Vol. 12, No. 3,009 - The American Reporter - October 19, 2006


by Joyce Marcel
American Reporter Correspondent
Dummerston, Vt.

Printable version of this story

DUMMERSTON, Vt. -- Even if we don't remember Donald J. Carty's name, most of us remember his story.

Until he was forced to resign in April, Carty was the chairman and chief executive of AMR, the parent company of American Airlines. Because the airline was in financial trouble, Carty negotiated with his company's unions for $1.8 billion in employee wage and benefit cuts. Then the unions found out that he had salted away millions in his own benefit package, and in the benefit packages of his top eight executives.

When most of us read about Carty, we nod our heads and think, "Another corporate greedhead - what else is new?"

Jeffrey Hollender sees the story differently. Hollender is the owner of Seventh Generation, a Burlington, Vt., company that creates, packages and nationally markets "green" household products like dish- washing soap and baby wipes. Always an optimist (his first book was called "How To Make the World a Better Place"), he is currently writing about the happy future he sees for what others might call an oxymoron: corporate social responsibility.

"The book is about the fundamental changes happening in a system which is now exclusively focused on quarterly earnings," Hollender told me recently. "That way is just not sustainable. Society will no longer allow you, as a business, to do well financially but to not be responsible as a corporate citizen."

It is hard not to be cynical about this idea when corporate names like Halliburton and Enron Spring so easily to mind, and the ethics of the old robber barons - now driven by U.S. military spending - are running rampant throughout the world.

"Even I was a cynic until I started to write this book," Hollender said. "Then I interviewed companies, researched and did a lot of reading, and decided that social responsibility is just a matter of time."

Society won't permit companies to misbehave any more, Hollender said.

"Look at the rise of socially responsible investing," he said. "More people want to invest in companies that are doing better things. Look at what's happening in the labor world, where these pension funds are realizing that if they invest in a drug company, it makes a lot of money, but it makes that money by charging huge prices to their pensioners. Maybe they're going to make a 20 percent return on their investment fund, but their people are going to go broke trying to buy drugs. They don't want to support that any more."

Corruption is being routinely exposed and denounced.

"Transparency is changing everything," Hollender said. "Look at the way the Columbia space shuttle disaster was covered this time, as compared to last time, when NASA tried to hide all its mistakes." Or look at Chiquita Banana.

"Once it was famous for raping and pillaging Central American nations," Hollender said. "Now it's selling mostly certified organic bananas on plantations which are independently verified as treating their workers well and growing bananas in a sustainable way."

Nike is another good example. Only a short time ago, the company did not consider the workers who made its sneakers in far-away factories as part of its responsibility.

"All of a sudden things changed," Hollender said. "And as a result, no consumer brand can say they don't care how workers are treated in the factories that make their products."

You could be excused for thinking, "Yeah, but those are the ones that got caught. Think of all the others."

That would be Hollender's point. As more companies and executives get caught, as more Kathie Lee Giffords go on the defensive and as more Martha Stewarts are indicted, the long-lost core values of meeting-a-payroll-every-week capitalism, ones like decency, honesty and responsibility, are gaining new ground.

Looking over a few Sunday New York Times business sections, in just the past two weeks, for example, I learned that William Clay Ford Jr., who runs the Ford Motor Company, is being taken to task for not living up to his pro-environment principles; that Wall Street's largest brokerage firms paid up $1.4 billion to settle claims that they had misled investors; that questions are being raised about an industry analyst who recommended a certain telecommunication stock just two weeks before his company managed a billion-dollar convertible bond deal for that company; and that long-overdue questions are being raised about why CEO compensation is not tied to company performance.

In his research, Hollender even found a large British insurance agency which is building transparency into its corporate policies.

"The company tells the companies it insures that they have to provide a report on their labor relations, human rights, and impact on environments," Hollender said. "These are considered as potential liabilities. Financial statements aren't enough. They're forcing these companies to provide disclosure on issues that were no one's business before. The insurance company says, 'If you have a labor problem in Africa and a war breaks out and people get killed, and we're insuring you, that's a business risk and we have to know about it. So we need to know how you're treating these people in African countries that before were beneath the radar screen.'"

Looked at from this angle, Carty's story may be a triumph for us all.

"He lost his job for taking care of himself and his fellow senior management," Hollender said. "It's just not acceptable any more to ask the union for concessions when you're not willing to make them yourself. That would not have happened a few years ago. It's a sea change. Only a little of it is bubbling up to the surface now, but when you look down below you see structural changes. Two years ago I was much more of a cynic than I am today. Not that there's not a lot of terrible stuff happening. There's atrocious stuff happening in the world. But I do see a fundamental change in the right direction."

Joyce Marcel is a free-lance journalist who writes about culture, politics, economics and travel.

Copyright 2006 Joe Shea The American Reporter. All Rights Reserved.

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