Episode 305: Future Proofing Promo with Denise Taschereau, CEO, Fairware

Welcome to Skucast, the podcast for entrepreneurs in the promotional products industry. Skucast shines a light on our industry's best work, features maverick personalities, and discusses what's really involved in running a modern promotional products business. SkuCast is the official podcast of Common Skew. At SkuCon in January, Denise Tashiro, the CEO and co-founder of Fareware, delivered a powerful talk titled Future-Proofing Promo, and it was sparked by this question: Does our industry have the resilience, nimbleness, and fortitude to meet the demands of today's buyers? If not, What are the core requirements we'll need to not only meet today's demand, but also lead the next generation through high-impact, conscientious merch experiences? Hi friends, I'm Bobby LeHew, Chief Content Officer at Common Skew. Denise answers these questions and more in this live recording from SkewCon in Las Vegas. But before Denise's talk, there's some really big news hitting the world of manufacturing sustainability in the EU that might have a dramatic impact globally. Globally, including the U.S. PPAI reported last week that EU lawmakers say carbon offsetting can't be labeled climate neutral. PPAI's Director of Sustainability and Responsibility, Liz Wimbush, said, quote, this lays out legal groundwork in Europe and comes closer to setting a global standard for what is considered accurate marketing in regards to sustainability claims, end quote. Now, this could create a ripple effect across the globe, impacting even suppliers and manufacturers in the U.S. So I invited Liz to hop on the SkuCast for about 5 minutes to help explain what this news is about and to unpack its potential relevance for our industry. Elizabeth, thank you for joining us. Can you explain what just happened with this new EU ruling? Like, first, what is the ruling?

Yeah. So on January 17th, the European Parliament approved new legislation that is aimed at curbing greenwashing by businesses. So it's called the Directive on Empowering Consumers for the Green Transition, which is a bit of a mouthful, but it aims to ban the use of terms like environmentally friendly and natural, climate neutral, or like eco without evidence, and also introduced a ban on using carbon offsetting on its own to substantiate those claims. So it's not in effect yet. It will take 2 years to become law, but it has been passed as new legislation.

Why did they have to create this?

So essentially this is kind of adding to the existing list of banned advertising practices, like not advertising cigarettes to children. Not that those are the same things, but you know. It's in an effort to clarify and standardize product labeling and help consumers be able to make better purchasing choices.

They use the phrase carbon offsetting scheme. Is there like a glaring example you can share that sort of demonstrates what they mean by carbon offsetting scheme?

Yeah. So in one of the press releases I was reading about it, a woman named Anna Cavazzini, who is a Green member of European Parliament, She had a really good quote that was, investments by companies in climate protection projects are welcome. And of course they can still be communicated. However, it should no longer appear that planting trees in the rainforest makes the industrial production of a car, the organization of a soccer World Cup, or the production of cosmetics climate neutral, which I thought summed it up pretty well. At the core of it, it just means a company can't buy their way out of unsustainable business practices.

Really. That's a really good way of putting it. What impact do you think this will have on European manufacturers and marketers of European manufacturers?

I think primarily it's going to help standardize a lot of the language that gets used in sustainability marketing.

Yeah.

So claims will have to be founded in evidence, like verifiable evidence, and it will probably lean heavily on audited and publicly approved certifications.

Okay. Now, if you're hearing this in the US, this, the impact of this ruling could trickle down to the US. Obviously, the EU has no oversight over US law, but could this impact public opinion and therefore change the way suppliers in the US use carbon offsetting as a proof point of their sustainability efforts?

Yeah. So I think part of how this will impact the US is multinational companies will start to hold themselves to that EU standard. To be diligent in all their environmental claims. So I think you're right about public opinion as well. It'll start to kind of shift how consumers here are, are interpreting things like impact reports and generally claims of offsets. So there are already some clear guidelines in place by some credible agencies like the Science Based Target Initiative and the GHG Protocol. That carbon offsets can at most account for 10% of a carbon neutral claim. So it's kind of the direction we're all heading in already.

