Father and Son by Andre Chin. CC-BY.

The W. R. Grace Company was founded by, yes, a man named W. R. Grace. He was Irish and it was a shipping enterprise he brought to New York in 1865. Energetic and ambitious, while his company grew on one side, he was getting civically involved on the other. Fifteen years after arriving, he was elected Mayor of New York City. Five years after that, he personally accepted a gift from a delegation representing the people of France. It was the Statue of Liberty.

Grace was a legendary philanthropist. He provided massive food donations to his native Ireland to relieve famine. At home, his attention focused on his nonprofit Grace Institute, a tuition-free school for poor immigrant women. The classes offered there taught basic skills—stenography, typewriting, bookkeeping—that helped students enter the workforce. More than one hundred thousand young women have passed through the school, which survives to this day.

In 1945, grandson J. Peter Grace took control of the now worldwide shipping company. A decade later, it became a publicly traded corporation on the New York Stock Exchange. The business began shifting from shipping to chemical production.

By the 1980s, W. R. Grace had become a chemical and materials company, and it had come to light that one of its plants had been pouring toxins into the soil and water underneath the small town of Woburn, Massachusetts. The poisons worked their way into the town’s water supply and then into the townspeople. It caused leukemia in newborns. Lawsuits in civil court, and later investigations by the Environmental Protection Agency, cost the corporation millions.

J. Peter Grace retired as CEO in 1992. After forty-eight years on the job, he’d become the longest-reigning CEO in the history of public companies. During that time, he also served as president of the Grace Institute.

The nonfiction novel A Civil Action came out in 1996. The best-selling, award-winning chronicle of the Woburn disaster soon became a Hollywood movie. The movie, starring John Travolta, continues to appear on television with some regularity.

To honor the Grace Institute, October 28 was designated “Grace Day” by New York City in 2009. On that day, the institute defined its mission this way: “In the tradition of its founding family, Grace Institute is dedicated to the development of the personal and business skills necessary for self-sufficiency, employability, and an improved quality of life.”“Our Mission,” Grace Institute, accessed June 1, 2011, http://www.graceinstitute.org/mission.asp.

PRACTICE QUESTIONS

1. The specific theory of corporate social responsibility encompasses four kinds of obligations: economic, legal, ethical, and philanthropic.

• How are business leaders meant to organize these four responsibilities? Which ones take precedence over the others and why?
• Judging the man named W. R. Grace through the lens of CSR, how well did he respond to his obligations? Explain.
• Judging the company’s more recent activities in the 1980s through the lens of CSR, how well did it respond to its obligations? Explain.
• The triple-bottom-line theory of corporate responsibility promotes three kinds of sustainability: economic, social, and environmental.
  • What does the term sustainability mean within this theory and within each of the three categories?
  • The W. R. Grace company has a long history. From the information provided, what are some of the steps the company has taken to become economically sustainable? Explain.
  • What are some of the steps the W. R. Grace company has taken to promote social sustainability? Explain.
  • What is environmental sustainability? How can the dumping of toxic waste in Woburn be categorized as unethical within the area of environmental sustainability concerns? Explain.
• Stakeholder theory affirms that for companies to perform ethically, management decisions must take account of and respond to stakeholder concerns.
  • What is a stakeholder?
  • Looking back at the early company in New York in the 1800s, who would have been some of the stakeholders surrounding the Grace shipping company?
  • Looking to more recent history, to the corporation as a producer of industrial chemicals in Woburn, Massachusetts, who were some of the major stakeholders surrounding Grace?
  • Explain why the Grace Institute, which receives generous support from the W. R. Grace industrial chemical corporation—and the women receiving training there—are stakeholders in the W. R. Grace corporation.
  • The Grace Institute—the people employed there and the women receiving free training—depend to some extent on the chemical company being profitable. Could you construct an argument in favor of the chemical company being environmentally irresponsible if that allows profits, and therefore necessary support for the Institute?
• As this question is being written, the share price of W. R. Grace is $26.17, and there are a total of 72,780,100 shares out there in the world. You’ve saved some money from a summer job and invested in Grace, 100 shares to be exact. That costs you $2,617, and means you own a not-overwhelming 0.000137 percent of the company. Next, you e-mail this to the CEO: “I worked hard for my $2,617, I bought stock to see that amount rise, and I want you to pour a little bit more of the profits into research and development of new products, and a little less into the Grace Institute.” Assuming the CEO is a proponent of stakeholder ethics, what do you suppose the response would be?
• There are a number of arguments supporting the proposal that corporations are autonomous entities (apart from owners and directors and employees) with ethical obligations in the world. The moral requirement argument contains four elements:
  • Corporations are already involved in the broad social world and the ethical dilemmas defining it, and therefore they are obligated to participate and help solve problems.
  • Well-established, successful, and powerful corporations can be involved in the effective resolution of broad social problems, and that ability implies an obligation to do so.
  • Corporations rely on much more than their owners and shareholders. They need suppliers, employees, a town in which to locate, consumers, air to breathe, and water to drink. That reliance implies an obligation to care for the welfare and protection of those things.
  • Because businesses cause problems in the larger world, they’re obligated to participate in the problems’ resolution. How can each of these general arguments be specified in the case of W. R. Grace?