Car Culture

Our blog has been a little quiet these last weeks. No, we haven’t been short on ideas to talk about. Hell no, what a stretch of events we had. The facebook IPO – what a rich field day for business ethics, to which thankfully other voices have added thoughtful reflection. Or the ongoing ‘American Idol AKA Republican Primary’-show, where even a lunatic like Mitt Romney - who as a Mormon Bishop among many other things believes in baptism of the deceased - appears the sanest option; what a rich field of exploring ethical issues in the public sphere.

Next to travelling and a busy work schedule there are a few domestic issues which have kept us busy these days. One of which was thinking about buying a car. Starting a family in North America obviously seems to equate with starting to become a car owner. In Canada, there is always the weather to blame, of course. But with public transport being what it is, trips to the supermarket, the doctor or the daycare just ultimately suggest you need a car.

Buying a car in North America exposes the potential customer to a number of issues we regularly discuss here from a more scholarly perspective. Let me throw in a couple of observations. To begin with, it is rather striking to see how fuel inefficient cars by and large still are over here. This is even more startling as most of the companies which offer cars here are multinationals which in other parts of the world are very well capable of offering fuel efficient vehicles. Be it GM through their Opel or Vauxhall brands in Europe, Ford in their German and British subsidiaries or Chrysler through their Fiat brand in Italy – they would not need to re-invent the wheel to offer cars that use significantly less than, say, 10 litres per 100kms. But you have a hard time to find these cars here, certainly in the affordable segment.

This observation in itself is worth pondering. How often do we hear, not at least from the American President, that the road to less dependency on oil is long and complicated. In fact though, in the short term, we could reduce car fuel consumption by roughly a third if only we found ways for these companies to offer in North America what they successfully sell in other parts of the world. The technology exists, its something else that prevents it from being used.

Mind you, this does not just apply to American auto makers. Checking the offerings of European car companies over here it is striking to see, that they just offer their largest, gaz guzzling versions over here. In Germany, I can buy a BMW X3 (mid size SUV) as a small Diesel (with ample performance) which just needs a little more than 5l/100km, whereas in Canada, the smallest option is a 240hp muscle man which roughly drinks double of the German option. And don’t forget we are talking about the company that prides itself on being the leader in the Dow Jones Sustainability Index for seven consecutive years!

Our readers might by now have raised the odd eyebrow about me mentioning the anathema of ‘SUV’ on an ethics blog. But yes, that’s what I am looking for. Mind you, in the beginning I just thought I might get a mid size car in the ‘wagon’ or ‘estate’ version. Like the proverbial Volkswagen Passat ‘Kombi’, in which a generation of German kids over the last decades has been raised. No such luck over here though. As soon as you are looking for a mid-size car with some trunk and loading space your only option with most manufacturers are small/mid size SUVs. Again, even if Volkswagen offers a nice Passat Wagon in Europe – here they send you towards their ‘Tiguan’ SUV  which starts with the modest, baby friendly engine power of 200hp!

Pretty much all car companies now serve you an SUV-only diet if you are looking for a practical and spacious car. With some exceptions from the Far East, all the offerings are over-motorized and loaded with gadgets such as four wheel drive, monster tires and racing gear which no one will ever really make use of.

Now one can argue that companies just cater for a certain taste of consumers. But my short experience as consumer in Canada so far has shown me that there is little choice beyond just some budget utilitarian options to drive a nicely designed, luxurious, practical car that is fuel efficient. Given that all the companies I checked have those on offer in other parts of the world points the finger in another direction.

While shopping around, I took this week’s New Yorker with me and found the article on ExxonMobil’s approach to governmental relationship in a funny way elucidating. It looks to me that my experience in the showroom of car dealers is maybe more the result of years of targeted lobbying by automakers and oil companies. The reason why GM or Mercedes offer fuel efficient cars in Europe has little to do with the fact that the consumers over there are so much more enlightened. It is more the result of stricter governmental control over fleet consumptions of car manufacturers and generally higher taxed gas/petrol.

In the US – as evidenced in detail by the mentioned article -  big oil&auto have been quite successful in keeping gas prices low and fuel consumption high. Even with stricter regulation around fuel consumption for cars, the exemptions for trucks have just created this loophole and in some ways motivated companies to move more of their offerings into the SUV category. All this political power of industry is nothing new though. Stan Luger has published his brilliant historical analysis years ago, and it still seems to hold true today. It is just interesting to experience what this really means for everyday life from a consumer’s perspective. 

