Patagonia’s mission statement is to “build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” I think because Patagonia is private, and because Founder Yvon Chouinard included addressing the environmental crisis as part of his company’s overall mission, Patagonia is a widely recognized corporate leader in exposing and driving solutions around climate change.
Chouinard is in a surprising field given his caution to others against consumerism. “If I was to give anybody advice, I always say simplify your life,” he said. “It’s a lot more satisfying.” Under Chouinard, Patagonia once took out a full-page ad in the New York Times that said “Don’t Buy This Jacket.” For all of these reasons, Patagonia’s focus on the environment is difficult for fashion companies to emulate because they have not incorporated sustainability into their DNA and rely on the very consumerism that Chouinard cautions against.
To respond to your first question, I think Patagonia is well positioned to serve as a megaphone to the fashion industry to build more awareness about environmental issues and walk the walk. Patagonia repairs customers’ used products and sells used products in its stores, relying on its high quality products’ durability to stand the test of time. Most of the fashion industry relies on making last year’s fashion obsolete to encourage people to buy the latest trends. This leads to the provocative question as to whether the fashion industry will ever be willing to preach moderation and attack consumerism, the very disease that props up the industry. I do not think this is likely so, rather than wait around for others to follow Patagonia’s venerable model, I hope Chouinard has more opportunities to make consumers feel ridiculous for our wasteful (and costly) fashion choices. The fashion industry may hasten evolving its practices only once consumers are convinced that sustainability is fashionable.
Great read, Brandon. You start out by acknowledging that PepsiCo and other industry leading corporations’ are taking on the role of corporate and environmental stewards, in turn for associated business benefits, whether through more favorable partnerships or positive PR. Responding to your first question regarding how PepsiCo can strike the appropriate balance between business interests and renewable adoption amongst suppliers, I think Pepsi has enough pull as a leading brand to establish supplier standards that will gradually lead suppliers to modify their practices if they want to retain and/or gain business with PepsiCo.
Moreover, I think the public and/or interest groups can hasten PepsiCo’s progress to reduce global warming emissions by continuing to scrutinize PepsiCo’s practices and raise negative PR, when necessary, to escalate to PepsiCo’s strategists where change is most necessary. It’s no coincidence that Saved by the Bellhorn noted that he “heard a lot of rumors about palm oil.” NGOs and interest groups had publicly attacked PepsiCo’s sourcing and links to deforestation and lobbied PepsiCo to transform its palm oil supply chain. Emma Lierley, a communications manager with the Rainforest Action Network, disclosed that “PepsiCo has been engaged by hundreds of thousands of emails, online petitions, phone calls, written letters and on-the-ground actions from supporters of the campaign, and over the past three years, our team has had extensive engagement with their sustainability team on these issues as well.”
While PepsiCo and major corporations like it are increasingly taking on more responsibilities to drive environmental and social impact through their business operations, as a public company, PepsiCo’s obligation is to maximize the value that it provides to its shareholders. This begs another question — do non-profits and environmental advocates have a role in pointing out where change is most needed in order to push companies like PepsiCo to focus on change, or are positive PR and advantageous supplier selection and other associated incremental business benefits enough to incentivize corporations to drive progress related to climate change?
Great read, Rob. In response to your question regarding ‘sweetheart deals’, to echo Reed’s point above, Teresa May’s “no detriment” guarantee is vague and not enforceable by Nissan particularly after it commits high capex investments. While Nissan played “hardball” with the UK government to obtain this concession, Nissan has no clarity on what this concession will look like or how competitors will respond.
Like Nissan, Toyota has signaled its commitment to remaining in the UK for now with a £240m investment in one of its UK sites in March 2017 that Toyota stated was focused on upgrades needed to stay in the UK market. Toyota signaled that it also negotiated with the UK government regarding this investment, though Toyota qualified that there is no guarantee that it will make future cars in its UK plant. Unlike Nissan’s investment, Toyota’s investment did not involve new jobs or increased vehicle production, signaling that has not yet committed to operating in the UK market longer-term.
