Interview with Jeffrey Hollender, co-Founder of Seventh Generation

Recently, I (SC below) had the pleasure of conducting an interview with Jeffrey Hollender (JH below), Co-Founder and former CEO of Seventh Generation as well as co-founder of the American Sustainable Business Council as part of our sustainable business strategy series on GreenBusinessOwner.com. Mr. Hollender has a new book coming out, Planet Home: Conscious Choices for Cleaning and Greening the World You Care About Most, and a lot of great advice for those of us working in the green economy.

SC: Obviously, the world has changed quite a bit since you founded Seventh Generation. Pioneers such as yourself early on saw the need for a sustainable economy, but has the pace of change and adoption of a sustainable ethic by corporations surprised you at all?

JH: There are two sides to the coin in answering this. 20 years ago, the language of green products and a green economy and sustainable business just didn’t exist. The good news is that these issues were outside the consciousness of business 20 years ago. Businesses these days, especially those that cater to consumers, have responsibility, ethics, and sustainability as top of mind issues. Retailers like Wal-Mart, who wouldn’t have considered this 20 years ago, are now selling green products. These are all good things.

The flip side is that, to a large extent, we don’t have a lot of standards on what ‘green’ is. It makes it hard for companies that are doing a lot to be competitive with companies that are doing a little…standing out is more difficult because of a lack of standards. Also, we’re far from a position where we’re making substantial progress on larger issues like global warming, social inequities. Problems are still getting worse.

So the question is “what will it take to get more significant solutions to impact our overall economy?” How do we get to a point where there’s sufficient capital to help startups that are creating green jobs and green products, and how, from a regulatory perspective, can we stop encouraging companies to do the wrong thing.

SC: Did you happen to see the article from the NYTimes about the U.S. Chamber of Commerce, which has long been an anti-environment lobbying group headed up by companies like Massey Energy, urging lawmakers to focus on fossil fuel production, rather than what they call ‘high-cost energy sources’ like wind and solar?

JH: This is all part of the reason that 18 months ago, several of us co-founded the American Sustainable Business Council, which now has 65,000 business members. ASBC represents a paradigm where, even if your issue is global warming, and mine is finance reform, it is obvious that standing together we have a much greater chance to work on these two highly correlated issues, than we do standing alone on our own issue. Members range from the Manhattan Chamber of Commerce to Green America, the South Carolina Small Business Chamber and the Social Venture Network. It’s an incredibly diverse group, which is a good sign. The ASBC is part of the answer to the U.S. Chamber of Commerce and other groups that aren’t helping us solve critical issues.

SC: You’ve been well-chronicled as a leader of the Triple Bottom Line economy. Your company’s innovative solution to the worker strike at Albertson’s grocery stores is a great example of innovation and balance along the Triple Bottom Line. Perhaps you can walk us through that, and then…What’s the epilogue to that story–what have you seen as a result of that effort? Was their any backlash from Albertson’s that you were supporting their striking employees? Have you seen labor leaders become more interested in sustainability as a result?

 

JH: There was no backlash at Albertson’s. Seventh Generation went on to pursue many years of refusing to do business with Wal-Mart in a very public way because of their absence of corporate social responsibility efforts. Rather than standing on the sidelines and criticizing Wal-Mart, I wrote Lee Scott of Wal-Mart to offer him help in choosing a better path. So we helped play a part in moving their significantly scaled operations in a more sustainable direction. 

From a labor perspective, there’s a coalition gaining momentum called ‘BlueGreen’ which brings together the labor and the environmental movement that is gathering strength. You have steel workers and the SEIU working side-by-side with the Sierra Club to help create a more equitable society, good jobs, and a thriving middle class. It does require people to think outside the box in dealing with these challenges that we’re facing. It’s like Albert Einstein’s quote, “We can’t solve problems with the same thinking that got us into the problem in the first place.”

One of the reasons we’re in the challenging position we’re in is that 30-40 years ago, most workers were in a trade union. We don’t have that counterbalancing force anymore, so that business interests have gotten disproportionately strong in terms of tax and public policy and regulatory issues. We end up with rules that allow hedge fund managers to avoid taxes on income and just pay capital gains tax. The highest paid hedge fund manager last year made about $4 billion dollars — in one year.

And the truth is that business needs a vibrant middle class. When you have incredibly high levels of unemployment, long term, that is really bad for businesses that are looking to sell to those customers. I support greater restraint on the business influence over electoral politics. We stand against public policy that continues to create a greater division between the rich and the poor, and these kinds of alliances are a good part of that solution.

SC: There have been a number of high-profile sell-offs of sustainable innovators such as Ben & Jerry’s, Aveda, Odwalla, etc. Seventh Generation remains independent. Can you tell us a little bit about how you think about the tradeoff of potentially wider distribution versus a dilution in brand and values?

 

JH: There is limited opportunity and huge challenges in scaling progressive, responsible business. It’s very difficult for those companies to remain indepedent. When Ben & Jerry’s was sold, Ben raised capital to try to purchase the company away from Unilever, but he couldn’t raise enough money. Unilever just had too much on the table. That’s a structural challenge in the marketplace. 

 

If you were to make a chart of the 100 leading responsible brands in the last decade, probably 95 of those have been sold to large companies. I don’t think that’s a good trend. The challenge is that these companies are the real innovators, the ones pioneering new ways of doing business…that process gets cut off, to some degree, when the company is sold. I am deeply concerned about that process and that trend. Seventh Generation, when it was under my leadership, which it no longer is, was very committed to keeping it independent for all those reasons. Increased sales and a larger distribution network is only one way you would measure the positive impact of selling out to a large company. The other questions you need to ask include: is the rate of innovation proceeding at the same pace as it was in the past? What is the impact on employees? Are they treated as well as they used to be?  What happens to the innovative practices like Ben & Jerry’s commitment to pay equity? These policies tend to cease when bigger companies buy these smaller innovators.

 

SC: What guidelines/visions would you like to share, or perhaps advice, for aspiring green business owners?

JH: Several things stand out for me, today. One is the importance of embedding your mission into your company’s governance. Efforts like B-Corp, that institutionally embed your mission into the DNA of your company, are well-needed. The second is that there be some effort on the entrepreneur’s part to maintain some control over the long-term mission and vision.

There are many ways that sustainable small businesses face the same challenge as conventional companies, and there are quite a few that face different problems. In the short term, businesses face a lot of challenges. Access to capital. Hiring and finding the best talent. Ensuring the product they’re selling actually has a market that’s interested in buying it. It is fascinating to see how startups can message their product/service and tap into consumers–not just LOHAS ones–and create a genuine business case for sustainability while yet balancing all these traditional concerns. 

That opportunity really gets to the question of positioning. One of the things that I’ve learned is the that all companies must answer the question of what’s in it for the consumer. It’s a critical question for sustainable businesses to understand. Health and safety benefits often trump environmental benefits to the consumer. So I encourage startup entrepreneurs to figure out how to communicate effectively with those consumers. Where is that target customer’s starting point? If you can tie your product to that person’s family, the health of their children, etc., then you can really connect with them. 

SC: One of the guiding principles of Seventh Generation is radical transparency. It’s a buzzword these days and you were obviously one of the pioneers of its full implementation. What’s been the biggest challenge on that?

JH: There are several. One is that lawyers keep telling you not to say anything you don’t need to say. Investors can sometimes be scared of anyone saying anything that might be construed as negative about your company. Investors tend to be out of touch with the influence of social media in that way, but it is a real challenge. Consumers are so cynical of business and feel so disappointed by business, yet there’s a genetic disposition among investors to only talk about the good, not the bad. Same can be said about salespeople–they’re nervous about disclosing anything less than ideal about the product. So it’s hard to maintain good relations with those folks. There’s a gap between the rate of change in the minds of consumers and the traditional way in which business managers have been trained to think.

SC: So how would a startup entrepreneur handle that kind of challenge?

You start with the 3-5 things you’re most scared people will find out about. And then you make a plan for how you’re going to communicate those things.

In addition, you should treat mistakes the same way you treat successes. You can build an authentic brand by giving them equal weight in your public and internal communications.

SC: So to back up a step, how do you feel about the green economy–its current state, its trajectory, and its possibility to really transform the global economy? How far off is this vision that we all share of a sustainable world?

JH: As much as one wants to celebrate the growth and positive trajectory, from my perspective, we also need to give the movement a huge shot of adrenaline. It needs to move much faster. It needs to approach what is done in a systemic fashion.

The green economy will grow out of necessity. The question I have is: will it grow because we’re thoughtful and wise and strategic, or will it grow because it is out of necessity due to increasing social and environmental disasters? Global warming propels attention to clean energy. That’s a potentially dangerous paradigm. We don’t want to let the bad of global warming get so bad that it creates catastrophic adverse impacts on peoples’ lives just so we can sell energy-efficient products. The challenge we face is, how do we move quickly enough so that we are proactive rather than reactive.

The green economy is, in a perverse way, where bad news is often good for business. A farm worker exposed to pesticides…moms exposed to toxic chemicals in a product that causes birth defects. These things bring needed attention to, and drive sales of, sustainable and healthy products. However, we need a new paradigm so that, as I said earlier, is proactive rather than reactive.

SC: Seventh Generation has gone in a new direction in terms of leadership. How do you feel about how the company is progressing after your departure?

JH: I’d feel better about it if the transition had happened differently. Being fired from the company you founded is hard for any entrepreneur/founder to deal with. If I had a piece of advice for entrepreneurs, I’d say, “don’t give up control.” And if you do, do it in a thoughtful, methodical fashion.

SC: Your new book, Planet Home, is coming out this month. Care to provide a preview?

JH: What makes Planet Home different is, aside from the fact that I’ve spent as long as anyone thinking about the question of green consuming and how to do it in an effective, intelligent, and pleasurable way, is that the book introduces a framework of thinking about a green consumer in a systems-based fashion. Instead of looking at, for instance, whether you should or shouldn’t buy organic chicken, it explores the system of eating, including the process of how you prepare that chicken–are you using cleaning chemicals on the cutting board on which you’re preparing that chicken, and thereby counteracting your desire to keep chemicals out of your food? So it is more holistic, perhaps than some of the other green guides out there.

Greater consumer awareness also helps to try to increase pressure from consumers for more green products. Because we’re not going to get to that green economy without more pressure from consumers.

SC: So what’s next for Jeffrey Hollender?

Between the book, working with the American Sustainable Business Council, and being on the Board of GreenPeace and Verite, I have a lot to keep me busy. My challenge is how do I contribute at the highest level and have an increasingly greater positive impact? That is the question I am pondering.

SC: Well, if you decide to take some time for some well-deserved R&R, no one would blame you! Thanks for your time today and your advice for aspiring green business owners will absolutely help so many aspiring green business owners.

JH: My pleasure.