Ross Dawson: Hello, and welcome. I'm Ross Dawson, a futurist, speaker, and author, hosting the Where the world's moving podcast series, presented by OFX, global money transfer specialist for where the world is moving.
Ross Dawson: Through this podcast series, we explore our fast moving ever-changing world, and some of the extraordinary technological and social shifts that are shaping business and society, driving collaboration and globalization, and supporting human progress.
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Ross Dawson: One of the most important social shifts we have seen over the last decades is the shift to meaning. An increasing proportion of people are not content simply to live their own lives, but want to through their lives have a positive impact on the world.
Ross Dawson: In the not too distant past, business was cast as driven entirely by greed, irrespective of consequences. Over many, that's even most of today's generation of entrepreneurs, want to make a difference and are shaping their companies to not just be profitable, but indeed to change the world.
Ross Dawson: Since it was founded in 1973, the outdoor clothing company Patagonia, has been an inspiration to a generation of environmentally conscious entrepreneurs. It's Director of Philosophy, Vincent Stanely, has been there from the outset, and is in a poll position to share how entrepreneurs can create massive value for the world, not just themselves.
Ross Dawson: Thank you for joining us Vincent.
Vincent Stanley: Well thanks for having me.
Ross Dawson: Patagonia was born 1973, that's 45 years ago now, and today many people look to it as an exemplar of responsible business. So when it was founded back in the early '70s, where did it start in terms of its intentions?
Vincent Stanley: We started out as a mountain climbing equipment company, that pre-dated Patagonia by about 15 years. Patagonia's founder, Yvon Chouinard, started climbing in his teens, and set up a small manufactory in his parent's backyard, bought a used coal-fired forge, and started making pitons.
Vincent Stanley: He developed a company over the course of about 15 years that had a reputation for making the highest quality climbing equipment in the world, and he had this little company, in California, had a significant share of the world market, probably close to 60, 70% and at the same time was doing far less than a million dollars, so the idea of the clothing company was essentially to pay for the climbing equipment company, and we had no notions about saving the world through clothing, and no notions about setting up a company that was going to do good in any kind of general way.
Vincent Stanley: Because we came out of climbing equipment, we had developed a very strong sense of responsibility to customers. You know, in climbing equipment, you're not building good, better, best gear. I remember in the earlier '70s sitting in our yard outside inspecting ice axes for hairline cracks, and being aware that if I made a mistake, or fell asleep on the job, that I would be hurting someone. And it wouldn't be just anyone, it would be a friend, or a friend of a friend, or a friend of a friend of a friend, because there were only three degrees of separation in the whole climbing world. So that informed. When we got into clothing, I think we had no intentions of being a "responsible" clothing company, but the habits carried through from climbing, and as we started to discover problems in the supply chain, we felt the same obligation to do something about it that we had felt when we had made climbing gear.
Vincent Stanley: Probably the first big realization for us was the harm done in raising conventional cotton or growing conventional cotton. This came on us as a surprise. We opened up a store in Boston with all of the low VLC paints, and all the newest environmental materials, this was in 1988, and our employees started to call in sick after three days with headaches, stomach aches, so we shut the store down, called in an environmental engineer to check out the problem. And he told us ... We said, "What caused this in the first place?" And he said, "The formaldehyde off-gassing from your cottoned clothes stored in your basement." So for us, making our employees sick is something we care about, so we commissioned a study in the four major fibers we used of wool, nylon, polyester, and cotton, and we found out, again to our surprise, that cotton was the most harmful to the environment, and not because of the formaldehyde finish which under proper conditions can be controlled, but because the intensive use of chemicals to grow cotton.
Vincent Stanley: We made a decision within about a year and a half to change entirely to organic cotton on the basis of what we saw on the fields, and on the basis of what we smelled on the fields. When you got out to a conventional cotton field, the organophosphates used on the crops are used the same chemicals as were developed for nerve gas for World War I. There are birds won't go near a conventional cotton field. There are no worms or vegetation, and it takes three years for the worms to come back. So that was the first big change for us is that we saw this, now we're going to switch to organic cotton, if we can't make the switch, and it was extremely difficult to do, we determined that we would be out of the sportswear business. We'd continue to make rain jackets, and insulation, and underwear, but if we were going to be in sportswear it had to be organic. And I think that was in the '90s, and everything we've done since then has been because we started down that road then, and so gradually we've accepted a larger sense of responsibility to not only to the environmental factors in our clothes, but also to the condition of the labor force, and how people are paid, and how they are treated.
