OPERATIONS

The Pioneers

They built these businesses back when green was just another color.
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Sustainability manager, staff ecologist--new job titles to consider

When Gary Erickson started Clif Bar, the only ecosystem he worried about was the one inside his own body. He was a cyclist and outdoor enthusiast, and he wanted to make an energy bar that was both healthful and flavorful.

Fifteen years later, the company provides a comprehensive model of what it means to be green. In 2001, Erickson hired a staff ecologist and began working to reduce Clif Bar's environmental footprint. Among the changes: shifting to organic ingredients, eliminating shrink-wrap (that saved 90,000 pounds of plastic and $400,000 annually), and supporting a wind farm to offset fossil fuel usage. Last year, Clif Bar, which now has 170 employees and revenue of $150 million, hired a full-time "sustainability manager," who is conducting an in-depth audit of the business's environmental impact. Based on the manager's findings, the company has moved its warehouse from Reno to Los Angeles, closer to its bakeries, and switched its truck fleet to biodiesel from diesel, which creates 75 percent fewer greenhouse gas emissions.

Erickson did a lot of this before it was trendy--indeed, when he started his environmental initiatives, Erickson wasn't sure whether his customers would even want to know about them. But now that green is chic, Erickson hopes that other companies aren't just "greenwashing"--that is, treating the environment as just another marketing fad. "If you start a company, and your goal is to sell your company 10 years later for the highest return possible, there wouldn't be that much motivation for you to make sustainability the bottom line," he says. "The core problem is that we in business don't tend to accept that at a certain point, enough profit is enough."

And the food co-op begat a retail store, which begat a distribution system, and an organic food company was born

In 1968, when a small group of University of Michigan students decided they wanted to eat healthful, chemical-free foods, they couldn't just make a trip to the supermarket--organic food was practically unheard of. So the students hit the road, struck deals with local farmers, and started a food co-op. The co-op quickly became a retail store, and then, when the students started grinding and bottling their own nut butters and vegetable oils, a distribution system. In this haphazard way, with nary a business plan or an investor in sight, one of the oldest natural food companies in the country, Eden Foods, was born.

During the 1980s, the company, based in Ann Arbor, Michigan, became the first major distributor of soy milk in the U.S. Today it makes a wide array of soy-based foods, as well as other natural goodies, has 130 employees, generates $75 million in annual revenue, and draws on more than 300 family farms containing more than 40,000 acres of organic farmland.

Michael Potter has been Eden's president and chairman since 1972. Now that healthful food is so readily available, you'd think Potter would be rubbing his hands with glee. But while he's glad that more people are conscious of their food choices, he's decidedly underwhelmed with the mainstreaming of organic foods. The trouble, he says, is that the term "organic" has become so diluted that it's lost all meaning. "Most organic food that's on the market today would not be considered organic by Eden Foods," he says. (Eden products are certified organic by the USDA, but the company does not put the agency's logo on its packaging, arguing that USDA standards are inadequate.) Potter is hopeful that his customers will be smart and separate out real organic food from what he sees as the pretenders. In the meantime, the company encourages everyone to be "an organic skeptic."

"We are making everyone in consumer products think about what they do"

Jeffrey Hollender started his career as an entrepreneur in the 1980s with an audio book company that scored with titles like How to Marry Money. But he soon had an epiphany, sold his company, moved to Vermont, and joined Seventh Generation, one of the first makers of green consumer products.

Two decades and several crests of ecoconsciousness later, Hollender sees interest in greener living at an all-time high. Indeed, after years of being sold exclusively in health food and specialty stores, Seventh Generation's paper towels, toilet paper, diapers, and cleansers can now be found in chains such as Safeway (NYSE:SWY) and Target (NYSE:TGT), spurring annual growth of 30 to 40 percent and driving revenue to more than $60 million.

Seventh Generation stands out for its top-to-bottom commitment to social and corporate responsibility. The company audits manufacturing partners on their environmental and social performance and evaluates its own practices in a corporate responsibility report. And while Hollender admits that Seventh Generation is "not even a fly on the back of a Procter & Gamble," he's proud of what his company has accomplished. "We are making everyone in the consumer products field think about what they do," he says.

The roots are green. So is the $250 million in revenue

Two decades ago, when Gary Hirshberg wanted to talk sustainable business practices with a banker or some other business-suit type, he'd notice eyes rolling. Today, Hirshberg, who turned a seven-cow organic farming school in New Hampshire into Stonyfield Farm, the third-largest yogurt brand in the United States, has no trouble grabbing the attention of even the most cynical number-cruncher.

While sustaining a compounded annual revenue growth rate of over 26 percent--five times the industry average--Stonyfield Farm has stuck to its roots, using organic milk and natural ingredients and donating 10 percent of its profits to earth-friendly causes. At the same time, Hirshberg has invested consistently in a host of energy-saving practices--building, for example, the largest solar photovoltaic array in New Hampshire, a move that has saved the company more than $1.7 million in energy costs over the past six years. Along the way, the company has amassed annual revenue of $250 million. (It is now 85 percent owned by Groupe Danone; Hirshberg and Stonyfield's 400 employees own the rest.) "Back when we started the company and we talked about organic farming or decreasing our climatic footprint, we were largely dismissed as wacko," he says. "Many of us who were pioneering in this area were responsible for that perception--the rhetoric was pretty heavy." Over the years, though, green-focused companies have gotten their rhetorical acts together. "Now we know that green means green, there's real money to be made."

Sustainable foresting, for more than five decades

Since the 1940s, the Collins Cos. has used responsible forestry practices. The Portland, Oregon-based company, which owns some 300,000 acres of land in California, Oregon, and Pennsylvania, has never clear-cut a forest and has always left old-growth trees intact where possible.

But after observing a wave of anti-timber protests in the early 1990s, senior vice president Wade Mosby decided that wasn't enough. So in 1993, Collins became the first company in North America to seek and win certification from the Forest Stewardship Council, an international organization that reviews the long-term viability of forests. Working with the FSC has meant letting outsiders dictate policy in some big ways--as when one of the company's forest managers was obliged to take courses on wildlife biology. On the other hand, FSC certification landed Collins' hardwood products in big-boxers like Home Depot. It also led the way for cost-saving innovations in operations, including a waste-auditing system that allows Collins to use sander dust in its particleboard products, saving hundreds of thousands of dollars a year.

Next: The Builders

Last updated: Nov 1, 2006




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