Dov Charney, founder and CEO of American Apparel, was ousted last week for “alleged misconduct.”
Long before the board of American Apparel decided to fire founder and CEO Dov Charney for ethical misconduct (involving nude photos, no less), Fran Hawthorne had come to the same conclusion, saying that Charney’s “cavalier (or worse) personal attitudes toward sex and women have set the tone of the workplace” and that “To earn a social-responsibility badge, American Apparel would have to take a major step: dump Charney.” In the following excerpt from her award-winning book Ethical Chic: The Inside Story of the Companies We Think We Love, Hawthorne profiles the problematic former head of American Apparel, and the long history of ethical lapses that provided the framework for his latest fall.
The tales have been repeated in news articles and lawsuits for years and to some degree even confirmed by Dov Charney. Allegedly, he walks around nearly nude in the office and has held business meetings in a similar state of undress, calls employees “sluts” and “whores,” favors staffers who sleep with him, hires young women on the basis of their looks, screams at employees, grabs their hair, describes graphic sex to them, and more. [A] Portfolio article talked about a half dozen male employees in their twenties who lived with Charney in his mansion, including one “loud, pear-shaped” PR apprentice who called the boss “Daddy.” New York Times Magazine consumer columnist Rob Walker wrote in his book that he was in the CEO’s office with one male and two female staffers while “Dov Charney was naked from the waist down”—but the punch line is that Charney was trying on prototypes of a new line of men’s underwear. He has certainly dated female staffers, at least three of them seriously. Most notoriously, writer Claudine Ko, in the June–July 2004 issue of Jane magazine, described a female employee presumably performing oral sex on Charney in a hotel room in front of Ko. A week afterward, the article continued, Ko was in a corporate apartment with Charney while the CEO masturbated and “we casually carry on our interview, discussing things like business models, hiring practices and the stupidity of focus groups.”
Nine female employees or ex-employees have filed lawsuits or legal complaints officially asserting sexual harassment. One was dropped, one was settled, and the rest were pending at the time of this book’s publication, one of them for years.
Of all the problems the world confronts today, climate change undoubtedly affects more people, with more potentially dire consequences, than any other single issue.
Yet most people, looking at the EPA regulation that President Obama just proposed for cutting carbon emissions in order to combat climate change, are probably saying: “I don’t own a coal plant. This has nothing to do with me.”
In fact, the proposal has plenty to do with all of us. And there’s a whole list of things we can do to help make the carbon-cutting goals a reality.
(Of course, if you do happen to own a coal plant, or if you are a member of Congress or a state legislature, or an aide to a politician—well, there’s even more that you can do.)
Why are prescription drug prices so high in the U.S.? Pfizer’s attempt to acquire the giant British drug company AstraZeneca—which finally collapsed in late May—pinpoints several reasons in a nutshell. (Or should I say, in a once-a-day pill?)
Not by coincidence, this would-be merger also reveals some of the ways pharmaceutical companies bend their ethics.
Pfizer, which was already the largest drug maker on the planet, had hoped to puff itself up even more by buying AstraZeneca, which ranks Number 2 in the U.K. Even when the bid reached $119 billion, AZ’s board had the gumption to refuse, and Pfizer gave in.
Such an attempt is hardly new for either Pfizer or the pharma industry: Over the past 15 years, a lot of premier names in the business have disappeared, several of them swallowed by Pfizer.
(Try to find a phone number for Wyeth, Pharmacia, Warner-Lambert, Schering-Plough, Genzyme, Hoechst, Ciba-Geigy, Burroughs Welcome, Sandoz, or Searle.)
Over the past few decades, public activism has—with growing success—pushed companies to act in more ethical ways. From Apple to WalMart, businesses are monitoring the working conditions at factories overseas, reducing energy use and carbon emissions, buying products only from animals that were raised humanely, using organic ingredients, and taking other socially responsible steps.
All this is, of course, good for the planet, customers, neighbors, and employees.
But in the glow of these achievements, have we forgotten a more fundamental type of corporate ethics? Ethical behavior that predates the Corporate Social Responsibility movement. Ethical behavior that applies even to executives who hate unions, love to drive SUVs, and don’t believe climate change is a problem.
Mount Storm Coal-Fired Power Station in West Virginia (by user Raeky via Wikimedia Commons)
“Even if Stanford [University] divested itself fully of all its stocks, both fossil fuel and nonfossil, it would probably take the market less than an hour to absorb all the shares. It would not lead the executives of the affected companies to engage in soul-searching, much less to changes in operations.”
