Fueled by the internet and the public’s growing distain for corporate greed, hacktivism is a trend on the rise. Today’s hacktivists use increasingly clever tactics in order to elevate public debate about the way corporations do business. In more cases than not, they succeed.

“What we do—and what you can do too—is impersonate captains of industry, infiltrate corporate events, give absurd and revealing presentations, and then escape to tell the story in the press, hopefully to the great embarrassment of the target,” say the Yes Men, a group of hacktivists that recently punked the likes of Chevron, Exxon Mobil, Halliburton, Dow, The U.S. Chamber of Commerce and the United Nations, among others. “You don’t have to be a James Bond for this. But what you might need is a fake email address and a business card.”

Armed with little other than a fake business card, letterhead and a masterfully worded news release, the Yes Men made a big point 2009 after a U.S. Chamber of Commerce “representative”  dramatically announced during a National Press Club event that the Chamber would be changing its position on climate change policy.

“We believe that climate legislation currently being considered by the U.S. Senate is a great start towards a bill that will spur American innovation, create jobs, and give us all a good chance of survival,” the forged news release said. “We at the Chamber have tried to keep climate science from interfering with business. But without a stable climate, there will be no business.”

The hoax circulated virally on You Tube and mainstream television, calling public attention to the growing number of corporations – including Nike, Apple, Exelon, PNM Resources, PG&E, PSEG and Levi Strauss & Co –  that had distanced themselves from the Chamber as a result of its conservative stance on climate change. But rather than publicly confront deeper issues and heed to the demands of its forward-thinking members, the Chamber filed a lawsuit against Yes Men and insisted that all videos of the hoax event be suppressed.

Perhaps Chevron will decide go the same way. Just last week the Yes Men targeted the company’s glossy new “We Agree” ad campaign with a satirical version of their own. Whereas Chevron’s campaign asks rhetorical questions like: “Should oil companies support the communities they work in?” and “Do oil companies need to get real?” Yes Men’s questions dig deeper and call attention to the company’s controversial past.

“Chevron’s super-expensive fake street art is a cynical attempt to gloss over the human rights abuses and environmental degradation that is the legacy of Chevron’s operations in Ecuador, Nigeria, Burma and throughout the world,” says Ginger Cassady, a campaigner at Rainforest Action Network, which collaborated with the Yes Men on the Chevron campaign. “They must think we’re stupid.”

Judging from Chevron’s own issued statement about the hoax, Cassady might be right. “There are some who are not interested in engaging in a constructive dialogue, and instead have resorted to rhetoric and stunts,” the company says, in full-blown denial of its own use of rhetoric and, yes, stunts.

Federal courts are now beginning to raise questions regarding Chevron’s persistent efforts to manipulate the U.S. legal system for its own gain. In an apparent effort to derail a potential multi-billion dollar environmental lawsuit against it, Chevron has filed discovery lawsuits against 23 people in the United States, including several lawyers associated with the ongoing Ecuador case. Chevron is also accused of submitting inaccurate and misleading translations to U.S. federal courts.

Wrong Answer

Legal antics aside, it is all too commonplace for corporations to respond to hacktivists in a gruff and humorless manner. But very often, such responses backfire. That’s because hacktivists are a persistent bunch. They are a professional and tactical force that leverages real data, overtakes live airwaves and mobilizes the masses. Corporate dissidence just furthers their resolve.

In response to Chevron’s issued statement, the Yes Men recently stepped up their campaign with a mock statement of their own and a plea to followers to post additional spoof print, web and TV ads online. “It’s been working,” the group says. “Search Chevron in the news and all you get is our spoof. Fifty million spent to keep our eyes off Chevron’s dirt… and it all just went down the drain!”

Lost advertising revenues are hard enough to recuperate. But what about lost corporate reputation? Some of the hardest hit companies of late leverage wholesome values, providing an easy target for hacktivists on a mission to elevate standards.

For instance, last month Hershey released its first CSR Report. Less than 24-hours later, labor rights groups Global Exchange, Green America, the International Labor Rights Forum and Oasis USA launched a counter report (convincingly titled “Raising the Bar: The Real Corporate Social Responsibility Report for the Hershey Company”) and accompanying web campaign.

“In the United States, Hershey conjures up innocent childhood pleasures and enjoyable snacks,” the counter report says. “However, halfway across the globe, there is a dark side to Hershey. In West Africa, where Hershey sources much of its cocoa, the scene is one of child labor, trafficking, and forced labor.”

According to Global Exchange, despite the fact that Hershey is a brand that both targets and supports youth through its marketing and philanthropy, the company seems unwilling or unable to adequately address the countless children harmed by its supply chain practices. Whereas competitors including Cadbury and Nestlé have at least made tentative steps toward labor reform, Hershey lags behind.

