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:

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“I’m a slut for change”

That’s how author and sustainability guru Paul Hawken responded when I asked him during FORTUNE’s Brainstorm Green why a small-is-beautiful guy agreed to work for huge companies like Wal-Mart and Ford. And I like to think that’s why nearly 300 business executives, NGO leaders, activists and government types came to our conference on business and the environment earlier this week. They were a diverse and occasionally disputatious group, which is exactly what we want: We had speakers from Greenpeace and the Rainforest Action Network, as well as Big Oil , the nuclear industry and American Electric Power, the nation’s No. 1 emitter of global warming pollution. But while there was disagreement over what path to take, there was broad consensus that business needs to find ways to become more sustainable.

Here are some of my takeaways from the event. One caveat—the quotes below were taken down on the run and may not be word-for-word perfect but they are close.

Bill Clinton doesn’t mind getting his hands dirty. Where do you find the former president these days? Occasionally, mucking around in the waste of cities like Lima, Mexico City and Lagos. “Whenever I think of an urban landfill, I see it not just as an eyesore and a contributor to global warming but a source of great wealth,” Clinton said, during the closing plenary. His Clinton Global Initiative on climate change, he explained, is training scavengers in Lima to be recycling workers, given them a salary and health care and encouraging them to become part of a “new industry in glass and metals.”

Clinton’s speech was a state-of-the-union style laundry list, long on details/solutions. He got all charged up about energy efficiency (hard to do) as he talked about retrofitting the Empire State Building, described extensive efforts to get cities to curb their carbon emissions and explained how he is helping to  make college campuses more efficient. “The most important thing you can do if you are not a member of the U.S. Congress,” he told the crowd, “is to show that the change we are all seeking is good economics.” He had a couple of odd ideas, suggesting that the states of Nevada and Arizona or maybe a Caribbean nation become “energy independent” to show the world that it’s possible. Clinton looked good, by the way—he wore a pair of Texas cowboy boots and hustled out of the hotel after his speech and a photo session to squeeze in a round of golf.

Some big problems, corporate America can’t solve. Fisk Johnson of SC Johnson, Jeff Hollender of Seventh Generation, Bill Valentine of HOK (big architecture firm) and Carl Bass of Autodesk (design company) joined me for a panel called Re-Imagining Consumption. The question put before them was simple but important: How can companies grow their revenues and profits while shrinking their environmental footprint? I thought we’d get into a conversation about cradle-to-cradle products that companies sell, or new business models like ZipCar. But we veered into a discussion of overconsumption after someone mentioned he oft-cited fact that Americans make up roughly 5% of the world’s population and consume 25% of its resources. That’s obviously a problem, and since companies are invented to solve problems, I ask them if there is a business opportunity there. They couldn’t see one although Bill Valentine said HOK often asks its clients whether they really need a new building, Carl Bass said  Autodesk is incorporating sustainability questions into its software, and Fisk and Jeff both talking about “greening” their products and packaging.  The truth us, it’s hard to imagine even progressive companies (except for recycling firms) coming up with products, services or new business models around buying less stuff. This tough job is probably best left to parents or religious leaders.

Environmentalists should reconsider nuclear power. I’m told there was a long and animated dinner conversation one night during which two leading thinkers of the sustainability movement—Janine Benyus of biomimicry fame and Ray Anderson of Interface–peppered Alan Hanson, an executive from Areva, the big French nuclear power company, with probing questions about nuclear power. I was pleased to hear that because I’ve thought for some time that environmentalists need to rethink their almost-religious opposition to nuclear power. (I’m going to write about this in more detail next week.)

If the problem of climate change threatens the very existence of human life on this planet (and it does), shouldn’t we reconsider nukes? Of course we should. We’re going to need baseload power and while a combination of efficiency, renewables and battery storage might get us where we need to go under a best-case scenario, I don’t want to bet the planet’s future on a best-case scenario. It’s likely we’ll face a choice between nuclear and so-called cleaner coal. I’m not sure where I come down on that.

