Archive for the ‘corporate citizenship’ Category

Curbing Illicit Flows of Money

The development goals of many underdeveloped nations are seriously hampered by illicit flows of money. The money sent into those countries in the form of aid and foreign direct investment is, in many cases, dwarfed by the money that flows out as a result of money laundering, bribery, and dodgy transfer pricing. Some estimates put that outflow as high as a trillion dollars. And a lot of that money flows through, between, or within corporations.

I recently took part in a panel discussion on this topic, part of a larger event put on by a group called Academics Standing Against Poverty (ASAP).

Here are a few of what I take to be the key points, not necessarily in order of presentation, from my discussion of the topic:

Corporations have two different categories of responsibilities when it comes to curbing illicit financial flows. First, they are of course responsible for their own behaviour. Under this heading, corporations have three key obligations. First is not to game the system to avoid taxes. Minimizing taxes — even going to significant lengths to avoid taxes — may seem to be part and parcel of a manager’s obligation to maximize profits. But there is no general obligation to maximize profits, and certainly no such obligation to do so ‘at all costs.’ Even the weaker duty to ‘put shareholders first’ is a vague enough concept to be consistent with a principled stance against aggressive tax avoidance, even where taxes can be avoided legally.

A second direct obligation has to do with transparency about transfer pricing. When goods or services are being sold between branches of a multinational, the prices charged should be fair and should be rooted in a clear methodology. And total taxes paid internationally should be reported in a company’s audited annual reports. Even when gaming the system is legal, it is dishonourable.

Third, companies should have zero tolerance for bribery. Besides being corrosive to local economies, bribery is often just a lousy competitive strategy: it involves payments that cannot be guaranteed to work, and when they don’t work there is of course no recourse to the courts. Businesses generally know this, but sometimes see bribery as a necessary evil; they need to work to make it less necessary.

In addition to these direct obligations regarding their own behaviour, big companies arguably have some responsibility for the indirect effects of their operations. Major corporations support entire ecosystems of smaller businesses — suppliers, subcontractors, agents, and so on. And activities within that ecosystem can be a major source of illicit transfers. Corporations should assume some responsibility for illegal and unethical activities in their shadow. This should at least mean setting clear standards for the behaviour of the companies with which they interact, and sharing best practices. Companies are starting to do this with regard to bribery, but they should consider extending that to other areas.

Next, a point with regard to how businesses interact with governments. The least controversial, over-arching norm for business is to play by the rules of the game. Normally, governments set rules and as long as businesses play within those rules, they are at least coming close to meeting their obligations. But not all governments are equally capable of setting and enforcing the requisite rules. And the absence of clear rules doesn’t imply an absence of obligations. So, for example, the fact that the government of a small developing nation hasn’t passed regulations (as Canada and the US have done) that set standards for fairness in transfer pricing doesn’t mean that a company can be complacent.

Finally — and this bit of advice is aimed at development advocates — it is important to avoid thinking of transnational corporations as the enemy. My sense is that a significant subset of folks who are concerned with development are focused on the negative side-effects of corporate involvement in developing nations. What we need to do, though, is to harness the power of corporations rather than regretting it. Business corporations, in addition to being potent organizations, have a vested interest in reducing poverty worldwide. Anyone living on $1.25 a day makes a lousy customer and a lousy employee. Of course, corporations face a collective action problem when considering how to reduce poverty. No one corporation can do much on its own, and it’s a challenge to find ways to get long-term interests in poverty reduction to override short-term interests in profits. But still, the development community needs to see corporations as important partners. We can’t let a culture war over capitalism get in the way of helping the world’s poor.

The video of our panel discussion is now available, here:

Kinder Morgan and the Ethics of Public Consultation

Energy company Kinder Morgan ran head-first into the complex ethics of public consultation last week. The company shut down an information session in Victoria, British Columbia, in response to what the company is calling “vandalism” of some of its on-site signs. The so-called “vandals” tell a slightly different story: they say all they did was peacefully replace the company’s signs with their own placards.