This makes me more concerned about Nissan’s no-detriment guarantee from Theresa May. I wonder whether Toyota was offered comparable terms during its negotiations and decided that this amorphous promise was too risky to rely on. I do not think the UK government should be in the business of negotiating behind-the-scenes guarantees with firms. I question the government’s ability to deliver on these guarantees, and the government’s ability to successfully manage individual private-sector negotiations to help businesses adapt to Brexit.
I agree with your recommendation for Driscoll to maintain production in Mexico and invest in any incremental operational efficiencies, though up to a certain extent. I think that a price elasticity study can’t hurt but that they should pass only a portion of any residual costs to consumers and take a hit to their margins for the rest. My reasoning is that Driscoll should take a short-term margin hit, increase its focus on lobbying and wait out the duration of the Trump Administration while building support for another NAFTA-renegotiation agreement when a new Administration assumes power. Because the nature of NAFTA is only trilateral, though this example only focuses on the U.S. and Mexico, I am more bullish on a new Administration reducing the tariffs with a similar agreement in the near-future (next Administration) particularly if Driscoll and other members of the Produce Coalition and other agricultural associations demonstrate how Trump’s policy has hurt U.S. agriculture businesses. Because of this, I don’t think Driscoll should upend its existing production processes and worry that if Driscoll passes on too many costs to customers in the short-term, they may hurt their brand in the medium-term, when I assume that the U.S. lobbying machine will kick into play and unwind Trump’s policy if these powerful agricultural associations continue to object to Trump’s NAFTA’s renegotiation.
Love the article Anusha! Responding to your question regarding insuring against autonomous trucking risks, I agree with all of your recommendations above and would add a couple of eggs into UPS’ diversification basket. While UPS should continue investing in automated trucking technologies, the future remains amorphous as to when/how widespread autonomous trucking will take off, and the regulatory hurdles will likely be tackled country by country.
In the meantime, UPS can also focus on geographic expansion, particularly in emerging markets where delivery infrastructure exists (roads, address database) but lags that of more modern countries. These countries may have more infrastructure advancements to make before autonomous trucks could be a reality. These countries are more likely to have different cultural customs that may make large swaths of populations hesitant to adopt autonomous trucking over the medium- or in some cases even long-term even if their infrastructure can accommodate autonomous driving. Delivery services in many emerging markets are not yet widely established so there is room for UPS to enter these markets from a competitive standpoint.
While I agree that UPS should remain in the autonomous driving fight, I think a substantial opportunity exists to enter new markets and gain market share before autonomous trucking becomes a widespread reality.
I love the post and the custom logo Mehdi! The fact that you used Disney’s signature font in the article image is itself revealing — Disney has higher brand equity than Netflix. In fact, according to Forbes last year, Disney has the most powerful brand in the world.
For this reason I am bullish on Disney’s endeavor to build a digital distribution platform, or to challenge a variety of incumbents in other areas for that matter. Responding to your question regarding movie company response, I think movie companies rely on Disney too much to cut ties. The movie “Frozen” alone grossed $1.3B at box offices. Disney is unique in its ability to capture the hearts and minds of children, who are in turn unique in their ability to capture the wallets of their parents. Children are typically not old enough to go to movies on their own and are apt to plead for their concession of choice. Therefore, Disney movies are unique in their power to increase ticket quantities and other revenue flows to theaters, which puts Disney at an advantage when negotiating with theaters.
For similar reasons, Disney has cornered parents into succumbing to their children’s high consumerism demands. Licensing revenue from Disney movies rakes in over $1B annually, which makes it tough to shield children from the viral nature of Disney movies. As a result, I think parents will likely succumb to paying for a digital Disney subscription, potentially with an additional fee to access day-and-date release movies or will continue to take their kids to theaters. If Disney does move forward with an OTT approach, they should take care regarding pricing to soften the great cannibalization risk point that BT’s comment surfaced.