BUSINESS WITH A SOUL:
A REEXAMINATION OF WHAT COUNTS IN BUSINESS ETHICS
Marianne M. Jennings, Professor of Legal and Ethical Studies,
Jon Entine, Journalist
"Rain-forest chic" (1) is a label coined in the popular business press for the increasingly popular corporate branding strategy of capitalizing on consumer use of environmental issues as a screen for buying decisions. Companies have parleyed this market strategy into product successes.(2) Shampoo bottles, powder blush and toothpaste carry labels that read "no animal testing."(3) Star-Kist markets that its tuna is netted "Dolphin-Free."(4) Companies stamp their stationery "this can be recycled" with the same pride with which price/earnings ratios were once released. This declaration of the obvious is perceived by some as a mark of progressive corporate behavior under popular ethical standards.(5) Rain-forest chic marketing provides a compelling two-for-one sale: buy hair conditioner or ice cream made with nuts from the rainforest and get social justice for free.(6)
"Rain-forest chic" might also be descriptive of the current trend in the field of business ethics that utilizes social issues as a standard for business morality. (7) Corporate social responsibility has caught the attention of academic researchers. The icons of corporate social responsibility (CSR) are familiar brand names: The Body Shop International cosmetics;(8) Ben & Jerry's Homemade ice cream;(9) Starbucks coffee,(10) Tom's of Maine toothpaste,(11) Working Assets long distance company,(12) Celestial Seasonings teas,(13) and a collection of clothing and sneaker retailers including Esprit,(14) Patagonia(15) and, until the sweatshop controversy is over, Nike.(16) These companies, all of which have engaged in marketing campaigns to promote their social consciousness, represent a coterie of '60s entrepreneurial companies with charismatic founders who have grown niche businesses into multi-national corporations.(17) Their companies and products are associated with the labels "green" and "socially responsible."(18)
These socially responsible companies promote themselves in contrast to companies who are caricatured as corporate desperados such as: Gillette, (19) Dow Chemical,(20) Exxon,(21) every tobacco company,(22) defense contractors,(23) the entire chemical industry(24) and all energy providers (unless perhaps they are a solar company or a wind-power start-up).(25)
Such a simplistic equation of social responsibility (26) obscures the reality that business ethicists have failed to examine closely either what constitutes business ethics or whether these particular firms would qualify as ethical by standards other than those measured by political issues or self-defined parameters.(27) Business and business ethics are much more complex than the breeziness of social responsibility. Understanding the corporate soul requires far more than the shallow categories the CSR. The soul of a company is more complex than that of an individual. A company is a dysfunctional family writ large. Its soul is shaped by quiet acts of humility, reform and contribution. Finally, there are the responses to inevitable corporate miscues. Mistakes and sin are built into life; soul and character are defined in the breach. This article outlines existing notions of ethical standards in business used to define the corporate soul and proposes a refocus of those standards.
II. THE CULTURAL CONTEXT OF CURRENT STANDARDS OF BUSINESS ETHICS
The "green" business movement is one more example of the growing influence of the baby boom generation. Boomers, unlike their parents who were depression and war babies, have been shaped by their affluence. (28) The prior generation was a product of economic uncertainty, fascism and the mass destruction of a world war; they remain conservative in personal values with an appreciation of self-sacrifice, tradition and social bonds.(29)
Aging boomers define history not around the unifying experiences of communal self-sacrifice, but around themselves. They believe inequality and environmental degradation are the excesses of prosperity. (30) The boomers' 1960's counter-culture has gradually become the '90's mainstream. Economically conservative but socially liberal, this generation has embraced numerous hot-button issues: environmentalism, abortion rights, feminism, gay rights, animal protection, pacifism and other social "ideals."(31) Propriety, only as defined by these social issue parameters, has become their standard for business evaluation and investment.(32)
With boomers now entering their peak earning years, they face the task
of integrating their social values with the practical realities of their
cost of living and their need for savings and investment for their retirements.
(33) Urban yuppies and affluent suburbanites who
created and fuel the green business movement have gradually replaced their
VW Beetles with BMWs and Broncos.(34) While they
once viewed business as inherently evil, a crop of New Age entrepreneurs
are now cultural icons and apostles of a "new way" of doing business.
Aging boomers see no irony as they "shop for a better world" the
oxymoronic title of the Council on Economic Priorities' "green" guide
that evaluates companies on the basis of their behavior within the social
III. THE GREEN MARKET NICHE AND ITS MASS MARKET
The search for guilt-free affluence permeates the marketplace and has helped to transform "green" business into a mass-market phenomenon. Companies strive to brand their corporate image and products with a green seal of approval that speaks more to political correctness than to any meaningful measure of corporate responsibility. (36) Sneaker or leisure clothing companies that source from third world suppliers continue to draft new codes of conduct with the resulting media fanfare and attention.(37) This attention-grabbing approach to corporate ethics is so trendy, and so emblematic of the erosion of civil and academic discourse, that Philip Morris has tried to position itself as a defender of freedom of speech in its ads as part of an effort to neutralize the backlash from anti-smoking activists.(38)
Marketing and demographic figures suggest that selling ethics pays and that this green marketing trend has room for expansion. (39) Currently, $165 billion is invested in more than forty U.S. mutual funds that attempt to screen out "sin" companies, such as tobacco and defense manufacturers, while screening in "good" companies.(40) A good company, as defined by fund screeners, vocally supports human rights, touts a cruelty-free animal rights agenda and promotes self-defined "progressive" corporate, consumer, employee and trading practices.(41)
Consumers claim they annually spend $350 billion using some personal, ethical barometer to distinguish between "socially responsible" products and companies, and everybody else. (42) The Council on Economic Priorities annually publishes its "shopping for a better world" booklet with its findings on who's good and who's bad as a means of recommending the direction of consumer spending.(43) The standards the CEP uses are nebulous, such as the label "family friendly."(44) "No animal testing" is an independent category in the CEP guide but there is no criterion associated with product reliability or harms that could result because the product is not tested.(45)
IV. BUSINESS ETHICS OR LIBERAL PROPRIETY?
There is recognition of New Age-ism in business ethics with Anita Roddick, the charismatic founder of Body Shop, and Ben Cohen of Ben & Jerry's, regularly gracing the covers of business and women's magazines. (46) But this celebration of entrepreneurs as leaders in the field of business ethics has spread to academia and the business world. Roddick regularly receives standing ovations and is awarded honorary doctorates by business schools.(47) Tom Chappel of Tom's of Maine, Sophia Collier of Working Assets money management, Paul Fireman of Reebok and Starbucks' Howard Schultz are frequent honorees at business symposiums and White House conferences where they expound on how "caring capitalism" works.(48)
The consequences of using these trendy standards as a basis for philosophical applications or as a measure for firms' ethics are substantial for the credibility of the academy. Relevant business data is ignored; close examination of operations and products is foreclosed in the name of social consciousness. (49) Larger firms whose forward strides have had a greater social, economic or environmental impact are ignored or demonized in the name of this new brand ethics.(50) Companies with a culture of ethics but without tendencies toward self-aggrandizement are sometimes trampled in the marketplace and denigrated in the CSR movement.(51)
Corporate Social Responsibility represents a set of static and simplistic beliefs grounded in political causes rather than moral values. Foresighted companies that have made business ethics part of their operations for decades are ignored while those in the "right" product line are celebrated. (52) The field of business ethics has far more depth than the current trendy notions allow and embraces theories of stakeholder responsibility as diverse as Milton Friedman on the right(53) and University of Virginia Darden School professor Ed Freeman on the left.(54) Business ethics has attempted to define the responsibilities of a corporation and its relationships with investors, customers, employees, franchisees, trading partners, the local community and even society-at-large. Business ethics should be the search for the soul of a company through its interaction with all of these affected stakeholders.(55)
The concept of a corporate "soul" is far different from the model that now dominates both CSR and the field of business ethics. According to CSR standards, now largely accepted in the field of ethics, firms that tout their social values are considered to operate at a higher ethical plane. Further down the continuum are "quieter" businesses, many of which grapple daily with issues such as fair wages, benefits, quality of products and services, relationship with vendors, the environmental impact of their business, and marketing practices. These companies may generate jobs, enrich their local communities and contribute generously to a variety of environmental and social causes, but they do not use their company as a base for social change according to idiosyncrasies of their CEO. These companies struggle with the public relations nightmare of being branded as "normal" businesses in a capitalistic system.
Redefining the notion of the soul of a company requires a review of the current perception of ethics in the field as established by a CSR continuum and discussion of the continuum's limitations and the dangers of conflating human-potential movement theology with New Age business propaganda. The field of business ethics requires a different model that attempts to refocus relevant inquiry on the corporate "soul" as measured by management actions. In contrast to today's fashionable notions, the concept of a corporate soul is a proposal to focus business ethics evaluation on an integrity and accountability model.
V. THE CSR CONTINUUM
A. Hierarchy of the Continuum
Figure 1 represents the current CSR/business ethics continuum. Under prevailing CSR theory, the conscience or soul of a business is measured by its public espousal of popular social goals. Those companies at the top of the continuum possess the most "good intentions," and therefore the highest order of moral development. Evidence of intention and morality under this model is measured by the products themselves or as demonstrated by the company's image marketing and social campaigning.
The current CSR continuum is grounded in the premise that moral development
is correlated with the intensity of social involvement. Advancing the
popular social causes is equated with morality, with those companies actively
engaged in social cause marketing assumed to possess the most developed
business souls and the greatest integrity. Under the Hatano model for
social responsibility, these companies have adopted the philosophy that
a business best serves its shareholders by being first and foremost responsible
to "society." (56)
B. The Base of the Continuum: Agency Theory
Companies at the base of the continuum reflect the Friedman view that
businesses that act in the best interest of their shareholders are the
most socially responsible. Friedman's position has a strong moral component
of fulfilling the contractual obligation to the shareholders:
there is one and only one social responsibility of business to
use its resources and engage in activities designed to increase its profits
so long as it stays within the rules of the game, which is to say, engages
in open and free competition, without deception or fraud... By pursuing
[a person's] own interest, he frequently promotes that of the society
more effectually than when he really intends to promote it. I have never
known much good done by those who affected to trade for the public good.
Friedman's concept of social responsibility includes only the moral constraints of economics such as maintaining open and free competition, establishing a framework for the rule of law, avoiding deception, and exemplifying fair play. This ethic is captured in the quip: "What's good for GM is good for the country." (58)
Friedman's views on the responsibilities of business beyond maximizing
profits are reflective of a less-is-better philosophy:
Most of the talk has been utter hogwash... . [T]he only entities who can have responsibilities are individuals; a business cannot have responsibilities. So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no, they do not. (59)
Peter Drucker expands on Friedman's concept of corporate responsibility, proposing that businesses follow the Latin primum non nocere above all, do no harm. (60) The Drucker standard would require that businesses adhere to the basics of positive law, but would also impose additional responsibilities of not harming customers, employees and communities, even if those "harms" are not legal violations.(61)
Both Friedman and Drucker embrace agency theory of executives serving in a legal and limited sense as agents of the shareholders. Under agency theory, corporate agents are authorized by shareholders to increase shareholder value. To the extent that corporate agents exceed that authority, they not only violate their employment arrangement, they also undercut the free enterprise system through their intervention in social welfare issues and circumvention of public policy and political processes.
Friedman places social welfare outside the province of businesses and
cites as an example that Henry Ford did not build the Model T to be socially
responsible, but to make money. Ford Motors was able to pay workers twice
the going wage yet still make enormous profits, and the local and national
communities benefited as a result of his business judgments. (62)
C. The Middle of the Continuum: Voluntary Action to
Despite Friedman's adherence to the agency theory, he does, however, outline scenarios in which he believes that social involvement is not only acceptable but also required. Friedman isolates instances when managers should step beyond the constraints of their agency relationship and what the law requires if they can demonstrate that involvement in social issues benefits shareholders. He cites "green marketing" as an example. Friedman once described oil company television ads as "turning his stomach" for they made it seem that the purpose of energy companies was to preserve the environment. (63) However, Friedman adds that he would probably sue oil company executives if they didn't engage in such "nonsense" because oil companies must profess social responsibility to appeal to the public-at-large, remain competitive and ensure profits.(64)
Extending the same reasoning, Friedman supports "green practices" as well as green marketing in limited situations. Ordinarily, Friedman's notion of social responsibility provides that if it is cheaper to pay a fine for releasing effluent into the water surrounding a plant than it is not to pollute or to clean it up, then releasing the effluent is the most responsible action. (65) Friedman advocates the use of taxes or government regulation to control behavior (positive law). However, if an executive can demonstrate that the controversy surrounding the release of the effluents (a) makes it difficult to recruit and retain employees; or (b) offers the prospect of adverse publicity or litigation that diminishes its ability to compete, then voluntary reduction of the effluent, or voluntary clean-up is an appropriate extension of agency authority. If an energy company could mitigate these adverse consequences by modifying environmental practices, then it is compelled to act in its shareholders' best interest by doing so.(66)
For example, Johns-Manville might have avoided all its class action litigation and bankruptcy if it had warned users of the risks of asbestos fiber. Without regulation, Johns-Manville took no action, and no positive laws required it to warn of the dangers of lung disease and cancer. (67) This inaction, however, created a situation where Johns-Manville had full knowledge of the risks and no duty to disclose ultimately leading to tort litigation and liability at levels for which only bankruptcy could provide relief.(68) Which was the better choice: waiting for the government to pass a law on asbestos disclosure or voluntary disclosure? In terms of future liability, the failure to act voluntarily cost Johns-Manville its very corporate existence.
In theory, concern about fallout from companies being caught circumventing
positive law moves the "invisible hand" to encourage socially responsible
practices. (69) Even under the Friedman view of ethics
and social responsibility, business could report some environmental reforms
because they may yield economic gains in their own right as well as help
inoculate a company against expensive, adverse publicity and regulatory
D. The Middle of the Continuum: Using Green
Marketing as a Customer Ploy
As noted earlier, image-driven companies that profess social responsibility and market products to appeal to the public occupy the hazy middle of the continuum. Their socially responsible reputation may or may not match their practices. For instance, cosmetic companies such as Aveda with "cruelty free" labels may fund and develop modified safety-test procedures, pander to consumers and/or consciously churn public hysteria to attract customers and investors. (70) Image-driven companies label green marketing a "win-win" situation because they prosper by promoting what they believe is socially responsible.(71)
Occasionally, companies may anticipate modifications in positive law and develop products perceived as socially responsible. During the early 1980's, manufacturers of three-wheel all-terrain cycles (ATC) discounted reports of fatal and paralysis-producing accidents, blaming them on the poor judgment by riders (called "hot dogging"). Even after high profile reports on 60 Minutes and elsewhere, and despite investigations by regulators and protests by physicians, most companies stood firm in their three-wheel vehicle production as being within existing laws. (72) During this same time frame, Yamaha produced a four-wheel model ATC because studies showed this model had greater stability and was involved in fewer accidents. When the US Consumer Product Safety Commission banned the sale of all three-wheel ATC's, Yamaha was positioned to take over the market. Its voluntary and socially responsible action went beyond what the law required and created a market niche that enabled shareholders to profit.(73)
In some cases, a company attuned to social issues can position itself
in a better strategic posture for purposes of consumer and media reaction
and thereby better serve its shareholders. While Yamaha's decision may
have been desirable from an accountability perspective, it nonetheless
was a response to an ethical concern about safety and, with a massive
recall looming, to the very survival of the company.
E. Popular Theories of Corporate Responsibility
Underlying the Continuum
Shareholder accountability theory poses a simple question: Does voluntary business involvement in a social issue cost the business customers? According to the continuum model, shareholder benefits of social responsibility are less tangible as one moves up the ladder. Idealism, not just social actions, is the measure of one's CSR quotient. As a result, social responsibility becomes more ambiguous and less quantifiable.
A new generation of business philosophers promotes this "intentionality"
model. Conservative theorist Michael Novak, Professor of Religion and
Public Policy with the American Enterprise Institute and author of Business
as a Calling: Work and the Examined Life, lards agency theory with
moral components that are admirable in conceit but problematic in practice.
