The Business Ethics Blog

So, thrill-seeking billionaire Richard Branson has decided to donate a huge chunk of money (over the next 10 years) to fight climate change.
Here’s the story, from Forbes: Branson’s $3 Billion Donation

…Branson announced that he’ll hand over all profits from his airline and train business to research and develop renewable-energy initiatives. What’s that mean? Branson estimates he’ll end up donating $3 billion over ten years.

Accoding to the BBC,

The funds will be invested in schemes to develop new renewable energy technologies, through an investment unit called Virgin Fuels.

Branson’s espoused reason for this? (From Forbes…)

I’ve got children; hopefully I’ll have grandchildren. Everything I’ve read about the world shows we need to reinvest in new sources of fuel. I’m in a position to do something.

Sounds like a nice bit of philanthropy. Now, there is a bit of a catch. Branson isn’t just giving this money to charity. He’s planning on investing it in companies seeking to develop cleaner fuels, renewable sources of energy, etc.

Branson is quoted byABC News:

Obviously what we hope is to generate profit from that so we can then carry on reinvesting it and building a powerful company, which can invest … in more fuels

OK, cynics: ready, set, GO!

“Ohhhhh,” quoth the cynic, “he’s not actually giving money away, he’s just investing it in hopes of making more money!”

But wait.

Will Branson get some press for this? Sure.
Will Branson’s ego get stroked? Of course.
Will he profit from his investment? Who knows. Maybe. It’s a gamble.

The key, I think, is this: Branson clearly has some cash at his disposal. (And by “some”, I mean “lots of.”) He can invest it in lots of things. He can invest it in Exxon (which would be a much safer investment). Or in the tobacco industry. Or in expanding his mansion. Or in solid-gold toilets for his private jet(s). Intstead, he’s decided to invest a huge chunk of change in something worthwhile.
So, is Branson going to get praised just as if he were handing money over directly to some charity? I sure hope so.

The language of “corporate citizenship” is pretty common these days. My friends Wayne Norman and Pierre-Yves Néron (at the University of Montreal) have been doing good work examining the ups and downs of applying the political vocabulary of citizenship to the artificial entities known as corporations.

In light of this, I found the following story pretty interesting:
Wal-Mart strides into election fray

Wal-Mart, the nation’s largest employer, is planning to launch a voter registration and education campaign this fall targeted at its 1.3 million employees in an effort to combat growing criticism from Democrats and labor unions.

By doing so, the world’s largest retailer is striding into the national political arena, which until this election cycle it has taken pains to avoid.

Fantastic, huh? A major corporation working hard to make sure its employers vote (in an era where voter turnout in many democracies is pretty pathetic). That’s good, right? Promoting voting, and other forms of legitimate political engagement, has to be a central virtue of citizenship. But wait, this is a big corporation, flexing its muscles in the political realm. That’s bad, right? Uh-oh! Lots of people get uncomfortable — understandably — when corporations (and their deep pockets) get too involved in politics. Well, it’s certainly food for thought.

As Wayne and Pierre-Yves argue, in a paper they presented at the Society for Business Ethics meeting in Atlanta last month…

What a normative theory of corporate citizenship needs…is a framework for deciding what sorts of political activities and relations with government regulators are appropriate or inappropriate, permissible or impermissible, obligatory or forbidden for corporations….

(p.s. Some people say Enron is the best thing that ever happened to Business Ethics, as an academic discipline, on the grounds that it did a lot to bring the importance of business ethics into the media spotlight, and made it harder for dinosaur colleagues in certain business schools to continue doubting the significance of ethical issues in business. I think Wal-Mart has done more for Business Ethics than Enron did, precisely because Wal-Mart presents so many ambiguities. Enron is the hard sell. But Wal-Mart is so much more thought-provoking.)

Over at the Rebel Sell blog, Andrew has a nice commentary on a NY Times story about the battle over standards for organic foods. Wal-Mart is (again, still) being accused of selling “organic” food (in this case, milk) that doesn’t meet the standards for real organic food.

Andrew’s response to one critic’s concern that feeding cows grain — even organic grain — isn’t natural? This:

Natural behaviour? Cows aren’t natural entities. Like dogs, they’re completely artificial. They’re basically living meat sculptures, shaped by humans, for human purposes, over thousands of years. Besides, who cares whether what they eat is part of their natural behaviour? You’re going to drink their milk. Once you’ve decided that you’re willing to swallow whatever comes out of a cow’s udder, you’ve pretty much abandoned any high ground on the “natural behaviour” front.

Seems to me the obvious pop-cultural touchstone for the un-naturalness of cow’s milk is comedian Tom Green’s famous stunt, drinking directly from a cow’s teat. (I’m sure Green wasn’t the first to do this for its shock value, but he did kinda perfect it.) Green’s shtick is funny precisely because it plays on our own visceral reaction to the un-natural act of drinking cow milk.

