Today’s quiz: How well do consumers understand “green” brands?

(1)          They are savvy.
(2)         They don’t have a clue.
(3)         They don’t care all that much.
(4)         All of the above.

The answer, judging from the results of this year’s ImagePower® Global Green Brands Study,  is (4) all of the above.

Hey, who ever said communicating about “green” is simple?

The survey, which comes from advertising and marketing giant WPP, is based on interviews with about 9,000 people in eight countries.

In the U.S., where researchers conducted 1,200 interviews, consumers identified these Top 10 green brands:

1.    Seventh Generation

2.   Whole Foods

3.   Tom’s of Maine

4.   Burt’s Bees

5.   Trader Joe’s

6.   The Walt Disney Company

7.   S.C. Johnson

8.   Dove

9.   Apple

10. Starbucks, Microsoft (tied)

One important caveat: Consumers chose these brands from a universe of 45 brands in limited product categories, including personal care, grocery, household products and electronics—which is why you don’t see the Toyota Prius or Stonyfield Farm on the list:

If you want to argue that (1) consumers are savvy, read the first four names and stop. They four are what the researchers call “born green” companies, that is, companies that from the get-go set themselves apart from competitors by touting their environmental credentials.

Seventh Generation makes non-toxic cleaners and household products, Whole Foods sells lots of organic fare, Tom’s of Maine uses only ingredients found in nature in its toothpaste and Burt’s Bees offers earth-friendly personal care products.

“Consumers really get their authenticity,” says Annie Longsworth, global sustainability practice leader for Cohn & Wolfe. Having reported on all four companies, I agree that they deserve to be on any list of green brands.

That’s not so with the next name on the list, Trader Joe’s, a privately-held company that doesn’t reveal much about its supply chain, doesn’t report on its footprint and has been a target of activists. [See my 2009 blogpost, Greenpeace ridicules Traitor Joe's.] The believe that Trader Joe’s is green supports the believe that (2) consumers don’t have a clue.

Trader Joe’s ranking makes even less sense when compared with Wal-Mart, which ranked No. 20.

Annie Longsworth theorized that Trader Joe’s did well because shoppers perceive it as a “friendly, hippie” brand, and assume that it is also good for the planet. Walmart, by contrast, comes across as a big-box store (which it is, of course) and that’s not associated with being green.

Walmart has a green corporate sustainability story to tell, Annie said, but “they haven’t figured out how to make it a consumer story, yet.” Much of Walmart’s work has focused on its supply chain, which is invisible to shoppers.

[As it happens, when the list came out last week, I had dinner in Boulder with Hunter Lovins and Catherine Greener, two smart and insightful sustainability consultants. Both told me, unprompted, that Wal-Mart’s sustainability initiative was the best thing to happen to the environment in the U.S. in the past 10 years.]

Evidence that (3) consumers don’t care all that much comes from their responses when they were asked whether it is very important to them to buy from a company that is “is environmentally conscious.”  About 38% said yes, but that’s fewer than those who said it is very important that the company  “offers good value,” “is responsible,” “is reliable,” “offers high quality products or services,” “is trustworthy,” ”cares about its customers,” and “has a strong brand.”

Having said that, consumers worldwide told the pollsters that they intend to purchase more environmental products in the auto, energy and technology sectors, as well is green products in the more traditional “in me, on me” categories of food and personal care.

This Thursday in New York, I’ll moderate a panel of experts who will present the global and U.S. findings, and try to make sense of them all. We’ll be joined by, among others, John Replogle, who was formerly CEO of Burt’s Bee’s and is now CEO of Seventh Generation, so he’s led two of the top four companies on the list.

We’ll have speakers from Cohn & Wolfe, Landor Associates and Penn Schoen Berland Associates (PSB), all of which are part of  WPP, and from the sustainability consulting firm Esty Environmental Partners. There’s no admission charge to the event; you can learn more here.

Is shareholder capitalism broken?

Few would argue that it’s working well. Business as usual has us on a path to climate catastrophe. The housing/banking industry collapse threw the world into recession. We’ve seen Fukushima, the BP oil spill, the Massey coal mine deaths. Growing income inequality has become a persistent worry.

The conventional response to all that – indeed, the one that I share – is that smarter (though not more) regulation is needed. But a growing number of business people say the problems go deeper. They say a new kind of corporate legal structure is needed to require companies to operate for the  good of society, not just for their shareholders. These new corporations—they’re called B Corporations—are growing in number, and their structure has been enshrined into law in four states—Vermont, Maryland, New Jersey and Virginia.

Here’s what B Lab, the nonprofit behind B Corp, says on its website:

Our vision is simple yet ambitious: to create a new sector of the economy which uses the power of business to solve social and environmental problems. This sector will be comprised of a new type of corporation – the B Corporation – that meets rigorous and independent standards of social and environmental performance, accountability, and transparency.

And in its annual report:

After the latest round of economic and environmental crises, it’s clear we need systemic solutions to the systemic problem that places the interests of shareholders over the interests of workers, community and the environment.

Interesting, no? A couple of months ago, I heard Jay Coen Gilbert, a founder of B Lab along with Bart Houlahan and Andrew Kassoy,  talk about B Corp (it stands for Benefit Corp.) at a GreenBiz conference; afterwards, we caught up by phone to talk some more.

