abandonclosediscoverdisruptionfacebookgoogle-plus instagram linkedinmap-markerphonepinterestsearchtwittervimeo-squareyoutube email

Promoting purposeful business models in the private sector, pt.2

Download our free e-book ‘How Good Is Your Brand Purpose?’.

Download e-book

The outdoor outfitter Patagonia has been a successful retailer with one of the strongest brand purposes: “to help reverse the steep decline in the overall health of our planet”. This raison d’être resonates throughout the product designs, the people and the grassroots organisations Patagonia supports. Founder Yvon Chouinard notably wrote about the company’s unconventional ethos in his book, Let My People Go Surfing.

Certified B Corp Patagonia has taken an unorthodox approach to selling its products and built a reputation as a brand that wants people to buy into its principles and share its values. As a strong advocate for the environment, Patagonia ensures its product supply chain, materials and designs have the lowest impact on mother nature. They even implored consumers to extend their product’s lifespans by repairing and re-wearing through the Worn Wear initiative rather than mindlessly buying new in the “Buy Less” campaign. Patagonia CEO Rose Marcario stated, “brands can take a massive responsibility for the integrity of their products, supply chain and impact, however the onus transfers to the consumers upon traction and we must all transition from a mindset of replace to one of repair”. This statement seems paradoxical for a retailer but stays true to Patagonia’s values.

Tin Shed Ventures is Patagonia’s VC fund that’s offering $75 million to recipients that imitate Patagonia in placing a positive environmental mission over short-term profits. In the 1970s, Chouinard changed the core product to be less damaging to the environment, despite it originally costing around 70% in sales. Patagonia now sports $800 million in annual revenue and is once again betting on other business successes due to purposeful business models.

The fund espouses the traditional funding model for startups – rather than focusing on short-term growth and profits, Tin Shed Ventures places “environmental and social returns on equal footing with financial returns” and maintains a longer-term relationship to best support the start-up. Tin Shed Ventures has been able to measure the social impact of its portfolio of companies in which they’ve invested and have continued to work together with other B Corps to develop solutions to the environmental crisis.

The one-for-one model on which TOMS Shoes founder Blake Mycoskie based his socially minded start-up became the reason for its existence. A for-profit company whose purpose is about giving back, the TOMS business model is aimed at donating supplies and training to people in third world countries. TOMS’ brand purpose was a built-in marketing hook Mycoskie was able to leverage for scaling his business and draw in customers.

Following the sale of 50% of TOMS to private equity firm Bain Capital, in which TOMS was valued at $625 million, Mycoskie wanted to put the money back into making even more of a difference. In a similar fashion to Patagonia, Mycoskie established TOMS Social Entrepreneurship Fund in order to support other socially conscious start-ups in need of investment to further catalyse social entrepreneurship.

Businesses have been incentivised to place purpose at their core and reap the benefit through increased profits, engaged customers, and improved community relations. While charities already operate for the public’s benefit and businesses are being called on to be more socially responsible, these two sectors are increasingly converging. Companies are encroaching on charities’ territory and in a competitive market, they are vying for customers’ attention and donation. At this time when the private sector is joining the third sector, what enhanced role will charities have to play in the world of socially conscious business?

To read more on Brand Purpose, sign up for our newsletter Purpose in Practice or download our e-book ‘How Good Is Your Brand Purpose?‘ in which we explore why Brand Purpose matters in business today through interviews and thoughts from brand leaders across multiple sectors. 

You might also like: