JetBlue’s Deja Vu: Sort of But not Exactly

In 2007, JetBlue received intense media coverage (traditional and social) for stranding passengers on the tarmac, in a snow storm at the JFK airport in new York City for up to 14 hours on St. Valentine’s Day.  It became known as the “St. Valentine’s Day Massacre” for JetBlue.  JetBlue became an icon for crisis communication as its CEO, David Neeleman, began a series of media interviews to apologized for the situation and announce JetBlue’s “Customer Bills of Rights.”  The Bill of Rights set up a compensation program for flight delays including being stuck on the tarmac.  Neeleman even appeared in YouTube video to offer the apology.  Though people were horrified that passengers could be stuck on a plane for 14 hours in the snow for a supposedly three hour flight, JetBlue was generally praised for its response.  In part, the crisis was viewed as an extreme event that was unlikely to be repeated.  The snow storm was unusually bad and the planes just happened to leave the gate at an inopportune time.  This would not happen again, probably.

JetBlue seemed to experience déjà vu in October of 2011.  On Saturday, October 29, JetBlue Flight 504 departed Fort Lauderdale, FL for Newark, NJ.  An unusual October snow storm moved into the northeast causing flight problems for Newark and other nearby airports.  Due to the weather, Flight 504 was re-routed to Hartford, Connecticut (Bradley International Airport).  It is not unusual to re-route a plane because of weather.  Neither the airline nor the passengers like re-routing.  Passengers are not where they should be neither are the planes and crews.  The airline has to sort out how to get the passengers, planes, and crews to where they should be.  In short, re-routing is unpleasant for all involved.  But the problems with Flight 504 were just beginning. 

Flight 504 arrived at Bradley International at 1:07 pm.  The passengers left the flight at 9:00pm.  That was over seven hours on a tarmac waiting to de-plane.  JetBlue management was having a form of déjà vu.  They had a freak snow storm and people stuck on the tarmac.  The situation was not exactly the same as in 2007.  In 2007, the planes had left the gate with the hopes of taking off from the airport.  The planes could not takeoff nor could they return to the gate.  The circumstances that lead to the plane being on the tarmac were different but the had the same general outcome:  passengers stuck on the tarmac, due to snow, for a long period of time.  Moreover, there were the same issues of the plane running out of water and food while bathrooms broke down as well.  Here is a short description for a Washington Post Story about the experience:

“The toilets were backed up. When you flushed, nothing would happen,” said Andrew Carter, a reporter for the Sun Sentinel of Florida, who was traveling to cover the Miami Dolphins game against the New York Giants. His plane took off from Fort Lauderdale for Newark Liberty International Airport at around 9 a.m. After being diverted to Hartford, the plane sat on the tarmac between around 1:30 p.m. and 9 p.m., he said.

The situation was complicated further by passengers with medical conditions.  In fact, the news reports indicated that the reason the situation was resolved was the need for medical attention. 

Here is short chronology of the situation based upon a news report:

“At the three-hour mark they told us by law they had to let us off the plane. They were waiting for a tug to take us to a gate. We heard that same message at the four-hour mark, and continuing until state troopers boarded the plane for a medical emergency,” said Robert, a passenger who did not want to give his last name.

A paraplegic on the flight had a medical issue, and about seven hours after the plane landed.  It was at that point that police and firefighters came onboard to render medical assistance.  

“Still on the plane. We haven’t moved. Now EWR closed. Getting ugly in here. People yelling wanting to get off,” Andrew Carter said via Twitter just before 6 p.m.

One passenger noted at the end of the above news report:  “I’ll never fly JetBlue again, and I’ll never fly through Connecticut again”

CNN reported the following as JetBlue’s response: 

JetBlue apologized for the situation and blamed it on a “confluence of events,” including intermittent power outages which complicated matters.

“We worked with the airport to secure services, but our flights were six of the 23 reported diversions into Hartford, including international flights (picture big jets carrying hundreds of people), the airline said on its website. “Getting all the flights deplaned at the same time in a small airport is not unlike trying to get an elephant into a smart car; it’s not an easy fit.”

Passengers deplaned around 9 p.m., according to JetBlue.

Here is more of the JetBlue statement:

 ”JetBlue is doing everything possible to ensure our customers affected by today’s unusual combination of weather and infrastructure issues are being well cared for. We apologize for the experience.”

Unfortunately, no official statement appeared on the JetBlue web site within 24 hours of the crisis.  Most of the news stories noted a representative for the Bradley International Airport was not available for comment.  Hence, the airport was silent immediately after the crisis.

The social media was filled with stories, including some video from the plane, and commentary about Flight 504.  Here are some comments from the Washington Post web site about the story:

As long as people continue to willingly do business with corporations who care not a damn about them — due in the main to Congress’s refusal to hold those corporations responsible… for anything — then people have only themselves to blame for how they are treated. Want customer service at the airlines to improve? Simple: STOP. BUYING. TICKETS.

What is it about airlines that renders them so incapable of dealing with what should be a relatively simple problem? If the plane isn’t ready to go, allow passengers to disembark. It’s incredible that this scenario keeps repeating itself, and the airlines almost never offer any reasonable explanation once the ordeal is ended. It’s as if they’re just clueless.

Here are comments for the Huffington Post about Flight 504:

I thought it was good reportage to get all the facts before publishing a story? The 3 hr. rule was violated, by whom? Jet Blue who seems to be getting the brunt of the bad press. Or the Connecticu­t airport authoritie­s?

This happens every year. You’d think after all this time they’d learn how to deal with something like snow.

Update

JetBlue has gone social in its response, similar to the 2007 crisis.  A statement about the crisis appears on the JetBlue blog, BlueTales.  Here is the posting:

October 30, 2011

Dreaming Of A White Halloween? Information Regarding This Weekend’s Storm

Some people dream of a white Christmas; apparently Mother Nature was dreaming of a white Halloween this weekend. Winter reared its ugly head earlier than usual yesterday, causing a major crease in air travel.

On top of the obvious operational hiccups to flying airplanes in bad weather - wind, rain, hail, snow and ice – an additional unfortunate mix of circumstances caused a messy day operationally and has made the recovery for us and other airlines operating along the East Coast more challenging.

During the storm, multiple instrument failures occurred at JFK and Newark, affecting all carriers. This equipment is needed for flights to land when visibility is low; while it was out of service, both airports stopped accepting arrivals and eventually, a number of flights had to divert elsewhere to get more fuel.

Six of our flights diverted to Hartford. We worked with the airport to secure services, but our flights were six of the 23 reported diversions into Hartford, including international flights (picture big jets carrying hundreds of people). Getting all the flights deplaned at the same time in a small airport is not unlike trying to get an elephant into a smart car; it’s not an easy fit. As if things weren’t challenging enough, the airport experienced intermittent power outages, which made refueling and jetbridge deplaning difficult (not to mention the roads there were bad, which put a wrench in getting buses to the airport to alternatively get everyone where they needed to go). Temporary loss of de-icing capability added yet another challenge to being able to get planes out in Hartford.

Diversions in general, especially weather-related, are something that we plan for regularly. If heavy winds or a blizard are coming in, we look at our major cities and secondary cities in advance, sending the area’s airports a list 24-48 hours out asking what their capabilities are for handling diversions. We look at things like: does the airport have TSA on hand, buses, staffing, customs agents, etc. so we have it ahead of time. Flights are planned with alternates in mind and fueled accordingly.

Most diversions during weather are what we call “fuel and go” events. They happen specifically so we can get enough gas to navigate around the weather that’s built up in a certain area. Sometimes, the diversion is simply to wait out the storm.  In the case of Hartford, unfortunately, a power outage and failure of back up power resulted in the fuel supply being disrupted and the fueling of all airline diversions was halted.  The capability to refuel aircraft was restored later, after which we planned our four extra sections for today (3 to JFK, 1 to EWR) and approximately 500 of the roughly 700 customers who were diverted there are booked on them today.

A special thank you goes out to John, our General Manager Hartford and his team for working through the night and into today to recover the operation there. Another thank you goes out to JFK who sent additional crewmembers and leadership to Hartford to assist in preparing our aircraft and processing customers for today’s extra flights. And a big thank you goes out to our customers for their patience during this weekend’s challenges.

We apologize to those impacted by this confluence of events, as it remains our responsibly to not simply provide safe and secure travel, but a comfortable experience as well.

We’re offering customers traveling to/from the New York area today fee waivers to change or cancel their flights. Check jetblue.com for the full details and be sure to check the status of your flight before heading to the airport.

The web site link has operational information to help passengers cope with the disruption.  This includes waiving the change/cancel fees for those affected by the storm. 

JetBlue also has a video on their web site and linked to YouTube.  The video is an apology from Rob Maruster, Jet Blue’s chief operating officer.  Here are some of the reactions to his video:

 

• Fire Him Now. No Bonus No Excuses Dock His Pay!!
  • Lame
  • You Lie!!!!!!!!!!!!!!!!!!!!!!!!!

• I’m reading some of these comments so far and everybody is quick to pass judgement. What the media not telling you is that the airport had power outages very frequently and the reason for all those planes was because Boston airport turned away a lot of international and dosmetic diverting flights not because there system was down or they reach capacity but because Libyian fighters was more important. I’m not trying to push the blame one way or another because someone will take the fall for this
• Rob- Were you the VP of Airports the last time this happened in 2007? Barger was the COO and it was the Founder who took the fall for your incompetence. It looks like you two haven’t learned a thing, in fact it has gotten worse. Jetblue’s customers and crew members deserve ALOT better. It is time to clean house and bring in more competent management!!!!!
• You need to do better than this. This is not the first time this has happened. The excuses have worn thin.

• Mr Maruster’s body language speaks far louder than his words, and he is just going through the motions to give us the impression he and his ilk will correct this problem post haste. This man know full well that lessons learned from multiple events going back to February 2007 have been set aside, all for the sake to save a few more bucks and most likely increase his executive bonus. He should be tossed for his deliberate actions to ignore what is already well documented at Forest Hills.
• And a third chance after the next storm and a fourth chance after the storm after that. And so on.. and so on… Your pilot’s recodring to air trafiic control was played and he said his own company would not help. Bad, real bad.

Question to Consider:

1.  Do you think JetBlue’s initial response will be effective?  Why or why not?

2.  Is it ethical for the Bradley International Airport not to comment early in the crisis? Why or why not?

3.  If you worked for Bradley International Airport, what would you recommend as their crisis response and why would you offer that particular advice?

