Patagonia's Vincent Stanley on The Future of the Responsible Company

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“The Future of the Responsible Company - What We've Learned From Patagonia’s First 50 Years” is a book being released today that was co-written by Patagonia Director of Philosophy Vincent Stanley and founder Yvon Chouinard. Stanley joins the podcast to talk about why the book, which is an update to a similar title that the duo released a decade ago, is even more important amid today's corporate, environmental and political landscape. The book is full of sage advice for people who want to conduct business with an eye on more than just profits and it also reveals some surprising details about the origin of Patagonia. Stanley also spendd a few minutes sharing his advice for startups and other companies that might want to follow in the footsteps of Patagonia's amazing corporate evolution.

More resources

Patagonia's Our Footprint

Highlight from Vincent Stanley

The Future of the Responsible Company - 3:31
How Patagonia got into the clothing business - 7:10
From startup to business travel conversations - 9:00
Shareholder primacy - 13:19
Measuring GDP vs TBL (triple bottom line) - 14:44
The B corp movement is expanding - 17:50
The fascinating business model of the Henokiens - 20:20
The process of finding responsible suppliers and farmers - 25:53
'Living in a world of fewer, better things' - 28:06
Expanding 'healthful' decision-making beyond food purchases - 31:04
'Strategy starts with the real story' - 31:40
Collaborating with outside organizations like Samsung - 37:11
Advice for startups who want to follow in Patagonia's footsteps - 40:19
The power of word choice in communication - 43:40
The history of "Our Footprint" - 46:09
Sustainability and the role of agency - 50:10

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Transcript

(Note: This transcript was created using artificial intelligence. It has not been edited verbatim.)

Sean McMahon  00:00

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Hello, everyone, and welcome to the Sustainability SmartPod. I'm your host Sean McMahon, and today we have a different kind of episode. We've never done a book review on this show. But that's exactly what's in store today. The book, which is being released today was written by part of the brain trust behind a company that's well known and well respected in sustainability circles, Patagonia. The title of the book is “The Future of the Responsible Company - What We've Learned From Patagonia’s First 50 Years”. It was co-written by the founder of Patagonia, Yvon Chouinard and Vincent Stanley. Patagonia is director of philosophy. The book is actually an update to a similar title that the team released a decade ago. So part of that writing duo, Vincent Stanley, will join me in a few minutes to share some of his thoughts about what the world can learn from Patagonia's amazing journey. 

I gotta tell you, I read the book from cover to cover on a recent vacation and found it utterly fascinating. In fact, I tried to dogear all the pages that contain memorable quotes or valuable anecdotes. And let's just say that book had a lot of dog ears by the time I was finished reading it. So as I mentioned during my talk with Vincent, I think this book should be required reading at business schools far and wide, because it offers details about an approach to business, that all too often gets overshadowed in a world where shareholder primacy is taken as gospel. Because from where I'm sitting, it's pretty easy to see that the long term consequences of that shareholder primacy gospel, have left all of us in a precarious position, visa vie the environment and corporate responsibility. 

The book also holds some surprises, like the revelation that Patagonia wasn't founded on the premise that it would ever become a global leader in corporate responsibility. Yvon Vincent, and the rest of the company's early leaders, were just looking to make some easy money to help fund their other business, which was an alpine climbing equipment outfitter. I'll tell you right now that Vincent and I go kind of long in our talk, but that's because the book contains a mountain of incredible ideas and stories. The truth is, I could have kept talking to Vincent for another hour, easily. So I hope you enjoy the conversation. And be sure to pick up a copy of this eye opening book. 

Hello, everyone, and thank you for joining me today. I have a very special guests. Vincent Stanley Vincent is the director of philosophy at Patagonia. Vincent, how're you doing today?

Vincent Stanley  03:31

Doing well. Thanks for having me.

Sean McMahon  03:33

Yeah, I'm excited to talk to you. We're here to talk about the book that you co wrote with Patagonia's founder, Yvon Chouinard. Actually, it's an update of the book, I should say. 10 years ago, you published a book, you're about to launch an update called The Future of the responsible company. What we've learned from Patagonia is first 50 years. So as I mentioned, you and Yvon I think first published this was 10 years ago, I had the 40th anniversary.

Vincent Stanley  03:56

Yeah, I think in 2012, it came out

Sean McMahon  03:58

what made you feel like you needed to update it?

