Strategic CSR - Mandatory vs. Voluntary

The article in the url below raises an important issue in the CSR debate, although it does not do it directly and does it in a context not related to CSR. Applied to a discussion about CSR, however, the article is instructive—Can and/or should firms be compelled to behavior more responsibly? Specifically, the article focuses on the absence of law compelling people to help others in distress. Even when the risk and cost to the person in a position to help is low, the social consequences of not helping are high:

“‘The expert swimmer, with a boat and a rope at hand, who sees another drowning before his eyes, is not required to do anything at all about it, but may sit on the dock, smoke his cigarette, and watch the man drown.’”

What is worse is that:

“If you voluntarily try to rescue someone, you may be liable if you then stop and the victim is harmed.”

The article explains the evolution of this situation in language commonly used to describe the laissez faire approach to capitalism often promulgated in the U.S.:

“The ‘no duty’ rule can be traced to the spirit of rugged capitalist individualism, the Darwinist idea that the common good is advanced through the struggles of selfish individuals.”

As such, the current law is defended in terms of its defining goals:

“One defense of the no-duty rule is that common law exists to prevent people from harming one another, not to compel people to help one another.”

A big part of the core argument behind Strategic CSR is a debate about whether more socially responsible behavior is best encouraged via mandated or voluntary actions. The resolution we settled on is that firms are more likely to implement CSR genuinely and substantively if they are convinced it is in their self-interest to do to (hence the focus on medium- to long-term stakeholder value). Central to this argument is the belief that firms are more likely to avoid or try and circumvent legislation if they are compelled to act. This debate is not fully resolved in my mind, however, as there are many grey areas in between the extremes (e.g., the rise of behavioral economics, see: Strategic CSR – Nudge) and the article below taps into these internal debates:

“A duty to help would not require bystanders to endanger themselves or provide help beyond their abilities; it could simply require warning someone of imminent danger or calling 911. … it would require us to accept our fundamental moral duty to help those in grave peril.”

The concept of moral duty is difficult to quantify because morals and values are subjective. As such, who gets to decide which morals/values apply and in what situations? More importantly, if I disagree with those morals/values, why should I be forced to comply with them? In spite of these very valid questions, however, asking them does not feel very satisfactory. I am currently drafting the third edition to the book and have made a more conscious effort to move beyond a self-interest argument alone, reemphasizing the importance of a CSR Filter as integral to the strategic process (a central argument in the second edition), but strengthening the need to embed that whole process within a framework of guiding values that set the parameters of decisions and guide all employees through the construction of the firm’s strategy, as well as the day-to-day implementation via operations. The work of John Mackey (Whole Foods Market) on conscious capitalism (http://consciouscapitalism.org/) is highly complementary to the argument we present in Strategic CSR and was instructive.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Can the Law Make Us Be Decent?

By Jay Sterling Silver

November 7, 2012

The New York Times

Late Edition – Final

A25

http://www.nytimes.com/2012/11/07/opinion/can-the-law-make-bad-samaritans-be-decent.html

Strategic CSR - Robots

The article in the url below raises some interesting and challenging questions at the intersection of technology and ethics. In particular, it examines how machines are increasingly becoming a part of how we alleviate various human conditions and, as such, how the law needs to recognize and accommodate these changes. For example:

"Is a prosthetic legally part of your body? When is it appropriate to amputate a limb and replace it with a robotic one? What are the legal rights of a person with 'locked in' syndrome who communicates via a brain-computer interface? Do brain implants and body-enhancement devices require changes to the definition of disability?"

In response to rapidly evolving technology, a research project has been established in Europe to address some of these questions and is due to report by 2014:

"The RoboLaw project is an effort to anticipate such quandaries and work out where and how legal frameworks might need to be changed as the technology of bionics and neural interfaces improves. … it brings together experts from engineering, law, regulation, philosophy and human enhancement."

But, these questions are not part of some academic exercise that politicians will have to go through in crafting future laws, they are real problems that judges and companies are dealing with in court today:

"If you are dependent on a robotic wheelchair for mobility, for example, does the wheelchair count as part of your body? Linda MacDonald Glenn, an American lawyer and bioethicist, thinks it does. Ms Glenn (who is not involved in the RoboLaw project) persuaded an initially sceptical insurance firm that a 'mobility assistance device' damaged by airline staff was more than her client's personal property, it was an extension of his physical body. The airline settled out of court."

