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Smell the Starbucks coffee: a toxic mix of marketing, politics and tax



 

In a page on the Starbucks website, Kris Engskov, Managing Director of Starbucks UK, Starbucks offered a full explanation. Engskov provided that, “I want to personally assure you that Starbucks pays and will continue to pay our share of taxes in the UK to the letter of the law. We always have and always will.” Meanwhile executives told analysts that the UK business was “successful”, “profitable” and they were “very pleased with the performance”. The company has made UK sales of £1.2bn in the past three years but declared no profit despite having described the British business as “profitable” to investors and analysts.

PayUpandGetOut, on the same webpage, offered a problem with this argument, “Yes, we know you’re paying “to the letter of the law”, but you are using the law to allow you to pay less tax than really you are expected to.  It’s such a shame that you have worked so hard to improve your ethical credentials, and while this does not detract from your apprenticeships, links with local businesses and creation of more jobs, nor your support for farmers, it certainly makes me question your ethics, and thus will make me question buying from you in the future.” Some critics believe that corporate social activities  are undertaken by companies such as British American Tobacco, BP,  and McDonalds to distract the public from ethical questions posed by their core operations. They argue that some corporations start CSR programs for the commercial benefit they enjoy through raising their reputation with the public or with government. They suggest that corporations which exist solely to maximise profits are unable to advance the interests of society as a whole. Kappa99 offered another widely-held view that it is perfectly possible for somebody to act legally but totally immorally. Kappa99 writes, “Its legal to have sex with a horse in many US States. Its legal in the UK to kill a Scot in Nottingham with a crossbow.” There are numerous absurdities in how English law has evolved, to some extent through a process of ‘trial and error’.

Kris Engskov, UK managing director of Starbucks, has further added that the company had in the past three years “paid over £160 million in various taxes including National Insurance contribution for our 8,500 UK employees, and business rates”.  Starbucks is not alone by any means. Last week it emerged that Facebook UK generated revenues of just £20.4m last year and paid just £238,000 in tax to the Revenue. Experts said the social networking giant was not breaking any rules but paid less tax because its European headquarters is not in the UK but in Ireland. Stephen Moss adds in the Guardian: “My mobile network is Vodafone, which UK Uncut alleges obtained a very favourable tax settlement that left £6bn in back taxes unpaid. The headache all these numbers are giving me will be salved by pills from Boots, another target for UK Uncut after moving its headquarters to Switzerland in 2008. In 2009-10, Boots paid just £14m on profits of £475m, equivalent to 3%.” Prominent tax campaigner Richard Murphy, from Tax Research UK, later in this article argues that, “Where there are alternatives we should look for them,” he says, “but we should also be clear that these actions are symbolic. The real purpose is getting political change.” Murphy says the objective should be to make corporate taxation more transparent and establish a ranking of companies – a sort of good corporate taxpayers’ guide. Margaret Hodge, chairman of the Public Accounts Committee, said HMRC should look at the company’s tax affairs after this Reuters report. MPs may also want to grill Starbucks’ management over the revelations. The PAC is responsible for scrutinising the stewardship of public funds, including tax collection.

However, Starbucks as a multi-national company does appear to take its environmental agenda seriously. Earlier this year, Starbucks announced the availability of EarthSleeve™, a new hot-cup sleeve that integrates proprietary technology that enables a reduction in overall material usage while at the same time increasing the post-consumer content. These adjustments correlate to a savings of nearly 100,000 trees. With nearly three billion* hot cup sleeves produced in the United States in 2011 and Starbucks representing nearly half of the marketplace, this material evolution will have a substantial impact on the packaging industry. In marketing management, there has been increasing interest in “greenwashing”. Starbucks, unlike other firms, does not appear to have been engaging in greenwashing activity, on the basis that it takes its environmental agenda seriously.  Magali A. Delmas,  a professor of management at the UCLA Institute of the Environment and Sustainability and the Anderson School of Management, in California Management Review (2011) has defined “greenwashing” as “a fixed and focus on firm communication about environmental performance … given the shorter time frame required for a firm to alter communications about its environmental performance than for a firm to change it, our analytical focus on the drivers that lead (some) firms to communicate positively about environmental performance while holding firm performance constant is not only useful for analytical tractability, but is also true to shorter-term strategic decisions of managers in these firms.”

