preserve natural habitats and species. Conservation International, one of the biggest environmental NGOs in the world, has as its main mission preserving biodiversity. It is also a big believer in trying, when possible, to collaborate with big business, because when you bring a major global player around, it can have a huge impact on the environment. In 2002, McDonald's and Conservation International forged a partnership to use the McDonald's global supply chain-a behemoth that sucks beef, fish, chicken, pork, bread, lettuce, pickles, tomatoes, and potatoes from all four corners of the flat world-to produce not just value but also different values about the environment. “We and McDonald's looked at a set of environmental issues and said, 'Here are the things the food suppliers could do to reduce the environmental impact at little or no cost,'” explained Glenn Prickett, senior vice president of Conservation International.
McDonald's then met with its key suppliers and worked out, with them and with CI, a set of guidelines for what McDonald's calls “socially responsible food supply.” “For conservationists the challenge is how do you get your arms around hundreds of millions of decisions and decision makers involved in agriculture and fisheries, who are not coordinated in any way except by the market,” said Prickett. “So what we look for are partners who can put their purchasing power behind a set of environmentally friendly practices in a way that is good for them, works for the producers, and is good for biodiversity. In that way, you can start to capture so many more decision makers... There is no global government authority to protect biodiversity. You have to collaborate with the players who can make a difference, and one of them is McDonald's.”
Conservation International is already seeing improvements in conservation of water, energy, and waste, as well as steps to encourage better management of fisheries, among McDonald's suppliers. But it is still early, and one will have to assess over a period of years, with comprehensive data collection, whether this is really having a positive impact on the environment. This form of collaboration cannot and should never be a substitute for government rules and oversight. But if it works, it can be a vehicle for actually getting government rules implemented. Environmentalists who prefer government regulation to these more collaborative efforts often ignore the fact that strong rules imposed against the will of farmers end up being weakly enforced-or not enforced at all.
What is in this for McDonald's? It is a huge opportunity to improve its global brand by acting as a good global citizen. Yes, this is, at root, a business opportunity for McDonald's. Sometimes the best way to change the world is by getting the big players to do the right things for the wrong reasons, because waiting for them to do the right things for the right reasons can mean waiting forever. Conservation International has struck similar supply-chain collaborations with Starbucks, setting rules for its supply chain of coffee farmers, and Office Depot, with its supply chain of paper-product providers.
What these collaborations do is start to “break down the walls between different interest groups,” said Prickett. Normally you would have the environmentalists on one side and the farmers on the other and each side trying to get the government to write the regulations in the way that would serve it. Government would end up writing the rules largely to benefit business. “Now, instead, we have a private entity saying, 'We want to use our global supply chain to do some good,' but we understand that to be effective it has to be a collaboration with the farmers and the environmentalists if it is going to have any impact,” Prickett said.
In this same vein, as a compassionate flatist, I would like to see a label on every electronics good state whether the supply chain that produced it is in compliance with the standards set down by the new HP-Dell-IBM alliance. In October 2004, these three giants joined forces in a collaborative effort with key members of their computer and printer supply chains to promote a unified code of socially responsible manufacturing practices across the world. The new Electronics Industry Code of Conduct includes bans on bribes, child labor, embezzlement and extortion, and violations of intellectual property, rules governing usage of wastewater, hazardous materials, pollutants, and regulations on the reporting of occupational injuries. Several major electronics manufacturers who serve the IBM, Dell, and HP supply chains collaborated on writing the code, including Celestica, Flextronics, Jabil, Sanmina-SCI, and Solectron.
All HP suppliers, for instance, will be required to follow the code, though there is flexibility in the timing of how they reach compliance. “We are completely prepared and have terminated relationships with suppliers we find to be repeatedly nonresponsive,” said HP spokeswoman Monica Sarkar. As of October 2004, HP had assessed more than 150 of its 350 suppliers, including factories in China, Mexico, Southeast Asia, and Eastern Europe. It has set up a steering committee with IBM and Dell in order to figure out exactly how they collectively can review compliance and punish consistent violators. Compliance is everything, and so, again, it remains to be seen just how vigilant the corporations will be with their suppliers. Nevertheless, this use of supply chains to create values-not just value- could be a wave of the future.
“As we have begun to look to other [offshore] suppliers to do most of our manufacturing, it has become clear to us that we have to assume some responsibility for how they do that work,” explained Debra Dunn, HP's senior vice president of corporate affairs and global citizenship. First and foremost, that is what many of HP's customers want. “Customers care,” said Dunn, “and European customers lead the way in caring. And human rights groups and NGOs, who are gaining increasing global influence as trust in corporations declines, are basically saying, 'You guys have the power here. You are global companies, you can set expectations that will influence environmental practices and human rights practices in emerging markets.'”
Those voices are right, and what is more, they can use the Internet to great effect, if they want, to embarrass global corporations into compliance.
“When you have the procurement dollars that HP and McDonald's have,” said Dunn, “people really want to do business with you, so you have leverage and are in a position to set standards and [therefore] you have a responsibility to set standards.” The role of global corporations in setting standards in emerging markets is doubly important, because oftentimes local governments actually want to improve their environmental standards. They know it is important in the long run, but the pressure to create jobs and live within budget constraints is overwhelming and therefore the pressure to look the other way is overwhelming. Countries like China, noted Dunn, often actually want an outside force, like a global business coalition, to exert pressure to drive new values and standards at home that they are too weak to impose on themselves and their own bureaucrats. In The Lexus and the Olive Tree I called this form of value creation “globalution,” or revolution from beyond.
Said Dunn: “We used to say that as long as we complied with the local law, that was all we could be expected to do. But now the imbalance of power is so huge it is not practical to say that Wal-Mart or HP can do whatever they want as long as a state government or country does not stop them. The leverage HP would leave on the table would be immoral given its superior power... We have the power to transmit global governance to our universe of suppliers and employees and consumers, which is a pretty broad universe.”
Dunn noted that in a country like China there is an intense competition by local companies to become part of the HP or Dell or Wal-Mart supply chain. Even though it is high pressure, it means a steady volume of considerable business-the kind that can make or break a company. As a result, HP has huge leverage over its Chinese suppliers, and they are actually very open to having their factory standards lifted, because they know that if they get up to the standards of HP they can leverage that to get business from Dell or Sony.
Advocates of compassionate flatism need to educate consumers to the fact that their buying decisions and buying power are political. Every time you as a consumer make a decision, you are supporting a whole set of values. You are voting about the barriers and friction you want to preserve or eliminate. Progressives need to make this information more easily available to consumers, so more of them can vote the right way and support the right kind of global corporate behavior.
