Human Rights and Child Labor

Most Companies See Environmental Management As An Ally In Tough Times

Tuesday, April 29, 2008 / KW

Courtesy of the World Business Council for Sustainable Development, here's an important story from The Financial Times about how the looming recession is affecting corporate attitudes toward sustainability. Facing tough economic times, are companies backtracking on their environmental commitments? It turns out that the answer, at least for now, is no — because in the last few years, companies have come to see that energy reduction, streamlined packaging, and trimming waste are all money-saving as well as eco-friendly programs.

It seems to me that the sustainability challenges for companies will be greater on the social, labor, and community fronts. For example, will corporations with supply chains that trail deep into the developing world maintain their stated commitments to humane labor policies when sales begin to slump? Stay tuned.

Gap Uses Child Labor — And Takes A Hit Where It Hurts

Saturday, January 26, 2008 / KW

Here's a noteworthy story from the website of the World Business Council for Sustainable Development dealing with the current child-labor scandal in which the clothing retailer Gap has found itself embroiled.

Among other things, the scandal is an object lesson in the complexity of today's value chains and the enormous challenges involved in policing them thoroughly. In this case, it appears that the misdeeds — using small children laboring long hours at miserable pay scales to do detail work on clothing for The Gap — were perpetrated by a subcontractor to a Gap contractor.

To its credit, Gap is responding aggressively, announcing steps that hold out hope of alleviating the problem if not eliminating it altogether. They are also taking actions that will cost them money:

Gap has suspended half of its orders with the supplier for the next six months and has placed the factory on probation, demanding "significant improvements to its oversight of subcontractors". It also destroyed all of the garments made by the children to ensure they were not sold in its stores or elsewhere.

The retailer has vowed to pay the children back-wages, educate them and continue paying them until they are of working age, when it will offer them full employment.

In a case like this, it's important for the responsible corporation not only to take remedial action but also to quickly and publicly accept a financial hit. I say this not out of vindictiveness but because such action underscores the seriousness with which the company takes the rights violations.

Money is the universal standard of value in business. The best way to get and keep the attention of managers in any company is not to reprimand or publicly embarrass them but to do something that will impact their bottom line — as the destruction of the clothes made by children in this case does. There's no "scarlet letter" in business quite like the shame of having red ink on your P&L at the end of a quarter or a year.

Reading that Gap has taken these relatively costly steps gives me, an outside observer, the sense that they take the issue of child labor seriously and view it as more than just a public relations problem.

How To Respond To The Coming Turmoil In China? Going Green Is A Good Place To Start

Saturday, November 17, 2007 / AS

Perhaps you saw this week's story in The Wall Street Journal about how protesters are gearing up for the Olympic Games and what sponsoring companies are doing about it. Short version: Most companies are focusing on "going green":

Coke is playing up its water-conservation efforts on the Yangtze River and putting natural-refrigerant coolers and vending machines at all Olympic sites. Since March, Volkswagen has been planting thousands of trees in Inner Mongolia. GE is touting its role selling ecofriendly products such as solar-power and water-filtration systems for the Olympic venues.

By concentrating on the environment, companies can show they are acting responsibly and score points with the Chinese government while avoiding politically charged issues such as Taiwan or Darfur, PR executives say. Mr. [Richard] Edelman [of Edleman Public Relations] calls it a "win-win" situation.

A close reading of the article indicates that the most vehement and well-organized protests may actually be focused on human rights and other non-environmental issues. Which does mean that companies need to have that part of the sustainability agenda under control in terms of having appropriate policies, procedures, and programs in place.

But companies are right to focus on the environment for several reasons.

