The 21st century faces humanity with multiple considerable challenges — economic, social, and environmental. The Corona pandemic added a salient physical challenge, by affecting our health, which is argued to be related also to environmental issues. Climate change is the most burning issue, per se, that receives top attention, and requires action.
There is an on going debate whether and how companies should be involved in efforts to confront challenges to the well-being of people, side-by-side with driving towards their business goals. Would such efforts be contradictory to achieving the business goals or can they be complementary and even support the latter? Investors are often skeptical, concerned that the profitability and share value might be hurt, while a growing number of advocates argue (based also on research findings) that being just and fair, and helping communities to live better, is associated with higher returns, and may actually contribute to them (i.e., having a causal effect). At the very least, this type of behaviour can enhance a brand’s image and credibility and increase its stability over time (i.e., longevity).
Matters concerning the environment are crucial to the livelihood of communities, and in general to the quality of life of people (consumers) on our blue planet. Among the environmental aspects we may include climate change (warming effect) and weather instability, air and water pollution, preserving nature (e.g., forestry), protecting animal species (e.g., from danger of extinction), and more. Better management of natural resources, means of energy production, and sustainability have become more urging topics in recent years. Some of these issues may be essential to the day-by-day activities of many firms and relevant to the domain of their products or services; yet companies may choose to be involved and contribute on matters of the environment because it can improve the well-being of their employees, customers, and the communities among which they operate, and as an expression of civic or social responsibility. A way for a company (or brand) to do so is by incorporating its approach to support the environment in the company’s values, and act on the respective values to defend the environment.
Let us take Patagonia, the American outdoor clothing and gear company, as an example for high environmental awareness and involvement. Patagonia specialises in the manufacturing and marketing of clothing fit for cold and wet weather conditions, as well as accessories and equipment for holiday and travel, trekking and camping. Clearly the environment, and nature in particular, are directly linked to the domain of the company’s products, especially when used for travel purposes, whilst trekking in nature, and for performing associated sportive activities (e.g., mountain and rock climbing, skiing). However, the company is actively involved in matters of the environment that go beyond explicit uses of its products (e.g., executing pro-environment programmes, raising awareness, and disseminating knowledge).
Patagonia discourages redundant or wasteful possession of its products by consumers; the logical reason is that in order to reduce environmental damages everyone needs to reduce consumption [1a] (it is foolish to believe, the company claims, that a healthy economy can thrive on the selling and buying of things people do not need — a rather unorthodox way of marketing thinking). Patagonia runs a programme called ‘Worn Wear’ for Selling Used Gear. Through its programme the company receives used gear from customers for re-selling, or for using the materials again in making other products. Overall, the company is using recycled materials (e.g., fabrics, hemp, wool) in clothing (e.g., coats, sweaters). This policy has advantages on two ends of the production-consumption chain: save on raw materials originating first-hand from nature that could be leveling-off or in risk of diminishing, and reduce disposal of products back to nature as waste that pollutes the earth. The gain is especially more significant when the products, like clothing items, that customers disposed, were underused by them. When re-cycled clothing is donated to less economically advantaged communities it also becomes an act of social responsibility.
Patagonia is investing in research and development (R&D) for making products from recycled materials. The company, furthermore, encourages its customers to use the products of Patagonia for as long as they can. In order to support this pledge, it operates a factory dedicated specially for repairing worn out products (the company also operates a mobile sewing workshop for repairs, dispatched to more isolated communities) [1b]. Patagonia delivers an important message on product durability. We have seen every time and again in the past few decades that products are made at lower quality, meant to hold up for less time (i.e., less durable). Thus consumers are driven to replace products more frequently. Reasons given for this approach are that the higher quality products would be too expensive for many consumers, and for some products, it is due to the pace of technological innovation. In practice, consumers could be spending more money through more frequent replacements (e.g., shoes, smartphones). Repair services are in decline. The economic argument criticising reduced durability, however, has not been very convincing so far. Patagonia could be offering us a more substantial and vital reason in support for producing again more durable products — protecting the environment by saving on its resources and cutting down the dumping of used products too soon.
