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We make big fusses about political elections every couple of years. Beyond that many people think they aren’t able to enact big changes on their own. But what about the choices we make every week regarding what we buy? A big power of the people is regarding the economy. YOU can buy a better world!
The decisions on where we spend our money send big signals to big companies. To help distill how much power each citizen has, Andrew Winston joins today’s program to discuss the thought process of companies as they observe and track spending. How does change from a citizenry affect corporations and how does that change affect actual policies?
– Welcome back to the Urban Monk. Dr. Pedram Shojai hanging out in studio, Southern California. We are almost done with this movie, and by almost done, I mean it’s still going. There is so much goin’ on, tryin’ to get a movie … You know, sittin’ on an egg and tryin’ to hatch it. I promise it’ll be beautiful. There are a lot … We have a trailer coming. By the time you hear this, the trailer might be out. So the trailer’s comin’ out very soon. There’s just been some really unexpected things that have happened during the making of the movie, i.e. big stories in the movie changing. Like Whole Foods being purchased by Amazon. Now Rodeo Publishing being up for sale. So a lot of things that I have to adjust for, as we get into putting out a thing that then is out there in the universe. Stand by for more on that. I wanted to bring one of my favorite people from the film onto the show, so that we can break out into some dialogue, and talk about what’s really going on. His name is Andrew Winston. The author of The Big Pivot, Finding the Golden Green, which is … He’s been working with a lot of these very big companies, like biggest name brands in the world, really helping them find ways to be more sustainable and can align themselves with climate change goals, and all the good things that the good people in the world would want, because we’d like to live here still. I want him to share some of his insights there, and also just some of the current events that are happening, and just poke around at what may or may not be the benefit of this Amazon acquisition. If it’s all good, if it’s all bad, or something, and what’s happening in the industry. So without further ado, Andrew, welcome to the show.
– Glad to be here, thanks for having me.
– Yeah, so good to see your face again. Last time we hung out, we were in New York. Yeah yeah.
– Doing the film, and you’re almost done, you say.
– Yeah. It’s like the old Orson Welles thing. You just gotta abandon it at a certain point. You can tweak and tweak and tweak. I was on a Skype call with the team today. One guy’s in New York, one guy’s in Africa. The guy in New York was starting to get a little ticky tack on things and the guy in Africa is like, look, if it ain’t broke, we gotta move on. It’s how that works.
– That’s what they say in Silicon Valley. You gotta ship it right?
– Yeah, you gotta ship it.
– At some point. I write regularly, and at some point you’re like, I could keep editing, but, you gotta put it out.
– Just hit publish. Yeah, that’s it. Some things are iterative. Films are kinda done. You just do it. There is so much going on right now. From fake news to climate change deniers taking over the EPA, and all sorts of things that have been incredibly regressive, in my opinion, for people who want to live on this planet. We are now at a point where this conversation that we’re having with the movie is, it’s kind of a market driven conversation. It’s economic democracy. It’s really aligning yourself with the companies that share your values to get more of that. But then there’s been this tremendous policy shift, right? There’s been a lot of movement there. In your work, first of all, you’re consulting still, actively, with a lot of these companies. Has any of that changed because of the national discourse, with the companies you work with?
– Well, there’s been a kind of amazing shift, I think, in the last, obviously, six, eight months, in the country on policy. We have to keep in mind that the US is not the only country. So there’s a deep shift here, but the big companies are multinational and they’re dealing with issues all over the world, so it isn’t just the Trump phenomenon. There’s Brexit, there’s pressures in India, there’s lots of different places in the world, where the pressure on companies … Our quick changing policy environment is something they’re trying to get a handle on. What I’ve seen happen over the last four or five months is, I think we’re in this amazing time of a rising expectation of companies and their role in society. I’ve been working in corporate sustainability for many years, and it’s mainly been about control your footprint, maybe innovate, create new products, help the world shrink its footprint. Now there’s this pressure to put yourself out there as a company and have opinions on issues they didn’t use to speak out publicly. So you have companies speaking out on LGBT issues, on the immigration ban, filing legal briefs, right? The big tech companies, right after the first iteration of the ban, filed legal briefs. This is kinda new. We haven’t seen companies step forward in this way. I think it’s great, but it is putting them on the hot seat. My take in talking to companies and executives is, they’re kind of in a rock and a hard place. Do you go against the agenda of the President of the United States, and the feelings of a bunch of your employees, and some of your customers, or do you take a stand on an issue that’s really important to other parts of your stakeholder base? It’s a really challenging time.
