Corporate “Social Responsibility”

The Collapse of Wal-Mart’s Social Responsibility Charade

For the past eight years, Wal-Mart has pursued an image campaign apparently inspired by the Marx Brothers line: “Who you gonna believe, me or your own eyes?”

Despite the preponderance of evidence of its unenlightened practices, the company has tried to give the impression that it is really a model corporate citizen. Recent events suggest that the giant retailer’s social responsibility charade is now crumbling.

Through all of its scandals and controversies over the years, Wal-Mart could at least count on the support of its institutional shareholders, which for a long time turned a blind eye to the company’s transgressions and focused on its growth. Now even that is changing. The recently released results of voting at the company’s annual meeting indicate unprecedented discontent with its leadership. Not counting the large bloc of shares controlled by descendants of founder Sam Walton, more than 30 percent of the votes were cast against CEO Mike Duke, board chair Rob Walton and former CEO and board member Lee Scott. In the past, Wal-Mart board members typically had approval rates close to 100 percent.

The high degree of no-confidence this time around is largely attributable to the fallout from an 8,000-word exposé by New York Times alleging that high-level executives at the company quashed an internal investigation of foreign bribery. Before the annual meeting, the California State Teachers’ Retirement System filed a lawsuit against current and former Wal-Mart executives and board members for breach of their fiduciary duties in connection with the bribery scandal.

That scandal also appears to have played a significant role in Wal-Mart’s decision to cave in to calls to suspend its membership in the American Legislative Exchange Council, which is under siege for its role in promoting “stand your ground” laws such as the one in Florida linked to the shooting of Trayvon Martin. In the past, Wal-Mart, long a stalwart member of ALEC, would have ignored pressure of the kind being exerted by the anti-ALEC campaign.

By all rights, the disintegration of Wal-Mart’s responsibility image should have come from its retrograde labor and employment practices, which were the main reason for the public relations effort but which didn’t substantially change during the campaign. The company has never strayed from its uncompromising opposition to unions (except for toothless ones in China). The Organization United for Respect at Walmart is not a conventional union-organizing effort, yet the company recently fired several activists in the group in an apparent act of intimidation.

In its 1.4 million-employee U.S. retail operations, Wal-Mart has maintained a low-road approach of meager wages, inadequate benefits and overuse of part-timers. Workers at its more than 100 distribution centers had enjoyed somewhat better conditions, but it appears that is no longer the case. A new report from the National Employment Law Project finds that the company is increasingly using logistics subcontractors and temp agencies that engage in rampant wage-and-hour abuses and other labor-law violations.

In the latest in a long line of its own fair labor standards cases, Wal-Mart was recently forced by the U.S. Labor Department to pay $5.3 million in back pay, penalties and damages for violating overtime rules. Although the U.S. Supreme Court came to Wal-Mart’s rescue last year by blocking a massive class-action sex discrimination case, several non-class actions have been brought in recent months making the same allegations on behalf of thousands of women.

One area in which Wal-Mart believes it has attained a measure of legitimacy is environmental policy. It has succeeded in winning over some green groups, which cannot resist the temptation of working with such a mammoth company to change industry standards.

Yet the funny thing about Wal-Mart’s green initiatives is that most of them involve changes that the retailer is requiring from its suppliers, who are expected to bear the costs of altering their products and their packaging. This is consistent with Wal-Mart’s longstanding practice of forcing suppliers to cut their wholesale prices to the bone. When Wal-Mart does take steps on its own, such as in reducing energy usage in its facilities, those reforms are ones that reduce its operating costs and thus add to its bottom line.

Even if you believe it is okay for Wal-Mart to boost its profits while pressing suppliers to be more environmentally responsible, it’s important to remember that many of those suppliers are in countries such as China where oversight is difficult. A recent investigative report in Mother Jones found that Wal-Mart’s monitoring of Chinese plants left a lot to be desired and that this is causing frustration among some of the environmentalists who have been working with the company.

A report by Stacy Mitchell of the Institute for Local Self-Reliance finds that Wal-Mart’s domestic green initiatives, such as using more renewable energy sources, are also faltering, while the company ignores the detrimental environmental impacts of its land use practices. All this is compounded, Mitchell notes, by Wal-Mart’s extensive political contributions to candidates who are global warming deniers or otherwise have poor voting records on the environment.

The demise of Wal-Mart’s phony social responsibility initiative poses a fascinating question: Can the company return to its old critics-be-damned stance, or will it finally have to make some genuine reforms in the way it does business?

Facebook’s Dubious Social Mission

The Blues Brothers claimed they were on a mission from God. Mark Zuckerberg, whose $17 billion fortune is about to become even larger thanks to the Facebook initial public offering, insists that his company is on a “social mission.”

