Companies & Industries

Is Green the Color of Transparency?


Stakeholders expect—and the Web's sprawling influence demands—that values-driven companies reveal their shortcomings and engage the outside world on how best to fix them

Posted on Leading Green: June 19, 2008 11:40 AM

Any organization that aspires to be sustainable must have the courage to publicly bare, for all to see, its good, bad, and ugly impacts on society and the environment. Stakeholders expect—and the Web's sprawling influence demands—that values-driven companies reveal their shortcomings and engage the outside world on how best to fix them. We were recently reminded of the "see-through" imperative when our company, Seventh Generation, was greeted with a nightmarish collection of headlines:

"Seventh Generation Battles Carcinogenic Chemical Controversy"

"'Organic'" and 'Natural' Consumer Products Found Contaminated with Cancer-Causing Chemical"

This past March, the Organic Consumers Association released a report showing that 47 organic- and natural-consumer products contained detectable levels of the contaminate 1,4-dioxane. Seventh Generation's dish liquid was one of the brands named in the study, a revelation that spread over the Internet as fast as the flu. It didn't matter that the product had the lowest dioxane levels of any dish liquid tested, or that the FDA deemed those levels "safe." All that mattered was that we failed to reveal the problem.

Over the years, we held many meetings on how to completely purge dioxane from our products. But we never thought to open those conversations to the outside world. Had we shared our dioxane dilemma with everyone who wanted to weigh in or question our progress, we might well have cracked the conundrum and avoided those breathless headlines. But viewed another way, dioxane presented us with a rather extreme opportunity to absorb the new rules around transparency.

As some companies become less opaque, demands increase for greater transparency among all companies.

With more and more employees, CEOs, activist groups, and citizen stakeholders taking to blogging, the pressure to air company business grows stronger every day. Up until several years ago, no U.S. company would dream of disclosing on its website the names and locations of its overseas factories. But when Nike and Gap broke that taboo, it became an issue that every company with a global supply chain needed to think about.

Patagonia has launched a far more audacious attempt to make itself transparent. Its interactive Web site, the Footprint Chronicles, is built around a map of the world that offers an unflinching look at the salubrious and the noxious effects of manufacturing and transporting the company's wares. Click on the "Wool 2 Crew" shirt and you learn that the wool travels more than 16,000 miles from ranch to store. Patagonia's cold-eyed verdict on its own performance: "This is not sustainable."

By exposing problems, transparency begins to solve them.

When a company begins to make itself transparent, it essentially conducts an unambiguous audit of all its activities. The process is analogous to the life-cycle analysis of a product. Just as a product-development team puts a spotlight on all the impacts of a new offering, from cradle to grave, the company casts a bright light on itself, by measuring the systemic effects of its operations.

That's what led Timberland to affix first-of-its-kind Green Index tags to some of its footwear. The tags, which are modeled on nutrition labels, highlight where each product was made and its impact on the environment. This transparency-fueled design innovation led the company to a surprising find: most of its carbon footprint comes from extracting and processing raw materials, well before workers even make the shoes. By producing a 3-D picture of its carbon output, Timberland has taken the first step toward fixing the problem.

Transparency builds trust.

No company lives entirely in a glass house, meeting the transparency challenge at every level of the organization. Some secrets—Coke's formula, Apple's design process—will most likely always remain unrevealed. And yet, the accelerating power of viral media has upended the carefully scripted communications still venerated by many in the business establishment. To confront the relentless, Internet-powered scrutiny by outsiders (and blabbing insiders) of their business activities, companies will have to strip away the layers of secrecy surrounding their impacts on society and the environment. That's a good thing, because fewer secrets generate greater trust. And in our bottom-up media culture, trust accrues to the most transparent.

Provided by Harvard Business—Where Leaders Get Their Edge

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