Ivo Welch, a finance and economics professor at UCLA, wrote those sentences recently in a New York Times Op Ed column, after Stanford announced that its $18.7 billion endowment would dump all holdings in coal-mining companies.
But where else have we heard that refrain? Ah yes, about 30 years ago, during the movement to divest stockholdings in companies doing business in apartheid South Africa.
Selling a few shares of stock won’t do any good, the refrain goes. Instead, you should do A or B or C...
Back during the South Africa divestiture movement, skeptics said that people who really hated apartheid ought to keep their money in General Motors and other multinationals, and then use their clout to pressure those companies to improve conditions for nonwhite workers. For his part, Professor Welch says that Stanford should invest in “research and development of clean-energy technology.”
However, these naysayers are proffering a set of phony choices and premises.
The racist comments of L.A. Clippers owner Donald Sterling have been analyzed from a multitude of viewpoints—American culture, history, sports, free speech, even our obsession with celebrity. But to my knowledge, no one has discussed a critical aspect that directly affects more people than most of the other topics:
What is the role of an ethical consumer in this kind of situation?
I haven’t seen any suggestion, for instance, that Clippers fans should boycott the team’s games.
A partridge in a pear tree? But the Nahan’s Partridge of Africa is endangered, as are the Sichuan Partridge of China and the grey partridge of Britain. And why would you uproot a pear tree from its native habitat?
Chocolate Hannukah gelt? Not if that chocolate is from Cote d’Ivoire – the source of half the world’s chocolate – where young girls are forced to undergo genital mutilation.
On the other hand, coal in the Christmas stocking isn’t a great idea, either. Was the coal strip-mined by blasting the top off a mountain in Appalachia? Were any mine workers killed underground trying to dig it out?
Sigh. If you want to be an ethical gift-giver, it sometimes seems as if the only safe present is a tube of Tom’s of Maine peppermint toothpaste.
(Oops: Tom’s of Maine was bought by Colgate-Palmolive, so you would actually be giving your money to a big corporation that uses weird ingredients like PVM/MA copolymer and propylene glycol.)
Then factor in size, price, and whether the recipient would actually like the thing, and by any definition, it’s impossible to find the perfect gift.
But ‘tis the season. You have to try.
You can certainly read labels, consult “do not buy” lists, and seek out companies that fit your ethical standards. In fact, we at Beacon have compiled a comprehensive list of the major consumer, environmental, labor, animal-welfare, anti-sweatshop, and other “ethical” rankings:
If that seems too arduous, maybe you could look at gift-giving from a different direction. Instead of analyzing the labels, analyze the process. Here are some ideas:
Some companies are actually better than their reputation. Nike, for instance, has dramatically improved its monitoring of overseas suppliers and is considered a leader in ethical leather sourcing in the shoe industry. Nevertheless, it still has such a terrible image, stemming from its sweatshop horrors of the 1990s, that friends and relatives might be furious if you gave them a pair of Air Jordans. So for now, buy the shoes for yourself, and tell people why you did.
Other companies are worse than fans realize. Someone on your gift list might love a bag of Starbucks Via or a mermaid-logo mug, but you know that Starbucks tried to cheat the poor coffee farmers of Ethiopia, wrecks the environment by selling bottled water, and was cited by the National Labor Relations Board for illegal harassment of union organizers. Don’t buy that mug.
If a company takes some actions that really bother you, but overall it seems to be ethically operated, then go ahead and purchase its merchandise. But at the same time, make a donation to a cause that will help counteract the company’s misdeeds, and include the donation card with the gift. For instance: a contribution to PETA along with a set of leather Timberland boots, or a contribution to NOW with an American Apparel shirt.
Give alternative gifts. For the person who lives on Starbucks lattes, try a gift certificate to a local independent café. The Trader Joe’s addict? Some banana bread from the farmers’ market. Of course, the recipients may hate your gift; after all, there’s a reason they go to Starbucks five times a day. But they can always re-gift it.
In the end, there’s some truth to the cliché that it’s the thought that counts.
Sure, employees have filed at least 10 lawsuits against the founder
and chief executive of sexy-clothing-maker American Apparel, alleging sexual
harassment, bullying, violence, and illegal use of corporate money. His firm
went bankrupt once and has skirted the financial edge two more times.
The newest lawsuit—brought by the male manager of an
American Apparel outlet in uber-cool Malibu, California—claims, among other
things, that Charney spewed obscenities at him for poor sales, called him “a
fag” and “a f***ing Jew,” tried to squeeze and choke him, and then tried to rub
dirt in his face.