“We can’t have a new economy unless we have a new type of corporation,” Jay told me. “Corporate law actually works against sustainability.” Current law, he argues, require company executives to put shareholder’s interests ahead of everyone else’s.

Jay is himself a business guy. After graduating from Stanford grad, he joined  McKinsey & Co., then spent a couple of years working on child welfare issues for the government of New York City, and in 1993 founded with a shoe and apparel company for basketball players called And1. “We were very much the upstart, street ball brand,” he says. The company, which grew sales to $250 million, was sold in 2005, giving Jay the freedom to think about what to do next. He’d been inspired by socially responsible companies like Patagonia, Body Shop and Newsman’s Own, each of which, he said, was “very cool and inspiring in its own way, but all of the power and energy was diffused.”

How, he wondered, could the power of responsible business be harnessed?

“There was a clear need for a unifying brand that could help project the voice of this very compelling marketplace, from fair trade to clean tech, from microfinance to organic and local,” he says.

B Lab is the result, and he explains that the nonprofit trying to do several things at once.

First, it’s a certification effort, aimed at helping consumers identify responsible companies that meet rigorous and independent standards of social and environmental performance. “You can think of it as a LEED for business,” Jay says, referring to the system for rating green buildings.

More than 400 companies in 54 industries have been certified as B Corps. Most are small and privately held. Total revenues are under $2 billion. Among the early adopters are Seventh Generation, Method, Numi Organic Tea, New Leaf paper and Sansko. One of the bigger firms to be certified is Cascade Engineering, a $250-million Michigan plastics firm, which is profiled in the current issue of Inc.

These companies get actual benefits, along with the right to use the B Corps brand.  Salesforce and Intuit offer them discounts on software. Graduates of the Yale School of Management get favorable treatment of their student loans if they work for B Corps. The city of Philadelphia gives them tax breaks.

Second, B Lap is working with private equity investors to use its performance standards to help them make better-informed decisions about private companies. Its ratings are part of an initiative called the Global Impact Investment Rating System, or GIIRS, which provides data on the social and environmental impact of companies to investors who want to put their money into companies that are doing good. B Lab is beta-testing the GIIRS methodology with fund managers who have about $1.2 billion in assets under management.

Finally, Third, B Corps is pushing for new laws. The Benefit Corp legislation passed in four states creates a new corporate form which “redefines fiduciary duty, and holds companies accountable to create a material positive impact on society and the environment as measured by an independent, transparent third party standard.” Fundamentally, the idea here is to shield companies from protected from shareholder litigation when they made decisions that could negatively impact short-term profitability. Corporations operating in any state can, in theory, re-incorporate in these states to, in effect, redefine their purpose.

This is where I part ways with B Lab, but not before saying that what Jay and his colleagues  have accomplished in a few short years is nothing short of remarkable. They’ve catalyzed a movement, developed a sophisticated set of metrics around the corporations and the public good, won over hundreds of entrepreneurs and changed  laws in four states. They’re onto a big idea, and we can only hope it gets bigger.

The trouble is, the idea of business for the public benefit is not going to get big enough or important enough so long as it remains on the sidelines of shareholder capitalism. The world’s big companies–the Walmarts and GEs and McDonalds– would find it very hard, if not impossible, to re-incorporate as B Corps. If nothing else, they’d have to concede that there’s something fundamentally wrong with shareholder capitalism. They’re not going to do that–because, in my view, there’s nothing fundamentally wrong with today’s model.

While there are undoubtedly tensions  between maximizing short-term profits and building long term shareholder value, the job of a leader is to navigate those tensions and choose long-term value. Competitive markets also drive businesses to externalize their costs, but that problem is best addressed with regulation–starting, importantly, with a price on carbon. Corporate governance, too, needs fixing, so that managers are accountable to shareholders in fact as well as in theory.

There’s no doubt, in other words, that reforms are needed. But it’s my firm belief that companies that make the world a better place–by serving their customers, enabling their workers to flourish and giving back to their communities–will, in the long run, will be rewarded in the market and deliver superior returns to the owners. That will drive the change we want to see, at a scale that matters.

Seventh Generation, the pioneer of the “green cleaning” industry, needs to become more stylish and innovative in order to grow.

So says John Replogle, the former chief executive of Burt’s Bees who was named CEO of Seventh Gen last week.

“We makes the best products in the market,” Replogle said. But the competition is intense, from companies like Procter & Gamble, SCJohnson, Method and Clorox’s GreenWorks.

To grow, Seventh Gen will need to update its tired packaging and continually improve its offerings, Replogle told me when we spoke by phone last week.

“We are going to out-innovate the competition in terms of meeting consumers’ needs in an environmentally-friendly way,” he said.

This means changes are coming to the Burlington, Vt-based firm. In a press release, Peter Graham, the company’s board chairman, said that Replogle’s job is

to ensure that Seventh Generation’s untapped growth potential [emphasis added] is fully realized in the years ahead, both financially and in our continued efforts to make our world a safer place for our children and the next seven generations.

Replogle, who is 45, is an interesting choice to lead Seventh Gen. His first job will be to bring some stability to the company, which was led by for many years by co-founder Jeffrey Hollender and then, for less than two years, by former PepsiCo executive Chuck Maniscalco. (For background, see Seventh Generation out its founder and  Seventh Generation: Not Coming Clean.) Said Replogle: “There’s a real need for leadership.”