Public consultation is a regular part of business for many companies these days, especially those in the energy and extractive industries. In some cases, public consultation is required by legislation; in other cases, it’s just good business sense. But none of that means that all companies are going to be at ease with the process. To say that public consultation is common is not to say it is easy. For starters, the word “public” is too broad to provide clarity about what the process even amounts to. You’re not really going to consult the entire public. So who should you consult? The activist public? The educated public? The elected or appointed representatives of the public?

For that matter, how do you even label the process? Without harping too much on words, consider the difference in attitude implied by the terms “public consultation,” “public information,” and “public engagement.” The public’s perception of the process is liable to vary considerably depending on the way the process is labeled, never mind what it implies about the role the thing is going to play in a business’s operations.

From an ethical point of view, public consultation has two distinct objectives. First, consultation is a sign of respect, a way of saying to concerned individuals and groups, “We think you matter.” The other ethically-significant reason for public consultation is to gather input that might actually affect decision-making. Unanticipated concerns can easily come to light; asking people what they care about can be much more effective than guessing. These twin objectives — expressing respect and seeking information — provide hints as to how the process needs to go.

Of course, the information gathering goal is the easy part. Give people a microphone and they’ll talk. A company still needs to make an effort to get the right people in front of the mic, but that’s not rocket science.

The harder part is how to show respect, especially when the project at hand is a controversial one over which tempers are likely to flare. Like, say, a pipeline. And that’s where Kinder Morgan ran aground, in a mutual failure of respect. It’s not nice to mess with someone’s signs, but it behooves a company to respond to such things by taking the high road. After all, a company in the energy sector needs to not just show up; it needs to be good at this stuff. In public consultation, the kind of sophistication that befits a first-rate company means more than glossy handouts. It means being able to roll with the punches, because sometimes that’s what respectful dialogue requires.

Storms, Global Warming, and Corporate Citizenship

Humans are (very likely) changing the earth’s climate. And changes in climate are (very likely) making storms worse. And worse storms are (definitely) a bad thing. Granted, it’s hard — in fact, foolish — to try to draw a straight line between any individual’s or even any corporation’s behaviour and the Frankenstorm that just slammed New York and surrounding areas, but the fact remains that the devastation that storm wrought was not the effect of a mere freak of nature. As Businessweek bluntly put it, “it’s global warming, stupid.”

But what matters more than the cause of global warming is what we can do about it. In particular, what can business do about it?

Large-scale problems tend to require large-scale solutions, and so there’s a natural tendency to leave such issues to government. This is so for two reasons. First is simple scope: you driving a hybrid car or switching to CFL bulbs just isn’t going to accomplish much. Second is the nature of collective action problems: each of us benefits from a wasteful, energy-intensive lifestyle, and it seems narrowly rational to let other people (or other companies) bear the costs of doing things differently. But the fact that it’s tempting, or even narrowly rational, to let others bear the burden, or to wait for government to act, doesn’t make it the right thing, or even the minimally decent thing, to do.

So what can businesses do — what is it possible for them to do — in response to a trend in global warming that is clearly posing increased risks?

To begin, of course, they can work to avoid making things worse, by avoiding burning carbon and adding to the load of carbon dioxide in the atmosphere. This means looking at relatively small, obvious stuff like seeking energy efficiencies in their operations, promoting telecommuting, reduce air travel, and so on. Luckily, most such efforts are relatively painless, since they tend to reduce costs at the same time. Sometimes mere laziness or a focus on “how we’ve always don’t things” gets in the way of making such win-win changes. Don’t be lazy. Innovate. Share best practices with your suppliers, with other companies in your sector, and if you’re a B2B company, with your customers.

