fair to apply the same rules of transparency, accountability and democratic control as we do to governments? It is fascinating to see this debate and we guess it is far from over.

Ethics and financial crisis

With stock markets plummeting, financial institutions going belly-up, and governments on both sides of the Atlantic stepping in to bail out failing companies, the prospects for investors, the financial community, and even tax payers do not look good. And with the likely knock on effects for employment in other sectors almost certain to result in job losses, the fall-out from the current market turmoil is going to be widely felt.

For us business ethics professors, however, the picture is somewhat mixed. On the one hand, issues of social responsibility tend to be higher on the agenda when times are good. On the other, when greed and corruption contribute to downturns (such as in the post Enron wake of the early 2000s), significantly more attention can shift to issues of integrity and governance in business. Its no coincidence that the 2000s have witnessed perhaps the most sustained growth yet in the corporate responsibility 'industry' and in courses, books, conferences, and workshops on the subject.

Today's financial crisis clearly has at least some of its roots in corporate iresponsibility around the subprime mortgage market in the US. If 'responsible lending' practices had been observed (or if tighter regulatory oversight had been imposed), we might not all be in this position right now. Certainly, the financial industries of other countries appeared to be more attuned to the problem than in the US, such as in the UK, where the British Banking Association has in place a code on responsible lending:

Responsible lending is providing credit, based on background checks and professional judgement, to people who can accommodate regular repayments without getting into financial difficulty.

But although the sub-prime problem was the rockfall that got the financial landslide going, there are a number of structural issues that also need to be considered. And here we need to perhaps look at deeper institutional issues rather than the ethics of individual people or companies. As with Enron, the fault lines for disaster run through the system of risk management, regulation, transparency, business interdependence, and reward systems, not simply rogue traders crossing the ethical boundaries.

There are ethical issues here too of course, but they are at a different level to the ones that most people think of when they think about corporate responsibility. Here, we are talking about the ethics embedded in business systems and institutions, and how ethics and the law intersect to ensure that markets work effectively, fairly, and ultimately securely. Sure, a lot of our current problems with the financial crisis can be put down to individual greed, mismanagement, and bad decisions, but ultimately it goes deeper than that. Whether this means that the current crisis will be a boon to business ethics however depends on how well us ethical experts manage to get to grips with these deeper level problems.

For further reading on this, check out our paper on challenges to the business ethics curriculum, published in an early version available free online and later in the Journal of Business Ethics.

Business ethics at the Toronto International Film Festival

At the moment, here in Toronto, we are in the midst of the 2008 Toronto International Film Festival (TIFF), which is one of the world's premiere festivals , up there with Cannes, Venice and others. The city is alive with movie folk, big name actors and directors, and excited film fanatics. It's a fun place to be.

Regular readers of the blog and some of our other work will know that we are enthusiastic advocates of the role of movies in enlightening us about various aspects of business ethics. And TIFF 08 is no exception, with a bunch of exciting new films that get to grips with some of the social, ethical and environmental challenges facing contemporary business across the globe. We'll talk about some of these movies in a moment.

But it's not just the movies that are putting corporate responsibility in the limelight at TIFF this year. With increasing commercialisation and corporate sponsorship of the festival, some critics are complaining that the one time "people's festival" has been taken over by big business interests. With priority entry at some venues for sponsors, just flashing your Visa card (Visa is one of the main sponsors) can get you early seating and a place in the special lounge with drinks and refreshments while everyone else has to queue outside. Understandably, not everyone is over-enamoured with the implications of these acts of "good citizenship" by corporations - or at least not when there are such strings attached.

But it's tough balancing act for arts organizations when governments such as the incumbent Canadian Conservative Government, make cuts to arts funding leaving the private sector as the next obvious port of call. If arts organizations go in this direction, the challenge is obviously to work out a relationship that creates meaningful value for both partners - and takes account of the various stakeholders of each institution. It's a difficult proposition, but an important one to get right if these partnerships are to be sustainable. TIFF has clearly had the first warning shot fired across its bows and festivals around the world would do well to make sure they systematically incorporate these concerns into their subsequent planning.

But onto the films...

This year's line up has a few hot new documentaries that look worth checking out, including these (for more details check out the full program at http://www.tiff08.ca/:

Food, Inc. directed by Robert Kenner explores how modern developments in food production pose risks to our health and the environment. According the TIFF 08 programme:

Food, Inc. carefully dissects the cozy relationships between business and government in both political parties. In opposition to these powerful interests, we meet people from all walks of life, from a Republican mother who lost her two-year-old son to E. coli poisoning to the founder of Stonyfield Farm Organic Yogurt, who flouts conventional left-wing dogma by seeing a positive side to Wal-Mart.