In five years at Burt’s Bees, Replogle did well. He joined the privately-held firm in January 2006, and it was sold less than two years later to Clorox for $925 million. This year, Clorox’s CEO Don Knauss conceded that the company had “paid too much for it” after writing down the value of the company by a hefty $258 million. Of course, this means that Replogle made an excellent deal for Burt’s Bees shareholders. What’s more, Burt’s Bees remains the fastest-growing division of Clorox.

Whether this means that Seventh Generation’s future lies in an acquisition by a bigger firm is, of course, impossible to say.

Before joining Burt’s Bees, Replogle ran the skin care division of Unilever North America for three years and spent eight years as an executive of Diageo, overseeing its Guinness business. A graduate of Dartmouth and Harvard Business School, he’s a father of four who, for now, will keep his family home in Raleigh, N.C., and commute to Vermont.

Replogle made a point during our interview of praising Jeffrey Hollender’s leadership at 7G. “I’ve been inspired by Jeffrey and his vision and what he stands for,” Replogle said. Interestingly, Replogle was approached for the CEO job two years ago when Maniscalco was hired but said “at that point, I wasn’t ready.”

He noted that Seventh Generation has one clear advantage over most of its competitors–including Clorox–in the green cleaning arena: All of its products are environmentally friendly.

Replogle said: “This is the core of what we do. We don’t do it any other way. We are authentic. We are original. We are transparent. And consumers get that.”

The CEO of another green brand described Replogle to me in an email as “super smart, approachable and the right combo of green + making a business operate profitably.” We will soon see.

Chuck and Jeffrey: going and gone

Chuck Maniscalco, Seventh Generation’s CEO, will leave the company.

Maniscalco, you may recall, is the former PepsiCo executive who was hired in June 2009 to take over for Jeffrey Hollender, the company’s co-founder and longtime CEO.

Last October, Hollender was ousted from the company by its board, whose chairman is his former high school chum Peter Graham.

It’s an unfortunate sequence of events, and it only goes to show the difficulty of making transitions from entrepreneurial leaders who build companies to executives with the skills to leader bigger organizations.

The leadership gap at 7G comes at a challenging moment for the company. The so-called green cleaning category is getting crowded, with the rise of the Method brand, the commercial success of GreenWorks from Chlorox and continuing environmental leadership from S.C. Johnson. Seventh Generation, to its everlasting credit, invented the category and under Jeffrey’s leadership and has consistently helped advance the practice of corporate responsibility.

Chrystie Heimert, company spokeswoman, confirmed that Chuck would not be staying on in an  email to me this morning:

As shared in Peter Graham’s October 26th letter to Shareholders,  Seventh Generation’s Board of Directors had expressed their commitment to having the best leadership for the company and to that end, had immediately commenced a CEO search, which continues today.  At that time, Chuck Maniscalco had indicated that he would let the Board know if he wished to be included as a candidate for the position.  As you’ve learned, Chuck has decided not to pursue that opportunity.

It’s more complicated than that: Chuck and Jeffrey had butted heads, Chuck resigned, Jeffrey was forced out, Chuck agreed to stay on as an interim CEO, and now most people involved think hiring Chuck was a mistake.  The full story remains very much unclear because nobody has been talking. (See Seventh Generation sweeps out its founder and Seventh Generation: not coming clean.)

UPDATE***This just in from Seventh Gen:

BURLINGTON, VT — (MARKET WIRE) — 02/09/2011 — Seventh Generation today announced that its Board of Directors has named John Replogle to serve as the company’s Chief Executive Officer and President.

Replogle, 45, has served since January 2006 as President and Chief Executive Officer of Burt’s Bees, the leading Earth-friendly, natural personal care products company. Replogle previously spent three years at Unilever as General Manager, Skin Care, North America. Prior to joining Unilever, Replogle served eight years with Diageo as President of Guinness Bass Import Company, Managing Director of Guinness Great Britain and had several roles in Marketing, Sales and Strategy with Diageo. Replogle started his career as a Case Leader with the Boston Consulting Group.

For Jeffrey Hollender, the longtime chief executive of Seventh Generation, business has always been about more than selling laundry detergent and paper towels.

At Seventh Generation, Hollender looked for ways to do business better–better for customers and their health, better for its workers (who were also owners) and better for the environment.

Those efforts came to a abrupt halt in October when he was unceremoniously ousted by Seventh Generation’s board, which was forced to choose between Hollender and Chuck Maniscalco, the CEO he’d recruited as his replacement 18 months ago.

The story behind the falling out remains murky. Neither Seventh Generation nor Hollender have been willing to air their dirty laundry, presumably because their break-up agreement included a promise not to speak ill of one another.

Hollender broke his silence last week, not to talk about the past, but to discuss his future, which he says will involve business and political work to address social and environmental problems that he thinks are mostly getting worse.

“I’m very worried about where the country is headed,” he told me, when we spoke by phone.

Jeffrey, who is 56, divides his time between Burlington, Vermont, where he has lived for years, and New York, where he grew up. (Disclosure: Jeffrey and my wife Karen Schneider were high school classmates.)

So what’s next?

