Socially Responsible Consumerism

1. Socially Responsible Consumerism

2. Pressures on Short-termism • 1) Short-termism--- pressure on businesses to increase the value of their company each quarterly. • Such pressure makes it likely that businesses will: Search for low labor costs and cheapest materials despite consumer demands, innovate in ways that create harm. • Such actions harm: environment and workers, citizens: • Short Selling – “borrowing” assets from a broker, selling those assets and hoping those assets decrease in value as you purchase the assets back and then pocket the money when you give the assets back to the broker. If assets increase in value, you lose money. • Credit Default Swaps – buying something like “insurance” on a company so that if the company goes belly up, you get paid. However, you do not own any part of the company • Derivatives – Very confusing; two parties agree to bet on something that may happen in the future.

3. Consumers’ Choice? • The Irony of finding the “best deal.” • Is cheaper always better • Short term gains for consumer • Short and long term problems for consumer? • Unemployment • Environmental degradation • Lack of benefits in the marketplace • Health problems • Externalities

4. Who’s Responsible? • 1) Liberal Market Economy of US fosters a “laissez faire” ideology. • 2) Activists have forced companies to care about “Image” because Adam Smith’s idea of informal control not longer works

5. What are Activists Doing? • 1) Encouraging Social Responsibility: Holding corporations accountable and forcing transparency. Corporate Campaigns Shareholder Activism Corporate Dialogue Codes of Conducts • Global Reporting Initiative • UN Global Compact • CERES (Coalition for Environmentally Responsible Economies)

6. How Companies Respond? • 1) Join business associations like Businesses for Social Responsibility • 2) Directors of Corporate Responsibility • 3) Agree to Codes of Conduct • 4) Agree to Triple Line Accounting

7. GreenWashing? • 1) Some activists fear that corporations GreenWash instead of adopt true change. • 2) Corporations will not change their accountability or transparency – same companies that agree to Codes and Triple Line lobby government for “Free Trade.”

8. Shopping Responsibly? • Equal Exchange • Coop America • Environment: reduce, recycle, reuse. • Carbon Footprints (http://www.carbonfootprint.com/) • Turn off your engines, avoid toxic chemicals that harm water supply, encourage weeds, Decrease Carbon footprints.

9. Shopping Responsibly • What structural and cultural pressures make being responsible difficult?