The Triple Bottom Line Blog

This isn't a blog devoted to corporate communications, public relations, or business transparency. But all those topics are deeply intertwined with the theme of sustainability.

As we explain in our book, sustainability today is about doing business in an interconnected world and paying attention--not just lip service--to the responsibilities that entails. And in an interconnected world, you can't afford not to communicate with all your stakeholders. You need to listen to them, learn from their gripes and demands, and work with them to create meaningful improvements in the way you operate. And you need to talk back to them, presenting your side of controversies honestly and clearly, and claiming your fair share of credit for the genuinely good things you do.

For these reasons, we pay a lot of attention to how well corporations connect with the world around them. A few do a great job. Most, not so great. And one of the weirder current stories of bobbled communication efforts involves one of America's otherwise more responsible, sustainable companies--Whole Foods.

As you've probably heard by now, Whole Foods' founder and CEO, John Mackey, has gotten caught up in controversy over a series of unfortunate communications missteps. They include his vocal complaints about what he perceives as biased enforcement of the antitrust laws by the FTC (seeking to block Whole Foods' merger with Wild Oats while approving other similar acquisitions) and his posting of scores of pseudonymous messages on a Yahoo chat site that lauded Whole Foods and dissed the future prospects of Wild Oats.

Mackey has apologized to shareholders for his indiscretions, but this hasn't deflected an ongoing SEC probe into whether his postings violated corporate disclosure rules, as well as a wave of criticism from various watchdog groups and commentators ("monumental poor judgment," in the words of Nell Minow).

With this background, we were interested to read a recent Fortune magazine interview with Mackey in which he sounded a defiant note about not allowing his own CEO blog to be silenced, despite the controversies swirling around him. When the interviewer questioned Mackey about "the proper role for a CEO's blog," he responded:

I don't want to say what the proper role for a CEO's blog is. We want to communicate as honestly as we can. I am talking about the things I most care about. I don't do what other bloggers do. I don't post all the time. The great thing about blogging is that I don't need you journalists to interpret me anymore.

Strong, forthright language, and for those of us who believe in the value of transparency, rather heartening. But then we tried logging on to Mackey's blog to read his latest honest, spin-free comments on business. And here's what we found:

Dear Stakeholders,

A Special Committee of our Board of Directors' is conducting an independent internal investigation into online financial message board postings related to Whole Foods Market and Wild Oats Markets. In light of this, it is in the best interest of the company to temporarily hold off on posting on my Company blog. The ability to post comments to this blog will be disabled during this time as well. I look forward to resuming our conversations and plan on being in touch with you again soon.

Best regards,

John

So much for Mackey's experiment in unfettered corporate honesty--at least for the time being.

It would be a mistake, however, for CEOs to conclude that the Mackey saga demonstrates the folly of striving for transparency. If anything, the lesson is just the opposite. Mackey's mistake was hiding his identity behind a false identity while promulgating messages that served his own interests and those of Whole Foods. It wasn't transparency but opacity that got him in trouble.

The World Wide Web makes it possible to communicate anonymously (as the famous cartoon says, "On the Internet, no one knows you're a dog"). But anonymity is a luxury that company chieftains can't afford to indulge. If you're a business leader, you're a public figure, and you need to behave like one. That means taking responsibility not only for your actions but also for your words, whether you're being interviewed on CNN or typing an off-the-cuff blog posting in your pajamas at 2 a.m.

Are there risks involved in taking this attitude? Absolutely. But trying to elude responsibility for the messages you send is even more risky--as John Mackey and Whole Foods have discovered.

Labels: Communications and Marketing, John Mackey, Reporting and Transparency, Whole Foods

Hmm--from a P.R. perspective, it can't be good news for the nuclear power companies to have a Fortune magazine cover story lauding the revival of your industry hit the newsstands the same week as the release of a movie about America's most-famous and least-competent nuclear power plant employee! With your industry finally back in the spotlight, Homer Simpson is not exactly the image you want to present to the world.

Labels: Communications and Marketing, Homer Simpson, nuclear energy

One of the most interesting new blogs is The Social Atom, produced by science writer Mark Buchanan. Although Buchanan is a physicist, his primary interest is in the social sciences.

This recent post is a typically interesting one. Buchanan is responding to a profile of Howard Gardner, the Harvard professor of cognition and education best known for his concept of "multiple intelligences," in Strategy + Business magazine. According to Buchanan, the profile, which focuses on the theme of corporate ethics, is both inspiring and depressing:

Here's a man [Gardner] who is immensely well motivated and clearly a force for the good; for decades he's been writing books and talking to corporate leaders, trying to bring ethics into the corporate world. Yet he's clearly been encountering a deeply held view that sees ethical behavior as an "expensive luxury." The received wisdom glorifies the business importance of "hard-nosed" decision-makers who focus only on "the bottom line," and who know that greed is ultimately good.

