What obstacles do businesses face in sustainable transformation? Patagonia’s Asia Environmental Director reveals the key to ESG practices.
- brightdomiearth
- Nov 7, 2024
- 5 min read
Facing rapid changes in sustainability standards such as net-zero emissions, the Carbon Border Adjustment Mechanism (CBAM), the Taskforce on Nature-related Financial Disclosures (TNFD), human rights, and anti-corruption, global companies find themselves in a competitive puzzle of sustainability. According to the latest 2024 report, only 17% of global SDG targets are on track, and in 2021, over 5,000 sustainable initiatives were proposed in Taiwan, with as much as 75% not integrated with the core business operations.
What impact does the decoupling of sustainability from business models have? On November 5th, DOMI, in collaboration with Swedish sustainability researcher Miriam Garvi, published Taiwan's first "Sustainability Business Model Journey White Paper," which uncovers the current state of sustainability and actively proposes solutions. The paper calls on businesses to focus on finding their unique sustainability business model journey. The press conference also invited Deputy Executive Director Lin Zilun of the Executive Yuan's Energy and Carbon Reduction Office, as well as Kenji Shino, Patagonia's Asia Environmental Director and Brand Responsibility Officer, and Board Member of B Market Builder Japan, to share the key strategic thinking for corporate sustainability transformation — "Corporate Purpose" (Purpose).
Three Major Barriers to Corporate Transformation: Falling Behind Trends, Internal Friction, and Limited Budgets
In July 2024, DOMI conducted a survey on sustainable transformation among 73 small and medium-sized enterprises (SMEs). The results revealed the most common obstacles in corporate sustainability transformation: the rapid changes in international ESG trends and the overwhelming amount of information that businesses cannot keep up with (29%); difficulties in internal implementation (26%); and the lack of support or prioritization from top management, along with limited budgets (15%).
Corey Lien, Co-Founder of the Asian B Corp Movement and CEO of DOMI, summarized the survey results: "The three major challenges in corporate sustainability transformation are: no direction, no people, and no money. When corporate resources are limited and the strategy of 'why' and 'for whom' has not been clarified, companies fall into an endless pursuit of sustainability standards, resulting in the inability to effectively allocate resources (people and money) and an ongoing vicious cycle of insufficient sustainability. The fundamental solution lies in changing the mindset and viewing sustainability as a journey, ensuring its integration with the business model."
Deputy Executive Director of the Executive Yuan's Energy and Carbon Reduction Office, Lin Zilun, responded by stating that, in the face of climate change and the trend toward net-zero emissions, both the global and Taiwanese governments have proposed numerous policies to support and assist companies in their ESG transformations. However, despite ten years of progress in sustainability, corporate progress has been slow, and in recent years, businesses have been collectively "carbon-slanted," indicating that companies cannot just "Do sustainability"; they must also "Be sustainability." When sustainability integrates with the country's, city's, or the company's own operations and business models, only then can a long-term and effective transformation be achieved.
Patagonia Environmental Director Confirms "Corporate Purpose" as the Key Driver for Sustainable Development
DOMI collaborated with long-time responsibility leadership and corporate social responsibility researcher Miriam Garvi from Sweden, combining theory with over a decade of practical experience in promoting sustainability globally to co-author Taiwan's first Sustainability Business Model Journey White Paper. The paper highlights that the greatest driver for corporate sustainability development at present comes from "compliance." While compliance brings benefits such as reduced transaction costs, often, sustainability workers and stakeholders cannot see a clear "corporate purpose" or direction for sustainable development, limiting meaningful participation.
By analyzing cases like Heinz (the well-known ketchup brand) and Fairphone (a Dutch smartphone manufacturer), the paper examines how passive compliance versus proactive response can have dramatically different impacts. Fairphone focuses on improving the repairability of products and extending their lifespan to promote sustainability (product aspect), while also challenging irresponsible behaviors within the industry's environmental and social impacts (supply chain aspect). Fairphone has already gone beyond compliance, actively practicing its "mission to transform the electronics industry into one that naturally cares for people and the planet." The white paper also highlights the importance of "corporate purpose" through the examples of global food giant Danone and Danish toy manufacturer LEGO.
Kenji Shino, Patagonia's Asian Environmental Director, Brand Responsibility Director, and Board Member of B Market Builder Japan, also shared that Patagonia's mission has always been to create the best products while causing the least harm, using business to ignite and implement solutions to the environmental crisis. In 2022, the founder, Yvon Chouinard, and his family transferred ownership of the company to the newly established Patagonia Purpose Trust and nonprofit organization Holdfast Collective, ensuring that all profits from the Patagonia group will be used for climate change and protecting undeveloped lands globally. The concept of "corporate purpose" has become a core communication point both internally and externally, and is defined as "We're in business to save our home planet."
Kenji Shino further stated, "Corporate purpose changed the way Patagonia views itself, from setting high standards about the company itself to taking responsibility for the entire planet. This shift gave employees a deep sense of meaningfulness, as if no one else could do it." He gave an example of how, driven by corporate purpose, Patagonia not only focuses on producing the most eco-friendly clothing materials but also encourages the design team to think about "how to make the clothes last longer," even if this means reducing sales. The finance department has also begun to discuss how to evaluate the company's non-financial performance, creating sustainability performance indicators that were not previously part of the job requirements. When the mission is about the company, corporate purpose becomes more open, allowing the supply chain and ecosystem to share in the purpose. Under this mindset, sharing technology with the supply chain or cross-industry cooperation has become a new direction. Kenji also mentioned that, in addition to the apparel supply chain, Patagonia is actively seeking collaboration opportunities across industries, including in Taiwan, because when Patagonia's goal is to save the planet, every industry and company has the potential to bring about change.
DOMI Discusses the "Sustainability Business Model Journey" Transformation Formula
Compared to foreign and large benchmark company cases, 90% of companies in Taiwan are SMEs, making it even more critical for them to have tailored ESG transformation strategies and solutions. Miriam Garvi writes in the white paper: "When facing modern sustainability challenges, redefining the way companies operate requires more than just incremental change; it requires strategically redefining their organization or industry. Even smaller companies can drive change."
Corey Lien explained the "Sustainability Business Model Journey" transformation formula, which enables companies to reach the dual peaks of "business value" and "sustainability impact value." The three key components are: helping companies clarify and define their "corporate purpose," applying human-centered innovative technologies (Technology), and integrating meaning into the corporate culture (Meaning) to enhance sustainability competitiveness from the inside out.