The second thing that businesses can do is to work with, rather than against, government efforts at making things better. In particular, it is a fundamental obligation of corporate citizenship not to block government action aimed at effective action at slowing climate change, and in particular action aimed at dealing effectively with the effects of climate change. If, for example, a government wants to pass rules forcing businesses to pay the full cost of their energy usage, or rules that impose industry-wide energy efficiency rules, business should welcome rather than oppose such changes. Energy inefficiencies impose costs on other people, and hence count as the kind of externalities that go against the fundamental principles of a market economy.

It’s also worth noting that asking what business can do is not quite the same as asking what your business, or any particular business, can do. Business organizations and trade associations abound, and there’s plenty they can do to a) help members share best practices and b) foster industry-wide standards that can help businesses live up to their social obligations while at the same time maintaining a level playing field.

Finally, business can do the things that business is supposed to be good at: efficient management, synergistic use of a range of kinds of human capital, and innovation. That stuff isn’t just a good recipe for commercial success. It’s an absolute obligation. And innovation is clearly the key among those three aptitudes. Efficiency — tightening our belts — will only get us so far. We desperately need a whole slew of truly brilliant new ideas for products, services, and productive processes over the next decade if we are to meet the collective challenge posed by changes in our environment. And it’s foolish to expect government to provide those ideas. It’s time for business to step up to the plate. There can be no better way to manifest a commitment to corporate citizenship than to be the kind of corporate citizen that sees a business model in trying to help us all cope with global warming.

Business Obligations During Natural Disasters

As Hurricane Sandy bears down on Atlantic City, New York, and (eventually) parts of eastern Canada, thousands of businesses large and small are faced with dilemmas related to doing business before, during, and after a potential state of disaster. Certainly some businesses won’t have a choice, as flooding either wipes them out or makes access impossible. The NYSE and Nasdaq have both made the unusual move of staying closed for the day today (Monday).

But others will have hard choices to make, and no easy formula for making such choices is at hand.

Choice #1 pertains to the basic issue of staying open. Here, business owners need to balance the safety and security of their employees and buildings, on one hand, with the needs of their customers on the other. The weight given to the needs of customers must of course depend on just what you’re selling. If you sell water and flashlight batteries, a sense of social obligation ought to keep you open ‘as long as possible.’

The second choice has to do with the closely related question of whether businesses should require employees to work before, during, and after a natural disaster. Sometimes being at work will pose risks to health and safety, and sometimes the risk lies in getting to work. The transit closures that go with severe weather are a factor here, too. Lack of access to public transit can make it difficult, and sometimes dangerous, for employees to get to work. But then again, in some cases employees — especially ones earning an hourly wage — will prefer to work, in which case telling them to go home may be overly paternalistic.

The third question is about prices. In a reasonably free market, prices tend to go up when goods are scarce and when demand is high. And natural disasters have a way of both limiting supply and raising demand. As supply chains get cut off, it may be reasonable for businesses to raise prices somewhat in order to cover additional costs. But stores need to be careful to stay on the right side of the law — most jurisdictions have anti-price gouging laws that put limits on just how much you can raise prices in the wake of disaster.

All three choices involve difficult decisions about how to balance the competing interests of various groups. But in terms of fundamental motivation, it’s also worth pointing out that staying in business as long as possible can be a great way to build goodwill. A business that is there for its community in times of crisis is likely to reap rewards for a long time to come.

The business I happen to work for — Ryerson University — is an unusual kind of business when it comes to questions like these. I asked our VP Administration & Finance, Julia Hanigsberg, about the criteria Ryerson uses to decide whether and when to close.

“The safety of our community is the primary consideration on whether to close the university or cancel classes during extreme weather conditions or other emergency situations,” Hanigsberg told me. “Our Integrated Threat and Risk Assessment team monitors the situation by scanning publicly available sources and consulting with expertise available in the broader public sector about road conditions, availability of public transit, information from Emergency Services etc.”

One particularly interesting point that Hanigsberg made had to do with the fact that, really, the university never fully shuts down. Hanigsberg says: “Unlike most businesses, even when we ‘close’ the university is operational 24/7 with students in residence, research labs operational etc.”