First, he’ll continue to write and speak about business and politics. His latest book, called Planet Home: Conscious Choices for Cleaning and Greening the World You Care About Most, has just been published.  He’s previously written two good books about corporate responsibility, The Responsibility Revolution (2010) and What Matters Most (2006). This week, he’ll launch a website and blog at www.jeffhollender.com.

Second, he’ll work as chair of the American Sustainable Business Council, a loose-knit coalition of about 65,000 small and mid-sized companies that support a “vibrant, just and sustainable economy.”

Think of the council as a kind “anti-chamber” to the conservative U.S. Chamber of Commerce. “It will be active in Washington,” Jeffrey says, although he’s quick to add that “we’re not ever going to get close to the spending levels of the chamber.”

Businesses that wamt to be environmentally and socially responsible need a supportive policy framework, he says. The sustainable business council will support regulation of the greenhouse gases that cause global warming. It’ll back  higher taxes on the rich, too, t0 reverse growing income inequality in the U.S.

“The stratification of wealth—when you have one percent of the population controlling 90% of the wealth–that is not good for business,” Jeffrey says.  “Business needs lots of people sell stuff to.”

He worries that the shareholder capitalism, as currently practiced, leads companies to maximize short-term gains and externalize costs like pollution or the illness caused by unsafe chemicals.

“What was great about Seventh Generation was we proved you could be an exception to the rule,” he says. “The problem is that, unless you change the rules, there won’t be a lot of successful exceptions.”

Finally, he’s looking at entrepreneurial opportunities, He referred me to this very interesting article in The Nation about the Evergreen Cooperatives of Cleveland, a network of worker-owned “green” cooperatives, including a industrial laundry and a solar-power installation company, that are supported by the procurement power of public  institutions.. The Cleveland cooperative experiment is inspired by the Mondragon cooperative in the Basque region of Spain, which employs more than 100,000 people.

There’s talk, he says, about organizing networks of cooperatives in other places, including the South Bronx.

“How do you create a business enterprise that is in the business of social and political change?” he asks.

Worker-owned businesses could be one way. In Cleveland, the flagship venture is the Evergreen Cooperative Laundry, which serves the expanding health care industry and is said to be “thoroughly green in all its operations.”

Who knows? Jeffrey Hollender might find himself back in the laundry business again.

Seventh Generation’s ouster of co-founder Jeffrey Hollender remains something of a mystery, even as details emerge about the sequence of events that led up to his unexpected departure last month.

The company’s version of events is, in essence, that Jeffrey couldn’t let go of the place to which he’d devoted the last 20 years of his life, even after he’d hired a new CEO, Chuck Maniscalco, to replace him. Jeffrey’s associates say there’s more to the story, but they won’t be specific. And he’s not talking.

I’ve been in email communication with Peter Graham, the chairman of Seventh Generation’s board of directors (and Jeffrey’s childhood friend), and I’ve talked with Chrystie Heimert, the firm’s PR chief, as well as with an associate of Jeffrey. Jeffrey told me by email that he’d like to speak but cannot. Presumably, he’s working out terms of his exit and has agreed, in the meantime, to keep mum.

A friend of his told me: “They basically have Jeffrey handcuffed and his mouth taped shut.”

Here are some things we know: Jeffrey hired Chuck Maniscalco in June 2009, fully intending to step back from his day to day work at Seventh Generation, a leading brand of green cleaners, laundry detergent, dishwashing soap, diapers, baby wipes, etc. Previously Maniscalco had been president and CEO of PepsiCo’s Quaker, Tropicana, Gatorade division. (All healthy products, I might note, for those who would like to cast Maniscalco as the evil seller of sugary water in this drama. Fact is, he’s spent most of his career with Quaker.) Jeffrey was enthusiastic, both about the opportunity to explore new arenas — writing books, working with other business leaders, imploring Washington to deal with climate change and toxics — and about the new boss. He wrote:

It may surprise you to learn that my decision was a relatively easy one to make.

…While I knew I still had many meaningful contributions to make to Seventh Generation, it became clear to me that what I could not do was supply the managerial wisdom and experience needed to steer the company on the next stage of its voyage.

In addition to this extraordinary track record as a business leader, Chuck embodies the values and vision necessary to lead us. He “gets” our company’s culture, passion, and entrepreneurial spirit as well as our commitment to corporate responsibility.

So far, so good.

Chuck Maniscalco

But, for reasons that remain unclear, Jeffrey returned to Seventh Generation last summer. Was he asked back? Did he just show up? If so, why?

This began what Graham has described as “a difficult period” for the company. During a mid-September board meeting, Maniscalco resigned. The board refused to accept his resignation, Heimert told me. Jeffrey was then placed on leave of absence. That must have been quite a meeting.

Graham met with the company’s employees–about 100 work at its headquarters in Burlington, Vt–on Sept. 27 to explain Jeffrey’s absence, saying, as Heimert recalls it, that

The board recognized that one decision-maker needed to be at the top. That individual needed unambiguous authority and unambiguous responsibility.

A month later–on October 26–Graham told shareholders and employees in a letter that the board had “decided to end the company’s employment relationship with Jeffrey.” (For a copy of the letter, see Seventh Generation Sweeps Out Its Founder.) This surprised Jeffrey–which is perplexing because his wife Sheila was and is on the Seventh Generation board. Presumably, she was excluded from the conversations about his future. She’s now on the search committee for a new CEO, and Maniscalco hasn’t said publicly whether he wants the job, although he’s current leading the company.

