There are few sectors more controversial than the tobacco industry, especially when it comes to matters of ethics. Critics even go so far as to say that 'socially responsible tobacco' is a contradiction in terms, while tobacco companies themselves claim that they can be good corporate citizens, despite the risks associated with their product.

British American Tobacco is a typical example of the paradoxical nature of the debate. On the one hand, they were cited by Multinational Monitor as one of 10 Worst Corporations of 2002, 1 but they are simultaneously the first tobacco company to be listed on both the 2003 Dow Jones Sustainability World Index and 2003 Dow Jones STOXX Sustainability Index. 2 In April, their AGM was marred by activist protesters from the Burma Campaign UK 3 and Friends of the Earth 4 and the directors faced shareholder questions on the ethics of their joint-venture partnership with the dictatorial Myanmar government (formerly Burma). On the other hand they were provided with an ACCA award in the UK and a KPMG award in South Africa for Social Reporting. 5 Chairman of BAT, Martin Broughton, admitted that "CSR is a challenge in a business involving risky products", but argued that "it would be self-defeating if CSR were to become an exclusive club, admitting only businesses judged 'safe and pure.'" 6

At least there is one thing that tobacco companies and their critics both agree on and that is the central issue of the health impacts of cigarettes. According to the World Health Organisation's (WHO) 2002 publication, The Tobacco Atlas, smoking kills 4.9 million people every year and "of everyone alive today, 500 million will eventually be killed by tobacco." 7

In the face of sustained pressure by various stakeholder groups over the past few decades, tobacco companies no longer deny the link between use of their products and certain diseases. Bizarrely, many have even adopted the self-abusing slogan that 'there is no such thing as a safe cigarette' and pride themselves on the advice they provide for those who are trying to quit the addictive habit. 8 Given the de facto admission of guilt in terms of the harmfulness of their product, the industry faces an enormous challenge to their sustainability as they are hit by wave upon wave of liability suits. As the legal activity of the past quarter shows, the proverbial jury is still out on this question of long term survival of tobacco companies, with some court case decisions going in favour of the industry and others against.

For example, while an Illinois court ordered in March that Philip Morris USA to pay US$10.1 billion to smokers who claimed they were misled into believing that Marlboro 'lights' were less harmful to their health (the so-called Price case), two similar decisions were decertified on appeal in May: the Engle class action case in Miami involving a judgement of $145 billion and the Aspinall case in Massachusetts. 9 RJ Reynolds and Lorillard also turned the tables in April by suing the State of California for TV anti-smoking adverts that suggest that tobacco companies deliberately target children by selling near to schools. 10

Even the government is getting in on the act. The US Department of Justice filed evidence in January and March in its case against cigarette makers (including Philip Morris, RJ Reynolds and British American Tobacco's Brown & Williamson), claiming US$289 billion. The court case, which is based on the allegations of misleading advertising, is due to begin in 2004 and aims to recover the healthcare costs paid by the Federal Government over cigarette-related illnesses costing an estimated US$20 billion per year. 11 Not all governments are taking such a tough stance, however, given the powerful political and economic forces at play.

In June, the Asia Times cited the World Bank as saying that almost 80 percent of tobacco consumption worldwide occurs in Asia, with China's estimated 350 million regular smokers alone accounting for half of the global total. Furthermore, about 11 percent of all tax revenues in China, the Philippines and Turkey are derived from tobacco sales and 9 percent in Indonesia, while the governments of Australia, Pakistan and Russia capture 70 percent of the income from every cigarette that is sold. And at an economic level, domestic tobacco industries employ an estimated 3 million to 5 million people in Asia. 12

Together, these facts point to the powerful incentives that still exist in support of the tobacco industry. Anti-tobacco lobby groups will be quick to point out that these numbers do not automatically imply a net economic gain. For example, in the same article referenced above, the Asia Times cited a World Bank study in India which found that productivity losses resulting from medical afflictions were almost twice as great as national earnings from the production, sale and taxation of tobacco products. 13 But then there is also the pro-tobacco argument that, with increasingly transparent disclosure about the health risks associated with smoking, restricting consumption is interfering with individuals' freedom of choice. Others would retort that an addictive product is not one that can be defended on the principle of freedom of choice.

Many questions remain unresolved, particularly for those engaged in debates about corporate citizenship. By what criteria might we judge the ethics of tobacco companies? On their social and environmental principles and policies, or the extent of their stakeholder engagement and social responsibility programs? Perhaps the transparency of their product information and sustainability performance reporting? Or would this avoid the key issue of a harmful product, and the power of addiction? Business in the Community's Mallen Baker suggested that one of the most important things would be the position taken by tobacco companies on the regulation of their activities. 14 For years efforts have been underway to regulate tobacco advertising, for example, often thwarted by corporate lobbying.

A significant milestone came in May when the Framework Convention on Tobacco Control was adopted unanimously by the World Health Organisation's 192 member states. The Convention requires countries to impose restrictions on tobacco advertising, sponsorship and promotion, establish new labelling and clean indoor air controls and strengthen legislation to clamp down on tobacco smuggling. 15

Interestingly for those who would consider companies to always be adverse to such intergovernmental regulation of their activities, some tobacco companies were actually supportive of the move. The concerns of Asian tobacco producers about the US and other Western tobacco companies using trade agreements to lower trade barriers was key to some Asian governments supporting the Convention. This was because local companies did not believe they would be able to compete with well-marketed Western cigarette brands. Consequently, they looked at Thailand, where the introduction of tough advertising laws had restricted the ability of new brands to penetrate the Thai market, despite the country being ordered by the WTO to remove its trade barriers to foreign tobacco companies. The fact that different companies in different regions of the world can support regulatory initiatives should not be missed by advocates of corporate accountability. [See 'Cracks in A Wall of Silence' for more on progressive corporate lobbying.]