CHAPTER 8

ETHICAL CONSUMERISM and CORPORATE SOCIAL RESPONSIBILITY

I. INTRODUCTION

In an article written by Richard Stengel, entitled The Responsibility Revolution,

which zooms in on the topic of the rise of ethical consumerism, he started by saying:
"Americans are recalibrating their sense of what it means to be a citizen, not just voting
or volunteering but also through what they buy." He went on to elucidate by quoting FDR
in the midst of the Great Depression: “We have always known that heedless sell-interest
was bad morals. We know not that it is bad economics."
According to Stengel, "We have learned this all over again after the collapse of
Lehman Brothers, the shame of subprime mortgages and the branzen Ponzi scheme of
Bernie Madoff. But even amid the Great Recession of 2009, people have been trading in
their SUVs for Priuses, buying record amounts of fair-trade coffee and investing in socially
responsible funds at higher rates than ever before. What we are discovering now, in the
most uncertain economy since FDR's time, is that enlightened self-interest call it a shared
sense of responsibility is good economics… There is a new dimension to civic duty that
is growing... it's the idea that we can serve not only by spending time in our communities
and classrooms but by spending responsibly. We are starting to' put our money where
our ideals are."
The growing awareness of the social impact of the products we buy paved way to
the rise of ethical consumerism. In a sense, ethical considerations have become
increasingly important to a company's reputation at a time when public opinion can go
viral in an instant. Although not really a global phenomenon, in terms of how the idea is
being embraced, practiced or followed by the greater majority of consumers, it is
nonetheless gaining a wider latitude of support-which ranges from change of preference
in the items being purchased in the supermarket, to activism and boycotts on products
directly harmful to society and environment. People are switching to energy-efficient light
bulbs, organic food, and eco-friendly products. The marketing strategy of making it appear
that consumers get to help others (through whatever advocacy or charity works the
company is associated with) by purchasing their products seem to start paying dividends.
On the side of activism, more and more non-governmental organizations are starting to
sprout calling out for the boycott on products that they believe are unethical. Below are
examples of actual appeal to the public to boycott certain companies and their products
of recent memory.

…as a matter of fact,

Wendy's
The boycott was called by the Coalition of Immokalee Workers after Wendy's refused to
join the Fair Food Program (FFP).The FHP is a social responsibility program that
addresses decades-old farm labor abuses. It is unique partnership among farmers,
farmworkers, and retail food companies that ensures humane wages and working
conditions for the workers who pick fruits and vegetables on participating farms. It
harnesses the power of consumer demand to give farmworkers a voice in the decisions
that affect their lives, and to eliminate the longstanding abuses that have plagued
agriculture for generations. The Program has been called "the best workplace-monitoring
program in the US in the New York Times, and "one of the great human rights success
stories of our day" in the Washington Post, and has won widespread recognition for its
unique effectiveness from a broad spectrum of human rights observers, from the United
Nations to the White House.
All Wendy's major competitors such as McDonalds, Burger King Subway and Taco Bell
have signed up. Those that sign up agree to purchase exclusively from suppliers meeting
the code of conduct including a zero-tolerance policy for slavery and sexual harassment.
L’Oreal (including Body Shop)
Naturewatch, a registered charity working to improve the lives of animals whose mission
is to end animal cruelty and advance animal welfare standards around the world, has a
long-standing boycott of L'Oreal due to its continued use of animal testing tor cosmetics.
The French multinational uses ingredients that have been tested on animals, despite
public statements to the contrary. It has also been criticized for lobbying against an EU
ban on animal testing for cosmetics.
Adidas
Boycott call from Viva, an activist group geared towards the protection of the animal rights
and indigenous wildlife, for using kangaroo skin to make some types of football boots
Hemes
PETA are calling on a boycott of Hermes which sells luxury bags and belts using skin
from reptiles Alligators and crocodiles are brutally slaughtered for ‘luxury' fashion.
Nestle (Milk products and Baby Formula)
We're in the 905, and this is a sad story about poverty, breastfeeding and greed. Nestle
aggressively pushed their breastfeeding formula in less economically developed
countries (LEDCs) specifically targeting tie poor, They made it seem that their infant
formula was almost as go0d as a mother's milk, which is highly unethical for several
reasons.
The first problem was the need for water sanitation. Most of the groups hey were targeting
especially in Africa-didn't have access to clean water (many don't to this day), so it was
necessary for them to boil the water. But due to low literacy rates, many mothers were
not aware of this, so they mixed the formula with polluted water which put
children at great risks. Nestle seems to have knowingly ignored this, and encouraged
mothers to use the formula even when they knew the risks. Breastfeeding one of the
most important aspects for an infant, especially in unsanitized areas, was cast aside.
Baby formula was "the nearest thing in the world", and this "splendid triumph of care and
science" is "so like mother's milk that the tiny stomach won't notice the difference." But
the tiny stomach did notice the difference.
"Breastfeeding is unparalleled in providing the ideal food or infants The optimal way to
feed a baby is exclusive breastfeeding for the first six months followed by breastfeeding
combined with complementary foods until the child is two years old…” – a 2007 Save the
Children report.
Many mothers were able to read in their native language but were still unable to read the
language in which sterilization directions were written, Even if mothers understood the
need to boil the Water, they might not have had the facilities to do so. UNICEF estimates
that a formula-fed child living in disease-ridden and unhygienic conditions is between 6
and 25 times more likely to die of diarrhea and four times more likely to die of pneumonia
than a breastfed child. Another problem was that mothers tended to use Jess formula
than needed -to make the jar last longer, resulting in many infants receiving inadequate
amounts,
But even it the water was boiled, and even if the formula was administered in the right
proportion and in the right quantity, I is lacking in many of the nutrients and antibodies
that breast milk provides. Breast milk contains the required amount of the nutrients
essential for neuronal (brain and nerve) development, and o some extent protects the
baby from many diseases and potential infections According to the International Baby
Food Action Network (TBEAN), Nestle used unethical methods to promote their infant
formula to poor mothers in developing countries. But it gets even worse.
IBFAN claims that Nestle distributes free formula samples to hospitals and maternity
wards; after leaving the hospital, the formula is no longer free, but because the
supplementation has interfered with lactation, the family must continue to buy the formula.
Nestle denies those allegations... sort of
“Nestlé takes reports on non-compliance with the WHO Code very seriously and we have
endeavored to investigate all allegations brought to our attention, despite the fact that in
many cases we are not provided with accurate details substantiating the accusations.
This makes it difficult for us to investigate how, where and when the alleged infringement
could have occurred. Some of the allegations are several years old before they are
brought to public attention, which also could complicate the investigation.
Back then. Nestlé’s response was that their critics should focus on doing something to
improve unsafe water suuplies, which contributed to the health problems associated with
bottle feeding. They also later used this approach to promote their bottled water. As The
Guardian puts it, "its huge marketing budgets clearly influence peoples' behavior, even if
direct causality can't be demonstrated."
Today, several countries and organizations are still boycotting Nestle, despite their claims
to be in compliance with Who regulations. There's even a committee, the International
Nestle Boycott Committee that monitors their practices. Several universities and student
organizations have also joined the boycott, especially in the UK.
Nestle (Chocolate products)
Most people love chocolate, but few know the dirty decals behind chocolate production.
The 2010 documentary, The Dark Side of Chocolate brought attention to purchases of
cocoa beans from Ivorian plantations that use child slave labour. The children are usually
12 to 15 years old, and some are trafficked from nearby countries – and Nestle is no
stranger to this practice.
In 2005, the cocoa industry was, for the first time, under the spotlight. The International
Labor Rights Fund filed a lawsuit against Nestle (among others) on behalf of three Malian
children. The suit alleged the children were trafficked to Côte d'Ivoire, forced into slavery,
and experienced frequent beatings on a cocoa plantation. In 2010, the Us District Court
for the Central District of California determined 0Drporations cannot be held liable for
violations of international law and dismissed the suit a controversial decision which has
since been appealed. But even if Nestle wasn't legally liable for these abuses, they are,
at least morally. But that wasn't the only Case of this kind.
A report by an independent auditor, the Fair Labor Association (FIA, says it found
"multiple serious violations" of the company's awn supplier code. It was reported that
Nestle hadn't carried out checks against child labor and abuse. Additionally, man injuries
caused by machetes, which are used to harvest cocoa pods, have been reported. Nestlé's
excuse can be summed up broadly as everybody does it: "The use of child labor in our
cocoa supply chain goes against everything we stand for, says Nestle s Executive Vice-
President for Operations Jose Lopez: "No company sourcing cocoa from the Ivory Coast
can guarantee that it doesn’t happen but we can say that tackling child labor is a top
priority for our company.
The FLA reported that Nestle was fully aware of where their cocoa was coming from and
under what conditions, but did little to improve conditions.

