Resources: Interviews
Dr. Jacob Park , Assistant Professor of Business and Public Policy, Green Mountain College
Dr. Jacob Park, assistant professor of business and public policy at Green Mountain College, specializes in the teaching and research of global environment and business strategy, corporate social responsibility, business ethics, and community-based entrepreneurship and innovation. Dr. Park brings a wealth of international experience to Vermont, including working for a London-based socially responsible investment company as an Asian equity specialist and for the United Nations as a urban development/environmental policy specialist. He most recently served as a lead author on private sector/ecosystem scenarios for the UN Millennium Ecosystem Assessment. VSJF recently spoke with Dr. Park about sustainable business practices in Vermont, how Vermont compares to the rest of the world, and challenges facing businesses that attempt to become more sustainable.
VSJF: The definition of sustainable development put forward by the Brundtland Commission is now nearly 20 years old. What has changed in the intervening years?
Dr. Jacob Park: I think that what has changed dramatically is the importance of globalization. In other words, when the Brundtland Commission put the definition statement together it was hard enough to agree on a definition obviously, but one thing that we’re only now beginning to understand is how insurmountably more difficult or complicated sustainable development has become as a result of globalization.
I think there was a sense too, you know, 20 years ago we all naively thought that what we need to do is create the right set of mechanisms—institutions, laws, regulations—for the public good. And these institutions, laws, and regulations would simply create a sustainable society. Now, nobody thought it’d be that easy, but nobody thought, 20 years later, that it would be this hard.
What are we supposed to do about China, for example? Now, you can argue that sustainability demands that poverty is reduced. The problem is, what happens if China, which is a country with 1.3 billion people, decides that they want to live like us. Well, do we deny them the right to live the standard of living that all human beings should be accorded? Probably not. You know, we’re fond of statistics that say that a billion people on the planet live on less than a dollar a day. Well, that’s true, but what happens if we change that. Well, in China, you have massive inequity in terms of resources between rural areas and urban areas. You also have seven of the top ten biggest shopping malls in the world now in China. Wal-Mart, all of the things that we cringe about when we’re talking about sustainability at the local level are all happening in China on a massive scale.
So, whatever we do on a local level, whatever we do to reduce greenhouse gas emissions will be negated, to a certain degree, by the natural human aspirations of Chinese consumers. Basically, what you see are the same aspirations in China as you see in America, and Americans are in no position to lecture anybody about consumerism. But how do we get them to be not like us. It’s a huge challenge. I don’t think anybody believed the economic changes in India and China would happen so quickly.
VSJF: You’ve said that we rarely discuss what kind of business would actually deliver the kind of triple bottom line value we all say we want. And there are many people who would say that capitalism is unsustainable by its very nature. What does a sustainable enterprise mean to you?
JP: The way I would frame it is in terms of companies who operate according to the triple bottom line. It’s much more explicit as a purpose. What I mean by that is that there are companies that kind of fall into sustainability. They test the wind and decide ‘Oh! We should do this thing called triple bottom line reporting because more of our customers are expecting us to do it.’ And they put out nice, glossy reports. They retain consulting firms to do outreach to consumers and the media.
Look at what Wal-Mart is doing. I guarantee you that within 10 years there’s going to be a controversy as to whether Wal-Mart is the most sustainable company in the world. They have the resources to do it. They’ve hired just about every consultant in the U.S. and abroad who are trying to get them to re-position themselves as not only the largest company, but also to be sustainable. If you track the e-mail listserves habited by academics and researchers on sustainability this is the ongoing debate. The fact that Wal-Mart is now going organic, is that good or bad? To me, it’s not good or bad. The issue is intention. The intention for Wal-Mart is not necessarily about creating a sustainable society on any level. Rather, they’re market driven. Where is the money? They’re sensing that they have to change. The organic industry is now mature enough to garner the attention of the very largest retailers like Wal-Mart. At the same time, what you have are companies that are much more intentionally sustainable like Whole Foods deciding now that Wal-Mart is joining the organics game and probably pushing the prices down—which is good—at the same time it’s going to push companies like Whole Foods to go after more traditional Wal-Mart customers. They know that once Wal-Mart gets into the organics games they’re going to have to compete on price. They can’t do that. They will lose in that battle.
So, my definition has to do with intentions. Does a company from the very beginning of its formation have a triple bottom line orientation? Not simply as a product of market research and deciding it’s something they want to do later on.
VSJF: Based on your research, is Vermont unique amongst other states or the world in terms of its culture supporting sustainable enterprises?
