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Submitted by Guest Contributor

By James G. Steiker

In the jurisdiction of Oz, where Messrs. Page and Katz apparently believe most corporations are domiciled, all Ben Cohen and Jerry Greenfield would have needed to do to resist unwanted suitors was to have clicked their heels three times and incanted “there’s no place like home”.

For better or worse, Ben & Jerry’s Homemade was a Vermont corporation subject to Vermont corporate law and, as a public company, regulation by the United States Securities Exchange Commission. Messrs. Page and Katz hypothesize in their article, The Truth about Ben and Jerry’s, what the company and Ben Cohen might have reasoned and done.

Unfortunately, they are misguided. I know as I was there and represented first a group of independent “socially responsible” investors that would take Ben & Jerry’s private and then Ben Cohen individually as the company was sold to Unilever.

Ben & Jerry's: The Story

Let’s stipulate some of the facts.

Ben & Jerry’s stock, after initially providing large gains for investors, languished a bit in the late ‘90s. Prior to the board’s announcement that it would need to consider outside offers, it was trading in the low $20s. It became clear to the company and its board that several outside suitors, notably Dreyer's and Unilever, would pay a significant premium to the then-current stock price to acquire all of the outstanding Ben & Jerry’s stock.

Maintaining the Company's Social Mission

Messrs. Page and Katz state that the purpose of their article is “to dispel the idée fixe that corporate law compelled Ben & Jerry’s directors to accept Unilever’s rich offer, overwhelming Cohen and Greenfield’s dogged efforts to maintain the company’s social mission and independence.” They make light of “the stock analyst who claimed in 2000 that “Ben & Jerry’s had a legal responsibility to consider the takeover bids. … That responsibility is what forced a sale,”, ignoring that that stock market evidently believed this to be the case as the Ben & Jerry’s stock price rose significantly after the initial offers, despite clear signals from Ben Cohen that he personally preferred not to sell the company.

The authors go on to argue first that the Ben and Jerry’s board did not have a legal obligation to consider third-party offers to purchase the company and second that it had no obligation to accept even a high-premium offer. They claim, without any support, that

“In practice, courts are deferential to board decision making. Under a doctrine called the business judgment rule, unless the directors have a conflict of interest, nearly all board business decisions are beyond judicial review. If there is a potential benefit to shareholders, the courts will not interfere. In this way board decisions advancing a social mission are effectively immune from challenge; there’s no limit to the human mind’s ability to conceive of some benefit accruing to shareholders at some point, even if in the far-distant future. Absent special circumstances, a board’s decision to reject a proposed merger would easily survive a court challenge.”

One would hope that such statements, presenting as conclusions without evidence, and ignoring a long line of Delaware corporate takeover cases, such as Revlon v MacAndrews (1986), if presented by a second-year law student in one of their classes, would receive the “C” it so richly deserves.

Legalities

No practicing attorney would, in my view, advise their corporate client that a clear conscience and an empty head would be good enough to prevail against a high-premium takeover bid in all circumstances. Indeed, as Ben & Jerry’s shares were acquired by Wall Street arbitragers betting on the likelihood of the sale of the company, there can be little doubt that the board refusing an offer of nearly double the pre-sale discussion share price, would provoke significant legal action. One only needs to consider the current plethora of “stock-drop” cases brought against public companies and their directors to understand that litigation in this situation would be a near certainty.

The authors go on to conclude that even if there was litigation, the company would have been required to indemnify the directors, implying that any fear of personal risk or loss was ill-founded. Again one might suspect the authors have never been sued as directors of a company. The time, personal cost and difficulty of defending a well-funded and reasonably founded lawsuit, even if indemnification applies, would and should be enough to scare even the most hardy director.

Blocking the Sale

Finally, the authors argue that Ben Cohen and Jerry Greenfield could have blocked the sale simply by using their super-majority voting power and blocking any merger or tender as shareholders. They further assert that it would be unlikely that the super-majority voting stock could be forcibly redeemed. Again, this assumes a high appetite for litigation risk on behalf of both the directors and shareholders.

The authors’ arguments that Ben & Jerry’s founders had the ability to preserve the social mission goals of the Company by blocking a sale either via a friendly board or through well-designed poison pill supermajority stock have some theoretical merit but absolutely fail in the real world.

In theory, theory and practice are the same. In practice, they are different. The board, the company and the shareholders would likely have found themselves in protracted and expensive litigation with an uncertain outcome.

The Benefit Corporation: Unnecessary?

Messrs. Page and Katz then assert that the new Benefit Corporation legislation and related special forms of limited liability corporations (LLCs) with social mission provisions are unnecessary. In their view, the Vermont “constituency” statutes are enough and add sufficient additional heft to takeover defenses so as to make these new forms unnecessary or irrelevant.

Moreover, the authors believe that clever lawyers can achieve the same results as the new benefit corporation statutes through smart design and use of traditional takeover protections.

The authors miss the point mightily.

There is a large distance from statutes that merely allow directors to consider formally other stakeholders and tricked-up governance structures to the Benefit Corporation statutes that actively identify a public benefit of the corporation, state a duty and accountability to this public benefit, and provide formal exculpation for directors from the Revlon standard and its progeny in other states.

Lessons from the Ben & Jerry Sale

There are some real and less appreciated lessons from the Ben & Jerry’s situation. There was no mechanism in the 1980s to access the public markets, accept capital from anonymous investors, and make clear that the corporate directors could pay unfettered loyalty to social mission and other corporate goals without exclusive focus on shareholder value. He who took the king’s shilling would ultimately need to play the king’s tune.

In short, there could be no “social contract” among the shareholders of Ben & Jerry’s as a public corporation with numerous shareholders that would enable the corporation’s directors to set a balance among the corporation’s various bottom lines.