4.  What role does the 2007 event play in this crisis?

5.  What do the online comments tell you about stakeholder reactions?

6.  How could JetBlue use the comments to help them evaluate and to shape follow-up crisis messages?

7.  What role does social media play in escalating this crisis?  How can it help to de-escalate it?

8.  Based on the video comments, how would you judge reactions to the video apology?

9.  What are the advantages of JetBlue using social media in their crisis response?  The disadvantages?

Cantaloupe III: Blame and Punishment

Cantaloupe III:  Finding Blame

As of October 18, 2011, the listeria outbreak in 26 states had been linked to 25 deaths and 123 people being infected.  Of course the number of infected is probably much higher because food-borne illnesses are unusually underreported because people think it might just be the flu.  The fallout from the investigation is starting to become clearer.  As anticipated in an earlier blog, the cantaloupe industry is feeling the effects of the outbreak not just Jense Farms the source of the outbreak.  Consumers have begun to fear cantaloupe and are avoiding eating it.  Growers in the Rocky Ford area of Colorado have seen the clearest sense of guilt by association.  Jensen Farms used the name Rocky Ford for its cantaloupes even though the farm is 90 miles from the area.  People here Rocky Ford and think dangerous melons.  And the crisis could linger, as one news story reported:  “Eric Hanagan, a farmer in the Rocky Ford region, fears cantaloupe sales will drop next year and plans to plant about 50 percent less, replacing it with a lower-income crop like corn. Still, he said he wasn’t angry at Jensen Farms.”  

Farmers in California and Arizona are feeling the effects of dropping sales as stores pull cantaloupe regardless of its origin.  Stores simply believe customers are too afraid to buy the fruit.  Here is one description of the situation facing California growers:

“On an October day in the midst of harvest season, two farmworkers sat idly in their home in a Central California town that touts itself as ‘the cantaloupe center of the world.’

Instead of picking the melons and supervising a work crew, Dora and David Elias of Mendota were unemployed—laid off along with hundreds of others as the cantaloupe listeria outbreak traced to Colorado rippled across the nation.

The pangs were particularly felt here in the top cantaloupe-producing state. Sales of California cantaloupes plummeted, even though their fruit was perfectly safe to eat. Farmers abandoned fields. Farmworkers lost jobs.

‘We can’t sell the fruit,’ said Rodney Van Bebber, sales manager for Mendota-based Pappas Produce Company. ‘Retail stores are taking cantaloupes off the shelves, and growers are disking in their fruit because people are afraid to eat them.’”

The news has not improved for Jensen Farms either.  The initial report from the Food and Drug Administration points to sanitation issues at the farm.  When people here there was lack sanitation, they will begin to place greater blame for the crisis on the people operating Jensen Farms even though there are not specific violations of regulations.  Here is the FDA preliminary statement that appeared online and in news stories:

FDA Publishes Report on Factors Potentially Contributing to the Contamination of Fresh, Whole Cantaloupe Implicated in the Multi-State Listeria monocytogenes Foodborne Illness Outbreak

On October 19, 2011, FDA released a document which provides an overview of factors that potentially contributed to the contamination of fresh, whole cantaloupe with the pathogen Listeria monocytogenes, which was implicated in a 2011 multi-state outbreak of listeriosis. In early September 2011, the Food and Drug Administration (FDA), in conjunction with the Centers for Disease Control and Prevention (CDC) and state health departments, began to investigate a multi-state outbreak of listeriosis. Early in the investigation, cantaloupes from Jensen Farms in the southwest region of Colorado were implicated in the outbreak. 

On September 10, 2011, FDA, along with Colorado state officials, conducted an inspection at Jensen Farms during which FDA collected multiple samples, including whole cantaloupes and environmental (non-product) samples from within the facility, for laboratory culturing to identify the presence of Listeria monocytogenes. Of the 39 environmental samples collected from within the facility, 13 were confirmed positive for Listeria monocytogenes with pulsed-field gel electrophoresis (PFGE) pattern combinations that were indistinguishable from three of the four outbreak strains collected from affected patients. Cantaloupe collected from the firm’s cold storage during the inspection was also confirmed positive for Listeria monocytogenes with PFGE pattern combinations that were indistinguishable from two of the four outbreak strains.

As a result of the isolation of outbreak strains of Listeria monocytogenes in the environment of the packing facility and whole cantaloupes collected from cold storage, and the fact that this is the first documented listeriosis outbreak associated with fresh, whole cantaloupe in the United States, FDA initiated an environmental assessment in conjunction with Colorado state and local officials. FDA, state, and local officials conducted the environmental assessment at Jensen Farms on September 22-23, 2011. The environmental assessment was conducted to gather more information to assist FDA in identifying the factors that potentially contributed to the introduction, growth, or spread of the Listeria monocytogenes strains that contaminated the cantaloupe. 

FDA identified the following factors as those that most likely contributed to the introduction, spread, and growth of Listeria monocytogenes in the cantaloupes:

Introduction:

• There could have been low level sporadic Listeria monocytogenes in the field where the cantaloupe were grown, which could have been introduced into the packing facility
• A truck used to haul culled cantaloupe to a cattle operation was parked adjacent to the packing facility and could have introduced contamination into the facility

Spread:

• The packing facility’s design allowed water to pool on the floor near equipment and employee walkways;
• The packing facility floor was constructed in a manner that made it difficult to clean
• The packing equipment was not easily cleaned and sanitized; washing and drying equipment used for cantaloupe packing was previously used for postharvest handling of another raw agricultural commodity.

Growth:

• There was no pre-cooling step to remove field heat from the cantaloupes before cold storage. As the cantaloupes cooled there may have been condensation that promoted the growth of Listeria monocytogenes.

FDA’s findings regarding this particular outbreak highlight the importance for firms to employ good agricultural and management practices in their packing facilities as well as in growing fields. FDA recommends that firms employ good agricultural and management practices recommended for the growing, harvesting, washing, sorting, packing, storage and transporting of fruits and vegetables sold to consumers in an unprocessed or minimally processed raw form. 

FDA has issued a warning letter to Jensen Farms based on environmental and cantaloupe samples collected during the inspection. FDA’s investigation at Jensen Farms is still considered an open investigation.

Jensen Farms’ Recall

Jensen Farms voluntarily recalled¹ its whole cantaloupes on Sept. 14 in response to the multi-state outbreak of listeriosis. Cantaloupes from other farms have not been linked to this outbreak.

FDA has successfully audited the majority of Jensen Farms’ direct and secondary accounts. The recalled cantaloupes were produced from the end of July to September 10, 2011. Given that the Jensen Farms’ recall has been in effect for more than a month and that the shelf life of a cantaloupe is approximately two weeks, it is expected that all of the recalled whole Jensen Farms cantaloupes have been removed from the marketplace.

FDA has verified that the following states received recalled cantaloupes directly from Jensen Farms: Arizona, Arkansas, Colorado, Idaho, Illinois, Indiana, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, North Dakota, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Wisconsin and Wyoming. There is no indication of foreign distribution. 

Consumer Safety Information

Listeria can grow at refrigerator temperatures, about 40^◦ Fahrenheit (4^◦ Celsius). The longer ready-to-eat refrigerated foods are stored in the refrigerator, the more opportunity Listeria has to grow.

It is very important that consumers clean their refrigerators and other food preparation surfaces. Consumers should follow these simple steps:

• Wash hands with warm water and soap for at least 20 seconds before and after handling food.
• Wash the inside walls and shelves of the refrigerator, cutting boards and countertops; then sanitize them with a solution of one tablespoon of chlorine bleach to one gallon of hot water; dry with a clean cloth or paper towel that has not been previously used.
• Wipe up spills in the refrigerator immediately and clean the refrigerator regularly.
• Always wash hands with warm water and soap following the cleaning and sanitization process.                           

FDA advises consumers not to eat the recalled cantaloupes and to throw them away. Do not try to wash the harmful bacteria off the cantaloupe as contamination may be both on the inside and outside of the cantaloupe. Cutting, slicing and dicing may also transfer harmful bacteria from the fruit’s surface to the fruit’s flesh.

Listeriosis is rare but can be fatal, especially in certain high-risk groups. These groups include older adults, people with compromised immune systems and unborn babies and newborns. In pregnant women, listeriosis can cause miscarriage, stillbirth, and serious illness or death in newborn babies, though the mother herself rarely becomes seriously ill. A person with listeriosis usually has fever and muscle aches. Persons who think they might have become ill should consult their doctor.

For more information on the epidemiologic investigation, please refer to CDC’s Investigation on the Multi-State Listeriosis Outbreak².

Questions to Consider

1.  What might the unaffected producers do to protect themselves from the crisis and why might those actions be helpful?

2.  Why should the FDA report intensify the crisis for Jensen Farms?

3.  Is it fair for stores to remove cantaloupe from their shelves?  How can they justify such actions?

4.  What role does the number of deaths and infections do to keep the crisis alive?

5.  What actions should Jensen Farms be taking at this point to address the crisis?  How would those actions be related to risk communication? 

6.  How should the crisis effect the discussion of food safety in the US?

Wal-Mart China “Pork Scandal”: When Pork is not “Green”

Employees of a Wal-Mart in Chongqing, China were accused of mislabeling pork as organic.  The pork was not organic and should have been considered “green.”  Two employees were arrested, another 25 detained, and seven confined to their homes.  A total of 13 Wal-Mart stores were temporarily closed in the area.  Wal-Mart opened stores in Chongqing in 2006 (Wal-Mart has been in China since 1996) and has been 21 times in that area for selling uninspected or expired food and false advertising.  As one analysts observed:  “Wal-Mart has a record of other incidents related to its credibility in China and not in Chongqing alone.  The latest incidents added even more pressure on Wal- Mart and drive consumers to its competitors.”

Wal-Mart has been fined 3.65 million yuan for ($574,000) for the mislabeling.  That is five times the value of the mislabeled pork that was sold.  This may seem like an extreme reaction for mislabeling pork as organic.  However, this crisis is set against the backdrop of some very serious food scandals in China including banned additives in pork, dyed buns, hormone injected watermelons that exploded, and the melamine-tainted dairy products in 2008 that killed six children.  Wal-Mart is not responsible for any of those problems but the number and severity of the tainted food concerns has raised food safety as a “hot” issue in China.  Western firms have come under very close scrutiny over food issues due to this increased government vigilance.  Some claim even closer scrutiny that Chinese firms:

“Foreign supermarkets get targeted more for this,” said Paul French, founder of Shanghai-based market research company Access Asia. “I am sure Chinese supermarkets do it too but they have a level of protection at the moment from the government that does not want too many scandals among local food-related companies after the bad formula, tainted milk and endless scandals.”