In a letter accompanying the firm’s first substantive disclosure filing, Zuckerberg writes that “Facebook was not originally created to be a company.” Its mission, he says, is “to make the world more open and connected,” and he insists: “we don’t build services to make money; we make money to build better services.”

It’s difficult to take this high-mindedness seriously in connection with a company that may soon have a market value of $100 billion built on persuading millions of people to hand over vast amounts of personal information about themselves that Facebook— which has a total workforce of only 3,200—then sells to corporate marketers. Data protection and privacy are generally considered good things; for Facebook, the possibility of more stringent laws in those areas is presented as a risk factor in its SEC filing.

In his social mission statement, Zuckerberg also writes: “We believe building tools to help people share can bring a more honest and transparent dialogue around government that could lead to more direct empowerment of people, more accountability for officials and better solutions to some of the biggest problems of our time.”

It’s interesting that Zuckerberg never refers to the need for more accountability on the part of Facebook or corporations in general. His letter gives the appearance of promoting corporate social responsibility but never actually does so. His attitude seems to be that Facebook’s only real obligation is to provide supposedly fabulous services, and that by itself will change the world.

It should thus come as no surprise that when it comes to dealing with governments and communities, Facebook is just as self-serving as any corporation not pretending to be on a social mission. This is demonstrated most clearly at its data centers.

These facilities, also known as server farms, are large collections of computers that power online networks. They use vast amounts of power and thus are located in rural areas with cheap electricity. Being highly automated, they create few jobs—yet Internet companies take advantage of the desperation of local officials for investment of any kind to obtain substantial economic development subsidies.

Facebook announced in January 2010 that it would build its first data center in central Oregon, choosing a location in the economically depressed town of Prineville that was part of an enterprise zone, thus making it eligible for property tax breaks for up to 15 years. The company later began expressing public concerns about how its intangible property would be taxed. In recent months it has been pressuring state legislators to restrict the ability of the state revenue department to assess data centers as utilities.

The company has even tried to intimidate the state by warning that, unless it got its way on taxes, the future of the Prineville facility—which employs about 50 people—would be in question. The revenue department now seems to have backed down. It is amazing to see how this purportedly enlightened company would throw its weight around to avoid pay a tax bill that under the worst case scenario would have cost it only $390,000 a year. (That figure, by the way, is about 1 percent of the $30.9 million that Facebook chief operating officer Sheryl Sandberg received in total compensation last year, according to the company’s new SEC filing.)

Meanwhile, Facebook has negotiated a subsidy deal for its second data center, located in North Carolina’s Rutherford County. The facility, which was expected to create about 40 jobs, was made eligible for up to $11 million in county financial assistance, on top of state tax breaks for data centers enacted in 2010. The one good thing that can be said about these subsidies is that they are a lot less costly than the ridiculous sum of $260 million that North Carolina gave to Google in 2007 for its server farm project in the state.

In 2010 Facebook also got a $1.4 million grant from Texas Gov. Rick Perry’s Texas Enterprise Fund to help pay for the creation of a sales office in Austin.

Paying its fair share of state and local taxes without taking subsidies it doesn’t need and without bullying public officials would be a good way for Facebook to start acting like it really is on a mission other than enriching Mark Zuckerberg and a small number of other members of the 1%.

Corporate Environmental Opportunism

“There is too much regulation and this is acting as a depressant on the economy.”

This statement could have been made by any one of the current Republican presidential contenders, but the words come from a press conference held by Ronald Reagan shortly after taking office in 1981.

Reagan used the event to announce the launch of his effort to weaken federal rules in areas such as environmental protection and occupational safety and health—moves that were supposed to encourage job creation.

Little has changed over the past three decades in the thinking of conservatives about the purportedly harmful effects of government oversight of industry and the magic of deregulation. After all, they have gotten a lot of political mileage out of Reagan’s aphorism that “government is the problem.”

What’s more interesting is the changing posture of business, the constituency on whose behalf the assault on regulation is said to be mounted. Three decades ago, there was no question that large corporations were ardent foes of agencies such as EPA and OSHA, and they promoted the idea that aggressive regulation destroyed jobs and curtailed economic growth. They also acted on those beliefs.

Richard Kazis and Richard Grossman opened their 1982 book Fear at Work: Job Blackmail, Labor and the Environment by recounting the announcement in 1980 by Anaconda Copper (then owned by the oil company Atlantic Richfield) that it was shutting down its smelter and refinery operations in Montana because they could not be retrofitted to satisfy environmental standards. The move eliminated 1,500 jobs.

