General Mills, Walmart, Target and compassion

compassion-wordThe other day, I went to a daylong meditation retreat about lovingkindness. One of the themes: how to find ways to bring an attitude of loving kindness not just to friends, but to strangers and even to the most difficult people in our lives. My rabbi, Fred Dobb, with whom I ordinarily spend my Saturdays, touches on a similar theme when he talks about widening our circles of compassion, to go beyond family and friends; the edict to  love thy neighbor extends not just to the folks next door but to the needy around the world. I don’t mean to go all Biblical on you here but it is written in Exodus 23:9: “And a stranger shalt thou not oppress; for ye know the heart of a stranger, seeing ye were strangers in the land of Egypt.”

What does this have to do with corporate responsibility, and sustainability, the topics of this blog? A lot, actually, as I realized when a pair of stories that I wrote for Guardian Sustainable Business were published in quick succession this week. Both stories are about big, publicly-traded companies that seek to enhance shareholder value with considerable vigor. But both, at heart, are also about the idea that good companies increasingly take an expansive, as opposed to a constricted view, of their place in the world, and their obligations to the world.

Yesterday, I wrote a story about General Mills’ new climate policy. Here’s how it begins:

Two months after Oxfam launched a campaign urging food and beverage companies to take stronger action to curb climate change, General Mills has promised to reduce greenhouse gas emissions in its agricultural supply chain and to advocate for government climate policy.

General Mills on Monday detailed its new policy on its website, saying: “The imperative is clear: Business, together with governments, NGOs and individuals, needs to act to reduce the human impact on climate change.”

In a news release, Oxfam praised General Mills as “the first major food and beverage company to promise to implement long-term science-based targets to cut emissions from across all of its operations and supply chains that are responsive to the goal of keeping global temperature rise below 2C.

“It’s a major leap,” said Heather Coleman, climate change manager for Oxfam America.

What’s noteworthy about the General Mills’ policy is that it dig deep into the company’s agriculture supply chain, where its environmental impact is greatest, and that it commits the company to be more politically active on climate issues. Put another way, this big food company is taking responsibility for trying to reduce the environmental impact of oats that go into Cheerios. You can read more here.

Today, the Guardian published my story about an unusual collaboration between Walmart and Target that aims to insure that beauty and personal care products are produced more sustainably. Here’s how that story begins:

In an unlikely partnership, rivals Walmart and Target have joined together, working with suppliers “to improve sustainability performance in the personal care and beauty industry”.

Their first event, the day-long Beauty and Personal Care Products Sustainability Summit, will be held on 4 September in Chicago. It’s being organized by Forum for the Future, a UK-based NGO with an outpost in New York.

Up until now, Walmart, the largest US retailer, and Target, the fourth-ranked retailer (according to the National Retail Federation), have taken divergent paths on sustainability. Why are the two companies now joining forces around the sustainability of soap, toothpaste, hair care products, shaving cream and cosmetics?

The story goes on to say:

It may be – and this definitely falls in the category of informed speculation – that Walmart and Target have come to realize that they are not as powerful as they want to be when dealing with big consumer brands and their suppliers in the chemical and fragrance industries.

The secrecy around ingredients in beauty and personal care products, along with the complexity of chemical formulations, creates information asymmetries. The brands and their suppliers know a lot more about product formulations than the buyers at Walmart and Target. They often tell critics that there’s no readily available substitute for a “chemical of concern.” And they are unwilling to share information about whether they are researching or developing safer chemicals.

An industry insider told me: “There’s so much that’s hidden in these supply chains that even Target and Walmart don’t know what goes into everything on their shelves.”

The point is, Walmart and Target are digging deeper than ever before into their supply chains, seeking to understand the chemicals that go into cosmetics or hair care products, or the impact of packaging.

You can see these shifts across the field of corporate responsibility. Look at the apparel and electronics industries which, over time, have agreed, at least in theory,accept responsibility for the working conditions and environmental practices deep in their supply chains, in places like China and Bangladesh.

Are companies becoming more compassionate? I don’t think so, at least not in the since that people can seek to become more caring. But are they recognizing that the long-term health of their business depends upon their reputations as corporate citizens, not to mention the health of the planet or the safety of the products they sell? Yes, they are. It’s a very slow and imperfect process, but it’s real.

