Formula One Needs a New Formula

The topic of the ethics of sports (see last week's blog) does not want to disappear from the news. Reading this weekend’s news about the death of a protestor during the Formula One race in Bahrain will raise eyebrows with any CSR (Corporate Social Reponsibility) Expert. Now it’s even Formula One, that has to answer questions of social responsibility.

In itself this comes surprisingly late. As a sport, Formula One is not the environmentally friendliest sport. With 527 million viewers global television audience in 2010 it is one of the most powerful advertising platform for global brands making sure that even in the remotest hut in Indonesia or the poorest village in Tanzania consumers receive due induction the world of global (Western) brands.

But be it is it may, Formula One is certainly a business success. Taken from modest beginnings in the 1970s by its current President and CEO Bernie Ecclestone Formula One is now a multibillion dollar industry. Run by – and for – ‘petrol heads’ the company has never been exposed too heavily to demands for wider social responsibility. On its website you find nothing on CSR (and the like), something however insincere you will find most certainly on most multinationals of this size and world status.

The more exciting it is to see that a company which so far has never felt any exposure to live up to societal demands beyond its bare business deliveries has moved into the limelight of expectations beyond its core function.  What happened to Formula One this weekend in some ways is not new, but it reiterates three fundamental lessons which companies such as Shell, Nike or Google had to learn the hard way  years ago.

Lesson 1: Size matters. Just by sheer dominance in the racing sport, the size of the customer base (i.e. TV audiences), as well as the scope and scale of its global visibility have exposed Formula One to a much larger set of expectations. This has incidentally nothing to do with the legitimacy of those expectations (see below on this issue). It is just a simple fact of the CSR trajectory of companies, that just by dint of their sheer size they enter this space. Ecclestone might want to compare notes with Apple on this issue. Their troubles with human rights and labor conditions in their Chinese supply chain only rose to prominence at the time the company became one of the biggest players in term of market capitalization. In some ways, those companies just face a flip side of their admirable success in the marketplace.

Lesson 2: Global communication channels are not a one way street. Formula One thrives on its global visibility and presence. You have to give this to Bernie: the way he moved the business in four decades is hugely impressive. The small problem here though is: If you want millions to watch your product, in the age of the internet global visibility is not a one way street. People talk back. And they use your visibility to be part of the story. The protestors in Bahrain during the ‘Arab Spring’ had some exposure on global media during the earlier riots. But a brand such as Formula One of course provides an unique visibility to their issues which is just too effective to be missed. The ‘one way street’ metaphor not only works the way that people may ‘talk back’ but also in the way that if you employ the leverage of modern media, you can’t just control that it is only you who uses these conduits.

Lesson 3: If you are a Western brand doing business in a opressive political environment, the more successful you are, the more likely you will be used as a conduit for people’s political aspirations. Now this leads to the question whether the ‘piggybacking’ of protestors on the race in Bahrain is legitimate. In other words, is Ecclestone right when he says that the protests ‘have nothing to do with us’? Is a Formula One race just this apolitical, neutral sports event? Well, the most unequivocal answer to this came from the Al Khalifa Family itself, the authoritarian regime of Bahrain: in the built-up to the event they ran posters all over the place with the slogan "UniF1ed – One Nation in Celebration". This  was a quite undisguised use of Formula One to bolster their claim to have taken steps to improve conditions for their people since the first demonstrations last year caused the cancellation of the 2011 grand prix. Certainly Bahrain’s dictators got the message that Formula One can be used as a conduit of a political message - so why not people with different political opinions? Sports and politics are strange, but well groomed bedfellows. So Ecclestone has to do his homework here, and be it only for the protection of his global brand. This is even more a problem in the future as he has already moved into China and Russia, and is planning to expand into Abu Dhabi, Vietnam or Ukraine in the future.

Formula One needs an approach to CSR. What we saw this weekend was a dismal performance. And we are just talking good business strategy here. When people die; when journalists are restricted or even denied entry to the country; when the whole world watches the rules of fair play, fair competition and due process just being applied on the race course; when the personal safety of athletes is jeopardized (as in the case of team Force India) – a company has to act. Bernie’s reactive and – candidly – stupid and ignorant attitude will make things worse. He has to activate the same savvy and strategic thinking which made his company move into this public space to master the new challenges to which this very success has now exposed Formula One. 

Photos by Stu Seeger and Jaffa The Cake, reproduced under the Creative Commons License.

World's stupidest Gaza boycotts?

As a follow-up to our last post, this interesting blog entry from the folks at Foreign Policy may raise some laughs .. or a few hackles. The comments are interesting too. Thanks to Kejia for alerting us to this one...


