Who has even heard of Kering? Until a few months ago it was knowns as PPR. However, you might know some of the 18 brands it owns like Puma, Gucci, Stella McCartney and Saint Laurent.
While the Kering name might be unknown to many it is actually one of the prominent leaders in the business sector when it comes to sustainability, from the release of the first-ever Environmental Profit & Loss account (EP&L) by Puma in 2011 to Kering’s involvement in creating the B Team earlier this year.
Kering is the quiet type among the group of sustainable leaders which is why I was glad for the opportunity to meet with Marie-Claire Daveu, Kering’s Chief Sustainability Officer and Laurent Claquin, head of Kering Americas at a recent New York media briefing. (Full disclosure: Kering picked up the tab for the lunch).
Our conversation focused on the company’s overall approach to sustainability and the challenges it faces moving forward. The following summarizes some of the main issues raised in this conversation. They showcase the path Kering is taking and also provide some good lessons to other companies interested in following in their footsteps.
Last week, we witnessed a new wave of one-day strikes of fast food workers fighting to achieve an ambitious goal: increasing the minimum wage to $15 an hour. These strikes brought back to public attention the debate over minimum wage and its economic and social impacts, as well as the unavoidable question: How much would a Big Mac actually cost if workers at McDonald’s were being paid $15 per hour?
While the answer to this question provides some sort of indication as to the level of change required of McDonald’s and other fast food chains to provide their employees with a decent paycheck, it probably doesn’t help us much in understanding the issue we’re facing.
Why? Because the issue here is not about pricing or even human rights, but about innovation and design thinking. The question we should ask is not if McDonald’s can adjust its pricing model to a new wage level or not, but in what way McDonald’s will choose to redesign its business model.
First, let’s get the Big Mac question off the table. The Daily Beast created a McPoverty calculator that lets you see how your extra cents could translate into real-life wages based on the work of economists Jeannette Wicks-Lim and Robert Pollin. Using this calculator, the price of Big Mac would need to increase by 22 cents to enable workers at McDonald’s to make $15.23 per hour, or $31,671.83 per year.
Having the largest university endowment in the U.S. ($30.7 billion), Harvard finds itself in a club it might not want to be a part of. This club includes companies like Apple, McDonald’s, H&M and Walmart and the common denominator is that its members often find themselves under close scrutiny over social and environmental issues, even if they’re far from being the only ones having them, due to their size and impact.
In Harvard’s case, the issue is the divestment campaign, which is trying to convince universities and colleges to divest their endowments’ investments from 200 publicly-traded fossil fuel companies.
If Harvard agrees to divest its investments, it could be a game changer for the campaign, probably making it a lot easier for other universities to do it, too. So far, Harvard has been very firm in its refusal to divest itself from fossil fuels. “We always appreciate hearing from students about their viewpoints, but Harvard is not considering divesting from companies related to fossil fuels,” Kevin Galvin, a university spokesman told The New York Times last December.
Yet, last week Harvard Management Company (HMC), which manages the university’s endowment, announced that Jameela Pedicini will become its first vice president of sustainable investing. “We will be looking to Jameela as our subject matter expert on current industry practices, possible partnerships related to ESG investing, and on issues of interest emerging on Harvard’s campus,” said Kathryn Murtagh, HMC’s managing director.
So what does this appointment mean? Is Harvard getting closer to saying ‘Yes’ to the divestment campaign, or is it just a lip service gesture to the students?
When was the last time you went to a fast food restaurant and decided what to eat based on calorie information? If you have hard time remembering, apparently you’re not alone.
Huffington Post reports researchers from Carnegie Mellon University (CMU) found that when participants were given calorie guidance, such as recommended calories per meal or per day before eating at McDonald’s, where calorie labeling is already available, they consumed no fewer calories than if they were given no calorie advice at all.
This research can be added to a growing body of evidence that question the impact of calorie labeling in restaurants, which some restaurants have already put in place and all others (if they have more than 20 locations) will need to add in next year or so to meet Obamacare’s requirements.
“Most people are not going in and doing very specific math to figure out how many calories for each meal they should have. They are focusing on the entree only or deciding if they eat more now, they will eat less later,” explains Prof. Julie Downs of CMU who led the study.