Upstream Battle, directed by Ben Kempas, about Pacific salman, Native Americans, hydro-electric dams, and water rights in Northern California and Oregon (see the trailer here):

"Upstream Battle is wonderfully nuanced, acknowledging the complexity of the situation. The other stakeholders in this ecosystem include farmers who rely on the water for irrigation; the neighbouring tribes of Yurok, Karuk and Klamath; and commercial fishermen who catch the salmon at sea. The film manages to humanize those on all sides, including the corporate employees whose own livelihoods are in flux over changing owners."

And for a dose of individual resistance to organizational corruption, Yes Madam, Sir, directed by Megan Doneman tells the story of Kiran Bedi, the first woman to join the Indian Police Service, former head of Tihar Jail, Asia's largest, and notoriously corrupt and overcrowded prison, and latterly resident at the UN in New York.

"Kiran Bedi is arguably India's most controversial daughter, both revered by her supporters and reviled as a self-centred publicity seeker by her critics. In this captivating examination of her life, Australian documentarian Megan Doneman shows that whatever people may think of Bedi personally, there is no disputing her professional achievements. "

We'll try and catch one or two during the festival, but anyone that has seen these or who has more details, do drop us a comment. And if you're not in Toronto, keep an eye open for local release announcements ... and fof course or other new films that might be of interest. We're always keen to hear about new movies to feature. But let us know who you're being sponsored by first!!

The new business of shoplifting

It's this time of the year again. Classes have started (at least for us here in Canada) and in the first lesson it’s the thorny job of the business ethics professor to win over the skeptics. Those students who think that they shouldn’t be in this class in the first place. Those who need convincing that the law is just not enough to keep businesses on the bright side of life.

This day and age though, one doesn’t have to go far to find ammunition to make the case. This week, it can be found in a fascinating article in The New Yorker. The topic is shoplifting and how US retailers are trying to deal with it. Mind you, this is not about stingy shopkeepers trying to slap wrists of cheeky kids attempting to sneak out with a free ice cream. It is a US$ 40bn business issue for the industry. And it straddles class - remember Winona Ryder being caught with $5,000 of designer goods in Beverly Hills? It is also one of the most professionalized ‘sectors’ of the wider organized crime industry.

From a business ethics perspective this story is fascinating for at least two reasons. First, it is just mindboggling how much the industry has developed strategies, departments and instruments to prevent shoplifting. ‘Asset protection units’ as these are called – btw, relish the ‘amoralized’ language companies use! From hundreds of in-store cameras, armies of detectives on the shop floor, detailed profiling of customers, and even the operation of entire forensic labs, retailers have created their own mini law enforcement empires. The retailer Target alone faces 75,000 'theft apprehensions' a year. As their head of asset protection argues,

Even if all the U.S. attorneys across the country stopped prosecuting bank robberies, fraud, drug trafficking, and even terrorism, there would still not be enough capacity to prosecute even the apprehensions made by Target.

The result is simple enough: the tackling of this ethical issue is a core task for business. The article is a fascinating read for the challenges, risks and limits of addressing the problem in the corporate world.

The second aspect is even more striking: roughly half of all losses in retail are the responsibility of employees! It raises the thorny question of why these people commit such crimes. Fair enough, many organized crime rings try to recruit employees or even place their members as shop assistants. But for many shop assistants, being on low wages while selling $ 1,000 Armani Suits, the temptation may just be too much. As one VP of asset protection of a New York retailer argues in the article:

You're on commission selling. When times are good, you make a fortune. September through the holiday season, you're raking it in. Then Christmas is over, no one is shopping, gas is four dollars a gallon, and your paycheck went from fifteen hundred to five hundred a week and you have to pay off those bills from that Caribbean vacation you took when the money was rolling in. So you think, I'll credit my card for a thousand dollars and make out a fake return. When it works the first time, you try it again. But next time you load a little more onto your card. And the way this economy's going? We're going to be busy.

It turns our attention to what we call in our business ethics book (Chapter 4) ‘situational factors’ in ethical decision making. For some employees, given the wages and the nature of their products, the temptation is just too high. Whether security cameras and store detectives are the right answer then remains up for debate. Maybe it’s the general working conditions, the level of wages and the general identification with the company. Our guess is that a more in-depth understanding of why employees do these things would help to devise more appropriate strategies. We don’t know what you think. But we would love to hear.