There is no doubt that the social media is a major new influence in allowing consumers to give ‘instant feedback’ to suppliers.  Indeed, as consumers, the public, and investors become more interested in environmental issues, environmental activist groups become more powerful and can exert more influence and pressure on companies. In the same way, now members of the public are able to give feedback about how they perceive far taxation might work. There is also no doubt in the past that corporates have been using their green credentials to secure “competitive advantage” in the marketplace, and there has been much interest latterly in how ethical banks could attract customers through a “competitive advantage” of acting ethically. George Osborne has a think-tank of a few lawyers thinking about how make the corporate tax system fairer. Taxation has clearly become an issue, with David Cameron restating in one breath that, “Fairness includes asking those on higher incomes to shoulder more of the burden than those on lower incomes. I’m not saying this is going to be easy, as we’ve seen with child benefit this week. But it’s fair that those with broader shoulders should bear a greater load”, while not pursuing aggressive tax policies in top earners.”

Meanwhile, Natalie Bennett, Green Party leader, in responding to David Cameron’s speech, provided that: “Further cutting the real rate of benefits, when they are already insufficient for a basic decent life is unconscionable. As the Joseph Rowntree Foundation calculated, the minimum weekly income needed in Britain is £193 for a single person, but out of work benefits deliver just £85.” A political party which is able to grasp the nettle of this complex toxic mix of marketing, politics and tax may reap dividends at the ballot box perhaps.

All corporates should be supported in corporate social responsibility – that includes Serco



 

That Serco should wish to manage the ‘Big Society’ makes excellent business sense: by this, I don’t mean that I approve of Serco ‘running the Big Society’, but I think it makes sense for a large corporate to wish to been in participating in ethical capitalism. It would be rather disingenious if we were to show hostility to this, just because it’s Serco (effectively). In a sense, corporates are damned if they do, and damned if they don’t. New Labour cosied up to the City, and wanted to be seen as the party which embraced ‘business’ – for ‘business’, they meant the City and corporates. A wider drive, which has taken place in the USA, is how corporates can be included as worthy members of the rest of the society; in such a society, bankers would have an important rôle to play in society as wealth creators, while people in the public sector, while perhaps not contributing towards wealth, are doing worthy jobs such as nursing or teaching (and indeed are members of the Unions).

 

A criticism of public limited companies, such as Circle, which have been keen to be seen as embracing ‘The Big Society’ is that they appear to have antagonised relationships with the unions. The recent rift between UNISON and Hinchingbrooke Hospital is a case-in-point. That Serco is one of the major bidders of ‘The Big Society’ is a sign that Serco, whilst generating £4bn in revenue last year, thinks it can generate a shareholder dividend, while participating in something which it considers to be worthwhile (The National Citizen Service).

 

Ed Miliband’s formulation of ‘responsible capitalism’ is effectively corporate social responsibility (CSR). CSR is all about companies going beyond legal obligations and their own financial interests to address and manage the impact their activities have on society and the environment. Corporates often try to develop a CSR brand which embraces a much more diverse range of stakeholders. A ”good corporate citizen” is expected to address the concerns and satisfy the expectations of individuals and groups who can affect or be affected by the companys activities.

 

The move by Serco to be involved in a major ‘Big Society’ initiative, some might say, in fact makes perfect business sense.  In such a framework, the “corporate brand”, which applies a single brand across the entire company, must appeal simultaneously to these diverse stakeholder groups. A corporate brand is likely to be linked intrinsically to the identity of the company; thus it encompasses the distinct attributes and values of the company to define for what the company stands,  and relates  to what is promised and expected in identity terms.

 

However, this strategy has not always been successful.   Toyota received a reputation for environmental responsibility by introducing its celebrated ‘hybrid’, the Prius. However, even as Toyota enjoyed phenomenal awareness levels and positive associations, in addition to sales bumps, it suffered from increased attention to its corporate actions. Loyal Prius owners, special interest groups, and NGOs vigorously challenged Toyota s lobbying efforts (in cooperation with Ford and General Motors) against tougher U.S. fuel economy standards. These conflicting messages namely, advertising that claimed “harmony between man, nature, and machine“ together with corporate actions that seemingly harmed the environment undermined both the corporate brand and the product brands.

 

Such a strategy is also fraught with potential dangers from within Serco itself. For example, Serco might find that there is an increasing need to deal with stakeholders’  demands discursively. The pluralism of global cultures and values means there is no ultimate frame of reference, or ultimate “right answer”. Even honest, sincere brand-related stories can induce both positive and negative public discussion that might alter and perhaps damage the way consumers and other stakeholders perceive the brand.

 

It is, however, perfectly possible for Serco to make a success of its Big Society plan.   Managers of these highly visible CSR performers, such as the U.S. giants Starbucks or Timberland, face pressures associated with accountability, limited resources, and public governance; they also make more direct comparisons of the value of investing in CSR than do managers of privately owned companies.

ATOS and Dow – the real price of corporate sponsorship of the Olympics?



The involvement of corporates in sponsorship of the Olympic Games in 2012 here in London has been particularly controversial.

