“Company stakeholders from investors to customers to employees to regulators watch the 100 Best Corporate Citizens List closely, and are using it now more than ever to make important decisions,” said Corporate Responsibility magazine publisher Jay Whitehead in a recent press release. “As a result, making the List is worth millions or even billions in increased shareholder and brand value.”

This should be good news for Citigroup, Goldman Sachs, ExxonMobil, Chevron and Monsanto which, despite their notoriety, have been counted as “Best Citizens” by Corporate Responsibility numerous times. “When someone asks you to define corporate transparency, show them this list,” touts the magazine. But to an increasing number of observers, the transparency seems elusive – as does a clear indication of what the CSR industry stands for.

“Corporate Responsibility magazine’s so-called transparency only extends one layer deep,” observes Sea Change Media executive director Bill Baue. “We can see the categories and weightings, but we can’t see the rationale behind the decisions on actual scoring of company performance.” Baue notes that organizations including Corporate Responsibility collect data from business executives whose names and positions are not revealed, leaving questions about a company’s true impact on society unanswered. “Input from external stakeholders would make the methodology much more robust and credible,” he says.

Baue isn’t the only one questioning the value of CSR performance rankings. As evidenced by blogs and discussion boards across the web, a growing number of people are frustrated by CSR industry lists and the manner in which they are constructed. Some even perceive a pattern of favoritism. “Unlike programs like the Nobel prizes, Macarthur Fellowships, or Economist Innovation awards, the companies that run CSR awards and lists often have an incentive to fix the results,” says Martin Smith, founder and CEO of CSR industry website Just Means. “For instance, Corporate Responsibility magazine makes money from the companies that it rates in its annual list (through sponsorship, registration fees for events, and brand licensing arrangements). This, in any industry, would be seen as a conflict of interest, but in the realm of CSR and business ethics it is purely hypocritical.”

The backlash against CSR industry lists is nothing new. Last year, financial news site 24/7 Wall Street warned global equity investors to take Ethisphere’s results with a grain of salt, indicating: “the basis on which [the list] was put together is a bit naive and it appears to be troubled by several conflicts of interest.” In 2005, green business writer Joel Makower criticized Corporate Knight’s approach, saying: “The rankings only go so far. The whole exercise raises as many questions as it answers.” And when Corporate Responsibility magazine (previously called Business Ethics) first released its list, green media company AlterNet complained: “When one looks at this list, it is easy to be baffled at the real meaning of CSR. It is riddled with companies that have significant blemishes on their record when it comes to environmental matters, labor practices or treatment of customers. The likes of Wal-Mart and Big Oil have not yet made the cut, but that may be only a matter of time.”

Clearly the time has come, as many of the world’s most profitable oil, food, agriculture, pharmaceutical and retail companies are featured on the latest “most ethical,” “best citizen,” “greenest,” and “most sustainable” company lists. Given this fact, one has to wonder: Is the CSR industry completely missing the point? And if so, then so what?

Critics see several downsides to the muddle. “CSR is often too hard for the average consumer to grasp when making a purchasing decision, so companies use lists as stamps of approval,” says Smith. “But unfortunately, not only are the lists misleading for consumers, they actually bring an overall lack of credibility to the entire field of sustainable business.”

Given the importance of sustainable business practices to the future of the planet and its people, this lost credibility is a real concern. “The most vital CSR issue to measure is whether a company is operating sustainably, in the scientific sense,” says Baue. “Environmentally, for example, is the company using natural resources at a rate that allows for the planet to regenerate them sufficiently to provide for future generations?  Unfortunately, almost no companies [on the lists] fully integrate sustainability into their business models, and almost no CSR industry lists consider the sustainability context.”

What Next?

If inclusion on a CSR list translates to “millions or even billions in shareholder and brand value” as Corporate Responsibility magazine indicates, then it stands to reason that some investor and consumer wealth is being channeled in the wrong direction – toward companies that, to Baue’s point, may invest a few pennies in CSR, but make millions or billions of dollars in profits by selling things in ways that take a huge toll on society. This isn’t right. But are CSR industry lists entirely wrong? Not according to some profiled companies.

Dave Stangis, vice president of CSR and sustainability at Campbell Soup Company (which ranked number 12 on Corporate Responsibility magazine’s 2010 list) sees both an underlying purpose and a path forward. “No matter how bad a list is, there is something inherently useful about it,” he says. “It is easy to look at a list and poke holes in it, but what I’m trying to do is use the methodology and questions asked to determine what strategic elements I need to improve inside my company.”

Corporate Responsibility’s analysis, conducted by investment firm IW Financial, assesses 360 data points of public information across seven categories, including human rights, philanthropy and environment. But unfortunately, the same breadth of field that helps companies like Campbell’s to identify strategic weaknesses allows controversial companies to slip through the cracks. “People were up in arms this year, wondering how an oil company like Hess could be considered the tenth best corporate citizen,” says Stangis.  “But in terms of the questions IW Financial asks, such as: Does the company measure its carbon footprint? What violations occurred? How many people were injured? Hess fared well, since they got credit on the disclosures.”

Disclosures aside, many are wondering when CSR industry lists will get around to rewarding companies for creating positive value rather than merely mitigating risk. “These lists should showcase companies that are helping us innovative away from industries like oil, vertically integrated agriculture, and so forth,” Smith says. Stangis agrees: “I think the lists of the future are going to have to better address the issue of strategic opportunity. The real question is: can we finally come up with a list that rewards companies for producing products and services that meet unmet [social and environmental] needs, rather than just minimizing potential damage?”

Surely, that would be something worth recognizing.

In the midst of Hollender’s widely publicized transition (and on his way to holiday in Greece, in fact), I managed to catch a few moments of his time – along with a welcome burst of inspiration.