Corporate governance matters a lot when there are several or many shareholders.

The rules about the conduct of directors and shareholders define the things the corporation must focus on and the things that directors and shareholders may consider and do in conducting the business of the corporation. Ben & Jerry’s had anti-takeover poison pills and long-standing corporate practices around multiple bottom lines but there was no fundamental agreement among the shareholders to ensure that these “social mission” practices would be perpetuated. The Ben & Jerry’s directors and shareholders, without a “benefit corporation” or similar hook to hang their hats on, rightly feared for both themselves and the company in considering Unilever’s takeover offer.

One can argue whether the Unilever acquisition was ultimately better or worse for Ben & Jerry’s as a company or for its constituents or for it “social mission” It does seem clear though, that corporate shareholders ought to be permitted to agree among themselves about a corporation’s mission, constituents and practices. Ben & Jerry’s shareholders did not have this opportunity.

The outcome, had Ben & Jerry’s shareholders been permitted to elect to be a “Benefit Corporation” under the emerging statutes, would likely have been different.

About the Author

James G. Steiker is the founder of Steiker, Fischer, Edwards & Greenapple, P.C., a Philadelphia-based law firm that focuses on employee-owned companies and socially responsible businesses. He represented a group of independent investors and then Ben Cohen during the sale process of Ben & Jerry’s. He is a trustee of the Employee Ownership Foundation, Chair of the ESOP Association Finance Committee, and a member of the board of directors of the National Center for Employee Ownership. He also serves as a board member of eight privately-held employee-owned companies. He can be reached at [email protected] and 215-508-5643.

Related:

SSIR Article Attacks B Corps, Points the Finger at Ben & Jerry's

The Real Truth About Ben & Jerry’s and the Benefit Corporation: Part 1

Over the next couple of weeks, we’ve asked our writers (and guests) to respond to the question: "What is the Social Responsibility of Business?”  Please comment away or contact us if you’d like to offer an opinion.

One cannot write about the 'social responsibility of business' without mentioning Milton Friedman who stated in 1970 that, "There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits.”

This view is now considered to be outdated and conservative as more and more businesses are finding their value outside of simply making a profit. I do not disagree with the notion that the primary purpose of any business is to make profits - indeed that is how any business can stay afloat. I disagree that it is the only purpose of business, as it takes away from the aspect of capitalism that is ultimately very humanitarian.

One of the reasons that making a profit cannot be the only responsibility of business is the increasing resource crunch. During the age of the Industrial Revolution and up until Friedman's time there was little talk of natural resource depletion. Indeed, pollution was still an externality and the great cogs of industry made up society.

Now however, current economics prove that functioning without any regard to natural resources leads to the destruction of the ecological system, which leads to eventual collapse of the economic system. The social responsibility of business therefore is to protect the economic system and by implication the bigger socio-environmental system upon which it rests.

Business has the social responsibility to factor in 'negative externalities' like pollution -  in fact any economic model that still regards the environment as an externality is ultimately an anti-growth model. As the economic system has grown more interconnected and vast over the years, so too has the idea of business itself.

Today business has a responsibility towards its stakeholders - customers and society at large are more aware of the negative impacts of business as usual. They want cleaner and more ethical products and services. Business today also has a responsibility towards the environment - it cannot keep endlessly extracting resources without consequence.

Resources like air, water, biodiversity, fossil fuels are the very building blocks upon which a successful business is built. With the rapid depletion of these essentials, business needs to learn to deal with the ominous constraint of environmental degradation. Even big business today needs to adapt towards a social entrepreneurship model in order to survive.

The social responsibility of business is not just the limiting aspect of its responsibility towards societal and environmental protection, but it is towards the protection of the notion of business itself. The responsibility of business therefore is to not merely to generate profit, but to ensure a steady flow of capital that can be diverted towards the higher pursuits of society building. Without the realization of this responsibility, business will soon burn itself out.

Image Credit: Unsplash

Submitted by Guest Contributor

By Michael Replogle and Colin Hughes

(In collaboration with the Worldwatch Institute)

Perhaps it should come as no surprise that the commitments to sustainable transportation were some of the greatest achievements of June’s Rio+20 United Nations Conference on Sustainable Development (UNCSD).

Very little could exemplify the world’s need for sustainable transport to the delegates better than the average of six cumulative hours they spent on buses in a traffic-choked commute to the exurban conference site every day. It was a clear sign that despite having adopted strong language for sustainable transport 20 years earlier at the first CSD in Rio, the transportation sector needs to shift to a more sustainable path.

Transportation, after all, is a primary public good and critical to the sustainability of our economies, societies, and natural environments. Without sustainable transportation, children cannot go safely to school, goods cannot efficiently reach markets, and harmful emissions will exacerbate climate change.

Needed: A Global Shift To A Sustainable Transport Paradigm

As we discussed in our chapter, Moving Toward Sustainable Transport, in Worldwatch Institute’s State of the World 2012, the current model for transportation development – one of mismanaged motorization – is highly unsustainable: rapid growth in automobile travel and concomitant growth in fossil fuel use, traffic congestion, air pollution, greenhouse gases, and traffic fatalities is degrading the quality of life for people around the world. 

A global shift to a sustainable transport paradigm is desperately needed.

This new archetype must become a central part of economic, social, and environmental agendas. Sustainable transport, similar to other developmental issues, is not a problem for a single group: for urban planners or freight shippers, slum dwellers or suburbanites, the urban or rural, the rich or poor – transport is inextricably linked to the quality of life for each and every human. While momentum for sustainable transport is growing worldwide, a more broad-based and urgent campaign calling for sustainable transport policy is needed worldwide.

