Wallet Mouth

Off to Burning Man; back soon!

Apologies for the lack of posts. I'm at Burning Man, and I'll reemerge sometime after September 4. Happy Labor Day!

Credit goes grassroots

Recent headlines have been dominated by the subprime mortgage mess, the ensuing credit crunch, and the ripple effects that continue to be felt by financial institutions worldwide.

But loans don’t have to come from banks. San Francisco-based Prosper makes it easy for people like you and me to borrow from, and loan to, other individuals. I love the idea of circumventing the banking system (especially since financial institutions’ investments sometimes conflict with people’s ethics) and instead engaging in a community-based model of borrowing and lending.

Here’s how it works. Say I need $20,000 to make a documentary film about the conscious-consumerism craze that’s sweeping the nation, and my bank wants to charge me a 20% interest rate for the loan. I think I can do better. Once I join Prosper (for free), I can request a three-year, unsecured loan of up to $25,000 by posting a listing that states how much I want to borrow and the maximum interest rate I’m willing to pay—say, 15%.

Potential lenders search Prosper’s listings and bid on requests that appeal to them (based on the maximum rate, the borrower’s credit history and debt profile, and other factors). Each bid states the amount to be lent (it doesn’t have to be the whole chunk of change) and the minimum interest rate the lender is willing to accept.

Say one person will fork over $10,000 at 15%, one lender will part with $7,000 at 13.5%, and another person will let me borrow $3,000 at 10%. Bingo: Prosper combines the three offers into one loan for me and facilitates its payment and collection. My filmmaking career is launched! (See the FAQ for details about how Prosper handles identity verification, missed payments, etc.)

Another cool feature is that lenders can form groups on Prosper that focus on specific types of borrowers—college grads under 30, entrepreneurs, active-duty members of the military, Wisconsinites... the list goes on.

Power to the people!

Muddy waters make for dirty shoes

Last month I blogged about trying to get info from shoemaker Earth about its factories in China (link).

Why would a company with such a progressive image, I wondered, not be happy to verify its glowing assertions about the safety and labor-friendliness of its overseas contractors by having those operations inspected by one of the many third-party certifying organizations that exist for this precise purpose?

Why, in short, should consumers trust any corporation to effectively police itself?

(Since my original post, I’ve learned that problems still exist even when such certifiers are used, but I remain convinced that auditing is the best way to go.)

Five and a half weeks after my inquiry (which went unanswered, so I sent two more emails and left one phone message), Earth customer service finally responded. After disingenuously claiming to have received only my first email (I know that at least one of my later messages went through, because I got an out-of-office reply), the representative wrote:

We do not have specific answers for these questions, and I’d rather not open up the conversation.

We hold our facilities in China to the utmost standard both environmentally and socially. Our shoes are manufactured in a controlled, clean, and safe environment that is inspected, not only by our top executives, but also by larger US corporations. Our factory and offices are cleaner than most US plant and our workers are living and eating far above Chinese standards. Ten years ago, our workers were walking or pushing used bicycles to go to work, today several of them have their own cars. In short, US companies are pushing the envelope and raising up the bar for a better living and better environment. Thanks to companies like us, we influence changes and improve people’s life. I hope this information helps.

A few thoughts that might get Earth more grounded:

1. If you don’t want to have a conversation about these issues, you shouldn’t use them as a marketing ploy.

2. You can’t make claims about something that consumers care about and that has an effect in the world and then refuse to back them up.

3. Cutting-and-pasting unverifiable cherry-picked anecdotes does not reassure informed customers asking crucial questions. Rather, it insults them, invites claims of greenwashing (etc.), and pisses them off.

I followed up (politely) asking what “larger US corporations” means. What type of corporations? Fellow shoe manufacturers, perchance?

Evidence suggests I should hear back, oh, maybe by the end of September.

Amuse-bouche: Biodiesel on the high seas

Royal Caribbean Cruises to start using biodiesel. Link.

Are buyouts always sellouts?

In July I blogged about finding out that Kashi had been bought by Kellogg. Though the customer-service rep I spoke with went to great pains to reassure me that the buyout didn’t represent a betrayal of Kashi’s ideals, red flags still popped up in my mind. 

Oftentimes when small, ethically committed companies are acquired by mega-corporations, their sustainable ethos is lost or watered down. For example, ever since Horizon Organics was bought by Dean Foods, in 2003, it has faced criticism over the industrial-scale dairies that joined its milk suppliers.