Why do business people who are probably well-meaning, ethical people in their personal lives sometimes engage in selfish, unethical behavior in their corporate lives? Probing for an answer to this question, Buchanan describes a number of experiments in which social scientists tested the mechanisms by which "the tragedy of the commons" tends to be enacted in settings where both competition and cooperation are possible.

As Buchanan describes them, the experiments show that, where self-interested behavior goes unnoticed and unpunished by the group, cooperative behavior that benefits everyone (such as voluntarily contibuting to a common investment pot) tends to be extinguished over time. (After all, who wants to be the only "sucker" who contributes to the common good?) But where the experimental conditions are altered so that everyone's actions are transparent and there is the possibility of social sanctions against those who behave selfishly, then cooperative, mutually beneficial behaviors are encouraged and appear to remain the norm indefinitely.

Of course, it's dangerous to directly apply the results of simple experiments to the complexities of life. But it may be that the real world in which Howard Gardner, Mark Buchanan, and the rest of us are operating--in which a significant number of well-intentioned people are trying to "do the right thing" while feeling undermined by others who advocate a "greed is good, to hell with the rest of you" philosophy--is in the process of morphing from one experimental condition to another.

That is, as modern communication technologies expand their speed, reach, and power, business behavior is becoming more and more transparent; and as transparency increases, the possibility of meaningful social sanctions against antisocial business behavior becomes greater. These sanctions may take the form of penalties meted out by government. But increasingly they are taking the form of media exposure, PR disaster, customer backlash, and value collapse in the stock market--a costly modern form of social stigmatization as applied to corporations.

Who knows?--Perhaps we are nearing a "tipping point" at which the number of business people who recognize the new "experimental conditions" and are prepared to adapt to them becomes so great that the overall norm shifts. It may be that, a generation from now, the kind of self-centered business behavior once taken for granted (despoiling the environment, exploiting workers, ravaging communities) will be largely unthinkable, simply because the social circumstances that once made it easy to get away with will have disappeared.

Labels: business ethics, Howard Gardner, Mark Buchanan, Personal Musings, Reporting and Transparency

Today's New York Times highlights an intriguing business story with a major environmental component. The first three paragraphs of the lengthy Times piece convey the gist:

Oil refineries across the country have been plagued by a record number of fires, power failures, leaks, spills and breakdowns this year, causing dozens of them to shut down temporarily or trim production. The disruptions are helping to drive gasoline prices to highs not seen since last summer's records.

These mechanical breakdowns, which one analyst likened to an "invisible hurricane," have created a bottleneck in domestic energy supplies, helping to push up gasoline prices 50 cents this year to well above $3 a gallon. A third of the country's 150 refineries have reported disruptions to their operations since the beginning of the year, a record according to analysts.

There have been blazes at refineries in Louisiana, Texas, Indiana and California, some of them caused by lightning strikes. Plants have suffered power losses that disrupted operations; a midsize refinery in Kansas was flooded by torrential rains last month.

The article goes on to note that many of the breakdowns at U.S. refineries have been linked to the aftermath of Hurricane Katrina, which damaged some facilities, strained others through overuse, and encouraged oil companies to delay necessary maintenance as they ramped up production to take advantage of record-high prices.

I'm not a climate scientist, but it doesn't take any special expertise to sense a common thread among many of the problems mentioned by the Times. Hurricane Katrina . . . unusual lightning strikes . . . floods . . . torrential rains . . . aren't these just the kinds of weather anomalies that many climatologists have warned might be exacerbated by global warming?

If so, perhaps we are entering a period when the world's energy problems could begin to spiral out of control thanks to a new kind of vicious cycle: Reliance on fossil fuels promotes climate change; climate change helps produce more extreme weather conditions; extreme weather events damage oil production facilities, thereby lessening availability of fossil fuels. (And just to make the pot bubble a little faster, has anyone calculated how much more electricity people will be using to rev up their air conditioners if global warming raises average summer temperatures by a degree or two?)

Obviously, there's a limit to how far this cycle can continue without causing huge disruptions to our middle-class way of life. (As economist Herb Stein used to say, "Things that can't go on forever don't.") News like today's may mean that the day when all of us--business leaders, policy makers, and the general public--will be forced to alter our energy-consumption habits is a lot closer than we assume.

