More than a bean counter: Starbucks’ Howard Schultz

Starbucks chairman Howard Schultz said the company's 'open-carry' policy had been hijackedHere in the US, who are the big, bold corporate leaders when it comes to corporate responsibility? It’s not a long list. CVS’s decision to stop selling tobacco was a big deal, but I’ll bet you don’t know the name of the company’s CEO.* I’m a big fan of David Crane of NRG Energy, who has been outspoken on the climate issue, but NRG burns a lot of coal. GE’s Jeff Immelt, who talk a lot about energy and climate in the late 2000s, has quieted down, and he now backs the Keystone XL pipeline. Most interestingly, perhaps, Tim Cook of Apple has been speaking out about climate change and gay rights, and the company is doing good work on renewable energy and labor rights in its supply chain. But there aren’t a lot of CEOs in corporate America who are using their influence on behalf of the common good.

Then there’s Howard Schultz. One of corporate America’s longest-running CEOs — he has led Starbucks as either its CEO or chairman since 1987 — Schultz built not only a global economic powerhouse (Sbux has more than 20,000 stores in 65 countries) but also a company that stands for something. This week, the company sponsored The Concert for Valor, a moving tribute to American’s veterans on the National Mall.

I’ve paid close attention to Starbucks since the early 2000s, when I devoted a chapter to the company in my 2004 book, Faith and FortuneThis week, Guardian Sustainable Business launched a new “hub” on leadership, so it seemed like a good time to write about Schultz, and why he matters.

Here’s how my story begins:

“Why are there aren’t more Paul Polmans?”

Joel Makower, the writer and founder of GreenBiz Group, put that question to Unilever CEO Paul Polman at last week’s Net Impact conference in Minneapolis, Minnesota.

“There are 5,000 in the audience here,” Polman replied deftly, playing to a crowd of students and young professionals, who aim to use their business skills to change the world for the better.

It’s a good question, though. Why, indeed, aren’t there more CEOs willing to put society’s social and environmental needs at the core of their business, particularly here in the US?

Yvon Chouinard, the rock climber and environmentalist who started Patagonia, is one example, but he no longer runs his company – and in any event, it’s privately-held, which allowed him more room to maneuver.

A slew of business executives founded or led smaller, crunchy-granola firms with impressive environmental records – including George Siemon of Organic Valley, Jeffrey Hollender of Seventh Generation, Gary Hirshberg of Stonyfield Yogurt, and Drew and Myra Goodman of Earthbound Farms – but their influence is, or was, limited. It’s no wonder Polman sometimes seems to tower over the crowd of global CEOS.

Then there’s Howard Schultz, the CEO of Starbucks.

Schultz in the news this week, which is why his named occurred to me when I thought about Joel’s question. But for the past two decades, he has built a company that revolutionised the fast-food industry: providing ownership and healthcare coverage to its workers, investing in the environmental practices and wellbeing of coffee growers, supporting marriage equality, promoting job-creation during the last recession and, now, honouring America’s veterans.

You can read the rest here.

Feel free in the comments to name other leaders in corporate America who are using their power to help solve social and environmental problems.

*It’s Larry Merlo.

CEOs to Washington: Spend on energy R&D!

Can a massive government spending program bring us closer to a clean energy economy and help fight climate change?

Absolutely, say some of the America’s most powerful CEOs and ex-CEOs, capitalists all.

Solar_PanelsMicrosoft’s Bill Gates,  Jeff Immelt of GE, Ursula Burns of Xerox, Tim Solso of Cummins and former CEOs Chad Holliday of DuPont and Norman Augustine of Lockheed Martin, along with venture capitalist John Doerr, came to Washington today to release a new report calling for the government to invest in energy innovation.

They’re calling for $16 billion a year to be spent on energy R&D. That’s more than three times the current Department of Energy research budget—although last year’s stimulus package included a one-time boost of about $37 billion for the DOE.

Yes, it’s a lot of money, but as John Doerr put it: “Americans today spend more money on potato chips than we do on energy R&D.” Yikes.

The CEOs held a press conference at the Newseum and then took their message to the White House, where they were scheduled to meet with President Obama. They were also headed for Capitol Hill, which energy-and-climate legislation has been stalled for months.

“Our job is to keep agitating and be a force for positive change,” Immelt said at the press event.

If America doesn’t get its clean-energy industry going, the GE chief said, “everybody else around the world will. This is a primary pillar of national competitiveness.”

Now let’s be clear—there is obviously some self-interest at work here. GE and Cummins, which makes diesel engines, would both benefit if the government helps research and finance clean energy. (See GE and Washington: Too cozy?) The same is true for Kleiner Perkins, which has invested in startups that need financing to get to the next level, companies like the biofuels firm Amyris and Bloom Energy, which makes fuel cells.

