Top 10 Corporate Responsibility Stories of 2010

Mermaids protesting the BP oil spill. Photo by Johnathaneric.

 It's been a big year for corporate responsiblity. A huge oil spill, continued ructions in the financial sector, landmark decisions in the courts, and a new dawn for online companies around human rights issues. It is never easy to pick the most important stories of the year. Some get huge coverage simply because they feature big brand companies. Some hardly even scratch the public consciousness despite having major implications. In other cases, it can be difficult to determine accurately what their long-run significance will be.

But here in the Crane and Matten control room, we've put our heads together to come up with what we regards as the top 10 corporate responsibility stories of the year. These are the events that we think will have the most lasting impact on the field. But it was a hard choice - narrowly missing the cut were the 10 year anniversary of the Global Compact, the FIFA World Cup corruption scandal, Unilever's "Sustainable Living" plan, Apple's labour violations, Wal-Mart's latest announcements on sustainable agriculture, Jerome Kerviel's massive fine, and American Apparel's rollercoaster ride through 2010, among others.

But, hey, not everyone can be a "winner". So if you think we're worng, or if we've missed off your biggest story of the year, do let us know. And while you're at it, take a moment to complete our poll on the right to help us find the top stories according to our readers.Here, though, is our top 10.

1. BP's oil spill in the Gulf of Mexico
Deepwater Horizon was one of the world's largest ever oil spills, and understandably this story absolutely dominated 2010. Not only did it put a final nail in the coffin for BP's once vaunted sustainability reputation, but it heralded a major rethink about the viability of deep sea drilling. BP didn't cover itself in glory by failing to come up with a realistic remedy until far too late - and ended up picking up most of the tab, thereby putting paid to the usual assumption that pollution is simply an 'externality' of business. Really, this was the mother of all corporate responsibility crises in 2010.  

2. Google's battle for free speech
Google's withdrawal from China at the beginning of the year was a landmark decision in the battle for free speech on the web. A real clash of titans, no other story this year illustrated better the clash between government and big business around human rights issues. But Google's subsequent legal problems in Italy, where senior executives were convicted of privacy violations, demonstrated just how complicated this battle is going to be. 

3. WikiLeaks publication of the embassy cables
Who knows where this one will end up, or just what its long term significance will be for corporate responsibility? But it's hard to deny its significance as a major turning point in the fight for greater government transparency, and the contested role of the media and NGOs in bringing confidential information into the public realm. Heralded by some as the first great cyber war, the WikiLeaks maelstrom inevitably catapaulted online companies into the fray with predictably unpredictable results.   

4. Citizens United decision
The only court case to make it into the Top 10,  but according to President Obama the 5-4 decision by the US Supreme Court in Citizen's United vs Federal Election Committee "reversed a century of law" and "opened the floodgates" for corporations to play an ever greater role in US politics. According to the ruling, companies and other special interests can now spend as much as they like on influencing the outcome of elections. And why? Because despite their vast resources, companies should have rights to free speech on political matters the same as any other citizen. An historic ruling.

5. Toyota’s product safety recall
This case grabbed a lot of headlines in 2010, mostly because of the very scale of the recall and Toyota's previously unblemished safety reputation. This was a huge embarrasment for the Japanese car maker and showed up serious problems in the firm's management culture.

6. Bank bonuses 
Bank bonuses stayed in the headlines during 2010. Despite continued economic problems, huge public bailouts in Greece and Ireland, persistent unemployment, and widespread austerity measures, some banks managed to award bigger bonuses in 2010 than ever before.  No surprise that the public stayed angry with a bonus culture apparently so far removed from their day-to-day problems. But European regulators finally seemed to get the message with new guidelines released at the end of the year that looked set to dramatically change the bonus landscape across the entire continent.

Butcher in Haiti with food vouchers used to stimulate trade. Photo by DFID

7. Corporate response to the Haiti earthquake 
Few stories better illustrated the precarious role of business in international development than the corporate response to the Haiti earthquake back in January. The arrival of cruise ships full of vacationers represented for many the unacceptable face of corporate insensitivity and amoral consumerism. Yet, few denied that business had to be an essential ingredient in getting the stricken country back on its feet again. 

