Business and NGOs

Here is an article about non-governmental organizations and how businesses should respond to them.

In the contest between NGOs and companies, size is no advantage. Nor is being in the right. NGOs are increasingly pursuing their campaigns within America's notoriously plaintiff-friendly legal system, with its potential for huge payouts. (Worse, a case involving Nike now before the Supreme Court might discourage firms from entering into public debate with activists, by classifying their comments as "commercial speech", which lacks America's usual protection for free speech.)

Many firms bow to the demands of NGOs just to avoid the legal costs, even though there is little evidence that NGO PR campaigns damage a company's reputation.

The memory of a campaign may linger, but evidence of damage is scarce. Few customers of Citigroup seem to have cut up their cards. Craig Smith of London Business School studied the impact of an NGO campaign against a big European food firm and found that sales initially dropped but recovered within a few months.

Corporations sometimes do bad things, and should be held accountable. But too often environmental groups who preach doom and gloom get their way simply because the company they target is scared. In the end, it is the consumer who gets screwed by higher prices.