THE LIFEWORTH REVIEW OF 2008

Inspi(RED) marketing or (RED)wash?

May 11, 2009 by  
Filed under Second Quarter

In June 2008 the largest student and alumni network on corporate responsibility, Net Impact, organised its first European conference; or, to be more precise, volunteers from the University of Geneva and INSEAD organised it ably for them. The efforts of students in bringing together hundreds of delegates for a packed programme indicates the importance of Net Impact as a key connector in an emerging movement of young professionals that are ‘socialising’ business, as much as socialising with business. Or so we may hope. More on that later.

One of the highlights for an audience yearning for the possibility of both a corporate career and a clear conscience was a plenary on Product(RED) and its contribution to the Global Fund to Fight AIDS, Tuberculosis and Malaria. Launched in 2006 by U2 singer and activist Paul Hewson (known popularly as Bono), Product(RED) is ‘a brand designed to engage business and consumer power in the fight against AIDS in Africa’. It works with the ‘world’s best brands’ to make unique (RED)-branded products and direct up to 50% of their gross profits to the Global Fund to Fight AIDS, TB and Malaria, to fund African HIV/AIDS programmes with a focus on the health of women and children. (RED) explains it ‘is not a charity or campaign’ but ‘an economic initiative that aims to deliver a sustainable flow of private sector money to the Global Fund’.27 Greta Thomas told a few hundred delegates at the conference in Geneva that Product(RED) is ‘the most successful cause marketing initiative in history’, having raised over 100 million dollars for the Global Fund, through about 350 co-branded products in 60 countries.28 Product partners include Converse, Gap, Motorola, Emporio Armani, Apple, Hallmark, Dell, Microsoft and American Express. (RED) reports there are currently more than 45,000 people on antiretroviral medication in Ghana, Swaziland and Rwanda owing to support from these funds.

Great stuff. So who could be complaining? Around the time of its launch, some NGOs grumbled. ‘(RED) is unlikely to raise significant amounts of money to close the funding gap of US$3 billion over 2006–7 and risks giving business a good cover story without pressing them for a more substantial contribution,’ wrote Aditi Sharma, International HIV/AIDS Campaign Coordinator with ActionAid International. But (RED) couldn’t be held responsible for the woeful response of the wider private sector at the time of the call for donations. A more worrying attack for (RED) came a year later when Advertising Age, a key magazine for that profession, published an article that argued the brands involved in (RED) had spent far more on advertising than had been raised for the global fund at that point in time. They had got their figures slightly wrong, so boss and co-owner of the company behind (RED), Bobby Shriver, slammed the article. His riposte did, however, contain evidence that the companies had spent almost twice as much on advertising than had been raised by (RED) for AIDS work at that time. The criticism must have hurt, as 15 months later Ms Thomas mentioned it from the podium, and explained that, as people are going to continue being materialistic, and businesses are going to continue to advertise, it’s worth looking to get some good out of that process. The president of (RED), Tamsin Smith, told the New York Times, ‘We’re not encouraging people to buy more, but if they’re going to buy a pair of Armani sunglasses, we’re trying to get a cut of that for a good cause,’ she said.29

With people doing such ingenious, well-meaning and useful work, it can seem rather mean to pick holes. But someone has to do the unpleasant jobs. ‘Not encouraging people to buy more’? Was that really part of their pitch to Dell when asking the computer company to pay a big license fee upfront, as Dell planned a prime-time 2008 SuperBowl advertising slot in the United States for its (RED) laptop. All cause marketing, all advertising, all sponsorship, all PR is ultimately directed at encouraging people to buy from a particular company. Let us accept that and consider whether or not it is a good thing for the cause concerned that people buy more from a particular company.

Wayne Visser: putting the challenging question to (RED)

Wayne Visser: putting the challenging question to (RED)

From the floor of the conference the prolific writer on responsible business Wayne Visser asked the question that was in the minds of many who work on corporate responsibility issues: how does (RED) deal with the social responsibility of its product partners? Although Dr Visser chose not to give examples of (RED)’s product partners engaging in commerce that is ultimately detrimental to the cause, he would be aware that a UN study has found that corporations may be undermining the global fight against AIDS due to the impacts of their value chains on the conditions for HIV transmission and progression, and by not seeking to address these.30 For example, cobalt is a necessary component of all mobile phones. Cobalt is predominantly to be found in the Congo. A vigorous mining industry has sprung up to service this need. And mining has been key to the spread of AIDS in Africa. So we are entitled to ask about the negative impact on the fight against HIV of purchasing, for example, Motorola(RED) phones. It can be put quite bluntly: an initiative that promotes more business-as-usual in these high-risk sectors by encouraging sales is in fact exacerbating the spread of HIV/AIDS.31

In response to concerns about its product partners, (RED) espoused a set of principles, among which are: ‘(RED) respects its employees and asks its partners to do the same with their employees and the people who help make their products or deliver their services’ and ‘(RED) promotes HIV/AIDS workplace policies and practices’. To this end, it is working with the Global Business Coalition against HIV. In 2008 Motorola was not yet a member of this coalition; and the company’s 2007 CSR report does not mention working on HIV/AIDS workplace policies and programmes with its suppliers. In that report the auditor Verité calls for Motorola to do more on promoting awareness among its suppliers of the company’s code on various aspects of labour relations.32 So there is no evidence that Motorola has improved the impacts of its value chain to a degree that could give one confidence in a statement that one of its products is ‘Designed to Eliminate AIDS in Africa’, as its advertising claims.

Ms Thomas responded to Dr Visser by suggesting that when a company ‘signs up for Product(RED) it is arguably putting a great big target on its forehead for spotlighting its broader CSR activities’. This spotlight effect is yet to be seen in Motorola’s policies and programmes on HIV/AIDS. So, perhaps by writing this article we are in some way helping (RED) achieve this spotlight effect. We are happy to help, but might a more hands-on approach from (RED) more usefully consider the product partners as well as the intended beneficiaries in Africa?

The head of Private Sector Resource Mobilisation at the Global Fund, David Evans, declared from the podium that ‘(RED) involvement can be the start of a conversation with a company and in creating a deeper engagement with your cause’. He explained the Fund’s discussions with Nike—which is a (RED) partner through its ownership of Converse—about what could be done on gender issues, given the ‘feminisation’ of the AIDS epidemic. ‘Financial contributions . . . can’t be the end of a conversation; it has to be the start,’ he said.

Ms Thomas explained that (RED) encourages companies where possible to source or manufacture in Africa, in order to create employment in export industries. Some of the partners have sought to create positive relationships with African entrepreneurs as part of their (RED) commitment. Designer Giorgio Armani said, ‘as I set about designing my first collection of Emporio Armani(RED) products I wanted to create a tangible and personal connection with Africa. What better way than to incorporate the striking art of Owusu-Ankomah . . . ?’ Armani is now sourcing materials for its T-shirts from Mozambique, although no information is provided on its website or that of (RED) about the working conditions. More enterprise in low-income countries, whatever the enterprise and whatever the employment conditions, is not in itself progressive: the problems in the mining and manufacturing sectors provide a simple illustration of that. Creating decent work in sustainable enterprises must be the goal.33 The US company GAP was more forthcoming about its aims for its (RED) products to make a positive contribution beyond the fundraising. The company has worked to ensure decent labour conditions in the factories there. Of particular relevance is its work on HIV/AIDS in the garment sector in Lesotho. It has funded the Apparel Lesotho Alliance to Fight AIDS (ALAFA), to provide HIV testing and treatment options to thousands of garment workers. GAP has also lent its expertise on dyes and yarns, thus building local capacity to enter the Western market.34