Paralympic organisers have defended the sponsorship of the games by Atos, a private multinational company whose UK healthcare arm is responsible for delivering controversial “work capability” assessments (WCAs) for hundreds of thousands of disabled people on sickness benefit. WCAs are face to face interviews carried out by healthcare professionals employed by Atos Healthcare to assess disabled people’s entitlement to Employment and Support Allowance (ESA, a sickness benefit that has replaced the old Incapacity Benefit). Each existing recipient of Incapacity Benefit is now being assessed for eligibility for ESA, at the rate of some 11,000 people per week. WCAs have been the subject of serious criticism by all relevant stakeholders in civil society including doctors and NGOs working on behalf of disabled people.

The present case concerns some of the problems with the system as experienced by people with mental health problems. Although medically trained, Atos HCPs typically have very limited knowledge of mental health. The interviews are often hurried, and rely on applicants to explain the limitations on their ability to work. The High Court yesterday granted permission to two disabled people to bring a claim for judicial review against the Secretary of State for Work and Pensions to challenge the operation of the Work Capability Assessment. Atos Healthcare, tests around 11,000 incapacity benefit claimants a week under a £100m a year contract with the Department of Work and Pensions. The company has been criticised by MPs for its “flawed” approach which has left thousands of disabled people wrongly denied benefits and has become a lightning rod for criticism of the government’s welfare reforms.

Earlier this year, a coalition of pressure groups unveiled a campaign against three controversial sponsors of the London Olympics, accusing them of using the Games to “greenwash” unethical corporate activities. The coalition – bringing together protest groups campaigning against Olympic sponsors Dow Chemical, BP and Rio Tinto – is chaired by Meredith Alexander, who quit as a commissioner of the London 2012 sustainability watchdog over Dow’s $100m (£63m) deal with the International Olympic Committee and its agreement with London organisers to fund the £7m wrap that will surround the stadium.

Dow is one of 11 international Olympic sponsors who have global marketing rights to the Games. They each pay an estimated $100 million for a four-year cycle covering a winter and summer Games. The company signed up in July 2010 so London is its first sponsorship of any Games. The Bhopal disaster was a gas leak incident in India, considered one of the world’s worst industrial catastrophes which occurred on the night of December 2–3, 1984 at the Union Carbide India Plant,Bhopal, India. A leak of methyl isocyanate gas and other chemicals from the plant resulted in the exposure of hundreds of thousands of people. The toxic substance made its way in and around the shantytowns located near the plant.  The official immediate death toll was 2,259 and the government of Madhya Pradesh has confirmed a total of 3,787 deaths related to the gas release.

Dow denies the claims, arguing it was neither the owner nor operator of Union Carbide, the plant’s owner at the time of the disaster, and that the company had divested of its Indian assets by the time Dow acquired it in 1999. Dow says the legal case was resolved in 1989 when Union Carbide settled with the Indian government for $470 million, and that all responsibility for the factory now rests with the government of the state of Madhya Pradesh, which now owns the site.In June 2010, it was reported that convictions over a gas plant leak that killed thousands of people in 1984 in the Indian city of Bhopal had been heavily criticised by campaigners. Amnesty International described the two-year sentences for eight people as “too little, too late”. The convictions are the first since the disaster at the Union Carbide plant – the world’s worst industrial accident. The eight Indians, all former plant employees, were convicted of “death by negligence”. Nityanand Jayaraman, of the International Campaign for Justice in Bhopal campaign group, has said that the punishment imposed on Union Carbide was wholly inadequate. An academic lawyer has even commented that blaming Dow for the chemical disaster might be akin to blaming Germany for World War II.

Overall, the expectations that our society has for the criminal justice system is to punish and rehabilitate individuals who commit crime. Punishment and rehabilitation are also two of the four acknowledged objectives of the criminal justice system, with deterrence and incapacitation being the others. Globally punishment has always been the primary goal to achieve when dealing with individuals who commit acts of crime.  However many argue that the lessons of Bhopal have still to be learned. With increasing regularity, similar scenarios continue to be played out around the world. Environmental disasters—both chronic and immediate—caused by irresponsible corporate practices are said to be becoming more frequent. Transnational corporations have learned to downplay damage, and to focus attention and liability on the local company in order to elude criminal and/or civil liability.The traditional approach taken by governmental enforcement agencies to deter and punish corporate crime is a multifaceted one. However, a corporation cannot be jailed, feel shame, nor possess a traditional sense of mens rea. In fact, the deterrence of corporate crime depends entirely upon the deterrence of individual employees. Over time, the criminal justice system also provided for both more severe penalties and means of investigation that the civil enforcement system did not.  The purpose of special/specific deterrence is to instill fear on the offender so that they will not commit future crime. Others argue that rehabilitation is a more permanent fix in deterring crime. Rehabilitation programs can help previous offenders to become re-integrated into the community and give them a sense of being.  Aside from the bright blue and pink surface of the hockey pitches, Dow has stepped in, in the 2012 London Olympics, to provide the wrap that adorns the outside of the main Olympic stadium after the London organisers could not find the 7 million pounds to give the finishing touch to what was a rather industrial-looking stadium.

