Corporate Responsibility

In 2001, we had a problem with our baby wipes. Or rather with the manufacturing partner who produced our formula for us. What happened next is a case study in the challenges that socially responsible businesses so often face. Literally. By that I mean that University of Oregon Lundquist College of Business Professor Mike Russo and former grad student Dan Goldstein have actually turned the story into one that just won the 2007 oikos Sustainability Case Writing Competition sponsored by the oikos Foundation at the University of St. Gallen, Switzerland.

The case study, Seventh Generation: Balancing Customer Expectations with Supply Chain Realities, topped 22 other submitted case studies to take top honors. You can http://www.oikos-foundation.unisg.ch/homepage/Inspection_copy_RussoGolds... ">read it here.

While we were all being interviewed for the project and reliving the days back when, we took the opportunity to turn on our video cameras and make our own little mini-movie about the experience for the archives:

Click To Play

It’s an interesting parable about how difficult it can be for a small socially responsible company when the right thing and the profit thing don’t want to get along, which actually describes a fairly typical day around here. What do you do? Here’s what we did when the wipe out loomed, and while I don’t think there’s anybody here who would ever want to go through it again, I’m also sure there’s no one who isn’t thankful for the lessons learned.

Lara’s post about our weekend in NOLA reminds me that Sheila, Our Grande Dame of Donational Doings, has lately been feeding me her own tales of altruism in action, and they’re well worth a recap. It’s great to be able to give deserving causes some much-needed help and to make smiles grow as fundamental part of doing business. After all, companies and individuals who fail to give something back to the communities that make their successes possible really can’t be considered a success at all. With that in mind…

We recently gave $2,000 to Bike Recycle Vermont This organization collects old bikes, trains disadvantaged teenagers and adults to repair and restore them,

Yesterday, I had the pleasure of being interviewed by Mark Gunther, Fortune Magazine’s top “green” reporter, for a series of conversations organized by Net-Impact, a group of several thousand MBA’s committed to making business more responsible. Check out Mark’s thoughts on the conversation in his blog post "Seventh Generation’s Long Journey"

Well, you never know what to expect next from Wal-Mart. Today, they announced a new “Live Better Index” in an e-mail:

Yesterday, the Financial Times reported on a community of Benedictine nuns based in Texas who were stunned to find themselves on a list compiled by Wal-Mart of the biggest threats to the company. The nuns have called on Wal-Mart to explain how they came to appear on the list.

It’s sad to see one of the greatest “potential” forces for a more sustainable planet continue to undermine itself. Wal-Mart is on a dangerous see saw. One day, there’s good news, and the next it’s bad. This is a characteristic of too many large companies (BP and Merrill Lynch to name a few others) as they confine their sustainability and responsible business initiatives to a limited number of highly compartmentalized efforts.

These “non-system” activities create as much reputational risk as they do opportunity. Until any company looks at its entire business and develops a “whole” effort to manage all aspects of its activities with an integrated point of view there is little or no chance of sustained success. This is about changing the way we think, how we think, and what we think about.

This week’s New Yorker magazine (4/2/07) features a long negative story about Wal-Mart’s effort to “co-opt liberals.” This is another in the series of good news/bad news stories that both helps and plagues the company. After nearly a year of this endless seesaw, one wonders when they will get the message that systemic change is the answer. As I have often said about many other companies, without a systemic approach that engages the whole culture, the good work done by the right hand is almost immediately undone by the left hand. Compartmentalized initiatives do not work when it comes to managing risk, reputation and moving towards sustainability.

A few of the article’s highlights:

• According to one source, Wal-Mart has been paying Edelman Communications roughly ten million dollars annually to renovate its reputation. Edelman specalizes in helping industries with image problems; another important client is the American Petroleum Institute
• Ron Galloway, the maker of a recent pro-Wal-Mart documentary, "Why Wal-Mart Works and Why That Makes Some People Crazy," has turned against the company. Galloway told me that he now considers Wal-Mart to be a "heartless" employer.
• The chief spokeswoman for the company, a former A.T.&T. executive named Mona Williams, keeps on a shelf a filmed cover of a 2003 issue of Business Week featuring a story titled "Is Wal-Mart Too Powerful?" The story asked tough questions about Wal-Mart's influence on the American economy. "I keep that there to remind me never to trust reporters," she said, without smiling.
• Lee Scott, Wal-Mart's president and C.E.O., who last year earned $15.7 million in salary and bonuses. Early this month, the company announced that it was granting him an additional twenty-two million dollars in stock. In the past year, Scott earned roughly two thousand times the salary of the average Wal-Mart worker.

