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.

Culture clash in business-NGO partnerships

Ten years ago last month, Jem Bendell published what turned out to be one of the most influential books yet on business-NGO partnerships called Terms for Endearment: Business, NGOs and Sustainable Development. To mark the anniversary, the publisher Greenleaf is offering a big discount on the book (50% off) and making a number of the chapters free to download. Included in the free chapters is Andy's chapter, "Culture clash and mediation: exploring the cultural dynamics of business-NGO collaboration". We're really pleased to see this and some of the other chapters made freely available. The book itself was a great collection of articles and it really helped kick start a critical perspective on partnerships and an engagement from the academic community with the political ramifications of corporate responsibility practice - a theme that regular readers will notice that we've become ever more interested in.

So in support of the anniversary Andy has written a blog post reflecting on writing the chapter all those years ago. The post will go up on Jem's website Lifeworth.com sometime later this month, but he's agreed for us to publish it here first. So here it is - and don't forget head over to Greenleaf and download some classic chapters for free. 

"If truth be told, I discovered business-NGO partnerships pretty much by accident. I was trying to complete my PhD, which was about the “amoralization” of corporate greening. That is, how business involvement in sustainability was accompanied by some form of removal of moral framing and content. I’m not just talking the business case, though that was certainly a major part of it. But also how even social mission companies sometimes failed to morally engage their employees in green business. Or how middle managers in companies would try to make environmental issues as normal and unthreatening to their colleagues as possible. “The environment” my respondents basically seemed to be telling me, was “not ethics”.

I ran into the WWF Plus Group, which is the partnership that I examine in the chapter that is included in Terms for Endearment, because one of the companies I was writing a case study on was involved in the initiative. The Plus Group (a working group seeking to implement the Forest Stewardship Council accreditation scheme in the UK) seemed to me to be an especially interesting context to explore the kinds of questions that I was interested in. Here, I sensed, the moral complexion of the different partners might come into sharp relief. Not exactly a “good” NGO facing up to a whole bunch of “bad” companies like some latter day cowboy story. But certainly plenty of potential for a collision of moral worldviews – or more broadly culture clash as the chapter title puts it.

So I got deeper and deeper into the initiative, and became invigorated by exploring the cultural dimensions of business-NGO partnerships. A number of researchers had alluded to the potential for culture problems to arise, but no one had investigated them in any real depth. In the end, I got so into it that, like a badly behaved guest, I probably wound up staying longer than I was supposed to. But I also think that the kind of work I was doing was necessary to move our knowledge up a level.

Looking back now, I think that the chapter still holds up well. It shows that there are different ways of thinking about culture with respect to partnerships, which is a point still missed by many people who study the phenomenon. In that respect, I think it’s great that Greenleaf is making the pdf of the chapter freely available. It will help to disseminate the more critical approach to culture that the piece showcases.

And then there are the insights I provide about the role played by ‘cultural mediators’ in managing cultural translations across and within organizations. At the time that I was writing the chapter, more than a decade ago, this seemed fresh and new. It captured a very real and, I think, important dynamic at play in partnerships. In fact, I’ve had a number of practitioners over the years that have the read the piece saying, ‘yes, that’s exactly what I do!”

So the identification of cultural mediators, and my analysis of the role they play in this complex cultural milieu of partnerships, still rings true. Actually today, it’s much more commonplace for partnering organizations to go so far as to formally identify such a role: NGOs have partnership managers; companies have stakeholder relationship managers and other similar posts. But if we peer beneath the surface, we’ve still got a long way to go before we really understand what’s going on here.

That said, I’ve been heartened in the last few years to see some interesting studies emerging which really help us to see these deeper cultural dynamics more clearly. May Seitanidi, for instance, explores in her recently published book, The Politics of Partnerships, the dangers posed by seeking partners with too great a cultural fit, and the limits to meaningful change imposed by managing away conflict. Bahar Ali Kazmi, who is completing his PhD at the University of Nottingham, has been looking at how cultural mediators operate among different moral logics in the realization of human rights in developing countries. So there’s a lot of great work going on. And I expect that in another 10 years time, we’ll be looking back at how the research of these emerging scholars has helped shape the evolving field of business-NGO partnerships."

The Elephant in the Room

For the past two and half days I've felt a strange tension in this conference. It is about the thorny question of whether ethics pays. The business case for CSR. The harmony between economic, social and ecological sustainability.