New research from Mintel, a market intelligence agency, reveals that36 percent of
US consumers stop buying from companies they believe are unethical. what's more, over
one third (35 percent) of consumers stop buying from brands they perceive as unethical
even if there is no substitute available and 27 percent stop purchasing even if they think
the competitor oilers lower quality. Overall, more than three in five consumers feel that
ethical issues are becoming more important (63 percent). Some 34 percent of consumers
tell others when they perceive a brand to be making ethical actions or actions that are
honest, fair and responsible, while another 29 percent of consumers take to social media
to share their support of ethical companies.
And because of this growing trend of ethical consumerism, corporations and businesses
have started gearing their steering wheels to at least approximate these
expectations. For example, Cadbury Dairy Milk one of the best-selling chocolate
bars worldwide, added a new word lo their label, .e. fair trade. In addition to that, they
have pledged to invest 325 million in Ghana to boost cacao farmers’ incomes and fund
schools therein. The same company is also shifting towards a substantial reduction in its
use of fossil fuel, water and packaging. This is, in a way, in response lo the recent calls
for boycott against them due to alleged corporate and social unethical practices. In other
words, ethical consumerism likewise paved the way for the amplification of the talk on
corporate social responsibility.

…as a matter of fact…

In Uganda, Improving Health (and Wealth) Avon-Style
When Charles Slaughter signed up to be an Avon Lady, the Yale business school grad
didn't care much about makeup or skin cream. He was looking to poach a business model
Living Goods, the nonprofit he founded in 2006 (after his stint as a direct marketer), gives
Ugandan women the chance to be business owners. With microloans of about S50, they
buy much needed products like soap and malaria medicine and then sell them for small
profits. While charity funds and government aid can be short-term and unpredictable.
Living Goods' model offers long term stability. But the organization's economic impact on
Uganda goes beyond empowering new entrepreneurs - It makes the country healthier.
Says Slaughter "It’s hard to make a living when you've got malaria." -by Kate Pickert
Pumping Up the Harvest
Eighteen years ago, Kickstarť's founders, former aid workers Martin Fisher and Nick
Moon, were branded as heretics for selling irrigation pumps to poor Africans. But
experience had shown them that business models work: people are more invested in the
success of a tool they buy than in one they are given. So far, the aptly named Money
Maker pumps have helped 85,000 families increase crop yields and lift themselves out of
poverty. Some have even sold their wares to supermarkets in Europe, -by Deirdre Van
Dye
Brewing Up Social Justice
To Starbucks, paying above-market prices for coffee beans doesn't just improve the lives
of small-scale farmers. "If we build stable relationships with our growers, well get the
highest-quality coffee,” says Vivek Varma, senior VP of global responsibility. The mega
chain recently doubled its purchase of Fair-Trade coffee, to 40 million lb. (18 million kg),
and wants all its coffee to be ethically sourced by 2015
Starbucks offers full health-care coverage to part-time workers too, and since October
2007, its employees have completed over 400,000 hours of community service. Good joe
and giving back: a rich blend. -by Sean Gregory
II. CORPORATE SOCIAL RESPONSIBILTY

