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Companies are beginning to make serious money from investments in being 'Fast, Good, Cheap AND Green'. Consider the following examples cited in the same edition of the
Bulletin
in April 2007:

• Goldman Sachs invested US$1.5 billion into cellulosic ethanol, wind and solar, a gamble which has more than paid off.
  
• Swiss RE, the Swiss insurance giant with revenues over US$24 billion, pioneered derivative-based products to hedge against the risks of climate change.
  
• DuPont, once a poster child of environmental mismanagement, now receives US$5 billion of its US$29 billion in revenue from green end-use products such as chemical coatings for solar panels. It is developing a green replacement for nylon called bio-PDO, produces genetically engineered corn to make ethanol and has partnered with BP on a new fuel called biobutanol.
  
• GE wind turbines are selling faster than they can produce them.
  

The Building Code of Australia (BCA) has been amended to include guidelines for minimum energy efficiency in new buildings. It outlines a set of standards and restrictions for commercial buildings in terms of roof and window construction (for natural insulation), air conditioning restrictions, lighting, power usage and construction materials. Buildings are awarded stars to reflect their energy efficiency. Equally significant, the New South Wales Department of Energy in consultation with environment groups has introduced a rating system called the Australian Building Greenhouse Rating (ABGR). Even though it's the New South Wales Department of Energy, the system is administered nationally and measures the actual energy performance of a building.

Westpac, NAB, Lend Lease and a host of other companies have spent tens of millions of dollars on environmentally friendly buildings. Lend Lease spent $112 million developing the first ABGR five-star building in Sydney, which opened in 2004 as its new head office. Lend Lease has also joined with Origin Energy in pioneering a scheme whereby construction companies can trade carbon credits achieved through energy efficiency measures included in buildings.

Westpac also achieved a five-star ABGR rating for its new corporate headquarters in Sydney, and it makes enormous mileage from its environmental credentials. As discussed in the introduction, 'Getting Flipped!', Westpac launched its 'Every generation should live better than the last' campaign in a sixty-second television ad (sixty-second spots are pretty damn expensive). Three thirty-second ads followed, including one which boasted that Westpac was the only Australian bank to join with nine other banks around the world in signing the 'Equator Principles', an environmental charter committing them to financing only projects which don't destroy the environment.Westpac general manager for marketing and products Tim Harrington said this is about 'influencing people to consider Westpac's products and services because of its community and environment credentials'. At least he's honest.

These companies also promote more minor things that they do: at Westpac headquarters in Sydney, they have taken to farming worms in the basement levels as an environmental support project, and NAB is growing over three thousand mother-in-law's tongue plants to clean the air at its Melbourne headquarters.

One final example that I like: I had an opportunity to work with Google in the Silicon Valley, and was gob-smacked to hear that if a Googler buys a Prius or any other hybridengined car the company will give US$5000 towards the purchase, with some conditions around staying at the company and not selling the car the next day, of course. It is behaviour in perfect alignment with Google's mission statement: 'Don't be evil'.

FGC + RESPONSIBLE

Not being evil is also the order of the day, and not a moment too soon, I say. Corporate social responsibility, which includes both environmental and ethical issues, is proving to be important for both society and for the bottom line. It is not just how you treat the communities you operate in, but also how and where you source your raw materials and labour.

One of my favourite clients is the Commonwealth Bank Foundation. Born out of unclaimed savings accounts, the foundation is dedicated to help-ing Australians, especially the younger generations, improve their financial literacy skills. They run seminars, have websites and basically invest millions of dollars in this social initiative.

Commonwealth Bank refuses to allow any product information to be included in such activities, so it is not a hidden sales pitch. This does not mean, however, that the bank is not proud of its achievements in this area over quite a few decades, and as you would expect it uses its foundation activity to help attract the best staff and the most profitable customers.

