TIME: Almanac 1990/1990 Time Magazine Compact Almanac, The (1991)(Time).iso/time/070389/07038900.045

Text File | 1990-09-22 | 8KB | 139 lines

BUSINESS, Page 40

Listen Here, Mr. Big!

Corporate misbehavior is sparking a fevered outburst of consumer

protests and boycotts

By Christine Gorman


    For conscientious shoppers, finding the right product at the
supermarket used to mean checking the prices, scrutinizing the salt
content and looking out for saturated fats. But nowadays that's not
all. Many consumers have added a new standard to their shopping
lists: corporate responsibility. They may favor Campbell's Prego
spaghetti sauce over Unilever's Ragu because Campbell runs a
day-care center and Unilever invests in South Africa. Consumers
are eating chicken instead of tuna salad because thousands of
dolphins drown each year in tuna nets. They have put pressure on
Uniroyal to halt distribution of the suspected carcinogen Alar, a
chemical used to ripen apples and keep them crisp, which may have
influenced the company's decision last month to take Alar off the
U.S. market.

    After tolerating an anything-goes climate in business during
most of the 1980s, "people are starting to demand that corporations
live up to the expectations that we have of them as citizens," says
Alice Tepper Marlin, executive director of the Manhattan-based
Council on Economic Priorities. While most Americans still feel
confident about the economy and business in general, consumers have
become increasingly aggressive in taking corporations to task for
misbehavior and irresponsibility. Among the concerns: investment
in South Africa, environmental pollution, hazardous products,
offensive TV programming and testing on animals. Today's
campaigners for corporate accountability, unlike those in past
consumer movements, are drawn from the mainstream and include
activists who range from homemakers to corporate investors.

    A parade of highly visible corporate misdeeds has sparked the
outrage. According to a study by sociologist Amitai Etzioni, a
visiting professor at the Harvard Business School, two-thirds of
FORTUNE 500 companies were convicted between 1975 and 1985 of
serious crimes, from price fixing to illegal dumping of hazardous
wastes. Executives at Beech-Nut tried to pass off flavored water
as apple juice. Ivan Boesky and a ring of Wall Streeters traded on
insider information. Even such an upstanding company as Eastman
Kodak, which has won awards for its minority-hiring and other
social programs, has felt the heat. Residents of Rochester, where
Kodak is based, have accused the company of covering up its
chemical contamination of the city's groundwater.

    What set the stage for a backlash was the deregulation of such
industries as airlines and broadcasting. While the loosening of
rules typically brought consumers lower prices and wider choices,
the process reduced governmental monitoring of business. In its
free-market zeal, the Reagan Administration cut the budgets and
staffs of the Federal Trade Commission, the Consumer Product Safety
Commission and other supervisory agencies. In a Yankelovich poll
conducted for TIME this year, nearly 80% of the Americans surveyed
said the Government sides too often with business when it comes to
environmental issues.

    The credibility of some businesses has been eroded during the
1980s by the greedy tendencies of corporate leaders and Wall
Streeters. Takeover battles and buyouts have eviscerated hundreds
of companies and cost thousands of employees their jobs while
lining the pockets of many CEOs and investment bankers. From 1977
to 1987, executive pay and bonuses jumped 120%, vs. 80% for factory
workers' wages. Says Elmer Johnson, a retired executive vice
president of General Motors: "The best minds are not creating
wealth but just transferring and churning it."

    At the same time, momentous accidents have reminded citizens
that commonplace industrial activities have vast destructive power
when companies are careless. The deadly chemical accident in
Bhopal, India, groundwater contamination at Colorado's Rocky Flats
nuclear-weapons plant and the oil slick from the Exxon Valdez all
suggest that safety is too low a corporate priority. "That's why
there was such a sense of outrage over the Valdez," Johnson argues.
"The consequences of mistakes are just so much greater today."

    To help consumers send a message to corporate America, the
Council on Economic Priorities publishes a booklet titled Shopping
for a Better World. The 132-page guide, which has sold 300,000
copies at $4.95 each, ranks 1,300 products and their manufacturers
according to ten criteria, including the promotion of women and
minorities, testing on animals and environmental sensitivity.
Special commendations go to S.C. Johnson, maker of Raid, for
banning ozone-depleting chlorofluorocarbons from its products.
Dishonorable mention falls on pesticide manufacturers like Dow
Chemical.

    Activists have become more sophisticated and effective in their
protests. When Michigan homemaker Terry Rakolta was offended by Fox
Network's raunchy Married . . . With Children, she threatened the
program's advertisers with a boycott. The sponsors in turn
pressured the fledgling network, which toned down its show.
Animal-rights groups singled out the Draize test, in which dyes are
injected into rabbits' eyes, in their effort to persuade the
cosmetics industry to cut down on animal testing. Last week Avon
Products announced that it would stop such experiments. Even Ralph
Nader, the quintessential business basher, has adopted a more
moderate approach. Nader, who last fall led the California revolt
against excessive auto-insurance premiums, recently cited the auto
industry and its suppliers for their joint quality-control efforts.
Firestone, for example, allows automakers to inspect its plants and
equipment.

    Many investors are influencing corporate behavior by putting
their money where their morals are. Socially conscious investment
funds now hold nearly $500 billion, up from $40 billion in 1984,
according to Gordon Davidson, head of the Social Investment Forum
in Boston. Much of this nest egg belongs to pension funds like the
$53 billion California Public Employees Retirement System. Their
increasingly activist stance has strengthened the hand of the many
religious groups that have waged an 18-year fight with
corporations, seeking to influence policy through proxy battles at
shareholders' meetings. Harrison Goldin, the comptroller of New
York City and trustee of $30 billion in pension funds, led a
campaign last spring to force Exxon's management to place an
environmentalist on its board of directors.

    Many companies have taken heed of the grass-roots protests.
The mishandling of the Exxon Valdez accident prompted the oil
industry to announce last week the creation of a $250 million plan
to prevent and clean up future spills. In the wake of Washington's
defense-procurement scandals, Boeing beefed up its ethics
committee. "It's a no-nonsense program," says committee head
Malcolm Stamper, an aerospace veteran. "There's no winking. If we
find out that a program official is obtaining marketing information
improperly, we zap him."

    While many companies have been trying to live up to higher
standards, industrial leaders face competing demands on their
attention and resources. Executives are already struggling to keep
up with foreign rivals, manage their debt and navigate safe passage
through a flagging economy. Even so, consumers and politicians are
getting their message across with growing earnestness and skill.
Declares Nader: "The '90s will make the '60s pale into
insignificance in terms of the reform drive to clean up the fraud,
waste, abuse and crimes of many corporations." Corporate
responsibility will no longer be a fringe benefit but an integral
part of doing business.


-- Thomas McCarroll/New York and William McWhirter/Chicago