– Yeah. If you’re gonna fly a flag, that means something. It’s hard to stay neutral in times like these though. Especially when the overwhelming consumer sentiment is towards moving in a direction that might be more sustainable, right? That’s the part, I mean. I’m in a bubble, right? Everyone I know gets this, and obviously, wants this. There’s the reality of a lot of people who don’t believe dinosaurs existed. There’s a lot of that. How do you get people to come back to alignment with voting for their best interests, and purchasing for their best interests? It’s kind of our challenge for today.
– Look, if I had the answer to that, I don’t know. I’d be doing something else, I suppose. The answer of how do you get people to vote with their own interests is, I think, one of the challenges of modern America. We have millions of people, arguably, voting against their interests in a really profound way. Voting for people that will take away their health care. Voting for people that will ease up on air and water pollution restrictions that are keeping them healthy, that are keeping their water safe, and keeping their air breathable for them and their kids. Yet, millions of people have been convinced that the EPA is a bad thing, right? The Environmental Protection Agency. That somehow tackling climate change is horrible, and is putting the country at a disadvantage with the rest of the world, when it’s really the opposite. We are gonna fall way behind on the race to the clean economy, if we’re not committed to moving to a non-carbon economy. But again, kinda back to your first question. I think companies are just continuing on, for the most part. What happened after the President removed the US from the Paris Climate Accord, or signaled intention to, ’cause it takes years. The reaction was so quick, from states, from cities, and from hundreds of really large companies. That said, we’re gonna continue. We’re still gonna cut our carbon as much as the country has agreed to. That was incredibly optimistic for me. I think there’s lots to be pessimistic about right now, and I’m incredibly worried about our democracy, about the role of media, about all of the mega trends that keep companies moving, and whether it’s gonna be going in the right direction. Worried about all of that, but this was a really positive sign. Companies stepping up and saying, we’re gonna do it anyways. That was really nice, and it’s still growing.
– It’s almost like it’s become a multi nodal power structure. That kind of top-down, pyramid hierarchy is starting to collapse. Look, I’ve seen some very positive things from the judiciary. The judiciary is basically stepping up and being like, no, that’s against the law.
– [Andrew] For now.
– For now.
– Until it gets to the Supreme Court, where, the Republicans got their way, they got a seat that they shouldn’t have. They’ve got a very conservative justice, so we’ll see what happens. I think the checks and balances in the US are not checking and balancing very well right now. It’s a dangerous time, but companies have a lot of power, and again, they can influence the way the world moves, hopefully in a good way.
– I distinctly remember that when Obama won his presidency, there was a lot of people in the conservative circle, that were like, I’m leaving, it’s over. This country has gone to shit. Things moved on and did what they did. Now I have a bunch of liberal friends who are like, it’s over. The country seems to move forward, and it takes these big swings of the pendulum. At the end of the day, the tax base comes from businesses. The tax base comes from people spending money, and allocating money. Frankly, those guys that are buying, the lobbyists that are buying the politicians in. So how do we use our leverage, as a consumer, to start to shift the sentiment out there? How do we let these companies know, this is what we care about, and this is what we ask you care about, if you want our support.
– The answer, in part, is in the question, that we vote every day, in all the purchases we make. That said, it’s not easy to know a lot of the time, whether you’re making a more sustainable choice. It’s complicated. Life cycle analyses of products are not easy. Is cage free chicken a better footprint than grass fed beef, versus not eating meat. These are really hard questions, and I think, broadly speaking, you can try to support companies that seem to be doing the right things, that are rated well. It’s even hard to understand, if you’re in the field. If you really look at companies very closely. I actually think the real leverage for people, may come as employees. As working for companies, of all sizes. That’s where I see leaders of companies feeling the pressure, is from within. People, especially millennials, wanna come in and work for a company that stands for something. That has values that meets their values. I think that moves companies almost more than the consumers right now. I mean yeah, if consumers move their dollars aggressively, it would matter, but they don’t really, and they haven’t quite yet. Again, I think part of it is not knowing exactly what the right choice is.
– I don’t even know what the right news is anymore. That’s the problem. Every reality has come under question. You say this, and that’s fake news, I’m sorry.
– We could talk about, fake news has been warped, purposefully warped, in a very Orwellian way. For like a week or two, it had a real meaning. It was efforts by Russians and others to create stories that were completely made up to influence the way people think. The President and others just started calling any opinion they didn’t like, or just news outlets they thought were not positive enough for them, they started calling it fake news. We’ve basically taken those words, and they’ve made them meaningless now. Which is part of the point. That’s what you do. You confuse people, so now, I know many people just say, well, I don’t know what to believe. I can’t trust anybody. That’s an incredibly sorry state of affairs, ’cause there are definitely sources of quote news, that are mostly lying to people. But the mainstream guys, that’s not them. It’s a very strange world, if you start to believe that something like the New York Times is lying to you all the time. It’s like tin foil hat kind of stuff. I think the Wall Street Journal’s conservative, I think they’re pro-business. I think their op-ed page is horrible on things like climate change, but I don’t think their reporting is lying. It’s a strange state of affairs we’re in now, a very dangerous one. If you don’t know fact. If you don’t know what you’re looking at is true, how do you make a decision in the world? How do you know what you’re doing with your dollars, with your vote, with your time? It’s incredibly unnerving. It’s an unnerving way to live, if you’re like, I can’t trust anything. It makes me sad for people who say that. It’s scary.
