The Business Ethics Blog

Back in December I posted about Food Marketing to Children

Today, from Reuters: Suit seeks to stop Kellogg from targeting kids

A consumer group wants to keep Tony the Tiger from promoting sugary cereals on the SpongeBob SquarePants cartoon show, or anywhere else kids are watching.
The Center for Science in the Public Interest on Wednesday announced legal action to try to stop the Kellogg Co., maker of cereals like Frosted Flakes, and Nickelodeon cable network Viacom Inc., from marketing junk food to children.

A planned lawsuit will ask a Massachusetts court to stop the companies from marketing junk foods in venues where 15 percent or more of the audience is under age 8, and to stop marketing junk foods through Web sites, toy giveaways, contests and other techniques aimed at that age group.

Although I’m no lawyer, it’s hard to imagine this case succeeding. But it’s NOT hard to imagine this case drawing attention to an important issue. (Hmmm…could that be the whole point?)

Of course, this is “merely” a lawsuit (philosophers get to say that sort of thing), and law & ethics are not the same. So, even if the suit turns out to be more smoke than fire, that leaves the ethics of aggressively marketing high-sugar, low-nutrient foods to kids open to debate. It may well be that advertising to kids is “necessary” in the sugary-cereal business. But, as I’ve said in previous postings, there are some times when you’ve got to say: either find a way to do business ethically, or stop doing business.

[Link to my previous blog entry updated, Aug 2010.]

Tomorrow (Thursday, January 19th, 2006) Starbucks Canada is going to donate 100% of the purchase price of EVERY latte sold, to support literacy programs in Canada. They call this their Lattes for Literacy project.

So, what to think about the idea of giving to an excellent cause by spending a ridiculous amount of money on a caffeinated beverage? Is Starbucks to be congratulated for supporting literacy, when its way of doing so basically amounts to an effort to drag people into Starbucks outlets to buy high-markup beverages?

A few thoughts:

Sure, Starbucks likely has mixed motives. If they didn’t, they could just quietly donate a chunk of cash. Of course, they could also do something much less honourable with that cash, or donate it to a less-worthy cause.

But I’ve seen much more dubious examples of companies using a charitable donation to lure people into their stores. I’m sure we’ve all seen cases where the deal is more like “we’ll donate 5%” or something. Donating 100% of latte sales from across Canada is no small thing.

Savvy consumers understand how these things work. Of course the payback for Starbucks is good karma (and PR), as well as a bunch of extra people entering a Starbucks, people who might a) buy an expensive baked good to go with their charitable latte, and b) become devotees of the coffee mega-chain. So, if you decide to support literacy by buying a latte tomorrow, just ask yourself: am I willing to risk the possibility that I might be tempted (as Starbucks is likely hoping I will) to buy an over-priced baked good? Am I willing to risk the possibility the I might find Starbucks a congenial spot, somewhere I’d like to return to? See, it doesn’t really count as corporate manipulation if you agree to (risk) being influenced.

Finally, if you don’t like Starbucks (for whatever reason — for me, it’s the mediocre coffee) but want to support the good cause, why not donate directly? (That’s what I just did.)

(Props to Andrew over at Rebel Sell for prodding me to blog about this.)

I just watched the new DVD version of Enron: The Smartest Guys in the Room.

I reviewed the theatrical release last summer (short version: “Great movie”), so here I’ll just say a few words about the Bonus Materials on the DVD. The bonus materials might not be of interest to everyone interested in the movie itself, but anyone with more than a passing interest will enjoy them and learn from them. For anyone teaching Business Ethics, they’re fantastic.

The first Bonus is a commentary by Writer/Director Alex Gibney. Gibney does a little too much talking, for my tastes (I’d perfer to hear at least SOME of the film’s dialogue, with the commentary adding only occasional insights), but over all Gibney does a good job of telling “the story behind the story.”

Also included are a number of deleted scenes (scenes shot for the movie but not included in the theatrical release). One of the most revealing is a speech by Ken Lay, apparently given just after the collapse of Enron. It reveals a side of Lay not revealed in the movie, including some glimmers of compassion for the Enron employees who lost everything.