Partnership for Sustainable Low-Carbon Transport

Rio+20 provided a major opportunity to coalesce governments around commitments to sustainable development, including transportation. Though there was virtually no mention of transport in the original draft of the political outcome document, Rio+20 became a major breakthrough for sustainable transportation initiatives within the global sustainable development dialogue.

This success was largely achieved by the Partnership for Sustainable Low-Carbon Transport, a coalition of over 60 diverse transport-related organizations. Through direct outreach to governments and many high profile events within the UNCSD process, the Partnership strengthened the language regarding the need for sustainable transport in Rio+20’s final outcome document.

Yet, historically, agreements that were supportive of sustainable transport have had little to no impact in making transport more sustainable.

Rio+20 broke away from tradition and was a breakthrough for sustainable transport because the Partnership coordinated 16 voluntary commitments from NGO’s and multilateral institutions.

Most notably, the world’s eight largest multilateral banks (MDBs), committed to invest $175 billion over 10 years to advance more sustainable transport, with annual reporting and monitoring.

These commitments exemplify the array of stakeholders committed to achieving sustainability in the transport sector. Independent oversight will be needed to encourage effective follow-up.

Pushing National Governments To Create Sustainable Transport Systems

Despite this, significant work remains to ensure the momentum for sustainable transport emerging from Rio+20 translates into real change. Most crucially, citizens, businesses, and environmentalists everywhere must continue to push national governments to adopt sustainable transport policies, standards, and funding strategies.

Transport is a primary public good and its sustainability will be determined by the policies and investments made by national governments. Over half of the approximately one trillion dollars annually invested in transport infrastructure and operation worldwide comes from governments, which also set the policies that shape the remaining investment from the private sector.

Sustainable Transport Solutions

Sustainable transport solutions are well known and tested. They include avoiding automobile travel through denser, mixed-use urban development, shifting transport to more cost effective, low-carbon modes like bicycling and rapid bus transit, and improving the energy efficiency of vehicles.

The returns on such investments, in terms of economic, energy, health, and environmental impacts, are greater than that of automobile-focused investments. The success of these solutions is not a question of technology or effectiveness, but of generating sufficient political will and institutional capacity to implement them. 

More and better-targeted investment in transport would be beneficial, but these need to be accompanied by governance reforms to facilitate improved operations of transport systems, with more accountability for performance. It is time for civil society, businesses, and environmentalists worldwide to join forces to foster lower-cost, energy efficient, universally accessible transportation investments, and to cultivate local and global leadership to advance that agenda.

A growing number of cities, from Guangzhou to New York, supported by various leading businesses, are showing how sustainable transport progress can be achieved. New initiatives are coming from national governments in countries like India, Mexico, and Brazil, as well as from United Nations agencies to integrate sustainable transport as a core element of a sustainable development agenda.

As an increasingly urbanized world adds the next billion urban residents in a little more than a decade, it could not be more timely for this paradigm shift in transportation to unfold.

About the Authors:

Colin K. Hughes is a Global Policy Analyst at the Institute for Transportation and Development Policy [ITDP]. Before joining ITDP full-time, Hughes worked as a consultant with ITDP and the Global Environmental Facility to develop greenhouse gas analysis methodologies, developed sustainable urbanism projects with the Asian Development Bank, and planned bike-lane networks and bike-sharing facilities in Guangzhou, China. 

Michael A. Replogle is the Global Policy Director and Founder of the Institute for Transportation and Development Policy, a nonprofit organization that since 1985 has worked with city governments and local advocacy groups worldwide to implement projects that reduce poverty, pollution, and oil dependence. He is a strategic advisor on transportation to the Environmental Defense Fund, where he served as transportation director from 1992 to 2009. 

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More from The Worldwatch Institute:

Making the Green Economy Go: Scaling Sustainable Energy For All

Desperately Seeking: A Sustainable, Climate-Friendly Food System

Management Education: Planting The Seeds Of Sustainable Education

Adam Smith, an 18th century economist and author of The Wealth of Nations, is often viewed as the father of modern capitalism. Smith's three main underlying concepts were the "invisible hand," that individuals pursuing their own best self-interest would result in the greatest overall good to society, and that levels and kinds of goods and services in the market should be determined by the free market alone (i.e., not by government).

The first notion, that of the invisible hand, suggests that people essentially vote with their dollars. If we want a society with nothing but solar energy and organic food, we'd all go out and buy those things and not buy GMO or factory-farmed foods or coal-fired energy. This invisible hand would guide the suppliers in the marketplace to provide those goods and services for us, and there would be no such thing as coal power or GMO food.

The second notion, that an individual seeking his/her own best self-interest is actually the best thing that the person can do for society, indicated Smith's belief that, given sufficient motivation for personal gain, each person would work hard, and as a result, society as a whole would benefit with more jobs, more competition, and better quality goods and services.

The third notion effectively just means that government should stay out of the market, and limit their role to police.

Smith is often held up by modern conservatives as a hero of capitalism and freedom, and a reason that subsidies for things like solar and wind power should not exist. Smith acknowledged the concept of externalities and other free market breakdowns, but didn't really address them as a major challenge to society. Smith can be forgiven: when he was alive, there were less than one billion people on the planet, and the concept of externalities (mercury emissions, DDT, polychlorinated biphenols, stillbirths, cancer, and other disease caused by, but not paid for by, a business seeking its own self-interest) would have been foreign even to the most progressive economist.

Milton Friedman, a modern disciple of Adam Smith, is now often championed by conservatives for furthering Smith's line of thinking, with perhaps his most famous quote underscoring the concept of the social responsibility of business from a conservative point of view:

"There is one and only one social responsibility of business -- to use its resources and engage in activities designed to increase its profits."