Vincent Stanley  04:01

You know, I think a couple of things. One is, of course, there's just the passage of 10 years. So a lot had happened in in the company that was different. And also, I think the world is a different place than it wasn't in 2012. And kind of starting with that, first we we had been when we came out with the responsible company in 2012. At that point, we had already been talking for about 20 years about the environmental crisis, which is upon us, I think in three major ways. One is climate change. The second is the loss of species. And then the third is a water crisis. Interesting piece a couple of days ago and the times about groundwater removals, but we've also got severe loss of the dwindling of rivers and the pollution of rivers. So this crisis has become more acute in the past 10 years. Here's rather than starting to heal, and at the same time, we've learned much more about how to work as responsible companies and how to solve some of these problems. You have a funny world in which things bleaker on the one hand. And then the other hand, if we can marshal the political and moral well to actually deal with these problems, there's, there's so much we can do. I think even more than when the when the first book came out, we felt the necessity of locating business at within the larger context of society and nature and saying, Okay, this is this a particular force that has tremendous influence over the future of human beings. But one of the things that business can do, that government can't do and civil society can't do is that we can actually, when we put our minds to it, we can make products and offer services that solve problems. And we can do it in a self sustaining way, the business can keep itself going without going to the government for tax increases, or going to rich people for donations to cars. So that was also that was top of mind in this edition. And we also wanted to address this book to a new generation of people coming into jobs for the for the first time, and describing what we think. And will can offer opportunities for those people in the larger economy over the next decade, particularly with smaller enterprises that are more oriented that are specifically oriented to place and also to what's been called the circular economy, the idea that one business's waste can become another business's feedstock, we seize tremendous opportunities.

Sean McMahon  06:58

That’s one of the things I really appreciate about this book, as you told the origin story of Patagonia. And I'm not quite sure everyone out there knows that story. And obviously, now it has a stellar reputation that you've built over decades. But when it first started, you guys had this Alpine equipment company that was very well respected. And you open the clothing line as and I'm quoting you here to be an irresponsible and easy to milk cash cow. Yeah, so I didn't know that about the history of Patagonia. So tell me how we got here.

Vincent Stanley  07:27

I think what I was illustrating there was was the fantasy we had about the clothing business, you know, we're used to dealing with aluminum and steel and iron and getting your hands dirty, whenever you go back into the warehouse to ship something. And we, we imagined clothing is this easy business where you keep your hands clean, and everybody needs clothing, where's the universal climbing customers was really small. And one of the reasons we could never make more than 1% a year with a climbing business is that you know, the investments in tools and dyes to just sell 100 of this or 150x. So we had fantasies about the clothing business, it didn't turn out right. But we also I think had some habits for making climbing gear that made it difficult for us to kind of open up the stops and become a new responsible clothing company. And that that is, you know, if you're making climbing gear, you don't make good, better best, because your customers are trusting their lives to the quality of your of your gear. And when we got into clothing, that habit of quality died hard. In the first place. We were making clothes for climbers, so they had to be durable, tough, serve you well in very difficult conditions. And that habit never never died. So some of the ways in which we might have, you know, made a fortune and retired at 40 and bought a sailboat gone off to Tahiti, which was the original plan cuts averted by what we had already learned in business.

Sean McMahon  09:00

Okay, and then one of the ways illustrate that in the book, and I want to just quote it here about how things have changed so much. And here it is. 30 years ago, we didn't think we had much to say to the man or woman next to us on an airplane, wearing quote, business clothes. Now though, the business person on the plane is more likely to be wearing Patagonia than a suit. And we can think of several topics we might have discussed, from design to inventory control to the impact of material shortages on the balance sheet. We now know that Patagonia is exceptional only at the margins as mice and men share 99% of their jeans. So do Amazon Exxon, Twitter, and Patagonia. Right I find that fascinating because a you're right, a lot of executives were Patagonia now on planes, but B I feel like there's a pretty refreshing self awareness. I mean, you just put yourselves in the same bucket as the Amazons, exons and Twitter's So walk me through your thinking on that.

Vincent Stanley  09:56

Well, within a business you're, you're taking raw materials and you're made Making a product or you're offering a service. And to the extent you're doing that you have that in common with everybody else who's doing that. And in terms of the financial part of the business accounting principles are 700 years old, they were worked up by Florentine Mark, Mark, who was also a tutor of Leonardo da Vinci. So we're all businesses share that look at the balance sheet or the profit and loss statement. And I think I was trying to argue that what you do at the margins is what makes a difference, or what can change the practices of an industry or a society, but at the same time to have knowledge that we're subject to the same pressures. And the same reality that every other businesses, in many ways, I don't think there are a lot of companies that wear white hats or black hats. There are a lot of companies that we know of who are doing interesting things environmentally, and socially, who may also do things that we think are not great. There are a lot of things that we do, that we're not proud of, because we don't yet know how to change our practices. And I think one of the things that we have learned and we've created a culture around this over the last 25 years in particular, is that when we can identify a practice that is solving that is hurting the environment or hurting human communities, and we know how to change it, we do go through the work to change it. And moreover, when we apply constraints to our own behavior, when we say a very simple example, we're not going to make a trade show booth out of materials that aren't recycled. And when that booth comes to the end of its life, we're gonna recycle as much as possible. When we adapt those kinds of constraints or embrace them, it actually forces us to think and forces us to in product to innovate. And that innovation becomes central to the business model. So rather than talk about a kind of compromise between profit and purpose, we're actually saying, okay, the way we make our money is environmental innovations that we pursue, actually become integrated into the business model, because those new products arise from the constraints that we've placed on ourselves.

