The Business Ethics Blog

Somehow I missed this last month, even though I did mention the big turn-around at Nike. You can get some sense of just what I meant by checking out this Press Release from Nike, which starts out like this:

Nike’s commitment to industry-leading transparency in its social responsibility reporting has led to the company being named the top U.S. company and one of the world’s top 10 in the current SustainAbility Global Reporters Program ranking released today.

Here’s the SustainAbility ranking that Nike’s press-release refers to: Tomorrow’s Value: Leading companies
The ranking is the result of a

benchmarking survey of leading practice in corporate sustainability reporting, published in partnership with the United Nations Environment Programme (UNEP) and Standard and Poor’s. Entitled Tomorrow’s Value, the report ranks the world’s leaders in corporate sustainability reporting, transparency and disclosure.

In case you’re unfamiliar with Nike’s history, the company’s appearance in the Top 10 here is striking because, not so long ago, the company was widely reviled as a villain in the world of the international garment industry.

Of course, this is a ranking of transparency, not social performance. It’s possible, in principle, to be open & transparent about lousy performance and to do little or nothing of substance to do any better. But there’s nearly universal agreement that transparency is a pretty good start. Sunshine, as they say, is the best disinfectant.

p.s. This makes my prediction about Wal-Mart seem even more plausible. Some of you may recall that, back in March, I predicted that “within 5 years, Wal-Mart will be at the TOP of at least some business ethics / corporate social responsibility / corporate citizenship rankings.” Skeptics may say that it won’t happen, but the Nike case illustrates that it could.

[Thanks to Laura Hartman for the note.]

The current issue of The Harvard Health Letter features the “Top 10 Health Stories of 2006.”

What the casual reader of the HHL story might not have noticed is that most of their top 10 health stories are also significant business ethics stories.

Here’s their list, with quick pointers to the business ethics issues. (The bolded headlines are theirs; the comments after are mine.)

1. A new shot in the arm against cancer. I already blogged about this story a few months ago. I pointed out that marketing a product aimed at girls in their pre-sexual years, with the aim of preventing sexually transmitted disease, is going to pose some challenges.
2. Trans is fat non grata. Restaurants and manufacturers of food products are getting slammed for selling foods that contain trans fats. Thing is, no one business is going to sell enough to an individual in order to be responsible for the net effect of a high-trans-fat diet on that individual. I blogged about this story just last week.
3. Has Massachusetts figured it out? (Universal health insurance coverage, that is.) On the surface, this is a public policy issue, not a business ethics issue. But of course, lots of businesses are involved in lobbying to influence public policy. Do companies with a place at policy-making tables have an obligation to use their influence for the public good, or for the good of shareholders? Or both?
4. New treatment for macular degeneration. No obvious business ethics angle, except to the extent that there are always ethical issues involved in bringing a “promising” new drug to market, especially when potential patients have something as valuable as their eyesight at stake.
5. Germ warfare—and the germs are winning some battles. If — and I say if — drug companies are really dedicated to saving lives and promoting human health, they should work harder on finding new and innovative antibiotics, and work less hard on developing more “lifestyle” drugs.
6. Vaccines, kid stuff no more. What looks to physicians like extending a treatment to a new group of patients looks to pharma marketers as expanding their market. Not that there’s anything wrong with that. But we should always be ready to ask questions about new categories of health expenditures like this.
7. Drug approvals—with strings attached. The aforementioned strings come in the form of an obligation for companies to engage in careful monitoring of patients/customers. Pharma’s track-record at this sort of thing is spotty. What’s the right set of incentives to put in place to make sure that companies that are of course seeking profits don’t jeopardize human health in the process?
8. Bird flu preparations: Don’t chicken out now. This is probably a classic case of a situation where private innovation can’t be relied upon…unless it’s private innovation stimulated by big fat public subsidies.
9. Calls for FDA reform getting louder and clearer. Among the key reforms being proposed: do more to monitor the safety and efficacy of drugs after they’re on the market. The pharma industry can make this harder, or easier. It’s an important ethical decision (or, really, the net result of dozens of decisions made in particular cases.)
10. Finally, a vitamin makes the grade. OK, this story about Vitamin D has me stumped. No clear business ethics angle. But by now, you get the point…

