The Triple Bottom Line Blog

If you've read our book The Triple Bottom Line, you know the story of the Penobscot River in Maine, which has long been a subject of contention between environmentalists and business forces.

Like many rivers in the Northeast (and elsewhere), the Penobscot has been blocked by a series of dams that generate electric power but also harm wildlife--in particular, the Atlantic salmon that must travel up the river in order to spawn. For years, the utility company that manages those dams--PPL Corporation--battled relentlessly against any effort to remove those dams or even to mitigate their effects.

But as we recount in our book, several years ago, under new, enlightened management, PPL began to work with its critics, including not only environmental activists but sport fishermen and Native American tribes (for whom the Penobscot River is holy territory). Complex negotiations produced a landmark plan for restoring the river. Now a milestone in the project has been reached: a Maine environmental coalition, the Penobscot River Restoration Trust, has raised $25 million needed to purchase three dams from PPL.

It's a classic win/win solution: The dams will be dismantled, allowing salmon and other fish to travel freely up the river, while PPL and its shareholders will receive fair compensation for the loss of productive capacity. In addition, the utility has been granted by the state the right to increase its electrical generation capacity at other dams in the Penobscot system, so there should be no difficulty in keeping up with the growing demand for power in the region.

The tale of the Penobscot is a remarkable illustration of what can happen when an embattled company gets out of its defensive crouch and starts collaborating with opponents in search of creative solutions to shared problems.

Labels: Penobscot River, PPL, Role of Government, Water

New York Times columnist Thomas Friedman is a big boy--author of several best-selling books and one of America's most influential opinion-shapers about topics like globalization, economic policy, the "war on terror," and the energy crisis. Over the years, his ideas have been subject to plenty of scrutiny and criticism. But I was a bit startled to see his recent column on sustainable energy policy attacked by Daniel Luzer in the respectable Columbia Journalism Review not on the basis of any logical or factual errors but on purely personal grounds:

Friedman . . . is married to Ann Bucksbaum, the heiress to the $2.7 billion General Growth Properties fortune. Founded by Friedman's father-in-law in 1954, GGP is America’s second largest real estate investment trust and owns, develops, and operates regional shopping malls in forty-one states.

That's right, malls. Fat, energy-hogging, climate controlled, sprawl-inducing—many of the most palpable examples of American waste and ecological irresponsibility are owned and managed by Tom Friedman's family.

This makes [Friedman's] gee-why-don't-you-write-your-congressman naivete a little hard to take. Friedman actually has direct access to a company with some control over the level of waste the United States perpetuates on the world.

Is this fair or reasonable? Arguably not. Who knows how much actual influence Tom Friedman wields over the company his father-in-law founded? Nor does Luzer's article offer any information as to whether GGP has taken any steps to move the properties it manages toward greater energy efficiency or eco-responsibility. Apparently, as far as Luzer is concerned, the fact that GGP runs malls is damning in itself--and it thoroughly undermines Friedman's credibility.

This little episode offers an interesting reflection on the place of sustainability in the American dialogue today. Although more and more people now recognize the legitimacy of sustainability issues in the political and business arenas, there is somehow still a need to prove one's bona fides before advancing a sustainability argument--as though, unless you can somehow prove your personal purity, you're likely to be considered a hypocrite just for talking about sustainability. (Remember the attacks on Al Gore for owning a big house and flying around the world by jet.) And as Luzer's column suggests, criticism of your sincerity is just as likely to come from the left (i.e. from environmental advocates) as from the right (i.e. environmental skeptics).

It's funny: Anyone can make an argument on behalf of self-serving, absolute laissez-faire policies ("Down with regulation! Drill in Yellowstone! Pollute at will!") without having their right to make that argument questioned. The assumed sincerity of self-interest insulates the anti-sustainability crowd from this form of criticism. Environmental advocates are held to a higher standard, one that extends not only to their own behavior but even to that of that families.

If you're a CEO working to position your company at the forefront of the sustainable business movement, you should devote a little time to analyzing (and, if necessary, "cleaning up") your personal behavior as well, including the kinds of cars you drive, the houses you own, and the holdings in your retirement account. If your efforts on behalf of sustainability provoke resistance or resentment from any quarters, you can be sure all those purely personal matters will come under scrutiny--fair and reasonable or not.

If it can happen to Tom Friedman, it can happen to you.

Labels: Ann Bucksbaum, C-Suite, Daniel Luzer, GGP, malls, Personal Musings, Thomas Friedman

We've given Wal-Mart a fair amount of credit for some of the smart sustainable business moves they've made in recent months--for example, see what we wrote here, here, and here. Thanks to the favorable coverage Wal-Mart has (deservedly) received for some of its current initiatives, the company's bad reputation among citizen stakeholder groups has begun to dissipate.

On the other hand, it won't take too many stories like this one to undo all the good from a year's worth of well-meaning environmental and social efforts:

Wal-Mart Stores Inc. is mobilizing its store managers and department supervisors around the country to warn that if Democrats win power in November, they'll likely change federal law to make it easier for workers to unionize companies--including Wal-Mart.

