Dan Porter is the first to admit that, looking back on it, 2000 was something less than an ideal year for launching an Internet outfit. The dot-com frenzy had peaked, the NASDAQ was beginning its freefall, and a raft of ill-conceived e-concerns were burning through the last of their venture capital. In other words, it wasn’t exactly the most hospitable marketplace for a web-based start-up. Porter though, felt that he had a notion whose time had come. For close to a decade he’d been studying the concept of issues-based buying, exploring the potential for consumers to affect corporate behavior via purchasing decisions. The idea itself wasn’t a particularly new one; in truth, it had been floating about for years. But with the advent of the Internet, there was finally a medium capable of compiling and distributing the sort of information consumers needed to make informed choices about what to buy and from whom. And so, seizing the opportunity offered by the new technology, Porter, along with his co-founders Will Crosby and Sam Pierce, started IdealsWork – an online buyers’ guide providing information on corporate practices with the aim of educating consumers concerned with socially responsible purchasing.
“There was an understanding on our part that, really, the arguably most influential forces in the world today are corporations,” Porter says, recalling the Portland, Maine-based company’s genesis. “And so, if you really wanted to make an impact on certain things, you needed to find a way to actually influence corporations.”
“So we started looking at how you do that. Where were the pressure points? And that led to the concept for IdealsWork.”
The company’s site works like this: users first select the sort of product they’re interested in buying. Then, from a list ranging from animal rights issues to corporate governance, they choose the particular criteria that matters most to them, crafting a rating system that ranks brands according to whatever concerns they deem important. As Porter notes, the site’s focus on its users’ individual priorities represents a significant departure from the way things have traditionally been done.
“Historically what’s happened is organizations have had their own set of values that they want to apply, and the ratings they provide are really the ratings of that organization,” he says.
“Our approach is really oriented around making it possible for the individual to basically choose what values they think are important and see the ratings resulting from that.”
Fundamentally, Porter says, it’s a matter of giving customers the information they need to weigh all the costs inherent in a purchase – not just the number that appears on the price-tag.
“When you buy a piece of clothing made abroad in a country using child laborers getting pennies per hour, that’s part of what you’re getting. That’s the world you’re buying when you buy that shirt.”
The problem, he notes, is that very rarely has the general public related such externalized costs back to the product they’re buying.
“My hope is for a straighter and straighter line drawn between those two things,” Porter says. “If companies are doing the wrong thing, we can’t make them internalize that cost, but we can let consumers know, and the market can push back against those companies.”
“People can make whatever decisions they want, but the more information they have in front of them the more likely they are to make an informed decision, and the more likely those decisions are to be aligned with the values those people actually have.”
That’s the theory, anyway. And, it’s one Porter sees more and more companies taking note of.
“You watch TV and it seems 40 percent of the commercials consist of companies talking about how they doing something right for the community or the world,” he says. “That’s a clear indication of heightened awareness by corporations.”
And as corporations grow increasingly sensitive to such social concerns, companies like IdealsWork become ever more effective influencers of behavior. Porter tells of one firm whose president came across the IdealsWork site and discovered that his company didn’t rank where he thought it should. He had his PR agency contact IdealsWork to ask about the matter. In the end, it turned out that his problem with the rankings was largely due to the fact that his company hadn’t provided IdealsWork with certain relevant statistics. To Porter’s mind, though, the mere fact that this president was concerned enough to inquire in the first place demonstrates the effect an organization like IdealsWork can potentially have.
“He could have been the only person that visited the site, but brand-sensitive corporations spend a lot of money on their brands and they spend a lot of money to maintain them,” he says. “So just the presence of this sort of information, whether through our site or through other sources – and the more sources the more pressure – pushes companies to move in a positive direction.”
IdealsWork is seeking to apply this model to the investment side of the equation, as well. While the company began with an initial focus on consumers, it decided in 2002 to try out its ideas in a somewhat different space. The result – its IW Financial division, a financial services firm facilitating socially responsible investing. Unlike your traditional SRI firm, however, IW Financial has carried over IdealsWork’s fundamental philosophy of letting users choose what issues they want to base their buying and investing decisions upon.
“There were a number of existing players in the SRI space,” Porter says, “but they were largely oriented around very specific sets of issues, as opposed to our approach of letting the user decide.”
“When we started talking to investment managers, our idea was very favorably received because they had all different types of clients.”
And hence, all different types of social concerns. It is this atypical approach that’s helped IW Financial carve out a niche in what Porter observes to be a rapidly growing sector.
“If you look at the trends, what’s typically referred to as ‘socially responsible investing’ has been growing at around a 26-percent clip for the last ten years. So there are more and more dollars being invested with some kind of screen attached to them – with some kind of evaluation that’s not just the traditional financial evaluation attached to them.”
Good evaluations, though, are impossible without good information. Which, as Porter will tell you, is more or less the point of it all.
“Essentially, we’re trying to get this information out to more people in a usable fashion,” he says. “If you go by the premise that that there is something to this free market thing, then what you want is to create mechanisms that allow the marketplace to actually work because you’re providing missing information. You want individuals to be able to make their own decisions.”
“It’s all about transparency. At the end of the day, the more information that can be out there, the better off we’re going to be.”