Walmart’s index: A real-life toy story

April 17, 2013
Is My Little Pony sustainable?

Is My Little Pony sustainable?

This is the third in a series of stories about Walmart’s supplier sustainability index. An overview is here, and a story about flour, bread and agriculture is here. Today’s topic: plastic toys and PVC.

Walmart wants to improve the sustainability of plastic toys. The giant retailer isn’t playing around.

The company wants to improve the safety of workers who make the toys. It wants to make sure that manufacturers are taking steps to use fewer so-called “chemicals of concern” in toys. It would like suppliers to deal with any issues raised when kids outgrow Barbie or GI Joe and throw them away. If paper or wood goes into toy packaging, Walmart wants to know whether it is “sourced in accordance with a credible certification system that addresses ecosystem impacts and biodiversity.”

Some critics think Walmart is taking this too far. That’s what this story is about.

Walmart’s supplier sustainability index, which is being rolled out to thousands of suppliers, is the biggest environmental initiative in the company’s history.  It will likely do enormous good–requiring companies that make consumer products to examine their environmental impacts in ways they have never done before. But the index also raises questions about how the world’s largest retailer (2012 revenues: $469 billion) is exercising its market power.

Is Barbie toxic?

Is Barbie toxic?

Consider, as an example, PVC, or polyvinyl chloride plastic, commonly known as vinyl. It’s a widely-used plastic, and it shows up in toys, including such iconic plastic toys as Hasbro’s My Little Pony and Mattel’s Barbie. It can be made soft or rigid, it’s rugged, moldable, low-cost and excellent at holding color.

What, if anything, is wrong with PVCs? That depends on who you ask. [click to continue...]

Filed Under: Climate Change, Consumption, CSR, Energy, Environment, Health, NGOs, Sustainability, Transparency, Workplace Tagged With: , , , , , , ,

Walmart’s index: This is big. Really big.

April 15, 2013
A Walmart with LED lights

A Walmart with LED lights

This is the first of three stories about Walmart’s supplier sustainability index.

Since launching its sustainability program in 2006, Walmart has reduced energy consumption in its stores, installed solar panels on its rooftops, curbed emissions from its trucks and recyled millions of tons of its trash. Now that the world’s biggest retailer has streamlined its own operations, it is turning its attention elsewhere–actually, almost everywhere.

Since last fall, Walmart has rolled out what it calls a supplier sustainability index to thousands of suppliers, asking them pointed questions about their operations and prodding them to better understand and manage their own supply chains.

It’s Walmart’s most ambitious environmental project ever, and if all goes according to plan, it will change the way all kinds of consumer products–clothes, toys, electronics, food and beverages–are made. The typical Walmart stocks 125,000 to 150,000 products (!), and the envirommental and social performance of most of the companies that make them them will soon be rated and ranked in Bentonville.

So Walmart is asking lots of questions of its suppliers. Among them:

How can wheat be grown with less water and fertilizer? How can chemicals of concern be removed from toys? What mining practices were used to extract copper, gold and silver for computers or jewelry? What percentage of your televisions sold last year were Energy Star certified? Do the grapes in a bottle of wine come from a farm with a biodiversity management plan? How much water was needed to produce those polyester pants?

If this sounds like a massive and fiendishly complicated undertaking, well, it is. It has been in the works since 2009, when Walmart unveiled The Sustainability Consortium, a nonprofit coalition led by the University of Arkansas and Arizona State University that was set up to provide scientific research to undergird the effort. Since then, a few other retailers (Tesco, Kroger, Ahold, Best Buy) and dozens of consumer products brands (Coca-Cola, Disney, Kellogg’s, Mars) have signed on to the consortium. [click to continue...]

Filed Under: Consumption, CSR, Energy, Environment, Food, NGOs, Sustainability, Transparency, Uncategorized, Workplace Tagged With: , , , , , , , ,

An odd couple? HR and sustainability

March 19, 2013

savitz(5)Today’s guest post comes from Andrew Savitz, the author of a new book called  Talent, Transformation and the Triple Bottom Line: How Companies Can Leverage Human Resources to Achieve Sustainable Growth (Wiley 2013). As you can guess from the title, Andy argues that employees are the key to creating sustainable companies, but that they–and their colleagues  in human resources–are often overlooked when companies embark on environmental programs. I think he’s onto something. I’ve long thought that the single biggest business driver of corporate sustainability initiatives is the way they help better companies attract better people and motivate the ones they have.

