Health and wellness are good for the mind, body, and soul, but they are also increasingly good for business. For a retailer like CVS, where pharmacy services are at its core, you’d think this sentiment would resound throughout the company; but a couple of years ago, CVS and its Senior VP of Corporate Social Responsibility, Eileen Howard Boone, realized the brand needed to reevaluate one prominent product on its shelves: cigarettes.
With cigarettes raking in nearly $2 billion in sales, and constituting 2% of CVS’s sales (as of 2012), it’s hard to imagine eliminating this revenue stream in a low margin business. However, in October of 2014, the company rebranded its corporate name to CVS Health and became the first major U.S. drugstore to remove tobacco products from its 7,600 stores. “The decision to stop selling cigarettes was one that came with a financial risk. Eliminating $2 billion in sales is not something that is done every day by a Fortune 12 publicly-traded company,” Ms. Howard Boone told Forbes. While publically committing to reduce near-term revenue is a tough sell for a public company, Howard Boone and CVS Health considered other serious numbers, like the approximately 430,000 deaths that are attributed to cigarette smoking annually.
For CVS Health, the business case was clear. Providing health care services and promoting health as a core purpose would not be sustainable while selling a product that so directly competes with that aim. To Eileen Howard Boone, it’s all part of innovating and reinventing the business for the benefit of the customers. “Despite this loss in revenue, we were willing to take that risk, to ensure a positive impact on the long-term health of our customers, clients and colleagues and to advance the dialogue on public health,” she explained. It is important to note that while some cities like Boston and San Francisco ban the sale of tobacco products in pharmacies, the decision by CVS Health was completely voluntary. But many interested parties were already advocating for pharmacies to stop cigarette sales, beginning with the American Pharmacists Association in 2010. Dr. Risa Lavizzo-Mourey, CEO of the Robert Wood Johnson Foundation, which focuses on public health, called CVS Health’s decision “a bold, precedent-setting move because it acknowledges that pharmacies have become healthcare settings,” and hopes it will serve as a model for other pharmacies to follow suit.
As Boone explained in a recent interview with Forbes, the company’s CSR strategy, appropriately dubbed “Prescription for a Better World,” is three-pronged: building healthier communities, protecting the planet, and creating economic opportunities. The decision to eliminate tobacco products is just the tip of the iceberg in building healthier communities. CVS has aligned themselves with community partners such as the American Lung Association’s LUNG FORCE a women’s support program to educate and promote awareness. Like the many companies truly embracing the CSR spirit, CVS Health is ensuring its CSR initiatives go hand in hand with business strategy and key decisions that start at the top. “I’m very fortunate to have the example of our CEO, our board and our senior leadership team. This year, they made a bold move that really showed me firsthand what it means to be a leader in the area of corporate responsibility.”
See Eileen Howard Boone speak at BRITE ’15 (March 2-3, NYC) and hear more about the the power of purpose and the strategic role of CSR as a business imperative.