The lesson: across the world, most health care is delivered either by, or with the help of, business. (Even in places like Canada — with its wonderful publicly-funded healthcare system — corporations do a lot of research and development, and pretty much all pharmaceuticals and medical devices are made and distributed by corporations.) The decisions corporations make matter to our health. So, it follows almost trivially that most health-related news is also going to be related to business ethics.
[Thanks to the Women’s Bioethics Project Blog for the pointer.]

They used to say that you can never be too rich or too thin. I guess one out of two ain’t bad, at least in the fashion industry.
The fashion industry has long been criticized for demanding of its models, and hence promoting among fashion-conscious women & girls, a standard of thinness that is both unrealistic and dangerous. In September, organizers of Madrid Fashion Week announced that they would no longer contribute to the trend, and would in fact ban models whose Body Mass Index fell below the level associated with good health.

Now, another industry group has joined in, according to this story from the NY Times: U.S., Italy Addressing the Health of Models

…representatives of the Italian government and its fashion trade group, the Camera Nazionale, said this week that they would promote a national campaign against anorexia and what they described as “a national manifesto of self-regulation.” Independently the Council of Fashion Designers of America, the trade group based in New York, plans to address the issue with a response that has not been formalized.

Why is this story — a story from the NY Times “Fashion & Style” section — a business ethics issue? Well, first let’s establish that it’s a business story: the fashion industry is clearly a huge business, big enough that the new move by the Council of Fashion was actually first reported in the Wall Street Journal. And it’s a story about business ethics because it’s about companies, through their industry organization, taking action to change behaviour that has been subject to reasoned criticism in the past.

Two main business ethics issues arise here.
One is a matter of, for lack of a better term, workplace health & safety. Anorexia Nervosa — the world’s most deadly psychiatric illness — is said to be relatively common among models, and even models who don’t fit the diagnostic criteria for Anorexia can suffer significantly negative health impacts from being underweight. As the Times story notes, two models have died this year already. Some will say ‘but wait!’…this is all voluntary, right? Models get paid a lot of money, and if in return they have to meet certain physical standards, even dangerous physical standards, at least it’s voluntary. Lots of people have dangerous jobs. We don’t forbid that, so long as the decision to take such jobs is free & informed. Being a model is, in this sense, like being a coal-miner. Right? No. That argument is faulty, and the analogy is misleading. While it’s true that we do acknowledge that some jobs are more dangerous than others, and that people may freely choose to do those jobs in return for the right combination of pay, job satisfaction, etc., we none the less require that employers do what they can, within reason, to reduce risks. So in wealthy, industrialized nations, at least, we condone the still-dangerous work that miners do partly because the operators of coal mines have put in place a wide range of safety measures to make coal-mining as safe as it could reasonably be. (No endorsement of the mining industry is implied, here: I’m just saying the dangers of coal mining are not without limit.) So, likewise, the fashion industry is obligated to take reasonable steps to keep its workers safe.

The other issue here is a question of social impact. Fashion models set the beauty standard — no, they are the beauty standard — for millions of women and girls. To keep things simple, let’s avoid competent adults and focus on teen girls. The faces and bodies that teenage girls see on magazine covers and on TV footage of the runways of Paris, Milan and New York are bound to influence how they feel, how they act, how they eat. Of course, we can only hold the fashion industry responsible for so much. Evidence of a direct link between fashion industry standards and teenage Anorexia is hard to come by. None the less, it seems naive to imagine there’s no impact at all (even if the impact is limited to adding to the already-significant burden of teenage angst). So at least with regard to the vulnerable teen portion of their audience, it’s at least plausible that the fashion industry has an obligation to be part of the solution, rather than part of the problem.

