Corporate Social Reponsibility of the Tobacco Industry
According to Harvard University, corporate social responsibility (CSR) is a business strategy that encompasses the ways in which an organisation manages its economic, social and environmental impact. As such, the methods of managing an organisation’s impact can decide whether the organisation is ethical or unethical. There are eight principles stated in the Global Business Standards Codex (GBSC) which assist in the assessment of ethics of an organisation or industry (Paine et al. 2005). These principles of the GBSC set the standard in an economic, social and environmental sense which all organisations in the global economy should adhere to.
Therefore, the tobacco industry’s (TI) use of CSR strategy is unethical. This is because the TI’s use of CSR fails to adhere by the transparency, dignity and citizenship principles of the GBSC. Nevertheless, there are advantages and disadvantages of the TI using CSR strategies which benefit the stakeholders. Hence the CSR strategy used by the TI is nevertheless a valid strategy in the sense that this strategy improves the TI’s unethical public image. The TI is breaching the transparency principle by using CSR strategies to create a facade so that it can be perceived by the general public as an ethical industry.
This is in violation of the transparency principle as the TI is not conducting business in an open and truthful manner. However it can be argued that the TI isn’t required to enclose all information and that adhering to the Global Reporting Initiative (GRI) index is legally enough (Global Reporting Initiative 2012). By meeting the minimum requirements of the GRI index, major tobacco companies can maintain their competitive advantage by not revealing their marketing strategies which the transparency principle would require.
Nevertheless, the TI has been professed as an industry which solely focuses its resources on maximising profit which disregards the health of its users let it be first hand or second hand (World Health Organisation 2004). Epidemiology research by English & Spencer (2007) has shown that using the TI’s products if used as directed results in cardiovascular, respiratory, malignancy, reproductive and visual diseases which may lead to death. Hence these courses of events which include published epidemiology research which state that using TI’s product increases the chances of cancer ave generated the ethical issue of TI misusing the CSR strategy.
Hence, due to increased awareness by the general public on dangers of smoking (Office on Smoking and Health 2001) and a rise in tobacco related deaths, (Proctor et al. 2011), the TI has pursued the CSR strategy to improve its public image. The TI is using CSR strategy because it has created a bad reputation due to its products being deemed as unsafe by major research organisations (World Health Organisation 2004). Therefore, the TI needs to change its public image from unethical to ethical to sustain profits and stay a profitable industry.
The ethical issue present is that the TI is misusing the CSR initiative (Friedman 2009). To warrant that this unethical behaviour won’t happen in the future, the TI, which includes its managers and employees, must inform the public of their genuine intentions. This would make the TI transparent hence its CSR strategy would adhere by the transparency principle thus making it ethical. The TI’s CSR is a strategy which it is using to increase profitability and not contribute to the human development and wellbeing. This information is unknown to the general public.
Therefore it can be concluded that the TI is engaging in unethical activities while misleading public to perceive otherwise. This leads to the conclusion that even though this CSR strategy has resulted in increased profits in the long term (Hirschhorn 2004), the TI’s use of the CSR strategy is ultimately a breach of the transparency principle regardless of it improving TI’s public image and thus makes the TI an unethical industry. The TI isn’t considered unethical for only breaching the transparency principle as it also fails to comply with the Dignity principle.
This is because its CSR strategy promotes the use of its products which is detrimental to human health. Firstly, the TI has introduced a packet of cigarettes which is half the size and price of the regular packet (Barraclough & Morrow). Secondly, the TI is purposely portraying smoking as an adult activity by promoting smoking in youth-oriented movies (Palazzo & Richter 2005). Finally, restrictions such as age (Baker, Brandon & Chassin 2004) have been placed on ways to acquire cigarettes which make it harder for youth smokers to use TI’s products (World Health Organisation 2004).
All these activities have the compounding effect of portraying the use TI’s products as desirable in the youth community. The TI has introduced the smaller packets of cigarettes which are cheaper. This course of action will have a negative ethical impact on society because the cheaper packet of cigarettes allows easier access to youth-smokers which would then increase sales of TI and thus fulfil their goal of maximising profit. Also, by portraying smoking as an adult activity, the TI is creating incentives for under-aged smokers to purchase TI’s products and thus having an unethical impact on society.
Under-age smoking has the effect of preventing brain growth and increases the chances of lung cancer and cardiovascular disease in youths (Li, X, Zaiane, O & Li ZH eds 2006) thus not complying by the Dignity Principle. A prescribed course of action that’ll ensure that the unethical activities stated above won’t occur in the future is that the smaller packets should be prohibited from sale thus increasing the difficulty for youth to purchase cigarettes. Another viable option is to increase price or taxation of TI’s products and to stop smoking on youth-oriented films.
But currently none of these actions have been put forward. The Dignity Principle encompasses issues on human rights and safety (Stanwick & Stanwick as cited in ed. Campbell 2011). Hence, through promoting smoking in youths, the TI is violating the dignity principle and thus it can be concluded that the TI is unethical in misusing the CSR strategy to achieve its business goals. The TI is failing to act in accordance to the Citizenship principle by not preserving the environment even when using CSR strategies to attempt to make TI’s operations environmentally sustainable.
This is shown through the TI’s growing of tobacco in developing countries has led to extensive land clearance and deforestation (Tobacco in Australia 2008). Other environmentally detrimental activities the TI is inappropriately using include the use of agrichemicals to promote growth of TI’s crops and unrecyclable packaging used which is contributing to landfill. The TI’s CSR strategy promotes sustainable harvest of crops. However, the phases of production used in manufacturing TI’s products use carbon dioxide which is a greenhouse gas that causes global warming (Otanez & Glantz 2011).
The TI has been allowed to clear land which has led to deforestation in developing countries. This is mainly because of the lenient environmental laws in these countries which the TI is targeting. The agrichemicals have been used to promote faster growth of tobacco, which was done to increase production rates and thus profit of the TI (Tobacco in Australia 2008). Most packaging of TI’s products is encompassed in plastic which uses the unrecyclable chemical polyethylene.
This has led to increased landfill globally. The TI must make a genuine attempt to have sustainable environmental practices by promoting plantation of trees and sustainable harvest of crops which won’t have an overall detrimental impact on the environment. The TI should also use sustainable energy sources such as solar energy or wind energy to promote sustainable energy sources. The TI has exploited the CSR strategy to increase its profits and stay competitive in the global economy.
Therefore the TI’s use of the CSR strategy doesn’t adhere to the Citizenship Principle as the TI is engaging in unsustainable environmental practices thus failing to preserve public goods such as the environment and atmosphere. Therefore the TI’s use of CSR is unethical. Although the TI has been unethical by failing to adhere by the Transparency, Dignity and Citizenship Principles of the GBSC, it can be argued that the TI was fulfilling the goals of some groups of its stakeholders, that is, its stockholders and employees.
This means that the CSR is a valid strategy that has improved the TI’s public image as an increase in TI’s profits indicates the success of the CSR initiative. Therefore it can be deducted that the TI is a multifaceted industry in the sense that it can be perceived as being ethical by pursuing business goals to fulfil its corporate promises to its owners, employees and the government. As such, it can be said that the TI’s use of the CSR strategy is advantageous for some stakeholders and disadvantageous for other stakeholders.
In conclusion, the TI has used the CSR strategy effectively to successfully improve its unethical public image. However, this success has been achieved by unethical means as TI’s CSR strategy utilizes misleading marketing tactics, violates human rights through promoting unsafe practices such as under-age smoking and the strategy also fails to preserve the environment which is public property. Hence, the TI has failed to adhere by the Transparency, Dignity and Citizenship principle of the GBSC respectively.