– This happened not too long ago in human history, where a new religion took over the Roman Empire, and they just started the calendar over.
– Oh, you mean the Christianity.
– Yeah, they just started the calendar over. It’s just like anything before this didn’t matter, and now what I say goes. It’s a very Orwellian play that I think has been played out. It’s just the technology really enables it.
– Did you see the latest Louis C.K. routine? You know the comedian? He does this bit about, they released it on Netflix about the calendar. It was such a funny, interesting take on it, that no matter who you are, Jewish, Muslim, whatever, you all say that it’s 2017. Which is 2017 in the year of our Lord, right? It’s not even the right date. It’s not even historically when, from when Jesus was born. It was like when the date was picked. It shows the power of the Christian world view. It’s an amazing metaphor.
– Yeah, and it’s a battle for the narrative. His joke was, I’m sorry, Christians won folks. Scoreboard. I’ll tell you what day it is. That’s actually a really funny bit. I’ve never really been a big fan of Louis C.K. I saw that one, I was like, okay, he’s funny. He’s funny.
– He’s very smart. He’s a smart observer. He watches the world, like most smart comedians do. He finds humor in the dark places.
– Man, we mentioned this, and without spoiling anything in the film. There’s this whole bit about how climate change is not really being denied in any sphere, other than the American political sphere. Across the world, there’s no debate about climate change. Even in the business community. Let’s talk about the reality of this here, because it’s an important piece about distortion of news.
– Right. Climate denial has really climbed back into the front of the news in recent months, and I’ve written a bunch of pieces about that. I mean, I normally work with companies on strategy, and I write about what companies are doing, and their strategies and how they’re moving to renewables, and what have you, but I’ve been writing more about climate denial, and the phenomenon of it. In part because, it’s taken on this attitude, especially in the mainstream press, the free press, that they have to show both sides of the debate still. So the New York Times hired this op-ed guy, Brett Stevens, a few months ago, from the Wall Street Journal. His first op-ed was basically about climate. It was really interesting because, yes, there are the people like, I guess, the EPA head and the Secretary of Energy and others, who still seem to doubt whether the science has any validity at all. That group’s getting smaller and smaller. What’s taken over mainstream conservative thought in the US is this denial that we know enough to do anything, or denial of action. I wrote this piece on Medium that was one of the most read things I’ve written, that just said, there’s two kinds of denial. There’s denying the science, and then there’s denying that we should do something about it. Brett Stevens at now the New York Times, he basically said, of course it’s warming, and there’s evidence it’s humans, but we can’t be too certain. I think this is, in some ways, a more dangerous denial, because it just puts off action, and we have no more time. Because I think, what they keep saying is, well you’re saying you’re absolutely certain of the science. No one is saying, no scientist says they know exactly how things will play out. That’s not how science works. What I am 100% sure about, is that we now know enough that the risk profile means we should do something. That we should reduce carbon, because the risks are really high, and by the way, we now know that the payoff of reducing carbon is better than not doing it. It’s actually more profitable, so of course we should do it. I’ve been writing more about that lately. Why do I believe in climate change? Here’s the science, but it doesn’t matter. The risk and reward equation says, do something about carbon, and it’s a globally competitive market now to build a clean economy. This is the market of the future and the present.
– Tease that out for me. Why is that more profitable? Help me understand.
