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Late last fall,
some 600 business leaders—including CEOs, marketing directors, and
investors in some of the nation's largest corporations—gathered at
the Sheraton Grande, a giant nonunion conference center in downtown
L.A., for the fifth annual meeting of an organization called Business
for Social Responsibility. BSR started out as a small network of profit-minded
liberals in the Ben-and-Jerry's mold, eager to prove that you can save
the planet, help the poor, and make money at the same time. But in the
last few years the organization has welcomed hundreds of mainstream
companies into its ranks, such as Dayton Hudson (owner of the Target
stores), Phillips-Van Heusen, The Gap, Levi Strauss, Mitsubishi, Wal-Mart,
Monsanto, Reebok, and Nike.
At the conference,
even the more straitlaced business types could not get enough of the
feel-good stuff. Participants were especially keen on the concepts of
cause-related marketing (attaching a brand name to a charity to sell
products) and strategic philanthropy (making charitable contributions
with corporate interests in mind). Session after jam-packed session
examined innovative means of making good works pay off. At one, a bright
young marketer from Timberland explained the financial logic of offering
free boots to City Year youth activists (i.e., so their hip, urban friends
would want some, too); at another, a company called SAS Industries presented
diagrams in a slide show demonstrating how on-site child care and medical
care minimizes the amount of time employees spend away from their desks.
No one seemed to
notice the dissonance generated by the pooling of such helpful hints.
If this conference had a mantra, it was that being socially responsible
is, by definition, good for business; what will benefit society will
benefit the company, and vice versa. Old-school corporate executives,
stockholders, and radical economists alike might be skeptical of such
a premise, but at a lunch table or break-out session at this event,
expressing any doubt in its inherent validity felt like assailing the
tooth fairy in front of a classroom of second-graders.
In a panel discussion
focusing on human rights abroad, a patient professor stood for ten minutes
rephrasing his query for representatives of Liz Claiborne, Patagonia,
and Nike: "What do you do when treating workers well impairs your ability
to compete? Isn't there sometimes a trade-off between being socially
responsible and maximizing profit?" In reply, Nike's director of labor
practices, named Dusty Kidd, claimed that such questions were obsolete
now that companies have figured out that a contented workforce is more
productive. The woman representing Liz Claiborne called the issue of
a living wage a "media-driven distraction" from all of the voluntary
steps the apparel industry has taken toward greater social responsibility.
For their part, audience members emphasized the positive influence of
consumer social consciousness on corporate behavior, and conversely,
the deterrent effect of the high public relations costs on corporate
misbehavior.
Sometimes the discrepancy
between a firm's self-image and reality was almost surreal. Later on
at the same session, Nike's Kidd presented a video of a factory in Vietnam.
The camera followed a Vietnamese inspector on his rounds, interviewing
plucky, smiling workers, running his hands over gleaming production
equipment, and visiting immaculate homes. Unfortunately for Nike, two
days later—while the conference was still going on—a story appeared
on the front page of the New York Times about conditions in Vietnamese
Nike plants, where workers were being exposed to carcinogens at 177
times safe levels, and were being paid just $10 for a 65 hour workweek
(far longer than local law allows).
What rapidly was
becoming apparent, from all the videos and glossy brochures and slide
shows and speeches, was the very real—and growing—value that companies
are placing on cultivating an appearance of social responsibility, whatever
their actual practices. In part this is a consequence of rising interest
among investors in the stocks of so-called socially responsible companies.
Socially screened investments—very broadly defined—grew 85% in the
last two years, from $639 billion to $1.185 trillion, according to a
recent study by Social Investment Forum. Frequently, social screens
merely eliminate firms with extreme public image problems, such as tobacco
companies. The Domini 400 Social Index, one of the leading purveyors
of social research for concerned investors, is lenient enough to include
half of the S&P 500, and until late last October Nike was among them
(it was deleted due to "international labor controversies").
Perhaps even more
significant, though, is the value of brand-image for firms marketing
consumer goods to a broad segment of the public. A Roper-Cone poll found
that 78% of Americans weigh a company's social reputation when making
buying decisions. Cutting-edge marketing strategy prescribes building
relationships with consumers by conveying an impression of what the
whole company stands for, which is supposed to breed long-lasting brand
loyalty.
A look at the contrasting
cases of Reebok and Nike shows just how important clever public relations,
combined with targeted philanthropy, can be for a company.
Over the years,
Reebok has made many friends in the international human rights community
and, by extension, everywhere else. The late-80s "Human Rights Now!"
concert tour, featuring Sting and Bruce Springsteen, garnered huge publicity
in Central Europe and several Third World countries, associating the
brand with compelling pop icons. And the Reebok Human Rights Awards,
now in its tenth year, recognizes and rewards genuinely inspiring activists.
This year, winners include Rana Husseini, a Jordanian journalist who
exposed widespread "honor crimes" against women (including murder) that
go virtually unpunished; and Dydier Kamundo of Congo, one of the few
activists to challenge the military's systematic torture of prisoners.
Nike, meanwhile,
has largely neglected the realm of strategic philanthropy. Its clumsy
efforts to appear friendly to women through its "If you let me play"
ad campaign have backfired, with the National Organization for Women
and other women's groups mounting a campaign to publicize the exploitation
of women and girls in Nike plants in Vietnam, China, and Indonesia.
Nike has been the
target of boycotts, repeated media investigations, and international
protest. Reebok has experienced almost none of these things. To be sure,
Nike's overall labor record is worse, but not that much worse. There's
still plenty to complain about with Reebok: The company's contracting
factories in Southern China are riddled with wage, hour, and health
violations, and Reebok continues to exploit child labor to stitch soccer
balls in Pakistan despite a public pledge to put an end to the practice.
The danger is that
the rhetoric of corporate social responsibility can be an effective
disguise for seriously antisocial behavior. But there is, of course,
another side to that coin: namely the opportunity to point out hypocrisy
at its most egregious.
Dollars and Sense
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