Photo credit: 4PIZON on Flickr
Every other week, AHA! publishes a useful compendium of recent news from the financial world. It’s always an enlightening and interesting read, and it touches on a concept that’s relevant to everything we talk about here on Shiny Green Button: economic sustainability. So, we thought we’d share the wealth. Enjoy!
Photo credit: jeroen_bennik on Flickr
I was just blown away by how honest and principled Starbucks CEO Howard Schultz seems to be, when reading the recent interview with him in Harvard Business Review.
For example, here’s his response to a question about decisions he’s made that have been unpopular with Wall Street:
Within the past year I got a call from one of our institutional shareholders. He said, “You’ve never had more cover to cut [employee] heath care than you do now. No one will criticize you.” And I just said, “I could cut $300 million out of a lot of things, but do you want to kill the company, and kill the trust in what this company stands for? There is no way I will do it, and if that is what you want us to do, you should sell your stock.” What I stand for is not just to make money; it’s to preserve the integrity of what we have built for 39 years …
Especially in light of other recent CEO news, Schultz’s words were a welcome change of pace, and I must say, a brilliant piece of PR. Schultz seemed to be reaching out to all of his audiences—employees, customers, shareholders—and hitting just the right note. If I were a Starbucks employee, reading those words would make me proud to work at Starbucks. It’s motivating to know the company’s top guy cares as much about people as profits. As a socially conscious customer, I can feel great about buying my morning coffee, because my $2.50 happens to be funding the well-being of human beings, not corporate growth at all costs. For me, that’s a better purchase motivator than any sleek new packaging or combination of syrups.
And, shareholders? I’m sure he scared a few of them off. But maybe Schultz’s strategy is to not just have a more sustainable company—and by sustainability here, I mean long lived as well as green. Maybe he’s shaping a more sustainable investment environment, with shareholders who care as much about the complete health of the company as they do their returns.
Photo credit: szlea on Flickr
I am still thinking of this brilliant blog post, which I read almost two full months ago. The first sentence stopped me in my tracks:
“Did you know that the industry most responsible for high levels of carbon emissions, and also with the biggest potential role in mitigation is … banking?”
The post goes on to argue that because today’s banking is an industry based on selling credit, the credit card purchases we make today tax the resources of tomorrow.
I don’t expect even the most responsible of banks to change their business strategy. There’s no profit in telling your customers to stop swiping their plastic. I could cut up my credit cards, but I’m holding out for an alternative.
Earlier this year, AHA! released a white paper on triple-bottom-line banking, in which we featured three small banks that have made social and environmental responsibility part of their mission. But I am waiting for the big guys to get hit with the clue bat. What a great story it would be—what a differentiator—if a big retail bank used credit and other financial products for good. I can easily get a credit card that gives me bonus points or dollars back for every purchase I make (which just encourages me to buy more and spend more credit). But what about awarding points for more environmentally friendly purchases, like ENERGY STAR® appliances, or TerraPasses? Banks could still make a profit, but could encourage more environmentally responsible buying habits.
Or mash up ING and Global Giving: Let me choose where the power of my savings goes, perhaps to make loans to environmental startups, or micro loans to local businesses. I would be motivated to save more, just knowing how my bank is reinvesting my money. Right now, my savings could be going to fund the development of a new mini-mart.
So blogosphere, is there such a thing? Someone tell me that my Google search was too hasty and I missed something. Here comes Citibank with a new green credit campaign?
If such a thing exists, it seems like it would be the marketer’s dream. As the folks at egglog point out, there’s more and more consumer skepticism regarding gratuitous consumption, and lots of demand for products people actually want and need. A product that is good for customers, their financial status, plus good for the planet? That’s an easy sell.
“What is your bank trying to sneak by you?” asks the website for the newly launched Ally Bank. Unlike all those other bad, bad banks (you know, the ones who loaned all your money to people who couldn’t pay it back and then went out of business?), Ally is a bank you can trust.
In its mission statement, Ally claims:
We’re a bank that values integrity as much as deposits. A bank that will always be open, accountable, and honest. Yes, honest. We won’t deal in half-truths, kindatruths, or truths only buried in fine print. That’s because we don’t have anything to hide. We’re always going to give it to you straight.
This all sounds great, except that what Ally appears to be trying to sneak past us (they asked the question, after all) is the fact that in their former, and very recent, incarnation as GMAC (the finance arm of foundering General Motors) they were having some serious problems.