(74) Novak acknowledges that investors have a right
to a "reasonable return" but adds new corporate responsibilities, such
as to "create new wealth" and "new jobs," guarantee "upward mobility,
fairly reward "hard work and talent," promote "progress in the arts and
useful sciences" and "diversify the interests of the public."(75)
He then adds seven "external responsibilities" including promoting "community"
and "dignity," and "protecting the moral ecology of freedom," all of which
he believes are crucial to the health of civil society.(76)
Novak views business as a moral calling as opposed to being merely a profession.
However, a different moral call comes from those of different political
orientations such as theorists Paul Hawken, Hazel Henderson and rabbi
and founder of Tikkun magazine, Michael Lerner. This breed of
theorist promotes the stakeholder perspective on the role of business
F. Real-Life Contradictions in the Continuum
Business is more morally complex than the rather simplistic socially responsible business theories and the continuum suggest. Most companies seek to involve themselves in issues that gain customers (e.g.: broadly acceptable social causes such as promoting breast cancer awareness) and avoid involvement in social issues that will lose business and profits. (78) What appears to be a safe social cause can end up in controversy. For instance, when Dayton-Hudson's support of Planned Parenthood, Inc., took the media spotlight, right-to-life groups boycotted Dayton-Hudson. After Dayton-Hudson issued a response that there would be no future donations, pro-choice groups initiated a boycott.(79) Similarly, when US West donated money to Boy Scouts of America, gay rights activists protested because BSA refuses to allow gay troop leaders. After US West withdrew its contributions to BSA, religious groups protested because US West was supporting gay rights.(80)
A few New Age companies actively court controversy by efforts to increase brand identification and to increase the loyalty of their core customers. This inevitably results in the alienation of some customers. For instance, The Body Shop promoted a boycott of Shell Oil to protest Shell's involvement with Nigeria, which is beset by human rights and environmental problems. The Body Shop sacrifices its few loyal Shell customers for burnishing its image as a social campaigner. (81)
Business involvement with hot-button social issues often directly affects
the bottom line. Regardless of the position a business takes on these
types of issues, it may lose customers, at least in the short term. As
a consequence of using aggressive social marketing, firms may put a cap
on future growth and limit the company to a niche market.
G. The Pinnacle of the Continuum: Socially Responsible
At the highest level of corporate responsibility are those firms that promote themselves as devoted to, or in some cases were created for, addressing social issues. Corporate managers are viewed not as agents of shareholders but as agents of "society-at-large," a concept that is not well defined. Their purpose is to re-engineer society by using the power of capitalism and blending it with their social vision. Some of these firms are unique in that they were founded or taken public with disclosure in advance of public investment of their social goals and philosophies.
VI. FLAWS IN THE CONTINUUM
A. The Heaven-Hell Conundrum
The danger of the continuum model is that it perpetuates a simplistic and even demagogic concept of corporate social responsibility. The top-to-bottom structure comes to represent a normative scale from heaven-to-earth. Companies at the bottom are caricatured as the very definition of "unethical," while those at the top are iconized for capitalizing on popular notions of what constitutes "ethical" business practices.
Using the continuum model, businesses that market themselves as "values-driven" or committed to benefiting society are shrouded from serious scrutiny based on the self-promotion of their "good intentions." In the academy, niche-marketing skills have become a path to favorable treatment.
In contrast to these corporate white hats, firms that do capitalize on simplistic concepts of social responsibility suffer from being characterized as "irresponsible" and "greedy." Yet these black hats, although they do not promote themselves as socially progressive, may actually benefit society in measurable ways far more than CSR icons do by increasing investor wealth, creating jobs at reasonable wages, and increasing community wealth. Companies with non-SR products with quiet policies that address employee needs or provide generous financial packages including incentives are often ignored simply because of the nature of their business.
By taking their responsibilities to shareholders seriously, these companies
are frequently dismissed as morally stunted, occupying the very lowest
level of the noveau du Kohlberg scale created to simplify business ethics.
(82) The assumption this scale makes is that firms
that are lower on the continuum take only action required under the law,
and no more--indeed, perhaps even less! There are even times when firms
noted for their respect of shareholder accountability are criticized for
adopting a posture of social responsibility. For instance, when Exxon
increased donations to environmental causes in the years following the
Valdez incident, some organizations refused the charity claiming it was
"blood money."(83) Likewise, at the other end of
the continuum, perceived social responsibility stars are excused from
even the very basic ethical standards of treating customers fairly and
honestly. Business Ethics, a magazine geared toward the CSR investor,
allowed Sears to sponsor its company of the year award in 1996.(84)
Sears was classified as worthy of such attention based on the nebulous
standards of "no weapons" and "family friendly."(85)
However, Sears was charged with fraud in California for the ongoing practice
of performing unnecessary repairs at its auto centers largely because
of an employee incentive plan gone awry due to a lack of ethical parameters.(86)
In 1998 Sears struggled to explain its violation of the law in continuing
to contact and collect from customers in bankruptcy while other creditors
followed the law and played fair by waiting in line according to legal
priorities.(87) Arbitrary labels and designations
in the continuum ignore violations of the law when examining the soul
of a company. Instead, these labels and designations rely on the rhetoric
of good intentions. Additionally, social contributions from companies
at the bottom of the scale are ignored as unworthy at their source while
potentially questionable contributions from those at the top are accepted
pro forma. There is a foundation of original sin in the continuum; if
your area of business is wrong there is no hope for moral development
and if you are in the right business, you can do no wrong.
B. Profit Motive Versus Prophet Motive
The notions built into the continuum about business ethics present a Hobbesian choice between a faddish concept of social responsibility such as an opposition to animal testing and classic stakeholder concepts such as responsiveness to investors, customers and employees. For instance, helping the homeless is a noble cause, and certainly one that would place a company at the top of the social responsibility continuum. Few would suggest that a small grocery store with thin profit margins should be judged by whether it feeds the homeless in the town in which it operates. The owners and employees of that store depend upon profit for their livelihood, its customers depend on the store being open, and the community prospers if the store becomes more profitable and expands. By devoting its resources to feeding the homeless, such a grocery store would possibly exacerbate the homeless problem as its employees are no longer employed because the business would become extinct. Yet that mandate is imposed on larger companies in the form of social responsibility as an obligation above duties to others.
Entrepreneurs who promote themselves as having "good intentions" are treated differently by the media and by academia from multi-nationals. According to the CSR continuum, size magnifies the social demands on companies while smaller firms are frequently excused for moral transgressions on the basis of trying "a new way of doing business." As an example, Dow Corning was publicly tried and executed for not taking its silicone breast implant product off the market even though there was little scientific evidence to support the hysteria that was driving the debate. (88) Large multi-nationals are judged harshly when they do not react to public "outrage," even if unwarranted, to conform to popular views of issues. The current corporate responsibility continuum does not illuminate the complexity of business decision-making as executives attempt to balance competing stakeholder interests.
Since the Valdez disaster, Exxon is caricatured as the ultimate black hat, the very symbol of corporate irresponsibility and greed. Yet, although Exxon as a company is responsible for the spill, investigators determined that the act itself was caused by the recklessness of one of its employees. In the zeal to demonize Exxon, context was frequently absent. In the clamor to report the disaster, little mention was made that Exxon had in place one of the industry's most respected oil spill containment plans; or that according to the company that repaired the tanker, given the extent of the damage, the crew must have been particularly skilled and lightening quick to have contained the spill. (89) Subsequent investigations into the clean-up effort reveal that Exxon was often caught in bureaucratic battles between competing government agencies seeking to enhance their political standing by claiming credit for punishing the oil giant.(90) Few stories examined the self-interest and political circus that victimized the Alaskan coastline even after Exxon spent billions of dollars on a clean-up.(91)
Misinformation, when positive, characterizes the glorification of the continuum's high performers. For years after its introduction in 1990, "Rainforest Crunch" ice cream, the flagship product of Ben & Jerry's, was touted as a successful experiment in the partnering of American business with Amazon preservationists. According to company materials, "Rainforest Crunch" was created in part to help indigenous peoples find an alternative to selling their timber rights to mining and forestry industrialists. (92) It was a noble impulse but turned out to be little more than a brilliant marketing gimmick. For years, Ben & Jerry's purchased no nuts for its ice cream from rainforest aboriginals; more than 95% of the Brazil nuts it sourced were purchased off commercial exchanges supplied by businesses, not indigenous peoples, in Latin America that now dominate the Brazil nut market.(93)
Moreover, many anthropologists maintain that the harvest has actually
contributed to falling nut prices and an increase in the selling off of
land rights to industrialists to compensate for the economic short-fall.
The Ben & Jerry's program actually exacerbated the very problem it
was purported to address. In early 1995, Ben & Jerry's pulled the
claims on its Rain Forest Crunch label. (94) Although
the disastrous details of the harvest are widely known in the activist
media and SRB business community, Ben & Jerry's has been given a relative
pass on the disastrous consequences."(95) Nor is
the bankruptcy of Community Products, Inc. ("CPI") mentioned. CPI was
created in 1989 to promote the rain-forest crunch venture but also other
progressive causes such as prevention of French nuclear testing in the
South Pacific. Cohen was repaid his investment in CPI when CPI sold debentures
to CSR investors. CPI is in bankruptcy.(96)
C. Codes of Conduct and Mission Statements
What constitutes "the social good"? Is a firm that provides its employees safety precautions that go beyond current legal standards for instance, DuPont, which is obsessed with safety protocols less noteworthy because it acknowledges accountability to shareholders along with society-at-large? (97) Is a natural resource company less entitled to recognition for generous employee medical and health programs because popular fashion dismisses their business activities as environmentally threatening?
Celebrating good intentions based on litmus tests in the absence of systematic standards, transparency and accountability goes to the heart of the CSR/corporate ethics conundrum. For example, during 1994, Starbucks suffered embarrassing grassroots protests because it sourced beans from export houses that paid Guatemalan workers below a living daily wage, about $2.50 a day. Starbucks is no worse than the average wholesaler, but it has a better-than-average reputation as a new breed, values-driven corporation. Thus, under the continuum, Starbucks, a company under attack for exploiting cheap, foreign labor can still become the belle of the social responsibility ball. (98) When protesters leafleted Starbucks stores and targeted its annual meeting, a peace plan was offered.(99) Last year, Starbucks became the first company in the agricultural commodities sector to announce a "framework" for a code of conduct.(100)
Sensitive to the controversy, Starbucks had contributed to CARE, which sends emergency relief packages to troubled countries, for four years. There are more than 30,000 farms in Guatemala, one of 20 coffee-supplying countries. Starbucks was targeted not because it could change the labor status quo it is a big player in the coffee business but because of its high public profile. The increasingly visible protests left Starbucks with little choice but to pass its code, and it cost the company little. David Olsen, Starbucks' senior vice president, describes the company's code as one it was "prodded" into developing. (101)
Alice Tepper Marlin, CEP's executive director, felt Starbuck's good intentions, as reflected in its mission statement alone, were enough to earn Starbucks its honor. Olsen acknowledged nothing has been done to enforce the code and its implementation is described as a slow incremental process. (102) Starbucks' promised review of plantation conditions is being carried out by the Guatemalan Coffee Growers Association, the very organization accused of perpetuating the low wages.(103) First condemned for labor practices it could not hope to change, Starbucks was then praised for actions it has not yet taken.(104)
Codes are but a small part of the social issue of international wages and a bigger strategy of industry monitoring is needed. Codes are not entirely meaningless, but solutions rest with accountability, something that seems to escape a critical eye in CRS theory and under the continuum. Considering the labyrinthine politics in impoverished coffee countries, Starbucks has no practical ability to oversee conditions, and it says it cannot risk punishing violators.
CEP and other organizations that follow the anachronistic continuum model invariably iconize coffee, clothes, shampoo and sneaker retailers armed with impressive mission statements. The Gap, Levi Strauss, Nike, K-Mart and JC Penney, which all have admirable ethics codes, have sourced from foreign sweatshops. (105) Reebok gives out an annual Human Rights Award but sprints from one low-wage country to the next, paying its Indonesian workers twenty-three cents an hour.(106) Justified as not imposing U.S. culture on other countries, these countries have adopted a 'when in Rome, do as the Romans' philosophy.
That "progressive" organizations believe they promote corporate ethics
with their standards should not obviate their responsibility for muddying
complex problems and profiting handsomely from the debate. Awarding
"A's" for visionary rhetoric, as well-meaning as it might purport to be,
shifts focus away from actual corporate behavior to simply recognition
of good intentions.
D. False Icons
Some of the continuum's highly-praised "New Age" firms which sell commodity products at premium prices have been found lacking in critical areas of corporate accountability such as relations with customers, employees or trading partners, and honesty of marketing. (107)
Noble posturing obscures meaningful progress by "messier" companies.
Despite regular appearances on "dishonorable" lists, controversial multinationals
such as natural resource and chemical companies offer fair wages and benefits,
actively engage their community responsibilities, give millions of dollars
to charity, and sell quality, competitively-priced products and services.
(108) In the past few years, the number of U.S.
companies filing independent environmental reviews has exploded.(109)
Industry-wide environmental initiatives in the chemical industry have
reduced litigation expenses, lightened regulatory pressures, improved
company morale, and frequently resulted in considerable savings in their
own right. For instance, the Chemical Manufacturer Association's Responsible
Care Program has led to independent, third-party verification of risk
procedures and widespread reforms in how manufacturers do business.(110)
Selling necessary products with an eye to a broader definition of stakeholder
responsibilities is not recognized as a measure of the soul under the
continuum despite the fact that such efforts can promote positive social
E. Facile Issues
Gillette, one of the world's leading personal care product manufacturers, as noted earlier, has been targeted by many in the CSR movement. Pursuant to federal requirements Gillette still tests only a tiny fraction of its ingredients on animals. For taking its regulatory responsibilities seriously, it was targeted by People for the Ethical Treatment of Animals (PETA) in a high-profile campaign that prompted thousands of letters from school children who were taught by teachers that Gillette callously exploits animals. (111) Gillette has been called "insensitive, cold-blooded, cruel, and unthinkable vivisectors." Many public school teachers have urged boycotts.(112)
PETA supports a ban on all animal tests even for medical cures such as AIDS, and is embraced by many ethical funds and social responsibility activists. (113) An opposition to animal testing, regardless of the consequences, is considered one of the prime indicators of the soul of a company. PETA publishes an MTV-like magazine for school children that features Candice Bergen's recipe for veggie burgers, anti-Gillette statements by Ellen DeGeneris and Woody Harrelson, and prizes for students who spread the word about the moral black hole at the company.(114)
Gillette would be considered an unethical company under some existing facile criteria. Yet, by any reasonable measures, Gillette is the most conscientious of the personal care product companies. PETA does not disclose in its campaign to children that Gillette is the only personal care company that publicly releases its animal testing figures: how many animals used, what type and why. In the past ten years, Gillette has reduced animal tests by 90%. (115) It performs animal tests only when it is required to do so by law. It now does no tests on animals. Gillette has also spent money over the years to develop alternatives to animal testing.(116)
Gillette's image suffers because it shoulders the expensive responsibility of protecting the safety of its customers. By extension, Gillette ends up protecting the customers of "bathtub" operators that buy animal-tested ingredients but insulate themselves from controversy by sourcing them from others.
Gillette's willingness to accept its responsibilities in this area is consistent with its corporate culture. US Trust and KLD, two social research organizations that have examined Gillette's practices in context, cite the company for its open, forthright animal testing policies, its environmental and pollution abatement programs, and its extensive involvement in local communities where it operates. (117) Researchers have found that companies that act responsibly to their internal stakeholders are generally more consistent in meeting other social challenges.
VII. ICONS OF SOCIALLY RESPONSIBLE BUSINESS
Not surprisingly, some of the most prominent leaders of the socially responsible business movement are beset by basic ethical questions about their own integrity. Shielded by the continuum's theories, these companies have escaped serious scrutiny of their corporate performance.