It's a line that is often repeated by conservatives as a defense against claims that companies should be doing more. The challenges with this line of thinking, of course, is that single-minded focus on profit maximization is what led to the creation of bundled mortgage backed securities that led to the housing bubble that virtually melted down the global economy in 2008 (and realistically, to pretty much every speculative bubble in economic history). Friedman did eventually go on to add, "So long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." And of course, deception and fraud can be defined in many ways.  (Friedman was also fervently against privatization of jails and openly supportive of the legalization of drugs, which is often overlooked by conservatives).

The main challenge to this Smith-Friedman version of reality is that it can never be so simple.

Corporations doing business create side effects, and if they are not responsible for those side effects, the whole free market system breaks down. It's factory farms using antibiotics for their own gain (faster fattening of animals to bring to market) and causing antibiotic resistant bacteria that is now a public menace. It's pesticide use that is killing honeybees and causing a decline in pollination for other farmers. It's coal plants that produce mercury emissions and cause birth defects and respiratory ailments. The list can go on and on and on.

Smith, to his credit, at least acknowledged it. Joseph Stiglitz, a modern Nobel Prize winning Economist, said, "Whenever there are externalities--where the actions of an individual have impacts on others for which they do not pay, or for which they are not compensated--markets will not work well."

Conversely, Friedman, according to the otherwise conservative Motley Fool Stock Advisor, had it dead wrong with his quote on profit being the only social responsibility of business. The Fool suggests that, as opposed to Friedman's singular vision, investors take the long view, rather than focusing on quarterly reports, in part because quarterly reports give companies incentives to finagle and fudge on their responsibility to society for openness, corporate citizenship, and well, social responsibility.

Follow Scott Cooney on twitter and read his writings at the Inspired Economist.

Image credit: Pexels

Could Costco possibly be the most genuine leader when it comes to corporate social responsibility (CSR) and governance?

Retailers across the country constantly crow about the achievements they have made on a bevy of issues from more sustainable fish (Safeway) to solar installations (Walmart). Other retailers are yanking the chains on pork producers to cease the cruel use of gestation crates and of course just about everyone is on the organic and local produce bandwagon.

These shifts in business practices are great news for fish, pigs and of course, the environment and our health. But what about people who work in these stores, who stack, haul and crate the fish, pork and produce, whether they are free range, cruelty-free, duty free, or not? While most big box retailers insist on paying low wages with the claim that thin margins require reduced labor costs, Costco for years has been breaking the mold.

Wall Street squawks that the membership warehouse giant should push for higher profit margins and reduced labor costs, meanwhile the company, led by its iconoclastic founder and former CEO, Jim Sinegal, constantly flicks his chin at The Street and its yammering analysts. The results: happy employees, enviable stock performance and a brilliant shopping model that, let’s face it, bludgeons consumers into shopping happily for more.

So what makes Costco so successful? Arguably the biggest difference is how the retailer treats its workers. Walk into any Costco and look at the name tags. Chances are you will read the phrases “since 2002,” “since 1999” and “since 1995.” Costco workers get paid very well compared to their counterparts at chains including Walmart. In fact, employees working on the floor can make a salary that reaches the mid-$40,000 range; not bad for someone who starts working for the company out of high school.

And while the vast majority of Costco’s employees are not unionized (most of those are legacy employees from Price Club that the Teamsters represent), over 80 percent have competitively priced health insurance plans. The outcome includes more productive workers, lower turnover and for what it’s worth, relatively high job satisfaction.

Meanwhile Sinegal, who stepped down as the company’s CEO on December 31, earned a spartan salary compared to the vast majority of his counterparts. For years his salary, not including bonuses and stock options, hovered at $350,000. Critics lashed out when the company announced that current CEO Craig Jelinek would pull a salary of $650,000, but that is still a tepid amount compared to average CEO salaries, which are still on an upward trend despite the recent surge in “say-on-pay” shareholder votes.

Meanwhile Costco's stock has performed well, sliding only when the rest of the economy took a dive during the post 9/11 aftershock and the 2008 fiscal crisis. If you bought Costco stock a decade ago, your investment has roughly tripled in value. So, along with happier workers come fair prices and a commitment to local companies. Take those famous Calvin Klein jeans that have been a mainstay at Costco over the years. Depending on the price, they could be marked at $29.99, but if the company can snag millions more, they could be $22.99. Wall Street would insist that regardless of the wholesale price, Costco should maximize its profit. But the company’s philosophy has long been that it will pass on savings to its customers.

Most products in its warehouses are well-known national brands, but Costco does purchase local products. Karoun Armenian string cheese in Los Feliz, Goldilocks bread in Vallejo, hemp seeds in Santa Cruz and fruit from small San Joaquin Valley farms in Fresno are just a few examples that can be found in Costco’s warehouses.

Not everything at Costco is perfect: some products are well, dubious; Joan Rivers chained herself to a shopping cart after the chain stopped selling her book; and some suppliers have landed Costco into hot water. But in the end, the company treats its employees and shareholders more than decently. And sales continue to trend upwards. If you believe all workers should have the chance to earn a decent wage and be rewarded for hard work, shopping at Costco is an easy choice to make.

Leon Kaye, based in Fresno, California, is a sustainability consultant and the editor of GreenGoPost.com. He also contributes to Guardian Sustainable Business and covers sustainable architecture and design for Inhabitat. You can follow him on Twitter. Photo courtesy Wikipedia.

Image credit: Unsplash

Submitted by Earth Share

By Kal Stein, President & CEO, EarthShare

The journey towards truly responsible corporations has seen many landmarks along the way so far. One of the most important is the rise of the sustainability officer within companies. The appearance of a dedicated CSR professional—especially those in the executive suite—is a sign that a company has truly begun to grasp the value, both social and financial, of being green.

But what about companies where it just isn't feasible for one person to dedicate themselves to environmental issues? Or those companies that want to tackle more issues than they have bandwidth for at the executive level? One solution: the concept of a 'green team'—a cross-functional, often cross-departmental collection of employees, who unite to solve problems within the company.

What can a green team do?

A green team can have a dramatic benefit on a company's environmental and financial performance. Often, green teams are constructive in realizing reduced costs associated with resources and energy consumption through peer networking, forums, interactive sessions and change management across their departments. Its one thing for the company to decide on a goal of reducing its energy usage by 25 percent, but quite another to convince colleagues to change their habits in order to meet those goals.

Don't they take a lot of oversight?

One of the keys to the success of green teams is that they don't have to be top-down initiatives. In fact, many successful green teams have started without any management buy-in. All it takes is for a group of interested employees to commit to solving a problem. It's that simple.

However, there's no question that the success of any initiative within an organization--and especially those that hinge on changing people's habits--are greatly enhanced by the level of management buy-in.

At Citi, for example, the company blends top-down and grassroots approaches: while the organization of the teams and the initiatives they work on come from employees at a local level, the decision to create a network for the internal green teams to share best practices was a management-level initiative aimed at creating a supportive environment for the teams to grow and new teams to develop.

As the firm's Vice President for Sustainability Communications, Tyler Daluz suggests, the scale of the firm means that any attempt at controlling these initiatives could have easily become quite unmanageable: "We have over 12,000 facilities globally. These teams have been [successful because they have been] organic and grassroots."

So how do I foster a green team in my own company?

Beyond simply starting a green team, the biggest challenge lies in keeping participants constantly interested, and equipping them with the skills and knowledge necessary to tackle the problems that they've elected to work on. Within larger companies, that may be as simple as convening a regular meeting of all interested parties and bringing in specialists when required. For those seeking to make a difference where resources are more constrained or needing fresh ideas on addressing internal and external challenges, green team networks can be a crucial tool for sharing, learning, best practice ideas and encouragement.

External Forums: EarthShare's Green Team Meetings

Our team at EarthShare began convening Green Team forums several years ago--an initiative aimed at bringing sustainability professionals together to build strong networks of like-minded people to share best practices. Comprised of professionals from companies and institutions such as Marriot, Time Warner, the World Bank, Accenture, United Health Group, and more, this network bring together businesses and communities, regardless of their affiliation with EarthShare, to brainstorm solutions, learn from each other and share best practices.

As my colleague – and EarthShare's SVP for National Business Development and Managing Director of EarthShare NY – Mary MacDonald recently wrote on GreenBiz, "The focus of these meetings is to allow change leaders to meet in a safe zone to discuss challenges (such as lack of buy-in from executive leadership, low employee engagement, budget cuts, lack of information, too much conflicting information, etc.), and crowdsource solutions to those challenges. We also discuss emerging issues in sustainability and the environment."

But what they often become are discussions about how sustainability managers can engage their employees in understanding these causes and taking action. The value of such forums is impossible to overstate. In addition to offering a rare, focused opportunity for sustainability professionals to expand and strengthen their networks, the ability to learn from experts on everything from LEED certification to supply chain sustainability is a major benefit.

As Lauren Wylie, Head of Internal Sustainability at consulting firm Oliver Wyman puts it, "I am fortunate to be a part of a company that recognizes the importance of sustainability at the highest levels. They are open to my ideas and that's why it is important for me to keep those ideas fresh and innovative. Hearing the successes and challenges from other Green Team members offers a unique way for me to validate or modify my ideas and to feel confident that we are moving in the right direction."

Green Teams at Citi

Citi also became an active participant in our Green Team meetings because its employees "wanted to hear from other sustainability practitioners in the area, share best practices and talk about some common challenges," according to Daluz. The benefit of spreading the responsibility for sustainability throughout the company is not lost to participants: because no one person is responsible for everything. Companies send team members interchangeably to really maximize the forum – and the participants' time.

For Daluz, that has meant inviting "the person internally who is best for the topic to learn more about the issue or share their expertise."

And because "the agenda is set by attendees," Daluz feels participants don't just make small talk: "We talk about our approach to specific issues and goals, so the meetings are productive."

As for the importance of employee-led green teams, Daluz points out that, while Citi has "had an environmental footprint reduction goal for a few years," the firm realized that "we cannot reach those goals without employee engagement." And in Citi's case, the results have gone beyond even the engagement question and are now actively adding to the bottom line.

The Green Team in St. Louis, for instance, reduced waste and saved the local office nearly $10,000 through a simple excess office supply exchange program. "This initiative might seem small by itself, but if you encourage the replication of successful programs or behaviors across your footprint you realize how meaningful each action is."

Still think pursuing a triple bottom line is idealistic? Just look around. There is immense potentiality represented by your employees. Encourage their passion and their dedication to your organization by giving them the tools and a place to start.

Then watch the change take place.

Previously:

4 Environmental Issues That Matter to Employees – and Employers

Progress or Propaganda? The Corporation's Role in Promoting Workplace Giving

The Virtuous Cycle of Workplace Philanthropy

The Basic Rules of Impact: EarthShare CEO Connects the Dots

Submitted by Earth Share

By Kal Stein, President & CEO, EarthShare

There are many issues affecting our planet and our daily lives, and many ways of dealing with them. Consider the issue of climate change, for example. Not only are there a number of suggestions and initiatives to mitigate its effects, there are also those who deny that it is even taking place, and yet others who would insist that it is not a man-made dilemma.

As I made clear in a recent post, the need for reliable environmental information from viable sources is incredibly important -- a fact that places companies in a unique position as 'gatekeepers' that can connect their employees with information and organizations they may otherwise have never known about. Once employees get involved in projects and causes that matter to them, they also become more engaged within the workplace.  This can reap serious benefits for employers.

So what are some of those issues and -- more importantly -- what kind of information does it take to encourage employees to step across the threshold from interested non-participants to active participants?

