Listen Here, Mr. Big!

By Christine Gorman

For conscientious shoppers, finding the right product at the supermarket used to mean checking the prices, scrutinizing the salt content and looking out for saturated fats. But nowadays that's not all. Many consumers have added a new standard to their shopping lists: corporate responsibility. They may favor Campbell's Prego spaghetti sauce over Unilever's Ragu because Campbell runs a day-care center and Unilever invests in South Africa. Consumers are eating chicken instead of tuna salad because thousands of dolphins drown each year in tuna nets. They have put pressure on Uniroyal to halt distribution of the suspected carcinogen Alar, a chemical used to ripen apples and keep them crisp, which may have influenced the company's decision last month to take Alar off the U.S. market.

After tolerating an anything-goes climate in business during most of the 1980s, "people are starting to demand that corporations live up to the expectations that we have of them as citizens," says Alice Tepper Marlin, executive director of the Manhattan-based Council on Economic Priorities. While most Americans still feel confident about the economy and business in general, consumers have become increasingly aggressive in taking corporations to task for misbehavior and irresponsibility. Among the concerns: investment in South Africa, environmental pollution, hazardous products, offensive TV programming and testing on animals. Today's campaigners for corporate accountability, unlike those in past consumer movements, are drawn from the mainstream and include activists who range from homemakers to corporate investors.

A parade of highly visible corporate misdeeds has sparked the outrage. According to a study by sociologist Amitai Etzioni, a visiting professor at the Harvard Business School, two-thirds of FORTUNE 500 companies were convicted between 1975 and 1985 of serious crimes, from price fixing to illegal dumping of hazardous wastes. Executives at Beech-Nut tried to pass off flavored water as apple juice. Ivan Boesky and a ring of Wall Streeters traded on insider information. Even such an upstanding company as Eastman Kodak, which has won awards for its minority-hiring and other social programs, has felt the heat. Residents of Rochester, where Kodak is based, have accused the company of covering up its chemical contamination of the city's groundwater.

What set the stage for a backlash was the deregulation of such industries as airlines and broadcasting. While the loosening of rules typically brought consumers lower prices and wider choices, the process reduced governmental monitoring of business. In its free-market zeal, the Reagan Administration cut the budgets and staffs of the Federal Trade Commission, the Consumer Product Safety Commission and other supervisory agencies. In a Yankelovich poll conducted for TIME this year, nearly 80% of the Americans surveyed said the Government sides too often with business when it comes to environmental issues.

The credibility of some businesses has been eroded during the 1980s by the greedy tendencies of corporate leaders and Wall Streeters. Takeover battles and buyouts have eviscerated hundreds of companies and cost thousands of employees their jobs while lining the pockets of many CEOs and investment bankers. From 1977 to 1987, executive pay and bonuses jumped 120%, vs. 80% for factory workers' wages. Says Elmer Johnson, a retired executive vice president of General Motors: "The best minds are not creating wealth but just transferring and churning it."

At the same time, momentous accidents have reminded citizens that commonplace industrial activities have vast destructive power when companies are careless. The deadly chemical accident in Bhopal, India, groundwater contamination at Colorado's Rocky Flats nuclear-weapons plant and the oil slick from the Exxon Valdez all suggest that safety is too low a corporate priority. "That's why there was such a sense of outrage over the Valdez," Johnson argues. "The consequences of mistakes are just so much greater today."

To help consumers send a message to corporate America, the Council on Economic Priorities publishes a booklet titled Shopping for a Better World. The 132-page guide, which has sold 300,000 copies at $4.95 each, ranks 1,300 products and their manufacturers according to ten criteria, including the promotion of women and minorities, testing on animals and environmental sensitivity. Special commendations go to S.C. Johnson, maker of Raid, for banning ozone-depleting chlorofluorocarbons from its products. Dishonorable mention falls on pesticide manufacturers like Dow Chemical.

Activists have become more sophisticated and effective in their protests. When Michigan homemaker Terry Rakolta was offended by Fox Network's raunchy Married . . . With Children, she threatened the program's advertisers with a boycott. The sponsors in turn pressured the fledgling network, which toned down its show. Animal-rights groups singled out the Draize test, in which dyes are injected into rabbits' eyes, in their effort to persuade the cosmetics industry to cut down on animal testing. Last week Avon Products announced that it would stop such experiments. Even Ralph Nader, the quintessential business basher, has adopted a more moderate approach. Nader, who last fall led the California revolt against excessive auto-insurance premiums, recently cited the auto industry and its suppliers for their joint quality-control efforts. Firestone, for example, allows automakers to inspect its plants and equipment.

Many investors are influencing corporate behavior by putting their money where their morals are. Socially conscious investment funds now hold nearly $500 billion, up from $40 billion in 1984, according to Gordon Davidson, head of the Social Investment Forum in Boston. Much of this nest egg belongs to pension funds like the $53 billion California Public Employees Retirement System. Their increasingly activist stance has strengthened the hand of the many religious groups that have waged an 18-year fight with corporations, seeking to influence policy through proxy battles at shareholders' meetings. Harrison Goldin, the comptroller of New York City and trustee of $30 billion in pension funds, led a campaign last spring to force Exxon's management to place an environmentalist on its board of directors.

Many companies have taken heed of the grass-roots protests. The mishandling of the Exxon Valdez accident prompted the oil industry to announce last week the creation of a $250 million plan to prevent and clean up future spills. In the wake of Washington's defense-procurement scandals, Boeing beefed up its ethics committee. "It's a no-nonsense program," says committee head Malcolm Stamper, an aerospace veteran. "There's no winking. If we find out that a program official is obtaining marketing information improperly, we zap him."

While many companies have been trying to live up to higher standards, industrial leaders face competing demands on their attention and resources. Executives are already struggling to keep up with foreign rivals, manage their debt and navigate safe passage through a flagging economy. Even so, consumers and politicians are getting their message across with growing earnestness and skill. Declares Nader: "The '90s will make the '60s pale into insignificance in terms of the reform drive to clean up the fraud, waste, abuse and crimes of many corporations." Corporate responsibility will no longer be a fringe benefit but an integral part of doing business.

With reporting by Thomas McCarroll/New York and William McWhirter/Chicago