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U.S. Department of State

Diplomacy in Action

Interview of Virgin Group Ltd Chairman Sir Richard Branson by The Economist New York Bureau Chief Matthew Bishop

Washington, DC
April 26, 2012


SPECIAL REPRESENTATIVE BALDERSTON: We’re very excited about our next speaker. You all know Sir Richard Branson, founder of Virgin Group. We’re very much looking forward to hearing about his most recent book, his book, Screw Business as Usual, which is his call to shift from a purely profit-maximizing focus to caring for people, communities, and the planet. He’ll also discuss his work to facilitate sustainable business through Virgin Unite and the not-for-profit foundation of the Virgin Group and his work with entrepreneurs on the Carbon War Room. We run into your people everywhere around the world as we travel doing good things. So welcome.

Come up and join us. And joining him for a conversation on stage is Matthew Bishop, the U.S. business editor and New York bureau chief of The Economist. He’s written several books, including Philanthrocapitialism, on the global revolution underway in philanthropy. Sir Richard and Matthew, thank you for joining us.

MR. BISHOP: Well, good morning. It’s our job to inspire you and set the stage for the rest of the discussions over the next day and a half. And this is an impressively multinational gathering, and I’m delighted the State Department has handed it over to the British to – (laughter) – kick you off on this.

Richard, you – I guess I first became aware of you in Britain when you invested in the Sex Pistols, which was an impact investment of a kind – (laughter) – although I’m not sure it’s the sort that we’re talking about. But then you started to become, in my mind, a sort epitome of what I now call a “philanthrocapitalist” could be when you launch this brand of condoms in response to the emerging HIV/AIDS crises called Mates and it sort of transformed the whole discussion about how we responded to that particular challenge in Britain.

And then subsequently, you’ve gone on and done more and more and I think applied your entrepreneurial brain and talents to solving social problems in different ways. And we’re going to talk a lot about that. But you’ve written this new book called Screw Business as Usual. I’d never think of you as ever having done business as usual, but nonetheless what’s inspired you to write that book and what’s the message of it?

SIR BRANSON: Well, I think I’ve learned as an entrepreneur that – how to sort of tackle problems in an entrepreneurial way, and I think entrepreneurs should also look at some of – as Hillary Clinton was saying earlier – some of the sort of social problems in the world, not just think of themselves as money-making machines looking after the shareholders’ quarter results and so on but actually become a force for good. And I think if every company in the world could rethink their remit somewhat and really get out there – and small companies tackle small local issues, bigger companies tackle national issues, and international companies tackle the global issues – are using their entrepreneurial skills, using the workforce who would dearly love to do more than just say selling Coca-Cola or selling airline tickets or whatever, then I think we could get on top of most of the world’s problems, and I think it’s very – it’d be very, very good for the companies themselves and for the employees who work for the companies.

MR. BISHOP: I’m interested. Do you think this is being driven a lot by employees of companies that just want to actually work for companies they believe in?

SIR BRANSON: I believe that the employees of a company, if they are really proud of the company and they go out to the pub in the evenings and they can say they work for say Puma, who are really trying to make a big difference in the world rather than another company that doesn’t care at all, they will find it that much more enjoyable, that much more satisfying, and I suspect will work that little bit harder, which will actually pay for the cost of whatever the company’s doing to get on top of some of these problems.

MR. BISHOP: So what are your favorite examples where your businesses have really done something fundamentally different that’s really had an impact in the social sense?

SIR BRANSON: Well, first of all, I think all business is generally helping society in some way, most businesses anyway, the vast majority. So there’s no real point in going into business unless you’re going to make a real difference in other people’s lives. But I then think on top of that you can look at some of the bigger problems of the world and think are – is the social sector, say, dealing with those problems in the best way and can we as business leaders come up with a sort of entrepreneurial different approach to tackling the problem.

So one of the first organizations that we set up a few years ago very much as if we were setting up a business was a wonderful group of people called The Elders, where Nelson Mandela agreed to be the founding Elder, Graca Machel, his wife, the other founding Elder. And they asked 10 other global leaders, President Carter, Kofi Annan, Mary Robinson, Ela Bhatt, Archbishop Tutu, and so on to join with them to go out and try to tackle conflicts in the world. And so when the problems were breaking out in Kenya, Kofi Annan and Archbishop Tutu and Graca Machel went there, and a coalition government got formed, and I think war was averted. And they’ve been to North Korea, they’ve been, obviously, to Sudan, to Israel.

And I think on occasions I think having people of that stature ringing you up as a young leader in a country having problems with your – I mean, often it’s just like a business conflict. I mean, for instance, Sudan, I think, is very much like a two businesspeople having head to head in North and South Sudan arguing over who gets what percentage of the oil fields. And yet, if there’s not – if there’s no one for them to turn to, you could end up with the most horrible war again between the two countries.

MR. BISHOP: That’s interesting, because I mean in some ways setting up a group like The Elders feels like classic old-style philanthropy in a way. I mean, it’s not saying this seems inherently part of the call of business to get involved in sort of funding statesman to go around and sort of situations. Do you feel it is part of something that business ought to be involved in?

SIR BRANSON: Well, I think the – I mean, I – just prior to the invasion of Iraq by America and Britain, I was one of many people who thought this war is a terrible mistake, there must be a business way out of it, there must be some way stopping it. And so as a businessman you sit back and you think how would we find a business solution to this. And the business solution in my mind was to do what you did with Idi Amin where he was persuaded to go and live in Saudi Arabia and that country is now a good democratic example.

So we contacted Nelson Mandela, we contacted Kofi Annan. They both agreed to go and see him. We arranged for him to be – to go and live in Libya. But actually the day they were due to go, war broke out and the bombing started, and so the meeting never took place.

But I think – so I think that there are problems in this world that if you think in an entrepreneurial way how can you address it, I think business leaders have a different – they have financial capacity, they can pick up the phone and get through to people and get things just, and they just – I think if they just spent maybe 10 percent of their time trying to tackle these kinds of problems that some of these problems could get addressed.

MR. BISHOP: Because I mean at the moment the reputation of business leaders may be at an all-time low in some ways following the economic crisis and so forth. And I know you’ve thought about whether there’s scope for business leaders to take a more overt role similar to The Elders.

SIR BRANSON: Yes. I mean, I think that we’re in the early stages of doing a similar thing that we did with The Elders but with a group of business leaders, where they can, first of all, look at their own house and see whether the rules of engagement of a business that have been drawn up over the years, i.e. the imperative on profits and quarterly profit – quarterly results and so on are the best or whether they should look at a new approach to business and set – help set new rules.

But also I think a group like The Elders could be very much supported on having a group of business leaders come in and look at some of the conflict issues. Often the conflicts are over oil, land, issues like that, which business leaders might be more capable of analyzing than perhaps Elders but – or at least helping each other.

MR. BISHOP: Now, one of the themes that comes up time and again when we think about impact investing is how do we measure impact and when it is appropriate to try and measure what you’re doing and whether it’s succeeding or not. And I guess a project like The Elders almost impossible to come up with metrics that would tell you whether that was really making a difference, how much a difference it was making. It’s got to be a gut instinct that you feel it’s the right thing.

But as you look at moving down into the basics of a business, your 300-odd businesses in the Virgin empire, I mean how do you think about measuring social impact, environmental impact? And do you sense when it works and when it doesn’t work?

SIR BRANSON: Yes. I mean, obviously as a pure business it’s relatively easy to work out whether you’re achieving all the things you set out to achieve. I mean, if you’ve set up a new airline in America, do people like it, the feedback you get from your customers, and can you afford to pay the bills and so on. The – but I don't think that’s that dissimilar to setting up a – I mean, we set up an organization called the Carbon War Room with the aim of trying to get 20 gigatons of carbon out of the earth’s atmosphere on an annual basis.

MR. BISHOP: That sounds like a lot. How big is 20 – if you were to put it under simple terms?

SIR BRANSON: Well, it’s the equivalent of balancing our books as far as the climate’s concerned. So to set that target, then you draw up a list of the 25 different sectors that are putting out say a gigaton each, so the aviation sector, the shipping sector, cities, five gigatons. And you then come up with creative ways of actually working with each of those sectors to try to reduce carbon in a way that doesn’t damage those industries and that actually, hopefully, is a sustainable, long-term way of getting carbon under control. And we have Jose Maria Figueres who runs the Carbon War Room and the team there doing a fantastic job, and slowly but surely – I mean, in shipping they’ve taken the 80,000 ships on the sea, and they’ve said right – an A ship is a very efficient ship, a J ship is a much less efficient ship, and they’ve put up internet sites like going to Marks & Spencer’s and they’ve – the big retailers – and let them know which ships they should be using for shipping their produce, and they’re just working with the industry trying to work out ways in which they can be a lot more efficient, and they will get an enormous amount of carbon out of that industry.

