Archive for the ‘Corporate “Social Responsibility”’ Category

Shattering Myths About Business and Society

Thursday, March 14th, 2019

Those who believe that corporate executives are virtuous, government regulators are overreaching, and that we live in a meritocracy have been cringing every time they listened to a newscast in recent days. That’s because two major stories have been shattering myths about the way things work in the U.S. business world and the broader society.

The controversy over whether Boeing’s 737 Max aircraft should be grounded in the wake of a deadly crash in Ethiopia revealed the true nature of business regulation in the United States. Contrary to the image, depicted ad nauseum by corporate apologists, of bureaucrats crippling companies with unnecessary and arbitrary rules, we saw in the Federal Aviation Administration an agency that is essentially held captive by airlines and aircraft manufacturers.

It was only after the rest of the world ignored assurances from Boeing and took the common-sense step of grounding the planes that the FAA finally acted. The agency, its parent Department of Transportation and the Trump Administration had to be shamed into fulfilling their responsibility of protecting the public.

It remains to be seen whether the Trump Administration will temper its anti-regulatory rhetoric after this incident in which it was clear that the country needed more rather than less oversight. Unfortunately, the problem goes beyond rhetoric.

Since taking office, Trump has made it a crusade to dismantle much of the deregulatory system. Left to his own devices, Trump would continue on this path. His new budget proposes massive cuts in the budgets of regulatory agencies, including 31 percent at the EPA.

That budget was dead on arrival in the Democratic-controlled House, but the administration is undermining agencies by rolling back enforcement activity. Public Citizen has been documenting this ploy in a series of reports drawing on data from Violation Tracker. Its latest study shows a 37 percent drop in enforcement actions by the Consumer Financial Protection Bureau, the Federal Trade Commission and the Consumer Product Safety Commission during Trump’s first two years, compared to the final two years of the Obama era.

The other big myth-busting story is the admissions scandal at elite universities. The revelation that wealthy parents have been paying large sums to a fixer who bribed coaches and used other fraudulent means to get their kids into the Ivy League should cause all critics of affirmative action to hang their heads in shame.

It speaks volumes that one of the parents arrested in the case is William McGlashan, founder of The Rise Fund, an ethical investing vehicle managed by the private equity firm TPG Capital. Working with the likes of Bono and philanthropist Pierre Omidyar, the fund says it is “committed to achieving social and environmental impact alongside competitive financial returns.”

Defenders of the fund will attempt to separate its mission from McGlashan’s personal issues. Yet the scandal helps puncture the image of moral superiority projected by those who claim they can do good and get richer at the same time. It gives more ammunition to those who suspect that ethical investing may be little more than a way to ease the conscience of the wealthy with more than their share of misdeeds.

Undoubtedly, protectors of the conventional wisdom are seeking ways to restore support for the notions that regulation is bad and that the rich are good people who earned everything they have. Yet for now, let’s enjoy these moments of clarity.

A Reputation for Purity is Now in Tatters

Thursday, February 21st, 2019

For the tens of millions of baby boomers in the United States, the first large corporation whose products they encountered was probably Johnson & Johnson. That’s because the vast majority of parents in the postwar period used the company’s baby shampoo, oil and powder on their precious bundles of joy. Carefully cultivating an image of purity, J&J established itself as an indispensable part of infant care.

That image is now in tatters. The company just disclosed that it is being investigated by the Justice Department, the Securities and Exchange Commission and Congress in connection with possible asbestos contamination of its baby powder and other talc-based products. These probes were prompted by investigative reporting in outlets such as the New York Times alleging that J&J executives raised internal concerns about the asbestos issue decades ago but the company never acknowledged these publicly.

These revelations gave more credence to thousands of lawsuits filed against J&J in recent years by women, including many who used the company’s baby powder on themselves as well as their infants, charging that the products caused them to develop ovarian cancer. J&J has been losing a lot of these cases, including one in which a jury awarded $4.7 billion in damages to a group of 22 women.

Rarely has a product’s reputation fallen so far, and rarely has a company once held in such high esteem come to be regarded as morally equivalent to cigarette manufacturers. Yet a closer look at J&J’s track record shows that its immaculate reputation has been deteriorating for quite some time.

Over the past decade the company has been involved in a series of scandals and has been forced it to pay out large sums in civil settlements and criminal fines.