Sean McMahon  12:28

Okay, we do have a lot of business executives who listen to the show. And one thing that kept coming into mind when I read this book was that I feel like it should be required reading at, you know, whether economics majors or MBA candidates and things like that, because you do delve into kind of the economic philosophy behind most businesses, you know, and Milton Friedman, and like shareholder primacy and things like that. So what message would you try to get across to folks who are just their mind is only in that kind of space, where its shareholder, shareholder, shareholder, and different ways of measuring growth versus business health and how to value the two?

Vincent Stanley  13:02

Yeah. Well, I think it's hard. I think there are a lot of companies that recognize that the shareholder primacy model doesn't work for business much better, much better than it does for for society or the environment. The concentration on short term gain, works against a kind of long term patient approach to building a business over over time. And I think what you have is when you concentrate on shareholder primacy is that your principle product becomes your stock price. If you're a publicly traded company, rather than your product or service, you can see with General Electric that what looked like a very successful model developed by Jack Welch eventually really compromised the company in which they went away from being a product oriented company toward being a finance on when that stopped succeeding, there was nothing left to rebuild the company. So it's a particular way of looking at business. I think when we get behind shareholder primacy, and we start talking about stakeholder capitalism, in which you say, Okay, if a business and business really cannot succeed, without regarding its own financial health, you can't succeed without paying the bills. But you know, when we get up in the morning, we don't say I'm going to breathe some air today. We all need to breathe air, and we talk about what we're going to do with the day. And I think profit is the same thing to a business that areas to human beings some way.

Sean McMahon  14:44

You also talk about how we measure growth like GDP. Yeah, right, versus TBL. So yeah, those are familiar with TBL. What is that and what's your view on compare and contrast of those two measurements?

Vincent Stanley  14:55

Right? No, it's interesting connected to the idea of shareholder primacy and that short term gain versus a long term approach to business is the the concentration in economics on gross domestic product at GDP. There is a great, Mariana mazzucato, who's a pretty well respected economist said, okay, the way GDP measures the health of the economy, if you marry your babysitter, you're hurting the economy, because you're withdrawing that, that salary from the economy, right. But if you pollute, you're doing good for the economy, because it's the cost of cleaning up the pollution. So what we have both in, in the business world and an economics that measures business activity, is a kind of retreat from a sense of values of what's important, what's actually good for society, and what's good for the natural world, which is hurting and needs to be brought back to health. In business. That's one of the reasons I think it's important to think about stakeholder capitalism, because you cannot really think of the success of a company without it being successful for employees and the communities you operate in, and ultimately rethink for the natural world, because this is natural systems, that all of our industrial systems and social systems rely on the health of nature. When you remove that, or when you compromise that you get the kinds of major problems that we're experiencing now with climate change and species lasting water withdrawals. The triple bottom line is an interesting idea was developed by John Elkington, in the 1990s. It seeks to measure the financial health of a company, but also it's an environmental and its social impact. And it's interesting, John, a few years ago, issued a recall on the idea after three years, because he said he, he thought that companies were using it more for marketing than as a system of metrics. And it's a problem for companies that want to do the right things. Because you there's no agreement on how to measure a lot of social and environmental impact that companies have. We're sort of constantly refining how we measure our own activities to figure out what do we need to measure in what way in order to make the right decisions is hard. We've had 700 years of accounting for financial but maybe 30 years of work for the rest of it.

Sean McMahon  17:41

I gotcha. And so in the book, you also spent some time talking about B Corps. Yeah. And why they're important. He kind of seemed to, if I'm not mistaken, kind of lean to preferring that. Why didn't those are important? And what kind of role do you think they might have in a in a growing economy,

Vincent Stanley  17:55

but the B Corp movement is expanding. And what the B Corp movement requires of its members, is that you actually enshrine the company's most deeply held values into your business charter and your articles of incorporation. So if, for instance, calot, we became the first California Benefit Corporation, and one of the Frisbee crops of size and in the state of California, we've got six different values that are written into our own business charter. And there's been a change of ownership in the past year in which we actually the shipyards gave their stock to to 501. C for organizations, through which their their shareholder profits, what would have been their short shareholder profits are now channeled into this nonprofit organization that donates to environmental causes. But before we did that, they would have been very difficult for the company to be sold anybody who wanted to change the values of the company substantially because these were written into the charter. One of the surprises for us is that it gave us a community of companies that were interested in doing, making the right products or offering the right services and the right way. So I think it's very important for that reason, anybody can apply to become a B Corp, any business can, it takes kind of a minimum, they have a very complicated, what they call the the B LAB assessment of practices of everything from ratio of pay of the CEO to the lowest paid worker to whether you have a permeable parking lot to other kinds of practices. But you get you have to be reasonably serious. The average company that applies I think, gets a score of 55 and it takes a minimum of 80 to become a B Corp. And on a scale With 200. So it's rigorous. It's in our experience has become increasingly rigorous rather than watered down. And it's increasingly, it has caught the interest of larger companies like to known than Unilever who have subsidiaries that have become B Corps.

