Apologies

For some reason, my site is running extremely slow right now. As I am working on it, you may see some unusual looking pages. Sorry for the inconvenience.

The Robber Barons of Social Change

I think I need to read this book: Small Change: Why Business Won’t Save the World by Michael Edwards. Read the review by Mark Engler and Arthur Phillips here.

Excerpt:
The Ben & Jerry’s story is but a small cautionary tale about the still-growing and already far-reaching field of “philanthrocapitalism.” This is the term that author Michael Edwards uses in his new book, Small Change: Why Business Won’t Save the World, to describe a wide range of activities. It includes Silicon Valley CEOs using “venture philanthropy” to fund new, business-minded nonprofits; stock market traders developing socially weighted investment funds; bankers extending microcredit loans to the poor; and “social entrepreneurs” aiming to simultaneously serve a “double bottom line” of positive public impact and shareholder return.

The activities covered under the umbrella of philanthrocapitalism are diverse enough to offer exceptions to any generalization about the category. But its practitioners would almost uniformly describe themselves as “results-oriented,” implicitly critiquing the ineffectiveness of existing nonprofits and voluntary organizations. Their unifying idea is that business is more efficient and outcome-driven than government and civil society, and that unleashing market forces is the best means of addressing entrenched problems such as poverty, malnutrition, preventable disease, and poor education.

In Edwards’ words, “the basic message of this movement is pretty clear: Traditional ways of solving social problems do not work, so business thinking and market forces should be added to the mix.” During his nine-year tenure as a director at the Ford Foundation, Edwards saw the popularity of this argument skyrocket. He writes, “if I had dollar for every time someone has lectured me on the virtues of business thinking for foundations and nonprofits, I’d be a philanthropist myself.”

Read more…

Good Intentions

Bubble On Green
Photo by Limbo Poet

The Wall Street Journal seems to take great delight in the idea that the corporate social responsibility “fad” might be passing. Hmm. An 8% reduction in corporate donations in 2008? By what percentage did sales fall in that year? More importantly, it’s been quite awhile since anyone advanced the idea that a company’s commitment to corporate social responsibility should measured simply by its donations. Read the article here.

Excerpt:
When the going gets tough, costly good intentions can go out the window. Company spending has been squeezed by the global recession and budgets for corporate social responsibility have suffered disproportionately.

A survey of U.K. businesses by KPMG and Business In The Community found a third of companies cut their corporate social responsibility budgets in 2009. Corporate philanthropy has also been hit, with a study by the Giving USA Foundation revealing that charitable donations by U.S. companies fell by 8% in inflation-adjusted terms in 2008.

Perhaps this is not so great a loss. There is a growing feeling among company executives that marginal initiatives, which can so easily be dispensed, are not enough to alter corporate behavior. In a speech last year, Stephen Green, chairman of U.K. bank HSBC, said: “There has been a tendency to compartmentalize so-called corporate social responsibility activities as an adjunct to the mainstream business activities.” Mr. Green believes in replacing corporate social responsibility with a new focus on “corporate sustainability,” which, rather than being an add-on to a business. “is about the raison d’être of the company itself.”

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Toyota’s Tylenol moment

Read the article here.

Excerpt:
For guidance — and perhaps inspiration — Toyota should do some research on the Johnson & Johnson Tylenol recall of 1982.

That year, seven people in the Chicago area died from taking Tylenol capsules poisoned with potassium cyanide. The case remains unsolved, and no suspects were ever charged.

But Johnson & Johnson (JNJ, Fortune 500) didn’t wait around for the authorities to act. It stopped production of Tylenol and issued a nationwide recall of 31 million bottles already in circulation with a retail value of over $100 million.

The murders stopped, and J&J’s actions led to changes in packaging — those annoying seals on everything from aspirin to milk — as well as federal anti-tampering laws. Through its prompt action, J&J was able to actually enhance the value of the Tylenol brand by making product safety one of its attributes.

Toyota has a much tougher job ahead of it. That’s because the problems in its cars are not the result of a crazed individual but are systemic to the product development process. Fixing the system that allowed the defects to occur will be complex and expensive.

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“Walking away” not immoral, prof says

Sign Of The Times - Foreclosure
Photo by respres
“Strategic default” is the term used to describe the decision to walk away from an underwater mortgage. The terms of a mortgage contract spell out the responsibilities of all parties, and include a list of consequences for borrowers who fail to live up to their part of the bargain. Some homeowners, after looking at the terms of the contract, are concluding that they are willing to live with those consequences. But are there moral and ethical implications to this? Read the article here. You can download the discussion paper referred to in the article here.

Marketplace Money had an interesting piece, with Henry Blodget, CEO of the “Business Insider,” and Megan McArdle, of the “Atlantic” magazine debating the propriety of walking away. You can hear that piece and read the transcript here.

Excerpt from the Arizona Republic article:
Arizona law professor Brent White says the only thing standing between many “underwater” homeowners and a better financial future is a misguided sense that walking away from a loan commitment is morally wrong.

White, an associate professor at University of Arizona’s James E. Rogers College of Law, has spent the past few months presenting his argument to other lawyers, real-estate professionals and the national media.