While many corporate backers of the Olympics hope for the very best, Dow Chemical is taking a decidedly hard-nosed approach to its sponsorship in the face of criticism over its links with the Bhopal disaster. “This is an investment, not a sponsorship,” George Hamilton, the Dow executive in charge of its Olympic operations told Reuters in an interview as he rejected the Bhopal criticism as “inappropriate”. Other corporate sponsors include Coca Cola and McDonalds who also have extensive records in corporate social responsibility.

Prof Michael Porter, head at Harvard, and Ed Miliband are talking about the same thing



 

I am getting sick-and-tired of how many ‘experienced’ Labour bloggers, wonk-types and other politicos have no business nous. Please, when you’re reporting it, be aware that this is not a political idea which has come out of nowhere. It is a fundamental concept on all of the major corporate websites, including corporate law firms, called ‘corporate social responsibility’, explaining how corporates should have due respect for people, planet, and profit. For Greens, there’s an emphasis on the environment, for the Conservatives shareholder dividend (including A4e and G4s); but for us, even though we’ve been educated to be ashamed of them, the workers, you know the people who keep the education and health service alive – the Unions, the largest democratic movement in this country (as Owen Jones recently described in his set piece speech for NetrootsUK 2012). It’s really important that politicians who are involved in creating law understand what is going on in the outside world, particularly since many of them have no other experience, save for being a SPAD or other professional type. I should then like to defer discussion of this to Prof Michael Porter, at Harvard. He is saying exactly the same thing as Ed Miliband’s ‘responsible capitalism’ formulation. For people who do not understand the value of the workers in the organisation, or the value of the customers, often ignored in the public sector or in utility companies, this video is well worth watching.

 

A senior business professional in the US, Michael Hopkins, describes the situation well:

A heady mix of greed, overconfidence and the use of poor business models that showed up flawed strategies caused the global financial collapse of one year ago.Banks and other financial institutions are once again in the news for paying huge bonuses on the backs of taxpayers’ bail outs.Is the merry go round of greed, overconfidence and flawed strategies about to spin again?

 

Here is an extract from Polly Toynbee’s absolutely brilliant (in my humble view) op. of it:

“Miliband owns this turf: he earned it with his conference speech, considering the contempt from Cameron’s press and Blairites fearing he’d fatally broken the New Labour formula. Now he says he is breaking with that Labour past, and Cameron’s present. There is nothing anti-business about cleansing cheats, asset-strippers and vultures from honest savings and good business enterprise: Cameron has been forced to agree.

How has this change happened? UK Uncut‘s pithy demonstrations at TopShop and Vodafone graphically exposed tax avoidance. The Guardian’s Tax Gap series on companies avoiding £25bn tax through havens and loopholes provided facts. Occupy captured a public anger that conventional politics ignored. The High Pay Commission, set up by the left-leaning thinktank Compass, proved hugely influential, as did Will Hutton’s report on high pay in the public sector, blaming City contamination. London Citizens galvanised communities. Avaaz and 38 Degrees with their petitions raised the decibels. Drip, drip, drip, the ice thaws, and the outlandish becomes conventional when working with the grain of public opinion.

Miliband’s message today is important. Social democratic values are more vital in hard times when there is no money. How you share diminished resources matters more than how you share a growing cake. Labour always said cuts were inevitable, and now there is less money since Osborne stifled growth and added to the deficit. Hard choices for how we tax and spend need social democratic priorities: we are not all in it together when I get un-means-tested winter fuel payments, free travel and heavy pension tax relief with no perceptible cuts.”

 

Meanwhile, Michael E. Porter is the Bishop William Lawrence University Professor at Harvard Business School. As here, a university professorship is the highest professional recognition that can be awarded to a Harvard faculty member. Porter is a leading authority on company strategy, the competitiveness of nations and regions, and strategic approaches to societal problems, Professor Porter’s work is widely recognized in governments, corporations, non-profits, and academic circles across the globe. A sought after teacher, he also chairs Harvard Business School’s program for newly appointed CEOs of multibillion dollar corporations.