Q: You’ve lead Seventh Generation for more than 20 years, growing the brand from a fledging start-up to a household name. What prompted your decision to step down as CEO – and what’s next for you?

A: I decided to step down for two reasons. First, to continue to lead the business to its greatest potential in a highly competitive marketplace requires a depth of experience that I simply don’t have. A business of $150 million requires more than my intuition. Second, my passion for fulfilling Seventh Generation mission “to inspire a more conscious and sustainable world by being an authentic force for positive change,” can best be fulfilled if I now focus all of my time in it’s direct pursuit through speaking, writing, educating and influencing other business. I have two books in progress, a TV show (Big Green Lies) and a significant corporate educational program that we will announce in the next 30 days – so I won’t have trouble keeping busy.

Q: Seventh Generation has set a goal to grow its annual business from its current level of about $150 million per year to over $1 billion in the coming years. That’s aggressive. What are the keys to achieving this?

A: Remain radically transparent, stay true to who we are, pursue our mission with passion, hire the most talented people we can find, listen carefully to our customers and make sure we always have more capital than we think we need.

Q: Are you concerned that, with rapid growth, any aspect of the brand will become diluted? How will the company ensure that this doesn’t happen?

A: That will always be a critical concern. So far we strengthened our culture as we have grown by investing time and resources to ensure our community remains deeply connected to our mission. Personally, I will remain directly involved in ensuring that our purpose isn’t compromised as we grow. We have also developed some powerful institutions and rituals that help ensure we stay on course, from our annual all-company retreat to frequent meetings with senior management where staff members are encouraged to ask tough questions. The success and vibrancy of our brand in the marketplace and its impact and relationship with consumers is directly tied to the investment by the very people who drive, mold, invent and reinvent Seventh Generation day in and day out – their passion and authenticity is Seventh Generation’s vitality and this directly extends to our consumers. They relate to it.

Q: What do you say to those who those who worry that by bringing in Mr. Maniscalo, a Quaker/PepsiCo executive, Seventh Generation is “selling out?”

A: Chuck is here precisely so we won’t have to sell out. Most successful mission driven companies have been sold to large CPG companies because they couldn’t scale up independently. We’re acquiring the talent to ensure our independence and commitment to our mission.

Q: You’ve had an inspiring career and are credited not only for pioneering green cleaning products, but green business practices in general. What’s the greatest lesson you’ve learned — and if you could, is there anything that you would do differently?

A: I spend no time ever thinking about reinventing the past. There is much to much work to do that lies ahead of us. But the greatest lessons I’ve learned are that we need revolutionary, not incremental change. Businesses and NGO’s must cooperate more effectively. We need to move from being less bad to being truly good, and we need to recognize that the goal of sustainability is not enough. We must regenerate our planet. Human development represents unlimited potential, and anything is possible.

Amen to that.

Kozlowski is absolutely right.

The premier financial institutions of today – AIG, Barclay’s, Bank of America, Merrill Lynch,Citigroup, Goldman Sachs – make Enron’s 2001 accounting scandal look like child’s play. After taking $17.5 trillion in taxpayer money (in the form of loans, guarantees and bailouts), top-tier US banks Goldman Sachs, J.P. Morgan Chase and others experienced record earnings in 2009, prompting them to dole out an unprecedented $29.7 billion in executive bonuses. Citibank and Bank of America increased interest rates on credit cards and basic checking, boosting fees by as much as 50 percent. Meanwhile, the industry as a whole remains staunchly opposed to consumer protection reforms of any kind, raising serious ethical questions. 

Have mainstream banks learned a single lesson from Enron’s past mistakes? Apparently not. And what’s more, the Sarbanes-Oxley Act (SOX) – which was created in an effort to improve disclosure provisions, ensure auditor independence and strengthen corporate governance procedures – hasn’t made a drip of difference. There seems to be less financial transparency and oversight today than there was before SOX was instated in 2002. Big banks want SOX overturned, and they might have their way.

But even as legislation flounders and banking giants stay their course, the public moves in a new direction. A record number of people are flocking toward reputable and transparent companies like Boston-based Wainwright Bank & Trust and Bristol-based Triodos Bank.

Here are two community banks that, albeit on a smaller scale, manage to thrive despite the ongoing credit and investor confidence crises. While Triodos experienced 8 percent growth during 2008, Wainwright’s first quarter 2009 profits increased an impressive 33 percent.

“All this turmoil in the financial markets has continued to create opportunities for us to capture additional market share,” says Wainwright founder and co-chairman Richard Glassman. “We are pleased that there continues to be a market for our products and approach.”

The “approach” of which Glassman speaks is key. In fact, both Wainwright and Triodos sell the same products that you can find at any big bank – checking accounts, savings accounts, loans, etcetera. That’s not what drives their performance. It’s how they sell their products, how they conduct business overall, that sets them apart from their peers.

At Wainwright a socially progressive agenda represents an ever-important second bottom line to the company. “One platform sustains the other,” Glassman explains. “Our business success is fueled by the difference we make in our community.”

To date Wainwright has issued over $700 million in loans to community development projects like affordable housing and HIV/AIDS services. Remarkably, it has experienced virtually no defaults on those loans. In addition Wainwright has the highest level of customer loyalty and lowest rate of employee turnover in its industry.

Triodos also thrives by helping to improve people’s lives for the better.  “We want to act as a bridge between savers and investors on the one hand, and sustainable companies and projects that need financing on the other,” explains board Chairman Peter Blom. “[With us] savers and investors know what happens with their money. In this respect, the banking sector has failed badly in recent years.”

Wainwright and Triodos aren’t the only ones profiting from systemic failures on Wall Street. Community banks across America and Europe are benefiting, as customers seek institutions they can trust.

