Google: Much more than an Internet company

google_flat_logoIt’s hard to imagine life without Google–not just the search engine, but Gmail, maps, calendar and cloud storage. I could give up Twitter, Facebook and (reluctantly) Amazon, but Google and Apple are embedded deeply into my life. It’s not just me, of course. Google and Apple are among the world’s most valuable companies.

To its credit, Google has decided to invest some of its vast wealth in bold, world-changing ideas that could take years to pay off. Why? That’s the topic of my latest story for Guardian Sustainable Business.

Here’s how it begins:

In 2008, Google pranked everyone. It was April Fool’s Day and the tech giant uploaded a fake website claiming to be starting the first human settlement on Mars, with a little help from the airline company, Virgin.

Project Virgle had a 100-year development plan and an application for would-be Mars colonists.

Virgle does not sound quite as far-fetched now as it did then. More than any other company, Google has proven willing to support bold, costly and unorthodox projects far from its core business. But unlike the fictional Virgle, a plan to escape the Earth, many of Google’s biggest bets, including its investments of more than $1.5bn in renewable energy, aim to save it.

These efforts are spread across the company – software to track forests at Google Earth Engine, clean tech investments at Google Ventures, and Nest and its energy-saving thermostat, which Google acquired last year for $3.2bn. The most audacious, though, are found in a unit known as Google[x], where inventors, scientists and engineers seek solutions to the world’s biggest problems.

Google[x] is developing self-driving cars, which would make automobile travel radically more efficient, as well as energy-generating kites, self-flying vehicles to deliver goods and high-altitude balloons to provide cheap internet to people living in rural or remote areas.

We’ve come to expect this kind of thing from Google, but no other US company that I’m aware of has shown such boldness:

Imagine if General Motors invested in drought-resistant crops, or Disney decided to build small nuclear power plants, or Microsoft got into the algae business. That is the kind of boundary crashing that has become commonplace at Google.

This is about more than “doing good,” I’m sure. If even one of Google’s big, long-shot projects turns into a real business, the company will do very well for itself. Now, it’s being widely reported, Apple is at work on an electric car. This is all very encouraging.

You can read the rest of my story here.

A rank ’em and spank ’em study on packaging

A Dunkin Donuts--with throwaway cups--opens in Beijing
A Dunkin Donuts–with throwaway cups–opens in Beijing

Twenty-five years after McDonald’s, working with the Environmental Defense Fund, agreed to get rid of foam clamshells for its burger–in what is now called the first corporate environmental partnership–the problem of wasteful, polluting, throwaway packaging is, if not worse than ever, no better.

With industry leaders like McDonald’s, Starbucks, PepsiCo and Coca-Cola have invested in more sustainable packaging, others have failed to follow. This is the conclusion of a thorough packaging study released last week by As You Sow and the Natural Resources Defense Council that I covered for the Guardian.

Here’s how my story begins:

Big brands, including Burger King, Dunkin Donuts, KFC, Kraft Foods and MillerCoors, are wasting billions of dollars worth of valuable materials because they sell food and drinks in subpar packaging, according to a comprehensive new report on packaging and recycling by the fast food, beverage, consumer goods and grocery industries.

The 62-page rank-‘em-and-spank-‘em study, Waste and Opportunity 2015, was published Thursday by advocacy nonprofits As You Sow and the Natural Resources Defense Council. They found that few companies have robust sustainable packaging policies or system-wide programs to recycle packages. Indeed, no company was awarded their highest rating of “best practices.”

The environmental groups did identify a number of leaders, albeit flawed ones. In the beverage industry, New Belgium Brewing, Coca-Cola, Nestlé Waters and PepsiCo won praise. Starbucks and McDonald’s are said to be a cut above their competitors in fast food and quick-serve restaurants. As for consumer goods companies and grocery stores, the report offers qualified praise for Walmart, Procter & Gamble, Colgate-Palmolive and Unilever.

Broadly, though, this study paints a discouraging picture. What progress has been made is incremental and spotty, not comprehensive. As often than not, single-use packages of food and drinks are made from virgin materials and then tossed in the trash.

As the report notes, with an overall recycling rate of 34.5% and an estimated packaging recycling rate of 51%, the United States lags behind many other developed countries. Less than 14% of plastic packaging — the fastest-growing form of packaging — is recycled. Recyclable post-consumer packaging with an estimated market value of $11.4bn is wasted annually.

The interesting question is, what have we learned from NGO and government efforts to curb packaging waste and pollution? I’m not quite ready to give up on voluntary corporate efforts–not yet, anyway. Walmart reduced packaging across its global supply chain by 5 percent between 2006 and 2013; that’s a big deal. It’s now pushing suppliers to use more recycled content.

