When companies lose trust, they often lose capital. Case in point: Gulf disaster stocks BP, Halliburton, Transocean and Anadarko each sank between 25 and 45 percent during the past four months. The Goldman Sachs-SEC debacle pushed company shares down by 15 percent, and the Dow down by 130 points. Massey stock plunged 42 percent following a deadly string of safety failures. Toyota shares dropped 16 percent following its massive recall. And as of today, none of these companies has fully rebounded, indicating the markets grow slower to forgive.

“The last couple of years have provided plenty of reasons for a building sense of mistrust,” says Motley Fool’s Alyce Lomax. “Goldman Sachs and BP have become the most recent high-profile examples of the many big institutions whose highly paid managers seem to be only out for themselves. ”

Indeed, the lost faith Lomax describes seems to be the principle reason why many more investors demand greater honesty, disclosure, transparency, and professionalism from corporations – and flee stocks that don’t deliver. According to a recent Wall Street Journal article on the topic: “Small investors’ faith in stocks, which surged in the 1990s, has collapsed since the technology-stock debacle and the Enron and WorldCom scandals of 2000-2002…Investors talk of a growing disillusionment with big institutions, including corporations, government, banks and political parties.”

The reasons for today’s trust deficit are clear enough. What apparently isn’t as clear, particularly to the large corporations whose stocks are affected, is what to do differently in order to set things straight.

For the most part, the corporations mentioned above used a classic crisis management approach: deny, deflect, spin, repeat. Rather than open up, they withheld information. They denigrated critics, blamed others and refused to answer pertinent questions or engage in meaningful debate. They hid behind the veneer of canned statements and corporate rhetoric – with the occasional blunder thrown in.

There is “no evidence” that huge plumes of oil are suspended undersea, said BP. The charges against us will “hurt America,” said Goldman. The safety-related allegations against us are “a big lie,” said Massey. The independent research from Stanford University was “staged,” said Toyota.

When it comes to rebuilding lost trust, propaganda makes a bad problem worse. What improves situations is candor. Candor conciliates, clarifies and cuts through hype. Candor works. It’s the greed of the Twenty-first Century.

“Candor in business – or in any kind of organization – is a rare and wondrous thing,” write Suzy and Jack Welch in their book, Winning. “Rare because so few companies have it. Wondrous because when they do, everything just operates faster and better.”

Consider the success of online retailer Zappos, which grew its recently acquired, billion dollar business in under five years by forging open and honest relationships with people. From its standing invitation to the general public to come tour Zappos’ headquarters to its progressive use of blogs, videos and books – Zappos gives people outside the company an uncensored look inside the corporate culture. It even goes to so far as to share best practices with competitors.

“A lot of companies feel they need to guard the secret sauce,” said Zappos marketing executive Aaron Magness in a recent interview. “We’re very open to talking about our business model and plans with everyone. We’ve learned a lot along the way and made mistakes that a lot of other companies don’t need to make.”

Smart companies like Zappos don’t just aim for candor. They leverage it, invest in it, profit from it, and build new communities around it. For instance, Sun Microsystems CEO Jonathan Schwartz blogs freely about what his company and industry does right and wrong, engaging people on all sides of his business. Apparel company Patagonia tracks the social and environmental impact of its products from design through delivery, encouraging customers to buy smarter and contribute to rich discussions. Seventh Generation reveals the full list of ingredients used in its household products, earning customer loyalty and pressuring its industry to follow suit.

Candid companies help restore lost trust and balance to the markets. Rather than telling shareholders or stakeholders what to think, they allow the community to draw its own conclusions, which is precisely why people believe in them. As Seventh Generation’s Jeffrey Hollender said in a recent speech: “You can’t judge yourself to be sustainable or responsible. You can only be judged by others.”

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.

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.

Patagonia. The Body Shop. CREDO Mobile. Seventh Generation. Equal Exchange.

At first glance, these might seem like quintessential examples of the corporate left-wing. From human rights to environmental conservation and animal protection, each supports a worthy cause in a radical way. But take a closer look, because irrespective of the particular issues these companies take on, their impact is undeniable and their business formula is highly relevant to today.

Most businesses now support a philanthropic cause. But at Patagonia, The Body Shop, CREDO Mobile, Seventh Generation and Equal Exchange, cause transforms into forceful crusade. These game-changing companies give people something worth fighting for.

“Someone needs to be the loud voice out there, banging the gong. We want to be that,” says Eve Bould, Patagonia’s director of communications. “We can’t be taking the traditional corporate stance when we’re trying to give voice and legitimacy to vital environmental issues that deserve attention.”

As Patagonia rightly points out, there is no business to be done on a dead planet. “We believe we have no choice but to take strong positions,” Bould says. Nevertheless, certain people would clearly prefer that activist voices remain muffled, and many have grown incensed by Patagonia’s determination to be a loudspeaker for issues like forestry protection, corporate pollution, marine conservation and species extinction. In response to one of the company’s recent ads, an irate citizen sent this letter:

Patagonia –
Greetings from Grants Pass, Oregon. Saw your ad in The Daily Center. I have a suggestion: Why don’t you bastards keep your nose out of our business. And our lives!! Come around here and we will take care of pukes like you! YOU LIE AND YOU WILL BE STOPPED. STAY OUT AND STAY HOME. MIND YOUR OWN BUSINESS.

According to Patagonia, for its support of various environmental causes, the company received thousands of similar letters along with boxes of customer’s returned Patagonia gear. One retailer in California reportedly stopped carrying Patagonia merchandise after heavy pressure from a lumber company, while another in Maine cancelled its order after Patagonia supported the creation of a national park in the New England state. But like all the companies featured here, Patagonia never stood down.