North America and its ‘Car Culture’, i.e. its total dependency on the car for normal work, family and social life is a rather bleak reality. Americans now spend an average of 100 hours a year commuting by car – more than the average two weeks of vacation for most people here. Test driving one of those over-motorized SUVs this week also elucidated the Foucaultian nature of driving over here: just playing a little with the gas nozzle gets you into speed regions far beyond the ridiculous 100km/h which represent the limit here in Canada. All that money spent on such a car – and it is just good to show you yet another barrier, another rule by which our lives are constrained, restricted and domesticated...

DM

Photo by JMR Photography, reproduced under the Creative Commons License.

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 

Shooting straight at Target?

Target, the American discount retail giant that has for years been trying to claw market share from its mammoth rival Wal-Mart, was generally regarded as a more socially responsible alterntive to its big box competitor. That started to change with Wal-Mart's sustainability u-turn a few years ago, prompting Fast Company magazine to recently proclaim Walmart the winner in the "sustainability face-off" between the two companies.

One area of social responsibility where Target has continued to outpunch its rival though has been in diversity and human rights. For example, Target scored a maximum 100 points in the most recent Corporate Equality Index published by Human Rights Campaign, the largest national lesbian, gay, bisexual and transgender (LGBT) civil rights organization in the US. Among other things, Target extends its employee's health care coverage to same-sex partners. Wal-Mart, by comparison, until recently provided coverage to less than half of its own employees never mind their partners. It scored just 40 on the Index.

However, in the last two months, Target's carefully nurtured diversity reputation has begun to unravel. It is now in the midst of a boycott from LGBT customers, appears to have seriously angered many of its once loyal employees, and has even had the social media campaign for the launch of its fall clothing line derailed.

The cause? A relatively innoculous looking $150,000 campaign donation in the upcoming 2010 Minnesota Governor's Race. Target made the donation to MN Forward, a political action commitee which describes itself as "established to ensure that private-sector job creation and economic growth are at the top of the agenda during the 2010 campaign" . The group works to solicit campaign donations from  "Minnesota job creators to elect candidates from both parties who support policies that enhance job growth".

So far, so uncontroversial. Target is among a number of Minnesota-based companies contributing to MN Forward, with a view to backing candidates making job creation and support for business a priority. The group is putting its corporate money behind the Republican candidate Tom Emmer in the Governor's race. And they make no bones about why: "As a legislator, Tom Emmer voted against job-killing taxes and for reduced government spending. Emmer voted with the Minnesota Chamber of Commerce 91% of the time". You can't get much more pro-business than that. So it's hardly very surprising that Target is willing to cough up a few readies to get their man in poll position. So where's the rub?

The problem is Emmer isn't just about supporting business. He's also about supporting marriage. Traditional marriage. As in, not gay marriage. All of the other candidates are in support of legalizing same-sex marriage in the state, but Emmer has been a staunch opponent of LGBT marriage rights. As he says on his campaign website: "I believe marriage is the union between one man and one woman. As a legislator, I have consistently supported the constitutional marriage amendment that protects traditional marriage.”

There's more, as the Minnesota Independent newspaper documents well:

"In 2007, Emmer authored a constitutional amendment to prohibit same-sex marriage and civil unions. In many instances, Emmer has tried to change language in bills to that same-sex couples cannot benefit. In a bill to create standards around surrogate motherhood, Emmer attempted to replace the word “parents” with the words “mother and father.” In a wrongful death bill this session, Emmer questioned the use of the term “domestic partner” just as he has in bills aimed at providing benefits for same-sex partners. Emmer has also been criticized for his association with Christian hard rock ministry, You Can Run But You Cannot Hide Intl., Inc., which has made incendiary statements about the morality of imprisoning and executing homosexuals. Emmer’s campaign had purchased table space at the group’s fundraiser and visited with the group on the radio and in person."

Ah. So, not exactly a poster boy for Target's diversity policies then. The company, a regular supporter of the local gay pride festival, is more used to being recognized for its leadership on LGBT issues. So given this kind of backstory it is perhaps no surprise that the company's campaign donation has ignited a bit of a storm. Gay rights organizations have been up in arms, various facebook campaigns have been started, and protests have been held outside of the firm's stores. Boycott plans and employee unrest have followed.