Critics pointed out that Anaconda could have received a multiyear extension of its Clean Air Act compliance deadlines but had chosen not to apply for one, suggesting that it had other reasons for the shutdown. Nonetheless, Anaconda’s action served to generate hostility not toward the company but toward the EPA and environmental activists. Other large companies also stoked anti-regulation sentiments.

With the exception of a few diehards such as Koch Industries, today’s major corporations do not espouse Neanderthal views on environmental regulation. Almost all of them purport to have enlightened stances on issues such as air and water quality, climate change and recycling as part of overall company policies on corporate sustainability and responsibility (CSR).

BP, which purchased Atlantic Richfield in 2000, took a hit to its image during the Gulf of Mexico oil spill last year, but before that it had acknowledged that global warming was a problem and claimed to be going “beyond petroleum” by investing (modestly) in renewable energy sources. BP’s competitor Chevron also became a proponent of environmental protection and launched an ad campaign with the tagline “Will You Join Us” that was apparently meant to convey the idea that the oil giant is in the vanguard of efforts to save the earth.

Such positions are not limited to the petroleum sector. Retailing behemoth Wal-Mart has taken high-profile steps to reduce its carbon footprint and has pressured its suppliers to do the same. Toyota, General Motors and other auto giants have put increasing emphasis on hybrids and electric cars. Goldman Sachs, a CSR pioneer in the investment banking world, was the first Wall Street firm to adopt a comprehensive environmental policy (after being pressured by groups such as Rainforest Action Network). Ceres, a non-profit that focuses on sustainability issues, has several dozen Fortune 500 companies in its coalition.

Given all this high-minded corporate thinking on the environment, how can Republican candidates continue to portray regulatory rollbacks as the pro-business position? Or even, in cases such as Newt Gingrich and Michele Bachman, get away with calling for the abolition of the EPA?

A key reason is that big business, despite its claim to have embraced sustainability, is not willing to apply that principle in the public policy arena. CEOs are not speaking out against the EPA bashers or denying them PAC contributions.

This gets to the heart of what is wrong with CSR. It is a system of voluntary and selective actions that companies adopt, largely for public relations purposes—not mandated and enforceable directives imposed by democratic institutions. CSR cannot take the place of the EPA.

The absence of progressive corporate voices on environmental issues makes it easier for the likes of Gingrich and Bachman to make outlandish statements on regulatory matters. To make matters worse, President Obama implicitly endorsed the wrongheaded notion that environmental regulations stand in the way of job creation in his recent decision to prevent the EPA from implementing a long-planned stricter air quality standard for ground-level ozone emissions.

What more could Corporate America ask for? It gets to portray itself as environmentally friendly while reaping the advantages of regulatory rollbacks being promoted across the political spectrum. That’s opportunism on a grand scale.

Unsuitable Saviors

If you go by the agenda of Koch Industries and the U.S. Chamber of Commerce, big business is obsessed with cutting taxes, weakening regulation and denying the existence of global warming.

The truth is more complicated. For more than a decade, most large U.S. corporations—including the likes of Wal-Mart, Chevron and Goldman Sachs—have been ardent proponents of the principles of corporate social responsibility, or CSR. Like many of their European and Japanese counterparts, they profess to be leaders in a global movement to address the climate crisis, raise the living standards of the planet’s poorest and otherwise make the world a better place.

As London-based CSR evangelist Wayne Visser argues in his new book The Age of Responsibility, that movement is in crisis. The hypocrisy of espousing enlightened views while letting trade associations such as the Chamber lobby for Neanderthal ones is the least of it.

Despite the enormous resources and influence of the companies pushing it, CSR has done little to alleviate the larger problems it has taken on. As Visser puts it: ”At the macro level, almost every indicator of our social, environmental and ethical health is in decline.” He continues:

At worst, CSR in its most primitive form may be a smokescreen covering up systematically irresponsible behavior. At best, even the most evolved CSR practices might just be a band-aid applied to a gaping wound that is hemorrhaging the lifeblood of the economy, society and the planet.

As a long-time critic of CSR, my response to this diagnosis is: amen. However, I quickly part ways with Visser when it comes to a prescription for what to do next.

Visser spends much of his 366-page text arguing, essentially, that the antidote to failed CSR is more CSR. He never puts it quite that simply. Visser is a management consultant, after all, and he has to dress up his analysis with endless bullet points and matrices (many parts of the book read like powerpoint presentations).

At the center of all the jargon is the thesis that the world needs a new version of corporate social responsibility (actually, he prefers the phrase corporate sustainability and responsibility) which he dubs CSR 2.0.

This new approach is said to be based on five principles: Creativity, Scalability, Responsiveness, Glocality and Circularity.

Visser devotes a chapter to each of these, and the result is exasperating. His exegesis is full of platitudes and buzz words: “thinking outside the box,” “setting audacious goals,” “cross-sector partnerships,” “think global, act local,” “cradle to cradle” (rather than just cradle-to-grave) assessments of the environmental impact of products, etc.

