Is Whole Foods CEO’s Loyalty to Alleged Sex Abuser a Disloyalty to $WFM Investors?

We’re living in a world in which the President-elect can brag in the most vulgar terms about groping women, and dismiss it as “locker-room talk.”

One in five women in the U.S. has been the victim of attempted or completed rape in her lifetime. Nearly one in two women have experienced sexual violence other than rape in her lifetime. One in five men has experienced a form of sexual violence other than rape in his lifetime.

How do we change the culture of sexual violence?

Does a company’s commitment to corporate citizenship mandate executives to help alter the culture of sexual violence?

130 advocates signed an open letter to board members of Whole Foods Market and Conscious Capitalism, Inc., a nonprofit founded by Whole Foods CEO John Mackey.

Professors, students, and leaders of advocacy organizations, including Faculty Against Rape (FAR), and the National Alliance to End Sexual Violence (NAESV) are urging Mackey to disavow former rabbi, spiritual leader, alleged sex abuser Marc Gafni.

[Read: “An Open Letter To Whole Foods And Conscious Capitalism: Sexual Violence Accountability”]

Public outcry escalated after The New York Times ran a story in December 2015, noting Mackey’s association with Gafni.
The Times reported Gafni describing one of his accusers:

“She was 14 going on 35, and I never forced her.”

And:

“A co-founder of Whole Foods, John Mackey, a proponent of conscious capitalism, calls Mr. Gafni ‘a bold visionary.’ He is a chairman of the executive board of Mr. Gafni’s center, and he hosts board meetings at his Texas ranch.”

According to the New York Daily News, Gafni was never charged with a crime* and has denied sexual misconduct allegations; he stated his then-underage accusers were “willing partners.”

In the wake of The Times’ and Daily News’ stories:

Mackey declared his loyalty to Gafni in June, saying in a statement:

“I have known Marc Gafni for several years, and he has continued to tell me that he is innocent of the allegations being made about him. Loyalty and the presumption of innocence are important values to me, so I will not join those who are condemning him.”

A post on Mackey’s Whole Foods Blog says his involvement with Gafni is now “strictly a personal relationship.”

According to a Whole Foods Market statement, Mackey silently vacated his position as chairman of the executive board of Gafni’s center, and his decision to do so was “personal and independent of Whole Foods Market.”

Is there a firewall between Mackey and the corporations he leads?

According to an article in Business Ethics Magazine:

“If WFM’s board accepts that there is a firewall protecting the company from adverse attention in Mackey’s relationship with Gafni, as well as that the relationship is ‘in the company’s best interests,’ they shoulder accountability to stakeholders if they are wrong.”

An article in Nonprofit Quarterly addresses the potential impact on Conscious Capitalism. From The Whole Mess at Whole Foods: Questions of Leadership and the Personal Sphere:

“Nonprofit leaders know — or should be aware — that their behavior off the field can have potentially enormous reputational effects on the organization you lead.”

No one from Whole Foods responded to the open letter from advocacy leaders. Doug Levy, a board member of Conscious Capitalism, messaged:

“John [Mackey] is no longer associated with Gafni. John is no longer on the board of Gafni’s organization, and John’s endorsement of Gafni was removed from Gafni’s site.”

[Mackey and Conscious Capitalism threads are woven into Gafni’s sites, here and here.]

In the Trump era of “locker-room talk,” does Mackey need to go a step further and update his statement of loyalty to Gafni, disavow his friend?

From the open letter to board members of Whole Foods and Conscious Capitalism from 130 advocates:

“In pledging his loyalty to Gafni, and protecting their ‘personal relationship,’ as noted on his Whole Foods Market Blog, Mackey has inadvertently hurt survivors of sexual assault and obstructed efforts to change the culture of sexual violence. Overlooking Gafni’s public admission minimizes and normalizes sexual violence, and impedes efforts to change the culture.”

