10.11 Corporate responsibility and the birth of good corporate citizenship
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The document disclosure discussed in the preceding section brought the tobacco industry collectively to a point where it could no longer deny that its products were harmful. The seismic effects of the document revelations, along with continued pressure for product regulation, legislation and restrictions on smoking, required the companies to construct and promote a new image to ensure investor confidence. With masterly recalibration of their moral compasses, the companies began to acknowledge publicly that tobacco could be harmful, to reiterate that smoking was an 'adult choice' and that tobacco should be 'sensibly' regulated.
The tobacco industry's rebirth has coincided with a much broader move in the corporate world towards 'corporate social responsibility' (CSR), in which transnational corporations have begun to consider their impact on communities and the environment, and where necessary to change their ways and make restitution.157 Notions of what constitutes CSR vary widely, and the extent to which the adoption of CSR concepts by transnational corporations is more public relations than a true blossoming of corporate social conscience is a matter of ongoing debate.157
The websites of PMI, BATA and IMG devote countless pages to detailing company adherence to CSR policies. BATA and IMG provide annual reports benchmarking their progress, audited for accuracy by third party verification agencies. Philip Morris's website explains that it reminds people that smoking is dangerous, that it does what it can to keep cigarettes away from children, and that it is working to develop less harmful products (Philip Morris USA even sponsors its own extensive quit smoking website[21]). On a wider scale, it pledges to care for its employees, the environment and farming practices.5 BATA provides an Australasia Area Corporate Social Responsibility (CSR) Statement, which embraces themes broadly similar to those of Philip Morris. Imperial Tobacco's commitment to CSR has a slightly different emphasis, making it clear that when it comes to CSR, its number one stakeholders are its shareholders, but likewise outlines its commitment to its employees, the community, responsible sales and marketing and so on. Further discussion on the various components of the companies' CSR programs is provided in Sections 10.12–10.18.
For the tobacco industry, adherence to CSR depends on their being able to point to the legality of their products, and that smoking is an 'adult lifestyle choice' made by informed individuals. In their case study of CSR initiatives adopted by the tobacco industry,158 Palazzo and Richter note that 'tobacco companies are not in the CSR business as it is becoming commonplace now across various industries and throughout academic research. As long as cigarettes kill active and passive users, all that a tobacco company can achieve is a reputation for transactional integrity.[22] When tobacco companies try to link their activities to the common good, they indeed provoke the legitimate question whether tobacco and CSR are inherently contradictory.'158 p 398
PM's transition towards CSR from about the mid-1990s has been documented by Hirschhorn.157 PM management decided to frame the company as an honest and ethical business, predicated on the fact that they produce legal products for use by informed adults. As part of this strategy, the company undertook (and publicised) its social and environmental good works; pledged to operate more openly and voiced support for reasonable regulation, as well as adopting a consistent approach globally to matters such as marketing, trade, labour and the environment.
The evolving language used to express PM's views on tobacco, health, and addictiveness have been analysed.159 While PM's website appears to endorse mainstream medical views on tobacco, its language is non-committal and visitors are referred to external public health websites (see also Section 10.12). Friedman observes that PM's motivations are primarily in the interests of deflecting litigation and that the company is conceding nothing, while appearing to have changed its ways; a view backed up by internal PM documents.159 It has also been noted that the emphasis on the individual's choice to smoke and offering links to further information is framed to absolve the industry and shift responsibility to the smoker.160
Can a tobacco company truly claim to operate within a framework of CSR? According to Hirschhorn, the indisputable facts that:157
- tobacco has a devastating effect on the health of its users, as well as a subset of non-users who are exposed to it
- tobacco is addictive; and the industry knows this
- numerous studies show that most smokers would like to quit, and
- mentally ill smokers consume almost one half of tobacco used in the USA
fundamentally preclude the tobacco industry from qualifying as a socially responsible corporation. Added to this, most smokers become addicted before they have the opportunity to exercise adult choice.160 How, then, could a tobacco company reasonably earn CSR credentials? One experienced tobacco control advocate has come up with a number of suggestions (summarised below) but wryly points out that the industry would be unlikely to consider this agenda viable:160
- stop all forms of tobacco advertising and promotion
- support substantial price rises for tobacco products
- support youth tobacco prevention programs by increasing funding and placing them in the hands of an independent non-profit organisation
- stop interfering with provisions to protect non-smokers from second-hand smoke
- halt all forms of political donations
- provide generous financial support to non-profit organisations supporting quitting, including funding pharmaceutical cessation aids for low income smokers
- fund an independent, national tobacco and nicotine research foundation
- adopt generic packaging with large graphic health warnings
- comply with regulation of marketing, manufacturing and sales according to conform to best practice (mandated by government)
- support effective development of regulation of all nicotine and tobacco products
- abandon aggressive tactics for growth in less developed countries
- stop obstructing ratification of the Framework Convention on Tobacco Control.
10.11.1 Corporate makeover—Philip Morris and Altria—a case study in brief
Of all the international tobacco companies seeking to redefine themselves, Philip Morris has gone to greatest lengths. In January 2003 Philip Morris Companies, then parent company to PMI, PM(USA) and Kraft Foods,[23] changed its name to 'Altria.' According to the company's website,161 the word Altria is derived from the Latin word 'altus,' and conveys the notion of 'reaching ever higher.' It was also intended to clarify its identity as a parent company to both tobacco and food companies.161
Various commentators have interpreted the name-change as a public relations gesture, aimed at distancing the parent company and its non-tobacco subsidiaries from the stigma of association with tobacco manufacturing, and intended to reposition it in the minds of consumers, employees and investors.162, 163 This view has been confirmed by internal company documents dating back to the late 1980s that detail concern for the company's failing corporate image, and the evolution of plans for its resuscitation, culminating in eventual name change.164
The corporate structure of Altria has continued to evolve. In March 2008, Altria spun off PMI to make it a stand-alone company based in Switzerland. While Altria justified the initiative as motivated by a desire to 'improve focus on the different market dynamics, competitive frameworks, challenges and opportunities that Altria and PMI face,'165 other commentators observe that cordoning off PMI will make the new entity less vulnerable to US regulators, legislators and litigants, and will reduce public relations pressure on Altria, which will continue to manage Philip Morris' US operations.6 US ownership of PMI restricted PMI's opportunities for global growth. With the approach of the split between the companies, a host of innovative product developments that might have been expected to receive strong opposition in the USA, were announced for introduction to PMI's overseas markets.6 Altria retains ownership of PM (USA), the cigar-manufacturing concern John Middleton Co, a finance and investment company and a 29% shareholding in SAB Miller, the second largest brewing company in the world.161
[22] Transactional integrity refers to whether the company in question adheres to the legal and moral framework of the society within which it operates, such as by acting transparently, keeping its promises, and behaving fairly and with consistency. The authors of this paper observe that many would contend that the tobacco industry does not currently fulfil even this more limited ('transactional') definition of CSR.
[23]Kraft Foods, like PMI, now operates separately from Altria and PM(USA).
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