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course, sustainability lies in finding a strategic balance among social, environmental, and commercial goals. Activists may assert that commercial success is part of the equation, but for them it usually takes a back seat. And many activists have little understanding of particular companies’ business issues and capabilities. Starbucks initially chose to establish its own standards for sustainable coffee. The company felt that coffee quality, which is essential to the brand, was poorly addressed by the existing standards. So in 2004 it created the Coffee and Farmer Equity (C.A.F.E.) Practices, which sup- port both coffee quality and equitable sourcing goals. To enhance C.A.F.E.’s credibility, Star- bucks enlisted Scientific Certification Systems, a respected third-party standards consultancy, as its global partner. At about the same time, Nestlé partnered with the Rainforest Alliance to launch the AAA Sustainable Quality Program for its high- end Nespresso brand coffees. Like Starbucks, Nestlé wanted both high-quality coffee and greater sustainability. Both companies are working with external stakeholder groups to build critical mass around their own standards. Nestlé’s Coffee Forum, for example, has ex- panded to include the International Finance Corporation, INCAE Business School in Costa Rica, several sustainability consultancies, and more than half a dozen coffee suppliers. Cutting through a clutter of proliferating The Hazards of Charting Your Own Course standards requires investing in partnerships, developing trust, exerting political influence, and managing conflict, among other leader- ship challenges. But Starbucks and Nestlé are seeking to establish the benchmarks against which their brands—and potentially their competitors’ as well—will be judged. To date, sustainability has not been a rele- vant differentiator in the pay-TV industry, but DISH Network is attempting to change that. As the number three brand in the category, fac- ing brutal competition from market leaders Comcast and DIRECTV, the company hopes to generate competitive advantage by defining the green standards for its sector. To this end, it is seeking ways to leverage the environmental friendliness of its satellite network relative to cable and telecom infrastructures and is look- ing into alliances with and endorsements from credible sustainability partners. Break away. What can a company do if it’s confronted with established standards that don’t play to its strengths, are inconsistent with its strategy, or actively undermine its competitiveness? We know of only a few orga- nizations that have gone on the offense when faced by such a challenge, but we suspect that more will do so as bystander companies are in- creasingly blindsided by new standards. Apple, for example, confronted this problem in its typically iconoclastic way. Although it had positioned itself as the revo- lutionary leader in its industry, in 2006 Apple found itself glaringly out of step with the sus- tainability movement. In August of that year Greenpeace released its sustainability rank- ings of computer manufacturers, and Apple was conspicuously near the bottom of the list. At first the company dismissed the rankings, saying, “We disagree with Greenpeace’s rating and the criteria they chose.” Analysts initially viewed that reaction as simple defensiveness. But a deeper strategic move was under way. Apple subsequently turned the tables on Greenpeace by calling its criteria not green enough and pledging to set a new and higher standard for green computing. In short, it out- greened the greens. Apple contends that Greenpeace and, more important, its own high-tech competitors are ignoring the most blatant environmental im- pact of computers: the energy they consume and the carbon emissions they generate. In classic style, CEO Steve Jobs said the rankings Winning in the Green Frenzy Companies that create their own sus- tainability standards risk accusations of greenwashing—positioning “dirty” products or policies as environmentally friendly. Thus they should not try to break away from standards or define new ones unless they’re sure they can credibly demonstrate their commit- ment and capability. Monsanto learned this the hard way in the 1990s, when it claimed that its inno- vations would fuel sustainable agricul- ture by reducing reliance on pesticides and fertilizers and conserving water. In 1996 the CEO, Robert Shapiro, an- nounced that its genetically engineered crops would “help immensely in closing the gap between hungry people and ade- quate food supplies.” But following the announcement, the company faced pro- tests by activists worldwide who were concerned about the environmental and health impacts of gene splicing. Mon- santo had to back down from its claims, and its biotech business has since taken a far lower profile. Monsanto had to back down from its sustainability claims. harvard business review • november 2010 page 5PDF Image | Winning in the Green Frenzy
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