The broadest definition of corporate social responsibility is concerned with what is

– or should be – the relationship between global corporations, governments of countries
and individual citizens. More locally, the definition is concerned with the relationship
between a corporation and the local society in which it resides and operates. (It) is also
concerned with the relationship between a corporation and its stakeholders. A more
specific definition, according to the EU Commission, is that "it is a concept whereby
companies integrate social and environmental concerns in their business operations and
in their interaction with their stakeholders on a voluntary basis" And while the
voluntariness of the resort of companies to this framework is questionable, as some were
only forced by (as mentioned above) the rise of ethical consumerism and the call for more
active social participation, what is clear is that more and more corporations incorporated
the social, ethical and environmental concerns in these policies and blueprints.
Companies are no longer regarded, and for that matter tolerated, as an institution
isolated in a cocoon whose main existence revolves around the notion of profit-making In
as much as an individual person is no island and is considered responsible for the
consequences that his actions have towards the bigger community, so too does
corporations in their money making ventures. They too are part of the society. They too
are socially responsible for their undertakings and endeavors. They are demanded to play
an active role in the welfare of society. The society, which basically forms part of a
corporation's stakeholders, is keeping a close and vigilant watch.
It is apparent therefore that any actions which an organization undertakes will have
an effect not just upon itself but at the external environment within which hat organization
resides. In considering the effect of the organization upon its external environment. It must
be recognized that his environment includes both the business environment in which he
firm is operating, the local societal environment in which the organization is located and
the wider global environment. This effect of the organization can take many forms, such
as:
 The utilization of natural resources as a part of its production processes

 The effects of competition between itself and other organizations in the same
market

 The enrichment of a local community through the creation of employment

opportunities

 Transformation of the landscape due to raw material extraction or Waste product

storage.

 The distribution of wealth created within the firm lo the owners of that firm (via
dividends) and the workers of that firm (through wages) and the effect of this upon
the welfare of individuals.
  And more recently the greatest concern has been with climate change and the way
in which the emission of greenhouse gases is exacerbating this.
CSR, in today's generation, therefore yields a positive cost-benefit evaluation, and it gain
greatly enhance the firm’s competitive advantage the growing demand to alleviate this
world from the social and environmental problems plaguing it, a great chunk of which is
directly felt by its inhabitants, has also changed the way how people conduct and operate
their businesses. It’s no longer "mind your business in a world where one's affairs
significantly affect other's ventures and, ultimately, lives.

II.A. BASIC PRINCIPLES OF CSR

The following are the basic principles of corporate social responsibility, as recognized by
scholars and analysts:
1. Sustainability. The earth is drastically changing at an alarming peace and its natural
resources are thinning out faster than expected. And since most of what we use and need
every day are manufactured and produced using natural resources, it becomes a growing
concern and expectation that corporations utilize these non-renewable resources wisely,
More broadly, sustainability is concerned with the effect which actions taken in the present
has upon the options available in the future. If resources utilized in the present then they
are no longer available for use in the future, and this is of particular concern if the
resources are finite in quantity. Sustainability therefore implies that society must use no
more of a resource than can be regenerated. This can be defined in terms of the carrying
capacity of the ecosystem and described with input-output models of resource
consumption. Thus, the paper industry for example has a policy of replanting trees to
replace those harvested. Viewing an organization as part of a wider social and economic
system implies that these effects must be taken into account, not just for the measurement
of costs and value created in the present but also for the future of the business itself.
Measures of sustainability would consider the rate at which resources are consumed by
the organization in relation to the rate at which resources can be regenerated.
This principle shall be elucidated further at the latter part of this Chapter.

2. Accountability. As already mentioned above, companies are part of a bigger

environment and community. Hence they are morally and socially responsible for the
consequences of their actions, and more specifically, of the products and services they
offer to the public.
Accountability is concerned with an organization recognizing that its actions affect the
external environment, and therefore assenting responsibility for the effects of its actions.
It implies a reporting to external stakeholders of the effects of actions taken by the
organization and how they are affecting those stakeholders. Alongside this acceptance
of responsibility is the recognition that those external stakeholders have the power to
affect the way in which those actions of the organization are taken and a role in deciding
whether or not such actions can be justified, and if so at what cost to the organization and
the other stakeholders.

3. Transparency. Deceit in advertising is unethical and equally deemed illegal in certain

States. Consumers must know what is behind the brand name, ie. what they are actually
getting when they purchase a particular product or subscribe to certain services. And
integrity in this regard is of high importance, both as to building good corporate reputation
and advocating for the safety and welfare of the consumers
As a principle, it means that the external impact of the organization can be ascertained
from the organization's reporting and pertinent facts are not disguised within that
reporting. Thus all the effects of the actions of the organization, including external
impacts, should be apparent to all from using the information provided by the
organization's reporting mechanism

II.B. COMPONENTS OF CSR

To understand CSR further, we then examine the components of CSR ie, what are
the different level of responsibilities that make up this Concept. According to Archie
Carroll, total corporate social responsibilities are based on economic, legal, ethical and
discretionary responsibilities. He argued that these four components are not necessarily
mutually exclusive, but rather, represent a continuum in which corporate social
responsibility is examined.
1. Economic Responsibilities are based on the underlying foundation of why a firm has
been created, normally to develop economic value economic responsibilities are based
on the belief that the firm has a responsibility to use resources available to produce goods
and services for society. The economic responsibilities lay the foundation for the firm to
be able to support its other three responsibilities. As a resu.t, some specific components
of a firm's economic responsibilities could include maximizing earnings per share,
generating a high and consistent level of profitability, establishing and maintaining a
strong competitive position, and operating the firm at a high efficiency level.
2. Legal Responsibilities are the laws and regulations that all firms are expected to
abide by as they perform their daily functions. Firms are expected to be able to fulfill their
economic responsibilities while following the legal requirements that have been
established by society. Some specific components of a firm's legal responsibilities could
include the firm perform in a way that is consistent with governmental and legal
expectations; displaying complete compliance with all local, state, federal and
international regulations; and being a good, law-abiding corporate citizen. It is important
that a definition of a successful firm be one in which all of its legal obligations are fulfilled
so that all the goods and services produced by the firm meet at least the minimum legal
standards
3. Ethical Responsibilities are difficult to define and can change over time because they
are based on the expectations of society. As society changes over time, its expectation
of what is considered ethical by firms also changes. However, one constant is that society
expects that a firm should have ethical responsibilities that are beyond just meeting legal
requirements established by society. Some components of the ethical responsibilities of
the firm include: 1) making sure the firm performs in a manner that meets or exceeds the
expectations of both social and ethical norms; 2) having ability to adapt to new or evolving
ethical and moral norms within society: 3) ensuring that ethical norms are not ignore or
compromised so that the firm can achieve its objective: 4) behaving in a manner
commensurate with being a good corporate citizen based on its ethical and moral
conduct; 5) realizing that corporate integrity and ethical behavior go beyond the minimum
legal and governmental standards.
4. Discretionary Responsibilities are those responsibilities in which society does not
have clear message to present to businesses what their course of actions should be.
These responsibilities are left in the hands of the managers to exercise the proper
judgment. Some examples of discretionary responsibilities include having firms give to
charity organizations, providing programs to help people who are drug dependent, or
providing day care centers to help families cope in a work environment. These actions
are considered discretionary, so it a firm does not want to participate in these programs,
the firm’s lack of commitment would not be considered unethical. Philanthropic
components of a firm's corporate responsibility could include insuring that the firm
performs in a manner that is consistent with charitable expectations from society, helping
support causes such as the fine arts and the performing arts to enrich the cultural basis
of society, ensuring that managers and other employees also become involved by
volunteering at various charitable organizations, providing financial and nonfinancial
assistance to educational institutions, and volunteering to support community projects
that enhance the overall quality of life for the community.

…as a matter of fact…

THE ROLE OF CORPORATE PHILANTROPY
An underlying question is whether the "good deeds" done by the firm can help improve
the corporate reputation of the firm. One study found that firms that had a number of
Environmental Protection Agency (PA) and Occupational Safety and Health
Administration (OSHA) violations were able to improve their corporate reputation through
their corporate giving programs. Although the firms’ positive reputations diminished
because of the violations, they were able to preserve a positive reputations by financially
supporting numerous causes that affected their stakeholders.
Michael Porter and Mark Kramer warn that corporations must understand the true
meaning of strategic philanthropy. Facing the firm's support toward a single
philanthropic cause via public relations or advertising is not strategies philanthropy. In
fact, this "cause-related" marketing can backfire and lead to mistrust and suspicion
about the true motives of the firm. Porter and Kramer argue that true strategic
philanthropy is based on the belief that the actions of the firm can benefit society and
the firm through the firm's development of unique assets and expertise. As a result, firms
can use their philanthropic focus to enhance their competitive advantage. For example,
Cisco Systems has developed, the Cisco Networking Academy to train computer network
administrators. This is beneficial to society because the individuals going through the
academy have developed computer network skills, and it is beneficial to Cisco Systems
because the company now has a larger selection pool which to hire new employees.

Carroll hence concludes that CSR is defined by how well a company meets these
responsibilities, He also presented, through what he called the pyramid at corporate social
responsibility, how the profitability of the firm is the foundation that becomes intertwined
with the firm's legal responsibilities, Those two components allow the firm h develop its
ethical responsibilities, which could lead to discretionary responsibilities in the form of
philanthropic responsibilities This pyramid is a rather realistic way of looking at how
companies incorporate CSR to their policies and ventures, For while ethical and
charitable responsibilities should be ends in themselves, i.e. companies ought to pursue
these considerations for the sake of actually being good and helping others, reality would
tell us that this is a hard pill for companies to swallow – for in the first place, how can a
company give money to charity it does not have any, how can it increase its laborers
wages if it is struggling to even meet its financial responsibilities

