The Business Ethics Blog

Many folks in North America suffered through high gas prices during parts of 2005, supposedly mostly due to instability in the oil industry resulting from Hurricane Katrina.

Of course, the year wasn’t bad enough to prevent Exxon Mobil from reaping the biggest profits of any company anywhere ever.
See the Bloomberg story: Exxon Mobil 4th-Qtr Profit Climbs to Record $10.7 Bln

According to Bloomberg, the company actually benefited from the effects of the hurricane:

Revenue rose 20 percent to $99.7 billion as rising demand and hurricanes lifted prices for crude oil, natural gas and gasoline. The average U.S. profit on refining crude into gasoline and other fuels widened to a record of almost $11 per barrel processed, based on futures prices.

In light of this, it seems suitable to post this bit of anti-ExxonMobil satire…“Toast The Earth”. Now, a funny cartoon lampooning a corporation wouldn’t merit much attention on this blog, except these folks have gone a step further and provided a Fact Sheet. So, it’s not mere mud-slinging.

Update (January 31)
Late yesterday, Reuters ran a story about the reaction to Exxon Mobil’s record profits: Record profits spark new backlash against Big Oil

A few days ago, I asked “Does Google’s “Dont Be Evil” Apply in China?”

I just found out that, coincidentally (I’m sure), that very same day Google’s own blog featured a pretty frank explanation of Google’s rationale for entering the Chinese market and complying with the Chinese government’s insistence that Google assist in censoring search results. (Apparently their main search site, Google.com, while available to users anywhere in the world, works pretty poorly for folks in China. Hence the need to have a local presence and a dedicated Chinese search site.)

Here are a couple of snippets, but it’s worth reading their whole explanation.

This problem could only be resolved by creating a local presence, and this week we did so, by launching Google.cn, our website for the People’s Republic of China. In order to do so, we have agreed to remove certain sensitive information from our search results. We know that many people are upset about this decision, and frankly, we understand their point of view. This wasn’t an easy choice, but in the end, we believe the course of action we’ve chosen will prove to be the right one.
…
Filtering our search results clearly compromises our mission. Failing to offer Google search at all to a fifth of the world’s population, however, does so far more severely. Whether our critics agree with our decision or not, due to the severe quality problems faced by users trying to access Google.com from within China, this is precisely the choice we believe we faced. By launching Google.cn and making a major ongoing investment in people and infrastructure within China, we intend to change that.

Here’s a starting point for a good classroom discussion.

A story in today’s New York Times is called “How to Outwit the World’s Internet Censors”. It’s mainly about ways net-savvy folks in China might be able to circumvent their government’s stranglehold on the internet.

The OpenNet Initiative (www.opennet.net), an international human rights project linking researchers from the University of Toronto, Harvard Law School and Cambridge University, tracks Internet censorship and the techniques used to evade it. To surf the Web in China and elsewhere without censorship and in marginal safety, said John Palfrey, a Harvard law professor and a member of the initiative, the primary tool is an old standby: the proxy server.

A proxy server is simply a generic computer through which people who want to be anonymous drive Web traffic before it reaches their own machines. This helps dissociate a computer address from the Web sites its user has visited.

It’s not perfect. You never know, for instance, how trustworthy any proxy really is, and servers go up and down unpredictably. But people regularly use proxy servers for all kind of reasons — from the political to the pornographic.

So, companies and other organizations that supply proxy servers, or that supply software designed to mask a computer’s location on the net, are doing a big favour to both a) people living under repressive governments, and b) people who want to be able to traffic in child pornography (for example). And it’s very unlikely that those companies & organizations will be able to claim that their services & products are only used for the good purposes, and never for the bad.

So, here’s the question for class discussion: is a company supplying such products and services doing a good thing?

Links:
Electronic Fronteir Foundation
The OpenNet Initiative
Wikipedia entry on Proxy Servers
Wikipedia entry on Anonymity
Google resources on fighting Child Pornography

Wow. Bono seems to have reinvented corporate involvement in the fight against AIDS, while at the same time slagging old-fashioned philanthropy and hippies too. One smart dude.

From BBC News: Bono bets on Red to battle Aids

The rock star Bono has launched a new global brand, Product Red, with a share of profits to go to the fight against Aids in Africa.

Launch partners American Express, Gap, Converse and Giorgio Armani announced a range of “red” branded products.

These will include T-shirts, footwear, sunglasses and a credit card.

The hope is that profits from the venture will generate a “sustainable” flow of money to support the Global Fund to Fight Aids, TB and Malaria.

Bono warned the world was losing the fight against HIV/Aids, with 6,500 Africans dying of the disease every day.

He stressed that this was a commercial venture and not philanthropy. [emphasis added]

“Philanthropy is like hippy music, holding hands. Red is more like punk rock, hip hop, this should feel like hard commerce,” Bono said.

