Pursuing Ethical Practices: The Synergy of Profit, People, and Planet - Part 1

Discover the transformative effects of social entrepreneurship and ethical investing as we traverse the innovative landscape of Appalachia, where worker ownership and circular economic models are revitalizing the region's economy. Join me, Joel Skeen, on this episode of the Mindful Marketplace, where we pay homage to the legendary Charlie Munger and his investment wisdom, and spotlight the remarkable debt relief initiative at Morehouse College in partnership with the Debt Collective. Delve into the story behind Blue Forest's forest resilience bond, an ingenious investment that merges financial savvy with ecological stewardship, proving that profit and the planet can thrive in tandem.

Venture with us as we sit down with Eric Henry, president of TS Designs, unraveling the narrative of sustainable apparel and the dedication to the triple bottom line. Eric's tale is one of resilience and reimagining a business model that honors the local economy, high-quality craftsmanship, and environmental responsibility. We scrutinize the challenges and triumphs of being the first apparel B Corp and its implications for the industry, paving the way for an honest discussion about the necessity of transparency and a commitment to ethical practices. Tune in for a compelling journey through the intricacies of profit, people, and the planet, where every thread weaves a story of innovation and integrity.

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Transcript

Joel: 0:34

What if investing in each other could change the world? I'm Joel Skeen with BizRadious and this is the Mindful Marketplace. In addition to the Mindful Marketplace, here on BizRadious, I have on a fantastic guest who has been really a long-term social enterprise, social entrepreneur and sustainability business owner, and I'm really excited to get to talk to Eric Henry here in just a little bit. If this is your first time here with us on the Mindful Marketplace, this is the program where we talk to the entrepreneurs, advisors, industry leaders, investors and economic experts who are not only solving a market problem to make a profit, but they're also solving a social problem to make an impact. It's where we learn how to connect our money and our businesses to our values, our community and ourselves. So first, before I get into it with Eric here, I am going to hit on the balance sheet the assets, liabilities, debts and investments. First, in the assets column, I want to talk about a Forbes article that was written titled Worker Ownership and the New Appalachian Economy. We're based here in Western North Carolina, deep in Appalachia. It was awesome to see this highlighted In the article.

Joel: 1:52

Molly Hemstreet, who's the co-founder of Industrial Commons in North Carolina, discusses the importance of building a resilient economy in Appalachia Industrial Commons, which was founded by Hemstreet, focuses on incubating and building businesses in heritage industries such as furniture and textiles. They also prioritize circularity, aiming to create a sustainable ecosystem for manufacturing in Southern Appalachia. Hemstreet emphasizes the practicality and innovation of their approach, which involves collaboration and co-opetition. I really like that portmanteau there co-opetition to help lift up the entire community. The article also touches on the importance of employee ownership and democratized workplaces in creating retention, resiliency and profit, something we've talked a lot about.

Joel: 2:40

Hemstreet discusses the circular economy and the repurposing of industrial waste, highlighting the significance of returning waste back into the supply chain. She emphasizes the practicality and duability of these approaches, which align with our region's strong sense of grit and hands-on work. It's a great look at the need for innovative models of wealth creation, the importance of employee ownership and democratized workplaces, the practicality of the circular economy and repurposing waste, and the visual impact of revitalizing historical infrastructure. Also the collaboration and resilient nature of the Appalachian community. So check out that article. In Forbes In the Liabilities column. I am going to talk about values, investors in the stock market, because we did recently lose a legend in that world, charlie Munger, who was the quiet partner quieter partner of Warren Buffett, and he passed away at age 99.

Joel: 3:37

But, before he died this year, he made a series of warnings about how difficult it is to make real money in today's stock market. In a recent CNBC interview he was asked if it's harder to make money now and he said oh, of course it's harder. It's so much harder you can't believe it. At this year's Berkshire Hathaway investors meeting, munger also stated quote I think value investors are going to have a harder time now that there's so many of them competing for a diminished bunch of opportunities. So my advice to values investors is to get used to making less. There is so much money in the hands of so many smart people trying to outsmart each other. It's a radically different world than the world we started in. I suppose it will still have its opportunities, but it will also have some unpleasant episodes. So the main reasons for the difficulty that he sees are number one, the oversaturation of investment analysis. Number two is the sustained high for longer interest rates on businesses generally that we've talked about. And number three is the institutional filtering of money out of stocks and into the bond market. So Munger admitted in an interview on the Acquire podcast, which is really great. He said there was a lot of low hanging fruit in the early days of our operation. Now you don't have any low hanging fruit that's easy to recognize. So rest in peace, charlie Munger.