Aside from questions of how much is being raised compared to the marketing spend, and whether the participating companies are doing much on the HIV/AIDS impacts of their value chains, others have raised a broader critique about consumerism. The critics say it sends a message to the public that the current economic system and its large corporations are part of the solution to social challenges such as HIV/AIDS rather than an obstacle to their abatement. A political economic analysis of the reasons why governments, communities and individuals have been unable to protect and then look after themselves adequately can raise questions about the current system of corporate globalisation. One group called Product(RE) argues that ‘simply buying an item or advertising support for a cause will not solve an epidemic . . . it takes thinking more critically and consciously about how we consume’. It launched a counter-campaign that raises funds for HIV/AIDS in Africa through the reclaiming and recycling of consumer products, branded with a (RE)D logo, which involves (RE)cycling. They argue that (RED) ‘implies that corporations, branding and consumption are a necessary and healthy part of involvement in a cause . . . [but such] marketing is not only manipulative, but damaging. It claims to erase any guilt from shopping by offering products that aim to be not only ethically neutral but activist in nature . . . “This is for the greater good”, supplants doubts about the questionable origins or future life of an object.’35 Could Product(RED) be a form of (RED)wash, a corporate pretence towards social benefit, perhaps more insidious than ‘greenwash’, the pretence of environmental friendliness by business?

The company that owns the (RED) brand, Persuaders LLC, was not impressed, and its lawyers took steps against the (RE)D initiative. With that, the company is asserting that its critics should be legally accountable for any breach of copyright. However, others may question to whom the Persuaders LLC, or its owners Paul Hewson and Bobby Shriver, should be accountable to in respect of their product partners’ direct and indirect impacts on public health. Because, when pressed on the criticisms we have outlined here, (RED) spokespersons remind us, ‘we are a business, not a charity’.36 As a business with a growing role in the fight against AIDS, Persuaders LLC now requires more attention to its own social responsibility. The first step is transparency. Persuaders LLC does not have a website. Its co-owners are two of the richest men in the world, one of whom wrote the disingenuous statement ‘(RED) “shareholders” are the poorest of the world’s poor’.37 That sounds like a great idea. However, while it is owned by people who don’t need the money, and encourages people to buy into their brand to give money to charity, it is important to know how much income (RED) receives from the process. It does not divulge the licence fees it is paid to set up the product partnerships, what percentage of its own turnover (if any) it is taking as profit, or what levels of accountability it aspires to in operational issues such as its own overheads and salaries.

The contract between the Fund and Persuaders LLC is not public and neither are those between Persuaders and the participating companies. One person working on the project told the lead author of this review that the participating companies can pull out of the scheme if Bono is not involved in future. If the Fund’s projections are correct, then this would mean in future almost 10% of the Fund’s work would depend on the interest and health of one rock star. People and institutions change over time, for better or worse, and so systems should be ‘future-proof’. A lack of transparency means concerned people cannot check these issues.

Another concern has been raised by some NGOs about the influence of (RED), and its corporate partners, on the Global Fund. That fund is governed by rules that ensure human need, not donor interest, determines the activities it funds. However, (RED) wished to promote itself to consumers by highlighting who was benefiting, and so a compromise was reached whereby (RED) could identify itself with projects in Africa, but not further, and the connecting of a participating company to a specific project was done following careful procedures. In subsequent years further specificity has been allowed, including specific countries and types of intended beneficiary. As a result other corporate donors can now brand their philanthropy in the same way. If corporate giving increases, this could cause problems for the system of needs-driven grant-making. The influence of business interests on the strategy of (RED) is illustrated by Persuaders currently considering whether to expand their giving to Asia, so that Asian companies may be more inclined to join (RED).

