plentiful and visible each day. Publishers now vie to position their lists as strategic holy grails for corporations making the cut, and Wall Street has taken notice. Nearly one out of every nine dollars of professionally managed assets in the United States – valued at an estimated $2.71 trillion – has been invested in companies that perform well in CSR rankings.

“Company stakeholders from investors to customers to employees to regulators watch the 100 Best Corporate Citizens List closely, and are using it now more than ever to make important decisions,” said Corporate Responsibility magazine publisher Jay Whitehead in a recent press release. “As a result, making the List is worth millions or even billions in increased shareholder and brand value.”

This should be good news for Citigroup, Goldman Sachs, ExxonMobil, Chevron and Monsanto which, despite their notoriety, have been counted as “Best Citizens” by Corporate Responsibility numerous times. “When someone asks you to define corporate transparency, show them this list,” touts the magazine. But to an increasing number of observers, the transparency seems elusive – as does a clear indication of what the CSR industry stands for. 

“Corporate Responsibility magazine’s so-called transparency only extends one layer deep,” observes Sea Change Media executive director Bill Baue. “We can see the categories and weightings, but we can’t see the rationale behind the decisions on actual scoring of company performance.” Baue notes that organizations including Corporate Responsibility collect data from business executives whose names and positions are not revealed, leaving questions about a company’s true impact on society unanswered. “Input from external stakeholders would make the methodology much more robust and credible,” he says.  

Baue isn’t the only one questioning the value of CSR performance rankings. As evidenced by blogs and discussion boards across the web, a growing number of people are frustrated by CSR industry lists and the manner in which they are constructed. Some even perceive a pattern of favoritism. “Unlike programs like the Nobel prizes, Macarthur Fellowships, or Economist Innovation awards, the companies that run CSR awards and lists often have an incentive to fix the results,” says Martin Smith, founder and CEO of CSR industry website Just Means. “For instance, Corporate Responsibility magazine makes money from the companies that it rates in its annual list (through sponsorship, registration fees for events, and brand licensing arrangements). This, in any industry, would be seen as a conflict of interest, but in the realm of CSR and business ethics it is purely hypocritical.”

The backlash against CSR industry lists is nothing new. Last year, financial news site 24/7 Wall Street warned global equity investors to take Ethisphere’s results with a grain of salt, indicating: “the basis on which [the list] was put together is a bit naive and it appears to be troubled by several conflicts of interest.” In 2005, green business writer Joel Makower criticized Corporate Knight’s approach, saying: “The rankings only go so far. The whole exercise raises as many questions as it answers.” And when Corporate Responsibility magazine (previously called Ethical Corporation) first released its list, green media company AlterNet complained: “When one looks at this list, it is easy to be baffled at the real meaning of CSR. It is riddled with companies that have significant blemishes on their record when it comes to environmental matters, labor practices or treatment of customers. The likes of Wal-Mart and Big Oil have not yet made the cut, but that may be only a matter of time.” 

Clearly the time has come, as many of the world’s most profitable oil, food, agriculture, pharmaceutical and retail companies are featured on the latest “most ethical,” “best citizen,” “greenest,” and “most sustainable” company lists. Given this fact, one has to wonder: Is the CSR industry completely missing the point? And if so, then so what?

Critics see several downsides to the muddle. “CSR is often too hard for the average consumer to grasp when making a purchasing decision, so companies use lists as stamps of approval,” says Smith. “But unfortunately, not only are the lists misleading for consumers, they actually bring an overall lack of credibility to the entire field of sustainable business.” 

Given the importance of sustainable business practices to the future of the planet and its people, this lost credibility is a real concern. “The most vital CSR issue to measure is whether a company is operating sustainably, in the scientific sense,” says Baue. “Environmentally, for example, is the company using natural resources at a rate that allows for the planet to regenerate them sufficiently to provide for future generations?  Unfortunately, almost no companies [on the lists] fully integrate sustainability into their business models, and almost no CSR industry lists consider the sustainability context.”

What Next?

If inclusion on a CSR list translates to “millions or even billions in shareholder and brand value” as Corporate Responsibility magazine indicates, then it stands to reason that some investor and consumer wealth is being channeled in the wrong direction – toward companies that, to Baue’s point, may invest a few pennies in CSR, but make millions or billions of dollars in profits by selling things in ways that take a huge toll on society. This isn’t right. But are CSR industry lists entirely wrong? Not according to some profiled companies.

Dave Stangis, vice president of CSR and sustainability at Campbell Soup Company (which ranked number 12 on Corporate Responsibility magazine’s 2010 list) sees both an underlying purpose and a path forward. “No matter how bad a list is, there is something inherently useful about it,” he says. “It is easy to look at a list and poke holes in it, but what I’m trying to do is use the methodology and questions asked to determine what strategic elements I need to improve inside my company.”

Corporate Responsibility’s analysis, conducted by investment firm IW Financial, assesses 360 data points of public information across seven categories, including human rights, philanthropy and environment. But unfortunately, the same breadth of field that helps companies like Campbell’s to identify strategic weaknesses allows controversial companies to slip through the cracks. “People were up in arms this year, wondering how an oil company like Hess could be considered the tenth best corporate citizen,” says Stangis.  “But in terms of the questions IW Financial asks, such as: Does the company measure its carbon footprint? What violations occurred? How many people were injured? Hess fared well, since they got credit on the disclosures.”

Disclosures aside, many are wondering when CSR industry lists will get around to rewarding companies for creating positive value rather than merely mitigating risk. “These lists should showcase companies that are helping us innovative away from industries like oil, vertically integrated agriculture, and so forth,” Smith says. Stangis agrees: “I think the lists of the future are going to have to better address the issue of strategic opportunity. The real question is: can we finally come up with a list that rewards companies for producing products and services that meet unmet [social and environmental] needs, rather than just minimizing potential damage?” 

Surely, that would be something worth recognizing.

“We finally let off our last two passengers, celebrity artist Wyclef Jean and a young orthopedic surgeon from Grand Rapids, a father of four who had been in Haiti since day three performing emergency amputations with borrowed farm equipment,” Swartz recounts. “That gave me thirty-five minutes of one-on-one time with Bill, who I never get to be alone with. But I don’t think we said a word to each other the rest of the trip.”

Swartz and Shore were likely in shock. The full-blown mental processing of what they had just endured in and around Haiti would begin later, as they assimilated back into their previous routines. As part of his re-acclamation process, Swartz wrote a series of downloads to Timberland stakeholders – including a Fast Company blog post, which summarizes his takeaways, and a personal letter to employees entitled: “Bearing Witness to Haiti,” which provides a remarkable play-by-play account of his physical and emotional experience.

“I felt I needed to get this off my chest,” says Swartz. “So I wrote about the heroism of the many doctors we saw, the heartbreak of the destruction, the inspiration I felt with Bill and Wyclef, and the indignation I felt at the world’s well-intended but inept efforts to cope with this disaster.”

Also, Swartz says, he wanted to leave people with a solid indication of why a boot-making CEO would personally venture “to hell and back,” as he puts it, despite the risks involved in doing so. Just prior to his trip, reports of street violence in Haiti had escalated as millions of citizens struggled to survive a series of powerful aftershocks without adequate food, water, shelter, government or emergency support. Given the magnitude of the situation, how could a few individuals – let alone a corporate CEO – possibly make a significant difference? And besides, what would Swartz and the Timberland organization stand to gain from such a venture?

“Before I left for this hastily-planned trip, people  – many of them rightfully disgruntled family members – demanded to know what I hoped to accomplish,” Swartz says. “I always replied, honestly, that I didn’t know and wouldn’t know until it happened.”

But Swartz discovered answers in Haiti – several of which hold significance for business leaders interested in blending commerce with conscience. “[What I learned was that] CEO as disaster volunteer is not a good model. But, CEO as witness — that is a different story,” he says. “What my eyes have seen, my heart has felt. And so this voyage is just beginning.” 

World-Changing Leadership

World-changing business leadership requires three things: enhanced perspective – the ability to see clearly issues and patterns of significance that others don’t; personal resolve – the sheer determination to make a positive difference in the world; and formative relationships – the collaborative connections that amplify individual and organizational effectiveness. While in Haiti, Swartz solidified all three.

The experience appears to have permanently bonded Swartz, Shore and Wyclef. Swartz and Shore, who remain dear friends, serve on each other’s boards and recently confirmed their commitment to the Timberland-Share Our Strength cause partnership. Swartz also agreed to serve on Wyclef’s Yéle Haiti Foundation board in an effort to deepen their existing relationship.

The Timberland-Yéle Haiti alliance has resulted in notable innovations since it was formed back in 2009, including a successful line of eco-conscious boots. For every pair of Timberland Earthkeepers™ Yéle Haiti boots sold, Timberland donates $2 to Yéle Haiti to support restoration and environmental education projects in Haiti. 

After the earthquake struck, the relationship took a necessary turn. Wyclef was in Haiti helping to deliver aid, collect dead bodies from the streets and, via CNN and other international news sources, broadcast the urgent need for more efficient disaster relief. At the same time, Yéle Haiti was accused of financial impropriety. That was when Swartz realized he needed to stand by Wyclef in a literal sense. In addition to publicly voicing his support, Swartz joined forces with him on the ground.

“Wyclef is a man of many faces,” writes Swartz in his letter to employees. “We know him as a musician and a celebrity, for sure, but if I jump ahead and tell you about [who I saw in] Wyclef by the end of this voyage, I would speak of an immensely gentle, noble, powerful man — one part dreamer, one part prophet, one part revolutionary. And one part real friend.”

In fact, Clef (as Swartz now calls him) proved himself full of surprises during their Haiti voyage. Upon landing in Port-au-Prince, he casually announced that he had arranged for a meeting between their burgeoning convoy – which now included Swartz, Clef, Shore, action movie star Vin Diesel and an armed security detail – and the President of the Dominican Republic, Leonel Fernandez. 

“There I am decked out in my disaster duds: Timberland hiking boots, cargo pants, travel shirt, baseball cap, and Smartwool base layer.  Not exactly presidential visit attire,” recounts Swartz. “Clef whips out a suit he brought, just in case.” 

The meeting proceeds and Swartz is struck by the surreal nature of it all. “There’s Vin and the gun show flexing in one chair, the President looking presidential, Clef suited up, and me in my ‘let’s go hiking’ look.”

Despite his dorky get-up, Swartz, whose Dominican Republic-based boot factory employs approximately 1,800 local citizens and has operated in the country for 25 years, jumped at the opportunity to put his personal resolve into play. He helped do what previous negotiators had failed to: temporarily open the border between the Dominican Republic and Haiti so that vital supplies could flow through. 

“What I said was: “Señor Presidente, history is watching. How do you want to be judged? Haitians are dying because aid is not reaching the people, and we can help solve that  problem—with your help. From our warehouses in the Dominican Republic, Timberland can consolidate and ship by our trucking network. Yéle Haiti is prepared to receive and distribute the aid. Are you prepared to let the trucks go through without the usual bureaucracy?”  

President Fernandez agreed. With that, Swartz turned his attentions to the Timberland team, both in the Dominican Republic and back in New England. Failure to move food and supplies across the boarder was no longer an option, Swartz realized, and so he instructed his staff accordingly: “Don’t tell me that you can’t find a way to get stuff across the border,” he told them. “If stuff gets stuck at the border because you guys can’t figure out an innovative way to get the job done, please understand the consequences. If you have to beg, borrow or steal – just make it happen.”

And they did. Later that day, Swartz’s convoy arrived in Cite Soleil – the City of the Sun –  one of the worst slums in Port-au-Prince. In his letter to employees, Swartz portrays a vivid account of his experience handing out 8,000 hot meals to a crowd of starving people. Here is an extended passage:

...Clef says: “Not a lot of blanche (white people) in Cite Soleil. Should be interesting.” Just what I’m looking for – interesting. Because as the convoy weaves through the city, I am reduced to holding the video camera in my lap and filming my knee. I can’t believe the physical destruction. Nor the swarm of humans walking. People walking in the streets — this is one of the overwhelming images of this voyage. Where are they going? What are they seeking? Walking, everywhere. Streets choked with dust and detritus and despair, and folks out walking. Whole blocks just leveled...

We are in the Cite to feed the hungry. We’ve  already seen a UN convoy heading from the airport to distribute food and water — white armored personnel carriers, soldiers in body armor and combat gear, turret gunners manning loaded weapons, sirens blaring, trucks roaring through the clogged streets — just to hand out fifty pound bags of rice. Clef reminds me that good intentions don’t feed people. Fifty pound bags of of rice are not all that helpful when there is no pot, no cooking fire, and no clean water anywhere with which to cook the rice. 

The Yéle model is a little different — we  brought food from the Dominican Republic, food that Yéle purchased, and somehow, in this destroyed city, Clef’s team cooked 8,000 hot meals of Haitian cuisines (goat stew).  Someone “found” 8,000 styrofoam takeout trays from one of the  destroyed restaurants somewhere in town. And found a truck. Here’s the truck, here’s the meals, here’s Clef with a bullhorn shouting in Creole, and here is a mighty river of the hungry, lining up to be fed. With sweat pouring off of everyone, we began to hand out the meals.

It started “OK,” meaning I’m handing meals to human beings, little kids in Creole or French saying “thanks.” I am trying to say something in French for encouragement, we are working hard in the sunny version of hell, but despite everyone’s best efforts, all of a sudden, it starts to get tense. The Yéle volunteers are shouting at the folks in line in Creole: “don’t push, don’t push,” but you could see in the eyes of the mothers and the fathers and the children, everyone watching the pile of cooked meals in the back of the truck get smaller and smaller and a sense of despair and maybe even panic: “Will I get a meal for my child before they run out?”  And so all of a sudden, the business of Sunday lunch heads in the wrong direction — the river of hungry humans becomes a raging river, pressing forward, starting to crush each other and us. And so the security guys – with good  intentions – shove themselves in front of us, and everyone started taking out their weapons. I heard safeties being taken off and I knew we were not far from a really bad situation. 

At this point I was kinda crushed behind a wall of security people, up against the open back of the truck. In front of me, not three humans deep away, there was a little girl. And someone must have stepped on her or something – she started to cry. In the raging ocean of human suffering—her tears and her fear was too much for me. So I reached between two security guys and put my hand on her and shouted in French: “It’s OK, I’m gonna get you.” I couldn’t lift her up; I was wedged too tightly. But now I was back in CEO mode and so I said to the security guy in front of me: “get me that little girl.” And he did. Lifted her up and passed her back to me and I held her tight, in my arms, and she was sobbing and so was I.  I held onto her, maybe eight years old, talking to her in French, and after about 30 seconds she stopped crying.  Because the crushing that was hurting her—that’s gone now. I’m holding her and we’re behind a security guy and so she’s not going to get crushed. So she stopped crying. 

Kills me. My view of the world says, she should have still been crying.  But her view of the world is: “No. I may not have a home, I may be hungry, I may be living in hell – but that’s normal. That isn’t worth crying over. If someone is hurting me on top of all that, then I’ll cry.” I handed her a meal and off she went – as if to say: “I’m going back to the normal despair of my day and I can handle that, don’t need your help, thanks a million and have a good day.”

We went back to handing out the food. The crush didn’t go away, but the fear of a bad scene did. Everyone got their heads around the fact that we had 8,000 meals — not  8,001. So if you get one, great, if you don’t…I don’t know what. Clef exhorting the crowd; people shouting, crying, waiting…I’m still kinda pinned against the truck when, from under the truck, a little brown hand reaches out and grabs my cargo calf. Scared the hell out of me. I  look down, and there is a little hand clutching my leg. Can’t see the child — he or she has crawled through the densest crush of people I’ve ever seen, wriggled under the truck, and grabbed me — signaling: “I beat the line, now give me a meal.” I slipped one down to the hand; the hand grabbed it and vanished.  My heart still has not come back — a child, figuring out how to get a meal…

This is just one of a series of intense experiences that left Swartz traumatized, and yet focused on what needed to be done. “How am I feeling today? I don’t know. I don’t feel so good,” he says. “I still haven’t yet got my mind around the question: How can we let this happen?” 

Swartz admits to being far less patient today than he was before his trip, particularly toward those who perceive insurmountable challenges. “If a small-scale boot maker from New Hampshire, a prophet dreamer called Wyclef and a social justice guru like Bill Shore can take a field trip to Haiti and as a consequence, 8,000 people get served and a [border opens], you can’t tell me it can’t be done,” he says. “This isn’t in my, Clef’s or Billy’s job description – and yet I’ve got the pictures, and I can show you the faces of the people we helped. So when folks say it’s an impossible situation, that’s just not true. We have the intellectual capital. We have the resources. The question is: do we have the will to make the hard choices?”

