Toyota Totals Its Corporate Social Responsibility Creds

It would not surprise me if the people who do public relations for Toyota are flipping through their old scrapbooks to cheer themselves up amid the worst crisis in the company’s history.

They might be looking longingly at the 2003 Business Week cover story headlined: “Can Anything Stop Toyota: An Inside Look at How It’s Reinventing the Auto Industry.” Or the 2006 New York Times paean entitled “Toyota Shows Big Three How It’s Done.” Perhaps they are going back even further to the 1997 love letter from Fortune: “How Toyota Defies Gravity.”

These days Toyota is instead experiencing the unbearable heaviness of being exposed as just another unscrupulous automaker that, whether through incompetence or greed, puts many of its customers behind the wheel of a deathtrap.

New revelations that the company knew about the defective gas pedals for years before taking action are all the more scandalous because Toyota had a longstanding reputation not only for business prowess but also for social responsibility.

The company, of course, fostered this image. Its website proclaims: “Toyota has sought harmony between people, society, and the global environment, as well as the sustainable development of society, through manufacturing. Since its foundation, Toyota has continuously worked to contribute to the sustainable development of society through provision of innovative and high-quality products and services that lead the times.”

All big corporations make similar declarations, but Toyota managed to convince outside observers of its pure heart. Last year the Ethisphere Institute included the automaker on its list of “the World’s Most Ethical Companies.” Toyota is ranked 14th on the “Global 100 Most Sustainable Corporations in the World.” And it received the highest score among automakers in a 2006 CERES assessment of corporate governance changes adopted by large corporations to deal with climate change.

Toyota’s environmental reputation is not completely unblemished. In 2007 the company incurred the wrath of green groups for its opposition to an effort to toughen fuel economy standards in the United States (a stance it modified in response to the pressure). In 2003 Toyota agreed to pay $34 million to settle U.S. Environmental Protection Agency charges that it violated the Clean Air Act by selling 2.2 million vehicles with defective smog-control computers.

Overall, however, Toyota was regarded as a much more environmentally enlightened company than Detroit’s Big Three. In fact, its successful efforts to bring hybrids into the auto industry mainstream made it something of a corporate hero in green circles. Michael Brune, who was recently named the new executive director of the Sierra Club, brags that he and his wife have been driving a Prius since 2004.

Toyota’s more laudable stances on sustainability issues did not prevent it from being completely retrograde when it came to respecting the collective bargaining rights of its U.S. employees. It has successfully kept unions out of its heavily-subsidized American plants and has taken advantage of contingent workers to keep down costs in those operations.

Just as good environmental policies do not automatically lead to good labor practices, the current safety scandal shows that a company can be green and totally irresponsible at the same time.  Despite Toyota’s claim about promoting “harmony between people, society, and the global environment,” it appears the company put its business interests ahead of the safety of its customers and others with whom they share the road.

The automaker’s safety scandal is another indication that voluntary corporate social responsibility policies go only so far. It is only through rigorous government regulation, backed by aggressive environmental and other public interest activism, that major corporations can be kept honest.

Haiti: Corporate Charity or Reparations?

After the New Orleans region was struck by Hurricane Katrina in 2005, Wal-Mart scored a public relations coup by delivering emergency supplies quickly while government agencies stumbled. Ignoring the fact that the company’s vast distribution network made the feat relatively easy, awestruck journalists hailed the giant retailer as a “savior” for many of the storm’s victims.

The Behemoth of Bentonville has apparently not been performing any major logistics miracles for the people of Haiti in the wake of the recent devastating earthquake. The company is working mainly through the Red Cross, initially providing $500,000 in cash and food kits worth $100,000.

Although the company’s outlays have apparently increased a bit since its January 13 press release, the amount is still in the neighborhood of $1 million. To put that number in perspective, in 2008 Wal-Mart had profits of $22 billion, which works out to some $2.5 million an hour—every day of the year.

It is hard to be impressed at a commitment of 30 minutes worth of profits to help deal with a disaster of the magnitude facing Haiti. But this is not just an abstract issue of generosity.

Over the years, Wal-Mart has earned huge sums from the impoverished nation. Haiti is one of the low-wage countries where garment contractors have produced the goods that, despite Wal-Mart’s vaunted low prices, can be profitability sold in its network of Supercenters. It’s been going on for many years. A 1996 report on Haiti by the National Labor Committee noted that Wal-Mart was a major customer of sweatshops paying garment workers as little as 12 cents an hour.

