The article in the url link below provides a brief case-study of a “luxury organic skin-care company” that I hadn’t heard of before (Dr. Hauschka Skin Care) and that places sustainability at the heart of its business model (Issues: Environmental Sustainability, p171):
“"We aim to heal the earth and humanity," Susan, 58, says, pausing as if she's anticipating the skeptical retort, Through $14.50 tubs of lip balm? "Every action that is taken in this business, every intersection between the earth and end user, has a proactive healing impulse behind it." Hauschka's products back up the boast. Its raw ingredients are grown or sourced primarily from biodynamic farms and at fair-trade pricing.”
What is interesting about this article, however, are the steps the founding couple took to protect the sustainability focus of their business model beyond their time in charge:
“In a transaction believed to be unprecedented among U.S. companies, Kurz and her husband legally eliminated their ownership in Hauschka, and then placed the operating company, which is profitable, inside a Massachusetts nonprofit corporation. The result is a novel corporate structure that acts a lot like an irrevocable trust, with one significant exception: It has no trustees or beneficiaries, which means that the Estée Lauders and L'Oréals of the world will find it very difficult to buy Hauschka, ever.”
There is a reasonable amount of debate within the CSR Community regarding the issue of how to protect a firm’s founding values and business model beyond both a certain level of success and the day-to-day presence of the founders. [Note: Marjorie Kelly wrote an excellent article on this point in the summer 2003 issue of Business Ethics Magazine—‘The Legacy Problem,’ pp11-16, http://www.meadowbrooklane.com/business.ethics.legacay.pdf]. Any significant growth in operations presents logistical challenges that often require the skills of professional management expertise (i.e., The Body Shop—Issues: Hypocrisy, p122), while the associated success catches the attention of large suitors wanting to capture specific segments of the market (i.e., Ben & Jerry’s—Issues: Stakeholder Relations, p138). The article in today’s Newsletter (below) presents a unique solution that should appeal both to CSR purists, as well as to those interested in developing an effective business case for CSR:
“Hauschka looks like a nonprofit but isn't one. It makes money, and it pays taxes. It is governed by a four-member board that includes the Kurzes and two WALA representatives. Their charge is to see that the company complies with Hauschka's long-standing mission "to heal." The articles of incorporation prohibit board members from receiving any financial gain for their role, in salary or dividends. They also prohibit the sale of Hauschka's distribution rights. Without owners to collect dividends, all net profits are reinvested in operations, sustaining development.”
Take care
Dave
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther/
Can't Buy Me Love
How luxury organic skin-care company Dr. Hauschka has infused sustainability into its financial structure.
Fast Company Magazine
From: Issue 121 | December 2007 | Page 60 | By: Carleen Hawn | Photographs By: Ben Stechschulte
http://www.fastcompany.com/magazine/121/cant-buy-me-love.html