Tax avoidance, and corporate responsibility

uncle-sam-pay-your-taxes1Would you consider Apple, Coca-Cola, General Electric, Google, Microsoft, Nike and PepsiCo good corporate citizens? Certainly they position themselves that way, and they deserve credit for their leadership around human rights (Apple, Nike), climate change (GE), water (Coca-Cola), renewable energy (Google, Microsoft) and sustainable agriculture (PepsiCo).

But when it comes to paying corporate income taxes, they have some explaining to do.

That, at least, is the conclusion that I came to after reading an excellent report on tax avoidance titled Offshore Shell Games, and published last month by Citizens for Tax Justice and US PIRG.

Corporate taxation is all over the news these days as US firms move their headquarters overseas for tax reasons, in a process known as inversion. But aggressive maneuvering to avoid taxes is nothing new, as I wrote today in a story for Guardian Sustainable Business.

Here’s how the story begins:

America’s a great country. That’s why people from all over the world — including, lately and tragically, thousands of poor children from Central America — clamor to get in. So why are some of America’s wealthiest companies trying to get out?

It’s simple, really — they don’t want to pay US taxes.

You’ve probably heard about Walgreen’s, your neighborhood pharmacy that is contemplating moving its headquarters to Switzerland to reduce its tax bill. Medtronic, the big medical device company based in Minneapolis, Minnesota, has plans to move to Ireland, for tax-avoidance purposes. Then there’s Mylan, a maker of generic drugs based near Pittsburgh, Pennsylavia, which intends to incorporate in the Netherlands, where the tax rate is lower. Mylan’s CEO, as it happens, is Heather Bresch — the daughter of US Senator Joe Manchin, a West Virginia Democrat — and she says she has no choice but to go.

Other companies aren’t going so far as to relocate their headquarters, a process known as inversion that often requires them to acquire a company based elsewhere. Instead, to avoid US taxes, they are parking their earnings offshore, often in tax havens like Bermuda and the Cayman Islands that levy no corporate income taxes. That tactic, which like the inversions is legal, is being employed by companies that position themselves as good corporate citizens — among them Apple, Coca-Cola, General Electric, Google, Microsoft, Nike and PepsiCo.

Exploiting loopholes in the tax laws may or may not be legal–the IRS is hopelessly outgunned by big corporate tax departments–but it’s unethical.

The report from Citizens for Tax Justice and US PIRG, which makes for surprisingly compelling reading, details a number of questionable tax avoidance strategies that allow companies to shift earnings, purely for tax purposes, from high-tax jurisdictions like the US to tax havens. Here are my favorite fun facts from the report:

The report found that subsidiaries of US companies reported earning $94bn in Bermuda, which has a gross domestic product of just $6bn. That doesn’t compute. US firms reported earning another $51bn in the Cayman Islands, where GDP is about $3bn.

This is outrageous, and please don’t tell me that the way to fix the problem is to reduce the admittedly high US corporate income tax rate. The US cannot compete with places where the tax rate is zero.

All of these companies, of course, benefit enormously from government services–public education, police, the rule of law, highways, etc. Those companies that don’t pay their fair share shift the burden to others–small businesses that can’t afford high-priced accountants, companies that don’t have overseas operations and therefore can’t take advantage of the opportunity engage in tax-avoiding shenanigans and, of course, the rest of us.

You can read the rest of my story here.

When NGOs can’t be trusted

DonateNonprofitsLogos304I’ve spent the last couple of weeks reporting a story for the Guardian on NGOs and GMOs–specifically, the ways that some nonprofit groups have stirred up fears about genetically-modified organisms, by taking facts out of context, distorting mainstream science or, occasionally, saying things that simply are not true. I did the story in part because I believe that agricultural biotechnology could be–could be–a valuable tool as we try to feed people in a resource-constrained and warming world. I’m by no means an enthusiastic fan of biotech crops — the rollout of the technology has been managed poorly by the industry–but I’m fairly confident  that they have enormous potential. That potential will never be realized until we can have a rational fact-based debate about how the technology should be managed.

But my hope is that this story will make a bigger and more important point about the non-profit sector: That the claims of NGOs and advocacy groups should be received with the same skepticism and scrutiny that we apply to claims from business and government. That might seem like an obvious point, but my experience tells me that many people tend to take what NGOs say at face value. Public opinion surveys also find that NGOs are trusted, far more than corporations or the government.

On the GMO issue, this is a terrible  shame. But it helps to explain why, as I write

so many people – 48%, according to Gallup – believe that foods produced using genetic engineering pose a serious health hazard, despite assurances from corporations, government regulators and mainstream scientists that the genetically modified organisms (GMOs) now on the market are safe and, indeed, have been studied, tested and regulated more than any other food product in history.