In this time of dire need, Wal-Mart should feel pressure to make a commitment to the Haitian people of a magnitude comparable to the wealth it has extracted from the country over the years.

The question of the obligation of a company such as Wal-Mart to a situation such as Haiti is particularly relevant in light of the outrageous ruling by the Supreme Court in the Citizens United case. Thanks to the High Court’s corporate shills, Wal-Mart executives are probably already fantasizing about the unlimited slush funds they will have to sway elections and pressure incumbents to do their bidding.

Now is a good time to launch a movement to push corporations to do something with their money other than buying the political system. The outpouring of support for Haiti could be the springboard for a campaign that demands that Wal-Mart—and other major corporations that have benefited from the country’s cheap labor—provide not a bit of charity but rather a substantial amount in the form of reparations.

Perhaps the way to start is to call for disclosure of an estimate of how much value Wal-Mart has extracted from the Haitian people. Rather than letting the company brag about its pittance of a voluntary contribution, it would be much more satisfying to see it have to negotiate an amount that would make a real difference for the country.

Shades of Green

NewsweekMichael Moore may be on all the talk shows these days touting his new film on the evils of capitalism, but elsewhere in the mainstream media the celebration of big business continues apace. Especially when it comes to the environment, we are meant to believe that large corporations are at the forefront of enlightened thinking.

This is the implicit message of the cover of the new issue of Newsweek, which is filled with leaves to promote its feature on “The Greenest Big Companies in America: An Exclusive Ranking.” The list itself, however, has more validity than the usual exercises of this sort, which tend to take much of corporate greenwash at face value.

The Newsweek rankings are based on what appear to be solid data from KLD Research & Analytics, producer of the reputable (but expensive) SOCRATES social investing database, along with Trucost and CorporateRegister.com. Each company in the S&P 500 is rated on its environmental impact, its environmental policies, and its reputation among corporate social responsibility professionals, academics and other environmental experts. The ratings even take in account a company’s “regulatory infractions, lawsuits and community impacts.”

Not surprisingly, those at the top of the list are high-tech companies—such as Hewlett-Packard (ranked No. 1), Dell (2), Intel (4), IBM (5) and Cisco Systems (12)—which have never had quite the same pollution problems as old-line industries and which in many cases have made themselves “cleaner” by outsourcing their production activities to overseas producers.  Dell, in particular, is on its way to becoming a hollow company by selling off its plants.

More interesting is that supposed sustainability pioneer Wal-Mart comes in at No. 59, behind old-line industrial companies such as United Technologies and Owens Corning. Whole Foods Market, purveyor of over-priced organic groceries, is a bit lower at 67. Oil giant Chevron, which urges the public to “join us” in its supposed commitment to energy efficiency, is ranked 371, not much better than long-time global warming denier ExxonMobil (395).

Since the Newsweek list covers the entirety of the S&P 500, we can also look at what is probably the most significant group: those at the very bottom. The harm that these companies—especially utilities such as American Electric Power and Southern Company with lots of fossil-fuel-fired power plants—do to the environment far outweighs any good done by those at the top of the list. Also among the laggards are agribusiness giants Monsanto (No. 485), Archer Daniels Midland (486), Bunge (493) and ConAgra Foods (497).

But special mention must be given to the absolute worst company of all: mining giant Peabody Energy. On a scale of 0 to 100, Peabody is awarded all of 1 point, presumably reflecting its single-minded dedication to climate-destroying coal and its support for groups fighting the climate bill now in Congress.

Newsweek deserves credit for undertaking a serious evaluation of corporate environmental performance. The web version even has a nice sidebar on green fakery. But the magazine could have easily turned the list upside down and headlined its feature “The Biggest Environmental Culprits of Corporate America.”

Corporations and the Amazon

amazonThese days just about every large corporation would have us believe that it is in the vanguard of the fight to reverse global warming. Companies mount expensive ad campaigns to brag about raising their energy efficiency and shrinking their carbon footprint.

Yet a bold article in the latest issue of business-friendly Bloomberg Markets magazine documents how some large U.S.-based transnationals are complicit in a process that does more to exacerbate the climate crisis than anything else: the ongoing destruction of the Amazon rain forest.

While deforestation is usually blamed on local ranchers and loggers, Bloomberg points the finger at companies such as Alcoa and Cargill, which the magazine charges have used their power to get authorities in Brazil to approve large projects that violate the spirit of the country’s environmental regulations.