At the UK’s Co-Operative Bank for instance, pre-tax 2008 profits increased 69 percent from 2007. At  California Community Bank, first quarter 2009 growth increased 26 percent from 2008. And at Liberty Bell Bank in Cherry Hill, N.J., first quarter 2009 growth increased 14 percent.

A recent survey conducted by Independent Community Bankers confirms that these results are not atypical. Community banks are getting new customers at a faster rate than in the past, with 57 percent experiencing an increase in new retail customers and 47 percent seeing an increase in new business customers compared to last year.

Though not immune to the challenges facing all financial institutions, community banks do offer realistic and profitable alternatives to traditional banking methods.

To start with, rather than serving the narrow interests of a few shareholders, community banks acknowledge wider stakeholder communities. As opposed to treating lower-income customers and charitable organizations as a liability, they view them as a worthy opportunity. Instead of hiding risk, they openly disclose their investments and methods. As an alternative to pushing product, they prioritize people and relationships. And in lieu of imposing pre-set terms, many community banks structure loans around the needs of individual borrowers.

“When Wainwright was founded, it was one of fourteen thousand banks in an undifferentiated industry with fungible products and commodity pricing,” says Glassman. “Now we’ve ended up as one of our region’s best-known banks with a constituency that knows exactly who we are and absolutely loves what we do differently.”

The fact is that community banks are genuinely different, which is why they are the preferred choice by more people around the world. Their lessons turn conventional banking wisdom on its head. Let’s just hope it stays that way.

To date, many advertising agencies have chosen to respond to the widespread disruption by tightening their belts, laying people off, and regressing to the safe harbor of shallow prose, banal imagery, and gimmicky campaigns. On the environmental and social front, certain elements have gone boilerplate. Reference Monsanto’s latest “sustainable agriculture” campaign:

“Producing More. Conserving More. Improving Farmer’s Lives. That’s Sustainable Agriculture. And That’s What Monsanto is All About.”

Evidence suggests that most people aren’t buying Monsanto’s planetary message. After the campaign launched this past June, hundreds of negative articles circulated the web, such as this one from Grist:

“The Monsanto ads are quite simply false. The premise of the ad is more or less that Monsanto’s genetically modified (GM) seeds are going to save the world from environmental catastrophe and human hunger. All while the corporation made more than 11 billion dollars in 2008 amidst a world food crisis….The reality of Monsanto’s seeds and the company’s ethics and commitment to fighting world hunger have nothing to do with producing more or conserving more.”

Despite Monsanto’s recent marketing misstep, the interesting news in advertising isn’t the growing trend toward greenwash. Rather, it’s how fervently certain ad agencies are resistinggreenwash – pulling, sometimes pushing, clients in a more meaningful direction.

World-Changing Agencies

The advertising world is undergoing a considerable transformation. About five years ago, many large agencies began investing in environmental, social and cause-related practices areas to capture what they perceived as a growing niche market and to complement their existing core services. Today more agencies (albeit just the smarter ones) recognize that such moves are limiting. What’s really needed is a sophisticated new worldview that incorporates essential social, cultural and environmental intelligence into the core organizational capacity. World-Changing Agencies possess this worldview, and it shows up in most everything they do.

World-Changing Agencies exist for a purpose: to assist clients in reaching positive social and environmental outcomes, thereby helping to create a better future for all. Through groundbreaking creative work, such agencies offer people new ways of seeing the world, and new ways of defining themselves within that world. That’s what the term “World-Changing,” originally coined by Alex Steffen on his environmental website WorldChanging.com, essentially means.

To fully appreciate the world-changing concept as it relates to advertising, please take a moment to view this ad from Saatchi Pakistan (click on the link below). Here, Saatchi uses an eye-opening blend of imagery, music and fact to address the issues of political, social and cultural prejudice:

Saatchi Pakistan True Blue

Rather than allowing Pakistan to be equated with fear and terror, Saatchi tells another story: “the one you don’t see on the evening news.” The end result? The ad encourages us to reconsider our old perspective, appreciate a new culture, identify with our universal selves and want to call our travel agents.  That’s World-Changing.

The reality is that good agencies are a dime a dozen. But great agencies – the kind that transform the way we see, buy and experience things – are few and far between. The World-Changing Agencies described below deserve credit, because what they do each and every day moves the market and improves people’s lives for the better. Their passion and purpose, their goals and strategies, their mediums and messages, encourage each of us to step back and see the bigger picture.

World-Changing Agencies encourage people to think twice before they buy. Through their work, we can redefine ourselves:

Saatchi S

When it comes to creating campaigns that move people, help shift planetary conditions and make companies money at the same time, Saatchi S is the master. “Imagine a billion people changing how they live, changing the things they buy,” the company says. “Imagine being a part of that.” That’s Saatchi S’s goal, and the company is well on its way toward reaching it. Though an unmatched blend of sustainable insights, spot-on brand strategy, thought-provoking creative (check out the new Prius campaign from Saatchi LA), and global reach, Saatchi S takes its clients to a leaner, cleaner, “bluer” future.

Some people have balked at the company’s decision to work with mega-corporations Wal-Mart, General Mills, Proctor & Gamble and Frito Lay, but Saatchi regards these clients as an important asset. “We work with some of the most influential companies in the world  a because we care about scale,” says Saatchi S CEO Adam Werbach. “Only through their success will we reach our north star goal of supporting one billion people in creating and maintaining their personal sustainability practices.” Werbach, who is indisputably one of the sharpest minds in the sustainability field (see his latest book), carefully placed Saatchi S at the epicenter of a budding trend. “The future is coming fast now,” he says. “The recession has caused every business to open up its business plan – and sustainability is showing up in every one.” Going forward, Werbach predicts that all of Saatchi, not just the ‘S’ division will “go blue.” He and and his worldwide team are working on making this a reality, through a new initiative called True Blue. Further announcements are expected later this year.