The will is alive and present at Timberland. As an outdoor company with a direct connection to the environment and local population, Timberland promises to pursue both reforestation projects that repopulate Haiti’s more desolate areas with newly planted trees, as well as broader initiatives that help struggling citizens to help themselves. “We have a strength to share,” Swartz says, “and we are going to share it.”

“Most consumers don't know where the gold in their products comes from, or how it is mined,” says NoDirtyGold.org, a group that encourages retailers to cease carrying gold that comes from illegal sources.  “Gold mining is a dirty industry: it can displace communities, contaminate drinking water, hurt workers, and destroy pristine environments.” 

Dirty gold is no marginal issue. According to a recent 60 Minutes report, dirty gold mining is rather pervasive, and is also responsible for “the deadliest war since WWII.” Five million people have reportedly died in the Democratic Republic of Congo in a war primarily funded by gold mined in the country by warlords, and then smuggled out to be sold in retail stores around the world. Could that bracelet you just bought at Wal-Mart have come from illegal gold originated in Congo? According to 60 Minute’s findings, it is a vague possibility.

As part of an in-depth investigative research process, 60 Minutes talked to some of the Nation’s premier gold retailers in order to determine which companies could trace their gold back to a particular mine. One retailer, Tiffany & Co., said it could trace nearly all of its gold back to a particular mine in Utah. On the other hand, Wal-Mart, the nation’s largest purveyor of gold, was far less certain about the origin of its products. The company said it plans to trace the source of 10 percent of its gold products by 2010. But given the scope of the tragedy in Congo, critics say Wal-Mart’s plan leaves much to be desired.

“Wal-Mart has moved so dramatically and impressively on its sustainability initiatives, that it’s surprising, and disappointing, to see them moving so tentatively on dirty gold,” says Gil Friend, author of The Truth About Green Business and CEO of sustainability consulting firm Natural Logic. “Their goal is too low, and their pace is too slow.”

As Friend and 60 Minutes point out, if Wal-Mart were to demand traceability all the way back to the mine on all the gold that it sells, it could have tremendous commercial implications for the industry – not to mention help put an end to a tragic war. In appreciation of this fact, Wal-Mart just signed on to support NoDirtyGold’s “Golden Rules” of gold mining, along with retailers Kmart, JCPenny, Blue Nile, Van Cleef & Arpels and many others. 

Grassroots campaign support is at least an optimistic sign. It represents a first step toward ethical gold sourcing and sends a message to the market that will hopefully help to kick off a process of purging illegal gold from the global supply chain. But as gold industry insiders point out, in order to successfully shift to a socially just and truly sustainable industry “gold standard,” there is still quite a distance to travel and also, systemic issues to explore. For instance, to what extent are communities around the world affected by gold mining? And what about the industry’s overall ecological footprint?

“Customers need to understand that the environmental impact of gold mining in our own country is quite devastating, even though the US is a developed country with strong environmental policies,” says Meghan Connolly Haupt, founder of San Franciso-based sustainable fine jewelry company C5. “The largest mine on earth is actually in Utah and measures 2.5 miles wide and one mile deep. It is visible from outer space. This is an important piece of information for consumers because it helps shatter the perception that the issues associated with mining are exclusive to developing countries.” 

Haupt explains that no matter where it occurs, gold mining is associated with the destruction of habitats and volumes of waste. One gold ring results in more than 30 tons of mine waste, she says. And that’s a quantity that continues to go almost completely unchecked. Where are the industry standards and safeguards?

“The industry as a whole has operated in almost the same way for many decades with little regard for the environmental and social impact,” says Haupt. “Lack of customer demand is often quoted as the reason the industry has been slow to change. But mining is a global industry and there are no universally accepted standards or industry certifications at this time. Those companies with the resources to devote to promoting change are often those that are the most stifled by existing operations.”

Perhaps that’s why large retailers lag behind pure-play, sustainable jewelers like C5 in terms of sustainable performance. In C5’s case, the supply chain is miniscule by comparison, so clearly there is a built-in advantage. Innovative, sensible and sensitive methodologies are a lot easier to implement and achieve.

Haupt crafts jewelry made with either recycled or fair-trade metal, using processes with minimal social and environmental impact. As her company reminds consumers, every piece of jewelry purchased from C5 versus a mainstream jeweler is one less that contributes to pollution, destruction of habitats, forced labor, displacement of communities and other negative impacts.

“I started C5 company to help create a systemic change in the jewelry sector,” says Haupt. “By leading the sustainable jewelry movement, we are helping to raise the standard of business, which translates into positive economic development in some of the world’s most impoverished countries.”

C5 is just now launching its first two collections of finished jewelry, and according to Haupt the company will be expanding those lines in 2010. Though as a start-up C5’s financial future is somewhat uncertain, its value proposition is abundantly clear. Talk about your statement pieces.

If you’re like me you spend a fair portion of each holiday season assembling plastic toys made in China, which often arrive unassembled in several dozen pieces. I have to admit, I do so begrudgingly. Of course I appreciate that all holiday gifts are given with the best of intentions and that, in the spirit of the season, we should appreciate all we have and are given. But the truth of the matter is, however magical the color photos on any given toy box look, what rests inside the package is often another story.

Last Christmas and Chanukah my son received, among other things, the Evenflo Exersauser, Baby Einstein Color Blocks and a Fisher Price Go Diego Boat Toy. While the Exersauser took a painfully long time to put together (the instructions might as well have been written in Chinese), both the Color Blocks and Boat Toy were recalled for a violation of lead paint standards. How do I know this? Because I monitored their status on the Consumer Product Safety Commission’s (CPSC) website. How would an average parent who does not obsess about such matters know this? Most wouldn’t, as virtually no marketer spends as much recalling a dangerous product as promoting its sale.

The CPSC’s list of 2009 toy recalls for lead and related safety violations is shockingly long, particularly considering the publicity uproar surrounding the 2007 lead-laced toy recalls, where Mattel Inc. alone took back over 1.5 million toys. Are toy industry standards improving? If they are, then it seems to be happening rather slowly. Companies including Various Toys, DND Imports and TDI International recalled products for lead paint violations in 2009, despite new consumer safety legislation banning lead, beyond minute levels, in children's toys.

Since corporate standards sometimes fail and CPSC auditing resources are themselves limited, dangerous toys inevitably slip through the cracks. The actual number of lead-laced toys on our store shelves is surely higher than we realize. That’s a serious issue since even limited lead exposure can lead to life-long learning and behavioral disorders in children. My sense is that as long as China remains the world’s toy factory, parents get torpedoed by escalating safety and regulatory risks.

The environmental integrity of plastic toys is another matter for consideration, as parents are all but left in the dark as to the ecological and health-related impacts of the chemicals used during the manufacturing process. Many toys sold in the US are made from PVC, a poisonous plastic.

“PVC is the most toxic plastic for our health and the environment,” says the Center for Health, Environment and Justice in a recently published Fact Sheet on PVC and children. “No other plastic releases as many dangerous chemicals. These included dioxins, phthalates, vinyl chloride, ethylene dichloride, lead, cadmium, and organotins. There’s no safe way to manufacture, use or dispose of PVC products.”

There is also no sure-fire way for parents to determine which toys on Toys R’ Us shelves contain PVC and which do not, since no labeling standard exists for the industry. Material disclosure options are left up to individual companies, and most companies opt not to disclose much of anything. That begs a question: What is a concerned parent to do? On the upside, there are some wonderful online resources and product alternatives for those inclined to opt out of the black box, toxic toy system.

I recommend starting with the Green Guide, an online resource containing facts, environmental impact data, product comparisons and shopping information. Browsing through Green Guide it should become fairly clear that one need not sacrifice fun and ingenuity for peace of mind. From PVC and pthalate-free LEGOs to PlaSmart’s PlasmaCar and Radio Flyer’s Earth Wagon, the selection of toys on Green Guide is fairly broad. It includes selections from small as well as larger companies, indicating that that the trend toward eco-friendly toys is not a temporary fad, but rather a genuine shift in the global market.

Global to Green

At the Pottery Barn Kids Corte Madera store, the statement reads loud and clear: Green is here, the company is invested, and quality comes first. A huge wall of environmentally friendly products – cars, cranes, planes, trains, recycling and dump trucks made from sustainable rubberwood and painted with natural, water-based dyes; all-terrain vehicles made of 100 percent recycled eco-plastics; phthalate-free zoo animals and figurines; BPA-free Klean Kanteen® Water Bottles and other amusements – greets arriving customers and provides a wonderful selection of holiday gifts for choosy parents.

“One of Pottery Barn Kids top priorities is the health and safety of children as well as the environment,” says Christina Nicholson, Director of Sustainable Development at Williams-Sonoma Inc. “Offering simple, safe, high-quality products are founding principles of our brand, which is why we have such a variety of eco-friendly products. Our customers have asked for more unique, eco-friendly products and we are excited to be able to offer a broad assortment.”

Unlike so many other mainstream toy brands, Pottery Barn Kids sets a relatively high bar, not just for its designated eco-friendly products, but for everything it sells. Whereas toy industry standards determine 600 lead parts per million as an acceptable lead content range for products sold in the US, Pottery Barn Kids abides by an internal standard of 90 lead parts per million. The company also voluntarily tests for a variety of other compounds, including antimony (Sb), arsenic (As), barium (Ba), cadmium (Cd), chromium (Cr), mercury (Hg), and selenium (Se). Remarkably, not every toy company does that.

Product development-wise, Nicholson sees expansion opportunities. “Customers are responding very well to our eco-friendly offerings,” she says. “They appreciate the benefits these products offer their home and children. With each season we will focus on growing our eco-friendly product assortment in all categories – toys, furniture, textiles and décor.”

In addition to eco-friendly toys, Pottery Barn Kids also offers FSC-Certified furniture and organic bedding. In 2008 the company reintroduced its Anywhere Chair, which has long been been a staple in the Pottery Barn Kids assortment, with a new “hybrid” insert made from 30 percent sustainable soy-based foam. Further plans for eco-makeovers on existing products, as well as the development of new eco-product lines through partnerships with manufacturers Sprig Toys, Plan Toy and Green Toys, are reportedly in the works.

“We are parents too and we are committed to making sure everything we sell is as safe for our customer’s kids as we demand that it be for our own,” says Nicholson. “We recognize that there is much more to be done, and we are committed to growing even more eco-friendly as a company.”

Nicholson’s attitude is a signal to parents – and smart marketers, too. Some US toy companies puff up their “rigorous standards.” Others blame lax oversight on the part of the Chinese government, or on the part of US regulators for their quality-related woes. On the other hand, Pottery Barn Kids, having made a significant investment in green toys while humbly communicating environmental and safety-related ambitions for the future, gives people a better sense of assurance. They neither over-promise nor under-deliver. And that’s the key to building trust.

Micro-lending website Kiva.org recently hit a major milestone. Since launching four years ago, the organization has facilitated $100 million in microloan transactions between individual lenders and low income entrepreneurs all around the world. Lots of charities target the poor, you may ask, so what makes this organization unique? It’s the approach. 

In order to achieve its mission of connecting people through lending for the sake of alleviating poverty, Kiva employs a strategy of inclusion. It turns what was once an opaque process in both lending and charitable giving on its head, creating greater levels of personal involvement and future commitment. 

A few weeks ago Kiva founder Premal Shah described this process to an audience of thousands at the 2009 Women’s Conference, saying: “When you give to big organizations, you don’t know where your money is going. Here you do. There are short feedback loops and direct transparency. When you browse entrepreneurs’ profiles on Kiva, choose someone to lend to, and then make a loan, you know exactly where your money is going. You can see that you are helping a real person make great strides towards economic independence. Because of the technology we enable, you get an e-mail from that person and establish a connection. That makes it personal.”

What Shah describes also encourages the experience of web-based world change to go viral. People excited about a new process tend to spread the word, and Shah says Kiva has benefited tremendously from this natural momentum: “We don’t even have a marketing person at Kiva, it all just spreads from word of mouth. For every dollar we spend at Kiva, we raise $10 online.”

Other firms are benefiting from technology-enabled connections, too. Ashton Kutcher’s company Katalyst, which is widely known among the Gen Y and Hollywood set for creating savvy social media campaigns, is now convincing large corporations that it’s time to go about communicating social issues and engaging stakeholders in totally new ways. Earlier this year the company joined forces with Kellogg company in order to confront hunger. 

The result of the Katalyst-Kellogg collaboration was a web video featuring a cross section of user generated content, submitted by people moved to help end the growing hunger epidemic in the United States. The aim of the video was to encourage consumers to donate to Feeding America, the nation’s leading hunger relief organization. The video, accessible on on the KelloggCares Facebook Page www.facebook.com/kelloggcares and numerous other channels, was directed by Demi Moore.

“The web is by far the quickest and most efficient way for companies to activate and organize people,” explains Kutcher. “We don’t just use the web to evangelize a cause, we use it to activate and mobilize people.”

The core idea behind what both Kutcher and Shah stand for, in addition to transparency and openness, is effective engagement. Both feel an urge to harness the power of technology in order to elicit a greater level of participation from the public on key issues that affect our world. They strongly encourage more companies to do the same. 

“Let people be the ambassadors of your cause,” Kutcher says. “There are now dozens of ways to do this. The biggest thing I advocate for is don’t go out and build a website. There are so many social media tools that already exist: Facebook, Twitter, iPhone applications...These are all tools that can be used to create social good. All you have to do is connect them. Just link these tools. Create a loop of technology to get your message out and create a world of good.”

Shah heartily agrees that linking technology applications creates superior social opportunities for companies, and points to how even the simplest advances – from e-mail to cell phones and mobile cash – have upped the ante for Kiva and helped his stakeholders tremendously. As for what the future holds, Shah seems optimistic: “What we are going to see in the next decade is going to be mind-blowing.”

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There is a great deal at stake in the bottled water business. Perhaps Nestlé Waters North America knows this better than anybody. The company presently controls approximately 41 percent of the $11.7 billion US bottled water market. Like every other competitor in the space, it faces shrinking category sales, as well as mounting pressure from groups complaining about the toll that water corporations take on the planet. 

Bottled water activists point to plastic waste, energy consumption, greenhouse gas emissions, the environmental effects of water extraction, water privatization issues and a range of social problems generated by the industry. Could such “road blocks” deter long-term growth for corporate bottled water empires? Nestlé thinks not. 

According to a 2009 document entitled “The Future of Bottled Water” authored by Nestlé CEO Kim Jeffery, the company’s broad portfolio of bottled water products, including Poland Spring, Perrier, Arrowhead, Deer Park and Zephyrhills, are well-positioned to recover from the present economic slump. “Bottled water is perfect as it is,” the company says. “[There are] limited opportunities to innovate.”

This company is clearly not of a world-changing mindset. Nestlé takes the position that the bottled water industry is unfairly portrayed as a “villain” by environmental activists and an angry public, and that “environmental facts do not support this.” Really, Nestlé?

In a press release and video web site launched last week, Nestlé attempted to express to the public the environmental virtues of bottled water. “Bottled water is actually the most efficient choice of any packaged beverage available to consumers,” the company insists. “Bottled water is a very small user of our water resources...Plastic represents less than one percent of solid waste. While water bottles can be recycled, not all Americans have access to curbside recycling...To sum it all up, bottled water is a healthful choice, can cost less than 20 cents per bottle, and has a lighter environmental impact.”

Of course, not everyone sees things through the corporation’s rose colored lens. Take the 5,400 local citizens of Salida, Colorado who recently banded together in order to fight Nestlé off and protect its local water resources and land. Or what about the residents of McCould, California, who claim their town was torn apart by Nestlé’s operations in the area? Nestlé makes no mention of such stakeholder concerns in its press release or video web site, both which set forth to “set the record straight.” 

Nestlé has a public relations problem. The problem isn’t just that Americans around the country are hanging signs in their windows and entryways reading: “Stop Nestlé” or “Nest-Leave.” Nestle’s public relations problem is its sterile, detached response. The company seems to be under the impression that people will read its communications in an isolation chamber, devoid of context, clue, cultural condition, and (yes, Nestlé) fact. 

Let’s start with the hard data. According to Food and Water Watch, bottled water produces up to 1.5 million tons of plastic waste per year. That plastic requires up to 47 million gallons of oil annually to produce. And while the plastic used to bottle beverages is of high quality and is demand by recyclers, over 80 percent of plastic bottles end up in land fills. That’s why the Pacific Rim Garbage Patch, the floating vortex of waste that’s twice the size of Texas, is comprised mainly of plastic. It’s also why so many sea creatures die every day from ingesting plastic, and why plastic waste has become one of the chief concerns of our Nation’s top environmental groups. 

