Victoria's Secret Trims Pulping the Boreal

Chainsaws down! Millions of men in the 18-35 demographic are relieved: Limited Brands just helped them reduce the size of their environmental footprint, and prevented the 2007 version of the The Victoria's Secret Fashion Show 2006 being greened out. Victoria's Dirty Secret is safe [see also SRI Extra, Monday, February 12, 2007]. After fumbling along without a leader in the C-suite on sustainability issues, it seems Limited Brands has empowered the SVP of Community and Philanthropy to help it get its head in the game. It is not clear on the power dynmaics, or where this will be in 2 years time. Any investor would worry a little about the poor reputation strategy management, especially for a FMCG firm, yes?! Or was that arrogance that LTD/VS could build a brand like Victoria's Secret on the basics of brand management, but the same laws would never apply to it? It is actually the VS sister company, Victoria's Secret Direct, that mails more than 400 million of its sexy catalogs per year, offering intimate apparel, women's clothing, and footwear. At somewhere between 20-32 pages, that’s a lot of bright shiny, ink-covered pages, many of which last about a week or hour until they are trashed.

While the announcement in San Francisco, Dec. 7, 2006 by ForestEthics of their pact on environmental stewardship with Victoria's Secret is good news, it will probably require ForestEthics keep the target companies feet to the fire. Annual checkups like Banktrack.org has done supported by WWF, RAN and FOE on lending practices after the Equator Principles is a good idea, and wherever possible, making the business case in laymen’s terms, for their motto after all is “because protecting the forest is everyone’s business”. An environmental impact scorecard or index like we covered for the Business Ethics 100 at KLD, perhaps in partnership with major media, will keep the trend toward more sustainable forest and paper policies in the news regularly, and cover all those moving forward like Patagonia, but also raise awkward questions in board rooms which have surprisingly shown stubborn resistance particularly endangered forests like some of the US industry's largest companies, including Sears and Lands' End.

The ForestEthics and Limited Brands, parent company of Victoria's Secret, announcement of a “new forest protection policy” included “several landmark environmental measures and ensures that the pulp for the company's catalog paper will not come from endangered forests” [I have a visceral dislike when corporate-speak trots out terms like “landmark”, “benchmark” and innovative”. Do you too?].

"We consider environmental stewardship to be an essential part of our values, and we're proud to take a leadership role," was the PR by SVP Tom Katzenmeyer, but one had to wonder where that “leadership” had been lurking the previous two or ten years… No word on whether Dan Howells, Paper Campaign Director for ForestEthics, smiled, grimaced or fidgeted when these words were spoken.

ForestEthics had been advocating with the catalog industry for several years to reduce their environmental impact on the Canadian Boreal leading two years ago launching a campaign against Limited Brands/Victoria's Secret, and deftly beginning “discussions” with the company. In June 2006 in St. Louis, MO they led local and national activists to rally at the Victoria's Secret store at the St. Louis Galleria, with Unitarian Universalist activists, Young Religious Unitarian Universalists (YRUU), the Missouri Forest Alliance, the Boston Coalition for Sustainable Logging, and other local activists. Those discussions must have been fun...! ForestEthics’ campaign has been about the impact of catalog production on Canada's Great Boreal Forest. ForestEthics statistics are alarming:

Stretching from Alaska to Canada's Atlantic coast, the Boreal contains 25% of the intact, roadless forest remaining in the world and is a key regulator of global climate, providing one of our first lines of defense against global warming. It is critical habitat for many species, including endangered caribou and half of North America's songbirds, and provides $93.2 billion a year in ecosystem services like air and water filtration. Currently, the Boreal is being logged at a rate of two acres per minute, 24 hours a day, and paper production accounts for nearly 50% of that logging.

