Is your fleece made of recycled plastic bottles?
Will Patagonia be able to maintain its advantage, as the premier producer of environmentally conscious clothing, over its competitors as more apparel companies begin to adopt similar sustainability programs?
Luckily for Patagonia, their founder Yvon Chouinard, gave them a multiple decade head start by creating Patagonia in 1973 [1]. Patagonia’s mission statement sets them apart from other apparel companies when it states, “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis [2].”
Combating climate change at the forefront of ethical business strategy has continually been a core principle to Patagonia, but as their business continues to grow and their products become more popular, maintaining those fundamental principles of a minimalist style will become more difficult. Yvon stated in his book, The Responsible Company, “We have borrowed from nature what we can’t pay back [3].” Patagonia has continued to find ways to reduce their environmental impact, but that pressure has been compounded by the growth of their business over the last three years. Patagonia is a private company that provides minimal insight about their financial performance, but on January 3, 2012, Patagonia became the first company in the state of California to formally register as a benefit corporation [4].
Additionally, since 1985 Patagonia has donated 1% of their net revenues to nonprofit organizations to preserve and restore wild places. In 2002, Yvon established the nonprofit, 1% for the Planet, which has encouraged over 1,200 other companies to share Patagonia’s commitment to the environment by donating at least 1% of their annual sales to environmental causes [4]. As a benefit corporation committed to donating 1% of their annual sales, Patagonia provides details about the amount of money they donate to nonprofits which can provide estimates of the company’s annual revenue. In 2013 Patagonia donated $5,602,433 to 773 nonprofit organizations that promote environmental conservation and sustainability [5]. Patagonia’s estimated 2013 annual revenue is about $560mm. After two years of growth Patagonia reported a donation amount of $6.2mm at the end of FY 2015, resulting in an estimated annual revenue of $620mm [6].
Patagonia finds itself in a dilemma where they try to maximize revenue which in turn leads to donating more money to environmental causes, but as their sales grew 9.7% over two years, one can assume they sold more items which contributes to additional harm to the environment. Generally speaking, the textile and apparel industries make up about 10% of global carbon emissions, and it takes about 200 tons of water to make one ton of fabric [7]. Patagonia is also in a predicament between functionality and fashion. The company’s founding values and mission statement are in stark contrast with a portion of their current market of customers who buy their products in excess of their basic needs. Yvon described his contempt with this form of customer behavior when he wrote, “As of this writing, two-thirds of the U.S. economy relies on consumer spending…Much of what we produce to sell to each other to earn our living is crap…We’re wasting our brains and our only world on the design, production, and consumption of things we don’t need and that aren’t good for us [8].”
Patagonia ran a campaign in 2011 titled, “Don’t Buy This Jacket,” because they identified the negative environmental impacts outweighed the benefit of producing the jacket. The company explained that manufacturing and shipping one of the jackets the campaign referred to required 135 liters of water and generated about 20 pounds of carbon dioxide [9]. Two years later Patagonia reported one of their two FY 2013 Short Challenges is that, “Not all of our products are made using low impact (environmentally friendly) materials [10].”
Currently Patagonia is at the forefront of Corporate Responsibility by, “…taking responsibility for the impact of their activities on customer, employees, communities and the environment [11].” One of the many aspects that Patagonia has focused on in the past two years is to ensure the humane treatment of birds that supply their down. Starting in the fall of 2014 the company began to only use 100% traceable down [12]. Many other production techniques that Patagonia uses to ensure an environmentally responsible consumer product include; the sole use of organic cotton since 1996, in 1993 they adopted fleece in their product line made from post-consumer recycled plastic soda bottles, undyed cashmere which lessens the use of water and chemicals, and they developed a supply chain for new wool to reflect high standards for both animal welfare and land management [13].
As Patagonia has become the industry leader in setting environmental standards in the production of clothing, there are always areas for an organization to improve. Some improvements that Patagonia can focus on include; further education of customers, recruiting more companies to participate in 1% for the Planet, invest in other companies and developing technologies that can positively impact the whole industry [14], identify products that will not be sourced at a sustainable level within three to five years and eliminate them from their product line, and continue to encourage customers to take proper care of and repair their garments to reduce the repurchasing of similar items [15]. Patagonia’s fundamental values over the last 40 plus years are a testament that a company can be profitable and environmentally conscious at the same time, and the external pressure they continue to place on the apparel industry is one that can be commended but continually improved.
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References:
[1] Yvon Chounard, Let My People Go Surfing, The Education of a Reluctant Businessman (New York, Penguin), 24-25, 38.
[2] “Patagonia’s Mission Statement.” Web. Nov. 2016. <http://www.patagonia.com/company-info.html>.
[3] Yvon Chouinard and Vincent Stanley, The Responsible Company (Ventura: Patagonia Books, 2012), 19.
[4] Patagonia Works, “Annual Benefit Corporation Report, Fiscal Year 2015, May 1, 2014 – April 30, 2015,” p. 4. Web. Nov. 2016. < https://www.patagonia.ca/static/on/demandware.static/-/Library-Sites-PatagoniaShared/default/dw388e98a1/PDF-US/2015_BCorp-AnnualReport-v6.pdf>.
[5] Patagonia Works, “Annual Benefit Corportation Report, Fiscal Year 2013, May 1, 2012 – April 30, 2013,” p. 12. Web. Nov. 2016. http://www.patagonia.com/on/demandware.static/Sites-patagonia-us-Site/Library-Sites-PatagoniaShared/en_US/PDF-US/bcorp_annual_report_2014.pdf>.
[6] Patagonia Works, “Annual Benefit Corporation Report, Fiscal Year 2015, May 1, 2014 – April 30, 2015,” p. 7. Web. Nov. 2016. < https://www.patagonia.ca/static/on/demandware.static/-/Library-Sites-PatagoniaShared/default/dw388e98a1/PDF-US/2015_BCorp-AnnualReport-v6.pdf>.
[7] Clayton Aldern, “Greening the clothing industry isn’t just about cotton and water. The message counts, too.” Grist (Mar. 1, 2016). Web. Nov. 2016. < http://grist.org/living/greening-the-clothing-industry-isnt-just-about-cotton-and-water-the-message-counts-too/>.
[8] Yvon Chouinard and Vincent Stanley, The Responsible Company (Ventura: Patagonia Books, 2012), 26-27.
[9] Nick Paumgarten, “Patagonia’s Philosopher-King.” The New Yorker, Sept. 19, 2016. Web. Nov. 2016. <http://www.newyorker.com/magazine/2016/09/19/patagonias-philosopher-king>.
[10] Patagonia Works, “Annual Benefit Corportation Report, Fiscal Year 2013, May 1, 2012 – April 30, 2013,” p. 12. Web. Nov. 2016. <http://www.patagonia.com/on/demandware.static/ Sites-patagonia-us-Site/Library-SitesPatagoniaShared/en_US/PDFUS/bcorp_annual_report_ 2014.pdf>.
[11] “Corporate Responsibility.” Web. Nov. 2016. < http://www.patagonia.com/corporate-responsibility.html>.
[12] Jessica Lyons Hardcastle, “Patagonia’s Commitment to 100% Traceable Down.” Environmental Leader (Oct. 30, 2014). Web. Nov. 2016. < http://www.environmentalleader .com/2014/10/30/patagonias-commitment-to-100-traceable-down/>.
[13] “Materials and Technologies.” Web. Nov. 2016. <http://www.patagonia.com/materials-tech.html>.
[14] Jessica Lyons Hardcastle, “Patagonia Bets $1 Million on Biochemistry.” Environmental Leader (Apr. 30, 2015). Web. Nov. 2016. < http://www.environmentalleader.com/2015/04/03/ patagonia-invests-more-than-1m-in-biochemical-firm/>.
[15] “Better Than New.” Web. Nov. 2016. < http://www.patagonia.com/worn-wear.html>.
Featured Image 1: Digital image. Patagonia P-6 Logo Roger That Hat. Web. Nov. 2016. <http://www. patagonia.com/product/p-6-logorogerthathat/38132.html?dwvar_38132_color =BLK&cgid =#tile-3=&q=logo&lang=en_US&start=1&sz=24>.
Featured Image 2: Digital image. Patagonia Men’s Classic Retro-X® Fleece Jacket. Web. Nov. 2016. <http:// www.patagonia.com/product/mens-classic-retro-x-windproof-fleecejacket /23055.html >.
Image 3: Digital Image. Patagonia’s Official Twitter Page. Web. Nov. 2016. < https://twitter .com/Patagonia>.
I had no idea that Patagonia incorporated recycled plastic bottles into their fleece jackets. This seems like a great way to tackle a large sustainability problem as water bottle use increases across the World with approximately 8 out of 10 water bottles ending up in a landfill [1]. Consumers are growing increasingly wary of plastic water bottles, with many turning to reusable bottles such as S’well metal bottles, and this campaign by Patagonia may be able to hop onto this trend. Patagonia’s marketing campaign of advising consumers not to purchase their products – the “Don’t Buy This Jacket” campaign – is quite odd, but shows that Patagonia is certainly concerned about the environment. One additional suggestion I would have in addition to encouraging customers to repair their existing jackets is to offer a recycling program similar to our IKEA case on Friday. Customers could return old jackets to the store, and materials could be recycled back into the manufacturing process.
References
[1] Knopper, M. (2008). Bottled Water BACKLASH. E: The Environmental Magazine, 19(3), 36-39.
Hey Ken,
Thanks for highlighting the great work Patagonia has been doing for decades.
I particularly appreciated that you shed light on the core tension Patagonia faces between its business strategy (to generate revenue by selling retail products that are often in excess of consumer’s true needs) and its commitment to reducing environmental impact. When the “Don’t Buy This Jacket” campaign rolled out, I struggled to believe whether the campaign’s message was genuine or whether it was a ploy to further increase revenue among consumers who will connect with company’s values and feel compelled to go buy new Patagonia products.