On the cost side of things, consumers pay a huge markup on a product even though as much as 40 percent of it comes from a tap in the first place. Stakeholder communities also pay. Food and Water Watch says Nestlé has an unfortunate reputation for moving into communities, taking water for next to nothing, selling it for a hefty profit, then leaving the locals to deal with the residual environmental and social externalities, and moving on. “Next!”

None of these issues are substantively addressed in Nestlé’s press release or on its video website. Through bullet points, select interviews and clip art snippets, the company only superficially confronts the environmental impacts of bottled water. Nestlé avoids all controversial content, including details related to ongoing rifts with local communities around the country. The company’s corporate tone of voice, detached message and superficial approach to “issues outreach” demonstrates an indifference to the wider public’s ardent support for environmental reform and social justice. The pitch is all wrong. 

Nestlé broke every cardinal rule in social media, stakeholder engagement and transparency with it’s one-sided, “set the record straight” public relations effort. There is no meaningful opportunity to interact with the company, no way to leave a comment. My bet is, the only folks convinced by Nestle’s “bottled water is good” message will be those who manufactured it. 

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A whopping 65 to 70 percent of New York City’s carbon emissions are projected to come from buildings, whereas very few examples of pre-war commercial building energy retrofits exist anywhere in the United States. That means the Empire State Building is literally clearing a path for thousands of other buildings to follow. It happens to be doing so with a visible commitment to the principles behind the sustainability movement – people, planet and profit.

In an effort to build stakeholder advocacy and encourage more commercial buildings to initiate similar energy retrofit initiatives, owner Anthony Malkin of Empire State Building Company has made a remarkable commitment to transparency.  He has decided that the company will share all of the new processes and technologies it develops and lessons it learns during the retrofit with the public. “It is my hope that people will be able to take a look at what we did here and be able to replicate the process,” he says.

During the course of the retrofit, stakeholders can gain access to behind-the-scenes information, including the models and decision-making tools used to make the Empire State Building’s green retrofit possible. An interactive retrofit puzzle demonstrates how taking the right steps, in the right order – from refurbishing the building’s 6,500 windows for maximum overall energy use, to installing energy management systems that allow tenants to access energy use data, obtain online tips and benchmark themselves against other tenants – makes all the difference when it comes to increasing efficiency. The company even updates key learning obtained during the process of the retrofit, as well as its ongoing engagements with thought partners Rocky Mountain Institute, the Clinton Climate Initiative, Johnson Controls, Inc., and Jones Lang LaSalle.

Thus far, the project takeaways are quite compelling. For one thing, there is the importance of taking a “whole building” approach to design. “The good work which has been done to date [in green building retrofit] has focused on individual elements – a lighting system, a cooling tower,” Malkin explains. “You have to look at how all the elements – the lights, the cooling tower, the insulation – work together. You then look for the combination of measures which creates the greatest savings with the shortest payback period.”

Taking a whole-building approach to the retrofit design was beneficial in that it allowed Malkin’s team to stay within budgetary parameters. The team started by identifying baseline budgets for 23 existing retrofit-related projects and then examined how sustainable alternatives could affect costs. For instance, the team found big-ticket cost-savings items on six projects, including a multi-year cooling and air handling replacement system, central cooling plant replacement, exterior tower lighting and mid-pressure steam riser replacement. [For an interactive model of how these technologies work cohesively together to save energy, click here.]

The Value of Green

While each one of these technologies improves the building’s environmental performance – reducing greenhouse gas emissions, chemicals and pollutants while increasing air quality and recycling – a principle motive behind the energy retrofit is long-term value. Malkin envisions green buildings as higher quality buildings – buildings that produce superior cash flow resulting from reduced energy costs and tenant’s desire for a better way of living. If only sustainability were marketed that way.

“I am so tired of the directional and qualitative nature of the sustainability effort,” says Malkin. “We need to get away from this idea of ‘doing the right thing’ without quantifying what the right thing is. There is way too much dogma and what we need to get to is dollars and cents. Watts and BTUs.”

Dollars and cents wise, Malkin expects to gain a lot more than saved energy from his retrofit project. In addition to driving down utility, maintenance and repair costs, improvements on The Empire State Building are projected to result in increases in rent and occupancy rates due to enhanced value on updated services. Further income is also expected from new tenant offerings such as chilled water.

To achieve such financial upsides in green building, one has to think holistically. Malkin swears by his systemic approach: “Green to me is a set of practices,” he explains. “It’s recycling tenant waste, it’s recycling construction debris, it’s green pest control, it’s green cleaning solutions, it’s using recycled materials in your build-outs and in your common areas. These things can be done at a similar cost in dollars and they are definitely less painful to the environment.  Quantifiable energy efficiency retrofits are different…they are energy saving and money making for the landlord and tenants.”

Malkin’s perspective is that ultimately, there is nothing “ungreen” about the idea of urban living. But in the mainstream environmental movement, green is rarely associated with towering steel skyscrapers. Changing the population’s mental imagery is a core objective of Malkin’s. That is why, as part of the Empire State Observatory visit, the company is putting together a walk-through explanation of the retrofit program, to give people a sense of how the environment they are in works in harmony with what supports and surrounds it.

“I had a series of museum installation designers come and present some ideas for the walk-through,” Malkin explains. “One of the elements suggested was visually projecting a “canopy of trees” on the top of the elevators, so there’s an image of green as you’re looking up. I said, “get rid of the trees!” One of the biggest problems is that people think of the environment as someplace you go to visit, and then you come back to your life.”

The refurbished Empire State Building represents a new way of urban life – a new American ideal. As President Bill Clinton recently said in a video describing the retrofit: “This project is not only good for the earth, it also makes real financial sense. If even a fraction of the buildings in the United States or our world were to carry out similar ones, the impact would be profound. More projects like this will continue to create incredible opportunities for change across America, and across the world.”

Klein is a proponent of a “contrasting, more hopeful perspective” on capitalism. He optimistically points to purpose-driven companies that create value for stakeholders as well as shareholders, and books like Firms of Endearment: How World-Class Companies Profit from Passion and Purpose (Wharton School Publishing: 2007). 

Being the author of several books on purpose-driven companies myself, I am familiar with the territory and can certainly appreciate where Klein is coming from. Still, even the most enlightened corporate responsibility professional has to acknowledge that, alongside the Whole Foods and Honest Teas of the world, there are the Citigroups and Halliburtons. Which companies control the most wealth? We cannot ignore the truths that Moore dramatizes, because they will not dissipate on their own.

Some of you reading this may vehemently disagree with Moore’s premise and approach. I encourage you to see the film and join the debate. To inspire further conversation I have included the following comment of mine, written in response to Klien’s original post. Please have at it:

Jeff, as someone who has been researching the matter of conscious capitalism for the past five years, I can tell you that we are on the same page with respect to our admiration of companies that stand for a meaningful purpose, and that integrate that purpose into everything they do – from the products they sell to the way they treat people and the planet. My second book, The High-Purpose Company (Collins: 2007), beat Firms of Endearment to the market by just a few months. I thought it was interesting how, although we had no way of sharing data or knowing how each other’s methodologies were structured, our two research-based books came to strikingly similar conclusions. I took this as an optimistic sign, and I am glad to see so many purpose-driven companies thriving in our economy.

Where you and I seem to differ is in our takeaway of Michael Moore’s main thesis. I believe Moore is telling a more prolific story, and that more of us involved in the CSR community might benefit by listening carefully.

Moore’s core message is not that all capitalism is evil. In fact, in Moore’s movie he features several purpose-driven companies, including Alvarado Street Bakery, as examples of what can be done when business leaders decide to embrace socially just business models.

Moore’s main message is that we live in a fundamentally imbalanced society – a plutonomy – where the top one percent of the population controls the vast majority of the Nation’s wealth. Upholding the top one percent are the nation’s premier financial institutions, which is why Moore points the finger at Wall Street.

Let’s be honest about the current circumstances our Nation faces, and Moore’s depiction thereof. Our premier financial institutions accepted $700 billion in no-strings bailout money. The banks have not disclosed where the bailout money went, though we know a portion of it was used to pay executive bonuses. The banks also continue to oppose proposed consumer protection reforms and other measures that would shield citizens against unfair industry practices. In all, I’d say Wall Street has shown itself to be less than honorable during a period of peaked economic stress for America’s middle class.

Given the widening gap between America’s “haves” and “have nots” (in addition to the reasons for that gap), some might characterize the current financial crisis as a social justice issue. That is one of the key points in Moore’s film. It is also a key point made by many in our industry who we consider leaders: Dr. Muhammud Yunus, Robert Glassman and Hazel Henderson to name a few. It’s just that these leaders deliver the message in a very different way from Moore.

We in the CSR industry need to ask ourselves what our role should be in all of this. I agree it is wonderful to continue to promote and protect the interests of legitimately responsible and purpose-driven companies. At a certain point, however, more force is necessary. This industry needs rebels, too.

There is a part of me that believes that if we continue to allow Bank of America, Citigroup, Goldman Sachs and others to continue be traded in our SRI funds and flouted on our “Best Citizens” lists, as they are today, then we will not be promoting justice, and we will not be doing our jobs.

It is often said that transparency is the most important value that a company can have. It might sound like a cliché, but this is a literal truth. Case in point: SIGG Switzerland (USA), Inc.  

A few months ago, SIGG was caught in a lie. Whereas the company built a profitable business in the US marketing metal, reusable bottles as a hip and environmentally sound alternative to plastic water bottles, it failed to inform its health conscious target audience that a large portion of its production line contained bisphenol A, a compound suspected to be hazardous to humans since the 1930s. 

When initially asked by consumer-watch groups whether SIGG products contained any toxic ingredients, company CEO Steve Wasik assured people: “Very thorough migration testing in laboratories around the world is conducted regularly and has consistently shown SIGG aluminum bottles to have no presence of lead, phthalates, Bysphenol A (BPA), Bysphenol B (BPB) or any other chemicals which scientists have deemed as potentially harmful.”

It turned out this wasn’t the case. SIGG bottles did in fact contain BPA. After the truth leaked out, it became clear that a public statement from management was necessary, and Wasik issued a written apology:

“I am writing to apologize.

As Chief Executive Officer of SIGG, a leading maker of reusable water bottles, I made a mistake when I decided not to announce that our old bottle liner contained trace amounts of bisphenol A. I learned about the liner's content in 2006, when there was debate in the scientific community about the effects of BPA. Scientists lined up on both sides of the issue: Some said BPA posed potential health risks, others said BPA was perfectly safe...Today, the debate continues. Scientists are still split on the issue. But the consumer environment has changed. Because of the all the conflicting data, a growing number of people have decided to eliminate the concern from their lives by avoiding BPA. Given the situation, I recently decided that we had to tell everyone that bottles manufactured with our former liner (prior to August 2008) contained trace amounts of BPA.

We were right to make the announcement. But I was wrong to have waited this long. One of our primary goals at SIGG has been to help reduce unnecessary waste and to educate people on the environmental benefits of using a reusable bottle. With that objective in mind, SIGG has been labeled a “green” company.”

Wasik’s apology was too little, too late. Some even found it offensive. Elaine Shannon, editor in chief at the Environmental Working Group, told Advertising Age: “Americans want transparency, and this company doesn’t seem to understand that. It’s mystifying. [Wasik’s letter] seems to be talking down to people, and a lot of people won’t tolerate that tone.”

Judging from complaint associated with the lawsuit, which was filed on behalf of a nationwide class of consumers who purchased SIGG reusable aluminum bottles that unbeknownst to them contain BPA, the company’s lack of transparency amounts to serious business. The named plaintiffs allege breach of contract, breach of express and implied warranties, and violation of the Kentucky Consumer Protection Act. They seek a class certification order; compensatory, punitive and statutory damages; restitution and disgorgement of profits; attorney’s fees and costs; prejudgment interest; and the costs of suit. 

The potential liability exposure for SIGG is significant, to say nothing of the added adverse publicity and wrecked credibility amongst the company’s own target market. Although it is possible that, as with many cases, this class action suit will settle before trial, even if it does the damage will have been done. Unfortunately, when something like this comes along, the negative impact on a company’s sales can be as profound as any adverse legal judgment.  

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The recent surge of leaked undercover videos showing inhumane and unsafe food industry practices adds fuel to a growing trend. Meat companies are being forced into a state of transparency, whether they like it or not. If they have something to hide, well, too bad for them.

To this day many meat companies hide their operations behind glossy marketing campaigns. Slick photos of beautiful rolling hills, fluffy chickens and healthy cows grazing out of doors are often a two-dimensional front for feedlots and suffering animals that are force-fed high carbohydrate diets and that rarely see the light of day.

Increasingly, that two-dimensional strategy backfires. People discover the truth, and the company ends up spending millions of dollars trying to repair the damage done. Some companies never manage to bounce back. For instance, after people discovered the inhumane treatment its cows were suffering and the health implications of its deplorable factory conditions, Westland/Hallmark Meat Company faced the largest meat recall in history and eventually shut its doors. Smithfield Foods still struggles with the negative press surrounding its Mexico operations, while Niman Ranch is losing market share, perhaps in part owing to founder Bill Niman’s own admission that the that company is not a ranch at all, but rather a factory, and that he himself no longer eats Niman Ranch products. 

In the current age of social media, where truth rules, trust agents are king, and online videos spread like wildfire, reputations can’t be managed via press release. Meat companies are having to publicly explain their way out of tight spots, while activists are waging war, and more meat eaters are thinking twice before ordering their next meal. The climate has changed dramatically, and smart companies will face the music.

There is absolutely no question that the public demands radical change from the meat industry. The signs are everywhere: in award-winning films like Food,Inc., best-selling books like the Omnivore's Dilemma – along with numerous web sites, activist movements and purchasing trends. You’d be remiss to dispute the evidence. The real question is: What is the change worth? If meat companies elevated their quality standards, would people be willing to pay more for the change? 

A few weeks ago I decided to try and find out. I reasoned that it was impossible to answer questions like these without seeing and experiencing the desired change first-hand. I visited Hearst Ranch, the most humane, environmentally sustainable and high-quality meat operation that I could find in the United States.

Keep in mind, the overwhelming majority of meat produced in the United states and sold in stores comes from confined animal feeding operations (CAFOs). The core objective of CAFOs is to cram as many animals into as small a space as possible in order to produce the highest output at the lowest cost. That’s how meat companies like Cargill, Tyson and Hormel Foods make so much money. CAFOs also produce significant environmental problems and help to spread diseases such as swine flu, avian flu, West Nile virus and bluetongue.

Hearst Ranch is the furthest thing from a CAFO that you could possibly imagine. Founded in 1865 by George Hearst, Hearst Ranch’s working cattle ranch sprawls over 80,000 acres, making it one of the largest working cattle ranches on the California coast. Though the photos displayed on the company’s web site are of the ranch itself – portraying its natural existence, biodiverse ecosystem and cowboy staff – they left me completely unprepared for what I experienced roaming the landscape, meeting the people and seeing the animals up close.

Like the flavor of its beef, Hearst Ranch is spectacular. Absolutely, pricelessly, indescribably beautiful. Thanks to one of the largest land conservation easements in California history, the Ranch will be forever preserved. Driving up and down its rolling hills, smelling the native grasses and taking in the majestic views, all I could think was, they should have sent a poet. Seriously, it might sound cheesy, but how many meat operations can you say that about?

Owing to the vastness of the Ranch, it took us 26 minutes before we could even find a cow. When we did finally come upon a small pack of eight animals at the top of a hill, we approached them slowly and respectfully. Cliff Garrison, Ranch Manager and my tour guide, turned the engine off. Rather than scatter, the animals remained completely calm, and a few even approached us.

They were beautiful creatures. Not long and thin like Angus cattle, but rounded and muscular with shiny coats and clear eyes. “Angus cattle were bred long and thin so that they could fit more animals into pens,” Garrison said. Just like seats on an airplane, I thought. Ah, the almighty dollar.

Hearst’s cattle are a breed apart. It doesn’t take an expert to identify healthy, happy animals living a low-stress life. The cows let Cliff handle them and seemed to like the attention. “Fast or excitement is usually not good with animals,” Garrison said. 

Later that evening it was explained to me that, in addition to Hearst’s commitment to animal welfare, Garrison is himself rumored to have special powers. “We call him the cow whisperer,” joked another cowboy.

The staff at Hearst Ranch feels strongly that letting animals graze freely out of doors is the key to a healthy working landscape, to the quality of the beef produced, and to many of the problems now plaguing the meat industry. “This is the way that nature intended,” Garrison said. “This is how cowboys have been doing it for a hundred years.”

As Hearst Ranch points out on its web site, well-managed grazing increases the biodiversity of the grassland by fostering competition amongst a wide grange of grass species, thus sustaining both its herd and precious land resources. 

