New Internationalist

faced Cheek

Issue 289


Bare-faced cheek
Can we as consumers really make business more ethical?
Rob Harrison examines the current global state of play.

Making a real difference with fairly traded coffee.
SEAN SPRAGUE / PANOS

In 1995 Third World debt campaigners in Britain started buying single shares in Lloyds Bank in order to be able to attend the company’s annual general meetings. At the Bank’s meeting that November both male and female protesters removed their clothes to reveal anti-debt slogans on their bodies whilst others threw stinkbombs, dressed up in fancy dress and ran around letting off sirens. The infamously debased tabloid press loved it, and ended up giving unprecedented coverage to the issue of debt forgiveness.

Five months later a more measured approach by church-based anti-smoking campaigners in the US won such significant support from pension-fund shareholders that they almost forced the board of RJR Nabisco at its Annual General Meeting to split the food and tobacco multinational into separate parts.

The idea of ‘ethical business’ is not new. It can be traced back to nineteenth-century philanthropists like the early socialist entrepreneur Robert Owen and various Quaker-owned businesses. But by the 1950s governments had introduced laws and regulations to prohibit many unethical practices and the notion of ethical business had become somewhat redundant. The rapid onset of ‘globalization’ in this decade, however, has made it easy for unscrupulous businesses to circumvent tiresome environmental or health-and-safety rules by relocating production overseas. This seriously undermines the capacity of national governments to set ethical boundaries for business. In order to remain ‘competitive’ and attract international investment, national governments are increasingly wary about setting limits on the nature of corporate activity.

As a result citizens’ groups concerned with issues like the environment and human rights have had to learn to focus their energies on the corporate sector. Thousands of groups have emerged. Grassroots ‘corporate campaigns’ are now spreading so fast around the world that even some of the biggest global corporations are genuinely alarmed. Far from being a temporary preoccupation of a disenfranchised minority, ideas about ethical shopping and investment are fast becoming absorbed into the mainstream.

The thing each company fears most is becoming the target of a powerful single-issue campaign group. So, rather than waiting for it to happen, managers are taking pre-emptive action. This may take the form of ‘environmental product’ development and labelling, or engaging with such ideas as codes of conduct and social audits.

Not surprisingly, consumers are wary about corporate claims to be ethical since most companies have direct financial incentives to overstate their commitment. If all corporate claims on ethics were cynical, consumers might be less confused than they are now. The problem begins when we realize that some companies are actually quite genuine. Some, like the Body Shop or Ben and Jerry’s are obviously driven by socially conscious entrepreneurs. With others, however, there is a danger that as consumers we may overlook and fail to support genuine initiatives in a determination not to be outwitted by the more cynical side of corporate Public Relations.

This is a problem both for companies and campaigners. But there is a solution: ‘independent monitoring’ or ‘independent auditing’ of corporate claims. Although it will be a while before independent audits appear in a form which will satisfy all the major players, campaign groups and large accountancy firms are already putting teams together to take the first few steps.

The speed at which all these new developments are taking place is encouraging. But corporate-responsibility campaigners and ethical consumers are only beginning to skim the surface. Much global business remains mercilessly unethical at heart. In the past year, for example, we have been made aware of the links between the horrific human-rights abuses of military governments in Burma, Nigeria and Colombia and the oil companies Total, Shell and BP, respectively.

Taking ethics to the heart of the global economy is an enormous task. Its sheer scale means that it is important at this stage not to be distracted by companies making misleading ethical claims. Such claims will eventually be unmasked – and common sense can act as some sort of guide. For example, general claims such as ‘environmentally friendly’ and ‘this company always operates with respect for human rights’ are far less likely to be honest than a specific, verifiable claim such as ‘made without CFCs’. A far greater problem is the attitude of many millions of companies who have yet even to acknowledge that it is their responsibility to be addressing ethical issues at all.

