Tree-Hugging For Money

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“Who are businesses really responsible to? Their customers? Shareholders? Employees? We would argue that it’s none of the above. Fundamentally, businesses are responsible to their resource base. Without a healthy environment there are no shareholders, no employees, no customers and no business.” ~Patagonia founder, Yvon Chouinard

The conversation around corporate responsibility over the last few decades has been, almost entirely, from the mouths of two warring factions. Those who believe in maximizing shareholder wealth by any means necessary and those who believe in corporate citizenship, which until recent years has almost always been viewed in the context of people, with a smallish bit of lip service to the environment.

Then came Al Gore’s Inconvenient Truth, followed this year by The Big Spill.

Longtime readers of this blog know I don’t get political here (at least rarely). Not that I don’t have opinions, this just isn’t my outlet for them. But, I do talk about business, and our responsibilities, dreams and quests as creators, problem-solvers, leaders and builders of legacy.

As a securities attorney, first at the SEC, then at a private firm in NYC, I was duty-bound by the law. And, so were board’s, officers and decision-makers of every public corporation. All were under a fiduciary duty to maximize shareholder wealth. Without fail, the measure of shareholder wealth was stock price, profitability and dividend. In all but the rarest of circumstance, the notion of corporate citizenship was considered only as a “stunt” to create a perception that might engender a big enough bump in feel good vibes to generate more revenue than the stunt consumed.

I get the need to be profitable. You can’t have an impact without a voice. And, you can’t have a voice if you don’t have a viable means to sustain your efforts. Money matters.

But, I’m increasingly drawn to what Brian Clark might call the corporate responsibility third tribe.

A growing movement of C-suite executives who strive to build powerful, impactful organizations that profit and maximize shareholder wealth not as the result of the more traditional crush, dominate, slash and burn approach, but rather as a byproduct of a fierce sense of corporate citizenship. And, I am stunned at how profitable some have become.

Interface is an interesting example of this. After years in traditional carpet manufacturing, Interface founder, Ray Anderson refocused the company on sustainability, retooling nearly every process, shifting resources and vendors in the name of what he calls Mission Zero: “our promise to eliminate any negative impact our company may have on the environment by the year 2020.” And, in the process, the company created FLOR, a sustainable flooring product, lowered net greenhouse gas emissions by 82%, dropped fossil fuel usage 60% per unit of production, decreased water usage 75%…and decreased costs by $400 million, increased sales by 67% and doubled profits.

Similarly, Chouinard’s Patagonia continues to build on it’s legendary footprint as a leader in corporate citizenship with it’s “birth to birth” initiative:

“…we’ve teamed up with some Japanese companies to, basically by 2010, make all our clothing out of recycled and recyclable fibers. And we’re going to accept ownership of our products from birth to birth. So if you buy a jacket from us, or a shirt ,or a pair of pants, when you’re done with it, you can give it back to us and we’ll make more shirts and pants out of it.

Which is a different idea about consuming. Right now the world runs on consuming and discarding, and we’re saying that we’re taking responsibility for our products from birth to birth. Can you imagine if a computer company said, “When you’re done with your computer, we’ll buy it back from you and make more computers out of it.” Instead, they sell you computer and you can’t even get service from them!” From Chouinard’s book, Let My People Go Surfing.

It’s a different way of accepting responsibility.

So, as I look at what’s unfolding on our planet, when I look at the impact the “by any means necessary” approach to corporate growth has had on the world, when I meditate on my entirely selfish hopes and dreams for the world my daughter will inherit…these are the people and the companies I look to learn from. And, to emulate.

And, I wonder…

What might the world look like 20 years from now if a growing number of freshly-minted and not so minty-fresh entrepreneurs and corporate leaders did the same?

Just thinking…and hoping.

How about you?

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21 responses

21 responses to “Tree-Hugging For Money”

  1. […] This post was mentioned on Twitter by remarkablogger, Grant Griffiths, kurio's resource, Santi Chacon, TwittyBean and others. TwittyBean said: The Real Corporate Responsibility: Tree Hugging For Bucks http://bit.ly/bu8Equ […]

  2. I agree completely with your point of view.

    I think its excellent that you’ve point this idea/question forth for other people to learn from. I’m especially curious to see how others (the freshly minted type) can apply this. I believe a lot of entrepreneurs who are just starting out are SO focused on making it “work” that these kind of concerns are put aside “temporarily”.

    I can see how it’d become a slippery slope…. “I’ll get environmentally conscious once all the bills are paid” could easily turn into the oil spill, many years down that track, once the business takes off and has more impact.

    I guess STARTING out with the right mindset is going to be crucial eh?

    What does everyone else think?

    • Brett says:

      Exactly.

      The thing is, being environmentally conscious costs money. It takes more money to go green, to eat organic, to buy products that are environmentally friendly… And that’s a hard thing to swallow when you’re a start-up – when you’re just focused on making a living rather than the environmental repercussions of your actions.

      This goes back to the great debate of this generation, business-wise: Mom and Pop vs. Walmart. Do you pay a premium for Mom and Pop’s better service (or, in this case, greener goods), or do you buy Walmart, with its vastly cheaper goods? Too often, consumers care too much about the bottom line and not the consequences of their actions.

      Here’s hoping the Big Spill makes more people wake up and be willing to spend a bit more in order to make this planet more livable. It’s no secret that we’re running out of resources.