Sean McMahon  20:20

I gotcha. And you also spend some time in the book, you know, and you're talking about motivations behind certain businesses and, you know, their strategy for operations. This was new to me that the Henokian my saying, Yeah, H-E-N-O-K-I-A-N. So yeah, what is that all about?

Vincent Stanley  20:36

Oh, glad you asked about them, their, their organization of family owned businesses have been around for 200 years or more. Wow. And I think it's an interesting counter model to our idea of, you know, a startup business with a with a radical idea that succeeds and then get sold the next money for its founders. These include distilleries breweries, they include Japanese ins, that have, you know, have not expanded for 500 years, but relied on the health of a spring to keep their customers coming back for year after year and decade after decade. And I think that that's a good model, it's good to consider that they, I think one of the things that's happened with globalization, which has provided a lot of benefit, but it's also I think, suck the air out of a sense of place, or a sense of location. And I think that that's, that's something that we need to regain, particularly if we're going to deal with our environmental and our social problems. If you paying attention to your neighbors, it's very different from when you're worrying about a global problem. That's far more abstract. If you pay attention to the, to the local spring, or to the quality of the local river, or what's happening with the forest nearby, that I think connects us back to reality in a way that we don't have when we're just when we're just thinking about large global scale organizations. And I say this, as someone, you know, I work for a company that operates not in every country, but certainly around the globe. And I think one of the things we tried to do is to be a local presence wherever we have a store to be engaged with a local environmental sport communities, sports that we make products for. So I love the hen opions because they're all none of those are those 200 year old family owned companies are our global companies, they all belong to a specific place.

Sean McMahon  22:52

I understand. So and you also you also write, quote, the rising tide may lift boats, but it washes over neighborhoods. Yeah. So is that what you're talking about in terms of the need to stay connected to the local, you know, city, town, village, whatever. Okay,

Vincent Stanley  23:06

Exactly.

Sean McMahon  23:07

That means my next question like what was the aha moment for you and Yvon and you know, some of the original folks at Patagonia to to make you want to be that company that's transitioning from, you know, making clothes to make them an easy cash cow irresponsibly, to suddenly very responsibly trying to navigate a world or the neighborhoods where you operate, where there's, you know, far more factors at play than print money.

Vincent Stanley  23:33

Yeah, I don't I don't think there was a specific aha moment. There was a there's a process here. I think from the beginning, again, gets we started as a, as a climbing company, our customers were our friends and equals, you know, everyone was there was at most three degrees of separation between us and the most casual customers. And we built Patagonia in a similar way. Most of the original employees were climbers and surfers and, and really had a love of wild places, and a desire to protect them. So early on, we by the mid 1980s, we were giving 1% of sales to environmental causes. I think that the progression of becoming more responsible is when we started to look at the environmental impact of our own activities, not just our activities, but those of our supply chain, because we've never since we stopped making ice x, or actually we never made ice axes. We imported those from Italy but since we stopped making Tetons and chalks, we really haven't made very much in house. Most of what we sell has been produced by other companies. So that was a big process to learn to work with our business partners and say, Okay, how do we create a polyester that goes into our fleece? How do we put recycled content into that? How do we move away from conventionally grown cotton? That chemicals are horrific used in the planting and the cultivation? How do we switch to organic and those kinds of decisions when we made them, and then survived them. Because each each was it tremendously disruptive to the businesses, it was at the time, I think we gain a kind of cultural confidence to take on the next step. If your game is a kind of making the making the best product, making a high quality product, you always want to improve it. And if you make environmental and social improvements, you want to take the next step, if you get the, if you get the chemicals out of the cotton that go into your clothes, you want to get the limestone out of the material that goes into your wetsuits.

Sean McMahon  25:53

I understand. So part of that, you mentioned cotton, and you kind of at some point, realize that it's quite a dirty process, you know, the planting and what it does the environment, things like that. So you talk a lot in the book about factory farming versus low input, farming, you know, getting away from the huge facility that can satisfy all your needs. Yeah, and really kind of doing some work on the ground, to get to know the four or five, six small farmers that can meet that same need, but there's just it requires a lot more engagement. So there's a lot of sustainability executives who might be hearing you and so what was that process like, and you have any advice for? I mean, you're pretty much signing up for a lot more work, you're signing up for a lot more communication, you know, maybe more travel to go meet more people and explain some things to different smaller suppliers. So right, what would you say to those folks who might have a similar challenge or trying to tackle?