 

Based on the work of Porter and others, Hopkins concludes, “Moreover, the collapse of firms such as Enron, Lehman Brothers, and (now largely in public hands) General Motors who all suffered from poor strategic models shows that new business strategy models are essential. And, as argued here, a key message is that CSR is becoming a, if not, the core of business activity.It is fast becoming acknowledged that a strategic stakeholder model of engagement with the business environment means that the potential for avoiding disasters and increasing success and innovation can be increased.CSR is obviously not a panacea for all ills but more and more companies are seeing that it can enhance their competitive advantage.

 

 

I am prepared to bet a huge amount of money that Ed’s speech for the Labour Conference in 2011 will be seen in retrospect as one of the most important political speeches of a generation in my lifetime.

 

 

 

Source: Harvard website.

For a fuller explanation, you are strongly advised to refer to this blog.

'Wilful blindness' (Margaret Heffernan) – corporate personality and cognitive dissonance



Wilful Blindness: Why We Ignore the Obvious at Our Peril [Paperback]. Margaret Heffernan 

Simon Schuster [Book review.]

 

 

 

 

 

 

 

 

 

 

This book would very much interest Adrian Sanders and Tom Watson. Rupert Murdoch was famously asked, “Are you familiar with the term “wilful blindness“?”

A definition of it, as stated in Heffernan’s book on wilful blindness, is supplied by Judge Simeon Lake in summing up the ENRON case, a corporate scandal which shook America and beyond: “You may find that a defendant had knowledge of a fact if thou find that the defendant deliberately closed his eyes to what would otherwise have been obvious to him. Knowledge can be inferred if the defendant deliberately blinded himself to the existence of the fact“.

In English law, the notion of a separate corporate personality has been pervasive, and the law has grappled whether or not the company is the proper defendant. Since the seminal case in the House of Lords, Salomon v Salomon [1897]. it has been held that the body corporate has a separate legal personality. However, it is  long been established that the Courts will not allow the Salomon principle to be used as an engine of fraud, for example Gilford Motor Company Ltd v. Horne [1933]. In a different guise, the legislature here has been concerned as to whether BSkyB is a ‘fit and proper person’ to hold a broadcasting licence, but the sting in the tail here. High quality global journalism requires investment. According to a recent article in the Financial Times, US Department of Justice is also investigating whether News Corp breached the Foreign Corrupt Practices Act (FCPA). Mike Koehler, a professor specialising in FCPA cases, has apparently opined that US regulators might be asked to consider whether they turned a blind eye over alleged payments to public officials.

The idea of the body corporate having a personality capable of criminal activity, such as fraud or manslaughter, is a well established one, and provides for a compelling look at the corporate psychology. The directors have a duty to maximise the success of the company, but it is possible that there might be wilful blindness on the part of companies. This provides the most interesting narrative of Heffernan’s clever book. Heffernan considers very convincingly how the human brain can cope with conflicting views, a notion called ‘cognitive dissonance’. The term “cognitive dissonance” is used to describe a feeling of discomfort that results from holding two conflicting beliefs. Heffernan in my view has grasped the full impact of the relevance of this to the corporate psychology, and hence potentially its behaviour.  Leon Festinger proposed that the greater the discomfort, the greater the desire to reduce the dissonance of the two cognitive elements (Harmon-Jones & Mills, 1999), and dissonance theory suggests that if individuals act in ways that contradict their beliefs, then they typically will change their beliefs to align with their actions (or vice-a-versa). You can easily read between the lines to see how a successful corporate might find itself in a situation like this, in a context such as phone hacking, and insights into the allegations about phone hacking have yet to be fully explored here in the English law.

Heffernan gives countless convincing examples of ‘wilful blindness’ from corporates. For example, the book makes reference to the collapse of Lehman Brothers, where it is alleged concluded that the failed investment bank had exploited its relationship with Linklaters to green light an accounting practice that kept billions of dollars off its balance sheet. This is reported in ‘The Lawyer’ here. Heffernan argues that, ‘in the desire to boost their balance sheet, such manoeuvres wilfully blinded their organisations to their own vulnerabilities.’ However, for me Heffernan’s most interesting analysis was why wilful blindness may be a form of shortcut, or as we know it in the trade of cognitive neuroscience, ‘a cognitive heuristic’. In a nutshell, we have 1 000 000 000 000 000 neurones approximately in a giant supercomputer, and we, as humans, have never been able to work out the brain is able to form so many higher-order differential equations, and once it does so, how it solves them so accurately. Many neuroscientists like me believe that shortcuts are the only way the brain can get round this. Heffernan directly argues that CEOs use such wilful-blindness cognitive shortcuts as a mechanism, when referring to the Deepwater Horizon disaster. According to Heffernan, Manzoni, a renowned energy supremo, said, “I believe nobody knew of the level of risk at Texas City because, if they had known, we would have taken different and substantively different actions.” Heffernan comments, pretty innocently, that: “Manzoni’s argument is intriguing because he’s using a logical shortcut: assuming that there could not have been a problem because, if there had been, someone somewhere would have taken action. Since no one took action, thee problem could not have existed.”