I see. Should carbon offsetting be used at all? And if so, how? I'm, I'm thinking of something you mentioned about using it as a complementary strategy to other things that you're doing. How should suppliers, particularly in our industry, approach carbon offsetting?

Yeah, so there's definitely still a place for carbon offsetting. It's not a replacement for carbon reduction strategy, but like I said, complementary to one. So there are unavoidable emissions on most supply chains at this point, kind of while we work to transition to renewable energy, for example. So carbon offsetting can finance projects that lead to emissions reductions or removals, like reforestation or renewable energy projects. And they can have positive benefits like biodiversity conservation and community development. So those are still really good things. As well as funds generated from carbon offsets can be directed towards research and development to speed up the transition to cleaner technology or support vulnerable communities that are more directly impacted by climate change. So while it's not a standalone solution, it's definitely part of a broader strategy. And I guess the big takeaway would be just making sure that they are transparent and verifiable projects.

Liz, thank you for joining us. It's really nice to know we have someone in our industry watching out for news like this and being our advocate to help us interpret what's happening, but also help give us a heads up about what we can do to prevent things from negatively impacting our industry. So thank you so much.

No problem. Thanks for having me, Bob.

Now on to our live recording from SKUCon with Denise Tashrow. If you're not familiar with Denise, as I mentioned, Denise is the CEO and co-founder of Fareware. Prior to starting Fareware, Denise spent 7 years as the Director of Sustainability and Community for Mountain Equipment Co-op, Canada's largest outdoor retailer. She is currently a board member of Promotional Products Association International (PPAI). Denise is also a board member of Promocares, a group working to inspire, educate, and provide actionable strategies to encourage social and environmental responsibility in the industry. Today's episode is brought to you by Commenscue, the work from anywhere platform that powers your connected workflow, enabling you to process more orders and dramatically grow your sales. To learn more, visit commenscue.com. Now here's Denise.

