Fueled by the internet and the public’s growing distain for corporate greed, hacktivism is a trend on the rise. Today’s hacktivists use increasingly clever tactics in order to elevate public debate about the way corporations do business. In more cases than not, they succeed.

“What we do—and what you can do too—is impersonate captains of industry, infiltrate corporate events, give absurd and revealing presentations, and then escape to tell the story in the press, hopefully to the great embarrassment of the target,” say the Yes Men, a group of hacktivists that recently punked the likes of Chevron, Exxon Mobil, Halliburton, Dow, The U.S. Chamber of Commerce and the United Nations, among others. “You don’t have to be a James Bond for this. But what you might need is a fake email address and a business card.”

Armed with little other than a fake business card, letterhead and a masterfully worded news release, the Yes Men made a big point 2009 after a U.S. Chamber of Commerce “representative”  dramatically announced during a National Press Club event that the Chamber would be changing its position on climate change policy.

“We believe that climate legislation currently being considered by the U.S. Senate is a great start towards a bill that will spur American innovation, create jobs, and give us all a good chance of survival,” the forged news release said. “We at the Chamber have tried to keep climate science from interfering with business. But without a stable climate, there will be no business.”

The hoax circulated virally on You Tube and mainstream television, calling public attention to the growing number of corporations – including Nike, Apple, Exelon, PNM Resources, PG&E, PSEG and Levi Strauss & Co –  that had distanced themselves from the Chamber as a result of its conservative stance on climate change. But rather than publicly confront deeper issues and heed to the demands of its forward-thinking members, the Chamber filed a lawsuit against Yes Men and insisted that all videos of the hoax event be suppressed.

Perhaps Chevron will decide go the same way. Just last week the Yes Men targeted the company’s glossy new “We Agree” ad campaign with a satirical version of their own. Whereas Chevron’s campaign asks rhetorical questions like: “Should oil companies support the communities they work in?” and “Do oil companies need to get real?” Yes Men’s questions dig deeper and call attention to the company’s controversial past.

“Chevron’s super-expensive fake street art is a cynical attempt to gloss over the human rights abuses and environmental degradation that is the legacy of Chevron’s operations in Ecuador, Nigeria, Burma and throughout the world,” says Ginger Cassady, a campaigner at Rainforest Action Network, which collaborated with the Yes Men on the Chevron campaign. “They must think we’re stupid.”

Judging from Chevron’s own issued statement about the hoax, Cassady might be right. “There are some who are not interested in engaging in a constructive dialogue, and instead have resorted to rhetoric and stunts,” the company says, in full-blown denial of its own use of rhetoric and, yes, stunts.

Federal courts are now beginning to raise questions regarding Chevron’s persistent efforts to manipulate the U.S. legal system for its own gain. In an apparent effort to derail a potential multi-billion dollar environmental lawsuit against it, Chevron has filed discovery lawsuits against 23 people in the United States, including several lawyers associated with the ongoing Ecuador case. Chevron is also accused of submitting inaccurate and misleading translations to U.S. federal courts.

Wrong Answer

Legal antics aside, it is all too commonplace for corporations to respond to hacktivists in a gruff and humorless manner. But very often, such responses backfire. That’s because hacktivists are a persistent bunch. They are a professional and tactical force that leverages real data, overtakes live airwaves and mobilizes the masses. Corporate dissidence just furthers their resolve.

In response to Chevron’s issued statement, the Yes Men recently stepped up their campaign with a mock statement of their own and a plea to followers to post additional spoof print, web and TV ads online. “It’s been working,” the group says. “Search Chevron in the news and all you get is our spoof. Fifty million spent to keep our eyes off Chevron’s dirt… and it all just went down the drain!”

Lost advertising revenues are hard enough to recuperate. But what about lost corporate reputation? Some of the hardest hit companies of late leverage wholesome values, providing an easy target for hacktivists on a mission to elevate standards.

For instance, last month Hershey released its first CSR Report. Less than 24-hours later, labor rights groups Global Exchange, Green America, the International Labor Rights Forum and Oasis USA launched a counter report (convincingly titled “Raising the Bar: The Real Corporate Social Responsibility Report for the Hershey Company”) and accompanying web campaign.

“In the United States, Hershey conjures up innocent childhood pleasures and enjoyable snacks,” the counter report says. “However, halfway across the globe, there is a dark side to Hershey. In West Africa, where Hershey sources much of its cocoa, the scene is one of child labor, trafficking, and forced labor.”