‘Wilful blindness’ is an elegantly written book which successfully combines cognitive neuroscience and the law, within the context of international contemporary corporate management. It will also appeal to law students and corporate trainees, and may even appeal to CEOs and the people who cross-examine them in formal hearings!

A paradigm shift is needed by law firms in understanding disability



‘Diversity’ is such a broad-ranging term, so as to be completely unhelpful. Far from promoting individuality, it clumps together people who are gay, black, bisexual, disabled, but draws the line at being male or female. Critically defining diversity has some bearing on whether you wish diversity groups to be safely ringfenced; or whether all ‘diversity individuals’ should be represented at all levels of a corporate. Whether or not a partner, who has a diversity issue, has time to making diversity part of the corporate culture or not is a moot point, or whether she or he gets paid extra and keeps work for this to a minimum to prevent its negative impact on targets and billable earnings, etc.

Lessons can be learned from another area so beloved of corporate legal marketing and recruitment departments. A highly seminal article on the different subject of corporate social responsibility (CSR) emerged from Porter and Kramer in 2006 in the Harvard Business Review. At this time, Porter and Kramer made a limited entrance into the discussion of CSR and corporate strategy, by structuring their discussion around reputation, sustainability / ‘people, planet, profit’, license-to-operate, and a few other associated issues. It is probably the article which has appeared from Harvard in 2011 that makes the most enduring impression of how CSR should be approached. Porter and Kramer introduce the notion of ‘creating shared value’, emphasising that a previous drawback of previous approaches – including their one – is that the corporation has been pitted against society. Of course, if the purpose of the company in English law is to maximise shareholder dividend, the issue of whether shareholders and directors have an alternative belief-set to other stakeholders becomes enormously relevant.

A similar criticism in my view can be made of the way that law firms approach disability. I am deciding not to hide this under the general term ‘diversity’. Michael Porter talks about the competitive advantage of businesses adopting CSR, such that your business is better than the competition. A lazy marketing solution would be to plaster your promotional literature with pictures of lawyers in wheelchairs, and get your firm to sign up to the aspirational but unenforceable Law Society Diversity and Inclusion Charter; and to concentrate on the profitability of your law firm instead. A more imaginative solution, in keeping with Porter and Kramer (2011), would be to acknowledge disabled individuals like myself as valued members of society. Whether or not you believe in multiculturalism, it is easily possible that a law firm, including the Magic Circle, could set up innovative professional legal services solutions regarding disability and employment issues in the corporate work force; they could make money out of this, indeed, and become more profitable in the process. More radical than making up numbers of the number of disabled candidates invited for interview, even.

I allude to this discussion briefly in a podcast I did with Alex Aldridge and Kevin Poulter this evening.

On corporate social responsibility: a meeting of 'Convergence' at Charterhouse Street



Marcus Jamieson-Pond is the Founder of Convergence, a group to discuss how to implement ‘corporate social responsibility’. Marcus organises a series of regular meetings in London with interesting and relevant speakers, who are able to talk about their direct experience in running social enterprise activities. Marcus believes that social enterprises are pivotal in this initiative. For example, private companies could outsource their entire CSR to social enterprises:

Contracting social enterprises offers businesses a very tangible opportunity to deliver shared value / long-term capitalism, without the need for all the time and money that goes into developing and delivering high profile internal programmes. At best, it could be like outsourcing your entire CSR department and not paying for it!

Marcus Jamieson-Pond – founder, Convergence

Marcus began Tuesday’s evening meeting with a simple question:

When you were 10 years’ old, what did you want to be? Why haven’t you done what you wanted to?

This week’s meeting was about aspiration. The speakers were:

Sonal Shah, Executive Director of Capital Community Foundation (CCF).

Ben Payne, co-Director of Ministry of Stories.

Sonal Shah

The Evening Standard has been running a campaign called the ‘Dispossessed’. The CCF was instrumental in setting it up. Sonal provided that anyone has worked with disadvantaged people knows that there is no magic wand.  She cited  ‘Just another emperor: the myths and realities of philanthrocapitalism’ by Michael Edwards, which discusses the concept of a ‘civil society’ as an iceberg, where the larger organisations form the peek above the baseline, and hold the collective work of a democracy.

