The business of modern-day slavery

Events last week in the UK, where three women were rescued from what appears to be a 30 year-long situation of forced domestic labour situation, have focused a great deal of attention on "modern-day slavery". But it is hardly a one-off. Issues of forced labour, human trafficking and modern slavery are increasingly gaining public attention. Business, however, has been slow to engage in the conversation.

Perhaps this is no surprise given that no company wants to run the risk of being tainted with the spectre of slavery. But most of the big modern slavery stories involve business. From children forced to harvest cotton in Uzbekistan to labourers enslaved to fish in the waters of New Zealand, hardly a week goes by without a new story of extreme exploitation being splashed across the media. The appalling treatment of migrant construction workers in Qatar the build up to the 2022 FIFA World Cup has gained more exposure than most, likely because of the headline claim that construction for the World Cup will leave 4000 migrant workers dead. It is a heart-stopping statistic.

With all this noise around modern slavery, much of it at the hands of campaigners such as Anti-Slavery International, Free the Slaves, and Walk Free (who are responsible for the recently launched Global Slavery Index), governments at least are gradually starting to act. The UK Government is already in the process of drafting a modern slavery bill to make the complex legal situation around the issue more clear for prosecutors. The US has also launched initiatives to tackle human trafficking in the supply chains of companies and government contractors. Canada too now has a national action plan to combat human trafficking whilst Brazil has perhaps gone the furthest of any country in seeking to tackle the problem.

Such measures are to be applauded, but there's still a long way to go in effectively combating the worst forms of human exploitation. And one crucial player that so far hasn't brought much to the party is business. Compared with many other social and environmental issues, modern slavery has not seen much enthusiastic response from the business community. Although virtually all corporate codes of conduct prohibit any kind of forced labour, the issue is rarely given any particular attention. Most businesses simply assume that it doesn't affect them. However, the torrent of news stories across various countries and industries suggests otherwise. Companies just aren't looking hard enough to find their connection to modern slavery.

David Arkless, formerly President of Corporate and Government Affairs at the global temp agency Manpower, is probably the most visible and articulate member of the business community involved in anti-slavery efforts. He said last week that he was "frustrated by the lack of involvement of corporations in efforts to ensure that their supply chains are verified against the use of abused labour and that most of the big corporations of the world have not amended both their financial, expense and human resource policies.” You can understand his frustration. Most business leaders are simply burying their heads in the sand.

This is a major stumbling block because most forms of modern slavery either involve business or affect it in some way. After all, forced labour is a particular way of doing business - a morally regnant one for sure, but a business practice all the same. Even illegal industries such as prostitution and drug cultivation, both of which have had numerous documented cases of trafficking and forced labour, rely on business principles and come into contact with legitimate businesses at some stage. The bottom line is that we have to understand modern slavery as a business if we are to make any real sense of it and take appropriate steps to prevent it.

The research base exploring the business of modern slavery is especially thin. So I was pleased last week to help launch a new report funded by the Joseph Rowntree Foundation on the business models and supply chains found in forced labour in the UK. It was a fascinating project to be involved in, and along with my co-authors, I'm hoping that it really helps to shine a light on the economics of modern slavery in developed country contexts.

One of our main findings is that although forced labour is often described as a hidden crime, it is not as difficult to unearth as many in the UK, including businesses and government, seem to believe. As my co-author Genevieve LeBaron and I say in a recent article for The Guardian: "The problem is not so much that we cannot find forced labour; it is that either we choose not to look where it is most likely to occur or we simply misclassify those being exploited as criminals rather than victims. A new approach to detecting and enforcing forced labour is necessary. To pinpoint its occurrence we need to start by examining the forces of supply and demand."

Much still needs to be done to really understand how these economic forces lead to such extreme forms of exploitation. But the good news is that we're making good progress. The challenge will be getting legislators and business leaders alike to take our findings seriously.

AC


Photo by Junaidrao. Reproduced under Creative Commons licence

Margaret Thatcher’s unacknowledged grandchild

The death of Baroness Thatcher is dominating today's news. Despite the euologic praises heaped now posthumously on the ‘iron lady’ one cannot overlook one common thread: ambiguity. Yes, she modernized Britain, but for whom? She was a war leader, but what was really gained in the Falklands? She battled constantly with her European friends, but to what avail? Yes, she was the first British female head of state, fairly unprecedented in many countries at the time – but did she leave a legacy to her sisterhood? “Well, yes, technically she was a woman...” was one of the funnier comments on Thatcher’s gender role I once heard.

It is fair to say then that among her legacy is certainly one topic which is close to the interest of this blog. And we hasten to add, a legacy no less ambiguous than all her other ones. She certainly symbolizes and has pioneered many of the political changes which have given rise to Corporate Social Responsibility (CSR) as a new business practice during the last three decades. This conclusion is fairly obvious looking at some of the more historical work on the spread of CSR in Europe by authors such as Jeremy Moon, Daniel Kinderman and others.

Among her heritage we can certainly count the comprehensive privatization of many then state-owned companies in the UK – a policy then also very popular in the US during the administration of her close friend Ronald Reagan. It was her conviction that telecommunication, public transport, water or electricity can be better delivered by private companies and governed by ‘free’ markets’. The attribute ‘free’, by the way, makes me cringe when it gets relentlessly rehearsed today (just listing to BBC World while writing this). Whoever has lived in the UK and has used, for instance, the railways knows that these markets are anything but ‘free’. In many cases her privatization project made a few people very rich and created a monopoly for private companies which resulted in lower quality of services and higher costs to the citizen-turned-consumer.

