The Triple Bottom Line Blog

This week, I hosted a panel at the Ceres Conference at which Jeff Swartz, the CEO of Timberland, the boot company, and Gary Hirshberg, the CEO of Stonyfield Farms, the organic yogurt company, answered questions about the role of business in society. Prior to the panel, I spoke with them about sustainable consumption.

I was very pleasantly surprised.

Rather than the usual canned answers one often gets from CEOs at these events, both these Red Sox fans proved to be deeply committed, not to selling less shoes or yogurt, but to sustainable consumption and enlightened consumerism as a potential way out of the ecological and societal quicksand in which we find ourselves.

Gary explained that only about half of what we eat is real food, in terms of its nutritional value. For him, sustainable consumption starts with optimizing the food value chain, which will reduce waste and create value simultaneously. The resources we now waste to make Twinkies can actually feed lots of people.

Gary believes that we need enlightened consumers, i.e. a critical mass of organic yogurt eaters to really change the equation. Twenty years ago, when Gary realized this, he started Stonyfield.

Jeff represents the third generation of Swartzes to run Timberland, and has a harder case to make with boots. But he and Gary are on the same program. Timberland's mission is "to equip people to make a difference in their world," which includes showing consumers, employees, other companies, and his children how commerce and justice can go hand in hand.

Timberland works hard to sell boots on the basis of its environmental and social actions. This is "cause marketing," yes, but also a deeper attempt to change consumer preferences by helping people "to be the change they want to see in the world." And, yes, quoting Gandhi is apropos here--Jeff is deeply motivated by spiritual and inter-generational concerns.

I know when I am being sold a bill of goods, and this time I was not. Both of these guys have thought deeply about their actions, and they're not just walking the talk, they're running it. When we finished the panel later that morning, they deserved the prolonged standing ovation they received.

As for me, like some other unenlightened "experts" in sustainability, I had wrongly assumed that smaller companies like Timberland and Stonyfield were sideshows to the main event—that the GEs and GMs of the world would move us forward, not the little guyes. Now I see the role that deeply committed CEOs like Gary and Jeff are playing and I would not be surprised if they had more of an impact, in the long run, than companies that are hundred of times as big.

And that size gap may not last forever. Under Jeff, Timberland has grown from annual revenues of $159 million to $1.6 billion, and the company now competes directly with Nike and Adidas. And while organic foods represent only three percent of the food consumed in the United States, Stonyfield sells six times the amount of yogurt as Kraft foods and is growing every day.

Maybe the answer lies in one of my favorite lines from The West Wing: "They'll like us when we win."

Labels: Gary Hirshberg, Jeff Swartz, Stonyfield Farms, Sustainable Consumption, Timberland

Check out this excellent article from the New York Times about the environmental costs of shipping foodstuffs around the globe. It's filled with remarkable facts like these:

Cod caught off Norway is shipped to China to be turned into filets, then shipped back to Norway for sale. Argentine lemons fill supermarket shelves on the Citrus Coast of Spain, as local lemons rot on the ground. Half of Europe's peas are grown and packaged in Kenya.

In the United States, FreshDirect proclaims kiwi season has expanded to "All year!" now that Italy has become the world's leading supplier of New Zealand's national fruit, taking over in the Southern Hemisphere's winter.

But perhaps the most revealing paragraph of the article is this one, which helps to explain why it (counter-intuitively) makes economic sense for food processing firms to move stuff from one continent to another:

Under a little-known international treaty called the Convention on International Civil Aviation, signed in Chicago in 1944 to help the fledgling airline industry, fuel for international travel and transport of goods, including food, is exempt from taxes, unlike trucks, cars and buses. There is also no tax on fuel used by ocean freighters.

Get that? Shipping foods around the world is not some market-tested, economically efficient business strategy developed in response to consumer demand. It's actually the perverse result of an indirect subsidy originally created for an entirely different purpose more than half a century ago.

Free-market fundamentalists often criticize environmentalists (and other non-fundamentalists) for wanting to interfere with the natural, unfettered workings of the economy, which are supposed to embody some quasi-mystical perfection. Their argument would carry more weight if those supposedly simon-pure markets hadn't already been endlessly tinkered with in order to tilt the playing field in favor of one business interest or another.

