Starbucks

Why I’m (still) an optimist

January 1, 2012

Happy New Year! And good riddance to 2011, a year during which we made little or no progress on some of the issues that I care most about: climate change, the long-term federal debt, social mobility (aka the American dream), and our dysfunctional Congress. Yet I remain an optimist.

Texas drought 2011

I could write many words about our woes. Instead, I’ll try to be succinct. On the climate issue, global emissions of carbon dioxide from fossil-fuel burning jumped by the largest amount on record in 2010, we learned recently, and 2011 surely brought further increases.  Concentrations of CO2 are 39% above where they were at the start of the industrial era and approaching the point when some scientists say it will be nearly impossible to contain global warming, the Guardian reports. Neither the US nor the UN moved closer to regulating CO2. In a discouraging development, Republicans Mitt Romney and Newt Gingrich backed away from their once-sensible support of greenhouse gas regulation, in what can only be seen as shameless pandering to the know-nothing wing of the Republican Party. Discouraging, too, was the Fukushima nuclear disaster, which will slow down the growth of carbon-free nuclear power. So will the failure of Solyndra. Meanwhile, the U.S. suffered massive flooding of the Mississippi and Missouri Rivers, a terrible drought in Texas, record wildfires and at least 2,941 monthly weather records that were broken by extreme events, according to the NRDC.. Coincidence? Uh, no.

Like the atmospheric concentrations of CO2, the federal budget deficit has been growing.That’s no coincidence either. We’re living beyond our means, whether by burning fossil fuels or taxpayer dollars, and sticking future generations with the cleanup bill. Just last week, the White House asked for a $1.2 trillion increase in the federal debt limit, raising it to about $16.4 trillion. According to Marketplace Radio, that amounts to about $52,000 for every American. For a typical  family of four, that’s bigger than the mortgage. [click to continue…]

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Starbucks: We are indivisible

October 30, 2011

I’m not much for patriotic displays, but I’m proud to wear this red, white and blue wristband inscribed with the word INDIVISIBLE.

I hope you’ll wear one, too. They’re available, beginning Tuesday, at Starbucks, for a donation of $5 or more to a project called Let’s Create Jobs for USA.

The program aims to create thousands of jobs across the country, by investing community development financial institutions (CDFIs) — mostly credit unions and community banks — that will then lend to small businesses, nonprofits, housing and commercial developers, micro-enterprises and the like, all to spark the economy and create jobs.

I’m a fan of this project,  for several reasons.

First, there’s no more front-of-mind issue in America today than jobs. So this a great example of how a big company can help tackle an important  problem–while enhancing its reputation as a business that supports its communities.

Second, Let’s Create Jobs for USA underscores the fact that, despite the rhetoric from politicians, jobs are best created by the private sector.  If you’re anti-business, you’re anti-jobs.

Ben Packard

Third, although credit for the campaign ultimately belongs to Howard Schultz, Starbucks CEO, Let’s Create Jobs for USA unfolded as it did because of a connection between Ben Packard, vice president of global responsibility at Starbucks and Mark Pinsky, president and CEO of the Opportunity Finance Network, a national network of CDFIs. Ben, Mark and I serve together on the board of Net Impact, a great organization of students and young professionals whose purpose is to inspire and equip young people to use the power of business to make the world a better place.

Let’s Create Jobs for USA is very much in the spirit of Net Impact. [click to continue…]

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Aron Cramer: Business needs to step up

September 7, 2011

Aron Cramer

Today, I’m pleased to publish the first in a series of guest posts from Aron Cramer, the president and CEO of BSR. BSR (formerly Business for Social Responsibility) works with its 250 member companies to promote a more just and sustainable world, through research, consulting and industry collaborations. Aron, who’s a longtime colleague and friend, has worked all over the world on business issues ranging from labor rights in global supply chains to Internet freedoms in China to the meaning of “sustainable consumption.” Here, looking ahead to BSR’s 2011 conference in San Francisco, he writes about the need for business leaders to step outside the boundaries of their companies to re-energize the sustainability agenda.

Most years, people are reluctant to see summer fade into fall. But the summer of 2011 was a bit of a bummer, bringing hurricanes and earthquakes in the American Northeast; ongoing political stagnation in the United States, Europe, and Japan; and signs that the world’s mature economies are stuck in neutral—and may remain that way for some time. Leaving this summer behind feels like a relief.

It’s up to business to turn things around. That’s why BSR has made redefining leadership as the theme of the BSR Conference 2011.