What’s also bewildering is that Visser points to numerous companies that, he maintains, have already been putting into practice his principles that are supposedly the wave of the future. Among them are many of the usual CSR suspects: Google, Wal-Mart, The Body Shop, Nike, Patagonia and the mining giants BHP-Billiton and Anglo American.

What, then, is really new about CSR 2.0? The only thing that strikes me as novel is Visser’s call for making CSR “systemic” or “holistic”—yet this is where the entire concept of CSR, it seems to me, breaks down.

It is understandable to want to attack problems in a more comprehensive way, but it is not clear, to me at least, that large corporations are the appropriate primary vehicle for addressing the climate crisis, air and water pollution, global poverty, diseases such as AIDS/HIV, child labor and sweatshops.

For one thing, transnational corporations have played a significant role in creating or at least exacerbating some of these crises—and they may have a vested interest in perpetuating them. Even where this is not the case, why would we want to give a leadership role to institutions that are inherently undemocratic and exist primarily to enrich a small portion of the population? Corporations should certainly clean up their own act, but there is no reason to put them in charge of everything.

Much of CSR can be seen as an attempt to replace rigorous government regulation with limited voluntary initiatives that companies also use for public relations purposes. The answer is not a more ambitious form of CSR, as Visser suggests. We need less emphasis on corporate responsibility and more on corporate accountability—on corporations being held to account by government and organizations representing all of society. That’s a 2.0 that would truly make a difference.

Targeting Target

The news of a union organizing drive at a group of Target Corporation stores in the New York City area raises the tantalizing possibility that the master of cheap chic may finally be knocked off its pedestal.

For years, Target has used its stylish image to obscure the fact that many of its employment and other practices are not significantly different from those of its scandal-ridden rival, Wal-Mart. It’s even managed to get itself included on a list of the “world’s most ethical corporations.”

Target’s stores, like those of Wal-Mart’s U.S. operations, are entirely non-union, and the company intends to keep them that way. The New York Times account of the organizing drive has Jim Rowader, Target’s vice president for labor relations, spouting the usual corporate rhetoric about how a union (the UFCW) would undermine the supposed trust that the company has built up with its workers. BNA’s Labor Relations Week (subscription-only) reports that Target is subjecting workers to captive meetings “conducted by store management in an attempt to dissuade workers from seeking union representation.”

Since no representation elections have been held yet, it is unclear whether Target will follow the lead of Wal-Mart in eliminating the jobs of those who dare to vote in favor of a union.

Target does not have a reputation quite as abhorrent as that of Wal-Mart when it comes to other employment practices, but neither is its record untarnished. It has been accused of subjecting its largely part-time workforce to the same abuses—inadequate wages, restrictions on health coverage, overtime violations, etc.—seen among other big-box retailers. Though not as often as Wal-Mart, Target has shown up on lists prepared by state governments of the employers with the most workers or their dependents receiving taxpayer-funded healthcare benefits. Target has fought against living wage campaigns, most notably in Chicago in 2006, when it threatened to cancel plans for two new stores in the city unless Mayor Richard Daley vetoed a wage ordinance (which he did).

Target has also faced accusations relating to the treatment of minority applicants and employees. In 2007 the company paid a total of more than $1.2 million to settle cases brought by the U.S. Equal Employment Opportunity Commission involving alleged racial discrimination in hiring in Wisconsin and a racially hostile environment in Pennsylvania.

There have been controversies involving the treatment of workers by Target suppliers and contractors, as well. In 2002 Target was one of a group of retailers that together paid $20 million to settle class-action lawsuits charging them with permitting sweatshop conditions at factories run by their suppliers in Saipan, part of the U.S. Commonwealth of the Northern Mariana Islands in the Pacific. A 2006 report by SOMO, a Dutch research center on transnational corporations, documented other instances in which Target garment suppliers were reported to be abusing workers and the retailer did little in response.

Target has a history of hiring janitorial contractors for its U.S. stores that tend to engage in rampant wage theft. In 2004 one such contractor, Global Building Services, paid $1.9 million to settle an overtime-violation case brought by the federal government on behalf of immigrant workers. In 2009 another Target cleaning contractor, Prestige Maintenance USA, settled an overtime lawsuit for up to $3.8 million.

Labor practices are not the only area in which Target’s accountability record falls short. Earlier this year, the company had to pay $22.5 million to settle civil charges that its operations throughout California had violated laws relating to the dumping of hazardous wastes. Target has had a good record on gay rights, though last year the company found itself at the center of a controversy after it was revealed to have contributed to a business PAC which in turn contributed to a gubernatorial candidate in Minnesota who campaigned against gay marriage (among other reactionary positions). Target later apologized.

