When Yvon Chouinard and his team started Patagonia Inc., they were looking for a cash cow. The company he had already built selling specialist mountain-climbing gear, Chouinard Equipment Ltd., had been struggling financially and needed something to support it.
“At the beginning, Patagonia was to be our irresponsible company, bringing in easy money, a softer life, and enough profits to keep the climbing business in the black,” Vincent Stanley, who has held various executive posts with the company, writes in The Future of the Responsible Company, with his uncle, Mr. Chouinard.
While they were environmentally minded, they kept encountering difficulties. Their reusable hard steel pitons had become environmental villains, disfiguring mountains, and had to be replaced with aluminum chocks that could be wedged in and removed by hand without using a hammer. Cotton in their clothing was as dirty as coal they learned and after shifting to organic cotton they decided to go farther, working with small farmers who could rotate crops to improve the soil. When it was revealed that Kathie Lee Gifford’s clothing line for Walmart was sewn by 12-year-olds, Patagonia executives realized they had no idea about the conditions in the factories supplying their wares.
“We did not set out to be a responsible company, but time after time, we stumbled into virtue after discovering we were causing harm,” Mr. Stanley says.
And he stresses that their efforts did not make them a sustainable company: “No human economic activity is sustainable. We believe we have no right to apply that word to our business activity until work does not interfere with nature’s capacity to regenerate itself and support a rich variety of life.”
The descriptor they prefer is responsible. They try to be a responsible company and encourage other companies to join them.
That responsibility is toward various stakeholders, including the planet itself. The company decided early on to tax itself, giving 1 per cent of sales to grassroots environmental groups and the Chouinard family has transferred its shares to a foundation dedicated to the environment.
The triple bottom line is often cited as a standard of responsibility, recognizing the social, environmental and economic aspects of a company. But while profit is easy to measure, the nonfinancial components lack rigour and a universal standard. Mr. Stanley recommends the B Impact Assessment tool, used to evaluate for-profit companies like Patagonia that want to recognize obligations beyond the shareholders.
Initially, Patagonia supported activists with donations and space in its catalogue and on its website for environmental education. Then it decided it must become an activist organization, which required learning more about environmental injustice, racial marginalization, the hollowing out of rural life and other societal issues. “The days of our low-quality, high consumption society are numbered, as resources grow scarcer and the world population grows bigger and more urban,” Mr. Stanley writes. “A responsible company in the twenty-first century needs to cultivate an economy based on fewer things of better quality.” He points to four companies in Halifax that work together in a circular microeconomy, the waste from one becoming the feedstock for another company.
His words on activism would seem extreme for many business leaders. Sure, companies must be responsible. But activist? Activists are extremists, who usually target companies and their executives.
Still, Jon Miller and Lucy Parker, who advise those executives on responding to critical social issues, believe corporate leaders must become activists. They have seen it happen with people they work with, who move from “somebody should be doing something about these societal issues” to deciding they will.
“They’re upending the usual dynamic, where corporations are always seen as bad guys, the perpetrators, the problem in the great issues facing the world. Instead, they’ve set about demonstrating that it’s possible to run a successful business at the same time as actively engaging with the societal issues that surround them,” Mr. Miller and Ms. Parker write in The Activist Leader.
Not zealots but activists. Mark Schneider, chief executive officer of Nestle, told them: “I have chosen to work in the business and I have to do this within the business.” Lars Fruergaard Jorgensen, chief executive officer of the pharmaceutical firm Novo Nordisk, likes the term pragmatic activist: “Activism sometimes, in its purist sense, can become too political or get blocked by its own idealism. Corporations can bring a pragmatism that means they are probably the organization that can drive most change in today’s society.”
Mr. Miller and Ms. Parker stress that people – especially employees – are not looking for noble sentiments but for action. “Given the scale and intensity of the crises facing the world – and the central role of business in many of them – the risk of not getting involved outweighs the risk of getting involved,” they write.
And they argue this doesn’t only have to come from the top. Even people early in their career can respond to the need for activism. It involves fixing problems, mobilizing others, campaigning for change, redefining what’s possible and building bridges to mediate between conflicting viewpoints. It requires immersing yourself in wicked problems that are even difficult to define let alone solve. But, they note ultimately businesses can’t function in societies and systems that are broken. They must be activists.
- The toughest part of leadership is the balance between building trust with your team but then also having to make difficult decisions for the betterment of the business, says Sonia Millsom, chief executive officer of Oxeon, a health care firm.
- Consultant Mike Figliuolo urges you to calculate the amount of time that you spend on various tasks, from very little to a lot, and then the impact that has on the performance of your team, from very low to very high. He bets you’re spending a lot of time on administration, with a low payoff. Instead he suggests spending more time on problem-solving, generating ideas and developing your people.
- Calgary consultant Michael Kerr recommends improving your meetings by establishing a “no rehash” rule. Brivo, a security management software firm, has ping pong paddles with “no rehash” on them that people can raise when they think a topic or point has already been addressed or made.
Harvey Schachter is a Kingston-based writer specializing in management issues. He, along with Sheelagh Whittaker, former CEO of both EDS Canada and Cancom, are the authors of When Harvey Didn’t Meet Sheelagh: Emails on Leadership.