The tangled ethics of black economic empowerment

Following up form our last blog entry about South Africa, the latest issue of the magazine Ethical Corporation provides an interesting feature about he impacts of the black economic empowerment (BEE) policies in South Africa. Citing a recent report from Harvard economists that was commissioned by the South African finance minister Trevor Manuel, the article offers a damming verdict of the policy, which it suggests "is failing the poor of South Africa and not helping business... the policy designed to right the wrongs committed against the country’s black majority during apartheid is working only for a few"

'Reverse discrimination' always makes for some tense ethical debates, but in the South Africa case, the sheer scale of past inequities provided a powerful rationale for introducing some radical measures. Not everyone was completely convinced by BEE, but by going beyond simple hiring and promotion quotes to include a groundbreaking attempt to spread business equity and control to previously disadvantaged groups, no one could say that South Africa's leaders were not ambitious.

The evidence that seems to be emerging though suggests that perhaps they were too ambitious, particularly given the social, economic and political context that South Africa is faced with. The Harvard report points to corruption, personal enrichment, poor financing of BEE equity deals, and some pretty unrealistic targets as some of the key factors that have driven the scheme off the rails. Without sufficiently well-educated and trained talent to fill BEE places, quota programs have run into problems, whilst a skills shortage has been exacerbated by emigrating whites dissatisfied with the skewed labour market. Positive discrimination, if it is going to work, needs to take a root and branch approach that tackles the underlying conditions of inequality (education, poverty, health, and some of the institutional arrangements of business and society) alongside its attention to the symptoms.

BEE is far from a lost cause, and the latest report, whilst controversial, will provide some much needed oxygen to a debate that can all to easily collapse into anger, point scoring, and various forms of racism and political correctness. Supporting or criticizing BEE can sometimes come across as taking sides in a political debate, but ultimately the most ethical policies are those that actually improve people's lives in meaningful ways. So, upholding the moral purpose and principles of BEE is crucial, but clear sighted reform so that it has a greater impact on ordinary black South Africans may be the best, and the most ethical, way to go. Business and government will both have to play a part in making that happen.

A view from Africa on corporate citizenship

We are writing this blog entry on the long trip back from a fascinating trip to South Africa. We were there mainly to participate in a big international conference organized by the International Society of Business, Economics and Ethics (ISBEE) – a global network of organizations and scholarly societies dedicated to business ethics. The conference only happens every four years, and brings together people from every continent (it’s not for nothing that it’s called the Olympics of Business Ethics!), and it’s an exciting place to be to talk and learn about what’s happening across the globe.

We were there to launch 2 of our new books, to run some professional development workshops, but most of all, to talk about our work on corporations and citizenship. And the conference, and South Africa in particular, turned out to be a great location to do this. Questions and debates about the social and political roles and responsibilities of corporations are fundamental to countries like South Africa, where it is companies that are charged with the responsibility for implementing black economic empowerment legislation through their human resource programs. Companies are also a key player in the provision of various public goods, such as water, health, and education. For instance, on one of our trips outside Cape Town we passed a special needs skills school sponsored by the local Coca-cola bottler (see photo) that demonstrates just a little of how deeply embedded corporations are in traditionally ‘non-business’ activities.

Such issues also swirled in and out of the several of the keynote speeches at the conference. We heard an executive from the mining company Anglo American discuss at length their responsibility to ‘be a healthcare provider’ and ‘guarantee the human rights’ of South Africans through their impressive HIV/AIDS program. We heard the manager of the charitable foundation of the pharmaceutical company Abbott Laboratories argue that the legitimacy of their African health initiatives would be threatened by incorporating business goals into their social programmes. And Henk van Luijk, one of the original European pioneers in the business ethics field, and a founder of ISBEE, explicitly identified the political role of the corporation as one of the key challenges facing business ethics and CSR in the future.

So when we came to present on the final morning of the conference, rather than the usual smattering of diehard conference junkies that make it to the last paper sessions of such a long conference, we were greeted with a large, eager crowd that was fully primed for a serious discussion about corporations, politics, and citizenship. Now we’ve been presenting our ideas on all this for a good few years, refining and sharpening as we’ve gone along, but this was definitely one of our favorite, and most productive, conference presentations for a long time.

In what was an unusual occurrence for us, most of the packed room was in agreement that we had to develop better conceptual and practical tools to address the political dimensions of business. In other occasions though, people’s discomfort with the whole idea of business playing a role in politics has meant that they have done their best to shoot the messengers. In one of our recent papers, we discussed this fear in terms of ‘monster theory’ which we had a little fun with.

But this time, corporations and politics were clearly on the agenda amongst our audience. However, not so many of them were convinced that ideas like citizenship, and corporate citizenship specifically, were the best way forward. They could have a point, but at the moment, it is certainly emerging as one important piece of the puzzle. And what we need is more people engaging in the debate about corporations and politics, and eventually devising serious alternatives, rather than just wishing it would all just disappear. In our conference presentation we worked with our audience to think through some potential routes forward for doing this. And in our many conversations both inside and outside the conference itself, we learned a lot about some of the challenges that we face. So whichever way you look at it, spending time in South Africa definitely got us thinking… (oh, and having a little fun too, as you can see in the picture above).

