Special Trademarks For Everything

Published Date: 02 Nov 2017

Table of contents

Executive Summary

Inhoud

1. Introduction

Nowadays we have special trademarks for everything, whether you want to buy a table that is produced sustainably with a FSC trademark on it or you want a cup of tea with the Fair Trade brand on it. In the act of making product choices anywhere in their lives people now depend a lot on these trademarks and brands in order to be assured that the choice they make is a good one. The past few months I came into contact with these brands since they are offered more and more on the shelves of the supermarket as well as on the internet and in commercials.

Yet not all these publicity is always positive, the last year there were some key incidents that attended me to the fact that these quality brands were not totally performing like one would think. For example het Nederlands Dagblad (Donkerlo, 2012) performed an investigation to MaxHavelaar FairTrade chocolate, which is known as good chocolate for which the coffee farmers get a good price. Yet, research from this newspaper showed that a lot of farmers did not even know that they were part of the MaxHavelaar chain and therefore did not receive a good price for their cacao beans.

This is not the only case, also in the business world there is a lot of use and abuse of quality and responsible trademarks that are used and misused. Sometimes it is unclear to the buyer what the trademarks stand for, how difficult they are to obtain and how strict they are controlled. In the following report I will investigate the ISO 14001 norms and how they are used and abused. Furthermore I will take a ISO 14001 case and perform a business ethics analysis, give recommendations and portray lessons learned.

2. Methodology

For this report an inductive research approach has been used in which variety of sources including books, webpages, and academic research has been included. Also, the incredible knowledge from my father about VCA, NEN and ISO norms have been exploited. This report has a main focus on the theory that was explained during the Corporate Social Responsibility classes. For the inductive research the main information was obtained from EBSCO Host, Google Scholar, company websites and my father.

The previous mentioned sources were used to explore the theme and filter the relevant information from the appropriate information. Finding a relevant case with concrete CSR benefits or failures was hard to find, yet the IBM case describing the practice of implementing the ISO certification gave insights into the ISO accreditation process. This process and the corresponding benefits and negative aspects of this process and its outcomes are evaluated according to the deontology, virtue ethics, consequentialism and contractarianism. From these practices conclusions will be drawn and recommendations given for practical business application.

Also, my perspectives on the CSR will be given considering previous views and newly formed views due to the informative lectures.

3. Definition of CSR

There are many terms in how to describe the activities you perform to create a better world for yourself and the people around you. As we learned in class the term Corporate Social Responsibility has been changed throughout the years and currently the term Corporate Responsibility is widely used in sustainability reports from the major players. This vagueness in sustainability is destined provide give a grey zone and ambiguity between what is right and what is wrong, and is totally up for personal interpretation.

Nothing is more open to interpretation than ethics. I dare to argue that no two people in this world will have exactly the same view on ethics or what is right or wrong. For that reason, this chapter aims to give a clear picture of my own view on CSR. Before analyzing the case, I would like to introduce the reader to my own opinions and views, so that they can put my analysis of the case into perspective. This chapter should be read as a definition on CSR within the framework of this report. In addition, it describes what I learned in class and how my views have changed.

3.1 Initial personal views on CSR

I grew up in a family with a father that was highly involved into sustainability and responsibility towards the environment. In our house I was constantly reminded to turn off the light and switching off the heating after leaving the room because of the environment impacts it has. Also, my dad bought solar panels the minute they were on the market since he believes people have an obligation to reduce the pollution they create in any way possible. Another example of my fathers’ responsibility fetish is that at our house we separate our waste into, normal waste, vegetable and fruit waste, plastics, batteries and chemicals. Due to these practices that I was taught by my father I developed a similar interest for ethical responsibility towards the world which we need to preserve and make the best out of it for future generations.

Still, this view has slightly changed which is partly due to the financial and profit focussed approach that is being taught here at the International Business School. Courses like financial / management accounting and Stock markets aim students to maximize profits and adhere to shareholder expectations instead of stakeholder expectations. It was a strange thing that this approach which was deeply rooted in my system to preserve the environment before making profits changed into pursuing profits before my own deep rooted values.

3.2 Knowledge acquired during class

During the first lessons of the classes of Corporate Social Responsibility we were introduced to the history of CSR which immediately drew my attention to the great variety in which CSR is interpreted throughout businesses and other bodies. As stated before during the classes of other courses we were taught to run a business from a shareholder point of view and adhere to the wants and needs of these shareholders. The CSR classes gave me a far larger scope on which to interpret CSR and how a company can influence the impacts a business has on the environment in a broad sense.

Another interesting fact that was made apparent during the classes was that it is important to ask yourself the question what is the function of the economy within a society. If this is merely the creation of wealth for stakeholders (Smith, 1759) or like Milton Friedman (Lall Ramrattan, 2008) states: the main purpose of a business is to increase profits, there is no place for social entrepreneurship. Yet, like Friedman states is that increasing profits is social responsible since it increases the standard of living for many people from a utilitarian point of view. This raised my awareness about the various stakeholders that are involved in a business and which are being affected this company.

Furthermore I was very glad to be offered a framework in which I could place my ethical views. I always had a strong opinion on ethics and now I was able to put these in a framework of 4 different points of view namely, the utilitarian, virtue ethics, deontology and consequentialism. Although ethics is still a very objective study that is totally open for own interpretation I can now put practices of companies in a certain model to assess the positive and negative sides from my point of view. These lessons did not only invoke discussions in class but also in my living room about various business practices and cases that are current news.

3.3 Developed New perspectives (lessons learned)

I can state that my individual view on CSR and ethics has not changed dramatically during the CSR classes. I always had the opinion that people have the societal duty to contribute to the community by working and creating wealth but also have the moral duty to provide for a good and comparable living environment for the generations that are yet to come after us. This view has not changed during the classes and was maybe even emphasized. Especially due to the interesting presentations that were given during the last weeks of class more and more awareness was generated on the malpractices of certain companies that only acted out of self interest and even when they had a sustainable approach this was not a legitimate approach but merely an extension of their marketing efforts (Bhattacharya, 2009).

Due to the various views on CSR, ranging from a laissez fair to shapers of society, people handle approaches to what is right and what is wrong (Gerry Johnson, 2008). Still, it is great to be able to put this in the above mentioned framework of ethical views for sense making and to make ethics a little bit more objective.

4. What is ISO 14001

The ISO 14001 norms are a set of specific requirements that combined assemble a environmental management system. This system will aid an organization or company to conform to the standards considering legal issues, policies and objectives with regard to environmental principles. Companies will identify the divisions and activities within the organization which they can control and on which they can perform a certain influence. Although the ISO standards do not specify certain standards or performance objectives to which the companies have to commit, yet they guide companies into becoming more environmentally aware.The main objectives most companies pursue is to become both more efficient in their supply chain and therefore earning higher profits as well as doing good for the environment. Therefore the ISO norms involve quite a lot of internal as well as external stakeholders that are being addressed and the goal of implementing the ISO norms have both principles involving the concepts of Freidman as well as Freeman aspects: profit can be a driver, but also other important stakeholders like customers.

The ISO norms can be administered to any organization that is willing to incorporate an environmental management system into their business regardless of their industry or sector. This management system will aid the company to improve environmental policies, help business units stick to these policies and control conformity to ISO 14001 by the guidelines and seek for rectification by third parties (ISO, 2012).

4.1 Motives for certification

Using ISO 14001:2004 can provide assurance to company management and employees as well as external stakeholders that environmental impact is being measured and improved.

Companies, governmental bodies and customers in today’s world are increasingly more aware of their environmental footprint that they have on the world and are inclined to reduce this to provide for a better world in the future for next generations. The most important objectives for companies are to become more effective and efficient, increase the output per unit but at the same time keep profits up and keep stakeholders satisfied (Hanson, 2012). For these reasons the ISO 14001 could provide the following benefits: Reduced costs of waste management, decreased costs of distribution, the image of the company is enhanced for stakeholders and consumers and reduction in energy and materials costs. The implementation of the ISO certification follows the Plan, Do, Check, Act (PDCA) model (Deming, 1982)

One of the main benefits of ISO accreditation is that it is universally accepted and that increasingly more companies bind themselves to these approaches and therefore construct an awareness on environmental awareness throughout the world (Philip A. Marcus, 1997).

5. The ISO 14001 issues at IBM

The IBM environment report describes various areas of sustainability, of which one is their environmental impact. Considering the CO2 reduction they report that they plan to achieved a 11.5% decrease in CO2 emissions for the year of 2010. The actual reduction that was achieved in 2010 was even 16.7% (IBM, 2010). IBM reports that this objective was a real achievement since they did not only meet their goals but even was able to set the bar higher and decrease their CO2 emission by a higher amount. The problem here is, who checks what IBM achieves and how this is achieved. One of these bodies that provides monitoring for these goals is the ISO 14001 certification (ISO, 2012).