Cone

Cone’s original “cause branding” approach has spawned an industry of imitators, but agency founder and chairman Carol Cone welcomes the competition: “Imitation is the highest form of flattery,” she says. For over twenty years Cone has engineered public-private alliances that serve worthy causes, from Avon’s Breast Cancer Crusade to Reebok’s Human Rights Awards, The American Heart Association’s Go Red for Women Movement, PNC Grow Up Great and Western Union Our World, Our Family. While Cone’s signature cause branding programs have raised more than $1.2 billion for worthy crusades, each and every relationship has been built on a foundation that Cone describes as: “Better Business: Greater Good.”

“We never want any of our clients to be the cause du jour,” says Cone. “It’s crucial that everything we do is authentic and sustainable – that we make a real and measurable difference in people’s lives, the social issue and our efforts have a positive impact on the business and the brand.” Blending social justice with business opportunity and personal passion comes naturally to Cone, which is exactly how she got her business of the ground in the 1980’s. “It all started with Rockport. We tried to do traditional marketing, using the usual mediums and messages, but it just didn’t work,” says Cone. “Then we realized the essence of this company’s shoes  –  they were great for walking. So we linked them to walking for health and fitness in authentic and novel ways. They grew from $20 million to $150 on that positioning. And America embraced a new fitness regime.  Sometimes the solutions are right there in front of you, but you have to look through a certain lens to see them.” At present Cone publishes original research and offers a full suite of strategic services including cause branding, corporate responsibility, brand marketing and crisis management to clients including Timberland, Ben & Jerry’s, Starbucks and eBay.

Global Change Network

“Global change is a tall order,” the agency acknowledges. “But our clients are doing just that by addressing poverty, creating energy out of garbage, and empowering women.” Comprised of some of the most passionate and  politically astute communications experts in business, the Global Change Network (GCN) works with organizations and corporations for whom social and environmental issues are core to their identities. Recently GCN has waged such world-changing efforts as encouraging G8 leaders to invest in extreme poverty; promoting recycling by branding waste as a valuable renewable resource; raising awareness of HIV/AIDS as a preventable and treatable disease; and repositioning reproductive rights as a fundamental human right.

“Our mission is to help our clients make positive change – for their companies, communities, and the environment,” says Global Change Network Principal Arlene Fairfield. “We do that by telling stories that combine human insight and creativity with astute policy and political acumen.” What separates GCN from the pack is the team’s unparalleled depth and breadth of expertise – over two decades of experience assembling groundbreaking campaigns for clients including The ONE Campaign, The David and Lucile Packard Foundation and Energy Star.  “It’s our understanding of brand value and audience motivation that makes us different,” says Fairfield. “By combining consumer insight and creativity with astute policy and political acumen, we’ve been able to move the needle on some of the most important issues of the day.”

Emotive Brand

This San Francisco start-up was recently founded on a revelation. “Branding efforts that ignore trust and reputation are waste of money,” says company co-founder Tracy Lloyd. “That’s why we’ve pulled together an award-winning team of designers, strategists, and experts on everything from sustainability to social media to help companies build foundations that people can rely on.” Lloyd draws an important distinction between brand and reputation. “Think about it this way, branding is what you tell people to feel about you,” she says. “Reputation is what people actually feel about you.” Emotive Brand’s services, which include a cathartic strategic process called “Reputation Lab” as well as social media, interactive, advertising and corporate communications services, are offered up to clients including UPS, TED, VMware.

“In order to help clients shift their reputations, you need to stop the PR spin cycle and start to advocate behaving in the right ways,” says Lloyd. “Our goal is to help clients face the truth about themselves and then focus strategic and creative efforts on the areas most in need of attention.” Want to put a band aid on that environmental catastrophe and walk away? Then perhaps Emotive is not for you. “If clients are willing to openly work through the rough spots, then stakeholders will most likely be supportive. Proactively engaging people in the right way is a huge strategic advantage,” says Lloyd. “The bottom line is that we’ve got our client’s backs, whether or not they face challenges in the reputation arena.”

Frog Design

“We are fanatical about improving the world,” says Frog Design. “We choreograph cultural change through design. We strive to change minds, touch hearts and move markets.” As one of the world’s leading global innovation firms, Frog Design’s “humanizing solutions” emerge from a globally diverse team of more than 400 designers, technologists, strategists, and analysts from around the world. The company’s multidisciplinary process –  which over the years has grown to include research,  industrial design, digital media design, and brand strategy –  reaches such clients as Disney, GE, HP, Logitech, Microsoft, MTV, Seagate, Yahoo! and others.

“Improving the world is the key motivation for every creative person and should be the main mission of every business,” says Tim Leberecht, vice president of marketing and communications at Frog Design. According to  Leberecht,  “green thinking” is now central to every design project at Frog, and something the firm’s designers think about on a daily basis. “For us, innovation means imagining the ideal and making it real. We consider it to be our responsibility to see ideas through, from insight to market. We’re seeking to find design-driven, unorthodox, and holistic solutions to key challenges of our time – from sustainable mobility to rich communications to human-centric health care.” Recently, Frog teamed up with Intel in order to rethink the future of the traditional cash register. The result? A 70 percent reduction in energy use with just a few repurposed chips. That’s good thinking.

GreenOrder

Stonyfield Farm’s Gary Hirshberg calls them “remarkable, knowledgeable and dedicated.” Office Depot’s Yalmaz Siddiqui considers them “true partners.” GreenOrder offers business strategy, environmental science and policy, and marketing and design services to clients including GE, GM, BP, DuPont, Ralph Lauren and Hines. As with Saatchi S, the general viewpoint is that mega-corporations are our friends, and that such companies should profit from their sustainable endeavors. “GreenOrder helps companies build a culture of environmental innovation that creates long-term competitive advantage and business value,” says GreenOrder associate Ted Grozier. “We don’t believe in going green for green’s sake, nor do we believe companies should limit green initiatives to one-offs like carbon footprinting or marketing, for to do so misses key opportunities to capture value.”