I'm here to talk about future-proofing promo. And like Mark said, I co-founded Fareware 18 years ago with Sarah White, who's in the back. And you know, We've been at it for a while. And I think what's interesting is 10 years ago, we were talking about sustainability. And a lot of the room was like, what are you on about? And some of the room was like, yeah, yeah, yeah, that's the future. That's where we need to go. And I think 10 years later, I think we can all agree that it's here. And so I think I'm in a fairly good position to talk about what might be coming next. And to give you a little context, Faroer was started in Sarah's garage. Really started to kind of align merch with the brands that we admired and the values that they held. We were the first promotional products distributor that was a certified B Corp in the industry, and that was almost 15 years ago. And when we started, I think what we knew and understood is that there were buyers out there that wanted ethical supply chains. They wanted sustainable product. They wanted, probably even more importantly, supplier partners that shared their values, and we understood that. At Fair Wear, we have a driving ethos, and this is it. We believe that if done right, merchandise can amplify movements, it can uplift communities, it can showcase how we can use our businesses to drive sustainability. It can literally give voice to causes. It can stop a nation in its tracks. It can bring together communities and families and colleagues in a way that really like no other merchandise medium can. It's incredible. So how do we make sure that our medium is future-proof? How do we make sure that we elevate it? How do we make sure that we grow it in a way that's gonna resonate in the future? So I have 4 ideas that I think we really should be thinking about. Step 1 is that the marketplace is bigger than the industry. And our industry has a sort of historical construct. There's suppliers and there's distributors, and it's served us well and it's not gonna go away and it's gonna continue to serve us well. But it's fairly narrow. And I think it's important for us to really think about the marketplace of branded merchandise and all that's happening. It's having its moment right now, merch. It has never been cooler to be in this industry. There's collaborations between Justin Bieber and Tim Hortons. There's Sonic mood rings. There's all this awesome merch. Like, literally, I probably haven't seen as cool a merch in the last 3 years as I've seen in 18 years. But there's another force right now really pushing on our industry, and that's that we're getting hammered. We're getting hammered in the likes of Fast Company magazine where they're writing articles about cheap throwaway swag. There's anti-swag bills. We have brands out there that are looking at our category and wondering if it really tees up with their sustainability agendas. And I'd argue that we need to kind of get ready. We need to get on hand. And we need to sort of mobilize the broader community. And I'm going to give you a few examples. So pre-COVID, I spent about 3 years on an advisory board to Etsy. And it's a custom merchandise platform at its core. And at the start of 2023, they had over 100 million products. They had 7.5 million makers. And they had 95 million buyers. I'll give you a little context. PPII has about 15,000 members. So, are Etsy makers competitors? Are they collaborators? Should we be afraid? Or could we potentially build capacity with those makers in that ecosystem that match our client needs? Having spoke to a bunch of them and having worked on a, on a project to try and get wholesale ready some of those makers, what I learned was two things. One is, what they have is hard for us to find out on the show floor. But more importantly, what we have— our skills, our competencies, our systems— are desperately needed. So we're not going to see them this week on the convention floor. But what if we could? Like, what if we had a broader marketplace that brought some of those makers in? And I'll give you another example. I think some of you are using a pen right now called a Ciclo. And Celine is here. Celine's here. She's from Montreal and she's kind of like a distributor, has incredible clients, makes custom branded merchandise. But what she does is she has a studio and has designed and manufactured her own product line in Montreal for her clients. And then more recently, she started working with Recycle Quebec, built those pens in a circular model with an incredibly low carbon footprint. I think it's like the equivalent of sending 4 emails. And I met her in Montreal, and I was trying to get her more involved in PPAI. I'm like, you've got to join. You've got to get more involved in industry. It's an incredible product. You should be selling it to everyone. And she asked me, well, what category should I join in? Am I a distributor or am I a supplier? And the reality is she's kind of both and actually something in the middle. And it's hard to know where to put people like that. But what we do know is they're innovators, and we want them in our industry. So we have to grow our scope and our understanding. Of who belongs in the industry. And I think a lot about B2C brands. And we did a lot of work over the years. And I think some of you in here do a lot of work to find cool B2C brands and to bring them into the industry. And whether we bring them into ourselves or more broadly. And these are folks that are nimble. They're ready. They've completely torn up the go-to-market strategy in retail, completely torn it up. And our buyers are finding them on the weekend and finding a cool product. And their bosses are saying, that's cool. I'd love to have 100. And suddenly these brands are in the B2C, the, the corporate gifting market. And you know, when we started to see brands like Clean Canteen and MIR and Topo Designs and W&P show up in our space with Gemline and Spectre and Leeds, at first we were grumpy because we had been working with those brands directly for years. And I was a little miffed and it's like, oh gosh, you know, we're eroding at our competitive edge. And, and you know, Now, when I look back at it, you know what happened? We sold a lot more of that product. You know why? Because we made it easy. Our industry made it easy for those incredible B2C brands to come to market. And so as we start to wrap our heads around the future, I think we need to wrap our heads around the marketplace. So number 2 is coopetition is greater than competition. And coopetition, or some word like it I'm hoping you'll get, Said again, it should. We need to work together more. We need to collaborate more, and we need to understand the difference in our businesses that are competitive and the things in our businesses that are not. And this community, I think, is unique. The Commonsku community is unique in that it has nurtured collaboration like nothing else, but it's kind of rare. And in the fall last, maybe it was November, Pierre, I don't know if he's here from Chameleon Light, came up to Vancouver and he did his sales meetings with a bunch of different distributors. And that night, instead of having dinner with one, three of us got together and said, let's all go out for dinner. And in the middle of the dinner, we were chatting about our businesses, the challenges we were facing as we were coming into Q4, the opportunities we were facing, all sorts of things. And Pierre just stopped and he said, you know, this is so rare. I don't think I've ever had a dinner in a community with a bunch of competitors that are chatting this way. But you know, at the end of the day, Paterson Brands, Creative Boulevard, Fair Wear. We're all better for dinners like that. And I know that people go to dinners like that, and there's people in this room that host dinners like that. But we need to move forward and we need to collaborate. So I'm gonna tell a story about way back in the way back years, which is when I worked for Mountain Equipment Co-op, so Canada's largest outdoor retailer. It's like the REI of Canada. And in the early days there, we were working on a collaboration with a lot of other brands to try and move the needle on cotton farmers and mills towards organic cotton. And it was a collaboration with some of the most competitive brands you could imagine. Nike was in the room. Patagonia was in the room. REI was in the room. Timberland was in the room. These were fierce competitors. But what we were doing is meeting in a pre-competitive landscape to literally move the dial on a global agricultural system. And it took that kind of coopetition, it took that kind of trust to actually get the buy-in for farmers to transition their crops to organic cotton. Now, once the mills started spinning and organic cotton started to really get into the marketplace, how we cut it, how we sew it, how we dyed it, how we market it, fiercely competitive. But I think the more that we can understand what's competitive in our business, What do we really need to compete on and what can we share? We won't go as far and we won't go as fast. I don't think y'all are gonna win your business or win a new client because of that really cool app you found to plug into your inventory management system. I think you're gonna win business because you're incredible at getting product to market. But that app might mean a lot to a lot of people in here. I know that I don't win business because of the platform, that Fair Wear Trust, to manage our carbon accounting. We've been doing it since 2009. That's why we're going to win business. So really understanding what are those pieces that we could collaborate on and we could lift each other up. So, you know, it is funny. I kind of think here, it's like, oh, is it giving away the secret sauce? People always ask me, like, well, what about, like, your secret sauce? And, you know, I don't think it is about giving away your secret sauce. It's about understanding really strategically, what is your go-to market and what is just another thing that's helping your business move that you think you could share and you think could grow us all. So I'm going to talk— the third one is really about impact. And I'm going to spend a fair bit of time on this because it would be tough for me not to. This is our passion. This is why we launched Fairware as a company. This is why I ran for the board of PPAI.. And it's that impact is greater than business as usual. I'm gonna talk a little bit about, you know, sort of, sort of, there was essentially our impact agenda is what we call it. And there's a huge opportunity here. And it's a, it's, it's really an act for us of sort of strategic mitigation. Like you need to start to think about these sorts of things because your clients are going to start to ask. And if your buyers aren't asking, that's okay. What I would challenge you to do is look at the brands they work for. Because if, if you take a look up a band or two bands up from your buyer, chances are that the companies you're working for are starting to think about corporate social responsibility and are starting to think about ESG and impact. And at some point, it is going to trickle down to your buyers. I'll give you some examples. Salesforce has a huge procurement team. They have a director of sustainable procurement, and they have a director of diverse spending procurement. It's happening. They're asking the questions, and, and we really need to be ready. So I wanna share with you our framework at Fairmore. We have 5 areas that we focus on. In terms of impact and sustainability. It kind of helps us make sure that we're ahead of where our clients are going. And so our impact, you know, it's 5 things. The first thing, responsible sourcing. And the way that we think about responsible sourcing is we think about our supply chains. Where are our products being made? Who's making our products? Are they being treated fairly? Are the manufacturing partners, the suppliers that we all trust, many of them in this room, do they have the systems in place to ensure that the workers in their factories and manufacturing facilities are meeting the worker rights codes that are sort of adopted internationally? That's a really key area. The second piece in responsible sourcing is really about product safety and sort of the reliability of that product. Are there forever chemicals? In the products that we're giving through to our clients. It's actually mind-blowing. But product safety, making sure that the products meet the regulations in the US or Canada or any country you're importing to, it's still aspirational. There are a lot of people in our industry that are still wrapping their heads around this. So making sure our products are safe are another really critical piece of responsible sourcing. And finally, sustainable products. Are our manufacturing— are manufacturers pivoting to less impactful materials, to more sustainable materials, whether it's recycled polymers, organic cotton, biodegradable, compostable products? Are they doing it? Are they doing it right? Is it legitimate? And are they bringing it to market in a way that actually looks cool, is beautiful and durable so we can sell it? So that's the first area we focus on. The second area we focus on is justice, equity, diversity, and inclusion. And for us, that really means bringing fairness and access and opportunity to our team, making sure that everyone has a chance to be part of our team, to grow in our team, and to be elevated. And I think a lot of folks struggle with what this might look like. And, you know, maybe a simple way that I could say it is that Our workforces, and in particular, our leadership teams, should look like our nations, not like ourselves. It'll make us more resilient. It'll make us more interesting. It'll make our companies more relevant. So think about what you're doing around diversity, equity, and inclusion. The third area for us is community impact. This is the give where you live. This is the connect with your community, connect with the industry, donate, volunteer, enable your staff to volunteer. At Fareware, we have one paid day a year where people can volunteer. We do team activations in the community. If you can do one thing, support every Promo Cares for Good campaign. We make it easy, we make it turnkey, and this is such a great story starting block for this journey. If you're intimidated and you don't know where to start your sustainability journey or your impact journey, community engagement is a really, really easy step. Your employees will love it. The fourth area for us is environmental responsibility. And for, for Faroer, and I think for the industry, it really comes down to we have to reduce the carbon impact and the waste of our products or our clients will walk away. We can't produce brand fill. We can't produce products that brands are going to look like and say, this doesn't line up with who we think we are. We have to get better. We have to make meaningful merch. We have to make sustainable merch. We have to make merch that matters.. And it's really, really key. And I think it's something that all of us have to start to work on. And it could be as simple— like, people are like, oh, you know, I'll rattle on about decarbonizing our supply chain, and people's kind of narcolepsy kicks in, and they're like, what is she on about? But you know what it really means is it could be this simple: talk to your buyers about not air shipping. When we ship a box in a plane, it's 8 to 10 times the carbon impact. Get them to plan. I'm gonna talk about that in a minute, but get them to plan. Get them to consider what it really means. And the fifth area is kind of like, it's not for everyone, but it's part of our impact agenda. And so for Fareware, our fifth pillar is advocacy. And this is about taking a stand for what you believe in. As business leaders, we're really in quite a unique place to speak to the legislation and the policy that's actually going to drive this change. It's not going to happen with consumers. It's not going to happen with businesses. It is going to be a legislative process. It is going to be a regulatory process. And I think a lot of people will sit here and be like, whatever, I've got 3 people. I don't have any power. So I think it's in the US stats are 43.5% of jobs in this country are small businesses. It is, it's 43%, 50% of jobs in this country are small businesses. It's 43.5% of the GDP is delivered by small businesses. And if you want some context, oil and gas is 8% in this country. The numbers are quite similar in Canada. But think about that. The power of small and medium-sized enterprises as a polity, as a political force, 5 times oil and gas. Imagine how much they're chatting with legislators and regulators about the kind of future they want. We have to talk about what we believe in. We have to take a stand. I'd encourage you to get brave. So the fourth area, I think we need to understand that if we spend time marketing our medium, it's greater than marketing ourselves. So what do I mean about this? Our medium is amazing. I love it. Aside from the hugging this week. I am reminded and reinvigorated. And you know, every time I think about our medium, I can't help but think, have people here seen the Paul McCartney photo? I think it was showed here many years ago, but it's literally Paul McCartney, probably in his like late sixties. He's at a soccer game and he is pummeling the people next to him in the seat and lunging to catch the t-shirt from a t-shirt can. Like literally this guy's probably worth $6 $6 billion, or €6 billion, and he's crushing people to get the free t-shirt. There's an incredible amount of power in our medium. So why are we so low on the marketing rung