Wider Embrace of Social Responsibility Provides Burdens as Well as Benefits
Timing is everything. Just ask Robert D. Haas.
Three days before he was to fly to Los Angeles to deliver the keynote speech at the annual conference of Business for Social Responsibility, the company he heads, jeans maker Levi Strauss & Co. of San Francisco, disclosed that it was closing 11 factories and eliminating more than 6,000 positions, or a third of its U.S. manufacturing jobs. Try explaining the social benefits of that to a banquet room full of people devoted to ensuring that companies balance the often competing demands of investors, employees, communities, customers and the environment.
As many rising-star companies--from Starbucks Corp. to Body Shop International to Odwalla Inc.--have learned in recent years, the mantle of social responsibility can quickly become a burden when harsh realities intrude. Companies that tout their blending of social values with business often learn the hard way that the media are eager to pillory them.
Despite the perils, more companies are realizing that it pays to embrace the social responsibility movement. Increasingly, companies are hounded into it by investors or peers.
“Corporate responsibility is no longer just an option, it is an imperative,” BSR literature notes. “Companies that address issues of corporate responsibility successfully gain competitive advantage; those who ignore them do so at great risk.”
Founded five years ago with 45 small companies, Business for Social Responsibility has mushroomed to 1,400 member companies and affiliates. This month’s conference at the Sheraton Grande Hotel attracted 615 gung-ho supporters, 20% more than attended last year’s meeting. Included were entrepreneurs in the movement’s vanguard, along with new faces from big corporations and start-ups alike.
“The numbers are remarkable,” said Bob Dunn, president of the San Francisco-based group, reputed to be the nation’s fastest-growing business association.
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A year ago, BSR companies reported total sales of $425 billion. Now, with the likes of General Motors Corp., Wal-Mart Stores Inc., Coca-Cola Co., Home Depot Inc. and AT&T; Corp. on board, members’ sales exceed $800 billion and collective employment tops 5 million.
If some of those companies don’t leap to mind as pillars of social responsibility, it helps to understand that BSR favors inclusiveness, figuring that smaller, innovative companies can lead the nation’s giants--be they lumbering or nimble--toward incremental changes that can have a huge effect.
Among the group’s newcomers is sport shoe maker Nike Inc., which for months has been under fire for conditions and wages at its overseas factories. In a conference session on human rights, Dusty Kidd, Nike’s director of labor practices, proudly showed a video of a plant in Vietnam that the company views as a model of worker-manager cooperation. Two days later, after the meeting had adjourned, a report challenging the plant’s safety and working conditions surfaced in front-page news reports.
“It was ironic,” Kidd said ruefully. Nike, he contended, has been addressing those very concerns for months. Absent from the reports, he noted, was the fact that the company has been making a shift from a solvent-based to a water-based glue in an effort to eliminate harmful fumes.
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Nike, based in Beaverton, Ore., came into the BSR fold in 1996. Membership enables it to benchmark its practices against those of other companies and to hear “philosophical input,” Kidd said.
“For companies using contract manufacturing, to the extent we can pool information and resources, we’re all better off,” Kidd said. “BSR is helpful for that, especially with regard to environmental issues.”
Last year, more than 1,000 companies tapped BSR for information on leadership practices, ethics, community involvement, workplace issues, the environment and human rights.
It will be interesting to see how well Levi’s reputation for social responsibility holds up after its devastating cutbacks. To soften the blow, the company has offered to pay out $200 million, the most generous severance package the apparel industry has ever seen. Every laid-off worker is to receive eight months’ pay plus three weeks of wages for each year of service, as well as 18 months of health insurance coverage and a $500 bonus if he or she finds a job. That averages about $31,200 per employee.
Yet those workers must have swallowed hard when they learned that closely held Levi paid former President Thomas Tusher more than $125 million last year as part of a stock repurchase. Though compensation experts said the payout was not out of line, it might strike a few laid-off workers otherwise. One could argue, after all, that they are paying the price for management missteps.
To them, the payout to Tusher might seem irresponsible--or at least a case of perverse timing.
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Does your company have an innovative strategy for balancing the conflicting demands of employees, customers and shareholders? Tell us about it. Write to Martha Groves, Corporate Currents, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053, or e-mail martha.groves@latimes.com