But this group was brought together by Gates, who is spending more time focusing on energy and climate, and it includes retired CEOs like Holliday and Augustine, who have no stake in government handouts or guarantees.  Call me naïve if you like, but I think they they’re putting their time into this because they are worried about the future. As they write in the report:

the energy challenge is much worse than most people realize. The problem is already imposing a heavy burden on our nation—a burden that will become even more costly. The economic, national security, environmental and climate costs of our current energy system will condemn our children to a seriously constrained future unless America makes significant changes to current policies and trends.

Or, as Immelt put it at today’s event: “It’s really easy to be cynical about whether something can actually be done. But I’d say status quo for this country is a losing hand, right now. We’re falling behind some of our global competitors.”

To push their agenda forward, the business people formed a group called the  American Energy Innovation Council. You can download their 32-page “business plan for America’s energy future” here, and watch them talking about energy. Here’s a short video in which their make their case:

Because I’m a skeptic about the ability of government to spend that much money smartly–my preference would be to find market mechanisms to invest capital in a variety of technologies, and keep politics out of it, or simply to put a steep price on carbon and let the chips fall where they may–I asked several of the CEOs why they had confidence that a centralized approach made sense.

Immelt noted that GE is in the health-care business as well, and said the National Institutes of Health has been very effective. That NIH spends about $30 billion a year, most of which supports research done at universities. “The NIH is a pretty good model,” he said. Partly because of work done at NIH, he said, the U.S. is the world’s leader in health care, at least when it comes to innovation and technology. The report notes that Gleevec, a cancer drug, came out of work done by an NIH-backed researcher. Presumably there are many more examples.

I also talked with John Doerr after the event. Naturally, being a venture capitalist who made his fortune from information technology (Kleiner funded Google, among others), he cited the Defense Advanced Research Projects Agency (DARPA), where the Internet got its start, as an example of successful, government-backed R&D.

“So much of America’s prosperity can be traced back to those investments,” Doerr said. “ARPANET essentially created the discipline of computer science. ARPANET funded radar. ARPANET created the computer-assisted design industry.”

There’s no reason, he said, that the DOE can’t do as well. “The national labs are already doing some really good work,” he said. They just need more sustained support. Government loans, he said, can play a key role in bringing proven technology to scale.

One final note: When I saw the names of climate scientist Ken Caldeira and geoengineering expert David Keith listed on the AEIC’s “technical review committee,” I asked Gates whether he thought some  government funding should be used to research geoengineering. Gates has made small grants of his own to Caldeira and Keith to fund research into ways that humans can deliberately manipulate the climate to deal with the threat of global warming. (See Is Geoengineering Inevitable?)

While geoengineering isn’t mentioned in the report, Gates said it’s worth researching. “Fortunately,” he said, “we’re a long ways away from anyone would have to look at deploying” geoengineering technology. “But you’d want to be fully informed,” particularly if, as seems likely, other countries that fear climate change do their own geoengineering research.

There’s lots more at the American Energy Innovation Council website, including a model budget on how the $16 billion could eventually be spent–basic energy science ($2.6b), nuclear fission ($1.0b), nuclear fusion ($400 million), efficiency ($2.1b), renewables including solar, wind, bioenergy, geothermal and hydropower ($2.4b), fossil energy including clean coal ($1.3b), electricity transmission and distribution ($1.2b), as well as large-scale pilot and demonstration projects.

Said Chad Holliday: “We don’t see a better investment that our country can make in future generations.”

People will, of course, argue about the priorities. But isn’t it time that we get going?

GE and Washington: Too cozy?

Since 2004, when I wrote a story for FORTUNE called Money and Morals at GE , I have been an admirer of General Electric and its CEO, Jeff Immelt. My admiration deepened when GE unveiled EcoMagination, its effort to solve important environmental problems. Immelt and GE also led the U.S. Climate Action Partnership, an alliance of big business and big NGOs committed to getting the government to regulate greenhouse gas emissions.

Jeffrey Immelt

Jeffrey Immelt

But–and you knew there’d be a but, didn’t you?–I’ve got a couple of questions about GE and Immelt that have been nagging at me. First, has GE become overly focused on Washington? Second, when will Immelt deliver for GE shareholders?

The first question was prompted by an aside in John Harwood’s column in The Times a week ago, about the Obama administration’s all-out effort to get Ben Bernanke confirmed as Fed chief. He wrote:

The investor Warren Buffett and Jeffrey R. Immelt, the chairman of General Electric, helped contact senators, a senior official said.