If Patagonia truly wanted to reduce impact and get consumers to “not buy their jackets”, why didn’t the company reduce its offerings of new products and shift its positioning to being a re-sale business? Or, why didn’t it increase product prices such that the premium covers the costs of all negative environmental externalities incurred during production and discourages consumers from buying in excess.
Overall, I struggle with how Patagonia can dually exploit consumers’ behaviors to buy in excess of what they need, while also condemning this behavior.
Great investigation Ken! Patagonia has been a brand I admire for their leadership and stewardship of bringing not only environmental sustainability but animal welfare into the retail production conversation. I agree with Ryan’s comment about how they are condemning the consumer’s excess buying behaviour while offering so many options of many of their products. Patagonia can do better by practicing what they preach and offering fewer choices.
I think it is great that they are giving back 1% of their earnings each year but it seems that they are dispersing it to a large number of sources. As a company founded on principles of implementing solutions to the environmental crisis, could they give back more? Even an incremental 1% could have added an additional $6.2M to organizations driving positive change. There are many companies that give back up to 11% [1] so is Patagonia doing as much as it could? Overall, I still look up to Patagonia and hope they can not only continue but do more in the future.
[1] http://www.forbes.com/pictures/mkl45ejjg/1-kroger-company/#52627f1a56d1
This post does a great job of outlining the steps Patagonia has taken to help preserve our environment, and not produce more waste in the world. Patagonia is in an interesting position because its business model is inherently dependent on selling stuff to people, but they also actively campaign against this (as described in the “don’t buy this jacket campaign”). Patagonia has a lot of power to deliver their message to consumers and encourage them to use less product with the environment in mind, but this also has some downsides. If consumers actually listen to this message, their business ultimately fail. If their business fails, then they will no longer be able to deliver their message. Patagonia has to balance this fine line of producing consumer goods and actively encouraging people not to buy them. Now that Patagonia is a household brand name, they could consider changing how they make their products and which products to make. Using recycled materials is a great move, but I am interested to see how they develop their sustainability program and continue to convey their core message to customers.
Interesting post! I personally love Patagonia and I remember their “don’t buy this” campaign.
Patagonia also has a fix it program where they will repair your items. “Patagonia employs 45 full-time repair technicians at our service center in Reno, Nevada. It’s the largest repair facility in North America—completing about 40,000 repairs per year. We’ve also teamed up with the repair experts at iFixit to create care and repair guides so you can easily do it yourself.”
But I agree with Ryan here that I’m not sure that they are fully altruistic here. I question some of their “don’t buy this” intent when they send out catalogues regularly showing off new styles and colors of the same products they have had in their line for a while. I think Ryan brings up a good idea about setting up re-sale options for those consumers who want the “unnecessary” items. They do offer a recycling program for their clothes and encourage people to “find a new home” for their items until they are finally worn out, but this puts more ownership onto the customers.
It is a fine line to walk to be able to bring these better practices into play, but I do think that they have a significant following who love to buy extraneous pieces.
http://www.patagonia.com/worn-wear.html
Ken – solid work!
Have you been tracking Patagonia’s roll-out of its new “natural rubber” wetsuits [1]? These new wetsuits highlight some of the key issues you laid out in your post and raise some new questions.
Long story short: traditional wetsuit materials like neoprene and newer replacements like “geoprene” are derived non-renewable resources and petrochemicals that contribute to climate change and other adverse environmental effects. As a solution, Patagonia worked with a company called Yulex to develop a wetsuit made from Forest Stewardship Council (FSC) certified natural rubber. They claim the manufacturing process emits up to 80% less CO2 and that the wetsuit itself actually performs better than its neoprene competitors. They’ve also “open-sourced” the technology, manufacturing process, and supply chain data on the rubber in the hopes that other companies will adopt the material without having to spend time and energy on R&D [2]. For me, this seems as close as possible to an altruistic motive, as sharing this tech could undercut Patagonia’s competitiveness and profitability in the category.
As a smaller player in the surf segment, do you think Patagonia will be able use this new product to apply the “external pressure on the…industry” that you described? Or – to Ryan’s point about their sympathetic customer base – will they be able to punch above their weight in this category due to a target market that’s sympathetic to their eco-friendly cause?
[1] “Yulex Guayule Rubber.” Web. Nov. 2016. .
[2] Hansman, Heather. “Outdoor Gear Companies: It’s Time to Open-Source Your Technology,” Outside Magazine, 31 Oct 2016. Web. Nov 2016. .
Other companies should look to Patagonia as a prime example of how to help fight climate change. Patagonia has done an incredible job marketing their products and is positioned as a company that provides outstanding outdoor clothing, is environmentally conscious, and even as a fashion brand for some. Patagonia’s largest competitor, The North Face, has demonstrated a significantly lower enthusiasm and push for sustainability despite serving the same customers and pushing out the same message.
I did not know that Patagonia was so actively fighting against climate change. I’m glad the HBS section clothing is made by Patagonia, I just wish the sleeves on their clothing weren’t so darn long!