The recent decision by drugstore giant CVS to stop selling tobaccoreceived a great deal of attention, as it should. It’s a big deal when a US-based, public company chooses to stop selling something.
Some have downplayed the move, calling the $2bn in lost sales “a mere dent” in the company’s $123bn in revenues. But I challenge anyone to walk into their bosses’ office at a big, publicly held company and say, “Hey, let’s cut a couple billion from our revenue on purpose.” The choice that CVS made, in a culture of relentless pressure on short-term earnings, was brave – full stop.
As others have pointed out, it was also a logical decision that was likely good for the business.
The free publicity alone was worth a great deal. And the goodwill from many customers should pay off. I realize my family makes an unscientific focus group, but when the decision was announced, my wife said: “We really should go to CVS more and give them some business.” I went to a CVS that day.
More strategically, a couple of key questions come to mind. First, why did CVS do this? Perhaps they’ll just save money. After all, Target stopped selling tobacco in 1996 to cut costs (from reduced shoplifting and anti-theft measures).
But I’m inclined to take CVS at face value. Here’s what Larry Merlo, CVS’ CEO, said about the company’s core mission to provide health services: “Cigarettes and providing healthcare just don’t go together.”
That indicates this was a strategic decision about the future of the company. Still brave, but logical. It’s a great example of what I call a big pivot – a fundamental shift in strategy and tactics to deal with some big shifts in how the world works. I usually focus more on climate changeand resource constraints as drivers of change, but health and wellness issues are extremely large forces to reorganize a company around as well.
The second big question is, what’s next? What other items on CVS shelves don’t fit the health care focus? Several columns in the Guardian – as well as The Boston Globe – call out the candy, soda and other fatty or sugary snacks still on offer.
It’s worth considering, in a larger sense, the things many companies are doing today that don’t fit with their missions. Does it make sense, for example, for companies that rely heavily on a robust middle class to fight a raise in minimum wages? A century ago, Henry Ford raised wages so more people could afford cars. And on Wednesday, apparel retailer Gap announced it would pay its employees more, raising its minimum hourly rate.
How about the use of fossil fuels in business? It may seem like a leap, but for many companies and organizations, using, supporting, and investing in climate-changing fuels goes against their missions. For CVS, we could ask, what’s “healthy” about fuels that generate air pollution, which increases asthma and heart attacks, or that destabilize the climate and drive extreme weather that threatens public well being?
We can look at many stated visions for organizations and ask whether fossil fuels fit. Take Walmart’s “Save money, live better” slogan. We’re clearly not going to be living better with extreme weather, droughts and floods.
To Walmart’s credit, the company is buying significant quantities of renewable energy (not as high a percentage of its energy use a few other retailers, such as Ikea, but still a quickly growing one). At the company’s quarterly milestone meeting this week, it announced that 1,300 of its stores use renewables and Walmart de Mexico is now getting 60% of its energy from clean sources.
The company makes the case in mainly financial terms, saying it’s paying less for energy, or by citing the resilience benefits. Those are great reasons, but a mission check might drive even faster adoption of new technologies.
Or consider the universities under pressure to divest from fossil fuels. Most recently, Harvard and Brown resisted calls to divest. They made seemingly well reasoned arguments: they have other means to effect change, their investment portfolios aren’t so large as to influence the markets, and there may be hypocrisy in relying on fossil fuels to operate while de-investing.
A recent piece in The Nation makes a number of strong counter arguments, including the basic fact that climate change already disrupts university operations. For example, Tulane in New Orleans had to shut down for months after Hurricane Katrina.
But perhaps the most powerful argument is that climate change threatens a core mission of a university, preparing students for the world, by changing the world irrevocably. This means the universities may be training a generation for the wrong reality.
I recently wrote about three possible paths to getting us off of fossil fuels– government regulation, economics (as renewables get cheaper) and moral pressure. But there may be an important additional pathway that we can see at play in the tobacco example: changing cultural norms. Perhaps CVS has decided, about 50 years after the Mad Men era when everyone smoked, that it’s just not cool anymore.
So who’s going to be brave enough to say no to fossil fuels, without couching it in economic or business-case terms? Who will state clearly that this kind of energy no longer fits with what we want to be?
(This post first appeared on the Guardian Sustainable Business hub.)
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