While not every business will have the desire or foresight to invest in adequate land in order to take animals out of CAFOs, it is worth spelling out some of the benefits that models like Hearst’s offer to consumers:

Far Less Waste

The 238,000 CAFOs operating in the US produce an estimated 500 million tons of waste each year. The U.S. Environmental Protection Agency reports that hog, chicken and cattle waste has polluted 35,000 miles of rivers in 22 states and contaminated groundwater in 17 states. The European Union says that CAFOs are responsible for 18 percent of global warming. In contrast, the vast grasslands of Hearst Ranch host an unusually complex mosaic of vegetation. By rotating the animals through various pastures through the seasons, Hearst sustains that complexity, a practice that supports biodiversity, improves soil fertility, and eliminates the waste-management problems associated with CAFOs.

Much More Humane

There is probably no better life for an animal to live than the natural life that nature intended. Hearst cattle are living the dream, with free access to natural forages, fresh air and clean water – and very little human intervention. They have visibly lower stress levels and are humanely treated. They are never fed sub-therapeutic antibiotics and are never given growth hormones. All their lives, they have the freedom to roam. There’s an old cowboy saying at Hearst Ranch, which is: “go slow, get there faster.” This means that if you treat the cows gently and don’t push too hard, but rather allow them to find their natural way at their natural pace, you’ll be more successful. It would be great if more businesses thought this way.

Better Nutrition

Most beef cows in America are shot-up with medicine and raised on diets of grain, which boosts levels of E. coli in their guts and encourages the spread of disease. Grass-fed beef cows eat grass their entire lives, so they are healthier and the nutritional value they provide is significantly different. Grass-fed beef contains 10 times more beta-carotene, three times more vitamin E, and has three times the healthy omega-3 fatty acids than traditional beef. Grass-fed beef also contains three times more CLA, or conjugated linoleic acid, which is another of the healthy fats that has been shown to be good at lowering so-called “bad” cholesterol, lowering the risk of diabetes, heart disease and various forms of cancer.

Superior Quality and Flavor

If you live near or visit San Francisco and crave a burger, I highly recommend heading over to Cafe Americano and ordering one of chef Paul Arenstam’s famous Hearst Burgers. No joke, this is the best burger that I’ve ever eaten. The flavor of Hearst’s beef is rich, robust and pure, with no fatty or greasy aftertaste. As one customer recently put it: “This is how beef is supposed to taste.” In the wine industry, the word “terroir” refers to the flavor imparted to the wine by the entirety of the property upon which the grapes are grown. The same principle applies to beef. The rich and robust flavor of Hearst’s beef comes from the nutrients that are themselves derived from the purity and diversity of the grasses that the cows eat their whole lives.

The bottom line is that Hearst Ranch beef, and high-quality grass fed beef in general, is worth more. Not just a little more – a lot more. 

Personally, I am willing to pay 50 to 80 percent over the commodity prices coming from the big meat companies, but be much more selective about which companies I buy my meat from, and eat meat less often. But maybe that’s just me. My sense is that if the benefits of sustainably and humanely raised meat were communicated properly – if more people could see and experience what I did a few weeks ago – then perhaps others would pay more too, and would take steps to do business with select companies like Hearst Ranch. 

Then, just maybe, the meat industry would elevate its standards.

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Irrespective of how catchy the phrase ‘sustainable brand’ is, the fundamental issue remains: either a company is sustainable, or it’s not.

Some companies approach sustainability with an unparalleled level of innovation and fearlessness. I have written about such companies numerous times in books, essays and articles, which is why I am so disappointed to see many of them continuously omitted from the surveys, articles, and highly-touted lists pulled together and promoted by the corporate social responsibility (CSR) industry – particularly those citing the “greenest,” “most ethical” or “most sustainable” citizens or brands.

In March, CRO Magazine chose Merck, Monsanto, Chevron, Citigroup, Goldman Sachs, Smithfield Foods and other questionable choices as “Best Corporate Citizens of 2009” (read my response here). 

Last week, a survey released by Cohn & Wolfe, Landor Associates,  Penn, Schoen & Berland Associates; and, Esty Environmental Partners indicated that Clorox Green Works, not Seventh Generation, was the “Top Green Brand.” 

Perhaps this result was to be expected given that Clorox Green Works now owns over 40 percent of the green cleaning category. But I found the result disappointing, since Seventh Generation is a 20-year old pioneer in the green cleaning market, a leader in green business practices, and is well on its way to becoming a truly sustainable company. Clorox Green Works was recently introduced and has basically relied on its marketing muscle and existing distribution infrastructure to achieve success with Green Works. Although the Green Works product line is a step in the right direction for Clorox, the company also markets highly profitable toxic products like Formula 409, Tilex, and Armor All.

As frustrating as Seventh Generation’s pass over was, the icing on last week’s faux ‘sustainable brand’ cake had to be Forbes’ lead story: “ExxonMobil: Green Company of the Year.” 

Exxon’s latest marketing campaign sends a message to stakeholders: “Taking on the world’s toughest energy challenges” while “preserving and protecting the environment.” Some people might buy that message, along with the company’s pitch that, despite its past and allegedly present efforts to fund global warming skeptics, a sizable investment in natural gas equals a genuine commitment to “going green.” But judging from the reader commentary posted on the Forbes website, not everyone is easily persuaded:

What are you smoking Forbes?? Besides Natural Gas?? Or did Exxon just buy a lot of advertising from you? Calling the company that denies global warming is real “green” is akin to calling the Mob a bunch of nice guys. Burning natural gas is not green, period. Cleaner, yes. But not green. Do some real investigative journalism and not just regurgitate some PR hack’s false truths!

As this reader commentary correctly points out, by calling an unsustainable company like ExxonMobil “green,” Forbes crosses the line between journalism and public relations. In the same way, by labeling other unsustainable and ethically dubious companies “Best Citizens,” “Greenest Brands,” “Sustainable Brands,” or what have you, the CSR industry is effectively perpetuating a standard of greenwash.

Greenwash is dangerous to our economy because it runs the risk of breeding consumer and investor cynicism toward genuinely sustainable companies that create environmental, social and financial value through the products they sell, the investments they make and the issues they relentlessly fight for. All of this ‘information greenwash’ being spun out of research groups, media companies and the CSR industry accumulates on the web over a period of months and years. In time, consumers and investors will be left with a data trove of incomplete and arguably inaccurate information with which to make investment and purchasing decisions. That means their money could end up in the wrong places – in companies and investment funds that, if they knew better, they would not support. 

That makes this problem as serious as it is unjust.

Follow Christine Arena on Twitter: @christinearena 

Reference Mark and Nick, two emerging Generation Y change agents who started a London grassroots effort called Project Dirt. Project dirt is an interactive “ecommunity” that serves as a catalyst for Londoners wanting to volunteer in local neighborhood projects, but not knowing where to start. As part of Timberland’s ongoing campaign, the “Earthkeeper Hero” series, the company recently provided Mark and Nick with a forum to show the world that there’s plenty to be optimistic about in the environmental change arena:  

Project Dirt – Green Reasons to Be Happy [YouTube Video]

According to Timberland, Mark and Nick are just one small piece of a widespread recruiting effort. The company is currently “calling all people who do small things for the environment, like recycling, biking instead of driving and using energy-efficient light bulbs.”  Through an international campaign called “Earthkeepers” – which is cleverly targeted towards environmentalists, consumers (Timberland has 30 million of them), employees, suppliers and even competing businesses around the world – the company intends to recruit over one million people through the ‘revolution’, as Timberland CEO Jeff Swartz calls it, of social networking, including Twitter, YouTube and Facebook, as well a strategic partnership with Changents.com and a website, www.earthkeeper.com. 

The point of the Earthkeepers campaign is to inspire passionate stakeholders to become their own agents of change in their communities, using Timberland as the primary mechanism. That places Timberland in a unique position, one where the participating community relies on the company’s unique values and strengths, and where the company depends on social networking tools more than ever before.

“At the heart of the Earthkeepers campaign is the idea of becoming a sustainable brand and creating collaborative and value-creating relationships,” Swartz told stakeholders on a Tuesday conference call, facilitated through the JustMeans.com online network. “Earthkeeping demands networking on a level we have never imagined before. If we’re going to transform Timberland from a company that does green to a company that is sustainable, we need to assemble a wider network of citizens, consumers, suppliers, partners, NGOs, even other businesses. We don’t see how any one business, no matter how principled or passionate, can become an Earthkeeping business and brand on its own.” 

Swartz defines “Earthkeeping” businesses as those that care about their impact on the environment, and that openly and honestly communicate their efforts in order to better manage that impact. These business, he says, are becoming forces for change in the new social media world order. Through its Earthkeepers campaign, Timberland hopes to not only to interact with a new generation of accomplished environmental heroes, but to also encourage other businesses to become more open, candid and engaged with stakeholders – particularly when it comes to environmental issues. However, Swartz acknowledges that this latter goal is perhaps an overshot.

“I think there are too many CEOs that aren’t going to get this,” says Swartz. “I don’t mean that disrespectfully. It’s just that this conversation of ‘should we or shouldn’t we be transparent?’ is a moot point because in today’s social media climate, every success is getting shared as quickly as every failure. We can pretend like we have a choice about transparency, or we can recognize the fact that almost everything that is being done is being exposed.”

With respect to what Timberland itself has to expose, the company has made significant progress of late. As of 2009, nearly eighty percent of the company’s footwear styles feature recycled content. The Earthkeepers™ product line, which debuted in 2008, contains fully organic and renewable material content, as well as solvent-free adhesives and is designed for reduced climate impact. In the crowded world of consumer retail, Timberland is one of the few businesses that sticks to the guiding principle that what you sell is every bit as important as what you say. After all, how many other pairs of shoes come in a box with a ‘nutritional type label’ about their construction?

Jeff Swartz is a visionary yet grounded CEO leading a family business that has grown into a highly successful global brand since its inception the 1950’s. His pragmatism, accessibility and personal openness are obvious to most who meet him. These traits were evident during last week’s stakeholder call, as well as during the social media interactions facilitated through Timberland’s Earthkeeper campaigns. In both cases, the dialog is kept authentic. Swartz and his team tend to speak off script. If they don’t know the answer to a question, they will say. If they miss something, they will apologize. There’s no rhetoric, no spin. This straightforward attitude melds into corporate philosophy – encouraging the business to face its challenges head-on. You can see this reflected across many of the company’s current initiatives. 

For instance, Timberland’s response to the recent Greenpeace campaign to protect the Amazon from deforestation caused by cattle farming (i.e. the leather industry) wasn’t to deny culpability or ignore the problem and walk away. On the contrary, following in Nike’s footsteps in mitigating a potential media disaster, Swartz decided to admit that he didn’t fully appreciate the extent to which Timberland was having a material impact on the Amazon through its supply chain, as suitable ‘traceabilty’ mechanisms in the leather industry were not in place yet. Currently the company is working in collaboration with Greenpeace to settle this issue, and to help improve industry standards. Timberland’s willingness to work in conjunction with Greenpeace demonstrates how candor can help to diffuse difficult situations, and establish leadership positions for the companies involved.

Dozens of similar examples abound. Swartz is presently working on a quest to rid the company of bottled water, and despite backlash from the all-mighty bottled water industry, he presses on. He is also having the roof of Timberland headquarters painted white instead of black, cutting energy costs by an estimated 20 percent. And through Timberland’s Path of Service program, the company is offering its employees paid time off to volunteer on environmental projects across the country.

“These are concrete things that we’re working on, but we can’t simply cobble them together,” says Swartz. “We’ve got to make them a vibrant and integrated network of engaged consumers and stakeholders. We’ve got to get to this goal of becoming a sustainable for-profit business.” 

Call us crazy, but it seems like Timberland might be further along than Swartz himself acknowledges.

This article was co-authored with David Connor, a corporate responsibility and sustainability consultant based in Liverpool. E-mail David at david.connor@coethica.com

Like what you just read? Get your daily dose of corporate insights. Follow Christine Arena and David Connor on Twitter: @christinearena @davidcoethica

To date, many advertising agencies have chosen to respond to the widespread disruption by tightening their belts, laying people off, and regressing to the safe harbor of shallow prose, banal imagery, and gimmicky campaigns. On the environmental and social front, certain elements have gone boilerplate. Reference Monsanto’s latest “sustainable agriculture” campaign:

“Producing More. Conserving More. Improving Farmer’s Lives. That’s Sustainable Agriculture. And That’s What Monsanto is All About.”

Evidence suggests that most people aren’t buying Monsanto’s planetary message. After the campaign launched this past June, hundreds of negative articles circulated the web, such as this one from Grist:

“The Monsanto ads are quite simply false. The premise of the ad is more or less that Monsanto’s genetically modified (GM) seeds are going to save the world from environmental catastrophe and human hunger. All while the corporation made more than 11 billion dollars in 2008 amidst a world food crisis....The reality of Monsanto’s seeds and the company’s ethics and commitment to fighting world hunger have nothing to do with producing more or conserving more.”

Despite Monsanto’s recent marketing misstep, the interesting news in advertising isn’t the growing trend toward greenwash. Rather, it’s how fervently certain ad agencies are resisting greenwash – pulling, sometimes pushing, clients in a more meaningful direction.

World-Changing Agencies

The advertising world is undergoing a considerable transformation. About five years ago, many large agencies began investing in environmental, social and cause-related practices areas to capture what they perceived as a growing niche market and to complement their existing core services. Today more agencies (albeit just the smarter ones) recognize that such moves are limiting. What’s really needed is a sophisticated new worldview that incorporates essential social, cultural and environmental intelligence into the core organizational capacity. World-Changing Agencies possess this worldview, and it shows up in most everything they do.

World-Changing Agencies exist for a purpose: to assist clients in reaching positive social and environmental outcomes, thereby helping to create a better future for all. Through groundbreaking creative work, such agencies offer people new ways of seeing the world, and new ways of defining themselves within that world. That’s what the term “World-Changing,” originally coined by Alex Steffen on his environmental website WorldChanging.com, essentially means.

To fully appreciate the world-changing concept as it relates to advertising, please take a moment to view this ad from Saatchi Pakistan (click on the link below). Here, Saatchi uses an eye-opening blend of imagery, music and fact to address the issues of political, social and cultural prejudice:

Saatchi Pakistan True Blue

Rather than allowing Pakistan to be equated with fear and terror, Saatchi tells another story: “the one you don’t see on the evening news.” The end result? The ad encourages us to reconsider our old perspective, appreciate a new culture, identify with our universal selves and want to call our travel agents.  That’s World-Changing.

The reality is that good agencies are a dime a dozen. But great agencies – the kind that transform the way we see, buy and experience things – are few and far between. The World-Changing Agencies described below deserve credit, because what they do each and every day moves the market and improves people’s lives for the better. Their passion and purpose, their goals and strategies, their mediums and messages, encourage each of us to step back and see the bigger picture. 

World-Changing Agencies encourage people to think twice before they buy. Through their work, we can redefine ourselves:

Saatchi S 

When it comes to creating campaigns that move people, help shift planetary conditions and make companies money at the same time, Saatchi S is the master. “Imagine a billion people changing how they live, changing the things they buy,” the company says. “Imagine being a part of that.” That’s Saatchi S’s goal, and the company is well on its way toward reaching it. Though an unmatched blend of sustainable insights, spot-on brand strategy, thought-provoking creative (check out the new Prius campaign from Saatchi LA), and global reach, Saatchi S takes its clients to a leaner, cleaner, “bluer” future. 

Some people have balked at the company’s decision to work with mega-corporations Wal-Mart, General Mills, Proctor & Gamble and Frito Lay, but Saatchi regards these clients as an important asset. “We work with some of the most influential companies in the world  a because we care about scale,” says Saatchi S CEO Adam Werbach. “Only through their success will we reach our north star goal of supporting one billion people in creating and maintaining their personal sustainability practices.” Werbach, who is indisputably one of the sharpest minds in the sustainability field (see his latest book), carefully placed Saatchi S at the epicenter of a budding trend. “The future is coming fast now,” he says. “The recession has caused every business to open up its business plan – and sustainability is showing up in every one.” Going forward, Werbach predicts that all of Saatchi, not just the ‘S’ division will “go blue.” He and and his worldwide team are working on making this a reality, through a new initiative called True Blue. Further announcements are expected later this year.

Cone

Cone’s original “cause branding” approach has spawned an industry of imitators, but agency founder and chairman Carol Cone welcomes the competition: “Imitation is the highest form of flattery,” she says. For over twenty years Cone has engineered public-private alliances that serve worthy causes, from Avon’s Breast Cancer Crusade to Reebok’s Human Rights Awards, The American Heart Association’s Go Red for Women Movement, PNC Grow Up Great and Western Union Our World, Our Family. While Cone’s signature cause branding programs have raised more than $1.2 billion for worthy crusades, each and every relationship has been built on a foundation that Cone describes as: “Better Business: Greater Good.” 

