[MUSIC] So this is Mike Rosenberg from IESE Business School. And this is the course on strategy and sustainability that you've been following. Today, we're going to start Session IV which is on environmental interest groups. If you've been following the course, you started with Session I, which is on business and the environment. Looking at the relationship that has been between business and the environment. As the world has kind of woken up to the environmental issues over the 60 years. In Session II, we looked at five strategic issues, which I believe are critically important for a business to worry about. Regardless of the politics of the people in the business or the shareholders. These are things which I think, a CEO and a Board of Directors need to look at. In order to do their fiduciary duty by the firm and to think about the medium term. In the last session, Session III, we looked at different strategic options, generic strategic options which companies can pursue. And in this session, we're going to dive into a very specific aspect of this whole issue. Which is the environmental interest groups which are engaging with business in different ways and in my belief that they are not all the same. So we'll be talking about that in this session. Our session, we'll start with an introduction. I'll use the Sierra Club. The Sierra Club is one of the oldest environmental institutions around. It's very, very well regarded. And really, there's a lot in its story, which I'll go into in a minute, to illustrate what I believe are four different types of groups in this area. Which I call Conservationists, Activists, Localists, and Advocates. This session, we'll close with a discussion of what Dave Barron at Standford calls Non-Market Strategy. Which is how a company needs to deal with the issues beyond the marketplace which we might have to deal with. So let me just, as a way of introduction, you go back to this issue that there's a distance between business people in the way they see the world. And the way environmentalists see the world and sometimes they're called tree huggers. So there's an image of a tree hugger just to kind of illustrate how far part apart they are. And we looked very deeply at those differences back in Session I. The poster girl or poster woman for this whole thing, this woman, she's called Julia Butterfly Hill or Butterfly Hill. This woman lived in a tree for 738 days in Northern California. The tree is a California Redwood, it was probably 1,500 years old. And it was on the list to be knocked down by a logging company, the Pacific Lumber Company. So this women when she was 25 she just said, I'm going to go live in the tree cause they're not going to cut it down if I'm living in it. And she stayed in the tree pretty much through the whole 1998 and 1999, plus some days for more than two years. I guess it's a bad word, until finally, a deal was made with the lumber company to save the tree. The tree was called Luna and Ms. Hill has gone on to be a fantastic spokesperson for the environment. But this distance between these groups of people is important. So if you look at the environmental movement though, there are these four categories. There is Conservationists, Activists, Localists, and finally what I call Advocates. So I'll use the Sierra Club to illustrate these different things. Because, in fact, I believe that the club has passed through all these different phases on it's very, very long and successful history. Now, we'll look at the Sierra Club because the Sierra Club is a fantastic example of an organization. Which over more than a 100 years, has actually passed through different phases of its existence and really what it's trying to do. The club was founded in the 1860s by John Muir and a number of business people from San Francisco. And really, it was a localist organization founded to protect Yosemite Valley. The Yosemite Valley's a beautiful valley in San Francisco, has enormous redwood trees. And which just reach to the sky, and just breathtaking, a natural beauty. And they were concerned that local interests were going to log the timber from these enormous, very, very special trees and develop the valley for commercial purposes. And to protect that, to prevent that, they actually went to Washington and lobbied the federal government to create Yosemite as a National Park. To transcend the local politics of California and protect the valley from itself, from its own people, from the people around it. And I think, the park was founded in 1865 or 1864. Creating, I think, it was the second national park after Yellowstone, a really amazing achievement. And then, this group went on to work on additional places becoming much more of this conservationist idea. That their reason for being is to protect wild places in the world, The Grand Canyon, Mount Ranier, Joshua Tree National Park. All these were created because of lobbying by the Sierra Club, saying these pieces of land are special. They're wild places which must be protected. In 1910, there was a huge battle in San Francisco for San Francisco's water supply. There had been a terrible fire in San Francisco and it was clear that the city needed more water. So the National Forest Service had a proposal to dam the river and create in a place called Hetch Hetchy. The Hetch Hetchy River a huge artificial reservoir system which would bring water all the way from the mountains to San Francisco. That system is still in use today and it's essentially the principal source of water for San Francisco. The Sierra Club opposed it, they tried to stop it. Again, localist people saying no, no, we want to keep the beautiful valley. We don't want the water, we'll get the water some other way. They lost that fight and in fact, they lost that fight largely because of the very strong support of the US Forest Service. The US Forest Service was run by a gentleman called Gifford Pinchot. He was a very famous forester. And his belief was that the nation's