Chemistry or contamination: Dow at the Olympic Games

Right now a brouhaha is building between the India Olympic Committee and the IOC over the presence of Dow Chemicals at the London 2012 Summer Games. In particular, India is up in arms over Dow’s sponsorship of an $11.4-million decorative wrap to be installed around the London’s Olympic Stadium, according to this post in Brandchannel.

The Indian Olympic Committee takes exception to Dow’s ownership of Union Carbide, which Dow bought in 2000, 16 years after that company’s plant in Bhopal had leaked gas killing thousands and injuring hundreds of thousands more. For their part, Dow seem to be saying that they didn’t own the plant when the accident happened and therefore the Bhopal tragedy is not their responsibility.

In a letter to the Indian Olympic Association quoted here , IOC President Jacques Rogge explained that “Dow had no connection with the Bhopal tragedy.

“Dow did not have any ownership stake in Union Carbide until 16 years after the accident and 12 years after the $470 million compensation agreement was approved by the Indian Supreme Court.

“The court has upheld this agreement twice since then, in 1991 and 2007. We understand that this is being reviewed yet a third time by the India Supreme Court and we are aware of Dow’s position in this matter, and of the sensitivities of all parties.”

There are some far-reaching implications in this story that I thought it would be useful to explore.

To my mind, it is simply not true that Dow has no connection with the Bhopal tragedy. They were not directly involved, but that does not mean they are not connected. And that’s because there is a significant and important difference between legal ownership and brand ownership. In addition to the lingering contamination and the human misery that continues to haunt the families of those affected, and which will continue to affect perceptions of their brand, what Dow seems to have overlooked in their statements about Union Carbide, and the big lesson for brand owners and acquirers the world over, is that when you purchase a brand, you pay for all the assets.

That includes the physical property and goodwill of course, but Dow have also, and unmistakeably, purchased the “badwill” as well because, when they bought the Union Carbide brand, Dow acquired the global memories of what transpired at Bhopal and the enduring emotional reaction to that tragedy. They continue to own that “badwill” regardless of the actual legal arguments and decisions.

When they bought Union Carbide, Dow inherited emotional responsibility for how the world feels about the legacy of what occurred, whether they wanted it or not. They can rationalise all they like that a compensation agreement has been paid, and that they have legal decisions in their favour, but that does not mean that the company can sweep the inconvenient parts of its acquired history under the carpet and somehow view them as divorced from the plant they bought.

Indeed, one could argue, if you apply that line of thinking elsewhere, that no company today  should be responsible for cleaning up what has happened to the environment because the damage was first done years ago by someone else.

Global companies are not just globally accountable for the brands they own and the companies they acquire, as shareholders they are responsible for the brand equity they manage and the emotions associated with their brands. They cannot selectively impose territorial N/As or hope to deflect responsibility for ownership from those parts of their organisation that no longer suit them by gloriously proclaiming and highlighting their participation in another event half a world away.

A wrap is not a gag – no matter how much it costs. Nor can it be a cover-up.

And time does not diminish moral responsibility – especially for a brand.

Brands are living memories. As long as the memories live, they are a responsibility of the brand owner.

What Dow have missed here in my view, dating all the way back to the date of purchase, was an opportunity to step up and take control of correcting the situation they had inherited. This could and should have been a showcase example of the chemicals industry leading the great global clean-up – working with the community to change the future for all those innocent people caught up in these horrendous events. Once again, what I can only assume was risk aversion has seen a brand back away from an opportunity that should have generated them massive goodwill. As a result, they now find themselves in damage control, looking to distance themselves from the fall-out of an asset that is undeniably part of their global brand.

Perhaps they thought no-one would question their involvement with the Olympics after so many years. (Why has it taken this long incidentally?)

Welcome to a world where scrutiny never dies.

What also seems to be missing from events in London is a very clear and assertive principle for involvement by the IOC. IOC President Jacques Rogge simply says in the Brandchannel article that they were “aware” of the Bhopal tragedy. What exactly does “aware” mean? And what influence did “aware” have on their decision? How long have they been “aware”? And have they ever done anything about their awareness?

I’m disquieted by what I read. In the newspaper article Rogge is quoted as saying that the IOC only enters into partnerships with organizations which the IOC believes work in accordance with the values of the Olympic movement.

“Dow is a global leader in its field of business and is committed to good corporate citizenship,” he is quoted as writing to the Indian Olympic Committee. “The company has supported the Olympic Movement for over 30 years, providing support and bringing industry-leading expertise and innovation to the Games.”

Spot the subjectivity in both these statements. Once again, it is a cautionary tale for all brand owners and managers. I interpret Mr Rogge’s statement as saying that as long as the IOC believes an organisation aligns with its own values, it will work with them. And while Dow may be committed to “good corporate citizenship”, it seems to be Dow who decides on the calibre of their own citizenship.

Unfortunately, for both organisations, you don’t get to referee your own corporate reputation. So while both Dow and the IOC may be satisfied with their actions, that does not mean they are exempt from criticism. Meeting your own criteria for comfort is not enough in a world where everyone gets to form and post an opinion.

