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A Theoretical Discussion of the Ethical Issues of CSR and Sustainability in the Tobacco Industry: A case study of the British American Tobacco 2008 Sustainability Report

BA-Thesis - Summer 2010

A Theoretical Discussion of the Ethical Issues of CSR and Sustainability in the Tobacco Industry -

A case study of the British American Tobacco 2008 Sustainability Report

By: Anders Wedendahl, BaMMC - 2010Mentor: Karen M. Lauridsen

Table on Contents:

BA-Thesis by: Anders Wedendahl of 32


1 Introduction........................................................................................................................................3

1.1 Thesis Statement......................................................................................................................5

1.2 Theoretical Framework........................................................................................................5

1.3 Methodology.............................................................................................................................. 6

1.3.1 Theory of Scientific Method – Kuhn’s Paradigms.............................................7

1.3.2 Brief Overview of Thesis structure.........................................................................8

1.4 Delimitations............................................................................................................................. 8

2 Stakeholders and Publics..............................................................................................................9

3 The Semiotics of CSR and Sustainability.............................................................................11

4 Ethical Discussion on Sustainability and CSR...................................................................12

5 Creating a Market for the Sustainability and CSR concept..........................................14

6 Using Assurance Programs to Build Credibility...............................................................17

7 A Discussion on the Effects CSR and Sustainability Reports have on Business

Performance………………………………………………………………………….19

8 Future Prospects for Sustainability and CSR Initiatives in the Tobacco Industry

................................................................................................................................................................... 22

9 Conclusion........................................................................................................................................ 27

10 Summary.........................................................................................................................................29

11 Bibliography..................................................................................................................................31

12 Appendices.................................................................................................................................... 32

Total Characters: 54.136



1 Introduction The field of Corporate Social Responsibility (CSR) in business has become an almost

unavoidable concern and focus for large global companies as well as for small to

medium sized enterprises (SMEs). This is seen through the growing amount of reports

published by companies worldwide. “…2008 confirms an increasing trend in the

evolution of sustainability reporting…” (Blanco & Souto, 2009, p.167).

The British American Tobacco Company (BAT) is no exception, and the company

has published its CSR reports since 2002 (www.bat.com). The increasing focus from

the public on the tobacco industry and the health risks associated with its products,

give rise to ethical questions on as to why they are conducting CSR and sustainability

reporting. Thus, a discussion on BAT and its engagement and investment in CSR and

sustainability reporting poses several ethical questions which this thesis will discuss.

Moreover, the field of CSR and sustainability is a hot topic for scholars at all major

business universities. Together with the growing debate on global climate challenges,

renewable energy sources and a general public concern for the world’s environmental

condition, the rising population number and a natural reaction from global companies,

it seems only fair that companies take part in this debate and act upon these societal

and political tendencies. This notion is supported by Aras & Crowther who claim “…

the impact of corporate activity upon society and its citizens – as well as stakeholders

including the environment – is considerable and has an impact not just upon the

present but also upon the future.” (Aras & Crowther, 2009, p.279). Hence, the

exponential growth on CSR reporting should not come as a surprise to anyone

involved in the global business environment.

The content of these reports varies greatly. Therefore, the need for a global

standardisation for CSR reporting is called upon in order to gain a more transparent

look into the different companies’ CSR activities. This lack of transparency is one of

the general concerns from major stakeholders as Blanco & Souto note, “They

stakeholders are concerned that the existing CSR obligations are insufficient and

voluntary CSR programs are inadequate.” (Blanco & Souto, 2009, p.161). In this

case, the World Health Organisation (WHO), who is one of BATs major stakeholders,

is reaching out towards BAT for a more open discussion on their CSR reporting and


http://www.bat.com/


for a more transparent communication towards other major stakeholders. Moreover,

they question the ethical issue of tobacco companies and their CSR work as they state

in one of their reports:

“The business community, consumer groups and the general public should join

policymakers and the public health community in being more vigilant and

critical about tobacco companies’ CSR activities. Because, despite the

industry’s claims, there is little evidence of any fundamental change in their

objectives or their practices” (App. 1, p.10)

Moreover, the field of sustainability, which falls under the category of CSR, has

become an important issue when discussing corporate ethics, values, beliefs and

culture. Hence, there is reason to believe that business performance may be enhanced

for companies adopting CSR versus those who do not. I shall give a more thorough

explanation on what is meant by business performance later in the paper, and discuss

whether there is reason to believe that CSR and sustainability reporting affects

business performance.

Thus the growing interest for CSR engagement in the business environment leaves

many questions to be answered. The general concern for the lack of a standardisation

within CSR reporting and the vagueness of CSR as a concept and field within Public

Relations (PR) opens up for an interesting theoretical discussion on especially the

ethical issues of CSR reporting. As Laufer notes “Unsubstantiated and unverified

social and environmental disclosures often amount to little more than public relations

– issued to manage public perceptions, to respond to public pressure, or to react to

perceived public opinion.” (Hooks et al. 2002; Adams, 2002 in Laufer, 2003, p.255).

Hence, without clear guidelines and a strengthening of the CSR and sustainability

concept there is good reason to question its validity.

With BAT being viewed as a company with a rather controversial product, namely

cigarettes (App. 2), one might ask whether it is ethical to accept and honour BAT with

rewards on their CSR reporting and accept their initiative towards becoming a

globally accepted corporate citizen (App. 2, p.5). WHO is, as mentioned, a key

stakeholder of BAT, being a large stakeholder with a very strong political agenda on



tobacco and smoking. Hence, WHO questions the legitimacy of BAT as a CSR and

sustainability reporting company.

Moreover, it is an interesting discussion whether the field of CSR and sustainability is

a mere question of portraying a caring company, through the use of strong discourse,

semiotics and if the assurance of legitimate corporate social responsibility is simply a

way to generate a new area for business to take place. Within the field of CSR, and its

practising scholars, there seems to be a rising scepticism towards the field and hence,

a questioning of the ethical background for a tobacco company as BAT to take on

CSR as eligible.

Therefore, it is interesting to further investigate the ethical discussion of the field of

CSR and sustainability. Using BAT as an example can help develop the discussion in

that it is a large global company (App. 2), and one that is challenged by one of the

largest political organisations in the world. Furthermore, the nature of BAT’s product

gives rise to questions on its attempt to be viewed as a corporate citizen. Moreover,

the attempt of BAT to reach out to WHO opens up an interesting position, namely that

the cooperation between companies and stakeholders could lead to a more transparent

CSR work, and thus create a better chance of enhancing business performance.

1.1 Thesis Statement Using British American Tobacco’s 2008 Sustainability Report as an example, I wish

to conduct a theoretical discussion on whether it is ethical to carry out sustainability

and CSR reporting when your product is of a controversial nature and if such a report

in theory could have an effect on BAT’s business performance?

1.2 Theoretical Framework To answer this thesis statement, theoretical knowledge is presented and applied to

BAT’s sustainability report. This knowledge consists of theories and concepts from

the field of public relations, semiotics and theory of scientific methods. Stakeholder

theory will be applied in order to identify the key stakeholder, whom the BAT

sustainability report concerns, in order to discuss the relationship between BAT and

its stakeholder and how this affects BAT’s CSR reporting. By applying theory of

scientific method and cultural theory it is possible to indentify the current context and



environment in which BAT operates. Moreover, by using semiotics, one is able to

gain an understanding of the communicative value of the CSR report, and thus better

understand the concerns key stakeholders have towards the ethical value of BAT’s

sustainability report.