The Chinese consumer market is massive.  Wal-Mart wants to be a part of that market to increase its profits.  However, Wal-Mart faces strong competition from other competitors including China’s Sun Art, China Resources Enterprise, Tesco (UK brand), Metro (German brand), and Carrefour (French brand).  Wal-Mart is second in Chinese market share but Carrefour is close behind.  Mis-steps such as the pork scandal could allow Carrefour and others to overtake Wal-Mart in China.

Here is Wal-Mart’s initial statement on the situation:

SHENZHEN, China—Walmart China issued a statement regarding recent store closures in China. The company was ordered to close several stores in Chongqing because of the mislabeling of pork products. The Chongqing Administration of Industry and Commerce says Walmart mislabeled regular pork as “green,” or organic, pork.

The statement follows:

“We were officially directed earlier today by the Chongqing Administration of Industry and Commerce (AIC) to temporarily close some of our stores in Chongqing for a period of 15 days.

We believe the closure has come about as a result of a recent investigation in some of our stores in Chongqing due to the “green pork” incident by which the rights of consumers were infringed.

We have fully cooperated with the investigation and focused upon the fastest implementation of corrections suggested by the local AIC. Some Walmart associates have been detained by the Chongqing Public Security Bureau (PSB). Walmart China is cooperating fully with the PSB and doing everything possible to conclude the investigation.

A taskforce from Walmart China headquarters was sent to Chongqing to work closely with the respective stores and the local officials of the AIC immediately after notification of the investigation several days ago. They are leading the Walmart commitment to ensuring our stores in Chongqing follow Walmart’s strict inspection and management policies and taking all necessary steps to ensure this does not recur. Walmart is committed to protecting the rights of consumers and will spare no efforts in this regard.

The closure of the stores in Chongqing for the next 15 days will allow us time to focus on implementing corrective actions.

Walmart is an important part of the Chongqing community, and we care deeply about the well being of the community with over 3000 of our own associates living and working in Chongqing. We are deeply sorry for the inconvenience this may cause our customers and are even more determined to meet the service expectations they have of us.”

Questions to Consider

1.  Based upon SCCT, what type of crisis is Wal-Mart facing in China?  What evidence lead you to that conclusion?

2.  Based upon SCCT, evaluate Wal-Mart’s initial crisis response.  Did it fit with the prescriptions from SCCT?  Why or why not?

3.  Does it matter that Western brands get closer scrutiny about food safety in China that local brands?

4.  What impact will Wal-Mart’s past violations have on the current crisis and why?

5.  What other advice would you give Wal-Mart about responding to this crisis and why?

6.  What makes this situation a crisis for Wal-Mart?  For consumers in China?

7.  What role might risk communication play in this situation?

Crisis Insurance for Reputations: Ironically from AIG

AIG are three letters associated with the financial crisis of 2008 and the US government bailout of corporations.  AIG received billions in bailout money from the US government after it lost nearly $100 billion dollars in 2008.  In fact the US Treasury still owns a majority of AIG’s common stock.  The price of that stock is still down 95% from its pre-crisis high.  AIG rebranded AIU in Chartis in 2009.  The rebranding was seen as an effort to separate Chartis, a branch of AIG that was profitable in 2008, from AIG thus sparing it the reputational damage created by AIG’s controversial bailout.  Here is how Chartis presents itself on its web site:

Finding New Ways to Lead

We have established ourselves as a world leader in insurance by helping our partners and customers realize their own plans for the future. Our fundamental strength lies in the 40,000 employees who serve more than 70 million clients around the world.

Every day, our people deliver commercial and personal insurance offerings through hundreds of innovative products and services. By counting on us to meet their unique insurance needs, our clients are able to pursue a secure course toward their goals.

Partnering With Our Customers Along Their Way

You can be sure that you have a dedicated partner in Chartis, one who will take on your challenges as its own. By meeting straightforward needs as well as solving complex issues, we make your confidence our number one priority. Whether the need is as fundamental as insuring a home, or as nuanced as covering environmental exposures, we’re committed to delivering what matters most to you.

Commercial Insurance

Every day, our people bring a critical measure of confidence to the plans and projects of businesses like yours. We provide commercial insurance products and services to the full spectrum of enterprises all around the world—from large, multinational, and mid-sized companies to small businesses, entrepreneurs, and non-profit organizations.

Our offerings span traditional insurance categories such as property and casualty, and extend to new areas like political risk and crisis coverage. We also offer a breadth of products designed to meet the special requirements of particular industries.

As your needs evolve, so do our offerings: We maintain an ongoing dialogue with our diverse client base in order to identify emerging risks and respond with innovative underwriting solutions. To learn more about how Chartis can help you with your commercial insurance needs, please visit www.chartisinsurance.com.

Personal Insurance

Chartis has a long history of offering personal insurance solutions to meet the particular needs of individuals, families and students worldwide. Our products and services are tailored to meet the needs of consumers around the world.

Chartis is flexible and grows alongside you and your family. We consistently create dependable new offerings that address changes in your current lifestyle as well as your plans for the future. Our personal insurance solutions encompass a wide array of products, which can be tailored to meet your current and emerging needs.

To learn more about how Chartis can help you with your personal insurance needs for all ages, life stages and lifestyles, please visit www.chartisinsurance.com.

There is no mention of its roots in AIG.  Rebranding to protect reputations is based upon distance and Chartis keeps a wide distance from AIG.

This week, Chartis began offering customers a new insurance product known as ReputationGuard.  ReputationGuard is one of many crisis-related insurance products offered by Chartis.  The novel aspect of the new product was the recognition of the need to protect reputations during a crisis.  Here is how Chartis explains ReputationGuard:

Press Release Source: Chartis On Tuesday October 11, 2011, 9:04 am EDT

NEW YORK–(BUSINESS WIRE)– The Chartis insurers today introduced ReputationGuard, an insurance policy that provides innovative coverage to help policyholders cope with reputational threats. Developed by Chartis’ Executive Liability division, ReputationGuard delivers the benefit of both access to world-class reputation and crisis communications professionals as well as coverage for costs associated with avoiding or minimizing the potential impact of negative publicity. The result is cutting-edge coverage against publicity that puts reputation and brand image at stake.

A recent survey of public and private board members shows that 69% of them now rank reputation risk as their primary concern.¹ Another recent survey found that 79% of business decision makers believe they are only 12 months from a potential crisis.²

ReputationGuard gives policyholders access to a select panel of the internationally recognized and award winning communications firms of Burson-Marsteller and Porter Novelli. These firms are committed to providing strategic guidance and implementation support on critical communications issues on global, national and local scales.

Threats to reputation and brand image are more common and wide reaching today than ever before—and can impact a company’s bottom line. Events such as executive scandals, questions about product safety, data breaches, litigation and other negative publicity can become front page news and quickly impact reputation or brands. ReputationGuard combines the global reach of Chartis and its partners to increase an organization’s preparedness and access to key resources to stem the flow of damaging publicity in order to help protect its most valuable asset – its reputation.

“In today’s world, one person’s negative opinion can quickly become adverse publicity on a global scale,” said Tracie Grella, President of Chartis’ Professional Liability unit. “Public perception of the response to an event can have a lasting impact on an organization’s reputation. ReputationGuard is a unique solution to this exposure.”

Policyholders will gain access to a panel of world-renowned public relations experts and their affiliates:

Burson-Marsteller: Burson-Marsteller is a leading global public relations and communications firm operating across 96 countries. Companies engage Burson-Marsteller when the stakes are highest, during a crisis or at times of fundamental change or transition. It provides companies in crisis with strategic counsel and program development across the spectrum of public relations, public affairs, digital media, advertising and other communications services. For more than half a century, Burson-Marsteller has been selected time and again as a trusted partner to some of the world’s largest companies.

Porter Novelli: A global public relations leader, Porter Novelli has been providing issues and crisis counsel for nearly 40 years, serving clients from 90 locations around the world. Last year the agency introduced its Real-time Reputation specialty, which recognized that a world in which social media can damage hard-won reputations in just minutes requires a fundamentally different way to practice crisis communications. Porter Novelli’s Real-time Reputation Specialty is an end-to-end offering that includes everything from preemptive communications to programs that help restore corporate reputation after an incident. Its team of specialists in brand, corporate communications and social media work with senior corporate and public affairs communicators to plan for adverse events and move rapidly – within minutes – to manage these events both online and off, employing both conventional and digital means to mitigate possible damage to corporate reputation.

Analysts feel the product will be attractive to small and medium sized companies that lack in-house crisis communication capabilities. 

Burson-Marsteller is actually a link back to AIG.  Burson-Marsteller was hired by AIG to help it combat the reputational damage it was suffering from the bailout.  Critics did note that AIG used money from the US government to pay for consulting help designed to address problems from taking that same money from the government.  It was interesting that some news reports used the ReputationGuard announcement to link AIG to Chartis.  In a way, the announcement became a potential reputational threat for Chartis. 

Questions to Consider:

1.  What are the ethical implications of rebranding to escape past problems?  Is there an element of deception in this strategy that should raise ethical concerns?

2.  How much of a threat to Chartis is the revived connection between it and AIG?  Justify your evaluation of the threat?

3.  How does ReputationGuard help to validate much of the crisis communication research about crisis and reputation such as SCCT?

4.  Why was the bailout such a crisis for AIG?

5.  How does being part of ReputationGuard help of hurt the reputations of Burson-Marsteller and Porter Novelli?

6.  If you worked for a company, how would you justify either purchasing or not purchasing ReputationGuard?  In your answer consider the limits to ReputationGuard as a crisis management device.

Cantaloupe Crisis to Linger: Incubation and Litigation

It would seem quick to follow up on the cantaloupe post from yesterday but there are still some additional points to consider and information continues to roll in about the crisis.  It is odd for listeria to be found in a fruit, in fact it is the first ever listeria outbreak associated with cantaloupe.  Listeria is associated with processed meat, cheese, and milk.  Listeria can take up to two months to incubate.  That means more cases, and possible deaths, can keep appearing for weeks.  Each new case has the potential to extend the crisis and traditional and social media keep reporting on the events.

Jensen Farms remains at the center of the crisis as their cantaloupe are the cause of the outbreak.  However, there are gaps in the information about where the infected cantaloupe had been shipped.  Consider the following news item:

“Neither the government nor Jensen Farms has supplied a list of retailers who may have sold the fruit. Officials say consumers should ask retailers about the origins of their cantaloupe. If they still aren’t sure, they should get rid of it.

Jensen Farms of Holly, Colo. says it shipped cantaloupes to 25 states, though the FDA has said it may be more, and illnesses have been discovered in several states that were not on the shipping list. A spokeswoman for Jensen Farms said the company’s product is often sold and resold, so they do not always know where it went.

