The Business Ethics Blog

This past Wednesday I had the pleasure of giving a talk at an excellent event held by the Conference Board of Canada’s Corporate Ethics Management Council.

The substance of my talk was not about business ethics per se but about lessons I’ve learned in blogging about business ethics over the last 4 years.

In my talk, I noted that I’d run into a trio of key challenges, ones that I strongly suspect pose challenges for people trying to talk about ethics within their own institutions.

One problem is familiarity or comfort with talking about ethics. For some people, talking about ethics just doesn’t come naturally. For some people, I think, it’s just not polite to raise questions about values or matters of right and wrong. To talk about ethics constructively, you need to be able to put the topic on the table. That’s a challenge.

A second problem is vocabulary. To have a conversation, well, you need to use words, and you need some agreement on how words are to be used. Under this heading, I noted two key problems. One is the problem of “the E-word,” or “ethics.” Some people unfortunately find the E-word off-putting, typically because they misunderstand the term. (I blogged about this a few months ago, under the heading, What’s Wrong With “Ethics”?) The other vocabulary problem has to do with the plurality of other terms used to talk about the basic idea of doing the right thing in business. I’ve blogged before about terms like Corporate Social Responsibility, Triple Bottom Line, Corporate Citizenship, and Stakeholder Theory. There are serious problems with each of those terms, but each of them is typically intended to encompass the whole topic of doing-the-right-thing in business. It can be hard to have a good conversation about a topic if you can’t agree on what the name of the topic is.

The third problem I talked about was fear. It’s hard for people to engage in constructive dialogue if they feel that their livelihoods, their control over their own lives, their most deeply-held beliefs are being challenged. Discussions about business ethics inevitably touch on one or more of those things.

Now, it’s a good thing if we can talk about these issues constructively, and in a way that minimizes people’s fears and anxieties, but we can’t wish away conflict. Our actions, our choices, just do affect other people, and we very frequently disagree over the appropriate limits on our actions when they do so. Anyone who talks about business-ethics as if it’s conflict-free, or as if it’s just about achieving ever-higher levels of niceness in commerce, is glossing over some very important questions.

What rights should corporations have? Extreme answers one way or the other are immediately implausible. If corporations are to serve any useful purpose, they (and hence their owners) need to have some basic legal protections. But corporations neither need, nor deserve, every right that human persons enjoy. Somewhere in between lies the truth.

For a primer (and opinion) on the matter, check out this editorial, from the New York Times: The Rights of Corporations

The question at the heart of one of the biggest Supreme Court cases this year is simple: What constitutional rights should corporations have? To us, as well as many legal scholars, former justices and, indeed, drafters of the Constitution, the answer is that their rights should be quite limited — far less than those of people.

This Supreme Court, the John Roberts court, seems to be having trouble with that. It has been on a campaign to increase corporations’ legal rights — based on the conviction of some conservative justices that businesses are, at least legally, not much different than people….

OK, so let’s set aside American constitutional law, and think about the more general principles here. I’m far from an expert in this area, but it seems to me that there are 2 key questions to ask, in trying to come up with a general approach to this issue.

1) What social objectives are we trying to achieve by means of corporations? And what legal rights are, on balance, necessary to the achievement of those objectives? Example: the right to enter contracts is a fundamental requirement for the wealth-building function that corporations play in society.

2) What rights need to be attributed to corporations in order to protect the important interests of human persons (e.g., the human persons who work for corporations or own shares in them)? Basic property rights seem an obvious example: companies need a right against arbitrary seizure of property because, in the end, a corporation’s property belongs to people, namely the corporation’s shareholders and creditors.

All I’ll add to these preliminary comments is a suggested thought experiment.

Make yourself king or queen for a day. Imagine yourself setting up a society from scratch. Imagine that you want the people who live in your kingdom to have access to a wide range of complex goods and services, including some that are only feasibly provided through some form of large organization. Next, ask yourself this: which rights would you give to corporations, in the interests of your population? Of course, for you and me, it’s an idle (if instructive) fantasy. But for governments of developing nations, it’s a serious question; some of them really are starting from scratch, figuring out how best to structure the legal framework that underpins their economies. The film, The Corporation, gave the impression that the whole notion of rights for corporations is some sort of scam. But just try to imagine the consequences of not attributing any rights to corporations, and you’ll see that the question is not one of whether but which and how much.
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(For further insight on this & related issues, see Wayne Norman & Pierre-Yve Neron’s Citizenship, Inc., Business Ethics Quarterly, Jan 2008, Vol. 18 Issue 1, p1-26.)