Sonal argued that the hardest-to-reach Londoners need to be targeted some ideas. Her thesis is that the appetite for applying market principles to social change runs the risk of dampening community activism, such as the 999club from Debtford. The current language treats this citizen action as a poor relative, because it is not easy to get fast results, obtain good metrics, makes it harder to make a business case.

Sonal identifies three things in particular. She believes that, as funders, collectively you must retain a place for small grant funding, which is a vital tool in addressing disadvantage.

She feels:

  • Small organisations are vital for addressing disadvantage. They are closer to their beneficiaries, and can reach the sorts of people outsiders and professionals may not be able to. They can be responsive to the needs of the individual. The ‘Yes Project’ in Camberwell is a good example of this.
  • Stakeholders may feel excluded. It affects the way governments fund projects, and how citizens get involved. There are three things to be concerned about; scalability and replicability according to the funding landscape, self-sustaining and reducing funding in the longterm can be difficult (this approach may not suit all people – small organisations may not be able to compete against the big people), and the pressure-by-outcomes is difficult (quantifiable measurable outcomes can mean that organisations go for the low-hanging fruit).
  • It is important to engage them.  It is important to fund this work with flexible, small grants. The grant-making ethos is difficult. You need to be able to read between the lines, and go beyond the numbers, and perhaps take risks. It is necessary to talk in depth about lives changed in small organisations. People should be looking to reach such stories.

Sonal ultimately feels that we need to change our language – “you sometimes don’t need to invest but give, not about innovative but giving things to work, big is not necessarily best, ‘one size fits all’ is not necessarily true.”

Ben Payne

Ministry of Stories’ is based in Hoxton Street, working with children from Tower Hamlets and Islington.

Their website provides the following:

We’re here in Hoxton because we love stories. And we know others do too, so we aim to help young people write their own stories. Why? Well, let’s start with a true story…

Its roots are at 826 Valencia – the one thing that he couldn’t give teacher friends help with writing. The owner of that shop had a planning issue – instead they pretended to open it as a pirate-supply store. Two things happened – the children loved it, as the children were walking through the door into a story. People in the store wanted to buy the pirate gear – therefore all the writing workshops could be for free. There are currently eight of these centres.

In London, with the help of about a hundred volunteers, Ben and colleagues changed a site from an employment centre to a ‘shop for monsters’. Hoxton and Shoreditch has a very high density of writers and artists, which belies a great need, with children from low levels of income and low levels of literacy.

There, writers can spend two hours with access to a volunteer illustrator. The business model is of sufficiently high calibre, that the Ministry of Stories have become a national portfolio from the Arts Council, with funding from the next few years. They are very interested in corporate backing in the CSR department as they have 1200 people subscribed to be volunteers. ‘Mortal terror’ is one of their biggest sellers; they are shown in all their glory on this page. They have been bringing in money from individual donors.

Nick Hornby has inspired other Ministries – ‘Ministry of Happy Endings’ and ‘Ministry of Rightful Comeuppences’. He has been heavily involved in the Ministry of Stories project. The ‘Ministry of Stories’ also boasts an extensive list of high-profile ambassadors including Roddy Doyle, who founded the 826-inspired project Fighting Wordsin Dublin; author Zadie Smith; writer, playwright and actor Meera Syal and former Children’s Laureate Michael Morpurgo.

Jonathan Douglas from the National Literacy Trust has previously made it clear that literacy is not one issue – it has a context of biological and relationship changes, from primary to second schools. It’s not simply about skills – and we need to look at how we do things as a community.

Finally, the ‘Ministry of Stories’ needs volunteers: http://ministryofstories.org

(c) LegalAware 2011

 

CSR, marketing and competitive advantage: Bhopal



In May 2011, the BPP MBA exam contained a question on market signalling and corporate social responsibility.

As part of the presentation tonight in room G2 at BPP Business School at 5 – 5.50 pm, members of the BPP Legal Awareness Society will be discussing,

  • the impact of Jeff Skilling’s leadership in the Enron scandal (using a clip from “Enron – the Smartest Men in the Room”)
  • the legacy of ‘Bhopal’ in understanding business ethics and corporate social responsibility (using the YouTube video below);

  • the use of “perception management” by corporations; Pfizer turnstiles to prevent fare-beating in the subway (using a clip from “The Corporation”)

 

 

All BPP students are welcome to attend – including MBA and CIM students. Learners in the MBA ‘Organisations and Leadership’ module may find the session useful, entertaining, and interesting.

The power of Krispy Kreme donuts: a new model for corporate social responsibility?



Recently, the BPP Pro Bono Unit, which is extremely active and successful at BPP in delivering on legal pro bono schemes in the community, sent out the following brief message:

“Krispy Kreme doughnuts are being sold to raise money for Liberty tomorrow (Thursday) between 12 and 2pm in the foyer of BPP Holborn – enjoy!”