A. The Body Shop International
Body Shop International ("BSI") has long been touted as the premier socially responsible business. By its own estimates, BSI was averaging 10,000 positive media mentions a year until 1994. (118) In September of 1994, investigative work by Jon Entine, co-author of this article, and numerous journalists and social researchers, revealed a huge ethical gap between BSI's marketing image and its actual practices.(119) This deception - conscious or not - is pervasive: Roddick stole The Body Shop name and marketing concept, fabricated key elements of the company myth, misrepresented its charitable contributions and fair trade programs and has been beset by employee morale and franchise problems.(120) Moreover, its "natural" products are filled with petrochemical colorings, fragrances, preservatives and base ingredients such as mineral oil and petrolatum.(121) Its cosmetics are considered "low-end products at a premium price" according to a recent article in Women's Wear Daily and numerous reviews by cosmetic product experts.(122)
Gordon Roddick, the chairman of the board and husband of its founder, acknowledged many of the charges in a memorandum of response to exposes. For instance, Roddick agreed that Body Shop extensively uses non-natural ingredients in its products. His response was the classic ethics rationalization: "all [cosmetic] firms" do it. (123) But, all cosmetic firms do not market their products as "natural" with ingredients from exotic locations.
Inaccurate descriptions about product ingredients or gross misrepresentations about a company's origins or charitable record are generally called fraud. Kirk Hanson, a Stanford lecturer and personal friend of Roddick who was hired by BSI to assess its ethics, noted a "pattern of exaggeration," and gave it low ratings for accountability and integrity. (124) He concluded that BSI has a mixed record "on shareholder concerns such as financial performance, governance structure, and maintaining the quality of management,"(125) and says some suppliers had been approached by "company representatives" with unethical proposals.(126) According to Mr. Hanson, "the company's record of social performance has been strongest in areas...independent of the traditional trading and commercial activities of the company."(127)
Hanson's identification of integrity problems with BSI stakeholders is echoed in a separate social survey authorized by the company and published as part of its first social assessment. Only 20% of UK employees agree or strongly agree that BSI was a better place to work in 1995 than 12 months before. (128) Fifty-nine percent of U.S. BSI sub-franchisees, but only 40% of UK sub-franchisees, believe BSI portrays its business practices accurately to the public. Reflecting on the results of the surveys, the Head of BSI Company Culture notes that there is a "discrepancy between the aspirations of The Body Shop and the reality of day-to-day life within the Company."(129)
Hanson then surprisingly concluded that "overall, The Body Shop demonstrates greater social responsibility and better social performance than most companies of its size." (130) Hanson does not define what he means by social responsibility or social performance. Hanson's analysis is typical of business ethicists who measure a firm's ethics by their intuition of good intentions and rhetoric. There is an assumption that a firm with CSR has a developed "corporate conscience," for it has evolved from mere compliance with the law to the highest level of social responsibility - business for the benefit of society. Such a company is not capable of fraud because it is values-driven. It has "soul," and as a result is exempt from scrutiny on basic ethical issues such as honesty and fairness with customers, employees and shareholders (Figure 2).
THE CONTINUUM'S BENEFICIARIES, TARGETS AND ISSUES
B. Ben & Jerry's
Ben & Jerry's Homemade Inc. enjoys a high position on the continuum. But, like The Body Shop, Ben & Jerry's has been the focus of criticism of its ethics and organizational integrity. It has been beset by a widening gap between its escalating self-promotions and its performance with stakeholders.
A recent survey of its stakeholders conducted on behalf of the company and summarized in its annual report notes employees expressed a "continuing sense of confusion, frustration and low morale," and "questioned Ben & Jerry's commitment to founding values." (131) Franchising, the key growth area of the company, shows signs of ethical strains. Seventy percent of franchisees have net sales below the company average and sixty-one percent believe Ben & Jerry's commitment to franchisees is sometimes inconsistent.(132)
Ben & Jerry's produces a high-quality, premium-priced product, but
it is not "all natural" as it contends; in some products, it uses margarine
and synthesized ingredients. (133) Other companies
and executives have been prosecuted for felonies under federal law for
inaccurate product labeling. Ben & Jerry's is also being sued by a
former supplier of one of its "socially responsible" products, Apple Pie
Frozen Yogurt.(134) The product used pie bits purchased
from a New Jersey bakery that was set up as a non-profit to provide jobs
for the homeless, drug addicts and alcoholics. According to the suit,
Ben & Jerry's ordered supplies erratically and then discontinued the
product without notice, sending the bakery into bankruptcy and hundreds
of homeless back into the streets.(135) Although
Ben & Jerry's is fighting the suit, it has not contested the factual
Esprit de Corp, the San Francisco-based women's clothing retailer, founded in the late 1960's by Doug and Susie Tompkin, introduced unusual perks for its mostly female staff such as free language lessons, in-house lectures on feminism and radical environmentalism, and raft trips. (137) "It's a sin here not to realize your potential," was a popular press quote from one employee.(138)
But following the 1980's boom, Esprit unraveled. Susie eventually bought
out her husband Doug's interest and focused on her strength: green marketing.
(139) She emphasized social causes and promoted
a non-hierarchical workplace that favors women. Customers were asked to
fill out cards reading, "If I could change the world, I'd...." Beneath
the company's green patina, and because of fierce competition from The
Limited and lower-cost international competitors, Esprit quietly laid
off workers and sourced garments from San Francisco sweat shops that paid
below-minimum wages with no overtime.(140) This
ethical grayness is neither reported nor examined in the business ethics
literature because of the company's assumed soul on the basis of its position
on the continuum.
Sherri Poe, a victim of a sexual assault, founded the women's shoe company Ryka, Inc. She attracted investors, in part by stating that her company was committed to helping assault victims through donations to counseling programs. (141) Helping women overcome the violence of a male-dominated world was cited as the company's reason for existence.(142) Ryka made a quality product but never turned a profit. LA Gear approached Poe with a takeover offer for shareholders of twenty-five cents on the dollar; Poe would get $1.3 million the first year.(143)
One shocked shareholder asked, "How could a company with such strong
ideals make such an unfair deal?" The operative words in the shareholder's
question are "strong ideals." (144) Shareholders,
many customers, employees and other stakeholders of Ryka, the Body Shop
and Ben & Jerry's and Esprit mistakenly assume the continuum to be
accurate: that the companies that claim "strong ideals" operate with consistency
and integrity with all of its stakeholders. There is a leap in logic in
the continuum as well as a blind spot for basic issues of morality in
VIII. EVALUATING THE SOUL OF A COMPANY
A. The Continuum's Flaws
Can a shareholder or customer trust a firm simply because it has adopted a posture of social responsibility? Can a shareholder or customer assume that a firm is less honorable if it states that it is accountable first and foremost to its shareholders? The answer to both questions is "no." The continuum model is misleading.
Dishonesty and a lack of loyalty can be found in firms that fit both the Hatano scale and Friedman's shareholder model. One cannot assume that "activist" firms are more ethical. Many firms that take their shareholder and stakeholder responsibilities seriously are unfairly targeted as unethical organizations. As it currently exists, the continuum symbolizes an appalling standard of research and candor on the parts of academics, investment counselors and socially responsible investment funds.
If the continuum offers an inaccurate measure of a company's integrity or soul, what alternative can be substituted? No company is ethically perfect. It is questionable whether companies evolve to become more ethical over time and because many factors other than intention shape a company's destiny: changing market conditions, leadership qualities, economic and demographic trends and luck. No company, just as no individual, is without sin or exempt from mistakes. Consequently, the obsession to anoint icons of CSR only interferes with candid evaluations of the soul of a company.
Corporate social responsibility is a reflection not of intentions and mission statements but day-to-day practices and a company's responsiveness to missteps when they invariably occur. Symbolism such as the blanket demonization of defense contractors or the celebration of corporations that make tiny purchases from developing countries frequently provides a cover for myopic, autocratic entrepreneurs who hawk ethics like carnival barkers.
Many of the screens now used by ethical investment funds reflect a narrow ideological bias without addressing corporate ethics. Should a company that manufactures weapons automatically be screened out of "socially responsible" portfolios? How is a proper comparison of soul made between a soap company and a weapons manufacturer? Is the morality found in not dropping shampoo bottles on the enemy during a war? A screen on military production in the name of ethics is offensive; it may even undermine the pro-active goal of curtailing unnecessary defense expenditures. The more complex question is which companies are involved in the kind of military research or production that offers a better hope for peace.
In a 1995 issue of Business Ethics, an article suggested boycotting
Kinko's for its advertisements during Rush Limbaugh's radio program. (145)
Where Kinko's advertises--and, under Friedman's model, Kinko's should
target all potential customers including Limbaugh's listeners who need
photocopies just like Howard Stern's listeners--is not an issue of business
ethics. It is a hazy political issue shaped in part by fashion and does
not measure Kinko's responsiveness to its stakeholders. Kinko's might
face ethical questions if it surreptitiously over-charged or short-counted
its customers. For ethics to be accepted as an integral measure of a company's
performance, it is critical to avoid ever-changing standards. Political
issues and social causes are not an accurate measure of a company's integrity.
B. A New Model of Business Integrity
Determining the soul of a company requires those conducting the examination
to look beyond ever-changing political issues. The CSR continuum has come
to promote narrow and contradictory social agendas as opposed to universal
measures of integrity. For example, honesty in business dealings is a
universal measure of a company's soul. Looking beyond facile symbolism
opens up an examination of ethics. There are eight questions that should
be answered about a company to determine the character of its soul.
1. Does The Company Comply With The Law?
If the basic notion of compliance with the law is not embedded in company culture, claims of social responsibility are a front. Compliance with the law is the common denominator for ethical performance and a building block for the evolution of a culture of responsibility. Business ethicists are reluctant to examine even this basic measure of a soul. While civil disobedience is an appropriate topic for debate in the philosophical realm, organizational ethics in a business setting require more absolute standards. Perhaps an underlying cause of the lack of definite ethical standards in business is an unwillingness to commit to absolute standards for behavior. Perhaps that unwillingness contributes to the ongoing ethical lapses witnessed at all levels of the continuum.
There are numerous examples of firms that have fallen short in meeting this base level of compliance. Honda is noted for manufacturing efficient, quality, environmentally friendly vehicles. Yet, sixteen domestic Honda executives have been tried or entered pleas in a case that charged them with accepting bribes in exchange for the allocation of dealerships and cars. (146) One executive accepted a $50,000 Mercedes as a bribe to award a dealership.(147) These transgressions, that involve violations of the law, offer some warning signals about the ethical standards of Honda's corporate culture. The failure of these executives to comply with the laws on bribery reflects an attitude of self-enrichment and an ethical breach of loyalty.(148)
When Joseph Jett's accounting scheme that netted him a $9 million bonus was discovered, leading to Kidder Peabody being sold at a $600 million loss by General Electric, the Securities Exchange Commission (SEC) stepped in to investigate. According to the SEC, bond department revenues under Jett's watch climbed from six to twenty-seven percent in a one-year period. (149) Such gains "defied all reasonable explanations" in the words of the SEC.(150) Yet, Jett's supervisor did not ask the hard, ethical questions, and some employees were even dismissed for raising concerns about Jett's outsized performance. An expert described Jett's performance as the equivalent of a child raising $1 million at her lemonade stand. Jett's position as a government bond trader could not possibly produce the income he was claiming he made. Those within the company were unwilling to examine critically such an obvious earnings anomaly. A firm's refusal or reluctance to examine potential illegal activity or turn a blind-eye to an obvious disparity possesses a tarnished soul.
In the late 1980's, Salomon Brothers cornered the US Government Bond market when its traders and supervisors agreed to utilize false customer fronts. An entire section of Salomon conspired to violate securities law over an extended period of time. (151) If avoiding compliance with the law is not only tolerated but arranged, there is little to be said of a company's soul or ethical core, the company risks substantial lack-of-performance issues.(152)
William Aramony, former head of the United Way, went to prison for legal
transgressions committed during his tenure as United Way's chief when
he awarded contracts to a young girlfriend, expensed homes to the United
Way and took Concorde flights and limousine rides at the charity's expense.
(153) He justified his lavish conduct as being equivalent
to that of other CEOs managing similar-sized asset bases. Not only was
Aramony breaking the law and his moral commitments to the charity, but
officials at United Way abandoned their responsibilities for oversight.(154)
These ethical fumblings have led to a decline in donations at United Way
and near insolvency at some local chapters.(155)
2. Does The Company Have A Sense Of
A business may operate according to minimum legal standards but ethics requires standards of propriety. While "standards of propriety" seems like a nebulous term, it is one akin to the U.S. Supreme Court's notion on the definition of pornography -- you know it when you see it. An illustration of this notion of propriety involved Stanford University and its federal grants fiasco in 1990. (156) When a federal auditor discovered Stanford University was using grant overhead funds for expenses such as cedar-lined closets in the president's residence, flowers for receptions, grand pianos and a yacht for entertaining alumni, the initial response of then-president Donald Kennedy was that Stanford had done nothing illegal. Kennedy was technically correct; no law was violated. Stanford was, in fact, performing on all of its research grants. The lights in the labs were on and the Bunson burners were going. However, there was justifiable outrage on the part of Stanford alumni and taxpayers.
Compliance with the law is not enough. Kennedy's arrogant response offered a window into his soul, the leadership or tone at the top of Stanford and Stanford's attitude about funding; the lack of an aggressive rebuke of Kennedy by Stanford demonstrated that it did not grasp the abuse of propriety. Use of funds for anything but their intended purpose is an indication of moral confusion within an organization. A sense of propriety avoids the slide down the slippery slope. Propriety and humility in the face of a misstep are key elements in understanding the soul of a business. (157)
Nestlé Company broke no law when it marketed infant formula in developing countries by giving out free samples and dressing its sales force as nurses. (158) However, such conduct violates standards of ethical propriety because many infants in these countries who were fed formula died from ingesting polluted formula made from impure water. Mother's milk was preferable in these nations regardless of nutrition issues. There was public outcry and boycotts over a company's exploitation of the ignorance and lack of technology in poor countries.
Propriety also applies to a company's products and their impact on society. Companies that manufacture or market radar detectors facilitate breaking the law and contribute to accidents by indirectly encouraging speeding. The Jennings Family of California has a number of companies that manufacture cheap handguns that are sold primarily in high crime areas. (159)
Media companies that market content pandering to prurient sex and violence have abandoned reasonable standards of propriety. Disney is touted for its openness with respect to gay rights, yet it faced loud protests over its since-cancelled television sitcom, Nothing Sacred, in which a priest, depicted as desirous, breaches propriety. (160) The withdrawal of sponsor support as well as objections from many religious groups provides the warning that the line has been crossed. Simon & Schuster turned down the right to publish a particularly brutal and sexual novel.(161) Although the First Amendment opened the way for it to publish the book, the First Amendment does not mandate that everything that is written must be published, even if it might be profitable.
The First Amendment may provide wide protection to companies but it
does not shield them from ethical scrutiny. Time Warner was publicly embarrassed
following its release of the song "Cop Killer" by the rap artist Ice-T.
The CD was shipped to record stores in small body bags as a marketing
gimmick. (162) After months of claiming First Amendment
protection, the song was withdrawn. Rather than a firm dedicated to freedom
of speech, Time Warner came to be regarded as a company that would sell
its soul for a dollar.(163)
3. How Honestly Do Product Claims
Match With Reality?
The manner in which a company treats its customers is telling. Bausch & Lomb reacted defensively to reports that it was charging more for a small bottle of contact lens solution than for a larger bottle of the same solution. Lack of candor and bungled responses revealed a company with less-than-optimal organizational checks and balances. Its soul, its guarantee of integrity, was in turmoil. (164) Months after the contact lens fiasco, Bausch & Lomb became consumed in an accounting scandal that devastated its share price.(165) Its inability to deal honestly with its customers signaled more serious structural problems.
Intel sent its Pentium chip to market knowing it had flaws in certain high-level math computations. Even after a math professor revealed the problem, Intel disputed the seriousness of the problem and offered refunds only to those users who actually needed the sophisticated functions. (166) The issues for Intel were two-fold: it knowingly sold a faulty product and then arrogantly dismissed the public outrage, justified or not, surrounding its manufacturing misstep. Shareholders were stunned at Intel's flip attitude, wondering why it would risk its good reputation on such a small issue. The Pentium chip debacle offers insight into Intel's responsiveness to its stakeholders. In contrast, when the flaw in Intuit's tax program was revealed, the company apologized and offered full refunds or exchanges. Its quick response beyond its technical liability indicates more than flexibility. There is a forthrightness with customers that emerged quickly and is either indicative of an existing culture or will serve to shape it.
