The Business Ethics Blog

Robert Pojasek, over at GreenBiz.com, has posted this useful commentary (which, totally coincidentally, says some nice things about a paper I co-wrote)… “Focus on Substance, Not Slogans, to Strive for Sustainability.” It’s essentially an attempt to enunciate a vision of what social responsibility looks like, minus the catchy jargon.

Here’s Robert’s opening paragraph:

Polling and advertising agencies have been warning us about confusion around the practice of going green. The New York Times has coined the term, “green noise” to describe this confusion. The Wall Street Journal posits that the consumer is becoming more skeptical of green products due to both greenwashing and green noise. It is clear that consumers are inundated with too many issues to be able to understand all of them….

The whole piece is worth reading.

One example of an overused ‘green’ slogan, according to Robert is the “Triple Bottom Line” idea. Regular readers will know that I think the Triple Bottom Line jargon is badly misleading. I’ve blogged about it several times (see here and here, for example) and co-authored a scholarly critique.

Interestingly, Robert says that, in his experience, our criticism of the Triple Bottom Line “makes the people that use the TBL phrase angry.” That may be true, but that anger (or even disagreement) has seldom found its way into print. I know of only one published response (by Moses Pava) to our criticism. If the Triple Bottom Line is so popular (as it still seems to be) where are its defenders? I’m sure most of them simply haven’t read our criticism. Others just don’t care, for one reason or another. Some probably doubt the relevance of criticisms authored by philosophers: we’re about “theory,” they’ll say, not “reality.” Which, of course, is a huge cop-out. When the accusation is that the concept you’re using to sell your consulting services — in this case, the Triple Bottom Line — is not just misguided but positively misleading — you either need to defend your use of it, or stop. Otherwise, you’re just selling snake-oil. And that’s quite a result for consultants who claim to be selling ethics.

Some of you may recall that, along with this humble blogger, President Barack Obama (back then he was merely “President Elect”) was included on Ethisphere Magazine’s list of the 100 Most Influential People in Business Ethics (2008), earlier this month.

The rationale provided by Ethisphere:

Obama has made ethics a cornerstone of his administration, which in turn has already caused a priority on ethics to trickle down into public and private companies. Many businesses have already responded directly or indirectly by shifting their overall business strategy.

It’s not clear how much influence Obama could have had in 2008, when he was merely a presidential candidate. It’s clearer that he has a chance to exert a fair bit of influence in 2009, and beyond. Just how much influence he can have on the way business is conducted, and the mechanisms by which he can do so, is an interesting question, one I’m not sure I’m qualified to answer.

But I’ll point out that we could begin to answer the question by noting that the there are two categories of ways in which the President (be it Obama or anyone else) can influence business ethics.
1) Leadership. The President, in a very real way, gets to set the tone for other leaders, including leaders in commerce. He gets to lead by example, and, in Obama’s case, lead through the persuasive force of his very considerable oratory skills. Just how potent such example-setting and persuasion are or can be is an open question.
2) Legislation. Now, I’ve been at pains before to point out that law & ethics are not the same thing. But ethical constraint often (and perhaps most critically) comes into play in what HLA Hart called “the penumbra of the law” — the grey zone along the law’s edges. Change the law, and you change the penumbra, the area within which companies and executives have to exercise ethical judgment.

Time will tell whether Obama exerts the kind of positive influence on business ethics with which Ethisphere has already credited him. Americans of all political leanings, and people around the world, should wish him luck.

History is full of well-intentioned actions with unfortunate, unintended consequences. The attempt by Western activists to stop multinational companies from buying goods made by sweatshop labour might be a good case in point.

That’s the argument put forward in the short video, A Dirty Job: Making the Case for Sweatshops, by Nicholas D. Kristof for the New York Times. The video is just under 5 minutes long, and well worth watching. The setting is a garbage dump in Cambodia, where many individuals and even entire families eke out a meagre existence there by scavenging for scrap plastic and scrap metal. Needless to say, it’s a brutal life these people live. Is it the best they could hope for? No, many of them do have dreams: they dream of a job in a sweatshop.

Here’s a quotation from the video’s narration:

‘Sweatshop’ is a dirty word for us in the West. And all the criticisms of sweatshops are justified. I sure wouldn’t want to work in one. But in the world’s most impoverished countries, even a sweatshop job beats the alternatives: construction, prostitution, or scavenging. Nearly all of the people with whom I spoke at the dump consider factory work an improvement, maybe even a dream job of sorts.

According to Kristof, sweatshops aren’t just a dream for individuals, but for entire economies:

Manufacturing also offers one of the best hopes for mass employment in a poor country. Sweatshops are how East Asia raised living standards.

The conclusion, Kristof suggests, is pretty clear:

I know it sounds strange to say so, but if we care about the poor shouldn’t we actually be campaigning for sweatshops?