Bad habits die hard

It is amazing with how little social responsibility some companies manage to keep up a reasonably good image. BP is one such example. A major contributor to climate change, with recent scandals and disasters in Texas and Alaska – it nevertheless still maintains this cosy, green, ‘we’ve-made-a-start’ image.

There are also examples for the opposite. Nestlé is a case in point. Yes, they had some major blunders in the past about the marketing of their infant formula. But by and large, the company is nowhere up there with the oil, tobacco or car industries; no large scale environmental disasters, no deliberate misinformation of the public and no negligent acquiescence in killing their customers. Nestlé’s products are by and large OK; yes, some of them, such as KitKat might not be the healthiest, but by and large Nestlé is a food company who even amongst its peers (such as McDonalds, Cadburys or other food companies) does not look like the worst villain.

Despite all that, Nestlé has ‘skillfully’ managed to be one of the most vigorously criticized companies; in fact they hold the record of the most boycotted one. The latest blunder of the Swiss multi reads a bit like a piece out of a cheap spy novel: allegedly, according to Swiss television, Nestlé has hired the private security firm Securitas to spy on the Lausanne chapter (next door to Nestlé’s HQ in Vevey) of the NGO Attac. Main point of interest for Nestlé allegedly was a book the group was writing about the company.

It is amazing how illiterate in an ethical sense a company with this legacy can be. It is even more bizarre considering that under its current CEO Brabeck-Letmathe Nestlé has made considerable inroads into systematically addressing CSR. Yet, the deeper DNA of the corporate culture seems more stubborn than – maybe ephemeral – CSR fashions dictated from the top floors. It obviously crossed nobody’s mind at Nestlé, that some companies have actually started to talk to their ‘adversaries’ – stakeholder dialogue we call this.

It might be interesting to speculate about the reasons why Nestlé is so clumsy in addressing its stakeholders. We won’t get into that here. Sure to say though, Nestlé still has more of a ‘Feindbild’, a stereotype of an enemy, when they think about their stakeholders…

Yahoo facing up to human rights in China?

It's been a heady time for business and human rights recently what with the UN Special Representative, John Ruggie's final report having just been released to general mumurings of support.

His approach of "protect, respect and remedy" makes a lot of sense as an organizing framework, and whilst it falls short of the kind of normative principles and binding regulations that some critics were hoping for, his focus on providing some much needed clarity on what it means for businesses to manage human rights responsibilities is one that we are happy to see. The message that companies do have responsibilities in this arena, and distinct ones from government at that, provides an important mark in the sand in terms of identifying some of the political responsibilities of corporations.

All this is good timing for news to emerge about Yahoo's response to the government censorship issue in China that hit the headlines a few years ago (and that we wrote about in our Business Ethics text). Of course, Yahoo has been mainly drawing attention recently in respect to its battles with Microsoft about their abortive takeover. But the good people at Ethical Corporation recently reported on developments in the censorship issue that have been overshadowed somewhat by all the takeover speculation.

It turns out that following a dressing down by the US authorities, and a lawsuit from the World Organisation for Human Rights (which was eventually settled out of court), Yahoo has made some efforts to enage in what Ruggie would call the "remedy" component of business and human rights - such as paying legal bills for imprisioned Yahoo customers, setting up a fund to support human rights, and lobbying the US government to press for the release of political dissidents imprisioned by the Chinese authorities as a result of Yahoo's release of user information.

Of course, all this does not detract from the continuing responsibility the company should have for protecting the human rights of its stakeholders in the first place. But at least it does show that firms can play a role in pressing for human rights at a political level. This is in marked contrast to the Olympics sponsors, all of which have resolutely refused to discuss the possibility of any political response to events in Tibet. As the Adidas CEO recently said, pressure to issue a statement on human rights in China was an "effort to drag us into politics, and we will not allow that to happen".

Why the difference? Well the main point here is that Yahoo's involvement in human rights comes from people actually using its products - something that, in the parlance of global governance, falls directly within their "sphere of influence". The Olympics sponsors, however, are more removed from the issue, and so can realistically make a case for having rather less influence. After all, people are not going to be arrested for wearing Adidas sneakers. Such assessments though are, of course, a somewhat inexact science. However, these are some of the major issues that UN, Yahoo, Adidas and others concerned with business and human rights will have to grapple with in the years to come.