But is this really the case? Does menu labeling really have no impact on consumer behavior?
In one of my cupboards at home I have an broken DVD player waiting to be recycled. It has been waiting there for two years. I feel bad every time I open this cupboard since I know that I’m now one of the 68 percent of U.S. consumers stockpiling electronics and I hate to be part of this statistic.
The reason we have this huge stockpile is not necessarily because consumers (me included) are lazy or don’t care, but because it’s quite difficult to find a convenient recycling program for these products. The e-recycling system is still very much based on the options retailers provide us with, and as a new report released by the Electronics TakeBack Coalition (ETB) shows, most retailers still do a poor job helping consumers responsibly recycle their old electronic products.
Released for the first time, ETB’s report card on electronics retailers and their programs gave three retailers, Staples, Best Buy, and Office Depot the highest grades (B+ or B), as all three “have robust programs that let consumers bring our items back to their stores for recycling.” Four more retailers got a C or D and nine retailers, including Walmart, Sam’s Club, Amazon, and Costco, got an F.
“Staples, Best Buy, and Office Depot are leading the charge to meet consumers’ demand for recycling options, but there is a much bigger number of disappointing laggards who are selling us billions of dollars of electronics each year and doing nothing to help consumers recycle them later,” said Barbara Kyle, National Coordinator at ETB.
Israelis – my people – are usually very innovative, working constantly to develop the next great idea. Sometimes these ideas become successful products and sometimes they don’t. One of the latest ideas from Israel trying to make its way into the first group is the cardboard bike.
There’s only one little problem: Its developers might have chosen the wrong platform to bring their product to market – crowdfunding.
It all started when Izhar Gafni, the inventor of the cardboard bike, and Nimrod Elmish the CEO of Cardboard Technologies were looking to raise $5.5 million to build a factory. They thought a crowdfunding campaign might be a good fit to raise at least some of the money given the nature of the product.
“Because we want to include as many people as possible in this green revolution, we launched this Indiegogo campaign. The funds we raise will allow us to establish the first cardboard bicycle production line, thereby creating jobs, affordable transportation and a cleaner environment,” explained Elmish.
Now that most American and European retailers have signed on to plans to improve factory safety in Bangladesh, there seems to be a notion that the business world acted responsibly, more or less, following the factory building collapse that killed 1129 workers last April.
After all, as Bobbi Silten, senior VP for global responsibility at Gap said, “We may have two plans…but we have one shared purpose and that purpose is to improve worker safety in garment factories in Bangladesh.
We might even feel that the world is a bit of a better place now and hope we can get back to business as usual, aka buying cheap clothes from H&M, Walmart, Gap, Zara and other fast fashion retailers with little less guilt.
But is this really the case? Is fast fashion any more sustainable now due to the new safety plans? And how far are we really from the next tragedy? This might be a good time for a retrospective look at the events that took place after the latest tragedy in Bangladesh. Here are five lessons we can learn from them that might provide us with the answers we are looking for.
1. Businesses act incrementally, not systemically – “At the moment there’s a bias towards action, which is a good thing, but there’s a danger of that action being inevitably being about incremental change rather than some of the radical steps shifts and transformation that we require,” Peter Lacy, managing director at Accenture Sustainability Services explained last year in an interview with Jo Confino.
The response we saw to the tragedy in Bangladesh reflects this notion. While workers’ working conditions will probably be a bit better now, the supply chain they’re part of is still very unsustainable. For example, an article in the New York Times earlier this week explained how “Bangladesh’s garment and textile industries have contributed heavily to what experts describe as a water pollution disaster.”
What you’re eating for lunch today – chicken sandwich? Pasta pesto? Green salad? I don’t know about you and actually haven’t decided yet for myself either, but I know what Rob Rhinehart will have.
Hold your Charlton Heston jokes, he is probably going to have a bottle full of Soylent, a liquid food replacement he developed that is made from “broken-down multivitamins, raw elements like potassium and magnesium purchased from lab supply stores, and olive and fish oils, among other ingredients.”