“Maybe Hershey is unaware of how this story has played out before and that some kind of reform is inevitable,” says fair trade chocolate company Equal Exchange’s Rodney North. “Or perhaps they are cynically stalling and trying to put off real reforms for as long as possible.”

Hershey’s real motive for stalled progress is anyone’s guess. The company has done little if anything to publicly acknowledge labor problems, let alone address the burgeoning online crusade against it.

“Hershey has not responded to any part of our campaign,” says Global Exchange’s Adrienne Fitch-Frankel. “We haven’t gotten a response to our repeated requests for meetings either, which is disappointing since this is a company that’s using child labor and child slavery. Their silence is really quite disturbing.”

Hershey might not be talking, but hacktivists, investors, NGO’s, film-makers, journalists, mothers and even children themselves are. Collectively, these stakeholders tell a convincing story.

You can run. But you can’t hide.

When companies lose trust, they often lose capital. Case in point: Gulf disaster stocks BP, Halliburton, Transocean and Anadarko each sank between 25 and 45 percent during the past four months. The Goldman Sachs-SEC debacle pushed company shares down by 15 percent, and the Dow down by 130 points. Massey stock plunged 42 percent following a deadly string of safety failures. Toyota shares dropped 16 percent following its massive recall. And as of today, none of these companies has fully rebounded, indicating the markets grow slower to forgive.

“The last couple of years have provided plenty of reasons for a building sense of mistrust,” says Motley Fool’s Alyce Lomax. “Goldman Sachs and BP have become the most recent high-profile examples of the many big institutions whose highly paid managers seem to be only out for themselves. ”

Indeed, the lost faith Lomax describes seems to be the principle reason why many more investors demand greater honesty, disclosure, transparency, and professionalism from corporations – and flee stocks that don’t deliver. According to a recent Wall Street Journal article on the topic: “Small investors’ faith in stocks, which surged in the 1990s, has collapsed since the technology-stock debacle and the Enron and WorldCom scandals of 2000-2002…Investors talk of a growing disillusionment with big institutions, including corporations, government, banks and political parties.”

The reasons for today’s trust deficit are clear enough. What apparently isn’t as clear, particularly to the large corporations whose stocks are affected, is what to do differently in order to set things straight.

For the most part, the corporations mentioned above used a classic crisis management approach: deny, deflect, spin, repeat. Rather than open up, they withheld information. They denigrated critics, blamed others and refused to answer pertinent questions or engage in meaningful debate. They hid behind the veneer of canned statements and corporate rhetoric – with the occasional blunder thrown in.

There is “no evidence” that huge plumes of oil are suspended undersea, said BP. The charges against us will “hurt America,” said Goldman. The safety-related allegations against us are “a big lie,” said Massey. The independent research from Stanford University was “staged,” said Toyota.

When it comes to rebuilding lost trust, propaganda makes a bad problem worse. What improves situations is candor. Candor conciliates, clarifies and cuts through hype. Candor works. It’s the greed of the Twenty-first Century.

“Candor in business – or in any kind of organization – is a rare and wondrous thing,” write Suzy and Jack Welch in their book, Winning. “Rare because so few companies have it. Wondrous because when they do, everything just operates faster and better.”

Consider the success of online retailer Zappos, which grew its recently acquired, billion dollar business in under five years by forging open and honest relationships with people. From its standing invitation to the general public to come tour Zappos’ headquarters to its progressive use of blogs, videos and books – Zappos gives people outside the company an uncensored look inside the corporate culture. It even goes to so far as to share best practices with competitors.

“A lot of companies feel they need to guard the secret sauce,” said Zappos marketing executive Aaron Magness in a recent interview. “We’re very open to talking about our business model and plans with everyone. We’ve learned a lot along the way and made mistakes that a lot of other companies don’t need to make.”

Smart companies like Zappos don’t just aim for candor. They leverage it, invest in it, profit from it, and build new communities around it. For instance, Sun Microsystems CEO Jonathan Schwartz blogs freely about what his company and industry does right and wrong, engaging people on all sides of his business. Apparel company Patagonia tracks the social and environmental impact of its products from design through delivery, encouraging customers to buy smarter and contribute to rich discussions. Seventh Generation reveals the full list of ingredients used in its household products, earning customer loyalty and pressuring its industry to follow suit.

Candid companies help restore lost trust and balance to the markets. Rather than telling shareholders or stakeholders what to think, they allow the community to draw its own conclusions, which is precisely why people believe in them. As Seventh Generation’s Jeffrey Hollender said in a recent speech: “You can’t judge yourself to be sustainable or responsible. You can only be judged by others.”