We view this opportunity as having four dimensions, which we outlined in our most recent annual report. In this series of blog posts, I want to elaborate on each one, beginning with the need for business leaders to invest in the infrastructure required for sustainability. [click to continue…]

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Best books on corporate sustainability?

May 9, 2011

Judging by the number of books about business and the environment piling up on my shelves, the corporate sustainability movement is alive and well.

One of the best is Business Lessons from a Radical Industrialist by Ray Anderson, the founder and chairman of the commercial carpet company Interface.

I’ve been provided with two signed copes of the paperback edition to give away. I’m expecting a signed copy of Howard Schultz’s book, which I’m also going to give to a blog reader. More on that, in a moment.

But first, a few thoughts about Ray and his book. Ray is a terrific guy who has had a great influence on business people across America, by tirelessly promoting the idea that a truly sustainable approach to business  is good for business. (See my 2009 interview, Ray Anderson, Radical Industrialist.) “Take nothing from the earth that cannot be replaced by the earth” is how he puts it. [click to continue…]

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Social funds: BP, the 1960s, and greed

August 15, 2010

Recently, after posting a column about BP and socially responsible mutual funds (See Social Funds and BP: How embarrassing!)  I heard from Adam Kanzer, who is managing director and general counsel at Domini Social Investments. While Domini has never owned shares of BP, Adam and I began a conversation about the role  of socially-responsible mutual funds. Adam, who has been in the fund business for twelve years, is a smart and committed executive, but we don’t always agree, so we decided to engage in a dialog about social funds.

Adam Kanzer

Adam Kanzer

Marc: Adam, let’s start with BP. Why did Domini exclude the company? Do you hold any other oil or coal companies?

Adam: Domini has consistently excluded BP from our portfolios because of our concerns about their safety record. Our initial review followed the Texas City explosion in 2005, but our decision was quickly reinforced by the Prudhoe Bay spill the following year.  We met with BP to discuss these and related issues with them. And each time we revisited BP, we found more violations.

We’re looking to identify the key sustainability challenges each company faces. For the oil and gas industries, worker safety and environmental compliance are among a handful of core issues we consider.  I should also note that we have consistently excluded Transocean and Halliburton, both of whom played a role in the Deepwater Horizon project. In addition we have also consistently excluded Massey Energy, the other current poster-child for disaster, as well as Toyota for substantial safety, employee relations and human rights concerns.  We discuss these decisions on our website. And yes, we do hold other oil and gas companies, although we set a high bar for entry. We do not invest in companies whose core business is coal mining.

Marc: Any thoughts on why BP was so widely held by other socially-responsible funds?

Adam: As CEO of BP, Lord Browne made very important statements about the reality of climate change at a time when others in his industry were denying its existence. That was important. In addition, BP has been committed to transparency on its social and environmental performance. I can’t speak for other firms, but I can see how those factors may have led some to hold BP. We felt that the safety and environmental issues outweighed these positives.

If a fund’s benchmark is heavily weighted towards oil, then an SRI manager will need to consider that. This tyranny of the benchmark certainly led many to hold BP and other oil companies that in a perfect world they would have preferred to avoid.

Which brings me to the important question that I have not heard – why did all of the so-called ‘mainstream’ investors buy BP? Why did investors allow this company to become one of the largest in the world by market capitalization? At least social investors weighed these issues and came to a decision. The rest of the market acted as if there was no problem.

Marc: That’s an excellent point, and it makes me wonder why people pay mutual fund managers such high fees. They missed the housing and Wall Street bubbles, and didn’t see or care about the safety issues at BP. Clearly most  funds aren’t very good at managing risk.

Turning to another topic, many SRI funds have their roots in the anti-war movement of the 1960s and 1970s as well as in faith-based investing. So funds like Domini exclude companies that make weapons, alcohol, tobacco and nuclear power. My question is, why? Let’s start with weapons. Don’t we need companies that make weapons in the post 9/11 era?

Adam:   First, it is important to understand that we divide those industries into two general categories – companies that provide addictive products and services, and companies whose products contribute to geopolitical instability. We place military weapons manufacturers and nuclear power in the latter category. We do not consider investments in addiction and global instability to be productive uses of capital.

National defense is too important to be placed in the hands of the same system that brought us the financial crisis. When Eisenhower issued his warnings about the growth of the military-industrial complex, he wasn’t questioning our need for a strong national defense. Yes, we need weapons, but do we need publicly traded companies manufacturing weapons? Are the capital markets an appropriate mechanism for providing these goods, or have the markets distorted our national priorities? That’s a critical debate our nation needs to have.

There are also categories of weapons that violate international humanitarian law because they cannot distinguish between military and civilian targets. These include landmines, clusterbombs and nuclear weapons. These ‘products’ make the world more dangerous, and landmines have caused incalculable misery to innocent civilians – including children – around the world. As investors, we have a responsibility to choose wisely. Our Funds’ shareholders choose not to profit from these violations, so we exclude these manufacturers and companies that manufacture nuclear weapons delivery systems.

Marc: What about nuclear power? Some environmentalists, notably Stewart Brand, say we need to seriously consider nukes in light of the climate crisis? [click to continue…]

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Earth Day at the mall

April 18, 2010

AI-edhmug402222523486_5e1894e314Somehow Americans manage to turn every holiday—from Christmas to Valentine’s Day, Mother’s Day, Father’s Day, the 4th of July, Veterans Day, Memorial Day, so-called President’s Day and the rest —into a shopping opportunity.

Perversely, this is now happening to Earth Day, as companies try to persuade us that we can  shop our way to a cleaner, greener planet.

Crazy, isn’t it? Along with coal plants, gas-guzzling SUVs and climate deniers, the American way of producing and consuming and discarding, buying lots of stuff we don’t need that isn’t going to make us happy anyway is, not to put too fine a point on it, trashing the only planet we have.

This is not what the first Earth Day–40 years ago, in 1970—was all about. It was a political event. It was about building an environmental movement. It was led by young people and scientists and counter-culture types and it arrived at a time when support was building for other political and social movements as well—the opposition to the Vietnam War, the feminist movement and the gay rights movement, all of which were inspired by the civil rights movements of the 1950s and 1960s.

None of these were mainstream, at least not at first. None were about shopping.

Earth Day led to the environmental laws of the early 1970s, which brought real and dramatic change: Our air and water are cleaner, parks and wilderness have been conserved, species have been protected.

Today, Earth Day is mainstream. An recent MBA grad I know says that’s a good thing. She told me by email:

I think it’s generally good if green is mainstream as more companies are offering environmental products.  That way we Berkeley types aren’t the only crazy ones!

I’m not so sure. Buying a T-shirt or tote bag won’t curb climate change or protect endangered habitat. That takes politics, organizing, hard work.

Here are some of the Earth Day products that have been brought to my attention  in the days leading up to the 40th anniversary.BagsinARow copy These are bhappybags — I’m not making this up — and they are described as an “attractive yet durable line of reusable shopping/tote, [click to continue…]

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Rwanda’s bold power play

March 4, 2010

Lake Kivu

Lake Kivu

As natural disasters go, the limnic eruption — an explosion of gas from beneath a lake  — of Lake Nyos in Cameroon in 1986 ranks among the most horrifying and bizarre:  About 1,700 people and 3,500 livestock were suffocated when a large cloud of CO2 descended silently on their villages.

Lake Kivu, one of Africa’s great lakes, which lies on the border of Rwanda and the Democratic Republic of the Congo, poses a similar danger because vast amounts of methane gas and CO2 are buried in its depths. At the same time, rural Rwanda desperately needs more electricity–only about 6 percent of the nation’s 9.7 million people are connected to the electricity grid, according to the government.

To Contour Global, a private company that specializes in power-generation projects in the global south, this is a business opportunity. The company has embarked on an ambitious $325 million plan to extract the methane gas from the lake to provide about 100 megawatts of gas-fired electricity to Rwanda.

To put that in context, total generating capacity in Rwanda is now just 69 megawatts — about 10% of the capacity of a single coal-fired power plant in the U.S. [click to continue…]

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In search of the perfect (Coke) bottle

November 30, 2009

plantbottle1Since joining The Coca-Cola Co. in 1997, Scott Vitters has gone to work most days with one question on his mind:

“How do we get to our vision of a 100% renewable, 100% recyclable bottle?”

It’s a simple question, with anything but a  simple answer—getting to a renewable, zero-waste bottle requires technology breakthroughs, favorable economics that will drive recycling, changes in human behavior and supporting policy from governments around the country, if not around the world.

This winter, though, Coca-Cola is taking a meaningful  step towards its goal with the introduction of what it calls a PlantBottle – a bottle made of PET plastic, 30% of which is sourced from Brazilian sugar cane and molasses.

That puts Coke on the road to 100% renewable.

PET, meanwhile, is 100% recyclable—although actual recycling rates are far lower.

It’s a start.

