Archive for the ‘values’ Category

Ethical Complexity and Simplification in Food Choices

As I pointed out a few days ago, shopping ethically is hard. Right on cue, a flurry of news items followed to drive that point home.

First, a story about how — say it ain’t so! — local food isn’t always ethical food. The story points out that some agricultural workers in southern Ontario (just a short drive from where I live) report suffering from a range of ailments that they attribute to the chemicals to which they are exposed. So, yes, there’s more than a single dimension to food ethics. If (or rather when) local is actually better, that’s got to be an “other things being equal” sort of judgment. Local might be better — so long as local farm workers aren’t being abused, and so long as growing food in your local climate doesn’t require massive water and fuel subsidies, etc.

Next, a Valentine’s-themed bit on how to buy ethical chocolate. The short version: apparently you’re supposed to look for local, organic chocolate that’s certified free of child-labour, sold in a shop that dutifully recycles and composts. Of course, such chocolate isn’t necessarily cheap. And if you’re spending that much on chocolate, then you might want to think what other things you’re scrimping on as a result, and who might be affected by that scrimping.

Finally, there was a story — really just a press release — noting that chocolate bar manufacturer Mars is set to ‘help’ consumers by narrowing their choices: the company is aiming to put a 250-calorie limit on all its bars by 2013. Interesting question: is this a matter of helping particular customers, by encouraging them not to over-indulge? Or is it rather a matter of specifically social responsibility, an attempt by a food giant to respond to (or at least to limit its contribution to) the social problem of obesity? And — speaking of value choices — should food companies aim first and foremost at pleasing their customers, or serving society as a whole?

Ethical Consumerism is Hard

It’s not easy being an ethical consumer, these days — especially if you’re hoping to buy products that embody all or most of the ethical values you care about.

Here’s an example. If you like salmon, and if you’re the sort of consumer who wants to eat ethically, should you buy organic salmon or buy wild salmon? After all, there’s a huge effort these days to promote organic foods as ethical — gentler on the earth, and so on. Of course, others aren’t so sure that there’s much benefit to organic foods, and some even argue that the organic label is more a status symbol than anything else.

Now what about wild vs farmed? Some people think that farmed salmon is always bad. Others, like food-policy expert James McWilliams, argue that for whatever its current flaws, farmed fish provides our best hope for a future that includes significant amounts of protein at acceptable environmental costs. Eating wild fish, on the other hand, puts pressure on fragile wild populations.

But still, there are plenty of people who are dedicated to eating organic, and plenty of people who are quite insistant upon eating only wild fish.

The problem is, you can’t have it both ways. Wild salmon cannot, by definition, be organic, because it’s impossible to control what wild salmon eats. It can only be truly organic if it’s raised in captivity. Damned if you do, damned if you don’t.

This is just one tiny example of the challenges of ethical consumerism. Any given product can embody any number of incommensurable values — values that can’t just be added up to arrive at a total “ethics quotient.” The same problem applies to wind power (which produces no air pollution but kills birds) and oil from Canada’s oil sands. (which is produced in a democracy but is environmentally-dodgy).

Of course, none of that means that it’s not worth some effort to try to buy conscientiously. It just means that, as often as not, values-based consumerism is going to mean purchasing according to values that matter to you, rather than hoping to buy in a way that is ‘truly ethical,’ in some grander sense.

What is ‘Business’ and Why Does That Matter?

There’s been discussion lately (constantly, in fact) about whether President Obama is “pro-business” or “anti-business.” What commentators generally mean by that is whether Obama is sufficiently sympathetic to the needs of the business “community,” or rather excessively sympathetic to the wants of Big Business. A lot turns here on what we mean by business. Confusion about that muddles discussion of business ethics, too.

Confusions about business ethics abound. Some people, for instance, think business ethics is about the pursuit of sainthood in commercial domains, a definition which makes the field an eminently unpromising endeavour. Others mistakenly associate the term “ethics” with a narrow range of limits on personal behaviour, things like accepting bribes. Still others seem to think that the word only applies to big corporations. All of that is wrong, and starts discussions of business ethics off on the wrong foot.