Even more conceptually challenging is dealing with questions around how robotics and technology alter our understanding of what it means to be human:

"To what extent is [our humanity] defined by having a body of a particular shape, or by cultural factors? Technologies such as exoskeletons that provide increased strength and implants that improve memory will put both definitions under pressure. Human-enhancement researchers … are considering future technologies, such as embedded devices that enhance the senses or add new ones, and implants that improve memory or allow messages to be sent or devices to be controlled using thought alone. Such devices might initially be used to overcome disability, but could also be used to augment and increase the performance of the able-bodied."

The fields generated at the intersection of technology and ethics (e.g., bioethics, nanotechnology) are a minefield that we are only just beginning to wrap our minds around. And, as usual, the market is far ahead of the law, which is struggling to keep pace with both the growing complexity and speed of change.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

You, robot?

September 1, 2012

The Economist Technology Quarterly

5

http://www.economist.com/node/21560986

Strategic CSR - 2012

As the article in the url below reminds us, when there are so many reasons to criticize, you can sometimes lose sight of all the good things that are happening in CSR:

“It’s easy, amid the daily churn of downer headlines, to lose sight of the good stuff, the developments that signifies a marker for progress.”

With this in mind, here are a selection of the fifteen highlights of the best that happened in terms of sustainability in 2012 (according to GreenBiz.com):

• Marks & Spencer announced that it had sold one billion sustainable products. Over a third of the items it sells now boast some form of sustainability credential.
• The U.K. government said it will introduce mandatory carbon reporting rules requiring around 1,800 of the country's largest listed companies to report annually on their greenhouse gas emissions.
• Whole Foods became the first major North American retailer to stop selling unsustainable, or red-listed, seafood, a determination by the Monterey Bay Aquarium and the Blue Ocean Institute that the fish species is being overfished or that current fishing methods harm non-target marine life or habitats. 
• Nike’s adopted a waterless dyeing technology that uses recycled carbon dioxide to color synthetic textiles. The process could eliminate the use of countless billions of gallons of polluted discharges into waterways near manufacturing plants in Asia.
• Puma published a detailed environmental profit & loss statement for 2010, valuing the costs to the planet incurred by its operations across its supply chain.

This list reminds me again that for-profit firms are central to the kind of society that we want to construct. They are the best way that we have found to organize and distribute scarce resources in the most efficient and socially constructive way. For-profit firms need to be a big part of the solution, which is why the business school is such an important part of a university education.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

2012 was the year that …

By Joel Makower

December 31, 2012

GreenBiz.com

http://www.greenbiz.com/blog/2012/12/31/2012-was-year

Strategic CSR - Conspicuous Virtue

The article in the first url below ties together a few ideas that I have been playing around with for a while now. The first is the primary focus of the article—the concept that unforeseen consequences often undermine the good intentions behind an innovation (see: Strategic CSR – The Jevons Paradox). In this case, the article claims that re-usable shopping bags might be more of a health hazard than an environmental benefit:

“Recent years have seen a raft of bans put in place on plastic bags—Los Angeles and San Francisco both have them, as does China. In their paper, University of Pennsylvania economist Jonathan Klick and the lawyer Joshua Wright decided to look at emergency room admissions for illnesses related to food-borne bacteria before and after San Francisco County imposed its ban in 2007. They found that the problem had increased by more than one fourth, and that deaths had risen by the same amount.”

The cause of the problem is that the bags are re-used and, therefore not sterile/clean, in the way that new plastic or paper bags are clean:

“The issue, it seems, is that the vast majority of shoppers who re-use bags never clean them. … Most people also don’t pay close attention to whether they’re using a bag to carry mesclun greens and apples that they used a week earlier to tote chicken breasts or other raw meat—or for that matter, a dog leash and their soccer cleats.”

The second idea is only briefly referenced at the end of the article—the concept of conspicuous virtue:

“The inconvenience of reusable grocery bags is what give them their power as symbols of green virtue, along with reusable water bottles and hybrid cars.”

The author introduces this point to suggest that re-usable bags will lose their status once their health effects are broadly understood. I find this idea that perception (rather than functional value) drives the consumption of specific goods fascinating. I also suspect it is more widespread throughout the CSR/LOHAS/sustainability community than many of us are willing to admit.

I used to think something similar when I lived in Austin, TX. Shopping at the main Whole Foods store there (Whole Foods’ HQ is in Austin and the store beneath the HQ is the firm’s show store where the firm tries out new innovations before rolling them out firm-wide). Watching a lot of shoppers there, it was hard not to conclude that the value of being seen shopping in Whole Foods was almost as high to consumers as the value of the products they were buying.

