The Business Ethics Blog

The idea of a $100 laptop for the developing world is not news.

But what IS news is yesterday’s announcement: U.N. Lends Backing to the $100 Laptop. The involvement of the United Nations seems a significant milestone.

The United Nations on Thursday lent its support to a project which aims to ship inexpensive, hand-cranked laptops to school-aged children worldwide.
Kemal Dervis, head of the U.N. Development Program, will sign a memorandum of understanding Saturday with Nicholas Negroponte, chairman of One Laptop per Child, on the $100 laptop project, at the World Economic Forum’s annual meeting.

The program aims to ship 1 million units by the end of next year to sell to governments at cost for distribution to school children and teachers.

UNDP will work with Negroponte’s organization to deliver “technology and resources to targeted schools in the least developed countries,” the U.N. agency said in a statement.

How is this a “business ethics” story? Well, the $100 Laptop is a project coming out of MIT’s Media Lab, but a research institute like the Media Lab isn’t going to fabricate a few million computers itself. So it’s got corporate partners, including Advanced Micro Devices (AMD), Brightstar, Google, News Corporation, Nortel, and Red Hat. For those companies, contributing to a project like this is likely to be counted as part of their Corporate Social Responsibility Programs. These laptops will not be sold in developed nations, so this project is unlikely to be a major source of profit. All indications are that this is an attempt to do something positive by making use of these companies’ core competencies (i.e., they’re making the world a better place not by throwing cash at a problem, but by doing what they’re already good at, namely designing and building information technology).

Holy cow!

McDonalds (yes, the restaurant chain) now has its own blog on Corporate Social Responsibility. Yes, a corporation with its own blog dedicated entirely to CSR. From the looks of it, this is brand new, so too soon to tell whether this will be something other than window-dressing, what sorts of issues they’ll deal with, etc.
But on the “about this blog” page, Bob Langert, Senior Director for Corporate Social Responsibility at McDonald’s, writes:

We want to open our doors to corporate social responsibility (CSR) at McDonald’s–to share what we’re doing and learn what you think. That’s the purpose of this blog.
I see a lot of what goes on behind the scenes. I have always wished others could see what I see. Now you can.
I want to use this blog to introduce you to some of the people, programs, and projects that make corporate social responsibility a reality at McDonald’s–to take you along with me as I engage with some of our internal and external stakeholders in various parts of the world and to highlight our accomplishments, as well as the challenges we continue to face.
We want to hear from you because we are always learning and trying to improve. And you can’t learn–or improve–without listening. We live in a constantly changing world where the issues are complex and solutions anything but simple. With such complex issues, we may not always agree on the root causes or best solutions, but we can have a conversation.
CSR is multi-dimensional. At McDonald’s, we break it down into five key areas: balanced active lifestyles, responsible purchasing, people, environment, and community. We’ll be talking about all these areas. I’m very passionate about them all. We know you care about them too and welcome the opportunity to hear your perspective.

And yes, believe it or not, the McDonald’s CSR blog actually does invited your comments.

From Wired News, yesterday: E3 Expo Bans ‘Booth Babes’

The video game industry’s 2006 E3 Expo trade show in Los Angeles is getting a make-over — banned are the swarms of sexy, semi-clad “booth babes” that in years past took the unveiling of new games and technology to titillating new levels.

Rules prohibiting the use of scantily clad young women to peddle video games are nothing new, but the handbook for this year’s show in May outlines tough new penalties, including a $5,000 fine on the spot for the booth owner if the “booth babe” is semi-clad.

Yes, sex sells.
Yes, using scantily clad women to sell video games is pretty demeaning.
But there’s another problem. I think the video game nerds need to be protected. I can’t help thinking: isn’t using scantily clad women to sell things to nerds a bit like using cartoon characters to sell sugary cereal to children? In both cases, we’re talking about a pretty vulnerable population, who may or may not have the experience to make good decisions in the face of such pressures.

(Photo credit:G4 Videogame TV)

This article is a couple of years old, but new to me:
The Wal-Mart You Don’t Know, by Charles Fishman, writing for Fast Times.

The article is about how being a supplier to Wal-Mart is a double-edged sword. Getting the Wal-Mart account can result in huge sales, but Wal-Mart has also been known to bully suppliers into slashing margins and moving production facilities off-shore.