Last week’s Fortune magazine ran a most incredible story. It details a partnership between Nobel Peace Prize winner Muhammad Yunus and Danone, the French food company, to build a yogurt factory in Bangladesh. What’s so amazing about the story is that Danone believes that profits are not necessarily “always” essential to creating shareholder value, that there are times when it is appropriate to deploy corporate capital in the pursuit of social benefit that will ultimately create additional brand value.

(Danone) can see social benefits, something (Danone CEO Franck Riboud) says may ultimately be reported on Danone's bottom line along with the revenue from its Dannon and Stonyfield yogurts and Evian and Volvic mineral waters. "We're saying that profit maximization is not going to be the only way to measure value," says Emmanuel Faber, Danone's former CFO, who now runs Asia-Pacific operations for the company and who arranged the lunch between his boss and Yunus. "There is a whole emerging area of picking stocks for social impact.”

The factory – and ultimately 50 more, if it works – will rely on Grameen microborrowers buying cows to sell it milk on the front end, Grameen microvendors selling the yogurt door to door and Grameen's 6.6 million members purchasing it for their kids. It will employ 15 to 20 women.

Danone estimates that it will provide income for 1,600 people within a 20-mile radius of the plant. Biodegradable cups made from cornstarch, solar panels for electricity generation and rainwater collection vats make the enterprise environmentally friendly.

What if we lived in a world where companies didn't measure their performance only in terms of revenue and profitability? What if pharmaceutical companies reported on their bottom lines, along with those familiar figures, the number of lives saved by their drugs every quarter, and food companies reported the number of children rescued from malnutrition?... That's the world Yunus envisages.

This is a real breakthrough, if we can harness the experience and financial resources of the world’s largest companies to address fundamental issues of equity, justice, and poverty, the future may be brighter quicker than I had imagined.

Way to go Danone! And a serious kudos to Fortune for bringing stories like these to corporate America.

As I’ve said in previous posts, Seventh Generation is not just a product but an idea. To continue with this idea, there is always a mind behind an idea. Jeffrey Hollender is that mind for Seventh Generation. All of his hard work, incredible values and intellect are not solely appreciated by the employees, bloggers also notice. CSRFanatic’s latest post expresses appreciation for Jeffrey.

“He sets a high standard for building an enduring a great company through his unwavering dedication not to compromise the company’s vision and mission.”

CSRFanatic includes many excerpts from other websites and magazine articles that support his conclusion. Jeffrey stands by his values and makes it look so easy to stand strong against all negative influences. Keep up the good work, you set an amazing example!

A few weeks ago BusinessWeek ran an unusually long and cautionary tale about the challenges and limitations of “ethical” purchasing in China.

“Some companies that thought they were making dramatic progress are discovering otherwise. A study commissioned by Nike last year covered 569 factories it uses in China and around the world that employ more than 300,000 workers. It found labor-code violations in every single one.”

One of our corporate responsibility goals is to “green” our supply chain. That means spreading our gospel of sustainability to all the other companies we work with so that they eventually become responsible businesses we can keep doing business with. It’s a big and important part of what we do but something you’re unlikely to hear much about because it happens “behind the scenes.”

The fact is that many of the companies in our supply chain are pretty traditional. They’re often not real tuned into environmental ideas and/or overly aware of or concerned about the impacts they’re creating. So we try to change that.

For example, we use a logistics company called Deringer to facilitate the shipment of our stuff from place to place. On Earth Day, we made a little video for them with the idea of turning them on to environmental action and kind of getting them stoked about making some changes. It worked! Here’s an e-mail Tara at Deringer shared with us today about some cool new ideas taking hold at the company: