Is big business too powerful?

Corporate America has pretty much had its way in Washington for the past couple of years. Its CEOs and lobbyists got the Wall Street bailout. They got the auto bailout. They set the terms of the health care bill. They blunted financial regulation. They blocked climate legislation. If they were tied to the defense industry, they enjoyed a surge of military outlays. Of course they preserved the tax cuts for the rich. They did all of this, mind you, after the Democrats swept the 2006 and 2008 elections and gained control of  Congress and the White House.

Remarkable, isn’t it?

Now, with business-friendly Republicans in control of the House, the most powerful corporate lobbies—the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers—have even more clout. They can, at minimum, stop just about anything they don’t like.

But they would be well advised to use their power sparingly.

I write this as a rational optimist, and as an unabashed believer in the power of business to do good—by creating jobs, generating wealth, satisfying people’s wants or needs, and enabling an unprecedented wave of economic growth during the past half century. (See China, cappuccino and cell phones, my first blogpost of 2011) But it’s hard for me to ignore the fact that the benefits of that growth are not being as broadly shared as they should be, at least here in the U.S., and that the reason for that, at least in part, is business’s outsized power in Washington.

The growth of inequality is especially troubling in the aftermath of the great recession. Wall Street is booming again, the stock indexes are up, corporate profits are growing…while the middle class and especially the poor—43.6 million of them, one in seven Americans—are being left behind. [click to continue…]

Seventh Generation: Not coming clean…

Seventh Generation’s ouster of co-founder Jeffrey Hollender remains something of a mystery, even as details emerge about the sequence of events that led up to his unexpected departure last month.

The company’s version of events is, in essence, that Jeffrey couldn’t let go of the place to which he’d devoted the last 20 years of his life, even after he’d hired a new CEO, Chuck Maniscalco, to replace him. Jeffrey’s associates say there’s more to the story, but they won’t be specific. And he’s not talking.

I’ve been in email communication with Peter Graham, the chairman of Seventh Generation’s board of directors (and Jeffrey’s childhood friend), and I’ve talked with Chrystie Heimert, the firm’s PR chief, as well as with an associate of Jeffrey. Jeffrey told me by email that he’d like to speak but cannot. Presumably, he’s working out terms of his exit and has agreed, in the meantime, to keep mum.

A friend of his told me: “They basically have Jeffrey handcuffed and his mouth taped shut.”

Here are some things we know: Jeffrey hired Chuck Maniscalco in June 2009, fully intending to step back from his day to day work at Seventh Generation, a leading brand of green cleaners, laundry detergent, dishwashing soap, diapers, baby wipes, etc. Previously Maniscalco had been president and CEO of PepsiCo’s Quaker, Tropicana, Gatorade division. (All healthy products, I might note, for those who would like to cast Maniscalco as the evil seller of sugary water in this drama. Fact is, he’s spent most of his career with Quaker.) Jeffrey was enthusiastic, both about the opportunity to explore new arenas — writing books, working with other business leaders, imploring Washington to deal with climate change and toxics — and about the new boss. He wrote:

It may surprise you to learn that my decision was a relatively easy one to make.

…While I knew I still had many meaningful contributions to make to Seventh Generation, it became clear to me that what I could not do was supply the managerial wisdom and experience needed to steer the company on the next stage of its voyage.

In addition to this extraordinary track record as a business leader, Chuck embodies the values and vision necessary to lead us. He “gets” our company’s culture, passion, and entrepreneurial spirit as well as our commitment to corporate responsibility.

So far, so good. [click to continue…]

Seventh Generation sweeps out its founder

Here’s some sad and shocking news: Jeffrey Hollender, the pioneering co-founder and longtime CEO of Seventh Generation, has been forced out of the company.

Details on what happened and why are scant—I hope to tell you more, before long—but Jeff has told friends that his ouster came as a surprise. It evidently followed months of tension with his board and  with Chuck Maniscalco, the former senior exec at PepsiCo who was brought on as CEO of Seventh Generation in June 2009.

Maniscalco, who previously ran the Quaker, Tropicana and Gatorade businesses at PepsiCo,  resigned as CEO in September. But he remained on to manage a transition and is now once again a candidate for the position, according to a letter to Seventh Generation shareholders and employees from Peter Graham, the company’s board chairman. The letter — dated October 26 — said that the board has “reluctantly voted” to put Hollender on leave of absence from the company and remove him from the board.