Alcoa is constructing a huge bauxite mine that will chew up more than 25,000 acres of virgin jungle in an area, the magazine says, “is supposed to be preserved unharmed forever for local residents.” Bloomberg cites Brazilian prosecutors who have been waging a four-year legal battle against an Alcoa subsidiary that is said to have circumvented the country’s national policies by obtaining a state rather than a federal permit for the project.

Bloomberg also focuses on the widely criticized grain port that Cargill built on the Amazon River. Cargill claims to be discouraging deforestation by the farmers supplying the soybeans that pass through the port, but the Brazilian prosecutors interviewed by Bloomberg expressed skepticism that the effort was having much effect.

Apart from the big on-site projects, Bloomberg looks at major corporations that it says purchase beef and leather from Amazonian ranchers who engage in illegal deforestation. Citing Brazilian export records, the magazine identifies Wal-Mart, McDonald’s, Kraft Foods and Carrefour as purchasers of the beef and General Motors, Ford and Mercedes-Benz as purchasers of leather.

The impact of the Amazon cattle ranchers was also the focus of a Greenpeace report published in June. That report put heat on major shoe companies that are using leather produced by those ranchers.

Nike and Timberland responded to the study by pledging to end their use of leather hides from deforested areas in the Amazon basin. Greenpeace is trying to get other shoe companies to follow suit.

Think of the Amazon the next time a company such as Wal-Mart tells us what wonderful things it is doing to address the climate crisis.

Wal-Mart’s (Un)sustainability Index

Del95400Wal-Mart has taken the latest in a long series of steps to make itself look good by imposing burdens on its suppliers. The mammoth retailer, which is thriving amid the recession, recently announced plans to require its more than 100,000 suppliers to provide information about their operations that would form the basis of a product sustainability index.

Rating products is a good idea. It’s already being done by various non-profit organizations that bring independence and legitimacy to the process. Wal-Mart, by contrast, brings a lot of negative baggage. In recent years, Wal-Mart has used a purported commitment to environmental responsibility to draw attention away from its abysmal record with regard to labor relations, wage and hour regulations, and employment discrimination laws. It also wants us to forget its scandalous tax avoidance policies and its disastrous impact on small competitors. The idea that a company with a business model based on automobile-dependent customers and exploitative supplier factories on the other side of the globe can be considered sustainable should be dismissed out of hand. Yet Wal-Mart is skilled at greenwashing and is, alas, being taken seriously by many observers who should know better.

On close examination, Wal-Mart’s latest plan is, like many of its previous social responsibility initiatives, rather thin. All the company is doing at first is to ask suppliers to answer 15 questions. Ten of these involve environmental issues such as greenhouse gas emissions, water use, waste generation and raw materials sourcing. The final five questions are listed under the heading of “People and Community: Ensuring Responsible and Ethical Production.”

Two of them involve “social compliance.” It is an amazing act of chutzpah for Wal-Mart, which probably keeps more sweatshops in business than any other company, to claim moral authority to ask suppliers about the treatment of workers in their supply chain.

The questions in this category seem to assume that suppliers don’t do their own manufacturing. This is a tacit acknowledgement of how Wal-Mart has forced U.S. manufacturers to shift production offshore, and often to outside contractors. Now Wal-Mart has to ask those companies to be sure they know the location of all the plants making their products and the quality of their output.

The point about quality was one that CEO Mike Duke (photo) emphasized when announcing the rating system. This is also highly disingenuous. For years, Wal-Mart was notorious for pressing suppliers to reduce the quality of their goods to keep down prices. Now the behemoth of Bentonville is suddenly a proponent of products that “are more efficient, that last longer and perform better.” Will Wal-Mart pay its suppliers higher prices to cover the costs of improving quality?

goodguideI can’t bring myself to jump on Wal-Mart’s bandwagon. If I want product ratings I will turn not to Mike Duke but rather to someone like Dara O’Rourke, who founded a website called Good Guide that rates consumer products and their producers using independently collected data from social investing firms such as KLD Research and non-profits such as the Environmental Working Group. It uses criteria such as labor rights, cancer risks and reproductive health hazards that are unlikely to ever find their way into the Wal-Mart index.

Good Guide also rates companies, including Wal-Mart, which receives a mediocre score of 5.3 (out of 10), and it reaches that level thanks to its marks on p.r.-related measures such as charitable contributions and some but not all environmental measures. In the category of Consumers it gets a 4.1, Corporate Ethics 3.9, and for Labor and Human Rights 4.1 (which is generous).

Maybe Wal-Mart should focus on improving its own scores before presuming to rate everyone else.

