Patagonia Is Innovating & We Need to Do More, a Guest Post from the authors of “Democratize Work”
In Democratize Work: The Case for Reorganizing the Economy sociologists Isabelle Ferreras, Julie Battilana, and Dominique Méda interrogate how capitalism has dwarfed democracy, leading to the monumental challenges facing us from our workplaces to our collapsing environments. In this thoughtful piece below, they speak about the book’s themes and their hope for the future.
The day after Yvon Chouinard announced the decision to transfer ownership of Patagonia, Inc. I happened to be sitting in the audience of a conference on corporate environmental, social, and governance (ESG) responsibilities hosted at Harvard Business School. Chouinard’s decision — to transfer the company to a trust and nonprofit dedicated to environmental protection, fighting climate change, and conserving nature — was the elephant in the room. For some in the audience, it was the cause of much excitement and anxiety for others. When the president of a Fortune 100 company stood up to give opening remarks, he joked that his company wouldn’t be making the same change any time soon yet recognized the need for companies to serve their shareholders and the world at the same time.
That opening moment revealed the current reckoning of corporate social responsibility in America. The business world has awoken to the fact that humanity is facing mounting environmental, social, economic, and political challenges; however, many corporate leaders are still struggling to figure out how, and how much, they need to change their companies in the face of this multidimensional crisis. While corporations have been deeply affected by this crisis, they have also played a central role in creating, reproducing, and perpetuating many of the problems that we confront today, from increasing social and economic inequalities to environmental degradation. One of the most striking statistics about income inequality is how over the past 40 years CEO pay has increased by 1,322 percent while worker pay has only grown by 18 percent. In the meantime, when it comes to the role of business in environmental degradation, researchers have found that 35 percent of global greenhouse gas emissions from fossil fuels and cement between 1965 and 2018 can be traced back to just 20 companies.
Under these circumstances, staying the course is not an option: if we are to address the multidimensional crisis we face, then the ways that we live, work, and govern together must evolve — meaning companies need to change too. This is where Patagonia comes into play. The company’s announcement has gained enormous attention because it breaks with the core norm of American business: shareholder value maximization. In a great communication coup, the video announcing the change shows Chouinard hand-writing the words “Earth is now our only shareholder” on a piece of lined paper. By fundamentally rethinking its purpose and public responsibility, Patagonia is diverging from “business as usual” and acknowledging a, well, inconvenient truth: The exclusive focus of the market economy on profit maximization has become, at its core, a destructive force. Companies must transition toward a more sustainable corporate model that elevates the pursuit of social and environmental goals alongside financial bottom lines.
The reality is that this kind of systemic change doesn’t come from one person, family, or company. It also doesn’t come from one sector. It requires a collective cross-sector effort. In our book, Power, for All, Tiziana Casciaro and I identify three roles necessary for the success of such collective movements for change in organizations and in society: the roles of agitators, innovators, and orchestrators. Agitators speak out against the status quo and raise public awareness of problems. Innovators propose alternatives — they develop concrete avenues for change and new ways of organizing. Finally, orchestrators help implement these new solutions at scale, create structures and processes that promote their adoption, and hold parties accountable for those changes.
With its announcement, Patagonia is not only playing the role of an agitator, but also that of an innovator. The company’s new corporate model is the latest and boldest innovation in its history of environmental activism. Such innovations are vital in the movement to change how businesses prioritize sustainability, and we need more of them, but if we are to save our planet and put human beings back at the heart of our economic system, a single company’s activism will not be enough. What is at stake is changing the rules of the game for businesses. We must collectively work as innovators and orchestrators to enable companies to go through a sustainability transformation by changing the institutional context in which they operate. Instead of holding companies accountable only for their financial performance, we need to hold them accountable for their social and environmental impacts too, and we need to support and reward those that pursue these multiple objectives.
Corporate leaders’ public commitment to change is a sign in that direction, but it is not enough. Even Patagonia has been criticized for helping create sustainability standards that “green-wash” the environmental damage caused by the apparel and fashion industries. Public authorities and citizens have a critical role to play in redesigning the rules of the game, but how so? Isabelle Ferreras, Dominique Méda, and I set out to address this question with a group of 10 scientific experts in our new book Democratize Work: The Case For Reorganizing the Economy. Building on research across fields of social sciences, we call for three interrelated system-wide reforms to redistribute power, reduce inequality, and reprioritize the typical business model away from short-term profits (which have dire long-term costs for all of us). Specifically, we propose to democratize firms (that is, empower workers in organizational decision-making), decommodify work (that is, recognize work as a human right and ensure that all people who seek a job have access to one), and decarbonize our environment (that is, create incentives, regulations, and legal apparatuses to facilitate an economy-wide shift to environmental sustainability).
We argue that just as the social, economic, and environmental crises we currently face are fundamentally connected, so, too, must be their solutions. In the current model of ESG, firms still too often pick and choose what part of the acronym they want to address, and how they want to do so. Paying lip service to environmental sustainability or workers’ empowerment will not create the kind of institutional overhaul we need to create change. Much more is needed. The Chouinards’ decision to commit their company to the environment is a laudable and bold step in the right direction. Their potential to be true leaders of the movement toward a sustainable form of capitalism will only be realized if they continue to build partnerships with businesses, NGOs, and governing bodies to create systems that hold themselves and others accountable for sustainable practices in the environmental and social domains.
One thing is certain: they cannot do it alone.
— Isabelle Ferreras, Julie Battilana, and Dominique Méda
Isabelle Ferreras is a senior research associate at the National Fund for Scientific Research in Brussels, professor of sociology at the University of Louvain in Belgium, and a senior research associate of the Labor and Worklife Program at Harvard Law School. She serves as president of the Royal Academy of Science, Letters, and Fine Arts of Belgium and is the author of Firms as Political Entities.
Julie Battilana is the Joseph C. Wilson Professor of Business Administration at Harvard Business School and the Alan L. Gleitsman Professor of Social Innovation at Harvard Kennedy School, where she is also the founder and faculty chair of the Social Innovation and Change Initiative. She is the coauthor of Power, For All.
Dominique Méda is professor of sociology and director of the Institute for Interdisciplinary Research in the Social Sciences at Paris Dauphine University PSL. She is the coauthor of several books, including Post-Growth Economics and Society. Together they lead the www.DemocratizingWork.org movement.