Business Ethics in the News
A discussion of the week's top business ethics stories by Kirk O. Hanson, Executive Director of the Markkula Center for Applied Ethics and John Courtney Murray S.J. University Professor of Social Ethics
Thursday, Feb. 6, 2014
CVS Caremark, the largest drugstore chain by both sales and pharmacy sales, announced Wednesday that they would no longer sell tobacco products at its stores by October of this year.
"We came to the decision that cigarettes and providing health care just don't go together in the same setting" - Larry J. Merlo, cheif executive of CVS.
The company anticpiates a loss of $2 billion in sales from removing tobacco products, but hopes to make up some of that with smoking cessation programs, beginning with a campaign to help half a million Americans stop smoking. While $2 billion is a fraction of the company's $123 billion revenue (in 2012), this is a proactive measure on their part in demonstrating their commitment to health care services.
There's also an ethical angle here as well: is this an example of CVS going above and beyond, or should we expect this from all stores with pharmacies?
CVS Vows to Quit Selling Tobacco Products (NY Times)
Ending Tobacco Sales in Pharmacies (Journal of American Medicine)
A Framework for Ethical Thinking (Markkula Center for Applied Ethics)
NEXT STORY: OLYMPIC SPONSORS HIT WITH MASS PROTESTS
Wednesday, Feb. 5, 2014
The 2014 Winter Olympics are fast approaching, but it’s not the athletes that are getting the attention, it’s the protestors. Their target? The top 10 corporate sponsors of the Olympics. Protests are primarily due to Russia’s stance on gay rights, coming to a head with a law passed this June by the Russian Parliament banning “propaganda of nontraditional sexual relations.” At a Coca-Cola PR event swarmed by protestors in London, a poster read, “Coca-Cola sponsors anti-gay Russian Olympics. Boycott Coke!” All Out, an LGBT-rights group responsible for many of the protests, recognize Coca-Cola’s good record on supporting gay rights in the United States, but is calling on it to do more: “At the very least, they should speak out, consistently with their own values.” Corporate sponsors contribute a substantial portion of the budget for the Olympics, and some say this gives them the ability and obligation to influence how the games are run for the better. On the other hand, speaking out may undermine the company’s relation with the IOC and hosting country. Are the corporate sponsors of the Olympics obligated to use that “seat at the table” to advance social goals? Is it inconsistent of Coca-Cola not to expand their advocacy for gay rights into this sponsorship?
Kirk: I am sympathetic with corporate complaints that they cannot take on every social issue involving every business or event partner they work with. Nonetheless, there are some events so prominent and some partners so odious that the corporate sponsor should voice its disagreement with the behavior or policy of the partner. Coca-Cola, according to a website called Adbranch, was one of three beverage sponsors of Hitler's showcase 1936 Olympics in Berlin. I hope the company regrets this decision. But does Putin's personal identification with the Sochi Olympics and the actions of the Russian Parliament rise to the level where Coca-Cola must withdraw, or at least voice their disagreement. I would say yes, they should at least voice their disagreement prominently, though I would then be tolerant of their continuing as a sponsor. Their claim to be a liberalizing influence requires that they be strongly on record in Sochi as being supportive of gay rights.
Patrick: I think the primary issue here is whether multi-national corporations are obligated to keep a consistent message across all areas of operation. In my view, yes, multi-nationals should have a consistent message across the board. If the corporation decides to take a stand, whether it is on principle or for the goodwill of its customer base, it is obligated to follow through with that position. This isn’t to say that we should expect them to take a stand on every issue at hand, but if there isn’t a commitment to consistency, it’s not a position the corporation should be taking; especially in the age of social media where it will get out quick if that's the case. Now, Coca-Cola isn’t necessarily supporting the views of the Russian parliament on gay rights, but in this case, I think that silence constitutes an inconsistency in its message. A secondary issue is on the nature of the Olympic games, and whether they should be insulated from political discourse — what do you think?
