Archive for the ‘certification’ Category

Customizing Ethical Products

So-called “ethical” products are in the news again. This time, the controversy is over whether the fairtrade movement should expand to include certification of large farms.

A controversy like this serves to highlight the complexity of the notion of an “ethical” product. After all, any product has many different characteristics, and hence many different dimensions of ethical concern. Just for starters, two food products of the same kind (say, two different brands of coffee) might vary in terms of whether they are FairTrade certified or not, whether they are organic or not, whether they are from countries with bad human-rights records, and so on. So the choice we face isn’t just between the ethical brand and the “other” brand; it might well be between two brands with different combinations of more, or less, ethical characteristics.

So here’s a thought experiment. Imagine a world in which mass customization technology make it possible for you, by purchasing online, to hyper-customize the products you buy, according to various ethical characteristics. Imagine you could choose, with a click of your mouse, any or all of a range of characteristics. And to make things more interesting (and likely more realistic) let’s say that each additional characteristic you ask for implies some additional cost. After all, some “ethical” production processes are costly, and some certification schemes are costly. So let’s imagine, say, that each additional ethical characteristic you opt for results in a modest 2% increase in the price of the product.

Given the opportunity to buy such customized products, which ethical characteristics would you choose to pay for?

Consider, for example, what you would choose faced with a website that let you order coffee and gave you the following options:

Or imagine being able to buy beef and to select from among the following characteristics:

Or again, imagine being offered the following choice with regard to the cotton from which your newly-tailored shirt is to be made:

This thought experiment raises several questions. For you, the consumer, it raises the question of which combination of ethical values you really want — and would be willing to pay for — in your purchases. For purveyors of “ethical” consumer products, it first raises doubts about the term itself, and about how confident companies can be that they’ve already identified “the” characteristics that make up an ethical product. Consider the light this sheds on the case of so-called “ethical veal,” as discussed in a recent story from the Guardian. Sure, the veal referred to in that story is ethically better in at least one way. But have the people selling it cognizant of the range of characteristics that different people regard as essential to making a food product truly ethical?

Of course, the shopping scenario imagined above is science fiction for now. You can buy customized shoes online, and customized chocolate bars, but as far as I know foods customized ethically are not yet on sale. If they were, would that make the choice faced by ethical consumers easier, or harder?

Ethical Investing and Values-Based Investing

If you’re an investor, and if you want your money invested in companies that will not just bring you a return on investment, but will also some good in the world, that means you’re interested in what is variously called “responsible investing” or “ethical investing” or “values-based investing.”

I was recently interviewed for a documentary on the topic. Here it is: “Responsible Investing: An Evolving Story.” The 20-minute video was produced by the Ontario Teachers’ Pension Plan (OTPP). OTPP (colloquially known as “Teachers”) is one of the biggest institutional investors in Canada, managing a fund of just over a hundred billion dollars.

One of the main points I tried to make in the segments I’m in is that the key to thinking about values-based investing is to think of it as a mechanism for value-alignment. That is, it’s a way for investors to invest in companies whose values are like their own. It allows pacifists to avoid investing in arms manufacturers, and allows anyone who is stridently anti-tobacco to avoid investing in that industry. It’s not about all of us investing in products or industries that are “more ethical”, overall. Such global judgments are difficult to arrive at, and even harder to find consensus on.

That is, it’s best not to think of values-based investing as “ethical” investing, as if in contrast to all that other, unethical, investing. Indeed, referring to it as “ethical” investing probably makes the same mistake as references to “ethical oil” or “ethical food” does: it confuses the fact that there is ethical reasoning involved in such investing with a much grander claim that your investments are the only (or most) ethical ones.

Certifying Virtue

Kenan Institute for EthicsTwo weeks ago I was at Duke University’s Kenan Institute for Ethics, in part to participate in a panel discussion called “Certifying Virtue.” The panel was basically about the challenges faced by various attempts to certify particular consumer goods as having been ethically produced.

My excellent co-panelists were Greg Dees (director of Duke’s Center for the Advancement of Social Entrepreneurship) and Tim Büthe (Assistant Professor in Duke’s Political Science department). The panel was organized and moderated by Kenan’s Lou Brown.

My own comments focused on:

  • The large number of value-dimensions along which different consumers might want assurances about the things they buy.
  • The epistemic problems involved in figuring out how to measure the things you might want to certify (e.g., measuring “environmental impact”).
  • The moral problem that arises when 2 or more desirable characteristics conflict (e.g., “wild” vs “organic” salmon — you might want both, but no one fish can be both wild and organic.)
  • The role of brands and certification schemes as “value-alignment” mechanisms, helping consumers find producers with whom they want to do business.

The panel was videorecorded, and the resulting 90-minute video is here, on YouTube: Certifying Virtue

The Ethics of Ethics Awards

Here’s a story worth looking at, by Will Evans, in Slate:
It’s All Good: Beware of corporate consulting firms offering awards for corporate ethics.

Evans casts a skeptical eye on corporate ethics rankings. The article focuses in particular on the rankings issued by Ethisphere (the same organization that has honoured me twice in the last 2 years). I should also note that I’m mentioned in the story as someone who was technically a member (though not an active member) of the advisory board for its corporate ethics ranking.