– There’s a couple different dimensions of it. There’s just the fact that reducing your carbon footprint basically means reducing energy, reducing waste, and that just saves money. That’s kinda basic efficiency, Eco-efficiency, or just lean, sic sigma, whatever phrase you wanna use about business leaning, that saves money. At the macro level, for the economy, there’s building out all of the technologies and services related to the clean economy. So there’s a group called the Advanced Energy Economy Organization, and they’re an NGO. They put out stats and data, and they’ve been pushing the data that shows there’s now more people in the US working in solar than in coal, by a lot now. We now have more and more people working. So from a macro kind of American level, you’ve got this mad race now to build out multi trillion dollar markets. The energy business is biggest sector in the world, and we’re revamping it. The next biggest is transportation, and we’re moving to electric vehicles. I don’t know if you saw, Volvo just announced that as of 2019, all their new models will have an electric engine. Could be hybrids, but will have an electric engine. That’s a signal. The first major auto company has now said, there’s no going back. We’re talking about shifting many trillions of dollars from oil and gas and combustion engines, and kind of old, inefficient buildings, to clean energy, electric and hybrid vehicles, buildings with much better controls and insulation and windows. These are all huge businesses. This is a race, that we now have an administration that says we don’t wanna race. We don’t wanna be in the race. We’re gonna let China and others build out these new industries, and it’s a shame. This would be like saying, 20 years ago, we’re not interested in this internet thing. Look where the world is. We are no longer the dominant economy, but in the internet, in the newest stuff, all the biggest, besides a few, besides Alibaba and a few in China, you’ve got the big five are here. They’re US companies. Started mainly by immigrants, by the way, on another topic. Are we gonna be that for the clean economy? It doesn’t look like it. China now has the biggest makers of solar and wind.
– Oh yeah, and they’re crushing us. I think I remember right after the Paris Accord, was it? Was it the French President? Said basically he did this op to Americans, basically saying, come over here, we want you.
– It was kinda brilliant. Yeah, he posted a video. There was one in French, and then he did one in English. That just said, hey scientists and business people, and whatever, come here. We believe, and we think this is gonna be the next big wave, and we wanna build it. I mean, look. If you were a scientist, or a developer of new clean technologies, where would you go now? I mean, if you’re coming here getting your, maybe getting your engineering degree, or working on a new business plan, and you’re coming from India or China, you’re getting here. Are you gonna stay here anymore? I don’t know. It’s like it’s not gonna be that supported by the government. Maybe the private sector will keep spending, but you need both. China’s spending committed to 350 billion between now and 2020. That’s not all private money, that’s a lot of government money. It’s a shame. We are giving up on the fastest growing, biggest part of the global economy. We don’t have to do this. We can lead.
– It’s funny is I was in New York not too long ago, and I was stuck in traffic on one of the bridges, and I’m just lookin’ out my window, lookin’ at just this rusty old rickety bridge that used to be hallmark of American civilization. I’m looking at some of the dilapidated parts of New York. My friend had just gotten back from Singapore, and I was just hearing about all the new development in Asia and all this. As Americans, we don’t quite see the fact that we’ve been lapped already. This is our last chance to stay in a leading position, or we’re just gonna get leapfrogged pretty hard.
– We’ve substituted chanting, “We’re number one!”, for actually doing the work of being number one. That’s been a dangerous development over the last generation. We just keep saying, and if you say something like, we need to improve on this, or we’re not number one or here’s the statistics, you’re called unpatriotic or Un-American. Like you’re just supposed to just say we’re the best, no matter what. Infrastructure, in particular, is something that I just can’t believe that we now have lapse and debates about that. It used to be completely bipartisan. I did some research on this. Eisenhower signed the roads bill in the ’50s. It’s still talked about as one of his big achievements, that built out the first national continental road system. But he signed a bill that was basically unanimous in the Congress. There was one Senator and a couple people in the House that voted against it. Can you imagine that today? Anything? Any bill of substance? It was an expensive, a couple hundred billion in today’s dollars. We need to do it again. We need a new grid, a new electric grid. We need a much better one to transport energy further, without losing too much of it. We can have big wind farms, like in the middle of the country, and send out energy around the country. We don’t wanna spend on stuff anymore. People don’t wanna pay the taxes that go to infrastructure. It’s just not sexy. Even though it creates jobs. Certainly creates jobs. I don’t know why, I mean look. I don’t know why we can’t get there anymore. Everyone just wants the smallest tax bill possible, and then still wants all the services. It’s just, we’ve lost our logic and connecting why we pay taxes. It isn’t just to give some other, the man, money. It’s to support actual things. I don’t know how we get back to that.
– Yeah, it’s gonna be tough. If you think about it, Putin probably embedded these memes, and is laughing right now. The demise of the western world. Is a lot of this stuff built into the belief systems of the people who live here is now starting to cause the demise of a country that used to be the strongest, and used to stand for lots of things that people would immigrate for and to. I know a lot of people, this is a brain drain. I know a lot of people that are leaving America, because of all this.
– It’s scary.