This liquid food includes the essential ingredients the body needs to thrive explains Rhinehart, a 24-year-old programmer from Atlanta, who is the co-founder of a new startup by the same name (Soylent). In the last five months, he has been living on Soylent almost exclusively, with very occasional solid meal here and there, testing on himself the impacts of what he sees as “a more efficient way to stay nourished.”
And the results so far? Rhinehart reports improved concentration and strength as well as weight loss. “By every objective measure, I’m an incredibly healthy person,” he told Gawker’s Adrian Chen two months ago. “It’s been a huge change, not just in terms of sleep and gym performance but cognition. I can say I feel much more alert, and more patient, and optimistic.”
One adjective I might add to the list is visionary. While Rhinehart by no means suggests his new liquid drink is meant to revolutionize the food system, he certainly sees it as a way to provide a nutritious and efficient alternative to people who see food as more of a tiring chore aimed at keeping us energized and want to reduce the hassle of energy consumption to minimum.
Last month at Google’s “How green is the internet?” summit, Eric Schmidt, the company’s Executive Chairman, discussed the new digital age and how it could address global warming’s “fact problem.”
Schmidt said in his talk that “you can hold back knowledge, but you cannot prevent it from spreading. You can lie about the effects of climate change, but eventually you’ll be seen as a liar. It may take 5 years or 10 years.” Well, in the case of Republican Senator Jim Inhofe, one of the leading figures of what President Obama called “the flat-earth society,” it might take even longer, thanks to some help from Google.
Last Thursday, the company held a fundraiser at its D.C. headquarters – a $250 to $2,500 lunch – to benefit Inhofe as well as the national Republican Senatorial Committee. Why would a company whose Chairman basically just called climate change deniers liars support a senator who said that “global warming is the greatest hoax ever perpetrated on the American people”? Well, Google was happy to explain:
“We regularly host fundraisers for candidates, on both sides of the aisle, but that doesn’t mean we endorse all of their positions. And while we disagree on climate change policy, we share an interest with Senator Inhofe in the employees and data center we have in Oklahoma,” a Google spokesperson told the Guardian.
If you look at Inhofe’s positions, you will find that Google probably disagrees with him on every subject, from net neutrality to LGBT rights to immigration reform. Actually, it might be that the data center in Oklahoma is the only thing Google and Inhofe see eye-to-eye on. Well, maybe that and the need to have a low corporate tax.
Some ambitious green dreams fail and just fade away (Solyndra for example). Others fail but get a second chance. Better Place is lucky enough to be included in the second group. Less than two months after the company filed for bankruptcy, Israeli courts approved the recommendation of the company’s liquidators to sell all of its operations and assets in Israel to a group of U.S. and Canadian businessmen backed by the Association for the Promotion of the Electric Car in Israel.
The buyers will pay will pay about $5 million for Better Place Israel’s assets and $6.9 million for Better Place’s intellectual property. This is quite a good price considering that $800 million has been invested so far in Better Place, but as one of the lawyers involved in the liquidation process told Israeli newspaper TheMarker “while it looks like a small price was paid for a luxury boat, you need to remember this ship sank.”
When it comes to making clothes more sustainably, the conversation in the last couple of months has focused mainly on the working conditions in garment factories following the tragedies in Bangladesh.
Now, MAKING, a new app that Nike launched last week to help designers make informed decisions about the environmental impacts of the materials they choose, provides a reminder that sustainable apparel is not just about where the clothes are made, but also about the materials they are made of.
The new app is powered by data from the Nike Materials Sustainability Index (MSI), a database built on more than seven years of materials research and analysis. It aimed to help designers and product creators select materials with lower environmental impacts by ranking and comparing materials based on specific environmental impact areas like energy, water and waste.
This app is not just a valuable sustainability working tool for designers but also an interesting milestone in Nike’s journey from open innovation to systems innovation, as well as another indication (if you still need one) of Nike’s commitment to “move past the current incremental mindset into a genuine shift of entire systems.”
MAKING’s first version includes the 22 materials that are most commonly used in apparel and home goods, like silk, polyester, cotton, polypropylene and down. The app scores the materials in four specific environmental impact areas – chemistry (level of toxicity), energy/greenhouse gas intensity, water/land intensity and physical waste. The higher the score, the better the environmental footprint of the material (50 points is the maximum).