The most serious of those cases involved allegations that several of its subsidiaries marketed prescription drugs for purposes not approved as safe by the Food and Drug Administration, thus creating potentially life-threatening risks for patients.

For example, in 2013 the Justice Department announced that J&J and several of its subsidiaries would pay more than $2.2 billion in criminal fines and civil settlements to resolve allegations that the company had marketed it anti-psychotic medication Risperdal and other drugs for unapproved uses as well as allegations that they had paid kickbacks to physicians and pharmacists to encourage off-label usage. The amount included $485 million in criminal fines and forfeiture and $1.72 billion in civil settlements with both the federal government and 45 states that had also sued the company.

Other J&J problems resulted from faulty production practices. During 2009 and 2010 the company had to announce around a dozen recalls of medications, contact lenses and hip implants. The most serious of these was the massive recall of liquid Tylenol and Motrin for infants and children after batches of the medication were found to be contaminated with metal particles.

The company’s handling of the matter was so poor that its subsidiary McNeil-PPC became the subject of a criminal investigation and later entered a guilty plea and paid a criminal fine of $20 million and forfeited $5 million.

J&J also faced criminal charges in an investigation of questionable foreign transactions. In 2011 it agreed to pay a $21.4 million criminal penalty as part of a deferred prosecution agreement with the Justice Department resolving allegations of improper payments by J&J subsidiaries to government officials in Greece, Poland and Romania in violation of the Foreign Corrupt Practices Act. The settlement also covered kickbacks paid to the former government of Iraq under the United Nations Oil for Food Program.

All of this has been a humiliating comedown for a company that was once regarded as a model of corporate social responsibility and which set the standard for crisis management in its handling of the 1980s episode in which a madman laced packages of Tylenol with cyanide. While the company was then being victimized, in the subsequent crises it mainly has itself to blame. Off-label marketing, faulty production practices and foreign bribery are bad, but the current scandal over asbestos contamination and the alleged cover-up pose a threat to the survival of the company.  

Backlash of the Billionaires

Thursday, January 31st, 2019

Most of those who have thrown their hat in the ring for the 2020 presidential race have been met with varying mixtures of enthusiasm and indifference. Howard Schultz is another story. The former Starbucks CEO has engendered a wave of hostility based on concern that his plan to run as an independent would split the anti-Trump vote and usher in another term for the current occupant of the White House.

Schultz is making himself even more unpopular by unleashing a string of attacks on some of the key policy proposals being discussed by progressive Democrats, denouncing Medicare for All and taxes on the wealthy as un-American and ill-informed.

This could simply be an appeal to what remains of the right flank of the Democrats, but it also seems to be part of an emerging backlash among the super-wealthy and corporate elites to a progressive agenda that would affect them directly. Schultz is not the only billionaire complaining at the prospect of having to pay more to Uncle Sam. Michael Bloomberg, another potential presidential contender, has been mouthing off against Sen. Elizabeth Warren’s wealth tax idea and defending U.S.-style capitalism.

We may soon see large corporations speaking out as well. Foxconn did not explicitly link its decision to abandon plans to create 13,000 manufacturing jobs in Wisconsin to the election of progressive Tony Evers as governor, but Republican leaders in the state legislature are making the connection.

Big business has had the best of both worlds during the past two years. While a few corporations such as Foxconn have directly aligned themselves with Trump, most large companies have dissociated themselves from the president’s odious positions on immigration and nationalism. Some business figures such as Larry Fink of BlackRock have been promoting the idea that they are the true paradigms of civic virtue.

At the same time, these executives and their corporations have been making out like bandits from the tax breaks and regulatory rollbacks—including those eroding worker protections–promoted by the faux-populist Trump Administration and its Republican allies in Congress.

The time may soon be coming when large corporations and billionaires have to choose between pretending they are part of the resistance and giving up some of their economic privileges. Or maybe they will lose both.

After all, the idea that large corporations are a force for good is already a dubious notion. Take the case of Starbucks, which has cultivated an image of being a progressive employer but has had to pay more than $46 million to resolve collective-action lawsuits alleging wage and hour violations.

The big question is whether big business and the super wealthy will accept that they have to give back some of their advantages. We know that the likes of the Koch brothers and Sheldon Adelson will fight to their last breath. The Foxconn disinvestment decision could be a harbinger of a coming capital strike in some quarters.  