The moral tone of The Yes Men Fix the World is pretty much summed up by the following cheerful bit of narration from the film, describing an appearance by one of the protagonists on a national news program in the U.K.:

“Andy’s about to tell a really big lie. Which, unnnnfortunately, is going to knock $2 billion off one company’s stock price.”

(It’s important for you to know that, in the narration, the word “unfortunately” is said in kind of a shoulder-shrugging, “oops-he’s-a-bad-boy!” tone.)

The Yes Men Fix the World is a documentary about a pair of anti-corporate pranksters known as The Yes Men. Here, from the promotional materials about the film, is what they do:

Andy Bichlbaum and Mike Bonanno have an unusual hobby: posing as top executives of corporations they hate. Armed with nothing but thrift-store suits, the Yes Men lie their way into business conferences and parody their corporate targets in ever more extreme ways – doing everything that they can to wake up their audiences to the danger of letting greed run our world.

How do they manage this? From the film’s narration:

“What we do is pass ourselves off as representatives of big corporations we don’t like. We make fake websites, then wait for people to accidentally invite us to conferences.”

So, the film follows its protagonists through a series of ever-more-elaborate, ever-higher-stakes pranks, designed to embarrass big corporations, and to highlight for corporate types and for the film’s audience just how evil the corporate pursuit of profit really is.

Now, while the pranks are clever — it’s hard not to admire the work that goes into some of the Yes Men’s elaborate schemes, and hard not to be amused by the credulity of the corporate types, conference organizers and journalists who are their intended victims — there’s frankly not much particularly clever about the Yes Men’s actual critique of the corporate world.

What exactly does their critique consist in? Well, that’s not entirely clear. There’s some not-too-subtle anti-corporate, anti-market stuff, à la The Corporation. Corporations sometimes do bad things. True. Governments sometimes let them get away with it. True. But much of the critique consists of letting the opposition do the talking: there’s a string of silly-sounding (out of context, surely) claims by economists and spokespersons for market-oriented think-tanks explaining the wonders of the market and the dangers of regulation, while the two protagonists do googly-eyed reaction shots. No, the filmmakers don’t seem to have a clear criticism. But what they do have is a mission: you know, to do something. Each time “Andy” and “Mike” pull another stunt, only to be disappointed not to have thereby changed the world, they say things like, (and I’m paraphrasing, here) “We didn’t quite know what the problem was, but we knew we had to do something about it.” So, their key message is that doing something is much more important than actually understanding the problem you’re trying to fix.

I see two big problems with this.

The first is the problem of shooting a gun into a darkened room. Some of these pranks (the point of which, recall, is unclear) have the ability to do real damage. As noted above, one of the pranks celebrated in the movie cost shareholders of one company (Dow) two billion dollars. That’s “billion” with a “b”. Now bear in mind that that’s money lost not just by the CEO, not just by rich industrialists, but by regular everyday shareholders, including plenty of blue-collar folks whose pension funds are invested in the stock market. Admittedly, Dow stock did bounce back, so as far as I know no one was ruined by the stunt. But did the Yes Men even think about how it would turn out, or whether anyone would be hurt? Not as far as we can tell. The fired into a darkened room. That’s not just raising awareness: that’s taking serious risks. So these are not frat-boy pranks. The goal here, it seems, is to pull off stunts that have serious impact, without enough of an understanding of the problem at hand to have any real idea of whether the impact of those stunts is likely to be positive.

The second problem with the focus on doing over understanding is that there’s substantial risk in sending out the message that the clever scam is more important than actually understanding the world around you. That’s particularly unfortunate given that many of the situation and issues discussed in the film are very serious ones, ones that deserve careful attention and serious analysis in pursuit of long-term solutions. Awareness is a good thing. But pranks to raise awareness need to do more than raise awareness of how clever the pranksters are.