4. How Forthcoming Is The Company With Information?
The derivative investment fiascoes of Barings PLC, Sumitomo Bank, Orange County, Procter & Gamble, Bankers Trust and Gibson Greetings cannot be dismissed as aberrations perpetrated by rogue employees. (167) These are not failures of business ethics but of personal ethics the ethical standards of traders, supervisors and executives.
The key ethical component in these cases is disclosure. Investors who held stock in the world's largest soap company or a greeting card firm were never informed that their company intended to maximize returns by high-risk leverage investments. These organizations never disclosed their risk strategies to shareholders and fund participants and even withheld information about the nature of their investment portfolios.
One of the most troubling aspects of The Body Shop's operations was its lack of candor with franchisees with respect to projections of sales, earnings and catalog competition. If a business cannot be candid with its owners who are assuming much of the financial risk, what expectations can be held for its ethical commitment to customers, investors and other stakeholders?
5. How Does The Company Treat Its Employees?
Marie Grey St. John owns a clothing company that would never be featured in a business ethics textbook: she manufactures $1400 suits. Yet, St. John as a company should command considerable respect for its ability to turn out high quality suits, when none of the work is shipped overseas and employees are paid the highest wages in the industry. (168)
Aaron Feuerstein makes Polar Tec, an artificial material for jackets. There is nothing natural about his company. After a December 1995 fire destroyed his Massachusetts factory, he continued to pay his employees despite their inability to do any work until the factory was reconstructed. (169) This act of conscience provides insight into his character. Who would worry about doing business with such a man? What investor would not feel assured that he would make good on a promise?
The Tasty Baking Company is another firm that does not show up on lists of SRB standouts, but should. It makes junk food such as fruit snack pies and cakes. Tasty Baking was founded years ago in a safe, residential area of North Philadelphia. (170) Today, that area is economically devastated and overwhelmingly poor. It has resisted entreaties by some to move its operations because of its long-standing ties to the local community.
Many companies that rank near the bottom of the continuum have an impressive record of innovative employee programs. Tenneco, for example, insists that its pipeline workers eat a low-fat diet and it pays extra to have a caterer furnish those meals to workers in the field. (171) Dow Chemical pays for annual mammographies for its employees.(172) DuPont has a zealous safety program, one of the most conscientious in any industry.(173) Each of these companies provides tangible benefits to key stakeholders. That they do so in a quiet unrecognized manner is indicative of a soul with more than just good intentions.
6. How Does The Company Handle Third-Party
Starbucks and Levi Strauss have faced difficult and complex issues of labor practices by suppliers and contractors. One passes a code and does nothing; the other actively involves itself in sourcing issues and absorbs the cost. (174) L.L. Bean inspects the place of business of each of its 500 suppliers at least once each year.(175) From the use of sweat shops to involvement in countries with patterns of exploiting its people, an important measure of a company's soul lies in its commitment to human rights, even with challenging cost and profit issues. Coca-Cola has a strong presence in Vietnam that has not produced the attention drawn to Nike.(176) Perfection is not the standard. It is the goal and conduct consistent with that goal that affords a measure of the soul.
7. How Charitable Is The Company?
Many companies demonstrate their commitment to local communities and charitable organizations. In 1993, when Anita Roddick was claiming that her Body Shop "gave an inordinate amount of pre-tax profits to charity," (177) an audit revealed that over its 18 year history, it had given 0.9% less than half the U.S. corporate average and contributed not a penny over its first 11 years of existence.(178) The issue here is not only how much or to whom but how honest.
8. How Does The Company React When Faced
With Negative Disclosures?
Some firms say nothing when confronted with a crisis. Others deny the existence of or attempt to cover-up a problem, or charge the public with over-reacting. The most ethical companies respond immediately even if they believe a crisis is over-blown. Two key components to ethical and effective crisis management are acknowledgment and correction.
Following the accident at Bhopal, Union Carbide's attempt to shift the responsibility for the incident shocked the public. (179) Evasion and denial revealed a callous corporation. In contrast, Johnson & Johnson's quick, sensitive response to the Tylenol poisoning pulling the product even though the withdrawn stock was almost certainly clean indicated its willingness to respond to the community's perceptions of danger.(180) Again, character is revealed in the breach.
An ethical corporate culture is not a permanent state; it must constantly be renewed. Recently, the FDA required disclosure on pain relievers about the dangers of mixing alcohol with these pills. Tylenol was the target of negative press stories. Johnson & Johnson again responded quickly, running full-page advertisements of "acknowledgment." (181) But in its admission, it said the problem applied to "all pain relievers" which it underlined in the ad, leaving the impression that it was everyone's problem. However, Johnson & Johnson's Tylenol was the only company subjected to the lawsuit. In this case, its attempt to spread the blame shows that there are character differences between the J & J of the early 1980's and today.(182)
Audi suffered almost terminable damage to its reputation over allegations that its automobiles suddenly accelerated. It knew the charges were baseless and studies have since reinforced Audi's innocence. (183) But Audi was not without culpability. Although the sudden accelerations were not caused by mechanical defects, they were linked to the poor alignment of the gas and break pedals that confused drivers. Audi knew of this confusion. It could have avoided a recall and devastating adverse publicity if it had acknowledged the problem and responded effectively. By stonewalling, it raised questions about the depth of the company's soul and endangered the financial well being of thousands of employees and investors.
Some firms are open but not responsive when facing problems that might impact their bottom-line. Ben & Jerry's commissions an annual social self-audit; step one is accomplished. But in the case of the rainforest harvest fiasco, Ben Cohen explicitly ignored the conclusions and recommendations of his independent social auditor, Paul Hawken. The report required a response. However, Cohen did not commit resources to repair the damage his company had caused. (184) When an audit reveals the same issues year after year, a company's sincerity and ethical instincts come under scrutiny.
Unfortunately, crises are commonly accompanied by varying degrees of hysteria. Invariably, the public adds a degree of outrage when faced with an environmental incident or a defective product. The test for a company is how well it responds to stakeholders' fears and anxieties, not just whether it confronts the technical reality of the problems. Its responsiveness is not only a measure of character but is the key component of effective crisis management.
Exxon might have recovered sooner from the Valdez spill had it been
more forthcoming with information from the outset. Dow Corning might have
more credibility defending itself against class action suits charging
health problems caused by silicone breast implants if it had been forthcoming
with its internal studies and was more sensitive to public concerns.
IX. THE SOUL OF A CORPORATION: A NEW ETHICAL
Case readings in business ethics invariably focus on a static set of social issues: environmental problems, affirmative action, employee privacy, executive compensation and product liability. Social investment firms and many business texts frequently add other dimensions such as comparable worth and protections and benefits regardless of sexual orientation. (185)
The ethical "rating" of a firm is usually based on a subjective evaluation of its performance in these ambiguous and politicized areas. If a firm violates the socially acceptable approach to a controversial issue, it is considered less than ethical or condemned for not conforming to social fashion. These "unethical" firms frequently are exemplars in addressing their responsibilities to direct stakeholders such as employees, customers and investors. In contrast, the icons of the continuum--entrepreneurial companies that target upscale niche markets--often charge premium prices selling commodity goods. The low-paying and low-security jobs generated by these companies are praised without question or evaluation by the media and business academics.
The sentence, punishment and adverse comparison do not match the evidence.
Popular standards of social responsibility and propriety do not equate
with business ethics. Questions of ethics are currently defined by social
agendas. Because social agendas fluctuate with the times, using them as
a basis for ethical analysis is arbitrary and ignores relevant ethical
questions about honesty, integrity and self-correction. A firm's ethical
standing requires a thoughtful and well-researched examination of its
X. SEARCHING FOR THE SOUL: OUTSIDE
EVALUATION OF A FIRM
While the proposed model for evaluation of the soul presents a series of questions, it does not provide the "neat" form of checklist used by groups such as CEP to determine whether a company is indeed ethical. Without tangible methods for evaluation of the soul, the CSR movement will continue its claim of definitional jurisdiction over ethical behavior and firms. The determination of the soul requires an auditor's approach of examining concrete factors ranked in an escalating scale. Figure 3 represents the tangible factors (ranked according to the questions proposed in the new model).
Under the proposed audit model, the focus is on honesty. Under all three levels, the questions asked focus on two basic concepts: What do you do? If you have fallen short of claims or not complied with the rules, how did you handle it? Compliance with the law represents an attitude of the company and its management. For example, investors will know little about the integrity of a firm from a checklist touting it as a non-weapon manufacturer. But, one does gain insight into the management, direction and future of a company that has engaged in price-fixing. Similarly, shareholders understand little from a "no animal testing" claim, but can gain insight into a firm's soul if an audit reveals significant deterioration in franchisee relationships. This proposed audit model offers, contrary to the continuum, information with some value to an investor not only from an ethical focus on integrity but also from the perspective of predictable financial performance.
Further, the audit reveals a true continuum with tangible objectives for achievement. (186) Noncompliance with the law is more than an ethical breach; it represents insight into the company's culture and potential. There is a direct correlation between financial success and compliance with the law. Level one of this alternative continuum is not just an initial hurdle for ethics but it provides a screen information infinitely more valuable to investors than a superficial look at a company's involvement in or stance on weapons or animal testing.
As the audit moves from compliance to philanthropy there is a clear distinction made between calculated or negligent breaches and the misstep bound to occur. The misstep is distinguished in its nature through a series of questions on ethics in the breach, the extent of management involvement, and the length of time involved.
What is missing from the audit and resulting continuum is the political agenda. It is not the purpose of the audit or reformed continuum to judge whether causes to which the company contributes are noble. Rather, it is only the role of the audit to determine whether those contributions actually occurred.
With this modest proposal is the basis for an objective look at companies. All companies have the potential for a successful audit. To the extent they are not permitted to move up in the continuum, it will be the result of action or inaction on their part and not the result of arbitrary social screens. What should count in business ethics has been largely ignored for cause-oriented ethics. This new continuum and audit returns the question of business ethics to one of conduct measured by uniform standards as opposed to political views.
©1999. No part of this paper may be reproduced without permission of the authors.
NPI Global Care Unit Trust
The Global Care Unit Trust invests in companies according to a number of positive criteria. It also avoids companies operating in some areas which we believe are unacceptable to investors wishing to adopt an ethical strategy. The criteria are classified into three categories.
Impact on people
Impact on the environment
Impact on animals
Within these broad categories are a number of specific issues which concern ethical investors.
A summary of these is given below.
A Guide to Socially Responsible Investment:
Founded on Principles of Caring
Concerned individuals investing wisely, without abusing the world's natural resources or exploiting its people and animals--this is the Ethical Investment Philosophy. Broadly speaking the selection process follows two paths:
1.) The selection of companies which positively contribute
to the environment.
2.) The avoidance of companies which have a negative
effect on the environment.
Investment is made in companies that support and actively encourage the following:
Conservation and recycling
Safety and security
Medicine and healthcare
Concerned, caring management
Equal opportunity provision for employees
Companies involved in the following activities, as far as is practicable, are excluded from the Ethical Fund portfolio:
Armament and nuclear weapons
Animal exploitation and experimentation
Alcohol and tobacco
Environmentally damaging practices
Poor employment practices
Any products, e.g., pharmaceuticals and
cosmetics, using animal experimentation
Any products, e.g., fur, involving 'inhumane'
Beers, wines and spirits
Involvement in the nuclear industry
Investment in countries with unethical regimes
(in the past notably South Africa)
Failure to promote equal opportunities
Failure to match First World employment
conditions in Third World countries
Lack of trade union rights
Inadequate level of giving to charity
Inadequate level of community involvement
Unreadiness to disclose information to Ethical
Investment information groups
Inadequate health and safety record
'Excessive' greenhouse gases
Use of tropical hardwood
Excessive effluent discharge
It is clear that some of these are products, e.g., alcohol. Others are processes or company actions such as employment or environmental protection practices. While the distinction is not entirely satisfactory, it is important. And, as noted above, the Ethical Investment advocates correctly point out that the list can be positive or negative: products or practices to avoid or good products and practices.
The Way Some Ethical Investors Trade On The Word
Our interest is in one question only. Many EI activists are keen to make sure industry's advertising is honest and informative. Is their own self-description honest and informative? How ethical is ethical investment?
Source: Anderson and Digby, What has 'Ethical Investment' to do with Ethics, The Social Affairs Unit Research Report 21 (1996).
THE CONTINUUM OF CONDUCT
FOR BUSINESS ETHICS
1. 1 "Rain-forest chic" is a term coined by Mr. Entine in his piece Rain-forest Chic: A Look at the Underside of Ethical Marketing, Toronto Globe & Mail Rep. on Bus., Oct. 1995, at 39.
2. 2 "Consumers put their money where their mouths are and are actually making what they believe is the environmentally responsible purchase." David Mager, Bottom-Line Benefits of Environmental Responsibility, 5 At Work: Stories of Tomorrow's Workplace, at 11 (Sept./Oct. 1996). One survey revealed that 71 percent of consumers switch brands because of environmental concerns. Joel Makower, Beyond the Bottom Line (1994). Another survey concluded that 27 percent of consumers boycott products because of the manufacturers' poor environmental record. R.G. McLeod, Environmental Worries Affect Shopping, S. F. chron., July 3, 1990, at A4.
3. 3 See Barbara Carton, Gillette Faces Wrath of Children in Testing on Rats and Rabbits, Wall St. J., Sept. 5, 1995, at A1, A5. Gillette Company provides insight into the backlash that occurs when products do not carry the "no animal testing" warranty. Gillette has become a national target for animal rights activists as well as school children who write letters such as: "Let this be a warning to you. If you hurt another animal, if I find out, one month from this letter arrives to you, I'll bomb your company. P.S. Watch your back." Sixth grader - James Martin Elementary, Philadelphia, PA; "You have no excuse for the murders that go on every single day in your laboratories, if you can call them that. It sounds to me like you are the Nazis back in World War II and the poor suffering animals are the Jews." Christina Fortner, age 13, Fredericksburg, VA. Id.
4. 4 The phenomenon of green labeling, or emphasizing environmental aspects of a particular product, is well documented. See, e.g., Green Marketing Isn't Dead, In Business, Jan/Feb. 1996, at 27; Jacquelyn Ottman, Green Marketing: Challenges and Opportunities for the New Marketing Age (1993).
5. 5 The most popular "eco product" is recycled paper stationery. David Riggle, Green Retailers Get the Message, In Business, Sept/Oct. 1996, at 34.
6. 6 Id. In 1991, there were 11 green retailers in the United States. By 1992 the number had climbed to 123 and by 1995 to 400. Current figures put the number of green retailers at 1,300. A label from After The Fall Vermont Apple Juice reads as follows:
ALL NATURAL INGREDIENTS
"The Finest: Here's Why"
- Clean Rural Environment
Distance from urban pollution, clean water and earth-
sensitive cultivation insure a purer product
- The Small Family Farm
Small farms pay attention to detail
7. 7 See, e.g., Denis Collins, Capitalism and Sin, Bus. & Soc'y, Mar. 1996, at 42; Carol M. Sanchez, Environmental Regulation and Firm-Level Innovation, Bus. & Soc'y, June 1997, at 140; Robert C. Solomon, The Moral Psychology of Business: Care and Compassion in the Corporation, 8 Bus. Ethics Q. 515 (1998).
8. 8 When Business Ethics published a piece on The Body Shop that raised issues about the company's honesty and fairness, the editor introduced the piece with an apology and confession of depression:
I'm depressed, most of all, to have to run a story like this about a colleague I have long admired -- Anita Roddick, the founder of The Body Shop. She's an entrepreneur whose style and verve I have always appreciated. When the histories are written, they'll say she was one of the first to put socially responsible business on the map. It was Anita who focused corporate attention on the issue of animal testing, who avoided idealized feminine images in her marketing, who used shop windows and company brochures to support issues like AIDS awareness and environmental protection, who turned company trucks into roving billboards for social causes. Marjorie Kelly, To Tell the Truth, 8 Bus. Ethics, Sept./Oct. 1994, at 6.
9. 9 Ben Cohen is called a "celebrated entrepreneur and social activist" by Business Ethics. Ben Cohen: Interview, Sept/Oct. 1994, at 19; Ben Cohen started the 1991 annual shareholders' meeting, of Ben & Jerry's by stating, "We want to celebrate our collective humanity and the interconnection of all things." Suzanne Alexander, Oh, Wow, Man: Let's Like, Hear From the Auditors, Wall St. J., June 28, 1991, at A1.