“We never want any of our clients to be the cause du jour,” says Cone. “It’s crucial that everything we do is authentic and sustainable – that we make a real and measurable difference in people’s lives, the social issue and our efforts have a positive impact on the business and the brand.” Blending social justice with business opportunity and personal passion comes naturally to Cone, which is exactly how she got her business of the ground in the 1980’s. “It all started with Rockport. We tried to do traditional marketing, using the usual mediums and messages, but it just didn’t work,” says Cone. “Then we realized the essence of this company’s shoes  –  they were great for walking. So we linked them to walking for health and fitness in authentic and novel ways. They grew from $20 million to $150 on that positioning. And America embraced a new fitness regime.  Sometimes the solutions are right there in front of you, but you have to look through a certain lens to see them.” At present Cone publishes original research and offers a full suite of strategic services including cause branding, corporate responsibility, brand marketing and crisis management to clients including Timberland, Ben & Jerry’s, Starbucks and eBay.

Global Change Network 

“Global change is a tall order,” the agency acknowledges. “But our clients are doing just that by addressing poverty, creating energy out of garbage, and empowering women.” Comprised of some of the most passionate and  politically astute communications experts in business, the Global Change Network (GCN) works with organizations and corporations for whom social and environmental issues are core to their identities. Recently GCN has waged such world-changing efforts as encouraging G8 leaders to invest in extreme poverty; promoting recycling by branding waste as a valuable renewable resource; raising awareness of HIV/AIDS as a preventable and treatable disease; and repositioning reproductive rights as a fundamental human right.

“Our mission is to help our clients make positive change – for their companies, communities, and the environment,” says Global Change Network Principal Arlene Fairfield. “We do that by telling stories that combine human insight and creativity with astute policy and political acumen.” What separates GCN from the pack is the team’s unparalleled depth and breadth of expertise – over two decades of experience assembling groundbreaking campaigns for clients including The ONE Campaign, The David and Lucile Packard Foundation and Energy Star.  “It’s our understanding of brand value and audience motivation that makes us different,” says Fairfield. “By combining consumer insight and creativity with astute policy and political acumen, we’ve been able to move the needle on some of the most important issues of the day.”

Emotive Brand

This San Francisco start-up was recently founded on a revelation. “Branding efforts that ignore trust and reputation are waste of money,” says company co-founder Tracy Lloyd. “That’s why we’ve pulled together an award-winning team of designers, strategists, and experts on everything from sustainability to social media to help companies build foundations that people can rely on.” Lloyd draws an important distinction between brand and reputation. “Think about it this way, branding is what you tell people to feel about you,” she says. “Reputation is what people actually feel about you.” Emotive Brand’s services, which include a cathartic strategic process called “Reputation Lab” as well as social media, interactive, advertising and corporate communications services, are offered up to clients including UPS, TED, VMware.

“In order to help clients shift their reputations, you need to stop the PR spin cycle and start to advocate behaving in the right ways,” says Lloyd. “Our goal is to help clients face the truth about themselves and then focus strategic and creative efforts on the areas most in need of attention.” Want to put a band aid on that environmental catastrophe and walk away? Then perhaps Emotive is not for you. “If clients are willing to openly work through the rough spots, then stakeholders will most likely be supportive. Proactively engaging people in the right way is a huge strategic advantage,” says Lloyd. “The bottom line is that we’ve got our client’s backs, whether or not they face challenges in the reputation arena.” 

Frog Design

“We are fanatical about improving the world,” says Frog Design. “We choreograph cultural change through design. We strive to change minds, touch hearts and move markets.” As one of the world’s leading global innovation firms, Frog Design’s “humanizing solutions” emerge from a globally diverse team of more than 400 designers, technologists, strategists, and analysts from around the world. The company’s multidisciplinary process –  which over the years has grown to include research,  industrial design, digital media design, and brand strategy –  reaches such clients as Disney, GE, HP, Logitech, Microsoft, MTV, Seagate, Yahoo! and others.

“Improving the world is the key motivation for every creative person and should be the main mission of every business,” says Tim Leberecht, vice president of marketing and communications at Frog Design. According to  Leberecht,  “green thinking” is now central to every design project at Frog, and something the firm’s designers think about on a daily basis. “For us, innovation means imagining the ideal and making it real. We consider it to be our responsibility to see ideas through, from insight to market. We’re seeking to find design-driven, unorthodox, and holistic solutions to key challenges of our time – from sustainable mobility to rich communications to human-centric health care.” Recently, Frog teamed up with Intel in order to rethink the future of the traditional cash register. The result? A 70 percent reduction in energy use with just a few repurposed chips. That’s good thinking.

GreenOrder

Stonyfield Farm’s Gary Hirshberg calls them “remarkable, knowledgeable and dedicated.” Office Depot’s Yalmaz Siddiqui considers them “true partners.” GreenOrder offers business strategy, environmental science and policy, and marketing and design services to clients including GE, GM, BP, DuPont, Ralph Lauren and Hines. As with Saatchi S, the general viewpoint is that mega-corporations are our friends, and that such companies should profit from their sustainable endeavors. “GreenOrder helps companies build a culture of environmental innovation that creates long-term competitive advantage and business value,” says GreenOrder associate Ted Grozier. “We don’t believe in going green for green’s sake, nor do we believe companies should limit green initiatives to one-offs like carbon footprinting or marketing, for to do so misses key opportunities to capture value.”

GreenOrder doesn’t really consider itself an “agency,” per se. “We’re more of a management consulting firm,” says Grozier. “First and foremost, we are strategists.” Apparently, the company’s marketing-related services are viewed as more of a side dish. What GreenOrder is most proud of is the broader impact that its strategic offerings have had on the marketplace as a whole. “A decade ago when GreenOrder was founded, sustainability was not part of the corporate discourse,” says Grozier. “Through the efforts of our team and other experts in our growing field, sustainability has now become a path to business value – and a key part of a larger cultural conversation.”

DiMassimo Goldstein

According to the New York Times, the recent ads spun out of DiMassimo Goldstein (DIGO) might be doing to the bottled water industry what antismoking ads did to the tobacco industry back in the 1990’s – causing major headaches. In case you’ve missed the unfolding “Tappening” campaign, the interactive and print ads are designed to encourage consumers to drink tap water whenever possible. They are deliberately outlandish, poking fun at the bottled water industry’s environmentally wasteful and often misleading nature. One poster claims: “Bottled Water Causes Blindness in Puppies.” Another reads: “Bottled Water: 98% Melted Ice Caps. 2% Polar Bear Tears.” All the ads are supported by an informative website, Tappening.com, where people can learn about the hazards of bottled water and what they can potentially do about them.

“We’ve spent these two years using our marketing and public relations abilities to un-sell bottled-water hype,” agency head Mark DiMassimo recently told Brandweek. “But I still see cascading waterfalls on labels that do not list the source of that water.” The agency is on a mission to help reverse the tides, and is using its arsenal of social media, web and advertising tools to do just that. In addition to promoting unbottled water, DIGO also helps organizations like Memorial-Sloan Kettering and ThinkorSwim to reach people with messages that resonate at the deepest levels.

Little Big Brands

In the world that is social and environmental marketing, Little Big Brands has the secret sauce: temperance. “Our work is insightful, inspired, never frivolous,” the company says. This non-frivolous attitude translates marvelously on the company’s blog, which simply reads: “If we have time to blog, then you shouldn’t hire us.” Evidently, LBB (which is what their friends call them) has been busy at work, drumming up eco-friendly packaging and clever advertising for clients including Born Free eggs, Yardley Natural soaps and Vitamin Water.

“It’s really exciting for us when we have the opportunity to work on a project where we can be a true partner, adding value every step of the way,” says Pamela Long, Director of Client Services. One recent LBB project entailed a facelift for Pennsylvania-based brewery, Lionshead. “They asked for a step up in quality, but a step down in cost,” says Long. “We went a step further by bringing substantial environmental savings to the table.” What stands out through most of LBB’s design and advertising solutions, including the Lionshead work, is that less can often be more. While the new Lionshead packaging uses 40 percent less material, it sends a motivating message to consumers about the importance of environmental conservation and recycling. “It would be pompous to suggest that we’re out there doing something that other agencies can’t or don’t,” says Long. “What I would say is we really care about what we do and what our clients do. We may be a little design firm, but we work for some of the largest companies in the world, and by helping them use resources as responsibly as possible, we can really make a positive difference.”

Amen to that.

Most Americans eagerly await healthcare reform. According to a poll of the general public conducted earlier this year by CBS and The New York Times, 90 percent of people believe the U.S. healthcare system needs to undergo fundamental change or be rebuilt completely. Unfortunately such restoration might come at a high cost to taxpayers – $1 trillion over a decade, according to the new bill.

In an appearance at the Children’s National Medical Center this week, President Obama urged support and quelled concern over the huge expense of covering millions of uninsured Americans. “There are some in this town that are content to perpetuate the status quo,” said the President. “There are others who recognize the problem but believe, or perhaps hope, that we can put off the hard work of healthcare reform for another day, another year, another decade.” 

In response, The Republican National Committee launched a counter attack consisting of a new TV ad andwebsite that accuses the President of “rushing through a grand experiment that will have serious consequences for future generations of Americans.” Republican Senator Jim DeMintthey pledged: “If we’re able to stop Obama on this, it will be his Waterloo.”

Political grandstanding aside, there are underlying systemic problems that affect every patient, and that neither the government’s bill nor individual party leaders can possibly fix singlehandedly. Take quality, for instance. 

Although the U.S. spends a bigger chunk of its wealth on healthcare than any other Nation, we have far less to show for it. Most people aren’t getting the kind of care they need. Studies from research and policy think tanks including Rand Corporation and the Commonwealth Fund indicate that healthcare is broken at the patient level. It’s not just that we lag behind many Nations in terms of infant mortality and life expectancy, it’s that our healthcare bureaucracy inadvertently puts people last.

Most patients leave physician’s offices without a clear sense of what they have just been told or what they must do in order to manage their condition. Emergency rooms and doctor’s offices are overcrowded and patient-physician relationships, if they exist at all, tend to be cold and abrupt. Twenty-three seconds is the average time that a patient gets to talk before being interrupted or cut off by a physician, while less than 15 percent of patients are able to ask all the questions they have. 

“If you’re sick and you need care, it doesn’t matter how far healthcare has come in its evolutionary history,” says says McKesson CEO John Hammergren in his 2008 book Skin in the Game. “You just worry about the last two feet – the distance between you and your doctor as you sit and discuss your condition and how best to treat it.”

Another problem eclipsing many attempts to drive change and improvement is fragmentation. For instance, each of the major stakeholders in healthcare – physicians, pharmacies, providers, payors and manufacturers – operate essentially as a cottage industry of independent players, unconnected by workflows, business processes and information systems. This creates a huge level of inefficiency, and potentially dangerous and costly consequences for patients and insurance companies. The needless or erroneous paperwork, tests, treatments, medicine, side effects, fears and misinformation adds up to millions spent – and eventually lost.

“What’s becoming better understood is that our healthcare crisis is fundamentally a business problem,” writes Hammergren. “The system is overstrained and is breaking down due to outdated information technology; poor application of the basic principles of market economics; overall inefficiency in terms of work flow, care delivery, and the spreading of best practices; a lack of transparency around quality and cost; and blocked access to making informed consumer choices.”

For those interested in the sobering statistics and staggering inefficiencies of healthcare, Hammergren’s book is a must-read. But for those not as inclined to pick up the book, here are a few key facts worth remembering the next time you visit the doctor’s office:

• Owing to the fragmented and non-standardized nature of healthcare, 500,000 people die every year
• Medical errors cause 100,000 deaths and one million injuries every year
• Whether you enter an emergency room, a physician’s office or a scheduled surgery, you have a 55 percent chance of receiving the best quality care
• There are 1.5 trillion health claims written each year, 30 percent of which are erroneous, and 15 percent of which are lost
• There are 140 million illegible prescriptions written each year
• Thirty percent of our healthcare dollars are spent on treatments that do not improve our health or that are completely redundant

Talk about your serious social problems. As the Nation’s oldest and largest healthcare company, McKesson has been effectively – and profitably – taking on these challenges for over 175 years. 

“McKesson’s goal is to help empower a better healthcare system—one in which healthcare is higher quality, more efficient, more personalized, and ultimately, more human,” says McKesson VP of Corporate Communications, Andy Burtis. “We have an unmatched breadth of products and services and deep, long-standing customer relationships with thousands of hospitals, physician offices, retail pharmacies, and payors. We are the only company that touches every aspect of healthcare – enabling us to see the issues first-hand and provide the necessary solutions.”

Systemic Care

McKesson’s business model hedges on a concept it characterizes as a forthcoming “bold new era of healthcare.” The company paints an interesting portrait: In the near future, healthcare companies will begin competing for business not on the basis price, but on the basis of delivering better value, quality and convenience. Meanwhile, fully integrated digital technologies will simplify workflows while eliminating paperwork and errors, thereby enabling collaboration and making “systemic healthcare” possible for the first time. As a result of the newfound digital freedom, consumers will have more choices, more access to information, and more control over where, when and from whom they seek treatment. In various ways, McKesson is creating this “bold new era” today.

“We’ve designed a system that fosters innovation, connectivity, renewed efficiency and evidence-based best practices,” says Burtis. “In partnership with our customers, we’re implementing the cutting-edge healthcare information technology, processes efficiencies, reimbursement solutions and connectivity tools that create a better healthcare system for everyone.”

Every day McKesson distributes one-third of the medicines used in North America, supplying more than 40,000 U.S. healthcare locations from Wal-Mart to local community pharmacies. It is the Nation’s leading healthcare Information Technology (IT) company, with software and hardware technologies installed in the vast majority of the Nation’s hospitals. McKesson’s electronic systems eliminate the need for paper prescriptions and paper medical records while providing physicians with easy and secure online access to patient information. One new offering along these lines, McKesson’s Advanced Diagnostics Management, addresses personalized medicine, helps physicians identify the right diagnostic tests and care options, and keeps patients informed about exactly how much out-of-pocket expenses to expect in real-time. 

Innovations like these lead to both lives and money saved. For instance, at John Muir Health, a 324-bed acute-care health center in the San Francisco Bay area, McKesson’s solutions resulted in a 30 percent mortality rate reduction and a 40 percent reduction in adverse drug events that result in re-hospitalization or death. According to McKesson, John Muir now has more efficient pharmacy services, increased patient safety, enhanced compliance and reporting capabilities, as well as reduced preventable adverse drug events – all as a result of working with the company. 

Similarly, McKesson’s solutions have saved the Illinois Department of Healthcare and Family Services over $138 million, while “helping people with chronic illnesses live fuller lives,” according to HFS director Barry S. Maram. “People are staying out of hospitals and emergency rooms because they are learning how to manage their diseases and stay healthy.”

Performance Cultures

The relentless focus on results is what differentiates corporate-driven healthcare reform from the bureaucracy that wastes billions and stifles innovation. Performance cultures are plainly evident in many publicly traded companies focused on healthcare like McKesson and also GE. With it’s newly minted and heavily promoted Healthymagination initiative, GE aims to channel $6 billion toward medical systems, technologies and services that are designed to drive down healthcare costs while expanding access and improving quality. The company’s goals are relatively aggressive. 

By 2015, GE intends to bring down the cost of many health procedures and services by 15 percent using GE technologies. It also plans to increase access to health-related services and technologies by 15 percent, reaching 100 million people every year. In addition, GE aims to improve quality and efficiency issues by 15 percent by refining healthcare procedures and standards of care.

“This is the right time to reposition our healthcare business, given the changes and challenges in the industry,” GE Healthcare President and CEO John Dineen said in a statement. “Our customers are looking for productivity and solutions. We will focus on the products, the process excellence and the partnerships that broaden access to healthcare and reduce its cost.”

Healthcare isn’t a sexy industry. But it is a vitally important one. And the fact is that incremental improvements within the corporate healthcare sector can have huge implications for every one of us. According to McKesson’s experience of processing more than a trillion dollars in financial transactions every year, the overall cost savings associated with moving from a paper-based system to an electronic one could potentially add up to as much as 75 percent. Think about that.

By simply establishing a stronger IT foundation, America can significantly improve its healthcare woes quickly, affordably and most important, safely. It could very well out that McKesson and GE – with their vast reach, established relationships, sophisticated technologies, systemic approaches and performance-driven cultures – are the players best suited to deliver the healthcare reform we so desperately need.

Seems like that’s change we can believe in.

