10.11 Corporate responsibility and the birth of good corporate citizenship

The document disclosure discussed in the preceding section (Chapter 10, Section 10.9) 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 if cynical recalibration, the companies began to acknowledge publicly that tobacco could be harmful, to reiterate that smoking was an 'adult choice' and to argue that tobacco should be 'sensibly' regulated.

The tobacco industry's public attempts at rebirth have 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 business practices and make restitution.1 Notions of what constitutes corporate social responsibility vary widely, and the extent to which the adoption of corporate social responsibility concepts by transnational corporations is more public relations than a true blossoming of corporate social conscience is a matter of ongoing debate.1

The websites of Philip Morris Internationali, British American Tobacco Australiaii and Imperial Tobacco Groupiii devote many pages to detailing company adherence to corporate social responsibility policies. British American Tobacco Australia has not produced a publicly available social report since 2007, but does publish an annual 'sustainability report' for the overall company on the British American Tobacco parent website.2 British American Tobacco Australia states on its website that 'our CSR performance is monitored by the British American Tobacco Australasia Audit and CSR Committee and members of the Management Board of British American Tobacco Australasia'.3 Philip Morris International'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 websiteiv). On a wider scale, it pledges to care for its employees, the environment and farming practices.4 Imperial Tobacco Group incorporates corporate responsibility highlights as part of its annual report and states that it is 'committed to operating in a way that is financially, socially and environmentally responsible. This underpins our growth strategy and is an integral part of how we do business. We believe that this focus and commitment not only helps us to build trust and protect our licence to operate, but also drives long-term sustainable sales growth'.5

For the tobacco industry, adherence to corporate social responsibility 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 corporate social responsibility initiatives adopted by the tobacco industry,6 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.v 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' (p398).6

Philip Morris International's transition towards corporate social responsibility from about the mid-1990s has been documented by Hirschhorn.1 Philip Morris 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 Philip Morris's views on tobacco, health and addictiveness has been analysed.7 While Philip Morris'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 Chapter 10, Section 10.12). Friedman observes that Philip Morris'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 Philip Morris documents.7. 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.8

Can a tobacco company truly claim to operate within a framework of corporate social responsibility? According to Hirschhorn, the indisputable facts that:1

  • 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
  • mentally ill smokers consume a large proportion of the tobacco used in the US

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.8 How, then, could a tobacco company reasonably earn corporate social responsibility credentials? One experienced tobacco control advocate has come up with a number of suggestions (summarised below) but concludes that the industry would be unlikely to consider this agenda viable:8

  • 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 secondhand 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 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 WHO Framework Convention on Tobacco Control.

In direct contrast to the above summary, the Philip Morris International website summarises what it defines as comprehensive tobacco control and the measures it is willing to support9:

  • mandated health warnings on packs and in advertising
  • limitations on tobacco advertising, including bans on television and radio ads
  • public place smoking restrictions, including bans on smoking in places where people must go and places catering to minors
  • minimum age laws
  • product regulations, including ingredient and smoke emissions reporting requirements
  • strict penalties for selling contraband or counterfeit cigarettes
  • tobacco tax policies that are integrated with health policies
  • regulations governing products that have potential to reduce risk.

It also specifically names measures that it opposes, such as generic packaging, point-of-sale display bans, total bans on communications to adult consumers, and bans on the use of all additives in tobacco products.9

10.11.1Corporate 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. Beginning in 1999, Philip Morris sought to become 'societally aligned' by identifying the public expectations of a responsible tobacco company through opinion research and developing and publicising programs to meet those expectations. Despite Philip Morris's claims, however, societal alignment in practice was highly selective. Examples of alignment strategies included voluntary programs, corporate advertising and industry-created youth smoking prevention programs, philanthropy, sponsorships, and support for weak tobacco control policies. Philip Morris retooled existing positions and programs, while entirely ignoring other areas that might have interfered with its business goals.10

In January 2003 Philip Morris Companies, then parent company to Philip Morris International, Philip Morris (USA) and Kraft Foods,vi changed its name to 'Altria'. According to the company's website,11 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.11

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 re-position it in the minds of consumers, employees and investors.12, 13 This view has been confirmed by internal company documents dating back to the late 1980s, which detail concern for the company's failing corporate image, and the evolution of plans for its resuscitation, culminating in eventual name change.14

The corporate structure of Altria has continued to evolve. In March 2008, Altria spun off Philip Morris International 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',15 other commentators observe that cordoning off Philip Morris International 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's US operations.16 US ownership of Philip Morris International restricted its opportunities for global growth. With the approach of the split between the companies, a host of innovative product developments, which might have been expected to receive strong opposition in the US, were announced for introduction to Philip Morris International's overseas markets.16 Altria retains ownership of Philip Morris (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.11

Enacted in 2009, Philip Morris was the only tobacco company to support the US Family Smoking Prevention and Tobacco Control Act, which gives limited powers to the US Food and Drugs Administration to regulate tobacco products. There is concern among US tobacco control stakeholders that the effectiveness with which the Food and Drugs Administration will be able to regulate tobacco products remains in doubt and that the law offers the tobacco industry an opportunity to rehabilitate its image and products because they are now 'FDA regulated'.17

10.11.2Corporate links with charities and social causes

Corporate sponsorship of sporting and cultural events was an important and highly effective vehicle for tobacco advertising in Australia before it was banned by a number of states during the late 1980s and finally by Commonwealth (national) legislation in 1992.vii As well as enhancing corporate image, sponsorship provided endless hours of visual and verbal brand exposure, linked cigarette brands with positive imagery and iconic events, bought considerable support for the industry when it needed friends, and effectively gagged potential anti-smoking advocates (such as sportsmen and women whose sport benefited from tobacco funds).

Termination of these sponsorships caused Australian tobacco companies to look elsewhere for ways in which to promote themselves. The advent of an agenda in corporate responsibility has lead to a focus on charities and groups with impeccable credentials, including aid for sick children, combating domestic violence and environmental stewardship.

During 1999, Philip Morris Australia claimed credit in publicity material for supporting a number of charities in Australia, including Jeans for Genes Day, Red Nose Day,viii the Lions Club and Ronald McDonald children's charities. None of these charities had knowingly accepted funding from Philip Morris, since the money had either been received via a corporate entity related to Philip Morris Australia at the time (for example, Kraftix—which owns Vegemite and other iconic food brands) or because donations had been made through employees of Philip Morris Australia apparently acting on their own behalf, rather than at the behest of the company. The revelation that donations could be attributable to a tobacco company caused consternation among the beneficiaries.18

In February of 2003, Philip Morris Australia co-sponsored a high-profile conference on domestic violence. The conference, Breaking Point: a Corporate Conference on Work and Family Conflict, was organised by the Australian Government's Office for the Status of Women.19,20 Along with Senator Amanda Vanstone, the then Minister for Family and Community Services, Philip Morris representatives from Australia and the US spoke at the event.21 The Office for the Status of Women was strongly criticised by representatives of the Australian Medical Association,19,20 the Federal Opposition20 and the public health sector21 on the grounds that tobacco is a major killer of women, and that acceptance of tobacco sponsorship detracted from the importance of the issue of domestic violence, while enhancing the corporate image of Philip Morris Australia.

Subsequent efforts by Philip Morris Australia to promote itself through corporate social responsibility in Australia were not so successful. At a conference in 2004 a company representative was scheduled to deliver an address on public relations and corporate communications. After being made aware of Philip Morris Australia involvement, other speakers threatened to withdraw, and the conference organisers removed Philip Morris Australia from the program.22 The following year, an attempt by British American Tobacco Australia to be associated with a conference on corporate social responsibility precipitated the exodus of other companies, including McDonalds, Pfizer and the mental health group Beyond Blue.23 In the international arena, at least one similar 'ethical' event has been shunned by non-tobacco companies once tobacco industry involvement has been exposed.22

Nevertheless British American Tobacco Australia appears to have had some success in forging connections with several 'charity partners' through the Our Workplace Giving Programme. The names of these organisationsx appear on the British American Tobacco Australia website.24 Employees may choose to make donations to British American Tobacco Australia's charity scheme, and British American Tobacco Australia pledges to match donations dollar-for-dollar. One of the charities to receive British American Tobacco Australia support is the Guide Dogs Australia, which provides services to the blind. Noting the well-established connection between smoking and blindness,xi one commentator has described this as an especially cynically calculated partnership.25 As part of its corporate responsibility strategy for the environment, British American Tobacco Australia also supports the Butt Littering Trust (see Chapter 10, Section 10.17).

On its international website, Philip Morris International pledges support for five defined areas: 'hunger and extreme poverty; education; rural living conditions; disaster relief and domestic violence'.xii In 2010, Philip Morris International donated to two Australian charities including US$24 564 to Aussie Helpers Limited for equipment and funding infrastructure improvements for a non-profit farming enterprise and US$19 936 to Habitat for Humanity Australia project to construct three houses for needy families in South Australia.26 Philip Morris International donated a total of US$25 025,392 globally in 2010.

Imperial Tobacco makes no other specific mention of its activities in Australia, but states a preference for supporting charities or not-for-profit organisations in which its employees are actively involved and matching funds raised by employee activities.27

Corporate philanthropy is unapologetically connected with corporate advertising in the US. There, Philip Morris has run television advertising campaigns informing the public of its good works, such as funding shelters for the homeless, food donations for the needy and programs against domestic violence.28 Philip Morris spent millions more dollars on publicising its charitable works in the US (US$150 million) than it actually donated ($US115 million).21 This advertising also allowed Philip Morris to generate its own positive publicity in mainstream media although direct tobacco advertising is banned on television in the US.29

A US study has documented how tobacco industry philanthropy is not only a public relations tool, but may actually have harmful consequences, particularly in terms of securing tobacco control legislation. Philip Morris explicitly linked philanthropy to government affairs and used contributions as a lobbying tool against public health policies. Through advertising, covertly solicited media coverage, and contributions to legislators' favourite charities, Philip Morris improved its image among key constituencies, influenced public officials, and divided the public health field.30

Tobacco industry philanthropic involvement is of concern to other charitable organisations and donors.31 In 2010, the Bill & Melinda Gates Foundation withdrew a grant of $5.2 million to Canada's International Development Research Centre (IDRC), stating that, 'The foundation was recently informed that the chair of the board of our partner, the International Development Research Centre (IDRC), has until recently also been a Director of Imperial Tobacco Canada, Ltd. We are deeply disappointed by this revelation and feel this conflict is unacceptable as we work to support meaningful tobacco control programs in Africa. Therefore, we are terminating our tobacco control grant to IDRC, effective immediately. We remain committed to tobacco control work and look forward to continuing to partner with the anti-tobacco community'.32

Recent news and research

For recent news items and research on this topic, click here (Last updated October 2016)      

References

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2. British American Tobacco. Sustainability report 2010. London: British American Tobacco, 2011, [viewed 12 August 2011] . Available from: http://www.bat.com/group/sites/uk__3mnfen.nsf/vwPagesWebLive/DO7FAK65?opendocument&SKN=1

3. British American Tobacco Australia. Our principles and standards. CSR Governance. Corporate website. Maroubra, New South Wales: British American Tobacco Australia, 2010, [viewed 12 August 2011] . Available from: http://www.bata.com.au/group/sites/BAT_7WYKG8.nsf/vwPagesWebLive/DO7WZEFH?opendocument&SKN=1

4. Philip Morris International Corporate Website. New York: Philip Morris International Management SA, 2008, [viewed March 2008] . Available from: http://www.philipmorrisinternational.com/pmintl/pages/eng/default.asp

5. Imperial Tobacco Group. CR overview. Annual report, Corporate website. Bristol, UK: Imperial Tobacco Group, 2010, [viewed 12 August 2011] . Available from: http://www.imperial-tobacco.com/index.asp?page=305

6. Palazzo G and Richter U. CSR business as usual? The case of the tobacco industry. Journal of Business Ethics 2005;61:387-401.