Corporate Sponsors Faulted for Sochi Participation (Al Jazeera America)
A Framework for Thinking Ethically (Markkula Center for Applied Ethics)
NEXT STORY: JPMORGAN INVESTS $1 MILLION IN HIGHER ED FOR VETERANS
Monday, Feb. 3, 2014
JPMorgan Chase announced this past week that it will invest $1 million to fund higher education programs for U.S. military veterans, in partnership with Florida State College, University of South Florida, the University of Texas, and San Diego State University. The funds will be used to build programs for student veterans, aimed at increasing retention and graduation rates.
The investment continues JPMorgan’s work with veterans, including the creation of the Institute for Veterans and Military Families at Syracuse University, dedicated to the social, economic, education, and policy issues veterans and their families face. In addition, JPMorgan has hired over 6,300 veterans itself, and leads a campaign to encourage other companies to do the same.
We are impressed by JPMorgan’s efforts to assist veterans, and hope that more corporations follow its lead. What's your take on its new programs?
JPMorgan Chase Announces $1 Million Investment in Higher Education Programs for U.S. Military Veterans (MarketWatch)
A Framework for Thinking Ethically (Markkula Center for Applied Ethics)
NEXT STORY: WHO IS RESPONSIBLE IN A SHARING ECONOMY?
Wednesday, Jan. 29, 2014
With a $4 billion valuation, Uber is among the fastest growing startups around. The app-based service helps people find a taxi and then facilitates the transaction, but what’s getting more attention is that just about anybody with a car can register with Uber to be a de facto taxi. With this new “sharing economy,” many questions of regulation are emerging, some of which are coming to a head with a wrongful death suit filed on Monday against Uber. Sophia Liu, a 6-year-old girl, was struck and killed by an Uber driver on New Year’s Eve. The driver, Syed Muzaffar, was on his way to pick up his next fare at the time of the accident. Uber’s legal team has argued that because Muzaffar did not have a fare at the time, “he was not providing services on the Uber system during the time of the accident.” The family’s attorney has countered that because he was on his way to pick up a fare, he was in fact representing Uber at the time of the accident. For drivers like Muzaffar, Uber has commercial insurance, but it only kicks in when there is a customer in the car; otherwise, the driver must have their own coverage. Is Uber accountable for the actions of its drivers in-between fares?
Kirk: In the sharing economy, we do put ourselves at more risk. While it may not be practical for Uber to screen and license every driver, online resources could enable them to weed out the least capable by checking driving and criminal records, and by requiring adequate insurance. There is a rationale for "let the user beware" as long as the rudimentary measures are taken. eBay faced this problem of serving as the market for many and unknown buyers and sellers, and then solved most of the problem with user ratings and payment processing that protected the buyers. Uber should also carry some level of liability insurance, and should not hide behind the distinction that Muzaffar was going to pick up a fare rather than carrying a fare at the moment.
Patrick: For me, I think Uber’s app clears all this up. Say you want to get a cab. The app recognizes your current location and sends a signal to all of the drivers in the area. If the driver is willing to take the fare, they indicate this on the app, followed by the customer choosing to accept or decline that particular driver. Once done, the app tells the customer how long until the driver arrives, and even tracks the driver by GPS. The transaction starts then and there, and so should Uber’s liability.
Uber and a Child's Death (NY Times)
Statement on New Year's Eve Accident (Uber)
Framework for Thinking Ethically (Markkula Center for Applied Ethics)
NEXT STORY: TOP BUSINESS ETHICS STORIES OF 2013
Monday, Jan. 27, 2014
Current events never leave us with a shortage of new business ethics issues to wrestle with; and 2013 was no exception. Here are the 10 business ethics stories of 2013 that you need to know.
Click the link to view the interactive version on Scribd.