This idea also has parallels with what economists call a Veblen good—“a product that is valued and desirable simply for being more expensive.” The 2007 article in the second url below applies this idea to help explain the consumption of CSR goods. The author illustrates his point initially in terms of the Livestrong yellow armband craze that had been sweeping the nation/world at the time:

“More than 60 million have sold since 2004, one of the greatest successes in nonprofit fund-raising history, with the proceeds going to cancer-related causes. No doubt some wear the bands in solidarity, or for inspiration -- but, that said, the wristband conceit was simply ingenious. It allowed people to make a show of their virtue. They could give to a good cause, and they could advertise their caring to everyone else.”

The idea of a Veblen good was introduced by Thorstein Veblen in 1899 in a sociological paper titled ‘Theory of the Leisure Class,’ which introduced the idea of conspicuous consumption. The author in the second article twists this concept to highlight the idea of what he calls conspicuous virtue:

“Conspicuous consumption stays with us today. But increasingly, it seems to me, many consumers are not seeking an outright demonstration of wealth. Instead, they consume to demonstrate their innate goodness. They spend not to suggest the deepness of their pockets but the deepness of their hearts. We inhabit, to update Veblen, an age of conspicuous virtue.”

Conspicuous virtue arises when consumers purchase “virtuous goods,” in part, to demonstrate their individual virtuousness, rather than for the instrumental value of the goods themselves:

“They are virtuous goods. To consume a virtuous good is to make a statement. It is not only to do right, whatever that might mean, but to announce that you are doing so.”

And, finally, I also see parallels with the idea that the level of visibility of something largely determines our reaction to it, and that this phenomenon also has an important application to the debate around sustainability. This was most forcibly brought how during the Deepwater Horizon oil spill, which obviously caused a strong negative reaction, when there is a much more serious and long-lasting form of pollution in the Gulf of Mexico that is routinely ignored. It is caused by the phosphate/nitrogen run-off from fertilizers used in farms all along the Mississippi river. The excess runs off into the river and flows into the Gulf, causing a “dead zone” that is much bigger than the Deepwater Horizon oil spill ever was, but, because we cannot see it, does not cause large complaints. Similarly, we cannot see the build-up of carbon-dioxide (and many other pollutants) in the atmosphere, which I think partially explains, why more people are not more concerned about the problem.

These ideas of visibility and conspicuous consumption driving behavior are interesting, I think, and seem to be equally applicable in relation to CSR issues as elsewhere.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Paper or Plastic (or Deadly Food-Borne Pathogens)?

Drake Bennett

January 15, 2013

Bloomberg Businessweek

http://www.businessweek.com/articles/2013-01-15/paper-or-plastic-or-deadly-food-borne-pathogens

Conspicuous Virtue and the Sustainable Sofa

By Joseph Rago

March 23, 2007

The Wall Street Journal

Late Edition – Final

W13

http://online.wsj.com/article/SB117462054041346510.html

Strategic CSR - Walmart & Nike

The articles in the two urls below (almost exactly a year apart) offer a contrast in responses to similar events. The article in the first url describes how Nike was able to transform negative perceptions about it as a sweatshop into a market opportunity by fully disclosing details about its supply chain:

“In April 2005, Nike surprised the business community by suddenly releasing its global database of nearly 750 factories worldwide. No laws presently require a company to disclose the identity of its factories or suppliers within global supply chains. Yet, between the early 1990s and 2005, Nike went from denying responsibility for inhumane conditions in its factories to leading other companies in full disclosure — a strategic shift that illustrates how a firm can leverage increased transparency to mitigate risk and add value to the business.”

In contrast, the article in the second url below describes an announcement by Walmart last week in reaction to the Bangladeshi factory fire last year, in which 112 workers died, but who were subsequently found to be making clothes for Walmart (according to the firm, without its knowledge):

“Wal-Mart Stores Inc. is warning suppliers that it is adopting a ‘zero tolerance policy’ for violations of its global sourcing standards, and soon plans to immediately sever ties with anyone who subcontracts work to factories without the retailer's knowledge.”