Remember those bank stress tests the government was putting banks through? It seems that after getting $6 billion in federal bailout funds, GMAC still had the “biggest [capital] shortfall by far” of any of the 19 banks tested. This is a fact that prospective customers of Ally Bank might be interested in, and it raises an important question about how to communicate with customers in this post-crisis era: At what point does straight talk become really, really risky talk?
Consumers already have a pretty low opinion of banks at the moment, so there’s clearly an opening for a no-nonsense approach to banking. But when you bill your new (actually, old) bank as the keeper of virtue and trustworthiness, the potential for customers to feel outraged, betrayed and disappointed at the slightest misstep seems even greater than it would be for today’s run-of-the-mill, TARP-fund guzzling banks.
The time is right for a company like Ally Bank. But we’ll have to wait and see what customers will do when the brand-new paint begins to rub off the Ally logo, revealing the old letters underneath: GMAC.
After a wondrous holiday weekend here in Portland (blue sky, sun, lots of planting, farmers market, live local music, mountains in view—is this heaven?), here’s something that helped me get back to the ol’ grind this morning. McDonald’s, who, IMHO, has done quite well the past few years in the area of CSR reporting, has done it again.
The granddaddy of all fast-food chains has just released a report that includes 80-plus green practices from their locations and operations worldwide.
The report features successful practices in energy, packaging, anti-littering, recycling, logistics, communications, restaurants, sustainable food, supplier leadership and other areas
Here are two nuggets that I’m particularly McLovin’ from this showing:
So … hats off to Micky D’s for its CSR communications efforts. Great, now I’m hungry for fries.
The food industry has already wrung every drip of meaning out of the word “organic”—is “local” the next victim?
On Tuesday, Frito-Lay launched a new marketing campaign that positions their potato chips as local food, focusing on the 80 “local” farmers in 27 states that grow its taters. The Lay’s website even features a “Chip Tracker” that tells you which factory your bag of chips was processed in. “Chances are,” the site says, “it may be closer than you think.”
Maybe it is—but that’s SO not the point. The local food movement is based on the idea of knowing more about where your food comes from. It’s about having a stronger relationship with the people who grow or raise it. It’s about eating food that’s in season, grown on a diversified farm without massive use of pesticides.
It most certainly does NOT mean food processed in factories (even if they are only two hours away), sourced from farms in more than half the states in this union, grown in massive monocultures, and stuffed with all sorts of preservatives and additives that extend shelf life far beyond any natural expiration period.
The director of public relations for Frito-Lay North America had this to say to the New York Times:
“Local for us has two appeals. We are interested in quality and quickness because we want consumers to get the freshest product possible, but we have a fairly significant sustainability program, and local is part of that. We want to do business more efficiently, but do it in a more environmentally conscious way.”
She forgot to mention the third, most obvious appeal: there’s a growing market for local food that Frito-Lay would like to tap into.
As a foodie who loves potato chips, I can’t help but see this campaign as anything but an epic masquerade. Frito-Lay’s target is obviously not the real locavores, who have already spoken out on the absurdity of it. No—their marketing team is smarter than that. They are aiming for people who are becoming more conscious about their eating habits but haven’t yet learned how to find food outside of the aisles of the supermarket. This campaign is a thinly veiled and poorly thought-out attempt at duping shoppers into thinking they’re making a healthier, more sustainable choice.
Will it work? Let’s hope not. So far, the campaign hasn’t jumped off to a great start: at this very moment, a Twitter search for the word “Frito” returns tweets about greenwashing, co-opting and spin. But if history is any test, Big Food is well on its way to repurposing a once meaningful, grassroots term.
Michael Pollan said it best today on Democracy Now!, referring to, among other similar attempts by the food industry, Frito-Lay’s new campaign:
“The language of sustainability and the critique of industrial food is being picked up by some of the major players within industrial food, either as an effort to co-opt the rhetoric or simply confuse the consumer and the citizen … I think what we see here is another example of the food industry’s ingenuity in taking any critique of industrial food and turning it into the next marketing strategy.”
Memo to Frito-Lay: if you really want to do it right, start by examining your product and the way you source its inputs, and look for ways to encourage safer, more environmentally sound agriculture. (And no, your compostable bag made from what I can only imagine is subsidized commodity-crop corn does not count.)
And, really, come on. Don’t pretend to be local. That’s like telling us your chips are “home-cooked” simply because there is a house down the road from your factory.
Some things just can’t be adapted to corporate, industrial food. Local is one of them.
Over at the Financial Brand, there’s an interesting compilation of statistics about the financial services industry. At first glance, it shows an industry in a world of hurt:
And not only is business down, many potential bank customers just aren’t making it into the bank. 32 percent of adults and 48 percent of Gen Yers have no savings. What’s more, 41 percent of adults give themselves a C, D or F on personal finance knowledge. So banks aren’t popular, and their customers aren’t motivated to give them business.