10. 10 Starbucks was described as follows:
With more than five hundred company-owned stores throughout the country, Starbucks projects itself as a progressive business, touting its "Bean Stock" employee ownership plan. Full medical and dental benefits -- available to even part time workers, and its annual six figure donations to nonprofit organization CARE. Mary Scott, Howard Schultz, Bus. Ethics, Nov./Dec. 1995, at 26.
11. 11 Tom Chappell: Minister of Commerce, Business Ethics, Jan./Feb. 1994, at 16, 17. Chappell received a theology degree from Harvard Divinity School in 1991 and has written The Soul of A Business: Managing For Profit and the Common Good (1993). Chappell's book notes, "The ultimate goal of business is not profit. Profit is merely a means toward the ultimate aim of affirming the health and dignity of human beings and their families, affirming aspirations of the community and affirming the health of the environment -- the common good." Douglas S. Barasch, God and Toothpaste, N.Y. Times Magazine, Dec. 22, 1996, at 27. Tom Chappell, the owner of Tom's of Maine, was quoted in a Business Ethics interview:
We call it common good capitalism because, for us it's not the dual bottom-line. I don't agree with the concept of dual bottom-line, because human spirit and goodness are not bottom-line thinking. I take great exception to that concept that's been out there in the social responsibility movement, because they're still reducing everything to the bottom line. Goodness is not a bottom-line. It's not reducible, it's not measurable, it's only something you can feel and affirm, and share. It can be done without a religious background, but it can't be done without the involvement of your spirit. We're talking about a business strategy that employs your head to do the calculations and the shrewdness, and your heart or spirit to be in respect and awe of the wonder and beauty of goodness in nature, in people, and so on.
12. 12 Working Assets Long Distance, now involved in marketing green power in deregulated electricity markets, offers long distance and charitable contributions. It's CEO, Laura Scher says, "We are offering people an opportunity to save money and save the environment at the same time." Jon Entine, Green Shell: Clean Power's Dirty Secret, Progressive Populist, June, 1997, at 14.
13. 13 A brief history of Celestial Seasonings:
The legend starts in the late 1960s with a band of youthful freespirits--led by a long-haired twenty-year-old named Mo Siegel--who scrambled around the Rocky Mountain hillsides above Aspen, Colorado, in search of wild herbs. The tale continues with the group relocating cross-state to Boulder, selling a member's car to raise badly needed capital, hand-packing 500 pounds of its herbs into 100,000 muslin teabags, and then successfully selling the entire lot through a local health-food store.
This scenario peaks with the company's products catching on with a health-conscious public, sales skyrocketing, suitors calling, and Celestial emerging as the dominant player in the fledgling herbal tea industry. All the while, of course, the firm clings tightly to its well-publicized people-oriented and anti-traditional business style. Howard Rothman, Under Pressure: Has Celestial Seasonings Lost Its Soul, Bus. Ethics, Sept/Oct. 1996, at 14-15.
14. 14 Susie Thompkins, owner of Esprit de Corp. explains her company's philosophy as follows: "This company has always been about vision and values. It's not just a clothing company. This company has heart and soul. I've always maintained that business is a tool for activism." Susie Tompkins, Bus. Ethics, Jan./Feb. 1995, 20, at 22-23.
15. 15 Patagonia has a "100 percent organic clothing line." Mary Scott, Yvon Chouinard, Bus. Ethics, Jan/Feb 1996 at 23. CEO Yvon Chouinard's describes his business philosophy: "When the surfs up, you go surfing, you don't plan to go next Tuesday at two o'clock. Why should you care what hours your employees have as long as the work gets done?" Deep Ecology and Sustainable Business: Steering Business Towards Sustainability (1996).
16. 16 Nike's code of conduct provides:
NIKE Inc. was founded on a handshake.
Implicit in the act was the determination that we would build our business with all of our partners based on trust, teamwork, honesty and mutual respect. We expect all of our business partners to operate on the same principles.
At the core of the NIKE corporate ethics is the belief that we are a company comprised of many different kinds of people, appreciating individual diversity, and dedicated to equal opportunity for each individual.
NIKE designs, manufactures and markets sports and fitness products. At each step in that process, we are dedicated to minimizing our impact on the environment. We seek to implement to the maximum extent possible the three "R's" of environmental action: reduce, reuse and recycle.
We seek always to be a leader in our quest to enhance people's lives through sports and fitness. That means at every opportunity - whether in the design, manufacturing and marketing of products; in the environment; in the areas of human rights and equal opportunity; or in our relationships in the communities in which we do business - we seek to do not only what is required, but, whenever possible, what is expected of a leader.
There Is No Finish Line.
Jeff Ballinger & Claes Olsson, Behind the Swoosh: The Struggle of Indonesians Making Nike Shoes 177 (1997).
17. 17 Cause-related marketing has increased from $75 million in 1988 to $535 million in 1997 Daniel Kadlec and Bruce Van Voorst, The New World of Giving; Companies Are Doing More Good, Time, May 5, 1997, at 62.
18. 18 See Paul C. Judge, It's Not Easy Being Green, Bus. Week, Nov. 24, 1997, at 180 (in which the companies and their images are discussed).
19. 19 See supra note 4.
20. 20 For a complete discussion of Dow Chemical and its vilification, see Marianne M. Jennings, Case Studies in Business Ethics 73 (2d ed. 1995).
21. 21 Time magazine referred to Exxon's "attitude problem." Barbara Rudolph, Exxon's Attitude Problem, Time, Jan. 22, 1990, at 51. The Washington Post chronicled Exxon's problems that preceded the Valdez spill. Jay Matthews, Problems Preceded Oil Spill, Washington Post, May 18, 1989, at A1, A18. Other article titles indicative of demonic status: Exxon Labeled No. 1 in Bungling a Crisis, Arizona Republic, Mar. 13, 1991 at A3; Michele Galen and Vicky Cahan, Getting Ready for Exxon vs. Practically Everybody, Bus. Week, Sept. 25, 1989, at 190; and Rae Tyson, Valdez Cleanup Is Skin Deep, USA Today, Mar. 22, 1994, at 3A.
22. 22 Again, article titles reflect the attitude: Kathleen Deveny and Joseph Pereira, Tobacco Stakes Sold by Harvard, Wall St. J. May 24, 1990, at B1; Tim Smart, It Takes More Than Black Robes to Scare Tobacco Companies, Bus. Week, April 8, 1991, at 34; Michael Quinn, Don't Aim That Pack at Us, Time, Jan. 29, 1990, 60; Watecia Konrad, "I'd Toddle a Mile for a Camel, Bus. Week, Dec. 23, 1991, at 34; and Joseph M. Beth and John R. Dorfman, Insurance Companies Should Divest Their Tobacco Investments, 97 Bus. & Soc'y Rev., Nov. 1997, at 26.
23. 23 Indeed, the market itself is indicted for producing defense contractors. Bill Shaw, Sources of Virtue: The Market and the Community, 7 Bus. Ethics Q. 33 (1997); See also, Albert O Hirschman, Rival Views of Market Society (1992).
24. 24 A piece on Monsanto offers insights into the business ethics community views on chemical companies: Monsanto's Brave New World, Bus. Ethics, Jan./Feb. 1996, at 47. Monsanto was the manufacturer of Agent Orange, but apparently has won converts with its genetic engineering of plants so as to not need pesticides. See also, infra note 26 for a discussion of social investment fund screens.
25. 25 Ross Kerber, For Sale: Environmentally Correct Electricity, Wall St. J., July 23, 1997, at B1, B2. "People want the opportunity to steer their money away from highly-polluting resources to ones that have far less impact," at B1. Each year Business Ethics names its worst polluters and its list includes electric utilities, steel companies, oil companies and chemical manufacturers. Those named best non-polluters include Coca-Cola, Colgate-Palmolive, Polaroid and Timberland. The Worst Polluters of 1995, Bus. Ethics, Jan/Feb 1996 at 15.
26. 26 In fact, the lines between ethical and unethical appear to be self-defined. One of the screens for socially responsible investment funds is that they will not own stocks in certain categories of companies. For example, an ad for the Security Social Awareness Fund provides as follows:
The Social Awareness Series of Security Benefit Life's variable annuity and variable life products specifically avoids investments in companies engaging in the manufacture of weapon systems, practices that pollute the environment, production of nuclear energy, and manufacture of tobacco, liquor products or the gambling industry.
Business Ethics Jan./Feb. 1997, at 24. The PAX World Fund is described in the same ad as follows: "PAX does not invest in weapons, nuclear power, tobacco, alcohol or gambling." Id. Still another, MMA Praxis, uses a positive definition: "With MMA Praxis Mutual Funds, you can be confident your money is being invested in a way that helps support and enhance peace, justice, and the quality of human life."
Business Ethics touts these funds as outperforming the market, but a financial analysis by the authors of the performance claims produced very different results. Interesting also are the evaluative remarks of the SR funds. For example, the Aquinas Equity Growth Fund was noted as a high performer, but the evaluator was still not terribly enthusiastic as explained below:
In its effort to appeal to Catholic investors, the fund has taken a strong pro-life position and even urges companies not to make charitable contributions to Planned Parenthood. Despite the nice financial returns this year, these social standards limit the applicability of the fund to a broad base of social investors, so it's not one I would recommend widely.
Id. at 20-21.
27. 27 As noted in the Auisas fund discussion, supra note 26, only pro-life screens, not nuclear screens, raise the issue of broad-based applicability for the fund evaluators. Once again, such one-sided statements raise issues of rigor and objectivity. Indeed, Recent events in journalism in covering business suggest that issues of honesty and fairness are secondary to a good story when it comes to covering corporations. The Cincinnati Enquirer was forced to issue a front-page apology and pay $10 million to Chiquita when Chiquita discovered that reporter Michael Gallagher had tapped into Chiquita's voice mail system and recorded and then printed privileged conversations between Chiquita executives and their lawyers. Devon Spurgeon. Voice mail flaws exposed in articles, Arizona Republic, July 8, 1998, at E1, E3. Further, the New York Times printed a story on Texaco executives' recorded conversations on a discrimination suit. The conversations appeared so damning that Texaco rapidly settled the suit for $176 million. Further investigation revealed that the conversations had not been transcribed correctly and that the tapes had too many pauses and edits to be authenticated. Further, the executives involved, charged with obstruction of justice, were acquitted of all charges. Peter Fritsch et al., Texaco to Pay $176.1 Million in Bias Suit, Wall St. J., Nov. 25, 1996 at A3; Holman W. Jenkins Jr., Texaco Ransoms Its Image for $176 Million, Wall St. J., Nov. 26, 1996, A19; Jury acquits former Texaco executives in bias lawsuit, USA Today, May 13, 1998, at 5B.
28. 28 Boomers developed the "greed is good" epitaph of the 1980s and are marked by their ties to BMWs, investment banking and conspicuous consumption. Shlomo Maital, Here Come the Twentysomethings, Across the Board, May, 1991, at 5. See also, Terence Murphy, Boomers, Busters and 50-Plussers: Managing the New Generation Gaps, Working Woman, July 1991, at 41, 43-45.
29. 29 Alan Brinkley, Richard N. Current, Frank Freidel, & T. Harry Williams, American History (1991), at 800-807.
30. 30 Steve Schueth, executive vice president at the Calvert Group (a social responsibility mutual fund dominated by boomer investors), explains Calvert's investment strategy as follows: "We are trying to reward companies that we believe will help make a better world for our children and families." Richard C. Morais, Feel-good investing, Forbes, Dec. 18, 1995, at 84, 85. A look at just the titles of articles in Business and Society Review is revealing: Tom Johnson, Will Mox Fuel Guarantee a Glowing Future? Playing a Game of Ecological Chicken; A Big Polluter Sees the Light; and Strange Bedfellows: Business and Environmental Groups 98 Bus. & Soc'y Rev., 4 (1998). In another issue: David J. Tennenbaum, et al., The Greening of Costa Rica; and Insurance Companies Should Divest Their Tobacco Investments, Bus. & Soc'y Rev. 26 (1997).
31. 31 There is an ongoing debate in the literature
on these issues and on the role of corporate social responsibility issue.
Professor Marc T. Jones theorizes capitalism is the problem and CRS has
evolved as the Band-Aid, developed primarily in the academy to remedy
the inherent evils of capitalism:
Unfortunately, much of the theoretical compatibility between capitalism and democracy breaks down in reality. History has shown quite clearly that capitalism leads to a massive concentration of economic resources in the hands of a tiny minority of firms and property holders. This point is not disputed even by the staunchest defenders of capitalism. In the United States today, there exist around 12 million business firms, yet the 50 largest firms make almost half of all profits, whereas the top 5% of households account for 26.9% of national wealth. This incredible concentration of economic resources translates into political power and undermines the democratic process. This is so because for democracy to be viable, concentration of power must be avoided and all participants in the political system require adequate resources to engage fully in the democratic contest. Herein lies the basic contradiction between capitalism and democracy.
Preceding from the ideational to the material aspects of the social responsibility discourse, one comes to the major sites or institutional locations where the discourse is produced, disseminated and practiced. Academia constitutes the site where the ideological core of the social responsibility discourse is situated.
Marc T. Jones, Missing the Forest for the Trees, Bus. & Soc'y, Mar, 1996, at 7, 13, 25 (citations omitted).
32. 32 The notion of basing one's investment decisions on one's beliefs is hardly new. Quakers have always avoided investment in firms that sell guns or are primarily armament or defense manufacturers. Calvert Group embraces environmentalism, Timothy Plan avoids investment in alcohol, tobacco, casino gambling and pornography. The Women's Equity Mutual Fund invests in companies that: 1) have a history of women in executive positions; 2) use women vendors; 3) provide and sponsor networking for women; and 4) "present positive images of women in their advertising." There are 757 social screen equity funds available that screen out everything from tobacco to British investments in Northern Ireland. Morais, supra note 30, at 85.
33. 33 The rise of the social phenomenon, the latte town, is an indication of the replacement of the simple goods with high dollar items that remain environmentally and socially conscientious. David Brooks, The Latte Town, Weekly Standard, Nov. 1997, at 10. Theme restaurants such as the Rainforest Cafe restaurant chain permit consumption without guilt. Christie Brown, Meat Loaf and Monkeys, Forbes, Oct. 23, 1995, at 44.
34. 34 Referred to a shopping for a cause, consumers use purchasing to solve social problems. See William H. Carlile, Socially Responsible Deals: Consumer Like Doing Business with a Good Cause, Ariz. Republic, Jan. 11, 1994, at C1; see also Council on Economic Priorities, Shopping for a Better World, (1992). The Council's rating key focuses on the following: giving to charity (top category is 2% or more); women's advancement (top category is 3 women as board members or officers); advancement of minorities (top category, is at least two minorities as members or officers); animal testing (top category is none); disclosure of information (top category is full disclosure on social programs); community outreach (volunteerism in housing and education). South Africa (top category is no investment in South Africa); Environment (top category for recycling, alternative energy sources, green products and packaging); Family benefits (top category includes flexible time, benefits, child/dependent care assistance, education and seminars); Workplace issue (top category: good union relations and no union busting); Military contracts (top category: nothing over $500,000); Nuclear Power (top category : none). Id.
35. 35 Id.
36. 36 For example, Starbucks, the boutique Seattle-based coffee retailer was given the International Human Rights Award by the Council on Economic Priorities (CEP) at its annual "Corporate Conscience" ceremonies. Starbucks and its treatment of coffee bean pickers in other countries is very different from its image:
To earn enough to afford a pound of Starbucks' coffee, a Guatemalan worker would have to pick 500 pounds of beans, about five days of work.
How does a company under attack for exploiting cheap, foreign labor by activist, environmental, and church groups become the belle of the socially responsible ball? During 1994, Starbucks suffered embarrassing grassroots protests because it sourced beans from export houses that paid Guatemalan workers below a living daily wage, about $2.50 a day. The company is no worse than the average wholesaler, but it has a better-than-average reputation as a new-breed, values-driven corporation. So when protesters leafleted Starbucks stores and targeted its annual meeting, a peace plan was offered. Last year, Starbucks became the first company in the agricultural commodities sector to announce a "framework" for a code of conduct.
