Is the Trump Organisation a socially responsible organisation?

Ethical Markets - RSRI/ESG News, Global Citizen, TV Series

“Ethical Markets salutes our longtime colleague Dr. Michael Hopkins of MHCInternational for undertaking this valuable overall assessment of the SRI/ESG  and ethical score of the Trump Organization, using his well-tested evaluation criteria.  ~Hazel Henderson, Editor”

Is the Trump Organisation a socially responsible organisation?

Michael Hopkins, Dec 18 2016

Introduction

The social responsibility of companies has taken a bad hit in recent times as first Britain votes to leave Brexit and thousands of companies are negatively affected by a social phenomenon i.e. the vote to leave. Then the CEO of an organisation that has never published a social report and with the claim that global warming is a hoax becomes President. An analysis of his company, the Trump Organisation, shows the lowest socially responsible score ever recorded, by far, in nearly two decades of tracking.

 

Trump and his many family members receive millions each year from the Trump Organization, which gets most of its profits from a complex web of licensing deals all over the globe. Trump claims his personal wealth is $10 billion, although Bloomberg[1] calculates it at $2.9 billion. It was not possible for me to work out the value of the Trump Organisation which, with debts, may be zero or depending on how much property is valued may or may not, less mortgages, be worth billions. It is also suspected that many of the loans are contributed by Russian and Chinese companies. For instance, Sergei Millian, the president of the U.S. Russian Chamber of Commerce and friend of Trump, claims in 2016 the figure is in ‘the hundreds of millions’[2].

 

These days the main sales point is his name which, presumably, drove him to the Presidential election and must have frightened the world out of him when he surprisingly won – he now has to do some real work!

 

Source: Newsweek Dennis Van Tine/ABACAUSA/Newscom

 

I still suspect that Trump doesn’t really want to be President with all its concerns, and maybe saw the run for President as a way of furthering his brand.

What is the Trump Organisation?

In fact it is very difficult to find out not only what Donald Trump is worth and also what his organisation is worth and what it actually does. Given that I, for my very small company, diligently prepare annual accounts I am quite astonished at how difficult it is to find out anything reliable about Trump – remember he refused to disclose his tax return before the election – and company accounts are haltingly filed. Dear UK Tax Office, the new President of the USA refuses to declare either his own earnings or his company. Do you mind if I take the lead as well from the most powerful nation on earth? Response: No.

 

As Timothy O’Brien of Bloomberg wrote[3] ‘Trump, who flirted with personal bankruptcy in the early ’90s, has never publicly offered an independently vetted assessment of all his debts. Indeed, much of the financial information he discloses is self-reported. Until that changes, there’s a good chance that a strong dose of grade inflation runs through all of the net worth figures cited above.’ Because of Trump’s habit of suing almost anyone who comes up with totals of his net worth which are lower than he declares himself both this article and the previous quote insist upon this disclaimer ‘This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP or MHC International Ltd or its owners.’

 

When analysing a company’s CSR I usually ask my students to start with the company’s website and then fill in a twenty question questionnaire that has been on my website for nearly 20 years. The full questionnaire can be found on my website www.mhcinternational.com under Rate Your Company. Unfortunately, Trump.com simply has a bunch of glamorous pictures but says nothing about the company. So I had to move onto other sources especially as Trump.com makes it clear it doesn’t wish to entertain any visitors unless, of course you are a billionaire. Rather forbiddingly the main message one receives from his website promoting his company is: Please note Mr. Trump does not receive and is not forwarded ANY e-mail messages, unsolicited phone or fax inquiries.[4]

 

The list of Trump’s failures as a businessman defy belief and too long to repeat here but see Corp-Research[5] that list his business activities, or lack of them, over 1970 to present times and Newsweek on the tentacles of the Trump org overseas[6]. For instance, they cite a June 2016 article in the New York Times that concluded that Trump’s casino business was “a protracted failure” and added: ‘But even as his companies did poorly, Mr. Trump did well. He put up little of his own money, shifted personal debts to the casinos and collected millions of dollars in salary, bonuses and other payments. The burden of his failures fell on investors and others who had bet on his business acumen.’

 

In terms of social responsibility the two key issues that came out of Trump’s Presidential campaign were jobs and his Trump Foundation. I look at both next.

 

Employment in Trump Organisation

Did the Trump Organisation do well at creating jobs? Donald Trump vowed that when elected president, he would “be the greatest jobs president that God ever created.” One of the main reasons Trump cites for that is that he’s a businessman. He has already created jobs, he argues, so he’ll do it on an even bigger scale as president.   So how many jobs has Trump created as a businessman? A CNN Money analysis calculated at least 34,000 jobs attributable to the Donald. But it’s not the most straightforward calculation. His company, The Trump Organization, is private, so it does not have to disclose information publicly about how much money it makes nor how many people it employs. His campaign didn’t give a specific figure either. So my source, CNNMoney, turned to PrivCo, which researches and tracks privately-held companies. According to PrivCo, the Trump Organization has 22,450 employees and brought in $9.5 billion in annual revenue in 2015.