Most of the time panellists and speakers were hammering it home that joining the UN Global Compact and implementing the principles just makes good business sense. I had a very lively conversation with Peter Solmssen, Executive VP of Siemens about this, who joined the company recently as part of the revamp of the board in the aftermath of the corruption scandals. He was fairly bullish that fighting corruption makes good business sense, 'we are more profitable now' he argued. He argued that in most countries big conglomerates like Siemens or General Electric are doing business with public purchasers who at the top level are not interested in corruption, and that companies who are known for not engaging in it, in fact have a competitive advantage. His view is that big players have indeed the chance of forming a 'cartel of the good' to collaborate on addressing ethical issues like corruption – and be the better off with it.

A similar take I got from talking to Gustavo Grobocopatel, President of Grupo Losgrobo from Argentina. His company works in agriculture and adjacent supplies and services, and he sees the particular value for his organization in engaging with the UN Global Compact in improved stakeholder relations. In particular his customers value this inclusive approach and for him CSR is very much about competitive advantage. His organization is particular interesting as it tries to keep more of the value chain of agricultural products in the country, rather than just exporting commodities and falling victim to what is commonly referred to as 'Dutch disease'.

In some ways then it was quite a little 'scratch' (I mentioned my Teflon-ized ears) to hear Klaus Leisinger (President and CEO of the Novartis Foundation for Sustainable Development) say on Friday morning that the talk of 'ethics pays' or 'ethics is just good business' is – in his words – just 'bullshit'. Why, he argued, would companies not do the right thing anyway if it were just good business? Instead he called for a commitment to basic values, brought forward in the 'Manifesto for Global Economic Ethics', by companies a priori, simply because it is morally right, as in some cases it might even cost money in the short term.

I tend to agree with this. Again, we can turn to the ten year old-metaphor: at this age, kids are at the 'conventional' level of moral development (in Kohlberg's theory): they do right and avoid wrong, because mommy and daddy say so and he tries to be a nice boy, and he tries to avoid the smack on the back or wants to get that ice cream as a reward. At least on the rhetorical level, the UN Global Compact members – by and large - seem to be not much beyond the conventional level. Which – don't get me wrong – is quite an achievement. Whole societies have survived on that, so that's fine for our birthday boy.

This apparent reluctance to think about the firm beyond the immediate business case became quite clear today in the sessions dealing with Development. I put the question to Jeffrey Sachs, Georg Kell and Chad Holliday in the final press briefing. Kell re-iterated that we are seeing an 'evolutionary transformation', a re-orientation from short- to long-term and a stronger focus on the (financial) risk which non-financial issues can cause. But 'the basic model remains intact', he said. In a similar vein Holliday, who hinted at further economic incentives to internalize sustainability issues, such as pricing carbon. It was then Sachs, who I think took up the question of whether it is time to move beyond the current framework. He said, that providing malaria medications to poor people 'is not a money making venture'. But still he argued that the business contribution to achieving the Millennium Development Goals is vital. So he pointed more at models of shared responsibility and sees business getting much more involved in public-private-partnerships. This was re-iterated by Robert Orr, Assistant Undersecretary General of the UN, who moderated the press briefing. For him the UN Global Compact is very much about becoming/being a player in global governance. He stressed there is hardly no issue on the global political agenda, where business is not part of any possibly thinkable solution. I liked that candour and agree.

Followers of this blog familiar with our writings will know that this is where I see the future of CSR going: Business as a political actor, intricately involved in societal governance. In Kohlberg's model of moral development, this would be the post-conventional level: understanding social contracts and universal moral principles – and doing the right thing based on understanding this. So let's wish our ten year old a healthy further development – there are new stages to discover!

What about politics?

Those of you who have followed this blog and our work over the last years will know that we have taken a special interest in the political role of private corporations. So what are the vibes here at the UN Global Compact Summit?

Well, the general gist seems to be that most of whom are quite happy to pass on more responsibility for the environment, human rights etc. (i.e. the ten principles) to the private sector. The most poignant role in this probably put forward by the UK's new Minister for International Development, Alan Duncan. I liked him when I lived in the UK, but was a bit underwhelmed by what he said. Basically he is a pink Thatcherite, talking about shareholder value and how companies can combine this with development. He ducked questions on BP and whether there is a role for governments in preventing these disasters, which was a bit weak, I found.
A refreshing accent was set by Mike Bloomberg and what the City of New York is doing. He was kind of cool, I found, saying that the City's carbon footprint is now at a third of the average American city. He said the City is willing to lead, but he expects business to do its part as well.