When hearing about a politician from the right side of the political map who believes we need to make a choice between fighting climate change and economic progress, you probably have a member of the GOP in mind. However, I doubt many would instinctively associate this notion with German Chancellor Angela Merkel.
Yet last month, Chancellor Merkel was the one who led the efforts to block new EU regulation aimed at improving the fuel efficiency of European cars over concerns the measure would cost jobs in the auto industry. “This is also about employment,” Merkel told reporters in Brussels. “That’s why we need time to review and evaluate and decide what we will do. That’s why the vote didn’t happen.”
This position was somewhat surprising considering that only two months ago, at Germany’s annual Petersberg climate talks, Merkel called for a binding pact by 2015 to reduce carbon emissions, saying that waiting is not an option as inactivity only increases the cost of combating climate change later on.
Even more surprising was what seems to be the main reason behind this flip-flop – heavy lobbying from the German automobile industry which represents BMW, Daimler, VW, Porsche and around 600 other companies and opposed the new regulation. It was pretty interesting to see that auto companies we usually hear about in the context of radical innovation in mobility, bold sustainability strategy or partnerships with carpooling ventures are also lobbying against tougher climate regulation.
Nintendo is the poster child of disruptive innovation. Disruption experts like Anthony Scott like to use the Wii as an example of new market disruption, explaining how “instead of focusing on sharper graphics, crisper sound, or more complicated interfaces, Nintendo is expanding the market by making video games simpler and more accessible.” Hell, there’s even a Harvard business case study entitled “Nintendo’s Disruptive Strategy: Implications for the Video Game Industry.”
Why am I bringing this up? Because when it comes to conflict minerals, Nintendo is no innovator, and actually seems to be lagging behind most other electronic companies. That’s why the company was targeted by the anti-slavery group Walk Free in a campaign asking Nintendo to ensure its suppliers source minerals responsibly.
So why is such an innovative company so behind when it comes to conflict minerals? And, no less important, can acting responsibly on conflict minerals be a disruptive force? Can it disrupt the disruptor?
Many of our discussions on the food industry are focused on the question of responsibility and who we’re expecting to take more of it – food companies? Consumers? Both? Yet, one important part is usually missing from this discussion – the regulator.
The reasons for this absence are plenty, but the bottom line is that the responsibility model we’re left with is usually a voluntary one, where food and beverage companies come up with their own initiatives because they are either pushed by NGOs or consumers to improve their policies and practices, or believe that this is the right thing to do.
But, there are still some exceptions, and last week we had the chance to see one of them when the U.S. Department of Agriculture (USDA) released the new Smart Snacks in School nutrition standards, which are aimed to ensure school vending machines include only healthy choices.
This was a rare event, not only because it was the first nutritional overhaul of school snacks in more than 30 years, but also because the food industry was part of the effort that led to creating these standards. This unusual collaboration got industry organizations like the American Beverage Association that usually opposes restrictive regulation, arguing it limits consumer freedom of choice, to applaud the new standards and commend the USDA for its work.
The new standards bring to mind two questions – first, is regulation really better than the voluntary model? And second, can the magic of government and industry collaborating together for the public benefit work outside the school cafeteria?
I’ve been intrigued with the concept of shared value ever since Michael Porter and Mark Kramer first wrote about it in 2006. I think the idea of creating economic value by creating societal value has the potential to be a game changer for many companies and help make progress on important societal issues. Yet, I have to admit that until last week, I didn’t connect it with selling bottled water.
I followed the conversations we had here and on Twitter with Heidi Paul, Nestlé EVP for Corporate Affairs, following the release of Nestlé Waters North America’s (NWNA) latest Creating Shared Value Report, and one question kept bugging me – can selling bottled water really be considered creating shared value (CSV)?
To find an answer I first went to Porter’s and Kramer’s 2010 HBR article to find their definition of creating shared value:
“The concept of shared value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress.”
So basically, CSV is about companies creating economic value by tackling a societal issue.
Now, let’s see what societal issue Nestlé is tackling by selling bottled water in North America. NWNA explained it in its Creating Shared Value report: