Based in Ventura, California, Patagonia was founded by Yvon Chouinard. As a 14-year-old boy, he started rock climbing in 1953 as a member of the Southern California Falconry Club. While searching for falcons, Yvon fell in love with the means to get to the falcons, climbing up and down mountains.2 Because Chouinard is a famed mountain climber and outdoorsman, his commitment to the environment and his company are completely intertwined. Inspired by his love of the outdoors and climbing, he started designing his own hardened steel pitons, which support the person during the climb up the mountain. His designs had significantly better holding power than the traditional soft iron pitons, and, just as importantly, they did not damage the rocks because soft pitons could not be removed from the rock while hard pitons can be removed and used again. He started selling the pitons from the back of his car and expanded to trying to improve every piece of climbing equipment to benefit both the user and the environment. Chouinard continued to work on new designs until he found an alternative to pitons. He designed aluminum chocks that could be wedged by hand instead of pitons, which have to be hammered in and out of cracks in the rock. This “clean” approach to rock climbing demonstrated that companies like Patagonia can develop products that fulfill the needs of the customers without harming the environment.3 From his focus on improving equipment, he ventured into clothing and started introducing bright and unique colors that starkly contrasted with the traditional black and gray sports clothing. The origin of the colorful shirts was based on a climbing necessity of comfort and practicality. Yvon was on a climbing trip in Scotland in 1970 when he bought a rugby shirt to be worn during a climb. The shirt was durable enough to withstand the strains of rock climbing and was blue with red and yellow stripes. He wore the shirt when he returned to California and his friends wanted to know where they could buy one. Yvon started importing rugby shirts from England, New Zealand, and Argentina. The shirts sold out so quickly that he realized that clothing could generate the type of sales and profits that were not feasible from his mountain climbing equipment gear. With his newfound commitment to clothing, Yvon decided he needed to change the name of the company from Chouinard Equipment. At the time that Yvon founded his company in 1973, Patagonia, a geographical region that covers the lower sections of Argentina and Chile, was perceived as an isolated paradise. This perception of “Shangri-La” and the practicality of being pronounced the same way in any language led to Patagonia becoming the name of his clothing company.

The Culture at Patagonia: Let My People Surf

It is not unusual to find surfboards stacked up in the mailroom at Patagonia, unless, of course, it is high tide and the boards are to be used on the ocean a few blocks away. There is a volleyball court in the back of the corporate headquarters, and there are showers in the restrooms. The corporate “uniform” is shorts and sandals, and the cafeteria is not allowed to serve beef. Their company’s mission statement is to “do no harm” in its business transactions. Decisions that affect the employees are usually made by consensus. For example, when Patagonia needed to lay off employees in 1991 (due to a recession in the United States that started in 1990), managers allowed the employees to review the financial books of Patagonia to demonstrate why the layoffs were needed. The employees responded to the information by recommending and implementing the cost cutting needed for the long-term sustainability of Patagonia. To encourage a family-friendly atmosphere, Patagonia set up a child care center so that children are always close to their parents. At lunchtime, many parents will eat with their children. In addition, both new mothers and fathers get paid leaves.5 After the 1991 layoffs, Patagonia realized that to keep its strong positive culture, it must allow the employees to enjoy all the different parts of their life. As a result, Patagonia allowed and encouraged employees to go surfing during lunch or high tide whenever they could. This flexible work schedule practice prompted the creation of the Patagonia phrase “Let My People Surf.” Management’s underlying assumption was that the employees would still complete their work responsibilities within their deadlines.6 This and Patagonia’s many other employee-friendly policies, such as a company café that serves organic food and drink, and an infant and toddler care room, keep turnover remarkably low, especially for the retail industry.

Patagonia’s Corporate and Social Responsibility

Patagonia is committed to ensuring that its workers, regardless of their location in the world, work in conditions that are safe, fair, legal, and humane. Patagonia conducts a due diligence evaluation of any facility that manufactures Patagonia products. For new factories, the due diligence evaluation includes the following practices: the director of the social/environmental responsibility (SER) department must be involved in the decision to include a new factory, the SER representative must work with the sourcing and quality departments on the decision whether to include the new factory, the director of SER has complete veto power to override the choice of the new factory, and the SER staff are also responsible for ensuring all new factories comply with Patagonia’s social and environmental standards included in Patagonia’s code of conduct and code of conduct benchmarks as well as with all laws and union contracts (if it is a union shop). If the standards vary, Patagonia will apply the standards that are most beneficial to the employees.