More on this, from BusinessWeek Online: For Bono, Star Power with Purpose

Perhaps no celebrity alive today is more effective at leveraging his fame for social good than Bono. A day earlier, he had launched a new fund-raising effort called Product Red, an effort to exploit famous brands such as Armani, Gap, and American Express to raise money for efforts to fight AIDS, tuberculosis, and malaria in Africa. Gap, for example, will sell an African-made T-Shirt (guess what color…uh, red), and Giorgio Armani is designing a pair of sunglasses. American Express will issue a Red credit card. A percentage of the sales that the products generate will go to the cause.

Update:
Here is the Product Red website.
Here’s Bono’s own website
Same story, this time from an African news-source.

King Kaufman, the sports columnist from Salon.com, has this skewering of what seems to be a ploy by Reebok to get credit for a huge charitable donation without, you know, actually making a donation:

Reebok escapes charity

I’m sorry to report that Reebok won’t be giving $1 million to Boys and Girls Clubs of America, because the virtually impossible condition the shoe company put on the donation wasn’t met.

You’ll remember that in the “RBK Touchdown Challenge,” Reebok promised the donation if its handpicked squad of six Reebok-endorsing quarterbacks threw more touchdown passes this year than any six quarterbacks had ever thrown in a season. They needed to throw 207.

This required that the six men — Peyton Manning, Donovan McNabb, Matt Hasselbeck, Mark Bulger, Chad Pennington and Byron Leftwich, plus “subs” Alex Smith and Eli Manning if up to two got hurt, which they did — improve on their career highs by 25 percent per man. Peyton Manning’s career high was the NFL record, by the way, so it was a pretty safe bet he wasn’t going to improve on it by 25 percent.

(To read the full story you either need to subscribe to Salon, or get a free one-day trial by agreeing to watch a commercial, first.)

I noted in an earlier posting that Google is a company with a rep for having some pretty high ideals. Their corporate ethics motto is straightforward: “Don’t Be Evil.”

Now Google is facing criticism — well, mixed reviews — for its decision to comply with the Chinese government’s request that the Chinese-language version of Google censor search results. See this story from Wired News: Google Gagged, but There’s Hope

Google’s decision to filter sensitive topics from web searches in China is a major triumph for the regime’s campaign to have the internet censor itself, observers said Thursday, amid mounting criticism of the move.

However, scholars who study the internet in China said free speech advocates still had room for optimism. While China’s grip on web content appears to be tightening, communist authorities can’t stop the overall trend toward access to more information and greater transparency, they said.

Google said its decision to launch a sanitized version of its famed search engine using China’s “.cn” suffix was aimed at reaching China’s massive internet audience. It defended the move as a trade-off.

The rationale is one I’ve seen before, for other instances of acceding to “local standards” that violate either a company’s home country’s standards or international standards. The idea is that progressive companies from progressive countries are likely to have a net positive effect on local standards. In Google’s case, the argument would look like this: look, if Google is operating IN China, that can’t not be a good thing. Google is all about making information — all information — available, easily, to everyone with net access. So, Google will inevitably result in freer information in China.

I gotta admit, I’m tempted by this rationale. Another way of looking at it: Chinese citizens won’t have any LESS access to information now that Google (even a censored Google) is available there. Only time will tell, but I’d lay money on Google’s presence having, overall, a positive influence on the openness of Chinese society.

The idea of a $100 laptop for the developing world is not news.

But what IS news is yesterday’s announcement: U.N. Lends Backing to the $100 Laptop. The involvement of the United Nations seems a significant milestone.

The United Nations on Thursday lent its support to a project which aims to ship inexpensive, hand-cranked laptops to school-aged children worldwide.
Kemal Dervis, head of the U.N. Development Program, will sign a memorandum of understanding Saturday with Nicholas Negroponte, chairman of One Laptop per Child, on the $100 laptop project, at the World Economic Forum’s annual meeting.

The program aims to ship 1 million units by the end of next year to sell to governments at cost for distribution to school children and teachers.

UNDP will work with Negroponte’s organization to deliver “technology and resources to targeted schools in the least developed countries,” the U.N. agency said in a statement.

How is this a “business ethics” story? Well, the $100 Laptop is a project coming out of MIT’s Media Lab, but a research institute like the Media Lab isn’t going to fabricate a few million computers itself. So it’s got corporate partners, including Advanced Micro Devices (AMD), Brightstar, Google, News Corporation, Nortel, and Red Hat. For those companies, contributing to a project like this is likely to be counted as part of their Corporate Social Responsibility Programs. These laptops will not be sold in developed nations, so this project is unlikely to be a major source of profit. All indications are that this is an attempt to do something positive by making use of these companies’ core competencies (i.e., they’re making the world a better place not by throwing cash at a problem, but by doing what they’re already good at, namely designing and building information technology).