During a panel on nuclear power (read David Whitford’s account here) that focused on its costs, I learned that Steven Chu, the energy secretary, is an advocate for nuclear while Carol Browner, the climate czar, is an opponent. President Obama has punted on the issue—he hasn’t said much of anything, at least according to our panelists. While Browner’s the more powerful figure in D.C., Chu is a brilliant and impressive guy, not to mention the only cabinet member with a Nobel Prize. I’d love to be a fly on the wall when they and Obama get together to talk about nukes.

I’m still not convinced about green jobs. Van Jones, the White House green jobs czar, spoke at Brainstorm Green and he managed to be both inspiring and utterly charming. But he couldn’t come up with a clear-cut definition of a green job. That’s not surprising. Consider the farmer who grows corn for popcorn. He’s a mere farmer. His buddy up the road who grows corn for ethanol? Green job, I presume.

Clinton, too, has hopped on the green jobs bandwagon: “I’ve always believed that work is the best social program,” he said. “Saving the planet from the threat of climate change will create more jobs, more ideas, more interdependence than anything else we can do.”

Hmm. Fred Krupp of the Environmental Defense Fund said the best economic studies about the impact of a cap-and-trade program to regulate greenhouse gases project that the long-term impact on GDP will be very, very slight. But if GHG regulation has even a slight negative effect on GDP, how can it create more jobs?

It’s time to stop feeling guilty about business travel. Brainstorm Green was held at the Ritz Carlton in Laguna Niguel, California—a spectacular place overlooking the Pacific. We had some fabulous meals—prepared by organic chefs—and I got up early to run (a little) each day. At night, I opened the door to my hotel room and fell asleep to the sounds of the waves and an ocean breeze.

As it happens, we were at ground zero for the crisis in business travel. Next door was a St. Regisl where AIG held a meeting last fall that made national news and led to the cancellations of hundreds of business meetings. Luxury hotels and their working-class employees are suffering. What’s good about that?

More important, there was value in getting 300 people together in a relaxing place for a couple of days to talk about things that matter. We learned. We met new people. We built relationships. We showcased leading thinkers and doers, perhaps inspiring others. Maybe a startup that needed money raised some. We may live in an always-connected, everything-linked world, but you can’t do those things very well on email or over the phone or in a video conference.
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SC Johnson: Coming clean

As a runner, I’m a fan of GU energy gels, including a flavor called “Tri-Berry.” The ingredients include many things…

MALTODEXTRIN (GLUCOSE POLYMERS), FILTERED WATER, FRUCTOSE, GU AMINO ACID BLEND (LEUCINE, VALINE, ISOLEUCINE, HISTIDINE), NATURAL AND ARTIFICIAL BERRY FLAVOR, POTASSIUM AND SODIUM CITRATE, GU ANTIOXIDANT BLEND (NATURAL VITAMIN E AND VITAMIN C), CALCIUM CARBONATE, FUMARIC ACID, SEA SALT, SODIUM BENZOATE, POTASSIUM SORBATE, GU HERBAL BLEND [CHAMOMILE, COLA NUT (HAS CAFFEINE), GINGER], CITRIC ACID, PECTIN

…but only a passing reference to berries. Tri-Berry, indeed.

What’s inside the stuff we buy? Even when it comes to food, it’s hard to know. (Fumaric acid? Cola nut?) As for other things—including the household products that we breathe and touch, like cleaners and air fresheners, the ingredients are usually a mystery.

SC Johnson Co., the $8-billion a year, privately held company that makes Windex, Glade, Shout, Off!, Pledge, Raid and Ziploc-branded product for the home, is going to change all that in a big way.

Last week, SCJ made a couple of announcements that are likely to shake up the home cleaning industry.

First, the company says it will disclose the ingredient in all of its home cleaning and air care products. This includes products with fragrances—which, up to now, have been closely held secrets because the fragrance industry had argued that it needs to protect confidential business information.