At EarthShare, our goal is to be a trustworthy partner that facilitates the process of introducing new audiences to and connecting them with America's most respected environmental and conservation charities. Because we are committed to providing the information our partners and supporters need to make educated decisions about where to give their support, our list of concerns is more than just a pet project: it's a snapshot of the most pressing environmental issues we face as a society. 

Here are a select few that every employee – and employer – can relate to:

1. Making our Businesses Greener

Not all philanthropic efforts are about charitable giving. Often, they're about changing our own behaviors and those of the people around us. With companies now starting to see the value of being green, sustainability officers have become almost ubiquitous.

Natural resources are becoming scarce and costly; simultaneously, customers, employees and investors are increasingly environmentally conscious. As the benefits become more apparent (and the alternatives more untenable), our member organizations are working with business and industry in a variety of ways to help them strengthen their commitment to sustainability.

It is no longer debatable that championing sustainability allows businesses to align deeply with their missions and engage customers on a more meaningful level. More and more companies are opening up the responsibility for sustainability to green teams, usually comprised of employee champions across the organization with often very varied skill sets.

One of the ways we support our partners is by convening Green Team Roundtables in major markets across the country to bring sustainability and environmental leaders together to share ideas, educate each other and discuss challenges and roadblocks in a private forum. (Watch for more on this in a later post.) The attractiveness of a private forum in a socially and digitally connected world is appealing for our partners and aligns well with our mission of educating them and learning from each others’ skills and perspectives.

2. Climate Change

Of all the issues out there, climate change is easily the most contentious.

There’s probably no other environmental issue today that has so much misperception surrounding it, and such a range of people and organizations lined up to deny that it exists. That denialism and obfuscation has significantly affected our society’s ability to meet the challenge head-on is one of the main reasons that organizations like EarthShare are a critical part of connecting people with authentic, accurate information.

Part of our role is to work with our vetted member organizations and other reliable sources to provide information and resources that inform current and potential supporters about the latest research in the field, the organizations that are leading the way in finding solutions, and providing them with effective ways to make a difference. Our workplace partners consistently tell us that these resources are invaluable in motivating employees, encouraging workplace giving and shifting the mindset on critical issues and behaviors.

How can a business-to-business organization place water efficiency in business terms for example? And how is deforestation affecting a manufacturer's long-term business plan and new markets? Why should a healthcare company invest in planting trees in China or working with farmers in Rwanda on clean technology and efficient resource allocation?

All these questions are connected to climate change but hard to connect to a business' bottom line without extensive research, measurement and projections. EarthShare’s program connects businesses and workforces with organizations working to address these gaps, and to support their sustainable development efforts while helping them make a difference.

3. Children’s Health and the Environment

While the connection between obesity and the environment may not be immediately apparent, it is a strong one. Obesity is a defining challenge of our age and one that touches a range of societal issues, from the cost and availability of healthcare to food production and marketing practices. When you consider that obesity now affects 17 percent of all children and adolescents in America and that this is triple the rate from just one generation ago, it is clear that the place to begin fighting it is in childhood. This means modified diets and behavioral changes that include, of course, increased physical activity. 

The need for healthy and safe places for kids to recreate outdoors – such as community parks and playgrounds -- could not be more essential to this equation. And in urban environments and lower income communities where fresh air and green space may be in short supply, it’s even more necessary.

On the flipside, however, while getting children off the computer and outside is a worthwhile goal, it can be counterproductive if their outdoor environment exposes them to harmful toxins. Exposure to certain pesticides, for instance, has been linked to lasting health problems in children, including asthma, preadolescent breast cancer, diabetes, leukemia, obesity, organ defects, autism and more.

One of the most likely places a child will encounter pesticides is at school: on sports fields, playgrounds, and even in classrooms. Children are more vulnerable to chemicals like pesticides than any other age group, and even low levels of chemicals are dangerous because of their developing organs and high metabolisms.

Building awareness and implementing programs that offer safe alternatives to harmful chemicals is an important challenge that several of our member charities focus on every day through their mission work.

Incidentally, one of the factors that affects giving and philanthropy is a strong sense of connection to the local community. Connecting with EarthShare member organizations working to develop and protect parks and playgrounds, as well as protect our children in their school environments, is an easy way to unite cause with passion.

4. Wildlife Protection

With the risks to our planet's wildlife increasing in recent years, it is no longer just man's best friend that needs protection. In the aftermath of environmental disasters such as the recent oil spill in the Gulf of Mexico, for instance, species including marine life are developing deformities, shifting the ecosystem, and even becoming extinct. Whether we’re talking about pollination or pest reduction, or regulation of prey numbers to maintain the delicate balance necessary for healthy forests and other ecosystems – wildlife occupies a crucial role in our ecology.

From creating safe landing spots for migratory birds and keeping coastal regions habitable for fish stocks, to preventing poaching on the African savanna, the need to protect wildlife is acute and is one that resonates with many people. And, like so many other issues, wildlife protection isn't simply an end in itself. It's an issue that touches everything from the safety of our food supply, to the concept of biodiversity.

While these issues are diverse and only represent a handful of causes being addressed by the environmental and conservation community, they are all issues that can be tackled at local and national levels through community engagement and workplace giving. For companies that want to make a difference and ensure that they fulfill their social license to operate, these issues present opportunities. Which one will you champion?

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More: One Environment. One Simple Way to Care for it

Last week, we saw an uproar of protests for and against Chick-fil-A, not because of the company itself, but because of the founder, Dan Cathy’s, position against the legality of gay marriage.  Cathy runs his company based on his religious convictions.  His biblical understanding also informs his position on gay marriage.