And with cities, they’ve gone to financiers, and they’ve said to financiers, “Look, why aren’t you lending to cities?” They’ve gone to the mayors of the cities, and they’ve put them – they’ve managed to work out ways of putting the two together and getting a lot of jobs created, and they’re experimenting with a $700 million investment in Miami which will create nearly 30,000 jobs and – to retrofit houses and offices, and –

MR. BISHOP: So you really think, I mean, setting very clear, specific numerical targets and measuring progress is actually profitable?

SIR BRANSON: Yeah, you may not succeed, but at least you’ve got to set – just like business, you – I mean, we set up these organizations, we find a great chief executive, we find a good chairman, we make sure they’re properly funded, and we then leave them to get on and do the job. But we set them targets, and hopefully, for all our sakes, some of – this plus other works that everybody else is doing will get on top of the problem.

MR. BISHOP: This is one of those moments where, when you invite a journalist to ask questions, sometimes the questions aren’t always what the host wants to hear, but, I mean, I’m very struck on the –

SIR BRANSON: (Inaudible.)

MR. BISHOP: Yeah. (Laughter.) So I’m going to invite you to be rude to our host here maybe. It strikes me here you’re trying to transform the aviation industry. You created a prize of the Clinton Global Initiative a few years ago to come up with a solution to improve aviation fuel. At the moment, there’s a huge fight going on between the European Union, which is trying to price the externalities caused by aviation fuel and the State Department, which is trying to stop it. Which side are you on that one? (Laughter.)

SIR BRANSON: Well, look, we – I mean, the traveling public, and obviously, airline owners do not want to be taxed out of business so that they can’t travel. And taxes have already now got to a level, particularly out of Great Britain, that they’re almost more than the actual ticket price itself. What we as an airline – as – well, and three airlines pledged a few years ago was that all the profits that the Virgin Group take out of the airline industry we would invest in trying to come up with clean fuels. And excitingly, I think – first, those fuels have now been developed.

So you’ve got a small company run by a Brit in New Zealand called LanzaTech that have come up with this wonderful way of just taking the rubbish that goes up the chimneys into this – into the atmosphere from aluminum plants and steel plants and turning that into aviation fuel. And so the carbon that was going up and polluting is recycled, and they’re now building big plants in Shanghai and in India, and Virgin Atlantic hope to be flying on that fuel within the next 18 months to two years.

And then there’s wonderful companies in America here who have had big breakthroughs with algae. There’s companies that have big breakthroughs with isobutanol. And I met the Secretary Mabus – I’m sorry, not Secretary Mabus, but the head of the Navy when I was last in Washington. And, I mean, he has pledged that at least 50 percent of every ship and every plane in the Navy by 2020 will be running on clean fuels, which is a massive boost to the clean energy industry.

MR. BISHOP: But let me – I mean, the reason I raise this question is that, I mean, we talk a lot about partnerships and the extent to which the private sector can actually solve problems, but it does need the government sometimes to set the right framework. And I guess one of the biggest issues, it seems to me, as we think about climate, is how do we price carbon into the system properly, and I just wonder where you see government -

SIR BRANSON: I think a global carbon tax is screaming – blindingly obvious and should have been introduced 15 years ago, and that would have been completely fair. Every single airline in the world would have been treated in the same way, every single shipping company, every single – and it would have – and then if you had obviously no tax on clean fuels, which are – because they’re clean, that would have encouraged that industry to have been up and flourishing in a much greater way than it is today. And I think the debate between the EUC [European Union Commission] and America and China at the moment is that somebody unilaterally got fed up waiting and has just gone ahead and done something. And – but ideally – and as an airline owner, I’m sure I’ll get told off when I get home – that the – but there should be a fair global tax with everybody taking a little bit of pain. It’s not massive. And if that happened, we would get on top of the problem.