It is just too easy to dismiss the idea of ethical business as a contradiction in terms. It is less easy to accept that businesses are only unethical because we, the customers, investors, employees or simply citizens, are allowing them to be. The worst thing we as consumers can do is to give up or not bother because it’s all too confusing. The sheer speed of globalization is such that every purchase we make on the grounds of cheapness and attractiveness alone, without reference to the ethics of its manufacturer, nudges the whole global economy towards ever-lower ethical standards.

As Anwar Fazal, former President of the International Organization of Consumer Unions, puts it: ‘The act of buying is a vote for an economic and social model, for a particular way of producing goods. We are concerned with the quality of goods and the satisfactions we derive from them. But we cannot ignore the conditions under which products are made – the environmental impact and working conditions. We are linked to them and therefore have a responsibility for them.’

Rob Harrison is co-editor of the UK-based Ethical Consumer magazine, and a consultant on ethical business matters.

photo by Justin Cooke

EFFECTIVE CAMPAIGNING
The main drive for ethical business has come from campaigns run by powerful single-issue pressure groups like Friends of the Earth or Greenpeace. There is no right way to run a ‘corporate campaign’, and very few are not worth supporting, but effective campaigning is likely to involve one or more of the following techniques:

Consumer boycotts
This is the ultimate show of force whereby a company can be faced with the option of adopting ethical limits or going out of business. In 1995 Shell, one of the world’s biggest corporations, decided to test the will of the European people over the dumping of its Brent Spar oil platform in the North Sea. Mainstream German politicians called for a boycott and Shell was forced to capitulate when it saw its German sales fall by 70 per cent in a two-week period.

Direct actions
Particularly useful against resource or construction companies who may not have a consumer product to boycott, direct actions can involve activities such as plugging effluent pipes, occupying offices or lying down in front of bulldozers. According to arms-trade campaigners, the four women who did ‘criminal damage’ to British Aerospace Hawk jets destined to help Indonesia’s suppression of East Timor achieved more in ten minutes than ‘ten years of more conventional campaigning’.

Shareholder actions
These can publicize a particular company’s unethical activities or may be genuine trials of shareholder strength. The huge size of many shareholdings can make it difficult for some pension funds and trusts to threaten disinvestment for ethical reasons. But larger funds are in a position to ‘engage constructively ’ with companies and put pressure on them in this way.

Letter writing
Today’s modern political activists are likely to be writing as many letters to companies as to politicians. Letters are a vital part of a boycott because without them companies will not know why their sales are falling.

Ethical competitors
Campaign groups can set up companies to market ethical products, which act either as models for mainstream companies or offer genuine ‘market threats’ to sales. In the early 1990s Greenpeace commissioned an East German factory to manufacture a completely CFC-free refrigerator. Within six months mainstream refrigerator manufacturers in Germany were marketing identical products.

Labelling
To tackle the problems of misleading ethical or green labelling by companies, some campaign groups have set up ethical product-labelling schemes. Most involve campaigners playing some role in monitoring companies’ adherence to a set of ethical standards.

Specialist campaigners
A growing number of organizations are being set up to campaign specifically against unethical businesses and to promote corporate responsibility. Some, like the US Interfaith Center on Corporate Responsibility, specialize in shareholder actions, while others like Corporate Watch in the UK specialize in direct action.

Specialist consumers
Ethical-shopping guides and consumer-boycott information are now published in the US, Britain, Germany, Italy, the Netherlands, Norway and Japan. These publish tables of companies selling a particular product and then use symbols to indicate which companies have poor social or environmental records. Every purchase, however small, is an opportunity to campaign for a more responsible or ethical approach to business.

Ethical screening
A number of investment-research groups around the world have been working to encourage the idea that all business investment could be ‘ethically screened’. Their work has led to the rapid growth of specialist ethical funds targeted at consumers and charitable investors.

Anti-consumerists or Downshifters
These have emerged in opposition to the dominant ethos of ‘business as usual’. Spurred on by question-marks over the sustainability of Western consumerism, these groups advocate lifestyles which are less materialistic and less reliant on global corporations.

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