In recent weeks, thousands of Wal-Mart store managers and department heads have been summoned to mandatory meetings at which the retailer stresses the downside for workers if stores were to be unionized. . . .

Wal-Mart may be walking a fine legal line by holding meetings with its store department heads that link politics with a strong antiunion message. Federal election rules permit companies to advocate for specific political candidates to its executives, stockholders and salaried managers, but not to hourly employees. While store managers are on salary, department supervisors are hourly workers.

Not only is this terrible public relations for Wal-Mart, it's a very clumsy way of trying to influence the political climate regarding labor. In the words of Daniel Gross, the Slate magazine commentator on business and economics, "Wal-Mart may be a master of many domains: global supply chains and logistics, local politics and zoning, anti-union warfare and branding. But on the stage of national politics, it has proved to be strikingly inept."

For one thing, why shift your political spending from overwhelmingly Republican to half-Democratic--as Wal-Mart has done in recent years--and then get caught awkwardly trying to torpedo Democratic electoral chances? If your goal is to make friends on both sides of the aisle (a wise strategy, especially during a period of political volatility), this is no way to go about it.

Gross goes on to point out that, in any case, Wal-Mart's assumption that having a Democrat in the White House would be bad for business is quite possibly wrong:

Despite Clinton's Arkansas roots, most Wal-Mart executives probably opposed Clinton in both his successful campaigns. But during his presidency, Wal-Mart's stock more than tripled. By contrast, Wal-Mart executives polled in 2000 would have been exultant at the prospect of two George W. Bush terms, especially if they were to be coupled with mostly Republican control of the House and Senate. And yet this decade has been a lost one for Wal-Mart shareholders: In the Bush years, the stock hasn't budged at all.

Yes, politics matters. But in the end, the macroeconomic climate matters a lot more. Wal-Mart's success ultimately depends on whether the lower-income and middle-income customers on whom it depends are doing well or getting eaten up by stagnant incomes and rising costs for health care and gas.

As Talleyrand once said, Wal-Mart's ham-handed political manuevering is worse than a crime--it's a blunder.

Lesson for business leaders: If you're going to get involved in politics, better rely on a team of people with shrewd political instincts and know-how. Otherwise you may end up doing yourself more harm than good.

Labels: politics, Role of Government, unionization, Wal-Mart

Because I worked with Jimmy Carter on three of his books (a decade or more ago), I am on the Carter Center's mailing list for periodic reports about the ex-president's overseas travels. They tend to be a little more interesting than my family slide shows from Disney World, since they deal with things like peace negotiations, monitoring elections, and trying to wipe out infectious diseases in Africa. I guess everyone has a different idea of fun.

The latest report I received is from a trip to the Arctic that Jimmy and Rosalynn took in July aboard the Endeavor, a National Geographic ship operated by Lindblad Explorations. The passenger list was rather unusual. Carter writes:

Participants included Madeleine Albright, Tom Daschle, Chevy Chase, Larry Brilliant and Larry Page from Google, CEO of National Geographic John Fahey, Director of the Centers for Disease Control Julie Gerberding, CEO of Monsanto Hugh Grant, CEO of DuPont Chad Holliday, CEO of Aspen Institute Walter Isaacson, Governor of Colorado Bill Ritter, eBay CEO Meg Whitman, and President of Lindblad Explorations Sven Lindblad.

If you're like me, you don't know most of these people personally, but the list certainly includes some folks I think of as "good guys" and some as "not so good." (I recently saw an advance copy of a film about the industrialization of agriculture that depicts the behavior of Monsanto in the most dire terms imaginable--more on this as the movie gets closer to its release.) Of course, President Carter brought Yasir Arafat and Menachem Begin to the same conference table, so I guess he is used to being in the same room with people whose goals and motives are (to the say the least) divergent.

The entire trip focused on environmental issues. Carter spoke "regarding my experience as president dealing with an inherited energy crisis (reduced oil imports from 8.6 million barrels/day to 4.3 million/day--it's now 15!)." That much-maligned malaise speech about the need to address environmental challenges isn't looking so silly now, is it? A couple of other notable points from his report, with my comments:

The leaders of Google, Monsanto, DuPont, Aspen, CDC, Alliance of Automobile manufacturers, eBay, German CEOs of huge wind-power companies, NGOs, etc. reported on current plans and progress.

(That must have been interesting. Obviously a cruise like this would be no place to launch a fierce debate or even to ask harsh questions, but it certainly seems as though the organizations represented have one or two differences of opinion and practice when it comes to sustainability.)

Biggest international interest now is how to extract more from Arctic region (fishing, minerals, transport, military) and not how minimize global damage. U.S. has refused to ratify the Law of the Sea treaty while Russia and other Arctic nations are making claims and taking action.

(Am I crazy or does this sound like a very big problem that is not getting anything like the attention it deserves from the mainstream media?)

Overall, the U.S. (and therefore the world) can act only if the next president can inspire the public and work harmoniously with a bi-partisan Congress, business, labor, science, environmentalists, educators, news media, etc.