Over the past 10 years, Patagonia’s environmental positions have only grown more extreme, articulate and impassioned. At the same time, sales have increased, creativity within the company has flourished (see eco-fabrics lline), environmental impact has diminished (see The Footprint Chronicles),and stakeholders have become fiercely loyal to the brand (see The Cleanest Line).

“We’re not out to make everyone like Patagonia,” says Bould. “Our founder, Yvon Chouinard, often says that he’s perfectly happy if half the people hate us, as long as the right people love us.”

What Bould describes amounts to a critical leadership trait that is somewhat lacking in the vanilla world of corporate philanthropy: fearlessness. The companies that fight fearlessly for worthy causes break through barriers and ignite people’s inner fire.

“You have to be vigilant and brave,” the late Dame Anita Roddick, founder of The Body Shop, told me back in 2004 when I interviewed her for my first book. “There are risks involved in taking a stand, but unless more companies do, we have little hope of evolving.”

Like Patagonia, The Body Shop realized early on that one of the most effective ways to get people emotionally invested was to outrage them, so many of the company’s campaigns have called attention to the awful truths about business. The most pivotal of these unfolded during the mid 1990’s, when The Body Shop shed light on the plight of the Niger Delta’s Ogoni people, whose way of life had been been ravaged by social repression and environmental degradation. US corporations, including Shell, were part of the problem. After protests broke out near a Shell refinery, a group of local Ogoni tribespeople, including Ken Saro-Wiwa,

Mass Movement

As Bould and Roddick make clear, the challenges the world faces now require bold actions and loud voices – not political correctness, temperance or candor. Alongside the public’s mounting intolerance for injustice, there is a heightened sense of urgency for finding answers to looming social and environmental problems, and a great attraction towards companies that can offer such things. The mass change movement is broader in scope and deeper in consequence than most people realize. It is global, classless, unquenchable and tireless. Paul Hawken calls it Blessed Unrest.

By its nature, Blessed Unrest gives rise to High-Purpose Companies.

Clorox brags about helping people lead “healthier lives,” even as it deploys its scientists and marketing mavens to develop a chemical-laden product that is just this side of legal…Clorox can still claim that it’s a responsible company, if you define “responsible” as reluctantly complying with the letter of the law. But an authentically good company is one where all of its works live up to its (good) words. Selling natural-based products (Green Works™) with the one hand while contributing to indoor-air pollution with the other shows that Clorox is neither completely good nor completely bad. It’s just a poseur.

As with the previous examples, Hollender’s emphatic post demonstrates the importance of standing for something concrete and unwavering. Seventh Generation stands for human health and environmental integrity. The company fights for these things on a regular basis – through everything it says, does and especially sells. But as Hollender points out, not all companies use the same approach. Clorox, it would seem, stands for human health and environmental integrity only partially.

Half-hearted approaches to corporate responsibility are prevalent in many industries, and only serve to bait protagonist leaders on. Take the coffee industry, for instance: “Many large corporations claim to be committed to Fair Trade when they’re only offering 5, 10 or 20 percent Fair Trade product. They are trying to sell to everyone, and therefore can’t take a strong stance in any portion of the market,” says Equal Exchange ‘Answer Man’ Rodney North. In contrast with larger corporations, 100 percent of Equal Exchange’s line of coffees, teas and chocolates are organic and Fair Trade certified. “We take the position that small farmers are the heart of Fair Trade. We get push-back from the agri-business crowd, and also from others in the Fair Trade category, but that only makes us think that we’re on to something.”

Since its inception in 1986, Equal Exchange has plunged full-force into the task of challenging industry convention and changing a broken food system. As North explains, what started as a political statement has steadily grown into a thriving business. “We launched our company by challenging the US government’s embargo on Nicaragua. (Seehttp://www.equalexchange.coop/story). As the US was by far the number one market for Nicaraguan exports, this had devastating consequences for Nicaraguan farmers and farm workers,” explains North. “To challenge the embargo and to launch our fledging company, we introduced “Café Nica: the Forbidden Coffee.” We got around the embargo by exploiting a loophole. In 1988 the Bush administration closed the loophole and would have bankrupted Equal Exchange, but we fought a PR and legislative battle and – just barely – came out victorious and with a stronger following than we would have without it.”

Like all brave brands, Equal Exchange never wastes time or money trying to woo everyone. “Of course not all customers are equally excited by our work. Some simply like the taste of our dark chocolate, or want an affordable organic coffee,” says North. “But a healthy number do care deeply about what we’re trying to do.”

By taking an unwavering stance and a targeted approach, Equal Exchange has literally incited a religious following. The company has established partnerships with eleven faith-based organizations, through which it generates about 20 percent of its annual revenues. “We are sometimes asked to address congregations from the pulpit, and are regularly endorsed by the local priest, pastor or rabbi,” says North. “When people tell one another “this is the coffee Jesus would drink,” that’s about as enthusiastic as it gets.”

If brand enthusiasm is the goal of any worthy corporate initiative, then Patagonia, The Body Shop, CREDO Mobile, Seventh Generation and Equal Exchange should give marketers pause. Brave brands like these demonstrate an important business truth: unless a company’s social and environmental positions present a worthy fight and cause some backlash, then they are probably not worth taking (let alone promoting) in the first place.

Nobody cares when companies say they are “committed to behaving in a socially and environmentally responsible manner” because nearly every company in the world says the same thing. To be truly meaningful to people, to win people’s hearts and loyalty, more businesses need to answer the pressing question: “So what?”