It started with a 50-page discussion paper he published in October, in which White argues that underwater homeowners, those whose unpaid loan balance exceeds the value of their home, are being manipulated into picking up the tab for a real-estate crash that borrowers and lenders created equally.

“I’m all for a society where people must take personal responsibility, but that should also apply to the banks and financial institutions,” he said.

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How Will the Citizens United Decision Affect Sustainable Business?

US Supreme Court
Photo by dbking
This is a very good article, full of links and references, covering not only the Citizens United case but also the issue of corporate personhood. I’m somewhat surprised at the reaction to the court’s decision in this case. As noted in this article, the US Supreme Court has previously established that corporations are persons in the Santa Clara County v. Southern Pacific Railroad decision of 1886 (yes, I know that there are disagreements about the implications of that decision, and I don’t like it, either). As a result, no one should be surprised that they have been afforded the protections of the Constitution. What we really need to be doing is to be rethinking the whole corporate personhood model.

Read the article here.

Excerpt:
News outlets and the blogosphere are abuzz with reactions to Thursday’s Supreme Court decision that will allow corporations to fund political campaigns. The ruling, which overturns decades of legal precedent and legislation limiting the ability of corporations to influence the outcome of elections, may have broad implications for the political process in the U.S. News of the decision has drawn criticism from both the right and the left, many voicing the opinion that dramatically increased rights for corporations will significantly diminish the ability for individual citizens to have their voices heard.

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You may also find this article of mine to be of interest: “Capital” Punishment: For Corporations That Violate the Public Trust

UK Business schools put ethics high on MBA agenda

It’s good to see a renewed emphasis on ethics in UK business schools. But what about here in the US? Read the article here.

Excerpt:
As the bodies responsible for teaching so many of the “masters of the universe” who did so much to cause last year’s economic meltdown, it is perhaps not surprising that business schools have spent the past year doing some serious soul-searching about their culpability for the recession.

Go back to the 1980s and 1990s, when many of today’s corporate leaders were studying for their MBAs, and business ethics and sustainability – in other words, issues around corporate governance, social responsibility and long-term decision-making – played ­little part in business school curricula.

Pre-credit crunch, the need for MBAs to be “ethical” as well as show you how to fast-track your career and make a load of cash was not that high on the agenda, concedes Mark Stoddard, accreditation projects manager of the Association of MBAs (Amba).

“Schools have recognised there have been gaps and they have needed to make changes in the way MBAs are taught,” he says. “Three to four years ago you might have got students complaining about having to take ethics courses. You don’t now.”

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U.S. Attorney: Johnson & Johnson Paid Millions In Kickbacks To Boost Sales Of Schizophrenia Drug In Nursing Homes

Not a good week for Johnson & Johnson, a company long considered by many to be a good example of corporate social responsibility. Earlier this week, the company expanded their recall of Tylenol and other products, but only after an FDA investigation revealed numerous problems that one of the company’s facilities. Now, the company is accused of paying kickbacks to nursing homes, in order to boost the use of a schizophrenia drug. Read the article here.

Excerpt:
TRENTON, N.J. — Federal prosecutors said Friday that health care giant Johnson & Johnson paid tens of millions of dollars in kickbacks so nursing homes would put more patients on its blockbuster schizophrenia medicine and other drugs.

In a complaint filed Friday, prosecutors said J&J paid rebates and other forms of kickbacks to Omnicare Inc., the country’s biggest dispenser of prescription drugs in nursing homes. Prosecutors allege Omnicare pharmacists then recommended that nursing home patients with signs of Alzheimer’s disease be put on the powerful schizophrenia drug Risperdal, which was later found to increase risk of death in the elderly.

The allegations are in a complaint filed by the U.S. Attorney in Boston, whose office has joined two whistle-blower cases. One was filed in 2003 by a former Omnicare pharmacist in Chicago, Bernard Lisitza, who alleges he was fired after he challenged the Risperdal kickbacks and other improper practices at the company. The other was filed by former Omnicare financial analyst David Kammerer in 2005, after he resigned from the company.

Read more… The New York Times also has an article here.

With Tylenol recall 2010, a corporate icon stumbles

Johnson & Johnson has long been lauded as a champion of corporate social responsibility. Their handing of the 1982 Tylenol recall has been used as a case study for the proper management of a company in crisis. (Just google “Johnson & Johnson Tylenol case study” – a good example of which is located here.) This time, the company appears to have handled the situation differently. Read the article here.

Excerpt:
In a moment of startling corporate clarity, Johnson & Johnson recalled all its Tylenol from US store shelves in 1982 after capsules tampered with in Chicago were linked to six fatalities.

The move cost the company $100 million and threatened to decimate its leading share of the market. Instead, consumers applauded the company’s openness and sales rebounded within a year. Three decades later, the move is still regarded as a shining example of corporate social responsibility.

The time it took the company’s CEO to make that gutsy call? Six days.

On Friday, a unit of Johnson & Johnson expanded a recall of Tylenol products to other over-the-counter medicines, including Benadryl, Motrin, and Rolaids, because of reports of nausea and other symptoms. The time from those initial reports to Friday’s action? Twenty months – and only after the Food and Drug Administration (FDA) had finished an investigation that found multiple problems at the Johnson & Johnson factory.

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