"One needs to understand one's business from beginning to end"

In Conversation with Professor Jeremy Moon. 

FULL TRANSCRIPT

2 May 2013, Melbourne Australia

Jeremy Moon is Professor and founding Director of the International Centre for Corporate Social Responsibility, Nottingham University Business School. He is in Melbourne as the Trinity College Gourlay Visiting Professor of Ethics in Business. Professor Moon sat down with Centre for Public Policy Research Fellow, Sara Bice, for a discussion on the latest developments in corporate social responsibility and business ethics. 

Excerpts from this interview originally appeared in The Conversation.

Sara Bice: Professor Moon, you’re considered a CSR guru in sustainability circles – you’ve been involved since the ‘early days’ of CSR and are a co-editor of the Oxford Handbook for Corporate Social Responsibility, which had become a kind of Bible for those of us working and researching in the field. Can you tell me a little about how you came to work in CSR?

Jeremy Moon: In some ways it’s a shock that I’m still involved in it because I encountered it professionally 30 years ago. I was doing research in the UK on government policy responses to unemployment, which was a very serious issue at the time. In a very short space of time, unemployment went from $1 million to 2 milion to 3 million. Probably the numbers were cooked, but it still seemed quite a huge number, associated with urban decay, disaffection, even riots as we saw in Bristol. And during the course of my research I kept encountering businesses being involved in a way, a number of ways, often supporting local economic partnerships where they’d been called on by local governments to devise ways to get people back to work, being featured in government training and work experience schemes.

Thirdly, they were involved in their own organisations, designed specifically for these purposes –certain organisations set up secondments from large companies to social enterprises, local economic partnerships. There was also the creation of a new umbrella org called Business in the Community which paradoxically encouraged by the government but principally led by the Captains of Industry, if you like. CEOs and the like. So, obviously the question is, “What’s going on here, then?” I started diverting some of my research energies from formal public policy instituted by government to these new areas.

My first paper on this, with my dear co-author, Jeremy Richardson, was something like the ‘unemployment industry’. There was an element of industry to it, but companies were part of it but not necessarily making money. One of the interesting things was it had been assumed that companies would throw their own resources at the problem, but what we found was that companies were bringing other sorts of skills to the table, their knowledge, their skills, their people, their ability to help through experience.

And that’s how I became interested in it, and it remained as a research interest when I returned to Australia. It was in the early 1990s and there was a downturn here. I did a study of that. So I did a survey of companies to ask about their corporate social responsibility and I thought, “How could you really corroborate these findings?” Because the problem with companies is that they would say that, well, they’d ‘over-egg the pudding, so to speak’.

So, I did a survey of  key stakeholders who might be sceptical—that was school principals—given that companies often prioritise education as one of the areas they should be concerned about, as an object of responsibility. And that led to providing evidence to a somewhat sceptical Senate Committee on Business and Education. And up until then CSR remained one of three or four of my main research interests and then I was lucky enough to be appointed to a job running a research centre dedicated to it. And that’s allowed me, for 12 years, to focus on these issues.

And it’s been very exciting! It’s been very intellectually stimulating, from an ethical point of view, from an economical point of view, from a political science point of view, from a legal point of view. I meet so many different people.

SB: And it probably allows you to play Devil’s Advocate a bit and to sit on different sides of the table?

JM: I do, and I mean, on my current lecture tour, I’m being accused of being unnecessarily optimistic, or inappropriately optimistic, but that’s in some ways the sort of person I am. I tend to accentuate the positive, but I’m not without ability to see some of the shortcomings.

SB: At your recent talk at Melbourne Law School on 'Can Business be socially responsible? Should it be?', you admitted to being an optimist when it comes to CSR. Where do you think the optimism comes from?

JM: Possibility. I suppose that’s partly my character fault.

SB: Or strength. Having had so much exposure to business for so many years, and having started on the ground floor of CSR, in terms of its 'embeddedness' in organisations, there must be something in your experiences that creates that sense of optimism or possibility.

JM: Yeah. Good question. In some ways, there are innumerable stories about companies being good at one thing and then getting something very badly wrong or companies appearing to do something very well and then it turns out they haven’t. Then they have to acknowledge that. I suppose that there is, in CSR, in a liberal democratic context, in a market context, a possibility for steady improvement. The formula is basically this: Companies think they need to look socially responsible. They make at least rhetorical commitments to this. They oftentimes come up short. That information becomes publicly available. The objective of positively reinforcing the company’s image is negated. In fact, things have got worse. And so companies need to invest and deal with social responsibility better .

That’s the sort of mechanism and I think that’s being addressed by professionalisation of the field—which is still very incomplete—assisted by accountants, by financial analysts, and by  experts in environmental and social issues who are being drawn in, not just to criticise the company, but to listen and to work with companies. So, I think there are some mechanisms at work which allow for some optimism, despite everything.

SB: Turning to recent news, the recent factory collapse in Bangladesh in which over 1,000 people were killed captured world headlines and presented shocking images. The factory has been linked to clothing produced for major companies, including WalMart, JC Penney and the Benneton brand, among several others. The Bangladeshi government entices retailers to invest in the country through ensuring costs are kept low. The building’s owner was recently arrested in India and taken back to Dhaka on charges of faulty construction and causing unlawful death. People are asking, “Who’s to blame?” From your perspective, and considering the debates around corporate versus government responsibilities, where does responsibility lie?

JM: [long pause] Bangladesh is a country where, I’m guessing, probably a quarter of its earnings are in the textile industry – conceivably more. And the sad news is that’s a result of t-shirts, dresses, shirts, trousers being produced there more cheaply than in the United Kingdom, the United States of America, Denmark, Sweden.

Now, the key question is how is that issue regarded?

One could regard it irresponsibly, casually and simply to exploit relatively powerless conditions of citizens and workers in that country.

Or it could present an opportunity to work with it, but also to see this as a development project, rather than simply a market relationship.

And this casualness, ostensibly, I think is shared manifestly with the Bengali Government, which is elected – and there are elections later this year.

So, these are elected governments. They have rules. And they do have capacities to enforce these rules. It’s a question of priorities.

Secondly, companies which source from these factories—in brackets—I suspect they often work through intermediaries, called ‘buyers’, so I think there’s another layer in the mix that would need to be scrutinised.

SB: And certainly that’s come out in the news lately where some of these big multinationals that have come under scrutiny have said, “We didn’t realise that our clothes were being produced in that factory”.

JM: Yeah, and this might provoke two sorts of responses, the first being that companies should shorten their supply chains, which probably would mean requiring them to buy from a smaller number of bigger operators. 

It may even prompt them to bring some of the production home. I’ll come back to that one in a minute. But 

they need to understand the provenance of their goods. Otherwise, any claims being made to being members of ethical trade initiatives are simply fraudulent. One needs to understand one’s business from beginning to end, and this is one of the new demands in the CSR terrain. It’s not just about sourcing but also about disposal, as well.

SB: And you can see that reflected in the GRI G4 and its focus on ‘value chain’.

JM: Entirely. It’s quite possible that some of these corporations acted in good faith and have been misled. If that’s the case, they now need to act very swiftly to ensure that they are not misled again.

The owner, I don’t know enough about. But it is manifestly appropriate that someone is at least questioned and perhaps charged. I would have thought manslaughter. Culpable manslaughter in the legal system I’m familiar with. Very sad, but not inappropriate.

And swift action by the government, in this respect, I hope will be complemented by swift action through the galvanisation in respect to certification systems. So, with a little luck, health and safety will be treated with the same respect as child labour, within the next decade. If not, these people may have died in vain.

SB: It’s interesting because child labour tends to be very emotionally evocative, whereas OHS may be seen as more pedestrian...

JM: Yes and no. The early factory workers’ movements were very much about adults and hours of work. It wasn’t just about the boys being shoved up chimneys. Whatever the Acts were of the 1840s and 1850s, they considered these issues.

But this does, of course, bring up the question of to what extent are levels of production improved, work conditions improved? And if there’s no improvement in Bangladesh, then it becomes a question of balance, rather than dichotomies.

SB: And do you think this example raises questions of bringing supply back ‘on shore’, as it were.

JM: It does. If companies want to understand and manage their supply chains, then in the long run, they may judge onshore manufacturing to be a cheaper option than the uncertainties of relying on intermediaries and on regulators whom they can’t quite trust.

SB: So it’s almost the opportunity cost, as opposed to price per shirt?

JM: And risk, yeah. Companies do make shirts in Britain, but they are quite expensive.