GreenOrder doesn’t really consider itself an “agency,” per se. “We’re more of a management consulting firm,” says Grozier. “First and foremost, we are strategists.” Apparently, the company’s marketing-related services are viewed as more of a side dish. What GreenOrder is most proud of is the broader impact that its strategic offerings have had on the marketplace as a whole. “A decade ago when GreenOrder was founded, sustainability was not part of the corporate discourse,” says Grozier. “Through the efforts of our team and other experts in our growing field, sustainability has now become a path to business value – and a key part of a larger cultural conversation.”

DiMassimo Goldstein

According to the New York Times, the recent ads spun out of DiMassimo Goldstein (DIGO) might be doing to the bottled water industry what antismoking ads did to the tobacco industry back in the 1990’s – causing major headaches. In case you’ve missed the unfolding “Tappening” campaign, the interactive and print ads are designed to encourage consumers to drink tap water whenever possible. They are deliberately outlandish, poking fun at the bottled water industry’s environmentally wasteful and often misleading nature. One poster claims: “Bottled Water Causes Blindness in Puppies.” Another reads: “Bottled Water: 98% Melted Ice Caps. 2% Polar Bear Tears.” All the ads are supported by an informative website,Tappening.com, where people can learn about the hazards of bottled water and what they can potentially do about them.

“We’ve spent these two years using our marketing and public relations abilities to un-sell bottled-water hype,” agency head Mark DiMassimo recently told Brandweek. “But I still see cascading waterfalls on labels that do not list the source of that water.” The agency is on a mission to help reverse the tides, and is using its arsenal of social media, web and advertising tools to do just that. In addition to promoting unbottled water, DIGO also helps organizations like Memorial-Sloan Kettering and ThinkorSwim to reach people with messages that resonate at the deepest levels.

Little Big Brands

In the world that is social and environmental marketing, Little Big Brands has the secret sauce: temperance. “Our work is insightful, inspired, never frivolous,” the company says. This non-frivolous attitude translates marvelously on the company’s blog, which simply reads: “If we have time to blog, then you shouldn’t hire us.” Evidently, LBB (which is what their friends call them) has been busy at work, drumming up eco-friendly packaging and clever advertising for clients including Born Free eggs, Yardley Natural soaps and Vitamin Water.

“It’s really exciting for us when we have the opportunity to work on a project where we can be a true partner, adding value every step of the way,” says Pamela Long, Director of Client Services. One recent LBB project entailed a facelift for Pennsylvania-based brewery, Lionshead. “They asked for a step up in quality, but a step down in cost,” says Long. “We went a step further by bringing substantial environmental savings to the table.” What stands out through most of LBB’s design and advertising solutions, including the Lionshead work, is that less can often be more. While the new Lionshead packaging uses 40 percent less material, it sends a motivating message to consumers about the importance of environmental conservation and recycling. “It would be pompous to suggest that we’re out there doing something that other agencies can’t or don’t,” says Long. “What I would say is we really care about what we do and what our clients do. We may be a little design firm, but we work for some of the largest companies in the world, and by helping them use resources as responsibly as possible, we can really make a positive difference.”

What do these companies have in common? According to CRO magazine (formerly Business Ethics), they are among the world’s Best Corporate Citizens, setting the gold standard in governance, ethics and corporate social responsibility (CSR).

“When someone next asks you to define corporate transparency, show them this list,” touts the magazine. “[Our] 2009 CRO 100 Best Corporate Citizens List is the world’s best-known apples-to-apples comparison of Russell 1000 companies’ performance in environment, climate change, human rights, employee relations, philanthropy, financial and governance.”

While the CRO’s leading “apples” might have done laudable things, several are also involved in ongoing legal and public relations scuffles stemming from alleged ethical breaches and poor business judgement. For these “top 100” firms, that’s nothing new:

• Merck, whose Vioxx product gave rise to class action lawsuits over allegedly deceptive marketing practices in 2006, is once again accused of engaging in similar deceptive practices

• Monsanto, which Amnesty International calls a “global corporate terrorist,” is using litigation as a tool to protect its market share and has filed dozens of lawsuits against family farmers across North America, alleging they “stole” airborne seeds

• ExxonMobil, which has a history of environmental and human rights lawsuits, has yet to pay $92 million worth of Valdez spill-related damages to plaintiffs in Alaska

• Chevron, which also has a history of environmental and human rights lawsuits, now argues that renewables “are not a mainstream business”

• Citigroup, which in 2002 faced FTC charges for abusive lending practices,  was recently accused of lying to investors and its own employees about the risks inherent in several speculative, mortgage-backed securities funds. It also froze customer lines of credit after receiving $20 billion in government bailout money

• Goldman Sachs, which in 2002 faced SEC lawsuits for securities fraud and conflicts of interest, recently changed accounting rules in order to hide December losses. It is also accused of being a serial violator of SEC regulations prohibiting long-outlawed “naked” short sales of stock

• Smithfield Foods, which recently faced multiple environmental lawsuits, runs slaughterhouses in Mexico that some experts have linked to diseases like swine flu

CRO’s Best Citizens list sheds light on a critical problem that keeps CSR on the sidelines of many corporate agendas: the industry is too ambiguous for its own good. As Paul Hawken argued several years ago in his critique of the $2.7 trillion socially responsible investment (SRI) industry: “The term ‘socially responsible’ is so broad it is meaningless…There are no standards, no definitions, and no regulations. Anyone can join; anyone can call his or her fund an SRI fund.”

