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Business Can Drive Demand for Organics

April 2004

STANFORD GRADUATE SCHOOL OF BUSINESS—Yogurt hardly seems like an industry to start a revolution, yet Gary Hirshberg is bent on doing just that.

"Organic foods are now a $13.7 billion business in the United States. Five years ago when I last spoke here, it was about $3.5 billion," said the founder of Stonyfield Farm, the nation's leading manufacturer of all-natural and organic yogurt. Hirshberg, who started the business in 1983 with seven cows and a recipe, sees organics as a sea change, with mainstream food companies entering the field "because they see the market going there and don't want to be left out."

"I believe business is the most powerful force on the planet," he said. "Most social and environmental problems exist because commerce hasn't made the solutions a priority. Business has the power to create a sustainable future, but if business doesn't, it's not going to happen. We've got to demonstrate the economic advantages of this cultural revolution. If I can get a Trojan horse working within Group Danone, then Nestle, Unilever, and Kraft are going to have to follow."

Stonyfield made major headlines in 2001 when it joined Group Danone of France, a move Hirshberg said he supported because he wanted to infect the French giant with Stonyfield's commitment to organics. Yet Hirshberg admits people don't eat organic yogurt because it's good for the environment. "It's the taste, stupid," he quipped. They buy organic food "because it tastes better. We're clearly paddling with the waves of society."

The environmentalist and yogurt maker who spoke April 8 was the most recent in a long line of distinguished speakers invited to give the School's annual endowed Conradin von Gugelberg Memorial Lecture on the Environment. Over the years, speakers have discussed an energy company's approach to reducing greenhouse gases; how bankers must figure environmental factors into their lending and investment decisions; and how an international cosmetics empire operates under a strict, environmentally friendly code.

In 1996, Barbara Dudley, director of Greenpeace USA, acknowledged that her organization is confrontational but argued it is a necessary approach. "At this time there is no international body with the power to stop environmental degradation. We have the World Trade Organization but we do not have the World Environmental Organization," she said.

Seven years later, architect and author William McDonough described the Hannover Design Principles—written for the German city—that cover the interdependence of humanity and nature, spirit and matter, and urge responsibility for long-term consequences of design decisions.

Over the years, many speakers have shared the belief that sound environmental policies make economic and strategic sense for businesses at large. "Mankind is heading for a new age of industry in which environmental responsibility leads to better business, profits, and long-term sustainability," Paul Hawken, author and founder of the Smith & Hawken specialty garden retailer, said in his 1998 address.

The 2002 speaker, Rocky Mountain Institute cofounder Amory Lovins, argued that wasting resources such as water, energy, or topsoil squanders materials that businesses need to create lucrative opportunities.

The von Gugelberg Fund, which supports the lecture series as well as activities to encourage recycling, internships for the Stanford Management Internship Fund, and case studies in environmental management, was created by four of von Gugelberg's Class of '87 classmates. "Conradin was a friend, a hiker, skier, and outdoorsman who studied engineering in Switzerland and worked in venture capital and management consulting," recalled Robert Cohen, one of the fund's founders. "We knew him as a gentle soul, a gentleman, and a conservationist."

Classmates Adam Stern, Peggy Brannigan, Louis Boorstin, Debbie Cohen, and Robert Cohen, plus von Gugelberg's friends and family from Switzerland, created the fund. In addition, many other members of the class of '87 have made donations. Robert Cohen recalled how when they were students, von Gugelberg would retrieve the School's only two recycling bins from the basement after Friday afternoon LPF parties, haul them up to the courtyard, and "put all the cans and bottles in them because he knew if he didn't they'd go into the trash."

His legacy to the School has been not only a plethora of recycling containers but a discussion of the environment that continues today.

Since the von Gugelberg series began in 1989, speakers and their titles at the time of their visit have included:

U.S. Sen. Tim Wirth (D-Colo.)
William Reilly, administrator, U.S. Environmental Protection Agency
William Ruckelshaus, CEO, Browning Ferris Industries; former administrator, U.S. Environmental Protection Agency
Anita Roddick, founder, The Body Shop
Fred Krupp, executive director, Environmental Defense Fund
Amory Lovins, CEO, Rocky Mountain Institute
Barbara Dudley, executive director, Greenpeace USA
Stephen Schmidheiny, founder, Business Council for Sustainable Environment
Paul Hawken, chairman, The Natural Step; founder, Smith & Hawken
John Sawhill, president and CEO, The Nature Conservancy
John Browne, group chief executive, BP Amoco
William McDonough, cofounder and principal, McDonough Braungart Design Chemistry, LLC
Gary Hirshberg, cofounder, president, and "CE-yo," Stonyfield Farm