What makes a company unethical?

Example: Groupe Danone

The popular vegan brands Alpro, Provamel and Soya Soleil are owned by French multinational Groupe Danone. Group Danone has a 24.4% share in the global fresh dairy industry, so when we buy Alpro we’re actually funding one of the world’s largest dairy producers.

Alpro, which is by far the UK's best known vegan brand, is now part of a brand roster that includes Activa yogurt, Cow & Gate baby milk and Actimel.

Danone is also subject to multiple consumer boycotts over their aggressive marketing of baby milk formula.

Other examples include:

• The brand Pure which is owned by the Kerry Group, that owns other well-known brands include Richmond’s sausages, Wall’s Sausages, Dairygold and Cheesestrings.
• Linda McCartney, currently owned by Hain Celestial, a company that sells poultry products in the US, as well as owning Ella’s Kitchen baby food, much of which contains meat.

Example: The Walt Disney Company

Disney might be looked upon as a company that warms the hearts of children and adults alike and spreads a little magic in the world. Unfortunately, Disney is failing when it comes to the challenge of global warming and addressing its own environmental impact.

The Walt Disney Company is a member of four corporate lobby groups that were seen to influence policy-makers in favour of market solutions that were potentially detrimental to the environment. These lobby groups include the American Chamber of Commerce, the International Chamber of Commerce, the Coalition of Services Industries and the US Council for International Business.

Disney also received our worst score for the following ratings: Carbon Management and Reporting, Environmental Reporting, Timber Sourcing, Cotton Sourcing, and Toxic Chemicals.

To provide some extra context let’s look at the company’s Environmental Reporting rating from September 2020.

We expect a company like Disney, which operates in a wide range of sectors including film, technology, theme park management and retail, to show a reasonable understanding of its main environmental impacts. These include resource use, the effects of consumption of certain resources (at both extraction and disposal stages), and logistical impacts such as transport.

We would also expect it to have at least two dated, quantifiable environmental reduction targets with a set baseline and to have its environmental data independently verified.

As a company with a turnover of £43 billion, Disney clearly has the necessary resources to develop these practices and up its environmental game and yet no evidence that it was doing this was found. This makes Disney a prime example of an unethical company.

Example: Gap Inc

The clothing sector is particularly well-known for being implicated in workers' and human rights issues. We rate companies on several aspects, such as supply chain management, countries they source materials from, and whether they’ve been criticised for issues like discrimination, union-busting or low pay.

Gap Inc owns several clothing brands, including Gap and Banana Republic.

When we last reviewed Gap Inc in July 2019 it lost a whole mark under our Human Rights category.

Gap Inc had operations in six countries considered to be oppressive regimes. Gap was the target of a campaign by the Asia Floor Wage Alliance in 2019, which criticised the company for failing to address alleged gender-based violence in its Asian supply chains. The campaign argued “Brands have shown time and again that they are not invested in creating economic stability and ensuring a workplace that is free from gender-based violence for their workers along their global supply chains”.

Gap Inc has been criticised in other reports too. It scored poorly for workers’ rights in a 2019 ethical fashion report released by Baptist World Australia. This report graded the company D+ for ‘Worker Empowerment’, a criteria which assessed whether the company had a calculated living wage for each region it operated in, and whether workers were trained on their right to freedom of association.

The 2019 Tailored Wages living wage report by Labour Behind the Label also found no evidence that Gap workers were paid a living wage. The report stated “Given that GAP have had a commitment to ensure wages are enough to meet workers basic needs in their policies for over 15 years, it is shocking that they have failed to make any progress whatsoever towards its payment.”

The company was also marked down for having a poor supply chain policy that lacked the detail expected from a large company. For example it did not specify the minimum age of workers and maximum working hours per week for those working in its supply chains.

Example: Superdrug

Superdrug has somewhat developed a reputation for being against animal testing, perhaps because it has Leaping Bunny approval for all its own-brand cosmetics and personal care products.

However, Superdrug also manufactures and retails medical products. When we last reviewed Superdrug in June 2020 no information was found in relation to the company’s policy around animal testing for medical products, so it was assumed that Superdrug does in fact test some of its products on animals.

An article by the Telegraph in 2018 also stated that Superdrug was facing criticism from animal rights groups for selling botox injections that were tested on animals.

Superdrug is owned by A.S. Watson Group, which owns the company PARKnSHOP. PARKnSHOP sold a range of meat and dairy products that were not labelled as free range or organic. As such it was marked down under our Factory Farming and Animal Rights categories.

Superdrug is therefore part of a corporate family that retails meat and dairy, and it likely tests on animals.

Example: Amazon.com

One of the subcategories our readers are most interested in is Tax Conduct. Here, we rate companies on their likely use of tax avoidance strategies.

Amazon, the world’s largest online retailer, is paying very little in corporation tax while raking in revenue. It is the subject of a global boycott call by Ethical Consumer.

When we last reviewed Amazon, it immediately received a worst rating in our Tax Conduct category when it emerged that while the company’s headquarters were in Washington, it was incorporated in Delaware (considered a tax haven by Ethical Consumer). It also had five subsidiaries based in Nevada or Delaware, jurisdictions on Ethical Consumer's list of tax havens at the time of writing.

A Guardian Article dated October 2017 also highlighted how Amazon had been illegally benefiting from a tax deal granted by the Luxembourg authorities, that allowed the company to artificially reduce its tax bill by 250m euros from 2006 to 2014. It was ordered to pay the full amount back plus interest.

Research from the Fair Tax Mark shines further light onto Amazon’s tax activities. Amazon has paid just $3.4bn in income taxes this decade, whilst Microsoft has paid $46.9bn. This is a staggering variance, especially as Amazon’s revenue over this period exceeded that of Microsoft’s by almost $80bn. Fair Tax Mark said this means Amazon’s effective tax rate was just 12.7% over the decade when the headline tax rate in the US has been 35% for seven of the eight years under examination.

Overall, a range of secondary sources criticised Amazon for its tax conduct, the company had no country-by-country financial information or reporting (CBCR), nor a clear public tax statement confirming that it was its policy not to engage in tax avoidance activity or to use tax havens for tax avoidance purposes.

It therefore received a worst rating for the likely use of tax avoidance strategies.

The company has also been criticised for:

• Sponsorship of a climate denial think tank conference
• Spending $27.4 million on lobbying and making $13,633,603 in political donations in 2018
• Excessive directors remuneration - the highest compensation awarded to an individual in 2019 was US $57,796,739.

Example: Pret a Manger

We searched the Pret a Manger website in October 2018, to find out how it sourced its palm oil.
No information was found. It wasn’t a member of the Roundtable for Sustainable Palm Oil (RSPO), nor did it supply any data about the amount of palm oil in its supply chain.

As a company operating in the food and drink industry Ethical Consumer considered it highly likely that it was selling and purchasing products containing palm oil such as bread, pastries, margarine and cleaning products.

The company therefore lost a whole mark for Palm Oil sourcing.