7. Friedman LC. Philip Morris's website and television commercials use new language to mislead the public into believing it has changed its stance on smoking and disease. Tobacco Control 2007;16(6):e9. Available from: http://tobaccocontrol.bmj.com/cgi/content/abstract/16/6/e9

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9. Philip Morris International. Regulating tobacco products, Corporate website. New York: Philip Morris International Management, 2011, [viewed 12 August 2011] . Available from: http://www.pmi.com/eng/tobacco_regulation/regulating_tobacco/pages/regulating_tobacco.aspx

10. Yang JS and Malone RE. 'Working to shape what society's expectations of us should be': Philip Morris' societal alignment strategy. Tobacco Control 2008;17(6):391-8. Available from: http://tobaccocontrol.bmj.com/cgi/content/abstract/17/6/391

11. Altria Group. Corporate website. New York: Altria Group, 2008, [viewed 6 February 2008] . Available from: http://www.altria.com

12. Chapman S, Landman A, Shatenstein S, Hirschorn B and Hamman S. The wolf changes its sheepskin. Tobacco Control 2002;11(1):9-10. Available from: http://tobaccocontrol.bmj.com/cgi/reprint/11/1/9-a

13. Myers ML. Philip Morris changes its name, but not its harmful practices. Tobacco Control 2002;11(3):169-70. Available from: http://tc.bmj.com/cgi/content/abstract/11/3/169

14. Smith EA and Malone RE. Altria means tobacco: Philip Morris's identity crisis. American Journal of Public Health 2003;93(4):553-6. Available from: http://www.ajph.org/cgi/content/abstract/93/4/553

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17. Glantz SA, Barnes R and Eubanks SY. Compromise or Capitulation? US Food and Drug Administration Jurisdiction Over Tobacco Products. PLoS Med 2009;6(7):e1000118. Available from: http://dx.doi.org/10.1371%2Fjournal.pmed.1000118

19. Button V. Smokes giant in charity row. p. A4. The Age, (Melbourne) 22 October 1999:

19. Domestic violence costing up to $1.5b. The Canberra Times, 2003:8 Feb. 3

20. Farouque F. Domestic violence a 'workplace issue'. The Age, (Melbourne) 2003:3 Feb. 15

21. Metherell M. Tobacco sponsorship under fire. Sydney Morning Herald, 2003:7 Feb. Available from: http://www.smh.com.au/articles/2003/02/06/1044498913856.html

22. Chapman S. Advocacy in action: extreme corporate makeover interruptus: denormalising tobacco industry corporate schmoozing. Tobacco Control 2004;13(4):445–7. Available from: http://tc.bmjjournals.com/cgi/content/abstract/13/4/445

23. Companies ditch conference over tobacco firm's presence. Sydney Morning Herald, 2005:25 Nov. 9 Available from: http://newsstore.smh.com.au/apps/viewDocument.ac?page=1&sy=smh&kw=Companies+ditch+conference+over+tobacco+firm%27s+presence&pb=smh&dt=selectRange&dr=10years&so=relevance&sf=text&sf=headline&rc=10&rm=200&sp=nrm&clsPage=1&docID=SMH0511255G6Q24ERS5J

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25. Chapman S. The blood money tradition continues. British Journal of Ophthalmology 2007;91(12):1578. Available from: http://www.ncbi.nlm.nih.gov/pubmed/18024807

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31. Chapman S. Health and philanthropy--the tobacco connection. The Lancet 2010;377(9759):11-13. Available from: http://www.thelancet.com/journals/lancet/article/PIIS0140-6736%2810%2961036-7/fulltext

32. Bill & Melinda Gates Foundation. Statement regarding IDRC tobacco control grant. Seattle, Washington: Bill & Melinda Gates Foundation, 2010, [viewed 12 August 2011] . Available from: http://www.gatesfoundation.org/press-releases/Pages/statement-on-idrc-grant-100412.aspx

v 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 fulfill even this more limited ('transactional') definition of corporate social responsibility.

vi Kraft Foods, like Philip Morris International, now operates separately from Altria and Philip Morris (USA).

vii Exceptions were made for some events. See Chapter 11 for further information.

viii Interestingly, funds raised by Red Nose Day support counselling services, research and education into sudden infant death syndrome. See: http://www.rednoseday.com.au/. Exposure to cigarette smoke, before and after birth, is a cause of SIDS. See Chapter 3, Section 8.2.

ix Kraft is now an independent publicly held company.

x The following organisations are listed: Mission Australia, Conservation Volunteers Australia, The Surf Life Saver Rescue Helicopter, Lifeline, Northcott, Guide Dogs NSW/ACT, Barnardos and ACT for Kids

xi Smoking is a cause of cataract and is a major risk factor for developing age-related macular degeneration, both of which may result in blindness. See Chapter 3, Section 10.

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