Yet it will be more interesting to see how far purported liberals like Schultz and Bloomberg are willing to go in resisting progressive reforms, and whether they will be joined by the corporate social responsibility crowd.  In the words of the old union song, they will have to decide which side they are on.

Don’t Read Their Lips

Thursday, April 12th, 2018

There have been times during the past 14 months when some people might have been tempted to regard big business as part of the anti-Trump resistance, based on the public stances that some chief executives have taken in response to the president’s more outrageous statements. A new report from Oxfam America shows that large corporations are not putting most of their money where their mouths are.

The Oxfam analysis compares the public rhetoric of 70 large U.S. corporations on topics such as immigration, diversity and climate change to the issues listed in their federal lobbying spending disclosures. It finds that most companies spent little or no money lobbying to reinforce their high-minded pronouncements.

Instead, they dispatched their armies of lobbyists to press for government action that would promote their own corporate self-interest, primarily through rollbacks in regulation and business taxes. For example, of the 70 companies only 13 (most tech firms) lobbied on diversity and inclusion, spending a total of $11 million. By contrast, 61 of the 70 lobbied on tax issues, spending a total of $44 million.

As Irit Tamir, Oxfam’s Director for the Private Sector, puts it: “Today’s CEOs have more appetite to align their company’s public image with specific sides in some of the country’s most contested and polarized debates. On issues ranging from gay marriage to refugee rights, executives across  industries have been pushed – or willingly walked – into the eye of the political storm. But when we look at what they are lobbying on behind closed doors, they really, really, really want to pay less in taxes while other issues take a back seat. Words matter, but actions – and lobbying dollars – still speak louder.”

Oxfam, which has done considerable work on corporate tax avoidance, finds it particularly troubling that so much of big business influence spending promotes policies that undermine public finance and contribute to the growth of inequality.

That’s certainly a valid point, but the report’s findings also highlight the reality that much of what is presented as corporate social responsibility is actually a smokescreen for more selfish practices. There is a parallel between this deception and that of the president.

Trump pretends to be a populist while actually promoting much of the conventional big business agenda. Corporate social responsibility proponents pretend to be social reformers while quietly lobbying for that same agenda. Moreover, the social responsibility initiatives themselves are often little more than image-burnishing measures and in some cases are designed to convey the dangerous message that voluntary corporate practices make stricter government regulation unnecessary.

The lesson from all this is that we should not pay too much attention to what either Trump or the big business reformers say and instead focus on what they are doing, which is to steadily dismantle the systems of regulation and taxation that are meant to keep predatory capitalism in check.

A Strange Way of Helping Workers

Thursday, September 28th, 2017

The Trump Administration would have us believe it is all about helping workers. Yet it has a strange way of showing it. Policies that directly assist workers are under attack, and all the emphasis is on initiatives that purportedly aid workers indirectly by boosting their employers.

That dubious approach is on full display now in a tax proposal that is being sold as pro-worker even though its main effect will be to make the rich even richer with the trickle-down hope they decide to use some of their additional wealth to create jobs and boost wages.

The same goes with regulation, a topic Trump is expected to return to in a speech next week. The dismantling of safeguards vital to the well-being of workers and consumers is packaged as the key to unleashing Corporate America’s job-creation mojo.

To a great extent these arguments are nothing more than chicanery. If there is any shred of sincerity, it is based on the idea that corporations, with fewer tax and regulatory burdens, will act in a socially beneficial way.

Corporations themselves, including ones that have lately been critical of the Trump Administration on issues such as race relations and climate change, help to promote the notion of business civic virtue. In fact, they and their apologists don’t restrain themselves in claiming the moral high ground.

A prime example of this appears in a recent issue of Fortune, which contains the magazine’s latest list of what it calls Change the World companies. These are the corporations whose operations supposedly have the greatest positive social impact.

Perhaps I have a jaded view, but I was astounded to see many of the companies on the list. Not only are they not paragons of virtue — in some cases they are leading corporate miscreants.

Take No. 1 on the list: JPMorgan Chase. In Violation Tracker the bank shows up with more than $29 billion in fines and settlements since 2000, making it the second most penalized company in the United States (after Bank of America). A big part of its total comes from toxic securities cases and mortgage abuses in the period leading to the financial meltdown, but there is much more. For example, it had to pay $1.7 billion to resolve a deferred prosecution criminal case relating to its role as the banker for Bernard Madoff’s Ponzi scheme; $550 million for its role in a conspiracy to manipulate the foreign exchange market; $329 million for illegal credit card practices; and so on.