So far well and good. If we release corporations into this sphere though, what about democracy and political principles. There is next to no discussion on this here, apart from the occasional reference to more accountability and transparency. Maybe that should be put on the agenda for the next decade. But this will make it a really warranted area of further research for the academic community. How to make this shift in governance of societies one which is really in the interest of those who are governed? Currently, our best hope is that we will be governed by all those 'benign dictators', which are currently gathered here.

McDonald's comes back out of le closet

The fast food chain McDonald's has recently released an interesting TV ad in France featuring a young gay character talking with his father. It's notable not just because it features a gay character in a big multinational company's commercial, but also because the character is actually hiding his sexuality.  You can see the spot with English subtitles here:



The ad has gained a lot of online attention. The spot itself has been seen by nearly 2m people on YouTube and there are countless sites (including repostings on YouTube) where commentators have made their views known about the ad. These views range from a positive appreciation of McDonald's for acknowledging the gay community to some pretty nasty homophobic vitriol. Somewhere in between there are those who are asking why a fast food company should even be mentioning someone's sexuality, and those that are questioning whether McDonald's is trying to reach out to a new, and potentially prosperous targt market. As we have explored in a recent paper (downloadable at SSRN), corporations have increasingly been involved in identity politcs, and this raises a number of critical debates about the intermingling of business and politics.

To understand the significance of McDonald's 'gay ad' though, we need to put it in context. The ad is one part of a larger campaign launched by the company last year featuring the strapline 'Venez Comme Vous Etre' (Come as You Are). The campaign includes film and print ads, viral videos and other stuff. The basic message of the campaign is everyone's welcome at McDonald's, however you're dressed, whatever your age or race. And whatever your sexual orientation. The official company line is that series "recognizes the diversity of McDonald's customers in France."

It's all part of the cosmopolitan identity that multinationals like McDonald's are increasingly seeking to create. Remember that not that long ago, anti-globalization campaigners in France saw McDonald's as a symbol of American big business and global injustice - and were wrecking their restaurants from time to time to prove the point. So in that context a campaign that presents the company as a broad church that welcomes one and all makes a lot of sense. So much so that in food-loving France, the chain enjoys growing popularity and has become, according to The Times newspaper, the country’s ‘worst-kept dirty secret’. Everyone loves McDonald's (at least that's what the company is telling us). Even gay people. Even closeted gay people. And even clueless Dads.

It might seem odd that the company has chosen to portray a young man who is cute and confident, but at home at least, firmly in the closet. Why not present an out and proud gay character? One answer could be that the company is looking to represent a realistic picture of gay identity, not just a handy stereotype of sugar-coated camp beloved of Hollywood. It's also worth remembering though that back in 2008, McDonald's got itself in a bit of hot water back home in the US over its purported support of the gay community. Following a $20,000 sponsorship donation and the appointment of a McDonald's VP to the board of the National Gay & Lesbian Chamber of Commerce (NGLCC), the American Family Association (AFA) and other groups from the christian right called a boycott. The company had refused "to stay neutral in the cultural war over homosexuality" the AFA claimed, and was "promoting the homosexual agenda, including homosexual marriage."Eventually McDonald's duly pulled out of its support of the NGLCC.

 McDonald's American experience shows just how problematic it can be for companies to get involved in representing different minorities. It can place them in a world of identity politics that they are unprepared and ill suited to deal with. Promoting diversity or targeting the lucrative gay market may make good economic sense, but its also a political act with political implications. Pro- and anti- groups may both use corporations to help them achieve their political goals, just like the NGLCC and the AFA have. McDonald's may claim it is simply about diversity and inclusiveness but others see it as the frontline of identity politics.

So this may help to explain the somewhat ambiguous messaging of McDonald's"gay ad" in France. The company is putting out a welcome whether you're in or out of the closet, or even if, like the father in the ad, you don't recognise or support gay identity. Come as you are, as they put it in the campaign.

That said though, running the ad is quite a risk for a company still smarting from a controversial boycott that riled up a significant chunk of their core customer base in conservative middle America. As several commentators have suggested, the ad is unlikely to run in the US, but even so it's starting to cause waves, as this clip of Bill O'Relly shows. The company can hardly be pro gay in France and neutral in the US. At some stage, like it or not, the embracing of diversity means you just have to take some kind of political position. As much as companies like McDonald's may be more comfortable talking economics, they simply can't afford to ignore the politics.