There are more than 30,000 farms in Guatemala, one of 20 coffee-supplying countries. Starbucks was targeted not because it could change the labor status quo --it is a bit player in the coffee business--but because of its high public profile. The increasingly visible protests left Starbucks with little choice but to pass its code, and it cost the company little. We were "prodded" into it, notes David Olsen, Starbucks' senior vice president, diplomatically.
Jon Entine, Corporate Ethics and Accountability, 5 At Work, at 3 (1996).
37. 37 Many companies with highly regarded labor codes still use third-world supplies from factories where conditions are problematic. Larry Rohter, Hondurans in 'Sweatshops' See Opportunity, N. Y. Times, July 18, 1996, at A1.
38. 38 Philip Morris created its own magazine in the late 1980s called Philip Morris in which it covered topics such as Jack Hanna and the Columbus Zoo, Milton Berle's short stories, and photographer Hiro. See Philip Morris, May 1989. One of its Bill of Rights ads featured the Reverend Theodore M. Hesburgh of Notre Dame with the following quote:
We tend to forget that the Bill of Rights was not a reality for many people before the Civil Rights laws of the mid-60s.
A century earlier, President Lincoln signed the Emancipation Proclamation. But slavery didn't really end for another 100 years.
The fact is that the Bill of Rights did not automatically guarantee life, liberty, and the pursuit of happiness for all Americans. We have had to enlarge our freedoms, promote human dignity, and eliminate injustice during all the 200 year of the Bill of Rights.
The ideal is there, but the reality has always needed enlarging. It still does.
Time, May 1990, at 46.
39. 39 Often referred to as "Caring Capitalism," companies tout their environmentalism. Patagonia switched in 1994 to organic cotton. Stonyfield Farm is searching for organic fruit suppliers for its yogurt, Edward O. Welles One Holdout: A White Knight Who Won't Quit, Inc. Sept. 1998, at 45; and Ben & Jerry's raises money to cleanup Lake Champlain. Paul C. Judge, It's Not Easy Being Green, Bus. Week, Nov. 24, 1997, at 180; see also, Kadlec, supra note 17, at 63 (noting cause-related marketing increased from $75 million in 1988 to $535 million in 1997).
40. 40 Keith H. Hammonds, A Portfolio with a Heart Still Needs a Brain, Bus. Week, Jan. 26, 1998, at 100. For more background on growth of socially screened portfolios, see Patrick McVeigh, 1996 Was a Great Year for Sociality Screen Mutual Funds, Bus. Ethics, Jan./Feb. 1997, at 19.
41. 41 See supra notes 26-27.
42. 42 Entine, supra note 1.
43. 43 Shopping for a Better World, supra note 34.
44. 44 Id. at 17. The definition of family
benefits in CEP is as follows:
CEP rates companies according to how many family benefits are offered company-wide. They look at three major areas of benefits coverage: (1) flexibility in workplace policies (parental leave, flextime, job-sharing, and flexible benefits); (2) child and/or dependent care assistance (reimbursement, referral, on-site or near-site day care, adoption subsidy, elder care, and disabled-dependent care); (3) education and information (onsite seminars, distribution of educational materials, and care-giver fairs).
CEP focuses on programs offered in the Flexibility and Dependent Care areas and uses the education programs as a "kicker" to boost a company's grade.
U - Company offers company-wide at least eleven of the benefits in (1) and (2) above, and offers educational support information.
- Company offers all benefits in either (1) or (2), company-wide but fewer than three in the other area. Very strong educational support may boost a company to a top grade.
W - Indicates that a company offers fewer than three of the options in (1) or (2) to its employees.
? - Insufficient information.
If a benefit is in an experimental stage or in the process of being implemented, CEP counts it as a "yes." A benefit still in the research stage is counted as a "no." The size of the company and type of industry are also considered. A benefit granted through "departmental discretion" or on a "case-by-case basis" is counted as a "no" for large companies. CEP feels that for large companies, only a company-wide written policy can eliminate the possibility of discrimination. For small companies, however, handling employee needs on a case-by-case basis is common. CEP credits case-by-case benefits for small companies only. Ratings in this category apply to U.S. operations only.
Id. at 20-21.
45. 45 U - No animal testing.
U* - Company tests on animals but has reduced the number used in testing by 40% or more over the last five years and/or has given $250,000 or more annually to alternative research through in-house or independent labs.
Uk - Same as U* but the company manufactures surgical/medical supplies and/or prescription drugs.
W - Company tests on animals; less than a 40% reduction in the number of animals used in testing in the last five years and/or less than $250,000 annually given to alternative research; or no quantitative report of reductions or major contributions to research for alternatives.
Wè - Same as Bottom, but the company manufacturers surgical/medical supplies and/or prescription drugs.
? - Insufficient information or company does "nutritional testing," the effects of which, if any, CEP has been unable to determine.
Where information was available, ratings were adjusted upward if the company: was close to threshold on either reductions or expenditures on alternative research; had significant reductions in animal use more than 5 years ago; was a leader in researching alternatives by convening seminars, establishing grant programs, or providing scientific expertise to industry committees. Id. at 17.
46. 46 Indeed, Ben & Jerry's appears in nearly all business articles on green marketing. See Kadlec, supra note 17, at 63; Judge, supra note 39, at 180.
47. 47 Charles P. Wallace, Can The Body Shop Shape Up? Fortune, April 15, 1996, at 119.
48. 48 The meeting on CSR on May 16, 1996 at the White House. Al Gore Talks Business, Bus. Week, June 3, 1996, at 39. See also, Civics 101, The Economist, May 11, 1996, at 61.
49. 49 The issue of whether CSR really makes financial sense for a company has been explored but readily discounted in the academic field. See e.g., William C. Frederick, Moving to CSR, Bus. & Soc'y, Mar. 1998, at 40; Jonathan Chevreau, Ethical Investing: More Marketing Than Substance? Financial Post, Feb. 6, 1997.
50. 50 Anne McElvoy has referred to the problem as "The Moral Daze" and written about the inherent difficulties with selling ethics and comments on the uncertainty as follows, "A lot of companies have an uneasy feeling about the implications of some of their actions. They hate the feeling that they are vulnerable to being called unethical and they are not quite sure why. It has nothing to do which [sic] ethics in any recognizable sense of the word." Anne McElvoy, The Moral Daze, The Spectator, Jan. 13, 1996, at 12.
51. 51 In the academic literature, the CSR movement is referred to as "stakeholder theory." As originally touted in the management literature, stakeholders were those affected by the decisions of businesses and include shareholders, employees, customers, suppliers, lenders, and society. R. Edward Freeman & David L. Reed, Stockholders and Stakeholders: A New Perspective on Corporate Governance, 25 Cal. Mgt. Rev. 88 (1983). For a summary of the expansion of stakeholder theory, see Robert A. Phillips, Stakeholder Theory and a Principle of Fairness, 7 Bus. Ethics Q. 51 (1997). See also, Stakeholder Capitalism, The Economist, Feb. 10, 1996, 23.
52. 52 In a presentation to graduate students who touted shampoo as a product superior to those of defense contractors, Mr. Entine responded, "What that means is that your shampoo manufacturer didn't drop shampoo bottles during a war waged to preserve human rights." Speech at Ariz. State Univ. College of Bus., Mar. 7, 1997.
53. 53 Milton Friedman, Milton Friedman Responds, 84 Bus. & Soc'y Rev. 5 (1984).
54. 54 See Freeman & Reed, supra, note 51.
55. 55 The focus of CSR is largely on the interaction of companies with the environment. Indeed, some philosophers have proposed that animals are stakeholders. Mark Starik, Should Trees Have Managerial Standing? Toward Stakeholder Status for Non-Human Nature, 14 J. of Bus. Ethics 207 (1995).
56. 56 Daryl G. Hatano, Should Corporations Exercise Their Freedom of Speech Rights?, 22 Am. Bus. L.J. 165 (1984). Hatano defines a social responsibility firm as one that puts the interests of society first. What those interests are is not defined. Id. In this sense, Hatano's model is no different from the stakeholder model. Id. The theories do not afford definitional precision. See supra, note 51 on stakeholder literature.
57. 57 Milton Friedman, Capitalism and Freedom 133 (1962) (quoting Adam Smith, The Wealth of Nations 421 (Cannon ed. 1930); see also Milton Friedman, The Social Responsibility of Business is to Increase its Profits, Responds, N.Y.Times Magazine, Sept. 13, 1970 (Friedman references this quote again).
58. 58 Frank Shipper & Marianne M. Jennings, Business Strategy for the Political Arena xix. (1984).
59. 59 Friedman, supra note 53, at 6.
60. 60 Peter F. Drucker, Management: Tasks, Responsibilities, Practices 366 (1973).
61. 61 Drucker describes the business ethics conundrum as follows:
Countless sermons have been preached and printed on the ethics of business or the ethics of the businessman. Most have nothing to do with business and little to do with ethics.
One main topic is plain, everyday honesty. Businessmen, we are told solemnly, should not cheat, steal, lie, bribe, or take bribes. But nor should anyone else. Men and women do not acquire exemption from ordinary rules of personal behavior because of their work or job. Nor, however, do they cease to be human beings when appointed vice-president, city manager, or college dean. And there has always been a number of people who cheat, steal, lie, bribe, or take bribes. The problem is one of moral values and moral education, of the individual, of the family, of the school. But there neither is a separate ethics of business, nor is one needed.
All that is needed is to mete out stiff punishments to those--whether business executives or others--who yield to temptation. In England, a magistrate still tends to hand down a harsher punishment in a drunken-driving case if the accused has gone to one of the well-known public schools or to Oxford or Cambridge. And the conviction still rates a headline in the evening paper: "Eton graduate convicted of drunken driving." No one expects an Eton education to produce temperance leaders. But it is still a badge of distinction, if not of privilege. And not to treat a wearer of such a badge more harshly than an ordinary workingman who has had one too many would offend the community's sense of justice. But no one considers this a problem of the "ethics of the Eton graduate."
The other common theme in the discussion of ethics in business has nothing to do with ethics.
Such things as the employment of call girls to entertain customers are not matters of ethics but matters of esthetics. "Do I want to see a pimp when I look at myself in the mirror while shaving?" is the real question.
It would indeed be nice to have fastidious leaders. Alas, fastidiousness has never been prevalent among leadership groups, whether kings and counts, priests or generals, or even "intellectuals" such as the painters and humanists of the Renaissance, or the "literati" of the Chinese tradition. All a fastidious man can do is withdraw personally from activities that violate his self-respect and his sense of taste.
Lately these old sermon topics have been joined, especially in the U.S., by a third one: managers, we are being told, have an "ethical responsibility" to take an active and constructive role in their community, to serve community causes, give of their time to community activities, and so on.
There are many countries where such community activity does not fit the traditional mores; Japan and France would be examples. But where the community has a tradition of "voluntarism"--that is, especially in the U.S.--managers should indeed be encouraged to participate and to take responsible leadership in community affairs and community organizations. Such activities are rewarded, or promoted according to their participation in voluntary activities. Ordering or pressuring managers into such work is abuse of organizational power and illegitimate.
An exception might be made for managers in businesses where the community activities are really part of their obligation to the business. The local manager of the telephone company, for instance, who takes part in community activities, does so as part of his managerial duties and as the local public-relations representative of his company. The same is true of the manager of a local Sears, [sic] Roebuck store. And the local real estate man who belongs to a dozen different community activities and eats lunch every day with a different "service club" knows perfectly well that he is not serving the community but promoting his business and hunting for prospective customers.
But, while desirable, community participation of managers has nothing to do with ethics, and not much to do with responsibility. It is the contribution of an individual in his capacity as a neighbor and citizen. And it is something that lies outside his job and outside his managerial responsibility.
Drucker, supra note 60, at 366.
62. 62 Ford raised the wages and reduced workers' hours while still increasing production and cutting the price of the Model T from $950 to $290. Alan Brinkley, Richard N. Current, Frank Friedel, and J. Harry Williams, American History, (1991), at 515-516.
63. 63 Friedman, supra note 53, at 8.
64. 64 Lee Smith, The Unsentimental Corporate Giver, Fortune, Sept. 21, 1981, at 121. Mr. Friedman has recently noted about social responsibility, "It was a very fashionable topic some 20 years ago, and then it sort of died down. I think it is all rhetoric." John F. Dickerson, Adam Zagorin, Stacy Perman and Jane Van Jessel, The New World of Giving, Time, May 20, 1996, at 40-41.
65. 65 Friedman, supra note 53, at 9.
66. 66 Id. In Mr. Friedman's own words:
Well, there is a great deal of misunderstanding about the pollution problem in our society. First, it is often in the private interest not to pollute. That being said, we musn't suppose that there are no mechanisms within the free enterprise society which lead to the "right" amount of pollution.
Let me stop here for a minute. An ideal of zero pollution is one of the fallacies mouthed about the problem. That is absurd. As in all these cases, you must balance returns with costs. People's breathing is one source of pollution. We breathe in oxygen and breathe out carbon dioxide. If too much carbon dioxide is breathed out, there is a lot of pollution. Now we can simply stop breathing, but most of us would consider the cost of eliminating that pollution greater than the return. We must decide upon the "right" amount of pollution, that amount at which the cost of reducing pollution to all the people concerned would be greater than the gain from reducing the level.
In many cases, the private market provides precisely that incentive. For example, consider a town that has been cited as a horror. Gary, Indiana, where the U.S. Steel Company is the major source of pollution. Let's assume for a moment that contrary to fact, none of the pollution spreads into Chicago. Instead, it's all concentrated in Gary. Now, if U.S. Steel pollutes heavily in Gary, the Gary environment becomes unattractive. People don't want to live and work there. U.S. Steel has to pay higher wages to lure employees. You'll say to me that not all the people in Gary work for U.S. Steel. Some people run stores and gas stations. But exactly the same thing is true. If Gary is an unpleasant environment, nobody will run a grocery store there unless he can earn sufficiently more there than he can elsewhere to compensate for enduring the pollution. Consequently, food costs will be high and that again will raise the wages U.S. Steel will have to pay to attract a labor force. Under those circumstances, all the costs of pollution are borne by U.S. Steel, meaning a collection of its stockholders and customers.
The people in Gary will not live in Gary unless it offers better opportunity than they can get elsewhere. Maybe other things aren't very good; maybe by your standards and my standards these people are not very well off. But among the alternatives they have, that's best. Id.
67. 67 Manville was aware of the health issues in
asbestos workers since at least 1933 when its board ordered the settlement
of a case brought by 11 workers. George S. Hobart, a Johns-Manville attorney,
wrote in a letter to a scientist:
It is only within a comparatively recent time that asbestosis has been recognized by the medical and scientific professions as a disease. One of our principal defenses in actions against the company on the common law theory of negligence has been that the scientific and medical knowledge has been insufficient until a very recent period to place upon the owners of plants or factories the burden of taking special precautions against the possible onset of the disease to their employees.
Paul Brodeur, The Asbestos Industry on Trial, The New Yorker, June 10, 1985, at 49, 63, 64.
68. 68 In 1976, 159 cases had been filed against Johns-Manville; in 1978, 792 suits were filed, and by 1982, suits were being filed at a rate of 6,000 per year. On August 26, 1982, Johns-Manville, unable to obtain a clean audit opinion, filed a Chapter 11 bankruptcy. Paul Brodeur, The Asbestos Industry on Trial, The New Yorker, June 17, 1985, at 45, 63.
69. 69 Friedman makes a similar point in response to a question posed to him by the editor of Business & Society Review, supra note 53.
McClaughry: One of the problems that has become a national issue in the last decade has been helping the "hard core" unemployed participate in the economic system. In New York City, a number of the large banks cooperated to hire some 60,000 new employees--a great many of them Negroes and Puerto Ricans--to keypunch bank statements. There is reason to believe that someday new equipment that can read directly from the printed checks will enable the banks to completely dispense with the keypunch operation. In such a situation, technology will put most of these people out of work. Does the government have a responsibility to help these people find new productive labor?
Friedman: First, were the banks who did this exercising a social responsibility? I doubt it. It was probably the cheapest way for them to get labor, and it was obviously sensible for them to advertise it as a socially responsible action. But the people who have these jobs are presumably better off than if they didn't have them. They accepted the jobs voluntarily. Nobody forced them. I don't believe that anyone has any responsibility of the kind you are talking about.