Further theories and concepts from secondary data, hereunder Tench and Yeomans’

book ‘Exploring Public Relations’ will be used as it provides a more general

background and understanding of the field Public Relations. The book offers

historical aspects on corporate social responsibility, future trends for corporate social

responsibility as well as stakeholder theory.

Moreover, secondary data has been collected from articles and databases in order to

obtain more knowledge on the context and nature of CSR. Specifically, articles on the

ethical issues of CSR have been key to answer the thesis statement. The theory will

help elaborate on the discussion and thus provide the necessary background in order

to answer the thesis statement.

1.3 Methodology The background for this thesis began with the idea that the concept of CSR was

presented as a positive PR strategy chosen by many companies and that it is likely to

influence business performance, particularly the financial performance. Hence, I

started doing research on some of the ethical issues that I thought might come about

when corporations initiate these kinds of CSR initiatives. Moreover, the rising

awareness on the mortality caused by smoking and second-hand smoking made me

think of the tobacco companies and whether they were conducting any kind of CSR to

prevent the rising pressure on the tobacco industry and its lethal products. Yach et al.

state that, “The social, financial and legal pressure on the tobacco industry is

increasing through heightened public awareness, released internal documents

showing questionable ethical behaviour…” (Yach et al. 2001, p.193). This leads to an

examination of BAT’s Sustainability Report 2008 (App. 2). Moreover, reports from

WHO, were criticising the tobacco industry for initiating reports, and BAT was

particularly exposed in one of WHO’s reports (App. 1). Hence, it was an obvious

choice to use BAT as an example for a theoretical discussion on the ethical issues of

CSR reporting and engaging in sustainability practices. BAT has been accredited by



Dow Jones Sustainability Index (DJSI) for their sustainability report, which in itself is

an interesting perspective that I thought may increase the company’s business

performance. Being recognised by larger indexes would in my mind call for a

competitive advantage towards gaining more shareholders, thereby increasing

investments in BAT and moreover, it should increase the trust of shareholders. The

general perception of CSR and sustainability is that it creates value and adds to the

transparency and trustworthiness of corporations. However, given BAT’s product, it

seemed like an interesting case to investigate further. There were only limited articles

discussing the tobacco industry and its CSR and sustainability reporting. This appears

strange as there is a growing focus on smoking and the health risks associated with its

consumption, as noted above. The growing ban on public smoking in Europe and

developed countries, made me question the legitimacy accrediting indexes such as the

DJSI and Business in the Community UK add to BAT. From an ethical point of view,

it gives rise to scepticism and opens for discussion.

1.3.1 Theory of Scientific Method – Kuhn’s ParadigmsThe issues are then discussed and should be understood within the theory of scientific

method, using Kuhn’s paradigms. Kuhn’s paradigms are the point of departure

keeping the discussion within a theoretical framework that ratifies the existence of

CSR and sustainability reporting as a concept. As Chalmer notes, “…concepts derive

their meaning at least in part from the role they play in a theory…”(Chalmers, 1999,

p.106). Thus, the concept of CSR and sustainability are valid as long as they play a

theoretical role in the paradigm of business and economics. However, if the use of

Kuhn’s paradigms are to add to the understanding of this thesis, it is important to

understand the picture of Kuhn’s scientific progress which can be described through

the following never-ending scheme: pre-science – normal science – crisis –

revolution – new normal science – new crisis etc. (Chalmers, 1999). Chalmers

defines the paradigm as such, “A paradigm is made up of general theoretical

assumptions and law and the techniques for their application that the members of a

particular scientific community adopt.” (Chalmers, 1999, p.108). Thus, one must view

the CSR and sustainability paradigm and its application in accordance with that of the

business community, to better understand the intended meaning of this thesis. With

the theory of Kuhn’s never ending scheme and his paradigms, this thesis argues that



the CSR and sustainability paradigm due to its existing nature is situated in the crisis-

stage of the scheme. This crisis may lead to a revolution of the existing paradigm.

Thus, the discussion in this thesis should be understood from this scientific

methodological approach.

1.3.2 Brief Overview of Thesis Structure

The first part of the thesis focuses on BAT and its stakeholders, with a primary focus

on the WHO as a key stakeholder to BAT and one that can influence their CSR

initiatives. It is necessary to understand the stakeholder relationship in the field of

CSR and sustainability, as these reports are primarily made for and in collaboration

with the stakeholders of the corporation. Since, WHO and BAT are two players of

conflicting interests, it is important to look at their influences on each other when

discussing the ethical issues that rise from BAT’s sustainability reporting.

The second part, is a discussion that follows the ethical issues that have been raised in

the first part. Finally, a discussion of the previous findings will help to conclude on

the thesis statement. Hence, a greater understanding of the ethical issues linked to

CSR and sustainability reporting that exist for corporations such as BAT will be

understood. Furthermore, the future complexities that follow from such reports should

be recognised with the notion that the transparency and explicitness of the reports

should be a main focus that is possibly solved through better stakeholder engagement.

Moreover, a discussion whether or not there is a business performance benefit from

engaging in CSR will help conclude on the thesis statement.

1.4 DelimitationsQualitative research could have been conducted specifically towards BAT and

perhaps show how their sustainability report directly affected their business

performance. Moreover, a qualitative examination of their stakeholder perception of

the ethical issues of BAT’s sustainability report would give a more detailed picture of

how BAT’s CSR involvement is perceived. Even though this is discussed in the thesis

and a feasible answer is provided, the use of BAT’s sustainability report 2008 should

merely be seen as an example of a corporation with controversial consumer goods and

a corporation that faces ethical issues given the nature of its products. Moreover, the

whole concept of CSR is not covered in the thesis because the field of CSR covers a



large set of areas, from health issues and environmental impacts to societal matters

(Tench & Yeomans, 2006). Discussing CSR from these perspectives may result in a

different conclusion which either supports this thesis or counter-argues it. Moreover,

it would have been possible to use another stakeholder to explain the ethical issues,

but WHO provides the sharp contrast and substantiates the discussion. Moreover, the

restricted amount of space in the thesis justifies the exclusion of the above-mentioned

delimitations. In addition, the accessible theory and number of articles on ethics

within the field of CSR and the tobacco industry were limited. Hence, a very narrow

discussion is kept on the field of ethics of CSR and sustainability in the thesis.

2 Stakeholders and PublicsThe stakeholder theory is briefly introduced, merely to give an understanding of the

problematic nature BAT faces and to support the problem statement. Stakeholder

theory is fundamental to PR, in that an organisation must know its stakeholders and

publics in order to produce the right communication through its PR. Moreover,

understanding stakeholders gives an important insight to the production of CSR and

sustainability reports as these are targeted at stakeholders.

To be able to understand the influence of BAT’s stakeholders and how they possibly

influence the ethics of business, it is necessary to give a definition of stakeholders.