JP: Maybe not unique in the sense of what the state government is doing, but I do think it is unique in terms of the kind of people it attracts. There’s no doubt in my mind. I’m simply overwhelmed by the number and intensity of both third-generation Vermonters and those who have recently moved to Vermont that are so captivated with the idea of trying to make a living doing something interesting and sustainable in Vermont. A lot of them are attracted to this rural, idyllic landscape that we call home and also trying to create a business that is ecologically sensitive, socially responsible and economically sustainable. 99.9 percent of that is going to be small. Because of the way the economy is structured in Vermont, a lot of that is going to be something related to food and agriculture. And to the extent that Vermont has a brand, which I think it does, it definitely is going along the lines of food and agriculture.
An interesting article in the Rutland Herald Sunday Magazine (May 14th edition) on the Jasper Hill Farm in Greensboro, VT made this point that the artisanal cheese industry in Vermont may be what Napa Valley was to wine 20 years. Will that necessarily be the case? I’m not sure, but success will breed success. Vermont has the infrastructure to do it. I personally think that the ultimate fate of the IBM plant in Vermont in the long-run is likely to be a non-issue. It will slowly decline in value until the question of whether to shut it down for good is raised by the parent company. While it will be socially and economically painful, it is not something that the Vermont state government has the necessary power to prevent the inevitable. What the state government does have some power over is to think strategically about best to nurture new business ventures accordingly to our local sensibilities. I suspect that food and agriculture will be the leading sectors that will define what local sustainability is because that is part of the state brand.
VSJF: Are you saying that because Vermont is small-scale and we have natural and agricultural related resources?
JP: It can be. That’s the starting point. But I guess my point is that Silicon Valley 30 or 40 years ago, if you were to venture to guess what the leading industry in Silicon Valley or Santa Clara County, what would you say?
VSJF: Agriculture.
JP: Exactly. A lot of the tech companies there are basically on orchards and other types of agricultural land. Now, it’s the most polluted in terms of toxic releases. Clearly, there are things to avoid. But if you do things right, it’s easy to build on the food and agriculture piece. What are the supporting networks and infrastructures that need to be built around this? I think this is key. Having one or two companies in a certain area is not enough. If a company wants to start a cheese related enterprise, that’s the kind of networking and infrastructure I could imagine developing in Vermont. Is that enough? I don’t think so. But I think we need to start with what we know best. We have a comparative advantage in certain areas and we need to build on that, while at the same time being attractive to the companies that make things like wind turbines that could be part of the Vermont brand and landscape.
One way to think about the future of Vermont is, while we’re having this debate about wind power and how big is too big, I would ask everything to think about how things would be different if the first known wind turbine at Castleton had been a success? What would Vermont look like? I mean, having wind turbines might be an eyesore to some, but frankly, a lot of the large barns might be an eyesore to some but are clearly part of the landscape now. What is really best for the future?
I don’t think Vermont is an inhospitable place for starting businesses, especially food related enterprises. What surprises me is how many of those companies are intentionally triple bottom line in their orientation. They don’t have to be. But I’m struck by how many new companies in Vermont have that orientation. The biggest fear I have is not necessarily small Vermont companies getting bought up by large companies, which I think will happen anyway, but rather we need to make sure that we continue to provide the right kind of environment—physical and social—to nurture new businesses that are like to constantly have a churning effect. I think that’s how dynamism is created.
VSJF: Is that what you mean by a “place-based model of business and sustainability”? Is that also what you mean by how Vermont can survive in an era of globalization? Sustainable enterprises that are intentional, networks that support these enterprises…
JP: Exactly. And I think that Vermont Businesses for Social Responsibility, Vermont Sustainable Jobs Fund, all of that plays a role in this. What Vermont can be really proud of is the existence of these organizations. To me it’s not a coincidence that VBSR, which I’m a proud member of, is the largest state based membership organization of its kind in the country. I would challenge you to find a state based or regional organization in the world that has been as active as VBSR. Again, success breeds success. It’s a state of 600,000 people. I find that amazing.
VSJF: One of the things you have researched is the lack of financing or venture capital available for rural areas. How can Vermont-based companies - as well as companies based in rural areas - overcome this tremendous financing/venture capital obstacle?
JP: It’s a tricky one. I’ve had extensive conversations with Cairn Cross from FreshTracks Capital and he jokes that he is frequently introduced as “Cairn Cross, from Vermont’s largest venture capital company,” and he has to correct the moderator and say that ‘we’re actually the only venture capital company in Vermont.’ That’s the reality. There’s lots of good ideas out there and supporting organizations, the money piece is what troubles me. The easiest solution is to have the government fund it and I’m not sure that’s the right way. I think the government does play an important role. I just was asked to serve on a regional loan committee for Community Capital of Vermont, and I think that is certainly one piece of it: provide early start-up cash, served by people who live in the area.