forests needed to be managed carefully. And to balance the needs of nature with the needs of man. Where the Sierra Club was saying, no, no, these are places which must be protected from man at all costs. Part of this whole thing resulted actually in the foundation of a different organization, the National Park Service. Which would be actually ran for the first time by Stephen Mather, who used to be a Sierra Club guy. And this created kind of a tension between the National Park Service trying to protect parks and places which are protected from development. To the US Forest Service which is actually trying to manage the nation's forests. And that tension actually exists today. So the origins of the Sierra Club were really with John Muir is protecting in natural places. And the organization was doing that and at the same time organizing outings. Taking people backpacking in the mountains, showing them how beautiful nature was, etc. And that was pretty much what the organization did until 1952, when a Gentlemen named David Brower became the first actual director of the club. Until then, the club had been run, more or less, by volunteers. But he became a paid operator, managing the club, and managing activities. And Mr. Brower had dreams and big ideas for the club. And he felt that the club should make much broader statement in society and be more active in the issues of the day. One of the things he did very successfully was commission Ansel Adams to make a series of beautiful photographs of Yosemite and other natural places. Put those into nice books and started selling books which was a new thing. They opened an office in New York. And started running advertisements in newspapers protesting against things which the club thought were very important. So things like how fast the country was growing. Nuclear power which is something that Mr. Brower was very much against. Water pollution which was again, becoming increasingly important in the 50s. The airport noise, all these issues which started to become important at the time. And Mr. Brower wanted to take the Sierra Club into the first line of debate, becoming much more of an activist organization. One of the things which happened under his tenure, was they became so involved in selling things and creating membership that the federal government removed their tax exempt status. They said, you're not a charity anymore, you're a company which caused a whole bunch of noise. And eventually, Mr. Brower lost the confidence of the board of the Sierra Club and stepped down. But during his tenure which went from 1952 to 1969, club membership grew from 8,000 members to 75,000 members. Really creating something that we hadn't seen before, this idea of an environmental organization. Now, what was interesting is, Brower was replaced by Michael McCloskey. Michael McCloskey was a lawyer, he had run for office, he didn't win. Joined the Sierra Club as an organizer and he took the club in a very different direction, then they continue the outings. They continue to work for protection of natural places. But he created the Legal Defense Fund for the club. And got much more involved in a whole bunch of legislations which is going on. Clean Air Act, the Ban on DDT which were mentioned in the other session, all of these different things, the Native Claims Act in Alaska. But not from the point of view of the magazines and not running ads in newspapers and not kind stepping up to the barricades. But working behind the scenes becoming probably, the most powerful environmental lobbying organization that anybody had ever seen. Under his tenure, the club membership went from 75,000 to 500,000 people. And they really got involved in all the issues of the day. But again, from this kind of quiet advocacy point of view, rather than kind of stepping into the cameras and stepping into the limelight. After McCloskey, there was a series of different Managing Directors or General Managers of the Sierra Club. Until the appointment of Michael Brune just a couple of years ago. Now, Mr. Brune started his career as a Greenpeace activist, so he was trained by Greenpeace. He was the head of the Rainforest Action Network before he joined the Sierra Club. And he has taken the club in a very, very different direction. Here's a image of Mr. Brune chaining himself to the White House in protest of Keystone XL. And in fact, Mr Brune and another 47 Sierra Club members were arrested that day protesting this pipeline. The pipelines a complicated issue which perhaps, we'll talk to in another session. Essentially, the pipeline was designed to help Canada export oil coming from its tar sands operations in Alberta. The point is tar sands have a very heavy carbon content, it's a bad idea. We're trying to persuade President Obama not to approve the operation. But in this case, Sierra Club leadership went over the line and broke the law, for the first time, in its 120 year history. Moving the organization from what was its history into a much more activist. Much more limelight-like stance which was, for many people kind of a shocking development. Now today, the Sierra Club is a machine. It's got 500 staff, 2.4 million members. A $100 million annual budget and it is a completely different creature than it was 120 years ago. Now, it's still doing backpacking trips, it's still doing lobbying. It's still protecting natural places, but it is much more an activist organization than has ever been done before. So you see, in the history of the club, how it went from being a localist organization. Being fundamentally conservationist, becoming an advocate, working behind the scenes. And finally, you can see Mr. Brune becoming an activist or being an activist. Taking charge of the club, taking a much more activist stance. So the Sierra Club kind of introduces this four different types of environmental interest groups. And what we'll see in the next few segments, it's kind of a deep dive on these different types of organization. [MUSIC]