MR. BISHOP: Now, I want to talk more broadly about what role government should be playing in promoting an entrepreneurial culture, because I guess a lot of entrepreneurs that I talk to in the course of my job, I say, “What do you want the government to do?” And the first thing they say is, “Just get the hell out of the way.” I mean, as you look at the developing world and the challenges that entrepreneurs face, what are you looking for from a government like the U.S., or, indeed, the local governments in terms of promoting their entrepreneurial development model?

SIR BRANSON: Well, I mean, there’s – I’m slightly biased, and I think that the future jobs are going to come from entrepreneurs and the social sector is paid for because of – directly as a result of the successful entrepreneur. So everything that can be done to get new entrepreneurs on their feet, the better. And we’ve gone to the length of setting up entrepreneurial schools in South Africa and the townships there and in Jamaica, and we’re looking at setting one up in Cairo and – just to help young people get on their feet. We’ve also –

MR. BISHOP: And you find a lot of – I mean, what sort of applications are you getting for it all?

SIR BRANSON: I mean, just – I mean, thousands of applications and, sadly, obviously only so many people can be taken on. But young people, they need mentors, they need – they can benefit enormously from mentors and finding out from other entrepreneurs where they’ve gone wrong. And by them going to these schools, it can really give them a big leg up. In the UK, we’ve been trying to encourage the government instead of just doing student grants for – to go to university, to allow students, if they want to set up a business, to take their student grant and start a business instead. And actually, in the last budget, the government agreed to that, and so that’s quite an exciting breakthrough as well.

MR. BISHOP: But in terms of – I guess the traditional development model has been very much aid-based, and now we’re talking about partnerships with the private sector. What do you think the government should be doing, what should the business sector be doing in terms of the division of labor between those two sides of the coin?

SIR BRANSON: I think that governments – I mean, governments should just as much as they can just get – hand over the running of things to private enterprise, and I’m sure there are some people in this room who disagree with that. But the – but generally speaking, private companies can run things better than governments. And, I mean, if you take space as an example, the – and by the way, as far as Hillary going to space is concerned, the – I had a call just before I came here from the chairman of the Republican Party who has offered her a ticket to space. (Laughter.) And I think it’s only – it may be one way, but – (laughter) – so it’s all paid for, all sorted. (Laughter.)

But NASA – it was a wonderful organization, but it cost $1.5 billion to put aid every time they sent a spaceship up into space, and the private – the government realized that and handed it over to the private sector. And we will be able to put spaceships into space for just the fraction of that cost and a fraction of the environmental cost as well, and satellites into space for a fraction of the cost, and I think, over the next 50 years, do as extraordinary things as NASA have done in the last 50 years. So in England, the NHS [National Health System], it’s a fantastic model. The – and no government would ever change the fundamentals of it. That is that every single person should have free medical service, and it’s extremely good. But it could be even better, and the government are taking basically taking little bits of it and saying to the private industry, “Can you save the country money? Can you run it more efficiently?” And then they’re parceling out little bits, but with the premise that the patient – it must improve patient care, and it must be more cost-effective. And so I think in most aspects around the world, that can be done.

MR. BISHOP: I mean, in terms of where you see business driving economic development, what’s been your experience in Africa? Have you managed to find businesses that actually do work in terms of small and medium enterprise creation, job creation?

SIR BRANSON: Yes. I mean, name dropping for a moment, I had a – I was in a bath in England, and I had a call, and I was told that Nelson Mandela was on the phone. So I moved down and --

MR. BISHOP: He always calls when you’re in the bath. (Laughter.)

SIR BRANSON: -- and took the phone, and he was president then, and he said and I’ve just – one of our biggest companies – the biggest health club chain has gone bust, and these 5,000 people are about to lose their jobs, and would I get on the next plane to South Africa, and said – and he – obviously if he calls, you do. And went down there and we rescued the chain. And now – I mean, we just opened a big health club in Soweto, the – and, I mean, obviously, South Africa’s been a tremendous success story largely due to Nelson Mandela and Archbishop Tutu.

And businesses are – Africa is a thriving continent right now. I mean, not every country, because not every country is run in a non-corrupt way, but most countries are absolutely thriving now. And you – Britain and America would be envious of the sort of 5 or 6 percent growth that’s going on down there. But there’s still places that need help. I mean, obviously, the amount of people with HIV and malaria, TB [Tuberculosis], and so on is still enormous. And I think we need to come up with imaginative ways of helping people there.