CSR and democracy in China

This week’s blog comes from Shanghai, where Crane and Matten have been involved in various speaking engagements over the last years at the China Europe International Business School (CEIBS). There are two conferences on CSR in Shanghai this week both of which were fascinating.

CSR is definitely on the agenda here. Not just for big western multinationals, but also for local companies and entrepreneurs. Yes, a lot of what was on display is corporate propaganda, but there is some real evidence of what companies do, too.

The conferences gave a lot of food for thought for our ongoing research work. CSR in China casts some particularly interesting light on the role of CSR and democracy. Examples of how companies conduct stakeholder consultations, attempt at securing participation, protecting property rights or providing access to health, education and security – corporations here in their CSR activities pretty much emulate certain traditional governmental jobs.

But not only that. In fact these companies apply a model of interaction to their stakeholders that treats them basically similar to the status we would associate with citizens in western democracies. The obvious question is: if western companies do their western-style CSR in China, are they not effectively implementing micro spaces of liberal democracy? Stronger even: are CSR-active corporations, at the end of the day, part of some subversive movement towards democracy by operating this approach in the way they conduct their CSR projects with their stakeholders? The jury is out. But the tensions between an inclusive, participatory CSR model on the one hand and a political system that leaves little space for democracy are palpable.

Diversity in diversity management

You may remember that in one of our posts last month we asked what exactly made women different in a business ethics context. One of the big issues here is the "glass ceiling"that hinders women from getting to the top of the corporate ladder. Discrimination is often invisible but incontrovertible to those that encounter it.

To be sure, this is a problem faced by women everywhere, but at the same time, such institutional discrimination also varies quite significantly between countries. In our business ethics book, we reported on evidence of female held directorships in Europe - where female representation in the boardroom ranged from 0% in Portugal to 29% in Norway. So it was with some interest that we read in the Financial Times last week about evidence emerging of female board memberships in the Gulf region - an area not traditionally known as a leader in diversity management.

The picture painted by the report is of a region that, in terms of diversity management, demonstrates much like Europe quite a bit of, well ...diversity. Some Gulf countries are actually emerging as leaders in the region, with women making up 2.7 per cent of boards in Kuwait, and 3% in Oman. This not only compares favourably to other Gulf states, such as Abu Dhabi (0.6%) and Saudi Arabia (0.1%), but also stacks up pretty well against other ostensibly less conservative countries such as Italy (2%) and Japan (0.4%).

Of course, board memberships do not tell the whole story about gender discrimination in business, but it certainly gives a good flavour of the types of challenges facing women looking to secure advancement to the executive suite. So it's good to see some progress being made in the Gulf, and hopefully will act as a further spur for laggard countries in Europe and elsewhere. Who knows, perhaps even Italy's womanizing PM, Silvio Berlusconi will be able to prompt a greater attention to gender among Italy's boardrooms, especially having appointed the former model and (as the media puts it "ex-showgirl") Mara Carfagna, as Equal Opportunities Minister (pictured right).

But whatever progress is made in Italy or Kuwait, though, such countries will still remain far, far behind the leaders in female board membership. Right now, the place to go for high flying women is Norway, where women now make up 40% of board positions. But we're not talking voluntary social responsibility here; Norway's female friendly pattern is a result of good old fashioned regulation. As the International Herald Tribune reported a couple of months ago, it's not been a easy transition for Norway, but with appropriate mentoring, training schemes, support mechanisms and enforcement, a genuine change in attitudes seems to have accompanied the 2003 law that forced Norwegian companies to fill 40% of board seats with women. Such positive discrimination isn't always popular, but as the chart from the IHT shows, it certainly makes a difference.

Getting an ethics fix

This week’s blog is a bit late. Sorry, but there is an excuse: Crane and Matten have recently been introduced to the TV series ‘The Wire’ and, though we are somewhat behind the rest of the civilized world in this, have been avidly watching the third season on DVD. This stuff is so addictive that one of us even managed to watch all 12 episodes in 2 ½ days. Well, sometimes you need to stop writing, and just starting watching…

The Wire is set in Baltimore and introduces us to the world of drugs, smuggling, crime, dodgy police and sleazy backroom local politics. As far as we’re concerned it’s probably one of the best TV serials ever made. The storylines are gripping, the plot credible and the acting is just superb. Each series operates between two ‘camps’. ‘The Law’ is basically the police, prosecutors, lawyers and local politicians. On the other side, there is the ‘The Street’: the local drug trade, constituted by various rivaling gangs.

There are many reasons for the popularity of the show, one of which is the apparent amorality with which the two camps are displayed. Unlike in many standard cop shows, the ‘good guys’ are actually not quite that good. And the ‘bad guys’ are even at times fairly decent: despite the drug dealing and murdering, there are strict rules, very clear notions of fairness and an honor code among the gangsters. Most of all, nearly all characters are so likeable. If bad things happen, they are mostly the result of ‘the system’ – be it the police bureaucracy, politics or the power relations within and between gangs.