Joel: 4:59

In the debts column. I want to hit some good news in the debts column. For once In the debts column we got the debt collective and Morehouse University or college. So Morehouse College recently made a groundbreaking announcement revealing its partnership with the debt collective, which is a union of debtors, and they are a nonprofit debt relief advocacy group. So they actually got canceled $10 million of student loans on over 2,700 students accounts. So this is a significant step towards alleviating the financial burden that is on students. The debt collectives approach to debt abolition, particularly through initiatives like Rolling Jubilee Fund, has been instrumental in addressing America's escalating debt crisis. By purchasing portfolios of people's debt on secondary markets and then canceling them, the fund has been able to provide life changing relief. The recent debt cancellation at Morehouse College is expected to empower thousands of individuals, particularly black communities, by enabling them to save for retirement, invest in home ownership and pursue entrepreneurial endeavors. This move also allows students to continue their education and access transcripts that were previously withheld due to unpaid balances. The partnership between Morehouse College and the debt collective underscores the transformative impact of debt relief and highlights the need for broader systemic changes in higher education finance. A quick reminder the Skiing Agency, my Financial Services Agency we do work on debt elimination plans with folks to help them pay off their debt in 7 to 12 years instead of 30 without spending extra money. So if you are in debt, go to MindfulMarketplaceShowcom, click on the Eliminate Debt tab to get a free report to see how it can help you In the investments column.

Joel: 6:50

Lastly, I want to highlight a really cool group called Blue Forest, who have developed a forest resilience bond. So this forest resilience bond is pioneering a unique approach to addressing the funding gap for forest restoration. By leveraging private capital, the forest resilience bond aims to support local land management and bridge the gap between investors and environmental interventions. The initiative is particularly significant because it facilitates private investment in land management, but also ensures the preservation of public land and the mitigation of wildfire risk. The forest resilience bonds, innovative financial structure and measurement technology, are designed to enable private sector investors to fund land management while earning competitive returns, thereby creating scalable investment vehicles to support forest and watershed help.

Joel: 7:42

Blue Forest, in collaboration with partner organizations, dedicates themselves to providing sustainable financing to accelerate forest restoration activities across the western US, including California and the Pacific Northwest, which has been ravaged by wildfires. By working closely with forest collaboratives and trusted nonprofits, blue Forest aims to create the necessary conditions for successful restoration activities, fostering community engagement and support along the way. So the FRB's goal includes driving new financial and technological resources to forest collaboratives, creating a highly replicable financial model to accelerate forest restoration nationwide, restoring watershed and forest health, mitigating wildfire risk and forest ecosystems and two forest ecosystems and surrounding rural communities. This initiative underscores the transformative power of private investment in conservation finance and the critical role it plays in advancing sustainable forest management practices. So check out Blue Forest for some creative, innovative, sustainable and socially responsible investment opportunities. All right, I'm excited to get into it here with Eric Henry, who is the president of TS Designs. Eric, welcome to the show. Glad to have you on here today.

Eric: 9:06

Thank you, joe, appreciate the opportunity. Yeah, yeah.

Joel: 9:10

So you have been a social entrepreneur and a sustainability entrepreneur for quite some time. How did that all start?

Eric: 9:19

Some is luck of life and something that life delivers. I started my business while I was at NC State in 1978. And at that time, as I think, things were a lot simpler, and so I decided to start selling t-shirts at the college campus, because that's where a lot of t-shirts are sold. And so shortly after that met my business partner, tom Sineath that's where TS Designs comes from and we launched TS Designs and we became what we call a large contract screen printer here in Burlington, north Carolina. And really what happened on January 1, 1994 is put me on the path that I'm on today and will continue to be on, which is NAFTA, north American Free Trade Agreement.

Eric: 10:02

So prior to NAFTA we had built a business here in Burlington servicing the big brands that you know Tommy, nike, gap, polo, adidas 120 people worked in our facility. We just moved in this new facility. At that time the business was growing, the bottom line was great, the banks loved us. But when NAFTA was ratified in 1994, january 1, 1994, within two years those 120 people were scaled down to about 12.

Eric: 10:33

As all those brands left, our business collapsed and this was a big textile community, and so it was devastating to our business, to our community. But I realize then is I realize now there's more to a business in a bottom line, and so we were an early adopter of what we call the triple bottom line people, planet, profit. So it was the heartbreak of NAFTA and the destruction that destroyed our business. That's put me, as I said, the path that we're on today and I think in now. We went through COVID and all the other challenges we have in the world. I think we're more and more people are coming to realize that the power of business not only to be profitable but to also be responsible and accountable for impact to people and planet.