Kozlowski is absolutely right.

The premier financial institutions of today – AIG, Barclay’s, Bank of America, Merrill Lynch,Citigroup, Goldman Sachs – make Enron’s 2001 accounting scandal look like child’s play. After taking $17.5 trillion in taxpayer money (in the form of loans, guarantees and bailouts), top-tier US banks Goldman Sachs, J.P. Morgan Chase and others experienced record earnings in 2009, prompting them to dole out an unprecedented $29.7 billion in executive bonuses. Citibank and Bank of America increased interest rates on credit cards and basic checking, boosting fees by as much as 50 percent. Meanwhile, the industry as a whole remains staunchly opposed to consumer protection reforms of any kind, raising serious ethical questions.

Have mainstream banks learned a single lesson from Enron’s past mistakes? Apparently not. And what’s more, the Sarbanes-Oxley Act (SOX) – which was created in an effort to improve disclosure provisions, ensure auditor independence and strengthen corporate governance procedures – hasn’t made a drip of difference. There seems to be less financial transparency and oversight today than there was before SOX was instated in 2002. Big banks want SOX overturned, and they might have their way.

But even as legislation flounders and banking giants stay their course, the public moves in a new direction. A record number of people are flocking toward reputable and transparent companies like Boston-based Wainwright Bank & Trust and Bristol-based Triodos Bank.

Here are two community banks that, albeit on a smaller scale, manage to thrive despite the ongoing credit and investor confidence crises. While Triodos experienced 8 percent growth during 2008, Wainwright’s first quarter 2009 profits increased an impressive 33 percent.

“All this turmoil in the financial markets has continued to create opportunities for us to capture additional market share,” says Wainwright founder and co-chairman Richard Glassman. “We are pleased that there continues to be a market for our products and approach.”

The “approach” of which Glassman speaks is key. In fact, both Wainwright and Triodos sell the same products that you can find at any big bank – checking accounts, savings accounts, loans, etcetera. That’s not what drives their performance. It’s how they sell their products, how they conduct business overall, that sets them apart from their peers.

At Wainwright a socially progressive agenda represents an ever-important second bottom line to the company. “One platform sustains the other,” Glassman explains. “Our business success is fueled by the difference we make in our community.”

To date Wainwright has issued over $700 million in loans to community development projects like affordable housing and HIV/AIDS services. Remarkably, it has experienced virtually no defaults on those loans. In addition Wainwright has the highest level of customer loyalty and lowest rate of employee turnover in its industry.

Triodos also thrives by helping to improve people’s lives for the better.  “We want to act as a bridge between savers and investors on the one hand, and sustainable companies and projects that need financing on the other,” explains board Chairman Peter Blom. “[With us] savers and investors know what happens with their money. In this respect, the banking sector has failed badly in recent years.”

Wainwright and Triodos aren’t the only ones profiting from systemic failures on Wall Street. Community banks across America and Europe are benefiting, as customers seek institutions they can trust.

At the UK’s Co-Operative Bank for instance, pre-tax 2008 profits increased 69 percent from 2007. At  California Community Bank, first quarter 2009 growth increased 26 percent from 2008. And at Liberty Bell Bank in Cherry Hill, N.J., first quarter 2009 growth increased 14 percent.

A recent survey conducted by Independent Community Bankers confirms that these results are not atypical. Community banks are getting new customers at a faster rate than in the past, with 57 percent experiencing an increase in new retail customers and 47 percent seeing an increase in new business customers compared to last year.

Though not immune to the challenges facing all financial institutions, community banks do offer realistic and profitable alternatives to traditional banking methods.

To start with, rather than serving the narrow interests of a few shareholders, community banks acknowledge wider stakeholder communities. As opposed to treating lower-income customers and charitable organizations as a liability, they view them as a worthy opportunity. Instead of hiding risk, they openly disclose their investments and methods. As an alternative to pushing product, they prioritize people and relationships. And in lieu of imposing pre-set terms, many community banks structure loans around the needs of individual borrowers.

“When Wainwright was founded, it was one of fourteen thousand banks in an undifferentiated industry with fungible products and commodity pricing,” says Glassman. “Now we’ve ended up as one of our region’s best-known banks with a constituency that knows exactly who we are and absolutely loves what we do differently.”

The fact is that community banks are genuinely different, which is why they are the preferred choice by more people around the world. Their lessons turn conventional banking wisdom on its head. Let’s just hope it stays that way.

Last week three Shell executives – Bjorn Edlund, Executive Vice President of Communications, Nick Welch, Head of Policy and External Relations and Nick Wood, Vice President of Communications – joined the Justmeans community for a provocative conference call about the Wiwa v. Shell case and the company’s recent $15.5 million human rights settlement.

