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That's why Whole Foods refuses to sell overfished marine life like Chilean sea bass. If the lobster industry doesn't start treating its catch more humanely by June, Whole Foods will stop stocking lobsters as well. The company contributes 5% of its profits to charity--a long-standing policy that has continued despite its 1992 debut on Wall Street. Last month it announced it would donate more than $570,000 to a foundation it helped establish to battle poverty in developing countries. The foundation will offer small loans to aspiring but poor entrepreneurs to set up such things as vegetable stands and small dairies in countries like Costa Rica and Peru, where Whole Foods buys some of its goods.
It doesn't sound like a profitable strategy. Yet more and more companies, pressured by activists and shareholders, are jumping on the do-gooder bandwagon. Some are finding that, done smartly, doing good can be good for business.
THINKING STRATEGICALLY
Many advocates of CSR argue that to make it work financially, a do-good plan needs to have some connection to the mission of the business. "Don't do it as a reputation-management tool," says Hannah Jones, vice president for corporate responsibility at Nike. "Do it because it genuinely contributes to your business strategy."
That approach doesn't endorse, for example, the generic philanthropy embraced by many corporations--well intentioned though it may be. Advocates of strategic responsibility argue that Ford Motor Co.'s support for the Susan G. Komen breast-cancer fund, for which it has raised $84 million over 11 years, doesn't make much business sense. "There isn't a real clear link, at least in my mind," says Kellie McElhaney, a business professor at the University of California, Berkeley, "between breast cancer and automobiles." After missing out on the early hybrid-car opportunity, which was seized by Toyota and Honda, McElhaney says Ford is now reallocating a growing portion of its CSR resources to alternative energy--something that makes good business sense.
Risk management is the clearest benefit of doing good. Nike knows something about that. The Oregon-based sneaker giant spent the 1990s batting away criticism for its dependence on foreign sweatshop labor. It became clear that the company was in trouble when Amnesty International postcards protesting the practice began arriving at Nike headquarters in the early 1990s. The campaign evolved into boycotts. Colleges dropped the brand from their athletic wear, and Nike spokesman Michael Jordan was put in the awkward position of calling on his sponsor to "do the right thing."
In an effort to get ahead of the protests, Nike in 1998 appointed its first CSR director. Last April it revealed how far it had traveled along the path to CSR redemption when it released a report in which chairman Philip Knight apologized for his laggardly response to the crisis in the 1990s. In an unprecedented move, Nike also laid bare not only the audits of its suppliers but also its entire supply chain. Nike has found that some of its suppliers still permit physical and verbal abuse of laborers, but its brand is once again glistening.
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