(While undoubtedly true, this strikes me as a fairly depressing statement, since it will take a lot more than "inspiration" to get this motley group of self-interested players to work together harmoniously.)

All in all, I'm afraid the environmental crises we are facing are going to have to get worse before we have much chance of making them better.

Labels: Arctic, Climate and Carbon, Jimmy Carter, Monsanto, Role of Government

As the 2008 presidential campaign heats up, perhaps the only point of agreement between Barack Obama and John McCain is that our country needs dramatic change. Both candidates are campaigning as change agents: Obama's slogan is "Change you can trust," while McCain campaigns on "Reform, Prosperity and Peace," which, if you stop to think about where America is today, is just another way of saying "change."

Neither candidate has been specific about what change is needed nor about how he plans to make the change, and I doubt that either one has a detailed plan for change that goes much beyond the hope to change his own address to 1600 Pennsylvania Avenue.

Perhaps you're wondering what this has to do with the theme of sustainable business. Actually, the connection is simple. In the world of sustainability, corporate executives are trying to change their organizations in all sorts of ways, from culture and systems to the way they recruit and compensate their people to how they measure and report their performance. What can this year's presidential candidates learn from business leaders about creating change?

I've written before about how Mike Morris, one of my favorite CEOs (and clients, although I had very little to do with what follows) has created culture change at the electric companies he has been invited to lead, from Consumers Energy to Northeast Utilities (NU) and now American Electric Power.

At NU, Morris worked with his deputy Dennis Welch, the VP of Environment, Health and Safety, to turn New England's largest power company from a cantankerous, arrogant, regulatory scofflaw into a model of environmental compliance.

On arrival, he announced that he would not tolerate obstructionism or hardball tactics when it came to dealing with regulators. Within days, he set an example by going to see the Connecticut Attorney General and legislative leaders, and traveling to meet with employees at the plants for face-to-face discussions on critical compliance issues. At the same time, he appointed Welch to create a company-wide environmental management system. Plant managers and employees would now be evaluated on their ability to make their programs compliant and keep them that way.

As a result, NU drastically reduced its legal problems and was ultimately able to sell its "troubled" (i.e. historically non-compliant) nuclear power plant (aptly named Millstone), for hundreds of millions of dollars more than its predicted sale price.

Now Morris and Welch are making change again at AEP, one of the nation's largest electric companies, which also happens to be the single largest consumer of coal on the planet. For over a century, AEP has been an innovator in the electric business, with hundreds of patents to its credit. But the company's ability to create solutions, along with its gigantic size and financial success, led to a sense of hubris and an our-way-or-the-highway approach to doing business.

When Morris arrived, deregulation and climate change were already rocking AEP's world. Reliance on coal, our dirtiest source of energy, was increasingly under attack He realized that the company's culture needed to change, and change quickly.

Morris sent a strong message, first to his leadership team and then through the ranks: "In today’s interdependent world, our ability to succeed as a business will be based on our willingness and ability to work collaboratively with all of our stakeholders, not just tell them what we plan to do." He then modeled this behavior, not only by demonstrating direct, solid and useful relations with political and industry leaders, and with AEP unions and employees, but also by showing candor and honesty in discussing the company's strengths and weaknesses.

For example, Morris wrote in the company’s first sustainability report that, despite many accomplishments, "2006 cannot be counted as a good year for us. One of our employees died on the job doing what should have been a routine task, and a contract worker died in a fire at a construction site . . . [T]his is completely unacceptable to me, to our company and to our employees." The report also detailed the company’s positive and negative environmental, health, and safety impacts--unlike many sustainability reports, which are filled with pure "happy talk."

Once again, Welsh began to create programs to back up Morris' words. He buttressed the company's health and safety programs with clear accountability standards. He launched a stakeholder engagement process with Ceres and national environmental organizations, and held periodic environmental calls with them like those the company held with investors and financial analysts. This year, the company has expanded the process to include stakeholder engagement at the regional, state, and local levels.

Will this new approach provide AEP with the breathing room it needs to develop the new clean-coal and other technologies it needs to succeed for another hundred years? The jury is still out. But it's fair to say that Morris and AEP have been a breath of fresh air in the debate over how to address climate change.

Which brings me back to our presidential candidates. If they're serious about change, Morris and other corporate sustainability leaders like Chad Holiday at DuPont and Katsuaki Watanabe at Toyota, who are transforming their companies for leadership in the 21st century, have a lot to teach them--about sending clear, unambiguous messages concerning the need for cultural change, and then matching their own actions to their words; about altering processes and incentives within an organization (or an administration) so as to reward new modes of behavior; about establishing lines of communication and accountability with outside stakeholders of every kind, including those usually considered adversaries; and, above all, about practicing genuine transparency--which, of course, is possible only when you really have nothing to hide.

If the next president practices policies like these, he'll go a long way to restoring the faith in government that millions of Americans have lost in the last decade.

Labels: American Electric Power, Barack Obama, C-Suite, John McCain, Management and Organization, Mike Morris, Role of Government