Stopping the outcry before it starts

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

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.

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.

For example, shoppers who sought to protect endangered forests and purchase more recycled paper products largely avoided paper products sold by Staples and Office Depot before the two firms began demanding stronger conservation practices from their suppliers in 2002 and 2004, respectively, Mr. Paglia says. A similar campaign is targeting Victoria's Secret, which is under pressure to use 50 percent recycled paper in its millions of mailed catalogs and shun paper derived from wilderness regions of the Canadian Boreal Forest. Limited Brands, parent company of Victoria's Secret, says the company uses recycled paper content "where feasible" and shows "preference" to suppliers whose sources are certified as sustainable and legally harvested.

In Paglia's view, consumers have strengthened their hand in recent years through new opportunities to make their case verbally and visibly.

"Back when we first started the Staples campaign [in 2000], if you got a dozen or two dozen protests to happen against the company nationwide, that was pretty good," Paglia says. "We're now at a point, because of the Internet and communities that are developing online, [where] we can do 200 protests – so we're hitting 20 or 30 percent of a company's stores – on a single day.... That kind of response is so different from where we were five years ago that I think companies have to take it more seriously."

In some cases, activists and consumers have together pressured retailers to improve practices, but their supply chains are the ultimate target. Example: computer recycling programs. Pressure from customers in recent years has helped cajole Hewlett Packard, Apple, and Dell to begin taking back used computers, printers, and other hardware. While this practice has the immediate benefit of reducing exposure to toxic waste in the developing world's salvage yards, the long-term goal is to get the chemical industry to furnish more ecofriendly raw materials for the next generation of computers.

"It's going to take HP or electronics producers or other people who use those chemicals to try to force the chemical industry to make some changes," says Barbara Kyle, national coordinator of the Computer TakeBack Campaign, a recycling advocacy project based in San Jose, Calif. By persuading producers to recycle, she says, consumers and activists establish a financial incentive for them to demand that computer components consist of chemicals that are easy to recycle.

Some consumer activists meanwhile aren't putting much stock in retailers to champion their supply-chain causes.

The Minnesota-based Organic Consumers Association, for instance, is boycotting milk products made by Horizon Organic and Aurora Organic Dairy. Among its concerns, the OCA alleges that farmers in both firms' supply chains don't give cows in feeding pens adequate time to graze pasture land. It's a claim supported in complaints filed this summer with the US Department of Agriculture by the Cornucopia Institute, a Wisconsin-based advocacy group for small farms. Both Horizon and Aurora deny the allegations.

Sensitive to food quality, the OCA shares many concerns with shoppers abroad. But unlike European activists, OCA isn't courting alliances with their large-scale retailers in a bid to ensure high standards in their organic supply chains.

Big retailers "are driving down the quality of US organic products by treating the organic marketplace like it's the conventional one" and demanding low prices as a priority concern, says Ronnie Cummins, national director of the OCA.

Meanwhile, even US companies that don't sell directly to consumers are raising standards for their suppliers in a bid to protect their brand names – and avoid the costly process of damage control.

"I think it did catalyze the industry" to have the retailer customers demand a new policy from all soy suppliers in the Amazon, says Lori Johnson, spokeswoman for Cargill. Even so, she adds, "our reputation was damaged a bit in this process, certainly by the campaign.... And all companies want to deal with other reputable companies. So ... it does matter – even if you'll never go to the grocery store and pick up something that says 'Cargill.' "

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