The contrast is interesting in terms of what it says about best-practice CSR principles in building an ethical supply chain. My understanding of best-practice is that firms should audit suppliers on a regular basis, but seek to work with them when problems are identified, rather than dumping them the moment they do something wrong (see also: Strategic CSR – GAP). Given that many problems occur in the supply chain due to firms embedding the wrong kinds of incentives into their relationships with their suppliers (i.e., incentivizing low-cost, fast-turnaround production, which encourages low pay and lots of overtime, even while asking suppliers to sign codes of conduct that promise to do the opposite), suppliers should not necessarily be punished (at least, not immediately) for code of conduct violations. Rather, an open, transparent relationship should be developed where both sides are honest about what they need and can offer. When something goes wrong, the firm should sit down with the supplier and work out a plan of action with realistic goals over a period of months—kind of like the policy Walmart is rejecting with its recent announcement:

“The tougher new policies replace the Bentonville, Ark., retailer's prior ‘three strikes’ approach to policing suppliers, which gave the suppliers three chances to address problems before being terminated.”

Nike now gets this, but Walmart does not. The firm’s new policy is due to take effect on March 1.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Just Do It: How Nike Turned Disclosure into an Opportunity

January 23, 2012

Network for Business Sustainability

http://nbs.net/knowledge/just-do-it-how-nike-turned-disclosure-into-an-opportunity/

Wal-Mart Toughens Supplier Policies

By Shelly Banjo

January 22, 2013

The Wall Street Journal

Late Edition – Final

B1

http://online.wsj.com/article/SB10001424127887323301104578256183164905720.html

Strategic CSR - Bribery

The article in the url below is interesting because it suggests a negative correlation between bribe paying and a firm’s economic performance:

“Companies that bribe their way to contracts under-perform for up to three years before and after winning the work for which the bribe was paid , according to new academic research … conducted by Cambridge University Professor Raghavendra Rau.”

What is also interesting is that the research reveals an interesting relationship between the status of the bribe receiver, the amount of money involved, and the utility of the bribe:

“When high-level government officials are bribed, the value derived from the bribe is close to zero, Rau said. But, conversely paying smaller bribes to lower-level officials is less likely to ensure that a contract is won, according to Rau.”

Relating the bribes to economic performance, Rau found that it is worse performing firms that tend to pay:

“‘From the point of view of society it’s terrible because the worst kind of companies are winning the contracts, and that amounts to a distortion of resource allocation in an economy,’ Rau said.”

The only issue with the data is that they capture actual recorded incidents of bribery and, as such, do not include firms that bribed, but did not get caught. As such, perhaps a more accurate interpretation of the data is that it is the less competent firms that bribe ineffectively, perform poorly, and get caught. There could be a missing variable in the model (incompetent managers) that is really driving the results!

Further details of the study are available on the University of Cambridge’s website: http://www.jbs.cam.ac.uk/media/2012/5400/

Have a good weekend.

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Bribes Provide Companies Few Benefits, Study Finds

By Christopher M. Matthews

November 23, 2012

The Wall Street Journal Blog

http://blogs.wsj.com/corruption-currents/2012/11/23/bribes-provide-companies-few-benefits-study-finds/

Strategic CSR - Human life

What is the value of a human life? From a business standpoint, it depends on a number of factors. One of the most important factors is how much longer you are expected to live. The longer you live, the less valuable your life (or, more accurately, your life insurance policy) to a firm that is willing to bet against that life, for a price. Such “bets” emerged within the insurance industry as “viatical settlements” in the 1980s. The term “viatical” originated from:

“… the Latin word viaticum (making provisions for a journey), and were specifically those policies belonging to people expected to have less than 24 months to live. … the business has continued to grow: Policies with a total face value of around $10 billion were bought and sold [in 2004], according to the Viatical and Life Settlement Association of America.”

As the size of this industry grew, firms began to innovate in terms of the application of this product. An example of a company willing to think progressively on an issue that could have created a lot of negative publicity, ended up with the Prudential being the torchbearer for a practice that quickly became the industry standard:

“An example of [a socially responsible corporate] practice is Prudential Insurance’s introduction, in 1990, of viatical settlements—contracts that allow people with AIDS to tap the death benefits in their life insurance policies to pay for medical and related expenses. The move generated so much goodwill that competing insurers soon offered viatical settlements as well. Very quickly, corporate behavior that had seemed radical became business as usual throughout the insurance industry.”

The article in the url below provides an update on the viatical settlements industry, which is now known as the “life settlement” industry:

“The financial practice originated … as a way to help the terminally ill. In the late 1980s, people infected with AIDS often had little time to live and a great need for money. In response, financial planners established the viatical business. Flyers went up at gay bars and clubs encouraging people to sell their life-insurance policies for quick cash. Some financial planners even trolled hospital wards to find customers.”