There’s nothing wrong with this, of course; Immelt has the right to ask senators to support Bernanke. But it reminded me that this registered Republican and his company have closely aligned their interests with the administration. Immelt serves on the president’s Economic Recovery Advisory Board. Newly-released figures show that among big companies or unions, GE was second only to Exxon Mobil in lobbying expenses during 2009, spending $21.4 million. (Other sources put the figure higher.) This isn’t a surprise–GE is a huge company (2009 revenues were $156 billion) and it has a myriad of Washington interests, including taxes, trade, energy policy and financial regulation.

But there’s more. GE’s Washington operation is a case study in Washington’s revolving door. Nancy Dorn, who runs the office, [click to continue…]

A greener–and more open–GE

General Electric and Wal-Mart are the two most important companies in America, for different reasons: GE’s reputation for management excellence means that its ideas spread widely, while Wal-Mart’s size and clout put it at the center of the consumer economy. Last week Wal-Mart announced its plans for a sustainability index, generating lots of excitement, and today GE releases a citizenship report that demonstrates that the $183-billion company is becoming not just cleaner and greener, but more open.

“We just crushed our energy consumption goals,” Bob Corcoran, GE’s vice president for corporate citizenship, told me when we talked recently about the report. “We have crushed our greenhouse gas emission goals. I feel very good about that.”

He added: “I’m sitting in a building right now” – GE’s corporate HQ in Fairfield, Connecticut – “that has solar panels on the roof.”

As you’d expect from the company that popularized the precision-driven Six Sigma approach to quality, GE’s citizenship report, its fifth, has no shortage of facts, numbers and metrics. But what struck me most about the report were the insights it offers into the changing GE culture.

GE is the No. 1 U.S. wind turbine maker

GE is the No. 1 U.S. wind turbine maker

[click to continue…]

GE’s Healthymagination

Merely by being GE, GE commands attention. So does its CEO, Jeff Immelt, who I interviewed today in Washington after GE unveiled a new health care initiative, dubbed, inelegantly, Healthymagination. It’s a sister program to Ecomagination, which has done a lot for the image of GE since it was launched in 2005. I covered the announcement here for fortune.com.

Interviewing Immelt is no picnic. He’s a no-nonsense guy and he’s always on message. Time is limited. Today, I was accompanied by a CNN camera crew. That doesn’t help anyone to relax.

So I can’t say I gleaned any great insight from our 15-minute talk. What did come across was Immelt’s passion for GE and his belief that the company’s ability to tackle problems on a global scale is one of its key advantages. GE’s stock hasn’t done much since Immelt  became CEO in 2001 but his self-confidence appears undiminished.

Healthymagination aims to do three things—lower health care costs, make care more broadly available and improve quality. That’s a tall order. In part, it will require a shift in thinking, away from making high-quality, expensive, cutting-edge products aimed at the U.S. market and towards making lower-cost products that are good enough to do the job in the global south, where more than 2 million people lack access to basic health care. Immelt told me that GE can make money serving the poor, citing, as an example, a product called the Lullaby Warmer that keeps infants warm after they are born. It can both make healthy margins for GE and lower infant mortality rates. GE is trying to serve the bottom of the pyramid, to borrow a phrase from business thinker C.K. Prahalad.

There’s lots, lots more, including video, at GE’s sleek, new Healthymagination website. Video of my interview of Immelt should be posted Friday at fortune.com. Here’s how my story begins:

GE and its chief executive, Jeff Immelt, announced Thursday a sweeping new healthcare initiative dubbed Healthymagination that the company says will help deliver better care to more people at lower cost.

With typical hoopla – a well-attended press conference with customers and health-care experts, a live webcast, full-page newspaper ads and even a Twitter feed – GE wrapped a big marketing campaign around a business, health care, that has been part of the company for more than a century, when it began making x-ray machines.

The health care initiative is modeled on GE’s Ecomagination project, which was launched in 2005 to drive the company’s energy, environment and clean water businesse.

Like EcoMagination with its “green-is-green” mantra, Healthymagination has a catch phrase of its own. “Health means wealth,” Immelt declared. GE, he said, thinks it can make money by providing health care more broadly and at lower cost, including some of the 2 billion people who do not have access to doctors or clinics.

You can read the rest here.

So what’s next for GE? Moneymagination, to fight global poverty? Don’t bet against it.
healthymagination-ge-new-plan

The climate change plan we need?

Climate change is “perhaps the most comprehensive challenge that mankind has ever faced,” declared David Crane, the CEO of NRG Energy, as a group of 26 big companies and five big environmental groups came together on Capitol Hill this morning to offer Congress a blueprint to tackle global warming.