– It’s a moment of reflection and inflection. I get that the world is becoming a global economy, and you can live anywhere, and all this kind of stuff. But there’s something great about this country, and the freedom, and the Constitution, and all of the things that it stands for, it has stood for, that are at risk of being compromised. The same people that are voting for Trump, and fighting for Trump, want that same thing. They’ve just been duped into thinking that that’s the solution. When you get Rex Tillerson —
– Or that we can get it for free. Or that we can get it without any expense. Or that there’s just so much waste in government, that that’s all we need to do is cut waste. There’s kind of a big lie going on, that we can do all these things and keep a safety net, and keep Medicare and Medicaid, and a strong defense and good roads, and pay less. Actually, I’m not sure this one was really Russia at all, I think we kinda did this to ourselves. This goes back to the neoliberal economic order. This whole idea of trickle down, is part of the same idea. If we just keep cutting taxes, we’ll grow and we’ll make up for it and we’ll get more money, and it’s just been disproven. I have nothing against a theory, if it works. But it just does not work, and it hasn’t worked, repeatedly. Look what’s going on in Kansas. The guy, Brownback, just cut taxes, cut taxes, and now his own legislature of his own party is reversing it, and saying, no we actually need to raise the money, so we can support schools.
– Turns out we need money.
– Yeah, we need money. Of course there’s waste. Of course. It’s a big organizations, but there’s just been this big lie. That there’s just tremendous waste, and that the government’s just trying to spend money to spend money. People don’t really understand where the budget goes. How much is really Medicare and Medicaid and defense, and social security? Those four are like 80, 90 percent. It’s like the vast majority. There isn’t all this spending that we can cut in everything else. We’re gonna find out. We’re cutting … These guys wanna cut the EPA back to the bone. We’ll see the repercussions.
– It’s all fun and games until your kid gets cancer.
– Well right. Til you can’t breathe. The amazing thing about the last six months is there are things that I thought we weren’t questioning anymore, like a commitment to clean air and water. That we’re now questioning again. They’re things that I thought we settled decades ago. It’s bizarre. It’s like everything’s on the table again. Maybe there’s a silver lining. Sometimes when you have a reset, maybe instead of Obamacare, we’ll end up with single payer, we’ll end up with like every other developed country in the world. Some support for health care for everybody, who knows? Maybe we’ll swing back another way. I’m not sure. I think, actually, back to our topic of prosperity and corporate sustainability, companies have to fill the gap more now. I think they may end up doing far more. They may end up moving faster, ’cause they have to. ‘Cause they can’t count on the government to supply any kind of support in dollars, resources, policies, whatever. So they’re gonna do it themselves.
– There’s a couple companies in the movie, one is a startup called Thrive Market, which basically, is like a membership model to get organic at the same cost as conventional food delivered to your doorstep. They’re really working to close that gap, because according to them, 70% of people don’t live within an easy driving distance to a health food store. Just getting healthy food is not easy in America. You live in a metropolitan area, you take it for granted. They’ve allowed for that. Amazon just bought Whole Foods. I can choose which one of these websites I click on, so now, the question really is, what are you about? Amazon has pretty bad track record when it comes to taking care of their employees. Just crushing, just bringing the margins up, by just crushing their cost bases down, and all these types of things. It’s like, do we really wanna see more? Do we want more miserable people, with miserable jobs, so that we can save eight cents, or do we wanna support a company that can support people so our neighbors have money to buy stuff from our stores? These are conversations that can happen here. Trump has nothing to do with that.
– That’s right. That’s why I think we’re seeing more action at the local level, on big challenges like climate. It’s state, local, cities, mayors. Food is certainly, there’s a huge movement on local. The Amazon Whole Foods thing is kind of fascinating. Amazon has, in many ways, lagged its ears on sustainability on things like clean energy, on supply chain pressure, but they also, in the last couple years, have really hired up with some very very good people, that I know a lot of them, to build out their sustainability thinking. There’s definitely more commitment there now. Which is a sign, in a way, that it’s not acceptable for a company. Again, I think the employees probably are a part of the pressure. It’s just not acceptable to not do things like get renewable energy for your data centers. They were like the last of the big tech companies to buy renewables, and they started doin’ it big in the last year. They’re catching up. We’ll see what they do with one of the premier sustainable food brands. We’ll see. It’s an unusual move.
– What’s your take on the move? What are the pros, what are the cons? You don’t seem too excited about it.
– I’m not. I’m having trouble separating out maybe a personal reaction from a strategy reaction. Look, I’m a business guy, I work with companies, I want them to be successful. I do think, though, that there’s something unhealthy about companies getting too big. We saw it with the banks, too big to fail. They’ve gotten even bigger. I just, in a way, don’t know why Amazon needs to own Whole Foods. I just feel like we still need a healthy amount of competition in the marketplace, and lots of different owners, and lots of different experiments. You need this balance. I do believe that the big guys can help bring about a thriving world, ’cause they have the scale. When Walmart says to suppliers, hey, everyone should buy more renewable energy. Apple has been pushing their suppliers around the world to buy renewables. That matters. ‘Cause they have the scale. But at the same time, there’s kind of a balance. Whole Foods was not a small player in the more sustainable food world. I don’t know. Just as a personal level, it seems like too much consolidation, in my mind. We’ll see. Maybe there’s something Amazon can do to help them scale even bigger. I know they’ve said there’s an intent to bring down prices and make it more affordable. That would be great. But arguably, partly because of Whole Foods, my local stop and shop and Walmart and others have a lot of organic offerings now, at cheaper prices. That already was happening. That’s the market. I’m not sure that we needed Amazon to buy them to accomplish that. I’m luke warm, clearly, and I’m skeptical about it. We’ll see what happens.