But I don’t think buyouts are always necessarily bad. One company I’m watching with interest is chocolate maker Dagoba. When it was acquired by Hershey’s in 2006, Dagoba founder Frederick Schilling stated on Slashfood that his decision “was based on my desire and passion to make change in the industry and assist in the transformation.” Far from compromising its ideals, the merger would enable Dagoba to “reach out to thousands, if not millions more farmers than we could have on our own.”

Is Schilling right? What about when his contract expires and the brand goes on without him? Only time will tell.

Another interesting example is yogurt maker Stonyfield Farm. Since 2004, 80 percent of its shares have been owned by Groupe Danone. Stonyfield has been criticized for decreasing the percentage of organic products it offers, but it’s still doing good things. It donates 10 percent of its profits to environmental projects, it offsets all of its C02 emissions, and as I mentioned in a recent post, it funds Climate Counts. CorpWatch even quotes a company spokesperson as saying that Danone “is asking us to help them change their operations worldwide to organic production.”

Indeed, a compelling argument can be made that large corporations, because of their size, have the capability to generate more net good in the world than small ones. But I still gravitate toward the little guys, such as family-owned yogurt maker Straus.

I’m definitely interested in continuing to explore this issue, though. If any readers have any good resources on this topic, shoot them my way.

EthicalQuote drops in price

This just in: Covalence, which I’ve blogged about before, is cutting the price for single-user subscriptions to its corporate reputation tool, EthicalQuote. The public version of the tool is still free, but the data in it is perpetually one year old. Subscribers, on the other hand, get up-to-date info on the behavior of a couple hundred multinationals in the form of a graph that lets you easily pull up details on specific inputs. Instead of $3,800 a year, it’s now $1,000 (or 732 euros). That’s still pretty steep for your average conscious consumer, but it’s a substantial reduction. Should I do it?

56... and counting

Thanks to Ethan at Hooze for turning me on to this one: A new nonprofit called Climate Counts aims to fight global warming by helping consumers find out how seriously different companies take climate change, so that people can boycott or buycott them as they wish.

“When consumers take action and raise their voices on issues that matter to them, businesses pay attention,” the site states. “Working together, consumers and companies can raise awareness, change behavior, and move markets to promote environmentally and economically sound solutions to the climate crisis.”

Climate Change, which is funded by Stonyfield Farm, Inc.,  uses 22 criteria covering four general categories to provide its company ratings: the extent to which a company has (1) measured its climate footprint, (2) reduced its impact on global warming, (3) supported progressive climate legislation, and (4) publicly disclosed its climate-related actions in a clear and comprehensive way.

To get the ratings, consumers can either search the website or send a text message to Climate Counts—the latter being a pretty cool option for when you’re actually out shopping.

The only downside is that so far there are ratings for only 56 companies across eight sectors. Then again, Climate Counts is still new, and collecting and processing this type of information is nontrivial. I’m excited to see how the effort develops.

Amuse-bouche: Farm bill or food bill?

Yesterday’s Talk of the Nation contained an enlightening segment on why something as boring-sounding as the U.S. Farm Bill (which continues wending its way through Congress after the August recess) should be of great interest to anyone who eats. Link.

Can sustainability be standardized?

The folks at Sustainable Business Achievement Ratings (S-BAR) think so. They’re working on a web-based tool for consumers and companies “that offers instant feedback, fast-track learning, evaluation and market-segment comparisons” regarding corporate environmental and social performance.

As S-BAR’s site points out, a wide variety of voluntary environmental and social standards exist covering various product, facilities, and company attributes, but they don’t add up to a coherent whole.

As a result, it’s difficult for consumers to know just how “good” any given company is—and for businesses to know what exactly they should do to be considered “good.”

S-BAR says it has developed a conceptual framework (using five categories—governance and management, workplace, community, marketplace, and environment) as well as software specifications for its tool. Currently it’s in research-and-analysis mode to refine those standards. And it’s looking for funding so that it can start beta-testing and preparing to roll out the system.

Sustainability standards are certainly an intriguing idea, but I have to wonder how well they will “take,” given that so many different ideas exist on what sustainability means. I immediately think of the debates surrounding the USDA organic standards. But my interest is certainly piqued.

Amuse-bouche: Food fraud

With the rise in popularity of origin-protected and organic comestibles, food fraud has become big business. The European Union is fighting back with a host of new technologies. Link.