Labels: Food and Agriculture, Role of Government, Supply Chain

Courtesy of the World Business Council for Sustainable Development, here's an important story from The Financial Times about how the looming recession is affecting corporate attitudes toward sustainability. Facing tough economic times, are companies backtracking on their environmental commitments? It turns out that the answer, at least for now, is no--because in the last few years, companies have come to see that energy reduction, streamlined packaging, and trimming waste are all money-saving as well as eco-friendly programs.

It seems to me that the sustainability challenges for companies will be greater on the social, labor, and community fronts. For example, will corporations with supply chains that trail deep into the developing world maintain their stated commitments to humane labor policies when sales begin to slump? Stay tuned.

Labels: Financial Times, Human Rights and Child Labor, recession, Supply Chain, WBCSD

I had the opportunity to speak last week about the relationship of sustainability to public policy in Washington's chandeliered, blue-carpeted Senate Caucus Room where, I was informed, John Fitzgerald Kennedy announced his candidacy for President of the United States 48 years ago.

That was only one of the day’s many humbling moments. Another was that I was addressing an awesome group of CEOs from Massachusetts who have formed the Progressive Business Leaders Network, dedicated to creating sustainable companies and pushing for public policy that will advance sustainable business development.

(Sometimes, despite the weather, the traffic, and the persistent but badly outdated attitude that Boston is the "Hub of the Universe," I love living here. This is one of those times.)

I'm blogging today because I saved the public policy part of the presentation for last, and ended up being severely time-constrained because an annoyingly tall, tanned, and dapper senator, also from Massachusetts, showed up and took most of my air time, which everyone present, I am sure, felt was a good trade. But here is what I was going to say . . .

Companies have a mind-boggling number of ways to advance public policy in favor of sustainability. The following are some proven approaches, presented in order from least to most obvious.

Regulating government: Here I am referring to businesses applying pressure to governments to do the right thing. Over the years, a public expectation has developed (at least in some quarters) that businesses with use their influence in this way. For example, most people expect Google to stand up to the Chinese government on censorship. The big precedent, of course, is the battle against apartheid. South Africa's racist regime finally fell apart when enough businesses threatened to leave the country over the issue.

The Extractive Industries Transparency Initiative, a voluntary agreement by the oil and gas companies to publish details on bogus extraction fees or facilitation payments they must pay in certain countries, is another example of businesses working to regulate government practices--in this case bribery demanded by corrupt officials. The companies are acting in concert since they cannot hope to win by acting individually. I believe the verdict is still out on whether this is working, and I would welcome any update.

Leading government: Many companies in the U.S. are leading the administration and Congress on climate change by participating in the Chicago Climate Exchange or other voluntary mechanisms for addressing the crisis. The Wall Street Journal (subscription required) recently reported:

Mr. Bush has opposed comprehensive legislation to curb emissions. But like an increasing number of utilities and manufacturers, he is aiming to join the discussions in the hopes of shaping the debate and creating a system that won't be too costly to industry or consumers.

Well, hello, Mr. President! This breathtaking piece of reportage by the nation's leading business newspaper underscores the fact that that proactive companies have already framed the debate to the point that this administration is and forever will be on the outside looking in at one of the most important public policy issues of its time.

Partnering with government (and with NGOs): This approach is considered the holy grail by many people--the only way to get the needed traction and speed to climb out of the all the holes we are digging--and it was the basis for any progress made at the World Summit on Sustainable Development in 2002. No treaties were signed there (as compared to the five or six multi-national treaties signed the Rio Earth Summit in 1992), but 300 or so voluntary partnerships were created before, during, and afterwards. (Does anyone know how those have worked out?)

Another example: Wal-Mart met with a coalition of mayors last week, including NYC's Mayor Bloomberg and Boston's Mayor Menno, and reached (per the New York Times) a "ten-point agreement with Wal-Mart, the country's largest seller of guns, to track the sale of firearms more closely."

This is likely an important and hopefully effective partnership and I thought it was telling that the mayors, not Wal-Mart, announced the agreement. Governments now need the active participation and, in many cases, the leadership of private companies to provide even basic goods and services like public safety. Our public agencies are increasingly dwarfed in stature and effectiveness by the world's largest companies. (Remember how FEMA's ineptitude during Katrina was emphasized by the fact that some of the nation's largest companies got private rescue operations going days before the federal group of bozos figured out where New Orleans was.)