Holy cow!

McDonalds (yes, the restaurant chain) now has its own blog on Corporate Social Responsibility. Yes, a corporation with its own blog dedicated entirely to CSR. From the looks of it, this is brand new, so too soon to tell whether this will be something other than window-dressing, what sorts of issues they’ll deal with, etc.
But on the “about this blog” page, Bob Langert, Senior Director for Corporate Social Responsibility at McDonald’s, writes:

We want to open our doors to corporate social responsibility (CSR) at McDonald’s–to share what we’re doing and learn what you think. That’s the purpose of this blog.
I see a lot of what goes on behind the scenes. I have always wished others could see what I see. Now you can.
I want to use this blog to introduce you to some of the people, programs, and projects that make corporate social responsibility a reality at McDonald’s–to take you along with me as I engage with some of our internal and external stakeholders in various parts of the world and to highlight our accomplishments, as well as the challenges we continue to face.
We want to hear from you because we are always learning and trying to improve. And you can’t learn–or improve–without listening. We live in a constantly changing world where the issues are complex and solutions anything but simple. With such complex issues, we may not always agree on the root causes or best solutions, but we can have a conversation.
CSR is multi-dimensional. At McDonald’s, we break it down into five key areas: balanced active lifestyles, responsible purchasing, people, environment, and community. We’ll be talking about all these areas. I’m very passionate about them all. We know you care about them too and welcome the opportunity to hear your perspective.

And yes, believe it or not, the McDonald’s CSR blog actually does invited your comments.

From Wired News, yesterday: E3 Expo Bans ‘Booth Babes’

The video game industry’s 2006 E3 Expo trade show in Los Angeles is getting a make-over — banned are the swarms of sexy, semi-clad “booth babes” that in years past took the unveiling of new games and technology to titillating new levels.

Rules prohibiting the use of scantily clad young women to peddle video games are nothing new, but the handbook for this year’s show in May outlines tough new penalties, including a $5,000 fine on the spot for the booth owner if the “booth babe” is semi-clad.

Yes, sex sells.
Yes, using scantily clad women to sell video games is pretty demeaning.
But there’s another problem. I think the video game nerds need to be protected. I can’t help thinking: isn’t using scantily clad women to sell things to nerds a bit like using cartoon characters to sell sugary cereal to children? In both cases, we’re talking about a pretty vulnerable population, who may or may not have the experience to make good decisions in the face of such pressures.

(Photo credit:G4 Videogame TV)

This article is a couple of years old, but new to me:
The Wal-Mart You Don’t Know, by Charles Fishman, writing for Fast Times.

The article is about how being a supplier to Wal-Mart is a double-edged sword. Getting the Wal-Mart account can result in huge sales, but Wal-Mart has also been known to bully suppliers into slashing margins and moving production facilities off-shore.

Wal-Mart wields its power for just one purpose: to bring the lowest possible prices to its customers. At Wal-Mart, that goal is never reached. The retailer has a clear policy for suppliers: On basic products that don’t change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year. But what almost no one outside the world of Wal-Mart and its 21,000 suppliers knows is the high cost of those low prices. Wal-Mart has the power to squeeze profit-killing concessions from vendors. To survive in the face of its pricing demands, makers of everything from bras to bicycles to blue jeans have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas.
…
By now, it is accepted wisdom that Wal-Mart makes the companies it does business with more efficient and focused, leaner and faster. Wal-Mart itself is known for continuous improvement in its ability to handle, move, and track merchandise. It expects the same of its suppliers. But the ability to operate at peak efficiency only gets you in the door at Wal-Mart. Then the real demands start. The public image Wal-Mart projects may be as cheery as its yellow smiley-face mascot, but there is nothing genial about the process by which Wal-Mart gets its suppliers to provide tires and contact lenses, guns and underarm deodorant at every day low prices. Wal-Mart is legendary for forcing its suppliers to redesign everything from their packaging to their computer systems. It is also legendary for quite straightforwardly telling them what it will pay for their goods.

Interestingly, the article also cites some very positive aspects of Wal-Mart’s ethics:

To a person, all those interviewed [for this story] credit Wal-Mart with a fundamental integrity in its dealings that’s unusual in the world of consumer goods, retailing, and groceries. Wal-Mart does not cheat suppliers, it keeps its word, it pays its bills briskly. “They are tough people but very honest; they treat you honestly,” says Peter Campanella, who ran the business that sold Corning kitchenware products, both at Corning and then at World Kitchen. “It was a joke to do business with most of their competitors. A fiasco.”

This is the sort of apples-and-oranges data that makes it hard to arrive at final, global assessments of a company as big & complicated as Wal-Mart. On the one hand…but on the other hand…