Now – some of you might be wondering by now what all this has to do with business ethics – or if it does, why Crane and Matten can’t even have the least bit of fun without bringing their ethics perspective into everything. Fair enough, so let us just say this much: ‘The Wire’ is absolutely superb if you want a lively laboratory of what we call ‘context related factors’ in ethical decision making (Chapter 4 of our business ethics book). The show gives a pretty vivid account of why it is that normal people end up doing some pretty bad things. This is what the Stanford University psychology professor Philip Zimbardo (of the infamous Stanford Prison Experiment) calls the ‘Lucifer Effect’ in his latest book: how personal morality is fundamentally shaped by social context.

And, besides, the link to business here is by no means artificial either. Stringer Bell, one of the gang leaders in the Wire, is actually doing a business degree part-time in the show, and he brings to bear some of the lessons from the classroom to his business on the street. Mind you, we doubt that he’ll have spent much time in any ethics classes. But that’s a shame. Not only could he have learnt more about why ‘The Street’ and ‘The Law’ behave the way they do, but he could also have provided us with some knowledge in the other direction. As some of our European colleagues have discussed recently, we can learn a thing or two about CSR from the way that organized crime outfits like the Sicilian mafia offer very instrumentalized forms of philanthropy to survive and flourish in governance vacuums. Oh, yes, but that was another show…

Time for multinationals to step up to the mark in Burma

The debate about the role of multinational corporations propping up Burma's oppressive regime has been a long and fractious one. It's something that we in have discussed in our business ethics book, and which has been widely documented elsewhere. But with the country suddenly in the midst of a huge natural disaster that has already claimed some 22,000 lives, now is clearly the time to go beyond debate and for any companies still doing business there to start rolling up their sleeves.

Many commentators have claimed that Wal-Mart's major ethical turning point came when it launched a massive aid operation in the face of the Hurricane Katrina disaster in 2005. So is Cyclone Nargis going to be the catalyst for any of the hundreds of multinations doing business with Burma to demonstrate some concrete proof that their business links can bring positive social benefits to the Burmese people? After all, the common argument used by companies involved in Burma is that they can benefit ordinary people more by investing there than divesting. So this is a real opportunity to finally show the world that this whole argument is more than just a lame excuse for profiting from human rights abuses.

The International Trade Union Confederation (ITUC) latest list of companies doing business with Burma includes Caterpillar (USA), China National Petroleum Corp. (CNPC), Daewoo International Corporation (Korea), Siemens (Germany), Gas Authority of India (GAIL), GlaxoSmithKline (UK), Hyundai (Korea), and Total (France). If anyone is going to be having a Wal-Mart moment in response to Cyclone Nargis, surely it should be one of these. For once, a bit of "disaster capitalism" could actually do some good.

Good news from China

We have been talking about China quite a bit recently. Not only on this blog, but also in numerous discussions and emails with our current and former students, various issues around the Olympics have come up. One of the sentiments voiced particularly by our Chinese readers was that it is quite hard to be Chinese these days. With all these critical questions asked about the politics of the country the debate can all too easily sound as if it is about bringing an entire country and its people wholesale into discredit.

Believe us, with one of the authors of this blog coming from a country with quite a notorious legacy in the 20th century, we can empathize with that feeling. Therefore, the more we are happy to report some interesting news on China and business ethics this week.

On Thursday, it was front page news in the New York Times that Chinese authorities successfully broke up a child labor ring in southern China’s Guangdong Province. More than 100 children between 13 and 15, often kidnapped from other parts of the country, were liberated from ‘captive, almost slavelike conditions and minimal pay’.

The article demonstrates a growing concern for human rights among Chinese authorities. It also provides an interesting perspective on the ethical issues involved. One factor is the sheer size of the country, which makes it tricky to enforce even the best intentions of the central government. Furthermore, it highlights that despite China’s economic boom, considerable parts of the population are still living in relative poverty and that cheap labour from rural China is in much demand from coastal regions feeling the pinch of rising costs.

These things take time, as we in the west should know all too well. In our business ethics book (p.298) we discuss Tom Donaldson’s argument that in applying human rights to a situation, the general context of economic development has to be taken into account. One or two centuries ago, European or North American children indeed played a key role in contributing to the family income, just think of Charles Dickens’ novel ‘Oliver Twist’.