Here’s what experts say:

Sandra J. Sucher, Professor of Management Practice, Joseph L. Rice, III Faculty Fellow, Harvard Business School, and author, The Moral Leader: Challenges, Tools, and Insights:

“Mackey’s fellow board members of Whole Foods and Conscious Capitalism have a legal duty of care to act in and protect the best interests of their organizations. They need to ask how Mackey’s association with Gafni may affect the reputation of the entities.”

James Abruzzo, Co-director, Institute for Ethical Leadership, Rutgers Business School:

“Sometimes the appearance of impropriety is itself improper. As a person whose name, ideals and personal mission contribute to the brand value of a public company, Mackey’s responsibility to Whole Foods’ shareholders should outweigh any personal predilections.”

Edward L. Queen, Director, Ethics, and Servant Leadership Program, Center for Ethics, Emory University:

“The CEO of Whole Foods has managed this horribly. While his latest statement is an improvement in that he finally acknowledges the pain and suffering caused by sexual abuse, he continues to fail to demonstrate the deep thoughtfulness of response these allegations warrant.”

Doug White, former director, Graduate Program in Fundraising Management, Columbia University, and author, The Nonprofit Challenge: Integrating Ethics into the Purpose and Promise of Our Nation’s Charities:

“There are three basic categories to consider: 1. those actions governed by law, 2. decisions that have no impact — like where you’ll eat dinner tonight, and 3. what we’re talking about in this case — things people care about, but where the law doesn’t go.

“Gafni’s uncontested, public admission of having sexual contact with a 14-year-old girl is relevant. By definition, as a minor, she could not grant consent. By ignoring this relevant information, Mackey, Whole Foods, and Conscious Capitalism are violating one of the basic mores of ethical decision-making.”

 

Brad Hecht, Vice President and Chief Research Officer, Reputation Institute:

“As the founder of, primary spokesman for, and emotional leader of Whole Foods Market, John Mackey has a responsibility to immediately and directly address this issue. Whether he is willing to admit it or not, Mackey’s personal actions and associations will have a direct impact on the reputation of Whole Foods Market, and therefore the willingness of customers to support the company he leads.”

Melissa Agnes, President and co-Founder of Agnes + Day, and Member of the Board of Directors, Online Reputation and Brand Protection Coalition:

“And while there is such thing as having personal relationships that do not overlap or reflect on the organization for which you work, there are two factors that play into this not being the case for Whole Foods in this particular situation:
“1. Mackey is a co-founder of Whole Foods, not just an employee. Therefore, his personal moral and ethical choices are, at least in part, a reflection on his organization; and
“2. When you openly choose to have a relationship with an alleged sex offender who has willingly admitted to having had sexual relations with a young girl, your character will be judged. And like it or not, as co-CEO, that judgment inevitably reflects upon the organization you represent.”

David Clohessy, Executive Director, SNAP (Survivors Network of Those Abused by Priests, the organization featured in the movie Spotlight):

“Mackey’s declaration of loyalty to a credibly accused child molester amounts to dangerous disloyalty to kids and survivors. We all like to stand by our friends. But at a certain point, when kids’ safety and survivors’ healing is at stake, responsible adults put the vulnerability of youngsters and survivors ahead of personal preferences.”

Bill Murray, Founder, and CEO, NAASCA (National Association of Adult Survivors of Child Abuse):

“John Mackey continues to besmirch the reputation of Whole Foods by participating in ‘institutional enabling.’ He is the voice and face of Whole Foods, and he risks the investments his stockholders and customers have made in the fabulously successful company.”

Matthew Sandusky, Founder and Executive Director, Peaceful Hearts Foundation (son of former Penn State football coach, convicted sex offender Jerry Sandusky):

“John Mackey and the Whole Foods Market Board of Directors have an opportunity to reach millions with an important message. Instead of maintaining the societal norm of silence around these issues, I would like to see them take a stand against child sexual abuse publicly — take a leadership role in getting the message across that we can no longer remain silent.”