If you want to understand the scope of business ethics, it helps, as a starting point, to begin by looking at what business itself is. Here’s my informal, non-textbooky definition of “business”:

Business is the activity of making stuff or doing stuff for other people, in return for money (or in exchange for other stuff).

That’s it. That’s all business is, fundamentally. What motivates those involved is another question. So is how they behave. Which brings us to ethics.

Business ethics is about what you can and cannot do in the process of doing business. What kinds of behaviours are good or bad, right or wrong, virtuous or vicious, in a context in which we are all trying to make a living?

I think this way of explaining business ethics is useful for a many reasons, but mostly because it’s non-confrontational. It ought to reassure — and hence draw into the discussion — the business community. As a business ethicist, I’m not poking my nose into the world of commerce to tell people there that they have to stop pursuing profits. Far from it. Profits are great — go for it! I’m just here to talk about what reasonable limits there might be on profit-seeking activity.

It also reminds those who are critical of “business” that what they are actually critical of is certain business practices, certain ways of doing business. “Business” isn’t synonymous with “Wall Street.” The idea of being “anti business” verges on incoherence, given this understanding of what business is.

Of course, the right understanding of business is only a start. But it’s an awfully good start.

(You can check out my more formal definition of business ethics here.)

Environmental Profit-and-Loss

It’s attractive, but very dangerous, to try to calculate a ‘bottom line’ for a firm’s social or environmental performance. Attractive, because key stakeholders are increasingly interested in knowing those kinds of details. But the main danger should be obvious: there’s just no way to add up the disparate factors that make up a firm’s social or environmental performance. How do you add together litres-of-water-used plus hectares-of-habitat-destroyed? On the social performance side, how do you sum up number-of-women-in-senior-management plus fair-trade-contracts signed?

The answer of course is that you cannot. You can’t add up things that are represented in different units of measure. That’s not to say that you can’t or shouldn’t track and report these various numbers; but it casts a dim light on the prospects of arriving at a global assessment of a firm’s social or economic performance.

Unless, of course, you simply put a dollar figure on everything, in which case the math becomes quite easy.

That’s what shoemaker Puma has done, with its new Environmental Profit & Loss Account (E P&L). They’ve attached a dollar value to their greenhouse gas Emissions and their water consumption, and compared that to the dollar value of the shoes they produce. And, interestingly, they’re publicizing the fact that, environmentally, they’re in the red. They extract more from the environment than they provide to consumers. Environmentally, they’re operating at a loss.

Now, in standard terms, any firm that uses more (in dollars) than it puts out (in dollars) is going to go out of business pretty quickly. But as Puma’s Jochen Zeitz points out, that’s not the case for many environmental inputs because so many environmental inputs are unpriced — that is, they cost a company nothing. Pollution, for example, when unregulated, costs a company nothing, and when under-regulated costs the company less than the cost such pollution imposes on others. So what Puma has done is put a dollar value on these things so that they can figure out what their environmental bottom line would be, if they actually had to pay for all they consume and all they emit.

There are two key problems with such attempts to calculate an environmental bottom line this way. One is practical: there just aren’t uncontroversial ways to put a dollar figure on every unpriced environmental input. Certainly there are people who can provide methods for doing so; but that doesn’t mean there’s a clear right way to do it.

The other problem is, well, philosophical. It’s not at all clear that everything we want to say about environmental ethics can be summed up in terms of economic impact. What’s the dollar value of the loss of a species? Is the value of beautiful scenery really captured by summing up how much each of us would be willing to pay to preserve it?

Still, Puma deserves credit for this rather striking bit of transparency. Even though the “E P&L” is a pretty incomplete picture, it nonetheless does tell us something about the company’s overall environmental impact, and its commitment to doing better.

(Thanks to Andrew Crane for pointing me to the Puma story.)

The Virtues of Local Ownership

There’s plenty in the news these days about the supposed virtues of “buying local.” Buying local usually means buying from small businesses. As I’ve argued before, in at least some cases buying local also means opting for small-scale, inefficient production processes. And in other cases, it means an unhealthy kind of insulation from the outside world.

