Ethics: benefits environment, community and bottom line

By Lorraine Heller

- Last updated on GMT

Related tags Management Business ethics

Integrating social and environmental concerns into business
practices ultimately benefits a firm's bottom line as well as the
environment, according to the CEO of energy bar manufacturer Clif

These could include initiatives such as waste management, energy reduction, sustainable sourcing and community support, said Sheryl O'Loughlin.

Speaking at a recent conference on corporate social responsibility, O'Loughlin revealed the firm's "five bottom lines"​ , which allow it to achieve long-term profitability while also supporting the environment.

These focus on a drive towards sustainability through sustaining its business, its brands, its employees, the planet and the community.

"We have the power, through business, to make an incredible amount of positive change in this world,"​ she told an audience of next generation business leaders at the Net Impact conference in Chicago on Saturday.

Indeed, consumers today are more interested in fair trade and ethical business than ever before, a social consciousness that provides food manufacturers with fertile ground to drive sales by building up a sustainable brand image.

As a result, a growing number of companies are becoming actively involved in social responsibility. Wal-Mart, for example, last month announced plans to measure its 60,000 worldwide suppliers on their ability to develop packaging and conserve natural resources.

This initiative, scheduled to begin in 2008, is projected to reduce overall packaging by five percent and to save 667,000 metric tons of carbon dioxide from entering the atmosphere, while also resulting in $3.4bn in savings.

California-based Clif Bar, which has an annual revenue of around $150m, also said it was able to cut costs by reducing its packaging.

"When you look at your business with a critical eye to the planet, you start to question things that may have become a habit with no real benefit,"​ said O'Loughlin.

In the case of the organic bar manufacturer, this involved slashing 90,000lbs of shrink wrap from its product boxes, which actually played no role in keeping the goods fresh. The action resulted in annual savings of $450,000, as well as reducing levels of plastic sent to landfill.

But the company is also seeing profits boosted in other ways.

When it made a switch to organic ingredients in 2003, despite previous consumer research indicating no particular benefit from the move, Clif brand's business saw a 30 percent year-on-year growth, after four years of flat sales.

"This was partly because people believed the products were healthier for them, but also because of the significance of the move. It meant a lot to them. Consumers are demanding sustainable production, they are voting for it with their dollars,"​ O'Loughlin told

But although profitability is obviously crucial to the company's survival, it does not focus on driving huge growth in the short term, but instead on sustaining profitability over the long haul.

Long-term profitability, which is one of the firm's five business aspirations, is what allows it to fuel its remaining aspirations, said O'Loughlin.

These include: sustaining its brands, which carry the company's story; sustaining the planet, by taking measures to reduce its ecological footprint; sustaining its community, through contributions of time and money; and sustaining its people, by inspiring employees and making the workplace 'fun'.

In order to achieve some of these goals, the firm has put a "one percent"​ rule in place. This means that every year, Clif Bar contributes the equivalent of one percent of its sales, its time and its products.

For example, part of profits from sales of Luna​, the firm's nutrition bar for women, go to the Breast cancer Fund, which works to eliminate the environmental causes of breast cancer. In eight years, the firm has donated $1m to this fund.

In terms of time, Clif Bar employees donate 2080 hours per year - the equivalent of one full time employee - to community service. Employees, who are the ones to choose which causes to support, have so far contributed over 13,000 hours to local organizations.

When it comes to of food contributions, hundreds of thousands of bars are donated each year, which are often used to provide nutrition in emergency situations. And in terms of business, the firm operates in ways that support communities that share its values about social justice and the health of the planet.

"Imagine what the power would be if all businesses embraced the one percent rule,"​ said O'Loughlin, who calculated that in the San Francisco Bay area alone, one percent of the revenues of 100 Fortune 1000​ companies would equate to almost $8bn.

However, no business model comes without its challenges. Although Clif Bar spreads its message of corporate social responsibility through grass roots marketing, the firm has found it difficult to clearly communicate the message on the limited space on its product packaging, and so far makes no mention of its business practices on the products themselves.

Sourcing ingredients also remains a primary concern, with organic ingredient demand outstripping supply.

But although sourcing large supplies of varied ingredients remains a major challenge in this area, companies are starting to realize there is a win-win situation between business and ethics, regardless of consumer interest. And this, in turn, indicates a turning point in food sourcing practice.

Indeed, according to the Ethical Trading Initiative (ETI), a UK alliance of companies, trade unions and non-governmental organizations, if a company has a value-added long-term relationship with suppliers it can build a bond of trust - and this helps overcome supply chain hiccups.

O'Loughlin on Saturday urged her audience of tomorrow's business leaders to carry the one percent rule throughout their career, to always find ways to reduce waste, and to maintain a critical eye on the way their business does business.

"A critical eye will reveal difficult challenges, but if you have the courage to embrace these challenges, it will improve your business, your people, the community and the planet,"​ she said.

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