SB: And one of the arguments that has been put forward is that, as consumers, we need to decide whether we feel ethically comfortable purchasing cheap clothing, and perhaps as consumers we need to be more willing to pay more for higher quality goods.

JM: Thank you for reminding me of this point. There was an editorial in The Australian a day or two ago, and this was quite nicely pointed to. The question of what’s the right price for the t-shirt you wear?

Sadly, price tells, even in general terms, among people who say they would like to favour ethical causes, and it shows especially in hard times, which in the United Kingdom is now the case. So, when Primark was excluded from the ethical trade initiative, young ladies immediately got on Twitter and blogs and said, “Hands off Primark. It’s providing us good, cheap clothes and people rely on it in hard times. It’s valuable.” So there’s a tension. And it’s one that’s not just between academics and experts, but it’s out there in society.

The Fair Trade movement’s done a lot in a small space of time, considering its modest resources, which are mainly good intentions and working long hours. But it’s impacted on some of those supply chains and those sentiments and standards need to be spread. But at the end of the day, it’s still up to consumers. At the end of the day, I think it’s a good long look at oneself. Or, as Roy and H.G. would say, “Going into the room of mirrors.”

SB: Yeah. Which can be quite confronting first thing in the morning.

Just on the issue of developing countries, and you’ll now have to think back a number of years to when you wrote with Wendy Chapple in Business and Society on the notion of CSR in Asia. There’s been a lot of talk about the ‘Asian Century’ in Australia recently, following the release of a government White Paper late last year. In the article, one of your hypotheses was that “CSR in Asia is dependent on development”. Eight years down the track, and in light of the ‘rise of Asia’, does your hypothesis ring true?

JM: Thank you for that one. I sort of think that we, our point was that if CSR is going to be seen as legitimate, both in host countries and among home country consumers, investors, employees, then it must be seen to be contributing to development in the broad, rather than just a footnote to it. And I think the claims of corporate social responsibility are often that companies, through their supply chains can achieve things which simple redistributions of wealth may not be able to be achieve or may be insensitive to.

In that sense, I stand by the expectation for corporate behaviour. And I think that governments in developing countries, in as much as they started to try to encourage corporate social responsibility, they’ve often harnessed it to national development goals.

The most obvious case is that of China, which is encouraging CSR to complement societal goals and to assist export industries to better meet the expectations of target markets. Countries like Singapore, which is developed, but nonetheless is worth thinking about in this conversation as they very clearly link CSR with development goals. I suspect the link runs through other Southeast Asian countries.

Whether—it’s been over a decade since we suggested that hypothesis—whether there is evidence that we were right, I’m not entirely sure. But what we do know is that the language of corporate social responsibility runs through local supply chains. It often sort of reinvigorated discussions of business norms and discussions around ethics.

So, in India, where there had been longstanding ethical norms on behalf of business people which then morphed into business philanthropy, that’s, if you like, been a very positive way of them integrating the spirit of philanthropy with doing the business more responsibly. To that extent again, I think that CSR is a way of managing and professionalising an ethical instinct. And over a decade of work in India, there is something happening there which I would regard as positive.

As always with these sorts of things, the challenge is getting these innovations and solutions to scale. And I think the challenges lie there for companies who really should use the Bangladesh situation to go to scale on standards enforcements, safety standards in factories. Why not?

SB: So actually using something that’s quite a tragic event to achieve motivation and momentum to affect change.

You mentioned there around the development in CSR and the development of government agendas and you mentioned in India you’ve seen a reinvigoration of ethics. You’re in Melbourne as the visiting Gourlay Professor of Business Ethics at Trinity College. Recently in Australia, business ethics has begun to be better integrated into MBA curriculum. At MBS, for example, there is now the Asia Pacific Centre Social Impact Leadership Centre and LaTrobe University has made a business ethics course part of its core MBA curriculum and signed onto UNPRME. Why do you think MBA programs are only now acknowledging ethics as a key component of the ‘business leaders’ toolbox’?

JM: A very interesting question and something that I’ve done some research on. I’ve done some surveys at business schools. And scratching my head, I’d say the following.

Yes, there seems to be a greater interest in this, in as much as our surveys tell us. Quite often, initially, the impetus came from interested members of faculty who were banging on the Deans’ doors, suggesting we do something here. And deans were probably a little sceptical but interested. And so they thought they’d better look at it.