But what about the virtues of specifically local ownership, when the ownership in question is ownership of what is otherwise a standard-issue department store, replete with goods ‘Made in China,’ as the stereotype goes?

The New York Times recently reported on an effort by a small town in upstate New York to ensure its residents have access to some sort of local department store. When the local Ames department store went out of business a few years back, residents of Saranac Lake — pop. 5,041 — took matters into their own hands. They raised the capital, at $100/share, to open their own department store.

It’s a charming story, and an interesting experiment, but we ought to exercise some caution before attaching too much significance to it.

First, it will be tempting to see this as radical re-visioning of modern capitalism. To see examples of such a temptation, see the 2004 Avi Lewis and Naomi Klein documentary, The Take, about the takeover of a defunct Argentinian factory by its former employees. Lewis and Klein portray that takeover as an example of the pursuit of a real alternative to capitalism — despite the fact that the cooperatively-run factory is still buying inputs on the open market, selling goods on the open market, and so on.

Were it not for movies like The Take, it might go without saying that innovations in ownership structure don’t eliminate the fundamental challenges of capitalism, and certainly don’t eliminate the standard ethical issues that face all businesses. The department store in Saranac Lake is — setting aside a few nods to local sourcing — just a regular department store. It’s got employees, so it will face questions about how those employees are treated. It’s smaller than your typical Walmart, but it will still face questions (or at least it should) about where its products come from, the conditions under which they’re manufactured, and so on. And its managers will still face questions about how to balance the good of the community as a whole with their obligation to be fiscally responsible. And so on.

Not that we need to be entirely cynical about the Saranac Lake experiment, and others like it. There’s at least a prima facie case to make for the significance of local ownership. Managers of a locally-owned store have at least some sense of what kinds of things shareholders would want them to do, and hence seem less likely to violate the trust placed in them. When you know your shareholders by name, you can ask them what they want, and they can tell you what obligations they feel to the community, and they can then ask you, their representative, to make good on those obligations.

In the end, I think experiments in capitalism are good. Indeed, the way it fosters experimentation is one of the great virtues of capitalism. We ought to keep a careful eye on such experiments, both for what we can learn about their particular virtues, and for what we can learn about the nature and structure of capitalism more generally.

Walmart, CSR Reporting, and Moral Grey Zones

It’s very hard to report on the good things you’ve done, when not everyone is sure that those things are actually good. Cutting CO2 emissions is pretty unambiguously good, as is working to reduce fire hazards in your suppliers’ factories. But in the realm of corporate responsibility reporting, there’s still lots of room for controversy.

Case in point: I recently had the chance to indulge in a careful reading of Walmart Canada’s 2011 Corporate Social Responsibility Report. Here’s a bit from the document’s intro, by CEO David Cheesewright:

We see this report as a powerful tool for corporate good. Our size gives us considerable influence and with it comes considerable responsibility – a role we embrace in order to help Canadians save money and live better.

Our goal is to present an open look into the impact of our operations in Canada over the past year. This latest report frames our diverse activities into four broad categories of CSR: Environment, People, Ethical Sourcing and Community.

In each area, we highlight our efforts and actions, both large and small – and summarize our current programs and challenges while outlining plans to keep improving in the future….

It’s a very readable 35-page document (more reader-friendly than some others I’ve read, which I think is really crucial if you want people actually to read the thing.)

One of the things that struck me about the Report is that there’s a genuine difficulty in reporting on this sort of stuff in a world replete with grey areas. There’s lots of lovely win-win stuff in the Report. But some of the stuff reported proudly is actually ethically controversial. A trio of examples will illustrate my point.

  • Under the heading of “Community,” Walmart Canada proudly reports that “Walmart Canada thinks locally,” and that the retail giant does a lot to boost the prospects of Canadian businesses, to whom it funnelled just over $15 billion in 2010. This goes some distance toward countering a common criticism. But as I’ve pointed out here before, a focus on “supporting Canadian business” is often a mistake, both economically and ethically.
  • Likewise, the Report indicates that their ‘Standards for Suppliers’ absolutely forbid the use of child labour. But there’s a good argument to be made that in at least some desperate parts of the world, child labour is a sad necessity. An absolute prohibition can make some kids’ lives worse.
  • The Report also brags about its new line of organic baby food, despite the fact that there’s little clear evidence that organic foods are ethically better than other foods. The question is controversial, to say the least.