Dirty air will have an impact on the games themselves and on the athletes, whereas hman rights and other issues will be at one step removed. The human rights activists will be trying to draw connections to the games, but the athletes and spectators are most likely to be talking about the environment and will have every good reason to do so. They will not seem like agitators serving some other, unrelated interest.The media will thus be talking about the environmental problems as part of the daily coverage of the overall "Olympic Story." Bad air is likely to affect the performances (think marathon), and it will be easy for the media to follow that angle and go deeper. Unlike human rights and even contaminated toys (the regime will make certain that there are no child laborers or contaminated toys within 1,000 miles of the Games!) there are easy, accessible visuals — smog, belching factories, traffic congestion — that will tell the story. It's the easiest story by far with no investigation and little explanation required. Also, bad air and possibly water (the foreign athletes may not be drinking from the taps) may well make this Olympics different from any other, and the media loves that.
Of course, all of this plays into the two biggest stories of the decade: China and climate change.
Then there is the political side of the environmental issue. Never having been to China, I have no real idea how big, strong and deep the environmental movement is there. (Elizabeth Economy's book on the subject, which my writing partner Karl Weber happened to work on, is probably a good place to start in learning about that topic.) But my guess is that the Olympics, and the presence of the international media, will give that movement plenty of cover, not to mention the international environmental activists who will be at the head of the parade. It will be hard for the government to arrest them all, if they do join hands. They would look really bad if they just arrested the locals, and even worse if they put the foreigners in the clink. And if there are protests and arrests that just gives the media an even bigger story to cover.
Finally, I think the human rights activists may understand all of this, and may rally behind the environment as a wedge issue. That's what happened in Hungary — the democracy movement rallied and prevailed around environmental concerns related to the planned construction of a large hydroelectric dam. In so doing, they served their broader political goals — undermining the power and authority of an autocratic central government, and demonstrating to the public that they could affect change if they chose to do so.

For all these reasons, a green focus is a very reasonable strategy for sponsoring companies to use in dealing with the challenges of China 08.

Business and Human Rights

Monday, August 27, 2007 / MT

One troubling question for today’s global managers is: How far out into the supply chain, and across what range of issues, do our responsibilities extend?

The answer: Further than you might think.

Nike was one of the first companies to realize, after repeated lashings by the media, that it did not hold the power to define its own responsibilities. Activists were turning public opinion against the company, and sooner or later Nike had to respond. That response was perhaps later rather than sooner, both for activists and for the company’s own reputation, but it happened in time for the company to survive — and even to turn the issue in its favor by striving for best-practices in this area.

But while the anti-Nike campaigns relied on boycotts and protests to push for corporate action beyond what was legally required, more recently human rights activists have found a legal basis for their demands. The Alien Tort Claims Act of 1789, originally intended as an anti-piracy measure (the old-fashioned kind of piracy, on the high seas), allows non-citizens to seek legal recourse in the US for violations of international law. Yes, that’s right: anyone, anywhere, can use the US court system to uphold the tenets of international law — tenets often based on norms and precedents, rather than deliberate legislation.

This Alien Tort Claims Act (ATCA) remained largely forgotten until the 1980s, but since then it has been used against Chevron, Chiquita, Coca-Cola, Exxon-Mobil, Firestone, Shell, Wal-Mart, and others.

Earlier this month, Drummond coal company won the first Alien Tort Claims case to reach a verdict; the company was ruled non-complicit in the killing of three union leaders of a Colombian mine. According to SocialFunds.com writer Bill Baue, however, the key take-away is not the verdict itself; it’s the fact that the case was taken seriously enough to reach a verdict. In other words, it was not dismissed, and the discovered facts rather than the legal basis gave Drummond its recent sigh of relief. Besides, there are appeals in progress.

And as Baue points out, tobacco legislation was defeated time and time again before it finally became a multi-billion-dollar liability for the corporations involved.

Chiquita is an interesting example, as some activists believe the company to be demonstrating best-practices in its transparency — openly admitting it paid “protection” money to different terrorist groups in Colombia. The company has since paid its fines and withdrawn from the country, but the pressure is not off. Less-friendly activists feel that the company’s actions are insufficient, and accuse it further of selling weapons to the terrorist groups involved. On the bright side, what Chiquita did was arguably to protect its workers; other companies stand accused of having their own workers killed.

One such company, Coca Cola, has been stubbornly (and foolishly) refusing to recognize the campaign against it. The company is the target of the “Killer Coke” campaign which was recently sweeping college campuses. Its alleged crime: failing to speak out when Colombian paramilitaries began killing its workers. A Coke spokeswoman says, "We were not complicit in what happened, so it wouldn't make sense for us to pay reparations. "But according to one of its accusers, Edgar Paez, Coke had another kind of complicity: "If the company had condemned the first death, there probably wouldn't have been any more." Managers take note: lawsuits and activist campaigns can be based on just on your company’s actions, but also on inaction.

