Wednesday, May 2, 2012

10 Questions with Patagonia Founder Yvon Chouinard

Yvon Chouinard, the 73 year-old founder of Patagonia, has a low opinion of business books. “I quit reading them 20 years ago,” he says, “when I realized that they had one simple idea that they expanded to fill the required space.” All the same, he has now written two. The first, Let My People Go Surfing (2005), tells the story of how he and others built the closely held outdoor apparel company into a leader in corporate sustainability. Patagonia employs 1,200 and had $414 million in sales last year. Chouinard’s second book, The Responsible Company publishes May 1 and was co-written with Vincent Stanley, editor of Patagonia’s supply-chain information website, the Footprint Chronicles. The Responsible Company is a primer, with to-do lists, for businesses that are striving to be more altruistic and reduce their ecological impact. Chouinard and I spoke by phone from his office in Ventura, Calif. on April 25.
Q: Your environmental ethic is widely admired, but how do you respond to those who say: ‘Yvon, the people who buy Patagonia are already halfway there. The environment isn’t as big a priority for my customers’?
A: I tell them: You better get on it. Otherwise you're going to be too late. You go to good restaurants now, they tell you the name of the farmer who grew the lettuce, for Christ's sake. Customers are starting to demand it. This generation is going to do zero for climate change or any of the big environmental problems that we have. But the millennial generation -- I'm talking 13 to 25 or whatever -- they're different than us. And they're dead serious. Those are the new consumers.
Q: Your “Don’t Buy This Jacket” ad on Black Friday discouraging overconsumption sparked a backlash. Would you do it again?
A: I would run that ad again. We actually experienced increased sales on that jacket. The ad also generated 30,000 signatures on a pledge to exercise more consideration before making purchases.
Q: In The Responsible Company, you note that Dupont, Wal-Mart, and McDonald’s have big sustainability initiatives. Are you aware of any other major corporations adopting these?
A: We have almost fifty companies now that are members of the Sustainability Apparel Coalition [cofounded by Patagonia and Wal-Mart]. It's all the Nikes and the J.C. Penney’s and the Kohl’s. It represents over 30 percent of apparel and footwear sales in the world. And we’re creating an index that will be a way to create real transparency in your company. If you're a retailer, you'll know what goes into the product that you're selling. And the same thing goes for customers. Eventually, they'll be able to zap the code and it'll tell them everything about how that product is made.
Q: Some apparel companies, such as Victoria’s Secret, have been burned for entrusting an NGO to certify their source materials and labor practices. How do you make sure your cotton really is organic, and that underage kids aren’t picking it?
A: We started a third party organization -- us and the Gap and Nike and Levi's -- that goes around and certifies plants. But we also continually double-check ourselves. The other thing is we helped start this organization called bluesign, which is a bunch of chemists in Switzerland who certify dyes and different processes used in making clothing. It was a real pain in the ass to determine if a dye was toxic or not. Now we just go to bluesign and say: Hey, can we safely use a neon dye for this product? And they'll tell you. They've got it down.
Q: Are you pleased with the progress of One Percent for the Planet [a nonprofit that helps member companies direct one percent of annual net profits to environmental causes]?
A: No. I'm a little disappointed. We were growing one-new-company-a-day for quite awhile, but then it slowed, after the recession hit. To tell you the truth, I'm not on the board of One Percent any more.
Q: Patagonia is California’s first Benefit Corporation [a legal status that protects directors from shareholder lawsuits if they prioritize social or environmental causes over profits.] Do you think this has real potential?
A: For us it does. The law is such that it forces every company to eventually become a public corporation. Like if my wife and I die tomorrow, the stock goes into a foundation. The foundation has a maximum of eight years to divest 80 percent of the stock; because they're not allowed to have all their funds in one company. And the foundation law says that you have to sell that stock for the highest price; otherwise you're not being a responsible as a foundation. Which means you have to go public. If I took my company public right now, I'd get so much more money than if I sold it privately. No comparison. 
The Benefit Corporation allows us to take all our values that we run this company by, and set them in concrete.  It also allows the company to not be profit-driven. All decisions made in a public company are made to maximize profits for the shareholders, and they do a lot of evil things to do that. Remember the [Ford] Pinto case? The gas tank was going to blow up, but the right thing to do for the stockholders was to let it blow up and let people fry.

Q: Bill McKibben and are trying to use protesting the Keystone XL pipeline as a way to jumpstart climate change activism. Is there, in your view, an environmental movement today?
A: No. We've lost. Corporations are so strong. They're stronger than any government. They're running the government. And oil is tough because we're addicts to oil. Who's going to go to an oil company and say: "I'm not going to buy your gas because you're irresponsible"? Because you’re addicted. You're not going to go to your pusher and say: "I'm not going to buy your dope any more."

Q: You say we’re screwed, and yet you continue to support scores of local activist organizations. So you must believe at a certain level that the game is not up, no?
A: Well, you got to do what you can.

Q: Any new “responsible” practices in the book you want to highlight?
A: Not specifically. But I can tell you that the checklists that we wrote are pretty severe. This isn't just at all "turn the water off when you brush your teeth." This is serious. Like for instance, let's say you have a downturn. The first thing you should do is not lay-off a bunch of employees. The first thing is management should take a cut in pay. They brought it on. They should take a cut in pay. And then you can have shorter work hours. Keep everybody employed but they can only work 30 hours a week. So spread it out. And then the very last thing you should do is have a general layoff.

Q: Looking back, what has been the best policy you’ve instituted at Patagonia?
A: I think having flextime has really worked out well. The surf comes up, you go surfing. It’s the attitude that nobody cares when you work just so the work gets done; that's all that should matter. My daughter went to a very hard design school. And the teacher in one course said: ‘I’m giving one A, only one A per class. I don't care how hard you work. You're going to be graded on excellence, not on the volume of stuff you produce or how hard it takes you to produce anything. You're going to be graded on the end result. That's the real world.’

Q: I suppose you can relate, since you started out making gear that made sure people didn’t fall to their death.
A: Yeah, including myself! I’m still alive.

Wieners is executive editor at Bloomberg Businessweek.

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