The recalled cantaloupes may be labeled ‘Colorado Grown,’ ‘’Distributed by Frontera Produce,’ ‘’Jensenfarms.com’ or ‘Sweet Rocky Fords.’ Not all of the recalled cantaloupes are labeled with a sticker, the FDA said. The company said it shipped out more than 300,000 cases of cantaloupes that contained five to 15 melons, meaning the recall involved 1.5 million to 4.5 million pieces of fruit.”

Officials are still working to track down the cause of the outbreak.  As one news story noted:

“Government investigators are continuing to search for the root cause of the outbreak, examining the possibility of animal or water contamination as well as the farm’s harvesting practices.”

Doubt will linger about the product’s safety until the root cause can be found.  Until a cause is found, no corrective actions can be taken that will reassure customers that the same event will not be repeated. 

Uncertainty is a part of crises but no identified cause coupled with no clear list of retailers generates great uncertainty for customers.  This uncertainty is captured the following comment from the CDC:

“If it’s not Jensen Farms, it’s OK to eat,” said Thomas Frieden, director of the CDC. “But if you can’t confirm it’s not Jensen Farms, then it’s best to throw it out.”

The uncertainty creates problems for all cantaloupe growers.  People become fearful of the product and avoid all cantaloupe.  Such was the situation in 1991 when Texas cantaloupe was associated with a salmonella outbreak.  California cantaloupe growers experienced a drop in sales too as customers just new “cantaloupe” was dangerous and was not differentiating between Texas and California cantaloupe.  In 1992, the Cantaloupe Advisory Board in California reduced its promotional spending believing a low profile would help people to forgive the health scare from 1991.  Other Colorado growers are concerned about the effects on their sales:

Local farmers are worried about cantaloupe sales after a Colorado farm says listeria has been found in some of its fruit. The new developments have prompted a recall of the fruit from Jensen Farms in melon-rich area of Rocky Ford.

Thursday’s recall most likely means a slow down in sales for local farmers, too. And, with melon season heating up for some on the Western Slope, it couldn’t have come at a worse time.

“It can be devastating if it’s in some of your major items,” Farmer Robert Helmer said of a produce recall.

Another factor that helps crises to linger are lawsuits.  Lawsuits can bring media attention and do involve financial costs.  More families are initiating lawsuits against Jensen Farms.  Here is sample of the media coverage from one lawsuit: 

Herbert Stevens of Littleton, Colo., bought half of a Jensen Farms cantaloupe wrapped in plastic at a local grocery store on Aug. 10 and the 84-year-old developed tremors on Aug. 22.

“On the 24th, he got really weak and was in a sitting position and couldn’t get up,” his daughter, Jeni Exley, told ABCNews.com.

Stevens’ wife called 911 and he was taken to a hospital, where doctors discovered he had a fever of 102.7. By the end of the weekend, he had been diagnosed with listeriosis.

Antibiotics destroyed the listeria in Stevens’ body, but he remains weak and it’s unclear when — if ever — he’ll be able to leave the long-term care facility where he’s been living for the past week.

“He is making some progress but still relies on a walker to walk and assistance with activities of daily living,” Exley said.

Prior to contracting the bacteria, Stevens was able to walk without assistance and was in good health. He often took trips abroad with his family, most recently to Sweden.

Right now, however, “He sleeps for most of the day,” said Exley. “This has played havoc with his whole body.”

 

The stories do generate sympathy for the victims given the deadly nature and effects of listeria.

Finally, the Food and Drug Adminstration said the situation is further evidence of teh need for the  Food Safety Modernization Act.

 

Questions to Consider

1.  What else could Jensen Farms do to improve on its crisis communication effort?

2.  How does this case illustrate the constraints that can limit an organization’s ability to respond effectively to a crisis?

3.  What can other producers do to limit the collateral damage from this crisis?

4.  Why does the CDC play such a pivotal role in these types of food borne illness crises?

5.  Jensen’s is considered a family farm.  Why might that be an asset in this crisis?

6.  Does Jensen Farms need to do more to address the lack of information about retailers?  Why or why not?

7.  Is this an appropriate time to push the Food Safety Modernazation Act?  Why or why not?

 

Fear the Fruit? Cantaloupe and Listeria in 2011

Cantaloupe is an ancient fruit with references dating back to ancient Egypt in  2600BC.  People are very familiar with the orange fruit.  It is a staple of summer along with watermelon.  But any food can become deadly if it is tainted in some way.  In 2011, a deadly listeria outbreak was caused by cantaloupe from Colorado.  It was a multistate outbreak with victims appearing in California, Colorado, Florida, Illinois, Indiana, Kansas, Maryland, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, Texas, Virginia, West Virginia, Wisconsin, and Wyoming. By late September of 2011, 16 deaths were associated with the outbreak making it one of the most outbreaks in over a decade. 

Listeria is not uncommon with over 1,600 cases in the U.S. each year and an average of three to four outbreaks.  Unfortunately, the death rate from listeria tends to be higher than for other food-borne bacteria.  Here is some additional information about listeria from the Cetners for Disease Control (CDC):

 

What is listeriosis?

Listeriosis, a serious infection usually caused by eating food contaminated with the bacterium Listeria monocytogenes, is an important public health problem in the United States. The disease primarily affects older adults, pregnant women, newborns, and adults with weakened immune systems. However, rarely, persons without these risk factors can also be affected. The risk may be reduced by following a few simple recommendations.

What are the symptoms of listeriosis?

A person with listeriosis usually has fever and muscle aches, often preceded by diarrhea or other gastrointestinal symptoms. Almost everyone who is diagnosed with listeriosis has “invasive” infection, in which the bacteria spread beyond the gastrointestinal tract. The symptoms vary with the infected person:

• Pregnant women: Pregnant women typically experience only a mild, flu-like illness. However, infections during pregnancy can lead to miscarriage, stillbirth, premature delivery, or life-threatening infection of the newborn.
• Persons other than pregnant women: Symptoms, in addition to fever and muscle aches, can include headache, stiff neck, confusion, loss of balance, and convulsions.

How great is the risk for listeriosis?

In the United States, an estimated 1,600 persons become seriously ill with listeriosis each year. Of these, 260 die. The following groups are at increased risk:

• Pregnant women: Pregnant women are about 20 times more likely than other healthy adults to get listeriosis. About one in six (17%) cases of listeriosis occurs during pregnancy.
• Newborns: Newborns suffer the most serious effects of infection in pregnancy.
• Persons with weakened immune systems from transplants or certain diseases, therapies, or medications.
• Persons with cancer, diabetes, alcoholism, liver or kidney disease.
• Persons with AIDS: They are almost 300 times more likely to get listeriosis than people with normal immune systems.
• Older adults

Healthy children and adults occasionally get infected with Listeria, but they rarely become seriously ill.

 

With any food-borne illness, the CDC works closely with state and local health officials to identify the cause of an outbreak once one has been identified.  The research involves interviewing victims to determine what and where they have eaten and to test food once possible sources have been identified.  In this case, the source was linked to Jensen Farms and its field in Granada, Colorado.  Consumers were warned not to eat Rocky Ford cantaloupes from Jensen Farms.  Clearly this was a case of product harm and a recall was issued.  The Food and Drug Administration (FDA) posted the official government statement on the recall:

Jensen Farms Recalls Cantaloupe Due to Possible Health Risk

 

Contact:
Consumer
800-267-4561
recall@rfordcantaloupe.com

FOR IMMEDIATE RELEASE – September 14, 2011 – Jensen Farms, of Holly, CO is voluntarily recalling their shipments of Rocky Ford whole cantaloupe because they have the potential to be contaminated with Listeria. The company is working with the State of Colorado and the FDA to inform consumers of this recall. L. monocytogenes is a bacterium that can contaminate foods and cause a mild non-invasive illness (called listerial gastroenteritis) or a severe, sometimes life-threatening, illness (called invasive listeriosis). Persons who have the greatest risk of experiencing listeriosis after consuming foods contaminated with L. monocytogenes are fetuses and neonates who are infected after the mother is exposed to L. monocytogenes during pregnancy, the elderly, and persons with weakened immune systems.

The whole cantaloupes in question were shipped between July 29th, 2011 and September 10th 2011, and distributed to the following states: IL, WY, TN, UT, TX, CO, MN, KS, NM, NC, MO, NE, OK, AZ, NJ, NY, PA. The whole cantaloupes have a green and white sticker that reads: Product of USA- Frontera Produce-Colorado Fresh-Rocky Ford-Cantaloupe or a gray, yellow, and green sticker that reads: Jensen Farms-Sweet Rocky Fords. If the whole cantaloupe is unlabeled, please contact your retail store for sourcing information. Jensen Farms is requesting any consumer that many have one of these cantaloupes to please destroy the products.

The recall involves only whole cantaloupe shipped by Jensen Farms, and no other commodities are involved. Jensen Farms feels it is prudent to participate in the recall as the State of Colorado has stated (in their September 12th, 2011 press release) that people at a high risk for infection should not eat whole cantaloupe from the Rocky Ford growing region.

“Jensen Farms continues to stay committed to the highest levels of food safety and maintains many third party safety audits, as we have for many years. We continually look for ways to enhance our protocol,” said Ryan Jensen, partner at Jensen Farms. Jensen Farms is a 3rd generation family farm of the Holly, Colorado community.

Consumers with questions may contact Jensen Farms via email at recall@rfordcantaloupe.com or phone 1-800-267-4561 between the hours of 9am and 4pm MST.

 

###

 The notice provided links to Flickr pictures of the recalled fruit.  Visuals make it easier for to identify if they have the recalled product. 

The product harm created a crisis for Jensen Farms.  Here is their announcement of the recall from their web site:

 

Company Statement

STATEMENT REGARDING 9/16/11 CANTALOUPE TEST RESULTS FROM COLORADO DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT “We are deeply saddened to learn that cantaloupes grown on our farm have been linked to the current Listeria outbreak. Our hearts go out to those individuals and their families who have been affected by this terrible situation. “We have been cooperating fully with public health officials who are trying to determine the source of the outbreak, and we will continue to do everything we can to assist them in their efforts. We hope that the investigation into the entire supply chain from farm to retail identifies the source of the contamination so that appropriate steps can be taken to prevent such an occurrence from ever happening again.”