Philanthropic
Responsibilities
Be a Good
Corporate Citizen

Ethical
Responsibilities
Be Ethical

Legal
Responsibilities
Obey the law

Philanthropic
Responsibilities
Be a Good Corporate
Citizen
Source: Archie Carroll, The Pyramid of Corporate Social Responsibility: Toward the
Moral Management of Organizational Stakeholders, (Business Horizons, July- August
1991)
More and more corporations are realizing that building a reputation upon the bricks
of social responsibility attracts more investments and customer loyalty. The traditional
predatory image of capitalism is starting to tame, and its apathetic stance staring to soften.
“Charles Fombrun argues that corporate reputation is not just nice to have but can add
overall value to the corporation. He (further) argues that everyday decisions are based
on reputation, whether it is the company you buy products from or the plumber you need
to fix the sink. A reputation is valuable to a company because it communicates the
expectations of the company to the buyer. As a result, a reputation has a strong
strategic value because it identifies why the individual should buy products and
use the services of one company rather than those of another. A firm’s reputation
becomes an intangible asset that can enhance the value of the firm and strengthen
the firm’s competitive advantage.
With global warning on the minds of many consumers, lots of companies are racing to
“outgreen” one another, a competition that is good for their bottom lines as well as the
environment’s. The most progressive companies are talking about triple bottom line –
profit, planet and people – that focuses on how to run a business while typing to improve
environmental and worker conditions.
Barack Obama, as a presidential candidate, relentlessly touted green products and
industry and preached the idea that profits and principles are not mutually exclusive.
His election was both a cause and an effect of this sense of social responsibility: his
candidacy capitalized on this evolving mind-set, and he has done more than anyone else
to advance it. But long before Obama started talking about how green is the new gold,
many corporations discovered that business was about a lot more than a profit-and-loss
statement. At first, the corporate stance was defensive; companies were punished by
consumers for unethical behavior. People, for example, became alarmed about “blood
diamonds,” or “conflict diamonds” – gems mined in war zones and used to finance conflict
in Africa.
The nexus of activist groups, consumers and government regulations could not merely
tarnish a company but put it out of business. Companies also began to realize that just
as some consumers boycotted products they considered as unethical, others would
purchase products in part because their manufacturers were responsible. In 1992, for
example, Gap developed sourcing guidelines for its suppliers, and in 1996 the company
put in effect a code of conduct for them. Since 2004, Gap has been publishing information
about the factories it uses and those it has stopped doing business with. Last year HP
followed suit, becoming one of the first computer manufacturers to apply similar
transparency to its global chain.
Many companies are trying to reconfigure their DNA as profit seekers. Take Walmart.
Once the poster child of corporate ruthlessness, it has resolved to change it ay of doing
business for the future of the planet. The company has required its suppliers to reduce
packaging to protect the environment and is trying to boost sales of energy-efficient
lightbulbs by giving them more shelf space and better placement in stores.
Other companies are ratcheting up their responsibility commitments. Intel, the world’s
largest chipmaker, says it plans to increase investment this year in energy efficiency that
will help the environment and cut costs. Mars and Cadbury have unveiled plans to
increase the amount of cacao they harvest from sustainable sources because it is good
for the environment and will also relieve potential shortages in the future.
None of this would have happened without consumer demand.
Some companies are even willing to give up their known biggest assets in
exchange of good reputation or ethical corporate image. Most recently, Maria Sharapova
and Manny Pacquiao, stalwarts in their respective sports, were dropped by their major
sponsors because of alleged usage of banned substance (Sharapova) and derogatory
remarks against gay couples (Pacquiao).

… as a matter of fact …
Nike and Tag Heuer cut ties with Maria Sharapova
theguardian.com
Nike and Tag Heuer have become the first major sponsors to cut ties with Maria
Sharapova after the tennis star revealed she had tested positive for the banned
substance, with Porsche also suspending promotions with the player.
The five-time grand slam winner announced on Monday that she failed the drug
tests after she was knocked out of the Australian Open in January. She has been
provisionally suspended from the sport by the International Tennis Federation.
Nike, Sharapova’s most high-profile sponsor, said it would be suspending their
relationship. “We are saddened and surprised by the news about Maria
Sharapova,” it said. “We have decided to suspend our relationship with Maria while
the investigation continues. We will continue to monitor the situation.”
Swiss luxury watchmaker Tag Heuer, which has had a relationship with Sharapova
since 2004, said it had stopped negotiations with the player, whose previous
contract ended on 31 December.
“We had been in talks to extend our collaboration,” a spokeswoman said. “In view
of the current situation, the brand has decided not to renew the contract with
Sharapova.”
Porsche, which signed a three-year-deal with Sharapova to become its first female
ambassador in 2013, also said it would be suspending promotional work with the
player.
In 2015, Forbes estimated that Sharapova, the world’s highest-paid female athlete
for the 11th consecutive year, had earned ₤16m in endorsements. Her lucrative
eight-year contract with Nike was signed in 2010 and worth almost ₤50m.
Other endorsements for the former world No 1 include Avon, Evian and Head
tennis rackets. Avon told the Guardian it would not be commenting for the time
being on the future of its relationship with Sharapova.
Evian expressed disappointment but said it was reserving judgement. “We were
surprised by the announcement of Maria Sharapova during her press conference,”
a spokesperson said. “Evian has bee a partner of Maria Sharapova for many years,
and until now, we have maintained a trustworthy professional relationship. Evian
attaches great importance to health, to integrity and to transparence, and we will
follow closely the development of the investigation.”
Russia is barred from international competition after a major doping scandal
involving its athletes last year but hopes to meet anti-doping standards set by the
International Association of Athletics Federations in time for the Olympics, though
many International observers believe this is unrealistic.
Sharapova has also said she hopes she can eventually return to the sport, despite
of being plagued by injuries. “I let my fans down, I let the sports down that I have
been playing since the age of four and I love so deeply,” she said at a press
conference in Los Angeles on Monday. “I know with this I face consequences, I
don’t want to end my career this way and I really hope I will be given another
chance to play this game.”
The drug Sharapova was using was placed on the banned list by the World Anti-
Doping Agency from 1 January because of “evidence of its use by athletes with
the intention of enhancing performance.” Sharapova claimed she had taken
meldonium legally for years for health reasons.
Nike cut ties with Manny Pacquaio derogatory comments
espn.go.com
Nike terminated its endorsement contract with boxer Manny Pacquaio on
Wednesday after he made derogatory remarks about same-sex couples.
“We find Manny Pacquiao’s comment abhorrent,” the company said in a statement.
“Nike strongly opposes discrimination of any kind and has a long history of
supporting and standing up for the right of the LGBT community.”
Based on Pacquiao’s comments, a spokesman confirmed that he is no longer on
the company’s endorsement roster. Pacquiao. 37, had endorsed Nike for a little
more than eight years.
On Thursday, Pacquiao said he respects Nike’s decision to drop him but stood pat
on his opposition to same-sex marriage and added that he is happy that “a lot of
people were alarmed by the truth.”
Pacquiao’s original remarks were made to a Filipino television station earlier this
week. “Have you seen any animal having male-to-male or female-to-female
relations?” Pacquiao said. “If you have male-to-male or female-to-female
[relationships], then people are worse than animals.”
 Pacquiao apologized on Twitter within hours. “I’m sorry for hurting people by
comparing homosexuals to animals,” Pacquiao tweeted. “Please forgive me for
those I hurt. God Bless!”
Pacquiao’s promoter, Bob Arum, CEO of Top Rank, said he understood Nike’s
decision to end deal. “Nike is in the business of selling its products to as wide of
an audience as they can, and Manny’s comments were insulting to a lot of people,”
Arum told ESPN.com. “His comments were made to a Filipino audience, where
same-sex marriage is not as accepted as it is here, and Manny is a convert of
enlightened Christianity, which does not believe in same-sex relationships. But to
people in the United States, his words can only be viewed as hate speech.
“If I was running Nike, I would have to make the same decision they did.”
Pacquiao was more of a billboard for Nike, which had its swoosh on his shorts for
fights and on his shoes, instead of a true revenue stream. Few Pacquiao items
reached the market.
Nike has been more active in terminating contracts of late than at any other time
in company history. Over the past four years, it has severed deals with cyclist
Lance Armstrong, running back Ray Rice, running back Adrian Peterson and
sprinter Oscar Pistorius.
Arum, according to The Associated Press, said Pacquiao’s message was
“diametrically opposed to what I believe.”
“I’m in favor of gay rights and same-sex marriage,” Arum said. “I’m apologetic
personally to the gay movement in the United States.”
This week wasn’t the first time Pacquiao has been involved in a furor over gay
rights. In 2012 he was quoted as saying he was against same-sex marriage
because “it’s the law of God,” though he denied implying that homosexuals should
be put to death.

