Spencer Putnam is executive director of Vermont Businesses for Social Responsibility. Along with companies one would expect to be members of VBSR, its 600 members include mainstream banks and utilities, employ 30,000 Vermonters and total revenues of all the companies is $4.5 billion.
Putnam previously was with Vermont Teddy Bear and Danforth Pewterers. This interview took place on December 13, 2006, at the Hungry Mind Cafe in downtown Middlebury, which minimized vehicular use by being located a mile and a half from the homes of both participants.
VBM: Could you start by saying something about your path to your present position, as the executive director of Vermont Businesses for Social Responsibility?
PUTNAM: I've been in business for 14 years. I was the chief operating officer for Vermont Teddy Bear for 12 years, starting in 1987, then I was for two years at Danforth Pewterers. Through that period, I was either an active member or else a board member of VBSR. In 2002, the former executive director, Jane Campbell, resigned, retired, after about 10 years, and I was invited by the board to take the position.
VBM: Did you have a key role in creating Vermont Teddy Bear's transition to being a gift company rather than a teddy bear manufacturer?
PUTNAM: Yes.
VBM: That was a very astute move.
PUTNAM: I can't claim the credit for thinking it up, but I implemented it. I was there - this happened in 1990 - 1987 to 1990 was the period we struggled to be a manufacturer. Of course it continues to be a manufacturing company, but that concept of providing the customer..
VBM: Customization, and quick response.
PUTNAM: That was always part of the business, but in 1990 we just pushed aside all else and went for broke. That's all we did for a while, and that's essentially all that we do. They do. I was on the board of Vermont Teddy Bear until it went private last year.
VBM: I've been interested in many of the concerns shared by VBSR members, but the immediate impetus for this article was seeing that you were invited to Green Mountain College to speak when they began their new online MBA in Sustainable Business. Shortly after that, Goddard College advertised for a faculty advisor for their residential MA in Socially Responsible Business and Sustainable Communities. I've heard such programs called Green MBAs as well. Do you have any sense of whether this approach to business education is becoming more widely accepted?
PUTNAM: Maybe exploded is the right word for it, in Vermont. Besides the two you mentioned, Green Mountain College and Goddard, Marlboro College is starting a program; UVM has had that in their program, had courses in that area for a couple of years; and Champlain College is doing it. And for that matter, Keene State College. All of them are VBSR members, including Keene State. It's a movement that is growing quickly in the state.
VBM: Do you have any thoughts as to whether graduate education in these concepts is likely to be of practical value in helping to run a business?
PUTNAM: All of these programs - I'm not intimately familiar with the curriculum, but I have a general sense - are really MBA programs with a green or sustainable spin to them. Yes, they certainly are instructing the people in them in the way any MBA program would, to run a business. But they have a large content in the emphasis on environmental or community responsibility. It is clear that these other perspectives are going to be increasingly important in years to come in the eyes of consumers and other business partners. People are going to be seeking out companies that espouse these ideals.
The coffee I'm drinking is roasted by a VBSR member in Brattleboro, and one reason I like to drink their coffee is, I knew they have culturally responsible principles at work in sourcing their coffee. So that is an example of how this makes sense from a business point-of-view.
VBM: So there'll be increased demand and increased supply, in traditional business terms, related to these concepts.
PUTNAM: Are you familiar with the work of Richard Florida?
VBM: No. Please say more.
PUTNAM: He is - and I have to confess, I haven't read his book, but I have had a lot of exposure to his ideas - he's created a concept he calls cultural creatives. He divides society into four categories. The most traditional are called traditionalists. There are two intermediary stages. Ile cultural creatives are people who first of all are very interested in culture: They pay attention to cultural trends, they pay attention to music and art, and they're part of the cultural movement that is increasingly recognized as a driver in our economic life. But they also make their purchasing decisions on some basis other than finances. They will look, as I just gave an example, for cultural or social values.
He has estimated this group is now something like 40 million adults in the United States - and the other sectors are shrinking. If his analysis is correct and accurate, and it seems borne out by the things I'm observing in my own work at VBSR, that this is a rich lode for businesses to mine. It really is a coming thing.
VBM: Thinking of what a liberal education is - not as political liberals - one of its main goals is to Let a sense of one's culture as a whole, and be aware that it is not the only culture, and not see it as an all-enveloping environmental but as something which is controllable and changeable. I think what you're saying suggests that the sustainable MBAs are carrying on that concept in undergraduate education quite well.