Second, SCJ says it has told its fragrance suppliers to stop using a controversial category of chemicals known as phthalates. Right now, SCJ cleaning and air freshener products include a phthalate called DEP.

Let’s take these one at a time, because each is interesting in its own way. (That’s also why this post is longer than usual…)

The disclosure issue, which has been roiling the household products industry, leapfrogs SCJ over its biggest mainstream competitors. (Seventh Generation, a smaller company that makes natural household products, has led the way on disclosure issues for years, driven by its pioneering CEO, Jeff Hollender.) While the home products industry has adopted a right-to-know initiative that calls for household product firms to list ingredients on either a label, or a website, or an 800 number, SCJ says it will make its information available in all of those ways. You can checkout the website at www.whatsinsidescjohnon.com.

More important, SCJ will  list all of its ingredients—an unprecedented move. By contrast, the industry-wide plan makes an exception for a category called “Fragrances, dyes and preservatives,” again, because of the concern about business secrets.

Kelly Semrau, who is vice president for global public affairs at SCJ, told me last week that the company had come up with an ingenious solution to the fragrance industry’s resistance: Instead of listing ingredients specific to each product, the company will publish a comprehensive list of all of its fragrance ingredients so consumers know what could be potentially included in the products they buy.

A “palate approach,” she calls it: “We’re rather put all the ingredients up there, and begin a dialog with stakeholders, than have it be a black box.”

In a company press release, Erin Thompson Switalski of an environmental health group called Women’s Voices for the Earth is quoted as saying: “SC Johnson just raised the bar for the entire cleaning products industry.”

The phthalate decision will also increase pressure on competitors to follow suit.

Several advocacy groups–notably the Environmental Working Group—have been campaigning against phthalates with scary newspapers ads and websites like www.nottoopretty.org. that point fingers at brands like Arrid Extra Dry and Poison perfrume (“For baby, it could really be poison”) and Arrid Extra Dry.

The FDA and European regulators have approved the use of phthalates, the chemical industry says they are safe—and so, apparently, does SC Johnson. But Fisk Johnson, the company’s chairman and CEO, asked his scientists whether they could reformulate their products to eliminate phthalates.

“IF we can make our products just as good, and without the phthalates, why wouldn’t we do this?” Semrau told me. “That was the question that Fisk put on the table.”

There’s a risk, of course, of allowing scare campaigns to drive business decisions. (I’ve written about this problem when it comes to BPA and baby bottles. See Wal-Mart: The New FDA. ) Neither the media nor retailers nor ordinary consumers are trained to assess scientific research. But until we can rely on an aggressive and independent FDA and EPA to police the products we use—they have failed in the past to meet that standard–it makes sense for companies like SC Johnson to both be cautious and to stay ahead of consumer sentiment.

“We cannot walk away from science. Science should drive public policy,” Semrau says. “But when you are a consumer products manufacturer, you have to listen to consumers.”

Frances Beinecke, the president of the Natural Resources Defense Council, wrote on the NRDC blog: “What is promising to me is that SC Johnson has made this move voluntarily, after NRDC raised the issue of phthalates in air fresheners last year… The company’s response is a testament to the power of consumers to make a difference.”

I emailed Rich Liroff, the executive director of the Investor Environmental Health Network, who knows more about these issues than anyone I know, to ask him what he thought of the SCJ decision. He replied:

this represents a precautionary business judgment by SCJ that even though they believe that regulators’ judgments are on their side in terms of continued use of phthalates, the better competitive position to adopt is to side with their consumers lacking faith in regulators’ judgment and to make a focused effort with their supply chain to eliminate chemicals of concern. So rather than taking the position so many other companies have taken—“the regulators say our products and chemicals are safe” or “we are in compliance with all applicable rules and regulations”—SCJ is acknowledging that such positions are no longer adequate for consumer-facing manufacturers and retailers.

