Episode 194: The Impact of the Apparel Industry on the Climate Crisis with Phil Graves
Episode 194: The Impact of the Apparel Industry on the Climate Crisis with Phil Graves
Today's guest is Phil Graves, Former Head of Tinshed Ventures at Patagonia. Phil's perch in the climate industry is unique. Most recently, he served as Chief Sustainability Officer at Bass Pro Shops and Vice President of Corporate Development at Patagonia. Phil walks me through his career path, his most recent role as Chief Sustainability Officer at Bass Pro Shops, and his time at Tin Shed Ventures. We also discuss the breaking unsustainable consumer patterns, the dirty side of the apparel industry, and the role of policy in a clean future.
As always, please consider giving us a rating or leaving a review. We heard that helps spread the word about our little show and engages more folks in the climate fight!
For starters, Phil, just talk about what you were doing most recently, your personal journey that led you to do the work.
Most recent role is chief sustainability officer, as you mentioned for Bass Pro Shops and Cabela's, and for me, it was a great way to connect some things that I'm passionate about. Those being conservation, sustainability, and then ultimately climate. I on the personal journey side grew up hunting and fishing in Texas, studied accounting and finance at Texas A&M University. And the first decade of my career in financial advisory services for consulting firms, Deloitte and PWC, was very much a traditional path.
So for me, the first decade was principally focused on what most people do. That's you go to college, you learn as much as you can, and then you start your career and your career is about promotions and ideally climbing that figurative corporate ladder. And then if you wanna be a quote, unquote, "good person" outside of work, you will, you work with local nonprofits or your church or give money away.
And so you basically had this fundamental disconnect of the purpose portion of your life with your profession. And I wish I could say that right when I graduated or when I was studying at Texas A&M that combination of purpose and your professional journey was front of mind, but candidly, they weren't, it was very much a journey for me. Where over the course of time, I recognized that if you're at a Deloitte or a Goldman Sachs or a startup, you pour so much of your life into work and that's not a bad thing, but having purpose be apart from that was increasingly troubling in my own life journey.
And so while at Deloitte had the opportunity to transfer from the Dallas practice to the San Francisco Bay Area practice to help rebuild it, we had some folks retire and leave to go to a competitor. And that's where I really got serious about, okay, is there a way to combine my outside interest and climate and regenerative organic agriculture and getting off this irresponsible consumption train that so many people are on.
And then ideally use my corporate finance investing background in a way that can help make that shift that we need to see in these broader systems. And the timing was sublime because Patagonia was diversifying. They're of course well known for making high-quality and durable gear. And at the time this is back in 24 routines, they were getting into regenerative, organic agriculture by starting a food business called Patagonia Provisions. They were doing more films to showcase the importance of wild places and saving the home planet and how we can do that as customers and global citizens.
And then specifically for me, they were getting into the venture, which was a little unconventional for them. The founders Yvon and Malinda Chouinard were very leery of making that move. They'd known many friends that started businesses that were purpose-driven and ultimately had to take capital to raise money. It was inevitably not like-minded. It was focused on growth, profitability in the exit.
And I remember talking to the Chouinards and Rose and Malinda was like, "Ah, vulture capitalist. We don't need to do that." And Rose Marcario Patagonia's former CEO and my boss did the heavy lift and that's convincing the Chouinard that we can do it at Patagonia in a different way.
And that's right at the time that I joined the company. So had the good fortune to work closely with Rose, the Chouinard built 20 million in change, which was the venture capital fund's name at the time we had earmarked 20 million on the corporate balance sheet to fund environmentally and socially responsible startups. So basically finding and funding the next generation of Yvon Chouinard and little seedling Patagonia companies, and then expand.
So over time, my team shifted from solely focused on venture capital and corporate development work to building a Worn Wear e-Commerce business. Patagonia's long known for repairing garments and keeping materials in use. So we actually threw one of our venture capital connections to a company called Trove built our own eCommerce business unit and was one of the swiftest growing and most profitable divisions at Patagonia. And we also went all-in on regenerative, organic agriculture, and other patch of mine and helped create a certification from scratch called Brock or regenerative organic certified that Patagonia, and some other companies, both in the food space and the textile space with apparel have adopted.