More broadly, though, it’s too easy to forget that NGOs, like companies or the government or, indeed, all of us, are driven by a set of incentives. Again, from the story:

..non-profits and the people who lead them are subject to the same temptations, pressures and incentives that drive companies: They are self-interested. They seek attention in a noisy marketplace. And they rely on the financial support of donors, just as companies depend on customers.

As it happens, some of the groups opposed to the spread of GMOS are backed largely by corporate interests: Just Label It, a dot-org coalition that favors GMO labels is financed by organic and “natural” food companies that benefit from the anxiety around biotech food.

Follow the money, as Woodward & Bernstein used to say. A lot of money behind the anti-GMO movement comes from the organic food industry. Right now, the best way to avoid GMOs at the supermarket is to buy organic.

To take an example from another arena: When I talk to scientists or engineers about climate change, most do not believe we will be able to power the US economy anytime soon entirely with renewable energy. They believe that some form of zero-carbon baseload power will be needed — either nuclear energy or coal plants with carbon capture. (About which there was a bit of encouraging news this week.) In the US, depending entirely on solar and wind, along with the required energy storage and transmission lines, would be enormously expensive. In places like China and India, it’s unthinkable. So it makes sense for the US to find ways to make nuclear power or coal plants with carbon capture a lot cheaper, so we can export those technologies to the developing world. This is true for solar and wind as well, of course.

Yet environmental groups–the Sierra Club and Greenpeace, in particular–are implacably opposed to nuclear power and, as best as I can tell, they oppose coal with carbon capture. Fracking, too. I don’t doubt the sincerity or the intelligence of their leaders, but I have to believe that if they wavered in their opposition to nukes and coal with carbon capture, their customers, i.e., their members and donors, would revolt. So, at the very least, the deep green groups are less than transparent about the tradeoffs that will be required if we give up on nuclear or so-called clean coal, and put all of our investment into wind and solar.

Another example, from the story:

The issue of credibility goes well beyond GMOs, of course. What’s the most effective way to improve the lives of the world’s poorest people? It’s hard to know whether a comprehensive approach (the Millennium Villages), major health initiatives (the Gates Foundation), micro enterprise (Kiva) or disaster relief (Care) will work best. Each NGO understandably touts its own approach. Meanwhile, economists say trade has done more than aid to help the global poor.

A bigger and more important point, which I’ll save for another day, is the question of who is holding NGOs accountable. It’s an important question because, like it or not, as taxpayers we all help finance the nonprofit sector because donations to NGOs are frequently tax-deductible.

None of this is intended to diminish the enormous value delivered by the nonprofit sector. My next Guardian story will be built upon a terrific new report on corporate taxation put together by a couple of NGOs. The NGOs that I know best, those in the environmental sector, including Greenpeace and the Sierra Club, for the most part do great work. My wife and older daughter work for NGOs, and I’m on the board of Net Impact, a nonprofit that I (obviously) believe in strongly.

None of which means you should automatically believe everything you hear from a so-called public interest group. You shouldn’t.

Fair Trade USA, growing and still controversial

fairtrade_6833958232_076a8a019b_bFair Trade is an elegant idea. It’s an attempt to make globalization work for the world’s poor. Those of us in rich countries agree to pay a bit more for whatever it is we are buying — coffee is by far the No. 1 Fair Trade commodity — and, in exchange, we are assured that the farmers and workers at the other end of the supply chain are treated fairly.

If only it were that simple.

Today, in the US, there are no fewer than seven Fair Trade and Fair Trade-like labels. You can find an analysis of them here, if you so choose. The trouble is, they are competing in what remains by any measure a niche market.

Paul Rice, the founder of Fair Trade USA, formerly Transfair, wants to change that. I went to see him last week in Oakland, CA., and wrote about his efforts the other day in a story for Guardian Sustainable Business.

Here’s how my story begins:

Paul Rice, the hard-charging CEO of nonprofit Fair Trade USA, recently toured the Brooklyn headquarters of furniture company West Elm, along with former president Bill Clinton and West Elm’s president, Jim Brett. They were there to celebrate West Elm’s commitment to handcraft products, including the first Fairtrade rugs, which are made in India. “You can have a huge impact on the wage structure in India,” Clinton enthused. “Consumers will buy these. They’re beautiful, besides.”