Tench and Yeomans define stakeholders as, “…stakeholders are those who influence

or can influence the organisation as well as those affected by it. … employees and

their trade unions, financial investors, customers, suppliers, distributors, the local

community, local and central government, industry groups and the media” (Tench &

Yeomans, 2006, p.241).

In this thesis the main focus is on WHO as one that is able to influence BAT both

directly and indirectly. WHO directly affects BAT’s business in that they question

BAT’s CSR initiatives directly in their reports. E.g. the WHO report; “Seeing

Beneath the Surface: The Thruth About the Tobacco Industry’s Youth Smoking

Prevention Programme” (App. 4). In this report WHO directly questions BAT’s work

and claims that their programmes do not have the intended effect on the youth.

Moreover, BAT is indirectly affected by WHO’s governmental work. WHO has



created “…the Framework Convention on Tobacco Control…” (WHO FCTC) (App.

1, p.9). The framework has been adopted, by multiple governments and it is a step

backwards for BAT and perhaps its business because it promotes anti-smoking

campaigns and bans on smoking in public places. Moreover it sets standards for the

marketing efforts of the tobacco industry, and therefore BAT. In the BAT

Sustainability Report 2008 BAT states, “However, engagement with stakeholders who

are the most critical of the tobacco industry remains a challenge… Many of these

stakeholders either will not, or feel they cannot, engage with us. Similar views are

also reflected… by government parties to the World Health Organisation’s

Framework Convention on Tobacco Control…” (App. 2, p.5). This statement provides

an understanding of the challenge which BAT faces in its sustainability practices.

Moreover, the statement underlines the fact that stakeholders of BAT do not wish to

engage with them because of the business they practice. Hence, an implicit reference

may be applied to the ethical concern which some of BAT’s stakeholders have

towards BAT’s tobacco products. Moreover, WHO questions BAT’s sustainability

report in the statement, “… tobacco industry programs that seek to contribute to a

greater social good urge the question: how can tobacco companies reconcile their

main aim, to gain maximum profit by producing and selling a deadly product, with the

goals of CSR: business norms, based on ethical values and respect for employees,

consumers, communities and the environment?” (App. 1, pp. 6-7). BAT’s response to

a stakeholder statement like this is given in its report, “We are actively pursuing

innovative methods to work with stakeholders on our key issues. We remain

committed to constructive engagement with any stakeholder on tobacco-related

sustainability issues.” (App. 2, p.5). The reason that these two statements are

presented is that they portray the contradiction that often occurs between a

corporation and a sceptical stakeholder. The thesis discussion relies on the

understanding of this contradiction. Hence, it opens for a discussion on the ethical

issues that CSR and sustainability reports contain.

3 The Semiotics of CSR and SustainabilityDefining corporate social responsibility is a challenge in that the concept covers so

many areas of business and it is conducted by so many different businesses in a vast



variety of sectors. Hence, the transparency of the concept CSR is somewhat blurred.

In this thesis the primary focus, and an important part of the concept, will be on

sustainability. The idea of building a sustainable business has different denotations.

The literal meaning of a sustainable business is: a business that will continue to

exist and operate into the foreseeable future (Aras and Crowther, 2009) or it can

denote a business, which practices cause an absolute zero amount of waste and loss to

the environment and hence, will not affect or limit the circumstances of world’s future

citizens. This last idea of sustainable development is commonly known as the

Brundtland Commission’s definition of sustainability (Kallio, 2007), whose idea of

sustainable development is reflected in the notion of sustainable development.

However, as I shall be discussing later, this idea meets inherent contradictions.

Hence, applying theory of CSR and particularly when referring to the word

sustainability it is important to keep these two denotations in mind. It may seem

obvious that there are two different meanings and it is often easy to see when

companies are talking about either a sustainable business in the future or a business

that operates with sustainability in its business practices. But the problem in many

cases is that corporations use the word interchangeably, making it hard for

stakeholders to identify when the corporation is talking about one or the other. E.g.

when BAT states, “We see sustainability as being about helping to build long-term

commercial sustainability by delivering on sustainable development objectives.”

(App. 2, p.4) and “… building a sustainable business that meets stakeholder

expectations…” (Ibid.). In each case it is clear what the denotation of sustainability is,

but what might be more interesting is which connotations follow from using the word

sustainability. In each case, the connotations of sustainability will depend on the

stakeholders. From a shareholder’s point of view these two claims have positive

connotations, by justifying that investing in BAT was profitable. Contrary, a

stakeholder such as WHO or anti-smoking groups would, given their negative view

on tobacco, react negatively towards such claims.

Thus, a general understanding of the denotations and connotations of sustainability

and the concept CSR is fundamental for the discussion because it clarifies the lack of

a specific standard and meaning to the concept of sustainability. The lack of a specific



meaning and interpretation of CSR and sustainability is a key point in this thesis’

discussions.

4 Ethical Discussion on Sustainability and CSRIn the text “Taboos in CSR Discourse” Kallio states, ”Thus, we may not be able to

define exactly what CSR is, but we do know what it is not, and so do the CEOs and

other business advocates.”(Kallio, 2007, p.168) and Blanco & Souto state, “All

concepts involved in CSR have the same particularity: everybody knows the concepts,

everybody can give appropriate definitions but the question is that these definitions

can be understood with different meanings.” (Blanco & Souto, 2009, p.157). Hence,

the ethical issues that surround CSR is open to discussion and may take on different

angles, given that CSR is, as Kallio and Blanco & Souto mention, not specifically

defined or understood. Hence, this part of the thesis deals specifically with the ethics

of sustainability as a concept under CSR. Crooks notes, “The ’pro-CSR’ discourse has

recently ’won the battle of ideas’.”(Crooks 2005, in Kallio, 2007, p.165) which leads

to Kallio’s notion, ”…it is hardly wise for a CEO to publicly question the firm’s social

responsibility, rather to underline the ethically high principles that steer corporate

actions.” (Kallio, 2007, pp.165-166). Thus, an understanding of the ethical principles

that drives business is here suggested to have a more important role, than CSR in

itself, to the company. However, if a business is able to conduct sustainability with a

proper ethical value, one might argue that if such an approach is adopted it could steer

the idea of ethical corporate sustainability in the right direction. This argument is now

further discussed.

Laufer argues that existing ethical programs read: sustainability programs are

perceived as most effective when there is already a dominant ethical culture and/or

credible ethical leadership style within the corporation. Hence, Laufer supports the

notion that for companies who wish to engage in CSR and sustainability programs,

there must exist a coherent culture that promotes ethical business (Laufer, 2003).

Therefore, it seems reasonable to question the ethical perspective of BAT’s

engagement in CSR and sustainability reporting. BAT’s products are unquestionably

of an unethical nature. BAT produces the only lethal consumer product which is sold

legally to the consumers. Even though it is not recognised by all consumers, the fact

that more than 70.000 articles have been published on tobacco consumption it is now



a known fact that nicotine is physiologically addictive and that this combination of

tobacco consumption and nicotine addictiveness is a major threat to the public health.

Moreover, the fact that tobacco companies cannot live up to one of the simplest rules

of CSR, primum non nocere, meaning, first do no harm. It seems fair to question how

they as such can achieve a status as a good corporate citizenship (Palazzo & Richter,

2005).

