Letter from Jeffrey Hollender, Co-founder and Chief Inspired Protagonist

Rethinking Corporate Responsibility

Not long ago, the vice president of corporate responsibility (CR) at a Fortune 500 company confessed that for the past couple of years, she’s been trying to change her title. “Corporate responsibility” has become so cheapened, she explained, the term no longer captures the spirit and the substance of her work, which is to leverage her company’s values to create value.

Why the frustration? After all, the notion that companies are responsible to society as well as to shareholders is more main-stream than ever. More than 4,700 businesses have signed the United Nation’s Global Compact, pledging to reduce the world’s social inequities and protect the environment. CEOs are scrambling to keynote “responsible business” conferences, where they expound on their efforts to conserve water or eradicate childhood obesity. On tens of thousands of Web pages, companies proclaim their commitment to doing good. Isn’t that a good thing?

Sorry, but the truth lies elsewhere. When grossly irresponsible companies claim to be “responsible,” to drum up business or to get critics off their backs, they render CR as something of a sham.

The disgraced insurance giant American International Group features a “corporate responsibility” tab on its web site, but at the time of this writing, the link leads nowhere — clear evidence of AIG’s real regard for CR. How many of the institutions that sparked the economy’s conflagration — AIG, Citi, the mortgage giant Fannie Mae, and the rest — issued corporate responsibility reports that omitted any reference to the reckless bets that caused their downfall? Their demise destroyed millions of jobs, along with the illusion that corporate responsibility actually meant a different way of doing business. When scandal-racked Fannie Mae can rank first on Business Ethics magazine’s 2004 list of “100 Best Corporate Citizens,” just before federal regulators challenged the veracity of Fannie’s financial reporting, we can conclude that CR has become PR — a way for companies to spin their reputation and burnish their brand. Such companies believe that by checking off the right compliance boxes on a spreadsheet, they become better corporate citizens. Never mind that an authentically good company weaves its aspirations for a better world into the very fabric of its being.

We haven’t reached the end of the road for corporate responsibility, but it’s my sense that we are nearing the outer reaches of its evolutionary arc. Moving forward, CR will most likely become a baseline requirement in every company’s license to operate. Consumers won’t believe that corporate responsibility reports are an indication of greater purpose or higher vision. A listing in the Dow Jones Sustainability Index or inclusion in the portfolio of a socially responsible mutual fund will be more about doing less harm than acting for the greater good. And that brings us to a crossroad.

No doubt, many companies will continue down the same path, making do-good claims that are little more than marketing pap. They will add CR coordinators who lack real clout. They will treat their CR departments as orphanages, filled with “responsibility” ventures for which their operating units feel little or no responsibility. And they will issue glossy reports declaring that they are stellar corporate citizens, while omitting the real costs of their impacts on society and the environment.

At the same time, a growing breed of good companies has heard President Obama’s call to a “new era of responsibility.” Fueled by an emerging generation of business leaders, these companies are committed to merging economic growth with social justice. They view the financial crisis and the climate crisis as once-in-a-lifetime opportunities to unleash principled behavior for the greater good. For them, values and principles are sources of innovation — opportunities to create products and services that deliver a Return on Purpose as well as a Return on Investment. I half expect that good companies will jettison the title VP, Corporate Responsibility, and create a new position that just might speak to the power of innovating for profit and for society: VP, Corporate Possibility — or even Senior Director, Corporate Consciousness, as we have done.

We are just beginning to discern the post-CR era, even as we create it. But I know this much; the business world’s unrivaled ability to attract capital and speed innovation is the very thing that makes for-profit enterprise a critical force for creating positive change. We can’t “ease the world’s inequities,” as Bill Gates once put it, without harnessing business to help us build a better future.

To launch this revolution, we’ve got to begin by learning to ask better questions. The questions we ask shape the design of everything we do. They frame the conversations we have and the answers we get. So far, we’ve been asking the wrong questions.

If we ask, “What can we do to build market share?” we will get a very different answer — and we will create a very different future — than if we ask, “What can we do to build a more sustainable economy?”

For too long, those of us in business have proved adept at posing the first kind of question, but all too inept at considering the second. Here’s a question that every business leader should ask, but too few do: “What does the world need most that we are uniquely able to provide?” That question animates everything we do at Seventh Generation. It’s a question that forces us to explore how we can develop the new thinking needed to respond to the enormous challenges (and boundless opportunities) that confront the planet.

The work we put into answering such a question led to the development of our Global Imperatives, which represent the world we dream of, the world at its very best. Our foundational imperative is also our first: “We’re dedicated to creating greater consumer consciousness through dialogue and education that encourages people to understand how their decisions today impact the next seven generations.”

On the surface, this sounds impossibly romantic and hopelessly naïve. But it doesn’t mean that we all join hands and sing “Kumbaya.” After all, it’s an imperative — it calls us to action, and it has catalyzed some tangible, real-world initiatives, such as our campaign to “Show the World What’s Inside,” which you will encounter in this report.

Yes, we’ve had our share of challenges during the past year. We are still working to replace the remaining synthetic ingredients in our products and to eliminate the contaminant 1, 4-dioxane from our cleaning products. Growing the company during this brutal recession has taken a toll on our associates, and our work/home balance is clearly out of whack.

Despite the setbacks, we continue to work on a half dozen projects that just might push Seventh Generation toward becoming an enterprise that truly restores and enriches society and the environment. They are a big part of what gets me out of bed every morning and makes me eager to come to work.

Our long-term goals — to eliminate synthetic ingredients in our products, to improve the sustainability of our supply chain, to dramatically reduce our packaging materials, to promote conscious consumption, to give back generously — are also meant to push other companies to do the same. Business can be a powerful force for positive change, but only if enough companies act collectively to restore the planet’s health and foster a just and equitable society. The stakes are too high — the challenges too great — for a few “eco-pioneers” to singlehandedly tackle the serious environmental and societal challenges that we now confront. So our foremost goal is to inspire — or if necessary, compel — other companies to move beyond the obligation to be less polluting, less wasteful, “less bad,” and to seek out innovative ways to be nourishing, replenishing, and regenerative. Our future depends on it.

See further thoughts from Jeffrey Hollender on this theme here: go/bailouts

Livia Frossard And also great to see that they are really opened to integrate stakeholders not only in the beginning of the reporting process, but also in the publication, showing that it's a true ongoing process. And the best practices book is a great idea. Two-thumbs up! 18 August 2009

Kevin Long Glad to see a leader of Jeffrey's stature willing to be critical of an industry that needs to evolve dramatically to address the challenge's we face today. 12 August 2009