So, just what is the debate over? At heart, it’s a debate over “the principles” of organic agriculture. Which principles are those? Depends who you ask. Given that, as far as I know, there’s currently no evidence that organic anything is any safer for human consumption than non-organic equivalents, debates over standards pretty much have to come down to debates like the one Andrew justly mocks. Debates over which style of organic farming is “more natural” have more in common with disputes over interpretation of religious texts and debates over whether a particular transitional painting is best seen as part of an earlier, or instead a later, artistic era, than they do with debates over (say) standards for garment-industry labour. (I don’t see any reference in the NYT story to animal welfare. Is that one of the “organic” principles? That’s quite a stretch, I would think. I care about animal welfare, but isn’t that a separate issue?)

What it comes down to, I suspect, is that Wal-Mart has figured out which aspects of “traditional” organic agriculture consumers (or at least, enough consumers), actually care about, which is absence of pesticides and growth hormones. Wal-Mart will capitalize on the fact that their average shopper does not care — probably never will care — about whether the diet the milk-cow ate or the environment in which it was raised was “natural.” Even if there’s no concrete evidence that organic foods are healthier, that’s what most consumers want from it, not good karma.

Things are not getting any better at Hewlett Packard. (The story is about allegations that HP used unethical, perhaps illegal, methods to determine who on their board was leaking information to the press. See my earlier posting about this.)
From today’s NY Times:
Hewlett Review Is Said to Detail Deeper Spying

A couple bits worth noting from the NY Times story:

Hewlett-Packard has said that as a public company, it had a responsibility to stop unauthorized disclosures.

Note the use (appropriation?) of the language of ethics, here. HP claims to have had a responsibility — an ethical or legal duty — to stop the unauthorized disclosures. Now, that might well be true. In fact, it probably is true. But such an obligation clearly does not immediately imply a right to meet that obligation by any means necessary. (Interestingly, little of the coverage of this story has had much to say about the actions of George A. Keyworth II, the board member eventually found to have been the source of the leaks. Were his actions unethical? Illegal? A serious failure of governance? A breach of fiduciary duties? Now, two wrongs don’t make a right — even if Keyworth’s actions were inappropriate, that doesn’t make HP’s investigative measures justified — but I for one would like to know more about standards for board confidentiality.)

This is also pretty interesting:

The account of those briefed on Hewlett-Packard’s review of the matter sheds new light on the scope and timing of the investigative methods, establishing that invasive and possibly illegal techniques were used far earlier than previously known and that the company’s chief ethics officer was among those providing supervision. [empahsis added]

The Times names Kevin Hunsaker as HP’s senior counsel and “director of ethics.” I don’t know whether “director of ethics” is the same as “chief ethics officer”. I checked HP’s ethics page, and it doesn’t seem to say who’s in charge. The search tool on HP’s website also turns up nothing for the name “Hunsaker.” Is this guy a ghost? Or has the Times mis-spelled his name (doubtful). If anyone can clarify this for me, let me know.

For further reading:
Governance & Ethics at HP

Here’s the “other shoe dropping.”

Yesterday I posted about exploitative videos, including the Girls Gone Wild Series. I felt a little conflicted about that posting. On one hand, it was a bit like shooting fish in a barrel: you don’t need a philosophy professor to tell you that selling videos of drunking co-eds flashing the camera is not exactly the height of virtuous business. On the other hand, it’s not like they’re snuff videos or anything.

A little more digging around on the internet proved disturbing. I found two stories from reputable sources, which together suggest that the dude behind Girls Gone Wild — Joe Francis — is more than just a low-level creep.

Dispatches From Girls Gone Wild, by Ariel Levy for Slate magazine.
‘Baby, Give Me a Kiss’, by Claire Hoffman for the L.A. Times’ West magazine.

(See especially Hoffman’s piece, which gives a first-hand account of an assault, and a second-hand account of a rape.)

Two stories popped up this week involving people getting into legal trouble over the exploitative videos they sell.

One story, on CBC Radio’s The Current 2 days ago, was about so-called “bumfight” videos…videos that feature homeless people either being payed to fight each other, or engaging in other dangerous and/or degrading behaviour.
According to the on-line synopsis of the show,

There are few people as vulnerable as the homeless, because many are rendered that way due to addiction and mental illness. That’s why our first story is so shocking. It’s about a video series that shows homeless people being beaten, tied up, thrown down stairwells, and goaded into bloody fist-fights and stunts. It’s called Bumfights—available for rent in some video stores in Canada, and on the internet. In the first six months of operation, back in 2002, the producers generated more than half-a million dollars in sales.