“We are trying to make ourselves available by using different avenues of social media to reach out to more people with a response,” says Shell’s Welch. “It’s our goal to respond as human beings, not as some big corporate machine. If this conversation stimulates people to want to learn more, then that will be all the better.”

The conference call was illuminating for those participating, and also timely. Just hours before the call took place, news broke of a terrorist attack on a major oil pipeline supplying Shell’s Bonny export terminal in Nigeria. In an e-mail sent to various news organizations, the militant group claiming responsibility, the Movement for the Emancipation of the Niger Delta (MEND), described their motive:  “The region where the wealth within the city has been built remains mired in poverty and lack. The people who own the resources have no stake in it, for which we have now waged a war to emancipate.”

Seemingly unruffled by the transpiring drama, Shell executives explained why this is only the latest in a string of similar attacks against the company’s Niger Delta facilities. “There is unrest because people see oil and gas operations generating billions of dollars in revenue, but people aren’t getting any of the benefits from that,” says Wood. “Communities are targeting companies such as Shell because they want a greater share.”

As with most oil rich Nations, Nigeria’s oil resources are controlled by the Federal Government, which then issues oil exploration and production rights to corporate partners in exchange for a share of profits. Oil presently accounts for 95 percent of Nigeria’s earnings and 80 percent of the government’s total revenues. But most of Nigeria’s 30 million citizens live below the poverty line, with no access to electricity, clean drinking water or other amenities enjoyed by Westerners. To add insult to injury, citizens living close to Shell refineries can plainly see the gas flares that contribute significantly to local air and water pollution, as well as global warming. These variables converge to create a terrible tension.

“What started as action by communities has over the years grown into a criminal movement,” says Wood. “[MEND] is heavily armed. They steal our crude oil, they attack our facilities and they pose a large threat to our staff working in the Niger Delta.”

According to Shell over the past three years 133 company employees and contractors working in the Niger Delta have been kidnapped, and five have been killed in assaults. Attacks from MEND are estimated to have forced oil companies including Shell to shut down at least 133,000 barrels per day of oil production in the last month, diminishing corporate profits and reducing Nigeria’s oil output by as much as 40 percent. That lost income creates a big incentive for military government intervention.

In mid-May the Nigerian military launched an offensive against MEND, bombarding rebel camps from the air and sea and sending in three battalions of ground troops to hunt them down. The offensive is said to have done little to quell the group’s resolve, however. Military attacks such as this one are known to sometimes displace villagers from their homes and also prevent people from accessing humanitarian aid. If anything, the Nigerian military’s notorious “kill and go” strategy potentially encourages some elements of the insurgency to become even more determined. Given MEND’s motives and the remote mangrove creeks of the Niger Delta, industry and security experts say that it is virtually impossible to guard against future attacks.

With no end to the violence in sight, Nigeria’s president, Umaru Yar’Adua, offered amnesty to militants in the Niger Delta this past Friday as part of his strategy for helping to protect national security and oil industry interests. For its part, Shell says that it is placing more emphasis on community outreach initiatives that create economic, social and environmental benefits for Nigerian citizens, but at the end of the day there is only so much the company can do.

“When it comes to [establishing] law and order, that’s not a Shell issue. This is not the sort of situation where we can get reasonable thinking people in a room and talk about it and sort things out,” says Wood. “The long-standing feuds between different groups of people, the huge economic interests on the legal and illegal side of things, makes this quite an intractable situation and a very difficult area to be in.”

Facing serious economic and ethical challenges, Shell is in a tight spot. Should the company decide to withdraw from Nigeria, then it would lose one of its most important markets, as it controls almost half of the 2.5 million barrels of oil that Nigeria exports daily. On the other hand, should Shell remain in Nigeria, then it will continue to come up against the nearly insurmountable struggles of staying ahead of security risks and also, reframing the past.

The Ogoni Legacy

Ogoniland, the 404-square-mile area off the coast of the Gulf of Guinea, is where Shell’s troubles in Nigeria all began. The Ogoni people, who represent less than two percent of Nigeria’s population, rose to international attention after a massive public protest campaign against Shell was led by the Movement for the Survival of the Ogoni People (MOSOP).

MOSOP’s campaign is ongoing, although it is not a terrorist group and is in no way affiliated with MEND. Founded in 1990, MOSOP’s mandate is to use non-violent protests in order to promote democratic awareness; protect the environment; seek social, economic and physical development for the region; protect cultural rights and practices; and seek appropriate rights of self-determination for the Ogoni people.

