Brands feel the impact as activists target customers

Adotei Akwei of Amnesty International, one of the groups involved in the campaign, said the industry's decision "has confirmed a growing trend that business cannot and will not be divorced from ethical issues like human rights".

The Financial Times
July 18, 2001

Brands feel the impact as activists target customers
Patrick Chalmers

It was a scene that would make any corporate marketing executive wince. On a crowded Saturday last September, protesters from the Campaign to Eliminate Conflict Diamonds set up pickets outside Cartier, one of the premier jeweller's on New York's smart Fifth Avenue.

As thousands of potential shoppers filed past, the demonstrators brandished signs depicting children whose hands and feet had been amputated by rebels fighting a brutal civil war in Sierra Leone. "Did your diamond do this?" the placards screamed. The protest, which was to be reinforced later by prime-time television advertising, was aimed at forcing the US diamond industry to support legislation to stem the flow of illegal diamonds, thereby robbing rebels in Sierra Leone and Angola of their main funding source. By linking the diamond industry with such extreme violence, the campaign tried to tarnish the image of diamonds as a sign of love and fidelity.

It was brutally effective. Last month the industry agreed to support congressional legislation that would block US imports of diamonds coming from African war zones.

Adotei Akwei of Amnesty International, one of the groups involved in the campaign, said the industry's decision "has confirmed a growing trend that business cannot and will not be divorced from ethical issues like human rights".

Matthew Runci, the president of the Jewelers of America, had a narrower concern. "This is the biggest step we can take to preserve the image and integrity of the diamond as a symbol of love."

Non-governmental organisations got their name largely because of what most have tried to do - influence governments from the outside. But many NGOs have realised that the quickest way to get the results is to go directly after companies by targeting their customers, their investors, or both.

"The intensity and sophistication of NGO activism in the markets is rising," said Roger Robinson, the chairman of the William Casey Institute, which last year led a successful campaign to discourage investors from an initial public offering by Petro-China, the Chinese oil company active in Tibet and Sudan. The record would bear that out. Two years ago Home Depot, the world's largest retailer of timber products, agreed to stop buying wood cut from old-growth forests, after the Rainforest Action Network and other environmental groups held a series of protests in front of Home Depot stores and ran advertisements denouncing the company. That in turn caused MacMillan-Bloedel, western Canada's largest timber company, which was later bought by Weyerhaueser, to pledge an end to cutting of old-growth forests in British Columbia.

Nike, the US clothing manufacturer, has been the target of US anti-sweatshop activists, who want the company held responsible for the conditions of workers in its apparel-assembly operations around the world. Similar campaigns have influenced large retailers as well, including Wal-Mart and Gap.

Under such pressure, most of the large US clothing companies and many retailers have agreed to corporate codes of conduct that ban clothing produced with child labour or assembled in unsafe working conditions. Some, including Nike, have even agreed to pay NGOs to monitor the operations of suppliers to ensure compliance with the codes.

Pressure from activist groups has also led many public pension funds to begin screening their investments on social grounds. Calpers, the California public employees' pension fund that is the largest investment fund in the US, last year pulled it money from tobacco companies and said it would stop investing in countries that restrict workers' rights or political freedoms.

The tactic is particularly effective with oil or mining companies that do not have a brand image to protect. The pension funds control huge resources, which gives them influence over the companies whose shares they hold, but the funds are controlled by elected leaders and are therefore particularly susceptible to political campaigns.

Mr Robinson argues that the growth of US pension and mutual funds, and the increased importance of the US capital markets as a source of financing for both domestic and foreign companies, has provided a powerful new source of leverage for NGOs that was not available a decade ago.

Such campaigns are not entirely new.

Nestle, the Swiss food company, became the target of a consumer boycott in 1977 over its promotion of infant formula in developing countries. The campaign has continued off and on since.

The effort to force mutual funds and other investors in the 1980s to divest from companies doing business in South Africa before the end of apartheid was a seminal event in the history of the NGO movement.

The biggest change, however, may be the willingness of NGOs to work closely with companies to try to affect changes. "There's been a huge change in terms of engagement with corporations," says the Reverend David Schilling of the New York-based Inter-Faith Centre for Corporate Responsibility, a coalition of religious groups trying to influence companies through shareholding and consumer activism.

Susan Aaronson of the National Policy Association, who closely follows the corporate social responsibility issues, says "many companies understand that consumer expectations are moving". She cites the growing niche markets for "green" products and socially labelled goods such as "fair trade coffee" as evidence of the impact NGOs have had in the marketplace.

Relationships between companies and NGOs are rarely terribly cordial, however. The Rev Schilling argues that while many companies do indeed want to be good corporate citizens, when faced with embarrassing public campaigns "they really can't do anything else because their brand and the perception of that brand is everything".

The diamond companies would agree.

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