Vincent Stanley  26:43

Well, it's hard to say without knowing what the business is like, other than to say, I think that we've neglected the model of the smaller play space business. And give me an example, I just heard this last week, that a lot of family farms here are threatened a lot of places. But in Pennsylvania, as families retire and sell their land, and they're going not to big ag, but to the Amish, the Amish are buying up small farms, and the Amish have tremendous amount of experience of working small acres of land. So that's interesting to me, I think one of I think we've just lost the imagination, to work on a small scale that that can then be deeply connected, sort of replicated. You know, when if we're going to grow cotton in a regenerative organic way, we're going to be buying from a lot of farmers. But the challenge there is how do you create a network so that you've got uniform quality. And you've got also the farmers are connected in a way that they can help one another. That's very traditional in farming anyways, cooperatives and, and also working with local local governments to help the farmer get the harvest and get to market.

Sean McMahon  28:06

And all this is kind of a quest for quality, right. And yeah, maintaining a high standard, you know, and just placing a value on it really, like I said, if it takes more work or a little more money, so I can't wait to the next quote, I want to pull from the book here, quote, living in a world of fewer better things that reflect their true social and environmental cost, may prompt us to shop less as a form of entertainment, that wouldn't be so bad. Yeah, we might recover time to pursue other deep interests and pleasures, and have more time with our friends and families. I like you're putting a target on the whole thing of shopping as a form of entertainment, and being more just, you know, aware of the things we're buying and or even hoping to buy in this society. So how do you get that message out to a wider audience? I think folks who've, you know, been purchasing your products for decades, you know, they're, they're not the people you have to convince on this. I don't think it's other folks. So how do you put that idea into action with both how you operate internally, because obviously, like I said, some of these initiatives, you're launching mean, a lot more work for your people, you know, in terms of finding suppliers and things like that, but also for your, for consumers who might be part of your audience, or you're trying to bring into the fold of the philosophies you're trying to share.

Vincent Stanley  29:24

We've been talking about being more responsible about consumption for for a long time. I think that we also rely on customers who it's kind of a word of mouth process, that people who have made the changes in their own lives, talk to their friends, and they talk to their friends. Once you do make these changes, if it's more satisfying than that message gets out. We're in a particularly the fashion industry, which we're not, I mean, we're in the apparel business, but we don't regard ourselves as a fashion company. But particularly fast fashion is one of the most destructive businesses on the planet. Because the average, the average fast fashion product is not made to last. And it's worn about five times and then thrown away, it's not even given to Goodwill. And that's where you have real shopping as entertainment. But the fast fashion is also relying on a very young consumer, you know, you've I think you're basically talking about people in their late teens in their early 20s, who are buying clothes for their date on Saturday night, and then planning not to wear it again. And I think that gets old for anybody over the age of 25, or 30. So I'm just hoping for more of an evolution away from products that are that may stand for abundance and prosperity that in in that in factor are really cheap. They're they're not made to last, the same goes for food. It's kind of a travesty that it's cheaper to eat at McDonald's and to buy organic broccoli.

Sean McMahon  31:04

And you talk about that in the book about how people, I shouldn't say everybody, but most people understand the wisdom of making a healthful food decision. Like your broccoli example. No one's gonna argue with that. Yeah, the broccoli is healthier than the fast food. But you can apply that same mentality to clothing. And yet, it's harder to get people understand that the benefits of purchasing the product, it's helpful for the environment over the one that's just cheap, and accessible. Yeah. I found that passage in the book rather interesting, because I never even considered that way you compared food and, and apparel. So within the company, obviously, you have dedicated workforce, and folks listen to the show have dedicated workforces where they work. Yeah. How do you convey the message to your internal stakeholders within the company? You know, I think in the book, you say, when employees perceive a company strategy that lacks integrity? Well, I won't say what typically say happens, but it goes off the rails a little bit. Yeah, how can executives void doing that?

Vincent Stanley  32:07

I think one thing is, is to turn that around, I think what we've tremendously benefited from the fact that we encourage people to bring their deep values to work, their better natures to work. And the easiest way to run a business is by fear, make everybody afraid of what's going to happen if they don't do something. But if your business model is based on innovation, or any kind of anything that involves creativity, or, or thinking that fear, fear is not a good motivator, it won't create the best product. And if you want to create the best product, or if you want to, you want to do something interesting with the business, it's much more of a motivator to if people can bring their deepest values to work and exercise them. So that has made a huge difference, you know, we sort of unleash the sense of responsibility or the sense of doing the right thing among among the people who work for us. And it's not something that we train for are not something that we provide, we do make it. We don't offer roadblocks. That's the big, big thing. But the motivation is intrinsic. And I think taking advantage of intrinsic motivation. To do the right thing, for a business that does the right thing is not as hard as it may sound, everything else is hard. Operations are hard. But harnessing that kind of motivation is not smaller.