Also useful is a “Where are they now” segment, which provides a relatively up-to-date accounting of who at Enron was charged with what crimes, etc. (For further updates, the DVD refers us to this website: The Fall of Enron.)

Other Bonus Materials:

• “We Should All Ask Why?” Making The Enron Film
• A Conversation with Bethany McLean (co-author of the book)
• A Conversation with Peter Elkind (also co-author of the book)
• HDNet’s Higher Definition: Highlights from the Enron Show (an interview with Bethany McLean)
• Firesign Theatre: The Fall of Enron (video of a radio show’s skit spoofing Enron)
• Alex Gibney Reads Enron Skits
• A Gallery of Enron Cartoons
• Fortune Magazine Articles (unfortunately, you can only read them on-screan, not download them in, say, PDF)

Overall, Enron: The Smartest Guys in the Room is a very entertaining DVD, whether you’re merely curious about what really went on at Enron, or looking for a terrific starting point for classroom discussion.

Update: List of other movie reviews on this blog.

Many people in business ethics are kind of ambivalent about corporate philanthropy. Certainly, there’s at least reason to be uncomfortable when people equate — and they sometimes do — charitable donations with ethics in general. Corporate giving, in itself, doesn’t make a company ethics. And if a company (or one of its executives) has a history of questionable behaviour, giving a few tens of thousands of dollars to a few charities clearly doesn’t wipe the slate clean.

Just how good, ethically, is corporate philanthropy? Some people argue that corporations (or businesses more generally) have an obligation to “give something back.” Others (most notably Nobel Prize winning economist Milton Friedman) argue that when corporate executives give money to charities, they are essentially “stealing” that money from shareholders. Still others point out that corporate giving can have a powerful positive effect on a corporation’s image.

Then, of course, there’s the question of what kinds of causes to donate to. What counts as a “good” cause? Most of us would say that donations to a local little-league team or a charity helping the homeless is a good thing. But what about donations to a pro-life, or pro-choice, organization? What about donations to controversial environmental organizations like Friends of the Earth? Should philanthropy be focused on causes where the needs are greatest (perhaps famine relief in Africa) or should companies focus on causes closer to home?

Articles on corporate giving, from OnPhilanthropy.com

[Edited Aug 12, 2010, to eliminate post script referring to a website that no longer exists.]

Check out this story in Business Week:

“A Columnist Backed by Monsanto”

Scripps Howard News Service announced Jan. 13 that it’s severing its business relationship with columnist Michael Fumento, who’s also a senior fellow at the conservative Hudson Institute. The move comes after inquiries from BusinessWeek Online about payments Fumento received from agribusiness giant Monsanto (MON ) — a frequent subject of praise in Fumento’s opinion columns and a book.

This raises a bunch of issues, but I’d like to point out 2 of them:

1) How much responsibility does a company (say, Monsanto) have for not putting journalists and authors into conflicts of interest? I take it the normal reaction is that this is an issue of professional ethisc: journalists, professors, etc., need to be careful about what kinds of agreements they enter into, especially if those agreements are likely to affect (or be seen as affecting) their professional judgment. But it takes two to tango. No professional faces this dilemma without someone having someone offered them something. Is a company to be blamed for doing so, or no? Do they have an obligation NOT to affect professional judgment in ways that might benefit them? Is transparency and openness enough to remove all worries in such cases?

2) In an era of blogs, democratization of media, etc., how the hell can we keep track of this stuff? For example, do readers of my blog have any idea whose payroll(s) I’m on? Maybe I’m a shill for the well-funded anti-SUV lobby. (?)

It’s Friday, and it’s sunny outside, so why not a (mostly) positive story about business ethics?

Google, in addition to being the world’s most popular internet search engine, has something of a reputation for ethics. From what I’ve read, that reputation includes both a commitment to ethical business practices, and a more general interest in making the world a better place. There’s also indication that a lot of what goes right, ethically, at Google has to do with the leadership of Google’s founders, Larry Page and Sergey Brin. (Here’s a letter from Page & Brin to Google’s shareholders, describing their thoughts on this.)

