Enacting moral capitalism

CYNTHIA RAMSAY

The theme of this year’s Jewish Family Service Agency (JFSA) Innovators Lunch – Value-based Leadership. Lasting, Positive Change – ran through the entire event, beginning with JFSA board and Innovators Lunch chair Greg Samuels’ welcome to the more than 550 attendees.

“Eight years ago, our board member, Naomi Gropper of blessed memory, started this Innovators Lunch with a goal to ... raising what we need to raise from private donors every year – $500,000 from people like me and you,” said Samuels, a lawyer by profession. “The people who receive our assistance are vulnerable seniors who use almost 24,000 hours of home-care support, 150 job-seekers who became competitive thanks to our employment counselors, over 40 youth-at-risk and their families who received supportive counseling and, yes, there are Jews, many Jews, living right here in the Lower Mainland, who are living well below the poverty line, who are hungry and for whom we provide a food bank and food vouchers totaling $225,000 a year. Thanks to your dollars, generated at this lunch and through our Friends campaign, we make a difference in the lives of over 2,000 people in the Lower Mainland.”

Calling on those present to consider making a further donation, Samuels also noted that the lunch’s keynote, Jeff Swartz, former president and chief executive officer of Timberland, donated his fee to JFSA, “to ensure that the dollars we raised here today are going to the programs that we provide.”

The May 23 event at the Hyatt Regency Vancouver was co-presented by Telus and Austeville Properties Ltd. Representing Telus was its vice-president of community affairs, Jill Schnarr, who praised JFSA for its 75 years of service. She added, “At Telus, we believe in our hearts and minds that, in order to do well in business, we must do good in the communities where we live, work and serve.” She added that “Telus, our team members and our retirees have contributed over $260 million to charitable and not-for-profit organizations, and volunteered more than 4.2 million hours of service to our local communities.” She then introduced Swartz, who she called “a true innovator,” leading Timberland to become “known as the number one outdoor brand on earth and ... as one of the most socially responsible for-profit businesses in the world.”

Among his first remarks, Swartz said, “To give where you live is a big deal, and it’s inspiring to hear the Telus story.” He thanked those attending the lunch “for the great good that you’re doing,” adding, “You can’t take for granted the fact that you came today, that you are supporters of JFSA, that you are concerned with the notion of feeding the hungry and clothing the naked.”

He noted that, “this week, Jews around the world are reading in the Torah ... the chapters that begin what’s, in English, called the Book of Numbers.... This section of the Bible presents a detailed census of each of the 12 tribes of Israel.... The text is clear that the census is much more than a tribal headcount.... Counting the people in the desert is a necessary preparation for organizing those assembled for the holy work that’s at hand. Moses is their leader; he’s commanded to count each soul, all who are called in service to the Jewish nation. And this is timely text for those of us assembled here for purpose.”

Swartz pointed out that 32 percent of those who access food banks in Canada are children. “Hungry children in this ... age, it’s not just an impossibility, it’s an abhorrent notion. It makes you sick as you eat this delicious meal to imagine that our children here today in Canada are hungry. That makes us crazy. It does, but we’re also businesspeople. We’re busy and we’re going to end at one-thirty because we have meetings and our meetings are purpose ... and so you can ask yourself a legitimate question, which is ... is this in fact my problem, or is this something I say, geez, that’s terrible, and I go back to work?”

Citing Nobel laureate economist Milton Friedman, “who said very clearly that the business of business is to earn a profit for its shareholders, and that’s what the CEO should be occupied with, and anything else that he or she is doing is distracting from their mission ... to earn profit,” Swartz noted the bad reputation that corporations have in general. He argued that Friedman, like those who once believed the earth was flat, “frame incomplete and inaccurate models for describing our world.” He added that, as a third-generation boot-maker, he knows that, “in the global market, you get paid or you get punished for empirical results.” However, he also strongly believes that “the business of business does involve the city square. I believe the CEO needs to be involved in social change – not because it’s a nice thing to do, but because it’s the right thing to do in the most profound way.” So, 30 years ago, he said, he set out to show that “there was a way to earn a living without destroying the environment.... There had to be, and I was going to see if we couldn’t figure that out at Timberland.

“After too much trial and error,” he continued, “I admit that freely, too much trial and error and too many years searching, we did find a route and, this morning, I want to share with you what we found and what we learned.”

