ETHICS Whole Foods

JEFF WELLS

Whole Foods Markets may eventually satisfy the Federal Trade Commission on questions related to its status as a food retailer. But on the issue of ethics, the supernatural chain answers only to a higher authority.

Nearly 200 stores strong, Whole Foods has set the industry standard on those intangible issues that help give a company its soul. It's grown over the years with a sense of fairness in a business that thrives on the lack of it. The code encompasses executive compensation, customer service and even lobster welfare.

In the past year, the retailer has worked to include more locally sourced food, setting aside $10 million a year in low-interest loans to encourage small-farm production. The company has also increased its focus on fair trade, partnering recently with the certification organization Transfair USA to offer a proprietary “Whole Trade Guarantee” set of standards.

Whole Foods also led the industry with a set of strict animal welfare guidelines that includes the Animal Compassion Foundation, created in 2004 and funded with 5% of total sales. This nonprofit organization provides suppliers with research and education. Overall standards are due to be updated later this year, and are meant to provide customers with “a clear and transparent way to make informed buying decisions based solely on animal welfare considerations,” according to the company.

“Customers know when someone is trying to sell them something, vs. someone who genuinely cares about their well-being,” said John Mackey, chief executive officer, at Whole Foods' annual shareholder conference this year.

The compassion level was taken to new heights last year with Whole Foods' well-publicized decision to stop selling live lobsters, acknowledging the cruelty of crowding a natural loner in a tank with others.

Such enlightenment hasn't come automatically, however. The chain created the local sourcing program after criticism it had become too reliant on overseas sources. Growth has come with new shareholder pressure to develop more competitive practices. To Mackey's credit, Whole Foods remains a willing student of consumer conscience.