Initially, Target was unrepentant. The CEO's response to staff was an email largely dismissing the problem. In the mail, he wrote: "We rarely endorse all advocated positions of the organizations or candidates we support, and we do not have a political or social agenda. As you know, Target has a history of supporting organizations and candidates, on both sides of the aisle, who seek to advance policies aligned with our business objectives, such as job creation and economic growth...Let me be very clear, Target's support of the GLBT community is unwavering, and inclusiveness remains a core value of our company."

However, fearing an escalation of the storm, earlier this month Target's CEO issued an apology letter to employees, remarking that "while I firmly believe that a business climate conducive to growth is critical to our future, I realize our decision affected many of you in a way I did not anticipate, and for that I am genuinely sorry." This seemed to stem the tide of protest, but the story has yet to go away for the troubled retailer. Last week, the Human Rights Campaign (yes, the group that gave Target the 100/100 score for their equality policies) announced that the company has refused to "make it right" to the LGBT community by retracting the donation or making a matching $150,000 donation to a gay rights organizaton. HRC said it would be making a $150,000 donation itself to elect a pro-equality governor.

We doubt ths will be the end of the story. But what can we learn from events so far? One clear conclusion is that the recent Citizens United ruling in the US that gives private corporations the right to fund political broadcasts during elections is not going to be a field of roses for companies. Whilst it may guarantee them free political speech, the question is will they necessarily want to use it given the dangers of upsetting their many and varied stakeholders? Big brand companies especially will probably want to be proceed with politics very carefully and not without due dilligence - as Target have found to their cost.

Secondly, companies will need to get smarter about how to engage in identity politics. It is no use saying "we don't have a political agenda" when you've invested in supporting minority or under-represented groups such as LGBTs, racial minoroties,or the handicapped. The decisions may be driven by business concerns but that doesn't mean that they don't have political ramifcations. And identity-based organizations know this and are ready to exploit companies' naivety. McDonald's have already been burnt on a simialr issue, as we reported a couple of months ago. And if you want to read more, we've recently written a couple of downloadable academic papers focusing on corporations and identity politics and how to bring identity afiliations into stakeholder identification.

The point is that companies are not yet very skilled at joined-up thinking across their span of operations when it comes to issues like gay rights - or any number of other issues that reflect people's complex and multi-faceted identities. Target is learning to thnk about LGBT issues not just in relation to human resources, but also in marketing, investor relations and government relations. Next it could be Muslims, Mexican immigrants or Mothers Against Drink Driving pointing out their inconsistencies. Or perhaps the American Family Association will start boycotting them now that they've heard about all that pro-gay stuff Target were doing. Then we'll really see if the company has a political agenda.

More on Google's growing political influence

When we reported yesterday on Google's recent spat with China we pointed to the growing political influence and power that the company was wielding. Anyone that takes on the Chinese Government must be pretty sure their political muscle.

One of our readers helpfully pointed us to a story by Chris O'Brien that ran in the Mercury News over the weekend, which throws more light on this trend, indicating how Google's spend on lobbying in Washington DC had mushroomed in recent years. O'Brien writes:

"In just five years, the search engine giant has gone from almost no presence in Washington to spending more money on lobbying than all but one other Silicon Valley company in 2009. And in the past three months, Google topped all other valley spenders."

The charts produced by the Mercury News show just how steep this curve has been, and how its lobbying expenditures are even starting to catch up with its fellow technology giants Microsoft and IBM:


The fact of Google's activities in DC is hardly surprising, but it is nice to get some detail behind the company's changing political status .... and to see just how much the company now sees policy makers as a key stakeholder. In a companion piece, O'Brien also takes a look at the changing face of the types of issues Google is lobbying on, and at some of the revolving doors between Google and the US government in terms of staffing. As he makes clear though, this is pretty much par for the course for a major multinational corporation - the point is not that Google is different (as it often likes to claim) but that it is essentially much the same. The big difference though is the speed of change, and the readiness with which Google has equipped itself for dealing with its political context - or as economists like to call it, the 'non-market environment'.

When we looked into our crystal ball at the beginning year, it looked likely that 2010 would be a pivotal year for Google in terms of corporate responsibility issues. There is every chance that with its growing power and the major impact it is having on industries such as media and publishing, a backlash could easily start to take off. However, the behind the scenes lobbying and the putative game-changing in China suggest that Google is reading the signs and seeking to head-off the critics before they can build up momentum. Getting this one right could be critical.


Figure copyright Mercury News