So a lot of fun journey. I frankly thought I was gonna be at Patagonia for the long haul. And so many things have happened over the last 18 months, two years with the virus, Rose stepping down and connecting the dots, being a native Texan. St Patagonia, I grappled with why don't more companies do this? I mean, Patagonia through my training at Deloitte, I look at our financial results and compare 'em to publicly traded peers. And we were crushing 'em upper quartile and growth and profitability, all these metrics that public companies would love to have, and still, we were doing some incredible things with fair trade and regenerative organic and things that most companies don't do.
So I'd always in the back of my mind, had this earnest desire to take these learnings, apply them at other companies, and show that you can do well financially while doing good. It's a little cliche, but it's absolutely true. And that's when I was approached by Bass Pro Cabela's about transitioning over and applying a lot of these learnings to Bass Pro. And that coupled with the fact that I could go back to my roots and work at a place that is thinking about conservation and bridging the gap.
So often sustainability is a politically divisive issue with green new deal and other things and you conflate environmental and social leanings with other political leanings. And I feel like that's a miss. Conservation sustainability those should be principles that unite us. We all want clean air, clear water, abundant fish, and wildlife for future generations. And so for me, that was enough to make the move.
Maybe let's just start with sustainability since that was your most recent title, chief sustainability officer. Are chief sustainability officer and chief climate officer synonymous in your mind or are they different? And if they're different, how are they different?
Ultimately, it just comes down to words whether the executive team has titles like sustainability or conservation or chief impact officer another one to put on the pile, those things are fine. They show that we are seeing a shift to environmental and social responsibility or stewardship, which is a good shift to have, but ultimately in my view, the executive team all needs to think about it.
Patagonia did not have a chief sustainability officer. And the reason for that is that the company's mission is we're in business to save the home planet period. And so every function, whether you're head of marketing, head of operations, head of supply chain, you thought about in your chair and your role, how can you save the home planet? And that perspective I think is really important.
So whether a company has a newly mentored chief sustainability officer, chief climate officer, they have to recognize that in the business environment we're in now, these things ultimately matter to customers for good reason, and they matter for your business too. So for me, seeing these shifts and titles are a good thing, but ultimately you have to create that shift in the mindset of across the organization at all functions and levels. And if you bring in a chief sustainability officer and their only role is to create a glossy impact report and speak on panels or podcasts periodically, you're gonna miss out. You're not gonna have that broader shift that needs to happen. So we can tackle some of these intractable environmental problems. Top of the list is climate.
Having spent so many years in Patagonia and that actually most recently at Bass Pro Shops, which probably has a different story in terms of when and how purpose was incorporated, how do you think about that? Is there a rule? is it case by case? What advice would you give to young entrepreneurs that are thinking of starting a brand?
The earlier the better. It's incredibly important to tie in your greater purpose into your business. You can do that formally through certifications like B Corp, or if you live in states that have the legal jurisdiction of a benefit corporation or special purpose corporation, you can actually embed within your charter, that greater purpose. And I would get after it right away.
I mean, ultimately if you want to attract and retain the best and brightest talent, you recognize that purpose is a competitive edge for you. People want to work at a place where their job encompasses more than just collecting a paycheck and climbing the corporate ladder. They're hungry for these purpose-driven businesses like Patagonia. For example, we had an internship spot on my team for a summer position a few years ago, and we had 5,000 applications for it.
So just think about the fact that you can have truly the pick of the litter. If you go into the lane of doing well while doing good. And it needs to be authentic. So for every company, it's different. With Patagonia, it was all about environmental activism and recognizing that our roots go back to Yvon's climbing experience and wanting to protect wild places and rock faces and surf spots.
The companies are headquartered about a quarter-mile from a great surf spot. So having that connection is a great edge to bring in folks that align with your mission and with Bass Pro Cabela's, hunting, angling, camping, boating, and ultimately for businesses in that space, it's about enjoying and loving and conserving the great outdoors. So there are many common objectives. So I think tree huggers and Turkey hunters have a lot more in common than they probably realize, but find what that purpose is for your business and run after it with gazelle, like intensity.
An analogy I like to think about is how does a gazelle run with a lion chasing after it? And it's very intense. So you need to take that same approach to the purpose side of your business, just like capital raising and with every other function.
You mentioned earlier that you've seen very few other brands following in Patagonia's path. Why do you think that is? And what do you think it is about Patagonia that's enabled them to do so, so successfully not only in terms of the impact that they've had on our having but all also financially?
I think it's a long-term perspective. And this goes into some of the fundamental problems that we have with capitalism and Wall Street, having a myopic focus on growth and profitability and change over the prior quarters. I think you have to take stock about how does this decision impacts our business two years from now, 20 years from now, generations from now. And that long-term approach is the approach that Patagonia has taken. The company is rolling into its 50 year anniversary. And Yvon has sold me many times when he makes a decision that is the right call for the environment.
