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at little or no cost,'" explained Glenn Prickett, senior vice president of

Conservation International.

McDonald's then met with its key suppliers and worked out, with them and with CI,

a set of guidelines for what McDonald's calls "socially responsible food supply."

"For conservationists the challenge is how do you get your arms around hundreds of

millions of decisions and decision makers involved in agriculture and fisheries, who

are not coordinated in any way except by the market," said Prickett. "So what we look

for are partners who can put their purchasing power behind a set of environmentally

friendly practices in a way that is good for them, works for the producers, and is

good for biodiversity. In that way, you can start to capture so many more decision

makers. . . There is no global government authority to protect biodiversity. You have

to collaborate with the players who can make a difference, and one of them is

McDonald's."

Conservation International is already seeing improvements in conservation of water,

energy, and waste, as well as steps to encourage better management of fisheries, among

McDonald's suppliers. But it is still early, and one will have to assess over a period

of years, with comprehensive data collection, whether this is really having apositive

impact on the environment. This form of collaboration cannot and should never be a

substitute for government rules and oversight. But if it works, it can be a vehicle

for actually getting government rules implemented. Environmentalists who prefer

government regulation to these more collaborative efforts often ignore the fact that

strong rules imposed against the will of farmers end up being weakly enforced-or not

enforced at all.

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What is in this for McDonald's? It is a huge opportunity to improve its global brand

by acting as a good global citizen. Yes, this is, at root, a business opportunity

for McDonald's. Sometimes the best way to change the world is by getting the big

players to do the right things for the wrong reasons, because waiting for them to

do the right things for the right reasons can mean waiting forever. Conservation

International has struck similar supply-chain collaborations withStarbucks, setting

rules for its supply chain of coffee farmers, and Office Depot, with its supply chain

of paper-product providers.

What these collaborations do is start to "break down the walls between different

interest groups," said Prickett. Normally you would have the environmentalists on

one side and the farmers on the other and each side trying to get the government to

write the regulations in the way that would serve it. Government would end up writing

the rules largely to benefit business. "Now, instead, we have a private entity saying,

'We want to use our global supply chain to do some good,' but we understand that to

be effective it has to be a collaboration with the farmers and the environmentalists

if it is going to have any impact," Prickett said.

In this same vein, as a compassionate flatist, I would like to see a label on every

electronics good state whether the supply chain that produced it is in compliance

with the standards set down by the new HP-Dell-IBM alliance. In October 2004, these

three giants joined forces in a collaborative effort with key members of their

computer and printer supply chains to promote a unified code of socially responsible

manufacturing practices across the world. The new Electronics Industry Code of

Conduct includes bans on bribes, child labor, embezzlement and extortion, and

violations of intellectual property, rules governing usage of wastewater, hazardous

materials, pollutants, and regulations on the reporting of occupational injuries.

Several major electronics manufacturers who serve the IBM, Dell, and HP supply chains

collaborated on writing the code, including Celestica, Flextronics, Jabil,

Sanmina-SCI, and Solectron.

All HP suppliers, for instance, will be required to follow the code, though there

is flexibility in the timing of how they reach compliance. "We are completely prepared

and have terminated relationships with

300

suppliers we find to be repeatedly nonresponsive," said HP spokeswoman Monica Sarkar.

As of October 2004, HP had assessed more than 150 of its 350 suppliers, including

factories in China, Mexico, Southeast Asia, and Eastern Europe. It has set up a

steering committee with IBM and Dell in order to figure out exactly how they

collectively can review compliance and punish consistent violators. Compliance is

everything, and so, again, it remains to be seen just how vigilant the corporations

will be with their suppliers. Nevertheless, this use of supply chains to create

values-not just value-could be a wave of the future.

"As we have begun to look to other [offshore] suppliers to do most of our manufacturing,

it has become clear to us that we have to assume some responsibility for how they

do that work," explained Debra Dunn, HP's senior vice president of corporate affairs

and global citizenship. First and foremost, that is what many of HP's customers want.

"Customers care," said Dunn, "and European customers lead the way in caring. And human

rights groups and NGOs, who are gaining increasing global influence as trust in

corporations declines, are basically saying, 'You guys have the power here. You are

global companies, you can set expectations that will influence environmental

practices and human rights practices in emerging markets.'"

Those voices are right, and what is more, they can use the Internet to great effect,

if they want, to embarrass global corporations into compliance.

"When you have the procurement dollars that HP and McDonald's have," said Dunn,

"people really want to do business with you, so you have leverage and are in a position

to set standards and [therefore] you have a responsibility to set standards." The

role of global corporations in setting standards in emerging markets is doubly

important, because oftentimes local governments actually want to improve their

environmental standards. They know it is important in the long run, but the pressure

to create jobs and live within budget constraints is overwhelming and therefore the

pressure to look the other way is overwhelming. Countries like China, noted Dunn,

often actually want an outside force, like a global business coalition, to exert

pressure to drive

new values and standards at home that they are too weak to impose on themselves and

their own bureaucrats. In The Lexus and the Olive Tree I called this form of value

creation "globalution," or revolution from beyond.

Said Dunn: "We used to say that as long as we complied with the local law, that was

all we could be expected to do. But now the imbalance of power is so huge it is not

practical to say that Wal-Mart or HP can do whatever they want as long as a state

government or country does not stop them. The leverage HP would leave on the table

would be immoral given its superior power . . . We have the power to transmit global

governance to our universe of suppliers and employees and consumers, which is a pretty

broad universe."

Dunn noted that in a country like China there is an intense competition by local

companies to become part of the HP or Dell or Wal-Mart supply chain. Even though it

is high pressure, it means a steady volume of considerable business-the kind that

can make or break a company. As a result, HP has huge leverage over its Chinese

suppliers, and they are actually very open to having their factory standards lifted,

because they know that if they get up to the standards of HP they can leverage that

to get business from Dell or Sony.

Advocates of compassionate flatism need to educate consumers to the fact that their

buying decisions and buying power are political. Every time you as a consumer make

a decision, you are supporting a whole set of values. You are voting about the barriers

and friction you want to preserve or eliminate. Progressives need to make this

information more easily available to consumers, so more of them can vote the right

way and support the right kind of global corporate behavior.

Marc Gunther, a senior writer for Fortune magazine andthe author of Faith and Fortune:

The Quiet Revolution to Reform American Business, is one of the few business writers

who have recognized how global corporations can be influenced by progressive politics.

"To be sure," wrote Gunther in an essay in The Washington Post (November 14, 2004),

"there are plenty of scoundrels out there, indifferent to the rights and wrongs of

corporate behavior. And some executives who talk of social is302

sues may be only mouthing the words. But the bottom line is that a growing number

of companies have come to believe that moral values, broadly and liberally defined,

can help drive shareholder values. And that is a case study from which everyone could

learn."

This progressive tilt of big business has not generated much press attention, Gunther

noted. "Partly that's because scandal stories are juicier. Mostly it's because

changes in corporate practices have been incremental-and because reporters tend to

dismiss talk of corporate social responsibility as mere public relations. But chief

executives of closely-watched firms like General Electric do not promise to become

better global citizens unless they intend to follow through. 'If you want to be a

great company today,' Jeff Immelt, GE's CEO, likes to say, 'you have to be a good

company.' When I asked him why GE has begun to talk more openly about corporate

citizenship, he said: 'The reason why people come to work for GE is that they want

to be about something that is bigger than themselves.' As Immelt suggests, the biggest

driver of corporate reform is the desire of companies to attract people who seek

meaning as well as money from their work. Few of us go to our jobs every day to enhance

shareholder value. Younger people, especially, want to work for companies with a

mission that goes beyond the bottom line."

In sum, we are now in a huge transition as companies are coming to understand not

only their power in a flat world but also their responsibilities. Compassionate

flatists believe that this is no time to be sitting on one's hands, thinking

exclusively in traditional left-right, consumer-versus-company terms. Instead we

should be thinking about how collaboration between consumers and companies can

provide an enormous amount of protection against the worst features of the flattening

of the world, without opting for classic protectionism.

"Compassionate capitalism. Think it sounds like an oxymoron? Think again," said

Gunther. "Even as America is supposedly turning conservative on social issues, big

business is moving in the other direction."

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Parenting

No discussion of compassionate flatism would be complete without also discussing the

need for improved parenting. Helping individuals adapt to a flat world is not only

the job of governments and companies. It is also the job of parents. They too need

to know in what world their kids are growing up and what it will take for them to

thrive. Put simply, we need a new generation of parents ready to administer tough

love: There comes a time when you've got to put away the Game Boys, turn off the

television set, put away the iPod, and get your kids down to work.

The sense of entitlement, the sense that because we once dominated global commerce

and geopolitics-and Olympic basketball-we always will, the sense that delayed

gratification is a punishment worse than a spanking, the sense that our kids have

to be swaddled in cotton wool so that nothing bad or disappointing or stressful ever

happens to them at school is, quite simply, a growing cancer on American society.

And if we don't start to reverse it, our kids are going to be in for a huge and socially

disruptive shock from the flat world. While a different approach by politicians is

necessary, it is not sufficient.

David Baltimore, the Nobel Prize-winning president of Caltech, knows what it takes

to get your child ready to compete against the cream of the global crop. He told me

that he is struck by the fact that almost all the students who make it to Caltech,

one of the best scientific universities in the world, come from public schools, not

from private schools that sometimes nurture a sense that just because you are there,

you are special and entitled. "I look at the kids who come to Caltech, and they grew

up in families that encouraged them to work hard and to put off a little bit of

gratification for the future and to understand that they need to hone their skills

to play an important role in the world," Baltimore said. "I give parents enormous

credit for this, because these kids are all coming from public schools that people

are calling failures. Public education is producing these remarkable students-so it

can be done. Their parents have nurtured them to make sure that they realize their

potential. I think

we need a revolution in this country when it comes to parenting around education."

Clearly, foreign-born parents seem to be doing this better. "About one-third of our

students have an Asian background or are recent immigrants," he said. A significant

majority of the students coming to Caltech in the engineering disciplines are

foreign-born, and a large fraction of its current facultyis foreign-born. "In biology,

at the postdoc level, the dominance of Chinese students is overwhelming," said

Baltimore. No wonder that at the big scientific conferences today, a majority of the

research papers dealing with cutting-edge bioscience have at least one Chinese name

on them.

My friends Judy Estrin and Bill Carrico have started several networking companies