However, what seems to be one of the major influences on the existing negativity of

tobacco companies is linked to their previous behaviour as an industry, with a

particular focus on the past representatives of the tobacco industry. The previous

unethical behaviour of the tobacco industry and its representatives are of major

concern to the representatives of today’s tobacco companies. Yach et al. present a

statement by Michael Prideaux, the director of corporate affairs in BAT, in which he

says, “We are very serious about demonstrating responsible behaviour in an industry

seen as controversial.” (Yach et al., 2001, p.196). Hence, the fact that BAT

recognises that their industry is of a controversial nature speaks in their favour, but at

the same time it also underlines that they do know that when engaging in CSR and

sustainability they must be careful due to the very nature, which surrounds their

corporate identity and brand. Moreover, Palazzo and Richter have found that the

tobacco industry for decades rejected the negative effects of smoking, including

passive smoking, and they used substantial efforts to reject scientific claims through

misleading campaigns and political lobbying. The reason being that they were trying

to protect themselves against lawsuits brought forward by affected consumers simply

because they recognised that such statements could lead to a major crisis within the

tobacco industry. Interestingly, the industry joined forces to depower WHO and the

tobacco industry deliberately destabilised WHO’s position, in order to prevent their

tobacco control efforts (Palazzo & Richter, 2005). This is critical information, and it

explains the reason why BAT, today, are having problems getting involved with their

most critical stakeholders e.g. WHO. However, it also provides an understanding of

why it is legitimate to question the tobacco industry’s ethical behaviour.

As mentioned above, Laufer argued that if a company is to successfully implement

ethical CSR and sustainability programs, there should already be an existing ethical

culture or ethical leadership style within the organisation. However, this seems hardly



the case in the tobacco industry, based on Palazzo and Richters’ research of the

tobacco industry (Palazzo & Richter, 2005).

Taking the problematic ethical issues of the tobacco industry into consideration, how

is BAT then trying to turn that negative perception around? The answer may appear

simple but it is given by BAT above as they recognise their dark ages. They are trying

to focus on the present and future by conducting CSR that reaches out to their

stakeholders. By doing so, BAT is asking its stakeholders to judge them on their

present action within the field of CSR instead of focusing on the previous rhetorical

strategy. However, the previous actions and rhetoric used in the ‘dark ages’ of the

tobacco industry has now become known to the public and for that the tobacco

industry is suffering today. Interestingly enough, the tobacco industry and BAT use

this as a legitimisation for their current engagement in CSR and claim that by doing

so, it is their chance to turn that general negativity and scepticism that surrounds the

industry, around. Moreover, BAT uses the CSR concept as a way of approving and

validating the development of new products. This notion will be discussed in the

following chapter.

5 Creating a Market for the Sustainability and CSR ConceptA discussion of whether sustainability exists for the sake of leading and driving

businesses towards a sustainable future, or for the sake of creating a new business is a

discussion that requires more focus. Multiple critics of sustainability and CSR as a

concept have questioned the legitimacy of both. There is evidence, as mentioned

earlier, that seeks to challenge the concept of sustainability as being merely a buzz

word or a concept that has won a positive semiotic value, both in its denotation and

connotation. This is supported by Aras and Crowther who argue, “… that this

treatment of sustainability is actually disingenuous and disguises the very real

advantages that corpoations obtain by creating such a semiotic of sustainability.”

(Aras & Crowther, 2009, p.284), and, “… it creates an image of the safety for

investors and thereby reduces cost of capital for such corporations. Such language

must be considered semiotically as a way of creating the impression of actual

sustainability.” (Ibid., p.285). Hence, in both arguments they question the validity of

the concept of CSR and sustainability and present it as something that relies on its

semiotic value rather than being an action. This is further supported by Pomering and



Dolnicar who state that, “Where CSR programs are cynically perceived to be used as

a corporate image tactic, rather than a genuine reflection of a firm’s values and

ethical commitment such claims may backfire.” (Pomering & Dolnicar, 2009, p.287).

Here, critics challenge the ethical perspective of sustainability and CSR. From these

quotes the discussion on whether the concept acts to merely support business and add

to the feel-good of the global business environment, or if the concept of sustainability

and CSR is driven by a sincere obligation from the firms to operate towards a

sustainable business, is opened.

The dispute once again lies in the weak definition of the concepts which have been

discussed earlier. An interesting note is made by Kallio who states, “… the business

world retained its hostile attitude towards environmental issues until the societal

atmosphere and political arenas adopted a different kind of more optimistic – naïve

one might say – environmentalism associated with the concept of sustainable

development.” (Kallio, 2007, p.169). This note is interesting in that it clarifies the

reason for why the global business society suddenly adapted the concept of

sustainability. Not forgetting that positioning oneself, as company against the greater

interest of society and political views, will in the long run contribute to the ‘death’ of

the corporation. Or as Kallio states, “Thus, in the long run no corporation or industry

can survive if it openly opposes the values of the greater public and therefore mislays

its legitimacy.” (Kallio, 2007, p.170). Thus, an acceptance that society and the global

political agendas create a need for these concepts. Since, companies are a part of

society, it is without doubt that they are contributing to the creation and retention of

the concept. Having identified this, the question is not a matter of whether or not a

business or industry as a whole should engage in CSR and sustainability, it is rather a

question of how long they can wait before they have to present and introduce the

concept into the corporation. As Blanco & Souto note, “The increasing importance

and current evolution of CSR as the new economic paradigm has to be supported with

the development of new instruments to manage entrepreneurial strategies…” (Blanco

& Souto, 2009, p.167).

Hence, if this is the case then the business world and society at large have, without

doubt, created a market for these concepts. Thus, a lack of effort to cast doubt on

these concepts has led to its strong position. The creation of a sustainability paradigm



is real, and thus the legitimisation of both the semiotic value of the word sustainability

has been accepted along with the CSR discourse (Kallio, 2007). Hence, it is key that

the legitimacy of the concepts and their discourses are questioned in order to

challenge the paradigm. This in turn, would make the discipline of CSR and

sustainability vulnerable which may lead to questioning the existing market for the

concepts, and thus also for the assurance programs. It would cast doubt on the

effective competitive advantage which, for the moment being, is associated with the

inclusion of a sustainability and CSR report. As Aras and Crowther note, “… firms

have recognised the commercial benefits of increased transparency.” (Aras &

Crowther, 2009, p.286). Moreover, an objection towards the existing CSR paradigm

would question the validity of the existing sustainability programs, and thus affect the

business world by making inquiries against an existing paradigm. Kallio states, “The

political nature of CSR is not willingly discussed because it might lead to a rejection

of the CSR rhetoric and thus threaten the integrity of the discourse.” (Kallio, 2007,

p.173) as well as setting forth the question Are we facing a dimension of nihilation?

Which is “… to suppress everything that is on the outside of the very same universe;

to deny all the phenomena and interpretations that do not fit in this universe?”(Ibid.,

p.172).