Needless to say the event proved to be very popular indeed! Interestingly, Emine Saner has recently written an article on how Britain has fallen in love with Krispy Kreme doughnuts. Her article from yesterday is here.

This week, the North Carolina-based chain announced it would be doubling the number of its outlets in the UK to 100 over the next five years, on the back of growing sales, with revenue up 12.6% and serving 5 million customers. The next will open in Leeds next month. There is no doubt that Krispy Kreme take their fundraising activities extremely serious in the UK. In the light of withdrawal of public funding for many walks of life, including legal services, this is especially important.

Their UK website gives a very inspiring description of their activities,

Need a more interesting way to raise money for your charity?

Whether you are a charity looking to raise money at a specific event or an individual looking for a different way to hit that sponsorship target, Krispy Kreme’s fundraising scheme is here to help.

From early on in our history, Krispy Kreme has supported charities and played an active role in the local community. We know that it is increasingly difficult to simply ask people to make a donation, which is why our scheme allows you to sell them something they’ll love, our doughnuts, whilst you make a profit for your charity!

Link here: http://www.krispykreme.co.uk/fundraising/raise-dough/

From a business point of view, here in the UK, they are stocked in Harrods and Selfridges as well as  there is also a less glamorous retail side. There are kiosks in motorway service stations, and in Enfield. In the UK, all stores are company-owned, but in the US, most are franchises). By the end of the 90s, the company had gone national, and in 2000 it was floated on the stock exchange. Over the next couple of years, the company expanded rapidly, including internationally. They spent little or no money on advertising, relying instead on word of mouth and giveaways.

Emile Saneer gives a very interesting of the marketing strategy, in relation to the strategic operation of Krispy Kreme. MBA students at BPP are currently studying in detail strategy and organizational behaviour. Saneer provides (in an article in the Guardian lifestyle section) that,

playing its part in the drive to get Americans to the polling booths during the 2008 presidential elections, Krispy Kreme outlets rewarded those who had cast their ballot with a free doughnut. To celebrate Barack Obama’s victory, the chain offered punters a free coffee with its very own piece of coffee art – an image of Obama in the foam – rebranding the drink “The United States of Americano”.”

 

This arguably extends further the concept of ‘corporate social responsibility’, seeing greater involvement between private companies in the private sector and charities in the third sector. For example, “Advice for Good” (4th June 2011) provides that,

“In this article in the Vancouver Sun we discuss an emerging type of partnership between charities and companies: affiliate marketing.  This mutually beneficial arrangement provides charities with access to funding and businesses with new customers and promotional opportunities.  It is a creative way for charities to get private sector funding and it goes beyond the typical corporate social responsibility (CSR) and community investment support. There are an ever increasing number of charity-corporate affiliate marketing partnerships, with companies including Ben and Jerry’s and Krispy Kreme getting on board.  With high demand among charities for corporate charitable contributions, affiliate marketing is a creative way for fundraisers to redefine corporate partnerships.”

 

Should corporate social responsibility be mandatory? Lessons from India.



Azim Hashim Premji (born 24 July 1945) is an Indian business tycoon and philanthropist who is the chairman of Wipro Limited, guiding the company through four decades of diversification and growth to emerge as one of the Indian leader in the software industry. According to Forbes, he is currently the third wealthiest Indian with a personal wealth of US$16.8 billion in 2011, as well as being the richest Indian Muslim. In 2000, he was voted among the 20 most powerful men in the world by Asiaweek. He was also among the 50 richest people in the world from 1999 to 2005 according to Fobes. In April 2004, he was rated among the 100 most influential people in the world by Time Magazine. He is India’s biggest philanthropist.

Premji says there is no need for a law on mandatory CSR spending. Speaking at a press conference with Warren Buffet and Bill Gates, Wipro Chairman Azim Premji said he felt larger companies had enough social consciousness to take up responsibilities without being told to do so. He also said that the legislation may be abused by companies which is why the government needed to issue certain guidelines. Premji was responding to a question on the government’s plan to make it mandatory for corporates to spend 2 per cent of their average income of three years, as part of the proposed Companies Bill.

Wipro chairman Azim Premji’s opposition to mandatory spending by industry on corporate social responsibility (CSR) activities is indeed echoed by others in the IT industry. Infosys Technologies CEO Kris Gopalakrishnan said that this should not be mandated, but it should be voluntary with proper disclosures. Some believe that shareholders ultimately own the company and thus they need to have a say in the matter as well. B Ramaswamy, MD of Sonata Software, said that the process of deciding how much a company must contribute to CSR must be made more democratic.

 

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