Finally, note also the significance of collective action in this story. Changing corporate behaviour is difficult when doing so implies a competitive disadvantage. If, for whatever reason, people in the industry see skinny models as central their success, it will be hard for any one company to deviate from the norm, for fear that other companies (other design houses, in this case) will gain a market advantage. So it’s essential in cases like this that change happen more-or-less in unison. Industry self-regulation is one way to achieve that. Government regulation is the other.

(I swear that it’s pure coincidence that this blog has featured photos of models two weeks in a row. I don’t make up the business ethics news, I just blog about it.)

Does everyone remember that story from September, about allegations that Hewlett Packard used unethical, perhaps illegal, methods to determine who on their board was leaking information to the press? I blogged about it here and here.

Well, the first part of this fiasco (i.e., the civil case) is settled, and HP comes out not looking so swell. Here’s the story, from CNN: HP pays $14.5m to settle lawsuit

Hewlett-Packard Co. agreed to pay $14.5 million to settle a lawsuit brought by state Attorney General Bill Lockyer accusing the company of unfair business practices in its crusade to unmask the source of boardroom leaks to the news media.

Interestingly, the Attorney General had some words of praise for HP:

“Fortunately, Hewlett-Packard is not Enron,” Lockyer said. “I commend the firm for cooperating instead of stonewalling, for taking instead of shirking responsibility, and for working with my office to expeditiously craft a creative resolution.”

Anyone care to guess how much recalcitrance would have cost HP?

Final note: there are still criminal charges outstanding. Among the accused is “former ethics chief Kevin Hunsaker.” As I mentioned in my Sept. 18 posting, Hunsaker (a lawyer) isn’t mentioned on HP’s website. That leads me to suspect that he has no actual expertise in corporate ethics (or else HP would surely have bragged about that). I guess you get what you pay for.

Here’s an interesting story…and not just because it gives me an exuse to post a picture of a Victoria’s secret lingerie model. (ahem!)

The environmental activist group ForestEthics has apparently convinced Limited Brands, the parent company of Victoria’s Secret, to change the paper it prints its catalogs on.

Limited Brands, which sends out more than 350 million Victoria’s Secret catalogues a year, promised to end purchases from an Alberta pulp mill logging in Canada’s boreal forest. The agreement came after ForestEthics targeted the company’s image with ads featuring bustier-clothed models toting chain saws.

Here’s the whole story from the Washington Post

The complaint is basically that catalog companies (Victoria’s Secret being one of them) are using too little recycled paper, and too much paper made from environmentally sensitive forests. Victoria’s Secret has, until now, bought its paper from West Fraser Timber Co., which operates in Alberta and British Columbia.

“These are critical and endangered forests that West Fraser is destroying” through clear-cutting practices that also disrupt caribou habitat…

The mayor of one town that is home to a West Fraser mill disputes the claims made by Forest Ethics:

“They don’t clear-cut up here. And it’s simply not true we are taking away caribou habitat,” said Taylor, who, like many in his town of 10,000, works for West Fraser. “This group is not telling the truth. Our boreal forest has actually grown,” he said. “There is more boreal forest today than 50 years ago.”

I don’t have much to say about this by way of analysis. But I’d love to know just what it was that actually convinced the folks at Limited Brands to make the move: was it environmental concern, or threats? (The story in the Post quotes one of the ForestEthics folks sounding like a mafioso:

“We are going to provide all these companies with the option of doing it the easy way,” Paglia said. “If they want to do it the hard way, we can see a tremendous amount of negative press and damage to their brand.”

Sounds like an offer you can’t refuse.

Relevant Links:
Here’s the story in the Globe & Mail (as it appears on the Forest Ethics website).
ForestEthics’s main website
West Fraser Timber Co.

I’m blogging on the road again. I just presented a paper on the labelling of Genetically Modified (GM) foods, at Université de Montréal. (Terrific audience, by the way. Thanks guys!)