Actually, this is an improvement over some of the earlier legal
actions, in which Charney was accused of grabbing his penis in front of one
female worker and using company funds to buy sex videos for himself. At least
this time, he apparently is concerned about store sales.
Yet, the case against Charney is not that simple.
The same bravado and willingness to buck conventional wisdom
that allegedly produce the sexual filth, also propel Charney to open his big
mouth for unpopular causes of social justice.
While other U.S. companies hire undocumented foreign-born
workers mainly to cheat them out of wages and overtime, knowing that they don’t
dare complain, Charney champions their rights. He marches in Los Angeles’s
biggest Latino parade, donates money to immigrant rights’ groups, ran ads
supporting citizenship, and designed two special lines of T-shirts as
While other U.S. clothing-makers ship their production out
to sweatshops in places like Bangladesh, Vietnam, Honduras, and China, seeking
the lowest wages possible, regardless of safety or health, Charney makes
everything in the U.S. At American Apparel’s airy, light-filled main factory,
workers can get subsidized health care, subsidized meals, free loaner bikes,
free massages, free English lessons, discount bus passes, and free international
calls back home (to all those countries they may have illegally come from).
Charney also vigorously opposed California’s Proposition 8,
which banned same-sex marriage.
In short, if you’re concerned about corporate ethics, those
two sides of Dov Charney can drive you crazy. Hate him or love him?
But there is a simple solution: Hate the man, love the
While Charney may be the drum major of the parade, the
qualities that make American Apparel an ethical business should be pretty well entrenched
throughout that factory by now. After 15 years, it would be hard to tear out the
sunny windows or yank away the health care and English lessons. Company
officials claim their “vertically
integrated” manufacturing platform has proved that making clothing in America is
Thus, the good parts should keep running even if Charney
By the same token, the harassment and abuse lawsuits are
only against Charney, personally, No other American Apparel executive has been
accused of talking and acting dirty. Get rid of Charney, and the harassment and
bullying should stop.
Charney probably owns too much of the company to be fired
outright, and anyway, it’s often his creative vision behind the popular
Instead, American Apparel should keep him locked up in a
tower with lots of porn videos, Hungry Man frozen dinners, consenting (and over
18) young women—and a laptop with a good graphics program. Every now and then,
a few upper-tier managers could come by to talk about plans for new hoodies or dresses.
But never, ever, ever let Dov Charney out.
least, before you pull out your wallet, think about the forced student
labor, the warlords who
benefit from mineral smuggling, the children exposed to toxic waste from old phones, and the pile of useless accessories you'll throw
With its constant pitching of the
newest cool thing to replace its previous newest cool thing, Apple has always been
one of the worst violators of the environmentalist credo “reduce, reuse,
recycle.” It barely gives customers a chance to use its toys, let alone reuse,
before making the toy obsolete and unfashionable.
But with the
iPhone 5, Apple has really outdone
instance, customers have recently become aware that iPhones and other Apple
gizmos are made in crowded and unsafe Chinese factories where people toil 15
hours a day for barely $50 a month. That’s
bad enough. Then, just a week before the iPhone 5 went on sale, it was revealed
that the factories had dragooned students onto the assembly lines in a rush to
get the phones made on time, threatening to kick them out of school if they
Nor has anything been done to ameliorate
the environmental problems. As with any product, making an iPhone uses up resources
for the components, ingredients, packaging, and marketing, and also uses fuel
and creates carbon emissions in the manufacturing and shipping processes. Again,
iPhones are worse than the average, because their components include dangerous
metals and ores like coltan, which is found only in endangered gorilla habitats
or in African war zones where the profits get siphoned by warlords.
Because Apple fans love their iProducts so ardently, they have often attributed to Steve Jobs and Apple almost every positive quality they want to see in a CEO and a company, whether deserved or not. Thus, they have assumed that Apple reduces its energy use, recycles its electronic waste, treats its workers well, and generally is a socially responsible corporation.
Toward the end of Jobs’ reign, fans gradually and grudgingly began to realize that their heroes didn’t deserve all those haloes.
Now, ironically, Jobs’ successor, Timothy Cook, may turn out to be the real hero of the myth.
This week marks one year since Jobs stepped down as CEO. He would die just six weeks later. During the transition to the Cook era, customers and investors have, understandably, focused on the products and stock price.
But quietly, Cook has made some important changes in the area of corporate social responsibility.
While he was still the heir-apparent, Cook visited the major Chinese factory that manufactures iPhones, iPads, and other devices, after a series of suicides there by workers protesting the long hours and low pay. Jobs never bothered to check in person. Early this year, Cook brought in an outside monitor to follow up on the complaints and again inspected the site himself.