Activist and author Ken Saro-Wiwa served as founding member and president of MOSOP until 1995, the year he died. According to the website www.wiwavshell.org, in 1994 Saro-Wiwa and eight other Ogoni leaders were prevented by the Nigerian military from attending a protest gathering which left four Ogoni chiefs dead. The bodies of the four chiefs were never found. Despite the lack of evidence, the military government accused Saro-Wiwa and the eight other MOSOP members of causing the deaths, and arrested and detained all nine men. Eighteen months later, Saro-Wiwa and five others – John Kpuinen, Saturday Doobee, Daniel Gbokoo, Felix Nuate, and Dr. Barinem Kiobel – were executed. The military also conducted raids on 60 towns in Ogoniland and detained and beat several hundred men suspected of involvement with MOSOP.

Saro-Wiwa fought vigilantly for human rights and environmental justice for most of his career. He was nominated for a Nobel Prize and awarded the Right Livelihood Award and the Goldman Prize. Reportedly, his last words were: “Lord take my soul but the struggle continues.”

The lawsuit Wiwa v. Shell was filed in 1996 on behalf of 10 plaintiffs, who include family members of the deceased victims. According to the complaint, plaintiffs allege that Shell officials helped to supply Nigerian police with weapons during the 1990s, that they took part in security sweeps in parts of Ogoniland, and that they hired government troops that shot at villagers who protested against a pipeline. They also allege that Shell helped the government to capture and execute Saro-Wiwa and the other MOSOP members.

Shell firmly denies these charges and also says that it tried to get clemency for Saro-Wiwa and the eight other men. “What happened in Nigeria in 1995 was terrible. It was just the beginning of the problems we’ve had there,” says Edlund. “It has become a reputational burden for us.”

Shell hopes that its $15.5 million human rights settlement will help set a new tone for the future and provide the Ogoni people with some relief. An out-of-court settlement wasn’t necessarily the easy route, the company explains, but the most sensible one for all parties involved. “We were quite prepared to go to court and wanted to clear our name. We were confident that there was no evidence to show that we colluded with the government in any way, in any of the allegations that have been made as part of this case,” says Wood. “On the other hand, you look at the thirteen years that it has taken to get this far in the case. We were all looking forward to moving on, and this settlement seemed the best way to maximize the chance for reconciliation in Ogoniland.”

Lessons Learned

Regardless of what people believe about Shell’s history in Nigeria, one thing is absolutely certain. This is a company with a truly global perspective and a wealth of expertise that very few other companies have. These corporate assets could prove invaluable to the global community in years to come.

“There is something we can do so that something good comes out of this,” says Wood. “Even if you learn the painful way, you do learn, and you can pass that information along to others.”

At present Shell is engaged in a number of initiatives designed to ensure that its insights and experiences will not go to waste. Through the Voluntary Principles for Security and Human Rights, Shell shares its framework for maintaining safety and security of its operations, while also acknowledging the fundamental freedoms of its stakeholders. Similarly, through theExtractive Industry Transparency Initiative, Shell shares best practices with governments, companies and civil society, also holds itself accountable to certain ethical standards. “We publish what we pay,” says Wood. “We make it clear what the revenue stream is, and how the share of income is distributed throughout the countries where we operate.”

With the confluence of political, economic, social and environmental forces simultaneously working for and against Shell’s interests, the company says it has learned why it is essential to build a business that is a welcome partner to people. The more Shell is embraced by local citizens, the lower its risks and operating costs will be, and the higher overall value the company stands to generate. Striking such a balance is complex, particularly in countries like Nigeria. Still, Shell seems determined to establish the necessary foundation.

“We haven’t got all of the solutions for improving local conditions in the areas where we operate, and neither have governments or NGOs,” says Edlund. “The game plan is to have a clear set of principles, clear governance within the company, and to recognize that [we] don’t live in a bubble, that [we] have to collaborate with other people that you can make some progress with.”

What do these companies have in common? According to CRO magazine (formerly Business Ethics), they are among the world’s Best Corporate Citizens, setting the gold standard in governance, ethics and corporate social responsibility (CSR).

“When someone next asks you to define corporate transparency, show them this list,” touts the magazine. “[Our] 2009 CRO 100 Best Corporate Citizens List is the world’s best-known apples-to-apples comparison of Russell 1000 companies’ performance in environment, climate change, human rights, employee relations, philanthropy, financial and governance.”

