With social awareness and consumer intelligence on the rise, it’s becoming the case that companies need to do more than create great products and services to inspire a loyal fan base. The success of companies like Apple
(NASDAQ:AAPL) and Trader Joe's prove that a strong brand with an ethically conscience image can do wonders for business, since even in this tough economy, consumers are lining up and going out of their way to buy pricey iPhones and frozen foods because the brands seem to fit the right social profile.
However, being profitable and socially responsible can be a tough road to take for most companies. In her new book, Ethical Chic
, award-winning freelance writer, Fran Hawthorne analyzes six of the most popular companies that benefit from their socially responsible images. Apple, Timberland, Starbucks
(NASDAQ:SBUX), Tom’s of Maine
(NYSE:CL), American Apparel
(NYSEAMEX:APP), and Trader Joe's are all put under the spotlight to see if they're really doing all they can to earn their status as exemplary firms.
As a veteran business journalist, Hawthorne has served as a writer and editor for Businessweek
, and Institutional Investor
, and still regularly writes for Newsday
, the New York Times
, and other publications. In 2009, she was a recipient of the New York State Society of Certified Public Accountants Award for Excellence in Financial Journalism for her book Pension Dumping
, which exposed the tendency of troubled American companies to dump their pension programs to appease investors. Ethical Chic
isn't really a muckraking investigation; instead, Hawthorne lays out a balanced view of a company's rights and wrongs. A firm like Apple can seem almost schizophrenic if you compare its hipster image and emphasis on creativity -- presumably progressive traits -- with its slow pace on issues such as the need to reform working conditions for employees in its Chinese supply chain (Foxconn plants). On Apple, Hawthorne asks, "...can a company be hailed as socially responsible if it's average? And how much credit should it get if the action was forced on it by public pressure? For a company to be truly ethical, CSR [corporate social responsibility] concerns should be built into the corporate culture," which is something unapparent in even Apple's American locations, as its stores and headquarters are home to as much performance pressure and micromanagement, as the sweatshops in China.
In the book, these companies’ brands and their practices are finally married, revealing a more complete image of the companies we think we love. For instance, Starbucks likes to champion that it buys fair trade, but not nearly all of its coffee is. American Apparel is vocal on gay rights and immigration reform, but few ever consider the social implications of the blatant sexism on display in its ads and allegedly rampant within corporate headquarters. Even fewer consumers are aware of the racism that occurs when it comes to the company's hiring practices. Moreover Timberland, with its fun outdoorsy image and claims of environmental stewardship, might not be as green as you think it is. The cows used to produce the company's leather create an enormous carbon footprint.
Hawthorne admits that some of her points are nitpicks and that the requests made of companies often directly oppose their ability to do business, but readers of her book might be surprised by the specific social wrongs committed by certain companies and the amount of arm-bending it has taken to get them to change their ways.
At the end of the day, Hawthorne isn’t asking these companies to stop making money and instead, save the world, but really to make good on the images they sell. Companies know that they're not selling products and services as much as a sense of style and an experience. The cleaner a brand looks, the better consumers feel about supporting it, so it’s in a firm's best interests to clean up its act. Still, if readers take away anything from Ethical Chic
, it should be that if they truly want to encourage corporate responsibility, they need to be more knowledgeable about the companies they support. Consumers who want to better the world can speak through their wallets. Hawthorne reminds readers that through consumer pressure, "Trader Joe's stopped selling orange roughy and other endangered fish...Starbucks signed a licensing deal with Ethiopia. Nike
(NYSE:NKE) has transformed itself from the evil sweatshop abuser to being greener than Timberland and Amazon
Throughout the book, Hawthorne makes judgment calls regarding which companies deserve their sterling reputations and which don’t. We’ve included a slideshow of her main findings
. Click on the image below to get started.
No positions in stocks mentioned.