The main point of my presentation (based on a paper I co-authored with Melissa Whellams, forthcoming in the Journal of Business Ethics) is that there just isn’t enough evidence that GM foods pose any serious dangers to justify thinking that individual companies have an obligation to label their GM foods. The argument is premised on the idea that the only way companies could be obligated would be if there were one of the following things:

1) A law requiring it;
2) A serious threat to human health;
3) Recognition within the industry that labelling made sense as a shared way of doing business; or
4) A consumer right to the information.

We argue that none of these conditions obtains. In North America, there are no laws requiring labelling. The relevant regulatory agencies and blue-ribbon panels say there’s no evidence of risk to human health. And there’s certainly no concensus within the industry that companies ought to label.
Finally, on the issue of rights: we note that though rights talk is rhetorically potent, we find little by way of cogent argumentation regarding the grounding of a consumer right to know, in this case. The interests at stake here simply aren’t sufficiently compelling to justify a rights claim; there are competing rights and interests (e.g., the rights & interests of farmers & retailers) that need to be taken into account; and, even if there were a right to this information, it’s not clear that attributing an obligation to individual companies would be a reasonable way of satisfying that right.
So, no corporate obligation.

Contrast this case with the case of trans fats. Trans fats are clearly, undeniably bad for us (though, as with most things that are bad for us, the danger depends on the quantity consumed). No one denies that. Hence some governments, including the City of New York, have banned trans fats from restaurant kitchens. Some people will take this as a precedent for stricter controls on GM foods. But two things need to be pointed out.

First, note that even though trans fats are bad, unilateral action by one or a few restaurants would have had a negligeable (perhaps literally zero) effect on anyone’s health. Even in the case of a chain as popular as McDonald’s, few people eat enough of the chain’s food that elimination of trans fats from it would have any effect. The hope — the evidence — is that a ban on trans fats across the board is going to do some good.

Second, note that even though the dangers of trans fats are undeniable, it’s still ethically controversial (though perhaps not indefensible) for a government to ban them. People like the cheap, tasty fries that emerge from McDonalds’ deep fryers. And there’s very little chance, at this point, that people are uninformed about the dangers of fast food. So, a law banning even those notoriously-unhealthy trans fats is in direct violation of the time-honoured principle (credited to J.S. Mill) known as “the Harm Principle.” That principle basically says that laws should be passed to protect people from each other, not from themselves. Of course, governments violate this principle all the time, but doing so often stirs up controversy, and pretty much always requires some special justification.
So, even for products that we know are dangerous, regulation is the only effective solution, and special justification is required for intervening in individual decision-making. Seen in this light, unilateral labelling of GM foods looks pretty tough to support.

Here are the results of the 2nd contest of my blogaversary, which ran on Nov. 21.

The question I posed was this: “what is the most neglected business ethics issue you can name?”

The result was a tie between two very thoughtful entrants.

The first winning entry was from Murat Sen, of Istanbul, Turkey. (FYI, Murat runs his own ethics blog, http://www.ethics-matters.blogspot.com. Check it out.)

Murat argues that the most neglected business ethics issue today is the the cluster of issues related to the “baby business” or “fertility business,” i.e., the business of helping people to conceive babies. Murat says he’s worried that such services are rushing ahead, and certain institutions are making a lot of money off of this business, without sufficient attention being paid to issues such as exploitation, the commodification of life itself, or the validity of the purported “right” to reproduce. Murat also rightly points out that sexy issues like cloning have garnered much more media attention than more mundane (but arguably more significant) issues related to the business side of biotech.

(If you don’t immediately see the business ethics issues here, consider the following. In places where it’s available, fertility treatments can cost something on the order of $10,000 per treatment…and often several rounds of treatment are required before a successful pregnancy results. But is the service worth it? From what I’ve read (and I’ll admit it’s been a while since I looked at the data) the evidence suggests it’s not. Very few couples are truly infertile. For most couple’s who’ve tried for a year and failed to conceive, the very best evidence-based prescription is a bottle of wine, a fireplace, and another year of trying. OK, so this is an expensive product that might not be all it’s cracked up to be. You could say the same about certain luxury automobiles. The difference lies in the fact that in the case of fertility treatment, the person selling the product is a physician, someone with a trust-based obligation not just to give ‘customers’ what they want, but to help them figure out what’s really best for them. None of this is meant to trivialize the anguish of couples who have trouble conceiving…it’s just that that very anguish implies good reason to give careful thought to the kind and quality of product they’re paying so handsomely for.)