MR. BISHOP: I mean, it does strike me as extraordinary, and I know the economics to some extent – we’re often blamed for having help perpetuate the image of Africa as a sort of basket case because we had to cover the hopeless continent, I guess, about 10 years ago. But the – actually, there is this tremendous entrepreneurship happening, tremendous growth happening in much of the continent.

And I talk to investors here still, and there’s this tremendous risk aversion still. I mean, I – people are still reluctant to say let’s go and put our money to work on the ground. And I wonder whether you think people are dramatically under – overestimating the extent of the risk in Africa – investing in Africa, and whether – what you would do to encourage investors to put more money to work there?

SIR BRANSON: Well, Chinese and Indians are pouring into Africa, and I think Britain, Europe and America are going to lose out in a big way. And I think the same applies to South America, to an extent. So there are – our own personal experience – I mean, we employ something like 3,000 people in Africa, and our experience has been extremely good. And that’s if you deal in countries where there is the rule of law and where corruption is not rife. And fortunately, there are enough examples of that to make it worthwhile for businesses to invest in Africa.

MR. BISHOP: I mean, do you think it is that much harder to spot a good business opportunity in Africa compared to in America or Britain?

SIR BRANSON: No, I don’t think so. I mean, I think if you – there are – you talked about – I don’t know – bad – I mean, we’ve been looking so slightly – we’ve been looking at setting up a center for disease control in Africa to see whether – again, whether that could be run more – diseases could be run more efficiently than they’ve been run in the past. I mean, bizarrely, you have a center for disease control in America; you have one in Europe, but you don’t have one in Africa. And Africa’s the place that most diseases exist.

Hillary Clinton talked about bed nets earlier, and bed nets definitely help enormously. But if you have a center for disease control, that can then examine is bed nets the best way or is painting the sides of buildings with DDT or a similar substance a safe and better way? And then what can – what’s the most economical approach?

And so I think – I don’t think Africa’s any different from anywhere else in the world. I think you just got to look at each – look at where the problems exist and then see, as an entrepreneur, whether you can come in and address those problems in a better way than they’ve been addressed by other people.

MR. BISHOP: I think as I look at this whole – the burgeoning movement of impact investing, there’s – it seems like people – a lot of people are interested. They feel that there is a genuine – an opportunity to do well and do good, as Secretary of State Clinton said, at the same time.

But I’m sort of very struck, and the reason – is the reason I brought up this risk question, that it seems to me that people are wanting to have the doing well by doing good without really taking on a lot of risk, and I wonder if that’s going to mean that it has a lot less impact and a lot slower taking off than it ought to be. And I wonder what you would do to sort of – is there anything we can do to kind of get investors to take it – to take a bit more courage and to jump in and really invest in some of the more unusual opportunities? I think you’re someone who’s always seen the unusual opportunities. And have you found a way of getting investors on board and --

SIR BRANSON: Well, I think – I mean, I think if something is particularly risky – I mean, like – okay, clean energy – quite a lot of people have fallen flat on their face with clean energy. Then on situations like that, government need to, say, take taxes away from the dirty industry and help kickstart the clean energy industry by not taxing that or giving them some sort of tax breaks. And – so it’s up to governments to sort of set the ground rules in order to get people to go into the slightly more risky industries.

One thing that we’ve been trying to encourage the big foundations to do is actually to use their money – rather than just giving it away as charitable money, to use their money as the initial risk capital for big projects. So if you’re talking about trying to sort of green a city, maybe let the Rockefeller Foundation put up this sort of – the 10 percent riskiest proportion of the money. Now they may not get that money back, but if they had just given it away, they wouldn’t have got it back anyway. But they may well get it back, where they’ll be able to then roll it on and do the same again. But if you can get that 10 percent risk element covered, you could then find banks and other people to come up with the 90 percent.

MR. BISHOP: See, I was talking to the Immedia [ph] Network recently and they were saying that they’ve calculated that it’s 1/50th of one percent of all foundation endowment money goes towards anything other than a grant. And there’s this sort of extraordinary lack of creativity from the foundation sector in terms of trying to do that kind of more –


MR. BISHOP: -- sort of intelligent risk-taking. And I – it does seem like there’s a huge opportunity to change that.