Andy has been his career working with companies on social and environmental issues. A lawyer by training (and before that a Rhodes scholar at Oxford), Andy has been a congressional staffer, the general counsel for the Massachusetts Office of Environmental Affairs and head of the environmental advisory practice at PriceWaterhouseCoopers (PwC). Since 2005, he has led a consultancy called Sustainable Business Strategies.

Here’s our online conversation:

Marc: You say that you’ve written the book “in large measure to bridge the gap between sustainability and HR.” HR? Really? Why do we need human resource people to get involved with sustainability? They don’t know anything about carbon emissions, say, or LED lighting, do they? [click to continue...]

Filed Under: Books, CSR, Environment, Leadership, Media, Sustainability, Workplace Tagged With: , , , , , , ,

John Mackey: Hippie, libertarian, CEO

February 12, 2013

imageThe top executives of big publicly-traded US companies, in my experience, tend to be rather drab fellows (nearly all are men) who choose their words carefully, hew carefully to the middle of the road in their thinking and rarely say (or do) anything outrageous.*

Not John Mackey, the founder and co-CEO of Whole Foods Market. For better and occasionally for worse, Mackey is an original, who doesn’t run his company by any conventional management book.

Instead, he has written his own book, called Conscious Capitalism: Liberating the Heroic Spirit of Business, with co-author Raj Sisodia, an academic affiliated with Bentley University. It’s a good read, especially because of the insights it delivers into the unusual culture and practices of Whole Foods, as well as into Mackey’s own evolution.

Some examples from the book: [click to continue...]

Filed Under: Books, Business Ethics, Climate Change, Consumption, Economics, Environment, Food, Leadership, Media, Politics, Sustainability, Transparency, Uncategorized, Workplace Tagged With: , , ,

Marcus Chung: A report from Bangladesh

January 27, 2013

ChungSadly, today’s guest post from my friend Marcus Chung is timely. The New York Times reported this morning on another factory fire in Bangladesh, this one killing seven women. Is this the price we must pay for cheap clothes? Marcus thinks not–although he’s just 36, he has worked for about a decade on corporate responsibility issues in the apparel industry, doing stints at Gap and Talbot’s. I’ve gotten to know Marcus as a fellow board member at Net Impact, a nonprofit organization of students and young professionals who want to use their business skills to make the world more just and sustainable. That’s exactly what Marcus, a Wesleyan grad with a Berkeley MBA, is doing in his current job, consulting for a global retailer of children’s clothing. Here’s his report from Bangladesh.

From the moment you arrive at the Dhaka airport, it’s clear that the apparel industry is vital to Bangladesh’s economy. Airport walls are lined with posters advertising local garment manufacturers, textile mills, and trims suppliers. Apparel accounts for between 70 and 80 percent of exports, so it’s no surprise that almost everyone on my flight from Hong Kong to Dhaka declared their profession as “buyer” or “sourcing” when clearing through immigration.

I visited Dhaka on behalf of a client to get a better understanding of the CSR challenges, trends, and opportunities that large apparel brands face in sourcing from Bangladeshi garment factories. Following November 2012’s tragic Tazreen Fashions factory fire that claimed the lives of more than 100 workers, there is renewed focus on how the industry can promote better factory working conditions. Tazreen was just the latest in a string of Bangladeshi garment factories that burned to the ground, but it also was the country’s most devastating in terms of lives lost.

Western mass-market apparel retailers source from Bangladesh because they can get a solid product at a competitive price. The apparel industry cannot ignore a fundamental commercial reality: Bangladesh has a ready supply of very capable garment factories that are filled with inexpensive labor. It’s not realistic (or probably advisable–MG)for companies to simply stop sourcing from the country. Therefore, the industry must do a better job of sourcing in a responsible manner that protects the rights of workers and includes basic commitments to a safe and healthy work environment.

A Multitude of Challenges

Over the years, I’ve heard many hypotheses about why fire safety continues to challenge so many Bangladeshi factory managers. Some cite an ineffective, corrupt government that does not enforce its own building code regulations. Others believe factory middle managers, myopically focused on production output, lack the ability or understanding to support fire safety practices with workers. Many believe pressure from Western brands to achieve low-cost goods encourages subversion of basic health and safety standards. I’ve heard people claim the root cause is a basic lack of infrastructure: old, multi-story buildings with poor electrical wiring; unreliable power supply (I cannot count the number of times the power went out during my visit) that causes short-circuits; and dusty, flammable materials lying dangerously close to unprotected electrical outlets. I spoke with one CSR leader who lamented a general lack of civil society and a culture where officials will agree to make improvements, but never follow through. [click to continue...]