Quick aside: Did you know that daytime TV dramas are called  soap operas because the original radio serials were sponsored by the likes of Procter & Gamble and Colgate-Palmolive? Well, now Seventh Gen has one of its own…

Seriously, though, in his email to me, Graham, who is a New York investment banker, elaborated just a bit on the decision:

In many ways, our present circumstances mirror those at many other companies whose founders have made the decision to turn over the reins to someone else. Jeffrey acknowledged his own struggle with the process in an article he penned for the Harvard Business Review last March.  Many times, those who have relinquished control wrestle with a transition that they themselves have put into motion. They find that letting go of something in which they have been so completely vested is extraordinarily difficult to do, and they struggle with the consequences.

He also said:

Jeffrey’s is a legacy worthy of the highest respect and admiration, and nothing in our decision should dim that in any way.

And:

Seventh Generation’s continued  success cannot and does not depend on any one individual. Instead it springs from the synergy that comes when many act together to realize a singular ideal. And while others in the press have questioned whether Jeffrey’s departure marks a change in focus, I assure you we have no intention of abandoning that ideal.

Except that one thing is already changing at the company, and that is its commitment to openness and transparency. Since Maniscalco came aboard in mid-2009, the company has raised $30 million in equity. From who? Neither Graham nor Heimert would say. Who represents those new investors on the board? Again, that’s a question neither would answer.

So we don’t know what role the new investors played in recent events at Seventh Generation. While Graham is the board’s chairman and spokesman, that doesn’t mean he led the effort to remove Jeffrey from the company and the board.

Blogger Lynn Miller at 4GreenPs is among those asking the company to do communicate better:

For Seventh Generation, a fiercely loved brand that has held itself up as a model of transparency, the time to speak to the media, bloggers, customers, and other members of its Seventh Generation Nation is now.

In fairness, because this is a personnel (and personal) matter, there may be reasons for the company to say no more about Jeffrey’s departure. But it ought to be willing to identify its major investors and directors, even though, as a private company, it has no obligation to do so.

Several concluding thoughts. First, this isn’t the first difficult leadership transition at Seventh Generation. A comment on my blog directed me to this 2004 story from Inc. magazine, about how Jeffrey, back in the early 1990s, ousted the company’s founder, Alan Newman. It’s a good read.

Second, this company better find a leader and fast. It faces tough competition in the green cleaning space from Method and from the Clorox Greenworks brand, as well as from SC Johnson and others.

Finally, I came across this photo of Peter Graham from the 1973 yearbook of Riverdale Country Day School, which Jeffrey (and my wife Karen Schneider) also attended. Peter and Jeffrey go way back, in other words.

Notice the lyrics to Cat Stevens’ “Father and Son”, at right. “It’s not time to make a change, just relax, take it easy…”

I’ll bet that’s what Jeffrey thought when the board turned against him.

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:

More than two decades ago, I founded Seventh Generation with the idea of creating a different way of doing business.  Since then, the company has established new benchmarks for ethical and sustainable corporate behavior, grounded in the principles of employee ownership, pay equity, environmental responsibility and transparency.  At the same time, Seventh Generation is a recognized pioneer in its category and a successful business enterprise.

On Monday, October 25th, the Seventh Generation Board announced to it’s shareholders and employees that they have “decided to end the company’s employment relationship” with me “. . .without cause”.   Though I cannot discuss the circumstances that led to this, I wanted you to hear this news directly from me. [I have also attached the letter that was sent out by the Company.]

Over the past twenty years, I have had the privilege to work with an extraordinary group of committed, talented people — and I thank them all and wish them the best. I plan to remain fully engaged in the work of creating a new paradigm for justice, equity and corporate responsibility through my new book, Planet Home that will be published by Random House in January 2011; my work on the boards of Greenpeace and Veritee; and in my role as the co-founder of the American Sustainable Business Council.

I greatly appreciate your support and friendship over the years.

And here is Graham’s letter to shareholders and employees:

October 26, 2010

Dear Friends and Shareholders of Seventh Generation,

In the life of every company, there comes a time when the most difficult of decisions must be made. These moments are rarely deliberately sought but instead thrust upon us by unexpected circumstance and by events, which demand that hard choices be made.

Recently, the Board of Directors of Seventh Generation faced such a decision and was forced to act in what we firmly believe to be the best interests of both our company and you, its shareholders. First, I want to offer you some context. In mid September, Chuck Maniscalco, our CEO since June 2009, resigned after a very difficult period. Following lengthy discussion the Board convinced Chuck to stay to lead the company at least through a transition while the Board immediately commenced a search for a new CEO. Chuck is personally committed to and focused on leading our company through this transition period, and is considering applying for the job of leading Seventh Generation as part of our search process. We are all committed to having the best leadership we can for our company.