Some companies have built their entire brands on being responsible. The Body Shop is an excellent example. In her brilliant book
Business as Unusual,
flipstar Anita Roddick told the story of how she built The Body Shop on a reputation of social and environmental activism. As far back as 1986, The Body Shop formed an alliance with Greenpeace on the 'save the whales' campaign. The Body Shop actually promoted the fact that its products were banned in China because Chinese law required animal testing of cosmetics and skin care products.

Roddick insisted that Body Shop marketing reflect a 'values-based company'. Shareholders even complained that maximum profits were not being achieved because profits were being funnelled into social projects. But this is the drawing card of the company.Marketing along these lines, the company achieved phenomenal growth, expanding at a rate of 50 per cent annually from its opening.When its stock was first floated on the Unlisted Securities Market in London in 1984 it was listed at 95 pence. Eighteen months later the stock was valued at 820 pence. After a patchy performance period in the early 2000s (not due to a failure of marketing, but due to a manufacturing outsourcing bungle and some internal turmoil) the company was valued at roughly US$1 billion, or 250 pence per share, at the end of 2005.

In March 2006 The Body Shop's positive reputation for social and ethical responsibility was tested by its sale to cosmetics giant L'Oréal for £652 million. Because of the sale,
Ethical Consumer
magazine dropped The Body Shop from 11 out of 20 on their 'ethical rating' system to only 2.5 out of 20. Whoops! The sale (or sell-out, as some have called it) has been seen as a bit of a betrayal of the company's ethical and unique roots. An index that tracks thousands of consumers in the UK (the daily BrandIndex UK) saw the perception of The Body Shop slump by almost
half.

So important is no animal testing to The Body Shop's core customers that some of them actively promoted a Body Shop boycott, because L'Oréal has not banned animal testing of its products. Dame Anita Roddick has sworn to give away the £130 million she made from the sale, but this has not stopped the cry that she has 'sold out'.

On the flip side, The Body Shop boosts L'Oréal's image among socially conscious investors and customers. And despite the backlash of hardcore Body Shop fans, L'Oréal grew sales in key Body Shop lines 9.7 per cent like-for-like in the year ending 31 December 2006, compared with 6.4 per cent for all L'Oréal brands. Twenty-five new Body Shop stores opened in 2006, bringing the total to 2290. The stores in Canada, Japan and Russia performed particularly well, with US stores lagging somewhat.

More broadly in the cosmetics industry, the Campaign for Safe Cosmetics lobbying group says that more than 500 cosmetics and body care producers have joined its campaign, pledging to eliminate toxic ingredients from their products. Interestingly, global giants L'Oréal, Revlon, Procter & Gamble and Estée Lauder have not been quick to sign on, although L'Oréal has made substantial strides in reducing its energy and water use, waste products and direct carbon dioxide emissions through its SHE (Safety, Health and the Environment) initiative.2 It will be a while before the big cosmetics companies can make themselves green and socially responsible throughout their vast industrial operations. Until then the smaller players can effectively use their 'responsibl?' position to differentiate themselves in the market.

In the fast food industry, Burger King took an early lead in socially responsible positioning in March 2007. The company announced that in the near term it would source 2 per cent of its eggs from providers that do not confine chickens in cages and 10 per cent of its pork from providers that keep pigs in pens rather than in small crates. The numbers may seem small, but they will rise as more cage-free and crate-free produced eggs and pork become available, thanks to Burger King and to consumers' increasing concern about the ethical treatment of animals. I will bet dollars to Whoppers that Burger King's move will eventually be emulated by other fast food companies.

Nike shows how customer preference is forcing companies to make their operations more environmentally friendly and socially responsible. Accusations about sweatshops and exploitation of workers in the third world impacted Nike's reputation badly. It has since made a concerted effort to be seen in a more responsible light.

In the 1970s, Nike shoes were made primarily in Taiwan and South Korea. But as economic conditions in those countries improved and workers gained rights to organise, Nike moved operations to Indonesia, China and Vietnam, countries where wage demands were low and where laws prohibited workers banding together in unions.

