By Marc Gunther

(FORTUNE Magazine) – One way to gauge the impact of a pressure group is by the quality of the vitriol it provokes. By that measure, the Rainforest Action Network stands out. When RAN, as it is known, launched a campaign against Boise Cascade, the forest products company accused the group of using "harassment and intimidation" to advance a "lawless, radical agenda" that would "destroy business and halt economic development in the world's poorer countries." Malcolm Wallop, a former U.S. Senator from Wyoming who leads a conservative think tank, says that RAN pursues a "utopian, pollution-free socialist world." Others have accused the group of coercion, blackmail, even terrorism. After RAN's opponents challenged the organization's tax-exempt status, a House subcommittee recently subpoenaed the group's financial records, documents, and e-mails relating to civil disobedience.

With an annual budget of just $2.4 million and a staff of 25 people, most in their 20s and 30s, RAN is dwarfed in stature by well-established environmental groups like the Audubon Society, the Sierra Club, and the Nature Conservancy. But this hard-core band of rabble-rousers knows how to get under the skin of big business. Using street theater, Internet organizing, celebrity endorsements, and an understanding of brand vulnerability, RAN has figured out how to push corporate executives' buttons. "Groups like this just nag you to death," says Drummond Pike, president of the Tides Foundation and a longtime supporter of RAN. "Kind of like sleeping in a tent with a mosquito--just a nuisance when it starts, but you can wake up later with some serious welts."

Just ask Sandy Weill, chairman of Citigroup. Four years ago a letter from RAN arrived at his office demanding that the global financial giant stop lending money for logging, mining, and oil-drilling projects that destroy rain forests, threaten indigenous people, and accelerate global warming. RAN then staged protests at bank branches and unveiled an Internet campaign urging customers to cut up their Citi cards. About 20,000 did so, the group says.

At first Citigroup ignored the agitators. But when the bank's reputation was tarnished by corporate scandals--it helped finance Enron, and its Salomon Smith Barney brokerage unit produced tainted research --RAN stepped up its attacks. It had volunteers rappel down the side of a building across from Citi's Midtown headquarters to unveil a 60-foot-wide banner saying, FOREST DESTRUCTION & GLOBAL WARMING? WE'RE BANKING ON IT! (The protesters were charged with burglary and reckless endangerment.) RAN activists chained themselves to the doors of bank branches in New York, San Francisco, Washington, and Miami. (They too were arrested.) When Weill traveled to Cornell University, his alma mater, to lecture on globalization, noisy protesters showed up to greet him. Even on a family vacation to Europe, Weill could not escape RAN. He opened the International Herald Tribune to see a full-page ad, with his picture, labeling him an environmental villain. Explaining that to his grandson was no fun, Weill said later.

On the eve of Citigroup's annual shareholder meeting in April 2003, RAN began airing commercials on cable TV that showed Ed Asner, Susan Sarandon, Darryl Hannah, and Ali MacGraw cutting up their Citi cards. That stung. Citigroup offered to negotiate with RAN if the organization would declare a cease-fire. RAN agreed.

In January, Citigroup and RAN said they had reached a "common understanding of key global sustainable development issues." Citigroup simultaneously published a sweeping environmental policy that went beyond what the bank had announced before. The company laid out rules that govern its investments in rain forest areas and promised not to finance projects that degrade "critical natural habitats." The bank pledged to create equity funds, using its own money, to invest in renewable energy and sustainable forestry. Finally Citigroup acknowledged the problem of global warming, promised to track greenhouse gas emissions at 12,000 buildings it owns or leases worldwide, and said it would report on emissions created by the power sector projects it finances. No other U.S. financial institution had taken as expansive a view of its environmental responsibilities.

Recently RAN returned to the bank, not to protest but to spend a day meeting with senior executives, including CEO Chuck Prince. "We have a good relationship with RAN," says Pam Flaherty, a Citigroup senior vice president who is responsible for corporate citizenship. "They genuinely care about the issues. And these are not issues that don't matter to the world. They do."

No one who understands power would believe that RAN, acting alone, could bend $95-billion-a-year Citigroup to its will. The thing is, RAN does not act alone. The San Francisco--based group serves as the shock troops of a loosely organized network that includes other environmental organizations, some with close ties to business; socially responsible investors who bring pressure to bear through shareholder resolutions; liberal philanthropists who finance anticorporate campaigns; and, more often than you might think, sympathetic insiders who push their companies to change. This green coalition has in recent years persuaded dozens of companies, including Home Depot, Lowe's, Staples, Office Depot, and homebuilders Centex and Kaufman & Broad, to alter their conduct to protect forests, their species, and the people who live in them. Just this month Bank of America, under pressure from RAN, announced environmental guidelines for itself and its borrowers that go beyond Citigroup's. Even Boise Cascade--the company that had denounced RAN's "lawless, radical agenda"--eventually sat down with the environmentalists and agreed to change its wood-buying practices.

