The Business Ethics Blog

On Inauguration Day, I raised the issue of just how, or how much, the new President would influence business ethics. I noted that, at least in principle, the President has two mechanisms for doing so: example setting and legislation. On the first full day of his administration, he took a stab at the former.

Here’s Obama’s very first Executive Order: Ethics Commitments by Executive Branch Personnel.

Here’s the story of Obama’s first day (with emphasis on the ethics stuff) from the LA Times: President Obama swiftly sets course on Day One

Obama used Day One as well to signal his commitment to a central campaign promise: upending the way Washington does business. He announced tough new restrictions on lobbying activity.

“This is big,” said Meredith Fuchs, general counsel of the National Security Archive, a nonprofit research institute at George Washington University that has challenged Bush administration policies on the release of information. “No president has done so much on the first day in office to make his administration transparent.”

(For more, see this from Bloomberg.com: Obama Freezes Pay, Toughens Ethics and Lobbying Rules.)

Here are the opening paragraphs of the Executive Order:

By the authority vested in me as President by the Constitution and the laws of the United States of America, including section 301 of title 3, United States Code, and sections 3301 and 7301 of title 5, United States Code, it is hereby ordered as follows:

Section 1. Ethics Pledge. Every appointee in every executive agency appointed on or after January 20, 2009, shall sign, and upon signing shall be contractually committed to, the following pledge upon becoming an appointee:

“As a condition, and in consideration, of my employment in the United States Government in a position invested with the public trust, I commit myself to the following obligations, which I understand are binding on me and are enforceable under law….

These aren’t exactly the kind of inspiring words for which Obama is famous. But that’s to be expected: this is the dull, administrative part of government ethics. The Order is detailed, including a long “Definitions” section, and a number of references to obligations that apply under other federal regulations. (e.g., for guidance on receiving gifts, it points to 2635.203(b) of title 5, Code of Federal Regulations). Of course, orders and regulations can never be sufficiently detailed to obviate the need for judgment. Judgment comes from experience and from understanding the spirit and intention of the regulations. Whether Obama can inspire members of his administration in this regard, the way he inspired voters this past fall, remains to be seen.

I blogged back in October about Apple’s & Google’s public opposition to California’s Proposition 8: Apple & Equal Marriage Rights. (And more recently I blogged about a donut company taking a risk by apparently commenting on a touchy subject.)

Now this new announcement, from the Official Google Blog: “Supporting equality”

Here it is, in its entirety:

1/15/2009 05:00:00 PM
In September of last year, Google announced its opposition to California’s Proposition 8. While the campaign was emotionally charged and difficult for both sides, in the wake of the election many were concerned with the impact Proposition 8 could have on the personal lives of people they work with every day, and on California’s ability to attract and retain a diverse mix of employees from around the world.

That’s why we’ve signed an amicus brief (PDF file) in support of several cases currently challenging Proposition 8 in the California Supreme Court. Denying employees basic rights isn’t right, and it isn’t good for businesses. We are committed to preserving fundamental rights for every one of the people who work hard to make Google a success.

Please join us in continuing to fight for equality for all Californians.

Posted by Kent Walker, General Counsel

I have little new to add to my earlier comments, except to note that while back in October Google’s statement focused on equality and discrimination, this new statement seems to focus a bit more on the business case against Prop 8.
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Update: comments are now closed.

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

Here’s Robert’s opening paragraph:

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

The whole piece is worth reading.

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

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

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

The rationale provided by Ethisphere:

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

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

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

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

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

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

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

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

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

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

The conclusion, Kristof suggests, is pretty clear:

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

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

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

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

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

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

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

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

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

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

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

Wrong.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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