– One of the things I read John Mackey saying, in the aftermath of all this, as it was going. He really held the line for his employees. He wanted to make sure his people had the benefits, and got paid well. He’s really about his people. This is a family. I started this in 1978, we take care of our people. If you’re inside of that ecosystem, it’s great. I’m getting paid better, I get a living wage, I get to not decide whether to go to the movies or buy this thing. You have money. There’s money circulating around the economy, but then, when you’re going up against people that don’t care about that, and are willing to crush their people and pay them less, and get more labor out of ’em, it creates an unfair playing field, and the people who supported Whole Foods were the people who were the early adopters, and wanted organics, and were willing to pay more for it. It’s tough, ’cause he was less competitive for the right reasons. Is it just the way of capitalism, to crush all that and bring it down? How do we set it up so everyone has a living wage?
– Maybe we gotta rethink capitalism a little bit. I’m not anticapitalist at all. I think it’s a tool, it’s a very efficient system. But that doesn’t mean it optimizes for all the right things. It optimizes for matching goods and services at the lowest possible price, and competition. It doesn’t optimize for a sustainable future. It kinda optimizes for the opposite, to use up common resources as fast as possible. I think there’s a more profound conversation to be had about, again, the role of business in society. What is a business? I think a lot of the problem is public companies versus family owned or private, or others that can take a longer view. Because I think the question, you get push back in the sustainability world, where if you talk about something that might take longer to pay off. First of all, that happens in business all the time, in innovation and marketing. When it’s called sustainability, you’re a hippie or something. But I do think there’s a larger philosophical question about, it isn’t a choice between profit maximization at all costs, maximizing every day, as much as possible, and going out of business. That’s always the way it’s portrayed. People are like, we can’t do something that might take a little longer to pay off ’cause we can’t go under. I’ll be talking with a client who maybe netted billions of dollars in the previous year. They’re not close to going out of business. The question is, could you have a discussion about being profitable, but how profitable? I saw the clip from the movie where John Mackey says, “You need money, you need profits to survive.” Of course. Do you always need the most right now? No matter what? ‘Cause that leads you to the private equity hedge fund, tear up assets and just squeeze as much as you can out. I don’t know, is that really what the point of a company is? I think a company is there to solve a problem for customers, to get a customer, to make their life better. To give them something they need at a profit. But does it have to be the most all the time? I don’t know. I just think that’s short sighted.
– I mean, you alluded to something that I think is also part of this whole unraveling of this Whole Foods story into the Amazon behemoth. John Mackey was facing a lot of pressure from activists, quote unquote, investors, who basically like yo, squeeze more blood out of this rock. That pressure. Look, he took a check from the wrong guys, in a lot of ways. Because the pressure to then feed a parasitic entity that constantly needs to extract more value out of what you’re doing, basically put him in a position where it created all sorts of Board of Directors issues and all this. What about slower money? What about, there’s all these sustainable funds. I’m moving my money into sustainable funds. The returns are okay, but I know that I’m not destroying the planet. How do you see that playing into an ecosystem like this?
– Look, there’s been so many analyses of sustainably minded investment. There’s always basically the conclusion that some do better, some do worse. I read another article the other day about well, it’s not the sustainable minded companies don’t always consistently do better. It’s like, well, if there was a sure thing in investing, there’s no such thing. You can’t go all technology companies do better than not. It depends, right? It depends on how well the company runs. Unilever one of the leading lights of large company sustainability, their stock’s done incredibly well. As the CEO said recently, they’ve done better than Warren Buffett over the last seven years. They’ve grown tremendously. I think there are people starting to think a little bit more about their money, and slower money. I think we do need to look at different ownership models. Again, it’s not that all public companies need to be private, but there’s parts of companies that will just never have the kind of growth profile that the market wants. You can’t have every company growing double digits. That’s just not mathematically possible. There’s pieces of business, kinda old, steady brands, that maybe just need owners that just want long-term stability. Big institutional investors, or pension funds. That they could own pieces of businesses, just kinda to own the cash flows, and just have a steady stream. I think we have to figure out ways to change ownership, and there’s people working on that, definitely. But it’s a big leap. Most of the finance world and Wall Street works in one model. Which is, tell us how fast you’re gonna grow. That’s why you see so much M and A these days, I think. You see it’s a way to grow the top line. You just buy somebody. That’s part of the Amazon story, right? They just need to keep showing growth.
