Calvin Frost10.05.22
That melody of the old Pete Seeger song keeps running through my head as I introduce my latest and, I promise, final 2022 message on renewable energy. Indeed, where have all the leaders gone? This came to me when I heard about the incredible change that Yvon Chouinard has orchestrated for Patagonia, his brainchild of the early 70’s.
Chouinard started Patagonia with the idea of it being “a great place to work and an important resource for environmental activism.” He eventually committed Patagonia to “tithing” for environmental causes, committing 1% of sales or 10% of profits, whichever the greater. This was in the 80s, mind you. Two weeks ago, and now 83, Chouinard transferred ownership of Patagonia into a trust that is focused on fighting “the environmental crisis and defending nature.” As he said, “Earth is now our only shareholder.”
I want to share with you some of his remarks in his announcement. It speaks of leadership far more poignantly than anything I could write:
“If we have any hope of a thriving planet – much less a business – it is going to take all of us doing what we can with the resources we have. This is what we can do.
I never wanted to be a businessman. I started as a craftsman, making climbing gear for my friends and myself, then got into apparel. As we began to witness the extent of global warming and ecological destruction, and our own contribution to it, Patagonia committed to using our company to change the way business was done. If we could do the right thing while making enough to pay the bills, we could influence customers and other businesses, and maybe change the system along the way.
We started with our products, using materials that caused less harm to the environment. We gave away 1% of sales each year. We became a certified B Corp and a California benefit corporation, writing our values into our corporate charter so they would be preserved. More recently, in 2018, we changed the company’s purpose to: We’re in business to save our home planet.
While we’re doing our best to address the environmental crisis, it’s not enough. We needed to find a way to put more money into fighting the crisis while keeping the company’s values intact.
One option was to sell Patagonia and donate all the money. But we couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed.
Another path was to take the company public. What a disaster that would have been. Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility.
Truth be told, there were no good options available. So, we created our own. Instead of ‘going public,’ you could say we’re ‘going purpose.’ Instead of extracting value from nature and transforming it into wealth for investors, we’ll use the wealth Patagonia creates to protect the source of all the wealth.
Here’s how it works: 100% of the company’s voting stock transfers to the Patagonia Purpose Trust, created to protect the company’s values; and 100% of the nonvoting stock has been given to the Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature. The funding will come from Patagonia: Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis.
It’s been nearly 50 years since we began our experiment in responsible business, and we are just getting started. If we have any hope of a thriving planet – much less a thriving business – 50 years from now, it is going to take all of us doing what we can with the resources we have. This is another way we’ve found to do our part.”
Chouinard’s letter oozes integrity, feeling, belief and commitment. It is bold and creative and, it seems to me, what leadership is supposed to be. Leadership is action that demonstrates a passionate belief that one’s goals will improve not just “the team” but the world.
Chouinard is a great example of a leader. May we all have the same determination and courage to support whatever we believe, personally and professionally. He is certainly the world’s conscience when it comes to supporting the concept of the 3 P’s: passion, purpose, and people.
Where have all the leaders gone...
Where is the leadership in renewable energy, in clean energy? Why are the big three, Exxon Mobile, Chevron, and Conoco Phillips, so reluctant to make renewable the front seat in their business, not the back seat? In just the first quarter of this year, those three made an extraordinary $17.6 billion after taxes, or nearly $200 million a day in profit. I realize these are concerning times with high energy costs, exasperated by the war in Ukraine and the poker game going on between Russia and Western Europe. But this is a hiccup and normalcy will return. Albeit with a continued focus on fossil fuels that include oil, gas, and worst of all, coal. While Avi Salzman writes in Barron’s that “the future of renewable energy has just arrived,” it was announced, literally just in the last few days as this goes to print, that two paper mills are shutting down because of the cost of energy. To be sure, this is more about energy costs than the conversion to renewables. But it all comes together in my view. And leadership in energy is needed to not only reduce costs but to convert to renewables and clean energy.
Renewables have an enormous opportunity to help Yvon Chouinard save our planet. Let’s look at the math: the US and Europe are each adding 30 gigawatts a year of new solar and wind capacity, enough to power 10 million homes. In the US alone, solar and wind have helped meet rising demand for electricity, but they haven’t cut much into the share of other power sources. You see, we here in the US increased 30 gigawatts of total new electricity generation. Mathematically what this means is that the renewable energy growth covered total electricity growth, but didn’t cut into traditional energy generation.
Consortiums need to be formed globally. All parties need to be part of a renewable energy scheme. This won’t work in the political arena with the likes of Paris and Glasgow Accords. This will take bold and committed leadership that is convinced that traditional energy is largely responsible for climate change and needs to be replaced by renewables. The cynic in me says we won’t find that leader. The “believer” in me says it will happen.
I see an analogy in our industry when it comes to dealing with our by-product. We can continue to make all kinds of improvements in our product that include benignity, light-gauging, reduced basis weight, recycled content, and so on. But the ultimate change must come with a commitment to deal with our by-product. This will cost our money, but we must make changes to eliminate landfill from our vocabulary.
I don’t think leaders are born. Yvon Chouinard was a gifted rock climber who realized using traditional pitons was destroying the very rocks he wanted to climb. Patagonia went through the same growth process, eventually developing friendly, water-repellant coatings. We must do the same thing. This isn’t about money and cost. This is about changing our habits so we improve our carbon footprint. It requires leadership. Where have all the leaders gone?Long time passing...