Photo by Márcio Cabral de Moura. Reproduced under Creative Commons Licence

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

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

Rethinking the division of labour between business and government

We liked this interview with Richard Haass in the McKinsey Quarterly where he talks about the implications of the new division of labour between and government. As he says, "the lines between what is government and what is the private sector of business will get blurred.... CEOs, when they get up in the morning and look out through their window or across their desk, they are dealing with a range of constituencies that looks an awful lot like what a cabinet member might look at." The basic ideas align pretty much with our own work on corporate citizenship and global governance, but seeing them getting such prominence from McKinsey shows just how much the whole agenda is starting to be taken seriously by the business community.

We were particularly interested in his thoughts on how companies should adapt to this 'new normal', as McKinsey likes to put it. Haass promotes a new way of thinking about business-government relations - an expanded perspective that not only thinks in terms of lobbying and political action committees, but about what the changing division of labour means for the company as a whole. As he says, we need to, "think about government and government-related issues not as something that you have a small side office [for], some vice president for government relations who maybe calls a congressional staffer when he’s got an issue. But it’s something now much more intrinsic, and every person in the company—certainly the upper echelon of leadership—needs to take this into account, needs to think very hard about what is the proper, desirable role of government for that company. ... the entire issue of government, and the division of labor between the company and government, needs to be something that is thought through from the outset."

Haass is short on specifics in the interview, but it certainly sends a clear message that we need to go further in working through what the expanded set of political responsibilities might look like. And it definitely crashes a rather large plank over the heads of most of our colleagues doing research on corporate political action who seem to simply be blind to the bigger picture of what's happening around business and politics. Dirk's article reviewing recent books by Robert Reich and Naomi Klein explains a little more where we think some of the problems are in this respect. If even the McKinsey Quarterly is getting it, surely our fellow management researchers won't be too far behind. We live in hope.

Business and climate change

Observant readers will notice that we've started adding some of our favourite blogs on business ethics-related subjects in the blogroll that you'll find on the right hand side of the screen. The latest addition is Climate Change Inc, the new blog on business and climate change by David Levy, a professor at the University of Massachusetts, Boston. Levy always has something pretty interesting to say, particularly on the politics of business responses to climate change. He's someone whose work we've found stimulating, and have always enjoyed bumping into him at conferences and collaborating on a few things along the way.

The new blog deals with all things business and climate change related, though with a particular slant towards politics and policy issues. We particularly liked this recent post on how the oil industry has recently resurrected its "carbon wars" strategy, including the mobilization of American citizens to protest against proposed climate change regulation. Here's what he says....

"....large numbers of Americans are suddenly getting excited about climate change. They are not, however, worried about rising CO2 levels and the impact on sea levels, hurricanes, or glaciers. They are jumping on buses and crowding into rallies to oppose the proposed energy legislation, which is intended to address climate change. Through placards, slogans, and speeches, the attendees demonstrate their concern that their very way of life – cheap fuel and electricity, even their jobs in energy-rich states – is under imminent attack. This threat is apparently more palpable and galvanizing than climate change, a distant and abstract concern, if not a hoax perpetrated by the same intellectual East Coast Europhiles trying to impose socialist medicine on beleaguered overtaxed Americans.

Perhaps a few of these angry citizens spontaneously joined the rallies in a state of high dudgeon after perusing the 1200 page Waxman Markey bill. Most likely, their transportation and placard messages were organized by Energy Citizens, whose website proclaims that it is “a nationwide alliance of organizations and individuals formed to bring together people across America to remind Congress that energy is the backbone of our nation’s economy and our way of life.” In fact, Energy Citizens was set up and financed primarily by the American Petroleum Institute (API), the US oil industry association, with support from the National Association of Manufacturers and other groups. It has contracted with a professional events management company to plan about 20 rallies against forthcoming energy and climate legislation in Southern US states, with a focus on energy producing states such as Texas. Member companies are encouraging their employees to join in. This project complements a massive increase in lobbying efforts by the fossil fuel industry in the last six months."

