Ousted founder Jeffrey Hollender explains how to tell if the company he created is sticking to his original values—and a company response.
“What I learned were too many things were dependent on my perspective and my belief and that’s not good for any business,” Hollender says. “The values have to be woven into the fabric not just culturally, but legally.” Hollender wishes he had enshrined more practices in bylaws and other legal documents.
“So, for example,” he says, “Seventh Generation has given 10 percent of its profits away to charitable nonprofit organizations. Now that’s not in the bylaws of the company, that’s not in the charter of the company. That can be changed at any time. Well, you know what, that’s a mistake… It should be in the bylaws and it should only be able to be changed by a supermajority that includes the employees… So if I failed, and I think I did fail in a lot of ways, I failed to institutionalize the values I believed in.” Heimert points out the 10 percent giving continues as it always has, directed by board member Sheila Hollender, Jeffrey's wife.
That's probably just one of the reasons Hollender isn't saying he predicts these things will change. In fact he repeatedly stressed that he doesn’t expect them to, but this is a time of reflection for him as he examines what led him to be ousted from his company. And he makes a passionate argument for using new tools to protect the core principles of values-driven businesses. He cites B-Corporation status, which requires a company to alter its bylaws so the leadership has to consider environmental and social impacts as well as financial factors before making corporate decisions. Seventh Generation was a founding B-Corporation when the concept was created three years ago. But those bylaw changes didn’t address 10 percent giving, CEO pay, or publishing a corporate responsibility report according to Global Reporting Initiative standards, all practices instituted by Hollender.
Dave Rappaport, the Senior Director of Corporate Consciousness, says he doesn’t know of any plans to alter the bylaws to enshrine any of those policies but says “there’s been no change to our commitment to all of the things we’ve been working on.”
(Rappaport's title in another company would be director of corporate responsibility, but one founder-inspired quirk of Seventh Generation is that company leaders make up their titles—at one point Hollender named himself Chief of Un-Fucking Up the World. That title lasted one day.)
Rappaport who was hired by Hollender after working in the NGO world, says all of the practices listed by Hollender will stick around. “Although the company was launched by Jeff’s vision, it is embraced by everyone here. It has been a part of everybody’s perception of their roles. Down to the innovations we’ve created on sustainability and corporate responsibility you will find the work of employees who took the vision to heart.”
He says, since letting Hollender go, the board of directors has approved the creation of a new committee on corporate social responsibility and sustainability. “With Jeffrey’s departure we know we have to institutionalize all of the things” he advocated for, to make sure there is management oversight and “continued direct board oversight, which there was through him” when he was on the board, Rappaport says.
Rappaport cited a few specific initiatives indicating how transparency continues to increase, including publishing the corporate responsibility report in an accessible online form and a new initiative to make more company data available to the public in the same way data.gov publishes government data. He hopes consumers and publications like GOOD will use it to hold his company accountable.
In possibly the most comforting statement he could give in this position, Rappaport echoed the man who hired him with a Hollender-esque call to consumers, "don't just take our word for it. Watch and see. Nobody deserves to get a pass on their actions ... our consumers need to be the ultimate judge of what we do."