The same is true for hospitals, of course, as well as other public services like shelters. But the same is true for businesses such as hotels and kennels and airports. Anything charged with the 24/7 sheltering and feeding of humans or animals — is unlikely to shut down entirely. The same obviously goes for essential services, such as police, fire, and ambulance. They’re not businesses in the traditional sense, but they face the same dilemmas, albeit with a much stronger public service impetus pushing them to keep the wheels turning.

The inability to shut down entirely brings special obligations, of course. For starters, it puts a premium on planning for disasters. Businesses that can’t shut down need to have plans in place, and need to train employees both in safeguarding their own health and safety, and in looking out for the customers who may be entrusted to their care in the most trying, and ethically challenging, of circumstances.

Wal-Mart Bribery and Bad Examples

This is the third in a series of postings on the bribery scandal at Wal-Mart de Mexico and its parent company, Wal-Mart Stores, Inc.

I’ve already dealt with why bribery is so seriously problematic in general. But let’s look here at why this particular instance of bribery (or pattern of bribery, really) by this particular company is especially problematic.

It goes without saying that the bribery that allegedly took place at Wal-Mart de Mexico is a wonderful example of lousy “tone at the top.” Eduardo Castro-Wright, who was CEO of Wal-Mart de Mexico during the bulk of the wrongdoing, is centrally implicated, as are senior people at Wal-Mart Stores, Inc., including CEO Mike Duke. How on earth can they now hope to exercise any ethical leadership? Clearly, they can’t, and that’s why in my opinion they both need to resign or be fired.

But the bad example set by this set of behaviours goes well beyond the walls of Wal-Mart itself.

Wal-Mart is an industry leader, taken by many as an example of how business ought to be done. The signal sent here is particularly corrosive with regard to doing business in Mexico. Mexico clearly has its problems with corruption. But there’s a self-fulfilling prophesy in this regard. If companies see Mexico as a place where bribery is necessary, they’re sometimes going to offer bribes to public officials who, in turn, will come to expect bribes. And if Wal-Mart, of all companies, says it can’t compete effectively in the Mexican market without engaging in that sort of thing — well, the lesson for merely-mortal companies is clear. If Wal-Mart can’t thrive there by playing by the rules, who can?

Think also about Wal-Mart’s supply chain, and the example this behaviour sets for the thousands of companies that supply Wal-Mart, directly or at one or more steps removed, with the goods it sells. Wal-Mart is notoriously tough on its suppliers, insisting on lower and lower prices and higher and higher levels of efficiency. But naturally — naturally! — Wal-Mart wants its suppliers to do all that within the limits of the law, right? Or at least that has to be the company’s official policy. But now, what are suppliers to think? With the revelation of Wal-Mart’s own lawless behaviour, the message to suppliers — thousands and thousands of them — is that getting the job done matters more, and that the ends justify the means.

OK, but won’t the fact that the Wal-Mart executives involved got caught also serve as an example? Well, perhaps. But that depends in part on what action is taken by law enforcement agencies and by the company’s own Board. I strongly suspect that decision-makers at a lot of companies will continue to fall prey to the cognitive illusion that so often facilitates wrongdoing of all kinds: “I’m too smart to get caught.”

So Wal-Mart has provided a clear example in terms of the benefits of bribery, and only a weak one in terms of the costs. Wal-Mart’s shareholders lost $10 billion this past Monday, in the wake of these revelations. But I fear the real impact of the scandal will be much bigger, and broader.

What’s Wrong With Wal-Mart Bribery, Anyway?

Everyone is aware by now of the stunning exposé on bribery at Wal-Mart de Mexico. As promised, this is the next in what will likely be a series of commentaries I’ll post on the scandal.

It’s worth starting at the very beginning, by considering the very basic question: What’s wrong with bribery in the first place?

