That
question came to mind after my recent piece for the San Francisco
Chronicle and the National Post of Canada on the use of genetically
modified organisms (GMOs) in agriculture. It made the social investment
community–which has become the public face of corporate social responsibility–very
angry.
At issue was the “milk policy” of the American-based coffee chain
Starbucks. Milk? While innocent consumers might believe that milk
is good for you, social investment groups, echoing environmental activists,
allege that as much as 90 percent of North American milk is “contaminated”
with “pus, bacteria, and antibiotics” that results from treating cows
with a protein supplement, recombinant bovine somatotropin, or rbST,
to increase production. Environmental fundamentalists such as Greenpeace
and Friends of the Earth brand milk one more “Frankenfood”, which
serves the wider purpose of demonizing genetic engineering. The anti-GMO
coalition wants Starbucks to substitute organic milk for the conventional
stuff.
Like in the ongoing Israeli - Palestinian clash over the right of
return, the opposing sides in the GMO debate see little room for compromise.
This a religious divide, unbridgeable by reason. GMO supporters include
farmers who have seen increases in yields of milk, corn, soybeans,
and cotton and a reduction of deadly chemical spraying. They see bioengineering
as a net plus for the environment and the developing world, which
needs more and more nutritious food. Even organic stalwarts agree
that there is no hard evidence that GMOs pose any more risks than
traditional crossbreeding and gene-splicing that have given us such
products as the tangelo and seedless grapes.
Social investment movers and shakers could have taken the high road
on this complex issue by nursing along, with appropriate oversight,
a promising if potentially problematic technology. Instead they are
actively trying to scuttle bioengineering under the guise of supporting
consumer rights.
Their tactic is to push for legislation that would require “made with
GMOs” be slapped on every product linked to biotechnology. On first
blush, that seems reasonable—full consumer disclosure. But it’s practical
real world effect would be far more fateful. "We expect that no company
would want to risk alienating their customers with labeling, so they'll
eventually decide not to use any bio-stuff at all," says Michael Passoff,
coordinator of the social investment campaign. Such a label would
amount to "a skull and cross bones" on a product, Arianne Van Buren
of the U.S. Interfaith Center on Corporate Responsibility cheerfully
told me.
In other words, if ethical investors should prevail, this disingenuous
ploy in the name of consumer disclosure would shut down a promising
technology without debate. That would restrict consumer choice, not
expand it.
The stance of ethical investors is even more disheartening because
it demonstrates the ascendancy of boutique social ideology over stakeholder
concerns. Bioengineering is merely the latest fad litmus test that,
in the absence of nuanced analysis, lets lazy social investors sort
“good” corporate citizens from “bad” ones.
Who are the bad companies? That’s any firm with links to defense production
(those that developed weapons, aircraft, satellite, and communications
equipment or even gas masks used in the battle against the Taliban
and al-Qaida are unacceptable), nuclear power, or firms that use products
or ingredients tested on animals.
The good guys? In a more innocent era–a decade ago–they were firms
like Body Shop and Ben & Jerry’s that pay their high-turnover workforce
near-minimum wage and sell luxury products at pricey premiums. The
autocratic, narcissistic leaders that typify such organizations made
names for themselves by campaigning for social justice and against
global warming. The more arcane the issue and the less impact it had
on direct stakeholders, it seemed, the better. On closer scrutiny,
self-anointed progressive businesses are often a land of alchemy where
promises are easy to make, workers are treated with indifference,
and environmental reforms are window dressing. "So many socially responsible
companies have noble corporate philosophies," observes Jon Lickerman,
head of social research at the Calvert Group, the Washington DC-based
ethical investment firm, "but mistreat their own employees, vendors,
and customers."
Following the ethical implosion of these myth makers, ethical investment
firms blindly touted telecommunication, technology, accounting, and
financial firms. These companies offered the benefit of having business
operations that were too inscrutable for ethical investment analysts
to penetrate, making it easier to adjudge them ethically acceptable.
Now with the collapse of the bubble economy and the ugly ethical shenanigans
unmasked in the wake of the Enron collapse, it’s becoming clear that
the reliance on litmus tests to distinguish between good and bad corporate
behavior just don’t work. For the most part, these screens are anachronisms
that draw on notions of liberal propriety and correctness that date
to the 1960s. Those truisms include the embrace of environmentalism,
pacifism, human rights, animal rights, sexual rights, women's rights,
and other -isms that few disagree about in principle but are problematic
in the messy reality of human and coporate relations. In effect, the
use of simplistic screens has devolved into a cheap marketing gimmick
that caricatures the world as a battle between good vs. evil–and sadly,
diverts attention away from the focus on transparency and stakeholder
practices.
There is an encouraging shift in some quarters away from the vague
ethical investment paradigm. In fact, some of yesterday's most vilified
multinationals have quietly moved to the forefront of corporate responsibility–including
Shell, Monsanto, DuPont, British Petroleum, and Gillette. By no means
are these perfect companies. But they are examples of firms that offer
tangible achievements for stakeholders: fair wages and benefits, impressive
affirmative action practices for minorities and women, honestly engaging
complex environmental issues, actively involvement in their communities,
–while selling quality, competitively priced products and services.
Of critical importance, they have made commitments to corporate disclosure
and transparency.
It's critical to move beyond the good/bad paradigm. Social researchers
or even company executives who rely on simplistic social screens belie
the moral and practical complexity of the real world. In the absence
of clear rationale, such criteria reflect not ethics but sentiment.
The reality is that corporate social responsibility must be grounded
in the actions that impact stakeholders, not on good intentions or
abstract principles. Let’s hope the ethical investing community is
listening.