Fascinating stuff. And, as Levy notes, a real return to the oil industry's seemingly dead-in-the-water tactics of the 1990s when climate change denial was all the rage and various political strategies were deployed by the sector to derail the gathering climate change consensus. Levy goes on to offer an analysis of why the industry appears to have engaged in Carbon Wars round 2, but admits that a final conclusion is difficult to arrive at given the mixture of motives, interests and positions among some of the key players. However, as we mentioned not too long ago in relation to BP's "Back to Petroleum" strategy, a new conservatism appears to be blowing in the oil industry around sustainability issues (or at least the pretense of progressiveness has lost its allure), so there is much to be gained in the run up to Copenhagen by seeking to tweak the political climate towards a more accommodating pro-fossil fuel position.

Our best bet is that a range of different company strategies may start to emerge again which could derail any kind of univocal industry positioning, which seems to be the aim behind the latest manouevuring. But in the meantime, it looks like the main business action will be in the nonmarket (i.e. political) arena rather than in new market developments, at least until a new climate consensus is reached post-Copenhagen. Be sure to keep up with Levy's blog for all the latest developments.

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

‘Are we all France now?’

That’s what Jon Stewart asked his guest Bill Clinton on the Daily Show a minute ago. They were discussing the proposed 700 billion (!) bailout for the financial industry proposed by the Bush administration today.

This is inspiring stuff. Who would have thought that the government most committed to reinstall freedom of markets, low taxes and ‘small government’ is now intervening directly in the economy in an unprecedented way. We blogged about similar cases in the UK and France recently – but what the US government intends to do here eclipses all the others.

We find it interesting from two perspectives. First, it is one of the classic examples of an ethical problem. On the upshot, yes, the financial industry is in trouble and the effects of further bank collapses would be massive - for the economy in general, but more concretely for jobs, home owners and ‘hard working’ Americans (and beyond). But on the other hand, why bail out an industry which has enjoyed fairytale profits in recent years, not to talk about bonuses and executive salaries far beyond imagination?

From a ultilitarian perspective (see Chapter 3 of Crane & Matten) maybe everybody would be better off by the bailout. But what about fairness and justice - providing healthcare for children has been anathema for the US government so far, yet would have cost much less. Or from another perspective, what about the consent of taxpayers to spend what amounts to $5,000 each in tax dollars for this massive bailout package?

The second aspect hints at the political role of private corporations. To have enough to live of in old age (i.e. pensions) and having a roof above your head (i.e. homes/mortgages) are obvious issues: access to these for a long time was considered a basic civic entitlements of citizens. That’s why welfare states in Europe still provide (or tightly regulate) access to these commodities. The US though has been at the forefront of creating markets for these things. As we see, the corporations in charge have failed at administering them – maybe because they shouldn’t have been in charge of these issues in the first place. And that’s why the government now feels it has to step in. The bailout now is an attempt to help out as a one-off. But it raises the general question we have discussed at length in our just published recent book: if corporations are now responsible for administering basic entitlements of citizens would it not be just fair to apply the same rules of transparency, accountability and democratic control as we do to governments? It is fascinating to see this debate and we guess it is far from over.

A view from Africa on corporate citizenship

We are writing this blog entry on the long trip back from a fascinating trip to South Africa. We were there mainly to participate in a big international conference organized by the International Society of Business, Economics and Ethics (ISBEE) – a global network of organizations and scholarly societies dedicated to business ethics. The conference only happens every four years, and brings together people from every continent (it’s not for nothing that it’s called the Olympics of Business Ethics!), and it’s an exciting place to be to talk and learn about what’s happening across the globe.

We were there to launch 2 of our new books, to run some professional development workshops, but most of all, to talk about our work on corporations and citizenship. And the conference, and South Africa in particular, turned out to be a great location to do this. Questions and debates about the social and political roles and responsibilities of corporations are fundamental to countries like South Africa, where it is companies that are charged with the responsibility for implementing black economic empowerment legislation through their human resource programs. Companies are also a key player in the provision of various public goods, such as water, health, and education. For instance, on one of our trips outside Cape Town we passed a special needs skills school sponsored by the local Coca-cola bottler (see photo) that demonstrates just a little of how deeply embedded corporations are in traditionally ‘non-business’ activities.

Such issues also swirled in and out of the several of the keynote speeches at the conference. We heard an executive from the mining company Anglo American discuss at length their responsibility to ‘be a healthcare provider’ and ‘guarantee the human rights’ of South Africans through their impressive HIV/AIDS program. We heard the manager of the charitable foundation of the pharmaceutical company Abbott Laboratories argue that the legitimacy of their African health initiatives would be threatened by incorporating business goals into their social programmes. And Henk van Luijk, one of the original European pioneers in the business ethics field, and a founder of ISBEE, explicitly identified the political role of the corporation as one of the key challenges facing business ethics and CSR in the future.

