Published 9 years ago.
About a 9 minute read.
This is the third in a series of excerpts from Engaging Outraged Stakeholders: A How-To Guide for Uniting the Left, Right, Capitalists and Activists (Affinity Press, 2013), the new book from Future 500. Earlier this month, we posted the beginning of Chapter Two: The Power of Engagement, and learned six reasons to engage your activist stakeholders. Here we continue further into Chapter Two to examine one of seven examples of how engaging activists stakeholders has helped companies serve their purpose.
The idea that corporations exist solely to maximize profits is one of the most damaging frauds perpetrated by business leaders against their own institutions.
What better set up could there be to demonize corporations, as soulless machines that exist solely to take wealth from others, and keep it for themselves — no matter who is harmed in the process?
As Harvard management guru Michael Porter writes, “The public’s dismay over corporate greed continue(s) to challenge the market system and the legitimacy of business itself.” [Business Week, May 6, 2010]
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Great business leaders know that their companies serve a higher purpose than mere profit. David Packard, co-founder of the electronics giant that bears his name, said it this way in 1947: “Many assume, wrongly, that a company exists simply to make money. … The real reason HP exists is to make a contribution … to improve the welfare of humanity … to advance the frontiers of science. … Profit is not the proper end and aim of management — it is what makes all of the proper ends and aims possible.”
In other words, “great corporations don’t exist to profit — they profit to exist,” according to Tachi Kiuchi, former CEO of Mitsubishi Electric America, and now global chairman of Future 500.
When business leaders and economists belittle the higher purpose of commerce, they not only feed the narrative of the evil corporation — they also justify irresponsible behavior by their colleagues and undermine support for free enterprise.
Here is one of seven examples — gathered from the experiences of Future 500 leaders and companies — of how.
When the supply chain power of entertainment giant Disney and other top brands combine with the strategic activism of Greenpeace and RAN, monumental change happens at Asia Pulp and Paper (APP), once the poster child for non-sustainable forest practices around the world, and now on the road to sustainability.
In 2011, the world’s most famous boy toy, Ken, publicly dumped longtime girlfriend Barbie, after he discovered to his dismay that she was wrapping herself in paper boxes made from Indonesian rainforest timber.
“I don’t date girls that destroy rainforests,” Ken declared in a Greenpeace video YouTubed by millions.
A few months later, Mickey Mouse and his paramouse Minnie scurried in Ken’s footsteps. With the help of Rainforest Action Network (RAN), the cartoon rodents staged protests outside Disney corporate headquarters, calling on their parent company to stop allowing their likenesses on paper made from primary tropical timber.
Mattel and Disney may have been the public objects of critique, but Greenpeace and RAN had a less well-known target in mind: Asia Pulp and Paper (APP), one of the world’s largest producers of tissue and paperboard, and in the process, a company with a history of deforestation.
On February 5, 2013, the campaign achieved a breakthrough. Responding to the loss of some of its biggest customers, “APP promised not to use a single splinter of wood again from natural forest, a stunning reversal that has environmental campaigners overjoyed,” reported the Christian Science Monitor.
The announcement came after a number of NGOs including Greenpeace, RAN and the World Wildlife Fund (WWF) undertook an international campaign focused on APP's environmental performance and particularly its role in exploiting the habitat of charismatic fauna such as the Sumatran tiger, orangutan and rare Sumatran rhino.
Following APP’s announcement, while keeping a watchful eye on how the policy is implemented, Greenpeace suspended its campaign. RAN and WWF are playing a watchdog role, cautiously optimistic but not yet convinced.
Powerful pressure on APP to fulfill its commitments is coming from major brands and retailers, which are the paper supplier’s biggest customers. They need to be assured that they will not be targeted by NGOs for selling products that are helping destroy rainforest. It is their decisions that have a direct commercial impact on the business.
“We’re still a little bit stunned, to be honest,” Laurel Sutherlin of RAN told the Monitor. “I think this will stand as one of the biggest market-based campaign successes that we’ve seen in a long time.” But Sutherlin emphasizes that the success will only come once they see the changes implemented on the ground.