There seems to be a pattern emerging in the way (RED) responds to criticism. When criticised that it is not doing enough for the social cause, it reminds people it is a business not a charity. When criticised for not being a good business, it reminds everyone of its charitable contributions. Given (RED)’s offices in London are within the PR company Freud, one might be inclined to think this double-speak is carefully conceived. However, it is more likely that it reflects unreconstructed notions of business and charity. Cause marketing maintains that dichotomy: business makes money, charity takes it, and the political economic order stays the same. That order is being eroded by corporate responsibility and social enterprise, which seek to create social benefit through core business operations. (RED) is not part of that movement. It could be. It could be a catalyst for mainstream corporate responsibility, starting by ensuring that the value chains of its product partners have the best possible workplace policies and programmes on HIV/AIDS.

The Global Fund is leading the way in tackling HIV/AIDS, tuberculosis and malaria. It has unrivalled levels of transparency on matters other than corporate engagement. The private sector, (RED) included, must respect that transparency and needs-driven governance process. The key is to keep the goal in sight. Although for (RED) ‘in the end it’s about the dollars’, the Fund’s purpose is not about raising cash, but about reducing disease; is not about spending money on grantees, but ultimately about reducing the need for people to need such charity in the first place. Unless the Fund and its private sector partners keep that in view and seek to tackle the root causes of the problems, including the way economic processes and companies are involved, then they will fail their historic mandate.

» Movement East?

(The references are available in the pdf download and hard copy versions of this annual review, available from Lifeworth’s bookstore.)

This section can be referenced as:

Bendell, J., and N. Alam, S. Lin, C. Ng, L. Rimando, C. Veuthey, B. Wettstein (2009) The Eastern Turn in Responsible Enterprise: A Yearly Review of Corporate Responsibility from Lifeworth, Lifeworth: Manila, Philippines.
(Page numbers for this section are available in the pdf download and hardcopy.)

Rent-a-geek

May 7, 2009 by  
Filed under Third Quarter

‘We see things as we are, not as they are’ it says in the Talmud. If we are someone who wants to benefit from society’s resources and respect, and who therefore associates with the people, organisations and ideas ‘in power’, how will we see ‘things’? Will we see them in a way that accepts, even praises, the status quo, and scoff at ideas that seem to challenge power? As you are reading this review, and have got to this stage of a rather long one, you are likely someone who takes pride in ‘knowing’ about things. But what are you actually coming to know, if you do not look inside yourself? In the face of a financial meltdown, the head-scratching of people who like to think they know things, and know some things better than others, should serve as a lesson.

During the third quarter, in classrooms and canteens of business schools around the world, business school professors were muttering about ‘necessary oversight’ and ‘greater transparency’. Many could not bring themselves to use the ‘R’ word: regulation. It does not take an expensive education to know that markets require regulation, so the stupidity of thinking that deregulation of financial markets would be beneficial had to arise from a process of social conditioning, willingly participated in by careerist academics.

‘Since the early days of recorded history there have always existed a class of people who will sell their intellectual prowess to those in power. The exceptions seem so rare that they are talked about for centuries afterwards. The most famous being Socrates. More typical are those who come up with reasons that the status quo is the appropriate organization of society and that those in power are the perfect persons to be running things,’ explains Robert Feinman.61 Until the 18th century religious leaders played a key role in providing justifications for power, such as the ‘divine right of kings’. Their influence waned with the Age of Enlightenment and modern science. ‘What is needed is a “scientific” rationale for the organization of society. This role has now been taken over by economists. Through the use of statistics and mathematical theories they have been able to produce whatever justification was desired by those employing them. Proof of their intellectual dishonesty is easily found. For every economist who can “prove” the effectiveness of, say, trickle down economics there is another who can demonstrate that such policies are a complete failure,’ says Feinman. In business studies this approach is sometimes taken to the extreme, when an academic’s concept finds its validity through being adopted by a famous CEO. Therefore, professors in more traditional disciplines have sometimes regarded business academics as intellectual rentboys of corporate elites.