To be sure, the CSR industry’s lack of universal standards and criteria leave many questions unanswered. But research indicates that it doesn’t need to be this way.

Companies that dabble in every conceivable CSR facet (community, diversity, environment, human rights, etc.) tend to be less effective than companies that pursue deliberate strategies in a focused area – both in terms of making a substantive social and environmental impact, and in terms of generating a financial return on their corporate responsibility investment. That was a key finding of my 2007 CSR effectiveness study, and it runs contrary to the way that companies are rated on “Best Citizens” lists.

According to the CRO’s methodology, Best Citizens lists are compiled by quantitatively rating companies across a breadth of performance dimensions:  environment, climate change, human rights, employee relations, philanthropy, financial performance, governance andlobbying activities. Scores are assigned to each category (some categories count more than others) and those companies with the highest cumulative scores win. Though the CRO suggests that this breadth approach to CSR performance evaluation yields a more holistic view, the result is that any company, regardless of history or industry, can be included for consideration. Halliburton and Blackwater (Xe) have yet to make the cut, but that may only be a matter of time.

On the other hand, as mentioned above, my research clearly demonstrates that depth works better than breadth. Rather than taking on every CSR issue at once, the companies producing the best triple bottom-line results (High-Purpose Companies) go deep in one or two particular areas where they know they can make the biggest difference. They find common ground between their core strengths and a critical problem that needs solving – and thus develop profitable solutions to that end. High-Purpose Companies have the financial incentive to create social and environmental value. That’s not always the case at the firms making CRO’s cut, which is why the magazine risks missing the point.

If the CSR industry is to be taken seriously in the future, then it needs to reward companies for producing value, not just preaching values.  Now is the time for an industry makeover. Let’s start with objective standards, critical thinking and a much stronger voice.

A few months ago, SIGG was caught in a lie. Whereas the company built a profitable business in the US marketing metal, reusable bottles as a hip and environmentally sound alternative to plastic water bottles, it failed to inform its health conscious target audience that a large portion of its production line contained bisphenol A, a compound suspected to be hazardous to humans since the 1930s.

When initially asked by consumer-watch groups whether SIGG products contained any toxic ingredients, company CEO Steve Wasik assured people: “Very thorough migration testing in laboratories around the world is conducted regularly and has consistently shown SIGG aluminum bottles to have no presence of lead, phthalates, Bysphenol A (BPA), Bysphenol B (BPB) or any other chemicals which scientists have deemed as potentially harmful.”

It turned out this wasn’t the case. SIGG bottles did in fact contain BPA. After the truth leaked out, it became clear that a public statement from management was necessary, and Wasik issued a written apology:

“I am writing to apologize. As Chief Executive Officer of SIGG, a leading maker of reusable water bottles, I made a mistake when I decided not to announce that our old bottle liner contained trace amounts of bisphenol A. I learned about the liner’s content in 2006, when there was debate in the scientific community about the effects of BPA. Scientists lined up on both sides of the issue: Some said BPA posed potential health risks, others said BPA was perfectly safe…Today, the debate continues. Scientists are still split on the issue. But the consumer environment has changed. Because of the all the conflicting data, a growing number of people have decided to eliminate the concern from their lives by avoiding BPA. Given the situation, I recently decided that we had to tell everyone that bottles manufactured with our former liner (prior to August 2008) contained trace amounts of BPA.

We were right to make the announcement. But I was wrong to have waited this long. One of our primary goals at SIGG has been to help reduce unnecessary waste and to educate people on the environmental benefits of using a reusable bottle. With that objective in mind, SIGG has been labeled a “green” company.”

Wasik’s apology was too little, too late. Some even found it offensive. Elaine Shannon, editor in chief at the Environmental Working Group, told Advertising Age: “Americans want transparency, and this company doesn’t seem to understand that. It’s mystifying. [Wasik’s letter] seems to be talking down to people, and a lot of people won’t tolerate that tone.”

Judging from complaint associated with the lawsuit, which was filed on behalf of a nationwide class of consumers who purchased SIGG reusable aluminum bottles that unbeknownst to them contain BPA, the company’s lack of transparency amounts to serious business. The named plaintiffs allege breach of contract, breach of express and implied warranties, and violation of the Kentucky Consumer Protection Act. They seek a class certification order; compensatory, punitive and statutory damages; restitution and disgorgement of profits; attorney’s fees and costs; prejudgment interest; and the costs of suit.

The potential liability exposure for SIGG is significant, to say nothing of the added adverse publicity and wrecked credibility amongst the company’s own target market. Although it is possible that, as with many cases, this class action suit will settle before trial, even if it does the damage will have been done. Unfortunately, when something like this comes along, the negative impact on a company’s sales can be as profound as any adverse legal judgment.

Klein is a proponent of a “contrasting, more hopeful perspective” on capitalism. He optimistically points to purpose-driven companies that create value for stakeholders as well as shareholders, and books like Firms of Endearment: How World-Class Companies Profit from Passion and Purpose (Wharton School Publishing: 2007).

Being the author of several books on purpose-driven companies myself, I am familiar with the territory and can certainly appreciate where Klein is coming from. Still, even the most enlightened corporate responsibility professional has to acknowledge that, alongside the Whole Foods and Honest Teas of the world, there are the Citigroups and Halliburtons. Which companies control the most wealth? We cannot ignore the truths that Moore dramatizes, because they will not dissipate on their own.