So when we came to present on the final morning of the conference, rather than the usual smattering of diehard conference junkies that make it to the last paper sessions of such a long conference, we were greeted with a large, eager crowd that was fully primed for a serious discussion about corporations, politics, and citizenship. Now we’ve been presenting our ideas on all this for a good few years, refining and sharpening as we’ve gone along, but this was definitely one of our favorite, and most productive, conference presentations for a long time.

In what was an unusual occurrence for us, most of the packed room was in agreement that we had to develop better conceptual and practical tools to address the political dimensions of business. In other occasions though, people’s discomfort with the whole idea of business playing a role in politics has meant that they have done their best to shoot the messengers. In one of our recent papers, we discussed this fear in terms of ‘monster theory’ which we had a little fun with.

But this time, corporations and politics were clearly on the agenda amongst our audience. However, not so many of them were convinced that ideas like citizenship, and corporate citizenship specifically, were the best way forward. They could have a point, but at the moment, it is certainly emerging as one important piece of the puzzle. And what we need is more people engaging in the debate about corporations and politics, and eventually devising serious alternatives, rather than just wishing it would all just disappear. In our conference presentation we worked with our audience to think through some potential routes forward for doing this. And in our many conversations both inside and outside the conference itself, we learned a lot about some of the challenges that we face. So whichever way you look at it, spending time in South Africa definitely got us thinking… (oh, and having a little fun too, as you can see in the picture above).

Yahoo facing up to human rights in China?

It's been a heady time for business and human rights recently what with the UN Special Representative, John Ruggie's final report having just been released to general mumurings of support.

His approach of "protect, respect and remedy" makes a lot of sense as an organizing framework, and whilst it falls short of the kind of normative principles and binding regulations that some critics were hoping for, his focus on providing some much needed clarity on what it means for businesses to manage human rights responsibilities is one that we are happy to see. The message that companies do have responsibilities in this arena, and distinct ones from government at that, provides an important mark in the sand in terms of identifying some of the political responsibilities of corporations.

All this is good timing for news to emerge about Yahoo's response to the government censorship issue in China that hit the headlines a few years ago (and that we wrote about in our Business Ethics text). Of course, Yahoo has been mainly drawing attention recently in respect to its battles with Microsoft about their abortive takeover. But the good people at Ethical Corporation recently reported on developments in the censorship issue that have been overshadowed somewhat by all the takeover speculation.

It turns out that following a dressing down by the US authorities, and a lawsuit from the World Organisation for Human Rights (which was eventually settled out of court), Yahoo has made some efforts to enage in what Ruggie would call the "remedy" component of business and human rights - such as paying legal bills for imprisioned Yahoo customers, setting up a fund to support human rights, and lobbying the US government to press for the release of political dissidents imprisioned by the Chinese authorities as a result of Yahoo's release of user information.

Of course, all this does not detract from the continuing responsibility the company should have for protecting the human rights of its stakeholders in the first place. But at least it does show that firms can play a role in pressing for human rights at a political level. This is in marked contrast to the Olympics sponsors, all of which have resolutely refused to discuss the possibility of any political response to events in Tibet. As the Adidas CEO recently said, pressure to issue a statement on human rights in China was an "effort to drag us into politics, and we will not allow that to happen".

Why the difference? Well the main point here is that Yahoo's involvement in human rights comes from people actually using its products - something that, in the parlance of global governance, falls directly within their "sphere of influence". The Olympics sponsors, however, are more removed from the issue, and so can realistically make a case for having rather less influence. After all, people are not going to be arrested for wearing Adidas sneakers. Such assessments though are, of course, a somewhat inexact science. However, these are some of the major issues that UN, Yahoo, Adidas and others concerned with business and human rights will have to grapple with in the years to come.

CSR and democracy in China

This week’s blog comes from Shanghai, where Crane and Matten have been involved in various speaking engagements over the last years at the China Europe International Business School (CEIBS). There are two conferences on CSR in Shanghai this week both of which were fascinating.

CSR is definitely on the agenda here. Not just for big western multinationals, but also for local companies and entrepreneurs. Yes, a lot of what was on display is corporate propaganda, but there is some real evidence of what companies do, too.

