Changing Corporate America
Book excerpts with notes by Eliyahu Lotzar

ELIYAHU: In February of 2005, in our article “Making a Difference”, I wrote that “many businesses and organizations are moving in the direction of compassion and unity over selfishness.” Still, many of us continue to expect headlines of corporate corruption; we have developed a case of “Paralyzing Enronitis” when thinking of politicians and businesspeople. This lowers our sense of trust and our sense of the possible, and can sap our will to make positive changes. It is vital to our future that we see and join the change among American consumers and businesses towards respecting and caring for each other and the Earth.

The following sections are excerpted from Values Driven Business, a book by Ben Cohen of Ben & Jerry’s, and Mal Warwick of the Social Venture Network. First are two of many examples of “VDB” companies, followed by the theory in brief, and a postscript that includes ways to engage in “socially responsible investing.” Values Driven Business is a book by and for businesspeople; but, we all interact in some way with businesses and bureaucracies, so this is relevant to us all. The excerpts are reprinted here that we may gain wisdom and strength of heart. Indeed, there is a rising tide of compassionate unity-mindedness in the marketplace.

Values Driven Business

Avalon Natural Products
Win-Win Solutions through Collaboration
Avalon Natural Products is the leading brand of natural organic body and skin care products in the natural products industry. It sports three brands: Avalon Organics, Alba, and Unpetroleum.
           In 2004, the company learned that scientists from the European Economic Union identified and banned more than 1,135 toxic chemicals being used in personal and home care products, categorizing them as carcinogens, reproductive toxins, and mutagens. Although the U.S. Food and Drug Administration had banned only nine such chemicals (versus a total ban by the European Community) in 2004, Avalon last year decided to take the lead and reformulate close to 100 items in the Avalon Organics line to eliminate all toxic ingredients. That meant working in close partnership with the company’s vendors, the manufacturers of Avalon’s products.
            “We developed a mission called Consciousness in Cosmetics, and our mantra is ‘Honor your body with consciousness,’” says Morris Shriftman, senior vice president of marketing and new product development, who has been in charge of the reformulation project. “We want people to understand that the skin is the largest organ and much of what you put on it is absorbed directly into your body. Women can use as many as fifteen to twenty-five personal care products every day. Even small amounts of toxic substances can accumulate in the body and create problems.”
            Avalon’s consciousness-raising mission has applied to both consumers and vendors alike. Working in tandem with the Breast Cancer Fund, the company collaborated with its suppliers to completely remove unhealthy chemicals, such as parabens, petroleum-based substances, urea, and artificial colors and fragrances, from products produced for Avalon and to create safer, cleaner, purer personal care products with enhanced levels of organic ingredients, such as essential oils and certified organic vegetable oils. “We asked our suppliers to completely rethink their use of ingredients and how they put them together – something that was totally new and very difficult – but we received tremendous support from them,” says Shriftman. “They were excited about the process because they were collaborating with us to do something that was truly outstanding and that would positively affect the lives of millions of customers.”
            It’s been a win-win deal for everyone involved. “The product reformulation has ended up helping our suppliers in their own businesses,” says Shriftman. “Now they have unique formulation abilities that they can bring to other clients, as well.” Avalon continues to work with vendors to support the increase of the acreage under organic cultivation, reduce unnecessary packaging, and make sure that products are not environmentally polluting.