A second important heritage was deregulation. Many of her reforms here, for instance, created the burgeoning financial industry in the City of London; but it also cut down workers rights, the power of trade unions and a host of welfare state institutions.

The crucial side effect of this retreat of the state of course was that suddenly a huge vacuum occurred. The initial reason why many public services were ‘public’ was that receiving a letter, drinking clean water or having access to affordable transportation was seen as a civic entitlement. And the expectations, once administered by the state, now turned to private companies. The same with abandoned public services: safe high streets, reliable schools,or care for the elderly and poor in many cases morphed into ‘responsibilities’ for private companies. The retailer Marks&Spencer, in explaining their CSR approach, used the slogan ‘healthy high streets need healthy back streets’. It still symbolizes this turn. Thatcher pioneered in the UK what we have seen over the years happening in most other European countries and beyond with some time-lag; and it is for this reason, that the UK became and still is the leader in CSR in Europe.

The legacy of privatization and deregulation again is at best ambiguous, and CSR as it were is the knock-on effect of that. Even the more recent events at the financial markets after 2008 can be seen as the aftermath of the Thatcherite legacy. And lets not forget - the British banking system and indeed the UK economy has been hit quite severely to this day. Deregulation left more discretion to actors in those markets – which encouraged a behavior which has contributed to the financial crisis. Which in turn led to calls for more responsible and accountable corporate action even louder and more demanding today than ever before (think Occupy).

CSR then can be seen as some sort of unacknowledged grandchild of Mrs Thatcher: a knock-on effect of her policies, but certainly not one she would have approved. Her policies were very much inspired by the other big critic of CSR, Nobel Laureate and Chicago economist Milton Friedman. It was a big illusion of the 1980s to think that government can discharge themselves from a host of public services and responsibilities and to expect that the market will happily take care of all those issues. While Thatcher’s idea was to free markets from stifling regulation and to liberate companies to pursue their economic self interest – companies end up having to look after healthcare, education, infrastructure and many more social goods. It is fair to argue, that in the UK – but also in Scandinavia, Germany and France – privatized utility companies are at the forefront of CSR currently.

It is deeply ironic that the person who emphatically claimed that ‘there is no such thing as society’ instigated a renewed sense of social embeddedness and social responsibility exactly in the very place which she went out to free from all such considerations. While her famous statement ‘the lady is not for turning’ remains unforgotten, the turns of history are sometimes stronger than the most resolute renegade – even if they come in the shape of an ‘iron lady’.

Artwork by Rachel E. Chapman, reproduced under the Creative Commons License.

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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Solving the executive pay problem

The idea that executive pay can be "too high" is a touchy issue. While many regular Joes are seeing their jobs disappear, or have been forced to endure cut backs to salary and benefits, CEO pay continues to escalate. Bonuses in the financial sector - never popular among the general public - are largely back to their stratospheric pre-crisis levels, much to the chagrin of the tax payers who funded the bailouts that kept them in business. And there is the growing chasm between those at the top and the bottom of the pay ladder that helped galvanize the Occupy movement. According to one recent study, the gap between CEO and average U.S. worker pay was 325-to-1 in 2010. In 1965, it was 24:1.

The business community, of course, continues to argue that it should have the right to determine its own remuneration levels. The global market for executives, they say, forces them to offer high salaries to attract the top talent. But stagnant performance is prompting many to question the logic of that argument. Why should companies be rewarding top executives for failure when everyone else is tightening belts?

Unsurprisingly, regulators have started talking tough. But progress has been limited. Three years ago President Obama announced that he would cap the salaries of executives of companies in receipt of TARP balilouts, yet by 2010 could do nothing to stop those companies awarding huge bonuses, judged to be "ill advised" by his newly appointed pay czar. A more systematic approach was promised with the Dodd Frank financial regulation, but efforts to rein in pay have had limited success. After much sword rattling from senior British politicians, the announcement by the UK government on January 23rd of a new approach to regulating executive pay claims to be the start of a more concerted response to the problem. The trouble is, it is not a very convincing solution. And perhaps even worse, it is not at all clear what the problem really is that they are trying to solve.

The "problem" with executive pay is that it is in fact a whole set of related problems. And each of these require different types of solutions. Income disparity between high and low earners is one thing, whereas CEOs being rewarded for poor performance is quite another. Setting the pay of bailed out businesses is yet another. And so on.

Regulators have to work out which of these problems they are trying to solve and what the best combination of regulation, encouragement, incentives, and sanctions should be to achieve desired results. Take the problem of pay disparity and those troubling pay ratios.  Blunt regulation probably isn't going to be very helpful here. For a start no one really knows what the "right" ratio should be. A maximum permitted ratio of say 100:1 may be feasible in some industries, less so in others. And as many have pointed out, the unintended effects might be that companies start outsourcing any of the low wage jobs they still have to generate a lower ratio.

Incentives, such as tax breaks for companies reaching certain thresholds, may offer more potential, although it would be technically complicated to administer effectively. A pay-ratio credits type market could also be devised whereby those companies failing to meet their targeted ratio could buy credits from those that over-achieve theirs. Much like in carbon markets, these types of systems help to even out differences across industries.