The ISO 14001 is a voluntary certification and has a focus on environmental impacts in the designated company of which CO2 emissions is a key driver of performance. In the year 1997 IBM was the first company to be accredited for the global Environmental Mangement System standard (EMS). To be able to hold on to this accreditation IBM had to be audited yearly on twenty different manufacturing plants that were chosen randomly (IBM, 2012). Although the accreditation and auditing companies that perform the audits cooperate with the ISO and are independent companies there are still some issues that are at hand (ISO, 2012).

For example, the registration as the global EMS standard does not mean that all the strategic business that are being operated and products that are created under the IBM umbrella also qualify for this standard.

From the Q&A of the environmental section of IBM we learn the following (IBM, 2012).

Q: Does this single registration mean that IBM's products are certified to ISO 14001?

A: No. ISO 14001 is an Environmental management system standard, not a product labeling standard. ISO 14001 registration does, however, include IBM's management system for developing and manufacturing products with improved environmental attributes, but it does not certify the resulting products nor is it product specific.

This information explains that a lot of IBM’s business units and activities do not meet the ISO 14001 criteria in terms of CO2 reduction since they can be in an entirely industry of IBM. Moreover, the total supply chain of IBM is also not taken into account. It is very possible that outsourced activities and various raw materials and parts made for IBM are made by companies that do not meet the requirements. The possibility is there that the least environmentally unfriendly business units gets audited and receives a positive certification from the ISO partners while the other business units or stakeholders in the supply chain are performing at a much lower, unworthy for certification, level of ISO 14001 standards.

Via this way IBM can promote their whole business as ISO 14001 certified while it is actually not performing up to standards throughout the supply chain including its suppliers. Yet IBM has adhered to this problem by sending out letters to its suppliers asking to support the ISO standards and comply with the same principles. Of course this is a good initiative but it does not really make IBM a sustainable business throughout and can be considered as a shabby attempt to seem sustainable. This letter is also stated as a request and therefore IBM does not penalize or break bonds with suppliers in case they do not comply with the ISO standards. A good starting point and intrinsically admirable motive for IBM to do is give the ISO partners to also audit the suppliers and partner companies that are in the supply chain of IBM to be certified, or not. In this case the ISO 14001 certification would give a better insight into the real environmental impacts of a company and be a lot more credible and valuable.

Also the ISO certification process has implications, as mentioned before the ISO partners only audit 20 business sites. In a business like IBM with more than a hundred offices, manufacturing plants and sites scattered around the globe this could have some reliability and validity issues (Saunders, 2009). I could be that only the offices in The Netherlands are subject to an audit which would not for a reliable sample. One way to tackle this problem would be for the ISO to publish this information which sites they audited and why.

6. Theoretical framework: perspectives of CSR

In the following section analyzes the IBM ISO certification situation according to the four part theoretical framework of consequentialism, utilitarianism, contractarianism, deontology and virtue ethics.

6.1Consequentialism

Consequentialism describes how people should behave in a variety in situations. These actions are graded to have either good or bad outcomes. ‘’Consequentialism, as its name suggests, is the view that normative properties depend only on consequences’’ (Sinnott-Armstrong, 2011). Therefore only the consequences of the actions of IBM are being considered.

Applying the consequentialist point of view in the IBM case it can be said that it is positive. The results that were obtained from the ISO 14001 certification considering the CO2 achievements are evident: IBM planned to reduce their CO2 emissions for 2010 by 11.5%, but even managed to decrease is their emissions by 16.7%. Also they redesigned their business to be more environmentally friendly and sustainable. IBM has shown great initiative in engaging into the costly certification process to improve their business practices for the common good. Consequentialism does not look at the motives for which a business started a process or action but only judges the outcomes of the action, which in this case can only be graded as positive.

From an utilitarian point of view, which is part of consequentialism, that approaches activities from a cost/benefit analysis it can be said that IBM is doing quite well. The people that are affected by CO2 emissions, jobs created with the implementation and certification of the ISO 14001 in the long run are far larger than the amount of people that would incur disadvantages from this action.