– Yep. They weren’t showing any profits for years. Almost like a decade or so.
– Most of the last 20 years. Jeff Bezos has done a brilliant job of convincing investors they should wait, and that he’s gonna keep growing. He’s paid off handsomely. So far, the stock keeps kinda going up year after year. It’s amazing that he’s convinced them of that. So many others, most companies, can’t get away with that. Can’t say, there’s no profits this year, but we’re investing it, and we’re gonna grow. At some point, he has to produce steady profit. It’s hard to say.
– And then when he turns that corner, he’ll probably face the same internal pressures that John Mackey did, right? He’ll get to a point where, yeah, people want their money.
– Yeah. Exactly. I mean, that’s the problem with the activist investors. They’re trying to turn a profit. Again, it’s not like there’s no purpose to that. Again, capitalism has its benefits, but I think it’s gotten outta hand. It’s gotten too extreme, and lost the sight of the role of companies, and what they do as providers of some good or service to people and employers. A big part of a company is giving thousands of people some work to do, and often meaningful work. Helping them raise their families, and have a life. That’s a really critical role for business. I’m not anti-business. I think there’s too much anti-corporate in the sustainability, traditional, kinda old school sustainability world. That’s not helpful. Business is too big a part of the economy to just say we’re gonna create a world without them. But I do think we need to rethink some of the definitions here, and kinda some of the purpose.
– But to your point. If Amazon can no longer get away with having terrible track record in carbon emissions and all these types of things. It means that people are watching. Whether it’s internal employees, or customers. The gig’ll be up. Especially with the internet. Especially the way things travel, news travels nowadays. You just can’t be a shithead anymore. Companies get away with that. Traditionally, have gotten away with that. Now that that is up, and information is traveling so quickly —
– [Andrew] So fast.
– Right. Maybe that’s a really good way of us being able to keep an eye on them, and leverage them, and write to the CEOs.
– The transparency is, I think, the most powerful force of the mega trends that I study, and work with companies on. I think the rise of transparency is perhaps the biggest one. It’s technology enabled as we get more and more data. It’s social media enabled. I mean, I wrote a article a couple months ago, called The Speed of Corporate Shame. It was the week that United beat the crap out of a passenger to take him off, and Pepsi released an ad, with Kendall Jenner solving racial problems with a Pepsi. I thought they were really an interesting study. One company that was, frankly, well meaning. I think Pepsi was trying to say, we should all be together. It’s kinda like Cokes teach the world to sing, from years and years ago. But they just executed it poorly. Then there was United that just had a horrible policy of we can kick people off, and then calling the cops. It was nuts, right? The amazing part, to me, was that companies still don’t quite have a handle on the fact that everyone is carrying a video camera with them. That everyone is a reporter, and a customer, and an agitator. I just can’t believe how often this now happens. When you record something going wrong somewhere, and the company still doesn’t know how to handle it. I agree with you. I think this level of transparency generally will lead to much better behavior. Because you can’t get away with anything anymore.
– Maybe that’s the solution to fake news. I don’t think anyone called that fake news. It’s clear as day. This is what happened. If you have video footage of reality happening as we speak, it’s kind of an interesting way of watching the world events. Things are just changing.
– The Facebook Live thing, right? People just start filming something. I mean, like the Castile shooting, where his girlfriend filmed it. The police coming and talk … It still didn’t result in a conviction, which is unbelievable. Almost everything’s gonna end up on film now. When you hear about anything happening now, don’t you just expect, oh, we’re gonna see a video of that. We’re gonna see it. It’s kind of remarkable. I think it will end up making companies much more careful and smart about the things they do. We’ll see. There’s still gonna be missteps.
– So the book is called The Big Pivot. Radically Practical Strategies for a Hotter, Scarcer, More Open World. Man, you’ve been working with a lot of the biggest brands. You’re modest. You work with the biggest of the big. You know what? It’s commendable. These guys are hiring you and saying, let’s have this conversation. Are they trying to green wash, or are they listening to you?