Patagonia will also review the factory’s SER management systems and will train the facility’s employees to ensure they comply with Patagonia’s code of conduct. In addition, a prescreening takes place at the facility by either the SER staff or a third-party monitoring firm that does a full social audit on the facility. The social audit includes a payroll analysis and interviews with workers in their local language. Patagonia will not tolerate any facility that supports child or forced labor, worker abuse, worker harassment, or worker discrimination and will immediately reject the facility if they find any of these conditions. For those facilities that have minor violations, the factory owner must agree to correct all the violations before the facility can start manufacturing Patagonia products.

Patagonia uses four criteria in selecting a new facility to produce its clothing: quality, business factors (technologies used in the plant, skills of workers, location of the plant, price per unit of clothing), customer service, and dependability based on the ability to deliver the final goods in time. In 2012, Patagonia made products in factories in Jordan, Nicaragua, Sri Lanka, India and Bangladesh, China, Thailand, Vietnam, Turkey, Mexico, Costa Rica, Colombia, El Salvador, Israel, the Philippines and the United States. The company tries to manufacture as many products as possible in the United States. In 2012, Patagonia had eight domestic factories in this country, but a lack of skilled garment laborers and higher labor costs prevent Patagonia from producing more clothing here.8 Patagonia’s SER staff visits all of its factory sites regularly to check current conditions and ensure that previously cited violations have been corrected. The SER staff will also consult and perform training for the employees if they have specific concerns that need to be addressed at the facility. Furthermore, Patagonia tracks the wage rates for the countries to which it outsources its manufacturing. Management will negotiate with the owners of the factories to work toward a higher fair or living wage rate for the workers who produce the Patagonia clothing. Many of Patagonia’s plants pay workers more than the minimum wage rate for the country. In 2010, Patagonia audited 90% of its supply chain for both social and environmental issues.

The Natural Environment and Patagonia

With the founder’s sustainability beliefs firmly entrenched, Patagonia has always been an environmental pioneer. In 1985, Patagonia became committed to donating 10% of pretax profits annually to grassroots environmental groups and later amended it to donating either 10% of pretax profits or 1% of sales, whichever amount is greater. To differentiate itself in the marketplace, Patagonia focuses on environmentally friendly materials. In 1996, Patagonia announced that its entire sportswear line would be produced using organic cotton. Patagonia also uses naturally grown hemp and recycled polyester in its clothing. Patagonia gets the material for its recycled polyester from used soda bottles and other sources.10 Patagonia tracks the carbon footprint of its products throughout its supply chain. For each product being tracked, the company measures energy consumption, carbon dioxide emissions, waste generation, and water use. Patagonia defines the start of the supply chain as occurring at the origin of the primary material (cotton, wool, leather, polymer) and follows the process through the production of the garment from a fiber to a finished product. The supply chain is completed when the garment reaches Patagonia’s distribution center in Reno, Nevada. The energy consumption that is measured through the supply chain includes the energy consumed during transportation and the energy consumption at each step in the manufacturing process. The measurement of carbon dioxide and other greenhouse gas emissions is based on the transportation and supply chain energy use of the products sold by Patagonia. The amount of waste generated is based on solid waste that has been developed at each step in the production process. This waste metric does not include waste that has been classified as liquid, hazardous, or packaging. The water use is based on the calculation of the total amount of water that has been consumed at each step in the production process. The water use does not include water that has been recycled or water that has been discharged during the manufacturing process.

In July 2011 in the United States, Europe, and Japan, Patagonia started taking back every single product made by the company for potential recycling. Clothing that is made from polyester and nylon is melted down and converted into a new fiber. Organic cotton and wool clothing are chopped up and recycled into new materials.

Used fishing waders are recycled by a company called Recycled Waders into fishing bags, and used wet suits can be converted to beer koozies. Patagonia will also take products such as used shoes, backpacks, and luggage. Returned shoes that cannot be recycled are donated to the Soles4Souls program. Patagonia does not yet have a plan for recycling the backpacks and luggage.

In April 2012, Patagonia launched the Patagonia Provisions Salmon Project, which promotes the sustainability of wild Pacific salmon, whose numbers have been dwindling. Chouinard wrote in an essay posted on the Patagonia website, “Our goal is to create a new model that demonstrates how selectively harvesting salmon is not only possible, but good business, and can help protect the future of wild salmon.”

In October 2014, Patagonia announced the opening of the Patagonia Park. Patagonia, along with its partner Conservation Patagonia, created a new national park in Patagonia, Chile. The park has almost 100 miles of hiking trails, three campgrounds, a lodge with a restaurant, and a visitor’s center.....

Questions

1. Comment on the Common Threads Initiative. Will it be successful, in your opinion?

2. Can organizations effectively manage environmental issues while making a profit? Explain your position.

3. Patagonia appears to be concerned with being an environmentally friendly company. Do you think this effort will be sustainable in the long run? Explain.

4. Do consumers really care about preserving the environment? Cite examples to support your position.