The fundamental ethical problems with bribery are clear. Bribery of public officials induces those officials to engage in acts of disloyalty. Civil servants are sworn to uphold the public good, and every decision they make needs to be made on that basis. Bribery violates that principle; it interferes with the decision-making of the functionaries of a democratic system.

Bribery also tilts an otherwise fair playing field. It’s one thing for a company like Wal-Mart to muscle into new territory by means of its superior management techniques and hyper-sophisticated supply-chain. Such advantages are well within the rules of the game. If you invent a better mousetrap, the maker of the old mousetrap has little grounds for complaint when driven out of business. But bribery is well outside the rules of the game. It represents a refusal to compete openly and fairly, and an attempt instead to gain special advantages that have nothing to do with ingenuity or with the quality of one’s services.

And, from a systemic point of view, bribery is a zero-sum game that acts as a drag on an economy. Consider: when two companies engage in bribery as a competitive strategy, the only guaranteed winner is the undeserving recipient of the bribe. The companies involved suffer unnecessary expenses that could better have been spent on research and development, on higher wages for employees, and so on — if only they were jointly able to forgo the bribery.

There is, from an ethical point of view, no plausible pro-bribery argument.

What about cultural differences, you ask? We are all aware that, in doing business in a foreign country, we are liable to run into ways of doing business that would not pass muster back home. And we’ve all heard the saying, “When in Rome, do as the Romans do.” But that saying is no doubt used as an excuse for wrongdoing far more often than it is used as a reminder to be sensitive to cultural variations. The trouble is that bribery is a lousy way to show respect for someone’s culture. You don’t respect a culture by corrupting its public officials. Never mind the fact that bribery, though perhaps not uncommon in Mexico, is none the less illegal.

But perhaps the most stinging critique of bribery is this. If you have to engage in bribery in order to succeed, it implies that you are not very good at your job. Eduardo Castro-Wright, the man who was Wal-Mart de Mexico’s CEO at the height of its bribery activities, was considered a true Wal-Mart star. In fact, he’s now vice chairman of Wal-Mart Stores, Inc. And his reputation was built in no small part upon his stunning success in pushing Wal-Mart de Mexico’s rapid expansion. But, as it turns out, he wasn’t quite as great a manager as he seemed to be: the rapid expansion wasn’t so much a credit to him as it was a credit to the campaign of carefully-targeted bribery conducted by his underlings. As is so often the case when it comes to white-collar crime, this suggests that senior managers at Wal-Mart de Mexico were not just lacking ethically, but lacking as managers too.

Is 7-Eleven My “Neighbour”?

I live on the edge of Toronto’s Little Portugal. There are two corner stores in my neighbourhood. One is a 7-Eleven. The other is a small, family-owned convenience store. I shop at both stores from time to time — to pick up eggs, bread, whatever.

Is there any ethical difference between shopping at 7-Eleven, on one hand, and shopping at the little Portuguese place, on the other?

At least some advocates of the “buy local” movement would say I absolutely ought to shop at the locally-owned Portuguese place. After all, it’s a part of my community, whereas 7-Eleven is a multinational corporate entity. But wait…7-Eleven is a franchise. So even though the parent company isn’t local, the owners of the franchise very likely are. The owners of that franchise are just as much part of my community as the owners of the Portuguese place are…minus the franchise fee they pay to Seven-Eleven Japan Co. Ltd. (Does that count?)

But still, the 7-Eleven, even if locally-owned, is still part of the 7-Eleven empire. When I shop at my 7-Eleven, I’m patronizing that empire. I am, to some extent, entering into a relationship with the parent company. So this question occurs to me: is Seven-Eleven Japan Co. Ltd. in any sense my “neighbour”, one to which (or to whom!) I owe the neighbourly obligation of shopping at their franchise?

Major corporations are increasingly expected to think of themselves as good neighbours, and as having obligations to local communities. But the “neighbour” relation is generally thought of as being reciprocal, as are the duties it implies. If you are my neighbour, then I am your neighbour, and vice versa. So if 7-Eleven, and other major corporations, are expected to act as good a neighbour, should we all reciprocate, and act as good neighbours to them in turn?