No. 9 on the Fortune list is Johnson & Johnson, which long cultivated a lily-white image as a producer of baby powder and other wholesome items, but in recent years has gotten itself embroiled in a series of scandals. Its Violation Tracker tally comes mainly from a 2013 civil and criminal case in which it had to pay $2.2 billion to resolve allegations of promoting three prescription drugs for uses not approved by the Food and Drug Administration.

Among the companies on the top tier of the Fortune list are some with terrible employment records, including Walmart, which has long fought efforts of its U.S. workers to form unions and bargain for better pay, and Apple, which grew rich from the toil of the underpaid overseas workers producing its overpriced devices.

The Fortune lists contains some smaller and less notorious companies, but the presence of those leading corporate culprits taints the whole project.

A similar taint can be found in the Trump tax and deregulatory initiatives. If you want to help workers, help them directly — don’t give away the store to their employers.

Principles versus Interests

Thursday, December 8th, 2016

The website of every large corporation these days has a section labeled Corporate Social Responsibility containing high-minded language about its commitment to sustainability, community development, human rights and the like.

For the most part, these positions serve mainly as a form of corporate image-burnishing and have little real-world applicability. Now, however, a group of large U.S. and foreign banks are being challenged to live up to their CSR principles in connection with one of the most contentious projects of our day: the Dakota Access Pipeline.

Following a recent decision by the Army Corps of Engineers to block the final permit needed to route the pipeline (usually referred to as DAPL) under North Dakota’s Lake Oahe and dangerously closely to the Standing Rock Sioux Reservation, the project is stalled. Yet that could quickly change with the incoming Trump Administration.

Meanwhile, attention has turned to a syndicate of 17 lenders that have committed a $2.5 billion line of credit to the project.  Among the leaders of the pack are Citigroup and TD Securities, owned by Canada’s Toronto-Dominion Bank. Of the 17, all but two are endorsers of a CSR document known as the Equator Principles. (The list of endorsers is here; the two members of the syndicate not among them are China’s ICBC Bank and Suntrust Robinson Humphrey.)

The principles were drawn up in 2003 by a group of major banks facing increasing pressure from environmental and human rights groups over their involvement in controversial projects undertaken by mining, petroleum and timber corporations.

In adopting the principles, banks committed to providing loans only to those projects whose sponsors could demonstrate that they would be performed in a “socially responsible” manner and according to “sound environmental principles.” Sponsors were also supposed to conduct assessments that took into consideration issues such as the impact on indigenous communities.

The current version of the Equator Principles states that projects affecting  indigenous  peoples  should include “a  process  of Informed Consultation and Participation, and will need to comply  with the rights and protections for  indigenous peoples contained in relevant national law, including  those  laws implementing host country obligations under international law…Projects with adverse impacts on indigenous people will require their Free, Prior and Informed Consent.”

It is highly questionable that Equity Transfer Partners and the other companies involved in DAPL have met this test. On the contrary, the harsh response of the project sponsors and local law enforcement agencies to the peaceful protests at the site has demonstrated an utter disregard for the concerns of Native water protectors.

It is no surprise that opponents of the pipeline are calling the lenders to task. In November a group of more than 500 civil society organizations from 50 countries issued a joint letter to the 17 lenders citing the Equator Principles and calling on them to suspend their financial support of the project until the concerns of the Standing Rock Sioux Tribe are fully addressed.

So far there is no sign that the lenders are prepared to withdraw their support of the pipeline. This means there will be more clashes ahead — both between police and protestors, and between the profit interests of the lenders and their purported principles.

Putting Apple in Its Place

Thursday, September 1st, 2016

bad-appleApple’s indignant response to the European Commission tax ruling has nothing to do with an inability to pay. The company’s cash pile of more than $200 billion could cover the assessment several times over. Instead, it’s something more akin to the attitude attributed to the late New York hotelier Leona Helmsley: only the little people pay taxes.

Large corporations like Apple think that what they do is so important that they should be able to skirt their fair share of taxes. Some of their dodging is covert and some is done brazenly out in the open; some is done against the wishes of tax collectors and some is done with their full cooperation.