Joel: 11:23

Yeah, I love that I remember. So I moved to Western North Carolina from Michigan and pretty much I mean half the people when you're in Michigan are in some way connected to the auto industry, and when NAFTA happened and all those jobs went out, you just saw incredible decimation. I think there was definitely a realization among people that none of these parties, none of these major, these policymakers, are really actually looking out for working people one way or the other, and that something has to change, that there has to be some kind of way to do things differently. And so I think it's really cool to see you take that charge and actually make it happen, cause it's easy to talk about it, but it's a whole other thing to make it happen. So tell us so. Ts design so you guys still make t-shirts. What else is there to it?

Eric: 12:20

Yes, Now we're still in the t-shirt business, but obviously, and I like to say, sustainability being a journey, not a destination, and also it takes a community and glad to be in a community that I like to say with the intersection of agriculture and apparel. Ie, the painting in the wall behind me is the cotton farm we work with about 60 miles from here. So we are focused on domestic apparel manufacturing, highlighting what we can do in North Carolina, because we have all the assets here and the assets never left. Globalization forced them to go overseas again, chasing price. And thing I like to say when you go outside of your market for product or service or market level, you're cheating the system. So we were just down this cotton field a couple of weeks ago and I think of the cotton that's grown in the US, only 10% stays here. The rest of it, somewhere between the field and the apparel that we're today, gets shipped overseas. And so we were just. That's the journey we've been on, but we're constantly learning and again our guiding principles or star, whatever you want to call it is how do we make a better product that will impact our bottom line positive egg, but also make sure people and planet are always represented. It's not always equal, it's not always balanced, but we don't work in a vacuum and, as I said, that's just kind of our guiding principles is always making sure as we move forward. And today I like to say we make the highest quality, most sustainable print apparel in the world. And the way I can say that is again we're fortunate that the cotton that comes from this painting from behind me, we're able to take that cotton and make a t-shirt in 700 miles. That's impressive in itself, because the tip of a t-shirt is about 20,000 miles because we chased the world for cheap labor.

Eric: 14:19

But I think the other big issue that haunts the apparel industry and one thing we realized again we started working as a farmer back here over 15 years ago and we went to reach out to Ronnie, now working with son Andrew and I'm there to forget when I went down there the first time guy, that was probably 17, 18 years ago and Ronnie said why the heck do you want to buy my cotton? Because you can buy all the t-shirts you want from. At that time it was a 1-800 number. Now it's online. I realized then as well. Now is I want to control that supply chain, I want control. I don't want to grow the cotton. They do a great job of cotton. I don't want to grow it, I want to gen it, spin it, knit it, finish, cut it, sew it. Matter of fact, you said earlier, molly Hymstreet is a very good friend of mine. She does some of our cut and sew of t-shirts.

Eric: 15:02

But we want to facilitate that supply chain and so, fast forward to today and with typically 97% 98% of our clothes made overseas, one of the biggest issues challenged is the industry faces the peril industry is is a lack of transparency. I know we live in a global economy and I know we're all going to put that genie back in the bottle, but what we do and we used to use a contrasting color thread in the sleeve and now we actually use a QR code when you scan that QR code, it will take you to a website whereyourclothingcom W-H-E-R-E yourclothingcom, and you just I mean this is a public website, anybody can go there and you actually meet Andrew Burleson. You'll get a picture, a phone number, a physical address and an email. You can go visit Andrew or Wes or Andy or the whole supply chain without coming to us. Try to do that with any other peril you've got and you might get even it's crazy about this industry. You know, all in all, it it might say made in USA, but that could be imported fabric, it might be domestic fabric.

Eric: 16:09

But again, who? I think, without transparency, you have lack of trust and the peril industry is constantly getting busted about. You know where it was grown, how it was made, the environmental, the social impact and again, we're not a perfect company. There's always room for improvement, but there's no secrets. There's no secrets. You're basically, you come to TS Designs, you go to our supply chain, you see everything, know everything. And again, that's the biggest thing that I call out to the brands is I'm not saying it's all going to come back to this state. It's going to balance the scales a little bit, but you as a consumer that supporting a brand should have access to that information of where your clothes are manufactured and you should be able to reach out to that company in Bangladesh or Vietnam or China or India and there'll be a contact there. But no, that's completely made very opaque. And again, as I said earlier, you know, every couple of months here comes another disaster in the industry and the consumer doesn't know.

Joel: 17:13

Have you ever tried to do that? Have you ever tried to find out from a major global supplier those?

Eric: 17:19

details? Oh, I've asked. We had a couple of years ago, joe. We had and we're open to anybody. You know you might as come visit, please come visit us. But we were doing a tour for a group of students out of Mississippi State University and they have a textile school and on that tour bus, which I didn't know at the time, were some folks from GAP and GAP was sponsoring the thing. And they came in and we're kind of doing a meet and greet and the folks from GAP whipped out their beautiful sustainability report I mean gorgeous pictures, all these graphs and stuff and I said that's fantastic. I said, but what am I called?

