CHAPTER

14

A New Generation of Corporate Leaders

I don’t know if corporate boards can ever plan seven generations ahead, but having been granted the advantages of personhood, corporations should at least be directed by their shareholders to conduct themselves as responsible “people” of a larger community. Shareholder advocates can push them to do it, but some CEOs are accepting that challenge of their own accord.

NEAR-DEATH WAKE-UP CALL

Several years ago, recovering from a near-death experience, Aetna Insurance CEO Mark Bertolini began meditating and doing yoga.¹⁷⁰ He found the practices so beneficial that he rolled out meditation and yoga classes in the company’s offices. Some 13,000 employees—a quarter of the work force—have now taken part.

Class participants reported reduced stress, a 20 percent improvement in sleep quality, and a reduction in pain of 19 percent. In terms of investment return, class participants gained an average of 62 minutes per week of productivity, which the company, Aetna, estimated was worth $3,000 annually per employee. Medical visits and prescription drug use were also down by some 30 percent, resulting in enormous savings.

That’s the kind of bottom line payoff that CEOs love and that boards should recognize and reward. Aetna’s program has been so successful that it has begun selling the classes to clients and offering reduced premiums for participants.

Bertolini isn’t alone in this sort of consciousness-raising management. There are emotional intelligence courses at Google. At General Mills’ corporate campus, every building has a meditation room. Employees at the Wall Street firms BlackRock and Goldman Sachs can take advantage of free meditation classes.

Bertolini didn’t stop with meditation, however. After reading Capital in the Twenty-First Century, a book about wealth and income inequality by French economist Thomas Piketty, he also took the wage disparity issue by the horns, increasing pay by 33 percent to $16 per hour for Aetna’s lowest-paid employees. Bertolini is on the record as saying that even if the raise didn’t make strict economic sense, he was still glad he put it in place, because it was the right thing to do for his company’s employees.

“Doing the right thing” was behind the move by CVS Health, operators of the CVS drugstore chain, to halt sales of tobacco products in 2014. In keeping with its mission to promote better health, the company launched stop-smoking programs. Several months later, CVS, with 7,800 stores nationwide, quit the US Chamber of Commerce in protest of the Chamber’s strong-arm tactics in promoting smoking outside the country. Shifts like these have rapidly enabled CVS to become, according to the New York Times, “arguably the country’s biggest health care company, bigger than the drug makers and wholesalers, and bigger than the insurers.”¹⁷¹

A SPEAR IN THE CHEST

Interface Carpets was already one of the biggest companies in its field when CEO Ray Anderson launched an ambitious program to guide his company to a sustainable business model. Anderson’s visionary drive makes him one of my personal heroes.

Manufacturing carpet tiles for business offices, Interface, founded by Anderson in 1973, was a typical “take, make, waste” manufacturer and was, by all measures, a prosperous operation. But in 1994, Anderson began to notice a persistent question from customers: “What was Interface doing for the environment?”

Anderson realized that the answer was “nothing.”

Then, preparing for a company presentation, he read the book The Ecology of Commerce¹⁷² by Paul Hawken and had what he later referred to as a “spear in the chest epiphany.”¹⁷³ He knew that it was his mission to transform the heavily petroleum-dependent company to one that would have zero negative environmental impact. That meant zero impact in terms of carbon footprint, water use, and waste. Ultimately, he hoped that the company would, in fact, have a positive impact on all those things.

Against dire predictions of failure, he put Interface on a 20-year program to produce products that were climate neutral, from the sourcing of materials to their useful life to their reclamation. He also pledged to modify all manufacturing, office, and distribution channels to attain the goal of zero waste and zero impact.

It was a hugely ambitious program, involving changing everything from the design of the products to sourcing of raw materials to manufacturing processes, water use, disposal of carpet after its useful life, and much more. Even something like an incorrect invoice was considered waste, because, in the final analysis, creating it, sending it, and correcting it required energy.

Sadly, Anderson passed away in 2011,¹⁷⁴ before the full realization of his ambitious vision. At Interface, energy use per unit of production is down 39 percent. Greenhouse gases are down by 82 percent. As of 2013, five of Interface’s seven factories operated with 100 percent renewable electricity, and 35 percent of the company’s total energy was generated from renewable sources.¹⁷⁵

The list of Interface’s successes is long and impressive, but more impressive still is this: since Anderson put Interface on the climb up what he dubbed “Mount Sustainability,” output has grown by two-thirds, and Interface has become the largest manufacturer in its category.

THE EXAMINED LIFE

Patagonia, the athletic equipment and clothing manufacturer and retailer, although a private company, has a similar story. After learning about the environmental impact of the pesticides used in growing cotton, Patagonia went organic in 1996 and never looked back. Now, their commitment to environmentally and socially responsible behavior infuses every aspect of the company.

Specialists were hired to analyze working conditions and establish fair pay structures for every person who sews a Patagonia garment. As just one example of a very broad sustainability program, Patagonia manufactures its fleece jackets from recycled plastic bottles and then recycles used fleece jackets to make more of them. From using recycled paper to examining the fuel consumption of their employees as they commute to work to subsidizing childcare and much more, Patagonia strives to adhere to the highest standards of environmental and social corporate responsibility.¹⁷⁶

In 2011 Patagonia decided to promote its position by encouraging customers to buy less. They took out a full page ad detailing the environmental costs of one of their top-selling sweaters. Its “worn-well program”¹⁷⁷ offers assistance to customers on how to repair tired and well-loved clothing. Customers are encouraged to share their stories on social media. This anti-growth strategy¹⁷⁸ may seem counterintuitive, but sales boomed by over 30 percent in the year following the campaign.

So much for skeptics who argue that renewable energy and sustainable resourcing are in opposition to profitable business practices. Environmental responsibility is neither a passing fad nor the whim of a few renegade CEOs. It’s a business model.

There is a downside to running a company that strives for higher consciousness, however. “Living the examined life is a pain in the ass,” according to company founder Yvon Chouinard as quoted on the company website.

Without question, manufacturing useful, quality products or offering a valuable service is difficult. It takes more effort to do it with care toward the environment and employees. Anything worth doing takes effort, and the previous examples prove that corporations, like individuals, can and should take full responsibility for manifesting their values in the world.