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Jun 10, 2008



Re Andrew's point and with the righteousness of a former smoker:
BAT makes a product that is known to kill hundreds of thousands of people around the world. There isn't much they can do in the "business" or "consumer" layers of their corporate activity that can compensate for that. As BAT is fundamentally evil for dealing death, ethics are irrelevant. Make sense?



As much as I believe ethical rankings tables are a wonderful tool for companies in terms of benchmarking ethical performance, as well as being useful to the general public in terms of holding corporations to account, they have their limitations, and in some cases, may prove to be misleading.

One example is British American Tobacco. For six years running, the company has been included in the Dow Jones Sustainability Index, based on social and environmental performance. In 2007, it achieved a third place ranking out of the FTSE 100 companies in the Ethical Bonus Index 2007, as well as a gold ranking in the "Companies that Count' 2007 list of the United Kingdoms most responsible companies, published by the Sunday times.

One could look at such a record and conclude that British American Tobacco was a responsible company. That would be misleading. In South Korea, a tax office investigation recently found that the company had engaged in tax evasion to a value of about $USD 60 million over a five year period from 2001-2005. The investigation found evidence of falsified invoices as well as evidence that the company had paid bribes to a tax official to 'overlook' the problems. In Nigeria, the government is taking legal action against the company for allegedly promoting cigarettes to underage smokers. In Hungary a consumer protection agency fined the company for breach of advertising regulations, and in 2003, the company was fined for involvement in a price fixing scandal in Italy.

Ethical rankings tables are a useful tool for measuring the ethical performance of companies. But, as you note, readers should exercise considerable caution in interpreting the results of such tables.



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