An earlier example of high-profile corporate inaction is Shell Oil; a 1999 Harvard Business School case study examines whether the company should have acted to protect indigenous-rights leader and respected author Ken Saro-Wiwa, whose death sentence was eventually carried out despite international protest. Shell never took a stance on the issue, claiming it did not want to be involved in foreign politics — but at the same time, some argue that the Nigerian government suppressed activist campaigns in order to maintain a business environment attractive to Shell, and that failing to speak out made the company complicit.

In my own experience, managers dealing with supply-chain issues want to believe that they have all the answers, or can determine them pretty quickly. But these examples show otherwise. They show that:

Your company can face not only reputational challenges and boycotts, but also legal challenges, based on human rights violations overseas.
These challenges do not necessarily distinguish between your own workers and those of your suppliers — and may even extend to activists engaged in campaigns against your company.
Your company can be accused not only of wrongful actions, but also of wrongful inactions — and of complicity.
New campaigns spring up quickly, and what could never have been on your radar screen last year might make front-page headlines this year.

Remember: don’t learn the hard way. Keep your antennae out, and be aware of any accusations against your company. Think broadly of how blame might be interpreted, and engage early with your accusers. Listen to them, and show yourself open to finding the right solution. Statements and settlements will be less costly, and their goodwill will go further, if you make them early and proactively.

And always remember, just because you think you’re taking care of your supply chain doesn’t mean other important stakeholders agree — and doesn’t mean the press and the public will agree. Keep trying to do the right thing as you interpret it, but also keep your ears open, and be ready to react quickly even to issues you think are bunk. Human rights issues are growing in visibility and in scope, and it would be a shame to tarnish your reputation over them.

NOTE: In this post we originally misspelled the name of the country of Colombia as "Columbia," like the university. Thanks to reader Shoshana Grossman-Crist for showing us the error of our ways.

The China Olympics: Watching the Watchers and the Perils of Corporate Sponsorship

Friday, June 29, 2007 / AS

Browse the web for any Fortune 500 company followed by the word "watch," and you will find websites devoted to overseeing the company's activities. Use an expletive following the name and sites appear detailing grievances that run from reasonable to far-fetched to demented. (If you haven't already scanned the web for hostile sites aimed at your company, you should try it soon — just be sure to have the antacids within reach before you start.)

Olympic Watch is a recent addition to the watch sites. Dubbed the "Genocide Olympics" by human rights activists who have their eyes on China — for its role in Darfur, not to mention child and slave labor, capital punishment, forced evictions, political repression, and denial of free speech — the site aims to put pressure on Olympic sponsors to speak out against the host country's human rights abuses.

Putting pressure on the authorities directly may be hopeless, but associating big corporate brands with China's denial of basic human rights, might just work. Pressure on business to leave South Africa eventually worked to end apartheid, so why not oppressive practices in China?

The time is right: People in the United States are very upset with China right now, not primarily for human rights violations, but for lead paint on toy trains, poisonous toothpaste, contaminated food and a general concern that China might just grow bigger and faster than us.

So it's a good time to turn up the heat on human rights.

Sponsoring companies will maintain they can't be held responsible for the actions of the Chinese government. But that's like saying that you can’t be held responsible for poisonous toothpaste or child labor simply because you outsourced the manufacture to a third party. If your logo is on the product, it doesn't matter that the culpable party is a separate legal entity, or even a sovereign government. Just ask Nike. Or any of the companies that are under pressure on Darfur.

Corporate managers should be aware that:

1. Your company can be held responsible, and your brand held hostage, for the egregious actions or policies of the government in any country where you do business. This is why, for example, the pressure on Google to fight for free speech in China will continue.

2. You must consider that risk when making any investment in a country with suspect environmental or social policies, or one that is engaged in bad acts, even when your activities in the country have no direct connection to the activities in question.