The company tries to compensate for the relatively higher priced products by giving its customers the possibility to fix their used products at the company’s facilities. The customers will benefit from being able to continue using the products they have become accustomed and attached to. During the Corona pandemic there has been some rise in employment of repair services (e.g., clothing, appliances), mainly for economic reasons and due to the shutdown of stores, while repair shops and services remained available. Consumers may continue to rely more on repairs after the coronavirus pandemic recedes. Perhaps the pandemic crisis would lead to revival of more durable products and increased use of repair services, but motivated by an environmental cause and not just by an economic cause.
The values of Patagonia entail (1) Build best products, highlighting their function, repairability, and durability; (2) Cause no unnecessary harm; and (3) Use business to protect nature. Under “Environmental Responsibility” the company states its commitment to applying robust environmental and animal responsible programmes for making materials (e.g., ‘organic cotton’) and products. Activities described above demonstrate how the company implements its values. In addition, the company advances, under its website section ‘Activism’, public campaigns (e.g., signing a petition, volunteering to help and support the environment) and publishes informative stories on the state of the environment and nature (e.g., a story titled Will You Vote for Winter on defending winter for snow lovers and skiers). The company makes the following commitment: “We aim to use the resources we have — our voice, our business, and our community — to do something about the climate crisis.”
According to Rose Marcario, former CEO (for seven years until June 2020), Patagonia is committed to defending planet Earth; the threats facing Earth, such as due to effects of its warming, required the company to reset its mission and get more committed and involved. Acting to advance social goals does not have to stand in the way of achieving economic (financial) goals — Patagonia quadrupled its annual revenues to over a billion US dollars, while setting a new standard in protecting the environment. Marcario suggested that customers appreciate Patagonia’s commitment and behaviour, and remain loyal [1c].
Dov Seidman, a moral philosopher, managerial and legal adviser, is a leading proponent of the constructive roles that ethics and justice can undertake in business. He has been an adviser on corporate virtue, culture and ethical compliance to Fortune 500 companies (through the company he has founded, LRN). He contends that in a global and transparent world, companies that “outbehave” their competitors ethically will also tend to outperform them financially. Good behaviour is likely to be rewarded, whereas bad behaviour, due to the rise of information technology and communication, is harder to hide. Seidman argues that for competing on behaviour, it matters crucially how companies treat their customers and employees: “It’s about who has the most trust in their relationships, and where most people want to work; this will be the soft currency of the 21st century” [Fortune, 2].
Making a strong commitment and taking action on behalf of the environment, and towards social responsibility, as Patagonia does, is a demanding mission that bears costs. Protecting the environment may also incur costs for consumers, such as by behaving in ways that require somewhat more consideration and effort, and willing to pay higher prices for more durable products (made yet of higher quality materials). Repair services will have to be fairly priced relative to the cost of buying new products, thus making the repair more worthwhile. The cost of R&D and production of good quality recycled materials will need to be economic as well to encourage consumers to buy these products. Yet the benefits from such behaviour of both companies and consumers can well exceed the costs if it succeeds in creating an environment much safer and pleasant to live in for everyone (and also payoff financially for the companies and consumers).
Notes:
[1a] – [1c] ‘Pursuing Justice (and Making Money){Origin in Hebrew}’, Amir Barnea, Haaretz Weekend Magazine (HaMussaf), 4 December 2020, pp. 18-23. (Amir Barnea is Proferssor of Finance at HEC Montreal, and at Coller School of Management, Tel-Aviv University.)
[2] ‘Why Doing Good Is Good for Business’, Richard McGill Murphy, Fortune (Europe), 8 February 2010, pp. 59-62.
Consumer / Shopper / Customer Behaviour 