Even more amazing, Cook publicly identified 156 Apple subcontractors and published the monitor’s report. This, from the company that never talks to the press?
True, Cook has continued the tradition of shunning reporters. However, he showed up at a big meeting to speak with financial analysts—which Jobs rarely did—and has schmoozed with members of Congress.
Such outreach is important, because social responsibility is simply impossible without open communication. Transparency enables customers, neighbors, suppliers, employees, investors, and social activists to see exactly what the company is doing and, in turn, push the company on their own goals.
And Apple employees have started to relax. It’s no longer the case—as Jeffrey S. Young and William L. Simon famously wrote in their 2005 book iCon—that “You didn’t want to encounter him [Jobs] in a hallway, because he might not like an answer you gave... And you sure as hell didn’t want to get trapped on an elevator with him, because by the time the doors opened, you might not have a job.”
The new CEO is—well—a normal person, not a demigod. He is private but not obsessive and mercurial.
Nor does the praise of Cook diminish Jobs’ incredible talents and achievements. Probably only an obsessive and mercurial creative genius could have had the vision and persistence to transform the floundering concept of a portable music player into the iPod or to revive a cartoon shop called Pixar—to name just two of Jobs’ successes.
Cook may never invent or inspire the invention of a better product.
But he may well reinvent Apple as a better corporate citizen.
Liberals seem to get all the attention for investing and shopping according to their ethical values, perhaps because the Civil Rights movement began with a boycott of the Woolworth’s lunch counter in Greensboro, NC. And since then, the most famous consumer actions have tended to tilt leftward—against Dow Chemical for making napalm during the Vietnam War, or against Nike and now Apple for dreadful working conditions at overseas factories.
So it’s only fair that it’s finally the conservatives’ turn.
Accordingly, gay rights groups have called for a boycott, while Christian conservatives promised to eat more chicken than ever and declared a “Chick-fil-A Appreciation Day.” Conservative politicians like the former presidential candidates Mike Huckabee and Rick Santorum are leading the charge.
Rare though it might seem to be, Chick-fil-A isn’t the first right-wing consumer cause. For instance, there are socially responsible investment vehicles from all sides of the values spectrum. Some religious-based funds avoid companies in the business of selling alcohol, tobacco, and military equipment—seemingly liberal causes—but others shun anything to do with abortion or birth control. The Republican state treasurer of Missouri launched a “terror-free fund” a few years back, to bam companies that have a financial relationship with countries on the federal government’s list of state sponsors of terrorism.
Years ago, Pepsi was known as the “Republican” cola, and Coke was the “Democratic” alternative, because of the political campaigns to which each manufacturer supposedly donated.
As it happens, I’ve never eaten at Chick-fil-A. Until this controversy, I was only vaguely aware of the company, and there are no outlets near me.
On the other hand, I also don’t live near any In-N-Out Burger sites—I’m in New York, and the chain is located only in the West—but my family makes a beeline whenever we are within 10 miles of an In-N-Out restaurant, because we love the high-quality beef and secret sauce. Never mind that this brand, too, could be considered a fundamentalist Christian company, because the late president, a born-again Christian, instituted a practice of referencing Biblical chapters and verses on its paper cups. (Who even looks at the bottom of the cups?)
It’s too soon to tell which side will win the current chicken war. As a liberal, of course I hope the pro-Chick-fil-A movement flounders. I am troubled by the intolerance—indeed, the avid and self-satisfied intolerance—of the chain’s owner. If I ever stumble across an outlet, I will stay away.
Yet in a weird way, I’m glad to see the concept of ethical shopping gaining favor among conservatives.
True, right-wing activism will probably lead to more union-busting or anti-gay bias in the short run, if consumers flock to companies that engage in those practices. Chick-fil-A would undoubtedly rake in less profit if people like Huckabee and Santorum weren’t making such a concerted effort to dine there.
However, in the longer run, this trend could mean a chance for dialogue. With both sides now talking the language of ethical consumption and activism, maybe we can change some minds or find common ground.
We all win when consumers realize that every dollar has a larger meaning.
New Trader Joe’s outlets have just opened in Lexington, KY, and West Seattle, and 18 more are scheduled soon across the U.S., from Medford, OR, to Sarasota, FL, to Albany, NY. That should certainly please fans like Jeff Pollard, 33, who lives near Albany and belongs to a group called “We Want Trader Joe’s in the Capital District” – the Capital District being the area around Albany, the capital of New York State.