Eric and Ryan Jensen
Jensen Farms

Press Release

Jensen Farms Recalls Cantaloupe Due to Possible Health Risk FOR IMMEDIATE RELEASE September 14th, 2011-Jensen Farms, of Holly, CO is voluntarily recalling their shipments of Rocky Ford whole cantaloupe because they have the potential to be contaminated with Listeria. The company is working with the State of Colorado and the FDA to inform consumers of this recall. L. monocytogenes is a bacterium that can contaminate foods and cause a mild non-invasive illness (called listerial gastroenteritis) or a severe, sometimes life-threatening, illness (called invasive listeriosis). Persons who have the greatest risk of experiencing listeriosis after consuming foods contaminated with L. monocytogenes are fetuses and neonates who are infected after the mother is exposed to L. monocytogenes during pregnancy, the elderly, and persons with weakened immune systems. The whole cantaloupes in question were shipped between July 29th, 2011 and September 10th 2011, and distributed to the following states: IL, WY, TN, UT, TX, CO, MN, KS, NM, NC, MO, NE, OK, AZ, NJ, NY, PA. The whole cantaloupes have a green and white sticker that reads: Product of USA- Frontera Produce-Colorado Fresh-Rocky Ford- Cantaloupe or a gray, yellow, and green sticker that reads: Jensen Farms-Sweet Rocky Fords. If the whole cantaloupe is unlabeled, please contact your retail store for sourcing information. Jensen Farms is requesting any consumer that may have one of these cantaloupes to please destroy the products. The recall involves only whole cantaloupe shipped by Jensen Farms, and no other commodities are involved. Jensen Farms feels it is prudent to participate in the recall as the State of Colorado has stated (in their September 12th, 2011 press release) that people at a high risk for infection should not eat whole cantaloupe from the Rocky Ford growing region. “Jensen Farms continues to stay committed to the highest levels of food safety and maintains many third party safety audits, as we have for many years. We continually look for ways to enhance our protocol,” said Ryan Jensen, partner at Jensen Farms. Jensen Farms is a 3rd generation family farm of the Holly, Colorado community. Consumers with questions may contact Jensen Farms via email at recall@rfordcantaloupe.com or phone 1-800-267-4561 between the hours of 9am and 4pm MST.

The recall information could be found using a link placed in the bottom right corner of the Jensen Farms home page.  The information was clearly visible in the “Farm Blog” tab and easy to access.  Jensen Farms has a Facebook page with a little over 200 fans/likes.  They posted a statement there are well and their supports rallied around the company.  Below is the Facebook post and some responses:

Many Thanks to those with continued support of Jensen Farms

We want to reach out an thank everyone for supporting us through this terrible time in the history of our beloved farm. Your messages and wall posts are helping us stay motivated, and optimistic about our future. Thank you…

Responses:

We are very sorry to hear about your time of trial our family will lift up you, your family and the others affected by this trial. God Bless and keep trusting.

I feel the store may have been the issue..I hope and pray your farm is clean so you can continue to share good food with us all….But Please do us all a favor…edcuate everyone as you learn…..the truth:) We are all with you and with the families that are ill…we are just a small farm , we grow organics for ourself but need farms like you to supply what we dont grow for ourself….Our trust is in the truth….best wishes to your family and the families of the ill to get to the bottom of this , to learn and grow

Love you guys and hope everything gets cleared up soon!!!

Praying for you and your family. I will continue to purchase our produce direct from the Arkansas Valley. Hope the consumers will learn how important it is to wash their produce no matter what. Don’t ever loose the faith, God Bless.

I am praying for your family/farm, and will continue to buy your produce!

I cant even imagine but you have mine and my families support..click on me if you need any help, I’ll try and do what ever I can…Im really ticked that this happened weather it was planted or just a freak of nature. Im even more ticked that someone is wanting to be greedy and gain from this mess..But you do have my support, just ask…thats what people do they come together and help

It really could have happened to anyone, so my best hope is that people understand this and don’t let it stop them from buying your produce in the future. Best of luck!

I’m so sorry this has happened and you will always have my support!

Praying for you guys! This is just heart breaking and if there is anything we can do to help just let us know! I love cantaloupe, it’s my favorite. Everyone needs to make sure they wash their produce before it is consumed.

 

With people becoming ill and dying, a lawsuit was quick to follow the crisis.   Charles Palmer, 71 years-old, was hospitalized for two weeks from the listeria in the cantaloupe he ate.  Here are the Jensen Farm comments in the story about the lawsuit:

“We’re deeply saddened that there’s a possibility that our family’s cantaloupe could have gotten somebody sick,” Jensen Farms owner Eric Jensen told 7NEWS Thursday. “Our first priority is the public’s health and safety.”  Jensen’s fourth-generation family farm in Holly, normally busy with harvest now, was ghostly quiet after the suspected listeria contamination forced Jensen to shut down Monday and destroy his cantaloupe crops.

The grower launched a voluntary nationwide recall on Wednesday.

Jensen said the farm had never faced a public health crisis and he’d never heard of listeria contaminating cantaloupe.  ”We’re still in shock,” Jensen said, choking with emotion. “We’re completely focused on our recall efforts right now.”  Jensen said he had no clue about the source of the contamination, adding that it could still be found “on the retail end.”  While a terrible setback, Jensen said that the listeria outbreak wouldn’t claim his farm.

“We’ll definitely be back,” Jensen vowed.

 

Crises with victims typically are extended in time and cost by lawsuits.  Victims sue the organization causing longer attention from the media and increased costs from the litigation and any settlements resulting from the litigation. 

Questions to Consider

1.  How would you rate the crisis response from Jensen Farms and what factors influenced that rating?

2.  How does the government’s involved in a crisis response help or hurt the organization trying to management the crisis?

3.  How did the Jensen Farm recall statement differ from the FDA’s and why would there be a difference?

4.  Was it a good or bad idea for Jensen Farms to post a message of Facebook?  What is the reasoning behind your conclusion?

5.  In general, how might the supportive statements on Facebook help Jensen Farms through this crisis?

6.  Is there any way Jensen Farms might effectively incorporate the supportive Facebook comments into their later crisis response strategies?

7.  What advice would you give to Jensen Farms about recovering from the crisis at this point?

 

H&M Goes to Detox Thanks to Greenpeace

In July of 2011, Greenpeace began the Detox Campaign.  The purpose of the campaign is to eliminate the toxic chemicals being released into the water by textile manufactures.  Once again, the apparel industry was the target because they are purchasing the materials that are creating the toxins.  As Greenpeace stated:

“During our recent investigations, Greenpeace identified links between a number of major clothing brands – including the sportswear giants Nike and Adidas and the fast-fashion retailer H&M – and textile factories in China that are releasing hazardous chemicals into our rivers.”

 

Their publication, “Dirty Laundry 2:  Hung Out of Dry,” identified 15 major brands that were linked to the toxin producing textiles.  Among the brands specifically identified by name at the Detox web site are Nike, Adidas, and H&M. 

Puma was the first to accept the challenge and detox.  Here is their announcement:

In line with PUMA’s long-term sustainability program, the Sportlifestyle company PUMA recognizes the urgent need for reducing and eliminating industrial releases of all hazardous chemicals[1] . According to its approach based on prevention and precautionary principles [2], PUMA is committed to eliminate the discharges of all hazardous chemicals from the whole lifecycle and all production procedures that are associated with the making and using of PUMA products[3] by 2020.

PUMA understands the scope of the commitment to be a longterm vision – with short term practice to be defined in the clarification of actions to follow. To ensure transparency, PUMA will report on the progress of this commitment in its annual PUMA Sustainability Report.

An Action Plan will be set up by PUMA within eight weeks from the time this commitment was made.

 

[1]All hazardous chemicals means all those that show intrinsically hazardous properties (persistent, bioaccumulative and toxic (PBT); very persistent and very bioaccumulative (vPvB); carcinogenic, mutagenic and toxic for reproduction (CMR); endocrine disruptors (ED). This will require establishing – ideally with other industry actors – a corresponding list of the hazardous chemicals concerned that will be regularly reviewed.

[2]This means taking preventive action before waiting for conclusive scientific proof regarding cause and effect between the substance (or activity) and the damage. It is based on the assumption that some hazardous substances cannot be rendered harmless by the receiving environment and that prevention of potentially serious or irreversible damage is required, even in the absence of full scientific certainty.

[3]This means the commitment applies to the environmental practices of the entire company and for the whole product-folio of the company. This includes, as a longterm vision, all its suppliers or facilities horizontally across all owned brands and licensed companies as well as vertically down its supply chain. As a first step – within 18 months – this will cover all Tier 1 and vertical suppliers across the PUMA brand. Through this step PUMA aims to exert power through its Tier 1 suppliers down to Tier 2 suppliers which include wet process.

Once Puma committed in July, Greenpeace upped the pressure on Nike and Adidas by issue a video challenge.  The video showed people dancing and stripping in front of Nike and Adidas stores around the world.  Nike jointed Puma in August followed a few days later by Adidas.  Here is the Adidas statement:

 

adidas Group’s Commitment to Zero Discharge of hazardous chemicals

…

Herzogenaurach, August 26, 2011

Context

…

Since July 2011 Greenpeace International has been campaigning to drive change in our industry. They are calling for the zero discharge of all hazardous and persistent chemicals at all points in global supply chains: from the cotton fields, to the mills and dye houses that make the fabric and the garment production. In China alone, there are an estimated 50,000 textile mills and hundreds of chemicals suppliers. To put this in context, the adidas Group buys fabric from 10 key textile mills and dye houses in China. These materials suppliers follow some of the strictest standards in the industry.

Greenpeace has directed its campaign towards sporting goods companies in the belief that they can act as a catalyst for change for the whole industry. Why? Because sporting goods companies, such as the adidas Group, are already widely recognised for their leadership when it comes to environmental sustainability. The adidas Group has one of the most stringent restricted substances policies of any consumer goods company operating in the apparel sector. We have been working successfully on the reduction and progressive elimination of hazardous chemicals in our supply chain for more than 15 years.

Greenpeace’s Detox campaign has been characterised as a competition among brands. The simple truth, however, is that there can be no “winners” unless the industry acts together. With that objective in mind, the adidas Group has together with other brands been working tirelessly in recent weeks to bring the industry together in a forum to develop a roadmap that will address the “zero discharge” challenge that Greenpeace has posed. That forum is planned to be held at the end of September in Amsterdam.

The following statement is our commitment to deliver change.

Our statement to Greenpeace

…

The adidas Group¹ is committed to the goal of zero discharge² of hazardous chemicals³ from our supply chain via all pathways, with a 2020 timeline.

The scale and complexity of this endeavour make this a very challenging task, which we will work on through an open and informed dialogue with all stakeholders.

If we are to deliver lasting solutions, our actions need to be guided by transparency, fact-based decision-making and based on a preventative, precautionary⁴ and integrated approach to chemicals management.