Fairtrade rugs? What’s next? A lot more than coffee in church basements, it turns out. “We’re talking about furniture, we’re talking about linens, we’re talking about all kinds of things,” says Rice, when we met last week at Fair Trade USA’s offices in Oakland, California. “This move into the manufacturing sector puts us on the threshold of something really big.”

Fair Trade USA is in fast-growth mode. This fall, Patagonia and PACTwill begin selling Fairtrade apparel, made in factories that they say will meet strict environmental and social standards; a small company called Oliberté already sells Fairtrade shoes. Several years ago, Fair Trade USA formed a partnership with a nonprofit startup called Good World Solutions, which has developed mobile technology to connect big companies to the farmers and workers in their supply chains. Meantime, Fair Trade USA is working to certify a bell pepper farm in British Columbia, Canada, expanding the movement beyond its roots in the global south.

This flurry of activity has brought Rice lots of attention, some of it unwelcome. His supporters say that he works tirelessly to expand the impact of fair trade. Critics accuse him of abandoning its principles. As Jonathan Rosenthal, a co-founder of the co-op Equal Exchange, told The Nation: “Paul is not afraid to think and act on a big scale. That’s one of his great gifts. And he’s willing to cut any corners to get there. That, to me, is one of his great faults.”

The disagreements about what constitutes authentic Fair Trade can get pretty arcane pretty quickly. Some people, for example, argue that a chocolate bar should not be labeled Fair Trade unless the chocolate and the sugar were both procured from worker owned co-ops; others say the chocolate alone should do it. Small differences often matter, but in this arena, it seems to me that the priority ought to be growing the idea and practice of Fair Trade, even if compromises must be made along the way. As the movement grows, the bar can be lifted.

If you want to know more, see my 2012 blogpost, A schism over Fair Trade. You can read the rest of my Guardian story here.

A murmur, not a message

800px-US_Capitol_SouthOne reason why it has been so hard for President Obama and environmentalists to persuade Congress to enact climate-change legislation is strong opposition from much of corporate America. The U.S. Chamber of Commerce, the National Association of Manufacturers and the editorial page of the Wall Street Journal, which is seen as the voice of business, all, when it comes down to it,  oppose a carbon tax or an economy-wide scheme to cap greenhouse gas emissions.

They’ve got some sound reasons for doing so: Climate regulation by the US, if it is not followed by regulation in China and India and the rest of the world, will do little to curb global warming, but it will disadvantage the US economy and cost consumers money by raising energy prices. The thing is, China and India and the rest of the world are unlikely to price carbon unless the US leads the way. And right now it’s “free” for fossil fuel companies and utilities and the rest of us to pollute the air with CO2, and so we do so with impunity.

Thankfully, the chamber, NAM and the Journal don’t speak for all of business. That’s why a business coalition known as BICEP (it stands for Business for Climate and Energy Policy) needs to grow in numbers and in political clout. BICEP favors climate regulation, and its members include such well-known companies as eBay, Gap, Levi Strauss, Mars, Nike and Starbucks. But BICEP, pardon the bad pun, doesn’t carry much weight in your nation’s capital, and it’s fairly easy to understand why.

For the US fossil fuel industry, most of which opposes carbon regulation, the climate issue is a matter of the utmost importance. Environmentalists  who worry about the climate crisis increasingly argue that much of the world’s reserves of coal and oil must be left in the ground, unless and until  engineers come up with practical and cost-effective way to capture CO2 from power plants or from the air.  If that argument that we need to burn dramatically less coal and oil prevails, the stock-market value of the fossil fuel industry would collapse. This is the so-called carbon bubble, and it is an existential threat to the fossil fuel companies.

By contrast, climate change is an important issue Mars, Nike, Starbucks and the other companies in BICEP,  but it’s by no means their biggest issue. They are to be commended for stepping out, but so far they have not thrown the full weight of their Washington operations (or, for that matter, their marketing departments)  behind their position.

That was evident last week when BICEP organized a lobbying day on Capitol Hill. I covered the event for Guardian Sustainable Business. Here is how my story begins:

It is not often that big business comes to Washington to seek regulation. But a group of companies including IKEA, Jones Lang LaSalle, Mars, Sprint, and VF Corp did so this week, asking Congress to take steps to prevent catastrophic climate change.

Executives organized by the business coalition BICEP (Business for Innovative Climate and Energy Policy), testified before a Senate and House task force on climate change, telling lawmakers about their own corporate commitments to reduce carbon pollution. Then they fanned out across the Capitol to lobby on behalf of a clean-energy financing bill.