The board action “came as a surprise to me,” Jeff told a friend, via email. “My sincere hope and intent was to have resolved these issues with the company.”

I emailed Jeff today, requesting an interview.

“Not much I can say,” he wrote back. He did share with me the company announcement and an email he sent out, both of which are pasted below.

Seventh Generation, as most of you know, is a leader in the “green” household products arena. It makes green cleaners, laundry detergent, dishwashing soap, diapers, baby wipes, tampons, recycled toilet paper, tissues, and paper towels. As a private company (though it was publicly traded for a time), Seventh Generation doesn’t report sales or earnings. In a June 2009 blogpost, Jeff said the company had sales of about $150 million. The board hired Maniscalco to drive sales to $1 billion. (See: A new CEO for Seventh Generation)

Jeff’s impact has been felt far beyond the walls of Seventh Generation, which is based in Burlington, Vt. He’s co-author of an excellent book, What Matters Most, about the corporate responsibility movement. He speaks frequently about business and sustainability, and has  been politically active on behalf of climate change, among other issues. He sits on the board of Greenpeace USA. He recently formed a joint venture with the Kpalan education company called the Sustainability Institute. His Inspired Protagonist blog is a model of corporate transparency.

Speaking of transparency…. there’s not a word (as of Monday Nov. 1) on the Seventh Generation website about his departure.

Interestingly, Peter Graham, the board chairman, is a childhood friend of Jeff’s. They attended Riverdale Country Day School together and several years ago traveled to India. It’s not clear whether Graham backed Jeff in the power struggle at Seventh Generation, or turned against him. [Disclosure: My wife Karen Schneider went to high school with Jeff, who I’ve known for years, and Peter Graham, who I’ve never met.] Obviously there’s more to this story than we know; if any readers of this blog have insight, by all means, be in touch.

In the meantime, here’s an email that Jeff  shared with me:

[click to continue…]

Mark Hurd got off easy

Some notable and quotable items from the news:

Mark Hurd got off easy: Yes, by all accounts, he was a great CEO of Hewlett Packard and no, he may not have engaged in sexual harassment, but let’s focus for a moment on what he did.

The WSJ reported today that “the woman [HP contractor Jodie Fisher] was paid at times when there was no legitimate purpose.” In plain English, this means that he sent money to her that belongs to HP shareholders for work that she did not do. If true, this is clearly a firing offense. If it’s not fraud, then what is it?

The HP board, it seems to me, should have fired Hurd for cause and taken away his severance, which is being valued at about $35 million by The Journal.

As my friend Nell Minow, the corporate-governance expert and founder of The Corporate Library, tweeted the other day, linking to a column by Henry Blodget:

Wait A Minute — Why Does Mark Hurd Get $50 Million Severance When He Lied In His Expense Reports? 10:58 PM Aug 6th via TweetMeme

See Nell’s blog here.

As for those who say Hurd will be hard to replace, well, if that’s indeed the case, that’s his fault. A key job of any CEO is to groom potential successors, and assemble a team that can keep a company running smoothly in his or her absence. It’s never a one-man show, and shouldn’t be. One measure of just how well Hurd led HP will be the company’s performance in the next couple of years.

A climate “Pearl Harbor”: Congress’s reluctance or inability to act to curb global warming has led some people, notably Joe Romm, to speculate about what it might take to spur action. Back in 2008, Romm listed a number of “climatic mini-catastrophes” that might move public and policymaker opinion, among them the Arctic going ice-free, a mega-drought hitting the American southwest, more super storms like Katrina and “a heatwave as bad as Europe’s 2003.” I don’t know how the current Russian heat wave compares to the 2003 heat. But shouldn’t it be a wake-up call, if not a Pearl Harbor, when it comes to global warming?

For a detailed meteorological analysis, see Dr. Rob Carver’s blog at Weather Underground. Russian officials now say the heatwave has cost 5,000 lives as fires range out of control, says the Telegraph. Russia banned grain exports last week, with uncertain effects on world food prices. “Russian grain exports totaled 21.4 million metric tons last year, about 17 percent of the global grain trade,” The Times reported. What’s more, according to The Times’ Green blog, Russia’s president, Dmitri A. Medvedev, blamed the crisis on climate change and called for action:

What’s happening with the planet’s climate right now needs to be a wake-up call to all of us, meaning all heads of state, all heads of social organizations, in order to take a more energetic approach to countering the global changes to the climate.