8. Greenpeace campaign against Sinar Mas palm oil 
Greenpeace won Ethical Corporation's campaigner of the year in 2010 for its work in combating deforestation. This was exemplified in the NGO's campaign against Indonesian palm oil producer Sinar Mas which saw them force Unilever, Nestle and others to cease buying from the company during the year. Greenpeace's spoof ad on YouTube for the Nestle chocolate bar Kit Kat went viral demonstrating how campaigners were effectively harnessing social media for anti-corporate protest. 

9. HP's termination of CEO Mark Hurd
Hewlett Packard has had its ethical ups and downs over the years, but few expected the company to follow through quite so severely when CEO Mark Hurd was found to have made fraudulent expense claims to cover up a relationship with a female contractor. Rejecting Hurd's offer to pay back the $20,000 he'd received for the claims, the highly regarded leader was ousted by the board for failing to live up to the company's code of conduct. This was an impressive commitment to ethical rules by anyone's standards. However, it angered many who thought the company was shooting itself in the foot. A tumbling stock price and Hurd's instatement at competitior Oracle showed how much pain there could be in doing the right thing.

10. India's 2G licence scandal
OK, so actually this happened in 2008, but it was only in the closing months of 2010 that the full extent of the 2G telecom spectrum licences scandal began to be revealed. In what some have called India's biggest scandal since independence, Telecommunications Minister Andimuthu Raja was forced to resign over allegations that he lost the Indian Government some $38 billion in revenues using an opaque permit system that was riven with corruption. Leaked tapes of secret phone calls with corporate lobbyists have poured oil on the fire. This could yet become India's Enron moment.

So that's our Top 10 for 2010. Doesn't make for particularly edifying reading, but it hasn't been all bad. In amongst the scandals and corruption there have been some genuine cases of ethical leadership in 2010, where companies like Google and HP have had to make some hard ethical choices that have cost them dear. No ne said corporate responsibility was easy.

‘Freedom of Speech is Priceless - For Everything Else, there is MasterCard.’

This is a quote from the German blogosphere today, commenting on the decision of MasterCard, Amazon, PayPal and other companies to withdraw their services from the controversial Wikileaks site.

In the last two days the attention on Wikileaks has taken a really funny turn. While most of the brouhaha in the media over the last days has been about the stirs in the political world ensued by the disclosure of the diplomatic cables, the debate has taken a conspicuous turn in the last two days.

First, there is the decision of these companies to withdraw their services from Wikileaks. While this points, once more, at the blurring boundaries between business (making profits) and politics (acting as agents of their democratic electorates) it also highlights the increasing relevance of ethical reasoning for corporate decision making. How we would love to have been a fly on the wall in the boardroom of these companies when they were deliberating on how to deal with Wikileaks these days!

Now, the controversy here is rather simple – and has been discussed by us on the blog before: what should a corporation do in the face of censorship by a government? In the case of Google et al. in China the answer still seems reasonable easy: of course they should not allow it, in particular as they would bow to demands of a totalitarian, undemocratic regime. But what about the US government? And its perils in the face of a fairly low key website such as Wikileaks, disclosing some rather embarrassing realities about the war in Iraq, Afghanistan, and latest, their real thoughts about friends, foes and allies?

Alas, the reaction of these companies and their declared intents are anything but convincing. And do not reveal a very informed and mature expertise in addressing ethical issues. How can MasterCard still offer services to organisations close to the Ku Klux Klan, but turn down Wikileaks on the grounds of violation of the rule of law in democratic countries? It does not make sense. Similarly, Twitter’s half-baked explanation about why to go easy on Wikileaks Tweats was anything but convincing. It all points to a second insight the recent disclosures have made more than obvious.