The article also puts this governmental crack down in the context of the Olympics. As unpleasant as all this international criticism might be – it obviously has an effect. And as predicted earlier in our blog, businesses are in the front line if it comes to the locus of change. Perhaps most heartening of all though is that details of the child labour ring were uncovered by the Chinese media, not the usual suspects from overseas.

During the cold war, progressive political leaders such as the famous Willy Brandt were vilified for their ‘change through rapprochement’ politics between West and East. Arguably, by hindsight this was a key element in bringing down the Iron Curtain. It seems that with China, the same strategy might work. That’s why hosting the Olympics, maintaing close economic ties, and encouraging media freedoms, could be key for the journey ahead.

On a more personal note, Crane and Matten had other good news from China this week. Brokered by one of our students, a leading Chinese University Press has taken up discussions with our publisher to prepare a Chinese translation of ‘Business Ethics’! We keep you posted on these developments. But no promise yet that we will ever master a Chinese blog for that one…

So, what makes women so special?

This week on the website of the Globe and Mail newspaper, you can watch Scotiabank CEO Rick Waugh talk about why he thinks it’s a good idea to hire more women. Actually, what he says is not very spectacular, mostly that women are as good as men and often easier to get (as employees, that is…). Well, not exactly a daring observation. And that his company will work hard to raise the 33% share of women in executive positions. Nice intentions.

It goes to show though that equal opportunities for men and women are still an issue. Just think of all the talk about a woman now running for president in the US. It looks like we have come a long way, but there is still much to do.

It is interesting to see how this topic has become more and more an issue for corporations. In our forthcoming book ‘Corporations and Citizenship’ we have a whole chapter on the corporate role in reflecting, enabling or restricting identities of citizens. Gender is just one of many examples here. If we think about equal opportunities for women careers, issues like maternity leave, freedom from discrimination or harassment – it is mostly the corporate sphere where these issues are either respected or suppressed. In that sense then having a CEO talking about the issues is actually reflecting the simple fact that, yes, companies are nowadays centre stage in tackling these inherently political issues.

The debate also goes on in the academic community of business ethics scholars. Our book is one of the few that explicitly features the approach of feminist ethics. While we don’t do much more then summarizing the state of the art, this little section in Chapter 3 has ignited some debate recently. The question is really whether women are inherently different from men: is it correct to stereotype men as ‘rights/status oriented’ whereas women, in this school of ethics, are stereotyped as ‘care/relationship oriented’. With many of our younger (especially female) students our experience in the classroom has been that sometimes this sounds to them like grandmother talking about the war. Long gone are the heated debates on feminism in the 1960s where these theories gained currency.

As we said, we have come a long way here, but it seems there still remains a lot to be done. Both in understanding and appreciating gender diversity (without stereotyping), but also in addressing discrimination and prejudice. And it is in business, where most of these issues are the most hotly contested.

Fat chance for CSR

Regular readers of the Crane and Matten blog will be aware of our ongoing interests in social responsibility and self regulation in the food industry. Few subjects arouse as much debate as the stuff we put on our plates every day, the things that make us fat or thin, healthy or unhealthy … and of course the role that corporations play in enabling or preventing us from making informed and sustainable choices about food consumption.

So it is with some interest that we can report that this week saw the introduction of the first bill in the US that requires food outlets to display the calorie contents of their products on menus (see the recent newspaper article in The Guardian about this for more details). Yes, New York City has defied the vigorous campaigning of the fast food industry to put in place regulations that will ensure that customers in the city will no longer have to scrabble through the desultory rack of in-store nutrition leaflets or wade through the games and promotions on the corporate website in order to work out just how many calories that bucket of fried chicken and fries is going to pack.

Regulation of course is somewhat anathema to some (but not necessarily all) in the CSR world. Proponents of social responsibility typically promote self-regulation by business as a preferable alternative to government-imposed legislation. But in the hard fought battle of the bulge in New York, the city’s restaurant chains have been reluctant to introduce more far reaching CSR initiatives that may have staved off today’s regulation.

So from our perspective, the new legislation represents something of a mixed blessing. Sure, customers should be able to make informed decisions on the basis of readily available, easily comparable, and ultimately relevant, information about their prospective purchases at the point of sale. The New York legislation clearly has the potential to deliver this, providing restaurant chains live up to the spirit as well as the letter of the law. And, most importantly, such information is critical to the enabling of what we discuss under the label of ‘consumer sovereignty’ in our business ethics text. Basically, as the INSEAD professor Craig Smith has shown, the point is that ethical exchanges require consumers to have appropriate capability, information and choice in making their purchase decisions.