Extractive industries had been targeted long before firms down the pulp and paper supply chain, as the WSJ reported back in 2001 [not on the editorial pages] Wall Street Journal -- Big Firms, Environmentalists Join To Save Canada's Boreal Forests by Christopher J. Chipello. They adopted the classic regulatory route, calling for government action not positively establishing their own private sector standards for the 10% not in government hands, including chunks in company leaseholds. Of the four big natural-resources companies that announced they will join with a coalition of environmental and native groups to persuade the Canadian government to protect much of the country's vast boreal-forest region, according to officials involved in the effort, only one firm, pulp producer Alberta-Pacific Forest Industries Inc., was expected to make a commitment to have its forestry practices certified by the Forest Stewardship Council [FSC], the leading standards organization. Of course, Gary Larson's Far Side would surely cartoon the irony of a oil sands firm calling for forest protections [does that include unpolluted groundwater from mining operations?], Suncor Energy Inc. extracts oil from the massive oil-sands deposits in northern Alberta.

The measures make for interesting reading on what a leading NGO had been able to negotiate with an industry major, based on willingness to negotiate and how material the impact may be:

1. Limited Brands will partner with its primary paper supplier to eliminate all pulp supplied from the Boreal Forest (Alberta's Rocky Mountain Foothills) and British Columbia (Inland Temperate Rainforest).
2. Shifting its catalogs to either 10% PCW or at least 10% Forest Stewardship Council (FSC) content during 2007.
3. A preference for FSC certification, the only credible certification for sustainable logging. Limited Brands has partnered with one of its principal suppliers to shift four of its mills to FSC.
4. Overall catalog paper reduction.
5. A commitment to continual improvement on environmental attributes of catalog paper and paper use. Progress will be audited by an independent third party and made public.
6. A commitment to phase out of endangered forests.
7. One million dollars committed to research and advocacy to protect endangered forests and ensure leadership in the catalog industry [is this the cheapest marketing spend ever for a billion-dollar consumer brand with a sustainability themes problem?].

No word on what the CFO had to say. When will the case be put in compelling business terms, explicitly linking damaging the natural resource bases irreparably as a cost to society and therefore to business? Fortune's Marc Gunther had in September covered the Canadian forest issue in Are Kleenex tissues wiping out forests? referencing Kimberly-Clark being targeted by Greenpeace and other environmental groups for misleading the public on its sustainability practices and reports, the unfortunately common practice of “greenwashing”, referencing the Domini work on FSC sourcing. Kimberly-Clark Corporation (NYSE:KMB) is a US$16 billion a year forest products firm whose brands include Kleenex, Huggies, Scott, Pull-Ups, Cottonelle, Viva, Kotex and Depend. Greenwashing is a business characteristic that will perpetually offer ratings firms like KLD, Innovest, EIRIS and GES a daily wage. I will be watching for what the Forest Service Employess for Environmental Ethics has had t say. FSEEE is made up of those public servants and retired workers who actually care about what they did at the environment service and its forest philosophy, although I am sure same little in-fights happen along the way. I still think the whistle-blower is the most powerful component of any corporate governance or ethics protocol.

Victoria’s Secret has been a phenomenon and a shining star for LTD. Lingerie, especially VS's expensive lingerie has along with conspicuous luxury items like handbags for Coach [NYSE:COH] been a strong consumer trend in affordable luxury segment – you need more than one, right, Dara?! The branding masterstroke was to use the annual fashion show as a TV event, like SI’s annual swimsuit edition [although the latter suffers withholding from fathers and librarians who are getting increasingly nervous]. I'm still waiting to be invited, and will let all know as usual on the EVENTS page! It really would be a sad understatement to regard the photos from the VS catalogue like the cataloguing of equipment in say Runner's World or Chainsaws Monthly, yes? Never having heard of VS before coming to America in Feb. 2002, I often wondered how the prudish American TV sensibilities allowed the dressed up lingerie to wiggle through onto primetime TV like at The Victoria's Secret Fashion Show 2006.

No word yet on greening the fashion show for 2007, using wind turbines driven by all the hot flushes, perhaps…