And companies are willing to do all of these for the sake of good corporate
reputation. And having a strong positive reputation can produce three major
benefits for the strategic focus of the firm:
1. Stakeholders prefer to do business with firms that have a positive corporate reputation.
When a customer is unfamiliar with attributes of one product versus another, the
reputation of the firm is considered. If the firm has a positive reputation, this could
determine which item the customer will purchase. In addition, if the customer has already
bought a different product from the firm, the customer will be more likely to purchase the
additional product from the same firm because of its corporate reputation.
2. It can greatly aid a company during a crisis.
3. It can increase the financial performance of the firm because the firm’s superior
competitive advantage.
However, it must be noted that CSR initiatives are not all he impeccable me calls for social
and ethical responsibility are left unheeded, especially when it comes to issues whose
moral value is highly debatable. Take for sample Calvin Klein' latest advertisement in
Instagram, which features a photo of an "upskirt" shot of a model. Despite the sexually
provocative ads of this company, which some considers as sexist and unethical, it actually
gained more curious consumers to visit its Instagram page to see what the fused is all
about-rather than boycotting it outright or joining the uproar for its removal.

.. as a matter of fact...
Calvin Klein is sticking by its 'upskirt' ad that has caused social media uproar and
a petition for its removal.
Calvin Klein, a brand well-known for courting controversy with its marketing, struck again
earlier this week with an ad on its Instagram page. The ad in question features an "upskirt"
shot of model Klara Kristin, alongside the tagline: '’I flash in #mycalvins.
As we reported earlier this week, the ad has drawn a fierce reaction in the comments and
elsewhere on social media from critics who think it is perverted and sexist.
On Thursday, the National Center on Sexual Exploitation (NCOSE) launched a petition,
calling on Calvin Klein to 'stop glamorizing sexual harassment and assault" NCOSE also
wants Calvin Klein to issue an apology to "victims of sexual harassment or assault
everywhere.
But so far, Calvin Klein has stayed quiet on the subject. The company did not immediately
respond to Business Insider's request for comment.
In fact, the brand has continued to go on to post some sexually-provocative ads to its
Instagram page. The latest image, posted late on Thursday, shows Dutch model Saskia
de Brauw topless, covering her modesty with her right arm.
The “I ___ in my Clavins campaign first drew criticism back in March. A billboard showed
Klara Kristin posing provocatively, alongside the tagline “I seduce in #mycalvins. Adjacent
to that image was a close-up of male rapper Fetty Wap’s face, with the slogan "I make
money in #mycalvins.”

While the attempts are far from perfect, and corporate initiatives are slower than
expected, at least there are vertical movements But at the very least, ethical and
environmental considerations are finding their ways toward the endeavors and priorities
of business moguls and capitalist tycoons.