3. You can't expect a free pass just because the specific operation you're involved in is politically blameless or even has positive connotations like those generally associated with the Olympic movement. Controversy can become attached to any activity under the right (or wrong) circumstances. Fair? Maybe not. But that's reality.

This doesn't mean you shouldn't do business abroad or attach your name to any widely-publicized event. But when you do, do your homework. Research likely areas of controversy; track the vagaries of public opinion constantly; and be prepared to respond honestly and pro-actively to attacks.

Above all, be clear in your own mind why you are choosing to associate yourself with a particular regime and how you intend to have a positive impact on the people whose lives you will be touching. Having a clear, coherent, and believable story to tell can go a long way toward defusing the hostility you may encounter.

Summer Rayne Oakes —Eco-Model Extraordinaire

Friday, June 22, 2007 / MT

Summer Rayne Oaks There are many people spreading the gospel of sustainability these days, and in many different ways — but perhaps none in such a hip and stylish way as Summer Rayne Oakes.

One of the many hats I wear is Chapter Leader of Net Impact Boston, and two nights ago we put on our biggest event yet — the local launch party for SustainLane.com, a new web directory of sustainable businesses. It was a great opportunity to invite a speaker I’ve wanted to meet for some time now: Summer Rayne Oakes.

An environmental activist since childhood, Oakes has put together her unique basket of skills in a very compelling way — all in an effort to mainstream issues of environmental and social justice.

What are those skills?Well, for one, Oakes is about 5’11 and completely gorgeous, so modeling has always been a career path open to her.She is also artistically inclined, with an eye for fashion and an impressive portfolio of drawings. And she’s smart — she earned a degree from Cornell University and has written some impressive academic papers on very non-fashionable topics like sewage sludge. To top it all off, she’s a genuinely nice person who is easy to like and who cares about doing good in the world.

Put all that together, and what do you get?An amazing career that is going in about twenty useful and exciting directions at once.Here’s a small sample:

Oakes models for many eco-conscious labels, and also works with major companies like Levi’s to develop new earth-friendly apparel. And it’s not anoraks and Birkenstocks — more often it’s lace or leather. Sometimes even latex.
She produces and writes a regular feature for the European fashion magazine Lucire, each month going “Behind the Label” to explore environmental, social and ethical issues in the apparel industry.
Recently Oakes started SRO as a consultancy which “couples the power of research with the pulse of current trends" — advising companies on branding and communication strategies that are aligned with sustainable business practices.
Always the educator on environmental issues, she’s even come up with a K-12 curriculum called Ecofashion 101.
She’s about to publish a book that encourages girls to integrate environmentalism into their fashion sense. And yes, she actually did write it herself.
And if all that weren’t impressive enough, she’s working with the United Nations to develop and co-host an Eco For The World (E4W) “edutainment” series.

Her basic philosophy, as far as I can tell, is that fashion and celebrity, and the underlying force of branding, are powerful ways to spread ideas in our society — and can therefore be an asset to the sustainability movement. It’s a radical departure from the strategy that most activists take, but a great way to connect with mainstream audiences.

One of the ideas that Oakes referenced in her talk last night was the power of tapping into everyday conversations as a way to spread meaningful messages. For example, think of this conversation:

— Hey, great jeans.
— Thanks, man.
— Who made them?
— Her name is Jasmine.

Jasmine is one of the factory workers featured in an recent film called China Blue. Her story is powerful not so much because it is unique but because it is very common — she works long hours in a factory, so long in fact that she uses clothespins to hold her eyes open so she won’t fall asleep. Jasmine is the personification of the sweatshop issue, a familiar face at the end of the “supply chain.” Making sweatshop issues known, making them personal and memorable, and introducing them into everyday conversations — that’s a very powerful combination that can drive a new movement of consumer activism.

Oakes is a good example of two trends:

The new generation of activists, who are savvy about motivating stakeholders to influence corporate agendas, and are becoming increasingly sophisticated in their use of online platforms.
A push toward the "mainstreaming" of sustainability issues, which are no longer relegated to a small consumer niche.

To learn more about Oakes and her work, and by extension about the direction that young consumers and investors are headed, visit http://www.summerrayne.net/.