Unhappily, a crisis in Russia is highly unlikely to rouse the U.S. Senate to action. But imagine if this heat and drought were affecting wheat farmers in, say, Kansas and North Dakota?

Actually, even that might not have an impact. A poll released last week by the Shelton Group found that most people who doubt that climate change is occurring, and caused by man-made activity, would not change their mind even if reality of man-made global warming consumers would not change even if the polar ice cap melted, kids couldn’t go outside to play or shifting weather patterns turned Nebraska into a desert. My goodness.

But the good news is…that while Congress is stalled on the energy and climate front, and while consumers seem less engaged, companies are increasingly finding that sustainability is good for business. As my friend and colleague Joel Makower reports at

The footwear and apparel industry has joined forces to create an Eco Index tool to better understand materials’ and products’ impacts….Meanwhile, appliance makers agreed last week to new energy and water efficiency standards for major appliances that will reduce the nation’s utility bills by billions of dollars. A new bartering exchange was launched to help small businesses with excess supply of goods or services barter for things they need. And John Finisdore writes of an effort by more than 200 companies to understand and manage their dependence and impact on ecosystem services.

I wrote about the outdoors industry initiative (See How ‘green’ are those hiking boots?) last week. You can read more about Timberland’s effort to develop standards for its products here.

Speaking of Greenbiz, later this month I will be leading an online conversation with John D. Gagel, Sustainability Manager at Lexmark International, and Daniel Schmid, Head of Sustainability Operations at SAP, about how sustainability initiatives can drive profitability.  We’ll hear stories from Lexmark and SAP about tools and techniques for monitoring, measuring and reporting on corporate sustainability performance with an aim to driving financial returns. Greenbiz will host the free webcast on Tuesday, August 24, and it is likely to fill up fast, so register soon.

The business of rating business

good-better-bestIs Coca Cola a more sustainable company than PepsiCo? Which company is greener, Dell or Hewlett Packard? Both UPS and FedEx say they are environmental leaders—who’s right?

Underwriters Laboratories (UL) — one of the world’s oldest and most respected standard-setting organizations — is going to help settle some of those arguments.

In cooperation with Greener World Media — the publisher of, where I’m a senior writer — UL plans to launch a ratings system for companies by the end of the year. This is a big deal because it could help bring credibility and clarity to the very crowded and confused business of sustainability ratings, rankings and eco-labels.

The news that Greener World Media and UL are working together on a sustainability standard surfaced last week when Marcello Manca, the vice president and general manager of UL Environment, spoke on a panel at the Amsterdam Global Conference on Sustainability and Transparency convened by the Global Reporting Initiative (GRI). At the same time, my friend Joel Makower, the founder of Greener World Media, wrote a detailed blogpost, explaining the origins of the project, which go back to the early 2000s.  Joel calls the new venture “LEED for companies,” saying:

We’ve long described this in shorthand as “LEED for Companies” — that is, a point-based rating system along with good-better-best levels of certification. We have been inspired by the success of the U.S. Green Building Council’s LEED green building rating systems, which created definitions of “green building” where there were none. Those ratings systems were critical catalysts in spurring the green-building market. Similarly, we believe this new standard and rating system will help define sustainability at the enterprise level, growing markets for certified companies.

If all goes according to plan, the new ratings system will rise above the crowd because it combines the knowledge and networks of Joel and Rory [click to continue…]

100 Best Corporate Citizens? What a CROck!

google_logoGoogle challenges Internet censorship in China. It invests in solar power, electric cars, geothermal energy and the smart grid, and runs an array of programs to help its employees become more “green.” It’s consistently voted one of the best places to work. And it has an inspiring mission: to organize all of the world’s information.

Yet Google doesn’t even come close to making the 2010 list of 100 Best Corporate Citizens put together by CRO Magazine, now known as Corporate Responsibility Magazine.

Nor does Timberland, a pioneer in corporate responsibility, which monitors its global supply chain, provides employees with generous benefits including time off to volunteer and experiments with labels on its shoes and boots that disclose their social and environmental impact. General Electric, meanwhile, has won praise from environmental groups like the World Resources Council and Environmental Defense for its EcoMagination campaign, and it has led the battle for climate change legislation in Washington. But GE, too, didn’t make the cut.

Who did?