III.ENVIRONMENTAL SUSTAINABILITY
As pointed out above, one of the basic principles of corporate social responsibility
is sustainability. And while all of the issues normally associated with CSR are all
important, environmental concerns seem to be of more urgency. With climate change
being felt at its worst almost everywhere, the demand to undertake immediate steps to at
least slow down its pace is growing louder and shriller, Environmental sustainability,
therefore, becomes of great significance in the formation or reformulation of corporate
policies, as well as the image or reputation that companies are trying to create for
themselves.
In Joe DesJardin’s Corporate Environmental Responsibility, he explained why
environmental sustainability is of utmost importance especially in today’s generation.
First, a significant percentage of the world’s population live or below a minimal
level of subsistence. One quarter of the world’s population live in industrialized
countries and they consume 80% of the world’s goods. To meet just the simple
needs and minimum demands of other 75% of the world’s population, significant
economic activity is necessary over the next few decades. One estimates holds
that a fivefold increase in energy use and a five-to-tenfold increase in economic
activity would be required over the next 50 years to bring the standards of living
for the present population of developing countries into line with that of people in
the industrialized world.
Second, even conservative estimates suggest that during these fifty years world
population will double, bringing the total world population to over eleven billion
people. Thus, economic activity needs to increase minimally by ten-to-twentyfold
to bring the standard of living of the actual world population in fifty years into line
with that enjoyed by people in the industrialized present.
Finally, we must recognize that the only source for this economic activity,
ultimately, are the natural resources of the planet The three standard factors of
production natural resources, capital, and labor-all derive from the productive
capacity of the earth. In simple terms, ram material, energy, and food are the
essential elements of all economies activity. Yet, the productive capacity of the
earth is already under significant stress. For example, one estimate suggests that
if the world's population in forty years consumed nonrenewable mineral and
petroleum resources at current U.S rates, these resources would last fewer than
10 years.
These three factors – deep world-wide poverty, increasing population growth and
limited resources within an already threatened ecosphere – raise a serious
economic and moral dilemma. Significant economic activity will be necessary to
meet the basic needs of an increasing human population, yet economic growth
itself is responsible for much of the environmental degradation which already
jeopardizes the possibility of meeting even present needs. It would seem that
continued economic growth alone will not resolve this dilemma.

In simple terms, environmental sustainability involves making decisions and taking

action in the interests of protecting the natural world, the particular emphasis on
preserving the capability of the environment to support human life. It is about making
responsible decisions that will reduce the business’ negative impact on the environment.
It is not simple about reducing the amount of waste you produce or using less energy, but
it concerned with developing processes that will lead to businesses becoming completely
sustainable in the future. Businesses and entrepreneurs are expected to lead in the area
of environmental sustainability, not only because they have the necessary tools to affect
such advocacy, but also because they have one of the major culprits in causing
environmental detriments.

While the significance of incorporating environmental sustainability one's business

strategy cannot be overstated, as we have already discussed in the previous topics, its
actual incorporation and execution is easier said than done. Resorting to eco-friendly raw
products, or avoiding the usage of those which are detrimental to the environment, proved
to quite burdensome in terms of financial cost and in the changes they have to introduce
in their established policies and production procedures. However, with the present
condition of our environment, it becomes less of a choice, and more of an obligation. Plus,
its incorporation can had to the formation of a good corporate reputation, which can prove
to be beneficial of the company in the long-run.
There are number of points that strongly support the business case for
environmental sustainability. Some of them are the following:

1. Moving towards environmentally sustainable practices presents few or no risks to

business operations.
2. Potential to reduce your expenses in the medium to long term. For example,
making your business more energy efficient will save you a significant amount on
energy costs and help you to improve your bottom line.
3. It may also have a competitive edge when it comes to attracting customers and
investors. Modern consumers, as well as investors, are aware of social and
environmental issues and keep themselves informed about which businesses are
acting responsibly in the community.
4. It does not negatively impact on a business’ ability to generate a profit. In fact, in
the long term, it is considered to actually improve profitability through the reduction
of expenses and increased competitiveness.

Another edge that environmental sustainability gives to companies that adopt the
same is business differentiation. If a number of business, including yours is selling the
same product or offering the same service, how would you set yours apart? Why would
consumers purchase your product and not that of others? One way of doing that is
creating your own trend, setting a new tad for people to follow. Another way is taking the
route from the opposite side, i.e. by riding with the changing consumer expectation. And,
as we have discussed earlier, consumers are becoming more and more concerned with
environmental issues, then to crate corporate image patterned after this expectation
would be helpful to one’s business. Pacifying the uproar by trying to adopt
environmentally-charged policies would differentiate one's business from that of the
others.
 And all around the world, an ample of small entrepreneurs and big corporations
alike are starting gear towards embracing the call tor environmental responsibility.
Crayola, for example, has gone from simply being a corporate mogul in coloring materials
into a company wanting to lead the charge towards a greener future in its internet site, it
flags words social and environmental responsibility in bold, big and colorful letters. In
the same page, it declares: “At Crayola we believe being responsible’ means doing what
is right. It is being a good citizen in the communities and countries where we operate and
our products are found. It means incorporating social and environmental priorities and
practices into our Crayola brand, our products and our relationships with customers,
vendors, consumers and employees. Every day we learn more and work to apply best
practices to improve our company, our Crayola products and the environment. We take
these issues and challenges very seriously. We work hard to make a difference by
complying with, and even exceeding, industry standards and our own sustainability goals.
Crayola may make actually every color under the sun, but its current favorite is green. By
using renewable energy, reducing waste and protecting the rainforests, Crayola’s green
initiative is helping to ensure that today’s kids will have a healthy environment for their
creative tomorrows. The Crayola solar farm includes over 30,000 panels on 20-acres of
land. These solar panels provide enough power to make 1 billion Crayola crayons and
500 million markers in year.
In the September 200 issue of Times Magazine, they cited companies who are
making green changes in their policies, either as an innovator or simple one adapting to
this growing social demand.

