The Hard Work of Social Responsibility

by Stephen Morris, Rutland Herald on Feb 26th, 2006

Only in Vermont

Vermont Mystic Pie Company brings together a Who’s Who and What’s What of Vermont companies. The apples come from local orchards that embrace the most rigorous ecological growing techniques. The butter comes from the farmers of Cabot Creamery. The flour may not originate in Vermont, but is supplied by King Arthur Flour, the nation’s oldest miller, headquartered in Norwich.

The recipe was developed with the assistance of the New England Culinary Institute. Start-up financing came from the Barred Rock fund, a socially progressive venture capital fund established by Ben Cohen with money he received from selling his ice cream company to Unilever.

The founder of the Vermont Mystic Pie Company, David Barash has a background that includes stints with Shelburne Farms, Ben & Jerry’s, Autumn Harp, and Stonyfield Farm. He has the background to know that a company with the right stuff has either “Vermont” or “Green Mountain” in its name. A touch of whimsy doesn’t hurt, either. “Mystic” is to “pie” as “Magic” is to “beer.”

The company also needs a mission. In this case the company is addressing the imperiled local  apple industry which has declined more than 40% in the past 15 years, due in part to the lowcost competition from–gulp!–China. The company needs a social conscience, too. Vermont Mystic Pie will donate 10% of its profits to True Majority, the online advocacy community started by the aforementioned Mr. Cohen to influence Congress on issues of social needs and environmental health. Additionally, at a time when “the future” for most startups means next week’s payroll, 10% of the ownership of Vermont Mystic has been set aside for a yet-to-be named nonprofit organization. Finally, the packaging features the artwork of Stephen Huneck, the Vermont artist whose black dogs are almost as recognizable as those other black dogs.

Vermont Mystic Pie is a company that could not exist anywhere else in the country. It is a networking tour de force its shared social, political, and business values are as important as the flakiness of its crust.

By the way, the pie tastes good, too.

A New Bottom Line

“Vermont Businesses for Social Responsibility was formed when a group of businesses got together to form a business organization that could serve as a voice for businesses that ascribed to the ‘dual bottom line’ – i.e. profit and socially responsible involvement,” says Don Mayer of Small Dog Electronics in Waitsfield. “Over the years we have refined this concept and now refer to it as ‘multiple bottom lines’.”

The idea of a “chamber for the rest of us” (no one knows who coined the phrase, but it has stuck) achieved critical mass in the early 1990s when socially motivated individuals and businesses began meeting informally.

Today, Vermont Businesses for Social Responsibility (VBSR) is a force to be reckoned with. Spence Putnam, Executive Director, recently announced that membership passed the 600 mark. VBSR’s 600 businesses and organizations collectively employ over 30,000 and generate more than $4.5 billion in annual revenues. Future membership of 1000 seems not only attainable, but only a matter of time. Social responsibility has taken its place alongside dirt roads, maple syrup, fall foliage, mud, and wacky ice cream flavors as commodities that distinguish Vermont from the rest of the world.

VBSR’s emergence has not come at the expense of the State Chamber. With more than 22,000 incorporated entities in the state, there seems to be growth opportunities for everyone. The more mature Chamber was started in the early 1950s and has a membership more than twice the size of VBSR and is growing, according to Executive Director Duane Marsh, at 1 to 3% per year. Relationships between the groups are cordial and respectful.

Marsh can’t fully explain the popularity of social responsibility here. He came to Vermont from Michigan where there is no public awareness of “socially responsible” business. “At the Chamber we don’t believe that economic leadership and social responsibility are mutually exclusive,” he says. He attributes the success of VBSR as being a result of the state’s size and “unique culture” that allows “social responsibility” to be defined as a separate niche. Marsh is more focused on the 20,000 entities who are members of neither business network. He won’t be satisfied, he says, until he signs up “every one of them.”

Adds Putnam, “In the early days VBSR was viewed as a threat to Chambers of Commerce, mainly because our messages to the legislature were counter to theirs in some respects (minimum wage, environmental controls, etc).” The sense of rivalry passed quickly, however, and cross-membership in organizations on either the sate or local level is common.”

