The responsibility revolution?

The Asian version of Time magazine this week (21 September) has a cover story on the rise of the ethical consumer. As usual, by the time the mainstream media latch onto a theme it’s well advanced, but better late than never I suppose. But as I started reading the main story – “The responsibility revolution” – I started to wonder what responsibility really means for Time.

My response to Time’s shot at saying something sensible on this is part of a long standing gripe I have with the concept of the ‘ethical consumer’ and reporting on responsible companies in general. I can reduce my complaint pretty simply to this: talk is cheap.

The ‘ethical consumer’ and cheap talk: I have been reading survey results for as long as I can remember about how consumers will purchase products made by socially or environmentally responsible companies if given the choice. I’ve even seen one survey state that “42% of people in China between the ages of 15-54 who buy their own clothes say they would pay more for products made of organic cotton than products not made of organic cotton”. If your bovine quadruped manure meter isn’t going off about now, then please contact me about the $45 million inheritance left to me by my late father, the former governor of the Nigerian National Bank…

Time isn’t quite so cavalier with its data, but it is far from honest with the findings and conclusions. The findings first:

According to a poll conducted by Time, “more than 6 in 10 Americans have bought organic products since January [and] nearly 40% said they purchased a product in 2009 because they liked the social or political values of the company that produced it”.

It’s hard to know where to begin, but let’s start with ‘organic’. If I was editing Time, I would have rewritten that first sentence as “more than 6 in 10 Americans thought they bought organic products…”, because ‘organic’ has become the most abused word since ‘natural’. For the vast majority of products, consumers have no way of determining organic origins, even if products are labelled as such. Nor is it true that organic need necessarily equate with ethical.

Nor, while we’re on the subject of ethical, is it true that alignment of a company’s ‘social or political values’ with your own presages some form of corporate responsibility. To test that claim, consider a respondent to the Time survey who belonged to the Ku Klux Klan, was a serial rapist and believed natural wilderness was better utilised by building parking lots…

In short, the Time poll tells us nothing. Yet the author goes on to make a startling claim:

That’s evidence of a changing mind-set, a new kind of social contract among consumers, business and government. We are seeing the rise of the citizen consumer — and the beginnings of a responsibility revolution.

To know whether mind sets (or anything for that matter) are changing, we need to know what came before the alleged change. Time provides no evidence of this; it’s simply assumed that things are changing, but there is no previous data to demonstrate change. I’d assume that during the first years of the Republic, Americans purchased a greater proportion of ‘organic’…

Before anyone believes this stuff, we need to see real data (sales figures, facts, data over time, etc); not the vague results of a telephone interview asking people whether they bought organic or if they liked the social or political views of a company (how many companies broadcast their political values?).

My real gripe here is that talk is cheap. The gap between what people say and what they do is sometimes so large that you could drive a bulldozer though it. Until I see figures that prove sales figures are rising for certified organic products (not products that stamp ‘organic’ on the package because it’s green or has a mountain vista logo) colour me unconvinced.

The ‘ethical company’ and cheap talk: The real problem is not ‘greenwash’ – which the article acknowledges and is an issue. Here’s the real problem:

Jeff Swartz, CEO of Timberland and a leader in corporate responsibility, noted recently, “The vast majority of our consumers buy Timberland products because the shoe fits ... not because we maintain a measurably higher standard of human-rights practice.”

Does a “measurably higher standard” include using tanneries in China, one of which has been “faulted by pollution watchdogs every year since 2004, largely for exceeding emissions limits”? Does it include an answer to Ma Jun (director of the Institute of Public and Environmental Affairs in China) who asked Timberland via an article published in Hong Kong recently: “Did you know about their pollution record when you chose them as suppliers ... and will you take some action to bring it into check?”

Swartz is right about one thing: most consumers don’t care about this stuff. At least he’s honest enough to admit it, which is more than Time can be accused of. But he’s kidding himself if he thinks Timberland performs at a measurably higher standard. And the reason he’s kidding himself is because there is no benchmark (in any industry) that enables companies to say that. All Timberland can honestly say is that it meets certain standards when it comes to human rights (although even that is contestable given the state of data collection on these issues in supply chains), but it has no way of comparing that with anybody else.

So the real problem for my money is not that companies lie and exaggerate what they do, but that they can’t measure effectively, and thus can’t manage responsibility. Adding to this problem is that they can’t measure responsibility across a wide range of issues (Swartz is quoted on human rights, but what about water, emissions, renewable energy, sustainable raw materials, etc?).

What is responsibility? And are consumers willing to pay for it? There is no changing mind set in the supply chain. Things still need to be produced cheaply, quickly and at the highest quality. I’ll believe there’s a responsibility revolution when a factory owner in China tells me that she’s getting paid more for producing a cheap product because the factory is socially and environmentally responsible; not because some consumers in the US say they buy organic. There are a lot of good companies out there (including Timberland), but the article by Time is putting the cart way before the horse on this. Let’s see some real changes first before announcing the revolution.

Oh, and by the way, Milton Friedman did not write that a corporation’s only moral responsibility was to increase shareholder profits, as stated by Time. He said that it was responsible for doing it within the law. It’s worth remembering that… ■

by Stephen Frost sfrost@csr-asia.com