Who will be the business ethics winners and losers at the London Olympics?

Corporate involvement in the Olympic Games continues to expand in size and significance. This year, the 2012 London Olympics will boast sponsorship on hundreds of millions of dollars in corporate sponsorship and tie-ins. But as the corporate money flooding into the Games increases, so too do the attendant ethical risks. For all the advantages of being associated with one of the world's greatest and most watched sporting events, it also puts you at the mercy of activists and other critics ready to use the Games' huge pulling power to target big brands. Adidas, BP, Dow Chemical, McDonald's and Rio Tinto are all currently in the firing line regarding their involvement in the London Games. So the big question for the companies is: come closing ceremony time, who are going to be seen as the ethics winners and who will be the ethics losers?

 Four years ago, the 2008 Beijing Olympics also brought to the fore some major ethical risks for the Games' sponsors, mainly because of the potential for being tarnished with the human rights and environmental pollution problems facing hosts China. This time around, it is less the hosts than the companies themselves, accused of anything from using their sponsorship to greenwash their more unsavory practices (BP, Dow), to corrupting the ideals of the Games (McDonald's), and exploiting sweatshop labor to produce official Games sportswear (adidas).

The most tangible of these criticisms regards the sweatshop allegations. Over the years, adidas has worked hard on its ethical supply chain practices, and was one of the forces behind the Sustainable Apparel Coalition initiative. But having already dropped off one list of the most ethical companies this year, the accusations of poor labor practice in the factories producing the official kit for the Great Britain Olympic team will no doubt strike a significant reputational blow to the company.

Let's be clear here. It's unlikely that adidas is actually an outlier amongst apparel companies. A decent investigation into pretty much any global brand's supply chain could probably surface some major failures to live up to their impressive sounding codes. Not because they don't want to meet their commitments, but because there are always going to be suppliers that cut corners given the low cost, high flexibility model of production foisted onto them by the big brands. Adidas becomes a useful target though because of it's high profile in the Olympics. That's the risk that comes with the territory these days. Nike got it right 4 years ago when they published their special report on their Chinese operations months before the Olympics took place thereby taking any sting out of any likely exposé.

As for the so-called green washers, they also shouldn't be too surprised about the controversy they have sparked. BP as an official "sustainability partner" for the Olympics? Wouldn't it make sense to get your sustainability reputation back before wrapping yourself in such a cloak? Maybe they think that at rock bottom the only way you can go is up. But public trust needs careful nurturing if you are going to restore it after a major catastrophe. Not symbolic gestures.

If anybody should know how hard it is to rebuild public trust, it's one of the other Olympics sponsors currently in at the losing end of the PR battle, Dow Chemical. The beef with Dow goes back to 1984, and to a company that they didn't even acquire until 2001, Union Carbide. That the compensation question for Union Carbide's role in the Bhopal tragedy should still be rumbling on is testament to the importance of dealing effectively with legacy ethics issues. Here we are nearly 30 years later with Dow's banner role in the Games being the subject of front page news in India, the UK and elsewhere.

There's already been a high profile resignation from the watchdog supposed to monitor the sustainability of the 2012 Games as a result of the company's sponsorship deal, whilst over in India, the Government itself has now launched a diplomatic offensive against the company after it failed to persuade the London Olympics Committee to drop the firm as a sponsor. There has even been talk of a national boycott of the Games by India, but this currently looks unlikely. 

Let's get this one clear too though. Dow is no evil corporate monster, and has been doing some fine work in the sustainability space. But it does have a legacy problem still to deal with. And until it reaches a more easy relationship with key opinion formers in India (which, frankly seems unlikely in the near future given all that has happened ..... and when the response of the CEO to the current troubles is that any opposition to their sponsorship is "beyond belief"), it should just steer clear of huge global events like the Olympics. Any PR firm worth it's salt should know that. The $10m sponsorship money could have been spent in much more effective ways. Why take the risk of stirring up old problems - and more than that, give them a global airing - when you don't need to? Hubris, insensitivity, poor research, or just bad PR? It would be interesting to find out.

The bottom line is that the Olympics offers great opportunities for corporations to connect with a global audience. But those opportunities do not come risk free. Companies need to have their reputations in their best possible condition before they take such a plunge. And they need to have the PR department, the CSR team, risk management, and the senior leadership working together from the get go to minimize any damage.  Just ask any Olympic athlete. Winning at the Games is all about preparation, dedication, commitment, and having the right team in place to get you there. Business should be no different.

Photo by the|G|™. Reproduced under Creative Commons Licence

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Nike, China, and the Olympics

It looks like the 2008 Beijing Olympics are shaping up to be a major occasion for discussion of all kinds of social, ethical, and environmental issues. From human rights, to pollution, climate change, and a whole host of other issues, campaigners and activists are using the global pulling power of the Olympics to focus on some of the darker sides of the Chinese economic miracle. We've already had the Hollywood movie director Steven Spielberg resigning from his role in the games in protest against China's support for Sudan in the wake of the Darfur crisis. And, with corporations taking an ever greater role in global sporting events like these, we can expect the anti-corporate movement to get in full swing for a summer of olympian protests.

Some companies though are taking the lead in getting their story straight early. Nike is one of the forerunners here with the recent publication of a China supplement to its corporate responsibility report, 'Innovate for a Better World'. It makes for interesting reading.

To begin with, the report makes it clear that Nike and China's fortunes are inextricably linked. Not only are a third of all Nike shoe's produced in China, but China has also become the company's second biggest market. Mark Parker, the Nike CEO and President has this to say in his introduction to the report:

"For Nike the Beijing Olympics provide an opportunity to share China’s importance to our business. China produced 35 percent of Nike’s footwear in fiscal 2007 and is a substantial sourcing market for our apparel and equipment. This year we’re on course to achieve $1 billion in sales – making China our second largest market outside the U.S. China is key to our continued growth and success. Nike and China will succeed together."

Make no mistake, Nike needs China right now, probably more even than China needs Nike. So for Nike it is critical for the integrity of their hard won, newly minted reputation for corporate responsibility that the Olympics do not go seriously awry when it comes to ethical issues. And getting their defence lined up before the criticisms come flying in looks to be a good strategy at this stage. Nike isn't just sitting hoping that it doesn't get fired on, but is actually putting its head above the parapet and publishing data to show whats going right with their China operation. OK, so its less expansive about what's going wrong, but that's hardly much of a surprise. And taking the step to publish the report in the first place - and to make sure it is based on documented evidence - is interesting in itself as a strategy to try and diffuse the potential problems that might arise as the world starts focusing its attentions on China during 2008.

Nike has had to learn the hard way that defensiveness and secrecy in the face of ethical criticisms isn't always the best option, so we shall see if this new approach to transparency works out the way they're hoping. There is always the danger of course that by drawing attention to their operations in China, Nike just ends up as the main focus of attack - or even that it spurs their critics to dig even further to find some bad news. But, from where we are sitting now, it looks like a good way to start getting ready for a summer of considerable heat.

Like many other texts, our new CSR textbook includes a case on Nike's adventures in Asia, so it will be interesting to see how this next chapter turns out, and whether the Olympics comes to be regarded as a case study of Nike's increasing confidence in this arena, or an own-goal that teaches us all something new about the perils of conducting responsible business in China