An alternative approach is increased government regulations–deposit bills on bottles and, more recently, plastic bag bans and taxes. (New York City has just banned polystyrene packaging, joining 100 other jurisdictions, reports Mark Bittman.) But these are also halfway measures.

Bolder would be an economy-wide effort to impose Extended Producer Responsibility (EPR) rules, which are in place in much of the EU. I don’t know enough about how these work and what they cost to have an informed opinion.

I did buy a set of headphones for my iPhone the other day and had the hardest time getting them out of the ridiculous plastic package. Surely a company that’s as good at design as Apple can do better. But what’s the incentive for them to do so? Saving a few pennies from a $29.95 (!) set of headphones clearly isn’t enough.

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.

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

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…]

Tim Mohin: Changing business from the inside out

When I went to college, people with a strong social conscience went into politics or government, joined the Peace Corps, taught school, or became public-interest lawyers or doctors– in other words, they did just about anything but go into the business world. That’s no longer true, thank goodness. Today’s students understand that business can be a force for good and my  friend Tim Mohin — we serve together on the board of Net Impact — has written a new book called Changing Business From the Inside Out: A Treehugger’s Guide to Working in Corporations that helps business people, as well as students, understand how they can have a positive impact inside corporate America. Tim, who is currently direct of corporate responsibility at chip-maker AMD, previously worked on social-responsibility issues at Apple and Intel. His book has been heralded as “essential reading for anyone who wants to build a meaningful career”  by Aron Cramer, the CEO of Business for Social Responsibility. Here is a guest post from Tim about that offers a sneak peek at the book.

Like jumbo shrimp or military intelligence, “corporate responsibility” is considered an oxymoron by  many. People are skeptical of corporations and with good reason. Massive corporate scandals ranging from the 2008 mortgage meltdown, to the BP oil spill, to the recent headlines about Wells Fargo and Barclay’s have left a trail of destruction. The cost to repair the damage has been borne by society in the form of taxpayer-funded bailouts and environmental cleanup. Growing distrust in corporations boiled over last fall, sending young people into the streets in the Occupy Wall Street movement. So, at a time when trust in corporations has reached an all-time low, why is interest in corporate responsibility at an all-time high?

Even before the Occupy protesters set up their camps, corporate behavior was under intense scrutiny.  Regulations like “Sarbanes Oxley” and “Dodd-Frank,” required greater levels of transparency, a trend that has been fueled by social media and the Internet.  For more than a decade, companies in all industries have voluntarily published corporate responsibility or sustainability reports. CorporateRegister.com allows you to search 41,238 corporate responsibility reports across 9,153 companies, a number that has been steadily increasing.

Maybe there is a cause and effect here. The corporate scandals of the past have shown by painful example, just how quickly a company’s reputation, and brand value, can be damaged. Company employees, customers and shareholders know more, and increasingly care more, about corporate behavior.   So in today’s world, smart business leaders know that investing in ethical behavior is money well spent.

More important, I believe, is the need of every company to attract and engage talent.  A new younger generation of leaders is rising in corporate America,  and many of them bring social and environmental values to the job and will only work for responsible companies.

My new book, Changing Business from the Inside Out, delivers practical advice to this new group of committed business people. They recognize the power of business to drive positive change in the world. Changing Business From the Inside Out is “field guide” of practical tips, hard-won wisdom and leading edge concepts for people interested in a career in corporate responsibility. Here are the top five tips from the book: [click to continue…]

Is investing in poor women good business?

A health educator at her work station in Bangladesh

One lesson of the Apple in China scandal is that factory monitoring is a necessary but insufficient way to improve the lives of workers in poor countries. Apple inspected its suppliers’ factories, but conditions remain harsh. While strengthening inspections and sanctions, smart brands and retailers are finding ways to help workers in their supply chains gain more control over their work and lives.

A program run by BSR (Business for Social Responsibility) called the HERproject, which gives women working in export factories access to health information, is an example of what could–and should–be done. Teaching young women about health, including reproductive health and family planning, is, by itself, a good thing. It also delivers a not-so-subtle message to factory owners that it might be good for their business to take better care of workers, instead of exploiting them until they are used up.

Many factory owners “see their workers as cogs in a machine” and act accordingly, says Racheal Yeager, who leads the HERproject for BSR. “That’s why there are high rates of turnover and high rates of absenteeism.”

“What we’re trying to do is change the mindset of the factory management,” she says. [click to continue…]

Apple’s China problem–and ours

More than a decade after the Nike scandals of the late 1990s exposed terrible working conditions in the Asian factories where most of our stuff is made, has anything changed? To be sure, in the years since, most US brands — not just footwear and apparel companies like Nike, Timberland and Gap, but corporate giants like GE and Walmart — have assumed responsibility for human rights and environmental problems throughout their supply chains. But are conditions any better for the workers?