Sean McMahon  33:43

I understand. And you also write that, quote, strategy starts with the real story. And how that applies to if you're transparent, and the quote, quote, story, you're you're telling your employees, your shareholders, your bankers, your consumers, if it's all the same, then it's going to be a lot easier to to basically build towards that purpose and kind of get to where you're trying to go. So you mentioned operationally sometimes the operations things can be hard. And I read in the book, how, at least in the early days, the the environmental team within Patagonia was quite small. Is that still the case? And and what kind of power is bestowed upon the folks in those roles so that they can oversee the whole, you know, different business lines and really kind of shape everything and keep everyone going the right direction?

Vincent Stanley  34:26

Well, I think we were intentional to keep the environmental department small. Basically, we have two, two different kinds of environmental activities. One is a Grants organization that gives money to environmental causes, and also contributes to the activism that the company supports. But in terms of the operations, we locate the social and environmental responsibility team within operations, it's not a it's not a separate organization. And they have in terms of Making product they have veto power over replacement and a new factory. In other words, the sourcing people can find a new factory and you say, okay, the quality is great. They deliver on time. They have a lot of integrity. But the environmental people will go in and say, okay, the floor is too hot, you know, the temperatures not right, or there's a problem with the, with the books and how people are paid over time, et cetera. And they'll say, Okay, no, we can't move in there yet until corrective action has been taken. So I think that's unusual. I've never heard of another, another company in which the inventor of team can actually exercise veto power. But the other thing that's happened, and I think that's really critical, is that the sense of environmental responsibility exists throughout the company. So giving you another example, we outgrew our, our distribution center in Reno, we only had one for the US for years. And so we have our finance people, our finance people in our apps, people are driving around the East Tennessee and Pennsylvania with real estate agents. And they're being shown raw farmland, or forest. And we're talking about putting up a 350,000 square foot tilt up building with surrounding acreage. And there are people that nobody, nobody from the environment team is going around slapping anybody on the rest are even talking about it. They just say this is we can't do this. This isn't right. So they ended up teaming with an NGO that had spent 25 years reclaiming land on top of a mining disaster from the 1950s. So our East Coast distribution center rests on top of 22 caved in mining levels that are below the floor. And I think that that's important, because you know that compliance is expensive. But commitment is something that when you have that, that really helps make a business home.

Sean McMahon  37:11

Understand. So any examples of collaborating with outside companies? I know there's an anecdote in the book about the work we do with you did with Samsung. So can you kind of share that with us?

Vincent Stanley  37:20

Yeah, it was very interesting for me the THE ENVIRONMENT LEAD in Korea, has worked with 500 Different businesses in Korea, kind of talking to them about environmental activities, about the V court movement 1% for the planet. And that the head of sustainability at Samsung Electronics, heard him give a talk and spoke with him and had me speak to a group of 200 vice presidents, which astounds me because I've never can't conceive of having 200 vice presidents. And then I talked to another group and a smaller group of senior leaders. And I was I said, you know, kind of the analogy of Patagonia was like every other business, I said, we have our own problems, our own environmental problems, too. We make polyester fleece that generates microfiber waste in the washing machine. And it doesn't get filtered out. The municipal water filtration systems don't filter it out ends up in the ocean in the stomach's of shorebirds, and I said, you know, we've tried to work with different washing machine companies to come up with a filter. We're also working with ocean wise in Vancouver to talk about the design of municipal filtration systems. But anyway, they at one point I blurted out, I said, Hey, I think washing machines. And then I kind of backed off, I thought I was being rude. But two or three people who were listening, started working on the problem. And they developed, actually a filter that can be attached to a washing machine that filters out 98% of microfiber weights, which is absolutely astounding. And I think that that project was was viewed with skepticism within Samsung, at first by some of their colleagues. But eventually, when everybody got to be very proud of this, you know that this was an achievement the company had made in a very short period of time. So now everyone at Samsung is behind it, including the CEO, and competitors, of course, are working on filtration systems because they don't want to be left behind. So it's kind of a happy story. And I think it also within this very large corporation, publicly traded very, very competitive and not particularly that they're not tree huggers. But what you see is the same. The motivation of the engineers was to do the right thing and at the same time that they had a business solution that could actually be a self sustaining business within a company.

Sean McMahon  40:04

That sounds like quite a bit of serendipity there right, the right ears listening to your presentation and kind of you blurting out something you thought was maybe uncouth. And it really led to some positive outcomes,

Vincent Stanley  40:14

Followed by a great deal of hard work. And And for sure, and commitment. Yeah.

Sean McMahon  40:19

So I want to ask you a question that I thought of, as I was reading the book, in terms of advice you might have for startups, who are trying to follow in your footsteps and with all these the same priorities, and, and I asked it to through this lens, if you've already got existing customers who know your product, and know that you build quality stuff. It's not as big of a leap to ask them like, hey, try this new fiber we've developed because, you know, we think it's better for the environment, or Hey, pay a little bit extra for this garment, because it's better for the environment, or it's, it's more sustainably produced. I feel like it's more difficult for a startup who might not have that established trust with their consumers or their folks are trying to entice to buy their product. So how can that company that might not have the runway either might not have the capital, to stay alive long enough to to build that audience. So how can younger companies get to where you got to quicker?