It didn’t take long, however, for the financial industry to realize that viatical settlements had a much wider application. In theory, anyone with a life insurance policy whose life was due to be cut short, could make use of life settlements:

“Rebranded and redefined, the life-settlements business grew swiftly, reaching $12 billion in transactions by 2007. The recession has since walloped the industry, as have well-publicized cases of fraud, in which unscrupulous brokers persuaded people to take out life-insurance policies expressly for the purpose of reselling them a couple of years later. Only $3.8 billion worth of policies changed hands in 2010, but insiders hope that the business will ultimately surpass its previous high. There are $18 trillion worth of active life-insurance policies in the United States alone, and very few people even know that they can sell their policies.”

Advocates say that these policies offer a win-win situation for victims, who benefit from an up-front payment at a time when they need it most, but also for investors, who get a healthy return on their initial investment (as long as the recipient does not live too long):

“For potential investors, meanwhile, the pitch is that settlements offer a safe harbor. Let the Dow rise, let the Dow fall; a death payout is an uncorrelated asset whose timing bears almost no connection to the mood swings of the market.”

Ultimately, however, this industry still has some way to go before it can be considered legitimate:

“For all the supposed benefits, settlements still strike many people as creepy. They invert the traditional incentives of life insurance. Insurance companies have always had an interest in you, the policyholder, living as long as possible so that they can collect more premiums. Generally, you also want to live a long time, for obvious reasons. But a settlement means someone hits the jackpot when you die, and the sooner that happens, the more money that person makes.”

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

What’s Your Life Worth? The Strange, Lucrative Market for Other People’s Life-insurance Policies

By James Vlahos

August 12, 2012

The Sunday New York Times

30-35

http://www.nytimes.com/2012/08/12/magazine/are-you-worth-more-dead-than-alive.html

The first quote is from:

By Karen Richardson, ‘Viaticals’ May Draw More Insurers, The Wall Street Journal, May 18, 2005, pC3.

The second quote is from:

Roger Martin, The Virtue Matrix, Harvard Business Review, March 2002, Vol. 80, Issue 3, pp 68-75.

Strategic CSR - Welcome back!

Welcome back to the Strategic CSR Newsletter! The first Newsletter of the Spring semester is below. As always, your comments and ideas are welcome.

The article in the url below contains an entertaining look at the “10 worst business moves of 2012,” as determined by MSN Money:

“Chalk up some of these dumb moves to an election year, when emotions get riled up and people do things they probably shouldn't. But some of these mistakes go right into the obvious pile: Don't have an affair with a subordinate. Don't lie on your résumé.”

While not all related to CSR, what they contain in common is a consistent insensitivity to the needs and concerns of stakeholders, broadly defined. This is the core of the framework that we used to build Strategic CSR and should be the driving concern of all strategy and operations-related decisions taken by firms.

For your amusement and to begin the 2013 CSR Newsletters, therefore, the list features the following firms and their fateful “business decisions”:

• Apple Maps
• Hostess CEO cuts everyone’s pay but his own
• Yahoo! CEO lies on his resume
• Best Buy CEO has affair with a subordinate
• Groupon’s board drama
• J.C. Penney revamps its strategy
• Hallmark’s works birthday card ever
• Denny’s Obamacare surcharge
• Facebook’s IPO
• Wall Street supporting Scott Brown (against Elizabeth Warren)

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

10 worst business moves of 2012

By Kim Peterson

December 24, 2012

MSN Money

http://money.msn.com/investing/10-worst-business-moves-of-2012

Strategic CSR - Organic food

This will be the last CSR Newsletter of the Fall semester. Have a great holiday season and I will see you in 2013!

The article in the url below charts the evolution of the organic food industry in the U.S. from the perspective of one of its founders—Michael Potter, founder of Eden Foods (http://www.edenfoods.com/). The article reports that, in many respects, the terms “organic” and “big food” are becoming synonymous:

“The fact is, organic food has become a wildly lucrative business for Big Food and a premium-price-means-premium-profit section of the grocery store. The industry’s image — contented cows grazing on the green hills of family-owned farms — is mostly pure fantasy. Or rather, pure marketing. Big Food, it turns out, has spawned what might be called Big Organic.”

