Archive for the ‘CSR’ Category
The Oil Sands, and the Battle of the Boycotts
Filed under: accountability, boycott, consumers, CSR, environment, protest |
Comments (10) 
The Athabasca oil sands (in Alberta, Canada) are not pretty. But they are vast, constituting one of the largest deposits of oil in the world — something in the range of 150 billion barrels, enough to help make Canada a net exporter of oil.
The oil sands (also known, colloquially and sometimes pejoratively, as the “tar sands”) are also environmentally controversial. The process of extracting oil from oil sands is not a clean one; it has a significant impact on land, air, and water. In fact, the process is so messy that it is only worth doing when the price of oil is relatively high, as it is right now. For environmental groups and other critics, the oil sands are just not worth it.
It’s worth noting that the oil sands do have their defenders. Matt Ridley, for example, in his recent book, The Rational Optimist, argues that the oil sands are a much more sane solution to current energy needs than things like wind (too unreliable and too little output) and biofuels (wasteful use of land).
Back in July, two US-based groups (Forest Ethics and Corporate Ethics International) called for a boycott of Alberta as a tourism destination. (See the Financial Post story, here.) More recently, though, the boycott has expanded to include a number of American retailers who have promised to refuse to use any petroleum products from the oil sands. See the Scientific American story, by Tina Casey, Boycott of Petroleum Products from Alberta Tar Sands Gathers Steam:
In a sign of things to come for corporate activism, The Gap, Timberland, Levi Strauss and Walgreens have just joined Whole Foods and Bed, Bath and Beyond in a boycott of petroleum products sourced from the notorious Alberta Tar Sands. As reported by Bob Weber of The Canadian Press, Federal Express has also adopted a policy that appears to lead toward joining the boycott….
(A more recent story suggests that Levi Strauss is not, in fact, participating in the boycott.)
A few points:
First, I’m generally skeptical about boycotting an entire jurisdiction (as the original boycott of Alberta tourism seemed to intend) on the grounds that you don’t like one particular business there. It’s entirely unclear how boycotting Alberta tourism was supposed to convince the government of the province to shut down the oil sands. (Note that while tourism is not exactly trivial in the Albertan economy, neither is it crucial. And besides, international visitors to Alberta account for just 7% of the province’s tourism.) Note also that the principle supposedly at play here doesn’t generalize very well. If you don’t like Walmart, do you boycott Arkansas, where Walmart is headquartered? Is anyone calling for a boycott of the U.K.? After all that’s where BP is based.
But I’m even more interested in the corporate boycott by Whole Foods etc.
As this opinion piece points out, anyone thinking of boycotting oil from the oil sands needs to think about what they’re choosing instead:
Where are they going to buy their gas from, if not Canada?
Saudi Arabia? Could there be a more unethical barrel of oil than one from that racist, misogynistic, terror-sponsoring dictatorship? Venezuela, to enrich strongman Hugo Chavez? Iran, with its nuclear plans?
In other words, if you’re really going to get picky about where your oil comes from, you’d better just stop using it at all.
The same opinion piece (by Ezra Levant) pointed out that many of the companies participating in the boycott are not exactly angels themselves. Walgreens (a pharmacy chain) was fined $35 million for defrauding Medicaid. And pretty much everyone knows that The Gap has been the target of its fair share of criticism over the labour practices at the third-world factories that produce the clothes it sells. Now, being hypocritical doesn’t mean being wrong, but it might well lessen these companies’ moral authority somewhat. (And notice that Levant suggests a tit-for-tat boycott of The Gap, etc., by Albertans.)
Next, an economic point. I’m no economist, but my guess is that if the corporate boycott has any impact at all, it will be roughly as follows. The reduction in demand for oil-sands oil will reduce the price it can command. And when you lower the price of something? Yup, you make it easier for other people to buy it. So, more — not less — will end up being used.
Finally, the points above leave us with the conclusion that the corporate boycott of oil from the oil sands is largely symbolic. Well, that’s not necessarily a bad thing, is it? I guess that depends on who is sending, and who is receiving, that symbolic message. And in this case, the message certainly isn’t going to have — indeed, can’t possibly be intended to have — any effect on decision-makers in Alberta. So the only real possibility is that Whole Foods, The Gap, etc., are sending a message to consumers. What message? “We’re green,” I guess, or “We care.” But the message being heard by anyone looking at this carefully is, “We haven’t thought this through.”
[Thanks to MW for suggesting I blog on this.]