And then there’s the matter of subsidies. Like Wal-Mart, Target has extracted lucrative tax breaks and other forms of financial assistance from many of the communities where it has built stores or distribution centers. One of its more audacious efforts was a proposal for a $1.7 billion mixed-use project in the Minneapolis suburb of Brooklyn Park, for which Target wanted more than $20 million in property tax abatements and a public contribution of $60 million for infrastructure costs. Despite seeking all this taxpayer assistance, Target demanded a waiver from the city’s living-wage policy for many contract and part-time workers who would be employed at the site.

Perhaps the best thing that can be said about Target, aside from its style, is that it is much smaller than Wal-Mart. Its total revenues are only about one-sixth of the worldwide sales (and less than one-quarter of U.S. sales) of the Bentonville behemoth. Target’s workforce of 355,000, all in the United States, is dwarfed by Wal-Mart’s domestic headcount of 1.4 million and another 700,000 abroad. Target thus has a much smaller impact on overall labor practices and the global supply chain.

What impact it does have is not salubrious. Now that it is facing some union pressure, let’s hope Target breaks from Wal-Mart and decides that it is makes sense to treat its workers with as much respect as its customers.

NOTE: Speaking of subsidies, the Subsidy Tracker database I created for Good Jobs First has just been expanded and now has more than 65,000 entries covering 154 subsidy programs in 37 states.

Can Corporate Tax Dodgers Be Socially Responsible?

In much the same way that Wisconsin Gov. Scott Walker reinvigorated organized labor, General Electric is reigniting the movement for tax justice. The revelation in a March 25 New York Times front-page story that GE arranged things so that it owes nothing to the Internal Revenue Service on its $5 billion in 2010 U.S. operating profits—in fact, it expects to claim a refund of $3.2 billion—has sparked a firestorm of protest.

GE, of course, is not the only high-profile corporate tax dodger. The new US Uncut campaign is also targeting Bank of America, Verizon and FedEx. Other offenders include Google and Amazon.

What tends to get overlooked in the furor over big business tax avoidance is that the companies involved are usually ones that profess to adhere to the principles of corporate social responsibility.

Take General Electric. Like many other large firms, GE tries hard to present itself as a good corporate “citizen.” It has a website dedicated to the subject, and its board of directors has a Public Responsibilities Committee. GE also publishes an annual Citizenship Report.

In the 44 pages of that report, taxes are mentioned only in passing—and then mainly to cite the total amount GE pays to governments worldwide. It uses a figure of $23 billion, but that is over the course of a decade, whereas the other numbers in the report tend to be annual ones. Nor does GE compare the number to the more than $160 billion it earned in profits during the ten years.

GE goes on at length about its commitment to “Community Building,” stating that “Governments and national institutions are vital to progress. The quality of public institutions is therefore crucial.” Yet when it comes to explaining what it does to support a strong public sector, the company changes the subject. It highlights its charitable contributions, its investments in “human capital” and its involvement in environmental and trade policy issues.

GE, like many other companies, is able to get away with this because issues such as fair taxation and tax compliance are largely absent from the discourse of corporate social responsibility (CSR). Given the lack of a standardized definition of what is and is not socially responsible, corporations can pick and choose. We thus end up with cases such as Wal-Mart, which maintains its Neanderthal labor practices while touting environmental initiatives as evidence of its high level of ethicality.

Selective business ethics is especially problematic when it comes to taxes. Business apologists say that corporations have a duty to their shareholders to minimize tax payments and that there is nothing wrong with using all legal means to do so. But how far does that go? The Times pointed out that GE’s tax department has a staff of 975 dedicated to finding every last trick, and the company spends millions each year lobbying for even more loopholes.

What about Wal-Mart’s use of a device known as a captive real estate investment trust to avoid billions of dollars in state income taxes by essentially paying rent to itself and then deducting the cost? And how about those companies that create paper subsidiaries in offshore tax havens? A 2010 study published in the journal Corporate Governance found that even companies that move their legal headquarters to such havens go on claiming to be socially responsible.

Another obstacle is that the governments that are victimized by business tax dodging often fail to take strong measures, thus reinforcing the idea that it is not a significant offense. In the United States, criminal tax prosecutions of large corporations are few and far between. In a rare instance last December, Deutsche Bank paid $553 million in fines and admitted to criminal wrongdoing for helping U.S. customers make use of fraudulent tax shelters. Deutsche Bank, of course, professes a strong commitment to corporate social responsibility.

