10.11 Corporate responsibility and the birth of good corporate citizenship

Last updated: May 2018         

Suggested citation: Freeman, B and Winstanley, M. 10.11 Corporate responsibility and the birth of good corporate citizenship In Scollo, MM and Winstanley, MH [editors]. Tobacco in Australia: Facts and issues. Melbourne: Cancer Council Victoria; 2016. Available from http://www.tobaccoinaustralia.org.au/chapter-10-tobacco-industry/10-11-corporate-responsibility-and-the-birth-of-go

The document disclosure discussed in an earlier 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 revelations contained in the documents, combined with ongoing pressure for product regulation, legislation and restrictions on smoking, required tobacco companies to construct and promote a new image to maintain investor confidence. The companies began to acknowledge publicly that while tobacco could be harmful, smoking was an ‘adult choice’ and 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 consider their impact on communities and the environment, and adjust their business practices accordingly.1 However, the extent to which such corporations are becoming truly socially responsible, versus simply overhauling their public image, is a matter of ongoing debate.1  

The websites of British American Tobacco Australiai, Philip Morris Internationalii and Imperial Tobacco Groupiii devote many pages to detailing company adherence to CSR policies. In 2016, British American Tobacco produced a 'Corporate Behaviour Sustainability Focus Report', outlining its commitment to: responsible marketing, contributing to communities, strengthening approach to human rights, promoting standards for vapour products, safeguarding employees, reducing illicit tobacco, reducing environmental impacts, and upholding high standards of corporate governance.2 In recent years, British American Tobacco has stated that its corporate social responsibility strategy aligns with particular United Nations Strategic Development Goals.3 The company is also positioning itself as an employer of choice, particularly with regards to corporate social responsibility.4

Re-launched in early 2017, Philip Morris International’s website is heavily focused on promoting its 'heat not burn' products. The site claims the company is designing a “smoke-free” future, so that at an unspecified future date, it will no longer sell traditional cigarettes5 (despite its ongoing involvement in legal action against governments that enact laws to reduce cigarette sales). Philip Morris USA also sponsors its own quit smoking websiteiv. Imperial Tobacco Group has developed ‘a responsibility framework’ based on four key areas: ‘product responsibility, rewarding workplace, respecting natural resources and reinvesting in society’.6

A 2014 review of the CSR activities described on the major tobacco companies’ websites7 found that they consistently included youth smoking prevention programs, voluntary marketing standards, acknowledgment of smoking's health harms, and management of the tobacco supply chain. These CSR activities took place in 58 countries, with all but nine being parties to the World Health Organization’s Framework Convention on Tobacco Control. The WHO FCTC recommends restricting tobacco industry CSR activities, but comparatively few nations have adopted this measure. As of 2016, only 53 countries had banned tobacco industry CSR activities, 81 had banned the tobacco industry and other entities from publicising tobacco industry CSR activities, and 57 had banned the tobacco industry from  contributing to smoking prevention media campaigns.8 Authors of the 2014 review noted that tobacco industry corporate social responsibility initiatives are powerful political tools, used by tobacco manufacturers to: improve their public image and enhance their credibility; gain access to and influence policymakers; avoid or weaken regulation; influence the tobacco control agenda; and create allies. 

For the tobacco industry, a purported commitment to corporate social responsibility depends on the legality of tobacco products, and the argument that smoking is an informed, adult choice. The emphasis on the individual’s choice to smoke is framed to absolve the industry and shift responsibility to the smoker.9 One study10 notes that, ‘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).10

The argument has been made that the tobacco industry is fundamentally precluded from qualifying as a socially responsible corporation, because: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.
  • Most smokers would like to quit.
  • Mentally ill smokers consume a large proportion of the tobacco used in the US. 
  • Most smokers become addicted before they have the opportunity to exercise adult choice. 

In order to become truly socially responsible, tobacco companies might:9 

  • 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, government or non-profit agency
  • stop interfering with provisions to protect non-smokers from secondhand smoke
  • halt all forms of political donations
  • provide generous financial support to qualified agencies 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 FCTC and adoption of its provisions.

However, the tobacco industry is unlikely to consider these measures viable.

As of August 2017, the Philip Morris International website says that it supports “a common sense approach” to regulation and that “there’s absolutely no doubt that tobacco products should be subject to strict rules and enforcement.”11 However, it maintains a strong objection to plain packaging laws, and attempts to shift the regulatory focus to its other tobacco products. The company also implies that evidence-based tobacco control policies are no longer required but instead, “sensible, risk-based regulation of smoke-free products, combined with further restrictions on cigarettes, can help address the harm caused by smoking more effectively – and faster – than plain packaging and other traditional regulatory measures.”11

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. From about the mid-1990s,1 Philip Morris management attempted to frame the company as an honest and ethical business, predicated on the fact that it produced legal products for use by informed adults. As part of this strategy, the company undertook (and publicised) social and environmental good works, pledged to operate more openly, and voiced support for reasonable regulation. It also adopted a consistent approach globally to matters such as marketing, trade, labour and the environment. Despite Philip Morris’ claims, however, its approach was highly selective. Strategies such as corporate advertising and industry-created youth smoking prevention programs, philanthropy, sponsorships, and support for weak tobacco control policies were implemented, while other areas that might have interfered with its business goals were ignored.12 An analysis13 of its website found that while the company appeared to endorse mainstream medical views on tobacco, its language was non-committal and visitors were referred to external public health websites (see also Chapter 10, Section 10.12). Internal Philip Morris documents revealed that its endorsement of such views primarily aimed to deflect litigation.13  