They did so on the first anniversary of the release of the Climate Declaration, a corporate call-to-action that has been signed by more than 750 companies. It was a reminder to legislators that the US Chamber of Commerce, the coal industry and the Wall Street Journal editorial page do not speak for all of corporate America when they oppose government action to regulate carbon pollution.

“Business is not a monolith,” said Anne Kelley, who coordinates BICEP’s lobbying efforts. “That’s been the message of BICEP since the beginning.”

But if BICEP has shown that hundreds of companies favor political action on climate, its efforts so far have been drowned out in Washington by those of the US Chamber and its allies, a US Senator told the group.

Senator Sheldon Whitehouse, a Rhode Island Democrat and a strong advocate of climate action who convened the hearing, said BICEP’s voice is “a murmur and not a message”, and he urged companies to spend more of their political and reputational capital on the climate issue.

Whitehouse, as the story goes on to explain, urges the BICEP companies to be more forceful. Until more companies understand that the threat of climate change, and the costs of adapting to extreme weather such as heat waves and drought, is a core issue for them, the debate in Washington will be dominated by the likes of the US chamber. And that’s a problem for all of us.

Yet another reason to eat less meat

chickens-4The more I learn about the way most chickens, pigs and cows are raised and slaughtered in America, the less appetite I have for meat. I’m not a vegetarian, and may never become one. But, hey, I’ve given up the NFL. I’d like to give up industrial meat, too.

I’ve long been aware of the negative environmental impacts of factory-produced meat. There’s plenty of evidence that the meat-heavy American diet isn’t good for our health. We’re learning than the overuse of antibiotics in animal agriculture puts human health at risk. And chickens and pigs raised for food are confined in cages and crates barely larger than their bodies. It’s not a pretty picture.

Last week. at a forum organized by the New America Foundation called The New Meat Monopoly: The Animal, The Farmer, and You in the New Age of Global Giants, I heard about another reason to avoid factory-farmed meat: Big meat companies, and in particular Tyson Foods, have grown so powerful that they have made life harder than it needs to be for small-scale farmers and ranchers. At the Washington event, farmers, ranchers, anti-trust experts and animal welfare advocates lined up to pillory the big guys.

Among the speakers at the event was  New America Foundation fellow Christopher Leonard, the author of a well-reviewed new book called The Meat Racket:  The Secret Takeover of America’s Food Business. Leonard argues in the book (which I haven’t read, but hope to) that companies like Tyson “keep farmers in a state of indebted servitude, living like modern-day sharecroppers on the ragged edge of bankruptcy.” They are able to do so in part because many farmers have only one or two customers to sell to, so the customers hold all the cards.

Subsequently, I read Obama’s Game of Chicken, an excellent 2012 article Lina Khan in the Washington Monthly about abuses of power by companies like Tyson and Pilgrim’s Pride, and how Obama’s USDA and DOJ have failed to curb them. Khan, who’s also affiliated with the New America Foundation, describes in rich detail what she calls “the stark and growing imbalance of power between the farmers who grow our food and the companies who process it for us, and how this imbalance enables practices unimaginable in any competitive market.”

I wrote about the New America event last week for Guardian Sustainable Business. Here’s how my story begins:

Like politics, industrial-scale meat production creates strange bedfellows. Animal welfare advocates are joining up with farmers, environmentalists and supporters of stronger antitrust laws in the hope of engaging consumers on the issues involving the meat they buy. The aim? To counter the power of big meat companies like Tyson Foods and JBS, the world’s largest protein company and the owner of brands including Pilgrim’s Pride and Kraft.

“Maybe it’s time for a citizens revolt,” said Barry Lynn, director of the markets, enterprise and resiliency initiative at the New America Foundation. Lynn was speaking at a half-day forum in Washington called “The New Meat Monopoly: the animal, the farmer and you in the new age of global giants“.

The accusations thrown at the global meat giants were mostly familiar. By raising and slaughtering chicken, pigs and cattle on a large scale – about eight billion chickens will be raised and killed this year in the US – these companies squeeze out family farmers, treat animals cruelly, create waste and air pollution, and feed their livestock antibiotics that, over time, put human health at risk and raise healthcare costs, at least according to their critics.

What’s more, these critics argue, is that the meat industry’s consolidation and power have been supported by government policy. Subsidized corn and soy reduce the price of meat. Bank loans to farmers are backstopped by the USDA’s Farm Service Agency. Government regulations make it harder to build and operate small-scale slaughterhouses.