The most fundamental discovery, he said, was that “moral capitalism is not a fiction. It’s a reality that can be lived, a model that can drive sustainable shareholder returns.... At the same time, we can earn our quarterly earnings and be a force for good in the civic square.”

Swartz said his grandfather came to the United States for economic self-determination, believing it was his moral call: he wanted to earn a living and feed his children. “He was an entrepreneur who launched two businesses that failed,” shared Swartz about his grandfather. “To me, that’s a tremendous credential: to have survived failure. There was no JFSA for my grandfather; it was too early in the day, and so he had nothing to do but to pick himself up off the street and try again. I’m 52; he was 53 at the time, broke, when he borrowed $500 to start the predecessor company that eventually became Timberland.”

Swartz said that his determination to respect human rights all through the supply chain came from the example set for him by his grandfather and his father, who also worked in the business. At Timberland, “we believe that commerce and justice are not antithetical notions.”

Explaining that markets have no intrinsic morality or immorality, Swartz said he embraced “the notion that it is the job of government and, more importantly, for citizens working through their government to create the social contract in which markets function.”

Swartz shared some stories about his successes and failures in trying to implement moral capitalism at Timberland. He first spoke of how the company encouraged employees and management to get out into the community and volunteer – during work hours. “The hundreds of thousands of hours of service that we’ve done transformed Timberland in ways that were all about shareholder return and civic impact – not or, and.” He said executives learned more from such experiences about problem-solving and other skills than they could ever have learned from an executive training program; they also felt more a part of the community than they had before. Community involvement had many benefits, he said, including boosting the company’s reputation.

However, these initiatives hadn’t connected with consumers, in that consumers cited quality, cost, etc., as reasons for buying Timberland products, not the community services or ethical labor practices of the company. Swartz said his board of directors demanded there be a tangible link to consumers and, from this, “was born this notion called Earthkeepers,” an eco-conscious product line.

It took years to get it right, said Swartz. From the failures – notably a boot that was linked to stopping genocide in Darfur – he learned to ask questions and, from that, he learned how to link a product to justice in a way that makes sense. For Timberland, a company that makes products for the outdoors and whose logo is a tree, this meant making “an environmentally thoughtful product for consumers – not a green boot, [but rather] a spectacular, high-performance, beautiful boot that performs, comma, and is green.

“And we didn’t start reforesting all of a sudden,” he added. “We’ve been doing reforestation around the world for 20 years. We planted five million trees in China before we ever sold one pair of boots there because that’s what we believed was the right thing to do.”

He said, “Over time, Earthkeepers became the fastest-growing and most profitable part of Timberland’s brand, and it was a central reason why we were approached in September by an outside buyer to buy the company.”

Swartz stressed, “Profit motive aligned with social outcome. Is it alchemy? These values, they’re real, personal and deeply held.... It’s strategy, and it’s real hard work. Don’t tell me it can’t be done. I represent a different kind of one percent. I represent the one percenters that have piloted moral capitalism and delivered empirical results. Friedman was wrong: you can align profit making with just practices and social outcomes. Those who vilify the generative power of [capitalism] ... are wrong. Sustainable social change requires the self-interested power and creativity that resides in the entrepreneurial spirit in this room, in Vancouver.”

He returned to the Torah and the portions of Leviticus dealing with the marketplace; the idea of Yovel (Jubilee, every 50 years), when debts are forgiven, and Shemitah (Sabbatical, every seven years), when the land rests, “where social justice pervades in an economic sense. There is reverence in the text,” he said, “for the creative energy of the private sector and, equally, the recognition that we don’t serve markets, markets have to serve us. Capitalism is not immoral, unless we let it be.”

That these verses at the end of Leviticus lead into the census at the beginning of Numbers, with which Swartz began his remarks, is not coincidental, he said. “The vision of the moral marketplace is only a vision. If it can be animated by the leaders of a generation, it goes from being a vision to a reality that we can live.

“For 30 years, I pursued a vision of moral capitalism and I saw real progress and impact. But, for all the battles we won, the war remains. We’ve piloted moral capitalism, not yet made it the rule of the civic square, but we have to. We have to see this vision of moral capitalism scaled and realized, not as an intellectual conceit, but as a social outcome that must be delivered.”

^TOP