      • Brett – going green certainly CAN cost more if you think of it just in terms of consumption and the way affluent Westerners consumer these days. But a bit of creativity can help with some of that. E.g., biking instead of driving – HUGE savings. Buying LESS stuff when possible rather than buying pricey green stuff. Growing some veggies instead of buying everything organic at Whole Foods. And local producers’ markets are often cheaper than supermarkets – sometimes organic, sometimes not, but great in terms of reducing food miles, supporting local community (and fun too!). Buying quality and then using it for years & years (e.g., clothing, linens, tools, homewares)

        Great post Jonathan – glad to see your thoughts on this stuff!

  3. bencurnett says:

    Chouinard is brilliant. I was an outdoor guide for 20 years, and I watched his company go from making products to making a difference. I’m a proud consumer of the patagonia brand.

    I think it’s important to point out that, as a brand, they’ve always been more passionate about quality than their competition. It was how they started, making climbing gear that was better than anything else, b/c what they needed for their passion didn’t exist until they created it. (I still have a Chouinard ‘biner, thank-you-very-much.)

    Over the years, they’ve pointed that passion more and more at ecology. They are (and Ray Anderson is) not an example of corporate citezenship; they are it’s very definition.

  4. John Soares says:

    Jonathan, I always ask of any product or service: “Does it make the world a better place?”

    This guides me in what I do and with whom I associate.

  5. Anne Wayman says:

    Jonathan, excellent… so how do we encourage, or get, or require or… more corporations to become good citizens of the planet? What might have to happen to convince a BP it’s worth it?

  6. Sue says:

    Jonathan,

    This is a great article–and very timely. I think as consumers we really have to start voting with our dollars. If we really want to see corporations become better citizens (and put their money and practices where their mouths are in terms of the environment and social justice issues such as fair working conditions & wages, etc)then we need to start by seeking out and giving our business to those companies who are already practicing good corporate citizenship. Yes, it takes a bit of digging to get this information, but I’d say that goes with the territory of choosing to be an ethical consumer.

  7. […] Fields has a provocative post called Tree-Hugging For Money. A former SEC lawyer, he makes it clear that U.S. law requires corporations to maximize shareholder […]

  8. Kathy says:

    Please let it not be too late.

  9. Evan says:

    Mohammed Yunus of Grameen Bank fame and Bill McDonough have different approaches that are complementary and useful I think.

    It doesn’t take much to envisage thrival for all. The technology is there. We have easily enough wealth and resources. We just need to be intolerant of money killing people (which is what market based approaches to necessities amounts to).

    The impediment is vested interests of corporations and their courtiers (the politicians). I think the only hope is for groups of people organising themselves. Whether this will happen in time is open to speculation. The devastating effects of our current way of doing things are visible in many countries – as well as in the sight of an oil rig in the Gulf of Mexico.

  10. Mary E. Ulrich says:

    If you know of more companies doing the “birth to birth” please let us know. Thanks for the blog post full of promise, possibilities and hope in this bleak ecological disaster based on corporate greed.

  11. otah says:

    Well. it all voice down to the topic ETHICS. Nowadays many corporations only care about profits.

  12. We’ve been talking about this. How do we make up for the electricity we use to create our products? How do we make up for the trees spent by printing our books? I think by the end of 2010 we’ll come up with a more cohesive corporate strategy. For now, these exact questions are on all of our minds.

  13. Cath Lawson says:

    Hi Jonathan – It would be awesome if more companies were this responsible. It is financially beneficial to many of these companies to recycle too. Many mobile phone companies use expensive parts, so it’s far more beneficial to them to get them back and recycle them.

    It helps them offer better customer service too. My daughters mobile phone broke – she called them and they delivered a reconditioned one and took the broken one away at the same time. Not only is this good for the environment, it was also good for my daughter – no waiting; and the manufacturer – not having to replace old with new.

  14. Great post, Jonathan. It’s good to hear that some corporations are starting to move in the right direction. Here’s hoping that the rest do, too, and soon.

    That’s fascinating that they were able to increase their profits by going green. I think that a lot of companies are such huge, slow moving dinosaurs that have been doing things one way for so long, that it’s nearly impossible for them to be moved in a different direction, and nearly impossible for them to see how that change can benefit them.

  15. […] Jonathan Fields also backs this idea up in a different manner. “A growing movement of C-suite executives who strive to build powerful, impactful organizations that profit and maximize shareholder wealth not as the result of the more traditional crush, dominate, slash and burn approach, but rather as a byproduct of a fierce sense of corporate citizenship. And, I am stunned at how profitable some have become. […]

  16. […] Jonathan Fields also backs this idea up in a similar manner. “A growing movement of C-suite executives who strive to build powerful, impactful organizations that profit and maximize shareholder wealth not as the result of the more traditional crush, dominate, slash and burn approach, but rather as a byproduct of a fierce sense of corporate citizenship. And, I am stunned at how profitable some have become.” It’s this realization of changing the way we conduct business that will allow biodegradable plastic and more efforts to recycle to become prevalent – and profitable. […]

  17. Anthony Tori says:

    I have always thought of corporate responsibility when starting a business. When money is involved, people don’t care about the real important factors. It takes someone passionate about treating others the right way, whether it’s a person or environment, to really make a difference. When my business is popular, I plan to use my power in a positive way. I think in a few years people are going to start caring more and more of the businesses they support. Then, big businesses and executives who abuse power will start listening.

  18. Lynn Fang says:

    Hi Jonathan, Thank you for posting this! I am a total believer in corporate social responsibility, and believe this is the path to mainstream sustainability. I am a huge fan of Ray Anderson, I love that he speaks out passionately about what he does to inform the public about his company’s efforts. Paul Hawken’s book ‘Ecology of Commerce’ talks about a new economy where all industry considers its environmental impact and has responsibility over its waste. I think with the example of people like Ray and Chouinard, more businesses will see the benefits of converting their companies to similar practice.

  19. Abbie says:

    I agree. Completely.