“Conscious Capitalism” and Lessons from the Bangladesh Factory Collapse

Washington DC, May 4, 2013 and United Airlines, Flight 802 (LAX to Singapore), May 14, 2013

“Wal-Mart and other Western retailers share some of the blame,” my friend Hussain said as we stayed up late talking about D.C. politics, global affairs, and tips on M.B.A. programs.

“Their focus on maximizing profits has squeezed suppliers to cut costs in dangerous ways, creating unsafe working conditions,” he added.

We were discussing the tragic collapse of the Rana Plaza garment factory in Dhaka, Bangladesh on April 13, 2013, which injured over 2,500 and killed 1,127 workers.  The factory is one of over 5,000 in the country, which is the world’s third largest exporter of clothing after China and Italy at $20 billion in exports annually, and employs over 3.6 million workers earning a minimum wage of less than $40 a month.

Hussain had just returned from Bangladesh a few days ago, though as a son of a distinguished diplomat, he had spent much of his life abroad including grade school in Geneva, university studies in the D.C. area then graduate studies at the Fletcher School of Law and Diplomacy in the Boston area where we were classmates in the mid-1990s.  In the graduate dormitory Blakely Hall where we and about 60 students lived while at the Fletcher School, I remember seeing pictures of Hussain and his father, the former Ambassador of Bangladesh to the United States, taken with world leaders including President Reagan and Pope John Paul II.

After the Fletcher School, Hussain collected more graduate degrees in law and business with a J.D. from Georgetown University and an M.B.A. from New York University.  Our conversation veered towards M.B.A. programs and corporate profits in the age of globalization,

“Well, multinational corporations are not only driven by profit… they can do good,” I noted, given my work on international trade matters for over a decade, including at the World Trade Organization in Geneva, and private law firms in D.C. and L.A., and more recently as an entrepreneur in the entertainment space.

Though, unlike Hussain – I had not received in-depth training on corporate behavior and financial analysis – and decided recently to enroll in the UCLA Anderson School of Management – National University of Singapore Business School Global Executive M.B.A. program, starting this month.

“Consumers are more aware of product supply chains, look at Whole Foods Market and organic producers – it’s not all about the lowest price,” I explained, given my partnership with Whole Foods over the past several years.

I had also been reading “Conscious Capitalism” by John Mackey, the Co-Founder and Co-CEO of Whole Foods Market and Raj Sisodia, leaders in advocating more benevolent business philosophies.   In the book, the authors write that: “Conscious businesses think caringly, creatively, and strategically about the environment.”

Mackey also noted that Whole Foods Market from early on developed a strong partnership with their suppliers – and not just based solely on profit margins.  In fact, the original store established in 1978 in Austin, Texas was on the verge of closure after a serious flood – and it was the suppliers that urged the specialty retailer to rebuild and provide shelf space for organic and natural products that struggled to find distribution in other grocery chains.  Now, Whole Foods Market has nearly 350 stores in prime locations like New York City’s Time Warner Center who I met with earlier in the month, and a market value of nearly $20 billion.

Since 2010, I have fostered a collaboration between my entertainment entity Planet LA Records, Whole Foods Market and its charitable organization Whole Planet Foundation by raising awareness with artists and brands during the SXSW festivals, Grammy Awards week and music events.  This has exposed me to partners who have business models and value chains that are mindful of product sourcing, sustainable practices and equitable standards of corporate social responsibility (CSR) – sometimes referred to as the “Triple Bottom Line” of people, planet and profit.

Interestingly enough, Whole Planet Foundation collaborates with many of these suppliers in the over 50 countries where it has global micro-lending programs averaging $160 per loan to mostly women entrepreneurs and households with an impressive repayment rate of over 90 percent – creating stronger bonds between Whole Foods Market as the retailer, its over 50,000 suppliers and the millions of American and other consumers that support them.

Some promising examples include Sambazon and their preservation of Amazonian rain forests and support of small farmers of acai berries; VOS Flips and their sourcing of natural rubber products and matching donations of slippers; Nika Water and their donation of all profits to clean water and other causes; Mrs. Meyers cleaning products made from non-toxic and essential oils; Justin’s Nut Butter and their sourcing of sustainably-harvested cacao for their chocolates; Wear Pact clothing made with organic cotton in sweatshop-free facilities, and many others.  These are profit-driven businesses with unique stories and charitable aims, which can prosper in the age of “conscious capitalism.”

In fact, the recent factory collapse in Bangladesh has spurred widespread social media and other demands for preventative action – importantly, among the world’s leading clothing brands like H&M, Gap, Zara and other major retailers.  In the wake of the disaster, a coalition of private, non-government and public interests have formulated legally-binding agreements aimed at improving safety conditions in the factories of Bangladesh.

Earlier this month, some of the largest retailers including H&M (the biggest buyer of clothes from Bangladesh) and Zara have reached a critical agreement aimed at improving labor and safety conditions, though have argued that such agreements would only be effective if a substantial threshold of global suppliers also align their practices.  Some U.S. companies like Gap and Wal-Mart have argued that strengthening “best practices” and self-enforcing agreements are preferred, while others like Disney have suspended supplier relationships in Bangladesh in favor of suppliers in countries like China and Vietnam.

Having been born in Vietnam which also offers cheaper labor and less enforced standards – I can certainly empathize and support poverty alleviation and economic growth despite the costs.  Like the Industrial Revolution in Europe and America in the late 19th Century, rapid development certainly took a toll on the populace and the environment – and conditions were pretty awful for the working poor before an expansion of the middle class.

Given the speedy actions among a handful of key multinational retailers – spurred by swift public outcry to the Bangladesh factory disaster that killed over a thousand exploited workers, there is hope that businesses are not only driven by the bottom line.  In fact, these twin objectives of better standards and higher profits – often requires greater harmony between the trinity of the modern business model:  sensible suppliers, benevolent retailers and aware consumers.

On a personal level, and as I write this on a United flight from LAX en route to Singapore as I embark on my M.B.A studies this month – I hope to contribute to the global business dialogue in a profitable, as well as meaningful manner.

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2 thoughts on ““Conscious Capitalism” and Lessons from the Bangladesh Factory Collapse

  1. So how do we make Walmart and its ilk more socially responsible?
    So much in the globalizing corporate economy looks self-destructive, from the devastated manufacturing cities of the American heartland to the seemingly booming Third World factories like the one that prompts your posting.
    I suppose we could look at this from the perspective of greed all the way down to the shopper, but that’s never been part of the economic calculus. Let me suggest it should be.

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