Growing Pains by Susan Gaines
		Socially responsible business is moving beyond its narrow community of enthusiasts and into a heady adolescence. Americans aged in 1995 as they learned of the death of Jerry Garcia and the assassination of Yitzhak Rabin. Many grew weary as Congress chipped away at affirmative action and environmental protection, and cut funding for a myriad of social programs. It was also a year of record corporate mergers and acquisitions fueled in part by a soaring stock market. In the process, thousands of workers lost jobs and many others continued to feel the squeeze of lagging wages and higher demands. In October, the cover story of Atlantic Monthly asked, "If the economy is up, why is America down?" So where do we go from here? By most accounts, businesses aspiring to be socially responsible matured gracefully in 1995, rolling out of a year of extremes toward deeper goals, broader definitions, and a wiser perspective. But a transition began, one that will have a widespread effect on all business in 1996 and beyond. Analysts predict that what was once known as "the socially responsible business movement" will from this point forward grow more slowly as its appeal broadens and takes root in the mainstream business community. "The low-hanging fruit has already been picked for the most part," says Bill Shireman, CEO and president of California Futures, a research and consulting firm that helps resolve conflicts between the business and environmental communities. "The businesses that very easily and eagerly call themselves socially responsible are already in the arena. Mainstream businesses will get there, too, but they are very, very cautious." Eventually, most businesses will begin to understand that they are maximizing profits to pursue higher values, he adds. But, as the movement broadens its appeal, the meaning of "values" is stretching. "There is a continuing erosion of traditional labels of conservative and liberal," says Shireman. While to some the idea of "right wing social responsibility" is an oxymoron, he predicts that a few prescriptions by the right wing-"family values," for example- may be accomplished in alternative ways. "This is a more important phase in the social responsibility movement than in the early growth days," Shireman says. Global Market Pressures More important, indeed. But this phase is also more awkward and painful. In essence, 1996 is the beginning of the adolescence years for the socially responsible business movement. And facing businesses during this new stage of development will be greater peer pressure and external conflicts, including those related to the rapidly changing global market. Worldwide mergers and acquisitions reached approximately $800 billion in 1995. As multinational companies multiplied and enlarged, thousands of U.S. workers lost jobs; others lost earning power. "This is not a pretty picture for socially responsible business," says Lewis Maltby, director of the employment rights office of the American Civil Liberties Union. "It's very difficult to maintain the wages you'd like to pay when there are people all over the world that can do the job almost as well for a fraction of the price. Even if you don't take advantage of it, your competitors will. What choice does that leave you?" For companies like Levi Strauss & Co. of San Francisco, the choices are ethically clear but financially tough. "How do we remain true to our core values and at the same time remain sensitive to local market issues?" asks Levi's Chairman and CEO Robert Haas. Since the company issued its corporate sourcing guidelines in 1995, it canceled all of its sourcing contracts in Burma because of that country's widespread human rights violations. It has no interest in returning. Levi's pulled out of China for similar reasons. But returning is still a possibility, as management keeps a close eye on the complex political and economic conditions in China, says spokesman Sean Fitzpatrick. If it did re-enter the market, Levi's would only do so while remaining true to its values and guidelines. "In order to operate responsibly in all of our market locations," says Haas, "we must constantly test the actions we take on a local level to ensure they are not ethnocentric, yet still reflect the values upon which this company is based." One bright note when it comes to foreign working conditions is that, while high ethical standards can make for tough business decisions in the third world, socially responsible companies may find distinct advantages to doing business in Europe in 1996 and years ahead, says Maltby. Europeans tend to hold higher standards for their businesses than do most Americans. Thus, socially responsible businesses that have continued to upgrade their employment practices or other responsibilities are better able to compete in Europe. But that alone isn't enough to clear away the clouds that are rolling in over socially responsible firms. In fact, times ahead are going to become even more turbulent for companies with conscience, Maltby predicts. On the heels of congressional cuts in education and job retraining programs, American business managers are heading into 1996 in the wrong direction, he