SIR BRANSON: Yeah. Well, I think – I mean, I’ve talked to one or two big foundations. We may be – we might go and do a road show to foundations to try to encourage them to go down that path because I think the leverage – so a hundred million could be leveraged up to – for every – what, for every 10 million, it could be leveraged up to a hundred million and many times what it’s worth. And they might get that original investment back, and so it could just roll – it can roll on.

MR. BISHOP: In terms of the big businesses that you see out there, I mean, you’ve obviously – you’ve got a private company structure, which kind of gives you, I guess, more freedom in a way to do things without having to consult shareholders all the time. Are you – do you think there’s a – there are real limits for public companies in terms of how far they can go down this kind of agenda? Or is that one of those things that people just use as an excuse to avoid thinking too hard about it?

SIR BRANSON: I don’t – I actually don’t think there is anything in the public company rules that stops them from being far more – far braver than they currently are. Having said that, we think it makes sense to sort of look at those rules and see whether one – we can improve the rules to make it much clearer that – what a chairman of a public company should have obligations to do, rather than not to do.

But I think in this day and age, the city should realize that it is in the interests of these big public companies to have a – that’s a 200,000 workforce feeling wonderful about what their company’s doing. I mean, Coca-Cola, who is a – we’re a very small rival of theirs, but I will praise the fact that they’ve got a chief executive who seems to be getting out there and what – trying to make a real difference in the world. And they have an enormous part in so many countries in the world to make a difference, and fantastic to see a company like that. PUMA in – with Jochen Zeitz, I mean, he just decided – it’s a big public company, but let’s go and make a real difference in the world. And he’s done some fantastic, fantastic things. So with the right leaders, it can – they can – it can work.

MR. BISHOP: And you hear this is more than just a fig leaf for those companies. I mean, this is something that’s fundamentally changed –

SIR BRANSON: Yeah, I think it – I mean, I think if it’s a fig leaf, your employees will see through it and you’re not going to get the respect of the people who work for you. If you don’t get the respect of the people who work for you, the public will see through it. So I think you’ve got to make a real, genuine difference, and then I think your brand – your brand is all you’ve got. I mean, they – so if you’re making a real difference in the world, then your brand will be enhanced, and then you may well sell more products as a result, and – so be proud of the difference you’re making, and if it enhances the brand, that’s great.

MR. BISHOP: One of the areas that you work with is cities, and there’s a lot of discussion at the moment as to whether – as we become more and more frustrated with national governments and some of their dysfunctionality, whether actually the most effective unit of government to really drive change is going to be the city. And – we’ll just talk a bit about some of the projects where you’re partnering with cities to make some change.

SIR BRANSON: Yeah. I mean, I’ve sort of touched on – but this – I mean, what we did was we asked the financial world why they weren’t lending to cities and the mayors, and they said it was security on the loan. And so we then went to the mayors of the cities and said, “Look, why can’t you give – why can’t you just add the loan onto the taxes on the properties so that it’s not actually the owners of the house that are obliged to pay; it’s the house itself?”

And based on that simple sort of change, we got the first sort of 650 million loaned away in Florida. And I think Fannie Mae are kicking up a little bit of a fuss because they’re saying there’s a tiny little bit of further security there, and I think that issue’s being – hopefully being resolved. But subject to that, that could just be rolled out around the world, and since six gigatons of carbon come from cities, it could make a hell of enormous difference.

And it also would make an enormous difference to the importation of fuels from the Middle East into America and into Europe and other places and all that money pouring out and the home will pay back that loan within about five years. And then they’ve got insulation and clean energy going forward. So it is a win-win all the way around.

MR. BISHOP: Now, you’re often controversial, and one area in which you’re particularly controversial at the moment is your view of the war on drugs. And in particular, I guess – I was in Mexico last week at the World Economic Forum and there was a very interesting panel where a number of Mexican business leaders were saying this war on drugs ought to – it’s just completely counterproductive and is hurting economic development in Mexico and hurting the development of that country. Now is – that’s your view, I think, as well, isn’t it? And how do you see that campaign going? I know there are a lot of other business leaders that are trying to change policy in this area.