A minute ago, The Guardian (on its website) revealed how Pfizer attempted at tweaking the political system in Nigeria to avoid legal action because of dubious practices in drug trials (‘The Constant Gardener’ is kind of greeting…). Similarly, the cables reveal how deeply MasterCard and other credit card companies were using American political/diplomatic clout to further their business goals in Russia, for instance. Most notably we learned about the fact that oil giant Shell ‘had seconded employees to every relevant department and so knew "everything that was being done in those ministries".’ Not only that this slightly clashes with Shell’s business principles – or maybe provides us with a proper interpretation of those: ‘Shell companies do not take part in party politics.’ Fair enough. But the Wikileak cables provide us with the proper interpretation of what Shell really means when it makes a sweeping statement like this:

‘However, when dealing with governments, Shell companies have the right and the responsibility to make our position known on any matters which affect us, our employees, our customers, our shareholders or local communities in a manner which is in accordance with our values and the Business Principles.’ (Principle 3)

The merit of Wikileaks is not that we suddenly discover what companies say publicly is not the same as they do in private. We are all guilty of this at times. As Lizzie Widdicombe puts it in the New Yorker this week, the problem is not a certain discrepancy in facts, but the ‘abrupt shift in tone’. Not that companies feel exposed by revelations of some sort of truth, but in fact by a disclosure of intent. All that smooth talk about CSR in Nigeria on Shell’s website – at the end of the day the intent of their most senior executive in the country reveals the true attitude: an instrumental approach to the countries Shell is operating in.

So there is much merit in following the websites of those news organisations, Wikileaks has entrusted with the documents. Democracy is only possible with some basic transparency of the institutions that govern us. Wikileaks, again, highlights the fact that those are not just governments. But more and more also corporations. In that sense, it is somewhat sad that the two previous waves of Wikileaks’ disclosures have only met rather limited uproar: the Iraq war (incl. the video on American soldiers killing civilians) and the Afghan War Logs. The real fury in Washington and elsewhere came with the latest disclosure of the diplomatic cables. Chances are, that the latter will give us a much more precise idea of how much the collusion between business and governments has really developed.

Photo taken from Jotman.com

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  

What’s wrong with Canada?

For a long time Canada – certainly in the rest of the world – had this image of a very progressive, liberal and forward looking country in terms of social and environmental responsibilities of business. This not only applies to business leaders which from an early time on championed these ideas. To mind comes Maurice Strong and his engagement for various UN led environmental initiatives in the 1970s. Or Chuck Hantho who, while CEO of what is now ICI Canada, initiated the ‘Responsible Care’ program in Canada which subsequently was adopted by the global association of the chemical industry and is now a standard for the industry in 53 countries globally. Not to forget David McTaggart, the Canadian businessman who became one of the founders and early leaders of Greenpeace. Also notable are wider initiatives such as the Montreal Protocol or, more generally, the courageous stance for human rights and integrity in the world, symbolized by ‘the last man standing in Ruanda’, Canadian General Romeo Dallaire on the UN mission when the Genocide began to unfold in the Central African country.

This all sounds like long ago now. The month of November was not a good month for Canadians with an interest in social responsibility of business. First, we saw Bill C-300 voted down by the Canadian parliament – a bill which attempted at raising the standards of environmental and social responsibilities of Canadian mining companies abroad. We might quibble about details of the bill. But it is pretty undisputable that the Canadian mining industry as a whole has a pretty dismal reputation around the world. What is conspicuous is that Canadian politicians do not even see some attempts at ‘symbolic politics’ – which the bill would have been by and large – as necessary. It makes you wonder.

Then, later in November, it was a – by all standards rather modest – attempt at addressing Canada’s more than wanting approach to climate change, which was voted down in the Senate (Canada’s second chamber of parliament). Bill C-311 was a modest attempt to close the gap between the Kyoto targets and the current performance of the country, ahead of a next round of negotiations in Cancun this month.

Of course it does not help to be governed by a party whose power base and current Prime Minster is from the province of Alberta which thrives on one of the most questionable mining operations in the world: the oil sands. But it cannot be all just old-style business interest driven political manoeuvring. This blog is triggered by reports about the work of Vancouver based consultant Patrick Moore for Asian Pulp and Paper (APP) basically legitimating the environmental record of a company that is allegedly responsible for the most rampant deforestation in Indonesia. The delicate detail – which seems to look symbolic for the country: Moore once was a director and spokesperson for Greenpeace.

All this is even more interesting as Canadians generally pride themselves on being so much more sophisticated, civilized and socially literate than their relatives ‘South of the border’. Looking, however, at the track record on the ground, the mood of the country has largely assimilated to that of their Southern neighbours. And were it not for the last bastion of Canadian’s pride in their social edge – the public health system - the Country’s practices make it look in many ways like the 51st state...