So, congratulations to Murat. Your copy of John Roberts’ The Modern Firm will be on its way to you soon!

The other winning entry was from Sandra Woods, of Montreal. Sandra says that the notion of corporate personhood is the great under-examined business ethics issue of the day. Sandra notes that while corporations are considered by the law to be artificial persons, there are many ways in which they cannot really be treated like persons by the law. (e.g., they cannot be incarcerated). And from an ethical point of view, Sandra argues that corporations lack many of the characteristics that we commonly associate with personhood (conscience, etc.)

I’m not sure I agree with Sandra’s conclusion (that the notion of personhood is totally inappropriate when applied to corporations). I don’t see any problem with the notion that corporations can be artificial persons, persons admittedly different from human persons, but possessing many of the characteristics of personhood. And I’m not sure what the negative consequence of using that vocabulary is. None the less, she’s absolutely right that this issue is totally, utterly ignored by the media, and absent from public discourse. So, it’s a good answer to the question I posed.

So congratulations to Sandra. I tossed a coin, and the result was that The Modern Firm goes to Murat, and Sandra’s prize will be a copy of Rising Above Sweatshops.

Thanks again to Oxford University Press and Greenwood Publishing press for generously donating the prizes for this contest.

Google seems to be helping out with the (Red) campaign’s World Aids Day efforts. The link on Google’s home page leads to (Red)’s homepage, which features a video of Bono making an empassioned plea, asking us all to “join Red.”

I’ve commented on the (Red) campaign before, here and here.

Two further thoughts occur to me as I watch Bono make his pitch.

First (and I might actually be repeating myself here) is that even if you’re skeptical, cynical, whatever, about project (Red), or the motives of the people involved, or the power of commerce to effect change in the world, you have to admit that the other option hasn’t exactly been doing a wonderful job of solving the AIDS crisis. So, maybe something totally different is at least worth a try.

Secondly, it’s hard not to admit that lots of people watching Bono — with his rock-star sunglasses & standard-issue celebrity self-righteous tone — are just going to suspect him of being more interested in self-promotion than in the plight of AIDS victims in Africa. If you’re one of those cynical folks, ask yourself this: Let’s assume for the sake of argument that Bono is mostly interested in self-promotion. He’s got lots of ways he can do that. Fame tends to generate opportunities for more fame, so just about anything Bono chooses to do could attract attention. He could take up race-car driving. He could throw the world’s largest, most lavish CD-release party. He could allow a risquée home video of him and the missus to “accidentally” surface. All of these things would attract attention, put him in the limelight, maybe stroke his ego. If, instead, he chooses to grab the limelight by, you know, at least trying to do something good for the world, it seems churlish — and foolish — to criticize him for it.

[Thanks to Dominic for pointing out the Red/Google link.]

Students & scholars of business ethics must have all arched their eyebrows in unison recently, as it was announced recently that the FDA (in the U.S.) and Health Canada had both decided to permit — for the first time since the early 1990s — the marketing of silicone breast implants. The announcement is noteworthy in part because the breast implant story is one of the classic business ethics case studies.

During the 1980s and 1990’s, the implants were accused of leaking and causing a range of ailments (including cancer, autoimmune disease, arthritis, etc); and the makers of the implants were accused of knowing about it and of ignoring the evidence in the name of profit. The story involves a complicated mix of pathos, controverted science, women’s health, and profits. To many, it seemed like a clear case of a corporation putting profits ahead of health. But there also seem to be serious doubts about the scientific validity of the safety concerns. See, for example, this NY Times story from 1999 about a report from the Institute of Medicine: “An independent panel of 13 scientists convened by the Institute of Medicine at the request of Congress has concluded that silicone breast implants do not cause any major diseases.”