Those questions are front-page news these days, literally, in The New York Times, which has published two long and extraordinary stories about Apple and its supply chain in China. [See How the US Lost Out on iPhone Work and especially In China, Human Costs are built into an IPad.] The Apple-in-China story is also brought to life by Mr. Daisey and the Apple Factory, a lively, provocative episode of public radio’s This American Life, in which an actor-turned-reporter  named Mike Daisey investigates conditions at a Foxconn factory in Shenzhen. Together this reporting paints a shameful picture of harsh and unsafe working conditions at Apple suppliers: sometimes deadly safety issues, chemicals that scar people’s hands, 60-hour weeks, long stretches of work with no breaks, a rash of worker suicides, etc. To get some perspective, I spoke with Dan Viederman, the executive director of Verite, a nonprofit that helps companies build more humane and sustainable supply chains, and I’ve been reading my friend Adam Lashinsky’s excellent new book, Inside Apple.

Foxconn offers medical care on its campuses

For starters, let’s be clear: This is not an Apple problem. The focus of both The Times’ reporting and Mike Daisey’s story is Foxconn, which is said to be China’s biggest private employer and may be the world’s largest manufacturing company. It employs 1.2 million people (!) and assembles an estimated 40 percent of the world’s consumer electronics, for customers including Amazon, Dell, Hewlett-Packard, Nintendo, Nokia and Samsung, according to The Times. Part of a company called Hon Hai that is headquartered in Taiwan, Foxconn operates not just in Asia, but in the Czech Republic, Mexico and Brazil. It publishes a corporate social responsibility report and has US-based employees in Houston and Austin, TX.  Most Americans, of course, have never heard of Foxconn although they probably own something that was made by the company. [click to continue…]

Why Google invests in clean energy

Last year, Google invested more than $915 million in clean energy projects–solar, wind and transmission.

That’s a lot of money, even for Google, which had $38 billion in revenues in 2011. The investments don’t appear to be core to the company’s mission of organizing information, and they have attracted criticism, as well as some careless reporting, implying that the Internet giant is exiting the alternative energy business.

Does Google have an energy policy? Does it need one?

To find out,  I recently went to see Rick Needham, Google’s director of green business operations, at the company’s fabled headquarters (well, fabled for a 13-year-old company, anyway) in Mountain View, CA.

I came away not merely persuaded that Google’s energy investments make sense, but thinking that other companies that consume lots of electricity and have a pile of cash on their balance sheets  — Apple, Microsoft and GE come to mind — should consider deploying some of their cash in the clean energy sector.

Clean-energy investing isn’t philanthropy for Google. It’s business. In fact, it’s a classic double-bottom line investment, one that is intended to deliver environmental as well as financial benefits.

[click to continue…]

Big brands take climate action but…

Led by Unilever, Astra Zeneca and Nike, consumer brands are taking climate change more seriously than ever, says a new report from Climate Counts, a nonprofit that rates some of the world’s largest companies on their climate impact.

Big companies are reporting emissions, committing to targets and becoming more vocal in the policy arena, according to the report.

“There’s evidence to suggest we have reached a remarkable tipping point,” says Mike Bellamente, project director of Climate Counts. “Global corporations are increasingly acknowledging climate change as reality and are adopting measures to reduce their emissions and environmental impact.”

This is the fifth report from Climate Counts, which is the brainchild of Stonyfield Farms CE-Yo Gary Hirshberg. The ratings are intended to make consumers more aware of leaders and laggards on climate — the term of art for this is “rank ’em and spank ’em — as well as to spur companies to do better. or whatever reason, companies are improving: Bellamente told me over the phone the other day that the average score for the 136 companies rated this year is up by an impressive 54% from the initial set of ratings. [click to continue…]

Modern-day slavery: Here, there and everywhere

57470512SH007_migrantsModern-day slavery is not just about sex workers or poor people in faraway places.

Some farmworkers in the U.S., for all practical purposes, work as slaves.  Laborers  with few or no rights, working under inhumane conditions, typically far home, have produced such products as  blueberries, organic milk, personal computers or cell phones and garments imported from India, a new report says.

Consider:

An estimated 12 to 27 million people are victims of slavery, and other forms of forced labor around the world. In the United States alone, 10,000 or more people are being forced to work at any given time.

The report, called Help Wanted: Hiring, Human Trafficking and Modern-Day Slavery in the Global Economy (PDF for download, here),  was published by Verite, a non-profit based in Amherst, Mass., that monitors and reports on  labor rights abuses around the world. (It was funded by Humanity United, a nonprofit focused on peace and human rights started and chaired by Pam Omidyar.) Over the years, Verite has helped identify and clean up the supply chains of such global brands as Timberland, Gap, Levi Strauss, Apple, Disney and HP. I met with Verite’s executive director, Dan Viederman, last week in Washington to talk about the report, and what can be done to deal with slavery. [click to continue…]