Forming your own government: Many industries are, or at least purport to be, self-regulating with various certification schemes sponsored by entire industries, including Responsible Care, established by the chemical companies in the aftermath of Bhopal, the Sustainable Forestry Initiative by the American Forestry and Paper Association, and the recent proliferation of Fair Trade certification programs. Many of these schemes have real teeth: a company cannot belong to its industry's primary trade association unless it is on the program.

Regulate as if you are government: Wal-Mart again. The behemoth has such enormous purchasing power that almost anything it says has the force and effect of law with its 60,000 suppliers. The company's recent packaging guidelines are but one example of the way in which large companies now regulate their suppliers.

Even small companies are now working with their suppliers on environmental or social issues, creating supplier codes of conduct that supplement standard contract language.

Influence the real government: This is good old fashioned lobbying, and many companies have banded together to push Congress or state legislatures for changes in law or regulation that advance the cause of sustainability, usually with their own economic self-interest in mind. (There is nothing wrong with finding that sweet spot.) US CAP consists of corporate climate leaders like DuPont and GE pushing for climate change legislation which will be good for the planet and good for business.

I like to call this "sustainability ju-jitsu": taking the sustainable side of an issue, like investing in clean coal technology and then pushing to make it more expensive for your competitors who are lagging--turning your responsibility into an opportunity and making the other guy pay.

All in all, it's a pretty amazing assortment of strategies (some of them quite new) that businesses are using to pursue sustainability--and their own corporate interests--through governmental and quasi-governmental action.

And that's more or less what I would have said in Washington last week had I not been big-footed by an actual policy maker. But it's my blog, and nobody can pull rank on me here . . .

Labels: Progressive Business Leaders Network, Role of Government

I'm fascinated by this article from Globe-Net News about the future of urban design--specifically, about the wave of "sustainable city" projects now being built in some of the world's fastest-growing regions, from China, India, and Korea to the Gulf states of Dubai and Abu Dhabi. And while the little boy in me thrills at the science-fiction stylishness of some of the architects' renderings of these cities of the future (of which the picture above is a sample), another part of me wonders whether the promises now being made about these projects have even a chance of being fulfilled.

To explain my built-in biases: I'm a New Yorker from the generation that visited the 1964 World's Fair as children and marveled at the late-post-war visions of urban futurity on display at places like the General Motors pavilion, with its models of gleaming high-rise cities where cars glided soundlessly on highways suspended in space--mid-century versions of Corbusier's famous vision of the "Radiant City."

Then I got a little older, saw how the post-war high-rise apartment projects dotting New York's outer boroughs had become pockets of loneliness, crime, and decay. I read how attempts to build entire cities along modernist visionary lines (like the centrally-planned Brasilia) produced lifeless, boring failures. And I read Jane Jacobs, who explained how the technocratic dream of the centrally-planned city was really a quasi-fascistic nightmare that destroyed neighborhoods. (This is obviously a somewhat simplified whirlwind summary of the issues.)

I became a convert to what I understood to be "the new urbanism," which was all about human-scale, mixed-use, pedestrian-friendly neighborhoods that captured some of the charm, variety, and freedom of traditional city communities like Jacobs' beloved Greenwich Village.

Today of course human civilization is at a crossroads due to global warming, peak oil, population growth, and the challenges of rapid development in what used to be called the Third World. Around the globe, tens of millions of people are pouring into cities in search of economic opportunity, meaning that hundreds of new or enormously expanded cities will be sprouting up in the next twenty or thirty years.

This creates a wonderful opportunity for us to try to leverage the advantages of higher-density living by trying to construct the world's first truly sustainable cities, using all the latest knowledge and technologies for energy conservation and renewal, waste recycling, efficient transportation, and so on. The idea that urban planners, in cooperation with governments and businesses, are already designing and building such sustainable cities is truly exciting.

Yet the images I am seeing and the descriptions I am reading make me a little nervous.