The APP shift is the latest example of how environmental and social activist groups can begin to drive change within the marketplace, even without legislation or regulation. That is important in an era when government is gridlocked and increasingly unable to mediate between competing interest groups.
Since March, the UK-based Robertsbridge Group has been assisting APP on its sustainability roadmap. To be effective, it must encompass the activities of the business globally, with each market understanding how demonstrating a truly sustainable supply chain is critical to business growth. To ensure this consistency, Robertsbridge is working closely with its partners in Europe and Australia and with Future 500 in the U.S. and Japan.
APP’s commitment to end to all deforestation is a brave step that places the business clearly in the spotlight. With so many different players and factors in the chain that takes a tree and turns it into the paper on this desk, it is a devilishly complex and challenging task. But APP’s shift reflects an increasingly sophisticated approach by environmentalists, one that places more attention on the retailers and brands at the end of the supply chains for resources such as timber.
In the first two decades after the contemporary environmental movement was symbolically launched with Earth Day 1970, activists often targeted the timber, mining, chemical and oil companies they believed were harming people and the planet.
But beginning in the 1990s, the groups began to turn their attention away from the extractive industries directly, and toward the well-known brands that relied on them for raw materials and energy.
In 1993, for example, RAN targeted Mitsubishi Motors and Mitsubishi Electric to seek to gain leverage over a different Mitsubishi company that had operations in the rainforest. The deciding factor in targeting Mitsubishi was the name: The company had a brand name that made it more vulnerable than others, since its reputation could be tarnished if it were associated with a negative practice such as deforestation.
That helped motivate Mitsubishi Electric and Motors to become active in championing better forestry practices. When the companies adopted comprehensive procurement preferences for sustainably harvested wood, 400 other companies followed their lead. That changed market demand in North America, and led top forestry companies to change practices, to capture the rising demand for sustainably harvested wood. Michael Brune, later the executive director of RAN and now of the Sierra Club, called it “the biggest step forward in North American forest protection in 17 years.”
Now, groups such as RAN and Greenpeace have honed that strategy, carefully researching the supply chains that carry non-sustainable timber and other materials and fuels from mines and forests into the economy. When they find a top brand link, they know they may have the leverage to drive change.
That is the strategy that drove progress at APP. The campaign isn’t over; Greenpeace and RAN will keep up the pressure on APP and its customers. “Our group in Indonesia has no illusions about APP given their track record over the years,” said Sutherlin. “In the past there were commitments from behind the podium with no details, no plans, no transparency. So it was very easy to scratch your head and say, 'how are you going to get from Point A to Point B?' ”
But the APP commitment represents potentially the biggest success so far, in a gradually evolving strategy that drives better social and environmental practices globally, by targeting not extractive companies themselves, but their brand-name customers.
“You have to find a brand that resonates with people,” explained Greenpeace forest campaigner Rolf Skar. “So you take a Barbie, the most famous toy in the world, and then you’re linking Barbie boxes to environmental destruction all over the world,” he says. “As the world has gotten flatter and cultures have homogenized to some degree, it’s gotten easier.”
Pressed by the activists, as many as 100 companies adopted standards for sustainable forest products that effectively froze APP out of their supply chains. Among the companies were nine of the top ten U.S. publishers, just weeks before APP’s announcement.
To win back those customers and restore the confidence of their global sales team, APP committed to an immediate halt in all natural forest timber harvesting. Beginning immediately, the company would generate all its fiber from plantation fiber.
“We publicly say that we thank Greenpeace for their role in helping us change our strategy” was the unconventional message in a BusinessGreen interview with APP Managing Director Aida Greenbury, whose years of shuttle diplomacy helped seal the commitment on both sides.
“It was tough for us at the time when Greenpeace launched reports and attacked us and launched boycotts — it was very tough for us,” she said. “It was hard for us to understand and realize what they said might be true — we were slightly in denial. We were trying to justify what we were doing, but looking back without them doing that we wouldn’t be here. It was important.”
Next, part two of APP's story.
Published Dec 24, 2013 3am EST / 12am PST / 8am GMT / 9am CET
Cultivating understanding and, ultimately, mutual support between interests that view one another with suspicion, confusion, or anger: corporations, activists, conservatives, and progressives.