Why sweatshops stay in fashion, a green plan for Obama, and the $460bn annual cost of saving the planet

Shop till someone else drops

At Yale University in 1961, Dr Stanley Milgram undertook one of the most chilling psychological experiments of the modern age. Everyday citizens from Connecticut were invited to play teacher and run through a selection of multiple choice questions with a learner in another room. For every wrong answer, the teacher would administer incrementally more powerful electric shocks. Amid screams from the adjoining room, some of the teachers persisted until the dials were turned up worryingly high.

Similar parallels can be found in our shopping habits. Why do we, the consumer/teacher, buy items when we know they may well cause harm to the producer/learner? This, in essence, is the question posed in this Harvard Business School paper.

Like all moral questions, the answers are muddied by practical realities. All too often, the immediate desire for a product outweighs ethical concerns about that product’s origins. At least, that’s what the Harvard research discovered when presenting consumers with a hypothetical pair of jeans. Those surveyed were told that the jeans were of ethical, unethical or unknown origin, and then asked how desirable they found them.

The more consumers want a product, the research discovers, the stronger their ability to “morally disengage” and, in turn, the more attractive the product becomes. This leads to the ethical irony that sweatshop products are often more attractive to consumers than their non-sweatshop counterparts.

In Milgram’s experiment, it required a stern scientist in a white coat to persuade the “teacher” to inflict pain. In today’s world, all it takes is a trendy label or fashionable cut. And another difference. Milgram’s electric shocks were fake. Sweatshop labour is only too real.

“Sweatshop Labour is Wrong Unless the Jeans are Cute” by Neeru Paharia and Rohit Deshpandé, working paper, Harvard Business School, January 2009

100 days to save the world

“Where were you when Barack Obama was inaugurated the first black president in US history?” History’s epoch-making moments invite such questions. Environmentalists will soon have another: “Where was the green agenda when Obama finished his honeymoon?”

The new US president is beset with a global financial crisis, but lurking in the foreground is another far greater long-term threat: climate change. Patrick Parenteau puts himself in the shoes of Obama’s environmental adviser and lays out a 100-day, 10-point plan for the president.

In first place comes a mandatory emissions reduction target, something the head-in-the-sand Bush administration fiercely opposed. A cut in carbon emissions of 40% by 2020 and 80% by 2050 should suffice, the author estimates. Aggressive policies that push energy efficiency and renewables could see that happen. Joining up to Kyoto post-2012 runs a close second.

The list includes some other highly sensible suggestions: a moratorium on construction of new coal power plants; guidelines from the Securities and Exchange Commission for disclosure of climate risks; and rules to govern green marketing and carbon offsets.

A month or so in, and Obama has given environmentalists much to be enthusiastic about. He’s pledged a $150bn “new energy economy” in which a quarter of US energy will allegedly come from renewable sources by 2025. No one doubts the president’s oratory. Clear action is what’s required.

“The First One Hundred Days” by Patrick Parenteau, Vermont Law School, forthcoming

The $460bn path less trodden

If the planet had a bank manager, it’d be the first in line asking for a loan. And a big one at that. Between $262bn and $460bn will be needed to reverse the costs of climate change and put the world economy on a low-carbon trajectory, researchers at consultancy firm McKinsey estimate. That’s an annual figure. Large as it sounds, it’s less than 1% of forecasted GDP even in these turbulent times.

This detailed paper offers a business-focused look at the challenges ahead. Practical answers exist, but massive scale, determined cross-sectoral cooperation and political will are all required for them to happen.

McKinsey’s package, for example, includes an energy efficient overhaul of existing transport, construction and manufacturing systems; an increase of low-carbon fuels until they provide 70% of global electricity; and the planting of 330m hectares of new forests. There are more than 200 recommendations on emission reduction solutions, drawn from 10 industry sectors in almost two dozen countries.

“Pathways to a Low-Carbon Economy” by McKinsey & Co’s climate desk, January 2009

On campus

The European Academy of Business in Society and the European Foundation for Management Development have launched a new web-based resource profiling academic research on corporate responsibility. The Business in Society Gateway can be found at www.businessinsociety.eu.

Thomas Tierney, chairman of US non-profit Bridgespan Group, is to become the new chairman of the Social Enterprise Initiative at Harvard Business School. SEI is a research-based programme that seeks to disseminate practicable resources, tools, and knowledge to address social challenges. See www.hbs.edu/socialenterprise.

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