What Is The Future Of Corporate Responsibility
Corban Addison, author, attorney, activist, traveler and humanitarian, explains the lasting impact the world’s most powerful companies have had by committing themselves to global good.
As an author and a lawyer, I’m an outsider to the business of retail. But as a consumer, I pour money into its coffers every day. Until a couple of years ago, I gave little thought to the people who make the products I buy or the environments in which they are made. Without knowing it, I participated in the vast illusion upon which the consumer economy is based—that the things we love to buy and wear magically appear in stores and online all bright and ribbon-tied, waiting for us to take them home. It’s a convenient slight-of-hand. It lets all of us off the hook—consumers, investors, brands, and governments. But the consequences of that illusion—as I have seen with my own eyes—are neither inviting nor pretty.
Right now, in dozens of countries across the world, millions of factory workers fulfilling orders for the world’s great consumer-facing brands are laboring under conditions that no decent person would consider dignified. Many are working 80 to 100 hours a week in unsanitary, poorly maintained sweatshops where fires and structural issues proliferate and sexual harassment is common. Others are victims of forced labor, lured by the fraudulent promises of unscrupulous labor brokers into debt bondage that siphons off their earnings for years. Some are the children of home workers who sew beads and sequins on Western clothing at night and sleep during the day instead of going to school. Others have bosses who shirk on paying overtime and fire them for getting pregnant.
All of these workers are people like you and me, with children to feed and families to support. I met some of them when I was researching my new novel, A Harvest of Thorns, about the underside of the global fashion industry. Yet unlike workers in the West, where labor laws and workplace protections are plentiful and enforced by regulators with bureaus and budgets, workers in Bangladesh and Malaysia, Honduras and Madagascar, and so many others places, live every day on the verge of insolvency, one injury, one lost job, one sick child away from financial ruin. These people are hidden from our eyes, their stories unknown to us. But they show in their scars the true cost of a global economic model that rewards profit and efficiency far more than humanity and generosity.
For some time now, a debate has raged in business schools and boardrooms about the merits and proper limits of corporate social responsibility. How much of the human misery and environmental degradation that occurs in global supply chains is really the fault of corporations, and how much is the fault of corrupt governments and derelict suppliers across the developing world? At the same time, partially as a prophylaxis against risk and partially in response to the rise of conscientious consumerism, many of the biggest brands have developed extensive Codes of Conduct for their suppliers, staffed CSR departments with top-drawer talent, invested in philanthropy through partner foundations, and conducted glossy PR campaigns to show how dedicated they are to the common good.
Some of these efforts are genuine and laudable. Others are window dressing, disguising the same old unrepentant sourcing system whose principal economic objective is to squeeze margin from suppliers to drive share price up for stockholders and shelf price down for consumers. In some ways, this tension is endemic. At day’s end, the tug-of-war between the blunt self-interest of capitalism and the moral imperative of corporate social responsibility will continue as long as Wall Street remains fixated on short-term profits and consumers remain addicted to cheap consumption, which is to say, for some time to come.
But all is not gloomy and gray in the world of CSR. While there are most assuredly laggards in the universe of retail, hunkering down and holding fast to the illusion that the backstory behind their products is irrelevant to their business model, many companies are making real strides toward a more holistic sense of corporate responsibility, the kind embodied by Yvon Chouinard, the founder of Patagonia, who once wrote: “What is done in our name must not remain invisible to us. We are responsible for all the workers who make our goods.” In the world of fashion—the world I know best—many brands, including some frequently targeted by the media as bad actors, are taking meaningful steps to counteract human and environmental abuse and increase transparency in their supply chains.
The gold standard is Patagonia, where social responsibility has been part of its brand promise from the beginning. The company’s website is a tutorial in ethical business practices. At Patagonia, the invisible wall that separates CSR from sourcing in many companies does not exist. Indeed, CSR has veto power over sourcing decisions. The company takes a relational view toward its suppliers, offering them support in innovating and rewarding best practices. It is working with the Fair Labor Association to ensure that workers in its partner factories are paid a living wage. It is endeavoring to map its supply chain down to the agricultural level. And where abuses have been found, it has reacted with alacrity and transparency, breaking ties with wool farmers in Argentina whose practices violated the company’s ethics and disclosing evidence of forced labor to The Atlantic, which then wrote a groundbreaking article about it.
Of course, Patagonia has the benefit of being a relatively small, privately held company whose customers are socially conscious and generally affluent. A similar point can be made about Nike and Adidas, both industry leaders in corporate responsibility patronized by a wealthier demographic, and about the haute couture designers like Christian Dior and Louis Vuitton involved in the Positive Luxury initiative. The higher a company’s margins, the easier it is to invest in socially conscious practices. By contrast, fast fashion and discount brands appealing to more cash-strapped consumers are built upon a business model of more for less. Yet, they, too, are responding to the call for social engagement and taking steps to ameliorate the human and environmental impacts of their business.
Target, for instance, is in the process of launching a “Fair Trade” certified clothing line, the first products of which—a suite of undergarments made in conjunction with PACT—hit stores this past summer. More items in the line will be available in 2017 or 2018. Walmart, the world’s largest retailer, is making headway toward its goal of powering its business with 100% renewable energy and eliminating waste diverted to landfills. In addition, it has pioneered a “Women in Factories” training program that aims to teach critical life skills to 60,000 women in 150 factories across its sprawling supply chain.
Some observers argue that these initiatives are both inadequate and partly disingenuous, since they do little to address the paucity of labor protections in global supply chains, to guarantee a living wage in their partner factories, or to root out abuses like forced labor and child labor that thrive in the climate of maximum economic stress created by the discount and fast fashion business model. These critiques have merit, but they go too far. We should applaud Target and Walmart and the more socially conscious fast fashion brands like Gap and H&M for their efforts to create a more sustainable way of doing business. They have a long way to go, but they are on the path.
There once was a day when it made sense for a law-abiding business to say that its only social responsibility is to maximize profit for its shareholders. That day is past. CSR is no longer an industry buzzword or a cultural fad. Its star is on the rise, as the executives and directors of the future, all millennials born into an interconnected and socially conscious world, make their way into the ranks of middle management and start businesses of their own. History’s arrow is pointing in only one direction—toward an ever greater role for business in improving our global society. The sooner companies expand their concept of legal compliance into a broader social conscience and engage the needs of the world at their doorstep, the sooner their bottom line will be buoyed by these tides of change.
This is the business case for social responsibility at the dawn of 2017.
This is a window into the future of retail.