PUTNAM: I agree. It's an MBA that tries to have a broader focus than a traditional MBA because it is expected that it accounts for environmental issues - and I mean environmental in the general sense. Other MBAs don't pay so much attention to because they're so narrowly focused.
You may or may not have heard VBSR adheres to what we call "the multiple bottom line."
VBM: That's an excellent summation of many of the things people are trying to say.
PUTNAM: The point there is that rather than being exclusively focused on the financial bottom line - and most business people don't focus on that to the exclusion of everything else - but the difference I think is that VBSR members and others make explicit efforts to keep other considerations in mind. Those include environmental considerations, community considerations, the welfare of their employees, their dealings with their suppliers and customers, and so forth, and make them actually part of the business plan.
VBM: There's been a lot of talk about how the environment and business can conflict. This seems to put it on a much more specific basis. Do you see any conflicts ... there are people who see a conflict between environmental concerns and business opportunity is there any point at which the objectives" begin to clash with each other? I'm thinking here of how it is for a reporter. There are some things in your mission which clash: of being accurate and being fast with the news, of being comprehensive and writing things succinctly. Those things are continually rubbing up against each other. Is there a rub somewhere that's in this multiple mission?
PUTNAM: I think there is a bit of a rub, but I'm going to answer a bit tangentially, in a couple of ways. I distinguish between companies that have social responsibility at the center of their mission and others, a difference of both breadth and perspective. Breadth: the ones that are socially responsible have a much greater aware of their effects laterally, on their neighbors and their communities and their employees than companies that are more narrowly focused on the bottom line. When I'm thinking of the temporal perspective, they are willing to take a longer temporal perspective. Rather being focused right on the quarterly returns, thinking more of their impact five years, or 15 years, or even 50 years out. And when you take that kind of longterm perspective and thinking more broadly, you're not so affected by short-term issues.
VBM: Do publicly traded companies have trouble being VBSR members or the equivalent at whatever level they operate, because of the pressure of shareholders?
PUTNAM: I want to rephrase that question a little bit. They may have trouble adhering to this principle that I just enunciated. We don't have a litmus test for membership. We also don't police any behavior of our companies. They can join - we're not sitting in judgment of them - so they don't have trouble being a member.
VBM: That's a good clarification. So it's their own conscience they have to deal with.
PUTNAM: Right. One of the principles of our organization is that we are a networking organization: we have educational forums, an environment where people can exchange ideas and support each other. So there are many members that we have that you might not think of as being intrinsically socially responsible. But my belief is that they all have some value to add and that none of our members are perfect. Even the most rigorously socially responsible company can learn something from the others.
VBM: Machiavelli would have approved: "Keep your friends close, but your enemies closer" - though that's putting in an extreme form.
In general, we have an economy where growth is deemed essential. At the official level we have the Gross Domestic Product, and at annual meetings, stockholders look for appreciation in value. But not every country sees things the same way: in Buddhist Bhutan - we see pictures of Bhutan here on the wall - they use Gross Domestic Happiness as their summation of how development is progressing. Among your members, is there much belief in the need for replacing or expanding the GDP approach to business measurement? Is growth a necessity, or is sustainability a larger and more important way of characterizing economic success?
PUTNAM: That's such a complex question ... That may be an ideal that many companies have, replacing the focus on growth, but one way to answer the question is to say, I think again there may be some difficulties in maintaining growth if you adhere to these principles, but there's not an intrinsic conflict. You might settle for slower growth, because it feels more organic, or you don't have to trample on your principles to get there.
VBM: Many a company has come to grief by growing too fast.
PUTNAM: Well, yes, I'm very aware that in the 1980's, I think it was, Vermont was spared bank failures that were happening all over the country, and a lot of people said it was because banks were not able to speculate as they were elsewhere, especially in real estate, because Vermont has environmental controls. So the banks were saved from themselves by that kind of control. Well, similarly some of the controls these companies put on themselves are ones that help ... it may slow them down, but it may help them in that longer term perspective.
But you can't characterize all VBSR members in a single phrase. It's a very, very diverse group. But I think even the most rigorous ones know that they have to succeed financially, and usually that means the need to have at least a modest amount of growth. I think it's more a difference in emphasis.
VBM: Look before you leap, because he who hesitates is lost. But sooner or later, you've got to leap.
PUTNAM: Yes.
VBM: I recently did some stories on accounting, and became more acutely aware that there's a constant effort to revise accounting standards to make them more responsive to the actual conditions in the world and more of use to the various stakeholders, who rely on good quantitative information. But do you see a need for including more of what they called "externalities" in accounting?. I've heard some companies have even had "social audits" done. Has this become another accounting profession?
PUTNAM: I think it is a profession to create corporate social responsibility reports. It's very difficult to quantify these things, and nobody's really succeeded in coming up with the same kind of standards that are as quantifiable as the ones you use when you are analyzing the financial succes's of a company. Nonetheless, several companies and the ones I'm particularly aware of are Ben & Jerry's, Green Mountain Coffee Roasters, and most recently Green Mountain Power have created very comprehensive reports where they lay out some of their goals and a year later they look at them again and talk about have far they have come in achieving them.
One of the principles at work here is something called "transparency." In other words, the sense that they are laying themselves out in public and being public about what they are trying to achieve and then being public about how well or how badly they did. It's a principle of accounting and business management: when you measure something, it affects the behavior, and I think likewise of corporate social responsibility. If you produce a report and say you're going to have an environmental impact because you're not going to spray your rights-of-way as frequently as you used to, and then at the end of the year you have to admit that you fell short of that goal, there's quite an incentive to modify behavior to achieve it.
So transparency I think is what these corporate responsibility reports are encouraging - and they are really having an effect on the way companies behave.
VBM: I know what you're saying about measurement affecting what you're measuring. Negatively, it's a constant problem in science. Again looking at the problem side, some say it's a serious problem in education: with all the accountability being so statistical, are we narrowing our curriculum to teach to the test and driving creative teachers out of the teaching profession? That's one of those balances we'll never entirely resolve and just have to keep an eye on.
PUTNAM: Right.
VBM: Regarding sustainability, the conventional wisdom is that if Second and Third World countries insist on achieving standards of living comparable to those in this and other industrialized countries - or if only China and India insist on doing so - the resulting emissions and other byproducts have the potential to make global atmospheric hyperactivity irreversible and catastrophic. Does this mean that we, being first in our emissions and such, must seek sustainability simply for the sake of self-preservation?
PUTNAM: You're getting a little bit beyond what VBSR talks about. Personally, I agree. What I can say for our member companies is that at least they're making the attempt. There was a story in the news about building three coal-burning electrical plants in western Kansas, and they wouldn't put environmental controls on them. That's the kind of behavior I think most of our members would agree is just plain irresponsible. And putting profit above other considerations and thinking about the short-term and not really thinking about the long term.
So - I think our members are more conscious of that kind of thing, and take that responsibility more seriously than typical businesses, but I think they know they're not perfect. They know that we're contributing more to the problems of pollution, global warming, whatever.
VBM: We're sort of stuck with many of our social patterns, like our residential pattern involving the use of the automobile.
PUTNAM: I drove a mile and a half to get here.
VBM: I did the same. Well, at least it wasn't 100 miles.
PUTNAM: I do that, too, sometimes.
VBM: Looking at the social side of the multiple bottom line individual, family, community and civic life - we keep seeing statistics that suggest we are sliding along downward curves. Half of marriages end in divorce, young people take longer and longer to start families, increases in "productivity" are accompanied by dismal positions in the world lists of industrialized country lifespan and infantile mortality, we incarcerate more people than any other major country and are among the few that still execute criminals. The number without health insurance increases, as does homelessness and so on and so on. Amidst all this stress, the companies in VBSR seem like islands of relative serenity, with their benefits and sense of employee inclusion. Do you have any evidence, either quantitative or in the form of compelling anecdotal evidence, suggesting that it is possible for businesses to help move towards greater individual security and social harmony?
PUTNAM: I'm glad you have that image of VBSR. I don't think of them as islands of serenity, they struggle with these things, too. But people have done studies, and there are statistics to show,. for example, that some of the practices, especially the human resources practices that some businesses espouse, have a number of benefits, like greater employee longevity. They reduce turnover. That means there's a general increase in employee satisfaction. There's higher quality in either products or services because you have people with more experience who stay there, and people with more enthusiasm about working there and promoting the company.