1. NSA’s Surveillance Program (PRISM)
Without a doubt, the revelations of the NSA’s widespread surveillance network made the biggest waves this year. Among the troubling details that emerged was the participation of Google, Apple, and Facebook in the program.
Certainly impossible to separate from the PRISM program, but in addition to the privacy issues raised, Snowden’s actions also forced a reconsideration of what an organizational whistleblower is, and what role conscience plays in such matters.
3. Bangladesh Factory Collapse
The collapse of Rana Plaza, a multistory textile factory, in April last year is among the worst industrial disasters ever. In the fallout of the collapse, Western retailers faced a great deal of public pressure, and were forced to reevaluate their labor policies in Bangladesh.
4. The London Whale
The London Whale trading debacle of 2012 continued to play out in 2013, resulting in over $6 billion in loses and a slew of regulatory fines. Senate reports revealed widespread instances of JPMorgan traders hiding underperforming derivatives, exceeding risk limits, and the outright manipulation of investments.
5. Rise of the Activist Shareholder
Among the buzzwords thrown around this year, “activist shareholder” got around more than most. Procter and Gamble, Apple, Sony, and a handful of others found themselves in the line of fire. In their wake, a number of questions regarding fairness, fiduciary responsibility, and investor relations have emerged.
6. International Tax Loopholes
Certainly not a new issue, but with governments at all levels strapped for cash, the issue of tax avoidance is as important as ever. As always, firms have gotten amazingly efficient at exploiting loopholes, particularly those that emerge in the international arena. The question remains, are firms obligated to adhere to the “letter” or “spirit” of tax law?
7. Cyber Attacks
Despite being pushed out of the public consciousness by the NSA revelations, the number of cyber attacks aimed at U.S. firms reached troubling levels. Among the fallout of these attacks is the issue of how companies ought to respond to a security breached. Many chose to sweep it under the rug, but there has been a growing trend toward transparency.
8. Twitter IPO and Gender Diversity
In light of Facebook’s IPO, Twitter seemed to do everything right; that is, everything except having a gender balanced leadership team. At the time of filing, Twitter had no women amongst its board, major investors, or its executives (save for Vijaya Gadde who was appointed 5 weeks before filing). The story grabbed headlines and brought the issue of female representation in startup and tech companies to the front page.
9. Culture Clash in Business Dealings in China
GlaxoSmithKline and JPMorgan raised eyebrows this year for its business practices in China (the former even facing criminal action). The Foreign Corrupt Policies Act forbids companies “from offering anything of value to foreign officials to gain improper advantages.” On the flip side, gift giving is a major part of business relationships in that part of the world, leaving U.S. firms with a thin line to walk.
10. ObamaCare and Corporate Conscience
ObamaCare is the most hotly contested piece of legislation in recent history. Among the many resulting storylines is the string of court cases in which small business owners claim that ObamaCare infringes on their “corporation’s religious conscience.” The issue still remains and is proving to be the next saga in the corporate personhood debate.
NEXT STORY: ARE APP DEVELOPERS ON THE HOOK?
Thursday, Jan. 23, 2014
Monday, Google removed two Chrome browser extensions (think “apps added to your web browser”) from its store after they were found to be installing unwanted software and redirecting users to affiliate links. The two extensions, “Tweet this Page” and “Send to Feedly,” began as legitimate services, created by individual developers and offered free of charge. In both cases, the original developer sold the extension to a company who then took advantage of existing subscribers to disseminate ads. Send to Feedly’s founder, Amit Agarwal, sold his extension used by 30,000 to an unidentified party. “It was a 4-figure offer for something that had taken an hour to create and I agreed to the deal, says Amit. He has since published a blog post apologizing to existing users, and stated that taking the deal was a bad decision. While many corporations publish apps and extensions, a great deal of these services are made by nonbusiness entities and are offered free of charge. Do independent developers have the same obligations to their users as corporations? Is Amit Agarwal correct in calling his decision a bad one?