“It’s incredibly exciting for us to be able to see a route forward to zero waste,” says Vitters, who is head of global sustainable packaging for Coca-Cola. [click to continue…]

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Exposed! Starbucks goes undercover

July 19, 2009

Seattle surely has more coffee shops per capita than any American city, so the arrival of another one would ordinarily not get much attention. But a newly-renovated coffee shop called 15th Avenue Coffee and Tea in the city’s Capitol Hill neighborhood is attracting interest—because it’s a Starbucks in disguise.

YOUR neighborhood coffeeshop is a Starbucks!

YOUR neighborhood coffeeshop is a Starbucks!

Crazy as it sounds, Starbucks, which has its headquarters in Seattle, operates 16,000 stores around the world and has spent countless millions to build its brand, is going undercover.

[click to continue…]

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Can a company care?

June 4, 2009

Like a good neighbor, State Farm is there. Fly the Friendly Skies. You’re in good hands with Allstate. Talk to Chuck.  You have a friend at Chase Manhattan. (I know, I’m dating myself with that last one.)

For a long time, companies have sought to be our friends, neighbors and companions. Many tell their workers that they are all part of the family. Or at a minimum playing on the same team.

Is this all marketing b.s. or can companies care? I believe they can. My 2004 book, Faith and Fortune: How Compassionate Capitalism is Transforming American Business argued that smart companies (Herman Miller, Timberland, UPS, Southwest Airlines and Starbucks, among others) are driven by an ethic of service—to their employees, their customers and their shareholders, frequently in that order. This ethic of service generates loyalty and creates a powerful competitive advantage: Happier and more fulfilled employees mean satisfied customers, and satisfied customers generate long-term value for shareholders. Caring is good business.

The thing is, companies that say they care need to behave that way.  In tough times, that’s tough: Starbucks eliminated more than 6,000 jobs when its business went south last year. This doesn’t make Starbucks hypocritical when it cames to be a good employer, but, at the least, it puts a burden on the company to treat people well on the way out.

A provocative and lively book I’ve been reading, called Predictably Irrational: The Hidden Forces That Shape Our Decisions, explores these question in a chapter called The Cost of Social Norms: Why We Are Happy to Do Things, but Not When We Are Paid to Them. The author, Dan Ariely, argues that we live simultaneously in two worlds, one characterized by social exchanges and the other characterized by market exchanges. The first is the world of family, friends, neighbors and community, the second the world of business, wages, prices and rents. “When we keep social norms and market norms on their separate paths,” Ariely writes, “life hums along pretty well.” But when they collide, look out. Think about what happens when a guy tries to persuade his wife or girlfriend to have sex with him because he just bought her an expensive dinner—Ariely’s example, not mine.

Businesses gain when they bring social norms to the marketplace, Ariely says:

If customers and a company are family, then the company gets several benefits. Loyalty is paramount. Minor infractions—screwing up your bill or even imposing a modest hike in your insurance rates—are accommodated. Relationships of course have ups and downs but of course they are a pretty good thing.

I’m willing to bet that Southwest customers are less grumpy about flight delays than those on United or Delta because they have a sense that the company wants to treat them right. When I buy something at Nordstrom or L.L. Bean and something’s amiss, I’m okay with that because I know they’ll happily take the merchandise back.

Trouble arises when companies don’t deliver what they promise. We know that we can’t literally “talk to Chuck” but Charles Schwab had better make sure that the people who answer its phones are friendly, responsive and knowledgeable. State Farm has to act like a neighbor when a customer submits a claim. As Ariely writes:

If you’re a company, my advice is to remember that you can’t have it both ways. You can’t treat your customers like family one moment, and then treat them impersonally—or even worse as a nuisance or a competitor—a moment later when this becomes more convenient or profitable.

Just to be clear, Ariely isn’t saying that companies should only operate by market norms. He believes in the power of social norms, and his experiments in behavioral economics back him up.

“Cash will only take you so far,” he writes. “Social norms are the forces that can make a difference in the long run.” Money, he goes on to say, is “very often the most expensive way to motivate people. Social norms are not only cheaper, but more effective.”

Put simply, we’ll all work hard for a cause – or a company – that we believe in. Look at the success of open-source software or Wikipedia, where creators don’t get paid at all.

Much of this dovetails (pun intended) with the work of one of my writing/consulting clients, Dov Seidman, the founder and CEO of a company called LRN and author of a book, HOW: Why HOW We Do Anything Means Everything in Business (and in Life). Dov talks about how companies need to inspire, rather than coerce or motivate, their workforce. He also says that the best businesses need to “out-behave” their competition. I agree, but Ariely reminds us that this is a risky way of doing business.

Those who say that they care create high expectations that they had better meet.

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