Last week three Shell executives – Bjorn Edlund, Executive Vice President of Communications, Nick Welch, Head of Policy and External Relations and Nick Wood, Vice President of Communications – joined the Justmeans community for a provocative conference call about the Wiwa v. Shell case and the company’s recent $15.5 million human rights settlement.

“We are trying to make ourselves available by using different avenues of social media to reach out to more people with a response,” says Shell’s Welch. “It’s our goal to respond as human beings, not as some big corporate machine. If this conversation stimulates people to want to learn more, then that will be all the better.”

The conference call was illuminating for those participating, and also timely. Just hours before the call took place, news broke of a terrorist attack on a major oil pipeline supplying Shell’s Bonny export terminal in Nigeria. In an e-mail sent to various news organizations, the militant group claiming responsibility, the Movement for the Emancipation of the Niger Delta (MEND), described their motive:  “The region where the wealth within the city has been built remains mired in poverty and lack. The people who own the resources have no stake in it, for which we have now waged a war to emancipate.”

Seemingly unruffled by the transpiring drama, Shell executives explained why this is only the latest in a string of similar attacks against the company’s Niger Delta facilities. “There is unrest because people see oil and gas operations generating billions of dollars in revenue, but people aren’t getting any of the benefits from that,” says Wood. “Communities are targeting companies such as Shell because they want a greater share.”

As with most oil rich Nations, Nigeria’s oil resources are controlled by the Federal Government, which then issues oil exploration and production rights to corporate partners in exchange for a share of profits. Oil presently accounts for 95 percent of Nigeria’s earnings and 80 percent of the government’s total revenues. But most of Nigeria’s 30 million citizens live below the poverty line, with no access to electricity, clean drinking water or other amenities enjoyed by Westerners. To add insult to injury, citizens living close to Shell refineries can plainly see the gas flares that contribute significantly to local air and water pollution, as well as global warming. These variables converge to create a terrible tension.

“What started as action by communities has over the years grown into a criminal movement,” says Wood. “[MEND] is heavily armed. They steal our crude oil, they attack our facilities and they pose a large threat to our staff working in the Niger Delta.”

According to Shell over the past three years 133 company employees and contractors working in the Niger Delta have been kidnapped, and five have been killed in assaults. Attacks from MEND are estimated to have forced oil companies including Shell to shut down at least 133,000 barrels per day of oil production in the last month, diminishing corporate profits and reducing Nigeria’s oil output by as much as 40 percent. That lost income creates a big incentive for military government intervention.

In mid-May the Nigerian military launched an offensive against MEND, bombarding rebel camps from the air and sea and sending in three battalions of ground troops to hunt them down. The offensive is said to have done little to quell the group’s resolve, however. Military attacks such as this one are known to sometimes displace villagers from their homes and also prevent people from accessing humanitarian aid. If anything, the Nigerian military’s notorious “kill and go” strategy potentially encourages some elements of the insurgency to become even more determined. Given MEND’s motives and the remote mangrove creeks of the Niger Delta, industry and security experts say that it is virtually impossible to guard against future attacks.

With no end to the violence in sight, Nigeria’s president, Umaru Yar’Adua, offered amnesty to militants in the Niger Delta this past Friday as part of his strategy for helping to protect national security and oil industry interests. For its part, Shell says that it is placing more emphasis on community outreach initiatives that create economic, social and environmental benefits for Nigerian citizens, but at the end of the day there is only so much the company can do.

“When it comes to [establishing] law and order, that’s not a Shell issue. This is not the sort of situation where we can get reasonable thinking people in a room and talk about it and sort things out,” says Wood. “The long-standing feuds between different groups of people, the huge economic interests on the legal and illegal side of things, makes this quite an intractable situation and a very difficult area to be in.”

Facing serious economic and ethical challenges, Shell is in a tight spot. Should the company decide to withdraw from Nigeria, then it would lose one of its most important markets, as it controls almost half of the 2.5 million barrels of oil that Nigeria exports daily. On the other hand, should Shell remain in Nigeria, then it will continue to come up against the nearly insurmountable struggles of staying ahead of security risks and also, reframing the past. 

The Ogoni Legacy

Ogoniland, the 404-square-mile area off the coast of the Gulf of Guinea, is where Shell’s troubles in Nigeria all began. The Ogoni people, who represent less than two percent of Nigeria’s population, rose to international attention after a massive public protest campaign against Shell was led by the Movement for the Survival of the Ogoni People (MOSOP). 

MOSOP’s campaign is ongoing, although it is not a terrorist group and is in no way affiliated with MEND. Founded in 1990, MOSOP’s mandate is to use non-violent protests in order to promote democratic awareness; protect the environment; seek social, economic and physical development for the region; protect cultural rights and practices; and seek appropriate rights of self-determination for the Ogoni people.

Activist and author Ken Saro-Wiwa served as founding member and president of MOSOP until 1995, the year he died. According to the website www.wiwavshell.org, in 1994 Saro-Wiwa and eight other Ogoni leaders were prevented by the Nigerian military from attending a protest gathering which left four Ogoni chiefs dead. The bodies of the four chiefs were never found. Despite the lack of evidence, the military government accused Saro-Wiwa and the eight other MOSOP members of causing the deaths, and arrested and detained all nine men. Eighteen months later, Saro-Wiwa and five others – John Kpuinen, Saturday Doobee, Daniel Gbokoo, Felix Nuate, and Dr. Barinem Kiobel – were executed. The military also conducted raids on 60 towns in Ogoniland and detained and beat several hundred men suspected of involvement with MOSOP. 

Saro-Wiwa fought vigilantly for human rights and environmental justice for most of his career. He was nominated for a Nobel Prize and awarded the Right Livelihood Award and the Goldman Prize. Reportedly, his last words were: “Lord take my soul but the struggle continues.”

The lawsuit Wiwa v. Shell was filed in 1996 on behalf of 10 plaintiffs, who include family members of the deceased victims. According to the complaint, plaintiffs allege that Shell officials helped to supply Nigerian police with weapons during the 1990s, that they took part in security sweeps in parts of Ogoniland, and that they hired government troops that shot at villagers who protested against a pipeline. They also allege that Shell helped the government to capture and execute Saro-Wiwa and the other MOSOP members.

Shell firmly denies these charges and also says that it tried to get clemency for Saro-Wiwa and the eight other men. “What happened in Nigeria in 1995 was terrible. It was just the beginning of the problems we’ve had there,” says Edlund. “It has become a reputational burden for us.”

Shell hopes that its $15.5 million human rights settlement will help set a new tone for the future and provide the Ogoni people with some relief. An out-of-court settlement wasn’t necessarily the easy route, the company explains, but the most sensible one for all parties involved. “We were quite prepared to go to court and wanted to clear our name. We were confident that there was no evidence to show that we colluded with the government in any way, in any of the allegations that have been made as part of this case,” says Wood. “On the other hand, you look at the thirteen years that it has taken to get this far in the case. We were all looking forward to moving on, and this settlement seemed the best way to maximize the chance for reconciliation in Ogoniland.”

Lessons Learned

Regardless of what people believe about Shell’s history in Nigeria, one thing is absolutely certain. This is a company with a truly global perspective and a wealth of expertise that very few other companies have. These corporate assets could prove invaluable to the global community in years to come. 

“There is something we can do so that something good comes out of this,” says Wood. “Even if you learn the painful way, you do learn, and you can pass that information along to others.”

At present Shell is engaged in a number of initiatives designed to ensure that its insights and experiences will not go to waste. Through the Voluntary Principles for Security and Human Rights, Shell shares its framework for maintaining safety and security of its operations, while also acknowledging the fundamental freedoms of its stakeholders. Similarly, through the Extractive Industry Transparency Initiative, Shell shares best practices with governments, companies and civil society, also holds itself accountable to certain ethical standards. “We publish what we pay,” says Wood. “We make it clear what the revenue stream is, and how the share of income is distributed throughout the countries where we operate.”

With the confluence of political, economic, social and environmental forces simultaneously working for and against Shell’s interests, the company says it has learned why it is essential to build a business that is a welcome partner to people. The more Shell is embraced by local citizens, the lower its risks and operating costs will be, and the higher overall value the company stands to generate. Striking such a balance is complex, particularly in countries like Nigeria. Still, Shell seems determined to establish the necessary foundation.

“We haven’t got all of the solutions for improving local conditions in the areas where we operate, and neither have governments or NGOs,” says Edlund. “The game plan is to have a clear set of principles, clear governance within the company, and to recognize that [we] don’t live in a bubble, that [we] have to collaborate with other people that you can make some progress with.”  

After having allegedly been poisoned by the pesticide dibromochloropropane (DBCP), Nicaraguan banana plantation workers and a prominent L.A. attorney sued Dole and American chemical companies in 2007. A Los Angeles jury awarded $2.5 million in punitive damages to five workers, but the court later dismissed those damages, saying they could not be used to punish a domestic corporation for injuries that occurred only in a foreign country. Gertten’s film portrays both the court battle and the plight of third world laborers struggling against a relentless capitalist system.

“Every time a banana worker who was exposed to this chemical dies, then its one more victory for the Dole Food Corporation,” claims Los Angeles-based personal injury attorney Juan J. Dominguez, who represented the Nicaraguan plantiffs and also stars Gertten’s film. “This is bigger than just a case,” he says.

In the eyes of Dole Food Co., Gertten’s film is seriously flawed. This spring Dole investigators presented courts with evidence gathered from Nicaraguans who said Mr. Dominguez had falsified evidence against the corporation. Dominguez had allegedly recruited and coached plaintiffs, and outfitted them with false work histories and falsified medical lab reports. According to Dole, Dominguez also promised payouts to supposed pesticide victims.

In a letter sent to the Los Angeles Film Festival by Gibson, Dunn & Crutcher, the law firm representing Dole, the company attacked the film’s legitimacy and threatened retribution in no uncertain terms:

“Publication and further promotion of this self-described “court-room-thriller-documentary,” directed by Mr. Gertten and produced by WG Film AB and co-produced by ITVS, is indefensible...We demand that you immediately cease and desist making any false, defamatory statements about Dole Food Company, Inc. and any of its former or current officers or employees in connection with the film “Bananas!*” and the matters discussed therein. We also demand that you immediately remove any false statements of fact currently published on the promotional website for the film “Bananas!*” and in any other promotional material, and immediately publish, in a conspicuous manner on the film’s promotional website an unequivocal retraction of those statements. Please confirm to us in writing within five (5) business days that you have done so.

Should you move forward with plans to publicly display or distribute the documentary film “Bananas!*,” despite its obvious false and defamatory content, you will be held responsible for any and all compensatory, special, exemplary or punitive, and all other damages available under applicable law. Our clients reserve the right to take any action they deem necessary to enforce their rights, and will do so without further notice to you.”

Despite threats made by Dole attorneys, the Los Angeles Film Festival opted to go ahead and screen “Bananas!*” anyway. Reportedly at least ten people from Dole were in the audience, taking voracious notes. “The audience loved the film,” claims the Festival. “The debate was insane, but we did well. The sympathy fell on our side.”

In a Q&A session that followed the screening, “Bananas!*” film-maker Gertten defended his work: “In answer to the question of whether my film is fraudulent, I cannot see that it is.  Everything I filmed is the truth and how this all played out.” Gertten also emphasized the importance that films like his serve in fueling meaningful conversations about the impact of big business on local communities. “Dole and other big corporations have all the best reasons to fight [the film]. But I think they should do that in an open debate, not by threatening a film or a film festival and a filmmaker,” he said.

Given Dole’s current legal strategy, however, it seems improbable that the company will choose engage in any sort of open or constructive dialog with stakeholders concerning the film’s broader message points. More likely, it will continue to move against free speech –  deflecting criticism, discrediting opponents, defending its business practices and diminishing the film’s chance for widespread distribution. 

On June 25, 2009, Justmeans will host a call which brings together concerned citizens, activists, industry experts and Shell executives – including Bjorn Edlund, Executive Vice President of Communications, Nick Welch, Head of Policy and External Relations and Nick Wood, Vice President of Communications.

“Over the past two weeks we have received an overwhelming response to Shell’s $15.5 million human rights settlement,” says Justmeans founder and CEO Martin Smith. “We are delighted that Shell has agreed to participate in this meaningful conversation, and we hope to help establish greater transparency between the company and the community it serves.”

According to a flurry of comments posted on the Justmeans web site (over 150 and counting), Just Means community members are interested to hear from Shell statements that have not yet been publicly issued, including:

•  Exactly what role does Shell play in the ongoing Ogoni struggle?

•  Have all Shell employees in Nigeria or elsewhere who were complicit in the Ogoni executions been dismissed by the company?

•  How will the company prevent such human rights tragedies from occurring again?

•  To what extent has the company reformulated its policies and practices regarding human rights and community outreach?

Justmeans cordially invites the online community to learn more – and to participate in the call.

The call is scheduled for Thursday, June 25th at 9:00 PDT / 12:00 EST / 5:00 GMT / 6:00 CET 

A call in number will be posted prior to the event.

RSVP to this event on Justmeans.  

Successful public relations campaigns hinge on, well, public relations. The proliferation of social media makes it increasingly important for companies get out from behind canned statements and actively engage people in real conversations. As evidenced by Wal-Mart’s 2005 War Room, when corporations fail to properly connect with stakeholders, they can end up spending more money on crisis management in the long run. But tell that to Royal Dutch Shell.

This week marked an interesting point in the company’s history. On Monday Shell agreed to pay $15.5 million to settle a lawsuit over the 1995 deaths of Nigerian author and activist Ken Saro-Wiwa and others. On Wednesday a provocative debate broke out on the social media web site Justmeans, involving a cross-section of Corporate Social Responsibility (CSR) industry veterans, thought leaders and activists. By Thursday evening nearly one hundred comments had been posted and a petition had been drafted asking Shell to acknowledge the bigger picture and go deeper in its efforts to rectify the past: 

“Justmeans, the largest online community of people interested in good work, asks Shell to actively engage in a pivotal stakeholder dialog. Over the past week we have received an overwhelming response to Shell’s $15.5 million human rights settlement. Presently, Justmeans community members are banding together in order to launch a grassroots campaign that elevates a meaningful human rights conversation and also provides the Ogoni people with further relief.

This campaign, which centers on a fundraiser and live webcast, will bring together experts, stakeholders, shareholders and the public in a town hall setting. Our core objective is not to “bash” Shell. On the contrary, we seek to build bridges of understanding and encourage the formation of constructive new policies and initiatives.

The Justmeans community appreciates the fact that Shell’s recent settlement avoids further drawn out court battles. Most agree that this is in everyone’s best interest. Equally however, the Justmeans community maintains a genuine concern for the future of the Ogoni people, as well as all citizens in areas proximate to Shell operations. We are therefore interested to hear from Shell statements that have not yet been publicly issued....Furthermore, in appreciation of the enormous upheaval the company’s stakeholders have faced, and as a token of the company’s ongoing concern, we urge Shell to commit $15.5 million to Ogoni and human rights-related charities on an annual basis.”

Many Justmeans community members view Shell’s one-time $15.5 million settlement as inconsequential, particularly in light of the $458 billion in income the company generated last year. After all, the Ogoni people (and Nigerian citizens in general) have been struggling against oil companies including Shell for over twenty years. Prisoners have been tortured. Lives have been lost. Arguably, an entire way of life has been destroyed. That’s why Shell’s denial of guilt and recent statement that “government and local communities must take the lead in ending conflict” sparked an intense, ongoing debate.

Oil accounts for 95 percent of Nigeria’s exports and 85 percent of government income. The Nigerian government has a vested interest in protecting its main income source and has historically used unmitigated violence to squelch protests and guard oil facilities. It therefore stands to reason that Shell is not only involved in the ongoing cycle of violence and oppression, but at the very root of it. In light of this, the Justmeans community wants to know: How can the company possibly suggest that others take the lead? Why doesn’t Shell take the lead?

When Justmeans founder and CEO Martin Smith asked Shell executives to answer questions and participate in the burgeoning campaign, the company declined: “Right now there is no appetite to engage authentically on Justmeans,” Smith posted. “We will keep trying.”

Shell is reportedly about to embark in 50-city media tour in order to help iron out the kinks in its public image. Clearly the company does partake in PR – only on its own terms and at its own pace. But meanwhile, while Shell shuns an influential group, Justmeans community members keep each other informed of breaking news and insights in real-time. If Shell won’t tell its own story in a meaningful way, then others will.

Last week green cleaning and housewares company Seventh Generation made an announcement. Jeffrey Hollender, the company’s co-founder and CEO, is handing over the reins of the business to Chuck Maniscalco, a 21-year veteran of Quaker Oats, Tropicana and Gatorade. The decision surprised the corporate social responsibility community, causing many to ask important questions.

In the midst of Hollender’s widely publicized transition (and on his way to holiday in Greece, in fact), I managed to catch a few moments of his time – along with a welcome burst of inspiration.