VBM: And you probably have people getting more involved with their communities, from staying in the same place.
PUTNAM: They do that, and I also think they take pride in being associated with those companies, a greater sense they're in a company where they're treated well. I think there is compelling anecdotal evidence, and I believe people have done some studies, though these things are a little difficult to quantify.
One thing you can do, though, is calculate the cost of filling a vacant position - and it is staggering how much it costs, and there are many different costs associated with it. There's the cost of paying for ads, or paying for someone to carry out a search. Depending on the company, paying the travel costs of your candidates. Helping individuals to move into your community. There are a number of costs like that that are avoided if you don't have a lot of turnover.
VBM: Not to mention the costs of getting someone up to speed and integrated with everyone else.
PUTNAM: Exactly. Axe you familiar with the livable jobs toolkit?
VBM: That's on your website (www.vbsr.org).
PUTNAM: Yes.
VBM: I think I downloaded that, and haven't had time to look at it. It was a little bit intimidating because there were something like 96 pages - but that shows it was authentic. It wasn't a publicity statement.
PUTNAM: We just uploaded a brand new revised version. It should say "Fall of 2006," because if it doesn't, you're looking at the older version. They're essentially similar, but the 2006 one has updated facts and figures. It also has a workbook. The purpose of the toolkit is to help companies raise the level of support for their employees. Some of the kinds of support are not financial, some of them are financial.
There's actually a gradation. There are three "tools" in the toolkit. The first ones don't cost anything to implement: they're things like allowing for flexible scheduling, or that kind of thing. The second ones might cost a little bit, but have a disproportionate benefit for the employee. An example of that would be getting someone to come and do a personal finance course for all the employees. Or providing assistance with transportation, carpooling, whatever.
The third ones are more traditional benefits, sort of a listing of what the options are. The intent is to help companies make their employees financially self-sufficient while their company remains profitable. About half way through, it begins a series of seven or eight worksheets. A person reading it can take these worksheets and see where the company is.
VBM: It sounds like the sort of thing someone studying for one of these sustainable MBA's might want to go through, just as an academic exercise.
PUTNAM: Yes. It has some options in regard to the costs of following practices, but it also has references to other sources. So I recommend you spend at least a little time looking at it.
Getting back to something I mentioned before, about the conflict between profitability and environmental values, or more broadly, profitability and social responsibility. There are many ways in which our country is tilted against some of these practices. Another term you may have heard is "perverse incentives." Our country (and many other countries) has a long history of providing incentives for things they want to encourage - and it's very difficult to undo these incentives. So, as an example, inducements for oil and mineral extraction were implemented when the industry was in its infancy and it was highly risky to engage in it.
These incentives have not only persisted, but they have been enhanced. Now we consider them per-verse because they support fossil fuel consumption. One of the things you keep hearing about is, wind and solar energy can't compete with fossil fuels. Well, if you take away these perverse incentives, they actually are quite competitive. If you take away the perverse incentives, there would be no more reason to extract oil any more. It just wouldn't pay.
VBSR is working on the state level to try to change some of these policies.
VBM: What is brings to my mind is "the tragedy of the commons." The classic example is that when there was a common green for everyone to graze their animals on, everyone used it until the grass was gone.
PUTNAM: I want to volunteer another piece of information. In describing VBSR, I talk about a three-legged stool. The founding members of the organization - and I count myself among them, I came to it a year or two later - their first interest was influencing public policy on a state level. They thought it was important for someone to weigh in with the Legislature because other business associations were weighing in a way that VBSR members didn't feel was beneficial to the business community and the member companies.
Then the second thing was to have an educational thrust to the organization. The educational thing has always been open to the general public as well as members. The thought there is, we want to share things within our organization, but we also want to get the message out to the wider community. So all our educational functions - which includes two major conferences a year and seven or eight smaller events within our member companies and an array of other things - they're all open to the general public as well as our membership.
And then - I don't think this was explicit from the beginning but it arose naturally - the third leg is networking. We're now approaching 700 members statewide. I estimate that we represent something like 12 percent of the Vermont workforce. Our companies employ 35-40,000 people. So we have a critical mass, and that means some companies join us mainly for the networking, for the opportunity to market to our members. My personal bias is that our members tend to be among the most innovative and interesting companies in Vermont - so it's a great place to have the benefits of networking.