The conferences gave a lot of food for thought for our ongoing research work. CSR in China casts some particularly interesting light on the role of CSR and democracy. Examples of how companies conduct stakeholder consultations, attempt at securing participation, protecting property rights or providing access to health, education and security – corporations here in their CSR activities pretty much emulate certain traditional governmental jobs.

But not only that. In fact these companies apply a model of interaction to their stakeholders that treats them basically similar to the status we would associate with citizens in western democracies. The obvious question is: if western companies do their western-style CSR in China, are they not effectively implementing micro spaces of liberal democracy? Stronger even: are CSR-active corporations, at the end of the day, part of some subversive movement towards democracy by operating this approach in the way they conduct their CSR projects with their stakeholders? The jury is out. But the tensions between an inclusive, participatory CSR model on the one hand and a political system that leaves little space for democracy are palpable.

Giving olympic sponsors a sporting chance?

For those of you that have been following our entries on the upcoming Beijing Olympics, we thought this article, "Navigating Olympic Sponsorship: Marketing Your Brand without Alienating the World" from the Wharton School of the University of Pennsylvania might be of interest (thanks to Elizabeth Watson for alerting us to this one). It gives a good overview of some of the issues that the Olympics' corporate sponsors will have to juggle in the face of the political protests. As one of the Wharton professors comments in the article:

"Corporations that want to sponsor the Games have to navigate the political undercurrents ... I wouldn't be surprised if many underestimated the potential for [the Games] to turn into an international issue and thought instead, 'We can reach a billion eyeballs; the political stuff will just go away. But politics isn't about money. It's about hope and fear and common purpose and identity."

As the article rightly says, it is hardly surprising that the Games are a political focal point, and indeed, they often have been over the years. The difference now though is that the politics are far more embedded in economics than they once were. What with China being such an important trading partner for many corproations, not to mention the huge sponsorship deals involved, the incentives to avoid rocking the boat are there for all to see.

As we've already said, it's a little too early to tell what the consequences are going to be for the corporate sponsors, but one potential outcome mooted in the Wharton article may just be rattling a few nerves at Coca Cola, McDonalds, Volkswagon and the other sponsors. As anyone who has visited China will be aware, broadcasters in the PRC have a definite proclivity to black-out broadcasts at the slightest suggestion of anything controversial. After spending billions on sponsorship, the last thing the multinationals will want to see is a blank screen. Well, that's not counting the potential for "an unlucky photo or video clip of, say, Chinese police cracking a protester over the head in Beijing with a General Electric, Johnson & Johnson or Visa logo in the background". Unlucky? Or it just part and parcel of the heady brew of business, politics and sport?

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.

Corporations and political responsibilities

Just today the latest issue of Business Ethics Quarterly has dropped into the mailbox, featuring our latest article on corporate citizenship - well, actually an invited response to someone else's article about whether the label of 'citizens' fitted corporations or not. Oh, the joys of becoming "those two corporate citizenship guys" - available 24/7 to answer all your CC questions ... and more often that not to be roundly disagreed with by just about everyone.

Unusually for us, this time around we actually agreed with most of what our colleagues had written. Anyway, one thing that we particularly liked in this paper, and which we have been talking about in our work for some time, is the idea that once you start to acknowledge some role for corporations in the realm of citizenship, then you are effectively moving towards the idea that corporations have a political role in society.

Now, for various reasons, this whole idea that corporations might have political roles and responsibilities is for many people a fairly controversial one. Obviously none of us are very comfortable with the whole blurring of boundaries between business and government, between the economic and the political. But this is the situation that we find ourselves in at the moment. And, as people interested in nature of business ethics and responsibility, it represents one of the more fascinating, yet challenging aspects of the whole debate.

On the one hand, we applaud corporations that step in where governments have failed, such as in the provision of decent roads, schools, and hospitals, or where they move to protect their workers from HIV/AIDS infection. This is just good citizenship, right? On the other hand, we have many legitimate doubts about the presence of multinationals in delivering the basic entitlements of citizens, or when corporations get involved in lobbying governments to prevent legislation that might curb some of their worse excesses. Bad citizenship, huh?

So the area is something of a minefield, albeit quite a fun one to hop around in ... until you put a foot in the wrong place of course. But over the next few months we'll be commenting quite a bit on some of these political issues as they relate to corporations. There could be a few explosions along the way, but we're ready for it, helmets on, and ... well ... you can finish off the metaphor for yourselves...