I’m also quoted by Evans as saying that such rankings should be taken “with a grain of salt.” (Note, though, that the sentence that contains that quote might be taken, wrongly, to imply that I think rankings are window dressing. That’s an accident of sentence structure, and doesn’t represent my view.) But it’s true that such rankings shouldn’t be taken too literally. Corporate ethics is complex, and any ranking methodology is going to involve compromises and is going to be inherently controversial.

Now, I’ve been blogging about the limitations of corporate ethics rankings for years. Just a few examples:

A few quick points to make about Evans’ article:

First is that, to be fair to Ethisphere, the article doesn’t give any particular reason for singling out Ethisphere’s rankings, among the many similar rankings. I suspect an article could easily be written about each of the other rankings, with similar results (though perhaps not with precisely the same set of complaints).

Second, the key worry that Evans cites about Ethisphere’s corporate rankings is that Ethisphere’s sister organization, Corpedia, is an ethics and compliance consulting firm. And it’s not clear how (or to what extent) Ethisphere manages to insulate its ethics ranking from Corpedia’s interest in gaining new clients. It’s a fair worry, and I imagine we’ll see improvements from Ethisphere (at least in terms of transparency, and perhaps in terms of process) in the coming months.

Third, it’s worth noting, as in other cases involving conflict of interest, that there’s no accusation of actual malfeasance, here. Nowhere does Evans imply that Ethisphere has done anything dishonest, or that its rankings have actually been biased. The worry, rather, is in…well, in the worry. We worry about C.O.I. not just in situations where we think someone has actually been biased, but also in situations in which we think that bias could be likely to occur. It diminishes our faith in the system, though not necessarily in the people working within it.

Fourth, it’s also worth noting that the concern highlighted by Evans in his article mirrors quite directly the worry about financial consulting firms that (at least prior to Sarbanes Oxley) provide both auditing and other consulting services to the same company. Prior to Sarbanes Oxley’s harsher limits, accounting firms did at least have a range of mechanisms in place (such as Chinese Walls) to insulate their auditors from the profit-hungry consulting branches of their own firms. Groups that do rankings might learn from that example.

Finally, a point about the point of ethics rankings. Evans ends his article with an anecdote about a company that had done well on an ethics ranking, and that used that achievement as a way of trying to deflect questions about a more recent scandal. That, of course, is an utter misuse of such a ranking. Corporate ethics rankings, at their best, acknowledge — and hence reward — achievement in certain measurable ethically-relevant behaviours. They are not an eternal benediction, and neither corporate insiders nor outsiders should treat them that way.

Ethics of Organic Farming

My blog entry saying nice things about Wal-Mart last week didn’t draw too much fire, so maybe this is a good time to say some things about organic food. (Not coincidentally, I also blogged last week about Wal-Mart’s foray into the world of organics.)

Organic farming is a business. Indeed, it’s a big one. And for many, it is the epitome of an ethical business.

Organic foods enjoy a reputation among consumers that may not be substantiated by anything like real evidence. Consumers tend to think organic foods are healthier (either because they believe non-organic foods have dangerous levels of agrochemicals, or because they believe organic foods have superior nutritional value). Those beliefs are not fully justified, based on my reading of the available evidence. (Note that to say that a belief is “not justified” is different from saying it is “false.”)

And producers of organic foods undeniably benefit from the public perception that organic foods are healthier. Farmers and retailers benefit from that perception, because it means that a certain percentage of consumers are willing to pay a significant premium for organic foods. But are organic foods really any better? Organizations representing the organic agriculture industry are careful not to make health claims for organic foods (and indeed, in some juristictions such claims are forbidden by law.) But it’s hard to find a pro-organic website that doesn’t have some sort of claim — however vague — about the health benefits of organic food. Look, for example, at the 10 Top Reasons to Go Organic, from the organic lifestyles magazine (Note that the article does not cite sources; and many of its implied causal claims are highly suspect.)

So, here’s the qestion: what ethical concerns should we have about those selling organic food — a boutique product with only uncertain benefits? Is there more to be said for organic foods than there is for such dubious (and expensive) products as Qray bracelets and other pseudo-scientific products? And is organic food more than the bourgeois status symbol that some people say it is? Why don’t advocates for organic foods welcome the idea of Wal-Mart bringing organic foods to the masses? Is it because that would reduce the symbolic value of organics, the way the caché of Starbucks coffee would be diminished if they sold that at Wal-Mart? Do the claimed environmental benefits of organic farming stand up to the argument that intensive agriculture is more productive, and hence more sustainable?

As always, this blog is not the place to wrestle an issue to the ground. Whatever else this blog is for, it ought to get people to question their assumptions about what business practices are ethical, and why. Here are just a few links.

Footnote: From the category of debunked criticisms — there have in the past been claims that organic foods carry higher levels of E. Coli (a deadly bacteria) than other foods, because of the greater use of manure as a fertilizer on organic farms. This has pretty much been debunked (or is at least unsubstantiated, for now.) Also debunked have been claims about higher levels of mycotoxins (toxins produced by fungi) in organic foods. The scientists may still be wrangling over these issues, but for now it looks like these are not serious concerns (i.e., there is no reason to think that organic foods are, in general, less safe than other foods.)

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