For decades Vermont was a haven for cows and skiers, but a backwater for business. This changed, almost inaudibly at first, with the “settlers” who came to the state as part of the post-Vietnam back-to-the land movement of the 1970s. As a collective group they had long hair, tended gardens, and built primitive homes in remote locations. They loved their chosen state, but there were few ways to earn a living.

“If you wanted to stay at the party, you had to invent a job,” says John “Sucosh” Norton, currently Chief Operating Officer at Controlled Energy in Waitsfield. This company was one of many businesses that bubbled out a caldron of entrepreneurial activity in the Mad River Valley in the late 1970s and early 1980s. Small Dog Electronics, Northern Power, Wall/Goldfinger, and Vermont Castings were among the companies whose lineage is traced to this time and place.

Simultaneously in Chittenden County a corresponding gaggle of entrepreneurs were picking up the fragments of Garden Way, a multi-faceted enterprise that catered to the back-to-the-landers. After flourishing through the mid-1980s, its owners moved the headquarters to Troy, New York and divested the company of what it perceived as distractions from its mainstay rototiller business. Eager employees, schooled in the entrepreneurial traditions of Garden Way, started their own enterprises. Gardeners Supply, Country Home Products, Storey Publishing, Vermont Teddy Bear, Magic Hat Brewing, and Seventh Generation are just a few of the businesses with Garden Way lineage.

The third entrepreneurial force–Ben & Jerry’s–was a business nation unto itself. There didn’t seem to be a law of commerce that the boys from Waterbury couldn’t break and get away with.

By the 1990s these upstart, non-traditional enterprises were past adolescence, but not yet ready for middle age. They had the same networking needs as other businesses, but were not stylistically well-suited for the buttoned-down, traditional organizations such as the Chamber of Commerce. A murmuring began about “a chamber for the rest of us.”

The initial organizational meetings were held in the offices of Seventh Generation, then a mail order marketer of alternative lifestyle products. This was a fitting cradle for socially responsible business. Founded by Alan Newman, a Garden Way alumnus and later the founder of Magic Hat Brewing Company, this was a safe haven for gentle revolution.

Most of the founding revolutionaries are now the solid citizens on the statewide business scene. Bruce Seifer (now Mayor Clavelle’s Assistant Director of Economic Development) was part of the formative group. He remembers Peg Devlyn and Pat Heffernan (co-Presidents of Marketing Partners, a Burlington agency) as active contributors, along with Ben Ptashnik (founder of the importing company Via Vermont), and Matt Rubin (Vermont Guardian’s Business Person of the Year and leading proponent of building wind generators in the Northeast Kingdom).

The group decided they were FOR social responsibility, although they stopped short of defining what “social responsibility” was. “We decided the members would define the term over time by their actions,” says Bruce Seifer, “and that’s what seems to have happened.”

“I do not think that there was any precipitating event that began the movement,” says Small Dog’s Don Mayer. The organization was formalized in February 1991. Ben & Jerry’s and the city of Burlington provided seed capital to help the organization through its most formative years.

Almost from the start the group advocated for programs that were generally opposed by other business interest groups. VBSR supported Family Leave and advocated for a Sustainable Jobs Fund. They hired a Public Policy Director, Julie Davis, and fought to increase the minimum wage and defended Act 250. Membership grew by what current Executive Director Spencer Putnam calls “fits and starts” and had reached 415 members by 2002, when he came onboard.

Without existing models, members learned from each other. “We spent a lot of time doing write-ups called ‘Best Practices,’” says Bruce Seifer. (These are now available on VBSR’s website.) “We held regular meetings called ‘Circles’ where we would discuss and debate topics that would help members become more socially responsible.”

A business group that advocated treating workers better? An organization that said all workers deserved a “livable wage” so that they could afford the basics of life. These are novel? even laughable notions in the free-market, bottom-line driven business world. In Vermont, however, the ideas gained acceptance.

