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In some places, like California, the focus is on water conservation. In others, like Ireland, the company has worked to help upgrade the infrastructure. In India, it is teaching farmers about drip irrigation. In Vietnam and Thailand, it has teamed up with WWF to help preserve the entire Mekong River basin. "These efforts are not a separate thing [from the company's core business] like, here's what the environmental guys are doing," says Koch. "Yes, there's some altruism involved and wanting to do the right thing, but the single biggest reason is our business."
What Coke realized is that environmental risk is by its nature tied up with political and reputational risk. "Our water use is highly visible," says Joe Rozza, a global water-resource-sustainability manager at the company. "It's in our product as an ingredient. And we use it for cleaning and heating and cooling." In many cases, to be sure, Coke's buying power would allow it to continue to operate even in areas where water had become polluted or scarce. But while watching the taps run dry would be bad enough, the graver threat, as the company learned in India, is being blamed for the shortage. "Water is part of the social, political and economic fabric of society," says Rozza. "It touches everybody's life every day. It's really redefining the risk landscape of the future."
Still, there's no question that environmentalism in pursuit of profit has its limits. It works only as long as it serves the bottom line and doesn't undermine the company's core business. "McDonald's is a great example," says Radford of Greenpeace, which has worked with the fast-food giant in efforts to reduce tropical deforestation. The company's environmental efforts are commendable, he says. "But the world simply can't sustain that much meat. So that's one company that's hard to imagine being truly green."
Loro Piana, for its part, sells a lot more cashmere than vicuña hair despite serious concerns by environmental groups that the downy-haired goats that produce cashmere are the cause of land degradation and desertification. And it's not clear that the company could afford to maintain its commitment to the vicuña if demand for the fiber suddenly dropped. What would happen to the animal if the economic underpinnings of its preservation ceased to exist? Business-based conservation "needs to go in tandem with broad government policies and incentives," says Justin Ward, vice president of business practices for Conservation International, an environmental group that blazed the trail for corporate partnerships. "It's not an either-or proposition. The question is, How can government policies and private-sector action be most complementary?"
One way the two can work together is for companies to act as canaries in a coal mine. Consider the issue of climate change, a pressing one for politicians and executives alike. "When we talk climate change, what we're really talking about is the diminishing of quantity and quality in our supply chain," says Jim Hanna, director of environmental affairs at Starbucks.
For the Seattle-based coffee company, restrictions on carbon emissions are nothing compared with the threat that global warming could pose to its primary product: the climate-sensitive arabica coffee bean. Already, the company's small-scale suppliers have complained about changing weather patterns that have begun to disrupt their yields. Warm winters have unleashed pest infestations; earlier rainy seasons threaten to drown their crops; stronger storms are wreaking havoc in the fields. And while it may not be possible to link these types of specific environmental changes to global warming, they offer a worrying window into the future. "We're not going to wait around for the impact to be so severe that there's nothing we can do about it," says Hanna.
Some members of Congress are skeptical about global warming, but Starbucks joined a coalition of companies, including Nike, Timberland, Levi Strauss and Sun Microsystems, to lobby the U.S. government to take action to reverse climate change. "Our goal in Washington is to raise the awareness of elected officials that not everybody in the business community opposes legislation on climate change," says Hanna. Their efforts, say the companies involved, are slowly bearing fruit. "Congress really seems to like to hear from business leaders," says Anna Walker, senior manager of government affairs and public policy at Levi Strauss, whose chairman has testified before the House Select Committee for Energy Independence and Global Warming. "When it comes time to vote, it's helpful to them that their constituents hear that there's a business rationale behind their decision." When it comes to the environment, sometimes it's still money that makes the most convincing case.