The "transparency" option trumpeted by the current UK government speaks to a more typical way of government providing the framework for corporate social responsibility initiatives. In creating a mechanism for pay ratios to be compared across companies (such as through mandatory reporting of pay, and support for some type of league tables comparing performance) governments can spur companies to improve their ranking. This avoids any necessity of setting limits or levels of acceptable performance and instead relies on competitive forces to drive improvements. As with all these incentives type approaches, it remains up to companies themselves to determine how to improve their performance, whether through increasing the remuneration of lower paid workers or decreasing that of higher paid executives. It stops regulators getting directly involved in setting pay limits and enables businesses the freedom to determine what works best for them from a competitive point of view.

Of course, there are also other less direct ways to encourage better pay equity. George Monbiot the UK journalist and environmental campaigner has recently put forward a spirited defense of a "maximum wage". Others argue for incentives or regulations to encourage increased employee share ownership among the lower paid. Such initiatives avoid the risk of companies simply "gaming" the pay ratio statistics, but also run into other problems, such as resistance from the business community and difficulties in implementation. Still, there is plenty of scope for interesting and imaginative ideas to help solve this and the other executive pay problems, and the UK in particular seems to be at a crucial tipping point in terms of public support for change.

Where the current UK government's proposals largely fall flat is in their over-emphasis on enhancing shareholder control of executive pay. For a start this does nothing directly about pay equity (which is what the public wants) but rather focuses more on the problem of whether senior executives are being rewarded for poor performance. Whilst giving shareholders more input into executive pay is not a bad thing, first you need to have shareholders that are active participants in the companies they invest in. In our dispersed ownership model of financial capitalism where shares are often held for matters of minutes, hours, and days rather than months and years, we often simply don't have sufficient shareholder engagement for such initiatives to make all that much difference. Similar rules imposed by the Dodd Frank Act in the US have done little to curb executive pay.

Clearly the time is right for action on the manifold problems of executive pay. But for those seeking to tackle them, whether in industry, government, academia, or civil society, it is imperative that there is clarity on which problems are going to be addressed. And dealing with such complex issues is going to require more creativity in terms of solutions, and more joined-up-thinking in terms of the causes of those problems, than we've generally seen so far.

Photo by GDS Infographics. Reproduced under Creative Commons Licence

Why Occupy Wall Street should occupy corporate leaders' minds

This weekend, the Occupy Wall Street protest will go global. Protests, marches and occupations are planned across the world, with almost a thousand events across every continent scheduled to go ahead on October 15th. Here in Toronto, the financial district around Bay Street is preparing for an occupation that has so far garnered more than 9000 followers on Facebook. In London, social media sites have registered more than 15000 followers for the planned occupation of the London Stock Exchange. Similar smaller scale events are in the offing from everywhere from Alaska to Auckland. Whatever the success of these protests, it is remarkable the speed at which a local event in New York which was hardly reported on two weeks ago, has now been turned into a global movement.

Although the range of issues and demands of the Occupy Wall Street campaign and its various international incarnations are many and diverse, they share a strong single point of focus. The financial sector is very much the villain here. This is in some contrast to the movement that the current events most parallel, the anti-globalization protests that took to the streets in late 1990s and early 2000s, exemplified best by the Battle in Seattle in 1999. At that time, although many of the issues were the same as those receiving attention now, the main point of focus was international finance and trade organizations such as the WTO and the IMF, and meetings of political leaders such as the G8 were major targets. Now, by occupying the financial centers of major cities, the focus is much tighter. The financial sector is public enemy no.1.

In many respects, this is not too surprising. Economies across much of the developed world have been in a constant state of crisis for the past three years. Austerity measures are biting hard. Unemployment is up. And a significant proportion of society feels excluded, exploited, and ready for an alternative. The financial sector is an obvious target because it is here that the systemic risks have been created, and it is here that so much of taxpayers money has ended up, shoring up institutions that are too big to fail. When these same organizations continue to post substantial profits, pay out huge bonuses and generally carry on as before, it is fairly predictable that they will become the focus of so much public ire.

Much of the initial response to Occupy Wall Street has been dismissive. The financial sector, which must be getting quite used to being the bad guy these days, has hardly raised a murmur in response. As of yet, we haven't seen a single press release on the events from major financial services organizations such as Bank of America, Barclays, Citigroup, Goldman Sachs, HSBC, or anyone else. Don't business leaders have anything to say about what's going on?  Don't they want to be part of the conversation? Or are they just so concerned that anything they say will just be ridiculed by the protesters, or simply set them up as even more of a fall guy, that they are fearful of trying to put their position across in public?

But big business, and big finance in particular, needs to take this seriously. Here's why.

First, because governments are looking to be responsive and populist, especially with elections around the corner in the US. That could mean tighter controls, less freedom and more regulation. As even Dominic Barton of McKinsey made clear in the Harvard Business Review earlier this year, "Business leaders face a choice: They can reform the system, or watch as the government exerts control ... there is growing concern that if the fundamental issues revealed in the crisis remain unaddressed and the system fails again, the social contract between the capitalist system and the citizenry may truly rupture, with unpredictable but severely damaging results." Better regulation might fix some of these problems, but knee-jerk regulation, borne of anti-corporate prejudice is not going to be the best fix for the capitalist system, and not necessarily the one that we need.

Second, because the protests create a great opportunity for collective action on the part of business. Problems of financial risk, executive pay and corporate lobbying aren't going to be fixed by individual company initiatives, or even by national government regulation. If one firm or one country reduces its attractiveness by, for example, controlling pay, then talent will likely migrate to more rewarding shores. If one company puts a limit on government influence, then the attention of policy makers will simply be taken up by its competitors. That's the savage logic of the global marketplace. The best recipe for meaningful change is collective action across an entire industry. Like a financial sector executive pay protocol. Or a banking industry code of practice on political influence. But to be effective these would need to include government and civil society participation and include effective monitoring and sanctions across borders. No one is pretending this wouldn't require a huge effort. But crises of trust, like the current protests, could be the context that is needed for collective action such as this to arise and prosper.