While the CRO’s leading “apples” might have done laudable things, several are also involved in ongoing legal and public relations scuffles stemming from alleged ethical breaches and poor business judgement. For these “top 100” firms, that’s nothing new:

• Merck, whose Vioxx product gave rise to class action lawsuits over allegedly deceptive marketing practices in 2006, is once again accused of engaging in similar deceptive practices

• Monsanto, which Amnesty International calls a “global corporate terrorist,” is using litigation as a tool to protect its market share and has filed dozens of lawsuits against family farmers across North America, alleging they “stole” airborne seeds

• ExxonMobil, which has a history of environmental and human rights lawsuits, has yet to pay $92 million worth of Valdez spill-related damages to plaintiffs in Alaska

• Chevron, which also has a history of environmental and human rights lawsuits, now argues that renewables “are not a mainstream business”

• Citigroup, which in 2002 faced FTC charges for abusive lending practices,  was recently accused of lying to investors and its own employees about the risks inherent in several speculative, mortgage-backed securities funds. It also froze customer lines of credit after receiving $20 billion in government bailout money

• Goldman Sachs, which in 2002 faced SEC lawsuits for securities fraud and conflicts of interest, recently changed accounting rules in order to hide December losses. It is also accused of being a serial violator of SEC regulations prohibiting long-outlawed “naked” short sales of stock

• Smithfield Foods, which recently faced multiple environmental lawsuits, runs slaughterhouses in Mexico that some experts have linked to diseases like swine flu

CRO’s Best Citizens list sheds light on a critical problem that keeps CSR on the sidelines of many corporate agendas: the industry is too ambiguous for its own good. As Paul Hawken argued several years ago in his critique of the $2.7 trillion socially responsible investment (SRI) industry: “The term ‘socially responsible’ is so broad it is meaningless…There are no standards, no definitions, and no regulations. Anyone can join; anyone can call his or her fund an SRI fund.”

To be sure, the CSR industry’s lack of universal standards and criteria leave many questions unanswered. But research indicates that it doesn’t need to be this way.

Companies that dabble in every conceivable CSR facet (community, diversity, environment, human rights, etc.) tend to be less effective than companies that pursue deliberate strategies in a focused area – both in terms of making a substantive social and environmental impact, and in terms of generating a financial return on their corporate responsibility investment. That was a key finding of my 2007 CSR effectiveness study, and it runs contrary to the way that companies are rated on “Best Citizens” lists.

According to the CRO’s methodology, Best Citizens lists are compiled by quantitatively rating companies across a breadth of performance dimensions:  environment, climate change, human rights, employee relations, philanthropy, financial performance, governance andlobbying activities. Scores are assigned to each category (some categories count more than others) and those companies with the highest cumulative scores win. Though the CRO suggests that this breadth approach to CSR performance evaluation yields a more holistic view, the result is that any company, regardless of history or industry, can be included for consideration. Halliburton and Blackwater (Xe) have yet to make the cut, but that may only be a matter of time.

On the other hand, as mentioned above, my research clearly demonstrates that depth works better than breadth. Rather than taking on every CSR issue at once, the companies producing the best triple bottom-line results (High-Purpose Companies) go deep in one or two particular areas where they know they can make the biggest difference. They find common ground between their core strengths and a critical problem that needs solving – and thus develop profitable solutions to that end. High-Purpose Companies have the financial incentive to create social and environmental value. That’s not always the case at the firms making CRO’s cut, which is why the magazine risks missing the point.

If the CSR industry is to be taken seriously in the future, then it needs to reward companies for producing value, not just preaching values.  Now is the time for an industry makeover. Let’s start with objective standards, critical thinking and a much stronger voice.

A few months ago, SIGG was caught in a lie. Whereas the company built a profitable business in the US marketing metal, reusable bottles as a hip and environmentally sound alternative to plastic water bottles, it failed to inform its health conscious target audience that a large portion of its production line contained bisphenol A, a compound suspected to be hazardous to humans since the 1930s.

When initially asked by consumer-watch groups whether SIGG products contained any toxic ingredients, company CEO Steve Wasik assured people: “Very thorough migration testing in laboratories around the world is conducted regularly and has consistently shown SIGG aluminum bottles to have no presence of lead, phthalates, Bysphenol A (BPA), Bysphenol B (BPB) or any other chemicals which scientists have deemed as potentially harmful.”

It turned out this wasn’t the case. SIGG bottles did in fact contain BPA. After the truth leaked out, it became clear that a public statement from management was necessary, and Wasik issued a written apology:

“I am writing to apologize. As Chief Executive Officer of SIGG, a leading maker of reusable water bottles, I made a mistake when I decided not to announce that our old bottle liner contained trace amounts of bisphenol A. I learned about the liner’s content in 2006, when there was debate in the scientific community about the effects of BPA. Scientists lined up on both sides of the issue: Some said BPA posed potential health risks, others said BPA was perfectly safe…Today, the debate continues. Scientists are still split on the issue. But the consumer environment has changed. Because of the all the conflicting data, a growing number of people have decided to eliminate the concern from their lives by avoiding BPA. Given the situation, I recently decided that we had to tell everyone that bottles manufactured with our former liner (prior to August 2008) contained trace amounts of BPA.