I think Kristof makes a compelling case. But I think two additional points need to be made:
1) There are sweatshops, and there are sweatshops. The kinds of factories that might be crammed into that one awkward category vary enormously. Plenty of factories in developing countries wouldn’t meet Western standards for health & safety, pay, etc., but are basically “good” jobs from the point of view of the people working there. Other factories are even less lovely: some are basically forced labour camps, rife with human rights abuses. It’s worth keeping that distinction in mind when we hear arguments in favour of what we very loosely call “sweatshops.”
2) Accepting Kristof’s argument — basically that sweatshop jobs are, for many people, better than the alternatives — does not automatically mean that neither multinational corporations nor consumers need any longer care about labour standards in third-world factories. We should be careful not to ‘let the best be the enemy of the good,’ but we can also still care, and look for room for improvement where we can.

I blogged last month about the strike at York University in Toronto. The strike is still going on (now in its 3rd month).

One of the quirks of having a labour dispute at a university is that some of the people at the university (primarily professors) will often have have special expertise in issues relevant to labour disputes, such as labour law, labour relations, finance, accounting, and, well, ethics.

At York, one good example of someone with such expertise is law prof David Doorey. As it happens, Doorey writes a labour law blog. Doorey’s blog entry from 2 days ago poses an interesting question. He poses it as a legal question, but it could just as easily be re-cast as an ethical one.

It seems the Deans of the various faculties at York made the unusual move of sending out a memo, directly to the employees on strike, encouraging them to vote in favour of the University’s current offer. The question Doorey posed to his readers: does this memo contravene sections of Canada’s Labour Relations Act that forbid employers from exerting certain kinds of pressure directly on union members (as opposed to dealing with union leaders)?

Even if the answer turns out to be “no” (i.e., even if no, the Deans’ memo didn’t contravene the Act) there still remains the ethical question: is it ethical for managers (which is what Deans are, at Universities) to communicate directly with employees during a strike, or is such communication always at least vaguely coercive, given the power asymmetries involved?

My initial instinct is that the Deans’ letter is at least not clearly unethical. In order for the Deans’ memo to be taken as implying some sort of threat, it has to be the case that a Dean could know how a particular union member had voted. But they presumably won’t know that. If there’s a threat here, it’s a very vague and probably implausible one.

On the other hand, the strike won’t last forever. And when it’s done, and when the University goes back to business as usual, the Deans will go back to their roles as managers and the strikers will go back to their roles as educator/employees. It’s easy to imagine that the Deans’ memo — and perhaps their interference, and at least the hint of a vague threat — will be remembered, and resented.

It’s always interesting when major companies dip their toes in political waters in a public way. It’s even more surprising to see companies — typically wary of risking negative public attention — taking positions on highly controversial political issues. (Back in October, I blogged about Apple having taken a very public position against California’s anti-equal-marriage-rights Proposition 8.)
Here’s the latest such controversy. From Salon.com: Pro-life group slams Krispy Kreme for baby-killing treats

So Krispy Kreme has decided to offer a free doughnut to every customer next Tuesday in honor of Barack Obama’s inauguration. Nice of them, no? Maybe not completely selfless, since they’re probably figuring they’ll end up selling more doughnuts that way, and besides, it’s not exactly great for your waistline. But still — no one can complain about a free, delicious Krispy Kreme, right?

Wrong.

The anti-abortion group, American Life League, objected. Strenuously. The problem, it seems, was the wording of the donut company’s press release, which read in part: “Krispy Kreme Doughnuts, Inc. is honoring Americans’… freedom of choice on Inauguration Day, by offering a free doughnut of choice to every customer.”

The A.L.L. issued its own statement, with the provocative title, “KRISPY KREME CELEBRATES OBAMA WITH PRO-ABORTION DOUGHNUTS”. The statement said, in part:

The next time you stare down a conveyor belt of slow-moving, hot, sugary glazed donuts at your local Krispy Kreme, you just might be supporting President-elect Barack Obama’s radical support for abortion on demand – including his sweeping promise to sign the Freedom of Choice Act as soon as he steps in the Oval Office, Jan. 20.

I have little to say about this. It’s not clear whether, by using the word “choice” — a hot-button word in American politics — the donut chain really was referring to Obama’s position on abortion. That certainly wasn’t how I read the Krispy Kreme press release: I thought (naively, perhaps) that they were talking about electoral choice. If they really were referring to reproductive choice, if they really were pushing that particular political button, it’s a pretty risky way of garnering attention. On the other hand, the American Life League, in it’s insistence on reading Krispy Kreme’s statement that way, is definitely pushing buttons.