With that as background, I want to share with you that, following our September meeting, the Board of Directors reluctantly voted to put Seventh Generation co-founder Jeffrey Hollender on a leave of absence from the company and to remove him from the Board pending further discussions about his future role. Since that time, and after further deliberation, the Board has decided to end the company’s employment relationship with Jeffrey. Importantly, when Jeffrey stepped down as CEO, he negotiated an agreement with the company that allowed for the termination of his employment and provides him with generous severance and other benefits were his employment to end. We have honored that agreement to date, and we intend to honor that agreement going forward. And, I want to assure you that the board, in making these decisions, did so with the best interests of the company, as well as fairness to Jeffrey in mind.

All of this was difficult, and I must emphasize that these decisions were not taken lightly. As the leader of the company since its very earliest days and its philosophical guiding light for over two decades, Jeffrey has been an integral part of our brand and an obvious lynch pin of our success, our unique corporate spirit, and our much acclaimed emphasis on equity and justice in the way we conduct our business. It is no overstatement to say that without his unwavering dedication to our cause and his tireless efforts on our company’s behalf, we would not be the company we are today, and indeed might not be here at all. His is a legacy worthy of the highest respect and admiration, and nothing in our recent decision should dim that in any way.

Nevertheless, recent events have forced us to choose between divergent paths. We have elected to set the company on the one we strongly feel has the very best chance of fulfilling the commitment we’ve made to all our stakeholders to achieve the greatest possible lasting success, financially but especially in terms of making our world a better, safer place for our children and the following seven generations.

To a large extent, present circumstances mirror those at many other companies whose founders have made the decision to turn over the reins to someone else. As organizations grow, so do their managerial requirements. Eventually these increasing layers of complexity demand the recruitment of experienced professional leadership whose abilities and experiences are required to move forward. This is the crossroads at which Seventh Generation now stands.

And that is an important point that must be made: Though our leadership has changed, our aspirations have not. It remains our objective to continue to grow Seventh Generation while staying true to the strategies we’ve previously shared with you over the years. We believe deeply in our business and its model, and will continue to do all that is within our power to drive our business, our social mission, and our global imperatives forward.

Despite this period of executive transition, the Board remains confident in the company’s ability to continue to grow its business and social mission for long-term success. Our accomplishments over the past year are numerous, and each reflects the company’s ongoing commitment to corporate responsibility and to growth. These important milestones include:

–Achieving three consecutive quarters of growth despite an extraordinarily challenging economic and competitive landscape. Year-to-date, our sales have grown at a double-digit pace, which would be the envy of many of our competitors during this extraordinarily challenging economic landscape.

–Successfully introducing the first ever EPA-registered botanical disinfectant cleaner.

–Launching our first-ever national advertising campaign, which more than doubled awareness of toxic cleaning product issues as well as our brand itself.

–Expanding our already extensive distribution base to include Safeway and also Wal-Mart, a partnership that accelerated our commitment to make green products affordably accessible to more consumers.

–Increasing our involvement with Women’s Action to Gain Economic Security (WAGES) in order to more effectively address our economic equity concerns.

–Marshalling public support for reform of the badly outdated Toxic Substances Control Act.

–Engineering the first cleaning product packaging made from 90% post-consumer recycled content.

–Successfully completing a $30 million equity capital raise with a group of investors aligned with existing shareholders as responsible, long-term stewards of the Seventh Generation brand.

Change is always difficult, and this particular evolutionary moment has certainly been more challenging than most. What matters, however, is not what has happened but what will happen. On this count, the Board is confident that it has taken the steps necessary to ensure that Seventh Generation’s untapped growth potential is fully realized in the years ahead. As we move into that promising future, we continue to express our thanks for everything Jeffrey has done for us and for the company he has built. That company has a rewarding road ahead of it indeed, but this success cannot and does not depend on any one individual. Instead it springs from the unique synergy that comes when many act together to realize a singular ideal. That’s the task before us now, and with your continued help and support, I’m certain we’ll achieve it.

Respectfully,

Peter Graham

Chairman

Procter & Gamble, the world’s largest consumer products company, today unveiled a bold new sustainability vision.

Don’t start the cheering yet.

Yes, the company eventually aims to power of all its operations with 100% renewable energy, to use 100% recyclable or renewable materials in all its products and to have no waste from the manufacturing or use of its products end up in landfills.

The vision is unimpeachable.

But the path to get there is not so clear.

And the reason to withhold applause? In the next decade or so, if P&G continues to grow, its environmental impact is more likely to get worse that it is to get better.

This is a fundamental conundrum for consumer goods companies with traditional business models and even the best of intentions: The more stuff they sell (and of course they want to sell more stuff), the more they pollute.

What P&G does matters, a lot. It’s an $80 billion company (annual revenues, for the year ended June 30). Its brands include Tide, Pampers, Crest, Gillette, Bounty, Cascade, Oral-B, Pepto Bismol, Ivory, etc.  It reaches 4 billion–4 billion!–consumers around the world and aims to reach 5 billion in the next five years. And like General Electric, P&G is an executive training machine; many ex-P&Gers (Meg Whitman, Steve Ballmer, Steve Case, many more) have gone on to do big things.

You can read a straightforward account of the P&G sustainability plan here at Greenbiz and a thoughtful (and favorable) analysis from my friend Joel Makower here. This is the latest iteration of P&G’s sustainability commitment, and the company has some meaningful accomplishments, as Joel reports. Just the past six months, P&G has:

introduced to the U.S. its Future Friendly campaign, born in Europe, a multi-brand and multi-platform effort to raise awareness about greener products and greener practices;

created a high-profile panel of sustainability experts to advise on its Future Friendly efforts;

launched a supplier scorecard to measure their environmental impacts;

reformulated a bestselling shampooto reduce toxins;

announced concentrated versions of powder laundry detergentsthat significantly reduce packaging and energy use; and

introduced sugarcane packaging to three of its shampoo and makeup brands.