The artists' renderings of such cities-in-the-making (or re-making) as Dongtan, Guangzhou, and Harbin in China, Gugaon in India, Songdo City in Korea, and King Abdullah Economic City in Saudi Arabia (the one pictured above) look a lot like "Radiant Cities" right out of the old Corbusier playbook--right down to the isolated high-rise dwellings that, in my experience, relatively few people actually want to live in.

These supposedly sustainable cities of the future, with their glittering towers and pristine open spaces that appear devoid of humans, look all too much like the regimented visions of the mid-century planners whom Jane Jacobs wrote about so scathingly. The fact that these cities are being built in countries with authoritarian regimes strikes me as another worrisome symptom.

I'd like to be unreservedly enthusiastic about this new trend, and it's quite possible I am at least partially wrong. Herbert Girardet, a widely-respected expert on urban sustainability, is a consultant on the Dongtan project and has written glowingly about its potential as a truly eco-friendly city:

Dongtan's design is based on the principle that all its citizens can be in close contact with green open spaces, lakes and canals. Its buildings will be highly energy-efficient, and the city will be largely powered by renewable energy--the wind, the sun and biomass.

Most of Dongtan's waste output will be recycled and composted. The bulk of its organic wastes will be returned to the local farmland to help assure its long-term fertility and its capacity to produce much of the city's food needs. Chongming's existing local farming and fishing communities will have significant new marketing opportunities with the development of Dongtan, ensuring a high degree of local food self-sufficiency and enhancing the island's long-term environmental and social sustainability at the same time.

It sounds good! And surely something like this is what we need to build in order to house the hundreds of millions of people who will be joining the world's urban population in the next generation.

It's probably dangerous and misleading to lump the various "sustainable city" projects together (as the Globe-Net News article does). It's quite likely that some will prove to be really sustainable--in human, social, political, and esthetic terms as well as in technological and economic terms. But I suspect that some others may fall prey to the problems that have plagued past attempts at heavy-handed, top-down, utopian city planning, ending up as vast, lifeless ghost towns that no one with free choice would willingly inhabit.

I hope this post will attract a few comments from people with deeper knowledge of the subject than I have.

Labels: city planning, Corbusier, Dongtan, Green Buildings and Construction, Herbert Girardet

This is starting to get annoying. Two years ago, when the book came out and I set up my mini-consulting firm, my genius computer guy Dan suggested I use the e-mail address andy@getsustainable.net. I thought that was kind of cute, so I said okay.

For about a year and a half, no one except people in my circle remarked on this address.

But about three months ago, something weird started happening. I was on the phone with Expedia trying to reserve a flight for the next day when the Expedia representative on the phone asked me for my email address. I said “andy@getsustainable.net” and expected to move on. Instead, a long pause ensued, then the guy said,”That’s cool, I’m into that” and proceeded to tell me about the solar panels he had installed on his roof in 1993. For about five minutes, which I did not have, he went on and on.

Just now, I was trying to renew my subscription to MLB.com so I could listen to the Sox game up here on the third floor, when after a ten-minute wait to get an operator on the line, I got one who wanted to know all about why I had the email address, what I did, and where could she get a copy of the book? (Hey, fair is fair.) She was way into recycling and human rights and was all about sustainability and, and, and . . .

I put my foot down when she started to read from my website, and I realized that the Sox were scoring runs left and right (I could get the box score) and I was missing it. But she wouldn’t hook me up until she told me how important this was to her. Jeez . . .

Anyhow, there is something going on out there. But I’m going back to andysavitz@comcast.net

Labels: Personal Musings

Little did we know there is an entire website devoted to sustainable packaging! Now that we've discovered it (and added it to our blogroll), we can recommend this amusing post--couched in the form of a report from the Housewares Show at Chicago's McCormick Place convention center--titled "Sustainable Packaging, the Housewares Show, and the Five Stages of Grief."

Blogger Dennis Salazar shows how consumer products companies confronted with the new demand for sustainable packaging are passing through psychiatrist Elisabeth Kubler-Ross's famous "Five Stages of Grief"--Denial, Anger, Bargaining, Depression, and Acceptance. You'll have fun reading his post and figuring out which stage you and the companies you work with are currently passing through.

Labels: Dennis Salazar, Packaging

If you keep tabs on media coverage of the environment, you may have heard about the recent about-face at The New Republic regarding its new blog focusing on energy and the environment. When the blog was first launched a week and a half ago, it bore the logo and message, "Powered by BP," representing sponsorship by the somewhat controversial UK oil company. It was the only portion of the magazine's website to bear such a logo (though advertising not linked to any particular magazine feature does appear elsewhere on the site).