But, on the other hand, the New York regulations also, to some extent, a represent a failure on the part of the food industry’s CSR movement to get ahead of the game and work through a suitable industry-led alternative. Nutrition leaflets and website data are all well and good, but they hardly represent a creative and sustainable response to the health issues facing a society in the midst of a rapidly escalating obesity problem. McDonald’s, KFC, Burger King, Pizza Hut and the rest of the usual suspects have been talking the talk well enough, but in the end this wasn’t enough, at least not in New York.

Of course, the interesting question now is what will happen elsewhere, whether in other US states or further afield. Will the New York regulations act as a spur for more states or even countries to legislate? Will the food chains get their act together and instigate more responsible labeling programmes? Will we see new operators entering as-yet unregulated markets with information-led, nutrition-oriented value propositions, just as we have in the packaged food sector? Or, will all the fuss die down leaving fast food corporations free to scupper the new regulations before they have a chance to seriously take hold? The writing is on the wall, for sure. The only problem is, it’s just a little hard to read.

Giving olympic sponsors a sporting chance?

For those of you that have been following our entries on the upcoming Beijing Olympics, we thought this article, "Navigating Olympic Sponsorship: Marketing Your Brand without Alienating the World" from the Wharton School of the University of Pennsylvania might be of interest (thanks to Elizabeth Watson for alerting us to this one). It gives a good overview of some of the issues that the Olympics' corporate sponsors will have to juggle in the face of the political protests. As one of the Wharton professors comments in the article:

"Corporations that want to sponsor the Games have to navigate the political undercurrents ... I wouldn't be surprised if many underestimated the potential for [the Games] to turn into an international issue and thought instead, 'We can reach a billion eyeballs; the political stuff will just go away. But politics isn't about money. It's about hope and fear and common purpose and identity."

As the article rightly says, it is hardly surprising that the Games are a political focal point, and indeed, they often have been over the years. The difference now though is that the politics are far more embedded in economics than they once were. What with China being such an important trading partner for many corproations, not to mention the huge sponsorship deals involved, the incentives to avoid rocking the boat are there for all to see.

As we've already said, it's a little too early to tell what the consequences are going to be for the corporate sponsors, but one potential outcome mooted in the Wharton article may just be rattling a few nerves at Coca Cola, McDonalds, Volkswagon and the other sponsors. As anyone who has visited China will be aware, broadcasters in the PRC have a definite proclivity to black-out broadcasts at the slightest suggestion of anything controversial. After spending billions on sponsorship, the last thing the multinationals will want to see is a blank screen. Well, that's not counting the potential for "an unlucky photo or video clip of, say, Chinese police cracking a protester over the head in Beijing with a General Electric, Johnson & Johnson or Visa logo in the background". Unlucky? Or it just part and parcel of the heady brew of business, politics and sport?

Business and politics: Berlusconi and BAE back in the news

This week sees Crane and Matten travelling to Europe. At the moment we are in Milan in Italy, being hosted by the CSR Unit at Bocconi University. Later in the week, we will be off to the UK for meetings, research interviews, and a general catch up in London and Nottingham.

It's an interesting time to be here in Italy, with the Alitalia sale in the news every day, and the national election having taken place over the weekend. As expected, Silvio Berlusconi has come out on top, and is now set to lead the country for an incredible third time. As a renowned media tycoon, it just goes to show how ingrained business is with politics here, a point that we have been discussing a lot in our work on the political roles of corporations over the last few years. In fact, when we gave a seminar on Corporations and Citizenship at Bocconi yesterday, it struck us just how comfortable our Italian colleagues were with the idea that corporations have political roles and identities - an issue that often arouses controversy elsewhere, where the idea that corporations have solely economic roles in society often prevails. It made a change to get such a warm reception.

Of course, the intersections of business and politics will also be on the agenda when we touch down in the UK later in the week. One of the most popular cases in our Business Ethics book deals with the BAE corruption scandal, and it seems that this whole issue is very much back on the agenda again in the UK. Last week saw the high court in London rule that the Blair government's decision to quash the inquiry into the alleged corruption on the grounds of national security was unlawful, yet the new PM, Gordon Brown looks set to continue on the path of his predecessor in attempting to block any further investigation - despite what appears to be considerable international pressure from the OECD, the US and elsewhere to do otherwise.

The upshot of all this is that it is clear that the untangling of business and politics is getting increasingly difficult, whether here in Italy, the UK, or pretty much anywhere else. The cosy world of distinct sectors with clear responsibilities looks to be increasingly a feature of the past (if it ever was much more than a myth). The resulting challenge of working out what roles and responsibilities this poses for corporations will test the imagination of all of us. We have a new book, Corporations and Citizenship, coming out later in the year with Cambridge University Press, which attempts to make a start on this question. But even we have to admit that we end up asking more questions than we answer. But, hey, you've got to start somewhere.