The covert portion of Apple’s tax avoidance started to come to light in 2012, when the New York Times published an investigation of the company’s use of esoteric accounting devices such as the “Double Irish With a Dutch Sandwich” to route profits in ways that minimized tax liabilities or eliminated them entirely. A year later, the Senate’s Permanent Subcommittee on Investigations issued a report providing additional details on Apple’s tax tricks. It also held hearings in which Apple CEO Tim Cook insisted what the company was doing was simply “prudent” management while Kentucky Sen. Rand Paul brought shame on himself by declaring that Apple was owed an apology.

While Congress has done little to thwart corporate tax dodging, the EC used the Senate report to launch an investigation of Apple that resulted in the recent ruling. Now some members of Congress are making fools of themselves by protesting that ruling.

As Apple’s global tax dodging has gotten the most attention, the company has been able to avoid some domestic taxes with much less bother. That because states and localities routinely offer the kind of special tax deals to individual companies that are banned in Europe, more so now that Ireland’s attempted end-run was rejected.

This is seen most clearly in the subsidy packages that Apple and other tech giants such as Facebook and Google receive when they build new data centers necessary to handle the ever-increasing volume of human activity taking place in “the cloud.” Although the decision as to where to locate the facilities is based primarily on considerations such as the availability of low-cost energy (data centers are power hogs), these companies want to receive large amounts of taxpayer assistance.

As my colleague Kasia Tarczynska points out in a forthcoming report on the subject, companies such as Apple regularly negotiate subsidy packages and special tax breaks worth hundreds of millions of dollars for data centers that typically create only a few dozen jobs.

In North Carolina, Apple successfully pressured the state to allow it to calculate its income taxes through a special formula that will save the company an estimated $300 million over the 30-year life of the agreement. Local officials provided property tax abatements worth about $20 million more. All this for a project that was to create only about 50 permanent jobs. Despite its $1 billion cost, the facility did little to boost the local economy. “Apple really doesn’t mean a thing to this town,” a resident told a reporter in 2011. Apple went on to receive generous subsidy packages for additional data centers in Oregon and Nevada.

Apple’s various forms of tax avoidance are reminders that large corporations, even those that profess to have enlightened social views, don’t have respect for government and resent having to follow its rules. Rather than pay taxes and follow regulations, they prefer to make charitable contributions and undertake corporate social responsibility initiatives. In other words, they want to do things on their own terms and not comply with the same obligations as everyone else. Kudos to Europe for beginning to put Apple in its place.

The Limits of the Koch Charm Offensive

Thursday, August 6th, 2015

koch_charlesCharles and David Koch and their Koch Industries conglomerate, long known for an unapologetic defense of unfettered capitalism and hard-right politics, are said to be going soft. The brothers are taking pains to associate themselves with more progressive policies such as criminal justice reform, while their corporation has been running feel-good ads highlighting its purported commitment to enlightened principles such as sustainability.

At the same time, the Kochs are depicting themselves as backers of supposedly responsible Republican presidential candidates and shunning iconoclastic front-runner Donald Trump.

The Koch charm offensive does have its limits. A slew of groups funded by the billionaires are at the forefront of the campaign against the Obama Administration’s Clean Power Plan and are doing their best to defend fossil fuels. When it comes to environmental policy, the Kochs are still in the stone age.

That position is not merely a matter of ideology. Their opposition to environmental and other safety regulations amounts to a defense of the way the Kochs do business.

This was made clear to me in some work I’ve been doing on a new research tool called Violation Tracker that my colleagues and I at Good Jobs First are preparing. Patterned on our Subsidy Tracker, the new resource will take company-specific data on regulatory violations and link the individual entries to the parent corporations of the culprits. This will allow us to present violation totals for large firms and show which of them are the most frequent offenders.

The initial version of Violation Tracker, which will be released this fall, will cover data from the Environmental Protection Agency, the Occupational Safety & Health Administration and a few other federal health and safety agencies. Coverage on wage and hour violations, financial sector transgressions and other forms of corporate misconduct will come later.

A preliminary tally of EPA and OSHA data from the past five years indicates that units of Koch Industries have been hit with more than $3.5 million in penalties. The biggest amount comes from Flint Hills Resources, the conglomerate’s oil refining arm. For example, in 2014 the company had to pay $350,000 and sign a consent decree to resolve EPA allegations that it was violating the Clean Air Act through flaring and leaking equipment.