Many of the small and local brands, which many consumers probably believe remain ‘small and local,’ are now ‘big and remote’:

“Bear Naked, Wholesome & Hearty, Kashi: all three and more actually belong to the cereals giant Kellogg. Naked Juice? That would be PepsiCo of Pepsi and Fritos fame. And behind the pastoral-sounding Walnut Acres, Health Valley and Spectrum Organics is none other than Hain Celestial, once affiliated with Heinz, the grand old name in ketchup. Over the last decade, since federal organic standards have come to the fore, giant agri-food corporations like these and others — Coca-Cola, Cargill, ConAgra, General Mills, Kraft and M&M Mars among them — have gobbled up most of the nation’s organic food industry. Pure, locally produced ingredients from small family farms? Not so much anymore.”

The result of all this consolidation and commercial interest, according to Potter, is the dilution of the meaning associated with the organic label and all the health benefits that he believes stem from good, wholesome food. One example of how the influence of agri-business is affecting the final product is in the compilation of the National Organic Standards Board (http://www.ams.usda.gov/AMSv1.0/NOSB) (increasingly corporate) and the Board’s list of what substances can be included in organic foods and still continue to call the final product ‘organic’ (increasingly long):

“As corporate membership on the board has increased, so, too, has the number of nonorganic materials approved for organic foods on what is called the National List. At first, the list was largely made up of things like baking soda, which is nonorganic but essential to making things like organic bread. Today, more than 250 nonorganic substances are on the list, up from 77 in 2002.”

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Has ‘Organic’ Been Oversized?

By Stephanie Strom

July 8, 2012

The New York Times

Late Edition – Final

BU1

http://www.nytimes.com/2012/07/08/business/organic-food-purists-worry-about-big-companies-influence.html

Strategic CSR - BP

I found the recent BP settlement with the U.S. government regarding the 2010 Deepwater Horizon oil spill in the Gulf of Mexico interesting because of the individual indictments they contained:

“Donald J. Vidrine and Robert Kaluza were the two BP supervisors on board the Deepwater Horizon rig who made the last critical decisions before it exploded. David Rainey was a celebrated BP deepwater explorer who testified to members of Congress about how many barrels of oil were spewing daily in the offshore disaster. Mr. Vidrine, 65, of Lafayette, La., and Mr. Kaluza, 62, of Henderson, Nev., were indicted on Thursday on manslaughter charges in the deaths of 11 fellow workers; Mr. Rainey, 58, of Houston, was accused of making false estimates and charged with obstruction of Congress.”

As the article in the url below indicates, this represents a shift in emphasis. While the prosecution of individuals for wrongdoing in business settings was common up until the 1970s, after Watergate (when companies were found to be using slush funds to bribe foreign government officials, as well as to donate secretly to Nixon’s re-election campaign), Congress began to hold companies responsible for actions committed by individuals on behalf of the organization:

“Legal scholars said that by charging individuals, the government was signaling a return to the practice of prosecuting officers and managers, and not just their companies, in industrial accidents, which was more common in the 1980s and 1990s.”

This focus on the organization was reflected in legislation, such as the Foreign Corrupt Practices Act (see: http://strategiccsr-sage.blogspot.com/search/label/FCPA), and standardized throughout the judicial system in the U.S. via the 1991 Federal Sentencing Guidelines. This has meant that individual culpability has been de-emphasized for the last few decades in favor of punishing the corporation:

“[Jane Barrett, a University of Maryland law professor and former federal prosecutor] noted that it was unusual for the Justice Department to prosecute individual corporate officers in recent years, including in the 2005 BP Texas City refinery explosion that killed 15 workers, where only the company was fined.”

This decision by the government to indict two BP Managers for manslaughter and hold another one in contempt of Congress, therefore, suggests a recognition that, since corporations cannot be thrown in jail, focusing on organizational liability and letting individual perpetrators off-the-hook is an insufficient disincentive to commit harm:

“They are the faces of a renewed effort by the Justice Department to hold executives accountable for their actions. While their lawyers said the men were scapegoats, Attorney General Eric H. Holder Jr. said at a news conference, “I hope that this sends a clear message to those who would engage in this kind of reckless and wanton conduct.””

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

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In BP Indictments, U.S. Shifts to Hold Individuals Accountable

By Clifford Krauss

November 16, 2012

The New York Times

Late Edition – Final

B1

http://www.nytimes.com/2012/11/16/business/energy-environment/in-bp-indictments-us-shifts-to-hold-individuals-accountable.html