Nikki DuBose, Board of Directors, Peaceful Hearts Foundation:

“Regardless of whether Gafni was ever charged with a crime*, and in spite of statutes of limitations restrictions*, we are obligated as a society to support victims and survivors of child sexual abuse and give them a voice. As a leader, Whole Foods CEO Mackey’s unwillingness to address the issue at hand enables perpetrators of sexual assault, and allows the cultural stigma to continue.”

Myka N. Held, Esq., Staff Attorney, Legal Assistance Foundation, Former Staff Attorney, SurvJustice:

“Given the dismal rates of prosecution of rapists and the fact that even rapists who are prosecuted are not always convicted or appropriately punished, we cannot use the wide-spread failure of the criminal justice system as an excuse to let offenders off the hook. For these reasons alone it is important for us as a society to hold Gafni accountable, and part of the mechanisms for doing so require us to demand that his powerful friends end their support.”

What do socially responsible investors think?

James McRitchie, the publisher of CorpGov.net and shareholder activist, emailed members of the Whole Foods Market board of directors in January 2016:

“Mr. Mackey has a fiduciary duty to WFM shareholders. His affiliation with Gafni and the center certainly put the reputation and value of WFM at risk.”

Shane Yonston, a principal advisor with Impact Investors, said in January 2016, in a post on CorpGov.net, “John Mackey & Whole Foods in Spotlight”:

“Whole Foods positions itself as a socially responsible company, which is an important part of its brand. If these core values come into question by employees, consumers, partners, or investors, it can have long-term damaging effects on the company’s stock value. Reputational risk is real, and the way Mr. Mackey chooses to handle this conflict will certainly be watched by investors in the SRI community.”

One of the “best performing socially responsible investment firms,” Parnassus Investments, has made a sizable investment in Whole Foods. The firm holds approximately $106.3 million in market value of Whole Foods Market shares in its Endeavor Fund (as of 11/30/16), and has been steadily increasing its position in WFM since 2014.

About the Mackey-Gafni imbroglio, a spokesperson for Parnassus said the firm’s president and founder Jerome Dodson, who is also portfolio manager of the Endeavor Fund, is “tracking the item,” but declined to comment.

Where does all this leave us in the Trump era of “locker-room talk?”

Coincidentally, Trump jump-started his presidential campaign at the annual libertarian-themed FreedomFest in 2015. John Mackey, a featured speaker at the Fest, also paired up with Gafni on a debate team. Gafni presented solo, ironically: “The Erotic and the Ethical: Next Steps in Libertarian Awakening.”

Whole Foods does many things well (pricing notwithstanding). But their CEO and Board of Directors have a massive blind spot around changing the culture of sexual violence. In the era of Trump “locker-room talk,” it’s more important than ever that corporate leaders pipe up. Silence enables sexual predators to flourish.

Will John Mackey remain loyal to Marc Gafni? Or will he disavow Gafni, and by doing so, demonstrate his and Whole Foods’ commitment to changing the culture of sexual violence?

[*Gafni has never been charged with a crime. A legislative battle rages in New York State over the Child Victims Act proposed statute of limitations reform for claims of child sexual abuse. Protect NY Kids Political Action Committee is leading lobbying efforts.]

NOTE:
Protest organizing is underway, to take place at Mackey’s February 28 keynote speech at Conscious Capitalism in the SF Bay Area. Please join Peaceful Hearts Foundation, founded by Matthew Sandusky (son of former Penn State football coach, convicted sex offender Jerry Sandusky), and SNAP (Survivors Network of Those Abused by Priests), featured in the Oscar®-winning movie Spotlight, to raise awareness and change the culture of sexual violence.

Photo Credit: ellyn. Flickr via Compfight cc

Nancy Levine

Nancy Levine is the author of the four-book series beginning with The Tao of Pug (Penguin) has just been released. She spent 30 years in corporate recruiting and human resources roles, starting at American Express Company. More recently, Nancy has devoted herself to advocacy efforts, working to eradicate child sexual abuse and amplifying the voices of survivors. She lives in the San Francisco Bay Area.

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