Thus, can the discourse, the ethical issues, the corporations, and society in general

handle a discussion that challenges and perhaps exposes the CSR and sustainability

paradigm? From a theoretical perspective, and on the basis of the above-mentioned

quotes, it seems unlikely that there is an interest in questioning the sustainability

paradigm. The benefits as they are presented by theoreticians and empirical data are

outweighing the cost in the sense that there so far has been a rejection of scholars and

people from the business world who have questioned the concepts or tried to

destabilise the paradigm and its concepts. However, this thesis tries to develop on this

by discussing the assurance standards and if there is a direct influence on business

performance when engaging with CSR. This is discussed in the following chapters.

6 Using Assurance Programs to Build CredibilityThe BAT Sustainability Report 2008 has been accredited with two awards and

accepted into a business community for its sustainability activities. The report has

been acknowledged by Dow Jones Sustainability Indexes (DJSI), by Sustainable



Asset Management’s Sustainability Yearbook 2009 (SAM) and in the UK Business in

the Community’s 2007 Corporate Responsibility Index. These awards are particularly

special to BAT as the DJSI presents BAT as the only tobacco company in its index.

Moreover, the SAM identifies BAT as both a sector leader and sector mover.

Whereas, the Business in the Community places BAT’s report in the gold sector

(App. 2, p.5).

The idea of certifying a sustainability report stems from the assurance of financial

accounting reports which are ratified by third parties, usually large accounting firms.

Blanco and Souto state, “The active scheme for financial accounting and its

corresponding financial audit can be repeated for CSR contexts.” (Blanco & Souto,

2009, p.156). However, the assurance and auditing of CSR and sustainability are

incomplete under the above-mentioned notion that there is a lack of a definition for

CSR and sustainability. Such a definition is necessary in order to be able to define a

standard in which to work from, otherwise as Blanco & Souto note, “The current

situation, without a generally accepted standard, has negative consequences… for the

trustworthiness of the information.” (Blanco & Souto, 2009, p.161). Thus, we must

view these assurance programs and audits as mere proposals and not given standards.

Still, there is some evidence as to why BAT should use these assurance programs. In a

larger research conducted on firms that belong to the DJSI and firms that do not, it

was found that sustainability practices favour stakeholders’ legitimation offering a

positive image and improves its reputation. This may create a differentiating effect

between firms that follow sustainability practices and those that do not. (Lopez et al.,

2007). Moreover, what they found was that “These practices sustainability practices

help to develop opportunities and manage economic, environmental and social risks.

Many investors consider this a crucial value for success.” (Lopez et al., 2007, p.289).

These, findings support the idea of assurance.

When BAT is accredited by the DJSI, it is a marking of the company and its activities

that point in the right direction. Thus, the incentive for BAT to announce these

acknowledgements and assurance programs is legitimised by the effect it has towards

some of the stakeholders of the company. Particularly, shareholders are interested in

such accreditations, as it assures them that their money invested in BAT are brought

to good use which is supported by Lopez et al. who found that, “…stakeholders



believe accredited practices in CSR lead to good economic-financial performance for

a specific firm.” (Lopez et al., 2007, p.286).

However, there is good reason to question the use of these assurance programs. The

extent, to which these programs are used, relies on the receiver, in this case how BAT,

wants to be assessed. Blanco and Souto found, “The most selected option is limited

level of assurance…” (Blanco & Souto, 2009, p.166) which is also the one BAT uses,

“Provide a ‘limited level’ assurance opinion on the Report’s content with respect to

the AA1000AS (2008) assurance principles of inclusivity,

Materiality and Responsiveness” (App. 2, p.48) and

“Provide a ‘limited level’ assurance opinion on the

completeness and accuracy of the performance claims

and data presented in the Report” (Ibid.). If a company

chooses a limited level of assurance, how can

stakeholders view this as a credible and transparent

assurance level? The obvious answer to this question is

that the global business community acknowledges the

AccountAbility Standards (AA1000AS) as an assurance standard. Interestingly

enough, BAT is a Global Launch Sponsor of AA1000AS, (see App. 3). Thus, it is

reasonable to question the validity and objectivity of such a review, especially when

the corporation being reviewed sponsors the assurance standards. More importantly, it

substantiates the lack of ethics within CSR. However, the AA1000AS is used as an

assurance standard for multiple sustainability reports in many different corporations.

Therefore, it is still recognised as an assurance standard, but it is reasonable to

question the ethics and validity of these standards in the example of BAT. However,

the idea of standards without a clear definition poses ethical questions of legitimacy

and lack of transparency. Thus, a solution to the assurance program lies in a clear

definition. But, recognising that it takes time to define the concepts and agree on

standards can be learnt from the financial auditing world. Blanco & Souto conclude,

“For decades, financial accounting and financial auditing have carried out a long

development process to achieve a generally accepted conceptual framework.

Promoters of CSR should learn from this process.” (Blanco & Souto, 2009, p.167).

Thus, recognising the current embryonic stage, in which CSR and sustainability

reporting and assurance programs finds itself, helps explain its lack of clarification.


Appendix 3 : http://www.accountability.org/default.aspx?id=2974

http://www.accountability.org/default.aspx?id=2974



7 A Discussion on the Effects CSR and Sustainability Reports

have on Business Performance1

Previous evidence shows that corporations that show social and ethic responsibility

can actually benefit from it. According to Tench and Yeomans, “…companies with a

reputation for ethics and social responsibility grew at a rate of 11.3% annually from

1959-1990 while the growth rate of similar companies without the same ethical

approach was 6.2%).” (Labich 1992 in Tench & Yeomans, 2006, p .101). Moreover,

the companies recognise their competitive value and CEOs among others claim that

engaging in CSR is a necessity for corporations if they wish to stay profitable.

Moreover, they claim that their engagement in CSR will remain high even though the

economic conditions are going to change (Tench & Yeomans, 2006). BAT commits to

this in their sustainability report as the CEO claims, “Our sustainability agenda is

integrated into our business strategy and we believe our business strategy works in

good times and in bad, so it won’t change if the going gets tough...” (App. 2, p.3).

Thus, we see that BAT as a company is quite frank about their understanding of the

importance of CSR and particularly sustainability.

However, recent studies on this issue have shed new light on the general perception of

CSR as profitable engagement. And particularly for the tobacco industry there are

some suggestions towards a divestment for both financial and, perhaps what is even

more important, for ethical reasons (Yach et al., 2001). With respect to the critique of

CSR and, whether or not it is good business practice, and thus influences the business

performance of companies, it is important to mention Friedman’s critique. Friedman

argues that the business of business is simply to make profits and satisfy the

shareholders’ expectations. Hence, it is his argument that it is not the responsibility of

the business community to engage with society; rather it is a political and societal

matter, which they must resolve (Tench & Yeomans 2006). The critique stands,

however, it is nonetheless a fact that any corporation with respect for it self publishes

a CSR or sustainability report. Thus, we must accept that businesses are trying to

1 The definition of business performance in this discussion is based on Lopez et al. definition in their empirical analysis, as they base business performance on financial indicators, such as cost, revenue and profit.



influence the society in which they operate. For BAT this means a global influence,

and hence there is good reason to question whether or not their CSR and sustainability

practices have an impact on their business performance.

