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9 The Good Steward

Bassi, Laurie Berrett-Koehler Publishers ePub

Seventh Generation is among the most environmentally responsible companies in the world today. But leaders of the household and personal care products company will be the first to tell you they aren’t perfect.

They did just that in their 2008 Corporate Consciousness Report. “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,” cofounder Jeffrey Hollender wrote.1

A likely carcinogen, 1,4-dioxane can form in cleaning products when modifying natural oils with the petrochemical ethylene oxide and sulfur trioxide.2 Both Seventh Generation’s fabric softener and its dish soap liquid tested positive for 1,4-dioxane, the company said in the report.

Despite this admitted black eye, Seventh Generation’s track record has been a bright shade of green. Among numerous environmental awards, it was ranked as the best company on the planet by Better World Shopping Guide, a buying resource for ethically minded consumers.3 And Seventh Generation’s actions back up this honor. For example, the company in 2008 upgraded its product-testing regime, which led it to discover phthalates in its automatic dishwasher gel with a synthetic green apple scent. Although the particular phthalate found—DEP—is not a suspected carcinogen or endocrine disrupter, other phthalates have been found to be probable or possible health hazards.4 The company discontinued use of the green apple scent, replacing it with a natural grapefruit fragrance.5

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4 The Political Imperative

Bassi, Laurie Berrett-Koehler Publishers ePub

Computer chip maker Intel, famous for its “Intel inside” motto, got dinged from the outside in 2009.

Outside the marketplace, that is. European regulators slapped Intel with a record-large fine of $1.45 billion for abusing its dominant position in the market for a class of computer chips.1 After a lengthy probe of the market for chips known as x86 central processing units, the European Commission concluded that Intel engaged in illegal anticompetitive practices such as making direct payments to a major retailer on condition it stock only computers with Intel x86 chips.

“Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years,” said European Commissioner for Competition Neelie Kroes. “Such a serious and sustained violation of the EU’s antitrust rules cannot be tolerated.”2

Kroes’s indignant tone is telling. The antitrust penalty her organization levied on Intel is part of a pendulum swing back toward greater regulation of businesses by governments around the world. That regulatory push is among several political factors forcing companies in the direction of greater goodness. We define political here broadly to refer to the way people and organizations make decisions. In that light, this chapter looks at two other political trends besides the growth in government intervention. They are the increase in shareholder activism and the emergence of workplace democracy.

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Appendix. Good Company Index: Scoring and Sources

Bassi, Laurie Berrett-Koehler Publishers ePub

In calculating the Good Company Index Scores for the companies represented in this book, we used data from a variety of sources, which are listed at the end. (The most up-to-date information on the Good Company Index can be found at http://www.goodcompanyindex.com.)

In some categories, companies were ranked from high to low into octiles, or eighths, which were used to assign category scores that make up the Good Company Index ratings. For example, a company that falls in the top 12.5 percent (the equivalent of the top one-eighth of the overall distribution) would be in the first, or top, octile. A company that falls between 75 percent and 87.5 percent would be in the second octile, and so on.

Overall Good Company Grades and
Corresponding Numerical Scores

In order to calculate a score for a given company, we begin by measuring how good an employer it is. Using companies that have at least 25 employee reviews as of April 2010, we get a starting number based on the octile into which a company falls in Glassdoor.com’s overall ratings, relative to other Fortune 100 companies.

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5 Goodness Matters

Bassi, Laurie Berrett-Koehler Publishers ePub

A growing body of evidence shows that companies can do well by doing good. But that’s only part of the story in the world taking shape. The individual trends outlined in Chapters 2, 3, and 4—when taken together—indicate that goodness is rapidly becoming necessary to doing well.

What’s more, the convergence of the trends we’ve identified calls for a comprehensive response. Many companies during the past decade have launched disparate initiatives such as becoming an employer of choice, reducing carbon footprints, and beefing up compliance efforts. But firms that aim to succeed in sustainable ways must move to become good companies through and through.

This chapter summarizes some of the best available hard-nosed evidence that companies are doing well by doing good and risk doing poorly by doing bad. Although much of this evidence is based on large, publicly traded U.S.-based firms, the arguments presented in earlier chapters strongly point to the growing imperative for all organizations—private or public, large or small—to become thoroughly worthy.

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1 The Worthiness Imperative

Bassi, Laurie Berrett-Koehler Publishers ePub

The Home Depot didn’t look bad on paper in early 2007. But online, I the home improvement giant didn’t look good. And the story of that disconnect gets at the heart of this book: we’re entering an age when goodness matters for companies like never before.

In January 2007, Home Depot ousted an unpopular, highly paid CEO, Robert Nardelli. And although Nardelli’s whopping $210 million severance package irked investors, the company signed a much more reasonable deal with his successor, Frank Blake.1 The Nardelli-Blake transition earned Home Depot positive press.2 And although Home Depot was suffering from the housing market decline, Blake announced a hopeful outlook in late February.

“The long-term fundamentals of our company are strong,” Blake said, “and we believe we can improve our performance and grow at, or faster than, the market beyond 2007.”3 He also outlined investments for better employee engagement, improved product innovation, and tidier stores.

But one month later, this corporate giant—which in 2006 had ranked 14th in the Fortune 100—was beset by the consumer equivalent of a mosquito swarm. The trouble started with an essay by personal finance columnist Scott Burns at Web site MSN Money. In the article, Burns lamented that Home Depot no longer held an intimate place in his life.

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