Congratulations, Jeff. Enjoy the Formosa papaya and the Chicken Tikka Masala with Cumin-Flavored Basmati Rice.
Altogether, the new openings will mean approximately 400 Trader Joe’s stores in the U.S., which should make even more people happy (like Denice Rochelle in Seattle, who has blogged about that location). But this growth puts a real strain on the chain’s slogan: “Your neighborhood grocery store.”
Just whose neighborhood are they talking about?
The yuppie neighborhood near Manhattan’s “Silicon Square”? The middle-class family neighborhood in the Los Angeles exurb of Camarillo? The two neighborhoods in Atlanta?
Perhaps a surfer neighborhood in Hawaii? That would seem to be what the company wants shoppers to think, with all the surfboards, fake-bamboo, and garishly flowered shirts throughout the stores. However, there actually aren’t any Hawaii outlets.
True, each TJ site serves its own neighborhood, sometimes altering the product mix to appeal to the local demographic. Food shopping tends to be a neighborhood activity; we rarely drive 30 miles for a carton of milk. But in that case, Trader Joe’s is no more of a “neighborhood grocery store” than is Kroger, Safeway, Whole Foods, or any other supermarket chain-– many of which are smaller than Trader Joe’s.
So what difference does this make? Maybe none. The papaya and chicken taste the same, the staff is just as friendly, and the prices are just as low.
Yet the hidden billionaire ownership and the phony neighborliness matter, because they are part of a bigger misleading image-– along with a smattering of exotic veggies and cage-free eggs-- that makes people feel as if they’re somehow supporting a nice little health food coop when they shop at Trader Joe’s.
The truth is that Trader Joe’s is almost the complete opposite of that feel-good image.
As my new book Ethical Chic points out, it’s not merely the surfer-local image that’s false. For instance, only TJ-brand products are guaranteed to be free of trans fats, genetically modified organisms, artificial preservatives, and other yecchy stuff. The 20% of items that are not made specially for the chain can have any kind of ingredients, and that includes non-cage-free eggs from chickens kept in horrible battery cages. And think again about the pre-cooked, frozen Chicken Tikka Masala with Cumin-Flavored Basmati Rice. All the extra packaging? Ingredients shipped from India? That little meal violates some of the basic tenets of the organic and environmental movements, including “reduce packaging” and “buy local.”
I don’t want to be a grumpy, eat-your-tofu, enviro-extremist. Go to Trader Joe’s if you want, Jeff and Denice! It is fun to shop there (even if I think the hand-written signs are just too-too cute). All I’m saying is: Read the labels. Know what you’re buying-- and buy the product, not the image.
Consumers are told that when they put on an American Apparel t-shirt, leggings, jeans, gold bra, or other item, they look hot. Not only do they look good, but they can also feel good because they are helping US workers earn a decent wage (never mind that some of those female workers have accused their boss of sexual harassment). And when shoppers put on a pair of Timberlands, they feel fashionable and as green as the pine forest they might trek through-that is, until they're reminded that this green company is in the business of killing cows. But surely even the pickiest, most organic, most politically correct buyers can feel virtuous about purchasing a tube of Tom's toothpaste, right? After all, with its natural ingredients that have never been tested on animals, this company has a forty-year history of being run by a nice couple from Maine . . . well, ahem, until it was recently bought out by Colgate.
It's difficult to define what makes a company hip and also ethical, but some companies seem to have hit that magic bull's-eye. In this age of consumer activism, pinpoint marketing, and immediate information, consumers demand everything from the coffee, computer, or toothpaste they buy. They want an affordable, reliable product manufactured by a company that doesn't pollute, saves energy, treats its workers well, and doesn't hurt animals-oh, and that makes them feel cool when they use it. Companies would love to have that kind of reputation, and a handful seem to have achieved it. But do they deserve their haloes? Can a company make a profit doing so? And how can consumers avoid being tricked by phony marketing?
In Ethical Chic, award-winning author Fran Hawthorne uses her business-investigative skills to analyze six favorites:Apple, Starbucks, Trader Joe's, American Apparel, Timberland, and Tom's of Maine. She attends a Macworld conference and walks on the factory floors of American Apparel. She visits the wooded headquarters of Timberland, speaks to consumers who drive thirty miles to get their pretzels and plantains from Trader Joe's, and confronts the founders of Tom's of Maine. More than a how-to guide for daily dilemmas and ethical business practices, Ethical Chic is a blinders-off and nuanced look at the mixed bag of values on sale at companies that project a seemingly progressive image.