It’s hard to argue with his assessment. The question is, is the blueprint being put forward by Big Business (GE, DuPont, Alcoa, Dow, Duke Energy, Xerox, Shell, Conoco Phillips, the three automakers, etc.) and Big Green (EDF, NRDC, the Pew Center, World Resources Institute and Nature Conservancy) up to the challenge?

The 24-page document from the U.S. Climate Action Partnership, also known as USCAP, emerged from nearly two years of negotiations. You can read it here. “We don’t view this as a perfect document,” said GE’s Jeff Immelt. “We view this as a catalyst for change.” Congress now gets to tackle the issue. Henry Waxman, who heads the House committee dealing with greenhouse gas regulation, said today he wants to get a bill out of committee by May.

USCAP is proposing a cap-and-trade scheme (as opposed to a carbon tax), which adds multiple layers of complexity to the inevitably complex issue of climate change. Far be it from me to judge whether this blueprint will do the job. But here are a few of my first impressions:

A scientific problem, a political solution: The Intergovernmental Panel on Climate Change has estimated that to have a 50% chance of preventing the worst effects of global warming (and keep warming below 2 degrees C), developed nations as a whole must cut emissions by 25-40% from 1990 by 2020 levels and 80-95% reductions by 2050. The emissions reductions targets recommended by USCAP, while not precisely comparable, fall short of that. Nevertheless, Fred Krupp of EDF said, “This gives us the certainty we need that the atmosphere will be protected.” I don’t know if he’s right, but it’s fitting that the blueprint was introduced in the Cannon House Office Building—it was clearly the product of  compromise.

The dilemma of rising energy costs: A key goal of the cap-and-trade program put forth by USCAP is to put a price on carbon emission, to provide economic incentives for companies and individuals (i.e., all of us) to cut back on use of polluting fossil fuels and make cleaner fuels more afforable by comparison. That makes perfect sense. But (and this is a big but) companies are understandably worried about the impact that higher energy prices will have on the economy, and politicians are fearful of being blamed for higher gas and electricity rates. So they want to raise energy prices—just not by too much! This is one reason why U.S. Cap calls for a massive giveaway of the permits to pollute, to avoid putting too big an immediate burden on companies or their consumers. One CEO says the hope is to create a “bearable slope” of rising energy prices. Do you thing Washington can get that right?

A victory for clean coal: I defy any layman to read the coal section of the blueprint and explain what it means. I doubt many congressmen will be able to understand it. (Here’s a sample sentence: “Require all new coal and other solid fueled facilities emitting more than 10,000 tons of CO2 per year that are initially permitted after January 1, 2015, to emit no more than 1,100 lbs of CO2 for MWh; and require all new coal and other solid fueled facilities above this size threshold that are initially permitted after January 1, 202, to emit no more than 800 lbs of CO2 per MWH–provided that USCAP’s CCS direct cash payment funding recommendations are adopted and provided further….etc etc) Trying to translate all that into English, Jim Rogers, the CEO of coal-burning Duke Energy, said that USCAP has concluded that clean coal technology is crucial to solving the problem of global warming. Not only does the U.S. have abundant supplies of coal, he noted, but so does China, whose economy is growing fast and energy hungry. So USCAP calls for massive subsidies for clean-coal plants and rapid adoption of rules to permit the capture and storage of CO2 in underground caverns. “We cannot take coal off the table,” Rogers says. “We must find ways to remove CO2 from coal use.” Good luck.

No news on nukes: Exelon, GE, NRG Energy, Siemens and other big companies in USCAP  believe that nuclear energy should be a key part of the low-carbon energy mix of the future. The enviros won’t go there. So there is a barely a word about nuclear power in the blueprint. This will be a big issue for Obama and the Congress to resolve.

Offsets, global and domestic: These are allowed in substantial numbers, to help hold down energy prices. “Offsets are an important part of the blueprint,” said Bob Lane, CEO of John Deere. The idea here is that companies that find it too expensive or technologically difficult to cut their own emissions can pay others to cut theirs. Farmers could be paid to trap methane gas given off by cows and pigs. Poor people in the developing world could be paid to preserve forests. This is controversial, but probably a good idea, provided the offsets are determined to be real, additional, measurable, enforceable and permanent–no easy feat.

The bottom line: USCAP and Congress are trying to do something that’s really, really, really hard—engineer a dramatic transformation of the U.S. company in ways that aren’t needlessly disruptive. The goal, all agree, is to move from an economy that relies on low-cost, high-carbon fossil fuels (oil and coal) to one that runs on high-cost, low-carbon fuels (wind, solar power, geothermal, and, yes, clean coal).

The politicians and CEOs want to move slowly. The science tells us to move fast. Therein lies the problem.

Jeff Immelt of GE and Jonathan Lash of WRI introduce USCAP two years ago.