Still, the nature of the product involved is bound to leave many with doubts about the ethics of marketing it. Set aside, for now, questions about the sale of a product which, when used for cosmetic (as opposed to reconstructive) purposes, may contribute to perpetuating unhealthy ideals of female beauty. Feminist concerns aside, just consider that cosmetic breast implants are not exactly a life-saving pharmaceutical. We might (might!) interpret the science generously when the product in question is going to save lives. Most powerful pharmaceuticals come with risks, but in most cases we hope the risks are worth it. How much risk does there really have to be in order to cast doubt upon the sale of bigger boobs?

Here’s last week’s story, from the NY Times: The Return of Silicone Breast Implants

The silicone implants were largely banned in 1992 because the manufacturers could not prove they were safe and effective after health concerns arose. A barrage of lawsuits drove the main manufacturer into bankruptcy and led to payments worth billions of dollars to women who said they were harmed. But over the years a series of assessments concluded that the main fears were overblown. The implants did not appear to cause such major diseases as cancer, rheumatoid arthritis, immunological diseases or neurological problems.

That does not mean they are risk free. In approving the silicone implants made by two companies, the F.D.A. said simply that it had “reasonable assurance” that the devices were safe and effective, not ironclad proof. It approved the devices for cosmetic breast augmentation in women age 22 and older and for breast reconstruction in women of all ages whose breasts have been disfigured or removed for medical reasons. But it heaped on enough caveats to give women ample reason to pause before leaping into cosmetic breast surgery.

(Dow Corning, the biggest manufacturer of implants, left the business under a cloud of controversy in 1992, as did Bristol-Myers Squibb and Bioplasty. The companies who sought, and just received, FDA and Health Canada approval, are called Mentor and Allergan.)

Further Resources:

• Here’s a 1994 story about the orginal Dow case, by Andrew W. Singer, from when the case was still fresh.
• Here’s a timeline of the breast implant saga from Frontline (through 1999)
• Here’s Allergan’s press release about Health Canada’s recent decision.
• Here’s information on the decision to license silicone breast implants, from Health Canada.
• See also Marcia Angell’s 1997 book, Science on Trial: The Clash of Medical Evidence and the Law in the Breast Implant Case

[Note: it took forever to find the image above for use in this blog entry. Apparently, googling the term “breast implants” mostly doesn’t get you clinical images of medical devices. It gets you pictures of Pam Anderson. Go figure.]

“Buy Nothing Day” is a silly idea. I mean, cute…but silly.

In case you haven’t heard of it, “Buy Nothing Day” is the day when we’re all supposed to rebell, we’re supposed to stick it to the Man by not buying anything. ‘Cause after all, that’s what the Man, the System, the Capitalist Machine wants.

It always seemed silly to me. My reasoning was simply that, look, if I don’t buy that new CD today, I’m just going to buy it tomorrow. And the symbolic significance of a November 24 dip in retail sales is pretty effectively blunted by the corresponding — and inevitable — rise in sales on the 25th.

My friend Andrew Potter, co-author of The Rebell Sell gives a much more elegant argument in this really good interview, here.

…the gist of it is that it makes no more sense to talk about Buy Nothing Day in the absence of “Earn Nothing Day”, than it would be to talk about there being a surplus of heads over tails in the coin economy. They’re two sides of the same thing. And so our argument is you might as well call Buy Nothing Day, “Earn Nothing Day”, but that doesn’t have the same pleasantly cool ring to it.

You can get a fuller version of the anti-Buy-Nothing-Day argument by buying a copy of The Rebell Sell (which sells in the U.S. under the title Nation of Rebels).

So, my advice on Buy Nothing Day: go buy a book.

p.s. the contests from Tuesday and Wednesday are still open….