The world's stupidest Gaza boycotts

Predictably, Israel's continued assault in Gaza has led to renewed calls to boycott Israeli products. Everyone has a right to express their political views any way they see fit, but it's safe to say that some proposed boycotts are less productive than others.

More than 2,000 restaurants in Malaysia have removed coca-cola because of the United States' support of Israel. The Malaysian Muslim Consumers Association has also pushed for boycotts of Starbucks, Colgate, McDonald's and Maybelline in order "to protest Zionist cruelty."

Coca-Cola is a particularly odd target since it's bottled and sold locally by a Malaysian-owned company, so the activists are really just hurting their own country's economy. (I remember from college that students campaigning for a campus boycott against "killer coke's" Latin American business practices faced the same problem.) It's also ironic given that the company was once criticized as anti-Semitic because of its reluctance to break an Arab League boycott by selling coke in Israel.

Post continues ....

Should business boycott Israel?

With all the excitement in Washington over Barack Obama's inauguration, it may be tempting to put to one side for a little while the continuing problems in Gaza that so occupied the public and media attention throughout the last month. But one person clearly not watching Obama's swearing-in ceremony was the UN Secretary-General Ban Ki-moon who spent the day visiting the Gaza strip and Southern Israel. As the world's media widely reported, Ban, standing in front of the smoking rubble of a UN building described the scenes as "heartbreaking", and condemned the destruction as "outrageous, shocking and alarming".

It was an important and symbolic visit by the UN leader who was careful not to take sides in his condemnation of the "excessive force" used by both Israel and Hamas. And it clearly serves to highlight the fragility of the current ceasefire and the need for more determined resolve in finding a lasting solution to the problem. But the burning question, of course, is how can genuine progress to be made in such a complex and volatile political situation?

One suggestion recently put forward by the Canadian activist and author Naomi Klein is that businesses and consumers should take a role in addressing the conflict by actively boycotting Israel. Citing the Palestinian campaign group Boycott, Divestment and Sanctions (BDS). Klein argues that "economic sanctions are the most effective tools in the nonviolent arsenal." And she is not just talking about economic sanctions at the governmental level, but at the level of individual consumers and businesses too.

In fact, her two main examples of anti-Israel boycotting are both business-level actions: first, her own decision to switch publishers in Israel from a commercial publishing house to a small, anti-occupation acivist publisher; and second, a British telecom company, Freedomcall, which had recently sent an e-mail to the Israeli tech firm MobileMax saying "as a result of the Israeli government action in the last few days we will no longer be in a position to consider doing business with yourself or any other Israeli company."

Boycotts against Israel have been mooted, or activated, by academics, journalists and others in recent years - typically to storms of controversy. In the US, companies participating in anti-Israel boycotts can even be fined. However, recent developments in Gaza have clearly prompted a fresh look at some of these tactics by some, although specific instances of boycotts by western companies still appear to be very rare. Our very unscientific search only came up with one other report from the last two weeks - of a London-based Pashmina company which had joined a voluntary boycott on Israel due to "the horrors committed by the Israeli army". However, Ethical Performance also recently reported on Unilever selling its stake in a factory in an illegal Israeli settlement on the West Bank – but also noted that despite the protestations of campaign groups, had done so as part of a broader divestment process from non-core business rather than any "ethical considerations".

Similar protestations of what Klein calls "cold business calculation" are also evident at Freedomcall, where the managing director is quoted by her as saying "We can't afford to lose any of our clients, so it was purely commercially defensive." Such amoral language and the refusal by business to acknowledge that they are also involved in politics is not unusual. But what is unusual is Klein's appararent readiness to accept that business should be taking an active role in state politics, depsite (or even because of) their focus on commercial self-interest. The author of No Logo and The Shock Doctrine is better known for criticising the role of the private sector in the public domain.

It seems unlikely to us that too many companies will feel comfortable joining an anti-Israel boycott, whether for commercial or political reasons. Why? Well, the ethics are simply too contentious for most business leaders to be comfortable making that kind of a call. Apartheid-era South Africa, or the current situation in Burma have a degree of moral consensus that presages corporate decision-making in a way that the problems in Gaza do not. Yes, maybe business leaders should be encouraged to stand up for what they believe in, but this is less likely to happen when they think their customers and other stakeholders might not agree with them. If even Ban Ki-moon is so careful in choosing and balancing his words of censure, corporations will no doubt tread even more carefully. Only concerted efforts by consumer groups and NGOs will be likely to change their views on whether a political boycott makes good sense. For better or for worse, that is the cold hard logic of business that Klein will have to recognize.


Photo copyright Tom Spender