Readers protested, the blog's chief writer wrote a post explaining his own discomfort with the sponsorship, and within hours the other shoe dropped. The following note appeared on the blog:

You may notice that this blog looks a little different. The phrase "powered by BP," which appeared in the banner when we launched yesterday, led to some (justifiable) confusion about the blog's relationship with BP. But TNR's agreement with BP was and is purely an advertising deal, and the company never had any say in our editorial content. Today, the TNR business staff and BP decided to remove their logo placement to make sure that relationship is clear.

It's an interesting story that illustrates yet again the great and growing power of grassroots stakeholders--in this case, the readers of The New Republic--to force companies to back down from policies or practices of which they don't approve.

What I find most interesting, however, is the reason those readers objected to the BP sponsorship. It wasn't, apparently, any fear that BP would be dictating or influencing the content of the blog. Writer Bradford Plumer had addressed this issue in his post expressing concerns about the relationship, titled with disarming frankness, "Are We in the Tank?" His answer, obviously, was no--and judging by the comments he received, most readers accepted it.

No, what bothered the readers was the possible impact of the sponsorship on BP itself. As a commenter known as Nippers wrote:

The danger for T[he] N[ew] R[epublic] is not so much that BP will influence its writers as that TNR will lend BP integrity and eco-cred. Running BP ads would be one thing. But pinning that little petrochemical boutonniere to the web site's lapel--well, it's a mistake the magazine would do well to reconsider.

In other words, readers of The New Republic for whom the magazine's reputation is important were upset with the idea that that reputation would provide a little borrowed luster to an oil company.

Imagine--a group of customers who care more about the halo effect of the company's reputation than the company itself does! And one that pays close enough attention to the behavior of firms in other industries (like energy) to consider itself capable of judging which companies are and are not suitable business associates for a magazine they respect.

Now that's what you call an active, involved set of stakeholders. The New Republic did the right thing by reversing the sponsorship plan so quickly. If you're lucky enough to attract customers who care that much about what you do, you'd better treat them with respect--as the business partners they are.

Labels: BP, Communications and Marketing, New Republic

In somewhat the same vein as the story we posted yesterday about reducing your computer systems' energy use, here is a nice little article about ten business practices that can lighten your footprint on the planet. It's from a site we just encountered called Ecopreneurist.com. No profound insights or amazing strategies here--just a collection of practical, down-to-earth tips you may find valuable if you're a business manager. If the concept of sustainable business is one you are just getting your head wrapped around--which we suspect is true of many visitors to this blog--this could be the shallow end of the pool that makes it easy for you to get used to the water. Enjoy!

Labels: Ecopreneurist, Megan Prusynski, Small Business, Sustainable Consumption

Following other signs of turbulence, including the resignation of the CEO, here's the latest in the saga of troubled Hershey Foods (makers of the iconic chocolate bar) and its largest single shareholder, the Hershey Trust:

In another high-level departure in Hershey, the chief executive of the Hershey Trust Co., Robert C. Vowler, said he would retire from the company that has overseen investing decisions for one of the world's largest educational endowments.

The Hershey Trust manages $8 billion in assets owned by the Milton S. Hershey School for underprivileged children. Among the school's assets is stock that controls the Hershey Co., the chocolate-bar-maker and major Pennsylvania employer, and the Hershey amusement park.

As president of the trust in 2002, Vowler played a central role in negotiating to sell the Hershey Co. to diversify the multibillion-dollar school endowment. But the deal encountered fierce community opposition and fell apart. Company and trust officials revived deal talks in 2007, again without success.

The Hershey Trust administers the estate of founder Milton Hershey on behalf of the school he created and the community he built. In our book The Triple Bottom Line, we told the story of the 2002 battle over corporate control among the company, the trust, and the town--a revealing parable of how the community where your company operates can exercise a virtual veto power over your business strategies in this day of intense mutual interconnections. Evidently the aftershocks from that struggle still aren't finished.

Labels: Finance and Investment, Hershey Foods, Hershey Trust, Robert C. Vowler