Wal-Mart wields its power for just one purpose: to bring the lowest possible prices to its customers. At Wal-Mart, that goal is never reached. The retailer has a clear policy for suppliers: On basic products that don’t change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year. But what almost no one outside the world of Wal-Mart and its 21,000 suppliers knows is the high cost of those low prices. Wal-Mart has the power to squeeze profit-killing concessions from vendors. To survive in the face of its pricing demands, makers of everything from bras to bicycles to blue jeans have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas.
…
By now, it is accepted wisdom that Wal-Mart makes the companies it does business with more efficient and focused, leaner and faster. Wal-Mart itself is known for continuous improvement in its ability to handle, move, and track merchandise. It expects the same of its suppliers. But the ability to operate at peak efficiency only gets you in the door at Wal-Mart. Then the real demands start. The public image Wal-Mart projects may be as cheery as its yellow smiley-face mascot, but there is nothing genial about the process by which Wal-Mart gets its suppliers to provide tires and contact lenses, guns and underarm deodorant at every day low prices. Wal-Mart is legendary for forcing its suppliers to redesign everything from their packaging to their computer systems. It is also legendary for quite straightforwardly telling them what it will pay for their goods.

Interestingly, the article also cites some very positive aspects of Wal-Mart’s ethics:

To a person, all those interviewed [for this story] credit Wal-Mart with a fundamental integrity in its dealings that’s unusual in the world of consumer goods, retailing, and groceries. Wal-Mart does not cheat suppliers, it keeps its word, it pays its bills briskly. “They are tough people but very honest; they treat you honestly,” says Peter Campanella, who ran the business that sold Corning kitchenware products, both at Corning and then at World Kitchen. “It was a joke to do business with most of their competitors. A fiasco.”

This is the sort of apples-and-oranges data that makes it hard to arrive at final, global assessments of a company as big & complicated as Wal-Mart. On the one hand…but on the other hand…

As part of its annual World Report 2006, Human Rights Watch has just published the following:

Private Companies and the Public Interest: Why Corporations Should Welcome Global Human Rights Rules by Lisa Misol

Because voluntary commitments are insufficient in themselves to prevent corporate implication in human rights abuses, there have been increasingly frequent calls for binding standards. Indeed, regulations already have begun to emerge in some sectors on some issues, but coverage and enforcement is spotty, far short of the kind of comprehensive framework many believe is necessary. Multinational corporations have long responded to calls for any kind of binding human rights standards with the claim that self regulation or voluntary guidelines are enough. But there are signs that this opposition may be beginning to change.

In private, some multinational executives have started to question whether industry’s antagonism to regulation makes sense when it comes to human rights. They realize that only binding standards can ensure a level playing field and that, increasingly, the choice facing them is not between adopting voluntary codes of conduct and doing nothing. It is a choice between continuing to compete on an uneven, ever-shifting playing field and participating in the creation of universally binding and enforceable rules that apply equally to all companies.

The “level playing field” argument is a good one, generally. It basically says that in some situations, business should actually welcome some form of regulation. We all want to do the right thing; no one wants to see human rights violated. But the best intentions sometimes run up against competitive pressures. In the face of competitive pressures, personal conscience may fall by the wayside. One way to fix that is to invite regulation (either by government or by industry groups) so that all companies are able to do the right thing, without fear of competitive disadvantage.

Here’s a new study about the causes of unethical corporate behaviour.

Pressure to Meet Unrealistic Business Objectives and Deadlines Is Leading Factor for Unethical Corporate Behavior

NEW YORK–(BUSINESS WIRE)–Jan. 17, 2006–Pressure from management or the Board to meet unrealistic business objectives and deadlines is the leading factor most likely to cause unethical corporate behavior, according to a new survey on business ethics. The desire to further one’s career and to protect one’s livelihood are ranked second and third respectively as leading factors. That’s according to a global survey commissioned by American Management Association (AMA) and conducted by the Human Resource Institute (HRI).

The AMA/HRI survey on “The Ethical Enterprise” included responses from 1,121 managers and HR experts from around the world. The survey was conducted in conjunction with AMA’s affiliates and global partners, including Canadian Management Centre in Toronto, Management Center de Mexico in Mexico City, Management Centre Europe in Belgium and AMA Asia in Japan.

According to the AMA/HRI survey, working in an environment with cynicism or diminished morale, improper training about or ignorance that acts are unethical, and the lack of consequences when caught are the next leading factors likely to cause unethical behavior. These factors are followed by the need to follow the boss’s orders, peer pressure/desire to be a team player, desire to steal from or harm the organization and, paradoxically, wanting to help the organization survive.