Bottom line: would I show it in class? Yeah, probably. The film has its funny moments, and the issues it discusses (from the Bhopal disaster to climate change) are important ones. But I’d also use it as an opportunity to point out to my students that the thing they ought to be trying to get out of my Business Ethics course is the ability not just to lament corporate wrongdoing, or to poke fun at it, but to understand the world in which that wrongdoing goes on well enough to allow them to critique it in a way that lends itself to real change.

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Here’s the IMDB page for The Yes Men Fix the World.
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Disclosure: in case it’s not obvious, I was offered and accepted a free DVD of this film, in order to review it.

So much for food labels empowering consumers.

Here’s a story about an industry-driven labelling system supposedly set up to help consumers choose healthier foods. Except, as has now been pointed out, this particular labelling system is giving consumers what is manifestly some very odd advice.

Here’s the story, from William Neuman for the NY Times: For Your Health, Froot Loops

A new food-labeling campaign called Smart Choices, backed by most of the nation’s largest food manufacturers, is “designed to help shoppers easily identify smarter food and beverage choices.”

The green checkmark label that is starting to show up on store shelves will appear on hundreds of packages, including — to the surprise of many nutritionists — sugar-laden cereals like Cocoa Krispies and Froot Loops.

Here’s the website for the Smart Choices program.

The thing to remember in all of this is that a label of this kind is supposed to be a short-cut. It doesn’t add new nutritional information — the relevant nutritional information is already on food packages, by law. Such a label is supposed to contribute two things. First, it provides a summary of of all that information: it supposedly saves you from having to add up all the numbers on the “Nutritional Facts” part of the package, compare it to other brands one-by-one, and so on. The other thing it provides is an analysis of the relevant information, an analysis consumers may not be qualified to carry out (or have time to carry out) on their own. The Smart Choice label tells consumers that this product is, well, a smart choice all things considered, and implicitly that it’s a smart choice in the informed opinion of whoever put the label there. Now, most consumers frankly won’t stop to think very hard about just whose informed opinion is being given, but the assumption is likely to be that it’s someone who a) knows about nutrition and b) is doing their best to offer sound (or at least defensible) advice.

So, what are we to make of the fact that the Smart Choices program is giving the ‘thumbs up’ to Fudgsicle bars and sugary cereals? The Dean of Nutrition Science and Policy at Tufts (an unpaid expert member of the Smart Choice panel) explains that the Smart Choice checkmark doesn’t mean the food is nutritionally excellent, it just means it’s a better choice. According to Professor Eileen T. Kennedy, “The checkmark means the food item is a ‘better for you’ product….”
Better than what, for example?

“You’re rushing around, you’re trying to think about healthy eating for your kids and you have a choice between a doughnut and a cereal,” Dr. Kennedy said, evoking a hypothetical parent in the supermarket. “So Froot Loops is a better choice.”

So…what does the Smart Choice label mean, then? It means the food bearing that label is better than, well something. That is, the Smart Choice endorsement means there is something worse you could choose. Isn’t that roughly like putting a (hypothetical) “green vehicle” sticker on a Cadillac Escalade on the grounds that, after all, it’s not quite as horrifically fuel-hungry as a Hummer?

What people designing labelling regimes have to remember is that a symbol (like the Smart Choice checkmark) doesn’t just mean whatever you want it to mean. It means what consumers take it to mean. Any normal person seeing the words “Smart Choice” next to the big, friendly green checkmark is going to assume that the people who put it there are claiming that the food in the package is not just better-than-something. They’re not going to assume that this food choice is smarter-than-some-really-dumb-choice. They’re going to assume that the food labelled “Smart Choice” actually constitutes a smart choice — something good for you and your family. And if that’s not what they’re getting, then then this labelling regime has to be counted as a failure.

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While we’re on the topic of food marketing…. I’d like to draw your attention to this conference, happening this December, in Paris:

Food Marketing and Ethics Today

(I don’t normally advertise conferences on my blog, but I happen to be giving a keynote at this one, on the topic “Ethical Food Marketing in an Era of Competing Values”. It does look like it’s going to be a wonderful conference.)