Here’s a link to Google’s corporate philosophy.

Google’s unofficial code of conduct is simple: “Don’t be evil” (or, alternatively, “Do no evil”). Here’s the Wikipedia entry for that slogan.

The Register has this story (almost 2 years ago) about Google’s commitment to ethics: “Google’s Ethics Committee revealed”

The Economist has this story (yesterday) about one of Google’s founders: “St Lawrence of Google”

Wired had this story (3 years ago) about Google: “Google vs. Evil”

BBC News had this story in May of 2004: “10 things the Google ethics committee could discuss”

Gotta admit, I’m at a loss for words:

Pharmaceutical companies the world’s most ethical, says Swiss study

The three most ethical companies in the world are innovative pharmaceutical manufacturers according to a new and independent study by a Swiss-based organisation.
The Geneva-based organisation, Covalence, has released its 2005 annual ethical ranking of multinational companies across ten major sectors.

It found that the top three companies with the best ethical score, across ALL sectors, were GlaxoSmithKline, Merck and Bristol Myers Squibb.

If anyone has any thoughts on how companies in a nearly-universally-villified industry end up getting top marks for ethics, let me know.
Actually, I’d rather not hear guesses. But Covalence has some stuff about methodology on its website. [Link updated Nov. ’08] Their approach as a lot to do with corporate reputation (rather than measures of actual performance). A quick look suggests to me that a lot of the criteria have to do with stuff that doesn’t touch on the controversial aspects of the pharmaceutical industry (i.e., its effect on human health). So, if pharma companies do well at stuff like labour relations (which they might well — I’ve never heard of a pharma scandal in that realm), they might well score highly, especially if there isn’t also a category on, say, manipulation of research results.

A U.S. court has decided that the civil whistle-blower protection provisions of the Sarbanes-Oxley Act don’t apply where American companies work overseas.

Here’s a blog entry about it, from an expert on this stuff.

The case involves an Argentinian, working in Argentina for an American company. He blew the whistle on some wonky accounting, was fired, and then he sued the company. He also sought the protection of the U.S. Department of Labor. DOL dismissed his claim; he appealed to the courts, and was ultimately rebuffed.

Here’s the court decision.

(Thanks to Allison Garrett @ the International Corporate Governance Blog for alerting me to this story.)

The Simpsons & Jon Stewart have so numbed me to irony that I’m not sure I even recognize it any more.
Anyway, this story strikes me as ironic.

A senior Wal-Mart executive, Thomas M. Coughlin, apparently covered up the fact that he was stealing from the company by claiming that the expenditures were for a blatantly unethical (and maybe illegal) anti-union project. Oddly, the anti-union project apparently never existed. So, fake wrong-doing covered for real wrong-doing.

The full story: “Was Wal-Mart’s Anti-Union Image Used as a Shield?”, by Michael Barbaro @ the New York Times.

The union project, according to Mr. Coughlin, was a secret scheme, approved by senior Wal-Mart executives, to pay union members for information about which stores they planned to organize.

A year later, when Mr. Coughlin was accused of misusing more than $500,000 in company funds through fraudulent reimbursements, the union project became the heart of his defense, and it immediately transformed the case into a symbol of anti-unionism on the part of Wal-Mart. Reporters seized on it, labor groups issued a flurry of angry press releases about it and the National Labor Relations Board began an investigation into it.

But Mr. Coughlin’s agreement to plead guilty to federal wire fraud and tax evasion charges, which two people close to the negotiations disclosed on Friday, and the lack of evidence that he used the missing money to spy on unions raise doubts as to whether such a project even existed.

Apparently my posting on Microsoft’s complicity with the repressive Chinese government was not alone in the world of business ethics blogs.
Check out:
“Microsoft Bows to Chinese Censors” over at the Principled Profit blog
“Microsoft Going Red?”, at the Credo Advisors blog