Ross Dawson: I think it what's really interesting there is you're just telling a story where that responsibility started not specifically in an environmental sense, but in terms of responsibility for your customers, responsibility for your employees. So responsibility is what you, I suppose experienced developing. Is that right?
Vincent Stanley: When Yvon wrote a book called, The Responsible Company, and when we started out, we thought, "You know, everybody's using the word sustainable, and everybody still is." And I think in certain contexts the word sustainable is still genuine, but the reason we shied away from it is that we had come to the realization that everything we make actually costs the ecosphere, it costs nature, it costs the environment more than we know how to repay. Every time you manufacture something, you're using, you're generating greenhouse gases, you're using water, you are using energy and generating waste greater than you can actually give back in terms of regenerating the plant.
Vincent Stanley: We didn't want to use the word sustainable because we felt that nothing we were doing was sustainable, and we didn't want people to think that if you start to recycle, or if you switch to alternative energy sources, or you do any number of good things, that you're actually pursuing, you're actually going to reach sustainability. But you can be responsible, and all of those actions that I just described are the actions that we've tried to undertake are responsible practices. And the other implication with the word is the sense of agency. People want to make a difference, and when you give people a chance to make a difference, extraordinary things happen in my experience. So that was why we used this word responsible.
Ross Dawson: You describe how Patagonia has moved and progressed from those initial sense of responsibility, and that broadening of that sense of responsibility, so looking at the broader world, how much do you think attitudes on the planet, or I suppose in the world of business, or in society, have changed over the last decades?
Vincent Stanley: Well, you know, it's interesting in the States, The New York Times just published an article on how, in our country, we missed the chance, and actually the world missed a chance in the late 1980s to really address climate change. Before there was tremendous political resistance, and when there was, people started to have an understanding of the depth of the environmental crisis. So I kind of see these things in two lights. If I look at the crisis has worsened since the 1980s, we had in Australia, in the United States, and Japan, and Europe, we had environmental laws in the '70s, it cleaned out air and water, particularly in urban areas that made a huge difference, but we haven't advanced our environmental action since then. And so the culmination of a population that's nearly doubled since 1970, and an economy that's five to 10 times larger, is putting enormous pressure. So if I look at it from the point of view of the said health of the ecosphere, all of the indications are worse and they're dire.
Vincent Stanley: If I look at human response, or if I look at my own experience, and if I look at my company's experience over the last 25 years, I see the people have become more engaged. I see business schools that for 15 years have had sustainability programs. You know, in 1992, I hired Patagonia's first environmental director, and I couldn't get anyone from business. I could've gone to Dow Chemical or a DuPont, and those would've been the only businesses that have environmental managers. I had to hire someone from a city management. So all of that has changed, and the spirit of the young has changed very much from the '90s to now, where I think there is a strong sense of people coming into their working lives that they do want to have meaning, and that they do want to do something worthwhile.
Vincent Stanley: I am deeply convinced that no business will be able to operate within the next 10 years without addressing the harms it causes, without mitigating those, without trying to help solve social and environmental problems. So you know, depends on how you look at it. I was a lot more cynical in the 1990s than I am now, partly because my experience at Patagonia has been that when you get people committed to making a change, and they start to make changes, and they start to have confidence in their ability to make those changes, then you can do things.
Ross Dawson: There's many people that are feeling distressed at how things are going in the world. I still believe that we can have an optimistic frame, and I'm very glad to hear that over time you have seen this small positive frame be able to shift from, you know, it is easy to be cynical. So I'm glad that you are seeing that we are moving in a positive direction.
Vincent Stanley: I think that one of the things about optimism versus pessimism is that human beings, I think it's deep in our nature to have this sense of agency and responsibility, and that that responsibility gives us back life, and gives us back energy, so it makes a lot more sense to preserve your optimism or suspend your pessimism, and act because we'll actually be happier doing that.
Ross Dawson: If you're enjoying this episode, listen to the rest of the OFX series at wheretheworldsmoving.com.
Ross Dawson: We are seeing, in fact, more entrepreneurs today, start out their businesses with an explicit intent to have an impact, to change the world. Can you tell me a little bit about what you're seeing about sort of the younger companies, perhaps started by younger people who are going from the outset, to create a difference?