Some of you reading this may vehemently disagree with Moore’s premise and approach. I encourage you to see the film and join the debate. To inspire further conversation I have included the following comment of mine, written in response to Klien’s original post. Please have at it:

Jeff, as someone who has been researching the matter of conscious capitalism for the past five years, I can tell you that we are on the same page with respect to our admiration of companies that stand for a meaningful purpose, and that integrate that purpose into everything they do – from the products they sell to the way they treat people and the planet. My second book, The High-Purpose Company (Collins: 2007), beat Firms of Endearment to the market by just a few months. I thought it was interesting how, although we had no way of sharing data or knowing how each other’s methodologies were structured, our two research-based books came to strikingly similar conclusions. I took this as an optimistic sign, and I am glad to see so many purpose-driven companies thriving in our economy.

Where you and I seem to differ is in our takeaway of Michael Moore’s main thesis. I believe Moore is telling a more prolific story, and that more of us involved in the CSR community might benefit by listening carefully.

Moore’s core message is not that all capitalism is evil. In fact, in Moore’s movie he features several purpose-driven companies, including Alvarado Street Bakery, as examples of what can be done when business leaders decide to embrace socially just business models.

Moore’s main message is that we live in a fundamentally imbalanced society – a plutonomy – where the top one percent of the population controls the vast majority of the Nation’s wealth. Upholding the top one percent are the nation’s premier financial institutions, which is why Moore points the finger at Wall Street.

Let’s be honest about the current circumstances our Nation faces, and Moore’s depiction thereof. Our premier financial institutions accepted $700 billion in no-strings bailout money. The banks have not disclosed where the bailout money went, though we know a portion of it was used to pay executive bonuses. The banks also continue to oppose proposed consumer protection reforms and other measures that would shield citizens against unfair industry practices. In all, I’d say Wall Street has shown itself to be less than honorable during a period of peaked economic stress for America’s middle class.

Given the widening gap between America’s “haves” and “have nots” (in addition to the reasons for that gap), some might characterize the current financial crisis as a social justice issue. That is one of the key points in Moore’s film. It is also a key point made by many in our industry who we consider leaders: Dr. Muhammud Yunus, Robert Glassman and Hazel Henderson to name a few. It’s just that these leaders deliver the message in a very different way from Moore.

We in the CSR industry need to ask ourselves what our role should be in all of this. I agree it is wonderful to continue to promote and protect the interests of legitimately responsible and purpose-driven companies. At a certain point, however, more force is necessary. This industry needs rebels, too.

There is a part of me that believes that if we continue to allow Bank of America, Citigroup, Goldman Sachs and others to continue be traded in our SRI funds and flouted on our “Best Citizens” lists, as they are today, then we will not be promoting justice, and we will not be doing our jobs.

While brands are important corporate assets, the value they create for stakeholders tends to be largely intangible in nature. Brands themselves do not physically pollute, clean-up, employ, invent, invest, engineer, design, reach out, assist, collaborate and singlehandedly, they cannot save the world. Corporations and the networks, innovations and people inside them, on the other hand, can – and often do.Irrespective of how catchy the phrase ‘sustainable brand’ is, the fundamental issue remains: either a company is sustainable, or it’s not.

Some companies approach sustainability with an unparalleled level of innovation and fearlessness. I have written about such companies numerous times in books, essays and articles, which is why I am so disappointed to see many of them continuously omitted from the surveys, articles, and highly-touted lists pulled together and promoted by the corporate social responsibility (CSR) industry – particularly those citing the “greenest,” “most ethical” or “most sustainable” citizens or brands.

In March, CRO Magazine chose Merck, Monsanto, Chevron, Citigroup, Goldman Sachs, Smithfield Foods and other questionable choices as “Best Corporate Citizens of 2009” (read my response here).

Last week, a survey released by Cohn & Wolfe, Landor Associates,  Penn, Schoen & Berland Associates; and, Esty Environmental Partners indicated that Clorox Green Works, not Seventh Generation, was the “Top Green Brand.”

Perhaps this result was to be expected given that Clorox Green Works now owns over 40 percent of the green cleaning category. But I found the result disappointing, since Seventh Generation is a 20-year old pioneer in the green cleaning market, a leader in green business practices, and is well on its way to becoming a truly sustainable company. Clorox Green Works was recently introduced and has basically relied on its marketing muscle and existing distribution infrastructure to achieve success with Green Works. Although the Green Works product line is a step in the right direction for Clorox, the company also markets highly profitable toxic products like Formula 409, Tilex, and Armor All.

As frustrating as Seventh Generation’s pass over was, the icing on last week’s faux ‘sustainable brand’ cake had to be Forbes’ lead story: “ExxonMobil: Green Company of the Year.”

Exxon’s latest marketing campaign sends a message to stakeholders: “Taking on the world’s toughest energy challenges” while “preserving and protecting the environment.” Some people might buy that message, along with the company’s pitch that, despite its past and allegedly present efforts to fund global warming skeptics, a sizable investment in natural gas equals a genuine commitment to “going green.” But judging from the reader commentary posted on the Forbes website, not everyone is easily persuaded:

What are you smoking Forbes?? Besides Natural Gas?? Or did Exxon just buy a lot of advertising from you? Calling the company that denies global warming is real “green” is akin to calling the Mob a bunch of nice guys. Burning natural gas is not green, period. Cleaner, yes. But not green. Do some real investigative journalism and not just regurgitate some PR hack’s false truths!

As this reader commentary correctly points out, by calling an unsustainable company like ExxonMobil “green,” Forbes crosses the line between journalism and public relations. In the same way, by labeling other unsustainable and ethically dubious companies “Best Citizens,” “Greenest Brands,” “Sustainable Brands,” or what have you, the CSR industry is effectively perpetuating a standard of greenwash.