Labels: Climate and Carbon, energy, Supply Chain

It would be easy to exaggerate the importance of an event like this announcement that a group of 160 big-company CEOs in the Business Roundtable are calling for concerted action on global warming.

As we all know, the devil is in the details, and one of the crucial details in the announcement appears near the end: "Business Roundtable members did not reach a consensus on which policy tools, such as carbon taxes, would best serve the climate change fight." Agreement on specific policies, of course, is where good intentions collide with reality--and where the financial interests of specific industries are apt to diverge. So transforming a general consensus on climate change into meaningful support for specific solutions remains a major challenge for leaders in both the business and policy communities.

Nonetheless, this announcement marks a revealing moment in history. It's fascinating to observe how, during the second term of a conservative, pro-business administration in Washington, industry leaders are starting to step to the forefront of reform efforts in two major areas--the US health care system and, now, climate change. As economic pressures on business from these two trouble spots continue to intensify, it's likely we'll see CEOs driving government toward collective solutions rather than fighting such solutions, as in the past.

Labels: Business Roundtable, Climate and Carbon, Role of Government

Recently our very own Andy Savitz was interviewed by Total Picture Radio. You can listen to a 2-minute preview or the full 17-minute version here.

For those managers who may not have read the book yet, this is a great introduction to it, and forwarding the webpage (http://www.totalpicture.com/content/view/467/190/) is one easy way to share the TBL concept with others at your workplace or in your network. Enjoy!

Labels: The Triple Bottom Line

There are moments when you can actually see and feel a trend reaching escape velocity. That seems to be happening now with environmental concerns over air travel.

The signs are everywhere. They include criticism in the media of last weekend's Live Earth concerts on the ground that having stars traverse the world, sometimes in private jets, to reach performing venues sets a terrible example for those concerned about climate change. Other related news items just from the last forty-eight hours include:

• On the Business of Green blog hosted on the website of the International Herald Tribune, James Kanter notes that the British Centre for Alternative Technology has proposed that domestic air travel in the UK be restricted to emergency uses only, while an activist group known as The Camp for Climate Action is threatening to disrupt flights out of London's Heathrow Airport this summer.
  
• A recent survey of business travelers finds that 97 percent believe air travel has "a high impact on the environment" compared to other factors--and that 84 percent agree that corporations aren't doing enough to address the problem.
  
• Meanwhile, in what it hopes will be a pre-emptive defensive move, aircraft maker Boeing is touting its just-unveiled 787 as the most environmentally-friendly jumbo jet yet, claiming 20 percent greater fuel efficiency, reduced carbon emissions, and a 60 percent cut in noise pollution.


• At ClimateChangeCorp.com, Tobias Webb reports that the British airline Flybe is mounting a major marketing effort built entirely around creating a green image through $2 billion in investment in less-wasteful aircraft, a promise to purchase carbon offsets, and a plan to introduce "eco-labeling" (audited by Deloitte) to allow travelers to choose flights based on their environmental impact.

If worries over the environmental impact of air travel continue to gain visibility and momentum, the industries affected will include not only the obvious ones (airlines and aircraft manufacturers) but many others in travel and tourism: hotels, resorts, restaurants, theme parks, casinos, cruise lines, travel agencies, and service providers like American Express.

All these business categories suffered during the travel slump following 9/11. Smart managers in affected companies should be taking positive steps now to respond to the environmental challenge, whose effects may be just as deep and perhaps more long-lasting than those of the great terrorism scare.

Labels: airlines, Climate and Carbon

A recent article in the New York Times addressed the conundrum that increasing eco-consciousness among consumers has led to a buying spree of “green” products. While substituting organic, fair-trade, locally-made, or otherwise morally-righteous products for regular purchases is an incremental improvement over what we’ve been doing, many argue that it’s not enough. They say that buying less stuff is closer to the answer.

Another school of thought says that making it “hip to be green” is the only way to get sustainability out of the crunchy-granola niche and into the mainstream. And since buying less is a hard sell in terms of hip-ness, making cool new eco-products is our best shot at moving in the right direction. GOOD Magazine is an example of that zeitgeist.

So what’s a manager to do, in an economy awash with signals that growth is imperative?

• For one, make sure that the environmental benefits you’re touting are both real and significant. Keep in mind the “if everybody did this” mentality; i.e., if everybody bought an “Eco-McMansion” where would we be in the long run? Certainly not somewhere clean and green and naturally preserved.

• Use the fad-factor carefully. Generating an eco-buzz around a new product can be great for marketing and sales, but be sure to look at your message critically – before someone else does. Can activists accuse you of over-doing the hype for a fundamentally unsustainable product? Anticipate their stances early.