(Has anyone noticed that baked goods seem to show up ridiculously often on this blog? See here, here, and here, for example. It’s not intentional, I swear.)

Organic, organic, organic. Everything has to be organic today. Promoters of all-things-organic will tell you that you’re a fool to be eating/wearing/carrying the yucky non-organic version of their product, and that the producers of those products are purveyors of poison. On the other hand, those who sell organic goods are (in most places, anyway) forbidden from making any particular claims about why organics are supposedly better — mostly because no proof for such claims exists. That leaves sellers of organic stuff with the option of saying nothing, or promoting their products via hints and innuendo. Ethical problems all around, it seems.

See this story from the NY Times: The Stuffing Dreams Are Made Of?

The question of what’s really in a mattress is important, at least as some people see it, because, they believe, any product made with synthetic materials carries potential health risks. “You spend a third of your life in bed,” said Debra Lynn Dadd, an author and blogger in Clearwater, Fla., who has been writing about toxic substances in household products for 25 years. “If you are interested in things like organic food and natural beauty products,” she added, “you should realize that you’re actually getting a greater exposure to toxic chemicals in your bed than anywhere else.”

One of the key health concerns is that many “standard” mattresses contain polyurethane, which is made from petroleum, and which can emit volatile organic compounds. That might just be bad for you. The polyurethane makers, of course, are skeptical:

Robert Luedeka, the executive director of the Polyurethane Foam Association, dismissed the idea that mattress foam is dangerous as a “scare tactic” to help hucksters sell products. “It’s on their shoe soles, it’s in their clothing, their car; their bra pads are made of it,” he said. “It’s a pervasive material in everything we do. It’s in hospitals and in wound dressings. We sell two billion pounds of it a year.”
“I wouldn’t eat it,” Mr. Luedeka added, “but I would do anything else with it. I think it’s extremely safe.”

The most interesting line from the story is actually about the ethics of selling organic mattresses, rather than the ethics of selling the traditional kind:

Even if consumer concerns about health risks are exaggerated or entirely misguided, though, the lack of clear standards for mattresses labeled as organic or natural — and in some cases, a lack of transparency about their contents — may risk feeding the kind of suspicions that Mr. Luedeka noted.

One stone that the Times story leaves unturned: are their health benefits to “standard” mattresses, or risks associated with organic ones? Off the top of my head, I’d want to ask questions about whether fungi (molds, etc.) are any more likely to grow on natural/organic fibres, and whether there’s any risk from inhaling cotton dust (which, in industrial settings, can cause a lung disease called byssinosis.) I’m no expert on such things…but then, neither are most mattress salespeople.
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Thanks to my friend Andrew Potter, who also blogged on this.

A few weeks back I posted a fun little story about monkey waiters in Japan. A couple of commenters found my comments flippant; after all, is it right for animals to be used in this commercial way?

Now comes another story about a Japanese business making unusual use of animals. Apparently there are cafés in Japan where you can rent a pet — or rather, buy a pet’s company for a few minutes or hours. Here’s the story, from the BBC:
Rent-a-friend in Japan

Lola – or Rora – to give her a slightly more Japanese pronunciation – is a beauty and she knows it.
Customers pay by the hour for her company. Usually they just want to stroke her, but as a special treat for favoured clients, she will lie back in a chair, close her eyes and pose for photographs.
Lola is a Persian cat who works at the Ja La La Cafe in Tokyo’s bustling Akihabara district….

The superficial parallel with prostitution (of the brothel or “massage parlour” type) is pretty clear, and the BBC’s story plays that up.

Is this better, or worse, than using monkeys as waiters? Is there some worry that these dogs & cats are being “used?” Are there psychological dangers (to the animals, I mean) from subjecting them to so many, fleeting, relationships with people?

My friend Paul Gorbould took this picture (recently featured on the Freakonomics blog) and it’s worthy of consideration from a business ethics point of view. The picture happens to have been taken at a public building (at the Joggins Fossil Cliffs, in Nova Scotia), but signs much like this one are popping up at business establishments, too.

As the comments at the Freakonomics blog point out, there are plenty of problems, here. What does “alternative” fuel mean? Is diesel an alternative fuel? If not, why not? What about E85, which is basically a mixture of ethyl alcohol and gasoline? Why should a tandem pickup burning (lots and lots of) E85 get parking priority? How about a hybrid SUV? A hybrid SUV burns more fuel, and is worse for the environment, than, say, an “old fashioned” subcompact car burning unleaded gasoline. Why give it special parking privileges?