Early policy decisions were key. The organization would be about business, not social agenda or style. There would be no screens or criteria to determine who could join. You pay your dues, you’re a member. Secondly, the group would play actively in public policy. If you like the political and social positions the group is taking, you are inclined to join. If you don’t, you won’t. It’s a process of self-selection.

The benefits of membership are typical for a business network. VBSR holds two annual conferences that feature business speakers, seminars, and panel discussions. More importantly the gathering provide opportunities to learn from each other about the still-evolving practices of SR. The group honors outstanding achievement via its annual Terry Ehrich Award (named for the late president of Hemmings Motor News, also a driving force in the establishment of VBSR). It publishes a directory of members, including a listing of courtesy discounts and privileges members extend to each other. It offers accessibility to group benefits (such as health insurance) that small business members might not be able to afford.

In the early years of VBSR’s existence “social responsibility” meant very different things to different people. This was understandable according to Jeffrey Hollender, now president and “chief responsibility officer” at Seventh Generation. There was no precise definitions or measurements. “It’s like playing a game with no boundaries, where all the referees use different rules, and no one can agree who wins the game.”

Hollender remembers a lot of false starts. Seventh Generation (the company’s name borrows on the precept of the Great Law of the Haudenosaunee–Six Nations Iroquois Confederacy– which requires that chiefs consider the impact of their decisions on the seventh generation) won multiple honors in the 1990s for its environmental stewardship. Behind the green veneer, however, the story was often chaotic. The company experienced a traumatic break-up of its founding partners, a controversial public stock offering, and the sale of its flagship catalog. While there might have been high-minded talk about social responsibility, Hollender says “in the early years, it was really about survival.”

For others it seemed that social responsibility was synonymous with high-minded, wacky marketing schemes. Ben & Jerry’s, led by freewheeling and irrepressible Ben Cohen, set the tone. For a time it seemed that no idea was too outrageous. Need money? Sell stock to Vermonters and watch it rise in value. Thwarted by Pillsbury? Sue the Doughboy. Got a new concoction? Name it after other famous hippies such as Wavy Gravy and Jerry Garcia (and later Phish).

David Barash is the Mystic Pie Guy today, but in the 1990s was a member of Ben & Jerry’s senior management as sales mushroomed from $2 million to over $40 million. He recalls the challenges of nailing Ben’s feet to the floor with a rueful smile, “There is absolutely no doubt that, in certain areas, we absolutely did NOT know what we were doing,”

The company careened down a very public blind alley when Ben Cohen met with Jason Clay, then Executive Director of the non-profit Cultural Survival, after a Grateful Dead concert. The rainforest could be saved, said Clay, if a market could be developed for the Brazil nuts that grew there.

Saving the planet never seemed so easy. Ben, an affable guy willing to undertake Herculean challenges, answered “Sure!” and Rainforest Crunch, the ice cream flavor and candy was born. For several years Rainforest Crunch was the gold standard of how corporations can be powerful engines of social change. But after several heady years, the venture encountered reality. The simple plan to save the rainforest was not so simple. The resulting crash and burn, widely reported, led to a sharp re-assessment within the company of what social responsibility was. The company began conducting much more rigorous social audits conducted by independent third parties such as writer/activist Paul Hawken. The reports delivered pulled no punches and established levels of transparency, integrity, and maturity that raised the bar for everyone else. Social responsibility finally meant more than well-intentioned, crazy ideas.

Ben & Jerry’s commitment to social responsibility has faced a new challenge since the company was acquired by corporate giant Unilever. Was this a sellout by the good guys; or yet another bold stroke to bring mega-business into the orb of social responsibility? A visit to the company’s website today evidences continued commitment to the multiple bottom line: “We have a progressive, nonpartisan social mission that seeks to meet human needs and eliminate injustices in our local, national and international communities by integrating these concerns into our day-to-day business activities. Our focus is on children and families, the environment and sustainable agriculture on family farms.”