[Addendum added June 2010: See also my new Food Ethics Blog.]

Nearly 2 weeks ago, I posted something under the title, “The Zero-Impact Corporation”. I pointed out that under the popular “nexus of contracts” view of the corporation, corporations don’t really “exist” in many senses, they’re just the name we give to the mechanism by which consumers, managers, labourers, and shareholders exchange goods and services. By that hypothesis, I said,

Shell Oil has never emitted any pollution. Sure, smokestacks bearing its name have, but that’s just a short-hand way of saying that millions of car-drivers (and folks who heat their homes with oil or natural gas) have each contributed, incrementally, to that pollution.

Now, I was careful to point out that I didn’t intend this as a way of letting corporate managers off the hook for bad decisions. I’m just curious about to what extent, or in which circumstances, it makes sense to think this way.

But clearly, it’s not an either/or question: some corporate behaviours (e.g., basic production) are driven by consumers. And some behaviours (e.g., choice of production technologies) are determined by managers — that, after all, is what managers are for.

So, here’s an ethical hypothesis for discussion. I suspect that there are many cases the following ethical standard makes sense:

Hypothesis: If a company produces, by the most efficient means possible, precisely what its customers demand, then 100% of its emissions, water usage, etc., can be attributed to its customers. The company, itself (or management, perhaps), is only responsible for the difference between its actual levels of waste, emissions, etc., and the technically feasible minimum that a company of its kind could produce/emit/whatever. That is, a company (or its management) is ethically responsible for its inefficiency, which is the one thing that can’t plausibly be attributed to anyone else.

Thoughts?

Here’s an announcement for a new “interactive” or “deliberative” survey that I’m running, on Personal Genomics, Privacy & Consent. Anyone can participate.

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Our research group (at University of British Columbia, Saint Mary’s University, & Ryerson University) has created an online, interactive survey to better understand values & attitudes related to Personal Genomics. We’d like to include input from readers of this blog because they represent important perspectives on ethical issues related to Personal Genomics.

The survey will take about 10-20 minutes.

To take the survey you will need to register. This requires entering your email address. This is so that we can make the survey safe from spammers & hackers. We will not be able to link your e-mail address with your answers, & we won’t give your details to any third party.

If you have questions or concerns, email us at chris.macdonald@smu.ca or nwalton@ryerson.ca.

You can access the ‘Personal Genomics & Privacy’ survey via this link: http://www.yourviews.ubc.ca.

Thank you. We value your input.

Chris MacDonald PhD. & Nancy Walton, Ph.D.

File this under “Food for Thought.”

Last month I blogged about a Starbucks ad telling customers “Everything we do, you do.” (See: You Are Starbucks.) The idea implied by that poster was that all the stuff Starbucks does (in particular, all of its “corporate social responsibility” activities) is actually done by its customers — after all, customers are the ones paying the bills. Without customers, Starbucks wouldn’t exist.

It’s long been acknowledged that there’s a sense in which corporations don’t exist. On the “nexus of contracts” view, a corporation is just the name we give to the intersection of a whole bunch of private contracts: suppliers, employees, managers, and customers, all linked together by this thing we call a “company.” (Example: you can think of Walmart as just a vehicle by which millions of Americans buy tons of products from millions of Chinese. Exxon is just a mechanism by means of which millions of car drivers hire to oil-rig workers and geologists to help each of them exploit a tiny bit of the earth’s petroleum reserves.)

So, from that point of view, consider this: since corporations (in some sense) don’t exist, they also don’t pollute. Nor do they have any social impact at all, either for better or for worse.

Seen this way, Shell Oil has never emitted any pollution. Sure, smokestacks bearing its name have, but that’s just a short-hand way of saying that millions of car-drivers (and folks who heat their homes with oil or natural gas) have each contributed, incrementally, to that pollution. Likewise, Exxon has never spilled a drop of oil in the ocean. And Walmart has never driven a smaller store out of business: if a smaller competitor went out of business, it’s because thousands of consumers chose to shop at Walmart rather than at the smaller store.