I don’t have an answer to offer to this question. But I think the reciprocity that is normally a feature of the concept “neighbour” ought to be part of the larger conversation about how we think of the role of business corporations not just in our economy, but in our communities.

How Can Business ‘Give Back’ to Society?

A recent story quotes Fred Green, the CEO of the Canadian Pacific Railway, as saying that he won’t sacrifice safety in pursuit of profits. In his words, he won’t violate the terms of his company’s unwritten ‘social licence’ to operate.

The notion of a ‘social licence to operate’ reflects the notion that in order for a business to be successful, in the long run, the support and goodwill of society is essential. This includes everything from the willingness of a local community to walk into your store to buy things, to the willingness of neighbours to put up with the noise of your trucks driving past, to the willingness of duly elected representatives of the people to pass the kinds of legislation that makes modern commerce possible.

This raises the question: just how does a company earn, and maintain, its social licence to operate? How, in other words, can — or should — a business show its gratitude, or pay its debt to society?

There are a number of ways, and they are not mutually exclusive.

One option is through charitable donations. Corporate philanthropy is as old as the hills, but is generally pooh-poohed by proponents of modern CSR, who favour instead things like collaborative efforts to build local skills and capacity.

Another way is by paying special attention to social impacts, beyond what is required by law. For example: selling junk food is perfectly legal, and arguably fully ethical, at least on a case-by-case basis. But a food seller that looks to the aggregate social consequences of its junk-food sales, and tries to mitigate negative impacts, might be said to be doing so as part of its social licence to operate.

Another way is by paying its taxes. That might seem trivial, a mere matter of following the law. But given the complexity of the tax code, the number of loopholes, and the size of some companies’ accounting departments, a commitment to paying your fair share is probably non-trivial.

Another way a company can earn and keep its social license to operate is by a commitment to looking for ‘win-wins.’ In this category, we could place various efforts at seeking energy efficiency and waste reduction. Of the many ways a company can look to save money, some are socially valuable, and opting to pursue those over others might be seen as supportive of a company’s social licence.

And finally, there’s the old (and true) point made by Milton Friedman years ago, which is that companies contribute socially by making goods and services that people want. What does Merck ‘give back?’ It gives us pharmaceuticals that relieve pain and suffering. What does BP contribute? It finds and refines the oil without which our economy would literally grind to a halt. What does my local coffee shop do for the community? It provides a place to get in out of the rain, have a cup of coffee, and chat with a friend.

Now it’s quite likely that no one of these is sufficient. Each of them is a plus, and counts towards a company’s social licence, but likely some combination is necessary. From this range of options, each company chooses how it thinks it can best earn and keep its social licence to operate. Different mixes will make sense for different companies in different industries. There’s no one right combination that will let a company merit its social licence. Innovation and variety are a good thing, here. Let a hundred flowers blossom!

How Should Companies Memorialize 9/11?

The day has passed, but it’s a question that’s sure to arise again — just under a year from now, and the year after that, and so on.

What can, or should, businesses do with regard to a relatively recent tragic event like 9/11? The cultural significance of an event like 9/11 is hard for anyone to ignore, especially on the tenth anniversary of that fateful day. And companies thrive on raising their profiles, a feat that can most readily be accomplished by riding the coattails of cultural significance. But when the culturally-significant event in question is a tragic one, corporations need to tread carefully.

This general topic can be split into two more specific questions:
1) Can or should companies use references to an event like 9/11 in their advertising?
2) Can or should companies do something to memorialize such events?

The pure advertising question seems easy. Using references to 9/11 in ads is tacky, if not outright unethical. (For some examples, see this nice slideshow by Jim Edwards for Bnet: “10 Advertisers Exploiting the Sept. 11 Attacks to Push Their Brands”.) Profiting from other people’s pain and grief just isn’t a socially-constructive business strategy.