 

But Trump has acquired some existing properties, and so one could argue he didn’t create those jobs. He has also filed for Chapter 11 bankruptcy four times for some of his properties, mostly in Atlantic City. The hotels were still able to operate in bankruptcy, but Trump Plaza in Atlantic City did close in 2014, costing about 1,000 jobs. By that time, Trump was no longer running the company, although he retained a small stake in it. Also, consider Ricardo Ara, a 24-year-old who works in the Koi Soho restaurant in the Trump SoHo Hotel. His story made news because Ara is an illegal immigrant from Mexico who has the right to work at the restaurant in Trump’s hotel because of Deferred Action for Childhood Arrivals, a program Trump wants to end[7]. Ara is technically employed by the restaurant, not the Trump Organization, but his job probably wouldn’t exist if the hotel weren’t there.

The Trump Foundation

The Foundation is held wholly in the Trump family name (Donald, President and Eric and Ivanka Directors) and donates around $US900,000 a year[8], which is tiny for an organisation said to be worth in the billions. The larger donations of $100K were to Comic Relief, Caring for Military Families and Marine Corps Law Enforcement. The largest contribution to the Foundation in 2015 came from Victor Pinchuk[9], a billionaire from Ukraine whose father-in-law is former Ukrainian president Leonid Kuchma, the onetime patron of Victor Yanukovych, the Moscow-backed president who just fled his own country and reportedly spirited off billions of dollars.  According to Politico[10], Donald Trump’s foundation has acknowledged violating a prohibition against using charitable funds to benefit the leaders of the organization or their family members, a practice known as “self-dealing”. The nature of these and other allegations of illegal activity, improper conduct, or organizational mismanagement are such that Charity Navigator (CN) has issued a CN Advisory to provide ‘donors with content that they may find useful when making their giving decisions’[11]. One can only wonder why the Trump Organisation bothers with such a small Foundation which seems to only smear its reputation rather than enhance?

Rating the Social Responsibility of Trump org

I used my own rating system that is based upon a tried and tested questionnaire that I designed 16 years ago following a model of CSR that I call the Hopkins CSR Model (H-CSR-M) – see https://www.csrfi.com/hopkinscsrmodel . The questions in the questionnaire have not been changed simply to preserve comparability over time. Since the questionnaire was based on the CSR model, originally based upon USA Prof. Donna Woods model of social responsibility that I later adapted and called the H-CSR-M, the questions have not become particularly dated and the results are robust.

 

The scores were based upon the Trump website plus various recent newspaper reports referenced in the text above. The result was 9%. Over the 16 years that the questionnaire has been applied both on the web and hundreds of my students over the years, the questionnaire has been robustly tested yet all results have fallen between 40 and 90%. The Trump organisation gained a meagre 9% far lower than any other company or institution around the world.

 

Concluding Remarks

Showing the result to others the main feedback was a surprise in that many said ‘It should be lower than that’. The main reason the result was above zero was the assumption that the company probably observes some construction regulations and therefore avoids socially irresponsible use of its products e.g. hotels falling; the contributions (albeit meagre) to the Trump Foundation mayhave helped some communities and some jobs may have been created during the whirlwind of the election season over2015-16.

 

But, the main worry for us who have been promoting the social (social, economic, financial and economic) responsibility of companies and institutions is that one very prominent company had the lowest score ever achieved yet the public didn’t seem to care! Despite just about all Fortune 500 companies publishing social or sustainability reports and, as far as we could judge, acting upon their responsibilities thereby creating a fairer and more sustainable world, the movement has suffered a major blow. This author is convinced that the actual election was hacked, and not only the e-mail saga. That meant that probably only 20-25% of electors may have actually voted for Trump..we may never know the true figure. But what is clear, heading one of the most socially irresponsible companies in hstory has not prevented its CEO from dominating the richest country in the world. We in the CSR movement have much work to do!

 

 

Annex CSR QUESTIONNAIRE

 

Company name:Trump Organisation…………………………………………………………..

Your function: Analyst Hopkins..……………………………………………………………….

Sector of Activity: Hotels, Golf, Casinos………………………………………………………

Company size (Number of Employees]: 1-10 [ ], 11-50 [ ], 50-1000 [ ], 1000+ [X ]

E-mail (optional): Not Available…………………………………………………………………..