Georgia-Pacific, the Koch Industries forest products company, received more than $600,000 in penalties during the five-year period. These included $60,000 in penalties proposed in January by OSHA in connection with worker exposure to formaldehyde and other dangerous substances.

In 2013 the fertilizer company Koch Nitrogen had to pay $380,000 to settle allegations that its facilities in Iowa and Kansas violated the Clean Air Act.

Regulatory violations by Koch businesses began before the five-year period that will be initially covered in Violation Tracker.

For instance, in 2000 the Justice Department and the EPA announced that Koch Industries would pay what was then a record civil environmental fine of $30 million to settle charges relating to more than 300 oil spills. Along with the penalty, Koch agreed to spend $5 million on environmental projects in Texas, Kansas and Oklahoma, the states where most of its spills had occurred. In announcing the settlement, EPA head Carol Browner said that Koch had quit inspecting its pipelines and instead found flaws by waiting for ruptures to happen.

Later in 2000, DOJ and the EPA announced that Koch Industries would pay a penalty of $4.5 million in connection with Clean Air Act violations at its refineries in Minnesota and Texas. The company also agreed to spend up to $80 million to install improved pollution-control equipment at the facilities.

In a third major environmental case against Koch that year, a federal grand jury in Texas returned a 97-count indictment against the company and four of its employees for violating federal air pollution and hazardous waste laws in connection with benzene emissions at the Koch refinery near Corpus Christi. The company was reportedly facing potential penalties of some $350 million, but in early 2001 the newly installed Bush Administration’s Justice Department negotiated a settlement in which many of the charges were dropped and the company pled guilty to concealing violations of air quality laws and paid just $10 million in criminal fines and $10 million for environmental projects in the Corpus Christi area.

In 2002 Koch Petroleum Group, the Koch entity involved in most of these environment problems, was renamed Flint Hills Resources. That name change was as cosmetic as the current charm offensive.

If the Kochs really want to improve their reputation, they should go beyond public relations and make fundamental alterations in their business practices.

The CSR Sham

Thursday, October 16th, 2014

Varkey“We are committed to using our resources to increase opportunity, protect the environment, advance education, and enrich community life.” That declaration comes from the chief executive of the computer systems company Oracle, which is featured in a new report on spending by large companies on corporate social responsibility, or CSR. Statements like this, which are de rigueur these days in corporate communications, seek to give the impression that big business is largely a philanthropic endeavor – that the pursuit of profit and community betterment are not only consistent but are often indistinguishable from one another.

The report on CSR spending was prepared by the consulting firm EPG on behalf of the Business Backs Education campaign, which is based in Britain – where CSR is an even bigger deal than in the United States – and is said to be “led by UNESCO, the Varkey GEMS Foundation, and Dubai Cares under the auspices of the Global Education and Skills Forum.” Bill Clinton has lent his name to the effort.

I was unable to find a copy of the full report posted online, so I am depending on a summary published by the Financial Times. The main finding is that U.S. and UK companies in the Fortune Global 500 spending about $15.2 billion a year on CSR activities.

It’s not clear whether that number is supposed to be impressive, but it is worth noting that the 128 U.S. companies on the list alone account for $8.6 trillion in annual revenue. But even more significant than the amount of CSR expenditures is what they are being spent on. According to the report, 71 percent of the spending by U.S. companies consisted of in-kind contributions, often consisting of the firm’s own products. Oracle, which the FT calls “one of the biggest CSR spenders,” is said to grant “its software to secondary schools, colleges and universities in about 100 countries.” Pharmaceutical companies often donate their own drugs.

Not only is such in-kind giving much cheaper than cash contributions – it also serves to promote the company’s products. The giveaways are in effect marketing campaigns to raise the profile of and increase the future demand for those products.

EPG appears to have used a narrow definition of CSR, consisting of spending that is more commonly defined as philanthropic. CSR also includes broader initiatives on issues such as the environment. Such activities present another set of problems, given that those voluntary initiatives are often used by business as a way of thwarting more rigorous regulatory oversight.

The report is part of the Business Backs Education effort to get corporations to increase the portion of their CSR spending that goes to education. That sounds like a worthwhile mission, but when you look at who is behind the campaign, it all seems somewhat less altruistic.