BP and Corporate Social Responsibility
Filed under: consumers, corporations, CSR, energy, environment, honesty, shareholders, stakeholders |
Comments (12) I’ve long been critical of the term “CSR” — Corporate Social Responsibility. (See for example my series of blog postings culminating in my claim that “CSR is Not C-S-R”.) Too many people use the term “CSR” when they actually want to talk about basic business ethics issues like honesty or product safety or workplace health and safety — things that are not, in any clear way at least, matters of a company’s social responsibilities.
But the BP oil spill raises genuine CSR questions — it’s very much a question of corporate, social, responsibility.
BP is in the business of finding oil, refining it, and selling the gas (and propane, etc.) that results. In the course of doing business, BP interacts with a huge range of individuals and organizations, and those interactions bring with them ethical obligations. Basic ethical obligations in such a business would include things like:
a) providing customers with the product they’re expecting (rather than one adulterated with water, for example),
b) dealing honestly with suppliers,
c) ensuring reasonable levels of workplace health and safety,
d) making an honest effort to build long-term share value,
e) complying with environmental laws and industry best practices, and so on.
Most of those obligations are obligations to identifiable individuals (customers, employees, shareholders, etc.). There’s nothing really “social” about those obligations (with the possible exception of compliance with law, which might better be categorized as an obligation of corporate citizenship, or more directly an environmental obligation). And it’s entirely possible that BP, in the weeks leading up to the spill, met most of those ethical obligations. The exception, of course, is workplace health and safety — 11 workers were killed in the Deepwater Horizon blowout. But even had no one been killed or even hurt during the blowout, a question of social responsibility would remain.
So, what makes the oil spill a matter of social responsibility? Precisely the fact that the risks (and eventual negative impacts) of BP’s deep-water drilling operations are borne by society at large. The spill has resulted in enormous negative externalities — negative effects on people who weren’t involved economically with BP, and who didn’t consent (at least not directly) to bear the risks of the company’s operations.
Now, all (yes all) production processes involve externalities. All businesses emit some pollution (directly or indirectly via the things they consume) and impose some risks on non-consenting third parties. So the question of CSR has to do with the extent to which a company is responsible for those effects, and (maybe) the extent to which companies have an obligation not just to avoid social harms (or risks) but to contribute socially (beyond making a product people value). From a CSR point of view, then, the question with regard to BP is whether the risks taken were reasonable. Most of us would say “no.” But then most of us still want plentiful cheap gas.
Thus the BP oil spill provides an excellent way to illustrate the way we should understand the scope of the term “corporate social responsibility,” and how to keep that term narrow enough for it to retain some real meaning.
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p.s., here are a few relevant bits of reading:
1) Did you know that, in 2005, BP made it onto the Global 100 list of the “Most Sustainable Companies in the World”, a feat the company repeated in 2006. (And yes, that’s a reason to be skeptical about such rankings!)
2) See also this bit on Which is the Most Ethical Oil Company?
3) And finally here is BP’s own take on CSR, from 2002, see this speech: The boundaries of corporate social responsibility
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Addendum:
Here are a few books on ethics & CSR in the oil industry. No endorsement is implied.
- Drowning in Oil: BP & the Reckless Pursuit of Profit
- Corporate Social Responsibility Failures in the Oil Industry
- Price of Oil: Corporate Responsibility and Human Rights Violations in Nigeria’s Oil Producing Communities
- The Tyranny of Oil: The World’s Most Powerful Industry–and What We Must Do to Stop It
Ethics: Definition
Filed under: corporate citizenship, CSR, definitions, ethics, sustainability |
Comments (20) 
“Ethics” can be defined as the critical, structured examination of how we should behave — in particular, how we should constrain the pursuit of self-interest when our actions affect others.
“Business Ethics” can be defined as the critical, structured examination of how people & institutions should behave in the world of commerce. In particular, it involves examining appropriate constraints on the pursuit of self-interest, or (for firms) profits, when the actions of individuals or firms affects others.
The “critical” and the “structured” parts of those definitions are both important:
- Ethics is critical in the sense of having to do with examining and critiquing various moral beliefs and practices. (In other words, it’s not just about describing people’s values or behaviour, though that can be a useful starting point.) Ethics involves looking at particular norms and values and behaviours and judging them, asking whether various norms and values are mutually contradictory, and asking which ones matter more in what sorts of situations.
- Ethics is structured in the sense that it’s not just about having an opinion about how people should behave. Everyone has opinions. Ethics involves attempting, at least, to find higher-order principles and theories in an attempt to rationalize and unify our diverse moral beliefs.