What does it mean to say that government might have a responsibility? Government can't have a responsibility any more than the business can. The only entities which can have responsibility are people. Should some people be taxed to provide these particular individuals with some kind of retraining? In my opinion, the answer is no.
As a citizen, I am willing to tax myself to assist people who have low incomes. But I want to do so regardless of whether the reason for their plight is that they happen to be sick, or that they happen to be trained for an industry for which there is no more demand, or that they happen to be old. That is why I have long been in favor of getting rid of our present welfare system and our whole range of subsidization programs and instituting instead a single negative income tax which would provide an income floor to prevent people from becoming destitute. Beyond that, I would not like to see us do anything. Id. at 11.
70. 70 See Carton, supra note 3, at A5.
71. 71 Judge, supra note 39.
72. 72 The co-director of the National Spinal Cord Injury Statistical Center testified before a house committee, "We were seeing a disproportionate number of spinal cord injuries resulting from three wheeler or ATV crashes. These are dangerously deceptive, deceptively dangerous vehicles." Public Safety: All-Terrain Vehicles, National Safety and Health News, August 1985, at 78, 80. Roy Janson of the American All-Terrain Vehicle Association, a subsidiary of the American Motorcyclist Association, responded as follows:
Problems result primarily from how a vehicle is used rather than from its design. When ATVs are used as intended, they present no unreasonable risk to their operators. The major problems related to three-wheel ATV injuries are the failure of users to wear proper safety equipment while operating ATVs and using these vehicles in areas not recommended for ATV recreation. User education and information programs are clearly the most effective means for addressing the problems relating to misuse. Id at 79.
73. 73 After a Consumer Product Safety Commission report concluded the ATVs were basically "killer machines," Yamaha introduced its four-wheel model in 1986. Randolph Scmid, Safety Panel Tackles All-Terrain Cycle Issue, Phoenix Gazette, Nov. 19, 1986, at A14; Daniel B. Moskowitz, Why ATVs Could Land in a Heap of Trouble, Bus. Week, Nov. 30, 1987, at 38.
74. 74 Michael Novak, Business As a Calling: Work and The Examined Life (1991).
75. 75 Id. Novak also expounds similar theories in subsequent works. See, Michael Novak, The Fire of Invention: Civil Society and the Future of the Corporation (1997); Michael Novak, The Spirit of Democratic Capitalism (1991); Michael Novak, Toward a Theology of the Corporation (1990).
76. 76 Novak notes:
[T]here is no reason why we should not respect the motives of some of those who, to arouse public conscience, painted the misery of the poor in the blackest colors. We owe to agitation of this kind, which forced unwilling eyes to face unpleasant facts, some of the finest and most generous acts of public policyfrom the abolition of slavery to the removal of taxes on imported food and the destruction of many entrenched monopolies and abuses. And there is every reason to remember how miserable the majority of the people still were as recently as a hundred or a hundred and fifty years ago. But we must not, long after the event, allow a distortion of the facts, even if committed out of humanitarian zeal, to affect our view of what we owe to a system which for the first time in history made people feel that this misery might be avoidable. The very claims and ambitions of the working classes were and are the result of the enormous improvement of their position which capitalism brought about. There were no doubt, many people whose privileged position, whose power to secure a comfortable income by preventing others from doing better what they were being paid for was destroyed by the advance of freedom of enterprise. There may be various other grounds on which the development of modern industrialism might be deplored by some; certain aesthetic and moral values to which the privileged upper classes attached great importance were no doubt endangered by it. Some people might even question whether the rapid increase of population, or, in other words, the decrease in infant mortality, was a blessing. But it, and in so far as, one takes as one's test the effect on the standard of life of the large number of the toiling classes, there can be little doubt that this effect was to produce a general upward trend.
Novak, Fire of Invention, supra note 75, at 129-30.
77. 77 Their notion of business ethics is summarized
This is the central weakness of the claims of 'ethical business' to moral superiority. Compared with the traditional nostrum of maximizing revenue and being ultimately responsible to the shareholders, the 'stakeholder thesis' of unifying the interests of suppliers, consumers and staff promises of a wider spread benefit. It suggests decentralization and a broader distribution of responsibility for the company's activities.
McElvoy, supra note 50, at 11.
78. 78 An obvious exception to this prohibition would be for businesses involved in the issues themselves. Clinics and hospitals must decide whether abortions will be performed at their places of business. However, these businesses face their issues in the sense of a bio-ethics, as opposed to business ethics, question.
79. 79 Kevin Kelly, Dayton-Hudson Finds There's No Graceful Way to Flip-Flop, Bus. Week, Sept. 24, 1990, at 50. Other companies also experienced a Planned Parenthood flap: J.C. Penney Company, AT&T, and Pioneer Hi-Bred. Richard Gibson, Management: Boycott Drive Against Pioneer Hy-Bred Shows Perils of Corporate Philanthropy, Wall St. J., June 10, 1992, at B1.
80. 80 Adriel Bettelheim, Scout Aid May be Cut, Denver Post, Oct. 31, 1991, at 1A; Adriel Bettelheim, US Wests Won't End Boy Scout Aid, Denver Post, Nov. 7 1991, at 1A, 16A; Price Colman, US West To Keep Funding Boy Scouts, Rocky Mountain News , Nov. 7, 1991, at 55.
81. 81 Jon Entine, Shattered Image: Is The Body Shop Too Good to be True? Bus. Ethics, Sept./Oct. 1994, at 23.
82. 82 Lawrence Kohlberg, The Philosophy of Moral Development (1981).
83. 83 See generally, Barbara Rudolph, Exxon's Attitude Problem, Time, Jan. 22, 1990, 51 (noting public hostility toward Exxon).
84. 84 See notice of call for nominations, Bus. Ethics, Sept./Oct. 1996, at 17.
85. 85 See the four-page supplement in Business Ethics touting the softer, ethical side of Sears. Nov./Dec. 1996, at 19. See also, infra Appendix A for more details on screening.
86. 86 Tung Yin, Sears Is Accused of Billing Fraud at Auto Centers, Wall St. J., June 12, 1992, at B1; Lawrence M. Fisher, Sears's Auto Centers to Halt Commissions, Wall St. J., June 23, 1992, C1.
87. 87 Barnaby J. Feder, The Harder Side of Sears, N.Y. Times, July 20, 1997, § 3 at 8. This piece noted:
In sorting out individual responsibility, Mr. Martinez (Sears' CEO) will also have to confront the broader questions all companies face during corporate scandals. For instance, did Sear's corporate culture and compensation systems seduce loyal well-intentioned employees into unwise or simply illegal behavior? And if so, what is to be done? Id. at 8.
These two events in Sears' ethical history should be contrasted with language from the Business Ethics ad, supra at note 85:
Along with "empowerment" and "transformation," Martinez has infused "ethics" with common sense meaning that Sears managers can trust: Less is more, "The more rules and regulations you create," says Martinez, "the more difficult you make it for associates to understand what you want and the easier it becomes to justify behavior or action because it isn't specifically prohibited by any rule." To reflect his less-is-more philosophy, Martinez tossed out the company's 29,000 pages of policies and procedures that had accumulated over the company's 100-year history. In its place, he created "Freedoms & Obligations"--a thin white folder that includes "Leadership Principles," "Code of Business Conduct" and "Shared Beliefs." Its message might be summed up by a single commandment: Do the right things. "Answers, solutions, and action emerge from within the individual," says Martinez.
Indeed, if the company's soul rests on the individual characters of its associates, only freedom can allow managers the room critical to developing their own ethical strengths. The spirit of an organization cannot be commanded or taught. It can only flourish with the right balance of freedom and obligation. Spirit may indeed be the most critical component in the Sears transformation--one of the most thorough, holistic transformations of an American company.
See, Sears Ethics Initiative Strategy, excerpted from Martinez's
speech to the Ethics Officers Association:
(1) Keep it simple: doing the right things for the right reasons; (2) Provide broad guidelines and guidance. Don't try to write a regulation for every possible case. Too many rules result in less understanding, rather than more; (3) Be willing to call balls and strikes. Be decisive with unethical behavior; (4) Put trust in managers and associates to do what is right. It's a powerful thing to believe that managers will do what's right. When they believe you trust them it's even more powerful. (5) Partner with your stakeholders; don't go it alone. There's great strength in building internal and external alliances in your pursuit of ethical behavior and ethical standards. Id.
88. 88 Tamala M. Edwards, Sleights of Silicone, Time, Sept. 1, 1997, at 64. Marcia Angell, the executive editor of the New England Journal of Medicine described the studies linking breast implants to illness as "pseudo science." See also, Breast Implants Are Safe and Effective, Wall St. J., Jan. 15, 1992, at A12. Indeed, despite a settlement, an investigation continues by a National Institute of Health neutral panel. Sheryl Gay Stolberg, Neutral Experts Studying Implant Disputes, N.Y. Times, July 23, 1998, § 3, at 21.
89. 89 Nice Work, Joe, Time, Dec. 4, 1989, at 48. NASSCO's vice president noted that "incredible seamanship" prevented the spill from being much worse.
90. 90 Exxon Sues Alaska over Spill, Ariz. Republic, Oct. 24, 1989, at A1, A10. Exxon contended that the failure to approve its use of dispersants caused unnecessary delays and complicated the problem of treating and containing the spill.
91. 91 A federal judge noted that in settling charges and cases, Exxon negotiated in "complete good faith." Michele Galan, Turn Exxon Into a Model Environmental Citizen, Bus. Week, May 20, 1991, at 44. According to an HBO documentary, the Valdez spill was exacerbated by a lack of cooperation and lack of coordination by those ashore. Patricia Brennan, Behind the Devastating Oil Spill , Washington Post, Dec. 6, 1992, at 63. Exxon spent $2.5 billion for clean-up costs and settled liability cases for about $5 billion. Exxon, Lloyd's Agree to Valdez Settlement, Wall St. J. Nov. 1, 1996, at B2.
92. 92 The company's press release for the ice cream's debut provided:
Ben & Jerry's Raises An Alternative to Razing the Rainforests
Waterbury, Vt. -- Showing that tropical rainforests are more profitable when harvested than when devastated by logging and ranching, Ben & Jerry's of Vermont introduces Rainforest Crunch ice cream in pints, flavored with a buttercrunch that uses nuts harvested in the rainforest.
Ben & Jerry's is buying Rainforest Crunch candy from Community Products, Incorporated (CPI) of Montpelier, Vermont. CPI is buying the brazil nuts and cashews used in the buttercrunch through Boston-based Cultural Survival, a non-profit organization working as an advocate for the world's native peoples. CPI distributes 40% of the profits from Rainforest Crunch to rainforest preservation groups and international environmental projects. Another 20% of the profits goes to 1% for Peace, a non-profit organization advocating legislation to reallocate 1% of the U.S. Defense budget to fund programs promoting peace through understanding.
"Business and economics have been the root cause of destroying the rainforests," says Ben & Jerry's co-founder Ben Cohen, "what we're doing here with Rainforest Crunch is using business and the marketplace to turn things around and help preserve the rainforests."
Ben & Jerry's has adopted a three-point mission statement of product, economic and social goals. "This is a great example of putting our mission of caring capitalism to work," says Fred "Chico" Lager, Ben & Jerry's President. "We're buying 20,000 pounds of Rainforest Crunch candy a month from CPI, which means they're buying 12,000 pounds of rainforest nuts a month to supply our demand. It's a great flavor and it makes rainforest preservation profitable for everyone."
CPI co-manager Martha Broad is pleased with the way the buttercrunch candy is selling. "Rainforest Crunch has really taken off and Ben & Jerry's is the biggest customer. As things stand today, we've created an additional demand for 300,000 pounds of rainforest nuts each year. Plus, in our first full year of operation, we'll be able to donate $25,000 to forest harvesters. It's a small part of solving a big problem, but it is building."
Company press release, April 1, 1990.
93. 93 Between the 1990 product launch and 1995, 95% of the Brazilian nuts used in the ice cream came from traditional commercial suppliers. Entine, supra note 1 at 47.
94. 94 Mr. Entine described the impact as follows:
The view from Amazonia was quite different, Amazon peoples' groups and anthropologists feared opening up this fragile area even to supposedly friendly capitalists. There also is no evidence to support the central premise of the harvest--that nuts could ever approximate the income that natives collect by selling off land rights to miners and foresters.
The anticipated source for Ben & Jerry's nuts--the Xapuri co-operative in the Amazon--never produced the necessary quality or quantity to meet exploding demand. And the description of the Xapuri co-operative as "forest peoples" was odd: The co-op is largely run by ethnic European and mixed-blood rubber tappers who arrived as contract workers at the turn of the century during an earlier wave of rain-forest exploitation.
The harvest soon proved a windfall for the landowners who have long controlled trade in this region. To meet demand, the agency purchasing nuts on Ben & Jerry's behalf, in which Cohen was a partner, was forced to buy from the commercial markets supplied by some of the most notorious, antilabour agribusinesses in Latin America, including the Mutran family, which has been linked in Brazilian press reports with the killings of labour organizers. By the spring 1994, the Xapuri had cut off all supplies, saying their own harvesting efforts were hopelessly uneconomic. The project has run in the red for the past three years, generating none of the promised charitable contributions to the Amazonians that were to have flowed from sales of Rainforest Crunch. And there is no evidence that the harvest has provided an incentive for forest natives to curtail their auctioning of land, mining and timber rights. "It's really a disingenuous marketing strategy to say if you spend $2.99, you'll help save the rain forest," says Michelle McKinley, executive director of Cultural Survival, which used to run the project for Ben & Jerry's. "We rushed into this project recklessly. We created a fad market overnight and the hard-sell promotions have contributed to a lot of confusion. The harvest just didn't work."
Id. at 47. Mr. Entine's 1995 findings have been documented in Edward O. Welles, Ben's Big Flop, Inc., Sept. 1, 1998, at 40. Indeed, the entire nut venture is belly-up with bankruptcy filed and growers left unpaid. Id.
95. 95 The following is a high-praise excerpt from
a 1995 newsletter of Students for Responsible Business:
Ben & Jerry's is, of course, famous for such products as its New
York Super Fudge Chunk ice cream, which contains brownies baked at the
Greyston Bakery, which trains and employs economically disadvantaged people
from the local community in Yonkers, NY. A Ben & Jerry's scoop shop
near Times Square in New York City is owned and operated by a non-profit
with a mission of providing permanent housing and social service for lower
income adults. Ben & Jerry's dairy supply comes from family farms
who pledge not to use rBGH (bovine growth hormone) on their cows. The
company prints social action messages on its packaging to inform customers
about current issues. These are just a few ways the social mission is
incorporated into the company's actual business decisions.
Ben Says: Win Your Weight In Ice Cream, 3 SRB Newsletter 7 (Students for Social Responsibility in Business, Stanford Univ.) (1995). Ben & Jerry graced the cover story for Time on social responsibility. Kadlec, supra note 17.
A recent flattering article on a Ben Cohen and Jerry Greenfield appearance at Arizona State University included the following quote, "What we're starting to learn at Ben & Jerry's is that there's a spiritual quality to business." Gregor McGavin, Community Links are Key to Success of Ben & Jerry's, Ariz. republic, Feb. 11, 1998, at EVI, EV5. In the same article, Mr. Cohen noted how their ice cream increases the demand for rainforest nuts.
No mention is made in the CSR literature of an audit that revealed the ice cream's "all-natural" ingredients include artificial ingredients such as artificial vanilla, margarine and non-hydrogenated vegetable oil. Other revelations include the use of "dried-out" dough in its Chocolate Chip Cookie Dough ice cream and complaints from staffers about "a lack of leadership." Mark Maremont, Say It Ain't So, Ben & Jerry, Bus. Week, June 13, 1994, at 6.
Nor is any mention made of Ben & Jerry's hiring Perry Odak, a former gun company marketing executive as its new CEO. Fortune, Feb. 3, 1997, at 28; Keith H. Hammonds, A Portfolio With a Heart Still Needs a Brain, Bus. Week, Jan. 26, 1998, at 100.
Nor is any mention made of Ben & Jerry's $1.1 million settlement of a class-action security fraud suit by 1,300 investors. The suit alleged the company misrepresented the state of its new plant. The plant was not ready and the stock fell from $18.50 per share to $9.50. Ben & Jerry Settles Fraud Suit, Bus. Ethics, Aug. 1998, at 10.