 

Please tick only one box per question

 

  1. Does your company have a statement of the company’s mission & values (i.e. business principles or vision of corporate responsibility)? Yes [ ], No or Don’t know [ X]
  2. Does your company have a code of ethics or code of business conduct? [If your company does not have a formal values statement or code of ethics, does it try to integrate social responsibility into its business culture? Yes, most definitely [ ] Yes, I think so [ ], No or Don’t know [X ]
  3. Is the code distributed to all employees? Yes, with vigour [ ], Yes, but not much information about it [ ], No or don’t know [ X]
  4. Are staff trained on the corporate code of ethics? Yes, through a specific ethics training programme [ ], Yes, occasionally [ ], No or don’t know [X ]
  5. Is there a manager responsible for ethics or corporate responsibility issues? Yes [ ], No or don’t know [X ]
  6. Does your company promote any initiative to prevent socially irresponsible use of its products e.g. supporting research and education on the possible negative effects that could be generated? Yes, with vigour [ ], Yes, more or less [ ], A little [X], No or don’t know [ ]
  7. Does your company publish a social report or have an ethical audit? Yes [ ], No or Don’t Know [ X]
  8. Does your company require its suppliers to adhere or comply with its code of ethics? Yes to all [ ], Yes to some suppliers [ ], No or don’t know [ X]
  9. Does your company try to have a continuing dialogue with the internal and external stakeholders of the company on social responsibility issues? Yes, with vigour [ ], Yes, occasionally [ ], No or don’t know [ X]
  10. Are wages paid by your company in your sector of activity: Much better than average [   ], better than average [ ], average [ ], less than average [X]
  11. Does your company have a policy to support worldwide the human rights of its employees? Yes [ ], No or Don’t Know [ X]
  12. Does your company contribute to projects for the local community? Yes, with vigour [ ], Yes, occasionally [X ], No or don’t know [ ]
  13. Has your company been fined for false advertising in the past two years?                                 Yes or Don’t Know[ X], No [ ]
  14. Does your company apply an environmental standard like ISO14000 or EMAS or CERES etc.? Yes [ ], No or Don’t Know [X]
  15. Has your company been involved in corruption law suits within the past five years? Yes or Don’t Know [X], No [ ]
  16. Does you company have an anti-corruption or bribes policy? Yes [ ], No or Don’t Know [X]
  17. Does your company have an anti-discrimination policy in recruiting, promoting and training? Yes [ ], No or Don’t Know [X]
  18. Does your company have any form of employee participation to profits?                                 Yes [ ], No or Don’t Know [X ]
  19. Are the Board of Director’s actions transparent? (such as comply with Cadbury code, OECD corporate governance guidelines) Yes [ ], No or Don’t Know [X]
  20. Did your company create jobs in the last year? Yes [X], No Change [ ], Less or Don’t Know [ ]

Background

Mark with 1 = yes, 0 = no or dont know; if three responses uses 1, 0.5, 0; if four responses use 1. 0.66, 0.33, 0. Add all the scores up and divide by 20.

 

Benchmarks

The final score, aggregating over all questions, comes between 0 and 1 where 0 = poor performance and 1 = excellent performance in terms of corporate social responsibility.

 

Sample results

Shell:                                                                                                     0.88 [88%]

Rabobank:                                                                                          0.84 [84%]

Honeywell:                                                                                         0.78 [78%]

ILO (International Labour Organisation)                                  0.49 [49%]

 

Company Name: Trump
Function: Analyst – Hopkins
Activity: Hotel
Country: USA
Company Size: 1000+
Score: 0.09 [9%]

[1] http://www.bloomberg.com/politics/articles/2015-07-28/here-s-our-tally-of-donald-trump-s-wealth

[2] http://thehill.com/blogs/pundits-blog/presidential-campaign/302216-how-much-money-does-the-trump-organization-owe

[3] https://origin-www.bloombergview.com/view/articles/2016-05-20/trump-s-financial-report-that-s-rich accessed Dec 16 2016

[4] http://money.cnn.com/2015/07/28/news/economy/donald-trump-polls-taxes-wages/?iid=EL

[5] http://corp-research.org/trump-organization

[6] http://europe.newsweek.com/donald-trump-foreign-business-deals-national-security-498081?rm=eu

[7] http://money.cnn.com/2015/08/20/news/economy/donald-trump-immigration-ricardo-aca/?iid=EL

[8] According to tax return filed in 2016 see http://www.politico.com/f/?id=00000158-8cb3-d022-af5a-cfb3bb4f0000

[9] http://www.forbes.com/sites/katyasoldak/2014/03/03/ukraines-victor-pinchuk-the-oligarch-in-the-middle-of-the-crisis/#33562fd87289

[10] http://www.politico.com/story/2016/11/trump-foundation-irs-charitable-funds-self-dealing-231743

[11] https://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=16764