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Bleeding Heart Businesses

Corporate America Finds Profit in Tilting to the Left

By Marc Gunther
Sunday, November 14, 2004; Page B05

Compassionate capitalism. Think it sounds like an oxymoron? Think again. Even as America is supposedly turning conservative on social issues, big business is moving in the other direction.

Since Election Day, the pundits have been telling us that Americans concerned about "moral values" have sent a clear message about their dim view of liberal approaches to social issues. That may be so. But corporate America is grappling with those social issues in some surprising -- dare we say liberal? -- ways.

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This does not mean that CEOs are about to enter the public debate over gay marriage or abortion rights. But they do define "values" more broadly than politicians to mean the beliefs and principles that govern their business practices -- how they do what they do, in essence. And, despite the understandable cynicism about the corporate world that has been fed by Enron and other scandals, the truth is that many of America's big companies are becoming more socially responsible, more green, more diverse, more transparent and more committed to serving the common good -- as well as the bottom line.

Here's a recent example: Hewlett Packard, Dell and IBM have agreed on a far-reaching code of conduct to protect the health, safety, labor and human rights of people who work for their suppliers in the developing world. Their suppliers, who make electronics in Mexico, China and Southeast Asia, will be audited to ensure compliance. Factories that fail the tests will have to reform or lose business. Social activists praised the computer makers, ordinarily arch rivals, for joining together to protect workers' rights. No law requires them to do so.

Or consider gay rights. Voters from Mississippi to Oregon approved resolutions opposed to same-sex marriages, and fewer than a dozen states provide health care benefits to the domestic partners of gay and lesbian employees. The federal government under George W. Bush certainly does not do so, and won't. But at last count, 227 companies in the Fortune 500, including General Motors, Ford and ChevronTexaco, offer domestic partner benefits. A decade ago, only a handful did. More join them every year because firms need to compete for talent and want to be seen as treating everyone fairly.

On affirmative action, corporate America also finds itself to the left of Washington. When the U.S. Supreme Court took up the issue of affirmative action last year, Coca-Cola, General Mills, Intel and Microsoft filed briefs supporting the University of Michigan, which considers race as one factor in its admissions decisions. The Bush administration opposed preferences.

Nor is there much doubt that corporate America, which used to look upon environmentalists as enemies, is turning more green. Home Depot and Lowe's have pledged to stop buying wood from endangered forests in such places as Indonesia and Brazil. Staples opposed the Bush administration's decision to permit commercial logging in roadless areas of the Alaskan national forest. UPS operates more than 1,800 vehicles that use "alternative fuels" rather than gasoline, including electric-powered vans in New York City. Sustainability has become a buzzword in corporate circles.

Even on the contentious issue of climate change, big companies have moved beyond the White House and Congress. DuPont, once labeled America's worst polluter, is remaking itself from an oil-and-chemicals company into an environmentally friendly life sciences firm; it has cut its greenhouse gas emissions by 65 percent since 1990. American Electric Power, the nation's biggest coal-burning utility, has voluntarily agreed to reduce its carbon emissions; it is investing in renewable energy and planting trees, to offset its contribution to global warming, in Louisiana, Bolivia and Brazil. Environmentalists aren't satisfied, but they do see progress.

While critics say the federal government is growing more secretive, leading companies are becoming more open. Gap Inc. issued a warts-and-all report this year, acknowledging that some overseas workers who make its clothes have been mistreated; the company vowed to do better. Even when it comes to the daunting problem of global poverty, influential business thinkers C.K. Prahalad and Stuart L. Hart have persuaded Unilever, Coca-Cola, Johnson & Johnson and others to explore ways to profitably serve the world's 4 billion poor and promote economic development by making businesses out of manufacturing low-cost utilitarian products such as water purification pills.

Notice that we are not talking here about Hollywood elites or Ben and Jerry's. These companies are mainstays of the Fortune 500, many based in the red states. This liberal tilt of big business has not generated much press attention. Partly that's because scandal stories are juicier. Mostly it's because changes in corporate practices have been incremental -- and because reporters tend to dismiss talk of corporate social responsibility as mere public relations. But chief executives of closely watched firms like General Electric do not promise to become better global citizens unless they intend to follow through. "If you want to be a great company today," Jeff Immelt, GE's CEO, likes to say, "you have to be a good company." When I asked him why GE has begun to talk more openly about corporate citizenship, he said: "The reason why people come to work for GE is that they want to be about something that is bigger than themselves."

As Immelt suggests, the biggest driver of corporate reform is the desire of companies to attract people who seek meaning as well as money from their work. Few of us go to our jobs every day to enhance shareholder value. Younger people, especially, want to work for companies with a mission that goes beyond the bottom line.

Often companies still need a push. Sophisticated activist groups, whose efforts have been stymied in Washington, increasingly target corporations directly. Because so many businesses want to protect their reputations, they respond when they can. So-called socially responsible investors, who are growing in number and clout, put the heat on companies by filing shareholder resolutions.

Ironically, even the corporate scandals have been a boon to the social responsibility movement. Companies need to show that they are about more than greed. In the long run, business needs society's trust to thrive.

To be sure, there are plenty of scoundrels out there, indifferent to the rights and wrongs of corporate behavior. And some executives who talk of social issues may be only mouthing the words. But the bottom line is that a growing number of companies have come to believe that moral values, broadly and liberally defined, can help drive shareholder values. And that is a case study from which everyone could learn.

Author's e-mail: marcgu@aol.com

Marc Gunther is a Fortune magazine writer and author of "Faith and Fortune: The Quiet Revolution to Reform American Business" (Crown).


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