Third, because these protests clearly signal that for some proportion of the population, all the money, time and effort expended on CSR simply isn't working. And spending more isn't going to make a difference. These people are looking for a change in the system, in the rules that govern business and it's relationship with government.They're looking for more accountability, less political influence, and if their demands are for better corporate citizenship, they mean the kind of citizenship where you pay your fair share of taxes and don't just simply offshore when it suits you. This requires a very different approach to CSR than the one now predominant in the corporate sector. It means fixing attention on how to devise better rules, not how to behave better within the existing rules.

The challenge here, clearly, is a big one. Perhaps then it is no surprise that corporate leaders have been content so far to just cover their ears and hope it all blows over. But there are fundamental issues that need addressing at the heart of our model of global capitalism. Occupying Wall Street, Bay Street, or the City of London may not be any kind of solution, but that does not mean it should just be dismissed either. Business leaders would be foolish not to see this as an opportunity to create an improved system of capitalism that serves us all better.

Photo by david_shankbone. Reproduced under Creative Commons licence 

Controversies in university funding: LSE and the Libyan connection

The London School of Economics has been embroiled in a major controversy regarding its relationship with the under-siege Libyan regime, and most particularly Saif Al-Islam Gaddafi, the son of the Libyan leader. Last week saw the shock resignation of the LSE's Director, Sir Howard Davies, as a direct result of the crisis - a major scalp for those arguing that the university had put commercial interests before its academic integrity. But the case is far from clear cut.

So what has got the internationally acclaimed university into such hot water? The critical issue here is the receipt of money from sources attached to the Libyan regime, including a donation of £1.5m from a charitable foundation run by Gaddafi's son, and £2.2m paid to the university to train Libyan officials. To complicate matters, Davies also acted as an advisor to the Libyan sovereign wealth fund. Oh, and Saif Al-Islam Gaddafi is an alumnus of LSE, whose PhD, awarded in 2008, is now the subject of a heated plagiarism scandal. As with the recent case of Karl-Theodor zu Guttenberg, the German Defence Secretary that we covered two weeks ago, an on-line campaign to identify and make public alleged plagiarism offences in Gaddafi’s doctoral thesis has gathered considerable momentum, forcing the university to instigate an academic offences investigation. Who knew that PhD plagiarism would be such an on-trend internet phenomenon in the first months of 2011?

Davies' resignation from his role as Director of LSE could not have been envisaged only weeks ago. But with Gaddafi senior and his Libyan regime now widely condemned after the dictator’s brutal response to the public uprising in the country, (and Gaddafi junior very much defending his father’s position) those with links to Gaddafi have also increasingly come under fire. And it’s not only pop stars like Usher, Beyonce, and Nelly Furtado. When a university such as LSE is linked in such a direct way to human rights abuses, it is no surprise that its reputation will come under fire. As Davies remarked about his resignation:

"I advised the [LSE] council that it was reasonable to accept the money and that has turned out to be a mistake," he said. "There were risks involved in taking funding from sources associated with Libya and they should have been weighed more heavily in the balance."

Well yes, that’s probably so. University leaders do have a responsibility for upholding the reputations of their institutions. And despite the recent charm offensive from Libya, it certainly did continue to pose a significant reputational risk. But then with hindsight that is, of course, easy to say. The UK government was certainly strongly encouraging the LSE to engage more with the country and there’s definitely a strong case to be made that bringing the educational heft of the LSE to the Libyan regime might well have made a contribution to enhancing openness and democracy in ways that only a liberal education can. This side of the argument was persuasively presented by our former colleague, Darryn Mitussis, writing in the Letters pages of the The Guardian newspaper:

“Introducing the children of autocracy to the best traditions of critical, reflexive British education and inculcating anointed leaders with the rigours of public accountability and transparency is a wonderful and deeply subversive thing to do (irrespective of the fee accepted). If – and only if – accepting the money required a compromise in the academic integrity of the syllabus then resignation is appropriate. If academic standards were not compromised and it was still wrong to take Libyan money, then it is also wrong to take money from any number of government scholarship schemes funded by undemocratic states (including Saudi Arabia and China) that prepare their chosen future leaders for business, political and scientific leadership.”

There is clearly a broader issue here about the appropriate balance of public, private and international funding for education. But we agree that given the reality of so much external funding, the main issue with funding is whether it impedes academic freedom. When “strings” are attached to funding the ethical problem is one of misusing power to distort knowledge. With “no strings attached” arrangements, this moves to a more vague “complicity” with undesirable people or organizations or being associated with “dirty money”. Not that these are inconsequential considerations. But there is certainly a good case that can be made for using “bad” money for “good” ends – as critics of Microsoft’s monopolizing tactics might recognize in the Bill and Melinda Gates Foundation, for example. In the case of LSE, there is no evidence as yet of any such strings – but maybe Davies' prompt resignation could hint at further skeletons in the closet. Time will tell.

