Georgetown McDonough students and graduates put the service in beverage service.

By Heather Boerner

In late winter 2003, Michael Dupee (MBA/JD ’00) was sitting at his cluttered desk at 85 Broad St. in New York. His colleagues in Goldman Sachs’ mortgage department were buying and selling assets for their clients.

Amid the commotion, the calm voice of Bob Stiller trickled into his ear. Stiller, then president, chairman of the board, and CEO of Green Mountain Coffee Roasters in Waitsfield, Vt., was talking to him about a new kind of job: a senior management position that would make good works more than an ethos. It would be a department in the corporation — and he could run it.

A flare of energy surged up through the back of his neck. The spirit of service — instilled in him since Catholic grade school and reinforced at Jesuit universities Boston College and Georgetown — was coming alive in his work life.
“It felt as if a physical location in my brain was getting oxygen for the first time in years. In that moment, I knew I was going to do it,” says Dupee, who received a joint degree in law and business from Georgetown.

Dupee became Green Mountain’s first and only head of corporate social responsibility (CSR), spearheading and streamlining the company’s programs to reduce its environmental impact and improve the lives of employees and of the people and communities in Green Mountain’s supply chain. Today, he manages and distributes $15 -million in sustainability programs. That is just under
5 percent of the company’s $350 million pretax profits in fiscal year 2011.

Although Dupee believes in the need to do something to help the planet and others, he also believes CSR is practical for corporations. Being of service to others, in other words, also serves a company’s bottom line. To do otherwise, he says, is financially foolish because it allows for inefficient resource use and can make it harder for companies to operate agricultural production in some communities.

“Businesses that are not engaged in sustainability are leaving money on the table,” he says.
Although Dupee’s experience may be unusually visceral, it also is common. CSR is an umbrella term for a variety of sustainability approaches that are integrated into a business model. Once done strictly through grants, CSR now includes a company’s carbon footprint, subcontractor working conditions, and the off-hours fulfillment of its staff. CSR also has more scrutiny now than ever; an industry of bloggers monitors these programs, vetting them for effectiveness and calling out what they consider to be cynical, ineffective attempts to garner good will without making any significant changes in the way companies operate — a concept also known as “greenwashing.”

In the face of this growing pressure to produce real CSR, evidence supports Dupee’s thinking: Being of service does serve a company’s bottom line. A 2010 study in Family Business Review found that an ethical company focus predicts -better financial returns, further corroborating a 2003 review that found that CSR programs improved the bottom line, even after accounting for added CSR program costs.

These connections may be more pronounced in the food and beverage industry. A 2011 study in the European Review of Agricultural Economics found that the food and beverage industry has a serious impact on — and deep reliance on — communities and the environment, so CSR can help their bottom lines and their communities even more.

“It’s a double bottom line,” says entrepreneur Ian Simpson (MBA ’07), founder of Purpose Beverages, which gives 25 cents from every bottle sold to select nonprofits. “The goal is to do good and make a profit.”

Pouring On the Change
To understand how CSR in the beverage industry functions, you must first understand the supply chain, starting at ground level. Where and how the raw agricultural products are grown are financial, ethical, and environmental questions. Are crops treated with pesticides and fed with -petroleum-based fertilizers?

Next, look at where crops are grown and by whom. How the workers are treated and how the company interacts with the community are key to CSR.

When raw materials go from the ground to the processing plant, a company’s carbon footprint can skyrocket. If a processing or bottling plant isn’t local to where crops are grown or sold, a company might need to fly them around the world, as they might also need to do with water.
Then there are the questions of recycling and bottle type: glass, plastic, or cans? Whether companies invest in innovations such as compostable bottles or try to improve local recycling systems can have a big effect on a company’s impact.
Finally, what do you do with profits? Companies can give back via a lump sum, a percentage of profit, or a flat amount per unit sold. And how deeply such philanthropy is integrated into the business model and to whom they give are thorny issues.
It is enough to make your head spin. But when done right, it doesn’t just engender good will, it supports profitability.

Scaled for Success
Not everyone will be able to afford to hire a CSR director or to integrate it into the entire supply chain. Being of service is scalable.

Startup: Cause Marketing
Simpson got the idea to create a company that married service to profits in 1999. He was studying international relations and working at a nonprofit that connected Israeli, Palestinian, and Arab entrepreneurs as a way to promote peace.
It became clear quickly that social change required the cooperation of companies. “Businesses have the scale to get more done,” he says. “A marriage of business methods and social good seemed inevitable.” When he discovered cause marketing — that is, philanthropy that leverages social good to drive sales and increase corporate profiles and profits — things fell into place.
Once he graduated from Georgetown McDonough, he and friend Gerard Artavia decided to launch a new natural beverage. Artavia was already working in the industry and thought there ought to be a tea on the market that made a social impact. With his industry intelligence and Simpson’s entrepreneurial know-how, Purpose Beverages and its first tea, T¯evolution, were born.
How to differentiate it from the scores of other teas out there — and how to make it relevant to the natural-foods customer — was a question. Figuring out how they could afford to be socially responsible was another.
“Where do we make trade-offs?” Simpson remembers asking himself. “You can’t check every box. You can’t do everything and still make a viable product.”

