TOMS, Cotpaxi, and Warby Parker all have one thing in common: they strive to be ethical companies. That phrase might seem like an oxymoron. In the past, business was survival of the fittest. The young, social impact-minded founders of today, though, have put their energy toward a new trend: ethical entrepreneurship.
In 2012, Michael Burnstein and David Spandorfer founded Janji. It’s a running apparel company, but it also supports global clean water initiatives. Twice a year, Janji designs a collection inspired by a different country. The company meets with local artists to craft their countries’ “untold stories” through clothing. Once the clothing is designed, manufactured and sold, Janji donates 5 percent of proceeds to clean water projects in those countries.
Janji’s mission statement: “Our promise is to use the power of running to fight the global water crisis.”
To Spandorfer, Janji is “using running as a way to explore, connect, and change the world.”
But what is ethical entrepreneurship? It’s not a simple question to answer. Founders can’t exactly rely on the theories of ethics they learned as freshmen in Business 101.
Is Janji an ethical business because it works with local artists and donates proceeds to charity? What about how they source and manufacture goods, or how it treats its workers?
Vinit Nijhawan, interim executive director at the Massachusetts Technology Transfer Center and a serial entrepreneur himself, has one answer: generosity is key.
“The best entrepreneurs are generous with their employees, generous with their time, generous with their families,” Nijhawan said. “You have all these constituents, and you have to treat them fairly.”
Janji certainly meets the generosity requirement through its charity commitments. It also uses sustainable materials where it can; Spandorfer pointed to his company’s use of recycled polyester and Alpaca wool.
I asked if there were any guidelines in place to protect workers. Spandorfer lacked a concrete answer.
“We care about highlighting these people and doing it the right way,” he deflected.
Nijhawan believes the trend is prevalent because the increase of platforms connecting consumers to labor is causing a rise in employee exploitation. This has been most visible in so-called “gig economy” platforms, like DoorDash and Uber.
“If you look at the bunch of platforms that are launched around connecting consumers to labor, sometimes, their practices on the labor side could be considered exploitative,” said Nijhawan. “We focus on consumers, and you want to keep consumers really happy. One way you keep customers happy is by keeping prices low. To keep prices low, in order to sort of maintain your margins, ultimately, your main cost is labor. So in a way, you’re starting to see a real emergence of unions in that world as labor tries to protect itself.”
Indeed, labor has been working to protect itself in Massachusetts. Uber and Lyft drivers joined an international strike in May—just one flashpoint in an ongoing labor fight. On the management side, new startup founders are trying to create better work environments through ethical business practices.
One of those founders is Liz Vittori Koch. She founded Hatched, a children’s clothes and toy store located in Boston’s Jamaica Plain neighborhood, in 2002.
To Vittori Koch, the pillars of being an ethical entrepreneur include having, “first and foremost, respect for humanity,” she said. “And I extend that to respect and reverence for the environment.”
The toys and clothes sold in Hatched are eco-friendly, manufactured sustainably and not sourced from China, as American companies, in her eyes, exploit China for cheap labor.
“Environmentally, right now, I am concerned with the materials that are used in the products that I sell,” Vittori Koch said. “I sell primarily wooden toys. I don’t sell any plastic, but all the wood is from sustainably harvested forests, meaning that trees are replanted when they’re cut down. Also, none of the wood is treated with harmful chemicals. All of the colors are free of heavy metals and other toxic treatments.”
The clothes at Hatched are made from organic cotton and wool. To be certified organic wool, the fiber is not treated with chemicals, and the animals are treated humanely.
All of Vittori Koch’s vendors are strictly vetted; for example, if one of her vendors starts sourcing from China, she will drop it.
“When I’m choosing a vendor, when I’m looking for someone who’s from producing goods ethically, I look for people who have social accountability certifications,” Vittori Koch said. "No child labor, fair wages in the country, where the products are being produced, proper washing facilities, rest facilities, they’re allowed proper breaks, working in safe buildings.”
She also believes to be a true ethical entrepreneur, there needs to be a focus on the local.
“I’m supporting the local community by maintaining a brick-and-mortar shop, employing local people,” Vittori Koch said. “I think it’s an important part of creating a sustainable local economy. I also only sell things from smaller vendors, whereas some independently owned stores will sell the same items as big-box stores.”
With a broad term like ethical entrepreneurship, it’s difficult to determine what tenets actually make up an ethical business. Impact-minded founders might focus on sustainably sourced materials, respecting their workers, giving proceeds to charity—or all of the above.
Businesses don’t have to be all or nothing. If startups are putting positivity back into the world, great; same goes for large corporations.The problem with businesses declaring themselves ethical, though, is that some actually care about igniting change—and some are just using ethics as a marketing ploy.
“The word ethical has been used as a buzzword,” Vittori Koch said. “The people using it don’t necessarily fulfill that philosophy through their manufacturing or business prophecies. hey just use it as a label. But I believe in it 100 percent.”