Calvin Frost is chairman of Channeled Resources Group, headquartered in Chicago, the parent company of Maratech International and GMC Coating. His email address is cfrost@channeledresources.com.
Chouinard started Patagonia with the idea of it being “a great place to work and an important resource for environmental activism.” He eventually committed Patagonia to “tithing” for environmental causes, committing 1% of sales or 10% of profits, whichever the greater. This was in the 80s, mind you. Two weeks ago, and now 83, Chouinard transferred ownership of Patagonia into a trust that is focused on fighting “the environmental crisis and defending nature.” As he said, “Earth is now our only shareholder.”
I want to share with you some of his remarks in his announcement. It speaks of leadership far more poignantly than anything I could write:
“If we have any hope of a thriving planet – much less a business – it is going to take all of us doing what we can with the resources we have. This is what we can do.
I never wanted to be a businessman. I started as a craftsman, making climbing gear for my friends and myself, then got into apparel. As we began to witness the extent of global warming and ecological destruction, and our own contribution to it, Patagonia committed to using our company to change the way business was done. If we could do the right thing while making enough to pay the bills, we could influence customers and other businesses, and maybe change the system along the way.
We started with our products, using materials that caused less harm to the environment. We gave away 1% of sales each year. We became a certified B Corp and a California benefit corporation, writing our values into our corporate charter so they would be preserved. More recently, in 2018, we changed the company’s purpose to: We’re in business to save our home planet.
While we’re doing our best to address the environmental crisis, it’s not enough. We needed to find a way to put more money into fighting the crisis while keeping the company’s values intact.
One option was to sell Patagonia and donate all the money. But we couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed.
Another path was to take the company public. What a disaster that would have been. Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility.
Truth be told, there were no good options available. So, we created our own. Instead of ‘going public,’ you could say we’re ‘going purpose.’ Instead of extracting value from nature and transforming it into wealth for investors, we’ll use the wealth Patagonia creates to protect the source of all the wealth.
Here’s how it works: 100% of the company’s voting stock transfers to the Patagonia Purpose Trust, created to protect the company’s values; and 100% of the nonvoting stock has been given to the Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature. The funding will come from Patagonia: Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis.
It’s been nearly 50 years since we began our experiment in responsible business, and we are just getting started. If we have any hope of a thriving planet – much less a thriving business – 50 years from now, it is going to take all of us doing what we can with the resources we have. This is another way we’ve found to do our part.”
Chouinard’s letter oozes integrity, feeling, belief and commitment. It is bold and creative and, it seems to me, what leadership is supposed to be. Leadership is action that demonstrates a passionate belief that one’s goals will improve not just “the team” but the world.
Chouinard is a great example of a leader. May we all have the same determination and courage to support whatever we believe, personally and professionally. He is certainly the world’s conscience when it comes to supporting the concept of the 3 P’s: passion, purpose, and people.
Where have all the leaders gone...
Where is the leadership in renewable energy, in clean energy? Why are the big three, Exxon Mobile, Chevron, and Conoco Phillips, so reluctant to make renewable the front seat in their business, not the back seat? In just the first quarter of this year, those three made an extraordinary $17.6 billion after taxes, or nearly $200 million a day in profit. I realize these are concerning times with high energy costs, exasperated by the war in Ukraine and the poker game going on between Russia and Western Europe. But this is a hiccup and normalcy will return. Albeit with a continued focus on fossil fuels that include oil, gas, and worst of all, coal. While Avi Salzman writes in Barron’s that “the future of renewable energy has just arrived,” it was announced, literally just in the last few days as this goes to print, that two paper mills are shutting down because of the cost of energy. To be sure, this is more about energy costs than the conversion to renewables. But it all comes together in my view. And leadership in energy is needed to not only reduce costs but to convert to renewables and clean energy.
Renewables have an enormous opportunity to help Yvon Chouinard save our planet. Let’s look at the math: the US and Europe are each adding 30 gigawatts a year of new solar and wind capacity, enough to power 10 million homes. In the US alone, solar and wind have helped meet rising demand for electricity, but they haven’t cut much into the share of other power sources. You see, we here in the US increased 30 gigawatts of total new electricity generation. Mathematically what this means is that the renewable energy growth covered total electricity growth, but didn’t cut into traditional energy generation.
Consortiums need to be formed globally. All parties need to be part of a renewable energy scheme. This won’t work in the political arena with the likes of Paris and Glasgow Accords. This will take bold and committed leadership that is convinced that traditional energy is largely responsible for climate change and needs to be replaced by renewables. The cynic in me says we won’t find that leader. The “believer” in me says it will happen.
I see an analogy in our industry when it comes to dealing with our by-product. We can continue to make all kinds of improvements in our product that include benignity, light-gauging, reduced basis weight, recycled content, and so on. But the ultimate change must come with a commitment to deal with our by-product. This will cost our money, but we must make changes to eliminate landfill from our vocabulary.
I don’t think leaders are born. Yvon Chouinard was a gifted rock climber who realized using traditional pitons was destroying the very rocks he wanted to climb. Patagonia went through the same growth process, eventually developing friendly, water-repellant coatings. We must do the same thing. This isn’t about money and cost. This is about changing our habits so we improve our carbon footprint. It requires leadership. Where have all the leaders gone?Long time passing...
Calvin Frost is chairman of Channeled Resources Group, headquartered in Chicago, the parent company of Maratech International and GMC Coating. His email address is cfrost@channeledresources.com.