Within seven weeks, we will develop a roadmap specifically for the adidas Group and our entire supply chain, which will include programmes and actions that we commit to, including actions concerning disclosure. In addition, we will develop and disclose a joint roadmap to detail specific programmes and actions that we can take collectively with other brands to drive our industry towards the goal of zero discharge of hazardous chemicals.

This goal demands the collective action of industry, regulators and other stakeholders. We believe that the elimination of hazardous chemicals needs not only collaboration and partnership with our industry peers, but also a holistic and integrated approach. We will apply value-chain as well as life-cycle thinking and innovation throughout this process and to our approach for Integrated Chemicals Management.

Further, we recognise that to achieve the goal of zero discharge of hazardous chemicals, mechanisms for disclosure and transparency about the hazardous chemicals used in our global supply chains are important and necessary, in line with the ‘right to know principle’⁵.

A set of actions to be executed by the adidas Group within the period of these seven weeks will be:

Re-emphasising to our suppliers, T1 and nominated T2, the strict standards of our Environmental Guidelines and our Restricted Substances List (RSL).

 

Request information from our suppliers in relation to the use of NPEs⁶ in the manufacturing processes and request that they require of their sub-suppliers to avoid the intentional use of NPEs.

 

Request information from our T2 suppliers about their chemicals suppliers.

 

Give renewed notice to our suppliers that they must eliminate and replace hazardous substances that have been banned from use, with a non-hazardous chemical.

 

Increase the focus on chemicals management and wastewater treatment practices in our regular, comprehensive, environmental audit programme, with specific attention given to the T2 suppliers.

 

Begin developing a workshop approach for designers and product developers, where the understanding and knowledge of the colour choice consequences will be enhanced, as well as screening support is delivered. This work will be supported by our target-in-progress to reduce the number of colours used.

 

Continue our dialogue with peers to develop a joint roadmap.

 

Engage with other brands and associations to increase the leverage of such a joint roadmap.

 

…

Furthermore, we foresee that the joint roadmap would contain activities, research and decision milestones related to the following, specific aspects:

Application of a value-chain approach with a set of priorities and a phased approach.

 

Drive the implementation of a Globally Harmonised System of Classification and Labelling of Chemicals.

 

Develop or apply an approach to structure inventories of hazardous chemicals.

 

Apply a rigorous and transparent verification procedure.

 

Develop a joint generic environmental audit approach, with specific attention to, but not narrowly focussed on, chemicals management. The additional purpose will be to begin sharing audit experiences and results between brands with the ultimate aim to improve environmental audit coverage and reduce duplication.

 

Develop a single standard of good environmental practices for dye houses. This will include sound chemicals management. The development will be done in wide consultation.

 

Work with chemicals suppliers to develop screening, selection criteria and prioritisation approaches to drive the elimination of hazardous chemicals and the substitution with less harmful chemicals.

 

Strive to define timelines for the phase-out of the prioritised hazardous substances.

 

Assess the need for inclusion of additional chemicals to the RSL.

 

Assess the need for inclusion of additional chemicals on lists of banned (from the manufacturing) chemicals.

 

Develop mechanisms to transfer experiences with banned, phased-out chemicals from region to region and promote the global implementation of bans that have already been successfully executed in one region.

 

Enter into a dialogue with scientists and regulators in different regions with the purpose of influencing the pace of regulation of hazardous chemicals and the diffusion of a global approach to regulation.

 

…

Many of these activities build on programmes and initiatives which the adidas Group is already committed to, through our existing industry collaborations, such as the Sustainable Apparel Coalition, the OIA (Outdoor Industry Association) Working Group on Toxics and AFIRM.

¹adidas Group and its brands: adidas, Reebok, TaylorMade-adidas Golf, Rockport and CCM-Hockey.

²Zero discharge: Means elimination of all releases, via all pathways of release, i.e. discharges, emissions and losses, from our supply chain and our products.

³‘Hazardous chemicals’ means all those that show intrinsically hazardous properties (persistent, bio-accumulative and toxic (PBT); very persistent and very bio-accumulative (vPvB); carcinogenic, mutagenic and toxic for reproduction (CMR); endocrine disruptors (ED); or equivalent concern), not just those that have been regulated or restricted in other regions.

⁴Precautionary approach: It means that when scientific evidence suggests a substance may harm the environment or human health, but the type or magnitude of harm is not yet known, a preventative approach towards potentially serious or irreversible damage should be taken, recognising the fact that such proof of harm may not be possible. The process of applying the precautionary approach must involve an examination of the full range of alternatives, including, where necessary, the development of harmless alternatives where they do not already exist.

⁵‘Right to know principle’ Is defined as practices that allow members of the public access to environmental information – in this case specifically about the uses and discharges of chemicals based on reported quantities of releases of hazardous chemicals to the environment, facility-by-facility, year-by-year.

⁶Nonylphenol ethoxylates.

Once Greenpeace had the three athletic apparel manufactures onboard, the attention shifted to Swedish-based retailor H&M.  In addition to the web site, Greenpeace provide links so that blogs and Tweets could feature H&M and the need to Detox raising the profile of the toxic clothes problem on search engines.  People were encouraged to question H&M’s efforts on H&M’s Facebook page, sign a Twitter petition, and, in the real world, activists began placing detox stickers on H&M store windows.  The result was meeting between H&M and Greenpeace resulting in H&M detoxing itself.  Here is the H&M statement:

 

H&M engages with Greenpeace

Greenpeace International is calling for zero discharge of all hazardous chemicals in the global textile supply chain. H&M shares this goal with Greenpeace; since 1995 H&M has been working practically to reduce the use and impact of hazardous chemicals using an approach based on the Precautionary Principle. This is a continuous process depending on development of science and technology and revisions will therefore be necessary in future, not limited to the period up to 2020.

Why has Greenpeace targeted a campaign against H&M? As a leading actor with a well reputed Chemicals Management, H&M has the size and ability to act as a catalyst for change in the industry. H&M has also recognized the importance of cooperation; the industry must act together to achieve zero discharge. One example of this is as member of the steering committee of AFIRM (Apparel and Footwear Industry RSL (Restricted Substance List) Management group). The aim of AFIRM group is to reduce the use and impact of hazardous substances in the apparel and footwear supply chain. H&M is also an active member in Sustainable Apparel Coalition.

H&M’s Chemicals Management includes one of the most stringent chemical restrictions in the apparel sector. H&M also makes sure that these restrictions are understood and applied in its supply chain.

H&M’s Commitment to Zero Discharge of Hazardous Chemicals

H&M has since more than a decade recognized the urgent need to eliminate Hazardous (i) chemicals and has an approach based on prevention and the precautionary principle (ii).

H&M is committed to continuously eliminate the use of all hazardous chemicals and hence achieve zero discharge (iii) of the same from all production procedures that are associated with the making and using of H&M products (iv), at the latest by 2020 (f1).

We recognize that mechanisms for disclosure and transparency about the hazardous chemicals used in our global supply chains are important and necessary. In line with the right to know principle (v) we will increase the public availability and transparency of our restricted substance list and audit process and will set up public disclosure of discharges of hazardous chemicals in our supply chain. We will promote development of common standards towards this end.

H&M also commits to support systemic (i.e., wider societal and policy) change to achieve zero discharge of hazardous chemicals (associated with supply chains and the lifecycles of products) within one generation (vi) or less.

Due to the scale and complexity of this endeavour, true success can only be achieved by engaging with other companies in the apparel sector and stakeholders such as regulators, NGOs and the chemical industry. H&M will continue its efforts to create awareness and drive more responsible practices within the industry.

H&M is committed to continuously engage with and put demands on the chemical industry in order to spur innovation of safer alternatives to any chemical identified as hazardous. Similarly, H&M is committed to engage with material manufacturers to implement new technologies and safer chemicals as they become available.

H&M understands the scope of the commitment to be a long term vision – with short term practice to be defined in the clarification of actions to follow. An action plan will be set up by H&M within eight weeks from the time this commitment was made that will detail the measures to be taken to implement this commitment including timelines for public disclosure (f2) and for the elimination of the highest priority hazardous chemicals.

In addition, we will develop and implement a joint roadmap to detail specific programmes and actions that we can take collectively with other brands to drive our industry towards the goal of zero discharge of hazardous chemicals.

 

Actions already planned for execution by H&M within the period of these eight weeks include:

• H&M’s publicly available list of restricted substances (vii) will be extended with technical information such as restricted limits and test methods 1st week of October. An updated version will be launched before the end of 2011 taking into account the intrinsic hazards approach.
• Initiate investigation into how to increase the focus on chemicals management and wastewater monitoring practices in H&M’s environmental audit program, and how to make results more transparent, with specific attention given to discharges and factories with chemical intensive production processes such as wet processes.
• Request information from our suppliers in relation to the use (e.g. for other brands) of Nonylphenol ethoxylates (NPEs) in the manufacturing processes and request that they require from their sub-supplier to not intentionally use and release NPEs. At the same time, we will re-emphasise to our suppliers that they are contractually bound to comply with the strict standards of our Restricted Substances List. As part of this request for information we will immediately provide Greenpeace the identity* of the suppliers responsible for the products tested in the Greenpeace Report, and the quantities of all alkylphenol ethoxylates (APE) discharges, and work with urgency to reinforce the controls on all possible releases of APE from their production.

  *Our intent is to reveal this information under a non-disclosure agreement based on discussion with suppliers and the result of this investigation.

• Request information from our suppliers about their chemicals suppliers – specifically on how they control and report on what chemical ingredients they are using.

Footnotes:

(f1) We recognize the need for continuous review of the identification process and elimination of hazardous substances based on the intrinsic properties science.

(f2) Note: the first data should be reported to the public by end 2012

(i) Hazardous chemicals means all those that show intrinsically hazardous properties (persistent, bio-accumulative and toxic (PBT); very persistent and very bioaccumulative (vPvB); carcinogenic, mutagenic and toxic for reproduction (CMR); endocrine disruptors (ED); or equivalent concern), not just those that have been regulated or restricted in other regions.

(ii) Precautionary approach: It means that when scientific evidence suggests a substance may harm the environment or human health, but the type or magnitude of harm is not yet known, a preventative approach towards potentially serious or irreversible damage should be taken, recognising the fact that such proof of harm may not be possible. The process of applying the precautionary approach must involve an examination of the full range of alternatives, including, where necessary, the development of harmless alternatives where they do not already exist. It is based on the understanding that some hazardous substances cannot be rendered harmless by the receiving environment (i.e. there are no `environmentally acceptable´ use or discharge levels)

(iii) Zero discharge means elimination of all releases, via all pathways of release, i.e. discharges, emissions and losses, from our supply chain and our products.