First, these are all visionary long-term goals. No target dates are attached to them.

Second, P&G has been slow to develop this vision–which is strikingly similar to the the one laid out by Walmart in 2005. Indeed, while comparisons are inevitably imperfect, my impression is that when you measure P&G against Walmart, the world’s biggest retailer, or GE, the world’s most admired industrial company, or IBM, whose Smart Planet work is path-breaking, P&G is moving more slowly and timidly than any of those iconic FORTUNE 500 firms. It’s also trailing innovative competitors like Method (See Revolution in the laundry room) and Seventh Generation. More evidence that P&G is following, not leading? P&G’s Tide, the market leader, trailed Unilever’s All in the race to shrink laundry detergent packaging.

Third, and most important, P&G is mostly talking about eco-efficiency, as Sauers, to his credit, acknowledges. To pick just one example, P&G’s interim goals for 2020 include a commitment to reduce “packaging by 20 percent per consumer use.” This won’t be easy, I’m sure, and it’s admirable. But….let’s assume that P&G grows by a not-unreasonable 25% over the next 10 years. The company will then be producing more packaging, not less, than it does today.

P&G also tends to measure its reductions of  greenhouse gas emissions and water usage on a per-unit, rather than absolute basis. Strictly from a business standpoint,  this makes sense because as the company buys and sells businesses, it needs a consistent metric against which to define progress. But, as I wrote back in 2008 at Fortune.com with respect to P&G (See Buy Toilet Paper, Save the Planet):

Relative efficiency doesn’t matter to the planet. What matters is how many tons of greenhouse gases are emitted, and most scientists say those numbers need to first stabilize and then go down, dramatically.

Like most companies, P&G is still wrestling with the challenge of how to grow revenues and limit its footprint at the same time.

Given that, let’s hope that P&G’s talent for innovation will be focused on making consumption more sustainable. This page on P&G’s website offers a few examples, some impressive, most not so. If P&G can persuade more consumers to use Tide Coldwater or, in Europe, Ariel Cool Clean, both of which eliminate the need to heat water for laundry, we’ll all be better off. Opportunities around sustainability also lie in emerging markets, from which much of P&G’s growth will come.

As Len Sauers told Joel & Greenbiz:

I have a firm belief that all issues of sustainability will be solved by innovation. And at P&G, one of our core strengths is innovation, so as we go down this path to tackle these issues that the world is facing, I believe it’ll be our innovative solutions that are very helpful there. I see this as business opportunity for the company.

Today’s guest post comes from Jeffrey Hollender, the founder, executive chairperson and chief inspired protagonist of Seventh Generation, which makes safe and environmentally-responsible products for the home. Jeff is energetic and multi-talented–he is an entrepreneur, the author of several books, including a brand-new one, The Responsibility Revolution, which he wrote with longtime journalist Bill Breen, a lively blogger at the Inspired Protagonist and an activist who sits on the board of Greenpeace USA. (He’s also a good guy and always has been, at least according to my wife; they went to high school together.) I’m looking forward to reading Jeff’s new book and will review it soon. In the meantime, here’s an edited and expanded version of a recent blogpost that he wrote about the challenges that face consumers who face an onslaught of green and sometimes misleading marketing.

As companies step up their spending on green marketing, the confusion about what’s truly green is getting worse.

For consumers, it’s a challenge to cut through the clutter and decide whether to buy green products or support green companies.

Here’s a guideline that is easy to follow:

We should absolutely not support green products from companies that use them to distract us from their larger negative environmental and social impacts. We need systemically green companies to address the challenges we face, not business-as-usual companies that hold up one green hand while hiding another toxic, CO2-emitting, waste-producing one behind their backs.

Two examples:

The Clorox company has done an impressive job of adding an earth-friendly luster to its image by acquiring Burt’s Bees and launching the GreenWorks line of natural cleaners, which compete with Seventh Generation’s cleaners. But despite its best efforts to renew its image, Clorox can’t quite conceal the fact that at its core, it’s still a big-time bleach company.

Take, for example, a series of ads that the bleach maker ran in early 2009 for its amped-to-the-max cleaner Formula 409. Clorox boasted that it had the desire and the capacity to develop an even brawnier product, Formula 410, “but it would be illegal in twelve states.” The ad implied that if Clorox reformulated 409 just one more time, environmental regulators would ban the chemical-laced product. Perhaps Clorox’s true color is not quite as green as it would like us to believe.

For its part, BP used its “Beyond Petroleum” ad campaign to bolster its green credentials and highlight its comparatively modest spending on renewable energy. But the oil titan’s high-profile rhetoric failed to square with its scarring of a vast wilderness landscape to extract crude from Canada’s tar sands. Not surprisingly, a backlash soon followed. Activists described tar-sands oil extraction as “one of the world’s greatest environmental crimes.”