Two final thoughts. First, this issue isn’t going away. Just last week, Rich told me, a group called the Campaign for Safe Cosmetics released a report showing that that toiletry products for children contain formaldehyde. And The Walt Disney Co. released a healthy cleaning policy saying that it would take a “precautionary” approach to reducing its chemical use.

Finally, anyone who knows SC Johnson and Fisk Johnson won’t be surprised see them leading the way on an environmental issue. Back in the 1970s, SCJ took CFCs out of their products before they were banned. And at last year’s Brainstorm Green conference about business and the environment), Fisk spoke eloquently about how the company has been trying to avoid using coal-fired electricity in its manufacturing plants, turning instead to methane from a nearby landfill and wind power. I’m really pleased that Fisk will speaking again this year at Brainstorm Green.

Brainstorm Green 2009

Not long ago, Big Business and environmental activists were sworn enemies. No more. Today, companies and NGOs come together to work creatively around a variety of issues—from climate change to recycling to protecting the Amazon, from cleaning up dirty businesses like gold mining and to “greening” professional sports. One place they literally come together is at Brainstorm Green, FORTUNE’s conference about business and the environment, which will be back on Earth Day, 2009.

Helping to create Brainstorm Green was a highlight of my 12 years at FORTUNE, and I’m pleased that I’ll be back this year, co-chairing the event with my colleague Brian Dumaine, FORTUNE’s global editor. The program for this year’s Brainstorm Green is still a work in progress, but a group of us got a draft agenda down on paper last week and I’m confident that it will again be a lively, exciting, information-packed event. The theme, once again, will be: How can business help solve the world’s biggest environmental problems?

We’ll discuss and debate climate change regulation, “clean coal,” nuclear power, electric cars, the smart grid, investing in green, renewable energy, sustainable consumption (if there is such a thing), carbon finance and too many other topics to list here.

What makes Brainstorm Green special is the diversity of the crowd. This year, we’ll again hear from many of America’s most important environmental leaders, including Fred Krupp of Environmental Defense, Glenn Prickett of Conservation International, Mark Tercek of The Nature Conservancy (who was there last year on behalf of Goldman Sachs), David Hawkins of the Natural Resources Defense Council, Mindy Lubber of Ceres and Mike Brune of Rainforest Action Network. At least two dozen CEOs of big and medium-sized companies have agreed to speak, including Shai Agassi of Better Place (the electric car company), Ray Anderson of Interface, Carl Bass of Autodesk, David Crane of NRG Energy, Jeff Hollender of Seventh Generation, Fisk Johnson of S.C. Johnson, Donald Knauss of Clorox, Mike Morris of American Electric Power, Ralph Peterson of CH2M Hill, Jim Rogers of Duke Energy and Tom Werner of SunPower.

Other companies sending speakers include Wal-Mart, McDonald’s, Coca-Cola, Goldman Sachs, Mars, Intel, Boeing, McKinsey, the private-equity firm KKR and architectural firm HOK. That list is sure to grow.

We’ll also be joined by speakers whose ideas are shaping the sustainability debate. I’m looking forward to spending time with Paul Hawken, whose books have shaped much of my own thinking about business and the environment. The dynamic Van Jones, who is profiled in the current issue of The New York by Betsy Kolbert,  will talk about green jobs. The always-inspiring Janine Benyus, who spoke last year, will be back to show us how biomimicry works in practice. My friend Joel Makower, the guru of green business and author of Strategies for the Green Economy, will return as well.

Venture capitalists from some of America’s top firms and entrepreneurs touting exciting startups will round out the group. We’re hoping to attract senior officials from the new Obama administration as well.

You can find a full list of speakers on the Brainstorm Green website. That’s also the best place to propose new speakers or to sign up for the event. (FORTUNE screens all participants.) We’ll meet in a beautiful setting—the Ritz Carlton Hotel in Laguna Niguel, CA, and I’m looking forward to seeing many of you blogreaders there.