In January 2003 Philip Morris Companies, then parent company to Philip Morris International, Philip Morris (USA) and Kraft Foodsvi, changed its name to ‘Altria’. According to Philip Morris, the word Altria is derived from the Latin word ‘altus’, and conveys the notion of ‘reaching ever higher’.14 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.15, 16 This view has been confirmed by internal company documents dating back to the late 1980s.14 This campaign of corporate rehabilitation was met with confusion and mistrust by Philip Morris Company employees who were unconvinced that company could now responsibly sell it products while also continuing with aggressive promotion initiatives.17  

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’,18 other commentators observed that cordoning off Philip Morris International would make the new entity less vulnerable to US regulators, legislators and litigants and reduce public relations pressure on Altria, which would continue to manage Philip Morris’s US operations.19 US ownership of Philip Morris International restricted its opportunities for global growth. As the split between the companies became imminent, 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.19 As of August 2017, Altria comprised a group of companies that includes: Philip Morris USA, US Smokeless Tobacco Company, John Middleton (a cigar company), Ste. Michelle Wine Estates, and Nu Mark, makers of e-vapour products.20

Altria was the only tobacco company to support the US Family Smoking Prevention and Tobacco Control Act, enacted in 2009, which gave limited powers to the US Food and Drugs Administration to regulate tobacco products. Some public health experts expressed concern that the Act could offer the tobacco industry a further opportunity to rehabilitate its image and products because they are now ‘FDA regulated’.21

10.11.2 Corporate 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 1992vii. 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, created considerable support for the industry, and effectively gagged potential anti-smoking advocates (such as sportspeople whose sport benefited from tobacco funds). 

Termination of these sponsorships caused Australian tobacco companies to look elsewhere for promotion opportunities. The adoption of corporate responsibility has led tobacco companies to support charities and groups with impeccable public images, including aid for sick children, combating domestic violence and environmental stewardship.

In 1999, Philip Morris Australia claimed it supported a number of Australian charities, including Jeans for Genes Day, Red Nose Dayviii, the Lions Club and Ronald McDonald children’s charities. None of these charities had knowingly accepted donations from Philip Morris, since the money had either been received via a corporate entity related to Philip Morris Australia (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 were from a tobacco company caused consternation among the charities.22

In February of 2003, Philip Morris Australia co-sponsored a high-profile conference on domestic violence, organised by the Australian Government’s Office for the Status of Women.23, 24 Along with the then Minister for Family and Community Services, Senator Amanda Vanstone, Philip Morris representatives from Australia and the US spoke at the event.25 The Office for the Status of Women was strongly criticised by representatives of the Australian Medical Association,23, 24 the Federal Opposition,23 and the public health sector,24 on the grounds that tobacco is a major cause of mortality among 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 tobacco companies to involve themselves in Australian conferences were less successful; protests by other companies at times led to their removal from the program,26 or other companies to withdraw.27

Nevertheless, British American Tobacco Australia appears to have had some success in forging connections with several ‘charity partners’x through the ‘Our Workplace Giving Programme.’28 Employees may choose to make donations either through payroll contributions or through approved on-site fundraising programs. One such charity is Assistance 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.29 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 four defined areas: ‘education, empowering women, economic opportunity, as well as disaster preparedness and relief efforts.’xii In 2017, Philip Morris International donated US $40,000 to one Australian charity, Habitat for Humanity Australia. Philip Morris International donated a total of US$29 561,921 globally in 2017.30  

Imperial Tobacco makes no other specific mention of its activities in Australia, but states that 'we partner, support fundraising and encourage volunteering.'31 Imperial tobacco also says it has supported 'programmes to help address HIV/Aids, malaria and water-borne disease and to help provide disaster relief in the event of civil unrest, extreme weather events, major accidents, terrorism and / or geological catastrophes.'31

In the US, 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.32 Philip Morris spent millions more dollars on publicising its charitable works than it actually donated.25This advertising also allowed Philip Morris to generate its own positive publicity in mainstream media despite direct tobacco advertising being banned on television in the US.33 While some charitable organisations have rejected tobacco industry funds,34 the American Red Cross has defied the recommended policy of its parent movement, the International Red Cross, and continues to accept substantial tobacco industry donations.35

A US study has documented how tobacco industry philanthropy may actually have harmful consequences, particularly in terms of hindering tobacco control legislation. For example, Philip Morris has used philanthropy strategically not only to improve company image, but also to influence policymakers, and influence public health policies.36

Tobacco industry philanthropic involvement is of concern to other charitable organisations and donors.37 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’.38

Recent news and research

For recent news items and research on this topic, click here (Last updated June 2018) 

References

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3. British American Tobacco. Corporate social investment.  2018. Last update: Viewed Available from: http://www.bat.com/csi.

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5. Smith E. A. and McDaniel P. A. Covering their butts: Responses to the cigarette litter problem. Tobacco Control, 2011; 20(2):100–6. Available from: http://tobaccocontrol.bmj.com/content/20/2/100.abstract 

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13. 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  

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  

15. 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

16. 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  

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<27. Companies ditch conference over tobacco firm's presence. Sydney Morning Herald, 2005; 25 Nov:9. 

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38. Bill & Melinda Gates Foundation. Statement regarding IDRC tobacco control grant. Seattle, Washington: Bill & Melinda Gates Foundation, 2010. Last update: Viewed Available from: http://www.gatesfoundation.org/press-releases/Pages/statement-on-idrc-grant-100412.aspx.

ii See sustainability: https://www.pmi.com/sustainability

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 fulfil 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, Westpac Lifesaver Rescue Helicopter, Northcott, and Assistance Dogs Australia

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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