Kirk: Anytime you have 30,000 people using a product, you have an obligation to not sell out to someone who might corrupt it or change it in ways that exploit users. Agarwal and others like him clearly want to cash out, and rightfully so. But the glaring problem here is that Agarwal did not identify whom he was dealing with. In this case, it seems like the buyers refused to identify themselves, or at least made it very hard to do so. This alone is enough to say Agarwal should've passed on the deal.
Patrick: First, kudos to Amit for acknowledging his role in the situation. To start, I get where Amit was coming from: “I’m just a guy that made an extension… I don’t have customers.” But the way I see it, when Amit entered the market to sell the extension those existing users became “paying customers;” that is, he was then using them as leverage to get a deal. With that, I think certain obligations emerge; at the least, Amit should’ve announced the change in ownership to existing users.
Google pulls malware Twitter and Feedly extensions from Chrome (The Guardian)
I Sold a Chrome Extension but it was a bad decision (Digital Inspiration)
A Framework for Thinking Ethically (Markkula Center for Applied Ethics)
NEXT STORY: HOW MANY MINUTES DOES IT TAKE TO EAT A HAPPY MEAL?
Friday, Jan. 17, 2014
How many minutes does it take to eat a McDonald's “happy meal?” A New York City McDonald’s has walked into a firestorm, as the leaders in the local borough's Korean community are calling for a national boycott of the fast food chain. For sometime now, elders in the Korean community frequent a particular McDonald’s daily, arriving at 5 AM and staying nearly until closing.
So what’s the problem? Each person buys no more than a cup of coffee each, tipping the scales at $1.09, while on other days the group will split a small packet of fries between them. The store manager first posted a “20-minute time limit” above the tables (there’s your answer), but when the group refused to leave, called the police to escort the elderly patrons out. The store management has defended the decision by contending that the elders were driving away business. Korean community leaders understand the business concern, but argue that its business interest is superseded by the respect that elders are entitled to in Korean communities—an entitlement that McDonald’s infringed on by “treating them like criminals.” Is it reasonable to limit the amount of time customers sit in the restaurant? Is McDonald’s obligated to align its values with those of the Korean community that it operates in?
Kirk: I think McDonald’s was insensitive to the cultural factors in play, but did not necessarily act unethically. No business is obligated to provide what is essentially a public service: providing a place for the elderly to spend the day. But, in this case, McDonald’s clearly should have gone further to help the community address the need for places for the elderly to congregate. McDonald’s might contribute cash toward the creation of such a space; it might even provide contributions of food a day a week. There IS a general ethical obligation to try to help the community deal with its problems, and there is an ethical obligation to do much more before violating the local cultural norms; in this case, respect for the elderly.
Patrick: Let’s look at this from the other side. McDonald’s has aggressively expanded its McCafé brand in attempt to draw business from Starbucks and similar coffee shops. Do you think that Starbucks could get away with 20-minute time limits? No way; you could order a small hot chocolate and spend the whole day there, Wi-Fi included. The key consideration here is that Starbucks presumably benefits from creating that “neighborhood coffee shop feel” that goes hand in hand with letting people stay as long as they please. In the McDonald’s case, I think it comes down to this: if the local community wants to express the value they put on respect for elders, and wants local businesses to do the same, they should frequent the McDonald’s MORE for hosting the elderlies daily hangout, even if it means there are less tables available. Vote with your dollar people.
Korean Community Leaders Urge McDonald's Boycott (NY Times)
A Framework for Thinking Ethically (Markkula Center)
NEXT STORY: DISAPPEARING MESSAGES IN THE WORKPLACE?