Vincent Stanley: Yeah, well I'm seeing a lot of that. I work several weeks a year at Yale with joint students in the environmental and the business schools, and many of them are interested in starting their own companies. I speak a lot on campuses and I'm also involved in the B Corp movement, and I'm seeing tremendous interest from young entrepreneurs, but also now, I'm starting to see more interest in traditional, even publicly held companies, that they have started to look at what companies like Patagonia have done. They've started to look at the B Corp movement, and they've started to re-evaluate this maxim that business adopted in the early 1970s from Milton Friedman, that the sole social purpose of a corporation is to make profits. I think people in conventional businesses have become to understand, that pursuing the stock price actually as a sole measure of business health, actually takes a business downhill. You're starting to see evidence that B Corps have a higher survival rates, than other start ups, and I think part of that is because the attention that people give to governance, and it's also the attention they give to their relationship to the community, how they engage with their employees, and with their customers. So I think you're having a revival now of what really was traditional business wisdom in the 20th century until about 1970, which was that a business did have obligations to the people it was involved in.
Ross Dawson: So essentially that the evidence is that having a positive intent for impact beyond money, I suppose, is in fact in line with making money.
Vincent Stanley: Exactly. I think there are a couple of things. One is that people are backing off from the short-termism which is connected to this obsession with stock price. So if you are, as a manager, rewarded for your quarterly returns, and keeping those high, and not on much else, that's going to be good for the manager's bonus, and not good for the company in the long run. But if you look at what business objectives are, and what social, good social objectives and good objectives for the environment, and you look at all of those long term, they tend to align. If I want to build a business based on loyal customers, that's a long-term goal. It also has long-term reward.
Vincent Stanley: The other thing that I think people don't look at enough are the opportunities to make a profit, to innovate, to grow your business. From the kinds of innovations that are required for companies to do the right thing socially and environmentally, often force those companies, Patagonia's one of them, to look at its own practices and to come up with a different way of doing something.
Ross Dawson: So Patagonia's, of course, a wonderful example of that, are any other examples spring to mind for you where that, I suppose, are looking to have an impact, forces innovation which create value on many fronts?
Vincent Stanley: Well, I think the alternative energy business is built around this. I think that in manufacturing you've got large companies like Nike looking very closely at, if they really want to push the button on resource efficiency, it's just not a matter of using less materials, they've got to come up with new materials that can be used more sparingly. So I think there are a lot of people working on this.
Ross Dawson: Patagonia's mission statement, I think it dates from the early '90s, and part of that is to use business to inspire and implement solutions to the environmental crisis. So in that you've got the word inspire. No doubt, Patagonia's absolutely inspired many people, many entrepreneurs, and so if that's part of your mission statement, how else can you extend your impact?
Vincent Stanley: First of all, there are actions we take. So we've switched to organic cotton, and beginning in 2010 we started to take back, for recycling, any product we've ever made. We also work in partnership with others. We helped start the Sustainable Apparel Coalition, in 2011, with 16 different companies, and it's now several hundred. These companies make more than half of the clothing and footwear sold on the planet. The work of the Sustainable Apparel Coalition is to reduce energy, greenhouse gases, waste, and water use in the factories. It's also to provide clothing designers a guidance of the most environmentally and socially sensitive materials to use, and ultimately to create a consumer-facing guide to products, that's shared industry wide. So you can hold your cell phone up against a hang tag on a pair of jeans, and see whether it's got a 40, or an 80. And then engagement, I think, in the B Corp movement has been really strong for us.
Ross Dawson: How far do you think this trend will go in terms of responsible business?
Vincent Stanley: I think there are lot more people entering this space, and I think it's maturing, and I think it's at the very start rather than toward the middle or toward the end.
Vincent Stanley: There are possibilities, you mentioned our mission statement. The first clause is, "Build the best product," but the second clause is "Cause no unnecessary harm." Then it's, "Inspire and implement solutions to the environmental crisis." So this, "Cause no unnecessary harm," is kind of a critical second clause for us, and it's honest, because we don't know how to limit the harm we do, but it's also not exactly what's needed. What we really need are regenerative practices, and that is really in it's infancy. And where Patagonia's starting to work with the idea of regeneration is in food, where we just started about six years ago, a small food company. To give you an example, there's a wonderful man in the United States who's now 80 years old, who for 50 years has had the project, he was a scientist, to restore the Great Plains to health. And the Great Plains used to have top soil that ran a long way down underground, and now you have very shallow top soils.
Vincent Stanley: He developed, 20 years ago, a hybrid perennial wheatgrass called Kernza, that has 17 foot deep roots, okay. So when you get a plant that has roots like that, that doesn't have to be tilled, and those roots, when they extend into the ground they create an ideal jungle gym for all of the microbes and the fungi that you need to create rich soil. He couldn't get anyone to grow this, and because he would go to the farmers and they'd say, "Well, we have no market for that. It's a nice idea, but I've got to sell it." He came to us, and we thought about it, and we thought, "Well, why don't we make a beer out of it." And so we partnered with a brewery in Portland, and we got Wholefoods to carry it, this long root ale, and 108 of its west coast stores.