The alternative should not be a retreat to the libraries, but to be clear about the type of business and business person a business school seeks to inform. The difference between a management guru and a management geek is not only the style of communication and the reach of their ideas, but also how they see a wider context and serve a higher purpose.

The World Economic Forum (WEF) likes to think it is the leading intellectual forum on the world of business. As the financial system unravelled, their minor mea culpas mixed with ‘told you so’ was particularly revealing. In interviews with Bloomberg, leading staff at the WEF said ‘chief executive officers who gathered in Davos, Switzerland, over the last five years didn’t listen to warnings from their peers. Davos organizers also say they failed to play tough with the financial-industry bosses, opting to accept their funding and let them turn Davos into a rave-up for Wall Street excesses.’62

Leaders of the Forum have been putting their failure down to excess, rather than principle. ‘We let it get out of control, and attention was taken away from the speed and complexity of how the world’s challenges built up,’ said its founder Klaus Schwab. If not as much money had been taken from Wall Street speakers at Davos, would the WEF really have been much smarter? Hardly. The lesson is that an institution that pays its bills by convening the world’s largest companies to entertain them at high-powered meetings will be beset by systemic sycophancy. Some WEF staff complained that delegates did not listen seriously to helpful sessions on emerging bubbles. But what do they expect when you are in the Alps and Angelina Jolie might be at the bar? The hubris of the Forum is that they see themselves as an emerging power in global governance as significant as the UN. Yet it would be a truly crazy planet if the world’s largest corporations would be able to set the agenda for policies across the world.

Daniel Kaufmann: finance bosses had no incentive to change

Daniel Kaufmann: finance bosses had no incentive to change

A Davos delegate for seven years, the World Bank Director of Governance and Anti-corruption, Daniel Kaufmann, warned finance bosses ‘about global risk and the abusive nature of their actions, but they had no incentive to change . . . why should they have listened to us? I see it with my 10-year-old daughter, who scolds me because I don’t put the garbage in the correct bin. Let’s not delude ourselves. It’s impossible to teach old dogs and investment bankers new tricks unless you change the incentive structure.’63 This implies that if one is truly committed to improving the state of the world then one must reach out beyond the old dogs and fat cats. More than that, you must seek to be accountable to others. Perhaps if the WEF had listened to the protesters outside their luxury hotels, rather than their hand-picked corporate-sponsored NGO leaders, they might have developed a better sense of the state of the world. The WEF staff mistakenly thought such protests were about specific social and environmental concerns, which they could then effectively incorporate into the agenda. Other staff realised that the criticisms were of an economic kind, particularly as the alternative World Social Forum developed. They thought it was a disagreement about which economic theory was best to encourage social development. But the protesters do not challenge what the WEF delegates believe in, but rather their legitimacy to decide for others.

That message has not sunk in. For 2009, Schwab says his goal is to transform Davos into the ‘Bretton Woods of the new millennium’,64 a meeting targeted at establishing a fresh set of global rules for commercial and financial relations, much as the original Bretton Woods conference in New Hampshire did in the summer of 1944. Doing that in their current form, with their current membership, is bound to cause deep concern across civil society. The World Economic Forum might soon find that not only were they the greatest fans of the Emperor’s new clothes: they were those clothes. For the WEF to avoid being an intellectually insubstantial adornment to power, it will need to reconsider its membership structure and its approach to dialogue. This will become even more important if its Global Agenda Councils, which met for the first time in 2008, are to play a useful role in informing how we tackle global challenges.

» Looking East

(The references are available in the pdf download and hard copy versions of this annual review, available from Lifeworth’s bookstore.)

This section can be referenced as:

Bendell, J., and N. Alam, S. Lin, C. Ng, L. Rimando, C. Veuthey, B. Wettstein (2009) The Eastern Turn in Responsible Enterprise: A Yearly Review of Corporate Responsibility from Lifeworth, Lifeworth: Manila, Philippines. (Page numbers for this section are available in the pdf download and hardcopy.)