SIR BRANSON: Well, I’m a cog in the wheel on the Global Drug Commission, which President Cardoso, who turned Brazil around into the wonderful country that it is today, set up. And on that commission you’ve got 12 other South American ex-presidents, you’ve got Kofi Annan who just actually stepped down to do the Syrian thing – Paul Volcker, George Shultz, and basically we’ve spent the last two years looking at the war on drugs and it was patently obvious to us that the last 50 years every single year has gotten worse; that in America one and a half million people, I think, incarcerated; enormous quantities of black people in prison as a result of just taking drugs. And we examined other countries and we found that the countries that treated drugs as a health problem, not a criminal problem, seemed to be getting on top of the problem.

So if you take Portugal as an example, the last – 10 years ago they had a massive drug problem. They said we will not send anybody to prison ever again for taking drugs, so effectively de-criminalizing all drugs. And if anybody has a drug problem, they can come to a committee, which will have a psychiatrist; it’ll have health workers and so on. Those committees – the whole drug issue will be moved from the home office to the health department, so – and which it was – and over the last 10 years they managed to reduce the annual rate of people getting HIV from dirty needles by at least 50 percent, because people don’t have to go in the street to get their dirty needles, they don’t have to go on the street to get their fix. There’s places they can go where the government will provide them with methadone or whatever substitute is there needed. And then when they go to those places, when they’re ready to – when they need – ready to go to a clinic to get off, the government will pay for that, which costs a third of what it costs to send somebody to prison, and they have a much greater chance of actually then becoming clean again.

And the amount of young people taking drugs has dropped and there’s been no explosion in drug-taking in Portugal or anything like that. So I mean it’s been, I think, a success in almost every single department. And the country has saved millions and millions on the cost of sending people – incarcerating people in prison. All those people who go to prison, their lives are ruined. I mean, the amount of Americans now in prison is just many, many times more than anywhere else in the world as a percentage of the population, far worse than China. I mean it’s terrifying to think what happens here in America as far as the locking up of young – particularly young black people.

And so what the commission basically says is please experiment with new approaches. Whatever happens, stop the war on drugs, decriminalize – sorry – stop the war on people who are taking drugs, decriminalize drug use, help people who have drug problems, by all means go after the drug – the drug barons. But actually, if you do what Portugal have done, you will have pulled the carpet from under the drug barons anyway.

MR. BISHOP: And do you – I mean, do you think this is a sort of impact economy issue? I mean, if we don’t solve this problem, can many of these development problems will not be solved?

SIR BRANSON: Three hundred billion a year goes into the underworld just for drugs being illegal and the way we treat drugs. If you then add, say, prostitution which, if you analyze prostitution, is actually a very similar situation to drug taking. I mean, women are left at the mercy of their pimps, they’re not registered because it’s illegal, they’re not checked for medical purposes because it’s illegal, and in countries where they’ve actually legalized it and the prostitutes are registered, they don’t have the big sort of health problems they have in other countries. Women don’t get badly treated as they do in other countries.

Anyway, if you just take those two things alone, you’re talking about something like 400 billion extra that could be spent on education. It could be spent on health. It could be spent on health messaging, telling people how dangerous the taking of drugs is – I mean, warding people off about going to prostitutes. And it’s so – it’s just so similar to Prohibition in America. When Prohibition existed you had Al Capone, you had the underworld, America was a mess. And then once you got rid of Prohibition and taxed alcohol and taxed cigarettes and warned people of the dangers of it – cigarette consumption started to drop and, okay, alcohol consumption I’m not sure has – (laughter) – but we’re all guilty of that, anyway. At least we’re not locked up.

MR. BISHOP: Well, I suspect this conversation has ranged somewhat further than what may people thought they were going to hear about when they heard about impact economies this morning, but I think it does – it highlights the complexity of the – of the – of many of the issues and how many things that maybe seem on the fringe actually come back.

SIR BRANSON: The drug wars are – I mean, they’ve moved into Africa recently in a massive way. And they’re putting governments in danger. And as a businessman, if you’ve got a failed business that – it has failed, not just one year, but for 40 or 50 years, you do something about it. You change you approach. And that’s what the Global Drug Commission is saying is: Do not carry on with the current approach.