You can read the rest of the story here.

Natural capital: Breakthrough or buzzword?

forests-why-matter_63516847We depend on nature. Forests, fisheries, water, soil, clean air, the ability of the atmosphere and the oceans to absorb CO2, minerals, biodiversity, pollination, the serenity of the wilderness: They make life possible. Not to mention more pleasant. Fine. That’s not news.

Lately, though, environmentalists and a handful of companies and consultants have tried to assign a dollar value to the products and services provided by nature. This idea is what’s called “natural capital,” at least as I understand it. I took a look at the idea in a story posted yesterday at Guardian Sustainable Business.

The story has already generated reaction, positive and negative. (Sometimes from people in the same organization.) Before you read it, I want to clarify what I meant to say–something a reporter shouldn’t have to do, but it may be helpful in this case. I didn’t mean to diss the entire notion of natural capital. It strikes me as potentially a useful idea, particularly when applied at a modest scale, and with some humility. Specifically, some companies and government agencies have found that by “investing in nature,” they can generate favorable returns when compared to other more conventional investments. For example, Coca Cola bottling companies have paid upstream farmers to take better care of their land, as a way of protecting water that the company needs to make beverages. A small nonprofit in Oregon called The Freshwater Trust has found that working with landowners to plant trees along riverbanks can improve water quality more effectively and at a lower cost than installing conventional pollution controls. (Here’s an example, a project the group administered for the City of Medford.) Most famously, Dow Chemical has worked with the Nature Conservancy to develop “green infrastructure” instead of “gray infrastructure” at a big facility in Texas. Maybe because I can get my head around them, these projects make sense to me.

What’s harder for me to understand are the more ambitious and complicated efforts to account for natural capital on a corporate or even a global scale. The calculations get complicated, in a hurry. (PUMA and its parent company, Kering, have spent years trying to measure their impact.) The numbers become less reliable when we start talking about billions or even trillions of dollars. Most important, the object of the exercise is…..what, exactly? Some people argue that valuing natural capital helps company identify risks or opportunities in its supply chain, but does an apparel company really need to hire accountants and consultants to understand that growing cotton will be harder in a water-constrained world than it is today? What’s more, as I explain in the story, the idea of “finite” natural resources, on which much of the analysis depends, is itself flawed. Yes, we may run out of this or that, but over time, inventive people are about to devise substitutes for scarce resource as the prices of those resources. This is how markets and innovation work. After,  the  stock of natural capital in the 19th century would have included whale oil for lighting and horses for transportation; they were, perhaps, finite, but they became irrelevant.

In any event, here’s how my story begins:

The corporate sustainability movement needs many things – scale, acceleration, a sense of urgency, science-based targets and goals – but one thing it surely does not need is another buzzword. Yet that is what “natural capital” is at risk of becoming.

At the GreenBiz Forum last month in Arizona, which attracted nearly 600 sustainability professionals, talk of natural capital was everywhere. The Nature Conservancy and the Corporate Eco Forum unveiled the Natural Capital Business Hub, which aims to “help companies uncover opportunities to enhance their bottom lines by integrating the value of natural capital into their strategy, operations, accounting and reporting.” Companies identified as Natural Capital Leaders – including Kimberly Clark, Freeport McMoran and Adobe – were praised.

So what, exactly, is natural capital? And why should companies care? Will accounting for natural capital drive meaningful change – or will it merely consume time and energy, occupy panelists at sustainability conferences and generate consulting fees?

Defining natural capital is relatively easy. “It’s the products and services that nature provides to business,” explains Libby Bernick, a senior vice president at Trucost, a consultancy that has popularized the idea. Forests, fisheries, water, soil, clean air, the ability of the atmosphere and the oceans to absorb CO2, minerals, biodiversity, pollination, even scenic landscapes upon which tourism may depend: all these are forms of natural capital.

The problem, as some see it, is that businesses and individuals use natural capital without paying for it. As Pavan Sukdev, a former banker who helped spread the idea, likes to say: “We use nature because it’s valuable, but we lose it because it’s free.” It’s a profound statement. Catchy, too.

But putting a price on nature’s products and services and then using those valuations to actually do something useful – well, that’s when things get fuzzy.

You can read the rest of the story here.

Paul Polman: A radical CEO

Paul-Polman-chief-executi-005“We’re the world’s biggest NGO,” Paul Polman, the chief executive of Unilever, sometimes likes to joke.