The problem of course is that it’s hard to separate questions 1 and 2. Naturally, any effort on the part of a company to memorialize an event is likely to be seen as an attempt by that company to raise its own profile.

But memorializing an event like 9/11 in some way seems unobjectionable, and perhaps even obligatory. The hard question is what form such memorializing should take. The best ways, perhaps, are the small-scale and personal ones. Giving employees time off work to attend memorial services, for example. The same principle applies to expressions of sentiment: small and local seems best. A simple sign on your front window that says “Never Forget 9/11” seems to make the point best — better than, say, splashing that same slogan across millions of product packages — and is much less liable to engender suspicions that the expression of sentiment is self-serving.

As an final point, notice that this is precisely the kind of question for which the term “corporate citizenship” provides the right fulcrum. Some people try to use that term to cover all questions of corporate right-and-wrong , but that’s a mistake. Not all obligations or rights are rooted in a weighty concept like citizenship. But this one is. How we respond to national and international tragedies is clearly an issue of citizenship, in the full political sense of that word, the sense that implies a set of rights and responsibilities related to participation in public life. An alternative word like “sustainability,” which some people take to encompass all ethical questions, just doesn’t cut it here. How companies choose to respond to the anniversary of an event like 9/11 says a lot about how they see themselves as corporate citizens, as participating members of a still-grieving community.

Charity: Does Apple Do its Share?

Forget what your accountant tells you is tax-deductible. What counts as a charitable donation, ethically?

There have been a few rumbles around the internet recently about the lack of corporate philanthropy at Apple Computers, and about now-retired CEO Steve Jobs’ own lack of philanthropic donations. See for instance by John Cary and Courtney E. Martin, on CNN: Apple’s philanthropy needs a reboot

Apple’s…charitable identity — or egregious lack thereof — disappoints us. It’s time for Apple to start innovating in philanthropy with the same ingenuity, rigor and public bravado that it has brought to its every other venture….

Cary and Martin acknowledge Apple’s participation in the Product Red program (which has raised tens of millions for relief of AIDS in Africa, and for which Bono recently praised Jobs). But Apple made $14 billion in profits last year, and Cary and Martin think it’s pretty clear that Apple is obligated to give some of that away. They’re not so clear on where that obligation comes from, except to point to precedent within the computer industry. Both Google and Microsoft have well-established philanthropy programs — both of which, as Cary and Martin note, have drawn fire. Hmmm.

The interesting thing here is that Cary and Martin’s criticism implicitly raises interesting questions about what counts as philanthropy.

Take, for example, Apple’s sizeable donation to the fight against Proposition 8, California’s anti-marriage-equality effort. Was that a charitable donation, or a piece of political activism? Is there a difference?

Apple has also been known to donate computers to schools, and regularly gives students (and, ahem, professors like me) a discount on computer purchases. Of course, critics will propose that those are really marketing gimmicks. But then, no sane person thinks that corporate philanthropy stops being ethical when it’s a win-win proposition.

But then, back to the issue of why. Why are corporations obligated to give to charity? One group of critics is fond of pointing out that profits belong to shareholders, and so when corporate execs donate corporate funds to charity, they’re giving away other people’s money. And even within the modern Corporate Social Responsibility movement, the saner folks are at pains to emphasize that CSR isn’t about charity. It’s about making some sort of social contribution, preferably one that makes use of a company’s special capacities and core competencies.

And as a recent piece in The Economist pointed out that, if you’re talking about doing good in the world, you really must look at what Apple has done to put beautiful, highly-functional, productivity-enhancing devices in the hands of millions of consumers. That’s not exactly the same as feeding the world’s starving masses, but then neither is a corporate donation to build an opera house, or to get your company’s name on a plaque in the lobby of the local business school. The questions we ought to be concerned with are questions about a corporation’s net impact on the world, and the methods it uses along the way. A focus on corporate philanthropy risks obscuring both of those questions.

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