American Corporate Idol

Forget American Idol and Dancing With the Stars—here’s the contest you’ve been waiting for: the U.S. Chamber of Commerce 2008 Corporate Citizenship Awards. According to a press release put out by the Chamber, the awards “recognize companies, chambers of commerce, and business associations for making positive contributions to their communities, advancing important economic and social goals, and demonstrating ethical leadership and sound stewardship.”

The Chamber has just announced the finalists for each of the award categories. The winners in most of the categories will be chosen by “a panel of distinguished leaders in the field of corporate citizenship,” including Harvard Business School Professor Michael Porter, past winners and the board of directors of the Chamber’s Business Civic Leadership Center.

Let’s focus on the Large Business Award, which is given to companies with annual revenue of more than $5 billion. Although the public is not invited to vote in this category, we can cheer on our favorite contestant—once we figure out which one that should be. Let’s mull that over.

One of the most familiar names among the finalists is Verizon Communications, a telecom behemoth with $93 billion in revenues. Although the company’s traditional phone service business is highly unionized, its Verizon Wireless and Verizon Business units have vehemently opposed organizing drives by their employees.

Another finalist is Bank of America, which is now the parent of Countrywide Financial, the poster child for predatory mortgage lending currently being sued by various states for deceptive practices. B of A itself paid $460 million in 2005 to settle charges related to its marketing of WorldCom securities just before the scandal-ridden company filed for bankruptcy.

Also competing is Siemens USA, the American subsidiary of German industrial engineering giant Siemens AG. The parent company has been embroiled in a major bribery scandal that has resulted in the resignation of various managers, including some who have been convicted of misuse of funds.

Then there’s KPMG, one of the Big Four auditing and tax advisory firms. In 2005 more than a dozen of KPMG’s executives were indicted for promoting fraudulent tax shelters. The firm itself reached a deferred-prosecution agreement with the Justice Department but had to pay $456 million in fines.

The last finalist is known mainly to truck drivers. Pilot Travel Centers operates more than 300 truck stops in 41 states. It’s amazing to learn that this seemingly modest business has annual revenues of more than $13 billion. There’s not much objectionable about Pilot (except perhaps the fast food), but it turns out that Pilot is half-owned by Marathon Oil. In addition to having been identified as a potentially responsible party at ten different toxic waste sites, Marathon was one of a group of oil companies that agreed earlier this year to pay a total of $423 million to settle charges that they contaminated public water supplies with the gasoline additive MTBE.

Decisions, decisions. Should we go with the (alleged) union-buster, predatory lender, bribe-payer, tax cheat or polluter? Perhaps it’s best that the judging is being done by professionals, who are best equipped to appreciate the contestants’ unique qualities.

Is Starbucks Beyond Reproach?

There has been a spate of books celebrating the remarkable rise of Starbucks, but the latest, by Kim Fellner, stands out from the pack. Unlike the others, which are mainly addressed to appreciative shareholders, consumers and business analysts, Wrestling with Starbucks is an appeal to critics of the coffeehouse chain.

Fellner, an long-time friend and colleague of mine, places the origins of the book in late 1999, when she was in Seattle for the protests against the World Trade Organization and was surprised to see Starbucks attacked both figuratively and literally (when the front window of one of its outlets was shattered by demonstrators). Because she had a favorable impression of the chain, whose stores she frequented for her caffeine fix, Fellner wondered, she writes, “how had a coffee company with a liberal reputation come to symbolize the ills of globalization?”

Fellner spent much of the following eight years trying to answer that question. Her journey took her deep into the world of coffee – from the hillsides of Costa Rica to the Starbucks roasting plant in Kent, Washington to the various company outlets she visited in her travels at home and abroad. Fellner provides a wealth of anecdotes, but she keeps coming back to the issue of whether Starbucks should be viewed as a force for good or evil in the world.

Defying the tendencies of the labor and social justice circles in which she dwells, Fellner finds much to praise in the behavior of the coffee behemoth: good conditions, including health benefits, for its part-time baristas; strict environmental standards and fair prices for its third-world suppliers; high-quality products and appealing ambiance for its customers that have helped expand the demand for upscale java to such an extent that independent coffeehouses benefited as well.

Fellner is not blind to the company’s faults. She acknowledges the company’s strong anti-union animus; the fact that most of its workers (which it refers to as “partners”) don’t work enough hours to qualify for medical insurance; the inferior working conditions at the large number (more than one-third) of its outlets that are run by licensees at places such as airports and turnpike rest stops; the fact that it had to be pressured by groups such as Global Exchange before it began to purchase significant quantities of fair trade beans; and the clumsy way it responded to Ethiopian coffee growers unhappy that the company was asserting trademark claims over traditional names for their products.

The reason I (and I suspect many other corporate critics) part company with Fellner is that she is surprisingly tolerant of these shortcomings. She is convinced Starbucks–and especially its charismatic head Howard Schultz–is either trying hard to rectify the problems or has a sincere alternative view, such as the company’s insistence that what it considers its enlightened personnel policies are better for employees than union representation.

Fellner is uncomfortable with the latter stance–which prompted Schultz to encourage a decertification drive that removed the unions that existed at Starbucks before he took over the company in 1987–but she does not seem outraged. Schultz’s attitudes on unions, Fellner says in an oddly mild turn of phrase, “chafe me like an itchy sweater.”

Fellner seems to have a more seriously negative reaction to the unions that have tried to organize Starbucks outlets, especially the anarchist-inspired modern incarnation of the Industrial Workers of the World. She digresses into a discussion of alternatives to traditional labor organizing but ultimately concludes that unions fail to address the “psychic need” of today’s workers for “recognition and approval.” She lauds Starbucks for addressing that need through practices such as giving out “appreciation cards” to its “partners” when they do a good job.

Just when I thought that Fellner had gone over to the dark side, her book switches its focus from Starbucks to the broader issue of corporate social responsibility (CSR), which is so much the rage in business circles these days. Here her discussion is more nuanced. She acknowledges that CSR is often bogus and affirms that there are malevolent corporations–Wal-Mart, Big Oil, Big Pharma, etc.–that should be targeted. It turns out her real problem is not with anti-corporate campaigns in general, but rather with the frequent decision of campaigners to go after high-profile companies (like Starbucks) rather than the worst offenders in an industry. She worries that if “good” companies are continuously slammed for not doing better, they as well as their less diligent competitors will have little motivation to improve.

This is a legitimate issue, but the problem, as I see it, is that it’s not always clear who the good guys are. Fellner clearly believes Starbucks is one of them and Wal-Mart is not. Yet in the past couple of years, the giant retailer has made a mighty effort to boost its CSR credentials, especially in the environmental realm. It has made modest improvements in working conditions but remains vehemently anti-union. Does Wal-Mart now qualify to be exempt from vilification?

I would say emphatically no, but then again I don’t think any company should be given a total pass by labor unions and social justice organizations. Fellner is right to question whether corporations with better track records should be our primary targets, but that’s not to say they should never be challenged. Even companies like Starbucks–whose relatively enlightened policies may falter now that its financial condition is weakening–sometimes need to be pushed to do the right thing.

Giant Mining Firm’s Social Responsibility Claims: Rhetoric or Reality?

The recent decision by the U.S. Supreme Court to slash the damage award in the Exxon Valdez oil spill case and the indictment of Sen. Ted Stevens on corruption charges are not the only controversies roiling Alaska these days. The Last Frontier is also witnessing a dispute over a proposal to open a giant copper and gold mine by Bristol Bay, the headwaters of the world’s largest wild sockeye salmon fishery. Given the popularity of salmon among the health-conscious , even non-Alaskans may want to pay attention to the issue.

The Pebble mine project has been developed by Vancouver-based Northern Dynasty Ltd., but the real work would be carried out by its joint venture partner Anglo American PLC, one of the world’s largest mining companies. Concerned about the project and unfamiliar with Anglo American, two Alaska organizations—the Renewable Resources Coalition and Nunamta Aulukestai (Caretakers of the Land)—commissioned a background report on the company, which has just been released and is available for download on a website called Eye on Pebble Mine (or at this direct PDF link). I wrote the report as a freelance project.

Anglo American—which is best known as the company that long dominated gold mining in apartheid South Africa as well as diamond mining/marketing through its affiliate DeBeers—has assured Alaskans it will take care to protect the environment and otherwise act responsibly in the course of constructing and operating the Pebble mine. The purpose of the report is to put that promise in the context of the company’s track record in mining operations elsewhere in the world.

The report concludes that Alaskans have reason to be concerned about Anglo American. Reviewing the company’s own worldwide operations and those of its spinoff AngloGold in the sectors most relevant to the Pebble project—gold, base metals and platinum—the report find a troubling series of problems in three areas: adverse environmental impacts, allegations of human rights abuses and a high level of workplace accidents and fatalities.