Q: You’ve lead Seventh Generation for more than 20 years, growing the brand from a fledging start-up to a household name. What prompted your decision to step down as CEO – and what’s next for you?

A: I decided to step down for two reasons. First, to continue to lead the business to its greatest potential in a highly competitive marketplace requires a depth of experience that I simply don’t have. A business of $150 million requires more than my intuition. Second, my passion for fulfilling Seventh Generation mission “to inspire a more conscious and sustainable world by being an authentic force for positive change,” can best be fulfilled if I now focus all of my time in it’s direct pursuit through speaking, writing, educating and influencing other business. I have two books in progress, a TV show (Big Green Lies) and a significant corporate educational program that we will announce in the next 30 days – so I won’t have trouble keeping busy.

Q: Seventh Generation has set a goal to grow its annual business from its current level of about $150 million per year to over $1 billion in the coming years. That’s aggressive. What are the keys to achieving this?

A: Remain radically transparent, stay true to who we are, pursue our mission with passion, hire the most talented people we can find, listen carefully to our customers and make sure we always have more capital than we think we need.
 
Q: Are you concerned that, with rapid growth, any aspect of the brand will become diluted? How will the company ensure that this doesn’t happen?

A: That will always be a critical concern. So far we strengthened our culture as we have grown by investing time and resources to ensure our community remains deeply connected to our mission. Personally, I will remain directly involved in ensuring that our purpose isn’t compromised as we grow. We have also developed some powerful institutions and rituals that help ensure we stay on course, from our annual all-company retreat to frequent meetings with senior management where staff members are encouraged to ask tough questions. The success and vibrancy of our brand in the marketplace and its impact and relationship with consumers is directly tied to the investment by the very people who drive, mold, invent and reinvent Seventh Generation day in and day out – their passion and authenticity is Seventh Generation’s vitality and this directly extends to our consumers. They relate to it. 

Q: What do you say to those who those who worry that by bringing in Mr. Maniscalo, a Quaker/PepsiCo executive, Seventh Generation is “selling out?”

A: Chuck is here precisely so we won’t have to sell out. Most successful mission driven companies have been sold to large CPG companies because they couldn’t scale up independently. We’re acquiring the talent to ensure our independence and commitment to our mission.

Q: You’ve had an inspiring career and are credited not only for pioneering green cleaning products, but green business practices in general. What’s the greatest lesson you’ve learned -- and if you could, is there anything that you would do differently?

A: I spend no time ever thinking about reinventing the past. there is much to much work to do that lies ahead of us. But the greatest lessons I’ve learned are:

1. we need revolutionary not incremental change
2. business and NGO’s must cooperate much more effectively
3. we need to move from being less bad to becoming truly good
4. sustainability is not enough, we must regenerate our planet
5. human development represents unlimited potential, and
6. anything is possible

At first glance, these might seem like quintessential examples of the corporate left-wing. From human rights to environmental conservation and animal protection, each supports a worthy cause in a radical way. But take a closer look, because irrespective of the particular issues these companies take on, their impact is undeniable and their business formula is highly relevant to today.

Most businesses now support a philanthropic cause. But at Patagonia, The Body Shop, CREDO Mobile, Seventh Generation and Equal Exchange, cause transforms into forceful crusade. These game-changing companies give people something worth fighting for. 

“Someone needs to be the loud voice out there, banging the gong. We want to be that,” says Eve Bould, Patagonia’s director of communications. “We can’t be taking the traditional corporate stance when we’re trying to give voice and legitimacy to vital environmental issues that deserve attention.”

As Patagonia rightly points out, there is no business to be done on a dead planet. “We believe we have no choice but to take strong positions,” Bould says. Nevertheless, certain people would clearly prefer that activist voices remain muffled, and many have grown incensed by Patagonia’s determination to be a loudspeaker for issues like forestry protection, corporate pollution, marine conservation and species extinction. In response to one of the company’s recent ads, an irate citizen sent this letter:

Patagonia –

Greetings from Grants Pass, Oregon. Saw your ad in The Daily Center. I have a suggestion: Why don’t you bastards keep your nose out of our business. And our lives!! Come around here and we will take care of pukes like you! YOU LIE AND YOU WILL BE STOPPED. STAY OUT AND STAY HOME. MIND YOUR OWN BUSINESS.

According to Patagonia, for its support of various environmental causes, the company received thousands of similar letters along with boxes of customer’s returned Patagonia gear. One retailer in California reportedly stopped carrying Patagonia merchandise after heavy pressure from a lumber company, while another in Maine cancelled its order after Patagonia supported the creation of a national park in the New England state. But like all the companies featured here, Patagonia never stood down. 

Over the past 10 years, Patagonia’s environmental positions have only grown more extreme, articulate and impassioned. At the same time, sales have increased, creativity within the company has flourished (see eco-fabrics line), environmental impact has diminished (see The Footprint Chronicles), and stakeholders have become fiercely loyal to the brand (see The Cleanest Line). 

“We’re not out to make everyone like Patagonia,” says Bould. “Our founder, Yvon Chouinard, often says that he’s perfectly happy if half the people hate us, as long as the right people love us.”

What Bould describes amounts to a critical leadership trait that is somewhat lacking in the vanilla world of corporate philanthropy: fearlessness. The companies that fight fearlessly for worthy causes break through barriers and ignite people’s inner fire. 

“You have to be vigilant and brave,” the late Dame Anita Roddick, founder of The Body Shop, told me back in 2004 when I interviewed her for my first book. “There are risks involved in taking a stand, but unless more companies do, we have little hope of evolving.” 

Like Patagonia, The Body Shop realized early on that one of the most effective ways to get people emotionally invested was to outrage them, so many of the company’s campaigns have called attention to the awful truths about business. The most pivotal of these unfolded during the mid 1990’s, when The Body Shop shed light on the plight of the Niger Delta’s Ogoni people, whose way of life had been been ravaged by social repression and environmental degradation. US corporations, including Shell, were part of the problem. After protests broke out near a Shell refinery, a group of local Ogoni tribespeople, including Ken Saro-Wiwa, were jailed and later executed by the Nigerian government.

The Body Shop’s campaign, called “Make Your Mark,” generated a global outcry about Saro-Wiwa, the Ogoni people, and other human rights defenders. It also attracted unwanted attention to Roddick herself. “I got into some dangerous territory...I remember [certain companies] hiring agents to intimidate me,” Roddick claimed. “They would harass me, play dirty tricks, go though my documents, sift through my trash cans, everything.”

Ultimately, however, The Body Shop and its supporters had the final word. As a result of the Make Your Mark campaign, several human rights protesters were freed from prison, whereas oil companies were plagued by years of negative publicity. And while over three million consumers signed The Body Shop’s human rights petitions, the company estimates that via global publicity, it reached over 1 billion people worldwide with an urgent message. 

“Despite the enormous need for it, no other company had ever stood for human rights. No company has ever challenged other powerful multinationals on the basis of of their human rights violations. We did,” Roddick said. “I guess since I’m a loudmouth, I wanted a loudmouth company to speak out for the voiceless.”

Mass Movement

As Bould and Roddick make clear, the challenges the world faces now require bold actions and loud voices – not political correctness, temperance or candor. Alongside the public’s mounting intolerance for injustice, there is a heightened sense of urgency for finding answers to looming social and environmental problems, and a great attraction towards companies that can offer such things. The mass change movement is broader in scope and deeper in consequence than most people realize. It is global, classless, unquenchable and tireless. Paul Hawken calls it Blessed Unrest. 

By its nature, Blessed Unrest gives rise to High-Purpose Companies. In true High-Purpose Companies, social and environmental solutions are the core reason for being: “If a group of people form a company and they know what they stand for, it’s good to tell people; to tell customers,” explains CREDO Mobile CEO Laura Scher. “[But] CREDO is not a cause-related marketing company. Cause-related marketers select organizations to support and charities to fund because they believe it will increase sales. We started CREDO as an expression of the issues we care about and built the company around the vision that a business can be a force for social change.”

Like all High-Purpose Companies, CREDO offers people something of irreplaceable value: a direct mechanism for instigating change. By making ordinary phone calls, CREDO’s customers have thus far channeled $60 million towards extraordinary nonprofit groups. 

“Our customers have spoken out millions of times on issues concerning the environment, equal pay, gender equality, and women’s right to choice,” says Scher. Not surprisingly, CREDO has also experienced its share of backlash. “Over the years we’ve received hate mail, death threats and bomb threats for our support of pro-choice organizations. We’ve even evacuated our office. But we continue to support choice groups.”  

CREDO, which is Planned Parenthood’s largest corporate donor, was also one of the few companies openly opposed the Iraq invasion, pre-war. Rather than preach patriotism the way other US companies did, CREDO called for restraint: “We organized customer marches, held Congressional meetings, and were active against the US invasion across the country,” says Scher.  “We did so in deference and respect, but called for our elected officials to behave in a manner consistent with our country’s values.” 

Inspired Protagonists

As CREDO demonstrates, brave brands rarely take easy positions. They avoid the middle ground because doing so would defeat their purpose. In the same way, brave brand leaders tend to be inspired protagonists. Such individuals know that to be serious about corporate responsibility is to step out of line with their industry peers, which is why they are constantly shaking things up. 

In his must-read blog, Seventh Generation founder and President Jeffrey Hollender plays the consummate inspired protagonist, frequently running his competition through the ringer. On The Clorox Company’s launch of a new-and improved Formula 401, he recently had this to say:

Clorox brags about helping people lead “healthier lives,” even as it deploys its scientists and marketing mavens to develop a chemical-laden product that is just this side of legal...Clorox can still claim that it’s a responsible company, if you define “responsible” as reluctantly complying with the letter of the law. But an authentically good company is one where all of its works live up to its (good) words. Selling natural-based products (Green Works™) with the one hand while contributing to indoor-air pollution with the other shows that Clorox is neither completely good nor completely bad. It’s just a poseur.

As with the previous examples, Hollender’s emphatic post demonstrates the importance of standing for something concrete and unwavering. Seventh Generation stands for human health and environmental integrity. The company fights for these things on a regular basis – through everything it says, does and especially sells. But as Hollender points out, not all companies use the same approach. Clorox, it would seem, stands for human health and environmental integrity only partially.

Half-hearted approaches to corporate responsibility are prevalent in many industries, and only serve to bait protagonist leaders on. Take the coffee industry, for instance: “Many large corporations claim to be committed to Fair Trade when they’re only offering 5, 10 or 20 percent Fair Trade product. They are trying to sell to everyone, and therefore can’t take a strong stance in any portion of the market,” says Equal Exchange ‘Answer Man’ Rodney North. In contrast with larger corporations, 100 percent of Equal Exchange’s line of coffees, teas and chocolates are organic and Fair Trade certified. “We take the position that small farmers are the heart of Fair Trade. We get push-back from the agri-business crowd, and also from others in the Fair Trade category, but that only makes us think that we’re on to something.” 

Since its inception in 1986, Equal Exchange has plunged full-force into the task of challenging industry convention and changing a broken food system. As North explains, what started as a political statement has steadily grown into a thriving business. “We launched our company by challenging the US government’s embargo on Nicaragua. (See http://www.equalexchange.coop/story). As the US was by far the number one market for Nicaraguan exports, this had devastating consequences for Nicaraguan farmers and farm workers,” explains North. “To challenge the embargo and to launch our fledging company, we introduced “Café Nica: the Forbidden Coffee.” We got around the embargo by exploiting a loophole. In 1988 the Bush administration closed the loophole and would have bankrupted Equal Exchange, but we fought a PR and legislative battle and – just barely – came out victorious and with a stronger following than we would have without it.”

Like all brave brands, Equal Exchange never wastes time or money trying to woo everyone. “Of course not all customers are equally excited by our work. Some simply like the taste of our dark chocolate, or want an affordable organic coffee,” says North. “But a healthy number do care deeply about what we’re trying to do.” 

By taking an unwavering stance and a targeted approach, Equal Exchange has literally incited a religious following. The company has established partnerships with eleven faith-based organizations, through which it generates about 20 percent of its annual revenues. “We are sometimes asked to address congregations from the pulpit, and are regularly endorsed by the local priest, pastor or rabbi,” says North. “When people tell one another “this is the coffee Jesus would drink,” that’s about as enthusiastic as it gets.”

If brand enthusiasm is the goal of any worthy corporate initiative, then Patagonia, The Body Shop, CREDO Mobile, Seventh Generation and Equal Exchange should give marketers pause. Brave brands like these demonstrate an important business truth: unless a company’s social and environmental positions present a worthy fight and cause some backlash, then they are probably not worth taking (let alone promoting) in the first place. 

Nobody cares when companies say they are “committed to behaving in a socially and environmentally responsible manner” because nearly every company in the world says the same thing. To be truly meaningful to people, to win people’s hearts and loyalty, more businesses need to answer the pressing question: “So what?”

That’s putting it mildly.

Today’s adverse economic situation has had life-altering consequences for people around the world. A massive wave of home forclosures drove real estate values and property transactions down to their lowest point in twenty years. The stock market collapse destroyed an estimated 20 percent of the value of global assets and sent US unemployment rates skyrocketing to 15.8 percent. 

Now, credit cards companies are lowering credit lines, imposing extra fees and retroactively increasing interest rates on millions of consumers, causing more than 10 percent of people to default on their payments. 

“Credit card companies are part of an honest industry just trying to make 30 percent on a buck,” said the masterful Stephen Colbert in a recent bit that poked fun of the credit card crisis. “Being in a financial hole is as American as borrowing apple pie.” To be sure, living in debt is a way of life for many of us – starting from college and extending well into adulthood. But the obstacles to digging ourselves out of debt are piling high. 

Facing a desperate race to collect before consumers can claim bankruptcy, credit card companies are trying to squeeze out every last dime from every consumer they can. Last year alone they collected $18 billion in penalty fees. That statistic hits home, since research shows that most Americans are using credit cards for basic necessities like groceries, gas, car repairs, medical expenses and prescription drugs. Credit cards have become essential tools for functioning in today’s economy, but even so, there are few rules protecting consumers from abusive industry practices.

As research group Demos points out, it has been nearly twenty years since the credit card industry was deregulated with the promise of bringing greater competition and lower prices to consumers. That promise fell short big-time. “Under the shield of deregulation, credit card companies have shifted the cost of credit to individuals least able to afford it, while at the same time generating some of the highest profits in the entire banking sector,” Demos says. “As [our research] report shows, low-income individuals, African Americans, Latinos and single females bear the brunt of the cost of credit card deregulation through excessive fees and high interest rates.”

This brings up an important point, one that’s often debated by the so-called corporate responsibility community. Many of us like to think that market forces are the ultimate catalyst pressuring companies to behave ethically and responsibly. Pointing to worthy case examples, we hope that changing conditions and competitive pressures will pull industries in a more amenable direction. That optimism is not always warranted, though. Having been left to it’s own devices for so long, the credit card industry is the latest poster child for why we need a stronger regulatory net.

The CARD (Credit Card Accountability, Responsibility and Disclosure) Act of 2009 comes before the Senate today. This legislation, introduced by Banking Committee Chairman Chris Dodd, would amend the Consumer Credit Protection Act to ban abusive credit practices, enhance consumer disclosures and protect underage consumers.

“We are on the verge of a historic victory for hardworking American families that have suffered for far too long at the hands of credit card companies,” said Senator Dodd in a recent statement. “I am committed to working with President Obama and my colleagues to ensure that [CARD] passes with overwhelming support.  As President Obama said today, enough is enough.  It’s time to put an end to the abusive credit card practices that drive millions of American families further into debt.”

The bank lobby is strong in Washington. The industry asserts that new legislation could cripple its ability to deal with rising defaults, manage high-risk accounts and extend credit to certain people during the recession. 

In the event that the legislation does pass today, banks are expected to look to new revenue sources to make up for lost income. According to bank officials and trade groups, banks will likely target customers with sterling credit, who typically pay off their full balances at the end of each month. These customers can look forward to revived annual fees, curtailed cash-back rules, reduced rewards programs, and the immediate charging of interest on purchases made.

Going forward, it looks like people with great credit will have to subsidize those with riskier profiles. Fair? Probably not. But again, that’s beside the industry’s point.

What do these companies have in common? According to CRO magazine (formerly Business Ethics), they are among the world’s Best Corporate Citizens, setting the gold standard in governance, ethics and corporate social responsibility (CSR).

“When someone next asks you to define corporate transparency, show them this list,” touts the magazine. “[Our] 2009 CRO 100 Best Corporate Citizens List is the world’s best-known apples-to-apples comparison of Russell 1000 companies’ performance in environment, climate change, human rights, employee relations, philanthropy, financial and governance.”

