PPD1 – portfolio 2
Corporate Social Responsibility within Phillip Morris (USA and International)
Word Count: 1867
I will in this essay assess the efforts of the two chosen companies, Altria’s Phillip Morris USA and Phillip Morris International, in Corporate Social Responsibility (CSR). Before tackling this, a brief explanation of CSR and its introduction in the companies will be provided. Thereafter, I will deal with domestic issues within the United States regarding health deterioration caused by tobacco, state intervention and youth smoking prevention, by assessing how Phillip Morris USA has dealt with these. While these CSR issues mainly deal with the consumption of cigarettes - I will afterwards move on to the other company, Phillip Morris International, and evaluate CSR efforts relating to its supply chain. This discussion will mainly entail the issue of abusing labor. Make note, that the two companies used to be one, but were split in 2008. However, they created their CSR policies as one, and still share similar views on it, so for the purpose of this assignment, they will be treated alongside one another.
In order to discuss Corporate Social Responsibility, a definition must be provided, as the term has undergone much debate through time. CSR is by Griseri & Seppala (2010) broadly defined as “the accommodation of corporate behavior to society’s values and expectations”. CSR goes beyond legal and economic responsibility, which is the important distinction to make. Within Phillip Morris USA, CSR was introduced towards the end of the 90s, when in 1997 the “PM21” public relations strategy was launched (Hirschhorn, 2003). In the preceding years of the launch, the company had been suffering from an increasing number of lawsuits from US state attorneys, arising from public protest against tobacco products and their harmfulness. PM21 “intended to burnish the company’s image by stressing its humanitarian and environmental good works” (Hirschhorn, 2003), or in other words, the company wanted to improve its public image by switching the focus from their lethal products to their good deeds and efforts. One might deem this corporate identity change as an immoral way of winning back the trust of consumers - to encourage them to carry on smoking cigarettes. Heavy criticism of Phillip Morris’ attempt at CSR came in part from the World Health Organisation (2003), outlined in a report appropriately titled “Tobacco industry and corporate responsibility.. an inherent contradiction”. The Tobacco-Free Initiative, within the WHO, argue how all attempts at CSR by any tobacco company cannot be taken seriously along with other consumer good companies, as tobacco is the only product that in fact kills fifty percent of its regular consumers (WHO, 2003). One may therefore argue that tobacco companies should take CSR even more seriously, as their final products directly kill its consumer and deteriorate health and life expectancy. Phillip Morris USA carries the largest proportion of this responsibility as it, in the USA, possess 49 % of the market share (PM USA, 2011).
Phillip Morris USA have also continuously been involved in trouble with the US government, as reducing tobacco consumption remains of highest priority to the state. This has created a special legal framework for the tobacco industry, forcing them to deal with the ethical issues of tobacco consumption. The most important deal ever to be made in history is the Master Settlement Agreement (MSA) signed November 1998, which changed the way tobacco products are advertised, marketed and sold in the US (PM USA, 2013). Since over 80% of adult smokers start when they are under 18, youth smoking prevention was the biggest issue in the agreement (CDC, 2012). With regards to this issue, Phillip Morris USA has adapted several business practices, beyond the ones mandated by law, to discourage youth smoking. These for example include, age-verification tools, signage to warn...
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