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Peter Smirniotopoulos

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If "Corporations Are People, Too [My Friend]," Shouldn't They Behave Ethically?

Posted: 02/23/2012 4:00 pm

This is the third, and final, installment in my series on "A Better Form of Capitalism." For the first two blog entries in this series, please go to "It's Up to the 99% to Insist Upon a Better Form of Capitalism" and "A Better Form of Capitalism: Consumer Behavior Matters."

However, I first introduced this notion -- about the benefits inuring to a civil and thriving society from the endeavors of "moral corporations" -- back in early October 2011, with "Three Innovative Ideas, Which Could Help the Economy... but No One's Talking About Them." In my "Three Innovative Ideas" blog post I posited, as one among three innovations, that in the nascent days of the Occupy Wall Street and emerging Occupy movement, one could predict that the 99% would gravitate to products and services offered by "good corporate citizens." I also acknowledged, at the same time, that this was not by any means a new concept.

In 1993 Paul Hawken, co-founder of garden supply retailer Smith & Hawken, published "The Ecology of Commerce: A Declaration of Sustainability," offering a vision of corporate sustainability in which profitability and respect for the environment could be successfully blended. Retail companies like Smith & Hawken, Starbucks, and Chipotle (promoting organic and local food sourcing for its restaurants), as well as manufacturers including 3M, Adidas, and BMW, have recognized social responsibility programs that are integral to their business models. At a time when the three-week old Occupy Wall Street protest has expanded into the nationwide Occupy Movement, and there is increasing suspicion and even growing animosity among a majority of American voters and consumers toward business in general, those that sincerely embrace social responsibility may fair much better with consumers in the future, particularly those consumers with more limited dollars to spend.

I have, in the previous two "A Better Form of Capitalism" blog posts, identified some of the bad actors that perhaps should be boycotted or at least held hostage by consumers until they atone for their sins. I mentioned Apple twice (three times now, including this final installment), in part because their public image as a hip brand seems diametrically opposed to Apple's corporate practices. However, for this notion of creating a better form of Capitalism through collective action and thoughtful consumer behavior to actually have a chance to succeed, the focus can't be just on those bad actors (it remains to be seen whether Apple can shed that moniker, as suggested in last week's blog); there has to be some methodology -- some systematic but easy to apply metrics -- for identifying the "good actors," the good corporate citizens worth patronizing.

One such way, of course, is for corporations to take the lead in reforming their policies and practices, and re-positioning their branding accordingly -- thereby elevating the public's perception of their products and services -- as Good Corporate Citizens. An advertising, branding, marketing, and management wunderkind, David Jones, in his new book Who Cares Wins: Why Good Business Is Better Business, argues that this approach will distinguish the wildly successful businesses of the future from all the rest.

By way of context, Jones knows of whence he speaks. He is the youngest person ever to advance to the top leadership spot in global advertising and branding: He is Global CEO of Havas, an international advertising and communications firm based in France, and Euro RSCG Worldwide, a global advertising and brand management agency. In Who Cares Wins, Jones takes the same concepts promoted by Hawken's The Ecology of Commerce and not only expands the notion of the Good Corporate Citizen beyond environmental and sustainability policies, but also argues that in the Age of Social Media (in its infancy when The Ecology of Commerce was first published), corporations will have no choice but to act morally because to do otherwise will be at the peril of their worldwide reputation and profitability. As an aside, the Extreme Irony Department reports that, despite its "It's an Electronic World After All" message, Who Cares Wins is not available for the Kindle. Tsk-tsk.

Let's hope Jones' message in Who Cares Wins is embraced broadly by corporations worldwide, such that eventually consumers will not need to do their own homework or become Social Media Activists to insure better-informed and more-conscious consumer behavior. As an aside, for an interesting perspective on Who Cares Wins, see social media and PR innovator Todd Defren's PR-Squared blog post an "OPEN LETTER TO HAVAS CEO DAVID JONES," who asks, with the ubiquity of social media and increased media coverage of Apple's dismal record of worker abuse by its Chinese suppliers, "where's the outrage?" But in the meantime -- assuming this transformational process takes, say, a generation -- what can and should consumers do to "be the change they want to see in the world?"

One approach is, rather than focusing on the products one needs, wants or "whims" to purchase, start compiling a list of Good Corporate Citizens. This definition, of course, can be guided by a broad range of metrics. How does the corporation treat its employees? How ethical are the corporation's practices and policies? How environmentally conscious are the corporation's operations? In what countries and under what worker conditions are the corporation's products produced? How reasonable is executive-level and management compensation compared with rank-and-file employees? Naturally, each consumer should add to and prioritize for themselves what elements make up and carry the most weight in determining those Good Corporate Citizens they choose to patronize. Here are three examples, and why they're worthy of consideration.