It makes some money over the long term. It may not pencil out short term and in an excel model may say, "Ah, this is gonna have a negative impact for next quarter or even next year's financial results." But over the long haul, you recognize that customer loyalty and folks wanting to align their purchase dollars with brands that they admire and respect and they feel like they prize the same things. It ultimately creates a lot of long-term values. So I think the biggest thing for entrepreneurs is if you're raising outside capital find like-minded capital. There are a lot of funds that care just as much about environmental and social returns as the financial returns.
So seek them out. And then if they cut checks that don't represent the entirety of the capital you need, they often know other like-minded investment firms that could be part of a syndicate. So you really selective about who you align with on the capital side. Again, Malinda Chouinard, I've seen it many times where companies will take outside capital that is not truly aligned. It may sound like it is, but ultimately it's not. And that's one of the easiest ways to drift permission. And one of the most common mistakes that I've seen.
I've heard the apparel industry described as a dirty industry. Do you think of it as a dirty industry? And if so, which aspects of the industry are the biggest offenders from your seat?
I think by and large, yes, Jason, it is a dirty industry and it's not just my opinion. Yvon Chouinard has said everything that we make pollutes. And that's why the company got into the food business because you can actually have regenerative products. So when you purchase them as a consumer, there's a net positive in making that choice. And with the apparel industry, we have a long way to go, but I'm really heartened to see the strides that we're making. So in general, to make a garment, you're gonna use a lot of materials, you're gonna use chemistries, dyes, finishes, water repellency in the industry it's called DWR.
It's often made with a PFC chemical, which is a [inaudible 00:23:49] chemistry. And so all these things taken together have a really negative impact on the environment. So technology is gonna be essential to creating the shift that we have to see. A few examples of the startups that we've funded at Tin Shed Ventures in my view are great alternatives to the traditional model. There's a company called Circ based in Danville, Virginia. That has a technology that can take end-of-life clothing and apply it in a technology that's basically like a large pressure cooker using heat and water. They can separate the individual components, whether it's a cotton or a polyester, and then feed those materials back into the textile supply chain.
So instead of a shirt that's made with Virgin drive polyester that ends up in a landfill or the kind of previous industry gold standard was what Patagonia was doing. And that's taking end-of-life soda bottles and recycling those into little pellets and making those into garments. But with this model that Circ and Ever New, and some other companies are charging hard after you truly close the loop with apparels. You take end-of-life clothing, you break it down and feed that back into the textile supply chain.
So that's a great technological example. I think buying used is a great example. We stood up this one was the e-Commerce division. Many other brands have followed suit and the best jacket you can buy for the planet is one that already exists. Even with circ and these other great technologies, they still use some water. There's some transportation, there are some other things that go into it. So if you can find used products or keep the jacket that you have and use longer, that's the best thing that you can do to clean up the apparel industry.
As you think about the apparel industry of the future, that is more sustainable, that is more decarbonized, that is more in harmony with the planet, how much of the apparel that we buy in that world comes from the providers of today?
You're going to see a shift. I think the majority of benefit corporations are small ultimate size. There are some examples like Patagonia and Dr. Bronner's and some companies that are hundreds of millions or into the billions of revenue, but they are the vast minority. You see a lot of younger brands up and coming brands that from day zero have said, "Hey, the existing apparel industry is broken. We want to provide an alternative where we use things like for our natural materials using regenerative organic cotton, that sequesters more carbon than conventional cotton."
They're using recycled natural materials in their products. And then for the synthetics, which are also important from a performance standpoint. Using not only recycled materials but designing for end of life. So at the end of a product's life, and even after you repair it, at some point, it's gonna reach the end of life. Can you break it down and keep those materials flowing back into the textile supply chain?
So in my view, you have a lot of earlier stage brands that are building that into their DNA from day one, I think 10, 20, 30 years from now, those are gonna be the mainstream brands of today. And I hope you can see more mainstream brands making that shift and recognizing that "Hey, consumers care about this”. The days of fashion are in many ways, kind of like the oil and gas industry they are a thing of the past, there's a systemic shift happening and we need to be on the right side of history here.
Interested in coming on our show? Have a guest you’d like to hear from? Don’t hesitate to reach out! Email us at info@myclimatejourney.co.