in terms of strategy? So I'm gonna ask you to put up your hands. Who here has had a call on a Monday from a client who wants branded merch delivered on the Friday? Right? Thursday, Wednesday, Tuesday. So let me ask you this. Could you imagine someone calling a digital marketing agency and saying, we're gonna do an influencer campaign for a new product launch. We need it done by Friday. Could you imagine someone calling an advertising agency in like late January and saying like, we're gonna run a Super Bowl ad. You're gonna have that by February 11th. You know what? Let's make it February 9th. Let's build in a couple of buffer for days. Like, it just doesn't happen. So why does it happen to us? And I think there's a lot of reasons. And I want to talk about two. And the first one I want to talk about is I think we enable it. And what I mean by that is somewhere along the way in the last decade or so, we decided collectively as a group that the 24-hour turn and the 48-hour turn and the 72-hour turn were a point of pride. And we essentially have a collective go-to-market strategy strategy as a result that delegitimizes what we do. It doesn't give you time to work with your clients on strategic outcomes. It's like we're happy to be the candy rack at the supermarket where you kind of sheepishly throw a candy bar or the National Enquirer in your cart. It's like we've decided that it's okay to be 7-Eleven and get a snack at 10 PM at night instead of being the Whole Foods. Where people go with a list to nourish their family for the next couple of weeks. So we need to get out of this mentality that we're the last minute, that we can hustle. It's not the right go-to-market strategy, folks. We need to get on the agenda way further up. We need to get into marketing budgets. We need to get into strategy plans. We need to get into marketing plans. The other area that I think we're, I won't say we're bad at because I am on the board now, but the other area that I think we could really work on is data. We know that what gets measured matters. We're all hustling in our business to get metrics and KPIs and scorecards, and yet we're sort of failing our clients in doing the same. And I think it's two things. I think one thing is the data we do have, we don't leverage. And then there's like kind of a gap in some specific data. And what I mean by that is there's actually great market-level data. PPI puts it out. ASI puts it out. The Promo Products Workweek. It's like that asset set is full of amazing tidbits around recall and cost per impression. It proves that what we do works at sort of a high level. I don't think at Fareware, like, I don't think we've ever used Any of it. And I think that's sort of the next stage for all of us is to really think about bringing those stats, bringing that strategic insight to our clients in our marketing. The other area is at the project level. Like, it's kind of this thing where it's hard. We don't have a lot of data around, like, does it really work? Like, did that campaign work? You know, you did a gift drop for your prospects. Did it work? Like, we deliver the product and then someone else is like, panic buying over here. So we wander over there, we do the next project, so we're not really following through on what it really meant for our clients. And so, you know, you can A/B test merch just like you can A/B test an email campaign. If somebody's got 200 clients that they want to do, 200 prospects they want to do a gift campaign with, just do gifts with 50% of the base and then measure it. And find out if it really works. And I can tell there's some people here that might be like, oh my goodness, she's telling me to only get half of the job. And the reality is, is yeah, I'm telling you to only sell half of the merchandise, because if it works, if you measure it, they will come back to you forever. You will get a huge piece of that pie. And if it doesn't work, like, you shouldn't be selling it. Because it doesn't work. And you're doing your client harm and you're doing us as an industry a harm. So we need to get better at using the data, at sharing the data, and at getting the data. And I'm gonna put a little like call to action to y'all and we'll try and do it. I have team members here, Charles is looking at me. Once a quarter, I challenge you all in one of your marketing pieces to talk about the industry and the power of the industry. Not your product, not yourselves, but us, the industry. That's what it's gonna take to uplift us, to make us a strategic consideration in marketing and to put us where we should be, which is way up above bus ads and billboards and whatever else they're spending their money on. We need to move up the ladder. And so I'll leave you with this. You know, I left outdoor retail, probably one of the coolest jobs in my mind, from one of the coolest companies one of the coolest companies in Canada at the time. And I came into promo and my friends and my family, they were like, what are you doing? Like, literally, what are you doing? You're the director of sustainability for a $400 million outdoor realtor brand. You get deals on gear. You know, you can go bike riding after work and call it work. What are you doing? Why are you leaving this industry? And I joined forces with Sarah in her garage. And I thought, you know what, we can move the dial here. We can go into this industry. No one is thinking about this industry the way I know we can think about this industry. And as we've grown over the last 18 years, I think we've all come together to move the dial forward, but there's still a ways to go and it's going to take all of us. So make your merch matter. Thanks for having me.

Thanks so much for tuning into this episode of SkuCast. Be sure to keep up with our latest content by subscribing to SkuCast on iTunes or to our blog at community.comandsku.com. Until next time, friends, thanks so much for listening.

Mm.