Greenwash is dangerous to our economy because it runs the risk of breeding consumer and investor cynicism toward genuinely sustainable companies that create environmental, social and financial value through the products they sell, the investments they make and the issues they relentlessly fight for. All of this ‘information greenwash’ being spun out of research groups, media companies and the CSR industry accumulates on the web over a period of months and years. In time, consumers and investors will be left with a data trove of incomplete and arguably inaccurate information with which to make investment and purchasing decisions. That means their money could end up in the wrong places – in companies and investment funds that, if they knew better, they would not support.

That problem is as serious as it is unjust.

Reference Mark and Nick, two emerging Generation Y change agents who started a London grassroots effort called Project Dirt. Project dirt is an interactive “ecommunity” that serves as a catalyst for Londoners wanting to volunteer in local neighborhood projects, but not knowing where to start. As part of Timberland’s ongoing campaign, the “Earthkeeper Hero” series, the company recently provided Mark and Nick with a forum to show the world that there’s plenty to be optimistic about in the environmental change arena:

Project Dirt – Green Reasons to Be Happy

According to Timberland, Mark and Nick are just one small piece of a widespread recruiting effort. The company is currently “calling all people who do small things for the environment, like recycling, biking instead of driving and using energy-efficient light bulbs.”  Through an international campaign called “Earthkeepers” – which is cleverly targeted towards environmentalists, consumers (Timberland has 30 million of them), employees, suppliers and even competing businesses around the world – the company intends to recruit over one million people through the ‘revolution’, as Timberland CEO Jeff Swartz calls it, of social networking, including Twitter, YouTube and Facebook, as well a strategic partnership with Changents.com and a website, www.earthkeeper.com.

The point of the Earthkeepers campaign is to inspire passionate stakeholders to become their own agents of change in their communities, using Timberland as the primary mechanism. That places Timberland in a unique position, one where the participating community relies on the company’s unique values and strengths, and where the company depends on social networking tools more than ever before.

“At the heart of the Earthkeepers campaign is the idea of becoming a sustainable brand and creating collaborative and value-creating relationships,” Swartz told stakeholders on a Tuesday conference call, facilitated through the JustMeans.com online network. “Earthkeeping demands networking on a level we have never imagined before. If we’re going to transform Timberland from a company that does green to a company that is sustainable, we need to assemble a wider network of citizens, consumers, suppliers, partners, NGOs, even other businesses. We don’t see how any one business, no matter how principled or passionate, can become an Earthkeeping business and brand on its own.”

Swartz defines “Earthkeeping” businesses as those that care about their impact on the environment, and that openly and honestly communicate their efforts in order to better manage that impact. These business, he says, are becoming forces for change in the new social media world order. Through its Earthkeepers campaign, Timberland hopes to not only to interact with a new generation of accomplished environmental heroes, but to also encourage other businesses to become more open, candid and engaged with stakeholders – particularly when it comes to environmental issues. However, Swartz acknowledges that this latter goal is perhaps an overshot.

“I think there are too many CEOs that aren’t going to get this,” says Swartz. “I don’t mean that disrespectfully. It’s just that this conversation of ‘should we or shouldn’t we be transparent?’ is a moot point because in today’s social media climate, every success is getting shared as quickly as every failure. We can pretend like we have a choice about transparency, or we can recognize the fact that almost everything that is being done is being exposed.”

With respect to what Timberland itself has to expose, the company has made significant progress of late. As of 2009, nearly eighty percent of the company’s footwear styles feature recycled content. The Earthkeepers™ product line, which debuted in 2008, contains fully organic and renewable material content, as well as solvent-free adhesives and is designed for reduced climate impact. In the crowded world of consumer retail, Timberland is one of the few businesses that sticks to the guiding principle that what you sell is every bit as important as what you say. After all, how many other pairs of shoes come in a box with a ‘nutritional type label’ about their construction?

Jeff Swartz is a visionary yet grounded CEO leading a family business that has grown into a highly successful global brand since its inception the 1950’s. His pragmatism, accessibility and personal openness are obvious to most who meet him. These traits were evident during last week’s stakeholder call, as well as during the social media interactions facilitated through Timberland’s Earthkeeper campaigns. In both cases, the dialog is kept authentic. Swartz and his team tend to speak off script. If they don’t know the answer to a question, they will say. If they miss something, they will apologize. There’s no rhetoric, no spin. This straightforward attitude melds into corporate philosophy – encouraging the business to face its challenges head-on. You can see this reflected across many of the company’s current initiatives.

For instance, Timberland’s response to the recent Greenpeace campaign to protect the Amazon from deforestation caused by cattle farming (i.e. the leather industry) wasn’t to deny culpability or ignore the problem and walk away. On the contrary, following in Nike’s footsteps in mitigating a potential media disaster, Swartz decided to admit that he didn’t fully appreciate the extent to which Timberland was having a material impact on the Amazon through its supply chain, as suitable ‘traceabilty’ mechanisms in the leather industry were not in place yet. Currently the company is working in collaboration with Greenpeace to settle this issue, and to help improve industry standards. Timberland’s willingness to work in conjunction with Greenpeace demonstrates how candor can help to diffuse difficult situations, and establish leadership positions for the companies involved.

Dozens of similar examples abound. Swartz is presently working on a quest to rid the company of bottled water, and despite backlash from the all-mighty bottled water industry, he presses on. He is also having the roof of Timberland headquarters painted white instead of black, cutting energy costs by an estimated 20 percent. And through Timberland’s Path of Service program, the company is offering its employees paid time off to volunteer on environmental projects across the country.

“These are concrete things that we’re working on, but we can’t simply cobble them together,” says Swartz. “We’ve got to make them a vibrant and integrated network of engaged consumers and stakeholders. We’ve got to get to this goal of becoming a sustainable for-profit business.”

Call us crazy, but it seems like Timberland might be further along than Swartz himself acknowledges.

This article was co-authored with David Connor, a corporate responsibility and sustainability consultant based in Liverpool. E-mail David at david.connor@coethica.com