Most individuals who advocate for sustainability tend to also be in favor of gay marriage rights, and may even agree with the protest against Cathy and Chick-fil-A.  But what if that same religious conviction inspired action towards environmental sustainability?  How would that change not only what we think of, but whether we do or do not buy from Chick-fil-A?

Setting aside politics
Since there is so much emotion based on the gay marriage political positions, before we digress into Chick-fil-A’s environmental sustainability, we have to acknowledge the elephant in the room, and cast it aside for the moment.

Chick-fil-A has become a symbol to express our political positions on the legality of gay marriage.  Chick-fil-A is not the cause of whether or not gay marriage should be legal, but is a physical manifestation of where folks can show their anger or encouragement for their own cause.

Supporters of the gay marriage position are protesting and boycotting restaurants.  Opposers of the gay marriage position are buying more and more Chick-fil-A, probably more than they would normally.

There are even some folks who support gay marriage, yet do not boycott Chick-fil-A’s because they support of the companies right to free speech.  We have to cast these debates aside to give Chick-fil-A a fair assessment on what they are doing for the environment, and why they are doing it.

Caring for the environment
For some of us, we are stewards of the environment for the sake of the planet itself.  For other folks, we are custodian to terra firma for the benefit of people.  Perhaps some folks do it because it will make them great profit.

And yet other folks are caretakers of the earth based on biblical or religious values.  Chick-fil-A’s calling for environmental stewardship falls into the biblical or religious values category.

On environmental stewardship, Chick-fil-A writes:

Our Corporate Purpose calls for us to be "a faithful steward of all that is entrusted to us" and "to have a positive influence on all who come in contact with Chick-fil-A." With this in mind, Chick-fil-A cares about and is committed to being good stewards of the environment, as well as the communities in which we operate.

Environmental sustainability focus areas
Just like any company, there are many areas to cover in sustainability.  Chick-fil-A focuses on four areas:

• sustainable new restaurant development


• energy and water in existing restaurants


• sustainable supply chain


• cup recycling.

Chick-fil-A is breaking ground with a LEED® Gold certified restaurant in Montgomery Plaza, Fort Worth, Texas.  The company is using this restaurant as a test case, and if it is successful, plans to build more LEED restaurants in the future.  Let’s pray that all their new restaurants meet the LEED standard.

At the same time, Chick-fil-A is retrofitting existing restaurants, which include more efficient lighting and refrigeration, as well as water faucet restrictors.

Similar to what Walmart has done with their suppliers, Chick-fil-A has “asked [their] suppliers to join us on our environmental stewardship journey.”  The details of such efforts are not listed, but it would be interesting to see what innovations come from a restaurant supply chain partnership.  Could Chick-fil-A be the Walmart of restaurant supply chains?

One thing we may call a red flag on the first one cup recycling, because Chick-fil-A uses foam cups.  Yes, foam cups are recyclable (and some paper cups are not recyclable) as Chick-fil-A claims.  But, there are some challenges to recycling foam cups, such as demand for recycled polystyrene.

For a company whose business isn't in sustainability, these is a pretty good effort towards environmental sustainability.

To support or not?
What do you think of Chick-fil-A’s environmental sustainability efforts?  What is the reason you are a steward for the environment?  If a company is adamantly against your political position, yet for your environmental position, do you support or boycott that company?

Image credit: Mike Mozart/Flickr

Submitted by Beth Busenhart

By Beth Busenhart and Flory Wilson (pictured)

As we continue to explore the co-mingled flavors in the alphabet soup of impact investing, anyone familiar with the concept of Morningstar investment rankings or Capital IQ financial analytics will identify the role of GIIRS Ratings & Analytics (“GIIRS”) immediately.

When trying to decide where to invest money, there is no shortage of options in the marketplace. From mutual funds to private equity, the universe is diverse, and each category offers a systematic way for investors to evaluate vehicles, largely based on financial performance. Impact investing should be no different, however, the evaluation should also include an assessment of social and environmental impact, such as the number of housing units built, children fed or seats opened in schools.

GIIRS Ratings & Analytics provides a methodology for evaluating investment opportunities within the category of impact investing. The GIIRS Impact Ratings and Analytics platform work in tandem to gather and make available meaningful data that can be used to compare and contrast investment options in the impact space.

To achieve true blended value, it is not enough for an investment portfolio to show only a financial return alongside an annual report filled with anecdotal information on social benefits, perhaps in the form of a corporate social responsibility report or similar. To get the clearest picture of impact and deliver a “wow” factor to stakeholders, an investment portfolio ideally should demonstrate that financial return is a direct result of a socially responsible business model delivering profitability through sustainable practices.  

What is a GIIRS Impact Rating and how does it work to evaluate impact?

For impact investing to achieve credibility as an asset class, investors need a reliable way to compare investment opportunities and measure the performance of a fund’s portfolio over time. To meet this need, GIIRS has built a rigorous assessment process for both companies and funds. Data is self-reported by companies and reviewed by a third-party verification service provider, Deloitte & Touche, before a company can receive a rating.

Fund ratings include a weighted average of underlying portfolio companies as well as an assessment of the fund managers themselves. A GIIRS Impact Rating includes an overall rating and impact area (Governance, Workers, Community, Environment) ratings as well as key performance indicators (KPIs) specific to the industry in which the company operates, geography, size and mission. Roughly 30 of the KPIs included in the GIIRS Impact Assessment are from the IRIS taxonomy, and throughout the assessment, IRIS definitions are utilized to ensure compliance with the impact industry standard language.

GIIRS Analytics provide a logical extension of the GIIRS Impact Ratings by making collected data and KPI information available to the investment community for due diligence, advanced reporting and benchmarking.

GIIRS, IRIS and PULSE: Competitive or Complementary?