One of the key backers is the Varkey Gems Foundation, which was established by Sunny Varkey (photo), a Dubai-based entrepreneur who founded and runs Gems Education, the largest operator of private schools in the world and a for-profit provider of services to public schools. Forbes estimates Varkey’s personal wealth at $1.8 billion.

In other words, Varkey is pushing corporations to contribute more to educational budgets that in many cases will be spent on purchasing services that will enrich him and his company even more. And he’s doing this under the banner of CSR and with the imprimatur of UNESCO and the former president of the United States.

From the findings of the EPG report to Varkey’s broader plans, all this is a glaring example of how much of CSR is a sham, a way for large companies and the superrich to promote their self-interest while pretending to be humanitarians.

Religion Inc.

Thursday, July 3rd, 2014

samuel-alito-jr-2009-9-29-10-13-28Is Justice Samuel Alito really that clueless? During the 2010 State of the Union address, he nervously mouthed the words “not true” when President Obama warned that the Supreme Court’s Citizens United ruling would allow corporate special interests to dominate U.S. elections. A few days ago, Alito wrote an outrageous opinion in the Hobby Lobby case affirming the religious rights of corporations but insisting this would not do much other than prevent a few companies from having to include several kinds of birth control in their health insurance plans.

Alito’s claim about the narrow scope is already beginning to unravel. Although the written opinion suggested that only four types of contraception such as IUDs that religious zealots view as tantamount to abortion would be affected, the Court subsequently ordered lower courts to rehear cases in which employers sought to deny coverage for any form of birth control.

Business owners with other religious views contrary to federal policy will undoubtedly soon speak up. This is exactly what Justice Ginsburg warned about in her powerful dissent, calling Alito’s opinion “a decision of startling breadth” that enables “commercial enterprises, including corporations, along with partnerships and sole proprietorships, [to] opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs.”

Alito was apparently so shaken by Ginsburg’s accusation that he felt a need to deny it at length. The denial is not only unconvincing, it is clumsy and takes Alito into some strange territory for a supposed business-friendly conservative.

In their religious zeal, Alito and the other conservatives on the Court apparently forgot that corporations have been trying for the past century to depict themselves as totally apart from religious and moral concerns. Business enterprises are amoral institutions, laissez-faire proponents such as Milton Friedman repeatedly told us—they exist only to maximize their profit. It has often been corporate critics who have brought religious and moral issues into disputes over business practices.

Alito seems to embrace the notion of corporate social responsibility (CSR) when he writes (p.23):

Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so. For-profit corporations, with ownership approval, support a wide variety of charitable causes, and it is not at all uncommon for such corporations to further humanitarian and other altruistic objectives.

Alito even makes reference to growing acceptance of the benefit corporation, which he describes as “a dual-purpose entity that seeks to achieve both a benefit for the public and a profit for its owners” (p.24).

It’s unclear whether Alito sincerely believes in the validity of CSR initiatives or is simply using this comparison to try to make his assertion of corporate religious rights more palatable. Oddly, he describes as “unlikely” the possibility that a large publicly traded company would ever make a religious claim, even though such firms are among the biggest promoters of CSR.

Whatever Alito really thinks, his reference to CSR does not make the ruling any more convincing. CSR is already problematic to the extent that its practitioners try to use their supposedly high-minded voluntary initiatives to discourage more stringent and more enforceable government regulation. But at least these corporations are simply trying to influence government policymaking rather than asserting an absolute right to be exempt because of supposed religious convictions.

As much as Alito tries to deny it, his ruling has the potential to cause a great deal of mischief. A religious component can already be seen in the climate crisis denial camp; what will prevent companies from asserting that their beliefs prevent them from complying with environmental regulations? Is it that hard to imagine that business owners holding a scripture-based belief that women should be subservient to men may claim they should not be subject to anti-discrimination and equal pay laws?

Alito seems to be opening the door to such aggressive stances when he insists that “federal courts have no business addressing” the question of whether a religious claim by a corporation is reasonable (p.36). It’s true that, in general, government should not be passing judgment on matters of faith, but that principle falls apart when special interests try to use religion to undermine democratically adopted public policies. It’s even worse when those interests are employers asserting their beliefs at the expense of their workers.

The Supreme Court has done considerable damage by elevating the free speech rights of corporations; now it is compounding the sin by giving those corporations special religious rights as well.