And I know a lot of politicians think that this is an incredibly unpopular subject. We all know what’s right; we all know that we ought to do something to change this, but we’ll never get reelected if we go along that line. But we’ve done a lot of surveys, and the war on drugs has failed. Google+, there, they recently – 90 percent said it had. Should you decriminalize drugs rather than sending people to prison? 90 percent of people said yes, you should. So there’s a halfway – there’s a – okay, legalization of marijuana, maybe 50 percent. So – but it they could just experiment with different approaches, that would be great.

MR. BISHOP: Now our time is almost up, but I guess – I get a sense – I mean, I’ve always had a sense about you that you’re a tremendous optimist. And this is a time when I think around the world, there’s a lot of pessimism at the moment. And we’ve talked about some really difficult, challenging issues ranging from drug – the war on drugs to climate change where – again, I mean, the Rio+20 has the potential of being, rather, a depressing review as we look at where that whole issue has got to.

So I really want to get a sense from you, I think firstly, as to what are you most optimistic about solving of all these big problems over the next 10 years or so? Which do you think we can really – that this new approach could really solve things?

SIR BRANSON: I am an optimist. And actually, if you do look at the world today, over the world 20 years ago, and over the world 20 years before that, and so on – generally speaking, in most areas, we have progressed. The fact that Africa is experiencing 5 percent growth; the fact that India is experiencing nine percent growth; the fact that China’s experiencing nine and a half percent growth, which will be pulling, hopefully, hundreds of thousands of people out of poverty.

Obviously, that – and hopefully in time, will let – that will result in population – a population drop, rather than a population explosion as people do get out of poverty. So I think there are big challenges still there. I mean, obviously, there are still conflicts to be tackled, which obviously Hillary Clinton and the team in this building are working hard to try to address. There’s health issues, there’s global warming issues, and so on. But I think if we can unite the business world with the social world with the political world, and really go after these problems, I think we can get on top of most of them.

MR. BISHOP: And if there’s one thing you have to say to governments to say – if you just changed the way you operated in this way, you would find it much easier to form partnerships that really worked well with business, what would that one thing be?

SIR BRANSON: One thing.

MR. BISHOP: Or two things. (Laughter.)

SIR BRANSON: The – I mean, I think the – if you, say, take – I mean, there are a number of things. But I mean, if you, say, take the price of fuel. I mean, they – we – I think it’s getting to a level now where there’s a danger of it pushing the world into a double dip recession. And OPEC, they sit around every month and they sort out how they can push those prices up. Well, there isn’t the equivalent organization in the Western world sitting around thinking, right, how can we make sure that we become self-sufficient in fuel and in energy? How can we make sure it’s clean energy whilst we’re about it?

Every single department in our government should be focused on that because the world is run – everything runs on energy and fuel. And so we need a counterbalance to OPEC, but we need it for many different reasons: to be self-sufficient in energy, to be – bring the cost of energy down, to make sure it’s clean energy. And so anyway, if I have to – I can carry on, but one thing. I’ll go for that one.

MR. BISHOP: And if you had to challenge the business community, what will be the business – the challenge to the business community?

SIR BRANSON: I mean, just simply to say to them it’s – making money is okay. But actually, putting a little bit of your time into making a real difference in the world, I think when you retire from being a business leader, you will remember what you’ve done by making a difference in the world rather than last year’s bottom-end results. And I think if every business leader worked like that and get out Screw Business as Usual, then the world will be a better place.

MR. BISHOP: And we haven’t talked much about how you work with non-profits and things, but is that one thing that you would also see from a non-profit sector that could be changed that would make a much more effective partners for business in solving these problems?

SIR BRANSON: I just think if non-profits and for-profits work closely together – and quite often you’ve got different skills and I think if more businesses get involved, I don’t think the not-for-profit sector should be embarrassed about involving businesses and their local community to come and help them perhaps more than they do at the moment. And so I think the two should overlap more.

MR. BISHOP: Very well. I think we’ve covered a vast amount of territory, and I hope there’s lots of food for thought there. And we will have a day and a half now of discussing what’s screwing business as usual might mean.

SIR BRANSON: Thank you.

MR. BISHOP: And also some other areas. So thank you very much. (Applause.)

SIR BRANSON: Thanks a lot.

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