Most companies don’t know how to respond to revelations that they have acted irresponsibly in the past. Part of the difficulty is that they lack a blueprint to guide managers, who need to be accountable for actions and decisions they did not make but are nonetheless responsible for. Diego M Coraiola, Judith Schrempf-Stirling and Jordi Vives Gabriel have created a transitional justice approach to assist organisations in this delicate process.
What do you do when you discover that the company you own was built with slavery money? This happened to The Guardian, which is now scrutinising its past in an effort to clean the rubbish under the carpet of history.
The Manchester Guardian was founded in 1821 by John Edward Taylor, a journalist and cotton merchant, with the help of 11 financiers. For almost 200 years the origins of the founding capital remained unquestioned. Even though rumours about the links between the founder and the Transatlantic Trade existed, the chairman of the Scott Trust – the trust that owns the Guardian – declared in 2020 that they had “seen no evidence that Taylor was a slave owner, nor involved in any direct way in the slave trade”.
Everything changed when the results of an independent inquiry commissioned by the Scott Trust were released showing the deep connections Taylor and nine other financial backers had with the slave trade. In light of the academic findings, the Scott Trust and the Guardian publicly apologised “unreservedly for their roles in this crime against humanity”, and established a “decade-long programme of restorative justice” aimed at the communities affected by the legacies of transatlantic slavery.
Like The Guardian, many other companies carry such legacies of irresponsibility and may not even be aware of them. The surprising story of the publishing house Bertelsmann shows that managers can also inherit whitewashed histories. The revelation that the corporate narrative of proud resistance to Nazism was a forgery and that the company had actually contributed to and benefitted from the Nazi regime had a major impact on the reputation of Bertelsmann.
Some corporations systematically attempt to erase past misbehaviour, creating obstacles for the emergence of the historical truth. Several studies show how the tobacco industry orchestrated a campaign to obscure the harm their product caused and propagate misinformation about the damaging effects of smoking. As these cases show, organisations may have been associated with multiple forms of historical wrongdoing, such as political violence, forced labour, genocide and environmental destruction. The further away we are from the time when the wrongdoing was perpetrated, the more likely it is that important vestiges of irresponsibility have been erased and faded away.
Our research shows that when information about past corporate wrongdoing resurfaces, most companies do not know how to respond. There is no set of best practices to guide managers in addressing public criticism around historical irresponsibility. Contemporary approaches to misconduct are insufficient, since legacies of irresponsibility involve intergenerational harm and guilt. Organisations, lasting longer than individuals, pass on both positive and negative legacies. Past harm may disadvantage some groups and snowball into the future in the form of intergenerational trauma. Dealing with legacies of irresponsibility requires taking ownership of past generations of managers’ decisions and actions that are now considered unethical and immoral and may have enduring negative consequences for society and the environment.
In other words, managers need to be accountable for actions and decisions they did not make but are nonetheless responsible for, and they must ensure that the compounding harm caused is repaired and ceases to exist.
Part of the difficulty in tackling corporate legacies of irresponsibility is that we lack a blueprint to guide the actions of managers and organisations. There are various reports about what some organisations did here and there, but no evidence-based, systematic approach to addressing past irresponsibility comprehensively and consistently across different contexts. However, the literature on transitional justice, originally developed to facilitate political transitions and address nation-states’ involvement in mass atrocities post-WWII, offers a suitable framework. Transitional justice aims to reconcile victims and perpetrators and bridge past harms with a hopeful future through mechanisms such as justice processes, truth-seeking initiatives, reparations and institutional reforms.
To assist organisations in accounting for their legacies of irresponsibility, we build on these mechanisms and devise a transitional justice approach. For it to be effective, we contend that organisations must be fully committed to addressing their past mistakes before initiating this process. The first step comprises deep research into their past. This can be done in-house with the creation of an autonomous committee, as seen with universities like Brown and Harvard, or through external experts as was the case with the Guardian and Volkswagen. The goal is to unearth the truth and uncover the details of the historical wrongdoing. Once the organisation has a good grasp of its past irresponsibility and its consequences, managers must decide how they are going to engage in the process of reconciliation with affected stakeholder communities.
Figure 1. A transitional justice framework for organisations
Our framework outlines four strategies organisations can use individually or in combination with one another. They are different approaches to coming to terms with the past. At the centre of the figure is truth-seeking, which informs all four strategies. The four differ based on the temporal focus and the main target of the action. Strategies can be retrospective and involve attempts at amending past wrongs, or they can be prospective and focus on preventing the reproduction of past mistakes. They also vary depending on whether they aim at victims or perpetrators. Organisations can first reflect on their role as perpetrators or may instead listen to the victims. The decision on how much time and resources to invest in developing each strategy remains with the organisation and should be considered in light of the facts uncovered through truth-seeking and the demands of stakeholders.
Looking at the framework clockwise, starting at the bottom left, the four strategies are: retribution, reparation, reintegration and reform.
- Retribution is a form of accountability that establishes the punishment of perpetrators for past mistakes. It prescribes a loss to the perpetrator as a way to even out the harm caused in the past. The most common example of retributive justice is through lawsuits filed against companies that engaged in historical wrongdoing, but there is evidence of proactive retribution negotiated with stakeholders as a novel approach.
- Reparation includes a wide range of actions that aim to restore to the victims what has been taken away from them. It is a positive approach focused on giving back to victims. Reparations can be either material or symbolic. Repatriation of stolen goods such as totem poles and financial compensation to descendants of victims are forms of material reparation. Symbolic repair includes apologies, commemorations and memorials as well as actions such as the renaming of buildings and institutions and the removal of statues.
- Reintegration, at the right-top side of the framework, focuses on building a future for the victims and their descendants. It means providing opportunities for individuals and communities affected by intergenerational harm to be reincorporated into society equitably. The creation of educational funds to support the access of African-Americans to higher education, such as JPMorgan’s Smart Start Louisiana, and funding for human rights education, such as the one provided by SNCF America Holocaust and Human Rights Education Fund, illustrate how companies can address past harm by ensuring that affected communities find more support and understanding of their situation and can work towards building a better future for themselves.
- Reform is the final strategy in our framework. It means promoting structural and institutional changes to ensure that the future does not repeat the past. This includes changing organisational policies to provide a more inclusive and equitable environment as well as using the influence and resources of the organisation to promote changes in the government, economy and society to build more respect, compliance and accountability for human rights in the present and the future. Brown University’s journey of reckoning with its slavery ties offers a case in point. Not only has the university changed its internal policies to support the recruitment and academic development of underrepresented groups, but it has also provided support to higher education institutions that are interested in accounting for their slavery ties.
- This blog post is based on Dealing with Organizational Legacies of Irresponsibility, Academy of Management.
- The post represents the views of the author(s), not the position of LSE Business Review or the London School of Economics and Political Science.
- Featured image provided by Shutterstock
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