ShoreBank
The Little Bank that Could
Founded in 1973, ShoreBank is the nation’s first and leading community development and environmental bank. With headquarters in Chicago, it has banking operations in Detroit, Michigan; Cleveland, Ohio; Ilawaco, Washington; and Portland, Oregon. ShoreBank invests in people and communities to create economic equity and a healthy environment. The firm considers itself a triple-bottom-line company that equally values profitability, community development, and conservation.
            “Our job is to free the energies and resources of our customers,” says Jean Pogge, senior vice president of mission-based deposits. Most of those customers are low-wealth members of African-American communities. The bank’s home base is twenty minutes south of Chicago in a community that experienced neglect and the migration of residents and jobs in the late 1960s and early 1970s. “The area was redlined. There weren’t any loans being made here at all,” says Pogge. ShoreBank purchased a failing local bank in 1973 and turned it around in eighteen months.
            “We’ve proven that when you understand particular areas and needs, you become the bank of choice,” says Joel Freehling, manager of triple-bottom-line innovations at ShoreBank. “By focusing on lending to individuals, small businesses, and mission-based organizations in distressed neighborhoods, we’re in a position to forge new development opportunities that catalyze positive social change and build strong, vibrant communities. They support us as we support them.”
            ShoreBank provides loans to those who wish to revitalize neglected houses or multifamily buildings or to build on abandoned lots. It also lends to nonprofits with capital needs, including churches, civic-oriented organizations, and neighborhood groups. “Due to the destructive nature of the racial change process in the late 1960s, the South Shore community of Chicago would probably have ended up as just another blighted neighborhood with abandoned lots if ShoreBank had not shown confidence in the future of the community by making loans to those who in the past had been denied access to credit,” says Pogge. “Now it’s a vibrant, mixed-income community of choice – a place where people are choosing to live and work.”
            Promoting conservation and environmental improvement is an integral part of ShoreBank’s work, accomplished both through its intrinsic efforts to support local people in restoring neighborhoods and through the incentives it provides residents to incorporate energy-saving elements into their renovations. ShoreBank provides free energy-efficiency evaluations to help loan recipients understand how to reduce utility expenses and improve the comfort of their homes and offers an Energy Star qualified refrigerator from Sears to those who invest in more than $2,000 worth of energy-efficiency work. “We’re hoping to create converts to the energy conservation movement,” says Pogge.
            “For us, community development, profitability, and conservation are compatible,” she adds. “We believe that trying to do all three makes us better at all of them. As we increase community development or conservation output, we make more money.”
            ShoreBank’s Chicago branch, for example, which accounts for 95 percent of the company’s assets, is a $1.8 billion institution. Since its inception, ShoreBank has infused more than $2 billion into communities across the Midwest that have helped finance the purchase and renovation of more than 49,000 affordable housing residences and create more than 10,000 new jobs for local residents. Despite being mission-driven, ShoreBank’s performance continues to exceed that of its peers among commercial banks with assets between $1 billion and $5 billion. In 2004, the bank awarded $311 million in new community development loans and $150 million in new conservation loans. That same year, the bank’s losses were one-half of 1 percent. Those are exceptional figures.
            The company also requires every employee to understand and implement the triple-bottom-line concept. Each person has performance goals relating to financial performance, community development, conservation, customer satisfaction, and employee satisfaction.
            For example, folks who run the bank’s statement processing division met their conservation goals by sending an e-mail to colleagues soliciting used cell phones and donating them to women’s shelters. A customer service representative started a printer-cartridge recycling program for the entire bank. This year, with the squeeze on margins in the banking industry, employees were asked to come up with cost-saving ideas. Employees responded with an idea to cut back on paper usage.
            “Anybody interested in combining the financial and social bottom lines has a long-term perspective and understands the necessity of staying the course,” says Freehling. “That requires patience and diligence, and it takes more work. People have to be committed. It’s harder to do business like this because markets are not set up to make it easy. For example, we were trying to decide what kind of deicer to put out in front of our building. We knew we could go to the local hardware store and buy one off the shelf, but if you are really concerned about the environment and the community, then you have to take more steps and do more research on what the most appropriate product is.
            “It’s important to create networks,” he continues, “because a lot of these types of solutions come from trying different products. There are not a lot of places where you can go and ask, ‘What did you find that worked well, was cost-effective, and was socially and environmentally friendly?’”
            Pogge adds, “To be a triple-bottom-line company, you really have to make all three bottom lines equal. It’s not an add-on. Corporate giving is not business. The social values have to be core to your operations. We do community development and conservation loans, and we make money doing it.”

ELIYAHU: In brief, here are the principles of values driven business.

Values-driven business is based on five fundamental premises:

1. Employees work more productively and pay more attention to a company’s profitability when they’re working for something they believe in, are treated with respect, are well paid, and receive a share of the profits. They also tend to feel better if the owner or top managers aren’t making out like bandits by comparison.
2. Customers are more loyal and willing to forgive errors when a company’s dedication to quality products and services is obvious and when they deal with highly motivated employees – especially when employees are allowed to take the initiative to apologize and make things right.
3. Consumers often show a strong preference to do business with companies that demonstrate a commitment to their community and to the environment – and are sometimes disinclined to patronize those that don’t. Values alignment between a company and its customers builds loyalty. Customers are more forgiving of mistakes and less apt to buy from a competitor when its goods are on sale.
4. Your business will be better prepared for the future and more likely to survive inevitable disruptions if you build relationships today with your employees, you customers, your suppliers, and your community. And the planet we share will be more likely to survive the ravages of the human race if you do everything in your power to lighten your footprint on the environment. In other words, to use the contemporary jargon, your business will be more sustainable.
5. You – as the company’s owner or manager – will live a less stressful and more fulfilling life if you look at your employees, customers, suppliers, and the community as partners rather than adversaries.

As you might expect, there is enormous variety among values-driven companies. Some are simply trying to avoid the negative consequences of their operations. Others are actively seeking to change the world for the better. The range of possibilities is represented by the diagram…

Social change occurs when people alter their daily habits, when they start to look at familiar things in unfamiliar ways. That’s really what values-driven business is about.

ELIYAHU: These excerpts are reprinted with permission of the publishers. Copies of Cohen & Warwick’s book are available directly from the publisher, Berret-Koehler, at www.bkconnection.com.

Postscript: The May-June ’06 issue of Utne Magazine, in its article, “The New Capitalists – is it possible to make money and really make a difference?” points out the following:

The simple principle of CSR [Corporate Social Responsibility] is that companies should enhance the public good. As a result, a growing number of giant international corporations are appointing CSR vice presidents, launching environmental programs, scrutinizing suppliers’ human rights records, and adopting ethical guidelines to govern corporate behavior....

The number of socially responsible investment funds is growing rapidly. If you have investments now or are thinking about making them, you can explore the various financial instruments for putting your money to work for good causes at the Social Investment Forum (www.socialinvest.org) , a nonprofit organization linked to Co-op America. For the experienced investor, www.socialfunds.com offers newsfeeds and updates on socially responsible investing, and the site’s media section can be helpful for the newbie, too. The Friends of the Earth website (www.foe.org) includes an extensive how-to guide for shareholder activism. Green Money Journal (www.greenmoneyjournal.com) is a quarterly magazine for socially responsible investors that offers both print and online subscriptions.

ELIYAHU: There are many opportunities for using our resources to support a positive, inclusive, communal/global “we” perspective rather than a more narrow “me” perspective. We can support businesses and other organizations that care only about themselves, or we can support those whose concern is more far reaching.  Each time we buy a product, talk with an employee or invest funds, we make that choice. These days there are more and more socially, environmentally and spiritually responsible organizations. Let’s use our choices to build a mutually supportive world community, a world of unity, strength and compassion.