Ultimately though, universities should be (but are not) better prepared for the risks associated with their funding arrangements, especially in the UK where a great deal of controversy is attached to funding sources in higher education (a subject that barely raises a peep in North America). We should know, having both worked in a CSR centre initially funded with tobacco industry money (which understandably caused a storm) and now occupying chairs named in honor of a company featuring no less than two disgraced CEOs (HP), and a business man who among his many accomplishments was responsible for bringing the renowned animal lovers KFC to Canada (George Gardiner) – neither of which has raised a murmur.

When we joined the BAT-funded International Centre for Corporate Social Responsibility at Nottingham University in 2002 we quickly joined Jeremy Moon, the Director, in establishing a governance structure and a funding policy that ensured academic independence and scholarly freedom along with clear lines of decision making and reporting. LSE, by comparison is now nearly 10 years later only just talking about a developing guidelines for donations as part of an independent inquiry into the Libyan affair. Perhaps it would also be wise to belatedly start tackling the issue of plagiarism more concertedly. Davies was unlucky to take the fall for an unexpected series of events in the Middle East. But he only has himself to blame for not instituting the systems and structures necessary to deal with the problems effectively in the first place.


Photo by Leo Reynolds. Reproduced under Creative Commons Licence

Business ethics more culturally significant than CSR ... but not everywhere

'Business ethics' and "corporate social responsibility" are two terms that are often used interchangeably, but at the same time represent somewhat different lenses on business practice. Ethics, of course, is always concerned with norms and values, and is basically about what is right and wrong. CSR on the other hand may be about these things, but doesn't have to be - lots of people take a purely economic or strategic approach to CSR without any real consideration of the normative dimensions. CSR is also, as might be expected, a lot more business-friendly than business ethics. In fact, people often tend to use CSR when they're talking about the good things companies are doing, and business ethics (or a lack of them) when talking about the bad things they do. There are other differences too, but we'll save the definitional niceties for another day.

The point is that the term you use is not always just arbitrary. And the two have a very different heritage even if they have broadly similar concerns. As a professor of business ethics (Crane) and a professor of corporate social responsibility (Matten), and co-authors of textbooks on both subjects, we often get asked which is the most important, which is the most popular subject at university, and why we do we need more than one term to describe the same thing? So we were pleased to discover the new gizmo from Google that lets you easily and quickly do a simple analysis of the cultural significance of different words and phrases. The Ngram viewer from Google Labs plots the incidence of specific terms over the last 200 years in more than 5 million digitally scanned fiction and non-fiction books. It may not let you do anything very sophisticated from a research point of view, but it is incredibly easy and fun to use.

So we plugged "business ethics", "corporate social responsibility" in, and for good measure added "corporate responsibility" and "sustainable business". The results, shown above, relate to books published in English from 1900 to 2008 (the last year provided by the data). As you can see, CSR only really emerged post 1960, whilst business ethics has enjoyed more than a century of cultural dominance, with particular peaks around the crash and depression of 1929-1930, and the financial scandals of 2000. And CR was actually a preferred term to CSR in books until around 2001.

By the looks of things, the dominance of business ethics could be coming to an end though. CSR and corporate responsibility have become increasingly more used - especially in the last decade which has seen an exponential growth in their incidence. Saying that, we'll see if the most recent financial scandals see another resurgence of business ethics post 2008 as the last data points on the graphs might seem to suggest.

An interesting feature of the tool is that you can distinguish between books published in English in the US and books published in English in the UK (as well as books published in non-English languages). And here, we were intrigued to see that in UK publications, CSR has already overtaken business ethics as you can see in the graph below.

In fact, in UK books, business ethics in general has not achieved anything like the cultural significance it appeared to in the first graph. Until the early1980s corporate responsibility was actually the dominant term.

Looking then to US books (see below), we can see that it is here that business ethics particularly stands out - albeit with a mid 1970s blip when corporate responsibility overtook it. Even as late as 2008, business ethics still dominates by quite a gap, although this is clearly narrowing over time.

The US emphasis on individual ethics versus the European focus on system-level responsibilities is something we've discussed at some length in our Business Ethics textbook. Plus the UK has been very much at the vanguard of the CSR movement. So these graphs don't come as a complete surprise. Still, it's interesting to see the data set out so starkly. That said, there are clearly some limitations to the Ngram methodology, as has been widely discussed. Still, there is clearly food for thought in here. And, of course, we're sure there are a whole lot of other corporate responsibility analyses that can be conducted with the tool. Do let us know of any interesting ones you come across.

Is too much transparency a bad thing?

It’s been quite a week or so for transparency. The incendiary WikiLeaks release of almost a quarter of a million classified cables from the US diplomatic service has set news media across the world alight with daily revelations that have acutely embarrassed politicians everywhere. Last week also saw the FIFA bribery scandal reach new heights with the screening of the BBC Panorama program alleging corruption, followed by last Thursday’s selection of Russia and Qatar as the hosts of the 2018 and 2022 World Cups respectively. Yes, that’s Russia, the country labeled a “virtual mafia state” in one of the WikiLeaks cables. Both cases involve a whole host of ethical issues, but perhaps more than anything they pose critical questions about the appropriate limits of transparency. How much should we know about what goes on behind the scenes in organizations such as the US diplomatic service or a global sporting body such as FIFA? And can too much transparency really be a bad thing?