Nothing about health care or the war in Iraq, but clearly about more than making money. Is the glass is half-empty or half-full?

On a national level the social responsibility bandwagon is crowded by some of the most familiar names from the Fortune 500. The national counterpart of VBSR, Businesses for Social Responsibility counts amongst its membership Exxon/Mobil, Chevron, General Electric, and Wal- Mart, the same companies often portrayed as environmental villains.

Detractors claim that the national organization has no mission-driven soul and their members are using the cloak of social responsibility as a public relations strategy. Jeffrey Hollender describes their gatherings “a country club” held in meetings in opulent settings without a meaningful agenda.

Says Don Mayer “The positive benefits of social responsibility also attracts ‘posers’ or companies that wish to ‘greenwash’ their images as a public relations ploy. I believe that standards will help people to make the distinction between true socially responsible businesses and those that just want to seem to be socially responsible.”

Jeffrey Hollender adds “On my desk are a pile of corporate responsibility reports full of beautiful, idyllic pictures of sunrises and waterfalls. They show smiling faces of joyous people of all colors. These reports omit the bad news, the bits that failed, and the shortfall between where things are and where they ought to be. This is disingenuous and simplistic and reduces corporate responsibility to a series of check boxes to be ticked.”

While the jury is out on whether the concept of socially responsible business works at the megacorporation level, no one disputes that the idea is thriving in Vermont.

Jeffrey Hollender has emerged as an unofficial spokesperson for social responsibility. As the author of What Really Matters: How a Small Group of Pioneers Is Teaching Social Responsibility to Big Business, and Why Big Business Is Listening (Basic Books, 2003) he now finds himself on the other end of phone calls from CEOs of much larger companies who want to learn how to be socially responsible.

There’s an irony to this. Hollender came to Vermont with a reputation as a business-before-mission guy. In stark contrast to his colorful partner, Alan Newman, who was bearded, wore crazy glasses, drove an old Mercedes sports car, and had a nap room for employees, Hollender had not come to Vermont to plant a garden, make ice cream, or live off in the woods.

Trim, with only a slight betrayal of gray in his dark hair, it’s impossible to picture him in a tie-dyed t-shirt. He is frank about the lessons he learned about social responsibility. “What we learned is that social responsibility is not about what you say, it’s about what we do right inside our own building.”

The feedback from staff from their internal audits was often intensely personal. “People told me I was far too critical. It was painful to hear, but it was also a gift that gave me a roadmap of where I had to go.”

Seventh Generation has recently issued a 50 page corporate responsibility report that is filled with headscratching statistics and buzzwords like “transparency” and “closed loop systems.” Subtitled “Widening the Lens,” it portrays a company committed to defining something that is still elusive and defies quantification. “What I’ve learned,” says Hollender, “is that social responsibility is a journey that doesn’t have an end. And it is hard work. We are still in our infancy.”

Social responsibility is not a slogan, not a marketing strategy, but a way of life. It is not about counting paper clips, pretty pictures, or self-aggrandizing mission statements. It’s about where your vendors get their resources, what chemicals are used in processing those resources, how the by-products are disposed of, how they treat their work force. The hard work is about knowing how your own product affects the waste stream, and about owning up to customers when products don’t perform as promised.

Around Vermont Mystic Pie Company the talk is more likely to concern the grueling schedule of upcoming tastings than transparency or closed loop systems. While Dave Barash may fantasize about making the world a better place by gathering the world’s leaders over a slice of Vermont Mystic, accompanied by a scoop of Ben & Jerry’s (or a slice of Cabot Cheddar) and a steaming mug of Green Mountain Coffee, he knows that social responsibility is not a substitute for the myriad details involved in bringing a product–any product– to market.

If he can meet the expectations of customers, vendors, and employees … if he can stay ahead of the competition … if he can manage the cash flow challenges of a growing business … if the pies taste like the ones that Grandma made, then maybe he can think about social responsibility. Vermont Mystic Pie has great start, but there’s a lot of hard work ahead.