It is evident from the economic turmoil of the past two years that capitalism must be reformed. But what are the mechanisms of change that would require corporations to be more responsive to human needs?
One way of conceptualizing how change can happen is through consumers using their buying power to make sure corporations function as members of the community rather than predatory beasts. By using consumer boycotts and refusing to buy products or services of companies that violate moral standards, we can use the language of profit and loss, the only language corporations understand, to demand corporate responsibility.
I argued in Reviving the Left that such an approach is unlikely to succeed because corporations have enormous power to shape preferences and consumers lack the information needed to make informed choices.
This obstacle to reform was evident during congressional hearings this week in the report on greenwashing by the environmental consulting firm Terrachoice.
More than 98% of supposedly natural and environmentally friendly products on US supermarket shelves are making potentially false or misleading claims, Congress has been told. And 22% of products making green claims bear an environmental badge that has no inherent meaning, said Scot Case, of the environmental consulting firm TerraChoice.
The study of nearly 4,000 consumer products found “greenwashing” in nearly every product category – from a lack of verifiable information to outright lies. [...]
Rangan singled out “non-toxic”, “natural”, and “fragrance free” as misleading claims, because the federal government has never set a precise standard for manufacturers to meet. “Personal care products are the Wild West,” she said.
Reading the fine print on labels will not necessarily help either. Companies are not required to disclose the use of some substances believed to be dangerous – such as phthalates, which can cause birth defects and hormone abnormalities and are widely used, from baby bottles to cleaners and cosmetics.
Tighter regulations would help but predators are not easily corralled by rules, especially when they have armies of lawyers seeking loopholes which their armies of lobbyists write into law.
Radical changes in the ethics of the business culture will have to take place before we can expect much from this approach to reform.
Tags: corporate responsibility and greenwashing, greenwashing, Terrachoice