Why do powerful executives respond to this kind of pressure? They will tell you that they don't. No company likes to admit that it can be bullied by an advocacy group. "RAN didn't change our path," says Ron Jarvis, a Home Depot executive who oversees wood purchasing. "But they brought their issues to the attention of our senior management very, very quickly." That's a typical response--companies say that pressure campaigns at most accelerate changes already underway. To say otherwise would be to invite more aggravation.

Groups like RAN, on the other hand, exaggerate their own importance. "We really are changing the world," says Mike Brune, RAN's 32-year-old executive director. RAN, by the way, says it is by no means antibusiness. "We believe strongly that we are helping businesses to remain profitable by working with them to establish ethical environmental and social policies."

The truth is that companies adopt green practices for lots of reasons. They want to please their employees. They want to avoid government regulation. They see long-term benefits in protecting natural resources. And they care about their reputations, which is why corporate campaigns by the likes of RAN, Greenpeace, and Friends of the Earth have an impact.

In fact, what really enables RAN to get the attention of FORTUNE 500 companies is the business climate here. Most Americans have such a low regard for big business that they are willing to believe the worst. (Polls show that seven in ten Americans distrust CEOs of large corporations.) Most also say they favor protecting the environment, even if they drive SUVs. The result is that a receptive public awaits RAN's message: that big corporations are wreaking havoc on the planet.

What's more, although the media tend to portray corporations as ruthless, most companies shrink from a battle with groups like RAN. (Boise was an exception.) They don't want to offend anyone. "When the big bear of controversy enters the forest, no one clambers up a tree faster than the fabled beasts of commerce," says Eric Dezenhall, a Washington public relations executive who defends corporate clients, and the author of Nail 'Em! Confronting High-Profile Attacks on Celebrities and Businesses (Prometheus, 2003).

Most important, big companies increasingly take an expansive view of their environmental responsibilities. They are not merely looking for ways to reduce their own waste, pollution, and energy usage; they are pushing their suppliers, partners, and customers to do the same. Environmentalism at McDonald's, for example, used to be about eliminating Styrofoam and trimming the size of straws; these days the company is trying to induce the cattlemen, farmers, and fisheries that supply it to adopt practices that will preserve farmland and fish for generations. Staples and Office Depot have pledged to phase out sales of paper from endangered forests. And Hewlett-Packard invites consumers to return used ink cartridges to the company for reuse. Those are big shifts, and they are being driven in large part by mainstream conservation groups like the World Resources Institute, Environmental Defense, and Conservation International, all of which work in partnership with business.

But a big obstacle stands in the way of the greening of corporate America: The business case for many environmental practices remains murky, at least in the short run. (In the long run, if we destroy rain forests or remain dependent on oil, we're all in trouble.) This is where RAN comes into play. By attacking brand-name companies, RAN hopes to tilt the business calculus toward green practices. For example, if it is currently unprofitable for Ford to offer a wide array of cars with hybrid-electric motors--automakers lose thousands of dollars on each hybrid they sell--RAN will try to do enough damage to Ford's reputation to convince the company that it should recalculate the cost-benefit equation. RAN's critics call that blackmail. Brune calls it an effort to "transform the marketplace to harmonize ecological and social ideals with economic interests."

So while other environmental groups take polluters to court or map endangered forests, RAN stirs up trouble. "We trot out dinosaur-shaped balloons in the front yards of companies that refuse to protect forests," says Jennifer Krill, a RAN staffer who led the group's assault on Home Depot. The world's biggest retailer of lumber, Home Depot has a valuable brand and local outlets across America--which made it an inviting target for RAN.

RAN began by hoisting a huge banner on a crane next to company headquarters in Atlanta. Then it mobilized activists to oppose Home Depot's plans to open new stores by testifying at city council and zoning meetings. They picketed new-store openings. The Dave Matthews Band lent its support during a summer tour.