We were right to make the announcement. But I was wrong to have waited this long. One of our primary goals at SIGG has been to help reduce unnecessary waste and to educate people on the environmental benefits of using a reusable bottle. With that objective in mind, SIGG has been labeled a “green” company.”

Wasik’s apology was too little, too late. Some even found it offensive. Elaine Shannon, editor in chief at the Environmental Working Group, told Advertising Age: “Americans want transparency, and this company doesn’t seem to understand that. It’s mystifying. [Wasik’s letter] seems to be talking down to people, and a lot of people won’t tolerate that tone.”

Judging from complaint associated with the lawsuit, which was filed on behalf of a nationwide class of consumers who purchased SIGG reusable aluminum bottles that unbeknownst to them contain BPA, the company’s lack of transparency amounts to serious business. The named plaintiffs allege breach of contract, breach of express and implied warranties, and violation of the Kentucky Consumer Protection Act. They seek a class certification order; compensatory, punitive and statutory damages; restitution and disgorgement of profits; attorney’s fees and costs; prejudgment interest; and the costs of suit.

The potential liability exposure for SIGG is significant, to say nothing of the added adverse publicity and wrecked credibility amongst the company’s own target market. Although it is possible that, as with many cases, this class action suit will settle before trial, even if it does the damage will have been done. Unfortunately, when something like this comes along, the negative impact on a company’s sales can be as profound as any adverse legal judgment.

After having allegedly been poisoned by the pesticide dibromochloropropane (DBCP), Nicaraguan banana plantation workers and a prominent L.A. attorney sued Dole and American chemical companies in 2007. A Los Angeles jury awarded $2.5 million in punitive damages to five workers, but the court later dismissed those damages, saying they could not be used to punish a domestic corporation for injuries that occurred only in a foreign country. Gertten’s film portrays both the court battle and the plight of third world laborers struggling against a relentless capitalist system.

“Every time a banana worker who was exposed to this chemical dies, then its one more victory for the Dole Food Corporation,” claims Los Angeles-based personal injury attorney Juan J. Dominguez, who represented the Nicaraguan plantiffs and also stars Gertten’s film. “This is bigger than just a case,” he says.

In the eyes of Dole Food Co., Gertten’s film is seriously flawed. This spring Dole investigators presented courts with evidence gathered from Nicaraguans who said Mr. Dominguez hadfalsified evidence against the corporation. Dominguez had allegedly recruited and coached plaintiffs, and outfitted them with false work histories and falsified medical lab reports. According to Dole, Dominguez also promised payouts to supposed pesticide victims.

In a letter sent to the Los Angeles Film Festival by Gibson, Dunn & Crutcher, the law firm representing Dole, the company attacked the film’s legitimacy and threatened retribution in no uncertain terms:

“Publication and further promotion of this self-described “court-room-thriller-documentary,” directed by Mr. Gertten and produced by WG Film AB and co-produced by ITVS, is indefensible…We demand that you immediately cease and desist making any false, defamatory statements about Dole Food Company, Inc. and any of its former or current officers or employees in connection with the film “Bananas!*” and the matters discussed therein. We also demand that you immediately remove any false statements of fact currently published on the promotional website for the film “Bananas!*” and in any other promotional material, and immediately publish, in a conspicuous manner on the film’s promotional website an unequivocal retraction of those statements. Please confirm to us in writing within five (5) business days that you have done so.

Should you move forward with plans to publicly display or distribute the documentary film “Bananas!*,” despite its obvious false and defamatory content, you will be held responsible for any and all compensatory, special, exemplary or punitive, and all other damages available under applicable law. Our clients reserve the right to take any action they deem necessary to enforce their rights, and will do so without further notice to you.”

Despite threats made by Dole attorneys, the Los Angeles Film Festival opted to go ahead and screen “Bananas!*” anyway. Reportedly at least ten people from Dole were in the audience, taking voracious notes. “The audience loved the film,” claims the Festival. “The debate was insane, but we did well. The sympathy fell on our side.”

In a Q&A session that followed the screening, “Bananas!*” film-maker Gertten defended his work: “In answer to the question of whether my film is fraudulent, I cannot see that it is.  Everything I filmed is the truth and how this all played out.” Gertten also emphasized the importance that films like his serve in fueling meaningful conversations about the impact of big business on local communities. “Dole and other big corporations have all the best reasons to fight [the film]. But I think they should do that in an open debate, not by threatening a film or a film festival and a filmmaker,” he said.