Literally, he is correct: “We’re a non government organization. The only difference is, we’re making money so we are sustainable.”

Lots of money, in fact. As one of the world’s biggest consumer products companies, with such brands as Dove, Hellman’s, Axe and Ben & Jerry’s, Unilever generated about $67 billion in revenues and $7.2 billion in profits last year.

But while Polman has led a turnaround at Unilever since becoming CEO in 2009, he is best known because he is outspoken about his belief  that “business should serve society.” He sounds more like the leader of an NGO like Oxfam or Greenpeace than your typical CEO. He’d rather blather on  about the Millenium Development Goals than boast about his company’s earnings.

More important, Polman’s Unilever uses its global to work for change, around a set of big issues, ranging from curbing climate change to eradicating poverty to deforestation.

That’s why the Center for Global Development, a DC think tank, honored Polman the other night with its “Commitment to Development: Ideas in Action” award. Previous winners include Global Witness, the One Campaign and Oxfam. Polman is the first business guy to get the award, as best as I can tell.

One reason: Unilever’s strong commitment to reducing deforestation, which helped drive the decision late last year by Wilmar, the world’s largest palm oil producer, to sign a “no deforestation” pledge. Wilmar’s commitment has the potential “to create a global revolution in how we grow food,” Scott Poynton, executive director of The Forest Trust, wrote last month in Guardian Sustainable Business. Palm oil is used in a variety of foods, as well as personal care products, like soap.

At the awards dinner, Nancy Birdsall, president of the Center for Global Development, said of Polman:  “He is surely the most outspoken and effective advocate for reducing the amount of deforestation that takes places to produce consumer goods.”

I went to the award ceremony not because I hadn’t heard Polman before — we spent time together last year when I profiled him in Fortune, under the headline Unilever’s CEO has a green thumb — but because he is such an outlier in the business world and I wanted to hear what was on his mind.

He didn’t disappoint. Some highlights from his remarks:

On the need for government policy to curb climate change: “We need to have the business community in the US speak up more, and then the Republicans will have to listen.”

On the urgency of dealing with global problems: “First and foremost, I am a businessman. I like to get to action. This worldis very long on words and very short on action.”

On the importance of sustainable development: “It is desperately needed that we build a new economic world order where we live within planetary boundaries.”

On global inequality: “The top 1.2 billion people consume 75 percent of the world’s resources. That is a system that is not in equilibrium.”

On the exploitation of garment workers in Bangladesh, who are paid 11 cents an hour“That’s as close as you can get to modern-day slavery.”

On the opportunity to have an impact: “In the next 15 years, we as a generation have the opportunity to be the people who eradicate poverty in a meaningful and sustainable way.”

On the need for business to step up to deal with social and environmental issues: “If you don’t make a positive contribution, you will be rejected…I  don’t understand why more CEOs don’t see this.”

Chocolate, and the Congo

Joe Whinney, in the DRC

Joe Whinney, in the DRC

I met Joe Whinney, the chief executive and founder of Theo Chocolate, last month here in Washington, and liked him right away–he’s an unpretentious high school dropout, with a great deal of enthusiasm for his work. It’s important work: Theo Chocolate is helping to alleviate poverty in one of the world’s most godforsaken places, the Democratic Republic of the Congo.

I wrote about Joe and Theo today for Guardian Sustainable Business. Here’s how my story begins:

Buying a Theo chocolate bar will not put a stop to the long-running conflict in the Democratic Republic of the Congo. But it will help, at least a little.

Seattle-based Theo sources cacao beans from war-torn eastern Congo and pays premium prices for them. By doing so, the chocolate maker provides a livelihood to about 2,000 farmers and indirect benefits to perhaps another 20,000 people in the Congo.

As a small company, with revenues of about $12m last year, Theo can only do so much. But its work in the Congo demonstrates how companies, big or small, can find ways to attack some of the world’s most intractable problems, if they have the will to do so.

“We’re trying to build a business that can change the way an entire industry conducts itself,” says Joe Whinney, Theo’s founder and CEO. His hope is that other chocolate companies invest in the livelihood of cacao farmers, as Theo has.

I hope you read the rest of the story. This is the second time this week that I’ve written about the DRC, where more than 5 million people have died in the past two decades; my previous story looked at Intel’s progress in eliminating conflict minerals from the Congo from its supply chain.