The good news:

In June, 2003, several producers…pleaded guilty to staging an illegal fight for their videos. Last year McPherson and another producer were sentenced to six months in jail for failing to perform their community service.

Unfortunately: “Meanwhile, the company continues to produce new footage.”

(Question: why are bumfight videos so much more awful & exploitative than the Bumvertising that I blogged about back in December? Is it just the danger & violence? Or is it something else?)

The other story, which popped up on various news sources this week, is about the Girls Gone Wild series of videos.
Here’s one version of the story: ‘Girls Gone Wild’ Producer Pleads Guilty To Exploiting Minors

Joe Francis and the Santa Monica-based company he built on soft-core “Girls Gone Wild” videos has agreed to pay $2.1 million in fines after pleading guilty to violating laws designed to prevent the sexual exploitation of children.
Under the terms of a deal with the Justice Department, Francis agreed to personally pay a $500,000 fine to settle charges in Los Angeles that he failed to keep records of the ages and identities of the women who appeared in his films, the Los Angeles Times reported.
As a result, footage of minors engaging in sexually explicit conduct appeared in at least two DVDs he released, Francis said in a statement reported by The Times.

The interesting thing here is that Francis & co didn’t get in trouble for producing trashy, exploitative, demeaning videos. They got in trouble for poor bookkeeping. This serves as a pretty decent illustration of the distinction between ethics & the law. If you make videos of drunk women baring their breasts and then make a lot of money selling these videos, that is at least arguably unethical (see below), but it’s not illegal (in most places, anyway.) But if some of those “women” are underaged (i.e., under the legal age of consent), then (by definition) you’ve done something illegal. Similarly, you’ve broken the law if you simply fail to gather (and retain) evidence that the women are old enough: this is one of those cases where the legal onus is reversed…film-makers are required (in the U.S. — I don’t know about other juristictions) to have proof that they have not committed the crime of child exploitation.

Now, why do I say the videos are “arguably” unethical? Well, on one hand, when the women involved are “old enough,” then this looks like a voluntary commercial transaction: the women get t-shirts, free beer, fame, whatever. And in return the movie producers get images of bare breasts, girls kissing girls, etc. On the other hand, such videos are pretty demeaning to women. Showing women getting drunk & lifting their shirts is pretty straightforward objectification. Then again, you might ask: who’s responsible for the demeaning, here? Is it the women doing these things, or the guys selling the videos? But wait, then there’s the fact that most of the women involved are apparently drunk (see above re free beer), which renders their consent at least somewhat suspect. See what I mean? So, I’ll settle for “arguably” unethical. But even if you don’t think making & selling such videos is unethical: man, what a scuzzy way to make a living. Get a life, dudes.

(By the way, in case you were wondering, yes the Girls Gone Wild videos — some of them, anyway — are available via Amazon.com, but no I’m not going to link to them!)

Patricia Dunn is getting the boot as Chairwoman of Hewlett-Packard’s Board. And then there’s the issue of criminal charges…
California AG may indict within a week in HP case

What’s this all about?

HP, the storied technology firm founded in 1939 by William Hewlett and David Packard, has been enveloped in a scandal ever since it disclosed last week that an outside investigator may have used illegal methods to spy on some directors and reporters as the company probed leaks of sensitive corporate information.

According to Dunn:

“Unfortunately, the investigation, which was conducted with third parties, included certain inappropriate techniques. These went beyond what we understood them to be, and I apologize that they were employed.”

What were those “inappropriate techniques?” The technical term, we are told, is “Pretexting.” As in, private investigators acquired the phone records of the directors and reporters targeted in the probe by calling up phone companies on the “pretext” that they (the P.I.’s) were those directors & reporters.

As Wired put it,

“Pretexting is a method whereby a third party calls a phone company and poses as a specific customer of the phone company in order to request records of the customer’s phone calls. Such records generally contain the phone numbers of people called, the date and time of the call and the duration of the conversation.”

“Pretexting,” huh? For anyone confused by this sophisticated jargon, let me explain: in layman’s terms, it’s called “lying.”

From on-line news source The Raw Story: Labour campaigners accuse Disney of using sweatshop factories

Labour rights campaigners have protested outside Hong Kong’s Disney theme park accusing Disney of using sweatshop factories in China, a news report said Monday. Workers at three factories making Disney merchandise in China’s southern Guangdong province are being paid below the minimum wage and forced to work up to 14 hours a day, according to the protestors.

Nothing really “new”, here. Disney has faced this kind of criticism for years, as have many other companies. Monitoring labour practices throughout a supply-chain is no trivial task, though clearly some companies do better at it than others. Some companies, such as Nike, were notorious offenders back in the early days of the anti-sweatshop movement but have turned themselves into model citizens. Disney is generally not thought of as being among the success stories.

