ENV 188A Business and the Natural Environment

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ENV 188A Business and the Natural Environment
Alliances with NGOs

• Magali Delmas

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Types of alliances

• Corporate sponsorship
• Firm contributes to the environmental group
  financially or in king through becoming involved
  in specific env causes or fund raising
• Product endorsement
• Environmental group approves a firms product as
  being ecologically sound
• Task force
• to develop economically feasible solutions for
  the greening of business practices

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The context that leads to collaboration

• Perceived crisis and shortcomings of adversarial
  approaches to problem solving
• ex Lawsuits might take years and results in
  greater costs
• Problems that are so complex that they require
  multiple actors to solve them
• Disagreement over solution
• Disparity of power/expertise among stakeholders
  in dealing with the problem
• Environmental groups have expertise and public
  support but lack power of implementing solution
• Each of the stakeholders have a vested interest
  in the problem

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Nature Conservancy and Home Depot

• Target of Rainforest Action Network campaign
• Commitment to phase out wood purchases from
  endangered regions by 2002
• Developed new procurement policies to trace
  origin of wood

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The Home Depot Wood Purchasing Policy

• The Home Depot will give preference to the
  purchase of wood and wood products originating
  from certified well managed forests wherever
  feasible.
• The Home Depot will eliminate the purchase of
  wood and wood products from endangered regions
  around the world.
• The Home Depot will practice and promote the
  efficient and responsible use of wood and wood
  products.
• The Home Depot will promote and support the
  development and use of alternative environmental
  products.
• The Home Depot expects its vendors and their
  suppliers of wood and wood products to maintain
  compliance with laws and regulations pertaining
  to their operations and the products they
  manufacture.

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Home Depot

• Conservancy helped Home Depot identify endangered
  areas
• Connected company to legitimate wood suppliers
• Timber tracking system

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Pros of collaboration

• Firm perspective
• Access to complementary assets
• Credibility
• Green products are particularly hard to market
  because greenness is not easily verified by
  customers
• Additional communication channels
• Scientific knowledge
• NGO perspective
• Direct impact on firms behavior, potential
  ripple effect within industry

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Turned Negative into Positive

• Partnership received significant media coverage
  (CNN, Newsweek, major newspapers, etc.)
• Raised profile with U.S. government
• Recognition by Conservancy in magazine, web site,
  annual report
• Praised by other NGOs
• WWF is delighted that The Home Depot supports FSC
  and that the company is using its purchasing
  power to develop sustainable forest management
  around the world.

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Conservancy Project Criteria

• Consistent with values
• Prefer companies with demonstrated commitment to
  environment
• Impact at scale
• Create best management practices
• Action-oriented project with measurable outcomes
• Minimum level of financial support

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Metrics for the Conservancy

• Philanthropic dollars raised
• Increase in habitat protection with respect to
  the 10 year goal
• Reduction in conservation threats
• Conservation easements dollars saved

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Partners of Nature Conservancy

• 3M Alabama PowerAmerican Electric Power Bank
  of AmericaBPBurt's Bees CanonCargillCaterpill
  ar Centex HomesChevron Disney
  CorporationDominion PowerESRI ExelonGeneral
  MotorsGeorgia PowerGeorgia-Pacific

• Hewlett-Packard The Home DepotJ.M. Huber
  CorporationLennox InternationalLowe's
  CompaniesMBNAMeadWestvacoMicrosoft Monsanto
  FundNestle Waters North AmericaOraclePacifiCorp
  Procter Gamble PSC New Mexico Royal
  Caribbean Second Nature SoftwareShell Tom's of
  MaineXerox Corporation

Some of The Nature Conservancys leading
supporters over the past 5 years. These companies
have provided support of 1 million or more or
are marketing partners.
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ED and alliances for environmental innovation

• Bristol-Myers Squibb - "MERGE-ing" the
  environment into new product development  
• Citigroup - Reducing the financial and
  environmental impacts of copy paper use
• Compass Group - Reducing the use of antibiotics
  in pork and chicken
• FedEx Express - Building the next generation of
  pick-up and delivery vehicles  
• McDonald's Antibiotics Project - Protecting human
  health by reducing antibiotics overuse in animal
  agriculture
• Norm Thompson Outfitters - Improving catalog
  paper practices
• SC Johnson - Implementing design-for-environment
   
• Starbucks - Re-inventing the coffee cup  
• UPS - Re-designing overnight shipping packaging

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Cons of collaboration

• Firm perspective
• Negative backlash if the project fails
• Confidentiality issues
• How to retain the Intellectual property rights?
• NGO perspective
• Open to criticism that is becomes and ally of
  industry
• Open to criticism that it looses neutrality

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Issue of property rights

• NGOs diffusion of practices throughout industry
  have incentives to diffuse information to as many
  other corporations as possible.
• Example Greenpeace-Foron alliance. Foron did not
  keep control over property rights of Greenfreeze

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Guidelines for alliances success

• Selection of an environmental partner
• Selection of project
• Managing partner relations

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Selection of an environmental partner

• Env group should have an established philosophy
  favoring market based solutions
• Env group should have a recognized, credible
  reputation
• Ability of the parties to provide complementary
  assets

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Selection of project

• Keep alliance based on subjects that are far from
  firms IP (packaging for McDonalds)
• Find organizational attributes that make
  Intellectual property difficult to transfer
• Implement and market defendable goals and
  programs (beware of scientific uncertainty)
• Strive for early movers advantages

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Managing partner relations

• Clear definition of objectives
• Tasks clearly defined with deadlines
• Bridge organizational cultural differences by
  building personal relationships
• Frequent meetings both formal and informal
  facilitate cohesive linkages and build trust
  among partners
• Maintain an arms length relationship formal
  contract
• No exchange of money
• Set-up conditions for ending up the contract
• Confidentiality issues addressed

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Exert from ED contract Expenses Termination

• The Project will be carried out by appropriate
  Alliance and company name staff, and will
  require priority effort and time commitment by
  each of the Parties. The Parties will each bear
  all of their own costs and expenses in working on
  the Project, and company name will not
  compensate the Alliance in any way for any such
  costs or expenses. Meeting locations and other
  Project activities will be chosen to equalize the
  expenses of the Parties
• Each of the Parties has the right to terminate
  the Project at any time. In such an event, the
  Parties will be free to comment on the Project as
  they see fit.

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Exert from ED contract Confidential information

• In order for the Parties to work effectively, it
  will be necessary for company name to disclose
  certain confidential information to the Alliance.
  The Alliance agrees that all information
  identified by company name at the time of
  disclosure as confidential will remain
  confidential and will not be disclosed without
  the written permission of company name or used
  by the Alliance other than in connection with
  this Project, subject to the additional terms and
  conditions contained in the Appendix. This
  confidentiality obligation shall remain in place
  until company name informs the Alliance in
  writing that the information is no longer
  confidential.

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Conclusion on Alliances with NGOs

• Work best in following context Perceived crisis
  and complex problems with disagreement over
  solutions
• Provide firms with access to complementary
  assets (scientific knowledge and credibility)
• But are risky in terms of use of information and
  how Intellectual Property is protected
• Choice of partner project as well as design of
  alliance are key for success

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Next week

• Tuesday Summing up discussion
• Thursday
• Final presentation 5 minute for each group (3
  slides). Each group emails Powerpoint
  presentation on WEDNESDAY with Final report