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February 1st, 2009
Only two companies' stock rose in the Dow last year. Coincidentally, or not, they are companies that, under the influence of the same green activist organization, have made environmental accountability a key business strategy.
The companies — Wal-Mart Stores, with an 18% stock price gain in 2008, and McDonald's, up nearly 6% — both entered into deals with the Environmental Defense Fund at critical points in their business development.
McDonald's is the older story. Last year, McDonald's CEO Jack Greenberg celebrated with EDF's spirited leader, Fred Krupp, the 10th anniversary of their green alliance. They jointly announced cutting 150,000 tons of waste, saving millions of kilowatt hours of electricity, billions of dollars spent on recycled goods.
It was a sweet scene, a far cry from the hostile condition dating back to the 1980s when groups like EDF were agitating school kids and other customers to boycott McD's because they used non-biodegradable cups and sandwich containers.
Wal-Mart's story is even more dramatic. It involves the green conversion of CEO Lee Scott, who retired February 1. The story, told on NPR recently in an interview with Krupp and others, is that shortly after Scott became CEO in 2000, Krupp took him on a trip to the White Mountains of New Hampshire to talk about climate change.
Scott and Krupp then worked out a green push that would not only do social good but help the retailer's business success, with emphasis on cutting waste and energy costs, and influencing suppliers and customers to go green. Fluorescent light bulbs, priced Wal-Mart economically, were an early move.
Wal-Mart has in less than a decade become the most important sustainability force in the retail business world.
It has increased its use of solar and wind power, pushed vendors to make electronics more energy-efficient and switched to selling only concentrated laundry detergent in its U.S. stores. In October, Wal-Mart said it would start tightening controls on its Chinese suppliers by requiring them to meet tougher quality standards or face losing Wal-Mart business.
During Scott's tenure, Wal-Mart sales have doubled, the number of non-US stores has tripled and last year the company's investors made its stock a signal winner. EDF meantime has opened an office in Bentonville, Arkansas, to continue its social collaboration.
Does financial success substantially link with social accountability?
Retiring CEO Scott has actually scoffed at the suggestion that going green was designed to boost Wal-Mart's often battered image as a corporate citizen.
"There really isn't anything I've seen (with its image) that changes customer's buying habits," Scott told a reporter recently. "That's the part of image I care about."
The point is arguable. But I see mounting evidence of a rational and useful role for corporate greening in business success and stakeholder support. And it always involves the strategic value of transparent, collaborative communication.
On the radio interview about Scott's retirement, EDF's Krupp called the Wal-Mart chief "the Gorbachev" of retailing. As with the Russian's glasnost, Scott tore down walls inhibiting public examination. He made public commitments to social good, invited stakeholder involvement and shook hands with critics.
McDonald's has extended its green group relations. Its website says it now engages EDF and three other large NGOs "to get their best thinking on how we can improve our environmental performance."
Wal-Mart's new CEO, Mike Duke, says he wants to accelerate the company's sustainability efforts. "I am very serious about it. This is not optional," Duke told Reuters. "It's not something of the past. This is all about the future."
Big companies are big targets for activists, and bigger thinking in the C-suites is needed by CEOs, CFOs and chief communications officers, especially during economic downwind, to create stakeholder lift.
— E. Bruce Harrison
February 1, 2009
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