Photo by 416style reproduced under the Creative Commons Licence.

Price of tap water x 2000 + plastic bottles + manufactured demand = The Story of Bottled Water

We've been meaning to write something on Annie Leonard's "Story of Stuff" online phenomenon for some time. But then we thought: why not give some real "digital natives" the opportunity to express what they think about it? So we set a challenge for a class of undergraduates at Copenhagen Business School who we knew were using our book and were about to watch some of the Story of Stuff content as part of their CSR course. Write us a review, we said, and we'll feature the best one on the Crane and Matten blog.

And so here it is - a terrific guest blog from the winner of our challenge, Camilla Marie Thiele, a bachelor’s student at CBS.

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“The Story of Bottled Water” presents a narrative of how the bottled water industry came into being by “manufacturing demand” for an unnecessary product through misleading advertisements, and how this product is effectively trashing the planet. This narrative, which is cleverly presented in animated video form with smartly drawn cartoon characters that attract the attention of adults and children alike, attempts to expose the bottled water industry and its deceptive selling practices in an effort to help us consumers see through the deception. That said, the video also points the finger at us – the consumers – who purchase these millions of litres of bottled water every year and toss them out with little regard to where those chunks of plastic pile up.

Annie Leonard, the writer and narrator, offers a compelling argument of how the bottled water industry has worked to deceive us, where that industry has strategically called into question the quality of regular old tap water and manipulated all of us into thinking that water from the tap is inferior to water from the bottle. This is part of the bottled water industry’s plot to manufacture demand with an ultimate goal of relegating tap water to just showers and washing dishes!

And, as Leonard argues, it is obvious why the bottled water industry must work to manufacture demand because it costs 2000 times more for bottled water than tap water - not to mention that tap water has been shown over and over again to be just as high quality (if not better) than bottled water. Leonard goes on to argue that this has led to the current situation where because of this manufactured demand, people around the world are spending their money on bottles of water whereas the real demand issue of access to clean tap water is grossly underfunded. And this happens while the bottled water industry is laughing all the way to the bank!

Leonard is right - that does not sound sustainable. It is time that we took back the tap.

The seven minute animated video that is “The Story of Bottled Water” is part of a wider collection of videos known as The Story of Stuff Project. Since the first The Story of Stuff video was put out in 2007, this project has become an online phenomenon clocking up over 10 million views. This figure now includes my fellow classmates and I since we viewed both the Story of Stuff and the Story of Bottled Water as part of our bachelors course in Corporate Social Responsibility at the Copenhagen Business School.

The Story of Bottled Water critically examines the environmental and social consequences of an unchallenged allegiance to consumerism by using the bottled water industry as a compelling example of the harms that can result. And it is effective because even though The Story of Bottled Water is part of an activist campaign taking on a suite of very serious issues, Leonard frames the points in a satirical and highly entertaining way. Despite - or maybe because of - the simple videos and their easy-to-understand-manner, it is a message that provides substantial food for thought for every kind of audience. And perhaps most importantly for my fellow business school students and me, The Story of Stuff provides the opportunity to really dive into the questions about the responsibilities of business, in particular the responsibility of companies that manufacture demand for products that are not even needed.

Making a product that is not needed, and then spending all of your time and energy to manufacture demand for it? Hmmmm, that sounds like a huge waste. Why don’t we call for companies to focus their time and innovative energy on meeting real demands? The world is full of a lot of really big challenges and thus there are a lot of very real demands out there that could use creative people and companies addressing them, and ultimately turn these problems into more sustainable solutions. This calls for a re-calculation of the first equation:

Real needs + innovative products + sustainable solutions = Responsible and sustainable profits.

And who knows – you might even smile on your way to the bank. So be smart and think outside of the bottle.


Camilla Marie Thiele is a bachelor’s student at the Copenhagen Business School studying Business Administration and Organizational Communication. She can be reached at cath08ae@student.cbs.dk.

The blog challenge was facilitated by Robert Strand, a PhD fellow at CBS and one of our occasional guest contributors. Thanks Robert!