96. 96 Welles, supra note 94, at 47.
97. 97 Jon Entine and Martha Nicols, Blowing the Whistle on Meaningless 'Good Intentions,' Chicago Trib., June 20, 1996, at 1.
98. 98 Id. Starbucks was given the CEP's International Human Rights Award in 1996.
99. 99 Id.
100. 100 Id.
101. 101 Id. See also, Best Moves of 1995, Bus. Ethics, Jan./Feb. 1996, at 23.
102. 102 Olsen noted, "We've done nothing yet. It's a slow, incremental process." Entine and Nichols, supra note 96.
103. 103 Id.
104. 104 Id.
105. 105 Id.
106. 106 Reebok CEO Paul Fireman noted, "We don't impose U.S. culture on other countries." Id. at 1.
107. 107 See infra notes 116-130 and accompanying text.
108. 108 Tim Smart, A Lot of the Weaknesses Carbide Had Are Behind It, Bus. Week, Jan. 23, 1995, 83.
109. 109 In 1989, only 13 Fortune 500 companies filed environmental reports. By 1997, that figure topped 300. Also, by 1997 nine Fortune 500 companies had endorsed the CERES principles. Bob Massie Environmental Reporting Takes Off, Bus. Ethics, July/Aug. 1997, at 10.
110. 110 Agnes Shanley, Responsible Care Gains Momentum, Chemical Engineering, Apr. 1, 1997, at 39.
111. 111 Barbara Carton, Gillette Faces Wrath of Children in Testing on Rats and Rabbits, Wall St. J., Sept. 5, 1995, at A1.
112. 112 Gillette receives hundreds of emotional letters from students who generate them as class assignments. Gillette responds to each letter and even calls the children at home in order to explain its testing policies. Id at A1.
113. 113 Peta distributes pictures of sad-eyed bunnies to school children along with "Gillette Kills" stickers. Id at A1.
114. 114 The magazine also includes photos of mutilated animals. Id. at A1.
115. 115 Id at A1.
116. 116 The company's annual report reflects expenditures of $4 million on research in this area from 1991-95.
117. 117 See, Vivisecting the Vivisectionist Movement, Drug & Cosmetic Industry, Jan 1. 1997, at 38.
118. 118 Jon Entine, Let Them Eat Brazil Nuts, Dollars & Sense, Mar./Apr. 1996, at 30.
119. 119 Entine, supra note 81, at 32. See also, Cyril Dixon, Besieged Body Shop Comes Out Fighting, The Independent--London, Aug. 28, 1994 (discussing the Body Shops' response to Entine's accusations).
120. 120 Ed Brown, Can the Body Shop Shape Up? Fortune, April 15, 1996, at 117. The article noted, "the fact that there's hardly a financial analyst who has much positive to say about the company's prospects suggests that, for now, investors should probably stick to buying the Body Shop's soap -- but not its shares."
121. 121 Entine, supra note 117.
122. 122 Joan Bavaria, Eric Becker, and Simon Billenness, Body Shop Scrutinized, Investing for a Better World, Sept. 15, 1994, at 1.
123. 123 Memorandum of Gordon Roddick, at p. 3.
124. 124 Report of Kirk Hanson, The Body Shop International Social Evaluation 6 (1995). Indeed, Mr. Hanson did not assign a rating to product quality, relying solely on commentary because "there is no accepted standard of quality in the cosmetics industry." Id. at 10.
125. 125 Mr. Hanson does make recommendations on changes in corporate governance. Indeed, Mr. Hanson noted, "The company has not made the relationship with its shareholders a priority concern." Id. at 5.
126. 126 Id. at 6.
127. 127 Id. at 7-8.
128. 128 Mr. Hanson rates BSI one-star out of five on its responsiveness to criticism: "The most serious concern to be raised regarding the company's record of social responsibility is reaction to criticism. While it must be stated in the company's defense that few companies have faced such determined and persistent attacks as has The Body Shop, the company has reacted poorly to criticism even from "friends, franchisees and employees." Id. at 25. A recent seizure by French authorities of BSI's hemp product lines because of promotion of drug use brought this response from Ms. Roddick, "You'd have to smoke a hemp joint the size of a telephone pole to get the least buzz, and you'd die from carbon monoxide first." Jon Henley, Body Shop's Hemp Products Seized, Arizona Republic, Aug. 29, 1998, A24.
129. 129 Kirk, supra note 124, at 7-8.
130. 130 Mr. Hanson concluded as follows:
As noted earlier, the company's record is most outstanding in its contributions to social change. However, even in the company's chosen areas of priority concern--environmental sustainability, animal rights and human rights--there is room for improvement.
The company has been subject to many charges of irresponsible behavior over the past two years. Many of these charges have no merit, whatsoever. Others I have been unable to verify and have found still others to be accurate but greatly overblown in their significance. A few of the charges do have substance and are addressed in this report. Some have even argued that the company has cynically used claims of social concern for pure commercial advantage. I am convinced the company and its employees are genuinely committed to making The Body Shop a force for social change.
Finally, The Body Shop has been an important and powerful example to many other businesses and to consumers that it is possible to serve both social as well as economic goals. It has also pioneered many social innovations that have stimulated others to try similar efforts. The company's impact as an exemplary business, however, has at times been weakened by some of the behaviors noted in this report.
Id. at 6.
131. 131 See Aw Nuts--Ben & Jerry's Blows the Whistle on Itself, Orlando Sentinel, Jun. 11, 1995 at H6 (reporting on Paul Hawken's critical independent analysis of the firm in its 1994 annual report); see also, William S. Bulkeley and Joann S. Lublin, Ben & Jerry's New CEO will Face Shrinking Sales and Growing Fears of Fat, Wall St. J., Jan. 10, 1995, at B1, B4 (noting that share price went from $32 in 1993 to $11 in 1995, and it has remained flat).
132. 132 Paul C. Judge, Is it Rainforest Crunch Time? Bus. Week, July 15, 1996, at 70.
133. 133 See supra notes 93-95.
134. 134 Welles, supra note 94. This foray into charity has proven to be a disaster. Id.
135. 135 Id.
136. 136 Its first shareholder suit, a class-action, for misleading investors and for delays in bringing its "state of the art" plant on line which wiped out its 1994 earnings. See also, Ben & Jerry Settles Fraud Suit, supra note 95. The suit was settled for $1.1 million and was referred to by a spokesperson as a nuisance suit. Id.
137. 137 Susie Tompkins Bounces Back, Bus. Ethics, Jan./Feb. 1995, at 21.
138. 138 Id. at 22.
139. 139 Id. at 22.
140. 140 Lora Jo Foo, The Vulnerable and Exploitable Immigrant Workforce and the Need for Strengthening Worker Protective Legislation, 1994 Yale L.J. 103 (1994).
141. 141 Mark Maremont and Nanette Brynes, Ryka's C.E.O. "Sold Out" to L.A. Gear, Claim Some Shareholders, Bus. Week, May 15, 1995, at 48.
142. 142 Id.
143. 143 Mark Maremont, Social Conscience for Sale, Bus. Week, March 20, 1995, 38.
144. 144 Id. "Perhaps Poe's mistake came in holding herself up as a moral pillar. People expected her to adhere to a higher-than-average standard. When she didn't, they accused her of perfidy. The lesson: Money, ultimately, may talk louder than social good." Id.
145. 145Don't Like Rush? Tell his Advertisers, Bus. Ethics, May/June 1995, at 10. Yet another issue targets Newt Gingrich: Republican Ruckus: Will it be the Death Knell for Socially Responsible Business, or a Blessing in Disguise?, Bus. Ethics, Mar./Apr. 1995, at 26.
146. 146 A Big Honda Dealer is Indicted in Federal Bribery Case, N.Y. Times, 5 Dec. 1996, at C4; Bennet, James, Guilty Plea in Honda Bribery Case, N.Y. Times, 8 Feb. 1995, at C1, C8.; Bennet, James, Corruption Called Broad in Honda Case, N.Y. Times, 4 Apr. 1995, at C1, C6; Dealers Given Right to Sue Honda Over Bribery Scheme, Arizona Republic, 31 Aug. 1996, at A8; Honda Execs Guilty in Bribery Scheme, USA Today, 2 June, 1995, at 1B; Honda Sentence, USA Today, 28 Aug. 1995, at 1B.
147. 147 See supra sources in note 146.
148. 148 Indeed, these breaches of integrity are not limited to self-enrichment. Honda recently paid a fine for alteration of environmental devices on its cars. Jayne O'Donnell, Air Pollution Claims Cost Honda $17 Million, USA Today, June 9, 1998, at 1B.
149. 149 Michael Siconolfi. Report Faults Kidder for Laxness in Jett Case, Wall St. J., Aug. 5, 1994, at C1, C19. Saul Hansell, A Scoundrel or a Scapegoat, N.Y. Times, April 6, 1991, at M-B, 1, 8.
150. 150 Michael Siconolfi, SEC is Raising New Red Flag with Jett Case, Wall St. J., Jan. 19, 1996, at A6. Mr. Jett was found guilty of intent to defraud in July 1998 and ordered to repay all profits from his scheme. Peter Truell, Jett, Ex-Kidder Trader, Must Repay Millions, N.Y. Times, July 22, 1998, at C1.
151. 151 Carol J. Loomis, Warren Buffet's Wild Ride at Salomon, Fortune, Oct. 27, 1997, at 114.
152. 152 Salomon has not recovered from these questionable practices. Id. at 114.
153. 153 Felicity Barringer, United Way Head is Forced Out in a Furor Over His Lavish Style, N.Y. Times, Feb. 18, 1992, at A1, A10.
154. 154 Susan Garland, Keeping a Sharper Eye on Those Who Pass the Hat, Bus. Week, Mar. 16, 1992, at 39.
155. 155 David Cay Johnston, United Way Faced With Fewer Donors Giving Less Money, N.Y. Times, Nov. 9, 1997, at A1, A14.
156. 156 Karen Grassmuch, What Happened at
Stanford: Key Mistakes at Crucial Times in a Battle With the Government
Over Research Costs, Chron. of Higher Educ., May 15, 1991, at A26.
Some quotes follow:
What was intended as government policy to build the capacity of universities through reimbursement of indirect costs leads to payments that are all too easily misunderstood.
Therefore, we will be reexamining our policies in an effort to avoid any confusion that might result.
At the same time, it is important to recognize that the items currently questioned, taken together, have an insignificant impact on Stanford's indirect-cost rate... .
Moreover, Stanford routinely charges the government less than our full indirect costs precisely to allow for errors and disallowances.
Id., (University statement, Dec. 18, 1990).
We certainly ought to prune anything that isn't allowable--there isn't any question about that. But we're extending that examination to things that, although we believe are perfectly allowable, don't strike people as reasonable.
I don't care whether it's flowers, or dinners and receptions, or whether it's washing the table linen after it's been used, or buying an antique here or there, or refinishing a piano when its finish gets crappy, or repairing a closet and refinishing it--all those are investments in a university facility that serves a whole array of functions.
Id., (interview with Stanford Daily, Jan. 14, 1991).
157. 157 Id. at 26; Embattled Stanford President to Quit, Mesa Trib., July 30, 1991, at A6 (observing that Mr. Kennedy "got it' eventually, but not within enough time to avoid his resignation).
158. 158 For a full review of the Nestle infant formula dilemma see James E. Post, Assessing the Nestlé Boycott: Corporate Accountability and Human Rights, 27 Cal. Mgt. Rev. 113 (1985).
159. 159 Alix M. Freedman, Fire Power: Behind the Cheap Guns Flooding the Cities is a California Family, Wall St. J., Feb. 28, 1992, at A1.
160. 160 Gina R. Dalfonzo, Disney CEO Eisner Not in Tune with Today's Christian Families, Pensacola News J., May 14, 1998, at F2.
161. 161 The novel was described as containing "the most appalling acts of torture, murder, and dismemberment ever described in a book targeted for the best-seller lists." Meg Cox and Laura Landro, Paramount Shelves a Novel on Serial Killer, Wall St. J., Nov. 15, 1990, at B1.
162. 162 Protestors Demand That Time Warner Pulls Its Body Count Album, Time, July 27, 1992, at 23.
163. 163 See Gerald M. Levin, Why
Cop-Killer Stays On Sale, S.F. Examiner, July 22, 1992, at A13. Time
Warner's then CEO responded as follows:
Time Warner is determined to be a global force for encouraging the confrontation of ideas. We know that profits are the source of our strength and independence, of our ability to produce and distribute the work of our artists and writers, but we won't retreat in the face of threats of boycotts or political grandstanding. In the short run, cutting and running would be the surest and safest way to put this controversy behind us and get on with our business. But in the long run, it would be a destructive precedent. It would be a signal to all the artists and journalists inside and outside Time Warner that if they wish to be heard, then they must tailor their minds and souls to fit the reigning orthodoxies.
In the weeks and months ahead, Time Warner intends to use the debate engendered by the uproar over this one song to create a forum in which we can bring together the different sides in this controversy. We will invest in fostering the open discussion of the violent tensions that Ice-T's music has exposed.
We're under no illusions. We know all the wounds can't be healed by
such a process or all the bitterness--on both sides--talked out of existence.
But we believe that the future of our country--indeed, of our world--is
contained in the commitment to truth and free expression, in the refusal
to run away.
See also, Johnnie L. Roberts, Time Warner Directors May Bar Release of Certain Music, Wall St. J. July 24, 1992, at B1.
164. 164 Mark Maremont, Blind Ambition, Bus. Week, Oct. 23, 1995, at 78.
165. 165 Mark Maremont, Judgment Day at Bausch & Lomb, Bus. Week, Dec. 25, 1995, at 39.
166. 166 Jim Carlton and Stephen Kreider Yoder, Humble Pie: Intel to Replace Its Pentium Chips, Wall St. J., Dec. 21, 1994, at B1.
167. 167 See generally, Marianne M. Jennings, Case Studies in Bus. Ethics 301 (2d ed., 1996) (for background on the derivatives issues).
168. 168 Marianne M. Jennings, St. John's Knits--Made in the USA, In Business: Its Legal, Ethical & Global Environment 662 (1996).
169. 169 Steve Wulf, The Glow From a Fire: A New England Textile Manufacturer Turns Tragedy into a Christmas Tale of Warmth for his Workers, Time, Jan. 8, 1996, 49.
170. 170 See, History of Tasty Baking Co. (visited Aug. 1, 1998) < pa_tasty_b_1.html>.
171. 171 Marianne M. Jennings, Manager's Journal: Confessions of a Business Ethicist, Wall St. J., Sept. 25, 1995, A18.
172. 172 Id.
173. 173 Id.
174. 174 For complete background on the sweatshop issue, see David M. Schilling, Sneakers and Sweatshops: Holding Corporations Accountable, 113 Christian Century 932 (1996).
175. 175 Vikki Kratz, L.L. Bean to Visit All Foreign Factories, Bus. Ethics, Jan./Feb. 1996 at 14.
176. 176 Supra note 173. See also, Ballinger surpa note 16.
177. 177 Entine, supra note 1.
178. 178 Id.
179. 179 Scott McMurray, Wounded Giant: Union Carbide Offers Some Sober Lessons in Crisis Management, Wall St. J., Jan. 28, 1992, at A1.
180. 180 Drug Firm Pulls All Its Capsules off The Market, Ariz. Republic, Feb. 18, 1986, at A1.
181. 181 Doug Levy, Acetaminophen Overuse Can Lead to Liver Damage, USA Today, Dec. 22, 1994, at 1D.
182. 182 Johnson & Johnson has since decided to voluntarily label its product with warnings about alcohol use. Robert Davis, Tylenol Adds Warning about Pill-alcohol Mix, USA Today, July 8, 1998, at 1D.
183. 183 Bradley A. Stertz and Christis Harlan, Audi Dealers Win Legal Sanctions in Defense Against Frivolous Suits, Wall St. J., Sept. 29, 1989, at B6.
184. 184 Welles, supra note 94, at 40. Dave Alexander, formerly of Cultural Survival and a nut supplier who is owed $81,000 by Ben & Jerry's stated, "I was the victim of good PR. I believed Ben Cohen was a good guy, a socially and environmentally concerned capitalist." Id.
185. 185 See infra App. A.
186. 186 See supra figure 4.
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