And what solutions does the study suggest?

“Laws and regulations are, and will remain, the most influential external drivers of corporate ethics, but legislation is no substitute for the presence of leaders who support and model ethical behavior,” said Edward T. Reilly, president and CEO of American Management Association. “Corporate leaders need to communicate ethical values throughout the organization, but they must do more than talk the talk in order to establish and sustain an ethical culture,” Reilly added.

A couple of notes:
First, note that the headline of the press release is somewhat misleading: technically, the survey isn’t about unethical corporate behaviour. If you look at the full report, you’ll see that the researchers “asked participants about the top three reasons that were most likely to cause people to compromise an organization’s ethical standards.” So, it’s about individual behaviour. Sometimes, of course, an action by an employee affects outsiders in a way that might make observers want to call it a “corporate action.” (Example: Exxon rightly gets blamed, as a corporate entity, for the Exxon Valdez spill, despite the fact that running the oil tanker aground wasn’t really a corporate decision.) But that’s not really what the study seems to be about. It seems to be about unethical behaviour by employees, regardless of whether that behaviour amounts to a corporate action. (The work of ethics scholar Peter French is a good starting point for thinking about when it is that an action is a corporate action. See his “The Corporation as a Moral Person,” originally printed in the July 1979 American Philosophical Quarterly, but anthologized in various textbooks.)

Second, notice that the various factors listed are not mutually exclusive. It’s quite likely that unethical behaviour often results from a combination of, say, pressure to perform, the need to follow the boss’s orders, and a desire to help the organization survive. In fact, it seems quite unlikely that the need to follow the boss’s orders operates independently of the desire to further (or protect) one’s career. And a lack of (or improbability of) negative consequences must almost always be a factor.

Third, note (if you haven’t already) that little of this is very surprising. These are pretty much the factors most people would expect to see at play. But I guess it’s good to have actual evidence.

Fourth, this study only shows what factors people believe to cause unethical behaviour. It’s not about what actually does cause unethical behaviour.

Finally, note that there’s no mention of whether any of these causal factors amount to an excuse. (An electronic search of the full study finds zero occurrences of any of these words: blame, culpable, culpability, exculpate, justify, justified. There is one occurrence of the word “excuse.”) It would be interesting to know if the people surveyed thought any of the reasons given actually work to mitigate blame; it would be even more interesting for someone to work out a good argument about that.

Back in December I posted about Food Marketing to Children

Today, from Reuters: Suit seeks to stop Kellogg from targeting kids

A consumer group wants to keep Tony the Tiger from promoting sugary cereals on the SpongeBob SquarePants cartoon show, or anywhere else kids are watching.
The Center for Science in the Public Interest on Wednesday announced legal action to try to stop the Kellogg Co., maker of cereals like Frosted Flakes, and Nickelodeon cable network Viacom Inc., from marketing junk food to children.

A planned lawsuit will ask a Massachusetts court to stop the companies from marketing junk foods in venues where 15 percent or more of the audience is under age 8, and to stop marketing junk foods through Web sites, toy giveaways, contests and other techniques aimed at that age group.

Although I’m no lawyer, it’s hard to imagine this case succeeding. But it’s NOT hard to imagine this case drawing attention to an important issue. (Hmmm…could that be the whole point?)

Of course, this is “merely” a lawsuit (philosophers get to say that sort of thing), and law & ethics are not the same. So, even if the suit turns out to be more smoke than fire, that leaves the ethics of aggressively marketing high-sugar, low-nutrient foods to kids open to debate. It may well be that advertising to kids is “necessary” in the sugary-cereal business. But, as I’ve said in previous postings, there are some times when you’ve got to say: either find a way to do business ethically, or stop doing business.

[Link to my previous blog entry updated, Aug 2010.]

Tomorrow (Thursday, January 19th, 2006) Starbucks Canada is going to donate 100% of the purchase price of EVERY latte sold, to support literacy programs in Canada. They call this their Lattes for Literacy project.

So, what to think about the idea of giving to an excellent cause by spending a ridiculous amount of money on a caffeinated beverage? Is Starbucks to be congratulated for supporting literacy, when its way of doing so basically amounts to an effort to drag people into Starbucks outlets to buy high-markup beverages?

A few thoughts:

Sure, Starbucks likely has mixed motives. If they didn’t, they could just quietly donate a chunk of cash. Of course, they could also do something much less honourable with that cash, or donate it to a less-worthy cause.