Eric: 17:55

Action for you and for any brand, be it Tommy, nike, gap, paul, whatever, make your supply chain transparent. Trust your customers enough to give them the keys and say here you go, joe, you know you can, you can make that contact. I've never seen a global supply chain that's offered that level of transparency. Now, what they'll do, matter of fact, I got a pair of jeans on the day of a project we did a couple of years ago with Wrangler is. We did a little I won't call it niche or something like that where we put together not only a t-shirt and a pair of jeans, connected all the way back to the farmer and they did this whole Rudy collection.

Eric: 18:38

But typically what the big brands do? They do this kind of like window dressing marketing spin of you know to kind of show their support. But my experience with that they usually last one or two season, they move over, move on to the next little shiny object. Because what's happened in Joe is since NAFTA and again that's 30 plus years ago the brands are so enamored by the cost differential of apparel manufacturing labor Overseas to here, and so most brands, as soon as you say domestic apparel manufacturing, they shut it down.

Eric: 19:15

You know they, just they. The economics don't work and they built their model so much around that much, much, much less Cheaper, I should say, labor costs in these developing countries that they, they can't make the numbers work and that's something we can talk about later in the show house. I think we're working on something that will radically change that and again, I think the opportunity is looking at the peril industry not as a bottle bottom line focus but a triple bottom line. Yes, we need the brands to make money, but they cannot continue to make the money on the backs of people or negative impact of the planet, which I think they mainly been doing the last 30 years.

Joel: 19:59

So what I do want to get into in part two of this conversation I think now that I've kind of listened to you talk about, is you know you have mentioned triple bottom line a couple times and you know that's like you said, it's profit, but it's also people and it's planet.

Joel: 20:13

And I think that a lot of times there's a Misconception and there's an assumption out there that I think we should question this underlying assumption of what we could call two-pocket thinking, which is that with one pocket I've got to make all the money in the world and then in the other pocket I can maybe do a little bit of good with, and that business is over here to make money and that nonprofits over here to do good.

Joel: 20:35

And I think what your business and what you were doing is to kind of challenge that basic assumption and say, no, that's not the case. We can actually do business in a way that does good at the same time. And I want to dig into you in part two on things like how that actually affects your, the quality of your product, how that affects your customers, how that affects your workers, how that affects the supply chain and the larger planet and the ecosystem. But what I would like to spend the last couple minutes here with you on part one here is To just kind of highlight the fact that you were you were named the first apparel B corp and could you explain just in a minute or two kind of what a B corp is and what it's meant to you guys to be the pioneers of that in the apparel industry.

Eric: 21:20

And again it's kind of luck, joe Raising week way we became a B corp is we're in the process developing a unique print and garment dye process. This was shortly we developed two years after NAF because we realized we're not gonna be love-cost producers. So how can we bring value to the market through the lens of a triple bottom line? So we develop a process called re hands. We knew then, as we know now, is that if we do not have some type of certification, beyond us telling you that it's green, it's friendly, it's better, blah, blah, blah, you know, and we get into the whole greenwashing thing. So we were working on a certification out of Germany called Okatex. While we were doing that and had a couple consultants in to vet that, as I had two good friends, matt and Scott, that started Apparel Brand on the West Coast called Indigenous Designs, and I met Scott and Matt at a couple trade shows and they were the initial founders of B Corpse or through B Labs, and so they didn't know I was working on this certification Germany. They reached out and said you can check this thing out and we looked at it and at that time I think there might have been 50 companies at the time involved.

Eric: 22:36

We came in in year two and we wanted to look at our business. Vision was based on two things transparency versus supply chain and then some type of certification that sits outside of TS Designs, that they audit what we do. And we said, wait a minute, this looks like it's an assessment. They're trying to look at all type of industries, so let's kind of hang our hat on that.

Eric: 23:05

And we went forward and I think today where we three or four thousand globally still a small group of people, but bigger brands like Patagonia, ben Jerry's Ice Creams, the part of that but we're a big fan of it because you're connected to a bigger community that has these triple bottom line values. And then what I also like is they now it's in every three year assessment and it's a lot of work. This is not a couple of check boxes and Mel is the check and you're in there. Man. We actually the last two times, including now, we have to bring in somebody from outside because they do a deep dive into your business and really try to understand what you know, what makes us uniquely different compared to, you know, a legal firm or something like that. So you got great community.

Joel: 23:52

We do have to cut it there for right now. So everyone please. Obviously we got a lot more to talk about. Tune into part two of this next week on Biz Radio US. Also check out the other shows on Biz Radio US there's tons of great other content there and make sure to follow us on YouTube now, but also Spotify, iTunes, iHeartRadio Stitcher you know wherever you get your podcasts. And until next time, take care of yourself and take care of someone else.