RAN's most subversive tactic infuriated the company. After obtaining the access code to Home Depot's in-store intercom system from a friendly insider, RAN volunteers broadcast their own messages to customers. According to Brune, they went like this: "'Attention, Home Depot shoppers. There's a sale on wood in Aisle 13. This wood has been ripped from the heart of the Amazon basin. There may be some blood spilled on the floor, so please be careful. This wood is leading to the dislocation of indigenous communities, soil degradation, and we're helping to rape Mother Earth.' Something to that effect."

Because Home Depot didn't know where its timber came from, it could not deny the charge that it sold wood from endangered forests. Says wood expert Ron Jarvis: "When you'd ask people where the lumber came from, they'd say, 'The loading dock.'" Today the company knows where all its wood is sourced--not just lumber but the wood in ceiling fans, broom handles, and pencils. Why? It's not because customers ask for wood that's been properly harvested, Jarvis says. Rather, it's a matter of reputation. "People take pride in working for a company that's taking a leadership role," Jarvis says.

The Home Depot campaign became a template for RAN: Target an industry leader, then pressure its competitors to follow suit. Merely the threat of a RAN campaign induced Lowe's to match Home Depot's wood-purchasing policy. Big homebuilders also agreed to stop using wood from endangered forests, after RAN infiltrated a Dallas trade show to unfurl banners calling for an end to old-growth logging. The police arrested five activists on trespassing charges.

Brune was among them. He has been arrested 11 times but has never been convicted of a crime. (Typically, neither the police nor the companies want to take nonviolent protesters to court.) According to Brune, RAN operates within a tradition of nonviolent civil disobedience that runs from the Boston Tea Party to Operation Rescue. While some opponents have tried to link RAN with militant environmentalists who destroy property, Brune says, "We don't support and we don't condone violence, property destruction, vandalism. We're a peaceful organization."

RAN's agenda, however, is radical. The group opposes all major industrial projects --mining, logging and fossil fuel extraction--in old-growth forests. "The world can't afford more oil drilling," says Brune. RAN wants Ford to improve the average fuel efficiency of its cars to 50 miles per gallon by 2010 and to eliminate the internal combustion engine by 2020. "We need to reduce our emissions dramatically, and we can't do that if we are still powered with gas," Brune says. "We're already seeing warming of the deep oceans, melting of glaciers, species migrating toward the poles. It's thoroughly documented."

It's no wonder that RAN's toughest opponent was Boise, the Idaho-based company that battled environmentalists for years. Its initial meetings with Boise were "very confrontational, very antagonistic," says Brune. (Boise declined to comment on RAN.) Boise wrote to RAN's major donors, urging them to stop giving money to the group.

Ultimately RAN got to Boise through its customers. It persuaded Kinko's, L.L. Bean, Patagonia, and the University of Texas, among others, to cancel all or part of their contracts with Boise. Lowe's, a major customer, wanted to keep its own promise not to use old-growth wood, so it stepped in to mediate the dispute between RAN and Boise. (Lowe's CEO, Robert Tillman, called Boise's CEO, George Harad.) Last September, Boise agreed to stop buying wood from endangered forests worldwide and offered incentives to suppliers to harvest wood from forests independently certified as well managed. "When that policy is matched by Boise's peers," Brune said, "it'll enable us to push one industry--the logging sector--out of old-growth forests permanently." Since then RAN has launched a campaign against Weyerhaeuser.

In comparison, Citigroup proved a friendly target. "We have a policy of listening to people," said Citi's Pam Flaherty, who has worked for the bank for 36 years and was once its highest-ranking woman. "Even though some people are harder to listen to than others."

While RAN was agitating, Citigroup was meeting quietly with institutional investors and mainstream environmentalists. Flaherty found that many of the banks' interests were aligned with the environmentalists'. "We want to finance projects that are well received, that don't have delays, that don't have problems," she says. Shortly after RAN and Citi declared their cease-fire, ten global banks, including Citi, adopted the Equator Principles, a voluntary set of guidelines they developed to manage the social and environmental impact of capital projects that cost $50 million or more in the developing world. Citi's more recent environmental policy goes further.

As it happens, Ilyse Hogue, a 34-year-old activist who leads RAN's global finance campaign, had a personal stake in making peace with Citigroup. Her father, James Hogue, is a Dallas stockbroker with Citi's Smith Barney unit, where he has worked for more than 25 years. When she told her dad that she wanted to lead the campaign at Citigroup unless he objected, he told her, with some trepidation, that she should go ahead. When she tangled with Sandy Weill at a shareholder meeting, her father showed the videotape to friends and colleagues. Now he's proud of what she and RAN have done. "We're closer than ever," she says. As are big business and even hard-core environmentalists like RAN.