In all three cases, the company is portraying as ‘socially responsible’ something that, well, might or might not be, depending who you ask. But of course, child labour, healthy foods, and impact on local communities are precisely the sorts of things that critics (and maybe consumers more generally) want to hear about from Walmart. So it’s hard to fault them on doing, and reporting on, those things.

The point here really is not about Walmart Canada, but about the challenges of CSR reporting more generally. If CSR reports stuck to the unambiguously-great stuff, the reports would be vanishingly short and only minimally useful. And that would be a shame. The point of such reporting, I think is not to show that you’re doing everything right. It’s to show us what you’re doing.

Ice Cream, OxyContin, and the 3 Big Questions of Business Ethics

Sometimes it takes a really minor story to illuminate the basic issues at stake in business ethics. Like, for instance, a recent story about a guy selling both ice cream and serious street drugs out of his New York city ice cream truck. Here’s the story, by Jonathan Allen for Reuters: Ice cream vendor gets prison for selling drugs with treats.

That story highlights nicely one of three really fundamental questions that must be asked by anyone seriously interested in business ethics.

The three big questions of business ethics are as follows:

  • 1) What may I do, and what may I not do, in attempting to make a living?
  • 2) In what ways do my obligations change when I act on behalf of others, including employers, shareholders, etc.?
  • 3) What should I do when I see inappropriate business practices that don’t directly affect me?

Each of these “big” questions can of course be subdivided into an entire category of questions. Question 1, for instance, implies a whole range of more specific questions — not just questions about the basic ethics of commerce (Can I lie, cheat or steal? No. Can I exaggerate, or put important details in fine print? Not so clear!) but also questions about Corporate Social Responsibility and corporate philanthropy. The second question covers all the issues that crop up once businesses are staffed by more than a single individual. And the third concerns third-party critique, the work of consumer advocates, and government regulation.

The news story cited above illustrates beautifully Question 1, the question of what you can and cannot do to make a dollar. Louis Scala was, after all, just trying to make a living. There’s nothing wrong with that, of course. The catch was the method he chose.

Scala chose to sell two products. One was soft-serve ice cream, a dessert treat sold primarily to kids, who just can’t get enough of the stuff. The other was OxyContin, a highly-addictive narcotic, sold primarily to adults who just can’t get enough of the stuff. Selling the former is considered a reputable way to make a living. Selling the latter (out of the back of a truck!) is what earned Mr. Scala three and a half years in jail. But then, neither of those products is uncontroversial. Ice cream isn’t exactly healthfood, and child obesity rates are on the rise. But on the other hand, it’s a harmless treat, when consumed in moderation. But on the other hand, it’s not always consumed in moderation. But on the other hand…you get the point.

Figuring out what constitutes a legitimate way to make a living — taking into consideration all reasonable details — is far from straightforward. But realizing that the questions we want to ask about business ethics all fall under one or another of the fundamental headings listed above is, I think, a useful bit of mental bookkeeping, which is increasingly important in a world where criticisms, and defences, of business practices are becoming more and more diverse.

A High-Tech Replacement for Sweatshop Labour! Um…yay?

When new technology puts sweatshop labourers out of work, is that a good thing or a bad thing? It’s not an entirely hypothetical question.

Here’s the story, from Fast Company: Nike’s New Thermo-Molded Sneakers Are Like Sculptures For Your Feet

The classic Air Force 1, Dunk, and Air Max 90 Nike shoes get the Vac Tech treatment–a thermo-molding technique that produces one-piece, stitch-free sneakers.

As a centerpiece for the holiday season, Nike Sportswear has released three of its most venerable brands–the Air Force 1, Dunk, and Air Max 90–constructed using a thermo-molding technique, a kind of vacuum compression method that allows the shoe to be held together without any noticeable seams or stitching. The Nike Dunk VT, above, basically recreates the familiar silhouette of the original design as sculpture around your feet.