Vincent Stanley  41:13

I think it's interesting, when you're offering a new a new product or service. And if you're, if you're talking about making a high quality product, I think in our time that high quality also has to include social and environmental performance. But the performance of the product itself has to be key, you know, and for a time, in the early 2000s, we made a line of eco rain shells, that they were noisy, they were ugly, they didn't drape very well, and they didn't keep you dry. So you know, but they were environmentally less harmful than her. So all we were doing was turning customers off to anything with it eco label. And at that point, we said to ourselves, performance has to come first. And the environmental performance is a component of that, but sometimes, but the actual product has to actually perform for its intended use. So I would put that in the mind of any entrepreneur who is coming up with, with a series of products, and cared about the the social or the environmental performance. The other thing is, is related to, to what you were talking about earlier, is telling the same story to investors, customers, employees, etc. And so I think it's more than just telling your story, it also becomes a kind of strategic discipline. If that story becomes repeated often enough, and it becomes part of your kind of informal contract with your employees, your investors, your bankers, and customers, people understand who you are and what you stand for. And it becomes more difficult to veer off of that. In nonprofit circles, there's something called mission creep, which means you know, you start off, save the salmon in a certain River, and then you start to expand the scope of your activity, the same thing happens in business is very difficult to choose ways in which to expand, that are appropriate to the business that you've developed already. And I think that telling the same story to all of the, to all of your constituents or your, your, your stakeholders is, is helpful for that. And that, that helps you to go faster, because you make fewer stupid mistakes and speaking as, as one who has made them.

Sean McMahon  43:40

So that conversation about communicating, right, there's a part of the book where you talk about even like the responsibility we all have to nature, and it comes back down to even kind of word choice, right? So, you right? We know instinctively we are not superior to nature. But our language says otherwise. We refer to nature as quote, resources, as if it were at our disposal. We call nature our quote, environment, as if nature were here to wrap itself around us. We call ourselves quote, stewards, as if we have been ordained to be nature's keeper, a big key dangling from our neck, a white towel slung over our arm. That really hit home. I mean, I cover business news a lot from the financial side from, you know, the sustainability side. And those words, Resources and Environment and stewards. I see him a lot. And it seems like you and Yvon here are kind of saying, hey, we need to be careful about how we use those, especially if it's, you know, illegitimate. So what's kind of the underlying principle of how you and the team at Patagonia shape your communications message? Can we I'd like to talk about that limit in terms of, you know, our footprint and things like that, but even word choice. Yeah, it's very thoughtful. Yeah.

Vincent Stanley  44:53

Yeah. And it's hard to stick to because say the word sustainability which where we're reluctant to use, because we don't see very many activities that we pursue is actually sustained. Because we still think that we're particularly in the apparel business where extractive where we're not giving back to the planet as much as we're taking. But I think, you know, going back to this whole question of nature, there, I think especially the word choice becomes important because we really are a part of nature, it's not the other way around. It's, it's almost going back to the whole Copernican revolution where people discovered, no, the universe does not revolve around the earth, the earth is part of a larger system. And the sooner that we recognize that in the face of the environmental and social crisis that we have, I think the sooner, the more rapidly, we will begin to come up with solutions to the problems that were just, we're a part of this ledger system where we're responsible for what we do, but we're not apart from it. And we're not going to be able to solve the problem without having that kind of humility, of understanding that we're part of it.

Sean McMahon  46:09

Okay, and that humility and transparency with with what Patagonia does, you have information right on your website, you know, our footprint is one of them, you know, the gold standard, considered gold standard by most in terms of sharing with all stakeholders, you know, the footprint of a given product or, you know, a factory here, something like that. So, what made you decide to go that far in and just really share all the information?

Vincent Stanley  46:32

Yeah. Well, it's interesting, you know, we started, I think it was goes back 20 years, and corporations had started to come out with the first corporate sustainability report, CSR. And so the CEO at that time, wanted to create one from Patagonia and I wrote one up, we never released it. Because when we were I followed all the guidelines from GRI. And there were two things. One is we didn't have enough really strong data to actually talk about our performance. And the second thing is, it was really kind of dry. And we didn't think we could really connect to the customer that way. So what we did, we did instead was shelved that I've still got a copy of it somewhere.

Sean McMahon  47:20

And I gotta get my hands on that.