Monday, Jan. 13, 2014
Private messaging apps, led by Snapchat, are becoming immensely popular as a way of sending messages to friends and family, and a new app is now looking to bring private messaging into the workplace. Confide, made for use by Apple devices, allows users to send vanishing text messages (as opposed to Snapchat’s pictures), which disappear immediately after being read. Many are already raising red flags, with the fear that disappearing messages will allow individuals, and even corporations, to systematically erase any record of improper communications or behavior: including matters of insider trading, discrimination in the work place, and messages that constitute sexual harassment. Moreover, messaging services like this will without a doubt undermine the legal discovery process, which has effectively revealed wrongdoing in recent years through email history. Then again, these “off the record” conversations are going on regardless, and new tech developments always open doors for possible misuse. Should employers allow these private messaging apps in the workplace? Would you condemn a company that provides this service for its employees?
Kirk: While business ethics involves many things, managing an ethical business often comes down to effectively managing incentives. Offering this capability will undoubtedly give the message, inadvertently or otherwise, that you can say or do anything as long as you don’t get caught. This is particularly troubling, given that we are in a time where investigations of corporate wrongdoing are heavily dependent on email records. No company can afford to permit this type of communication without putting the state of its ethical culture at risk.
Patrick: The way I see it, companies would not be at fault for allowing this type of service to be used, although I would find it troubling if a company adopted disappearing messages as a provided service. “Off the record” conversations between individuals happen and there’s no stopping them. Yes, this technology makes having these conversations easier, but the price of technological advancement is often the possibility of misuse. On the other hand, if a company paid for or encouraged the use of this service, I would no longer see it as an off the record discussion, but rather an official forum provided for by the corporation—one which should be subject to review just like phone and email communications.
A Snapchat for executives? (Washington Post)
A Framework for Thinking Ethically (The Markkula Center for Applied Ethics)
NEXT STORY: HACKER ATTACK OR PUBLIC SERVICE?
Tuesday, Jan. 7, 2014
Snapchat, one of the hottest startups of 2013, is under heavy fire this week over a security breach that compromised the usernames and phone numbers of 4.6 million Snapchat users. “Gibson Security,” a group of unidentified “white hat" hackers that first uncovered the vulnerabilities, warned Snapchat privately in August to no avail, leading Gibson to publish a detailed account of the security flaws on an online website. On New Year’s Eve, a different group of hackers used Gibson’s information to “steal” user information, and then posted the usernames and phone numbers (partially redacted) on its own website to raise awareness on the issue.
Snapchat’s CEO, Evan Spiegel, responded with a cryptic tweet, stating that Snapchat was working with law enforcement, and later called the incident an “attack” and “abuse” of its system. Numerous journalists have criticized Snapchat for ignoring the initial warnings, the lack of apology, and for depicting the “hack” as a malicious attempt, as opposed to the benevolent effort many believe it to be. Nonetheless, Snapchat’s system was “attacked,” and millions of users’ private information was published online. Should the actions of Gibson and the other hacker group be seen as abuses of the system or as a public service to be lauded?
Kirk: I’ve never had much affection for “white hat” activists, especially when they facilitate the misuse of private and confidential information. These groups often due more harm than good, even when their intentions are in the right place. Real “white hat” groups should be able to accomplish their goals without publicly revealing data or methods for exploiting security weaknesses. Snapchat’s inability to respond to these warnings needs to be addressed--they have since created a direct email to receive security related messages--but Gibson Security is not blameless here.
Patrick: I see the upside of “white hats,” when done right they provide a counterbalance to keep corporations and governments honest. The flip side to this is that there is no counterbalance, no accountability, and often no way to prosecute these white hat groups, all of which should make the public hesitant to fully embrace them. My concern is over the publishing of the “recipe” for hacking the system—why wasn’t that also partially redacted? I think they got lucky another supposedly white hat group was the one to capitalize on the loopholes.
Snapchat Breach Exposes Weak Security (Times)
Snapchat GibSec Full Disclosure (Gibson Security)
SnapchatDB ("second hacker group")
A Framework for Ethical Thinking (Markkula Center for Applied Ethics)
NEXT STORY: WELLS FARGO INITIATES PROACTIVE ETHICS REVIEW