For practical purposes, ethics means providing reasoned justification for our choices & behaviour when it affects others, and reasoned justification for our praise or criticism of other people’s behaviour.
Now, nothing above constitutes an argument. I’m just explaining roughly the proper use of the term “ethics.” There are, of course, other uses of that term — some of them arguably regrettable. (Some people in business and government, for example, take the word “ethics” to refer exclusively to the rules set out in various “ethics laws” that govern the behaviour of individuals in positions of responsibility, rules about conflict of interest, bribery, and so on.)
So, here comes the contentious part. I’m not sure it really is or should be contentious, but some people are bound to disagree with it.
The breadth of the topic “business ethics,” as defined above, means that other, related ideas like Corporate Social Responsibility (CSR) and corporate citizenship and sustainability are in fact sub-topics within the broader topic of business ethics. That’s not to diminish the importance of those sub-topics. But it’s worth keeping in mind, because it means that a focus on any one of those topics means setting aside potentially-important issues that fall under a different heading. This is especially true when companies (and consultants) focus on just one term. When they do that, it’s worth wondering, and maybe asking pointedly, about the stuff they’re leaving out.
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Edited for clarity in October, 2011.
CSR is Not C-S-R
Regular readers will know that, over the last month, I’ve posted 3 blog entries critiquing the term “corporate social responsibility” (CSR). I’ve asked, rhetorically, whether the “C,” the “S,” and the “R” make sense. I’ve argued that, no, in each case the word those letters stand for fail to capture the range of issues devotees of “CSR” typically think are important. Basically, the conclusion is that “Corporate Social Responsibility” isn’t (just) about corporations, isn’t just about social questions, and isn’t just about responsibilities.
Now, this isn’t to say that there’s no topic at all that would suit the term “CSR.” If you really are just interested in corporations (and not other kinds of businesses), and if you really are just interested in their obligations (and find questions of rights, permissions, values, and virtues relatively uninteresting), and if you really are only interested in corporations’ outward-looking, specifically social obligations, well, then I guess you really are talking about CSR. But I suspect the number of people — and the number of companies — whose interests are that narrow is pretty small.
So, this all seems to imply:
- If you want companies to think carefully about the full range of normative (ethical) questions related to commerce, don’t ask them about CSR.
- If you want business students to be prepared for the decisions they’ll one day face as manager, don’t teach them courses in CSR.
- If you’re interested in learning a bit more about the ethical challenges faced by business, don’t read a book with “CSR” in the title.
- If your company wants to manage effectively the full range of ethical issues it’s likely to face, and not just one subset, don’t hire a “CSR” consultant.
Now, clearly I’m trying to be a bit provocative. You could have good reasons to do each of the things I’m warning against above. And many companies and consultants who use the term “CSR” use it, I’m sure, as a mere term of convenience, and are fully aware that it’s only a very rough label for the full range of ethical issues in business. But if you care about the topics I’ve covered in the last 3 blog entries on this topic, and if you happen to find yourself talking to a company or consultant (or professor) who’s excited about CSR, you might want to ask a few questions about what they mean by that.
Finally: Why the “R” in “C.S.R.”?
You probably saw this coming.
In mid-July, I asked Why the “C” in “CSR”?. Two weeks later I followed up with, Why the “S” in “CSR”? In both cases, my complaint was basically that the words the letters stand for (i.e., “Corporate” and “Social”) are too narrow to capture the topic at hand. So, am I now going to question the R-as-in-“Responsibility?” Yes, here endeth the trilogy.
The “R” in “CSR” is there because CSR grew out of an interest in the idea that companies, especially the biggest and most powerful ones, have some obligation, some responsibility, to do right by the communities they are part of. But the notion of “responsibility” is inadequate to capture the range of questions about which CSR advocates are typically (and ought to be) concerned. Such as:
- Questions about rights, such as “Is there a right to freedom of commercial speech? Does that right extend to corporations? Or does free speech only apply to individuals acting in their private capacity?”
- Questions about value, such as “Are there some things that ought not be market goods? Which ones? Why?”
- Questions about the virtues appropriate to the world of business.
- Questions about what kinds of actions are permissible, even if not morally praiseworthy.
- Questions about what kinds of actions are ethically desirable, even if they would not count as being a responsibility.
Now, each of those types of questions involves, at least tangentially, other questions that are about responsibility. But the questions above certainly cannot be reduced to questions of responsibility.
Of course, maybe people interested in CSR aren’t interested in those questions, or think such questions somehow are not central. But that just means that, whatever CSR is about, it isn’t about a whole range of the most interesting normative questions about business.
The Business Ethics Blog 