The business sector can be an enormous agent for change, Patagonia’s vice president of public engagement Rick Ridgeway says. And it might be the best hope we have of saving the planet.
Ridgeway was in Australia last week for a business summit held in Melbourne, where he told leaders from some of Australia’s largest firms that a reintroduction of a carbon price is inevitable.
“I predicted Australia can rally support for a price on carbon again and return to a place of leadership. I’m guardedly optimistic,” he told The Fifth Estate.
The smart firms are those already making moves to address their environmental footprint, he said, as this will put them in a position of competitive advantage when a carbon price comes about.
One example is Unilever, where Ridgeway is on the advisory board. He is also on the advisory boards of WWF and the Leonardo Di Caprio Foundation, and founding chairman of the Sustainable Apparel Coalition.
Ridgeway said he could see concern about environmental issues on a lot of the faces in the audience at the summit.
“The changes that are going to save the day are increasingly in their hands.”
The Patagonia business model, where the business is centred on having a positive impact on environmental issues, is one he said more firms were looking to learn from.
“People are listening to us and looking at our model because they are realising all businesses are underpinned at the end of the day by a healthy planet.
“Without the natural resources a healthy planet can provide, all businesses will be placed at risk. Without a healthy planet, there is no healthy society; and with no healthy society – there is no healthy market.”
He said that in the US, as in Australia, there was a “gap between what politicians are feeling on a personal level [about climate change], and the positions they have to take publicly”.
“Some of our US politicians have told me that if they felt there was more support from civil society, they would do things like put a price on carbon.”
Civil society and government could work together to get the right policies in place, he said.
Ridgeway and the company founder, Yvon Chouinard, learned as mountaineers and explorers about managing risk.
These lessons have been “taken down from those high places to our business life”.
“We’re not really risk takers; rather we’ve learned as athletes to manage risk.”
The risk management approach is centred on thoroughly examining not only the symptoms and impacts of the company’s actions, but the causes of them. The team asks as “many questions as it takes” to fully understand an issue.
“That [approach] allows us to make decisions that sometimes place the business into a position of risk, but we have a lot of information,” Ridgeway said.
An example is the switch to organic cotton. The market did not offer sufficient supply, so the company had to work directly with farmers. Even so, the decision to only use organic cotton meant the bottom line dipped for a couple of years, recovering within three to four years.
Ridgeway said Unilever chief executive Paul Polman was taking a similar position around aiming for the business to be a tool for environmental protection.
Polman also wants the firm to be an example for other publicly traded companies, delivering benefit not only to shareholders but to the wider picture of stakeholders, which includes suppliers, workers and the communities that their products are used in.
To be a successful example, though, the company itself must be financially successful also. Some people dismiss the Patagonia business model, Ridgeway said, because it is family-owned and has a customer base at the top of the consumer pyramid.
“All those points are true, but at the same time there is measurable business value in a commitment to sustainability,” he said.
“Companies like Unilever understand that when you manage externalities through the supply chain you can also avoid environmental and social landmines that can blow up and affect your business.”
Polman understood how equity funds are also using sustainability as one of their screens in terms of client investments, because they know it is good for shareholders, Ridgeway said.
The financial success of the company and its shareholder appeal also means Polman can have greater latitude for decision-making, such as his position that Unilever will not provide quarterly reports to shareholders.
Another benefit of sustainability commitments is that companies that have them can attract the “best and brightest” employees.
“Millennials want to work at companies that are committed to shared values,” Ridgeway said.
At one meeting of business leaders Ridgeway attended in the US, he recalled Michael Bloomberg was addressing the audience, and pointed to Rupert Murdoch saying, “He’s greening News Corp not because he’s environmental, but to attract people.”
Ridgeway said that when he gives talks to students in business schools, he tells the students they have the power to make change simply through who they choose to work for. Making a commitment to not work for any firm that has no commitment to shared values is a way of creating change.
“Despair is no fun. We have got to keep the hope alive,” Ridgeway said.
Research and innovation is an area of hope, for example the new regenerative farming practices that have the capacity to sequester vast amounts of carbon from the atmosphere in soils if they are adopted on a large scale.
Patagonia is supporting this new agricultural approach through a new start-up brand extension into a food enterprise producing nutrition bars, soup mixes and buffalo jerky that is all produced using ingredients produced through regenerative practices.
“You can’t give up, and you can’t give in.”
What mountain climbers learn is how to set a goal, develop a strategy to achieve it, and then at the end of the day apply to it a tenacity, he said.
Ridgeway has concerns the Transpacific Partnership may disempower governments to manage environmental impacts.
“You have to have hope that governments and societies that support them will over time make better policies,” he said.
That includes carbon pricing.
“It is inevitable there will be policies put in place to internalise these externalities like impact on the environment.
“To the degree they do already do so, it will place a business with a competitive advantage if it has been already managing its footprint and greenhouse gas emissions.”