(iv) This means the commitment applies to the environmental practices of the entire company and for the whole product-folio of the company. This includes, as a long-term vision, all suppliers or facilities horizontally across all owned brands and licensed companies as well as vertically up the entire supply chain (to material suppliers and dyeing/finishing facilities, in particular those which include wet processes). As a first step – within 18 months – this will cover all directly contracted strategic suppliers across the H&M brand, with a focus on chemically intensive processes, including wet processes.

(v) Right to know is defined as practices that allow members of the public access to environmental information – in this case specifically about the uses and discharges of chemicals based on reported quantities of releases of hazardous chemicals to the environment, chemical by chemical, facility-by-facility, year-by-year.

(vi) Regarding societal: One generation is generally regarded as 20-25 years.

(vii) The list of restricted substances is the summary of chemicals with hazardous properties identified as relevant for H&M’s products and processes.

Selected Achievements and Actions in Line With Above

• First Chemical Restriction list published in 1995
• Phase out of PVC in 2002
• Publicly engaging with Greenpeace in 2005 in a lobbying campaign for a stricter chemical legislation in EU
• In 2005 setting up of audit process intended to shift focus from testing final products to chemicals management in factories to ensure restricted substances are controlled and avoided from the very beginning
• In 2006 Screening for potential substances of very high concern (SVHC) relevant for H&M’s products with the goal of eliminating their use
• As member of AFIRM’s (viii) steering committee, working with others to educate suppliers and promote a responsible chemicals management from 2006 and onwards
• H&M was a major contributor to Chemsec’s (ix) first SIN-list in 2008 and engaged in lobbying activities for the same
• From 2008 and onwards, H&M is engaging with the UN to develop global general practice for spreading information on chemicals in products.
• From 2008, H&M has contributed to a bi-annual training programme (x) organized by Swedish Chemicals Agency and Swedish International Development Cooperation Agency to improve chemical legislation and enforcement policies in developing countries.
• H&M was the first major retailer to ban the use of Nonylphenol ethoxylates in 2009
• H&M initiated in 2009 an industry wide project to develop a harmonized test method for Nonylphenol ethoxylates, finalized in 2010
• H&M was the first major retailer to offer fluorocarbon-free garments with water repellent functional fabrics in 2010
• Engagement in Sustainable Apparel Coalition (xi) from 2010 with the goal of developing a universal index to measure environmental and social performance of apparel products
• In 2010 H&M started cooperation with chemical industry to conduct trials to convert traditional solvent based polyurethane (PU) material into water based PU.
• H&M is the world’s number one buyer of organic cotton in 2010

In just ten weeks, Greenpeace had managed to mover four major apparel-related giants to action on detox. 

Questions to Consider

1.  What is a major difference between the Puma and the Adidas announcements about the detox change?  Why do you think this difference occurred? 

2.  Why might it have been important the Detox campaign was using a mix on online and real world actions? 

3.  What CSR and reputational advantages does Puma gain by being the first to agree to the Detox campaign?

4.  How does H&M use the announcement as a means of building its CSR reputation?  How effect do you think that might be and why?

5.  Why do you think the Detox campaign has been so successful in such a short amount of time?

6.  How ethical is Greenpeace’s approach to the Detox campaign and what lead you to that evaluation?

Too Young for “Push-up” Tops: Abercrombie Kids Slowly Understands

Abercrombie Kids, a division of Abercrombie & Fitch, sells to an age range of 7 to 14 years old.  Now that is a fairly broad range and naturally there are differences in what is appropriate for each age range.    So when the company marketed a product across this range, there was some negative reactions.  The product was the top for a bikini.  The top of the “Ashley” was push-up, designed to enhance breasts.  Many mothers and social critics cried foul over sexualizing children as young a 7. 

Here is a sample criticism

“The spring line features three styles of tops: triangle,  bandeau…and push up. All starting at size 7. The push-up tops must be big sellers—they’re at the top of the list of swim top offerings. Of course, I can see why.  When you’re shopping for a bikini, there’s basically one ideal in the universal mind. Even a 7 year old knows you’re supposed to look like the girls in the pages of the Sports Illustrated swimsuit issue.

The thing is, it’s our job to show them why that’s not a good idea, not to help them achieve this fantasy sooner.”

The criticisms of Abercrombie appear online and in the traditional news media.  As CNN reported:  “No stranger to controversy, U.S. retailer Abercrombie & Fitch has come under fire for offering a push-up bikini top to young girls.  Its “Ashley” bikini — described as “padded” and a “push-up” — was posted on the Abercrombie Kids website earlier this week.  The company declined to comment Saturday but noted it has since updated the description of its bikini online.”  The consistent theme is these messages was that the marketing was age inappropriate and somewhat “creepy.” 

As background information, here are some addition controversies for Abercrombie:

“In 2002, for instance, the trendy retailer caught flak from parents because it was selling thong underwear in children’s sizes with the words “eye candy” and “wink wink” printed on the front.

In 2001, the company’s quarterly catalog created a stir when it ran photographs of models who appeared to be college-age or younger in the nude, kissing and fondling each other.”

The conflict carried over to Abercrombie Kids’ Facebook page as people debated whether or not the company had acted inappropriately.  As you might expect, there were defenders who were fans of Abercrombie.  Their points was if you do not like it, don’t buy it.  Here is a defending comment: 

Minreal Herrera

‘Ok stop really
Dont lik it? Dont buy it!
Dont lik our comments? Dont read them and to renee i think kids shood hav a say, and u cant control ur child forever! Of u want u can but other kids rnt urs so u cant tell us wat to say or do! So rea…lly… STOp!’

Another point that was made was that the smaller sizes might fit the younger demographic but some age appropriate buyers are smaller than normal for their age and want this style. 

The critics did respond:

“to all the people who said if u dont like it dont buy it.. really??? if u think 7 year olds should make them selves look sexually suggestive then u have a scew loose. u know there is that mom out there who has to “be cool” and buy it. kids dont understand the perverts out there. and too many moms are just plain stupid! so just get rid of it!”

Their point is that sexualizing children is wrong and responsible companies should not facilitate that process.  It is not a question of whether to buy it or not but whether or not it is appropriate at all to sell. 

Abercrombie did change after the “outrage” and related media coverage appeared.  Here is their statement:

“We’ve re-categorized the Ashley swimsuit as padded,” according to a statement posted Monday on the Abercrombie Kids Facebook page. “We agree with those who say it is best ‘suited’ for girls age 12 and older.”

The challenge from stakeholders was respect as Abercrombie changed the marketing of the produce to reflect the concern from critics, to a degree.  People may still debate their age choice.

Questions to Consider

1.  To what degree do you think past controversies affected the current situation and why?

2.  Do you agree or disagree with the critics of the marketing?  Why or why not?

3.  Why would this situation qualify as a paracrisis?

4.  What was the danger if Abercrombie choose to defend its actions?  Could they have done this successfully?  Why or why not?

5.  Some people claim all publicity is good publicity.  Do you feel that is the case here?  Why or why not?

6.  How ethical was Abercrombie in this case?  How ethical were their critics?

Johnson & Johnson: A Long Way from Tylenol

If you read almost any public relations textbook that mentions crisis management, the odds are it will include praise for how Johnson & Johnson handled its Tylenol product tampering in 1982.  Johnson & Johnson made an immediate recall showing their concern for customers and claimed the actions was guided by its Credo.  Probably no other crisis management case has been used more often as a shining example of effective crisis management.  Experts warn that organizations learn very little from their crisis management efforts.  Johnson and Johnson seem to be proving that observation in how poorly they have handled not one but a series of product recalls in 2010 and 2011.  The situation became so problematic that the Federal government has essentially taken oversight over three Johnson and Johnson facilities in March of 2011.  More specifically, those facilities are part of McNeill-PPC, Inc., a subsidiary of Johnson & Johnson.  The government continues its investigation into the product defects that are at the center of the recalls and have been critical of how slowly Johnson & Johnson has acted in the recalls.  The products in the recall include a number of children’s products  You can visit the recall web site to learn more about the number and types of products involved in the recall.  Click here to see a copy of the consent decree.

This is a serious situation when the Food and Drug Administration (FDA) takes oversight over a company’s operations.  The action was taken because the FDA found continuing problems at the facilities and did not think Johnson & Johnson were capable of resolving the problems on their own.  Moreover, the FDA is saying the facilities were not complying with federal laws.  These are serious concerns for products that people ingest and believe will make them feel better rather than worse.  The recalls center on quality and effectiveness of the products rather than the products being a danger to those who take them.  As Douglas Steam from the FDA noted:  “We’ve had a long engagement with McNeil over the last year with regard to their quality system.  We think this represents necessary important steps to assuring quality across the board.”

Here is part of the news release from the FDA:

The U.S. Food and Drug Administration announced today that a consent decree of permanent injunction has been filed against McNeil-PPC and two of its officers for failing to comply with current good manufacturing practice requirements as required by federal law. The action prevents McNeil, a subsidiary of Johnson & Johnson, from manufacturing and distributing drugs from its Fort Washington, Pa., facility until the FDA determines that its operations are compliant with the law.

McNeil Consumer Healthcare Division’s Vice President of Quality and the company’s Vice President of Operations for OTC Products also were named defendants in the consent decree, filed with the U.S. District Court for the Eastern District of Pennsylvania in Philadelphia on March 10, 2011.

The decree also requires McNeil to adhere to a strict timetable to bring its facilities in Las Piedras, Puerto Rico, and Lancaster, Pa., into compliance.

Dara A. Corrigan, the FDA’s associate commissioner for regulatory affairs said, “This FDA drug safety enforcement action is aimed at protecting the public health.”

FDA inspections at McNeil’s Fort Washington, Las Piedras, and Lancaster facilities from 2009 to 2010 found violations of the Federal Food, Drug, and Cosmetic Act. The Act requires drug companies to follow current good manufacturing practice requirements.

“This is a strong, but necessary, step to ensure that the products manufactured by this company meet federal standards for quality, safety and purity,” said Deborah Autor, director of the Office of Compliance in the FDA’s Center for Drug Evaluation and Research.

Manufacturing deficiencies at McNeil’s facilities have resulted in several extensive recalls, including an April 30, 2010, recall of lots of several liquid products such as children’s Tylenol, Motrin, Zyrtec, and Benadryl products. In January 2010, the FDA issued a Warning Letter to McNeil’s Consumer Healthcare Division regarding violations identified at McNeil’s Las Piedras facility.