One place where CSR-spouting corporate tax dodgers are starting to be challenged is Britain. Over the past few years, human rights groups such as Christian Aid have criticized tax avoidance and evasion by transnational corporate operations in developing countries, arguing that these practices keep those nations stuck in a poverty trap. More recently, the UK Uncut campaign (which inspired US Uncut) has targeted tax dodging in Britain itself by corporations such as the European cellphone giant Vodafone. Cyberactivists hacked into Vodafone’s CSR website to post messages about the firm’s dubious tax practices.

Actions such as these help cut through the corporate obfuscation and make it clear that the failure of a large company to comply with a shared responsibility such as taxes is socially irresponsible.

Putting Off Corporate Absolution

I was just beginning to recover from President Obama’s dismaying speech at the U.S. Chamber of Commerce when I found myself in the middle of another effort to gloss over the misdeeds of big business. This occurred at the annual conference of the BlueGreen Alliance, which brought together some 1,600 labor and environmental activists to discuss the prospects for a sustainable economy but also invited representatives of some supposedly enlightened corporations.

When we gathered for lunch on the first day we first had to listen to a presentation by David Kiser, a vice president at International Paper, which is listed in the conference program as one of the “Platinum Sponsors” of the event. Kiser went on about IP’s commitment to “environmental stewardship” and “caring for employees.”

I had to restrain myself from laughing out loud. IP has one of the worst track records of any major corporation when it comes to both labor and environmental practices. Some of the earliest anti-corporate research I ever did was to assist a campaign launched by the Paperworkers union (now part of the Steelworkers, which co-founded the BlueGreen Alliance) to resist company demands for contract concessions in the 1980s.

After workers at an IP mill in Mobile, Alabama voted against the concessions, they were locked out by the company. The Mobile workers then made a coordinated bargaining pact with their counterparts at three other IP mills—in Jay, Maine, Lock Haven, Pennsylvania, and De Pere, Wisconsin—where contracts were expiring and the rank and file had decided to strike rather than concede.

IP responded by bringing in replacement workers from around the country, many of them recruited by BE&K, an Alabama-based construction company that had diversified into strikebreaking. The campaign by the striking and locked-out locals was eventually crushed by the company.

Yet during that campaign, workers at the mill in Jay, Maine (photo, from 1973) drew national attention to the environmental hazards of IP’s operations, which were a major contributor to the dioxin problem due to chlorine used in the paper bleaching process. The labor and environmental issues intersected in February 1988, when unskilled strikebreakers hired by the company accidentally broke the valve on a tank containing chlorine dioxide gas in pressurized liquid form. About 112,000 gallons of the liquid poured out and vaporized into a huge green cloud that floated out from the mill, forcing the evacuation of some 3,000 people from homes, schools and businesses. If the weather had been warmer and the winds weaker, many could have died.

Paperworker union members helped enact local ordinances in Jay that cracked down on IP’s emissions and pressured Maine state officials to file suit against the company for environmental violations. IP paid $885,000 to settle the charges. Later, the U.S. EPA also brought action against the company, which in 1991 pleaded guilty to five felony charges and paid a fine of $2.2 million. Over the following decade, IP was implicated in state and federal environmental violations in states such as New York, Massachusetts, Wisconsin, Mississippi, Florida, California, Georgia and Virginia.

Since the early 2000s the company has been trying to rehabilitate its environmental image by actions such as donating land to conservation groups and appointing the head of one such group to its board of directors. Yet the company remains a heavy polluter. In the EPA’s most recent Toxics Release Inventory, IP mills rank first and second among all paper facilities in the total volume of releases and account for 15 of the industry’s top 50 polluters, with total toxic releases of more than 43 million pounds.

IP’s labor relations are a lot less tumultuous these days, but in the last decade the company has slashed its U.S. hourly workforce from 45,000 down to 24,000.

The International Paper of 2011 is not the same as the IP of 1988, but I still find it difficult to regard the company as an ally in the effort to shape the green economy of the future. It takes a long time for the impact of past transgressions to dissipate.

This was brought home to me at another session at the BlueGreen Alliance conference. An official of the EPA was talking about how Recovery Act money is being used to help clean up a Superfund hazardous waste site in New Jersey where a long-defunct company had dumped large quantities of radioactive thorium once used in the production of gas lamps. Thorium, the EPA guy noted, has a half life of 14 billion years.

When the impact of business misbehavior can endure for eons, it will take more than a few social responsibility gestures to redeem corporate sinners.

IKEA Knocks Down Labor Rights

When my colleagues and I at Good Jobs First introduced the Subsidy Tracker database recently, our hope was that the information would be helpful to a wide range of campaigns for economic and social justice. I can now offer one particular use.