While the CRO’s leading “apples” might have done laudable things, several are also involved in ongoing legal and public relations scuffles stemming from alleged ethical breaches and poor business judgement. For these “top 100” firms, that’s nothing new: 

•   Merck, whose Vioxx product gave rise to class action lawsuits over allegedly deceptive marketing practices in 2006, is once again accused of engaging in similar deceptive practices

•   Monsanto, which Amnesty International calls a “global corporate terrorist,” is using litigation as a tool to protect its market share and has filed dozens of lawsuits against family farmers across North America, alleging they “stole” airborne seeds

•   ExxonMobil, which has a history of environmental and human rights lawsuits, has yet to pay $92 million worth of Valdez spill-related damages to plaintiffs in Alaska

•   Chevron, which also has a history of environmental and human rights lawsuits, now argues that renewables “are not a mainstream business”

•   Citigroup, which in 2002 faced FTC charges for abusive lending practices,  was recently accused of lying to investors and its own employees about the risks inherent in several speculative, mortgage-backed securities funds. It also froze customer lines of credit after receiving $20 billion in government bailout money

•   Goldman Sachs, which in 2002 faced SEC lawsuits for securities fraud and conflicts of interest, recently changed accounting rules in order to hide December losses. It is also accused of being a serial violator of SEC regulations prohibiting long-outlawed “naked” short sales of stock

•   Smithfield Foods, which recently faced multiple environmental lawsuits, runs slaughterhouses in Mexico that some experts have linked to diseases like swine flu

CRO’s Best Citizens list sheds light on a critical problem that keeps CSR on the sidelines of many corporate agendas: the industry is too ambiguous for its own good. As Paul Hawken argued several years ago in his critique of the $2.7 trillion socially responsible investment (SRI) industry: “The term ‘socially responsible’ is so broad it is meaningless...There are no standards, no definitions, and no regulations. Anyone can join; anyone can call his or her fund an SRI fund.” 

To be sure, the CSR industry’s lack of universal standards and criteria leave many questions unanswered. But research indicates that it doesn't need to be this way.

Companies that dabble in every conceivable CSR facet (community, diversity, environment, human rights, etc.) tend to be less effective than companies that pursue deliberate strategies in a focused area – both in terms of making a substantive social and environmental impact, and in terms of generating a financial return on their corporate responsibility investment. That was a key finding of my 2007 CSR effectiveness study, and it runs contrary to the way that companies are rated on “Best Citizens” lists.

According to the CRO’s methodology, Best Citizens lists are compiled by quantitatively rating companies across a breadth of performance dimensions:  environment, climate change, human rights, employee relations, philanthropy, financial performance, governance and lobbying activities. Scores are assigned to each category (some categories count more than others) and those companies with the highest cumulative scores win. Though the CRO suggests that this breadth approach to CSR performance evaluation yields a more holistic view, the result is that any company, regardless of history or industry, can be included for consideration. Halliburton and Blackwater (Xe) have yet to make the cut, but that may only be a matter of time.

On the other hand, as mentioned above, my research clearly demonstrates that depth works better than breadth. Rather than taking on every CSR issue at once, the companies producing the best triple bottom-line results (High-Purpose Companies) go deep in one or two particular areas where they know they can make the biggest difference. They find common ground between their core strengths and a critical problem that needs solving – and thus develop profitable solutions to that end. High-Purpose Companies have the financial incentive to create social and environmental value. That’s not always the case at the firms making CRO’s cut, which is why the magazine risks missing the point.

If the CSR industry is to be taken seriously in the future, then it needs to reward companies for producing value, not just preaching values.  Now is the time for an industry makeover. Let’s start with objective standards, critical thinking and a much stronger voice. 

The stocks of major U.S. meat companies plunged last week in the wake of reports tying the swine flu outbreak to conditions inside confined animal feeding operations (CAFOs). Shares of Smithfield Foods – a company with CAFOs in Mexico that have been scrutinized in connection with the outbreak – saw the biggest loss among U.S. processors, dropping 12 percent. Tyson and Hormel Foods were also affected, posting share value declines of 9 and 2 percent respectively.

The pork industry’s response to the negative publicity has been swift, if not expected: “We deny completely that the influenza virus affecting Mexico originated in pigs,” said the National Organization of Pig Production and Producers in a statement. Smithfield, the world’s largest pig producer, categorically asserted that “there have been no clinical signs or symptoms of the presence of North American influenza in Smithfield's swine herd or its employees at its joint ventures in Mexico.” 

Although criticism of the meat industry is not new, for many people, the swine flu outbreak brought into sharper focus the harsh reality of CAFOs and the health and environmental ramifications they create.  While we do not know for certain how this particular flu strain emerged, it has raised fundamental questions: How did the meat industry get to where it is today? And at what cost?

For centuries, independent farms – with their traditional methods for livestock handling, feeding and processing – were the primary sources of meat.  After WWII, however, demand for meat soared, compelling producers to abandon their traditional methods in favor of more efficient, factory-like processes in order to meet that demand.  As a result today’s meat industry is highly concentrated and mechanized.  It also is dominated by a relatively small group of mega-players.  Data from the University of Missouri shows that most pork and beef production in the U.S. is controlled by just a handful of corporations, including Smithfield, Tyson, Swift & Co. and Cargill.  Processing powerhouses such as these operate approximately 238,000 CAFOs worldwide, slaughtering 9.1 billion animals on their way to market.  

Such efficiencies come with a huge environmental price tag.  Those same 238,000 CAFOs produce an estimated 500 million tons of waste each year. The U.S. Environmental Protection Agency reports that hog, chicken and cattle waste has polluted 35,000 miles of rivers in 22 states and contaminated groundwater in 17 states. The European Union says that CAFOs are responsible for 18 percent of global warming. In response to these alarming statistics, consumer groups like the Organic Consumers Association have commenced a petition drive calling for an outright ban on CAFOs and the initiation of governmental reviews of existing practices and standards.

In this era of shareholder and consumer activism, however, many people are not waiting for government intervention and are taking matters into their own hands.  More consumers are either choosing vegetarian options, or buying meat only from companies that have demonstrated an authentic commitment to more traditional and sustainable practices.

At California-based Hearst Ranch, for instance, traditional methods are the only ones considered:  “Our cattle live a natural existence as free-range foragers, roaming the 150,000 acres comprised by our two ranches and grazing on a diet of native grasses like rye, soft chess, filaree, clovers, brassicas, purple needlegrass and birdsfoot trefoil,” explains Hearst Ranch Beef division manager Brian Kenny. “We rotate our cattle pastures throughout the year, using well-managed grazing to increase the biodiversity of our grasses and improve the soil fertility of our working landscape.”

Kenny explains that CAFO market externalities stem from a business model that places quantity, efficiency and consistency above everything else. “Whereas it takes 16 to 18 months to raise a finished CAFO steer or heifer to an optimal weight of between 1,200 and 1,300 pounds, it takes 18 to 24 months to raise a free-range, grass-fed steer to 1100 pounds.” 

Permanent pasture operations like Hearst’s are seasonal, since both grass and animals are at full bloom only so many months per year. But there are significant upsides. “We can’t count on efficiency,” Kenny says, “but our operation fits within a natural resource capacity and our low-stress handling of the cattle results in a higher quality, tender product.”

CAFO cattle live cramped inside confinement pens where they are fed high-carbohydrate (grain-based) diets. That makes them significantly fattier and less healthy. On the other hand, because Hearst’s cattle are pasture-raised and grass-fed, its beef is leaner and healthier, providing ten times more beta-carotene and three times more omega-3 fatty acids than other beef.  “CAFOs can use tools like sub-therapeutic hormones and antibiotics to produce higher quality beef,” says Kenny. “Our quality comes from good grazing management, good genetics, and low-stress handling.”

Unfortunately while many meat companies claim to offer “sustainable” or “grass fed” meat products, the USDA’s standards for these labels are lax and somewhat misleading. Producers can label their meats “grass-fed” if animals were fed grass only for short periods of their lifetime. Additionally, “sustainably raised” doesn’t necessarily mean pasture raised. 

Names can also be misleading. Niman Ranch, for instance, isn’t much of a ranch anymore. The company has grown rapidly since its inception in the 1970s and it now boats a large operation that processes and sells nearly $85 million worth of beef, pork and lamb annually. Founder Bill Niman left the company after disputes with shareholders over money and animal protocols. He now reportedly refuses to eat their products.

The meat industry’s relentless quest for efficiency, along with loose standards and an apparent lack of transparency, can steer well-meaning consumers in the wrong direction. That fact, combined with the recent surge in health crises originating from CAFO animal diseases like swine flu, avian flu, West Nile virus, bluetongue, and foot and mouth disease, gives meat eaters good reason to think twice before ordering the next cut.

Kozlowski is absolutely right.

The premier financial institutions of today – AIG, Barclay’s, Bank of America, Merrill Lynch, Citigroup, Goldman Sachs  – make Enron’s 2001 accounting scandal look like child’s play. Evidently banking giants now make a habit out of inflating the value of certain assets, moving losses off the books and convincing accountants to look the other way. Such tactics have put investors at risk and cost taxpayers hundreds of billions of dollars. Meanwhile, fewer than 5 percent of bailed out banks will say where the money went.

Have these banks learned a single lesson from Enron’s past mistakes? Apparently not. And what’s more, the Sarbanes-Oxley Act (SOX) – which was created in an effort to improve disclosure provisions, ensure auditor independence and strengthen corporate governance procedures – hasn’t made a drip of difference. There seems to be less financial transparency and oversight today than there was before SOX was instated in 2002.

But even as legislation flounders and banking giants stay their course, the public moves in a new direction. A record number of people are flocking toward ethical, transparent and financially solvent companies like Boston-based Wainwright Bank & Trust and Bristol-based Triodos Bank. 

Here are two community banks that, albeit on a smaller scale, manage to thrive despite the ongoing credit and investor confidence crises. While Triodos experienced 8 percent growth during 2008, Wainwright’s first quarter 2009 profits increased an impressive 33 percent. 

“All this turmoil in the financial markets has continued to create opportunities for us to capture additional market share,” says Wainwright founder and co-chairman Richard Glassman. “We are pleased that there continues to be a market for our products and approach.”

The “approach” of which Glassman speaks is key. In fact, both Wainwright and Triodos sell the same products that you can find at any big bank – checking accounts, savings accounts, loans, etcetera. That’s not what drives their performance. It’s how they sell their products, how they conduct business overall, that sets them apart from their peers. 

At Wainwright a socially progressive agenda represents an ever-important second bottom line to the company. “One platform sustains the other,” Glassman explains. “Our business success is fueled by the difference we make in our community.” 

To date Wainwright has issued over $700 million in loans to community development projects like affordable housing and HIV/AIDS services. Remarkably, it has experienced virtually no defaults on those loans. In addition Wainwright has the highest level of customer loyalty and lowest rate of employee turnover in its industry. 

Triodos also thrives by helping to improve people’s lives for the better.  “We want to act as a bridge between savers and investors on the one hand, and sustainable companies and projects that need financing on the other,” explains board Chairman Peter Blom. “[With us] savers and investors know what happens with their money. In this respect, the banking sector has failed badly in recent years.”

Wainwright and Triodos aren’t the only ones profiting from systemic failures on Wall Street. Community banks across America and Europe are benefiting, as customers seek institutions they can trust. 

At the UK’s Co-Operative Bank for instance, pre-tax 2008 profits increased 69 percent from 2007. At  California Community Bank, first quarter 2009 growth increased 26 percent from 2008. And at Liberty Bell Bank in Cherry Hill, N.J., first quarter 2009 growth increased 14 percent.

A recent survey conducted by Independent Community Bankers confirms that these results are not atypical. Community banks are getting new customers at a faster rate than in the past, with 57 percent experiencing an increase in new retail customers and 47 percent seeing an increase in new business customers compared to last year. 

Though not immune to the challenges facing all financial institutions, community banks do offer realistic and profitable alternatives to traditional banking methods. 

To start with, rather than serving the narrow interests of a few shareholders, community banks acknowledge wider stakeholder communities. As opposed to treating lower-income customers and charitable organizations as a liability, they view them as a worthy opportunity. Instead of hiding risk, they openly disclose their investments and methods. As an alternative to pushing product, they prioritize people and relationships. And in lieu of imposing pre-set terms, many community banks structure loans around the needs of individual borrowers. 

“When Wainwright was founded, it was one of fourteen thousand banks in an undifferentiated industry with fungible products and commodity pricing,” says Glassman. “Now we’ve ended up as one of our region’s best-known banks with a constituency that knows exactly who we are and absolutely loves what we do differently.”

The fact is that community banks are genuinely different, which is why they are the preferred choice by more people around the world. Their lessons turn conventional banking wisdom on its head. Let’s just hope it stays that way.

The trust deficit is clearly a trend on the rise. Back in 2005, a Roper poll showed that 72 percent of respondents felt that corporate wrongdoing was “widespread,” up from 66 percent the year before. A subsequent survey issued by the Customer Care Alliance reported that 90 percent of people were dissatisfied with the way companies treated them, while 64 percent felt “rage” toward corporations. In 2008, a Reputation Institute study revealed that 13 of 24 industries had “weak” reputations based on the perspective of the general public. And in 2009, things have grown worse.

According to pubic relations and research group Edelman, global faith in business has hit a 10-year low, with 62 percent of people worldwide trusting companies less today than they did a year ago, and 77 percent refusing to buy from companies they distrust. 

“It has been a catastrophic year for business, well beyond the evident destruction in shareholder value and need for emergency government funding,” says Edelman's president and CEO Richard Edelman in a recent press release. “Our [2009 Trust Barometer] survey confirms that it’s going to be harder to rebuild our economies because no institution has captured the trust that business has lost.” 

Dismal as the current state may seem, it is a crucial one for companies to strategically face. They can start by asking smarter questions. For instance, it’s not so much about which companies and industries are among the world’s most and least respected, but why. What attributes and values do the winners and losers share?

The Reputation Institute says that outstanding leadership, financial performance, innovation, products and governance are the qualities that lead to a strong reputation. Boston College indicates that corporate citizenship plays an important role. Having spent five years researching this issue myself, I’ve found a common thread that might trump them all: purpose.

True High-Purpose Companies – those companies driven by a social or environmental cause to the extent where their financial performance depends on it –are among the most respected companies in the world. Conversely, Low-Purpose Companies – those companies whose social and environmental postures run contrary to shareholder interests – tend to be the some of world’s least respected. In true High-Purpose Companies, purpose directly influences everything from the product line to the innovation cycle, growth strategy, leadership, governance, citizenship  efforts and ultimately, the financial performance of the business. Take Toyota Motor Company, for instance. 

Toyota, which was just ranked “The World’s Most Respected Company” by The Reputation Institute, stands for the purpose of “making sustainable mobility a reality.” This purpose is clearly reflected throughout Toyota. Hybrid Synergy Drive, the Prius, zero waste manufacturing facilities and multi-dimensional quality models are just a few examples of how tangible the manifestation of purpose is at Toyota – and how crucial it is to shareholders.

There are dozens of similar examples. GE, Fortune magazine’s “Most Admired” company of 2008, serves the purpose of “providing imaginative solutions to the mounting challenges to our ecosystem.” JetBlue, which JD Power & Associates ranked “The Highest in Customer Satisfaction” three years in a row, aims to: “bring humanity back to air travel.” Patagonia, which Fortune magazine dubbs “The Coolest Company on the Planet,” exists in order to “inspire solutions to the environmental crisis.”

High-Purpose Companies are widely known and revered for their purpose, which is why so many people love them. Such companies might not be perfect, but they are authentic in the sense that their actions and investments match their words. That’s not case in Low-Purpose Companies, which tend to say one thing and do another. 

For example, Halliburton says: “[our] every action is guided by our vision to be welcomed as a good corporate neighbor,” but The Wall Street Journal reports that it is "the company with the worst corporate reputation." Monsanto promises: “integrity is the foundation for everything we do,” yet Amnesty International and the Organic Consumers Association  consider it a "global corporate terrorist." Allstate Insurance claims that its customers are “in good hands,” while the FBIC counts it as one of the Nation’s "top three worst insurers." ExxonMobil insists that it is effectively “taking on the world’s toughest energy challenges,” but Harris Interactive rates it as one of the world’s "least trusted."

The fact is that no ad campaign, no slogan, no celebrity and no promise can compensate for a lack of trust and the feeling that one is being manipulated, fooled or lied to. That’s why authenticity and purpose play such a vital role in establishing corporate reputation. 

While not every respected company in the world is a High-Purpose Company, every High-Purpose Company is a respected company. The strategic pursuit of purpose is therefore an effective tool that companies can use to improve their impact on stakeholders, their perceived character and ultimately, their worth.