WikiLeaks is clearly the most significant case of the two, and it looks set to be something of a landmark on the ethics of transparency in the digital age. On the one side, high profile rightwingers in the US, including Presidential hopeful Mike Huckerbee, have responded by suggesting the source of the leaks should be tried for treason. “Anything less than execution is too kind a penalty,” he commented. WikiLeaks founder Julian Assange is under investigation in the US and Australia, wanted for questioning in Sweden (for an unrelated charge), and on Interpol’s red list – not to mention being cast by Sarah Palin as an “anti-American operative” who should be pursued with “the same urgency [as] al Qaeda and Taliban leaders”. Bradley Manning the army private who is supposedly the original source of the material is sitting in a military jail awaiting court marshal and a possible 52 years in jail. US internet companies Amazon, Paypal and EveryDNS, meanwhile, have responded to pressure by US authorities and ceased supporting WikiLeaks by allow it to use their servers, domains, and payment services respectively. As a result, the organization has been forced offline several times in the last week.

On the other side of the debate, five respected news organizations – the New York Times, The Guardian, Le Monde, El País, and Der Spiegel – received prior access to the cables and have shown little hesitation in splashing front page stories over the past 10 days. Various commentators, hackers, and net activists have heralded the leaks as a new phase in the radical transparency of digital information. Columbia, meanwhile, has offered Assange immunity, whilst Amazon has been touted as a boycott target for caving to “censorship” and political restrictions on “free speech”. Clearly, things are complicated, to say the least.

The publishing of the embassy cables by WikiLeaks is in many ways a more ethically ambiguous act than many of their previous leaks, most notably the well known Iraq and Afghanistan war logs which detailed the hidden impacts of US military action. Other WikiLeaks though have also won acclaim focusing on documents alleging political and corporate corruption, public interest media reports suppressed by injunction, and secret Congressional research reports. The embassy cables, just by their sheer volume, represent a less focused campaign.

Yes, there are clearly some important public interest revelations in the material that has come to light. These include: the exposure of a US spying campaign targeted at UN leaders; the naming by US diplomats of China’s propaganda chief Li Changchun as the orchestrator of the Google hacking late last year; and disclosures that the Brazilian government deliberately covered up the existence of terrorist suspects within its borders to protect the country’s image, to name just a few. Oh and of course claims that the media organization al-Jazeera is heavily influenced by state foreign policy in Quatar, where the 2022 World Cup is going to be held. But it has to be said that many of the big news stories are no more than allegations by diplomats in what they thought were confidential dispatches rather than necessarily well-founded or verified facts. There is also a whole lot more material that is just plain gossip and rumor-mongering rather than what you might genuinely call ‘intelligence’.

All this makes the WikiLeaks cables less clear cut in terms of making the hidden “truth” public. They provide us with a unique insight into how international diplomacy works, and what emerges is hardly pretty or a paragon of honesty and integrity. But it is hardly the case of a whistleblower bringing a miscarriage of justice to light or an exposé of corporate malfeasance or political corruption, except in the very broadest of terms. Sure the material in the leaks is incredibly interesting, but how we have to ask how much of it is genuinely in the public interest. If it doesn’t pass this test, then why should supposedly classified information become public?

On the other hand, the arguments emanating from the US that the release of the cables has injured the national interest and put lives at risk is also rather flimsy. Yes it has embarrassed the government, but then who hasn’t it embarrassed? Putin, Burlosconi, and others have been just as much the target as those in the US. And no one yet has managed to unearth anything that has genuinely put lives at risk even if it has probably hampered US diplomatic efforts in general. This of course begs the question of why so much information should be classified in the first place if it’s not actually protecting anything.

It is this – the transparency versus confidentiality issue – that is at stake here. Some would clearly like to see all but the most critical security information made public so that the state can be held to account. Others believe that a communication made under the presumption of confidentiality should remain that way unless there is a clear public interest reason for disclosing it. In the FIFA case, there seems little doubt that the BBC was right to go public with its allegations of corruption, even if some commentators were unhappy that it potentially hampered England’s bid to host the 2018 tournament. And even if FIFA President Sepp Blatter complained of “the evils of the media"

The WikiLeaks cables though are so indiscriminate as to fail the public interest test, at least when considered as a whole. However, with appropriate sorting and contextualizing (which the newspapers appear to be doing a pretty good job of), this changes the complexion somewhat. Newspapers like the New York Times and The Guardian have given a good account of their motives and methods. As the New York Times editor says:

"The more important reason to publish these articles is that the cables tell the unvarnished story of how the government makes its biggest decisions, the decisions that cost the country most heavily in lives and money. They shed light on the motivations — and, in some cases, duplicity — of allies on the receiving end of American courtship and foreign aid. They illuminate the diplomacy surrounding two current wars and several countries, like Pakistan and Yemen, where American military involvement is growing. As daunting as it is to publish such material over official objections, it would be presumptuous to conclude that Americans have no right to know what is being done in their name."

With appropriate journalistic selecting and framing, there is little doubt that there is an important if rather delicate media task at work here. This doesn’t condone the release of the cables en masse, though, which in our opinion is harder to defend from an ethical point of view, unless one’s view is that all government should be 100% transparent.

Regardless of the rights and wrongs of WikiLeaks in this particular case, though, the broader lesson seems to be fairly clear. In business ethics, one of the standard rules of thumb is the New York Times test – if you wouldn’t want your actions to be reported on the front page of the newspaper then maybe you shouldn’t be doing it. No doubt US diplomats didn’t expect this to so literally come true, but in a digital world, the prospects for doing so are increasing exponentially. And if you don’t want to be a news star, then you’ll need to work a lot harder than the US government in making sure what is said in confidence stays that way.



WikiLeaks graphic by Anna Lena Schiller reproduced under Creative Commons Licence
America Shhh image reproduced from Boycott Amazon for Dumping Wikileaks  

Google vs China: upping the ante on industrial espionage

One of the big business ethics stories of the last month has been Google's announcement in mid January of a 'new approach to China' following reported attacks on the company's IT infrastructure from inside the country. Google's announcement spoke of targeted attacks on the email accounts of known human rights activists, both within and outside China, as well as other security breaches of Google and 'at least 20 other large companies'. Whilst the announcement of this degree of hacking would have been cause for concern, the explicit link to the surveillance of advocates of human rights in China was positively incendiary. Google was not just talking about regular industrial espionage here but about state-sponsored spying for political purposes. So suddenly the company had launched itself into a diplomatic row - albeit one between a company and a government - rather than its usual commercial scrapes.

The announcement didn't just make the headlines because of Google's allegations though. The company dropped another huge bomb by declaring that it would no longer continue to operate a censored version of its search engine in China - despite being required to by the Chinese authorities. 'Over the next few weeks' the company announced, 'we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.'

Since the furor over Google's announcement blew up a couple of weeks ago, numerous commentators have offered their view on what's going on. Many have focused on Google's ongoing troubles in securing in market leadership in China, (suggesting that the human rights concerns have been used as a smokescreen behind which to withdraw gracefully from a commercial failure), while some have presented it as a belated switch to principled behavior. Some have even reckoned that Google is using the publicity around the announcement to build awareness and brand loyalty in China. Working out the motivations of the company in picking such a huge fight in one of the world's most important markets is never going to be easy.

Three things that have particularly stood out for us though in all this are these, and we think they offer some salutary lessons for the brave new world of business ethics that is starting to emerge.

1. Google the 'political corporation'. Google clearly feels big enough and powerful enough to pick a fight with one of the most powerful governments in the world.... over human rights. On the one hand, this is great in that it means that we don't have to just rely on the government to protect our human rights. Some big companies (whatever their motivations may be) may also be willing to do some of the heavy lifting from time to time (at least when when it suits them). In some of our writings, we've refereed to this as the corporate administration of citizenship rights (yes, not the catchiest phrase we'll admit, but it does the job). On the other hand, isn't this an issue that national governments - especially the US Government - should be leading on, rather than, as Hilary Clinton did, simply backing-up Google once it has broken cover. Still, whatever one thinks about this Google is clearly feeling big and important ... and perhaps also starting to feel the heat that comes with such size. It could just be getting in quick before the ethical backlash over its mammoth reach begins in earnest. With its fingers in all kinds of free speech, privacy and intellectual property issues, Google is fast becoming the essential political corporation of the 21st century.

2. One step forward, two steps back for the Global Network Initiative. The global what??! If you've not heard of it, well you're not alone. In the latest bout of Google vs China, the initiative hardly even scored a mention in the media storm. However, the GNI was launched back in 2008 to much fanfare, and was promoted as the new approach that internet companies were going to deal with censorship issues after getting their knuckles rapped by the US government for bowing to the Chinese government's demands. Well, the 'new approach' before the latest new approach of course. As a partnership between Google, Microsoft, Yahoo and a score of NGOs and academic institutions, the GNI held out considerable promise for delivering a more responsible approach to a tricky ethics problem that frankly, was not going to go away fast. Fast forward to January 2010 and GNI advocates could well point to Google's announcement as proof that the initiative is starting to have a significant effect. After all, one if its members is making a major song-and-dance about its commitments to internet freedoms. The trouble is though, no one at Google thought to mention the GNI, or suggested that it played a role in its decision. More worryingly, one of Google's main partners in the initiative, Microsoft, publicly criticized the company for it stand in China. Oops, hardly a hallmark of a strong partnership.

3. Industrial espionage goes up a level. First, spies worked for governments, just like in the old movies. Then they worked for companies ... in fact just like in the (new) movies, such as the 2009 Julia Roberts' release Duplicity. But some of the big news stories now in industrial espionage involve both companies and governments. It's a kind of semi-industrial espionage. The Google story was just the latest and best known incident of this government-business espionage, but clearly its becoming an increasingly prominent feature of the contemporary business landscape. Just this last weekend, the Sunday Times in the UK reported on a leaked British security service document accusing China of bugging, bribing, and blackmailing UK business executives in an attempt to secure commercial secrets. Notably though, here the warning came not from a multinational corporation, but from the national security service (the irony of MI5 warning against spying was not lost on many of the newspapers' readers who commented on the story). Either way though, as these incidents suggest, the stakes being played in industrial espionage have been significantly raised. The question, of course, is how best to respond ... and whether governments or companies should be leading the line.


Photo by Mykl Roventine. Reproduced under Creative Commons Licence

Britain's bribery shame to end?

For the past few years, we have watched with sagging spirits the abject failures of the UK authorities to get to grips with overseas bribery by British firms. It's been a real stain on the reputation of the country, its rule of law, and its businesses. With the US pressing ahead with numerous convictions under its beefed up enforcement of the Foreign Corrupt Practices Act (i.e. any firm listed in the US is liable to prosecution for bribery wherever in the world it may have occurred), Britain has become something of an international embarrassment. So much so, that at the end of last year, the former head of Transparency International UK, Laurance Cockcroft bemoaned "Britain's bribery shame".


Cockcroft's article in the magazine Ethical Corporation, written following a damning report from the OECD's working group on bribery, made the case pretty starkly:

"This extraordinarily feeble performance by the UK is regarded as symptomatic of a profound lack of commitment to addressing corruption. The report of the OECD working group suggests the UK government’s inaction is creating a situation where UK-based companies can behave with impunity in the payment of bribes to win overseas business. ... [Earlier] the OECD had raised the question of whether the UK’s failure was effectively “systemic”. This implied that the nexus of inadequate legislation, feeble prosecuting agencies and a political willingness to buckle to an ally (Saudi Arabia) made uncomfortable by a criminal investigation meant that the UK was totally unable to address corruption. This fear was quietly reinforced by the fact that in Transparency International’s corruption perceptions index, published in September this year, the UK fell from 12th to 16th place."

We've talked here before about the huge BAE scandal in the UK, and the country's decline on the TI rankings. In the new edition of our business ethics book, which is just going into production, we explore the events in even more detail. But those of you that want the 2 second overview, the bottom line is that the Serious Fraud Office was forced by the British government to cave in on its investigation of BAE's alleged millions in bribes paid to Saudi Arabian officials after heavy lobbying from the company and the Saudi government. The whole episode spoke of a huge ethical failure - and even a wrenching of the basic rule of law. As Cockcroft put it (and he was among the more reserved commentators): "Ten years ago, the international community relied on the UK to be progressive in this arena. Now, disappointment at the lack of a serious stand has turned to disbelief, and disbelief to anger."

Today though, comes news of a small but significant breakthrough, with the announcement by the SFO of its first conviction of a major British firm for overseas bribery. The firm, Mabey and Johnson, a signifant player in the world of bridge-building firm, was found to have paid bribes totalling £1m to foreign politicians and officials to secure export orders. Operated through covert middlemen, the bribes were paid to officials in a range of developing countries in Africa, Asia and the Caribbean. The SFO, learning something from its US cousins, tconcluded its first plea bargain type conviction which saw Mabey and Johnson slapped with more than £6.5m in fines and reparations to foreign governments.

This can only be good news for the beleagured SFO which only a few months ago had been left dispirited and demoralized by the BAE failure. Its head and the main BAE investigator had both left the organization soon after the government had effectively closed down their biggest ever bribery investigation. Now, media reports suggest that the new director, Richard Alderman, may be ready to push for a plea bargain at BAE too.

Today's news can only be welcomed by those of us with an interest in seeing the UK get back into the driving seat on dealing with overseas bribery. However, it will take more than one prosecution to wash away the shame of its pitiful performance over the past decade. The country's record of investigating and prosecuting bribery is still woeful in comparison to its peers – at the end of 2008, only two cases had been brought, compared with 103 in the US, 43 in Germany and 19 in France. Let's not pretend that this is because British companies are so much more honest when it comes to bribery than their contemporaries - it's more a case of them simply being able to get away with it. And realistically, only a conviction of BAE is going to change the perception of Britain as a soft-touch country, at least in the short to medium term. The SFO has little time to lose - especially if they don't want to be further embarassed by the Americans prosecuting the iconic British firm before they do. But it's still not clear if the ethics will simply get submerged by the politics again.

Ethics and MP's expenses: storm in a (claimable) teacup?

Crane and Matten have been in the UK this week, and the big issue absolutely dominating the media has been that of the expense claims of the country's Members of Parliament (MPs). The press and TV have been all over this one like a bad rash, and don't look ready to letup soon. Now no one likes to see elected politicians misappropriating the public's hard earned money - and Britain has already seen itself slipping down the greasy poll of the corruption perception rankings as we mentioned last autumn. But over the course of the past few weeks the media storm has relentlessly criticised politicians from across the political spectrum for abusing the public's trust to such a degree that we've already seen one senior figure resign (the Speaker of the House of Commons), various politicians have had their knuckles rapped and have promised to repay their overenthusiastic claims, and party leaders have been scrabbling for the moral high ground in trying to instigate new systems of control.

When all is said and done, there is little evidence in all this that any of the politicians involved have actually broken any rules; in fact, it would appear that in many instances, their claims were not only approved, but actively encouraged by administrators. This has all been going on for years without anyone getting in much of a commotion about it. Besides, the padding of expenses is a problem that is hardly unique to poilitical circles - the private sector has just as many problems to deal with, and the media industry itself is hardly whiter than white. So is this all a fuss about nothing? Not exactly. There are some real issues here, especially around how to maintain public trust. There are also many lessons to be learnt about business ethics too - particuarly in terms of the limits to compliance systems in managing ethics, and the importance of getting to the deeper problems of how institutions are governed. Some of these points are dissected nicely in some recent posts on the Added Values blog by the folks in the Professional Ethics Network at the University of Leeds. They also link to a nice little interview clip from everyone's favourite Twitter-er Stephen Fry.

Another way of looking at this is to try and understand why such problems have gone on for so long, and how such a culture of corruption ever managed to get cemented into the heart of government in the UK. One of our favourite concepts in exploring institutionalised bad behaviour is "rationalization tactics", as described by Anand et al in the Academy of Management Perspectives. It doesn't take much effort to see in the case of MP's expenses some clear examples of how processes such as incrementalism, socialization, and cooptation have successively socialized MPs into unethical behaviour ... and how rationalizations such as appealing to higher loyalties and balancing the ledger have given them the kinds of excuses that deny wrongdoing and keep everyone in a state of denial. Of course, if we follw this path, the obvious solution that comes to mind therefore, is a fundamental culture change, a new broom in the dusty cupboards of Parliament. But for that, it's going to take a whole lot more than the rhetoric we've heard so far.

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 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.