While I’m by no means an expert on the DRC, both stories suggest to me that businesses can play an important role in resolving conflicts and promoting economic development in even the poorest places in the world. NGOs like the Enough Project, which is working closely with Intel, the Eastern Congo Initiative, a group supported by the actor and activist Ben Affleck that is allied with Theo, are doing good work in the DRC, but it will take enlightened businesses like Intel and Theo Chocolate to provide sustainable livelihoods for people living there.

Theo’s work is especially impressive because of the way the company goes well beyond Fair Trade to support cacao farmers. It will be interesting to see if the world’s biggest chocolate companies follow this pioneering small one into the DRC.

By the way, I’m delighted that Joe Whinney will be joining us in May for the FORTUNE Brainstorm Green conference, about business and the environment.

Theo Classic Bars

Intel: Taking a stand on “conflict minerals”

International-CES-Sets-Trends-for-Future-2Last week, I attended my first International Consumer Electronics Show in Las Vegas. It’s a big  deal: 1.8 million square feet of noisy exhibition space inside a gigantic convention center, 3,200 exhibitors, all of them clamoring for attention, and 152,000 attendees, which explains, among other things, why there were about 1,000 people, no exaggeration, on the line waiting for taxis at the airport. All against the backdrop of Vegas.

I was there to moderate a panel about conflict minerals for Intel, about which, more below, but I have to say that I was underwhelmed by the rest of the show. Most of the gadgetry on display at the show struck me as expensive or useless, or both. No, I don’t want or need an 85-inch bendable TV. No, I don’t want or need wearable computers. (Nor does my dog need an integrated health and wellness platform.) The BMW i3 is a very cool new electric car but I am perfectlyu capable of making my own restaurant reservations, thanks, and I have Pandora on my phone, so I don’t need it built into the vehicle.

In fact, I have just about everything electronic or digital that I need on my phone, my iPad and laptop. As an industry expert named Brian Lam told Nick Bilton of The Times in this excellent summary of CES:

“You only need a phone and a tablet and a laptop, and maybe you need a TV and some headphones, but that covers 90 percent of the needs for 90 percent of the population,” said Mr. Lam, the editor of The Wirecuttera gadget website. “But this industry that employs all of these engineers, and has all of these factories and sales people, needs you to throw out your old stuff and buy new stuff — even if that new stuff” is only slightly upgraded.

That said, I enjoyed learning about the issue of conflict minerals, and meeting Intel’s CEO, Brian Krzanich, who has led the company (and the electronics industry) effort to do something about the fact that the sales of tantulum, tungsten, tin and gold are helping to finance a two-decade old war in the Democratic Republic of the Congo.

I wrote about conflict minerals today for Guardian Sustainable Business. Here’s how my story begins:

This year’s Consumer Electronics Show in Las Vegas showcased 110-inch curved TV sets, watches that monitor your vital signs, self-driving cars … and the technology industry’s efforts to curb violence in the war-torn Democratic Republic of the Congo.

Those efforts are being led by Intel, the giant (annual revenues of $52bn) maker of microprocessors for computer, tablets and mobile phones, among other things, and its new CEO, Brian Krzanich.

Near the end of a high-profile keynote address in which he demonstrated “smart earbuds”, 3D printing, advances in video gaming and an embedded processor designed to enable “wearable computing“, Krzanich paused and said:

“Okay. I’m going to switch gears for a minute now. … This is not an issue we would normally talk about at CES, but it is an issue that is very important and personal to me. That issue is conflict minerals.”

After he showed a somber video about the devastation in the Congo, where more than 5 million people have died since 1994 – many killed by armed groups using profits from the mining of four minerals, tantulum, tungsten, tin and gold – Krzanich promised that every Intel microprocessor will henceforth be conflict-free. The world’s first conflict-free processors will be validated as not containing minerals sourced from mines that finance fighting in the Congo, he said.

The story goes on to say that not all companies are on board with the effort to curb conflict minerals. In fact, the US Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers have filed a lawsuit challenging a provision of the Dodd-Frank financial reform law that requires companies to report on their use of conflict minerals.

So this unorthodox, corporate-backed antiwar effort has sparked its own backlash–from business groups. It’s remarkable how the chamber winds up on the wrong side of so many issues.

You can read the rest of my story here. If you are really interested in the topic, here’s the video of my panel with Krzanich, Sasha Lehznev of the Enough Project and the actor and activist Robin Wright, who, I was pleased to read, won a Golden Globe last night for her performance on House of Cards.

[Disclosure: Intel paid me to moderate the panel at CES.]