Now keep in mind that this is not intended as a way of letting corporations (or managers) off the hook for bad decisions. It’s a kind of thought experiment, to see where it gets us, ethically, if we look at the corporation as a conduit between people who want to sell things (e.g., garments sewn in China) and people who want to buy them (e.g., North American teenagers).

Of course, from this point of view, no company would get credit, either, for any of the good things it “does.”

So, is this way of thinking about things helpful, or dangerous? Does it make sense for some of the examples suggested above, but not for others? Why?

Two months ago I blogged about Business Ethics and the Science of Climate Change. I asked in general how businesses should deal with scientific controversy, and used climate change as an example.

Here’s an interesting story about a businessman who, tired of being confused by the climate change issue, decided to spend some money on getting top-notch scientific input on the matter.

Here’s a print version of the story, from Scoop: Gareth Morgan delivers his climate change verdict.

If you want to get it from the horse’s mouth, check out this podcast interview, from New Zealand’s ABC National Radio’s Life Matters: Poles apart: Gareth Morgan.

Of course, Morgan’s method of getting the advice he needed isn’t generalizable. Most companies don’t have the resources, and even if they did it would be terribly inefficient for thousands of companies each to host their own conferences on the topic. I’m curious to know why Morgan thought he had to do so himself — surely there are suitable conferences going on already? More generally, though, it makes me wonder how many businesses (ones, say, who don’t already employ relevant scientists) know where to access good scientific information.

(p.s., here’s Gareth Morgan’s book: Poles Apart: The Great Climate Change Debate.)
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Thanks to Mark Edwards for passing this along to me.

Are charities responsible for the beliefs of the groups they sponsor?

An upcoming event being held at the University of Toronto, and co-sponsored by the SickKids Foundation is raising a few eyebrows. And raising questions about how careful charitable organizations need to be in deciding what other organizations to partner with.

The event in question is this conference: “Changing the Course of Autism In Canada”.

Autism (or more formally, Autism Spectrum Disorder) has been in the news a lot lately; it’s an important health issue, and a good one to hold a conference on. Here’s a bit from the conference brochure:

The conference features two dozen of the most highly respected names in the autism community and provides the most up-to-date information to help children, adolescents and adults diagnosed with ASD. You will hear lectures related to clinical and basic science, epidemiology, educational therapies, advocating for autism, and much more.

Sounds like most conference brochures. The difference: this event is being co-organized by a controversial organization called Autism One — an organization that promotes the now-discredited notion that autism is caused by vaccines.

(I won’t get embroiled in the scientific evidence here. But the Science-Based Pharmacy blog, of which I am a big fan, discusses the issue under the provocative title, The University of Toronto Embraces Autism Quackery. You get the picture.)

This may prove embarrassing for the SickKids Foundation (which is the fundraising branch of Toronto’s world-renowned Hospital for Sick Children). On the face of it, it’s odd for a research-funding Foundation to provide funding to an organization that has a reputation, within the scientific community, of turning a blind eye to what that community believes to be well-established research results (i.e., that vaccines don’t cause autism). One indicator of the tone of the conference: one scheduled presentation is about using homeopathy — water — to treat autism.

Of course, in all fairness, no funding agency can know everything about every group or event it sponsors. And the list of speakers at the conference does include people with relevant credentials and so on. But in terms of stakeholder relations, the SickKids foundation may nonetheless find that it is alienating some of its most crucial stakeholders — namely the vast majority of scientists and health professionals, along with well-informed parents.

(I’ve blogged before about Ethics for NGOs & Charities. I’ve also blogged about Guilt by Association.)
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Late-breaking news: Science blogger Orac has posted this, about the SickKids Foundation’s response to the controversy: The SickKids Foundation supports woo

I finally saw Food, Inc. Frankly, I didn’t expect to like it much. I expected a one-sided, misleading anti-corporate tirade, along the lines of The Corporation. I was only partly correct. The main message really does seem to be that big companies are ruining everything, and that things would be better if we all just realized that we should be buying directly from the kindly farmer/sage down the road. But in spite of that slant, the movie does contain some useful stuff. So, my conclusion: a grudging endorsement. I think the film is flawed, but worth seeing.