Filed Under: Consumption, CSR, Global Poverty, Human rights, Sustainability, Workplace Tagged With: , , , ,

John Mackey, and the paradox of profits

January 7, 2013

conscious capitalism_book coverI’m reading an advance copy of new book  called Conscious Capitalism: Liberating the Heroic Spirit of Business by John Mackey, the founder and co-Ceo of Whole Foods Market, and business school prof Raj Sisodia. It’s very good, with useful insights on almost every page so far. (I’m only 70 pages in.)

Mackey was a liberal hippie. He’s now a libertarian entrepreneur and cheerleader for capitalism. He’s also a vegan who meditates and practices yoga. Not your typical CEO of a FORTUNE 500 company.

One reason I like the book is that I agree with much of what Mackey says. This passage, about what Mackey and Sisodia call the “paradox of profits,” comes  from a chapter about how purpose, and not profits, is what drives all great companies:

Just as happiness is best experienced by not aiming for it directly, profits are best achieved by not making them the primary goal of the business. They are the outcome when companies do business with a sense of higher purpose, build their businesses on love and caring instead of fear and stress…

If a business seeks only to maximize profits to ensure shareholder value and does not attend to the health of the entire system, short-term profits may indeed result; perhaps lasting many years, depending upon how well its competitor companies are managed. However…without consistent customer satisfaction, team member happiness and commitment, and community support, the short-term profits will proved to be unsustainable over the long term.

The No. 1 competitive advantage of purpose driven companies (or values-driven companies, if you prefer) is that their workers are engaged, as I wrote in my own book, Faith and Fortune: The Quiet Revolution to Reform American Business, back in 2004. Mackey and Sisodia put it this way:

The difference in business impact and personal happiness between a team member who is inspired, passionate, and committed and one who merely shows up for a paycheck is enormous. The blame for this does not lie with ‘lazy and unmotivated’ workers but with companies that fail to create workplaces in which people are given the opportunity to find meaning, purpose and happiness…

They note that people devote enormous amounts of time, money, and effort to causes that often have nothing to do with their narrowly defined self-interest, and say:

To tap this deep wellspring of human motivation, companies need to shift their emphasis from profit maximization to purpose maximization. By recognizing and responding to the hunger for meaning that is a quintessential human companies, companies can unlock vast sources of passion, commitment, creativity and energy that lie largely dormant in their team members.

Makes sense, no? People who care a lot about food, health and the environment can pursue their passions at Whole Foods or Stonyfield Farm. People who love the outdoors can be fulfilled at Patagonia or REI.

Of course, a strong sense of purpose isn’t, by itself,  enough to assure profits. (Look at the newspaper industry.) But it  helps.

This book reminds me that there’s a big opening out there for a bank that is really, truly committed to serving its customers and workers.

Filed Under: Business Ethics, Consumption, CSR, Food, Health, Leadership, Sustainability, Workplace Tagged With: , ,

Who’s responsible for factory conditions in poor countries? Has CSR gone too far?

January 6, 2013

garment-factoryJust who is responsible for the fire in a garment factory in Bangladesh that killed more than 100 workers in November?

The factory owner? The government of Bangladesh? US and European brands and retailers who bought the clothes made there? Shoppers who demand the latest styles at low prices?

And who deserves credit for the improvements in working conditions at Foxconn, China’s largest employer and Apple’s biggest supplier?

Apple? The Chinese labor market? Journalists at The New York Times?

Similar questions could be asked about paint factories that discharge pollution into rivers, toy factories that use dangerous chemicals or factories everywhere that run inefficient equipment or burn dirty fuels.

For nearly two decades, a core belief of the social-responsibility movement  has been that western brands and retailers must take responsibility for the social and environmental performance of the factories in their supply chain. This has created an immense infrastructure–an industry, really, of consultants who write codes of conduct for those factories, inspect the factories, report on them and deploy a combination of carrots and sticks that, at least in theory, bring about improved performance.