– Like I said. There’s people on the climate action and sustainability spectrum who just think all companies are full of it, and we need to destroy the big company capitalist system. I get where they’re coming from. Just like the anti-government thing is kind of misplaced. All these organizations are just groups of people. I mean, there’s a few kind of bad actors, like the Koch Brothers, or the people that just kinda control their enterprises. They’ve got pretty clear views of where they want the world to go. But most companies, especially big public companies, are just groups of people. People generally want to do the right thing. They want their companies to do the right thing. I think there’s just a lot less ill intent, than people think. There’s a system with a narrative. As you said, a narrative, earlier. We have a story. Again, that neoliberal story that says your job in a company is to maximize profits right now, as much as possible, and that’s the only purpose. That story has kind of overtaken people. It’s made executives think that’s their only goal, and that they can’t do something that’s maybe more creative, or something that helps the world in some way. Even if it helps their business down the road, because maybe it’ll cost some money right now. There’s just so much of that, where the story has really overtaken. I think these companies mean it. There is really not a large company in the world anymore that’s debating climate change. Back to our conversation earlier about the GOP and the US being kinda the only pocket. Companies aren’t really debating it. It’s a matter of what do they do about it. How fast do they act. Someone’ll go a lot slower. Some really get it. Some see the kind of huge advantage in it, in selling more stuff, that helps the world get there. Those are the companies that are exciting. That see the change, that helping build out the cleaner economy is good for them. Those are the ones that are gonna lead in the coming years. I think they mostly mean it. It doesn’t mean they deliver on it. There’s a lot of gap from intention to action. But it’s not from ill will or lying, there’s just a lot of inertia in the system. It is hard to change.
– It’s also public will. If you’re giving them your money, and not bitching about what they’re doing wrong, and withholding your money. Really, where’s the incentive? You gotta line up the incentives with your values.
– The car companies have said for years, we’ll make more energy efficient cars when people buy them. There’s a chicken and egg logic there. There’s plenty in the world that we have, that companies have convinced people to want. Like most products, on some level, right? You don’t need 50 different kinds of toothpaste, or hundreds of different kinds. There’s a kind of give and take there. But there’s some truth to it, right? If people only wanted Prius’s and not Escalades, the car companies would just make the electric and the hybrids. When gas prices come down, all of a sudden, we all come out and buy big cars again. It’s really short sighted. Yeah, I’m with you. We need to walk the walk as consumers.
– There’s also a piece that we talked about in detail. The movie’s called Prosperity. There’s just this gap. Everyone quotes this book by Adam Smith, being kinda like the founder of modern capitalism, The Wealth of Nations. Most econ students never got through reading this book, ’cause it is thick and it talks about tariff deals with the Spaniards and the Dutch. It’s a thick, heavy read, but everyone quotes it, because this guy was the man. What they’re missing is that, he wrote this book first, The Theory of Moral Sentiments. He said that until you have your act grounded in morality, then all this other stuff means nothing. I never heard about this book in college, right? There’s a lot that’s missing. There’s a lot that’s misquoted. And then Milton Friedman took over. There’s a lot of conversations that have taken us to a direction of short-termism, and shareholder primacy, and all sorts of things that are ongoing themes in the Prosperity movie that we don’t have time to talk about here. This is the time of renewal of thought. This is a time when we really have an opportunity to say okay, we get to choose. What is our choice? We’re not victims here. It’s an empowering time, as far as I’m concerned. Scary times usually are. But it’s an important time to be able to step up and find your voice.
– Well there’s a lot more people who are, as the kids say, woke. Or as the Oxford English Dictionary just added woke to the dictionary, so I can use that without feeling like I’m trying to act young. Look, there’s millions of people, that are just much more aware that they gotta be thinking about their votes, they gotta be active, they gotta be voting. I think that that will be a good thing. You’re right about these theories. That we got a lot of them wrong in way, that we took the wrong … That Adam Smith was, everyone thinks, oh, invisible hand, meaning a market with zero moral guidance or any rules to guide the market. As you said, that’s not really what he said. It was like an invisible hand with a moral center. The other thing that we made into a business doctrine was Darwin. It was survival of the fittest when that’s not exactly what he was saying either. His was about adaptation. Evolving. It wasn’t just you eat the weaker. It was much more symbiotic than that. Much more systemic and holistic. What we’re learning now is how the world works. It’s much more connected. That’s happening, we’re realizing that in biology and in science. We need to realize that in our society, that we are all connected. That’s not a Kumbaya socialist manifesto, it’s just reality. What you do affects me and vice versa. It’s a crowded world. So we kinda need to work together.
– Yep. Amen. Well Andrew, it’s always a pleasure. We’re out of time. Man, there’s so many places we can keep going here. Keep up the good work. I’m gonna keep you on my speed dial, as more of our sustainable companies get acquired or things start shuffling. It’s just an interesting time. I think all things further. We just gotta keep our eye on it, and keep moving moving things forward.
– Absolutely. Good luck with the film, I’m excited to see it.
– Yep, it’ll come out soon. Thanks very much. I’ll see you next time. Let me know what you think in the chat threads.
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