According to Global Exchange, despite the fact that Hershey is a brand that both targets and supports youth through its marketing and philanthropy, the company seems unwilling or unable to adequately address the countless children harmed by its supply chain practices. Whereas competitors including Cadbury and Nestlé have at least made tentative steps toward labor reform, Hershey lags behind.

“Maybe Hershey is unaware of how this story has played out before and that some kind of reform is inevitable,” says fair trade chocolate company Equal Exchange’s Rodney North. “Or perhaps they are cynically stalling and trying to put off real reforms for as long as possible.”

Hershey’s real motive for stalled progress is anyone’s guess. The company has done little if anything to publicly acknowledge labor problems, let alone address the burgeoning online crusade against it.

“Hershey has not responded to any part of our campaign,” says Global Exchange’s Adrienne Fitch-Frankel. “We haven’t gotten a response to our repeated requests for meetings either, which is disappointing since this is a company that’s using child labor and child slavery. Their silence is really quite disturbing.”

Hershey might not be talking, but hacktivists, investors, NGO’s, film-makers, journalists, mothers and even children themselves are. Collectively, these stakeholders tell a convincing story.

You can run. But you can’t hide.

When academics, pundits and corporate heavy hitters take the stage to debate semantics, who wins? That question weighed heavily in my mind during last week’s “Great CSR Debate,” an event hosted by PR Firm Fenton and instigated by Professor Aneel Karnani’s controversial Wall Street Journal Op-Ed, “The Case Against Corporate Social Responsibility.”

As the webcast beamed out live to an audience of over a thousand viewers, thought leaders including The Economist’s Matthew Bishop, ThomsonReuters’ Chrystia Freeland, UN Global Compact’s George Kell, BSR’s Aaron Cramer, Campbell Soup’s Dave Stangis and GE Foundation’s Bob Corcoran argued about concept that evidently means different things to different people. As moderator of the debate, my intent was to “navigate” the conversation to the point where a “side” would “prevail.” But within the first few minutes, I realized why efforts in this direction were futile.

“What do we mean by corporate social responsibility (CSR)?” asked Karnani. “It’s not just that the terminology is clunky. It is also unclear.”

Indeed, it is unclear. According to a study published by Wiley InterScience, there are approximately thirty-seven different definitions of CSR floating about the business world. This problem is compounded by dozens of competing CSR or sustainability-related measurement and certification programs. Do well-meaning corporations adopt Cradle-to-Cradle or B-Corp standards? Should they join the Global Compact or Social Accountability 8000? Do Fair Trade or Ethical Trade models make the bigger difference? Who knows?

What we do know is that the old-school CSR rhetoric utterly fails to resonate. At least that was something both sides could agree on. “The problem with the rhetoric is that it can create confusion about what a business is doing in it’s core, versus what it likes to talk about or claim public credit for,” said Freeland, who pointed to campaigns issued by BP, PepsiCo and Goldman Sachs as examples of marketing hypocrisy.

Beyond the language and clear instances of greenwashing, however, there was a deeper point to be made, particularly by practitioners on the panel. When so-called CSR is most effective – when it generates so much value for stakeholders and shareholders that corporations cannot afford to stop investing in it – then it is no longer regarded as CSR, but good business strategy. GE’s multi-billion dollar investments in clean energy and affordable health care stand as a testament to this.

“If you label CSR or corporate citizenship as purely a philanthropic activity, then I agree that’s misguided,” said GE’s Corcoran. “[Authentic CSR] is about the core of what a business does, how it does that, and what it sells that is of value, that helps to meet unmet needs.”

Campbell’s Soup’s Dave Stangis agreed. “CSR is there [at Campbell’s] not because it’s nice to do, but because it makes the company better. It takes money from the supply chain, makes us more nimble and drives innovation.”

Still, despite the demonstrable move toward CSR-driven business models, Karnani insisted that corporations have no obligation to solve society’s ills. “That is the role of government regulation,” he said. “Governments are a far more effective protector of the public good than any campaign for corporate social responsibility.”

Here is where a second key distinction lies. It is one thing for corporations to conduct business ethically – trading within boundaries set by law. However, it is quite another thing for corporations to use laws as a strategic compass. Those that do will be playing catch up forever.

There is also the matter of our transformed society. “We don’t live in a world where government’s only job is to set and enforce rules and businesses only job is to sell products and services within those boundaries,” said Cramer. “We live in a transparent world, a globally connected world, a world where civil society plays a big role, where global markets exist but global governance does not.”  Despite the clunky language, today’s CSR is fundamentally about collaboration, which means getting to optimal solutions faster than if we waited around for regulation or business to advance independently, Cramer explained.