Their solution: Embed cause marketing into the essence of the brand. T¯evolution carries the tagline, “Twist. Sip. Give.” Purpose Beverages gives 25 cents on every bottle to charities chosen for their organizational health, message, mission, and willingness to work with corporations. The charities they choose mostly focus on children’s health, shelter, and education.
Twenty-five cents is a lot on a product, about 15 cents more than most companies donate. Setting the bar high is both a statement and a strategic advantage.

“Any tea that’s selling for less than we are doesn’t have the room in their profit-and-loss to give away a quarter. That is their bottom line,” says Simpson, who worked with teams of Georgetown McDonough students on everything from nonprofit selection criteria to building operating and marketing plans. “We’re able to get an additional bottom line on top of that 25 cents.”
They do this by working with their supply chain. Manufacturers, printers, local distributors, even warehousing facilities all give toward that 25 cents, either through small discounts or outright contributions. Those donations shield Purpose Beverages from negative business costs associated with such a large donation, and also mean that if lower-cost teas were to try to mimic its model, they’d have to reinvent their supply chain.

“With our ‘social supply chain,’ we’re infusing the cause through this brand,” he says. “It’s authentic and, at the same time, it gives us a competitive edge.”

So far it’s working. T¯evolution is in Los Angeles- and Washington, D.C.-area -natural-food markets, restaurants, and delis, and will expand to more markets this year. The cause marketing campaign — which allows consumers to text a code and find out where their 25 cents went — is yielding results, too. The blogosphere is championing the brand, and The Huffington Post named T¯evolution one of the top cause marketing campaigns of 2011.
“When we reach scale, we’re going to give away a lot of money,” says Simpson, who predicts upward of $3 million annually. “We’re going to have something incredible to hang our hat on.”

Mid-Size: Managing the CSR Portfolio
When Dupee came on board as Green Mountain’s CSR head, it was a homecoming of sorts. A Vermont native, Dupee had worked in the company’s purchasing department eight years earlier. Back then, Dupee also had led the company’s environmental team and set up its recycling programs. He was doing CSR before it had a name.

When he returned, his new co-workers were involved in a variety of initiatives that fit under the CSR banner: volunteerism, working with supply chain communities, engaging with employees on sustainability challenges, and investing in Fair Trade-certified- coffees.
“The challenge for me wasn’t to create a program; it was to channel it,” he says. “There was so much going on, there were some things we had to walk away from. We really needed to drill down to what was part of the company’s core mission.”
What evolved was a portfolio of projects and initiatives that support the company’s commitment to good corporate citizenship. These broke down into two basic categories: philanthropy and integrated -activities. Unlike Simpson’s 25-cents-off-the-top approach, Dupee continued the policy set in the 1990s to donate 5 percent of the company’s pretax income. That way, giving grows and contracts with market cycles.

Grants often go to communities where Green Mountain’s coffee is grown, such as Tanzania, Peru, and Indonesia, which brings us to the other side of the port-folio. Dupee coordinates his team and the company’s operations to ensure the company’s social responsibilities are taken into account in all aspects of the supply chain, marketing, human resources, and continuing education. His team functions as a “thinking partner” to the supply chain side, working in tandem to build business relationships and give back.

“It gives us the opportunity to advance across the organization,” he says, “and it contributes to our bottom line. The paybacks include stronger relationships with our customers, building a stronger brand, managing supply chain risk, and strengthening our right to operate in a given community. And then there are the just straightforward cost benefits, such as reduced energy use translating to cost savings.”

Fortune 500: Harnessing Passion for Profit
Emily Gassman Kiely (BSBA ’01) grew up in a town of 100 people near Sioux Falls, S.D., where being of service to others was just what you did. So when she took a job as director of category management for PepsiCo in 2008 and became familiar with the company’s “Performance With Purpose” mandate — an initiative designed to balance the company’s business objectives with its responsibility to the global community — she was inspired. So inspired, in fact, that she created PepsiCorps, a program for mid- and top-level employees that allows them to use their business acumen to address worldwide issues, such as access to clean water.
“When we weren’t talking about business, we were talking about how to take all of this creativity and passion that people put into every new brand launch and put that energy into solving real-world challenges,” she says. “We came up with the idea of a purpose sabbatical.”

When PepsiCo CEO Indra Nooyi invited employees to share ideas for supporting the company’s mandate in 2009, Kiely and her group proposed the idea. Nooyi liked it and, in October 2011, PepsiCo sent a team of eight employees from the U.S., Vietnam, Saudi Arabia, Spain, and Canada to Denu, a coastal village in eastern Ghana whose dire water-access problems fit well with Performance With Purpose’s environmental focus.

Denu has miles of sandy beaches and palm trees in 80-degree heat. To get to the beach, however, visitors have to wade through garbage, because there’s no garbage pickup. There’s no recycling for the small plastic bags of water residents buy, so the little Ziploc-type bags drift through the roads. Although 70 percent of residents in nearby Accra have access to clean water; in Denu, that number is cut in half. That means no indoor plumbing and poor hygiene.

And the local water boards were losing about half their water payments through “leakage.”

“Money went through seven touch points before it made it to a bank account,” says Kiely, who accompanied the group for the first part of the trip. The team cut that number down to two by implementing a coupon method that allowed water customers to pay a central location instead of paying at the pump and then watching that money go through a byzantine system of town and district leaders. “Now the water boards will have double the money to invest back into the water infrastructure.”

The group also created training programs on supply chain management, met with local school children to talk about hygiene, and consulted with business groups about infrastructure necessary to lure ecotourism dollars.

When they returned after a month, the group discussed how to apply what they learned to PepsiCo’s business development in emerging markets. And they returned as more enthusiastic employees.

“We wanted to give people in the critical leadership development years of their careers a unique way to gain a global perspective,” she says. “It’s about anticipating the future needs of PepsiCo, building empathetic leaders to guide the company forward, and creating sustainable solutions for communities along the way.”

Fortune 500: Rethinking the Bottle
Scott Vitters (EMBA ’12) came to Coca-Cola 15 years ago after working as a consultant for the U.S. Environmental Protection Agency. Since then, he has seen not only how important CSR is to the environment — especially for a large corporation operating in more than 200 countries worldwide — but also how it can be pivotal to the corporation’s success.

“Waste of any sort — whether it’s water, energy, materials — is a signal of inefficiency. Inefficiency is a signal of cost,” says Vitters, global director of sustainable packaging. “So when you start looking at environmental stewardship, it’s often just the other side of the coin of better productivity.”

Vitters cites any number of examples: eliminating more than $150 million in energy costs last year through improved manufacturing operations and increasing water-use efficiency for eight straight years, for instance. But a key part of Coca-Cola’s efficiency is built into its franchise business model.

Bottling, distributing, and other packaging happens in the community in which the beverage is sold. So in communities with little water infrastructure, Coca-Cola often works with the community to build or improve that infrastructure, expanding access to clean water in the process.
When it comes to packaging — Vitters’ purview — the primary demand is safe delivery of the product to customers. In less developed countries, affordability also is a concern. In such countries, refillable bottles serve two needs: They allow people to sample Coca-Cola products, and they reduce Coca-Cola’s environmental impact in areas where public recycling is limited or nonexistent.

In more developed markets, packaging serves needs beyond affordability. It must be lightweight, resealable, and shatterproof for people with fast-paced, mobile lifestyles, all while remaining compatible with local recycling systems.

“We look holistically at what need we’re trying to meet. Do we need to have packaging in the first place?” he says. The company cannot simply pour Coca-Cola into customers’ hands, of course, so the goal is to produce packaging with maximum utility for consumers and minimal impact on the environment.
Vitters manages a project that rethinks what a bottle must be. Coca-Cola first considered compostable bottles, but after analyzing the life cycle of materials, the -company discovered that putting the bottle back in the dirt would be less environmentally preferable than recycling the material over and over again.

“Everyone was looking outside the bottle for ideas,” he says. “We decided to look inside the bottle. We focused on what was right with the existing bottle and how we could make it even better.”

What they needed, they realized, was a plastic bottle that wasn’t made from petroleum. What they created was PlantBottle, which chemically is identical to the material used in traditional bottles, but made in part from the natural sugars found in plants.
This was a triple win for the company: It promotes the company’s commitment to environmental protection; it drives long-term productivity by reducing Coca-Cola’s dependence on volatile fossil fuel markets; and it strengthens emotional connections with customers. Plus, it does not upset the supply chain.

“The company that makes the bottle is the same, the recycler is the same, which means that it’s cost-efficient,” he says. “We are replacing one of the two ingredients in conventional plastic bottles. And we see a solution for completely decoupling conventional plastic from fossil fuel-based materials in the next few years.”

Of course, being a market leader also means Coca-Cola is under more scrutiny, and customers expect more from it. Perhaps that’s part of why Coca-Cola partners with third parties like the World Wildlife Fund and Greenpeace on its sustainable innovations. Vitters does not see it as a challenge. He sees it as motivation to serve.

“Due to the scale of our business, and our potential impact on the environment, we often do face higher expectations,” he says. “But it’s a good challenge to have. It leads to truly transformative innovation.” w

Heather Boerner is a San Francisco-based freelance writer who specializes in business and entrepreneurship.

When Ian Simpson discovered cause marketing — that is, philanthropy that leverages social good to drive sales and increase corporate profiles and profits — things fell into place.

“Everyone was looking outside the bottle for ideas. We decided to look inside the bottle. We focused on what was right with the existing bottle and how we could make it even better.” —scott vitters

Green Mountain Coffee Roasters’ Michael Dupee (MBA/JD ’00)

Purpose Beverages
co-founders Ian Simpson
(MBA ’07) and Gerard Artavia

Coca-Cola’s Scott Vitters (EMBA ’12)

PepsiCo’s Emily Gassman Kiely (BSBA ’01)

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