• Combine eco-product development with meaningful actions to reduce your company’s environmental footprint – to save paper, energy, biodiversity, and so on in your business operations. If your company can go beyond the selling-more-stuff mentality, you’ll fare better with both consumers and environmental advocates in the long run.

• Even in cleaning up your own house, keep in mind that product substitutions are not always sufficient. For example: rather than just buying offsets for corporate air travel, try to reduce unnecessary travel or to use trains between nearby cities.

Your green products may be selling great right now, but over the long run you’ll be glad you were ahead of the pack in going beyond green consumerism. Already, some environmental advocates are claiming that “green consumerism is an oxymoronic phrase,” and others are rejecting consumerism itself for alternatives like freeganism, community-supported agriculture (CSA), and gift economies like freecycle.

If managers do indeed want to keep selling more stuff, especially to the growing number of environmentally-aware “consumers” (or potential consumers), they’ll need to do more than simply make eco-themed products. They’ll need to find real ways to help would-be consumers reduce their own environmental footprints, and they’ll need to walk the talk in their own business processes.

Labels: Communications and Marketing, Sustainable Consumption

Perhaps the most important business story in today's New York Times appears not in the business section but in the "Dining In/Dining Out" section, normally devoted to restaurant reviews and recipes. In an article titled "The Debate Over Subsidizing Snacks," food writer Marian Burros analyzes the battle surrounding various versions of the farm bill now making their way through Congress. The key grafs:

Increasingly, people are blaming the farm bill, and the longstanding agriculture policy it embodies, for some of the problems afflicting the country: the growth in obesity, the increase in food poisonings, and the disappearance of the family farm. Payments for farmers were started in the 1930s during the Depression to help save family farms; now the program costs billions and benefits about one-third of the nation’s farmers.

Changes in the farm bill are being supported by the Bush administration and an unusual alliance that includes the American Heart Association, Environmental Defense, Taxpayers for Common Sense and GMA/FPA, a food industry association. They agree that some subsidies should be cut and money spent instead to help fruit and vegetable growers, protect farmland, support small farmers and promote healthier eating.

For the first time, lobbyists for farm subsidies are facing off in the halls of Congress against hundreds of activists.

We see here a theme we've written about a lot: the growing public interconnectedness of all the links in an industry's value chain. In this case, the connections are being pushed by ever-more-informed, ever-more-sophisticated activists who are joining forces to create multiple pressure points at which to push for change in a system they view as having multiple flaws.

A decade or two ago, the chances for altering America's farm subsidies program (which was widely recognized as unbalanced and wasteful even then) were slim, mainly because the lobby that supported the program (the farmers themselves) was concentrated, united, and well organized, while the opposition was scattered, disunited, and disorganized. Today this is changing. And a big reason is that consumers have come to recognize the connections between the checks the government writes to support producers of a few favored commodities--soybeans, corn, rice, wheat, and cotton--and the nutrition habits developed by kids in their school cafeterias.

Armed with this new sophistication, they are creating alliances among disparate interest groups that, in combination, have far more clout than any single organization could muster--enough, perhaps, to overcome the powerful opposition of U.S. agribusiness.

If you're a business manager, you can no longer afford to take an atomized view of your industry or behave as if you're responsible just for the handful of activities you conduct on your own. You need to start taking a wide-angle view that includes everyone in your value chain and the human, economic, environmental, and social effects they all produce. Because sooner or later--and probably sooner--the outsiders who scrutinize business will start judging you through just such a wide-angle lens, and you'd better be prepared for what they will see.

Labels: Food and Agriculture, Role of Government

Speaking of Muhammad Yunus, I see that Business Week has just named him one of its Thirty Greatest Entrepreneurs of All Time, alongside such icons as Andrew Carnegie, Thomas Edison, Henry Ford, and Sam Walton. At first glance Yunus might seem a surprising choice, since many people think of him more as a humanitarian than a business person. But his Grameen Bank is a self-supporting, profitable business, and Yunus's mission in life has been to expand the benefits of the free market to poor people who are currently excluded from full participation in the capitalist system.

In this respect, Yunus is very much in the mold of Ford, Walton, and others on the BW list. Like them, he has innovated by developing accessible products and services that are creating whole new classes of consumers and multiplying the life options enjoyed by millions of people.

If the entrepreneurial frontier in Henry Ford's day was made up of millions of working-class Americans desperate for mobility, today it includes billions of people in the developing world eager to enter the mainstream economy.

Labels: Base of the Pyramid, Muhammad Yunus, Personal Musings