In essence, US and European brands have become quasi-governmental, undemocratic standards setters and enforcers of social and environmental norms.

So how’s it working? The year just past put a spotlight on a glaring failure of that system–the fire in Bangladesh, where factory conditions in the garment industry are widely deemed to remain unsafe–and on what has been cited as one of its successes–the new transparency of Apple’s supply chain, and the improved conditions at Foxconn, which supplies HP, Sony, Dell and other electronics companies, as well as Apple. [click to continue...]

Filed Under: Business Ethics, Consumption, CSR, Economics, Environment, Global Poverty, Health, Human rights, Sustainability, Transparency, Workplace Tagged With: , , , , , , , , ,

Corporate America embraces gays. But what about gay marriage?

November 4, 2012

Gay rights hasn’t been an issue in the presidential campaign, and that’s good. “On gay issues, silence is golden,” says Jonathan Capehart, a Washington Post editorial writer. As recently as during the 2004 election, you may recall, Republicans put gay-rights measures on state ballots to draw out voters who would favor George W. Bush over  John Kerry. “We’re not the punching bags we were two elections ago,” Capehart says. The tide is turning.

Some credit for this belongs to corporate America, which has over the last two decades embraced the gay community.  Capehart made his remarks during a panel discussion at the 2012 Out & Equal Workplace Summit, a gathering of LGBT people in the business world. Out & Equal, an advocacy group, champions workplace equality, in part because changes in the workplace become a catalyst for broader cultural changes. [click to continue...]

Filed Under: CSR, Economics, Human rights, Politics, Workplace Tagged With: , , , , , , , , , , ,

Advantix: A cool idea from an unlikely place

October 17, 2012

A great salesman, they say, can sell ice to an Eskimo. Perhaps so, but try selling ice skating in Israel, where it’s hot all the time and most people can’t skate.

Five guys from Israel–brothers Dan, Tom and Mordecai Forkosh, with their father and their uncle–tried to do just that. Back in the 198s0, they brought  indoor ice-skating rinks to Israel, after visiting a skating rink while on vacation in the US. It didn’t go as planned. In 1991, during the first Gulf War, a Scud missile destroyed the company’s first ice rink at a mall in Haifa. Eventually, the family built 22 ice rinks in Israel and Europe. But, along the way, they learned  how to efficiently cool air in a humid climate, to keep their energy costs down. The technology they developed became Advantix Systems, a “startup” that, under the right circumstance, can reduce the costs of air conditioning in commercial and industrial buildings by 30 to 50%.

This is a big deal, says Hannah Choi Granade, the US president of Advantix, who left a prestige consulting gig at a McKinsey & Co. to join the company, trading in her heels for the steel-toed boots that she now wears on customer visits.

“This is the un-sexiest company in clean tech,” she says. “We make air conditioners.” But air-conditioning is a $100-billion global market, and it grew by 13% last year, despite the sluggish global economy. “The developing world wants air conditioning,” she says. “The rate of growth of air conditioning massively outpaces the growth of renewable energy.” And, of course, it matters to the environment whether AC is provided efficiently, or not. [click to continue...]

Filed Under: Climate Change, Economics, Energy, Environment, Sustainability, Workplace Tagged With: , , ,

Project Frog’s Ann Hand: Disrupting construction

October 14, 2012

Ann Hand, the CEO of smart-building startup Project Frog, did not begin her career in a green job. As an executive in training with Mobil, she ran gas stations in inner city Philadelphia. “I can tell you about the adjacencies of Kool Menthol and Orange Crush,” she says. She went on to spend about 19 years in the oil industry with ExxonMobil, Amoco and BP, where she lead global marketing around “Beyond Petroleum.”

Now Ann is in charge of Project Frog, a green-business startup which, despite the cutesy name, is serious about shaking up the construction industry. Project Frog aims not only to create better buildings–buildings that are attractive, energy-efficient and pleasant places to work–but also to change the way buildings are made. Its structures are “component buildings,” put together from pre-fab kits of parts, shipped by truck and assembled onsite. It’s as if you could buy a building from IKEA.

“We’re trying to change the game,” Ann says. “We give people a better-looking building in half the time at the same cost or less.” Better, faster, greener and cheaper is how the company puts it. Which is a whole lot better than just greener. [click to continue...]

Filed Under: Climate Change, Energy, Environment, Small Business, Sustainability, Workplace Tagged With: , , , ,
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