By the spring of 2009, the oil colossus announced that safety was now its “number one priority,” which led some environmental groups to conclude that the company was retreating to its all-petrol roots. Inevitably, more than a few wags suggested that BP should henceforth stand for “Back to Petroleum.”

To learn how consumers think about greenwashing, New Scientist magazine recently teamed up with EarthSense, which polled U.S. shoppers on their perceptions of the “greenness” of various companies, and with Trucost, which has compiled a quantitative assessment of companies’ global environmental impact.

Together, they looked at whether consumer opinion matched reality. Unfortunately, it didn’t. Take, for example the contrast between Fresh Del Monte Produce and Green Mountain Coffee Roasters. The research concludes that:

Both of these companies are seen by consumers as very environmentally friendly, yet they stand at opposite ends of the spectrum for environmental impact among our sample of food and beverage firms. Words like “fresh” and “green” immediately suggest a wholesome image. This is central to the identity of Green Mountain, a producer of whole-bean and ground coffee, including organically grown varieties. It is, indeed, the greenest of all our food and beverage companies, according to Trucost’s analysis.

Fresh Del Monte Produce similarly projects a green image, but London-based Trucost’s numbers paint a different picture. Growing fruit and vegetables involves heavy use of fertilizers and pesticides, but the main issue again is water consumption, which accounts for more than three-quarters of the company’s high environmental impact score.

That’s quite a gap between belief and truth.

But fear not — the age of transparency is coming as I predict in The Responsibility Revolution, the new book I have written with Bill Breen. Analyses like New Scientist‘s will allow us all to make more responsible decisions, and companies will have a harder and harder time projecting green images while hiding bad habits in their back pockets.

Until it all becomes clear, companies are well advised to use the seven principles for corporate responsibility defined in The Responsibility Revolution, and consumers should make sure that they have the Good Guide loaded on their mobile devices before they go shopping.

What are the “greenest” brands in the U.S.? Until we can define “green,” there’s no meaningful way to answer that question. Of course, that doesn’t stop people from having, and expressing, opinions.

Last summer, a group of agencies owned by the giant marketing and communications company WPP – the PR firm Cohn & Wolfe, branding experts Landor Associates and pollster-consultants Penn, Schoen & Berland Associates (PSB) – joined with Esty Environmental Partners, a consulting firm run by Yale prof and author Dan Esty, to survey about 5,000 consumers around the world about green products, companies and brands. This Friday,  the agencies will host a lunch in New York where I’ll moderate a panel (see below) to talk about the survey, called Green Brands, Global Insights.

The survey produced all sorts of interesting results—would you believe that 38 percent of consumers in Brazil are willing to spent 30 percent or more for green products?—but what jumped out at me was the list of the U.S.’s greenest brands. Here goes.

1. Clorox Green Works

2. Burt’s Bees

3. Tom’s of Maine

4. SC Johnson

5. Toyota

6. P&G

7. Wal-Mart

8. Ikea

9. Disney

10.  Dove

To which I can only say: I would never, ever have predicted that list.

On  the  bright side, I’m impressed that some Americans know that SC Johnson and Ikea are among the most environmentally responsible companies in the world, although I wouldn’t have thought of SC Johnson, which makes Windex, Raid and Saran Wrap, as a brand.

Seeing Clorox’s GreenWorks line atop the list doesn’t surprise me. I’m told the company spent $30 million (a figure I can’t confirm) to promote the new brand, so it looms larger in the minds of consumers than, say, Seventh Generation and Method, competitors whose ethos strikes me as deeper green. I’ve never bought a GreenWorks product but I happily spend my money on Seventh Generation and Method.

Toyota presumably gets credit for the Prius, which overshadows its gas-guzzling trucks and minivans.

Wal-Mart, we could argue about. The company would definitely make my list.

The names that surprised me are Disney and Dove.

Disney, it turns out, has a slew of environmental initiatives underway, but few have crossed my radar screen, perhaps because my kids outgrew the Disney world some years ago. The company announced targets earlier this year to reduce emissions, waste and fuel use. Maybe movie-goers give Disney credit for the Wall-E movie, an environmental cautionary tale. On the other hand, Disney operates a couple of cruise ships that spew thousands of tons of greenhouse gases and it  sells an awful lot of junk (food and souvenirs) at its theme parks.

Dove is more of a puzzle. Greenpeace International ran a campaign against Dove in 2008 because the company that makes it, Unilever, is said to be the world’s largest consumer of palm oil. Palm oil cultivation is a major cause of deforestation To its credit, Unilever, which has been an environmental leader for a decade or more, agreed to strongly support efforts to halt deforestation. But it’s hard to see how that makes Dove a green brand. It may be that Dove’s path-breaking and praiseworthy Campaign for Real Beauty led consumers to believe that a company that wants to free women from beauty stereotypes is also likely to be “green.”

All of this points to the need for independent standards to help guide consumers–who do care about the issues–through a thicket of environmental claims. Wal-Mart’s sustainability index can’t come soon enough.

In the meantime, we’ll dig deeper into the survey on Friday. I’ll be joined by Mark Penn of Penn Schoen & Berland, consultant and author Dan Esty, Russ Meyer, the chief strategy officer of Landor and Annie Longsworth, who leads the sustainability practice at Cohn & Wolfe. The event is by invitation only but feel free to email me (marc.gunther@gmail.com) to request an invitation.