2597643759_083ac733b9Oil companies Hess Corp. (No. 10 on the list) , ExxonMobil (No. 51, which for years sought to delay action to deal with climate change, says Greenpeace), Occidental Petroleum (No. 26, accused of contaminating the Amazon) and Chevron (No. 56, targeted in a landmark class action suit for creating en environmental catastrophe in Ecuador).

The Southern Co. (No. 71), a coal-burning utility which led the fight against the administration’s climate change bill.

And the Newmont Mining Corp (No. 16)., whose gold mines in Nevada have been major sources of mercury pollution.

One last example. Whole Foods Market, which has done more to promote organic agriculture than any company in America, doesn’t make the list but Yum! Brands (No. 62) does. Yum!’s contributions to corporate responsibility include KFC, Pizza Hut and Taco Bell.

If nothing else, all this proves that it’s not easy to make a list of the 100 Best Corporate Citizens. In fact, it’s really hard. How do you compare HP (No. 1 on the list) with Kimberly-Clark (5), Wal-Mart (21), Nike (23), Green Mountain Coffee Roasters (39),  Duke Energy (43), Citigroup (57) and Ford (88). They’re in disparate businesses, with different issues.

Simply deciding whether a single company is “good” or “bad”or somewhere in the middle involves a slew of value judgments. If you think nuclear energy will help solve the climate crisis, you’ll applaud the Southern Co. which is pushing new plants; if not, you’ll feel differently. Coca Cola (No. 8) has a great track record on water and packaging issues but the company’s core product is a sugary soft drink. Newmont Mining has an ugly history, but it’s working hard to clean up its act–how far should we look back when ranking citizenship?  Merck (17) has evidently been forgiven for the Vioxx scandal, while Pfizer is in the penalty box after paying a record fine for illegal drug marketing last fall.

Still, while some debate is inevitable, this list strikes me as way off base. [click to continue…]

Shareholders of the world, unite!

Several questions for those of you who own shares of stock:

When’s the last time you voted a proxy?

When’s the last time you opened a proxy?

Do you even know what a proxy is?

Don’t be embarrassed. Roughly 80% of individual investors–let’s call them share owners, because that’s what they are–don’t vote their proxies. This is one reason why CEO salaries are too high, boards of directors are complacent and executives fail to recognize that owners want companies to behave responsibly, as well as deliver returns.

A startup company called Moxy Vote aims to change that, by awakening share owners to their nascent power.


“It’s an interesting challenge–to put passion into proxy voting,” said Doug Gates, a Moxy Vote vice president, when we talked the other day.

Doug, 41, is one of three Gates brothers involved in the venture–his twin brothers Kevin and Rich are three years younger. The startup was hatched at a West Chester, Pa., investment company called TFS Capital, where Kevin and Rich work and which put $2 million into the business.

By enlisting the help of shareholder advocacy groups, the Moxy Vote founders think there’s an opportunity to organize individual share owners so that their voices can be heard in the boardroom. About 30% of shares in public companies are owned by individuals, as opposed to institutions like mutual funds, pension funds and insurance companies (most of which, of course, represent the savings of individuals). [click to continue…]

My five New Year’s wishes

HAPPY NEW YEAR 189Corporate America: Making the world a better place…or not.

That used to be the tagline of this blog, and it remains the standard I use to judge companies.

Are the jobs they create enabling their employees to flourish? Are their products and services improving lives? Are their shareholders earning good returns? Are they making their communities better?

Put simply, how well are they serving workers, customers, shareholders and communities?

Most companies, it seems to me, would like to serve better. To do so, they need better incentives. These incentives can take the form of government regulations (sometimes needed, but rarely optimal, because regulators often become captives of the industries they are supposed to oversee), industry standards (like sustainable forestry standards or Hollywood movie ratings, which general work well) or social expectations (like the growing desire of customers to patronize “good” businesses or avoid “bad” ones).

That brings me to my 2010 wish list. Each creates an incentive for companies to do business better.

Climate change regulation: Until Congress passes a law making it more expensive to burn fossil fuels, there’s no hope of solving the global climate crisis. This could be a simple carbon tax, the complex and pork-laden Waxman-Markey cap-and-trade bill passed by the House or the promising cap-and-dividend proposal from Senators Cantwell and Collins. Each approach has benefits and flaws, which we’ll get into some other day, but the best thing that could happen to business (and the planet) in the 12 months ahead is for the U.S., at long last, to stop allowing companies and the rest of us to pollute the atmosphere at will.