Then there’s the reference in his letter to the long-running nature of the relationship between the IOC and Dow, and the fact that, according to the newspaper article, Dow only became involved after Olympic officials had scrapped plans for the wrap because its price had been deemed too expensive at a time of economic austerity.

How do you read all that?

For all these reasons, and despite talk of standards and values and legal justification, I have to question the brand case for Dow’s high profile involvement. What are they hoping to achieve?

More particularly, where is their involvement in the debate raging around them? If they believe they are right, why are they not more engaged socially in this discussion? I would have thought that the questions being asked now, by the Indian Olympic Committee, by Amnesty International and by others, are working to undermine the very “good corporate citizenship” status that Dow must have set, surely, as one of its objectives. They have a right – maybe even an obligation – to defend that. Yes, they’re paying for something that might not have been affordable otherwise, but the cost to their own brand and to their own reputation could be very high indeed if this matter continues to escalate.

Leaving it to others to speak on their behalf is not a strategy I would have recommended. It implies they don’t have answers – or, at the very least, that they are not prepared to answer the concerns of their critics. That’s a vacuum. And vacuums will always be filled. By you, or by those who will speak over you or in your stead if you do not respond.

As for the IOC, why are they supporting Dow? I hope the sponsorship selectors did indeed carefully and objectively assess Dow’s involvement against their values, as they say they do with each partner, and that they didn’t just take the money because of a funding shortfall. I hope they can prove that if required, for the sake of the five rings brand as much as anything else. Sorry to be so frank. But if that were not the case, it would be a serious blow to the integrity, and therefore the likeability, of the Olympic brand.

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0 Comments

  1. Great post Mark. Very thoughtful. You make two particularly good points: that Dow purchased ALL the assets of Union Carbide – including ‘badwill’, and the concept that scrutiny never dies. So indeed, Dow shouldn’t be surprised at the antagonism coming its way.
    But neither should it simply give in to the ‘scrutiny’. Scrutiny never dies because it is driven by the same human passions and frailties that create corporate, personal and political cock-ups. Those making the criticisms of Dow are emotionally and professional vested in the issue of “Union Carbide” and Bophal.
    I know we deal in the realm of perception, but we owe it to ourselves to first anchor our judgement with reality. Dow mainly purchased physical assets. By way of analogy, should the new owner of a bus that once killed a pedestrian, be held liable by the family of the pedestrian? No, but the human and public relations side of us would say that the new owner ought to connect with the family to allow them to reasonably involve the bus in their expressions of grief over the ensuing years. Should the family be able to force the bus off the road on each anniversay, force the bus not to drive on the road where the accident happened, or force the new owner not to advertise the bus for charter? In my view those requests, which are akin to the unclear aims of those criticising Dow’s Games effort, are unreasonable.
    Dow is clearly making a mistake in trying to avoid responsbility by focussing on the claim ‘it wasn’t us’. This attempt to make a break with the past that is, effectively, inhuman. It should do nice things like the new bus owner above, and I understand that it has.
    Dow doesn’t get to referee its reputation – of course – but netiher do those who scrutinise Dow get to referee it, or determine it uncontested. Dow has a right, and I think an obligation, to counter those who attempt to besmirch its reputation.
    I think the company needs to fight for its right to operate, and to raise a few questions about the motives of those cricising it. The short answer to the criticism is: “We are proud of our work, and our sponsorship of the Olympics. It is unreasonable to ask that we stop this because of something another company did 25 years ago, and was punished for.’.
    A final thought. I wonder if the criticism is getting some traction because many people think the marketing idea of wrapping the stadium is so damn naff and out of step with these constrained times. Even though they don’t give a toss about the Bophal link, they use it as a weapon in their own critique of the event.
    Ah – isn’t public communication a lovely messy thing.

    • Mark – great analysis. Thank you. My personal value is that while Dow purchased the physical assets, they should have done so with their eyes open about the ongoing perceptive and emotional implications. I would have seen that as part of their due diligence process. However I also agree with you that Dow should not let this go uncontested. As I said, I think they have both a right and an obligation to defend what they have done, and that they should be using dialogue and conversation to build bridges and heal rifts. Clearly a lot of people are still deeply affected and no responsible corporate should shut its eyes to that in my view. This assumes of course that Dow can logically, methodically and credibly make the case for their involvement. Because to be honest I’m still not sure why Dow did this and what they expected to achieve from it. Profile? (Yes, but as we know that can work both ways). Respectability? Support of the Games? How did they think people would see it? Wouldn’t you love to see the briefing paper that senior execs received?

      It surprises me that they have appeared surprised by the reaction they have received. I think that they should have reasonably expected that such a high profile sponsorship in financially tight times could indeed provoke discussion and argument and that they should have been ready and willing to engage in that. Handled properly, this situation had the potential to work positively for Dow. Perhaps it still does. But I don’t think denial of responsibility and not engaging socially are the right approaches, and that is not a strategy that I would have recommended.

      I also think, as I said in the post, that the IOC needs to be very clear about its criteria for selection and that they need to show clearer aligbment between that selection process and their values.

      Brands live and die on their associations. Sponsorships are an extension of that. My take – be very clear about why you are associating your brand with an event/cause and make a solid case for your involvement.

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