First, I’ll note a couple of worthwhile take-away lessons, points that are made by the film and that seem well-justified.

Number one is that the meat industry is pretty disgusting. Most of the people who might be tempted to see Food, Inc. likely already knew that. But it’s a rotten industry. Injury rates for workers are high. Animals are treated badly. And quality control can be dodgy. The causes are pretty clear. Competition drives companies in all industries to cut corners in order to attract and keep customers. Sometimes that has undesirable effects. In the food industry, those effects can be pretty bad. Food, Inc. doesn’t tell us much that’s new, here, but it’s a useful reminder.

Number two: the corn subsidies in the U.S. are apparently insane. Those subsidies result in overproduction of corn (and hence of High-Fructose Corn Syrup). The result is that crappy food can be more affordable than nutritious food. Politically-powerful food companies like the subsidies (since they keep the price of ingredients down) so the food-buying public is likely to go on being subject to all the wrong incentives.
(For more on that topic, see the excellent 2007 documentary, King Corn.)

But in several ways the movie is less than satisfying.

My first worry has to do with the film-makers’ decision not to bring relevant expertise to bear. With the possible exception of journalist/authors Michael Pollan (author of The Omnivore’s Dilemma and In Defense of Food) and Eric Schlosser (author of Fast Food Nation), both of whom are knowledgeable guys, the movie’s cast of characters is seriously lacking in experts. Instead, it uses regular folks — people knowledgeable about their own experiences, to be sure — to talk about matters regarding which, as far as the audience can tell, they have no particular expertise. A bereaved mom (with no apparent legal training) explains legal issues. A farmer explains food economics. And so on. Now I’m not just worshipping at the altar of expertise, here. The experiences of the “regular folks” interviewed for the film are powerful and important and I’m glad they were included in this film. But food is (as is increasingly apparent) a complicated topic. So why not, in addition, feature interviews with experts in the relevant issues? Why not a food economist? Or a policy analyst with expertise in agricultural policy? Why not a lawyer or two?

My second concern (not unrelated to the previous one) has to do with factual accuracy. I kept wondering: could an organization with the journalistic standards of, say, the New York Times have made this movie? Would all the claims made in Food, Inc. stand if they had to be verified by two independent sources? Maybe they were carefully verified. Who knows? The audience can’t tell. Part of that has to do with the format: a film format occasionally requires that documentation be sacrificed in favour of drama, and there’s no easy way to provide footnotes in a documentary. In one segment, for example, a union official claims — in so many words — that law enforcement officials were conspiring with a meat packing company to make sure that just enough of its illegal-immigrant workers were arrested to keep up appearances without interfering with production. If that were verifiable, it would be cause for legal action.

Finally, the movie is also lamentably short on solutions. The movie’s complaint is clear: industrial-scale food production is the problem. But there are no serious suggestions about a different way to produce this much food, without the efficiencies of scale that come from factory farms, massive tracts of corn, and the huge corporations that are required to turn those inputs into dinner. So, we’re left with simplistic stuff like “buy local” and “buy organic”, neither of which is really much of a solution. There’s nothing wrong with the idea of ‘voting with your fork’; but it would help to know what we should be voting for. I suppose a film like this isn’t obligated to propose solutions: it’s goal is to raise awareness. But still. By now, we know many of the problems. Without viable, large-scale alternatives, we’re left with the vague feeling that the bad stuff Food, Inc. talks about might just be the lamentable side-effects (hopefully some of which are remediable) of an imperfect-but-generally-useful system.

Now to be fair, Food, Inc.’s shortcomings are pretty clearly part of the film-makers’ rhetorical strategy. It’s not an accident that they relied on the voices of real folks instead of experts, and that they point to problems but not solutions. The film is trying to raise awareness, pointing out problems in an enormous industry with potent political allies. In going for the gut, in not bothering to seek out experts, in leaving out important truths, the documentary fights dirty. But when your opponents are companies like Monsanto and Tyson, it’s hard not to admit that the film makers are fighting dirty in what is undeniably bound to be a dirty fight.

p.s. I liked this review of Food, Inc. by Marc Gunther: Food Inc: tasty but unsatisfying.