According to Global Exchange, an anti-sweatshop organisation, wages in these countries were shockingly low, in some instances not sufficient to cover an individual's basic needs. Some of Nike's contractors didn't even pay the minimum wage, petitioning governments for exemption citing 'financial hardship'. Conditions were bad too: workers complained of physical and sometimes sexual abuse or exploitation by factory officials.

But in 2005 there was a massive turnaround. The company commissioned a 108-page independent audit of working conditions at 569 of its factories. It found that as many as 650,000 workers (mostly 19- to 25-year-old women) in China, Vietnam and even the US and Australia were at risk from excessively long working weeks, being ripped off in wages, verbal abuse and even horrific human rights abuses such as not being allowed toilet breaks and being subject to sexual exploitation.

Kudos should be paid because Nike executives have now put it in the open and said this is a problem and they're going to try to clean up their act, and they're seeing massive benefits. Nike appointed a staff of inspectors whose job is to go from facility to facility ensuring basic working standards are met, and the company has allowed random factory inspections by the Fair Labor Association. Nike will now also deal directly with organisations that make complaints, rather than just issue denials – which means the days of public street protests are pretty much over because people with legitimate grievances have direct recourse to the company. So it's actually doing real good for their public image.

The reality is that Nike just isn't that good on the sweatshop front. But they're getting much better. Reforming practice across a company with around 900 outsourced factories is a long and hard job.

Nike has also been very smart in sponsorship of Lance Armstrong, highlighting his philanthropic ventures as much as his extraordinary athletic achievement. Of course, supporting Armstrong drives sales of Nike products, but tens of millions have been raised as a side benefit for cancer research. In conjunction with Lance Armstrong's foundation, Nike have sold more than 50 million yellow wrist bands to raise money for cancer research. This move has started a craze with every charity or 'movement' having its own wrist band. One of the most visible is the 'make poverty history' band, which is white.

FGC + BEAUTIFUL

Dell, another super performer over the last decade or so, has been suffering recently as its product lines, from desktops and laptops to servers, have become increasingly commoditised. Dell's cost basis has long been the envy of other computer manufacturers.What is truly amazing is that Dell has a better cost basis even than Lenovo and other Chinese manufacturers. While it remains highly profitable, it knows it must freshen its appeal in customers' eyes. Dell's initial efforts to do so through a new emphasis on design in its XPS range have signally failed, however. Instead it is HP that is gaining in the design sweepstakes on the leader in that area, Apple.

Twenty years ago, Samsung was a commodity manufacturer for other consumer electronics companies and had a discount brand image for its own products. Not content with that, the company set its sights on design excellence, and diligently entered every industrial and consumer product design contest it could. The result is that Samsung has become a recognised global design leader and a premium brand that does co-ventures in LCD panels and other areas with Sony as an equal, not a junior partner.

The power of Samsung's design story has an impact on customers far beyond the technical capabilities of any of their products.
BusinessWeek
calls the lead designers at Samsung 'foot soldiers in Samsung's continuing assault on the world of the cool'. Jong-Yong Yun, Samsung's chief executive, said he wanted to make Samsung the 'Mercedes' of home electronics. Patrick Whitney, the director of the Institute of Design at Illinois Institute of Technology, said that Samsung is a 'poster child for using design to increase brand value and market share'.

The transformation has been happening since 1993, when the then chairman visited a technology show and was frustrated that Samsung products were lost in the crowd. Since then, they have revolutionised design practices at the company. They have shifted their design labs to a place that is closer to the best design schools, and started an in-house design school (Innovation Design Lab of Samsung, or IDS) where employees can study under the best in the business. They also started collaborating with design-focused partners, a strategy we will explore in chapter 6, 'To Get Control, Give It Up', such as the US design firm IDEO (their first collaboration was on a monitor in 1994).

Further, they have poured literally hundreds of millions of dollars into updating the look, feel and function of every product from Mp3 players to washing machines. Between 2003 and 2004 they upped their design budget from 20 per cent to 30 per cent, and more than doubled their design staff.