Archives For business ethics

The True Cost

May 4, 2013 — Leave a comment

How much would you pay for a t-shirt? Five dollars? Ten? Forty?

How much should you pay for a t-shirt? What would it cost to produce a shirt that does no harm to the environment or person? Can clothing even be produced in a sustainable way?

Clothing is the second most chemical intensive industry in the world, after agriculture. Rivers in China run blue with the dye from denim.

Patagonia is, arguably, the most responsible manufacturer of clothes in the world. For the last six years they have been named on Ethisphere’s most ethical companies list (though they were left off this year). Patagonia has served as an industry leader in transparency, and publish information on all of their suppliers and manufactures  Recently they elected to become the first Benefit Corporation in California; this form of corporate structure requires that they put their stakeholders infront of corporate profits (Bloomberg explains the benefits and drawbacks of BCorps here). Recently they’ve partnered with the Nature Conservancy to work with sheep farmers in Patagonia to ensure that the wool they buy does not contribute to overgrazing. Overgrazing has turned 20 million acres of land into desert in Patagonia. On the largest shopping day of the year, Black Friday, they ran an ad telling customers, “don’t buy this jacket.” Instead they asked their customers to try and buy used versions of their product.  All of their cotton is organic, a decision they made when they realized how many chemicals go into growing cotton – they had to find famers to buy organic cotton from directly before there was a market for it.

In light of this, I’d say Patagonia is a pretty good example of what a responsible clothing company should look like.

Patagonia sells many clothing items, among them are t-shirts. The minimum retail price for a Patagonia shirt is $39.00. That is a pretty steep cost for a t-shirt; it reflects the cost of making clothes that do little to no harm to the environment and treat the laborers well.

You can buy shirts for considerably less than forty bucks, but should you? Gap, through Old Navy and Bannan Republic, sells t-shirts ranging from $4.99 to $32.50. Its hard to think how a $4.99 shirt could be made in a sustainable way, even at the high end its questionable. Gap’s CSR policy is as good as most clothing manufacturers, but implementing the policy while maintaining a competitive pricing policy is a hard task to juggle.

Gap manufactures a lot clothing in Sri Lanka, and they promise to maintain a watchful eye on the post war situation. Despite blatant abuses by the government, Gap continues to manufacture clothes here. More prominently, Gap may have been able to prevent the death of over 507 people at Rana Plaza in Dhaka last week.

In 2011 Gap walked out of negotiations which would have implemented extensive fire and building safety standards. This plan would have implemented these regulations outside of the control of the government, with funding by multinational manufactures. The companies would have contributed up to $500,000 a year. PvH (Calvin Klein and Tommy Hilfiger) and German retailer Tchibo signed on to the plan, but the commitment of at least two other firms was needed to implement the plan.

It’s being argued that cheap clothes have helped fuel social revolutions in Bangladesh, but at what point are clothes too cheap? If these reforms had been implemented Gap could have passed the increased cost on to consumers or seen their earnings reduced by 0.0034% (Gap Inc. earned $14.5B in 2012). Instead of moving operations to a higher cost country, with more regulatory burdens, Gap could have taken the charge and led meaningful reforms in Bangladesh.

Keep this in mind next time you’re out shopping.

Coffee is something I’ve struggled to live without while living abroad. After a month of living off of instant coffee, a friend turned me on to Hansa Coffee.

Great coffee can be found on Fife Road, in Colombo

Great coffee can be found on Fife Road, in Colombo

Hansa is a local coffee producer, and they’ve quickly turned into my favorite coffee brand. They have a small shop in Colombo, where you can purchase a variety of coffee drinks, snacks, and packaged coffee.

Hansa is unique because they roast their beans at the same altitude as they are grown, which is supposed to improve the taste and flavor of the bean. Sipping the Arabica blend – a favorite of mine – one picks up subtle notes of blueberry and chocolate. Needless to say, I’m glad to have made their coffee a part of my life.

Aside from producing coffee with a rich, fresh taste, Hansa makes coffee that you can feel good about drinking. Over the past few years I have grown more aware of the effects of my consumption on the rest of the world. My experiences in Kenya opened my eyes to the shocking working conditions and standards of living that tea and coffee workers often endure. Designations such as fair trade, organic, and rainforest alliance can help guide consumers to make more informed purchasing decisions, but there are flaws with these systems.

I recently had the opportunity to visit Hansa’s roasting operations in Nuwara Eliya. Lawrence, the founder and master roaster of Hansa, gave the Fulbrighters an open invitation to visit whenever we were in the area – I’m glad I obliged. Hansa might not be certified organic or fair trade (yet), but after visiting Lawrence I have no doubt that they are among the best coffee producers in the world.

The coffee used by Hansa is sourced from small growers in the central highlands of Sri Lanka, in contrast to the original coffee industry that existed on the island under British colonial rule. During that time, Ceylon was the world’s largest exporter of coffee in 1870, producing  51 million kilograms of coffee annually. The coffee plantations were built in deforested lands, and their monoculture ultimately led to the entire industry being wiped out by 1890. Hansa educates small scale farmers on techniques such as shade-growing, composting, and organic farming.

Hansa is trying to revive the coffee industry without causing further deforestation. Shade grown coffee has a longer yield cycle, but this slower growth leads to a coffee with more complexity and taste. By teaching farmers the benefits of a polyculture farm, Hansa is reducing their dependence on fertilizers and pesticides.

Once the beans are harvested, they are brought to the factory, where they are sorted by hand. Beans with any defect – insect damage, mold, or cracks – are removed. As it turns out, half of the coffee in America is contaminated with mold. This mold produces mycotoxins (not only do mycotoxins make your coffee taste bitter, they cause cancer and brain disease). After the defective beans are sorted out, it is time for the roasting to begin.

Hansa's Roaster

Hansa’s Roaster

When I entered the roasting room I was struck by the intense heat and the overwhelming smell of fresh coffee. The coffee is roasted in small batches, and their special Indian-made roaster is a relic of a bygone era. Periodically the beans are checked for their progress in the roasting process. Watching the pale coffee beans transform into the familiar black ones was fascinating. When I started to hear a cracking noise, the beans were released from their primary chamber and emptied into the bottom hopper. The steaming beans continued to crack. The roaster was brought back to temperature before more beans were poured in.

Hansa is my coffee of choice for a multitude of reasons. It is delicious, but it is also made in a socially and environmentally thoughtful manner. Lawrence is a humanist, who cares deeply about the tenets of organic farming. His company is both a reflection of his beliefs and an attempt to make a better cup of coffee.