What should managers of multinational corporations learn from stories like this one? I guess one lesson is that conditions in your factories will be monitored, either by you or by someone else. Wouldn’t it be better for you to monitor & manage your own supply chain, rather than waiting for an NGO to do it for you?

Related Links:
From the China CSR website: Hong Kong Disneyland In Middle Of Sweatshop Protest
The Maquila Solidarity Network’s Disney page.
Here’s my review of A Decent Factory, a film about the practical and ethical complexities of monitoring supply-chain labour standards.

And in related news…Disney tops BusinessWeek list. Interesting, huh?

Relevant Books:
Rising above Sweatshops: Innovative Approaches to Global Labor Challenges
Students Against Sweatshops: The Making of a Movement
Slaves to Fashion: Poverty and Abuse in the New Sweatshops
Disney War

Many of you will already be aware of the problems with BP’s corroded pipelines (at its Prudhoe Bay oilfield in Alaska). This week, senior execs at BP accepted responsibility for the troubles while testifying before the U.S. Congress’s energy and commerce committee.

Here’s the story, from The Guardian: Contrite BP bosses admit blame for Alaskan oil leaks

Senior BP executives owned up yesterday to “unacceptable” operating failures as they faced a barrage of attacks from US politicians over the company’s leaking pipelines in the Alaskan wilderness.
The British oil company’s US president, Robert Malone, and its head of Alaskan operations, Steve Marshall, ate humble pie in an appearance before members of Congress’s energy and commerce committee. “We have fallen short of the high standards we hold for ourselves,” Mr Malone said. “BP America’s recent operating failures are unacceptable.

I hope someone is out there writing this up as a full-length business ethics case-study. It’s got plenty of the classic elements:

• “…ignoring warning signs…”
• “…cutting back on maintenance…”
• employees who expressed “…fear of intimidation and harassment if they spoke out…”
• and significant “…staff turnover and a poor working culture…”

Uh-huh. Pretty disappointing, given that BP (“British Petroleum”) has lately been rebranding itself as a “green” company, in part by claiming that “BP” stands for “Beyond Petroleum.”

So, the discussion question of the day: are BP’s corroded pipeline more, or less, forgivable because of its recent attempts to rebrand itself as environmentally friendly?

See also BP’s Environment & Society page.

Check out this current item from Wired, by Bruce Schneier, “Quickest Patch Ever.” The story is mirrored on Schneier’s own blog under the title, Microsoft and FairUse4WM.
It’s a story about Microsoft’s sometimes-slothful and sometimes-speedy response to security gaps in its software.

Microsoft has suffered plenty of criticism in this regard. Why is that? According to Schneier:

…no software vendor likes to issue patches. Every patch is a public admission that the company made a mistake. Moreover, the process diverts engineering resources from new development. Patches annoy users by making them update their software, and piss them off even more if the update doesn’t work properly.
For the vendor, there’s an economic balancing act: how much more will your users be annoyed by unpatched software than they will be by the patch, and is that reduction in annoyance worth the cost of patching?

Microsoft’s usual practice is to gather up & analyse reports of problems, and then to issue one “mega-patch” on the second Tuesday of each month.

Why? Because it makes near-term financial sense to Microsoft. The company is not a public charity, and if the internet suffers, or if computers are compromised en masse, the economic impact on Microsoft is still minimal.
Microsoft is in the business of making money, and keeping users secure by patching its software is only incidental to that goal.

The story gets its title, and its point, from the fact that when Microsoft recently discovered a security gap in its own digital rights management (i.e., anti-piracy) software, PlaysForSure, it was able to issue a patch three days later. So, a slothful response represents a choice on the part of Microsoft, not an inevitability. This is just one example of a larger phenomenon, namely the huge variability in corporate customer service. Companies often can get away with customer service that is, from a customer’s point of view, pretty shabby. This presents companies with an ethical choice.

A few points:
1) This example serves as a pretty decent reply to skeptics who deny the need for, or relevance of, ethics in business. The decision whether, and how soon, to respond to security gaps clearly effects the wellbeing of consumers. Security gaps represent risks of data loss, data corruption, identity theft, etc.
2) This case also serves as a good response to anyone who thinks that normative issues in business can be exhaustively dealt with through regulation, or through the courts. Does anyone actually think that the best way to resolve cases of unsatisfactory customer service is to wait until enough customers are angry enough to launch a lawsuit?
3) Finally, this example puts pressure on the idea that corporate managers’ only obligation is to maximize profit (and to avoid breaking the law). It might be profit maximizing for Microsoft to issue security patches, say, every 2nd month. But it would expose customers to (lemme do the math, here) roughly twice as much risk as their current practice does. Exposing people to additional risk (which for some will translate into additional harm) is a bad thing, right?

Related posting:
See also my previous posting on customer service at Dell.
[Thanks to Bryn for the heads-up.]