Corporate governance reform: What will it take for Congress, the SEC and America’s shareholders to recognize that so many boards of directors are failing at their job? You would think the near-collapse of the banking system would do it. Or the yawning gap between CEO pay and performance. Or the fact that so many corporate mergers end badly. The breakdown of corporate governance isn’t an easy problem to solve, but there are plenty of good ideas out there, ranging from requiring directors to win a majority of shareholder votes to finding ways to give activist shareholders more power to recall underperforming boards. The best boards will encourage companies to take a long-term and expansive view of their role in society. My friends Nell Minow (of The Corporate Library) and Bob Monks have been working heroically on these issues for decades. Reform is long overdue.

Sustainability ratings: How do the cleaning products of Seventh Generation, Method, Clorox and Tide compare? What’s the carbon footprint of a plastic bottle of Dasani, versus Aquafina or Poland Spring? Measuring the environmental impact of consumer products is a gargantuan task, and assessing the social impact is even harder. These aren’t jobs for the government. But a consortium of academics pulled together by Wal-Mart is trying to develop a sustainability index, as is a division of Underwriters Laboratory (which I wrote about here). It will take years to finish the job, but I’m hoping that Wal-Mart and UL they make real progress in the year ahead.

Human rights in China: As the economies of China and the U.S. become more intertwined, it’s incumbent on global corporations to use what clout they have to make clear that they disapprove of the way basic human rights are routinely violated in China. Companies that fear speaking out on their own should organize their peers to do so as a group. They could voice their support for political dissidents and environmental advocates, provide funding to human rights organizations and aggressively monitor the workplace and environmental practices of their suppliers. China shouldn’t be too big to fault.

Electric cars: Lots of forces have to come together for the electric car business to take off this year—a price on carbon would help, as would tax incentives for buyers and support for an infrastructure of charging stations. Most of all, consumers need to embrace electric cars—neither the automakers nor the government can force them on people, needless to say. But the environmental and national-security benefits of electric cars are so compelling that it’s my wish that 2010 become the year when electric cars move from talk to reality.

Happy New Year, blogreaders! Let’s hope 2010 is a good one for business, and for the rest of us.

America’s worst CEO

The Motley Fool does a great series of podcasts–I’ve listened in recent months to interviews with James Fallows, John Mackey and Simon Johnson–and the other day I heard my friend Nell Minow of The Corporate Library talking about executive pay, boards of directors and her second life as Beliefnet’s Movie Mom.

Nell was asked who she would choose to dismiss as a CEO, if she had the power to do so. Her surprising answer: Tom Donahue, the CEO of the U.S. Chamber of Commerce.

tom-donahue12“He’s a terrible CEO,” she said, with her typical bluntness. “I think he is a virulent force in the field of business and corporations. I think he has hijacked capitalism on behalf of executives rather than investors.”

Why? It turns out that Donahue has served as a director of three public companies, all of which have had problems.

He’s a director of Sunrise Senior Living, which suffered from series of accounting problems, a plummeting stock price and a decision to settle shareholder litigation. Two well-respected governance groups, Risk Metrics and Proxy Governance, recommended that Donahue be voted off the board for “failing in is oversight duties,” according to Bloomberg News. [click to continue…]

A historic win for green investors

ceres_logoSometimes, history is made quietly.

For decades, shareholder activists have filed dozens, if not hundreds, of resolutions with public companies asking them to improve their environmental policies and practices. Not one passed—until this year.

The breakthrough vote came in May at IdaCorp.,  a $988-million a year utility company and independent power producer based in Boise, Idaho. Despite the usual opposition from management, the owners of 51.2 percent of IdaCorp.’s shares voted to ask the company to adopt greenhouse gas reduction goals.

Hardly anyone noticed at the time because, well, it was Idaho and not even the shareholder activists expected a victory. “I expected a vote of about 25%,” said Michael Passoff of As You Sow, a nonprofit group that organized the investor vote.

Since then, the company responded. Legally, it didn’t have to act because, as you may know, most shareholder votes are “precatory,” a fancy legal term meaning that management can ignore even a majority of the company’s owners. In any event, IdaCorp. agreed to adopt goals for curbing the heat-trapping gases that cause global warming, issued its first request for a proposal for a wind farm and submitted a “smart grid” proposal, hoping to tap into the federal government’s stimulus money to upgrade the grid. [click to continue…]