The Rise of the Moral Company

NEW YORK (MainStreet) – Last week, two of the nation’s biggest corporations made efforts to clean up their acts.

First came Wal-Mart (Stock Quote: WMT), which announced Monday that it plans to begin offering healthier food in its stores. The five-year plan includes reducing fat and sodium in packaged food and increasing the availability of low-priced fresh fruit and vegetables.  

Meanwhile, Marriott (Stock Quote: MAR) confirmed rumors Friday that it would stop offering adult Pay-Per-View programming as an entertainment option in its new hotels. While adult programs will still be an option in existing hotels, new Marriott hotels will use a new video-on-demand entertainment system that does not include adult programs or movies.

Undoubtedly, these are both good PR moves – Wal-Mart gets to tout its role in the fight against obesity, while Marriott gets to hone a more family-friendly image—but these moves also raise a question: Are these companies trying to be better corporate citizens, or are they chasing profits?

“There is a profit motive here,” said Brian Sozzi, an analyst for the stock market research firm Wall Street Strategies who covers the retail industry. Sozzi argues that pushing suppliers to reduce amounts of certain ingredients in their products – for instance, asking Campbell’s to reduce sodium in its soup – will allow retailers like Wal-Mart to demand lower wholesale prices for the product in question. He also notes that procuring fruits and vegetables from local growers will minimize transportation costs even as it wins the company plaudits from environmentalists. “They might be trying to cut costs more, and if they can make some good headlines, all the better,” Sozzi says.


A similar dynamic is at work with Marriott. In a statement to MainStreet, Marriott alluded to making the move in order to protect children from adult content, but also acknowledged that “changing technology and how guests access entertainment has reduced the revenue hotels and their owners derive from in-room movies, including adult content.” Put another way: Guests don’t need to pay for porn when they can bring a DVD or watch it for free on the Internet.

“[Porn] used to be a revenue engine, big time,” said Joe McInerney, president and CEO of the American Hotel and Lodging Association. “Now everybody has their different players – iPads, iPhones – and if you want to watch porn, there’s a lot of sites you can go to that are free.”

With adult videos no longer a significant source of revenue, Marriott can reap the benefits of ditching the risqué content without hurting its bottom line. “If they’re losing revenue, it’s going to be miniscule,” confirms McInerney.

The major difference between Wal-Mart and Marriott’s moves to morality is the way the companies publicized the shift.

Marriott only acknowledged the new policy to press organizations after the news was leaked by an analyst. “I don’t think they wanted to make a big deal out of it,” McInerney said. “It’s about taking it back to your core values of what you think as a company.”

On the flip side, Wal-Mart trumpeted its initiative to the heavens, blasting off a lengthy press release and making its announcement alongside first lady Michelle Obama for maximum exposure. But its lofty goals – including reducing sodium in packaged foods by 25% over the next five years – are nothing to sniff at.

Other Moral Moves – A Mixed Record

Wal-Mart and Marriott aren’t the only ones who have made a move toward morality in the past few years. Here are some other companies that have tried to take the high road – even if their efforts weren’t always met with universal acclaim.

Apple
Since launching the app store in 2008, Apple (Stock Quote: AAPL) has forbidden developers from introducing apps that feature “objectionable content.” While that has kept adult content out of the hands of children, the policy has attracted plenty of criticism from developers for its strict restrictions and sometimes arbitrary decisions.

BP
BP (Stock Quote: BP) tried to go “beyond petroleum” at the turn of the century, offering to take the lead on alternative energy sources. But it was roundly accused of “greenwashing” its image rather than making real change, and the rebranding crashed and burned with the Deepwater Horizon oil spill. Now Chevron has launched a similar campaign declaring its commitment to the environment – let’s hope they don’t meet the same fate as BP.

Starbucks
Starbucks (Stock Quote: SBUX) made an effort at social responsibility when it introduced a line of fair trade coffee in 2000, though it’s been criticized for not going far enough. The coffee giant also recently dropped high-fructose corn syrup from all its products in a move to satisfy health-conscious consumers.

Google
Google’s (Stock Quote: GOOG) unofficial motto is famously “don’t be evil,” initially referring to its commitment to unbiased search results. But the policy has been tested numerous times as the company has expanded, most notably when it agreed to China’s censorship restrictions in exchange for operating in the country.

Kellogg’s
Kellogg’s (Stock Quote: K) has always had its roots in tradition – its founder, Will Kellogg, was a deeply religious man who sought to create a healthy breakfast food. Most recently, the company agreed to stop marketing unhealthy cereals to children… but only after it was faced with a lawsuit over its advertising practices.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

Show Comments

Back to Top