“What is really going on here is a struggle to determine what tomorrow’s markets are going to be in a world that’s changing very fast, where all the old boundaries are breaking down,” said Bishop. “Now we’re all workers, consumers, capitalists and voters. And we’re trying to work out the right institutional arrangements to govern in that new world.”

So where does the “Great CSR Debate” leave divided minds? Perhaps right back where they started, or perhaps pondering the following choice: respond to the new reality, or don’t. Stangis put it this way: “This isn’t a debate about right or wrong, winning or losing. For me, it’s about changing the world, one company at a time – or sitting on the outside describing why that can’t happen.”

by Christine Arena

Why do some companies win public trust and others lose it? That’s a question more people are asking themselves, as global faith in business remains unfortunately fragile. Turns out the trust deficit, a trend on the rise for ten years now, is more than a mere wrinkle on the face of capitalism. It’s a pressing concern for every shareholder.

When companies lose trust, they often lose capital. Case in point: Gulf disaster stocks BP, Halliburton, Transocean and Anadarko each sank between 25 and 45 percent during the past four months. The Goldman Sachs-SEC debacle pushed company shares down by 15 percent, and the Dow down by 130 points. Massey stock plunged 42 percent following a deadly string of safety failures. Toyota shares dropped 16 percent following its massive recall. And as of today, none of these companies has fully rebounded, indicating the markets grow slower to forgive.

“The last couple of years have provided plenty of reasons for a building sense of mistrust,” says Motley Fool’s Alyce Lomax. “Goldman Sachs and BP have become the most recent high-profile examples of the many big institutions whose highly paid managers seem to be only out for themselves. ”

Indeed, the lost faith Lomax describes seems to be the principle reason why many more investors demand greater honesty, disclosure, transparency, and professionalism from corporations – and flee stocks that don’t deliver. According to a recent Wall Street Journal article on the topic: “Small investors’ faith in stocks, which surged in the 1990s, has collapsed since the technology-stock debacle and the Enron and WorldCom scandals of 2000-2002…Investors talk of a growing disillusionment with big institutions, including corporations, government, banks and political parties.”

The reasons for today’s trust deficit are clear enough. What apparently isn’t as clear, particularly to the large corporations whose stocks are affected, is what to do differently in order to set things straight.

For the most part, the corporations mentioned above used a classic crisis management approach: deny, deflect, spin, repeat. Rather than open up, they withheld information. They denigrated critics, blamed others and refused to answer pertinent questions or engage in meaningful debate. They hid behind the veneer of canned statements and corporate rhetoric – with the occasional blunder thrown in.

There is “no evidence” that huge plumes of oil are suspended undersea, said BP. The charges against us will “hurt America,” said Goldman. The safety-related allegations against us are “a big lie,” said Massey. The independent research from Stanford University was “staged,” said Toyota.

When it comes to rebuilding lost trust, propaganda makes a bad problem worse. What improves situations is candor. Candor conciliates, clarifies and cuts through hype. Candor works. It’s the greed of the Twenty-first Century.

“Candor in business – or in any kind of organization – is a rare and wondrous thing,” write Suzy and Jack Welch in their book, Winning. “Rare because so few companies have it. Wondrous because when they do, everything just operates faster and better.”

Consider the success of online retailer Zappos, which grew its recently acquired, billion dollar business in under five years by forging open and honest relationships with people. From its standing invitation to the general public to come tour Zappos’ headquarters to its progressive use of blogs, videos and books – Zappos gives people outside the company an uncensored look inside the corporate culture. It even goes to so far as to share best practices with competitors.

“A lot of companies feel they need to guard the secret sauce,” said Zappos marketing executive Aaron Magness in a recent interview. “We’re very open to talking about our business model and plans with everyone. We’ve learned a lot along the way and made mistakes that a lot of other companies don’t need to make.”

Smart companies like Zappos don’t just aim for candor. They leverage it, invest in it, profit from it, and build new communities around it. For instance, Sun Microsystems CEO Jonathan Schwartz blogs freely about what his company and industry does right and wrong, engaging people on all sides of his business. Apparel company Patagonia tracks the social and environmental impact of its products from design through delivery, encouraging customers to buy smarter and contribute to rich discussions. Seventh Generation reveals the full list of ingredients used in its household products, earning customer loyalty and pressuring its industry to follow suit.

Candid companies help restore lost trust and balance to the markets. Rather than telling shareholders or stakeholders what to think, they allow the community to draw its own conclusions, which is precisely why people believe in them. As Seventh Generation’s Jeffrey Hollender said in a recent speech: “You can’t judge yourself to be sustainable or responsible. You can only be judged by others.”