López et. al. performed an empirical study on two groups of fifty five firms, in which

one group consisted of firms belonging to the DJSI, noting that BAT belongs to this

index, and the other group of firms belonged to Dow Jones Global Index(DJGI). The

study was conducted in the period of 1998-2004 and the researches found that a

difference in performance exists. This distinction is related to the CSR practices,

which the DJSI group executed. They conclude, “…that a short-term negative impact

on performance is produced.”(Lopez et. al., 2007, p.285; Lopez et al., 2007)

It is important to point out that López et al. were looking for, “… significant

differences in performance...” (Lopez et al., 2007, p.285). Thus, they question the

existing perception that engagement in CSR and ethical practices lead to a direct

improvement of performance. Moreover, Yach et al. have made studies for the

specific case of the tobacco industry, and whether their adoption of ethical practices

towards becoming accepted as good corporate citizens is likely to influence the

economic performance of the tobacco companies, or if it is likely to have the opposite

effect. They discuss social responsible investing (SRI) in relation to the tobacco

industry. The trend for the tobacco industry is unquestionably moving in the wrong

direction, as they have found that the tobacco industry is suffering from a divestment.

The divestment in the tobacco industry is taking place in its established markets,

meaning the western world and countries who are considered as developed and

enlightened on the health issues that follow from smoking tobacco (Yach et al., 2001).

The divestment is also a reaction to this and Yach et al. pin point this as they found

“Many managers removed their money from tobacco stocks, mainly because of the

increasing financial risks and because they no longer considered tobacco a reliable

investment.” (Yach et al., 2001, p.192) and “The social, financial and legal pressure

on the tobacco industry is increasing through heightened public awareness, released

internal documents showing questionable ethical behaviour… and prospects of new

globalized litigation. These events are all leading to increased concern.” (Ibid,

p.193). This may also explain the tobacco industry’s increased focus on developing



countries, as they are still not aware, to the same degree as develop countries, of the

health risks connected to smoking. The focus on the developing countries is seen

through the sustainability operations of BAT, who to a larger degree focuses their

attention and CSR investments towards the developing world. Through the BAT

Sustainability Report 2008, we see examples of initiatives in countries such as;

Malawi and Nigeria in Africa and WHO mentions in their reports (App. 1) and (App.

4) that BAT has operations in Brazil and Bangladesh, Zimbabwe, Papua New Guinea

and Malaysia. This enhanced focus on developing countries indicates that BAT is

aware of the need for more marketing activities in these countries in order to increase

BAT’s profits in the future. In addition to this, developing countries’ governments are

more susceptible to lobbying by the tobacco industry. Moreover, an important note to

keep in mind is that the majority of the tobacco production takes place in the

developing world.

However, as mentioned above, it was found that the costs of engaging in CSR in the

short-term had a negative effect on the business performance. This may be explained

by the start up costs and a reallocation of resources that such an investment requires.

The change, which BAT as a company must go through in order to meet their

proposed business standards and achieve their sustainability goals, calls for a change

within the organisation, and thus leads to a direct cost for the company. Hence, the

goal and profit of engaging in sustainability must then be of a long-term nature. The

recognition of CSR as providing a competitive advantage is recognised by the

companies, and thus makes it logical to incorporate the concept into the business

strategy which is also what BAT has done. Moreover, “… sustainability practices

favour stakeholders’ legitimation offering a positive image and improves its

reputation. This may create a differentiating effect between firms that follow

sustainability and those that do not.” as noted by Lopez et al. (Lopez et al., 2007,

p.293). But there is a conflict of interest. When companies experience increased costs,

in this case the costs of implementing a sustainability strategy or program, the natural

reaction is to try and turn this negativity around. Thus, it is fair to assume that what is

in fact happening as a result, is that there is an optimisation in procedures, in

management and the use of resources which leads to lower costs. Moreover, we know

that competitors easily imitate CSR strategies and there is nothing to suggest that

Philip Morris; a large competitor to BAT, should not initiate a CSR and sustainability



strategy as well. In fact Philip Morris has already done so which supports this

argument. Thus, in the long run there is nothing that indicates that a CSR strategy will

improve business performance as compared to its competitors who may just as well

incorporate a CSR strategy. CSR reports are not secret confidential reports as they are

available to all stakeholders, including competitors, which supports the notion that

they are easily imitated.

With such notions, the idea that CSR should result in a positive business performance

in the long-term for a company, such as BAT, may be hard to conclude because there

are multiple aspects that influence business performance. Thus, it becomes hard to

distinguish between the effects of CSR initiatives and basic strategic changes and

optimisation of resources within the company. Conclusively, this may help explain

why it has become the general perception within companies and the business

environment that including a sustainability strategy will improve business

performance. It may well be, that the CSR initiative kick-starts the process but in fact

it is not the actual development and incorporation of sustainable practices that

enhance business performance. It is rather the optimisation that stems from the

negative costs which the start-up phase of sustainability practices incurs. Moreover, it

also helps explain why it is so hard to measure the direct financial gains that follow

from engaging in sustainability. Lopez et al. found, “Since there are no significant

differences in the variation of revenues, we conclude that differences in performance

are due to changes in cost.” (Lopez et al., 2007, p.295).

8 Future Prospects for Sustainability and CSR Initiatives in the

Tobacco Industry

Given the unclear definition of the concepts of CSR and sustainability, it is first of all

important that the business environment decides on a definition that explains the

concepts. Blanco & Souto predicts that, “The most salient of all these possible

objectives is the definition of a conceptual framework for CSR… worldwide

acceptation of reporting models and instruments, and assurance engagement

compromise. Within this ideal but possible setting, entities preparing sustainability

reports under specific standards…will…be qualified as Ethical, Ecological or

Socially Responsible, with capital letters.” (Blanco & Souto, 2009, pp.167-68). If the



use of sustainability and CSR is to continue as a credible strategy for companies it is

essential that a move towards a clear distinction of the concepts be established.

Moreover, what seems to be a general agreement amongst theoreticians is that, “Only

if CSR practices are integrated into strategic decisions taken in business will positive

consequences be achieved.” (Lopez et al., 2007, p.296) and “… engagement should be

based upon core competencies…” (Palazzo & Richter, 2005, p.391) and “…

recognising that CSR has many facets and needs to be interpreted differently for each

organisation – and made significant… towards both appropriate activity and

appropriate reporting of such activity.” (Aras & Crowther, 2008, p.283). Thus, if

corporations wish to be successful in their CSR and sustainability work, it is key that

they engage in operations that are meaningful to the corporation’s business.

Corporations must therefore seek to engage with stakeholders in a way that adds

credibility to their CSR and sustainability activities. In the discussion on the tobacco

industry’s ability to create a reliable, transparent and credible CSR and sustainability

strategy, it is important that we draw on the above mentioned learnings as they

provide the basis for further discussion. Moreover, the previous work of BAT can

function as a field of knowledge for improving their activities in the future with an

active focus on creating CSR strategies that can comply with their business. Palazzo

& Richter propose that, “A good corporate citizen in the tobacco industry has to

develop and communicate a clear vision that leads beyond the established business

pratices. Corporate transformation, from a marketing to a research-driven company

(safe cigarettes as main target), might be an element of such a vision” (Palazzo &

Richter, 2005, pp.397-98).