Vincent Stanley  47:24

We, we took the idea of Okay, let's take five products initially, and talk about what happens in the development of those products, all the way from the field or the oil wealth to our warehouse, what is the process of making it? And then we said, okay, let's, let's look at it through three lenses. What are we proud of? What are we ashamed of? And what are we going to do about it? And we didn't call it that. It was what we like, what we don't like and what we'll do. And then we expanded that to a series of products. We remember it being very problematic at a time because again, we're talking about working with partners. We didn't want to alienate our suppliers. So we would have to go through long conversations with them before we actually printed when we talked about a problem. But then when we found they would solve the problem, we would talk about it on footprint Chronicles and other suppliers begged to be a part of it. The other revelation for me was that this was intended for business students and NGOs and people who are curious about sustainability. But what I found is when we publish the footprint Chronicles or posted them online, it made our internal conversations more intelligent. Because most of our employees as committed as they were, and they were less committed them were siloed. They, they paid attention to the you know, the accountants paid attention to what they did, the environment to what they did, the production people. And what they started with the footprint Chronicles gave everyone a common language, about what the work that went into creating the products and also what the problems were. So rather than kind of water cooler gossip, we started to have much deeper conversations about okay, how do we solve this problem? So I shouldn't have been surprised. But that also really convinced me about using the same language with all your stakeholders because what I saw is that it advanced the company in all ways, it advanced us with our suppliers, with our employees, and with our customers because it educated them to things that they've never thought about. And it taught me a lot of things to where,

Sean McMahon  49:52

You know, obviously the the footprint Chronicles have gone through iteration after iteration as it's gotten bigger and better throughout the year. So we'll link to that you know, if any listeners aren't somewhere that they can kind of check out Patagonia's approach to sharing that kind of information. And that's interesting, not that I didn't realize you even doing it for NGOs, and things like that I would have thought of just for consumers. But but that's fascinating. You touched on sustainability a little bit earlier. And obviously, that word isn't the name of the show. Right. And so yeah, there's a passage of the book that really made me think I suspect that it will make some of the listeners of the show thing, a lot of folks have sustainability in their job title. So I'm gonna read it's an entirety and just ask you to share more perspective on it. So here we go. A word about a word we've chosen to use as little as possible sustainability, which means not taking more from nature than we can give back. As yet, we all still take more than we give no human economic activity is sustainable. We believe we have no right to apply that word to our business activity. And so work does not interfere with nature's capacity to regenerate itself and support a rich variety of life. Responsible seems to us to be the more apt modest word, while we hasten tour restorative, rather than an extractive economy, a lot going on there. And that passage, like I said, some of us spend a lot of time thinking about it professionally, and even, you know, just in our everyday lives. So what made you and Yvon write that?

Vincent Stanley  51:12

Well, I mean, I think we, you know, we made the reference to what can we be, we can be a responsible company, we weren't arguing that we were the most responsible company, but we can be responsible. We don't know how to be sustainable. So we shouldn't we shouldn't be staking that ground. I think that there's a couple of things and responsibility also relates to agency. And, and I think it's a, it's a funny thing, when people, people often ask me, whether I'm an optimist or a pessimist. I'll say, Well, I'm kind of, I'm kind of an optimist, but emotion artists, the most pessimistic person I know, you know, he's he describes himself as a doom that, and I don't blame him, you know, that he's spent so much of his life outside in the natural world. And you've seen the degradation over 50 or 60 years, that that person is have never stopped him from acting. He's always done what he could, when he knew how to do it, to, to reduce the harm the company does, and also to do some positive things as well. And so that I think, agent, that sense of agency that is so strong in in human nature, that we really want to be able to, to act on what we know, and to act on, on what we most deeply value. So, and I think that that really is a motivating force in companies far more than people talk about, because it's kind of squishy, to talk about values in business. But I think it's a really strong motivator to be able to bring your deepest values to work, and exercise it in the course of a working day is really important. We start the book with a quote from Gerald Amos, who's a tribal leader in British Columbia, this is the most important right we have is the right to be responsible. So it's not just a burden or an obligation, this is an actual positive, right? Just to kind of a closing comment, where we also look at the word regenerative, restorative or regenerative. And we got we've been in the food business in a small way. And they're when we're, when we're actually growing crops regeneratively inorganically, if you stop using chemicals, and you your companion planting, minimal tillage, crop rotation, you're actually building topsoil faster than nature. Can, you are getting back as much as you're taking. So that for us becomes kind of a North Star. Yes, this is possible to have regenerative business, and you can't have sustainability without having that regenerative component.

Sean McMahon  54:04

Okay, well, I think that comment, as well as the comment about, you know, the human right is to be responsible. So, Vincent, I could go on and on for hours to talk about this book. Like I mentioned earlier, I think it should be a must read for any executives, or anyone out there who's operating a business because it just simply presents another way of doing things. You know, it's not as commonly held perhaps as the Milton Friedman's of the world, but maybe one day it will be so again, the book is called The Future of the responsible company. What we've learned from Patagonia is first 50 years. Vincent, I truly appreciate your time today. Thank you.

Vincent Stanley  54:36

Thank you for yours. Thanks very much for having me on.

Sean McMahon  54:45

All right, everyone. Well, that's our show for today. Thank you all for listening. And if you haven't already, please subscribe or follow this show on Apple, Spotify, Google, or wherever you listen to your podcasts. And as always, please be sure to share it with your friends. Zim colleagues have a great day