says. More U.S. firms this year are trying to "beat the Indonesians and Koreans at their own game," looking toward lower wages, lower production costs, and fewer benefits for workers, he says. Good for business in the short term, perhaps. But the only way this country will maintain its high standard of living-especially when compared with third world countries-is by creating smarter, happier, and more efficient workers, Maltby says. "If we have any chance at all, it's to put more of our workers through college so they can justify higher wages in the global market." Congressional Cuts Instead, congressional cuts to education-combined with an overall national apathy toward the need to improve our educational system-will continue in 1996 to weaken the emerging American worker's ability to command a high wage in the global market. Also threatening the prosperity of American businesses going forward are the slashes to environmental protection initiatives. "The scandal," says Joel Makower, editor of the Green Business Letter, "is that Congress is dismantling programs that are actually beneficial to business in the long run. Ultimately, it will create bigger problems down the line that will require more serious government intervention." Indeed, Congress put some of the nation's most fundamental environmental protection programs, including the Clean Water Act, the EPA'S voluntary pollution prevention programs, and the Toxic Release Inventory reporting system, on the cutting block last year. Also threatened were many of the EPA'S programs that "encourage and prod companies to find their own solutions to environmental problems," says Makower. Though some of Congress more radical proposed cuts were defeated, the EPA'S recent "maturity"-which many business analysts have hailed-seems doomed by the current attitude in Congress and the Clinton Administration, which has lurched back and forth on environmental positions for three years. "That's not good for business and it's not good for the environment," says Adam Babich, editor and chief of the Environmental Law Reporter, published by the Environmental Law Institute, a non-profit, non partisan organization in Washington, D.C. "The good news is that Congress is not going to affect the thousands of companies that have recognized that good environmental practices are good business," Makower says. The bad news is that socially responsible firms will stand on the sidelines as a few other companies profit-at least in the short term-from government's backsliding on environmental protections. For example, a Dutch mining company is waiting for approval to build roads and a mining operation in the heart of some twenty million acres of pristine land in Utah, which that state's congressional delegation is proposing to open to industrial development. Also Joan Bavaria, founder of CERES (Coalition for Environmentally Responsible Economies), laments Alaska's proposed selling of oil leases in the Alaska preserve as "another example of Congress proposing to sell off a national asset and stick it into income." As we move further into 1996, socially responsible business faces not only the pressure to get off the lurching environmental train, but it also faces an unprecedented number of requests from non-profits, which the government has all but stopped funding, according to Ben & Jerry's CEO Bob Holland. "We're being flooded by requests for help. Every one of the requests is something that has a just cause behind it-the homeless, job training, . . . It's not a trickle now, it's a torrent," he says. "The safety nets are being pulled away and there are more people falling. There are so many cutbacks that more demands are being placed on those of us who are active. You really feel helpless." Investing & Shareholder Activism Successful capitalists, even socially responsible ones, look at even these challenging times as opportunities to improve business and help alleviate social and environmental ills at the same time. Social investors are asking for deeper corporate commitments to social and environmental issues, says Mark Zodis, vice president of the managed-money division of Progressive Portfolio Services in San Francisco. "Investors are saying, it is not enough to apply alcohol, gambling, tobacco, weapons, environment, employee relations screens to S & P 500 companies. Now they're saying 'I want to invest in companies that are part of the solution. I want to invest in companies that in a broad sense look like they're going to be part of a restorative theme." Shareholder activism is also on the rise. Some $450 billion of assets are influenced by some sort of shareholder activism, according to a recent study by the Social Investment Forum. From religious groups to pension funds or labor groups, shareholders are wielding a broader, more sophisticated kind of influence on corporate policies. "Previously unimaginable combinations of people are working together for a common goal," says Zodis. "The Catholic church, major women's organizations, progressive -almost socialist- organizations are joining together in proxy battles with major companies around biotech research, for example," he says. "These unusual coalitions wield more power." As these diverse shareholder coalitions grow stronger in 1996, they'll do so in part by employing the more persuasive language of economics, Zodis says. "The trend is to talk to major corporations in their own language, and to wrap the social issues inside that language," he says. Zodis and Bavaria predict that as shareholder activism continues to grow and investors continue to make more sophisticated investments in companies that are a part of the solution, the arena will move beyond the mainstream assumption that social investing is equivalent to below-market return. 