And I think there is, to some extent, student demand, though I wouldn’t exaggerate it. I think students go to business school to get the qualification, to get a good job, to make some money. But nonetheless the survey suggests that student demands are there.

I think one big change in the last five to six years is that the accreditation agencies are paying more attention to this and obviously organisations like the United Nations give an imprimatur to ethics in business. And I think the UNPRME (United Nations Principles for Responsible Management Education) is a potentially useful learning device and a learning opportunity among business schools to examine how and why they should do it. But I think there are some real difficulties with it. Number one, as I’ve already intimated, the students go there with an expectation that this is a route to making money. And this is how business schools are often sold. And indeed, one of the means of judging their behaviour is, according to the Financial Times MBA Index, salary progression is the major component of the index. Read into that what you like.

SB: Harvard Business School has been very open in saying that they aim to get people very early in their career so that when they graduate and experience career progression, they’re more likely to attribute it to their Harvard MBA.

JM: Exactly. And this is a complete disincentive to educating students from developing countries. Because they will not have dramatic leaps in their salary if they return to their countries.

I think also, it’s very hard to take seriously this ethical or responsible business education. One can teach frameworks quite easily. Ethical frameworks models, citizenship models. One can teach models of practices quite well. But it’s very hard to imagine how you would affect somebody who was in your class and, in ten years’ time, had a critical decision to make, and who presumably, this is the long term objective of those who want to put responsibility into business education –that it might have a profound effect on decision making over generations.

And I don’t really know what the solution is. Obviously, you could say, “Come back and have top-up education.” But then you might have to defend self-interest – Business schools love the idea of executive education.

SB: The boomerang student?

JM: Yeah. I actually suggested in another forum that business schools should see the follow up education as more of a service than a cash opportunity, as universities often do in other regards.

I think there are also other ways of thinking about teaching. And it’s not sitting in classrooms and doing case studies. It’s giving students experiences which might have some longer term impact. Either simulating hard decisions or through group exercises, game plays. I use film at Nottingham. I have an annual business and ethics film festival, just trying to get people thinking in slightly different ways, thinking about business and ethics. And also experience itself, but mediated by an educational imprint. A big challenge for us and obviously, a lot of work still to be done.

SB: And on the note of a lot of work left to be done, in your lecture at the Melbourne Business School last Wednesday, you debunked the usual arguments put up against corporate social responsibility—namely the Friedmanite ‘the business of business is business’ position, the ‘logic’ of unregulated markets and the notion that CSR may be a means of ‘corporatising’ the political—to argue that business can and should be socially responsible. In the coming decade, what do you think are the priority actions businesses can undertake to be socially responsible?

JM: I think there’s still a lot of work – incidentally, predicting the future is a fool’s game and I know this as a supporter of cricket and rugby teams.

I think there’s still a lot of work to be done around the notion of doing business responsibly. That’s being done more widely and I think that’s good. And understanding how to do it responsibly is fraught.

And I was talking with colleagues today about the financial crisis. And clearly in the crisis there was ignorance, myopia, general misunderstanding , as well as circumstances which led to the financial crisis, as well as what you might describe as unethical or  irresponsible behaviour.  So, I think some of the impetus could be still turned to more collective action solutions beyond the simple and relatively modest ethical trade partnerships and the like.

I think addressing the issue of scale improvements, which would have business benefits through improving social and environmental quality in which rests business opportunities. So, I think improving the conditions for business success around social and environmental welfare, sometimes you need a bit more joined up thinking between companies than has been witnessed to date. But I also understand that the more that CSR is integrated into company strategy, the more it’s seen as ‘competitive strategy.’

SB: It’s really interesting in Australia, with the prevalence of the mining industry, we’re just starting to see in certain areas where mines are proximal to one another, certain companies are coming together to address what we term in social impact assessment ‘cumulative impacts’. You have this accretion of mining effects. So it’s quite interesting now that mining companies are just beginning to express a willingness to work together, but they’re seeing it as essential in order to maintain what they’re terming their ‘social licence to operate’.

JM: Yeah, I think that’s exactly right. And I think social licences to operate are not just firm specific, they’re also business in general. And the worst case is that people who go into riots or anti-corporate activities usually are not singling out a particular company, sometimes they are, but quite often they are just attacking ‘big cars’ or ‘shopfronts’ willy nilly. There are exceptions. But I think the ‘cumulative impact’ is a nice way of summing it up.