Everybody knows that when starting a business you need to initially get money from friends, family and fools. Let’s say you need $100,000 and you can raise 20-25 percent on your own. You can get another $10-15,000 from Community Capital. But when you’re ready for the second round of funding there has to be a supporting financial organization to back that business. My fear is that we don’t have that. What we have is FreshTracks Capital, and unless your company is ready to scale up really quickly, a lot of companies are not ready to do that, so they wouldn’t necessarily give money. Seventh Generation didn’t make any money for the first ten years. How did they survive? Jeffrey Hollender happened to know a lot of friends or patient investors. Most companies can’t run on the Seventh Generation model because most companies don’t have Jeffrey Hollender as their CEO.
There have to be more intentionally sustainable companies. There has to be a financing wing or agent within the infrastructure, whether it’s a network of high-net worth investors or something that’s basically going to tide them over between the time of initial capital and the secondary and tertiary financing. That’s what’s missing. The few, the proud, that have been able to cross that threshold to get a bank loan are great.
The flip side of the financing piece, which is the dependent communities report that you worked on, is that there are companies that have been around for 20-30 years and they owners want to cash out. What do you do about that? They want to cash out but they want their business rooted locally. They want to retire but they’re not sure how. Is it going to be employee owned?
A lot of times people come to Vermont, not necessarily because it’s the best place to do business. I’ve never heard people coming to start here thinking ‘Oh, they’ve got the best package.’ It’s always something about Vermont’s mystique. They get drawn on to it. If you interview the board members of VBSR they’ll all tell you the same stories.
VSJF: So, you’ve talked about a lack of venture capital, you’ve talked about business succession. Have you done any research showing which Vermont companies have done a good job integrating the big picture?
JP: Not as much. It’s hard to say which companies have done a better job. I fall into the same trap as everyone else which is to look at best practices. But I can’t really say whether Green Mountain Coffee Roasters recent policy initiatives on livable wages are the best that they can do. I’m not sure. But I applaud the fact that Green Mountain Coffee Roasters is at least thinking about this issue before it’s legally mandated. I think, again, that’s what makes Vermont companies distinctive, because what seems like outright socialism in other parts of the country is being talked about in ways that are not divisive. I give credit to the people that started companies like Green Mountain Coffee Roasters that have a sensibility.
VSJF: What are the key business, institutional, and policy barriers to the development of sustainable enterprises in Vermont?
JP: In addition to the financing piece, supporting networks and clusters are important. Clusters are interrelated industries that are located within a specific community and region. Artesanal cheese is an example. There could be sustainable food and agriculture clusters throughout the state. I do think there is a possibility for that developing, just because there are interrelated industries and networks of support that exist. Think about any kind of sustainable food issues. Most people think of Vermont as a model for how that can be done.
There’s also what I would describe as an organizational challenge. Again, going back to the information that was in your [dependent communities] report, how can organizations or companies remain sustainable as they grow? Once the original investors want to cash out, how can you make sure that these companies are not bought out by somebody else? I’m not sure what the answer is. Clearly, some kind of employee owned structure is one answer. If you look at the list of companies, most recently Tom’s of Maine and the Body Shop, I don’t see that as bad news. I just think we need to be very, very careful that we don’t just become an incubator for new businesses that get bought by somebody else. What I fear more than anything else is that when the original investors cash out, the original environmental and social missions gets cashed out as well.
The final piece of it is what role is there for public-private governance? The Vermont Sustainable Jobs Fund is a good example. Obviously it wouldn’t exist unless there was a commitment on the part of state government that says that an organization like yours needs to exist at some level. I would shift the debate somewhat. You know, Brian Dubie has something called the Green Valley Initiative and I support the idea, but I would tweak it so that it’s not just relegated to obviously green companies and technologies. That, to me, is putting all your eggs in one basket. I think it should be broadly supporting any organization that has an intentional, sustainable orientation from the beginning. If we attract wind turbine companies, if we attract the next generation of solar technology companies, that’s great.
The other thing that I’d really like to have more focused discussion on is the idea of the Vermont brand, especially for the food and ag sector. I don’t think we’re helping the cause of sustainable enterprise in Vermont by not thinking deeply enough about what is the Vermont brand and why it is so important. The idea of securing and protecting the Vermont brand is critical. In order to have a place-based sustainable enterprise, especially in the food sector, the government needs to be vigilant about protecting and enhancing the Vermont brand. That’s the biggest competitive advantage that Vermont companies have, sustainable or not.
One of the best story I know to illustrate the challenges of building a sustainable Vermont enterprise in a global economy is the Middlebury, VT-based Maple Landmark, which makes maple wooden toys and gifts. I once asked Mike Rainville, the founder and owner of Maple Landmark, how he was going to survive in this era where cheap toys seem to just rule. And Mike replied that he can’t worry about China and other competitive threats that he has no controls over. He wants to make sure that his business survives, obviously. But what is perhaps more important is learning how to communicate the value of wooden toys and gifts to consumers who may opt for cheap over quality without that insight. There are things that we don’t have any control over. Let’s worry about the things that we have control over.
Photo credit: Wayne Fawbush
Print this Page