'Closed' After a year of Wall Street highs and radical initiatives in Washington, progressive business moves steadily toward broader definitions of social responsibility in 1996. A growing number of businesses continue to deepen the meaning of social responsibility, said Bob Dunn, president and CEO of Business for Social Responsibility (BSR) and the BSR Education Fund said in a recent speech at the Interfaith Center for Corporate Responsibility's (ICCR) twenty fifth anniversary dinner. Dunn cited companies like Burrito Brothers in Washington, D.C., which has managed to double its number of stores in a price-sensitive sector while using environmentally sustainable materials, publishing information about health and nutrition in its company newspaper, and reducing the fat content of its menu items. The company also gives all of its unused food and 7.5 percent of its profits to community organizations. "But small companies don't have a monopoly on good deeds," Dunn says. Take for example Kimberly-Clark's recent decision to spin off its tobacco division; Knight-Ridder's agreement not to run tobacco advertisements aimed at youth; and Bethlehem Steel's decision to sign the CERES principles. As shareholder activism gains momentum, says [CCR executive director Tim Smith, even more companies will respond to shareholder influence. But business leaders can only do so much good, says Ben & Jerry's Holland, who's pessimistic and angry about the mood in Washington. "Our country is no longer providing a minimum standard of living for people. We've put up a sign saying 'Closed.' That's a fundamental shift in what America's all about. It's written on the portals 'Send me your tired, your poor, your huddled masses yearning to breathe free.' All of a sudden, the men and women whose forefathers came through those portals are saying, 'Thank you, I'm inside. The hell with the rest of you,' " says Holland. "My hope is that eventually the mood and matter of the country will move toward benevolence. That's what we're working for here." Indeed, Holland's sentiment reflects the views of many socially responsible business leaders as we head into a new year. Most the pundits figure we'll fare better this year, with fewer surprises and less uncertainty than in 1995. And there remains the eternal optimism of those firms already leading the charge toward socially responsible business. "The leadership companies of the next decade won't be those who sat and waited for government mandates," says Dunn. "They'll be the ones that understood and acted to seek commercial success in ways that made a positive contribution to a more just and equitable society.' Susan Gaines is a freelance writer in Minneapolis. Blunders of 1995 Best Moves of 1995 1 . Louisiana Pacific Corp. was indicted by a Colorado grand jury for consumer fraud. The firm continued to market and sell its wood substitute knowing it was defective when used as exterior siding. 1. Former Dow Corning ethics officer John Swanson stepped forward to tell the inside story, and his wife's personal saga, about Dow Corning's breast implants. 2. PepsiCo.,Texaco Inc. and Conoco Inc. continued to conduct business in Burma, in spite of flagrant human rights violations in that country. 2. Eastman Kodak CEO George Fischer linked a portion of his executive pay to social factors. 3. Bankers Trust Co. had a series of debacles in its core derivatives business, with numerous clients sustaining immense losses. Client Proctor & Gamble says BankersTrust has a "culture of greed and duplicity." 3. Natural juice company Odwalla Inc. converted its fleet of 143 delivery trucks to natural gas. 4. Nezo Republic magazine further damaged media credibility with its cover story article calling Ben & Jerry's an "evil empire." 4. Labor Secretary Robert Reich announced a frontal assault against inhumane working conditions. His goal: to get U.S. retailers to police the twenty thousand domestic garments makers. 5. Britain's Barings P.L.C. failed to adequately monitor its traders; and Nicholas W. Leeson, the greedy 28 year old trader, brought down the banking icon through, shall we say, "questionable moves?" 5. Other best moves: Patagonia Inc. switched its entire clothing line to 100 percent organic; Starbucks Coffee introduced the first ever agricultural code of conduct; and Bethlehem Steel signed the CERES principles. Discuss it! What do you think about this article? This is important, I want more I found it interesting Ehh, it was OK It's not that significant I don't care Subscribe Now! Reprinted with permission of Business Ethics magazine.
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