But I’ve seen much more dubious examples of companies using a charitable donation to lure people into their stores. I’m sure we’ve all seen cases where the deal is more like “we’ll donate 5%” or something. Donating 100% of latte sales from across Canada is no small thing.

Savvy consumers understand how these things work. Of course the payback for Starbucks is good karma (and PR), as well as a bunch of extra people entering a Starbucks, people who might a) buy an expensive baked good to go with their charitable latte, and b) become devotees of the coffee mega-chain. So, if you decide to support literacy by buying a latte tomorrow, just ask yourself: am I willing to risk the possibility that I might be tempted (as Starbucks is likely hoping I will) to buy an over-priced baked good? Am I willing to risk the possibility the I might find Starbucks a congenial spot, somewhere I’d like to return to? See, it doesn’t really count as corporate manipulation if you agree to (risk) being influenced.

Finally, if you don’t like Starbucks (for whatever reason — for me, it’s the mediocre coffee) but want to support the good cause, why not donate directly? (That’s what I just did.)

(Props to Andrew over at Rebel Sell for prodding me to blog about this.)

I just watched the new DVD version of Enron: The Smartest Guys in the Room.

I reviewed the theatrical release last summer (short version: “Great movie”), so here I’ll just say a few words about the Bonus Materials on the DVD. The bonus materials might not be of interest to everyone interested in the movie itself, but anyone with more than a passing interest will enjoy them and learn from them. For anyone teaching Business Ethics, they’re fantastic.

The first Bonus is a commentary by Writer/Director Alex Gibney. Gibney does a little too much talking, for my tastes (I’d perfer to hear at least SOME of the film’s dialogue, with the commentary adding only occasional insights), but over all Gibney does a good job of telling “the story behind the story.”

Also included are a number of deleted scenes (scenes shot for the movie but not included in the theatrical release). One of the most revealing is a speech by Ken Lay, apparently given just after the collapse of Enron. It reveals a side of Lay not revealed in the movie, including some glimmers of compassion for the Enron employees who lost everything.

Also useful is a “Where are they now” segment, which provides a relatively up-to-date accounting of who at Enron was charged with what crimes, etc. (For further updates, the DVD refers us to this website: The Fall of Enron.)

Other Bonus Materials:

• “We Should All Ask Why?” Making The Enron Film
• A Conversation with Bethany McLean (co-author of the book)
• A Conversation with Peter Elkind (also co-author of the book)
• HDNet’s Higher Definition: Highlights from the Enron Show (an interview with Bethany McLean)
• Firesign Theatre: The Fall of Enron (video of a radio show’s skit spoofing Enron)
• Alex Gibney Reads Enron Skits
• A Gallery of Enron Cartoons
• Fortune Magazine Articles (unfortunately, you can only read them on-screan, not download them in, say, PDF)

Overall, Enron: The Smartest Guys in the Room is a very entertaining DVD, whether you’re merely curious about what really went on at Enron, or looking for a terrific starting point for classroom discussion.

Update: List of other movie reviews on this blog.

Many people in business ethics are kind of ambivalent about corporate philanthropy. Certainly, there’s at least reason to be uncomfortable when people equate — and they sometimes do — charitable donations with ethics in general. Corporate giving, in itself, doesn’t make a company ethics. And if a company (or one of its executives) has a history of questionable behaviour, giving a few tens of thousands of dollars to a few charities clearly doesn’t wipe the slate clean.

Just how good, ethically, is corporate philanthropy? Some people argue that corporations (or businesses more generally) have an obligation to “give something back.” Others (most notably Nobel Prize winning economist Milton Friedman) argue that when corporate executives give money to charities, they are essentially “stealing” that money from shareholders. Still others point out that corporate giving can have a powerful positive effect on a corporation’s image.

Then, of course, there’s the question of what kinds of causes to donate to. What counts as a “good” cause? Most of us would say that donations to a local little-league team or a charity helping the homeless is a good thing. But what about donations to a pro-life, or pro-choice, organization? What about donations to controversial environmental organizations like Friends of the Earth? Should philanthropy be focused on causes where the needs are greatest (perhaps famine relief in Africa) or should companies focus on causes closer to home?

Articles on corporate giving, from OnPhilanthropy.com

[Edited Aug 12, 2010, to eliminate post script referring to a website that no longer exists.]