‘WE’RE IN A STREET FIGHT RIGHT NOW’
Climate change strategy is part of Montreal-based Aldo’s arsenal in cutthroat market, Kevin Carmichael finds.
For some, the chief executive of Montreal-based Aldo Group Inc. needs no introduction. But I bet David Bensadoun is a mystery to many. The family owned company that Bensadoun has run since April 2017 is intensely private, considering its name adorns shoe stores in more than 100 countries.
A tour of the family owned company’s airy headquarters, more modern art museum than workspace, suggests there’s money in footwear. I asked my guide this week if Aldo would make Financial Post Magazine’s list of Canada’s 500 biggest companies. She smiled and said nothing. A direct competitor, New York-based Steven Madden Ltd., earned US$1.5 billion in 2017, which would be enough to crack the Top 250 if converted to Canadian dollars.
So we can assume Aldo plays in the big leagues.
But its approach to business will strike some as flaky; whereas Madden boasts of share buybacks and introducing a dividend in its latest report, Aldo’s new Corporate Social Responsibility code describes its “purpose” as “a journey to create a world of love, confidence, and belonging.” Love?
“It sounds funny,” Bensadoun acknowledged Monday, the day before Aldo announced it had become the first fashion footwear company to offset all of its carbon emissions.
“We’re not shy about saying it.” Aldo Bensadoun, David’s father and the company’s founder, was a “beatnik” who spent time in the same circles as Pierre Elliott Trudeau and Leonard Cohen at McGill University in the mid1950s and chose to weave those ideas into his company.
“Social justice type of values have really stayed with us and we tend to have recruited leaders that are from the left side of the political spectrum, but the right side of the business spectrum,” David Bensadoun said.
I asked Bensadoun about competitiveness, the theme of Finance Minister Bill Morneau’s economic update later this autumn. The Trudeau government is under pressure from virtually every business lobby to respond to U.S. President Donald Trump’s tax cuts, which dropped the U.S. corporate rate to roughly the same level as Canada, and provided a number of other breaks on new investment.
Bensadoun said it’s a “mistake to obsess’’ over taxes. Quebec is the opposite of a tax haven, yet Montreal is an excellent place to base an international company, according to Aldo’s boss. A multilingual, multicultural workforce and liberal immigration rules are a big advantage when your goal is to compete around the world, he said.
Still, on taxes: “For a long time we were lower than the U.S. and I think now the fact that we’re basically the same as the U.S. is a problem.”
The issue for Aldo is recruiting senior executives. A lower corporate rate allowed the company to offer higher salaries, necessary to offset the draw of lower personal income taxes in most American states. Thanks to Trump and the Republican majority in Congress, U.S. companies now have extra cash they can use to bid up salaries.
“Most Canadians accept the equation that we’ve settled on,” Bensadoun said. “But there’s a point where it just becomes too much and I think that we can’t have the same corporate taxes, which means it’s the same tax burden, which means we have less cash leftover to subsidize executive salaries.”
Nothing flaky about that assessment of tax policy, so let’s hear what he has to say about fighting climate change.
It wasn’t easy becoming carbon neutral. It took five years, and Bensadoun conceded that winning South Pole’s certification meant accepting “a bit of a hit” to profit margins.
Aldo has installed more than 14,000 light-emitting diode (LED) bulbs in its stores since 2015, but only after an excruciating period of research to find the hue — a bluish one, as it turned out — that wouldn’t cast shadows on display shelves.
The company reduced its air freight by almost 70 per cent, a logistical challenge that meant planning for deliveries that will take a couple of weeks longer.
There are two garbage dumpsters at headquarters where once nine were needed to handle all the trash that 1,200 employees would produce weekly. The company invested in hydroelectric projects in China and wind farms in Europe to offset emissions that proved difficult to eliminate.
Bensadoun is on the side of the hundreds of scientists who describe climate change as a existential threat.
But even if all of those really smart men and women are wrong, he doesn’t understand why some business-oriented people put up such a fuss. Polls show the newest generation of shoppers and workers cares deeply about the environment. Bensadoun sees the cost of going carbon neutral as an investment because the designation will help him attract younger employees as the labour pool shrinks. He also thinks it will help him win customers.
“We’re in a street fight right now, getting market share from some of the brands that we compete with, and if this gives us an edge, then great,” he said.
“The problem is a lot of businesses are business to business, they’re not business to consumer. I don’t believe anyone who’s in a business to consumer business would say that their consumer doesn’t care about climate change.”
Nothing flaky about that either.