… as a matter of fact …
Turning Trash Cans into Piggy Banks
So far, Recyclebank has enlisted more than 1 million people in 20 states in the U.S
to help save the planet by padding their wallets.” That’s our value proposition:
we’re going to make it financially attractive to recycle,” says Ron Gonen, who co-
founded the for-profit company in 2004 while enrolled at Columbia Business
School. Participants receive a container with a computer chip embedded in it that
weighs the amount they recycle and rewards them with points that can be
redeemed at more than 1,500 retailers, including Target.com and Bed Bath &
Beyond. The system, which lets consumers earn up to $400 a year, makes for a
nice little curbside pick-me-up. -by Alex Altman
Selling Solar on the Cheap
It’s playful name for a serious company: D. light Design sells $10- to-$25 solar
powered lamps in more than a dozen countries. Where people lack electricity ad
often spend a lot on kerosene, which gives off noxious fumes. D. light’s latest
model also recharges phone batteries. But one of CEO Sam Goldman’s goals is
to find ways to lower the cost even further. “I’m not satisfied with $10,” he says.
“The real reason customers that we started this business for can’t afford that.” -by
Gilbert Cruz
Green is good for Business
GE views its sustainability effort as a moneymaker. “Green is green,” says senior
vice president Beth Comstock. Launched in 2006, GE’s “ecomagination” unit
focuses on the energy-efficient technology that reaped $17 billion in revenue last
year, up 21% from 2007. It’s not easy for a company long known for dumping
chemicals to change course. But, says, Comstock, ecomagination “has put us on
the right side of our customers.” -by Laura Fitzpatrick

In the Philippines, companies are likewise joining the bandwagon of “going

green”

… as a matter of fact …
Ayala Group of Companies
In July, the Ayala group committee adopted a policy for sustainable business that
committed to increase sustainability impact in the are of operations by reducing
energy, water, and solid waste footprint and moving beyond compliance towards
global standards on environmental and social responsibility. These include
environmental parameters accrediting suppliers and enabling communities as well
as providing opportunities for entrepreneurs; considering lower environmental
impact during product development, among others.
Ayala Corp. president and chief operations officer Fernando Zobel de Ayala, for
his part, explained that while their corporate social responsibility (CSR) initiatives
in the past were more oriented towards philanthropy and charitable contributions,
this time, the CSR activities will have a sustainable business model attached to
them. He said that CSR was more about giving small amounts but was not making
a difference. The challenge is how to start bringing CSR into their business mode.
The emerging developmental model in business, he pointed out, goes beyond
governance and transparency and is more on the footprint or the impact of the
business on society, the environment, and the future. Ayala revealed that what
opened their eyes to the opportunities present in business sustainability is their
water business, Manila Water Co. “It was an opportunity to move into an industry
that was inefficient but very critical. The business serves some of the poorest
communities. This is an example of a business that is going to people not being
 served in the past, And now, we are giving more of the business contracts… such
as making street signs or painting jobs, to the communities rather than to our
traditional suppliers,” he said.

SM PRIME HOLDINGS
Water Management
With a total of three million customers a day, water consumption for the year 2013
reached 11,234,157 cubic meters. Faucet aerators installed in all comfort rooms
help conserve water consumption by about 20%. The malls have recycled 3,090,271
cubic meters of water or 30% of the total volume of water consumed from the water
provider. This is equivalent to 1,236 Olympic-sized swimming pools.
The malls are equipped with a sewage treatment plant to recycle water. Treated
water is reused for cooling towers, comfort room, flushing, irrigation, and grounds
keeping. The treatment plants feature sequential batch reactors that reduce power
consumption in the processing of waste water treatment. SM Prime follows
standards in treating sewage water before discharge to the public sewer line and
have been acknowledge for excellent compliance through the Laguna Lake
Development Authority’s Diwang Lawa Award.
The wide range of activities in the mall may translate to a large amount of trash if
not managed properly. Being a large scale developer, SM Prime highlights waste
management as a priority in its operational sustainability program. The malls
constantly monitor waste generation and the implementation of policies on proper
waste disposal. The Tenant Solid Waste Management Program requires tenants to
segregate their waste prior to collection and storage in the materials recovery facility
prior to collection by government certified haulers and recyclers.
In February 2007, a recycling market entitled “Trash to Cash” was launched to raise
awareness in the community on the environment efforts of the mall. This event is
participated in by customers and the rest of the community and is held
simultaneously in all malls every first Friday and Saturday of the month. The malls
also provide recycling trash bins to encourage the practice of waste management
among tenants and shoppers. SM Prime has been promoting the use of reusable
bags for the past 5 years with the release of its own line of fashionably designed to
Eco Bags, even before the release of plastics ordinances in cities across the country.
Through these collective efforts, Philippine-based malls have recycled 48% of solid
waste generated with the remainder being delivered to government accredited
landfills.
Air Quality Management
SM malls have implemented a no smoking campaign to reduce pollution and
improve air quality within the mall for both customers and employees. There are
designated isolated smoking areas to cater to smoking patrons. SM malls feature
bus bays and transport terminals for public utility vehicles for the convenience of the
customers.

All transports operators are required to submit certificates of emission tests for all
units plying the malls. This provision helps promote the use of public transportation
for cleaner air and helps decongest the roads surrounding the mall. Bicycle parking
slots are available in the parking lots, promoting the use of bicycles to reduce vehicle
emissions. The park finder in green and red light bulbs indicate the availability of
parking slots. This parking device gives parking availability guidance for mall
shoppers thereby preventing traffic congestion and gridlocks in multi-level parking
structures of the malls.
None of the SM malls are located in nationally declared protected areas nor do they
have direct or significant effects on biodiversity, especially endangered species. The
Company advocates environmental protection. There were no spills of any material
form the facilities during the reporting year. SM Prime has had no significant fines
nor non-monetary sanctions for non-compliance with environmental laws and
regulations in the year 2013.