Now presumably — though details are sketchy — the lack of stitching will mean these babies will be cranked out by machines, rather than assembled by hand by underpaid people in underdeveloped nations. Critics who think there’s no such thing as a good sweatshop should rejoice. But will sweatshop workers be so happy?

I hasten to add that the word “sweatshop” in its most pejorative sense doesn’t really apply to Nike. Nike, once villainized for having its shoes made by poorly-paid workers working under appalling conditions, is now widely recognized as a garment-industry leader in terms of labour standards. But that’s not to say that a job in a factory that makes Nike shoes is peachy. It’s still a hard life, by western standards. So is it good, or bad, for such labourers if a machine is developed that makes their services redundant?

As I’ve pointed out before, the workers vs machines conflict is, in the grand scheme of things, a false one. Machines can make workers more efficient (and hence valuable), can save humans from dangerous tasks, and can improve net social productivity in a way that stands to benefit literally everyone, in the long run.

But such generalizations don’t obviate the fact that there are some cases in which a new technology comes along and puts you out of work.

Unemployment is bad. Sweatshop jobs are bad. So do we celebrate or mourn when someone with a sweatshop job is put out of work? And is this a matter of choosing the lesser of two evils? Or the greater of two goods? And what does our answer to that question imply about the ethics of buying products made in the sweatshop jobs that remain?

Ethical Investing and Values-Based Investing

If you’re an investor, and if you want your money invested in companies that will not just bring you a return on investment, but will also some good in the world, that means you’re interested in what is variously called “responsible investing” or “ethical investing” or “values-based investing.”

I was recently interviewed for a documentary on the topic. Here it is: “Responsible Investing: An Evolving Story.” The 20-minute video was produced by the Ontario Teachers’ Pension Plan (OTPP). OTPP (colloquially known as “Teachers”) is one of the biggest institutional investors in Canada, managing a fund of just over a hundred billion dollars.

One of the main points I tried to make in the segments I’m in is that the key to thinking about values-based investing is to think of it as a mechanism for value-alignment. That is, it’s a way for investors to invest in companies whose values are like their own. It allows pacifists to avoid investing in arms manufacturers, and allows anyone who is stridently anti-tobacco to avoid investing in that industry. It’s not about all of us investing in products or industries that are “more ethical”, overall. Such global judgments are difficult to arrive at, and even harder to find consensus on.

That is, it’s best not to think of values-based investing as “ethical” investing, as if in contrast to all that other, unethical, investing. Indeed, referring to it as “ethical” investing probably makes the same mistake as references to “ethical oil” or “ethical food” does: it confuses the fact that there is ethical reasoning involved in such investing with a much grander claim that your investments are the only (or most) ethical ones.

Oil Poll: Human Rights or Environment?

A few days ago, I blogged about the notion of “ethical oil”. That’s the label one advocacy group is applying to oil from Canada’s oilsands, to distinguish it from oil from Saudi Arabia, a country with a less-than-admirable human rights record. That, of course, is a gross oversimplification.

But it’s still an interesting ethical issue. I said,

In principle, we could look at this as a matter of “choose your poison.” Do you want the oil that’s associated with human rights violations, or the oil that’s associated with environmental destruction?

It’s important to point out that there are two reasons this is a false dilemma. One is that consumers don’t actually get to choose: oil isn’t labeled by country of origin. The other reason is that neither of the nations named above is perfect, from a social and human rights point of view; nor is either country perfect from the point of view of environmental protection.

But it’s a philosophical thought-experiment worth conducting. So, let’s imagine: you’re driving your car, and your tank is near empty. You’re at an intersection with two gas stations. One is the Saudi brand and the other is the oilsands brand. Which one would you choose?

(Again, I do realize this is a gross oversimplification. It’s not a real choice. It’s a thought-experiment to get you to think about the relative value of the environment and human rights. Let’s all be thankful it’s not a choice we actually have to make.)

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