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Monday, October 29, 2012

Strategic CSR - Tobacco

I am still processing the news, contained in the article in the url below, that tobacco companies in Australia will no longer be able to see their products with their regular, brand-oriented packaging. Instead, they will have to display extremely graphic photos and statements in large bloc lettering stating how “Smoking Causes Lung Cancer”:

One of the world’s toughest cigarette labeling laws is set to take effect in Australia in December … . Graphic images of mouth ulcers, cancerous lungs and gangrenous limbs will dominate the front of all cigarette packages sold in the country, and brand logos will be banned, after a landmark ruling by the High Court of Australia determined that the new laws were consistent with the Constitution and did not violate the rights of Big Tobacco.

I find this decision fascinating on two levels: First, talk about societal indictment of a particular practice!

Australian officials welcomed the ruling, which they hope will combine with some of the highest taxes in the world on tobacco to further drive down smoking rates.

Second, for the businesses and executives who run them, it must be increasingly difficult to justify to themselves that they are adding social value. In the lawsuit, British American Tobacco, Imperial Tobacco, Japan Tobacco, and Philip Morris Australia had all argued that new law was an infringement on their intellectual property rights—i.e., their right to sell their products under their established brands. Part of me is amazed that a government would be willing to go so far (the photos are extremely graphic), although part of me is also a little shocked at the infringement of a business’ right to operate:

The Australian decision on the suit filed by the multinational tobacco companies was the last major legal hurdle to implementing the new rules, which require health warnings to cover 75 percent of the front of cigarette packages and 90 percent of the back starting Dec. 1. Brand logos and colorful designs will be banned, with only a small space remaining where the brand name and variant of the cigarette can be printed. Packages will be required to be a uniform shade of olive green.

It will be interesting to see how other governments respond:

The European Union already bans cigarette advertising on billboards, television, radio, print media and the Web. The Union also prohibits tobacco companies from sponsoring cross-border events. National governments can go further, and some member states have banned tobacco companies from distributing promotional merchandise like ashtrays and umbrellas.

There is evidence to suggest the strict tobacco laws already in place in Australia have already made a difference:

Partly as a result, smoking rates in Australia have declined in recent years and stood at 16.4 percent among adult men and 13.9 percent among adult women as of 2010, according to figures from the Australian Cancer Council. In the United States, by comparison, most recent data from the Centers for Disease Control show the smoking rate is 21.5 percent among adult men and 17.3 percent for adult women.

Contrast this response, however, with the response from U.S. courts in the article in the second url below:

A U.S. appeals court ruled on Friday that cigarette companies do not need to comply with new federal rules requiring their products to show graphic warning images, such as of a man exhaling smoke through a hole in his throat. The 2-1 decision by a court in Washington, D.C., contradicts a ruling in a similar case by another court in March, setting up the possibility that the U.S. Supreme Court will weigh in on the dispute.

Although the images are nowhere near as graphic as the ones being imposed on firms in Australia, the logic behind the Court’s decision was that the U.S. government’s demands infringed the corporations’ right to free speech:

’This case raises novel questions about the scope of the government's authority to force the manufacturer of a product to go beyond making purely factual and accurate commercial disclosures and undermine its own economic interest -- in this case, by making 'every single pack of cigarettes in the country mini billboard' for the government's anti-smoking message,’ wrote Judge Janice Rogers Brown of the U.S. Court of Appeals for the District of Columbia Circuit.

Take care

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Australian High Court Upholds Tobacco Rules
By Matt Siegel
August 16, 2012
The New York Times
Late Edition – Final

Court: Cigarette companies don’t have to show graphic warning labels
August 24, 2012