By plugging the name Swedwood into the search engine, one finds that the company received a $1 million cash grant under the Virginia Investment Partnership program in connection with its vow to invest $281 million and create 740 jobs. Actually, this grant was just part of a series of subsidies worth a total of $12 million that Swedwood received from the state (the data in Subsidy Tracker are not yet comprehensive).

Swedwood is significant because the company, a unit of the retail giant IKEA, is at the center of a controversy over its labor practices at a furniture plant in Danville, Virginia for which it received the $1 million subsidy. Employees of the facility, fed up with dangerous working conditions and discriminatory employment practices, have been trying to organize with the help of the Machinists union, which produced a report concluding that the Danville operation may be the most hazardous furniture plant in the country. Swedwood and its parent have responded to the organizing drive by harassing union organizers and firing union supporters.

The Machinists and the Building and Wood Workers International labor federation have launched a campaign to pressure IKEA and Swedwood to respect the rights of the Danville workers. Among other things, the campaign is asking supporters to send a holiday card to IKEA Chief Executive Mikael Ohlsson with instructions on how to build a fair collective bargaining relationship with the workers (allen wrench not included).

The unions might also want to make an issue of the fact that a company that was generously subsidized with taxpayer funds is now flouting labor laws.

The financial assistance IKEA got in Virginia is not the only time it has played the subsidy game. In places such as Tempe, Arizona and Frisco and Round Rock in Texas, the retailer has received millions of dollars in sales tax rebates and infrastructure assistance to help finance new stores. It is expected to receive up to $18 million in subsidies for the store it is building in Centennial, Colorado.

In fact, tax avoidance is at the center of IKEA’s entire corporate structure, a complex arrangement that puts nominal control in the hands of a Dutch private foundation but allows founder Ingvar Kamprad and his family to dominate the company and grow wealthier from it (according to Forbes, Kamprad is the 11^th richest person in the world, with a net worth of $23 billion).

IKEA is a prime example of how companies that have reputations for being socially responsible somehow get away with exploiting the system of economic development subsidies and with being hostile to unions in the United States – while cooperating with them in countries (such as IKEA’s native Sweden) where they are well established and protected. In the past, IKEA has relied on paternalism – including better than average employee benefits – to discourage unionization at its U.S. operations. The events in Danville suggest a troubling turn toward heavy-handed union busting.

Perhaps this will begin to change the view of corporate social responsibility arbiters such as Ethisphere magazine, which lists IKEA as “one of the world’s most ethical companies.” While the idea of corporate ethics is an oxymoron, companies should not be singled out for praise of any kind if they deny the rights of their workers to organize.

Note: The Dirt Diggers Digest index of information sources featured or utilized in the blog has finally been brought up to date.

European Companies Behaving Badly

Many American workers are irate these days about the jobs that are supposedly being taken away from them by undocumented foreign laborers. A new report from Human Rights Watch shows that the real threat to our living standards may come not from Mexican farmworkers, chambermaids or carwashers but from another group of “illegal” immigrants: European transnational corporations investing in the United States.

These companies – which include the likes of T-Mobile parent Deutsche Telekom, DHL Express parent Deutsche Post, French construction materials giant Saint-Gobain and Britain’s Wal-Mart rival Tesco – are illegal in the sense that they fail to comply with international labor norms when it comes to their U.S. operations.

Human Rights Watch, usually preoccupied with the mistreatment of dissidents and others in countries such as the Democratic Republic of Congo, Senegal and Kyrgyzstan, has not hesitated to point out that when it comes to the workplace, the United States is far from a paradigm of respect for individual rights. In 2000 it published a report called Unfair Advantage, which showed how workers’ freedom of association is routinely violated by employers.

Its new report, titled A Strange Case, shows how this pattern of abuse is practiced not only by domestic companies used to a climate of lax labor enforcement, but also by European companies that have much friendlier relations with unions in their home countries and that claim to abide by the principles regarding labor rights included in the declarations and conventions of the International Labor Organization, the Organization for Economic Cooperation and Development, and other global bodies.

Noting that these companies “exploit the loopholes and shortcomings in U.S. labor law” to engage in union avoidance and unionbusting practices, the report states: “The European Dr. Jekyll becomes an American Mr. Hyde.” Another way of putting it is that these companies behave like proper Westerners who indulge in sex with children when traveling to Southeast Asia: they are willing to do things abroad that they would never consider at home.

The Human Rights Watch report documents intimidation tactics used, for example, by T-Mobile in response to an organizing drive led by the Communications Workers of America and by DHL Express in response to a drive launched by the American Postal Workers Union. It also shows how European companies have tried to remove unions already organized, such as the decertification effort by Saint-Gobain against the United Auto Workers at a plant in Massachusetts. Other case studies show how companies such as Norway’s Kongsberg Automotive use tactics such as the lockout of union workers during contract negotiations that, as the report puts it, are “unheard of in Europe.”