With the availability of GIIRS for entering data and receiving ratings, the IRIS taxonomy for using a standard language on impact performance and publishing impact data reports, and PULSE for collecting, tracking and reporting impact data, some companies and funds may wonder if these tools represent competing solutions for the industry.

  Depending on the needs and goals of the company or fund, there is a business case for an organization to employ one or all of the tools. They do work in a complementary way to fill different needs at different times. While the value proposition may seem nuanced now, it will become clearer how each product serves a specific niche as the industry scales.

Consider how GIIRS supports the standards defined by the IRIS taxonomy but has a market based strategy at its core. A stated goal of GIIRS is to drive capital to impact investments. The role GIIRS plays in this process is to provide a comprehensive, comparable and verified measure of positive social and environmental impact for funds and companies and an analytics platform that allows investors and fund managers to manage and benchmark across a broad portfolio of impact data, create customized reporting, and screen mission-aligned companies and funds.

Separately, IRIS provides a foundation for measuring and demonstrating impact by identifying and defining standards for the industry. But IRIS also releases a data report.

So how is it different?

The IRIS data report is a performance analysis for the impact investing industry made up of aggregate data anonymously contributed by organizations. The purpose of this report is to provide insight into the overall performance of specific sectors of the industry from an impact standpoint.

A common misconception about GIIRS and PULSE is that they are alternative solutions. This could not be further from the truth. PULSE finds its sweet spot as an internal management tool for collecting, tracking and reporting on impact data. This is different from GIIRS, which provides the means for a company or fund manager to make the results of mission driven work available in a transparent manner by obtaining a rating and benchmarking performance against peer organizations in the same sector, geography and size.

Using PULSE as the basis for its internal technology strategy around impact management, a fund manager or company will be in a position to leverage the wealth of data across an entire portfolio of projects or products. This will allow for better decision making with regard to new investments or strategic direction.  

As part of ongoing efforts to educate on these tools, it is important to keep in mind that impact investing, as an industry, is in its infancy. Early adopters and thought leaders are feeling their way to make a case for the power of conscious capital. The teams at GIIRS, PULSE and IRIS all believe in the benefits of cooperation and transparency to help bolster the efforts of those doing the hard work for social and environmental change.

Flory Wilson is the director, international for GIIRS at B Lab. She joined B Lab in April 2010, working on the core team that has launched the Global Impact Investing Rating System (GIIRS) Ratings & Analytics. Flory chairs the Emerging Markets Standards Advisory Council that crafted the GIIRS rating methodology and led a beta-test of the GIIRS assessment in early 2011 that involved over 200 companies and 25 leading impact investing funds in 30 different countries. Flory also focuses on business development; working with emerging market based mission-driven enterprises, investment vehicles and impact investors who are using GIIRS Ratings & Analytics, and GIIRS' communications efforts. Flory can be reached at [email protected].

Presidio Graduate School’s Macroeconomics course for Spring 2012 is authoring a series of articles. The articles on this “micro-blog” reflect reactions and thoughts on news items, economic theory, and other issues as they pertain to the concept of sustainability. Follow along here.

What if we could increase a nation’s GDP by anywhere from 3-16 percent by making one tiny change? What if we could increase crop yields by 20-30 percent and reduce the number of hungry people around the globe by 12-17 percent? What would you say to increasing household incomes by 25 percent by making the same small change?

The change is investing in women. When 10 percent more girls go to school, a country’s GDP can be expected to rise by 3 percent on average, while reducing barriers to females entering the work force in the US, Europe, and Japan could lead to a GDP increase of up to 16 percent. The UN’s Food and Agriculture Organization notes that if women have the same access to land and resources as men, their crops can be far more productive, reducing the number of hungry in the world by up to 150 million and helping to achieve Millennium Development Goal One to eradicate extreme poverty and hunger.

In North Africa and the Middle East, studies show that increasing women in the workforce could dramatically bolster household incomes, and as a result change expenditure patterns (more on food and education, less on alcohol and tobacco) and improve child survival rates, nutrition, and educational attainment. Investing in women is not a new phenomenon, but it is one that is gaining traction.

The case for investing in women has been made; 90 percent of women’s income is reinvested in their families as opposed to upwards of only 40 percent of men's income. Women invest in their communities, which leads to increased financial growth and social opportunities for members of those communities. Although the female participation in the labor force has risen over time for all income levels, there is still a large gender discrimination gap for women the world over, particularly in developing countries. As one might imagine, these gender gaps are the most prevalent for the very poorest women in the poorest of nations. In Sub-Saharan Africa and parts of South Asia, school enrollment for girls is on par with that of American girls in back in 1810.

Nobel Laureate Amartya Sen has drawn attention to gender inequity in the developing world, and holds that women and girls are key to solving global poverty. These gaps can be bridged through direct microfinance loans made to women in poor countries. Institutions such as the Grameen Bank have been investing in women since the 1970s, which as of October 2011 had over 8 million female borrowers in rural Bangladesh (despite the controversy surrounding founder Muhammad Yunus).

Women’s WorldBanking, for example, has been encouraging women’s access to finances and participation in their economies since 1979 by offering a network of 39 financial institutions from 27 countries to help women start their own businesses. The Kiva Foundation strives to alleviate poverty through lending, and also sees microfinance as a way to empower women the world over. Yet another model is Heifer International’s Women in Livestock Development (WiLD) project, which aims to end hunger and poverty by empowering the world’s women through livestock gifts and training.

Four million women who live in low-income countries die every year who would not otherwise if they lived in medium- to high-income countries. These numbers must be brought down - and they can be - through small and simple changes. If we invest in women through microfinance, women have shown that they will re-invest and help bring themselves, their families, communities, and countries into a better financial state.

By investing in women, we can decrease female mortality rates and increase education and income while improving the health and well-being of our communities at large.

Image credit: Tumisu via Pixabay