Go Green: Are Values-Oriented Companies Recession-Proof?

Text by Catharine Livingston

“Downsizing” and “cutbacks” may be the mots du jour, but one nonprofit is growing faster than a shoot of bamboo: 1% For the Planet. Perhaps you’ve heard of it? It’s that pet project of outdoor gurus Yvon Chouinard (founder of Patagonia) and Craig Mathews (owner of Blue Ribbon Flies, longtime pal of Tom Brokaw’s). They founded the organization in 2002 as a way to pump more dollars into environmental protection; and the way it works is simple. A company (Teton Gravity Research, Sony) agrees to donate one percent of its sales to the Vermont-based group, which then distributes the funds to NGOs in need, from Michigan’s Anglers of the Au Sable to the Canadian Wildlife Federation. To date, 1% FTP has raised over $30 million, and its membership has ballooned from 21 businesses to 1,100.

Last month, I had the good fortune of meeting up with the 1% crew when they came through New York City to celebrate their 1,000-member milestone. It was fascinating enough to sit in a room with the godfathers of adventure and wax green, but most interesting was when the conversation turned to greenbacks. The economy may be in the toilet, but 1%’s never been better. In fact, 2008 marked its biggest year yet. I walked away from our little roundtable feeling inspired and perplexed—had I heard right? To find out, I gave 1% FTP’s CEO Terry Kellogg a call.

Last month you celebrated your 1,000th member. That’s about ten times what it was when you joined.
Yeah, when I started in March of 2005 it was 92 member companies. So it’s been a pretty wild ride. And during the past two years in particular, we’ve been adding on average more than one new member company a day.

Can you talk about 1% FTP’s growth from Sept 2008 forward—specifically, when the economy really started going south?
Sure. We were surprised ourselves to find that October 2008 was the biggest month for member acquisition of the entire year for 2008. That was the same month when global financial markets came unglued, and we signed up literally 58 new members in that month—so almost two a day, which is a rate that we’ve never seen.

We thought, at first, well, maybe this is an anomaly here because these companies could have been in the pipeline long before anyone knew that the markets were going to collapse the way they did. But as time went on from there, we continued to see the rates of signup that we’d seen over the course of 2008—you know on average more than one a day.

That started to make us think, boy maybe there’s something counterintuitive going on here. You might think that a tough economy is going to make it really hard for businesses to step up to this level, but perhaps businesses are looking at this climate and saying, you know what? I don’t like the way we were practicing business before and this is a reminder to me to focus on what really matters, and this is one of the things that really matters. That’s a possible explanation.

Another plausible explanation for the growth rates we’ve seen recently—and maybe it’s one or the other, or a combination of the two is probably likely—is simply that we are still well below the potential for this movement…. So we’re still enjoying some really impressive growth rates.

I remember Yvon and Craig talking about how six of 1% FTP’s member companies had their best years ever in 2008. Which ones were they—and what do you think is going on there?
Patagonia, New Belgium Brewing, Mountain Equipment Co-Op, SIGG, Klean Kanteen, and Cliff Bar. And yes, they all had their best years ever in 2008, at a time when their competitors were really suffering and the economy was really going south.
And you know, I think a big deal is that these companies have invested a lot in developing values-oriented brands that really resonate with consumers. Consumers have a very strong—unusually strong—level of affinity for those companies. And they’re still going to go back and support these companies that represent something more than just, you know, a source of stuff. For a lot of these companies, 1% FTP is a key part of how they are growing strong, values-oriented brands.

Any sense of how they’re doing in 2009?
I don’t actually—simply because it’s been pretty busy and we haven’t had much of a chance to circle back with them. My guess is that you might see more of a mixed pattern at this point. I mean … we’re seeing some very grim statistics, more and more grim every day. So you might see some up and some down, but I think you’ll also see brands that are doing much better than their competitors that haven’t been as thoughtful about positioning themselves in a way that really captures the consumers’ hearts.

You were the first Director of Environmental Stewardship for Timberland in 2000. How would you compare customers’ appreciation for responsible businesses then versus now?
Oh my goodness, it has radically transformed. And a statistic that I think is very revealing is, during my five years at Timberland, from 2000 to 2005, we received a total of two inquiries from consumers about our environmental practices. I think the climate today is dramatically different. We all know about An Inconvenient Truth and what an extraordinary impact that film had on raising national levels of awareness around climate. I think the story that’s not told as often is the impact that one woman, Laurie David, had on (a) causing that film to come about, and then (b) on using the levers that were at her disposal to further catalyze the movement … Prior to all of that happening in 2005 and 2006, there was only so far that companies could take their programs before they simply got into an area that was too costly—because fundamentally there just wasn’t enough awareness out there.

What is your honest prediction for how the economy will affect not just 1% FTP’s work, but the environmental movement at large?
Well honestly, I think this recession may be just what the environment needs. And this is probably going to get me in trouble but, I mean, I really think people are reexamining their values and what matters most. And I think ultimately consumer behavior and consumption—consumer behavior around issues of consumption in particular—are going to have a lot to do with long-term environmental health. And so maybe this bump in the road is ultimately something that helps bring more of a sense of balance.

With respect to 1% FTP, I believe that we are going to achieve remarkable things with this model. I believe we’re going to grow by another five-fold in the next five years. And that we’ll be generating a significant amount of new funding and perhaps become the largest source of funding anywhere for environmental causes.

And I think that we’ll be strong through this recession. We’re pretty close to the bottom right now. And so I think it’s just going to get better.

I’m torn. Philosophically, I can understand your argument for why this recession would lead to progress for the environmental movement. But practically, I can’t. And I wish I weren’t saying this, but—I think people are going to be focused on their immediate needs of getting food on the table and keeping their jobs. So how do you keep the environment from being pushed into, you know, ‘Another day we’ll deal with this?’
Yeah. I mean that’s a great question. And I think the polls bear out your concern. Overall, when times are good and people are feeling like their needs are met, you can see the environment beginning to surface as an issue that people care about. And vice versa.

But I think partly what that’s reflecting is perhaps an incomplete understanding of how a focus on the environment can actually become an engine of economic growth. And I think the whole green jobs movement is the perfect illustration of how you can have both, as we think about completely new industries built around things like energy efficiency and renewable energy in this country.

It takes a little bit of faith, but also a recognition that these are just fundamental necessities in building an economy that actually works in the future.