VBM: I would imagine that membership has the advantage of helping people to overcome career fatigue. I can reach the point where you ask, "Did I really go the wrong way in committing myself to this? It's so hard to be a business person; should I be a person who is doing more good in the world," kerblahblah-blah. And you can run out of steam in any profession, not just business. But to see other people who are still enthusiastic, idealistic, who are talking about the good things that have been done and are being done - that must be tremendously energizing.
PUTNAM: I think it is. For some members of VBSR, and I'm a good example, the organization is sort of an anchor to the windward. If your are idealistic about your involvement in business and feel that some of your colleagues are not so idealistic, then VBSR is a resource to go and refuel and gain some confidence that the ideas you have aren't totally crazy and that other people are doing them.
Also, among the earliest members of VBSR were some who were very conscious that business has power. The creation of wealth confers power, and many businesses have used that power in a deleterious way, a way that wasn't in the interest of the broader society. So they countered with exercising the power of business to improve the world, or to the change the world - whatever you want to say. Really self-consciously using the power of business to affect society in ways they felt were more appropriate.
VBM: It certainly seems to have been an afterthought in the lives of many a robber baron. They set up foundations after they had wreaked their devastation on the landscape, and now that,; how we know about the Fords and the Carnegies and Mellons and so forth. With VBSR members, I think it's more a case of giving with warm hands.
Seven hundred members. As we approach the next legislative session, is there anything on the state level you would like to see changed or added to our legal system?
PUTNAM: We're very involved with the health care debate. VBSR came out with a statement about 10 years ago, about the need to have a universal health care plan, and really didn't do anything more about it for a number of years, thinking it was such a huge problem we couldn't have an impact. But it's getting more and more critical, so two or three years ago VBSR adopted a position paper on health care, for health care reform, and in the beginning of the last biennium got very involved in the health care debate in the Legislature.
VBM: Your report went to the legislative committees, presumably.
PUTNAM: Yes. We actually have a full-time person in the Legislature. The general principles we espouse are that health care should be available to everybody, it should be centrally administered; everybody should pay something for it, but people should pay according to their ability to pay; and it should be decoupled from employment. We don't believe employers should be responsible for providing health care to their employees; likewise, we don't feel employees should be tethered to their jobs just because they would lose their health care.
We felt the Legislature responded very well to that with the health care bill they passed in 2005, which the Governor vetoed. We lost one member over that, and took quite a lot of flak for coming out in support of that.
This last year, we attempted to do something equally creative, and frankly were disappointed in what they did come up with. We felt the Catamount Plan is a small step, and there are several things it didn't do. It didn't do anything about decoupling health care from employment, and it really didn't address the need to contain costs in a global sense. So there's no real control on expenses. So we're back in there this year, and hoping the Legislature takes more steps in the direction of the principles I just outlined.
We've developed a position paper on energy, and we're considering not just electrical energy but also heating fuel and transportation issues. We will be working with the Legislature to encourage more sustainable policies in the energy area.
VBM: Isn't there a crossover, in that when people are in good health they have more personal energy?
PUTNAM: I'm talking about the energy we need to create our electricity and heat our homes. But yes, there is a relationship. We think all these things are integrated.
One other thing we I re going to work on, that's not as high a priority, is improving broadband access throughout the state. I think you'll find on our website a summary of the positions we have taken over the years, and we will be watching these - environmental issues, regulations, small business issues.
VBM: It sounds a lot like the Farm Bureau. Each year the members consider quite a large number of resolutions, the county chapters vote on them, and it's summated at the state level as Farm Bureau support for this or that - and it covers all kinds of things, some of them of course more important than others, but they do take a position - in a very democratic fashion.
PUTNAM: We do that. The objective of having someone at the State House is that we're going in the committee rooms, and we're having our members bring in someone to do the talking. We find it's more effective when a business person testifies than if we have a lobbyist testify.
And also working with a lot of coalition partners. We're networked with other organizations. One example is the Vermont Fair Tax Coalition: the primary partnership is that between VBSR and the Vermont Natural Resources Council and the Vermont Public Interest Research Group. We work on issues having to do with tax shifting, shifting taxes so we're taxing what we want to discourage and removing taxes from things we want to encourage. That's the big principle.
VBM: It sounds like you have a lot of work to do.
PUTNAM: We do.
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Source: Vermont Business Magazine