Patagonia. Patagonia's pro-environmental policies permeate everything the company does, from the way it manufacters its apparel to what it does with some of its corporate profits. This, from the company's web site:

The wild world we love is fast disappearing. At Patagonia, we think that business can inspire solutions to the environmental crisis. This means that what we make and how we make it must cause the least harm to the environment. We evaluate raw materials, invest in innovative technologies, and rigorously police our waste. Take a look at the Common Threads Initiative, bluesign Standard, the Footprint Chronicles and more. We also use a portion of our sales to support grassroots groups working to make a real difference (our "Earth Tax," to mitigate the damage we do). See Environmental Grants. And also, check out 1% for the Planet.

Of course, if you could trust a corporation's web site, or -- as was the case with BP, its self-serving "We care about the earth" advertising -- it would be very easy to support the wrong company. Simon Mainwaring, author of We First, believes that Patagonia lives up to its commitments to environmental sustainability. Patagonia: The power of brand transparency (Part 1) Mainwaring's validation that Patagonia is a company that does what it says and says what it does is reinforced by Olivia Khalili, founder of Cause Capitalism. In a blog post entitled 3 Things REI Should Do to Turn Its Social Programs Into a Social Mission she suggests that outdoor adventure retailer REI needs to be more like Patagonia.

Subaru. Subaru of America ("SOA") has a comprehensive Corporate Social Responsibility ("CSR") policy that goes well beyond promising consumers that the company makes quality vehicles:

[W]e have adopted a Corporate Social Responsibility policy with the following principles:


• We will uphold the highest standards of ethics and integrity in all business transactions.

• We will employ environmental practices and considerations that protect and preserve the environment.

• We support our local community through philanthropic investments of grants and volunteering.

• We actively protect the health and safety of our employees, customers and the general public.

• We maintain an employment policy and labor practices that promote fairness, equal opportunity and diversity.

SOA also expects each business partner to conduct themselves in a manner consistent with our CSR principles and to have in place their own Corporate Social Responsibility policies.

About a year ago, SOA announced that, through its Share the Love event, the company was donating over $5 million in vehicle sales proceeds to five charities: ASPCA, Big Brothers Big Sisters, Habitat for Humanity, Meals On Wheels and Ocean Conservancy. CSR Minute, February 16, 2011.

In 2004 SOA completed its "Zero Land Fill" plant in Indiana. More recently, SOA completed its LEED-Silver Certified Auto Parts Distribution, Training and Office Complex in Portland, OR. The U.S. Green Buildings Council Leadership in Energy and Environmental Design (LEED) program promotes design and building strategies that improve energy savings, water efficiency, CO2 emissions reduction, indoor environmental quality, and stewardship of resources and sensitivity to their impact through an internationally recognized green certification system.

SOA also has some of the lowest vehicle emissions across all its models.

Chipotle Chipotle is another national corporation with an impressive CSR policy, although that's not what they call it. Chipotle has fully integrated how it does things with what it does, encapsulated by their slogan "Food With Integrity." A review of the corporation's FWI Facts makes clear that, for Chipotle, sound practices making it a Good Corporate Citizen also differentiate it from its competitors. Among other things, Chipotle has completed the U.S.'s first ever LEED Platinum-certified restaurant, and sets goals for locally sourced and sustainably produced ingredients for each of its restaurants.

Chipotle's strategy is a really good example of how sustainability can be a differentiator in the $1 billion dollar fast food industry. For the first time, consumers can align their quest for convenience and relatively low-cost food with health, well-being and environmental sustainability. Chipotle Challenges Conventional Fast Food

If critics' positive response to Chipotle's recent Super Bowl ad, focusing on the company's local/sustainable sourcing FWI component is any indication, it suggests that David Jones' ideas in "Who Cares Wins" work in practice, and not just in theory. Chipotle's Anti-Factory-Farm Ad Captures Hearts and Changes Minds

I'm not saying consumers need to go out today and buy a Patagonia jacket, a Subaru Legacy wagon or a Chipotle burrito bowl in order to help create a more moral, better form of Capitalism. What I am saying, however, is that what consumers purchase, and from whom, matters greatly. And if the 99% want to help shape a better world in which we live, we need to choose how and why we spend our limited funds much, much more wisely.

 

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