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Stopping the outcry before it starts

Brand-sensitive retailers act fast to defuse ethical issues before they explode into costly boycotts

By G. Jeffrey MacDonaldCorrespondent of The Christian Science Monitor / August 28, 2006

Shoppers on the hunt for products made and shipped in an ethical manner are getting a boost from some unlikely sources: the 800-pound gorilla retailers who help keep their suppliers in business.

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McDonald's Europe, for instance, last month helped persuade agribusiness giants to stop buying soybeans from newly deforested tracts in protected regions of the Amazon. Also last month, Wal-Mart CEO Lee Scott urged hundreds of suppliers at a Bentonville, Ark. summit to combat global warming by using less energy and incorporating alternative sources. And for the past two years, Tiffany & Co. has been calling on gold miners to end waste dumping in pristine lakes and adhere to international labor standards.

For the past decade, some ethically minded consumers have shunned retailers who buy goods from shady overseas suppliers. But when brand-sensitive retailers bow to behind-the-scenes pressure, activists say, customers need to play a new role. They need to speak up, with notes applauding positive steps taken, as well as spend in ways that encourage more of the same behaviors.

"Get on their website, send them an e-mail, and say 'thank you' " for demanding higher standards from suppliers, says Michael Marx, director of Business Ethics Network, a coalition of groups that rally public pressure to move corporate policies. "The internal champions of that change need those kinds of e-mails to reinforce their stand against the more 'bottom-line' champions who don't want to make those changes."

Ethical sensibilities, clearly articulated among the buying public, seem to be driving this latest corporate cleanup. Just the prospect of a backlash at the cash register can be enough to trigger new policies, as the Amazon soy case suggests.

In April, days after Greenpeace International released a report detailing the illegal destruction of rain forest in order to grow soybeans, McDonald's investigated whether its suppliers were involved. Within weeks, a coalition of European food sellers led by McDonald's had united to demand new purchasing policies from the three implicated firms: Cargill, Archer Daniels Midland, and Bunge. On July 24, the three announced a two-year moratorium on buying soy from newly deforested areas. Meanwhile farmers, buyers, activists, and regulators plan to come up with a system to verify ethical soy-growing practices.

Though major news outlets covered the Greenpeace report, the issue was resolved before consumer outcry had amounted to more than a peep. That's because McDonald's is eager to settle controversial supply chain situations before they fester into public-relations nightmares, such as the antisweatshop campaigns that proved costly to Nike and the Gap in the 1990s.

"It was pretty clear that we had to act when we learned about this issue," since McDonald's was on record as a defender of rain forests, says Karen van Bergen, vice president of corporate relations for McDonald's Europe. "We did not have at that time, and still do not have, very active consumer input [on that issue]. We try to be ahead of that.... If consumers find out that you're doing the wrong thing, they will vote with their feet ... and that will be bad for business."

Still, consumers get much of the credit for the evolution of retailers into supply-chain reformers. By buying from new lines of ecofriendly products, shoppers in Europe have helped create a business environment where supply chains undergo scrutiny beyond what's required by law, according to Dale Atkinson, spokesman for the British Retail Consortium. He says strong sales of free-range eggs, organic produce, and foods that aren't genetically modified have told retailers that their vigilance in monitoring suppliers is appreciated. The BRC has in turn begun developing a seal of approval system to vouch for the humane, eco-friendly techniques used by certain local food suppliers.

In the United States, retailers seem to address supply-chain issues after weighing the effect on consumer spending habits and explicit feedback, according to Todd Paglia, executive director of ForestEthics, a San Francisco-based group of environmental activists.