Is it just me, or does this seem like a big, big opportunity for someone to make banking appealing? Or even cool? For several years, ING Direct has been chipping away at making savings attractive for normal folks, and before the Chase takeover, WaMu had a thriving retail banking business that made banks seem approachable and friendly. But the opportunity suggested by the above numbers seems bigger than that; it’s a chance to engage a huge and disaffected public as true partner and guide through the financial wilderness we’ve all been cast into. Most of us use banks because we need to. What could banks say or do to make us want to?
So, imagine you’re a bank, and you manage to pick up a whole lot of extra branches and customer accounts on the cheap. Of course, you’ll be changing the name of these new branches, which could make already skittish customers nervous. How do you announce the change that makes everything seem okay to depositors looking to pull their funds and transfer them to the seemingly superior security of their mattresses?
Here’s what Chase did, facing this very situation, to roll out the Chase name to former customers of the once-beloved WaMu in California:
There’s a clear break here from the Starbucks-casual image that WaMu cultivated (to considerable success, we should remember). It’s a montage of California cliches, from surfing to Easy Rider, accompanied by a remake of John Lennon’s “Instant Karma.” While the chorus “we all shine on” obliquely promises continuity, the future into which we’re headed is presented in a strangely disconcerting black and white. The lack of color strips the life and joy out of the images of freedom and happiness we see.
“Chase. New to California, but not to banking,” concludes the narrator at the end. This was probably intended to be reassuring to WaMu customers being brought into the Chase fold, but I also detect an undercurrent that says, “Now we’re Chase. Deal with it.” It’s a more austere approach to bank branding than WaMu customers are used to, and it perhaps signals a change in customer expectations: If the warm, fuzzy WaMu I trusted so much turned out to be just like all the other subprime-mortgage peddling grifters, maybe I don’t want a friendly casual bank. Maybe I just want one that will stay in business and not lose my money.
When my husband and I got hitched several summers ago, one of the first things we did was mingle our finances. I’d like to say that we spent hours researching banks, poring over account statements, brochures and offerings, and talking to the smartest people we knew before deciding who to trust with our modest savings. We didn’t. Instead, I immediately offered my Bank of America accounts up for sacrifice. The bank had recently contributed to George W. Bush’s inaugural celebration, and I wanted to mete out the only punishment I could.
My decision wasn’t based on location, interest rates or products, but on a gut-level reaction to Bank of America’s brand and what it stood for. I no longer trusted their policies, their ethics or their intentions. And without that trust, there was no way I was going to let them use my hard-earned money any longer.
Today, America’s largest banks have a much bigger problem than one pissed-off writer shuffling a few thousand bucks around. These institutions have tarnished their images with their participation in the economic crisis, squandering the faith of millions of Americans. What’s more, they have competition. Some banks out there have demonstrated that there’s a better way to operate by focusing on the triple bottom line—that is, measuring success not only by profits, but also by their positive impact on the community and environment. Arianna Huffington highlighted triple-bottom-line banks in a recent post, but we scooped her by a few days with our latest white paper.
Apparently, the recession isn’t affecting me at all. At least that’s what the people at Barclays Bank Delaware seem to believe, since they just sent me an invitation to apply for the Visa Black Card. “The Black Card is not for everyone,” reads the postcard that arrived in my mailbox along with my mortgage and utilities bills. “In fact, it is limited to only 1% of U.S. residents.” Finally, a bank with some good news!
I realize that I’m lucky to belong to this elite class of people who can enjoy spending freely when the rest of the country is worried about trifles like food and shelter. The Black Card’s $495 annual fee entitles me to 24-hour concierge service, an “exclusive rewards program” and unspecified “luxury gifts.” It’s like Barclays Bank has been reading my mind! As I watch my home equity wither and the prospect of retirement recede into the distance, not a day goes by that I don’t think to myself, “If only I had 24-hour concierge service!”
But the best part about the Visa Black Card is the way it looks at the cash register. As the invitation says, “The Black Card is not just another piece of plastic. Made with carbon, it is the ultimate buying tool.” It’s so refreshing to hear something nice about carbon for a change. I, for one, am tired of all the whining about greenhouse gases and the yapping little Priuses. I want to go back to the days before people gave me dirty looks for driving my Hummer. Yes, with the Visa Black Card, I can feel like I’m still living in 1999. Who cares what the rest of America thinks?