Given Dole’s current legal strategy, however, it seems improbable that the company will choose engage in any sort of open or constructive dialog with stakeholders concerning the film’s broader message points. More likely, it will continue to move against free speech –  deflecting criticism, discrediting opponents, defending its business practices and diminishing the film’s chance for widespread distribution.

]]> http://christinearena.com/2009/11/dole-v-bananas/feed/ 10 http://christinearena.com/2009/11/nestle-waters%e2%80%99-hit-and-miss/ http://christinearena.com/2009/11/nestle-waters%e2%80%99-hit-and-miss/#comments Wed, 18 Nov 2009 19:44:24 +0000 christine http://christinearena.com/?p=267 There is a great deal at stake in the bottled water business. Perhaps Nestlé Waters North America knows this better than anybody. The company presently controls approximately 41 percent of the $11.7 billion US bottled water market. Like every other competitor in the space, it faces shrinking category sales, as well as mounting pressure from groups complaining about the toll that water corporations take on the planet.

Bottled water activists point to plastic waste, energy consumption, greenhouse gas emissions, the environmental effects of water extraction, water privatization issues and a range of social problemsgenerated by the industry. Could such “road blocks” deter long-term growth for corporate bottled water empires? Nestlé thinks not.

According to a 2009 document entitled “The Future of Bottled Water” authored by Nestlé CEO Kim Jeffery, the company’s broad portfolio of bottled water products, including Poland Spring, Perrier, Arrowhead, Deer Park and Zephyrhills, are well-positioned to recover from the present economic slump. “Bottled water is perfect as it is,” the company says. “[There are] limited opportunities to innovate.”

This company is clearly not of a world-changing mindset. Nestlé takes the position that the bottled water industry is unfairly portrayed as a “villain” by environmental activists and an angry public, and that “environmental facts do not support this.” Really, Nestlé?

In a press release and video web site launched last week, Nestlé attempted to express to the public the environmental virtues of bottled water. “Bottled water is actually the most efficient choice of any packaged beverage available to consumers,” the company insists. “Bottled water is a very small user of our water resources…Plastic represents less than one percent of solid waste. While water bottles can be recycled, not all Americans have access to curbside recycling…To sum it all up, bottled water is a healthful choice, can cost less than 20 cents per bottle, and has a lighter environmental impact.”

Of course, not everyone sees things through the corporation’s rose colored lens. Take the 5,400 local citizens of Salida, Colorado who recently banded together in order to fight Nestlé off and protect its local water resources and land. Or what about the residents of McCould, California, who claim their town was torn apart by Nestlé’s operations in the area? Nestlé makes no mention of such stakeholder concerns in its press release or video web site, both which set forth to “set the record straight.”

Nestlé has a public relations problem. The problem isn’t just that Americans around the country are hanging signs in their windows and entryways reading: “Stop Nestlé” or “Nest-Leave.” Nestle’s public relations problem is its sterile, detached response. The company seems to be under the impression that people will read its communications in an isolation chamber, devoid of context, clue, cultural condition, and (yes, Nestlé) fact.

Let’s start with the hard data. According to Food and Water Watch, bottled water produces up to 1.5 million tons of plastic waste per year. That plastic requires up to 47 million gallons of oil annually to produce. And while the plastic used to bottle beverages is of high quality and is demand by recyclers, over 80 percent of plastic bottles end up in land fills. That’s why the Pacific Rim Garbage Patch, the floating vortex of waste that’s twice the size of Texas, is comprised mainly of plastic. It’s also why so many sea creatures die every day from ingesting plastic, and why plastic waste has become one of the chief concerns of our Nation’s top environmental groups.

On the cost side of things, consumers pay a huge markup on a product even though as much as 40 percent of it comes from a tap in the first place. Stakeholder communities also pay. Food and Water Watch says Nestléhas an unfortunate reputation for moving into communities, taking water for next to nothing, selling it for a hefty profit, then leaving the locals to deal with the residual environmental and social externalities, and moving on. “Next!”

None of these issues are substantively addressed in Nestlé’s press release or on its video website. Through bullet points, select interviews and clip art snippets, the company only superficially confronts the environmental impacts of bottled water. Nestlé avoids all controversial content, including details related to ongoing rifts with local communities around the country. The company’s corporate tone of voice, detached message and superficial approach to “issues outreach” demonstrates an indifference to the wider public’s ardent support for environmental reform and social justice. The pitch is all wrong.

Nestlé broke every cardinal rule in social media, stakeholder engagement and transparency with it’s one-sided, “set the record straight” public relations effort. There is no meaningful opportunity to interact with the company, no way to leave a comment. My bet is, the only folks convinced by Nestle’s “bottled water is good” message will be those who manufactured it.

Chistine Arena talks about everyday polutants from Urban ReVision