The report points out that these European companies exploiting the lax U.S. labor rights environment are invariably ones that profess to be practitioners of corporate social responsibility (CSR) and that claim to have policies of cooperating with worker organizations throughout their operations. This, along with the fact that environmental criminals such as BP can claim to be CSR advocates, shows that the organizations that rate firms on corporate responsibility have to do a lot more than take company statements at face value.

Although the Human Rights Watch report doesn’t address it, another factor in the ability of European companies to behave badly in the United States is the unwillingness of the unions in their home countries to take aggressive action on this issue. Some of those unions have spoken out forcefully in support of their beleaguered American cousins, but that has not been enough to stop the abuses.

Yet the central problem is not CSR hypocrisy or inadequate labor solidarity, but rather the dismal condition of labor law in the United States. It would be nice if European companies decided on their own accord to treat American workers as they do employees at home, but even better would be if the federal government compelled both foreign and domestic companies to respect the collective bargaining rights of all U.S. workers.

Villainous Visionaries

It is tempting to refute the new book on business ethics by Andy Wales, Matthew Gorman, and Dunstan Hope with two letters; BP. The oil giant’s record of negligence in connection with the Gulf of Mexico disaster, its refinery accidents and its pipeline leaks in Alaska flies in the face of the thesis of Big Business, Big Responsibilities: that large corporations are in the vanguard of efforts to address the planet’s most pressing environmental and social problems.

The text of the book appears to have been completed before the blow-out of BP’s Macondo well this spring, but it is likely that the incident would not have merited mention if the timing had been different. Wales, Gorman and Hope seem to live in a world in which corporations act nobly and business crimes such as bribery, price-fixing, toxic waste dumping, mistreatment of workers and disregard for safety norms are either a thing of the past or are rare enough to ignore.

The authors – two of whom work for large corporations while the third (Hope) is on the staff of Business for Social Responsibility – would have us believe that many major companies have in a short period of time evolved from villains to visionaries.

To their credit, Wales, Gorman and Hope do not claim that this transformation happened spontaneously. They fully acknowledge the role of environmental and social justice campaigns in highlighting harmful and unfair business practices. Yet they fail to address corporate resistance to these campaigns, making it seem as if top executives promptly renounced pollution and exploitation as soon as an objection was raised.

Wales, Gorman and Hope admit that the initial boardroom motivation was to protect brands damaged by aggressive campaigners, but they insist that many large companies have gone beyond that defensive posture and are now engaged in a “proactive search for opportunities to improve social well-being and achieve corporate financial success at the same time.”

Their outlook is representative of the new corporate utopianism – the notion that the profit motive can be made to align perfectly with the public good, thus making global companies the perfect vehicle for reshaping the world.

It is easy to see why Wales, Gorman and Hope, who have built their careers on promoting corporate social responsibility, would embrace this view, and its appeal among the companies they advise is obvious.

But it is not clear why those of us with no vested interested in corporate canonization should go along. Even if we admit that some companies are doing some socially beneficial things, what took them so long? Are we expected to forget their decades of rapacious behavior?

It is also unclear how far should we trust companies that began to act responsibly only after being pressured to do so by outside forces, which according to Wales, Gorman and Hope include not just corporate campaigns but also growing consumer preference for ethical and sustainable goods and services. The only internal impulse that seems to be at work in socially responsible companies is the desire to make a buck from these new market opportunities.

So let me get this straight: responding to external pressures, giant corporations are doing the right thing, which turns out to be highly profitable – and we are supposed to believe this is some kind of great moral awakening?

Before passing judgment on the intentions of companies professing a commitment to social responsibility, perhaps we should take a step back and ask how real is the purported transformation. And this brings us back to BP, which is repeatedly praised by Wales, Gorman and Hope for its forward-thinking stance on issues such as climate change.

Given what we now know about BP’s reckless actions, as opposed to its high-minded principles, it is likely that its commitment to social responsibility is a smokescreen. Wales, Gorman and Hope don’t consider the possibility that many of the laudatory policies adopted by BP and other corporate leviathans are nothing more than greenwashing.

Big Business, Big Responsibilities could be dismissed as a work of corporate propaganda, but what makes it more insidious is the appeal the authors make to non-governmental organizations. The last page of the book calls on NGOs to be less suspicious of corporations and to accept them as full partners in environmental and social campaigns. I read this as an effort to bring about a unilateral ceasefire by watchdogs groups, which would lose their independence and start functioning as appendages of corporate public relations departments.

While a few NGOs have already moved in this direction, it would be foolhardy for serious campaigners to abandon their adversarial posture toward corporations. Without such pressure, big business would inevitably return to all its old tricks.