Burt´s Bees

To: Brian Bolton

Subject: Answer the question: Can Burt’s Bees continue to be a leader in social, environmental and product innovation, while also sharpening its focus on growth and profitability as a part of a public company with fiduciary responsibility to its shareholders?

Yes, they can and they should. In addition Clorox shall let them be that and encourage as well as support the mission of Burt’s Bees. If they don’t, Clorox looses the reason it acquired Burt’s Bees. This is of course assuming that they have smart C-level executives who can convincingly execute overall growth strategy that can, but doesn’t necessary, involve value growth to shareholder in long-term gains over short-term dividends.

Sustainability and profitability are not opposites. That idea and false belief was developed due to the increasing demand for speed of development and growth.  This can be seen for example through the average lifespan of S&P 500 companies that has decreased from around 60 years in 1920s to around 15 years today. Earlier corporations developed products with longevity and took care of the community around them and they still did it to have competitive advantage and higher profit. While decades ago there was ignorance about certain chemicals and practices being harmful, the corporations considered employee housing, long lasting products and non-harmful products to increase the value of their corporations. Reduction on waste and water usage was seen as a way to save cost. Good example is a Finnish Stora Enso, world’s oldest LLC, that is located in a small country that has already in volume cut all the forests in the country more than twice but because it is done at sustainable rate the company and people can still use the natural resources. Additionally Stora Enso is growing currently its bio-energy and green construction products in addition to traditional pulp and paper manufacturing.  Another good example is Berkshire Hathaway. It has not fallen into chasing quarterly profits but rather long term sustainable business.  This is why they can be in business and well off, every day of every decade they are in business.

New companies do all of this in the name of sustainability. Burt’s Bees is merely working true to older beliefs on how to build and deliver value to a corporation. The fact that they have been growing continuously between 2002-2007 as presented in the case and the growth was significant, tripling the revenue in that time period. Even for last quarter in 2014 Burt’s Bees, as a part of lifestyle group, represented faster growth with 5% for Clorox than the company average of 2.8%.

There is a lot research that point to the fact that sustainability such as could be seen represented by Burt’s Bees 2020 goals is actually more profitable in the long run. It takes of course more planning than cutting quick corners but as book such as Cradle to Cradle points out, even amongst the most polluting companies (textile manufacturing) planning for sustainability can actually make changes that bring higher margins rather than higher costs. What Burt’s Bees is doing can be replicated by any and all companies. The problem is that the companies respond to demand and people create it. As long as people are not demanding change or better products the companies have no incentive to do so.  The organizations that we leave this responsibility to do are government agencies. Since entities such as Environmental Protection Agency or United States Forest Service exists consumers remove the responsibility to them to control sustainability instead of demanding it from the for profit corporations.