But there’s another important issue here: even if it were clear what counted as “alternative” (which it’s not) and even if “alternative” SUVs really deserved special parking (which they don’t) there’s still an issue about what sorts of values, in general, we promote through special parking privileges. Note, for example, that every parking space reserved for alt-fuel vehicles is thereby made unavailable for, say, handicapped parking. Or for parking for pregnant women and new mothers. Or for motorcycles and scooters and bicycles. A business can, of course, have special parking spots for all of the above, and still have room for the rest of us — if they’ve got a really big parking lot. But still, someone has to get the spots closest to the door. In making a move to promote a particular value (like environmentalism), organizations need to think not just about what values they’re promoting, but about what other values they’re de-emphasizing at the same time.

Another interesting twist: an environmental certification system may be behind this silliness. One of the people who left a comment on the Freakonomics blog pointed out that under the Leadership in Energy and Environmental Design (LEED) Certification system, builders get points towards certification if they provide parking for alt-fuel vehicles. The Joggins Building is LEED Certified. It’s unfortunate when well-intentioned certification systems encourage poorly-justified moves like this.

Ethics professors like me are fond of what we call “state of nature” thought-experiments. If you want to understand the value of a particular ethical standard (or the value of ethics in general) try to imagine what life would be like “in the state of nature” — that is, try to imagine what life would be like in a world without it. For example, if you want to understand the importance of telling the truth, imagine a world in which no one ever felt required to tell the truth — a world in which no one ever felt any compulsion to be truthful.

Sometimes, of course, our imaginations fail. We’re so used to taking certain ethical standards for granted that it makes it hard to imagine life without them. That’s especially true with regard to business ethics: the standards are often complicated and the role they play in commerce often isn’t obvious. In some cases, though, we don’t need to rely on our imaginations, because we can look to less-developed economies where business ethics in the formal sense is still being developed.

See, for example, this story from the Times of India: Drug cos associations agree to strict enforcement of ethics code

On Tuesday, representatives of drug company associations agreed to the need for the creation of a combined code of ethics and its effective enforcement.

At a meeting with pharmaceutical secretary Ashok Kumar, under the chemicals and fertiliser ministry, the representatives said that most of them followed a code of ethics. They, however, “admitted” that some pharma companies did not have such a code.

They assured Kumar that they will get back to him within a month with a uniform code of ethics that will be followed by all drug companies….

The basic idea, here, is that reliable ethical standards for companies aren’t just good for consumers — they’re good for the companies, too. Pharmaceutical companies in India have realized this, and so they’re doing their best to convince the Indian government that they’re committed to ethics. Why? Three main reasons. First, while you can obviously make a lot of money in the short run by doing business unethically, you can usually make even more money, in the long run, by doing business ethically, and building a reputation as a trustworthy industry.

Secondly (though this isn’t mentioned in the story), Indian pharmaceutical companies need to establish a reputation as ethical because they want to be able to form partnerships with wealthy North American and European companies, and to gain access to the lucrative North American market. India is not a wealthy country. Most of its citizens can’t spend a lot on pharmaceutical products. But an Indian company that can show itself to be trustworthy is more likely to get the chance to sell its products in to relatively affluent North Americans. There is big, big money to be made there.

The third reason is suggested here:

[The drug companies] requested the government to refrain from any legal intervention in the matter and leave the matter to be sorted out by the pharma corporate bodies.

Government in general has an obligation to protect consumers. But when your company or industry is perceived as ethical, you can make a much better argument in favour of government taking a hands-off approach and allowing industry a significant degree of self-regulation. Of course, industries don’t always do a good job of making and enforcing their own rules; only time will tell how well the Indian pharmaceutical industry does in this regard. But in this story we see a nice example of the very genesis of a set of ethical rules within an industry, and an illustration of the idea that business ethics isn’t just about putting external constraints on businesses but also very often about the kinds of rules to which businesses have good reason to commit themselves.

I spotted this sign at a large retail store on the outskirts of Ottawa a couple of days ago:

More specifically, the sign was taped to the checkout counter.

Now, a couple of things strike me.

1) The sign is at least borderline rude to customers. Obviously, it’s aimed at the obnoxious few who have the poor judgment to take out their Christmas shopping frustrations on sales clerks. But the sign is addressed to everyone. I’ve never been rude to a checkout clerk in my life. Why are they reminding me to be nice?

2) On the other hand, the sign also represents a laudable effort by management to make good on their obligations to their employees. Employees deserve to be treated with respect, and that includes by customers. It may be true that “the customer is always right,” but employees shouldn’t have to be subject to rudeness and abuse. Managers who stick up for their employees should be congratulated.

3) Finally, I can’t help thinking that a sign of this sort is a relatively bad way to pursue this particular goal. I mean, at least it’s printed professionally and not hand-written. But still. Is this the best social engineering we can do? Isn’t there a more effective method of reminding people of their manners? I think in general when you see signs taped to things (think how many times you’ve seen a hand-scribbled sign that says “Please use other door”) it’s an indicator of a failure of design, either physical or organizational.