Here is sample from the Johnson & Johnson news release:

FORT WASHINGTON, Pa., March 10, 2011 /PRNewswire/ — McNEIL-PPC, Inc. announced today that the company has finalized the terms of a Consent Decree of Permanent Injunction (Consent Decree) with the U.S. Food and Drug Administration (FDA) for manufacturing facilities operated by the McNeil Consumer Healthcare Division of McNEIL-PPC, Inc. in Las Piedras, PR, Fort Washington, PA, and Lancaster, PA. The Consent Decree is subject to approval by the United States District Court for the Eastern District of Pennsylvania.

In July 2010, McNeil submitted to the FDA and has been diligently implementing a Comprehensive Action Plan (CAP) to improve quality systems at its U.S. manufacturing facilities. McNeil believes that the terms of the Consent Decree recognize the progress made in remediation efforts to date, and are consistent with the commitments the company has made as part of the CAP. The Consent Decree allows McNeil to continue the work already initiated under the CAP, and identifies procedures that will help provide additional assurance of product quality to the FDA.

Under the terms of the Consent Decree, the company will continue to operate the manufacturing facilities in Las Piedras, PR and Lancaster, PA. The company will work with an independent expert who will inspect these sites and issue recommendations. Based on these findings, the company will develop remediation plans to address observations identified by the independent expert. These plans will be submitted to the FDA and are subject to the agency’s approval. In addition, the company and the FDA have agreed on a plan to have the independent expert review certain manufacturing records at the two sites while remediation is ongoing to ensure that products released from the sites continue to meet quality standards. The company expects that the Consent Decree will govern the company’s operation of the facilities for a period of at least five years following the completion of the remediation plan.

Chairman and Chief Executive Officer Bill Weldon sent out an internal note to all Johnson & Johnson employees about the announcement.  Here is the message:

I am writing to let you know that one of our companies, McNEIL-PPC, Inc., today will enter into what is known as a “Consent Decree” with the U.S. Food and Drug Administration (FDA). The Consent Decree is an agreement we have reached with the FDA to govern certain McNeil Consumer Healthcare manufacturing operations until McNeil completes the remediation of its facilities to the FDA’s satisfaction. The Consent Decree is subject to approval by the court.

There are other outstanding legal matters involving Johnson & Johnson companies that have been discussed in past public filings and covered in the media. We will keep you advised of critical developments in these matters just as we are now providing information about this Consent Decree and McNeil.

We are a company that strives to do the right thing, and we succeed far more often than not. When we don’t succeed, it’s painful. But, consistent with Our Credo, we take responsibility for our actions, and we learn from our mistakes. By moving to resolve the FDA’s concerns about McNeil Consumer Healthcare US manufacturing facilities, we are able to look to the future and focus on what is most important to us: serving the millions of people around the world who rely on our products every day to meet their health care needs.

The Consent Decree applies to manufacturing facilities in Fort Washington, Pennsylvania; Lancaster, Pennsylvania; and Las Piedras, Puerto Rico. Under the terms of the agreement, McNeil will continue to operate the facilities in Las Piedras and Lancaster, working with an independent expert who will develop a plan for improving operations and will conduct reviews of certain production records while remediation is ongoing. McNeil also has agreed that it will not re-open the Fort Washington manufacturing facility – which it voluntarily closed in April 2010 – until it is certified by an outside expert and approval is given by the FDA.

Under its Comprehensive Action Plan, McNeil has made important progress toward improving quality and compliance, such as accelerating changes in organization and culture, and conducting a thorough review of how the company operated its manufacturing plants. We believe the terms of the Consent Decree recognize this progress and are consistent with the work underway. At the same time, the Consent Decree requires additional quality assurance measures, and is a reminder that important work remains to be done. We will commit whatever time and resources are necessary for McNeil to address the issues raised by the Consent Decree.

While the particular issues involved in the Consent Decree are limited to McNeil, all of us across the Johnson & Johnson Family of Companies should take this opportunity to re-dedicate ourselves to working hard every day to do the right thing for patients and ensuring their trust.

The above statement appeared on an Internet site liked to Johnson & Johnson.  Here is one response posted below the statement:

Thank you for posting this highly-sanitized note from your lawyers. Legal-speak to avoid further class action lawsuits is not the same thing as real, meaningful communication with your stakeholder audience. You can take a lesson from your colleague Caroline Pavis on what a real, genuine communication might look like.

Although, given the lack of coverage on JNJBTW.com over the past few months to the mounting manufacturing crisis at the J&J family of companies, I was extremely surprised to see you stepping up and posting this note at all. It’s better than nothing…but it’s still not a meaningful.

It’s not too late – you can return the Credo and the principles that made you a once-great company. But the public is running out of patience…

Here is a statement by Johnson & Johnson about its  Credo:

The values that guide our decision making are spelled out in Our Credo. Put simply, Our Credo challenges us to put the needs and well-being of the people we serve first.

Robert Wood Johnson, former chairman from 1932 to 1963 and a member of the Company’s founding family, crafted Our Credo himself in 1943, just before Johnson & Johnson became a publicly traded company. This was long before anyone ever heard the term “corporate social responsibility.” Our Credo is more than just a moral compass. We believe it’s a recipe for business success. The fact that Johnson & Johnson is one of only a handful of companies that have flourished through more than a century of change is proof of that.

Follow this link the full Credo.

Question to Consider

1.  How do the news releases from the FDA and Johnson & Johnson for the same event seem to differ?  What are the reasons for those difference?

2.  What is the most damaging statement in the FDA news release and why would it harm Johnson & Johnson?

3.  What would you as a consumer think when you here that the government is taking oversight over a facility to insure product quality?

4. Have the statements from Johnson & Johnson helped to reassure customers?  Why or why not?

5.  How else might Johnson & Johnson responded in order to reassure stakeholders?

6.  What does the response to the CEO’s statement say about stakeholder reactions?

7.  Did Johnson & Johnson has lived up to their Credo in this case?  Provide a rationale for your answer.

Fear the Energy Drinks? New Evidence of the Dangers of Energy Drinks

It should be no surprise to anyone that too much energy drink consumption is bad for a person, especially children.  But how much is too much?  And how is bad for a person?  It is not uncommon for young people to drink more than one energy drink to stay up to engage in a variety of activities from gaming to studying.  The issue becomes the risks posed from the energy drinks.  The problem centers on the high amounts of caffeine and other ingredients that provide “energy.”  In reality, those ingredients heart palpitations, seizures, strokes, and even death.  Caffeine is the central ingredient.  Energy drinks typical contains  four to five the amount found in sodas.  Physicians now argue that drinking four or five energy drinks per day can be dangerous for children. 

Here is a summary of a recent medical study

Energy drinks may pose a risk for serious adverse health effects in some children, especially those with diabetes, seizures, cardiac abnormalities or mood and behavior disorders.

A new study, “Health Effects of Energy Drinks on Children, Adolescents, and Young Adults,” in the March issue of Pediatrics (published online Feb. 14), determined that energy drinks have no therapeutic benefit to children, and both the known and unknown properties of the ingredients, combined with reports of toxicity, may put some children at risk for adverse health events.

Youth account for half of the energy drink market, and according to surveys, 30 percent to 50 percent of adolescents report consuming energy drinks. Typically, energy drinks contain high levels of stimulants such as caffeine, taurine, and guarana, and safe consumption levels have not been established for most adolescents. Because energy drinks are frequently marketed to athletes and at-risk young adults, it is important for pediatric health care providers to screen for heavy use both alone and with alcohol, and to educate families and children at-risk for energy drink overdose, which can result in seizures, stroke and even sudden death.

Here is the name an link to the full report:  ‘Health Effects of Energy Drinks on Children, Adolescents, and Young Adults’

This is not an overreaction from a group of concerned parents or scare tactics from a group that does not like energy drinks.  This is a scientifically based study by trained medical professionals trying to understand the potential risk of a product.  Nor is the concern sudden.  In 2010, The American Association of Poison Control Centers began tracking energy drink overdoses and side effects nationwide.  Their findings:  677 cases occurred from October through December of 2010 and 331 have been reported this year (Feb of 2010).  One issue that Poison Control has is the failure of many companies to disclose the amount of caffeine in drinks.  In fact, the Poison Control Centers began issuing warnings about energy drinks three years ago.

If young people are a key target market, we would expect concern from the beverage industry about this new report.  Here is a statement from Maureen Storey, senior vice president of science policy at the American Beverage Association, an industry group, said the report “does nothing more than perpetuate misinformation” about energy drinks. The Association added: 

“Like all foods, beverages and supplements sold in the US, energy drinks and their ingredients are regulated by the US Food and Drug Administration,” the ABA said. “When it comes to caffeine, it’s important to put the facts in perspective. Most mainstream energy drinks actually contain about half the caffeine of a similar size cup of coffeehouse coffee. In fact, young adults getting coffee from popular coffeehouses are getting about twice as much caffeine as they would from a similar size energy drink.”

Here is more from the Association’s news release

“It’s unfortunate that the authors of this article would attempt to lump all energy drinks together in a rhetorical attack when the facts of their review clearly distinguishes the mainstream responsible players from novelty companies seeking attention and increased sales based solely on extreme names and caffeine content.

Their review confirms that the amount of caffeine in mainstream energy drinks is, in fact, moderate. As a comparison, energy drinks typically contain half the caffeine found in regular coffeehouse coffee. Specifically, a 16-ounce regular blend coffee at a popular coffeehouse contains 320 mg of caffeine, while a comparable size mainstream energy drink contains about 160 mg (see graphic here: http://www.ameribev.org/industry-issues/healthy-balanced-diet/beverage-ingredients/caffeine/fact-sheets/download.aspx?id=192). So those suggesting that energy drinks should require warning labels need to be aware of the slippery slope this would create: to be consistent, products at coffeehouses also would require such unnecessary labeling.

Furthermore, our companies market their energy drink products responsibly. It’s unhelpful to the public that the authors would combine certain extreme products with illicit or suggestive names with other more mainstream energy drinks in an effort to sensationalize and demonize the entire product category and gain exposure for their work.

Questions to Consider

1.  How would you evaluate the credibility of the study?  Why does credibility matter in issues management?

2.  How ethical is the charge of misinformation made by the American Beverage Association?  Explain your evaluation.

3.  Is it fair to say the reaction from the American Beverage Association was predictable?  Why or why not?

4.  Should the energy drink makers be worried about new regulations appearing as a result of this study?  Why or why not?

5.  How would you evaluate the American Beverage Association’s reaction from an issues management perspective?  From a crisis management perspective?

6.  How would you evaluate the risk this report posses to the energy drink makers?  How did you arrive at that evaluation?