6.2 Contractarianism

Contractarianism is an ethical point of view in which stakeholders have a mutual written or unwritten agreement that is meant to produce the greatest benefits for everybody involved. On one side there is the egocentric person that only acts out of self-interest, not thinking about what the implications might be for the group as a whole. When stakeholders do business, a social contract is established in which people, from a contractarian point of view, will have to give up certain rights to provide for the greater good of the stakeholders.

In the case of IBM they decreased the CO2 emissions and therefore the pollution to provide for the greater good of the people around the business and the world in general. Although they incurred costs in achieving this goal, they still had the ethical view that it would foster a better world. IBM gave up the right to pollute and therefore increase profits in order to improve the environment. This could be seen as a true contractarian act.

6.3 Deontology

The ethics approach of deontology treats an action as right or wrong and combines a duty to do something or a duty to incline to do something with a certain right. Also a specific limit is found up to which standard a company performs its duty. The categorical imperative (Kant, 1785) gives another view on a situation in which a sense of duty arises from reason or rational nature (Inja-Murphy MJ, 2012).

In the IBM situation the right for the company is to sell their products and the company with the ISO 14001 certification and receive the benefits from this. In return as a duty IBM has to adhere to the guidelines of the ISO and the partnering organizations that perform the audits. Which IBM does and therefore is, from a deontologist point of view active in good practices.

When Kant’s categorical imperative is taken into account it is said that IBM complies with the universal law formulation and sets a good example in engaging in an ISO certification and establishing an environmental management system. Yet in my personal opinion I think that IBM is using the ISO certification as an extension of their marketing toolbox and therefore uses humanity as a mean to develop profits instead of an end for which IBM develops a better future with their new practices.

Therefore, again, ethics has many sides and is often ambiguous as can be seen in this case.

6.4 Virtue Ethics

Virtue ethics looks at what the motives are of a company to behave in a certain way. What the final consequences are does not matter in this theory. In the virtue ethics world there is only good or bad and is therefore very judgemental.

As a virtuous person would act in the place of IBM they would do the same. They would cater for a environmental management system like the ISO 14001 yet they would implement it in such a way that the whole company be sustainable and not only parts of the business and receive credit for that. Also they would demand from their suppliers to do the same to increase the sustainability within the whole supply chain to benefit all the stakeholders involved.

IBM therefore does not comply with what a totally virtuous entity would do and is therefore not obedient to the virtue ethics principles. IBM receives the benefits from the ISO certification but it engages in a vice by giving some customers the idea that the total operation of IBM is ISO complaint, on purpose or not.

7. Conclusion and recommendations

Based on empirical research results it can be stated that implementing environmental management systems lead to increased corporate environmental responsibility. This responsibility translates into organizational and individual behavior leading to achieving the goal of developing an economy based on friendly environment through reducing climate change effects. The trend of ISO 14001 certificates and their effects on climate change are the proof regarding the effectiveness of environmental management systems in combating climate change. In addition, to prepare the ground for an easy implementation of ISO environmental standards, it was envisioned and built an environmental responsibility model. The model comprises of three elements ISO 14001 management system (implementation), climate change (reduction) through ISO 14001 implementation and, organizational culture which will support the implementation and the reasoning for climate change (ISO, 2012).

7.1 For companies

ISO 14001 will help companies scrutinize their environmental performance and

operations. It requires that a company develop an environmental policy, set objectives

in order to meet the policy, monitor progress towards objectives, mitigate

environmental problems and continually revise the environmental management system

(EMS) in order to ensure continual improvement of environmental performance.

7.2 For IBS

On a side-note, also recommendations for the International Business School were made. Over curriculum that is being taught at IBS there is a lack of Social Responsibility courses and learning outcomes throughout the 4 year study period. Especially in the more profit and financial focused courses there seems to be little effort to educating students to act in a social responsible way. A lot of times students are aware of the fact that there can be consequences involved with their actions in future positions that can have radical implications yet do not know how they can avoid these. Also, as stated before, the main focus in these areas is from a shareholder point of view instead of a stakeholder point of view. It is advised that the International Business School should revise its teaching practices and if necessary educate teachers to give them the necessary baggage to transfer the necessary knowledge corresponding to the subject but also involve CSR in their teaching methods. It is then up for the students what they do with it.

Implement a CSR part in all the courses especially in the more profit focused subject areas.