Hence, using Kuhn’s paradigms to explain the evolution of the business paradigm and

the CSR and sustainability paradigm, makes sense because the successfulness of these

are reliant on a fusion of the two paradigms. Wadham who argues, “…a compromise

solution may emerge if we can understand sustainable development from a broader

historical perspective and acknowledge the possible coexistence of the economic and

sustainable paradigms.”(Wadham, 2009, p.65) supports this idea. However, there is a

challenge in that Eden proposes, “… pro-business advocates try to keep NGOs, the lay

public, community groups and ‘renegade’ scientists outside legitimacy by presenting

them as non-rational and non-scientific, thus further branding them as inferior and



‘not to be taken seriously’.” (Eden, 1999 in Kallio, 2006, p.172) As noted above the

theoreticians argue that we must see a move towards sustainability practices that link

directly to the business of corporations and their stakeholders. This idea is further

supported by Lopez et al. who state, “Attention is directed to demands for a wider

group of stakeholders, since the firm’s success depends on stakeholders’ satisfaction.”

(Lopez et al., 2007, p.287). Therefore, knowing this it is not surprising that WHO as a

major stakeholder of BAT, questions its involvement with a health-care centre in

Bangladesh, or that WHO questions its youth anti-smoking campaigns. These issues

may be compared to Coca-Cola sponsoring a diabetes clinic in the U.S. which could

become an ethical question. Even though, it may seem logical when explained, it is

still a fact that the tobacco industry is involved in operations that contradict with its

business. Therefore, there is a sound reason to discuss and argue for a development of

the future CSR and sustainability strategy which BAT should engage in. Moreover,

the existing scepticism that exists towards the tobacco industry and the lethal

character of its products is important to keep in mind.

Palazzo and Richter propose four important issues that are important as to establishing

a legitimate CSR engagement, “corporate philanthropy, stakeholder collaboration,

CSR reporting, and self-regulation activities.” (Palazzo & Richter, 2005, p.390) and

how these are not sufficiently met by the tobacco industry and thus, BAT as a

company. Corporate philanthropy is the act of giving back to society e.g. donating

money to university programs as BAT did when they contributed to University of

Nottingham (UK) foundation of a research centre for CSR. However, this caused a

major clamour within the university and the surrounding public (Palazzo & Richter,

2005). Hence, we must understand that the intentions of BAT may be good but the

general public and stakeholders are likely to protest and object to such programs as

they conflict with the ethical obligations which is expected from a university. Yach et

al. propose that, “Funding which gives favourable publicity to a tobacco company or

which is likely to show the tobacco company in a favorable light should be rejected.”

(Yach et al., 2001, p.197). This as a result limits the act of corporate philanthropy for

the tobacco industry. Returning to the previous notion that there must exist coherence

between the CSR conducted and the company’s core business and values if BAT

wishes to be accepted as a trustworthy corporation. Blanco & Souto note, “They

stakeholders are concerned that existing CSR obligations are insufficient and



voluntary CSR programs are inadequate.” (M.A. Levine, 2008 in Blanco & Souto,

2009, p.161). The second issue is stakeholder collaboration which is regarded as key

in the act of CSR. However, using the example of the university sponsorship to

illustrate the conflict that may rise between stakeholder and BAT is useful. If

philanthropy done by a tobacco company causes a public outcry, the expected

reaction would be a negative coinciding of the university as a stakeholder and BAT as

the company. Therefore, collaboration between the University of Nottingham and

BAT could reflect negatively on the University and affect its reputation as a political

and ethical correct institution. The statement, “Being paid by the tobacco industry or

cooperating with it threatens the reputation of the external partner” (Palazzo &

Richter, 2005, p.391) supports this argument. In addition, WHO seems to refute a

direct collaboration with BAT but they do not ignore the tobacco industry’s attempt to

cooperate at any cost. There is evidence that WHO, being a critical stakeholder, still

has an interest in a debate with BAT and its CSR activities. Wadham argues,

“Partnership potentially allows companies to increase credibility and access to

stakeholders…” (Wadham, 2009, p.60) and later “CSR writers suggest that

partnership encourages a more sustainable approach to both CSR and core

business...” (Ibid.). Thus, theory suggests that a potential collaborative strategy can be

beneficial to both, in this case BAT and WHO. In their report WHO recognises this as

a wish from BAT but they are very reluctant as stated in the report, “Tobacco

companies are asking for open dialogue. They assert their efforts to undermine global

tobacco control policy… they seek to engage in constructive dialogue with the

WHO…Today WHO has defiantly acted for the benefit of the public health…” (App.

1, p. 9). Thus, recognising the tobacco industry’s effort to engage with critical

stakeholders, which if done effectively, could lead to beneficiaries in the long run, is

rejected by WHO. Hence, the effectiveness of stakeholder collaboration is a point of

critique for the tobacco industry. The third issue, CSR reporting, can be criticised on

the fact that it was previously noted that social responsible investing in the tobacco

industry is experiencing a divestment due to the tobacco companies efforts to appear

as socially responsible through its CSR and sustainability work. Thus, the ethical and

social responsibility, which investment firms are showing in their exclusion of

tobacco companies in their portfolios, supports the notion that, it is a bad idea for

BAT to conduct CSR reporting. CSR reporting normally substantiates and supports



social responsible investments for other firms that do not hold such a controversial

product as the tobacco industry.

Therefore, it is possible to argue that the inclusion of a CSR and sustainability report

in the business strategy may not prove as a long-term profitable investment.

Moreover, the negative costs and thus negative influence on performance, which

Lopez et al. found concerning the inclusion of CSR reports accredited by the DJSI,

further substantiates this argument. The fourth and last issue, self-regulation, was

questioned above as BAT used very limited standards of assurance. Furthermore, it

was a question of ethics as BAT is a main sponsor of the assurance program which

they use to guarantee third party control and transparency. Palazzo and Richter state,

“Corporate self-regulation often lacks transparency, accountability and thus is

deprived of any legitimacy.” (Palazzo & Richter, 2005. p.392) and “ “We have seen

no evidence that tobacco companies are capable of self-regulation…” ” (Rondinelli,

2002, p.407 in Palazzo & Richter, 2005, p.392) both statements support this notion.

Thus, the general perception of self-regulation is blurred but with regards towards the

tobacco industry there seems to exist an even greater scepticism, perhaps due to the

previously mentioned blurry past of the tobacco industry.

Based on these four issues mentioned by Palazzo and Richter, and the above-

mentioned prerequisites for sustainability and CSR, it is clear that the future prospects

of CSR and Sustainability as a concept within the tobacco industry is still open to

discussion and lacks concrete guidelines for the execution of its CSR and

sustainability strategies. As Blanco & Souto note, “... whatever CSR instruments is

used… these instruments should fulfil: clarity, transparency, completeness, reliability,

consistency, measurability, verifiability and comparability. All of these attributes

implicitly need standard reference to be achieved.” (Blanco & Souto, 2009, p.161).