Vincent Stanley: And so we got the first 200 acres of Kernza planted, and so it was kind of an 80th birthday present to Wes Jackson, but then when we got that planted, we got some interested from a major cereal company, that says, "You know, you not only have the potential to recover soil health, but also to sequester significant amounts of carbon." Which is what we now know we need to do. It's not just a matter of reducing the carbon dioxide that goes into the air, we need to draw it back down into the ground. And this has tremendous potential to do that, and they said, "If we use 3% of this in our cereals, you know we could be planting 40,000 acres of Kernza, rather than 200."
Vincent Stanley: So this is actually something that's not just doing less harm, this is actually regenerative. This is something that does lead us toward real sustainability in the business world. The more potential we have to do that, and technologically there's a lot of potential from 3D printing, to all kinds of technical advantages that reduce the marginal cost of goods, so that you can start to actually bring the ecosphere back to health, while at the same time, looking at making sure that social health is a part of that as well.
Ross Dawson: That's a beautiful example, and it's obviously imagination and creativity in bringing together those threads to have these plants creating beers and other ideas spawning off that on the other side.
Ross Dawson: And then I have to love this idea of regenerative, to again, sort of looking at the future, where do we need to have the impact? Is it with the large existing businesses? Changing consumer behaviors? Where do you think we should be focusing?
Vincent Stanley: So it's really critical that you get the smaller companies going who are going to do things that other companies can't take the risk, or they can't even imagine doing because they're not nearly set up that way. But what the smaller companies can do is to start to be a proving ground and start to demonstrate, "Hey, this isn't the risk you thought. We've worked this out. You big guys, you can come in, and you can start to make these changes as well." People who are at all progressive in business understand that we've got to keep moving, we can work closely, especially cities, can work closely together.
Ross Dawson: You've had extraordinary experience in helping to build Patagonia, so today, for entrepreneurs who are looking to start off to create a difference in the businesses they create, what are the lessons you've learned along the way? You know, what you'd advise them to do, how to go about it?
Vincent Stanley: I wouldn't recommend to anyone that they do what Patagonia has done over 40 years, which is to essentially transform itself fairly, from a more conventional company, into a company that is living out this three-part mission statement that we talked about. I think it's much better if you start out from the beginning, with a business that you operate according to your most deeply held values, and you can work those out at the beginning, you know, what is it that you care about? And what are the values you care about that are most deeply connected to the product or the service you offer?
Vincent Stanley: People come to me and say, "Well, when do I become a B Corp? When I've got my first million dollars in the bank?" And I say, "No, do it right away. You don't have to become a B Corp right away, but start taking the B impact assessments, start looking at your practices, determine what your values are." The reason to do that is, aside from the fact that you'll get to where you want to go faster, you also create expectations that are consistent among your investors, your employees, your customers, your suppliers, et cetera, and they know what you care about from the beginning. You're not going in two or three years from now saying, "Oh, you know, I've decided to be a good guy, I'm not going to do X, X and X," and that's going to create some problems for you. Much better to start out and have that and to act on your vision from the beginning.
Ross Dawson: If we act in accord with these values, what's our future? What world do you think we could create?
Vincent Stanley: I think that on several fronts I think you could create quite a wonderful world. Not that the world that we have isn't wonderful, but that the world that we can create can bring out the most wonderful things that we have now, that we're losing. The first thing I think is to, you can create cities that are far more liveable than most of the cities are in the world today. And the second is to create regenerative agriculture that actually grows better, tastier food, more nutritious food, sequesters carbon, uses much less water, and no longer uses the kinds of fertilizers that dump into the rivers and create algae blooms. You can preserve open spaces, where animals are threatened, or certainly preserve areas like The Great Barrier Reef, or the areas in Tasmania that have all of this tremendous natural value that we're about to lose. So I think those three things are pretty essential. And then on the more practical level is to move away from fossil fuels.
Ross Dawson: Yeah, well that's a pretty compelling future for us to take action about. So I think that certainly you've fulfilled your mission to inspire others to act and implement solutions to the environmental crisis, but also beyond to create a better world, so thank you so much for taking your time and sharing your insights with us, Vincent.
Vincent Stanley: Oh, well, thank you.
Ross Dawson: And hopefully the listeners will be able to take this on board, to be able to take action and contribute to what we're all doing to create a better environment and a better planet.
Ross Dawson: Thank you so much, Vincent.
Vincent Stanley: Thank you.
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Ross Dawson: This podcast is presented by OFX, as a BBC StoryWorks Commercial Production.