The environmental problems include numerous spills and accidental discharges at Anglo American’s platinum operations in South Africa and AngloGold’s mines in Ghana. Waterway degradation occurred at Anglo American’s Lisheen lead and zinc mine in Ireland, while children living near the company’s Black Mountain zinc/lead/copper mine in South Africa were found to be struggling in school because of elevated levels of lead in their blood.

The main human rights controversies have taken place in Ghana, where subsistence farmers have been displaced by AngloGold’s operations and have not been given new land, and in the Limpopo area of South Africa, where villagers were similarly displaced by Anglo American’s platinum operations.

High levels of fatalities in the mines of Anglo American and AngloGold—more than 200 in the last five years—have become a major scandal in South Africa, where miners staged a national strike over the issue late last year.

Overall, the report finds that Anglo American’s claims of social responsibility appear to be more rhetoric than reality.  Salmon eaters beware.

Wal-Mart and the Chinese Earthquake: Cheap Help for A Cheap-Labor Country

Wal-Mart Stores has put out a press release patting itself on the back for promising the equivalent of about $430,000 for disaster relief and reconstruction for the area of China hit by a massive earthquake this week. The gesture was laudable but the amount was less than impressive.

After all, the giant retailer would be nowhere today without the countless Chinese workers who toil in sweatshops so that American consumers can be offered the cheap goods that are at the core of the company’s business model. Last year those largely Chinese-made goods brought Wal-Mart profits of $12.7 billion, or about $1.4 million every hour of every day. The $430,000 contribution thus represents less than 20 minutes of profit.

Wal-Mart also profits from Chinese consumers. The company operates more than 200 stores in China (through joint ventures and minority-owned subsidiaries), several of which have been shut down because of the tremblor. Wal-Mart was so eager to operate stores in China that it agreed to let its employees there be represented by unions (though of the government-dominated variety).

Wal-Mart has a history of using relatively inexpensive amounts of disaster relief to boost its reputation. After Hurricane Katrina hit the U.S. Gulf Coast in 2005, Wal-Mart maneuvered to get maximum exposure for its prompt delivery of relief supplies. A fairly routine operation for a company possessing the most advanced logistics infrastructure was seen as nearly miraculous, given the ineptitude of federal and state public officials.

The company made an initial faux pas (quickly reversed) in announcing that employees at its stores shut down by the storm would be paid for only three days. It also started out offering a measly $2 million in relief but soon overcame its parsimonious instincts and upped the figure by $15 million, thereby winning wide praise. The wave of favorable coverage went on for several months, thanks at least in part to the efforts of its army of p.r. operatives from Edelman and a conservative blogger who was paid to tout Wal-Mart’s hurricane work in the blogosphere.

Wal-Mart may have to part with more than $430,000 to get a similar public relations bonanza from China’s suffering.

Social Responsibility for Sale

A feature article by two academics in today’s Wall Street Journal provides further evidence that the concept of corporate ethics is an oxymoron—or at least is a far cry from human ethics. The piece, by Remi Trudel and June Cotte of the University of Western Ontario’s Ivey School of Business, is headlined: “Does Being Ethical Pay?”

The authors don’t seem to think there is anything odd about discussing behavioral norms exclusively in terms of the material payoff. They unself-consciously refer to corporate social responsibility as a “big business” and thus don’t have any problem analyzing it in the same terms used for any investment.

Trudel and Cotte start out asking the question: “How Much are Ethics Worth?” What this means in practical terms is: how much extra can companies charge for products that are advertised as having been produced in an ethical manner. They ignore the question of how much more such goods actually cost to produce and consider only how much consumers are willing to pay. Based on experiments with a random group of adults, they found that people are willing to pay significantly more for the ethical goods, which suggests that consumers are a lot more ethical than companies.

Amazingly, the authors then address the question: “How Ethical Do You Need to Be?” Here they found that consumers would, for example, pay a differential for a shirt advertised as 25 percent organic but not much more for one said to have a higher organic content. The lesson Trudel and Cotte seem to draw from this is that companies should make some effort to give their products an ethical patina but need not go too far, since there will not be a proportional return for the additional effort.

The analysis of Trudel and Cotte is at the same time appalling and refreshing. It cuts through the social responsibility hype that permeates so much large-company marketing these days and shows that corporations will do the right thing only if it somehow enhances their bottom line. Lenin famously said that capitalists would sell the rope with which they would be hanged. Today’s corporate executives are happy to sell us the appearance of social responsibility—and, if we are lucky, the real thing.