Thus, the future for sustainability and CSR as a concept, especially within the tobacco

industry, requires specific standards to work from. The required ability to measure

and quantify these concepts may be key to their future. The power of trust relies

heavily on agreed upon standards, and with the tobacco industry’s current situation

there is evidence that in order for them to succeed and live up to Blanco and Souto’s

CSR instrumental requirements, they must first of all seek to build trust. Pomering

and Dolnicar identify trust in the CSR report and company as key to the general



success of CSR in that they state, “Trust in the information source2 is critical for CSR

communication success.” (Pomering & Dolnicar, 2009, p.288).

9 ConclusionThis thesis identifies and discusses the ethical concerns which British American

Tobacco must identify in order to conduct a transparent and trustworthy CSR and

sustainability strategy. The rising scepticism in the general public on the health issues

linked to smoking and second-hand smoking, and its importance to the political scene,

justify the ethical discussion of the tobacco industry’s adaption of CSR and

sustainability practices.

Moreover, it discusses the more general ethical issues linked to the concepts which

may be used by corporations who wish to conduct CSR and sustainability. On the

premises of the ethical issues, it discusses the general perception, namely that CSR

and sustainability increase business performance. It concludes that there is no

evidence that a CSR and sustainability strategy is the direct cause of increased

business performance, based on an empirical analysis by Lopez et al. 2007. On the

contrary they conclude that the investments required lead to negative business

performance in the short-term. However, it is recognised that their analysis may have

been conducted over too short a period, and thus a conclusion on the long-term

business performance is not included in this thesis. The reason for this conclusion is

that it was not possible to find any empirical research that was conducted over a larger

period, and included companies from the Dow Jones Sustainability Index, and thus

BAT. It is likely that future research may conclude the opposite and counter-argue

this thesis conclusion. Moreover, this paper identifies that a general accepted standard

for CSR and sustainability is perhaps the main flaw in the discussion. It is a key to

most of the critique, and used as basis in the discussion on the minimal

trustworthiness that applies to CSR and sustainability. Furthermore, it is connected to

the concept of CSR and sustainability due to this lack of a clear definition. Even

though, BAT as a company is trying to adapt a CSR and sustainability strategy, WHO

one of its key stakeholders continues to question the legitimacy of BAT’s CSR and

2 The word information source may here be interpreted as both the company but also the BAT

sustainability report.



sustainability operations, due to the nature of BAT’s products. But from this thesis, it

becomes clear that with a clear definition of CSR and Sustainability and accepted

standards for the concepts within the business environment, BAT would be able to

rely on a solid foundation and be able to create a better dialogue with WHO. Hence,

as noted through stakeholder collaboration and communication, there is a chance of

creating more ethical, transparent and trustworthy CSR and sustainability reports and

strategies in the future. This can be used by companies globally to gain an

understanding of the complexity of CSR, with a focus on sustainability reporting, and

the ethical issues that must be taken into consideration when engaging in CSR and

sustainability reporting. Moreover, it opens up the question of using CSR as a

strategic element in business and creates a foundation for future discussions and

research within the field of sustainability and CSR. A final remark should be made on

the understanding of the paradigms and the context in which this thesis takes place.

As noted in the methodology of this thesis, the concepts of sustainability and CSR are

valid as long as they play a specific role in the business paradigm. However, based on

the above-mentioned conclusions, there is some suggestion that point in the direction

of a revolution of the existing paradigms. Hence, a fusion of the sustainability

paradigm and business paradigm, would lead to a new understanding of the concepts.

That revolution may be characterized by a clear definition of the CSR and

sustainability concept. As Chalmers notes, “A scientific revolution corresponds to the

abandonment of one paradigm and the adoption of a new one, not by an individual

scientist only but by the relevant scientific community as a whole.” (Chalmers, 1999,

p.117). Thus, the complete abandonment of the paradigm may only take place, once

the adoption of a new one is accepted by the community, in this case by the business

community if they manage to establish a clear definition of CSR and sustainability.

10 SummaryThis thesis provides a theoretical discussion on the ethical issues that are connected to



the engagement of CSR and sustainability reporting by using Kuhn’s paradigms as the

framework. The discussion within this justifies the existence of CSR and

sustainability reporting as a concept. Thus, the concepts of CSR and sustainability are

applicable as long as they play a theoretical role in the business paradigm. It uses

British American Tobacco (BAT), one of the largest firms in the tobacco industry as

an example of a company that has been subject to criticism, especially on its ethical

issue of its recent engagement in CSR and sustainability reporting. The World Health

Organisation (WHO), a major stakeholder, opposes BAT’s CSR and sustainability

operations, primarily due to the nature of BATs products. Moreover, BAT has been

awarded by several indexes for CSR and sustainability. The accreditation is

questioned in the thesis from an ethical point of view, discussing whether such an

accrediting and assurance may influence the transparency and trustworthiness of

BAT’s sustainability reports.

In addition, it discusses the general perception that CSR and sustainability efforts can

have a direct influence on the business performance. Lopez et al. conducted an

empirical analysis on companies that belonged to the Dow Jones Sustainability Index,

including BAT. They hereby concluded that there is no positive influence on business

performance for those who conduct sustainability reporting and/or use CSR as part of

their corporate strategy. On the contrary there seems to be a negative outcome on

business performance in the short run. This thesis uses this empirical analysis in the

discussion, and concludes that there is reason to believe that the CSR and

sustainability efforts may indirectly affect business performance.

Moreover, the thesis discusses the empirical analysis and the time span of the analysis

acknowledging that future empirical analysis on the link between business

performance and implementing an ethical CSR strategy may provide a different

outcome.

The exploration within this paper is summed up in a discussion on the future

prospects for CSR and sustainability in the tobacco industry. More specifically it

discusses better stakeholder and corporate collaboration, noting that trust is essential

to create a more reliable and ethical CSR strategy for the tobacco industry. But, there

is still reluctance from WHO towards cooperating with the tobacco industry.



However, the discussion encapsulates a possible solution to this resentment which

WHO shows towards the tobacco industry. It concludes that a fusion of the

sustainability and business paradigm would lead to a revolution. This revolution may

be triggered with an agreement on a clear definition and a global business acceptance

of standards for CSR and sustainability reporting, the tobacco industry would be able

to use those agreed upon standards as a foundation for a future collaboration with

WHO because WHO would have to accept such global standards.

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Yach, Derek et al., 2001, Healthy Investments and Investing in Health, In Journal of Business Ethics, 33 pp.191-198.

12 Appendices

Appendix 1: World Health Organisation, 2004, Tobacco Industry and Corporate Responsibility: An Inherent Contradiction, http://www.wpro.who.int/health_topics/tobacco/publications.htm

Appendix 2: British American Tobacco, 2009, British American Tobacco Sustainability Report 2008,


http://www.wpro.who.int/health_topics/tobacco/publications.htm


http://www.bat.com/group/sites/uk__3mnfen.nsf/vwPagesWebLive/DO6RZGHL?opendocument&SKN=1

Appendix 3: AccountAbility Screenshot of Global Launch Sponsors http://www.accountability.org/default.aspx?id=2974

Appendix 4: World Health Organisation – Western Pacific Region, Seeing Beneath the Surface: The Truth About the Tobacco Industry’s Youthm Smoking Prevention Programmes, http://www.wpro.who.int/health_topics/tobacco/publications.htm


http://www.wpro.who.int/health_topics/tobacco/publications.htm




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