{"id":26409,"date":"2017-11-15T22:19:23","date_gmt":"2017-11-16T03:19:23","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/too-warm-for-the-fleece-patagonias-quest-for-relevance-amidst-climate-change\/"},"modified":"2017-11-15T22:19:23","modified_gmt":"2017-11-16T03:19:23","slug":"too-warm-for-the-fleece-patagonias-quest-for-relevance-amidst-climate-change","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/too-warm-for-the-fleece-patagonias-quest-for-relevance-amidst-climate-change\/","title":{"rendered":"Too warm for the fleece: Patagonia\u2019s quest for relevance amidst climate change"},"content":{"rendered":"

In 2014, the Financial Times reported that nearly 90% of Harvard Business School students purchased the infamous Patagonia fleece1<\/sup>. Most of us purchase the fleece for warmth, style, and community. Only a few of us purchase them because of Patagonia\u2019s intentionality in building an eco-friendly brand in response to a pressing megatrend. Climate change can both be attributed to and directly impacts Patagonia. Therefore, Patagonia should care about taking action through existing and new initiatives that address the issue for its supply chain.<\/p>\n

The carbon footprint of my fleece<\/em><\/strong><\/p>\n

The $3 trillion apparel industry is responsible for 10% of global carbon emissions, and ranks second to oil as the most polluting industrial business2<\/sup>. Cotton and polyester are the two most pervasive natural fibers in apparel production3<\/sup>. Each cotton T-shirt consumes 2,700 liters of water in production, enough to satisfy a human for 2.5 years.\u00a0 In 2015, polyester production for textiles resulted in Greenhouse gas (GHG) emissions equivalent to 185 coal power plants4<\/sup>.<\/p>\n

Patagonia should care<\/em><\/strong><\/p>\n

Patagonia is an outdoors apparel company with $600M in annual revenues5<\/sup>. CEO Rose Marcario should be concerned with this megatrend for three reasons. First, she manages a complex, global supply chain network, vulnerable to the impacts of climate change6<\/sup>. Supply chain risk is contingent on how each country manages climate change with additional external factors such as political stability, governance, and development7<\/sup>.<\/p>\n

\"\"<\/a><\/p>\n

Figure A 8<\/sup><\/em><\/p>\n

Nearly two-thirds of Patagonia\u2019s factories and textile mills reside in developing countries, prone to accelerated impact9<\/sup>. The fiber and yarn production processes alone comprise 36% of the total GHG emissions10<\/sup>. Sixty percent of the world\u2019s population lives in these countries where increased temperatures would be disastrous to the population and reduce labor supply11<\/sup>. Additionally, water shortages in these countries will inhibit the firm\u2019s cotton production12<\/sup>. These effects are amplified when work-in-process inventories need to be transported cross-seas. Climate change impacts each component of the supply chain.<\/p>\n

Second, management needs to care because climate change will ultimately reduce global demand for Patagonia\u2019s core products, the jackets, increasing excess inventory. Retailers across the industry, reported a 30% decline in sales for December 2015 and beyond due to the lingering warmth 13,14<\/sup>. Finally, the impact of climate change aligns with the company\u2019s mission to \u201ccause no unnecessary harm15<\/sup>.\u201d<\/p>\n

Patagonia cares \u2013 the Triple Bottom Line<\/em><\/strong><\/p>\n

Patagonia established the triple bottom line (Profit, People, Planet) in the late 1990s as its primary measure of success. The company website acknowledges, \u201c<\/em>We make products using fossil fuels, built in factories that use water and other resources, create waste and emit carbon into the air16<\/sup>.<\/em>\u201d <\/em>As an industry, the first step to creating change is recognition and measurement of the issue.<\/p>\n

In 1996, Patagonia shifted production practices to create apparel from recycled polyester and organic cotton17<\/sup>. The company has launched various initiatives including Footprint Chronicles, Materials Sourcing, and Worn to Wear. In the short term, the Worn to Wear initiative, where employees fix broken Patagonia gear, perpetuates the longevity of Patagonia clothing18<\/sup>. The Footprint Chronicles is a map that creates traceability in the supply chain19<\/sup>. For the long-term, Patagonia has changed the raw materials used in the supply chain to incorporate more durable natural fibers such as hemp and organic cotton19<\/sup>. Moreover, the firm altered its denim fabric dying methodology through dyestuffs that use 84% less water, 30% less energy, and emit 25% fewer carbon emissions than the traditional dyes20<\/sup>. These initiatives reduce per person GHG emissions due to lower garment turnover.<\/p>\n

Patagonia can care more \u2013 a deeper commitment to improvement<\/em><\/strong><\/p>\n

While Patagonia is an industry pioneer in climate change initiatives, there are observable areas of improvement that management should address. In the short term, the company can engage retail employees to transfer knowledge about the supply chain to the end-consumer. First-hand experience indicates that consumers are not properly educated about the positive impact of Patagonia\u2019s supply chain. A training program to increase awareness would \u201caccommodate\u201d the megatrend through building conscientious consumption at the end of the supply chain.<\/p>\n

In the long term, Patagonia ought to focus on the negative impact of transportation in its supply chain. The firm has engaged in ways to reduce GHG emissions at most stages in the supply chain except transportation. While tactically more challenging, relocating the Asia facilities to South America or other geographically closer areas will reduce the transportation carbon footprint.<\/p>\n

Patagonia\u2019s environmental efforts are admirable, but beget the following questions: (1) European corporations have consistently demonstrated a greater ability to reduce their carbon footprint through 100% commitment to closed loop production and supply chain management. Why is Patagonia lagging relative to its counterparts? (2) What\u2019s preventing the firm from leveraging its industry leadership to lobby and shape policy around carbon caps for apparel firms?<\/p>\n

(797 words)<\/p>\n

 <\/p>\n

References<\/strong><\/p>\n

1<\/sup>Elizabeth Paton, \u201cMBA chic on the business school campus,\u201d Financial Times<\/em>, January 21, 2014, [https:\/\/www.ft.com\/content\/19ca340c-7d0b-11e3-a579-00144feabdc0], acceded November 2017.<\/p>\n

2,4<\/sup> James Conca, \u201cMaking Climate Change Fashionable – The Garment Industry Takes On Global Warming,\u201d Forbes News<\/em>, December 3, 2015,<\/p>\n

[https:\/\/www.forbes.com\/sites\/jamesconca\/2015\/12\/03\/making-climate-change-fashionable-the-garment-industry-takes-on-global-warming\/#e93ef3879e41], accessed November 2017.<\/p>\n

3<\/sup>Luz Claudio, \u201cWaste Couture: Environmental Impact of the Clothing Industry,\u201d Environmental Health Perspective<\/em>, 115,9 (2007), https:\/\/www.ncbi.nlm.nih.gov\/pmc\/articles\/PMC1964887\/<\/a>, accessed November 2017.<\/p>\n

5<\/sup>World Resources Institute. \u201cThe Apparel Industry\u2019s Environmental Impact in 6 Graphics.\u201d \u00a0http:\/\/www.wri.org\/blog\/2017\/07\/apparel-industrys-environmental-impact-6-graphics<\/a>, accessed November 2017.<\/p>\n

6<\/sup>Fortune. \u201cPatagonia.\u201d http:\/\/fortune.com\/change-the-world\/2015\/patagonia-24\/<\/a>, accessed November 2017.<\/p>\n

7<\/sup>Richard Gledhill, Dan Hamza-Goodacre and Lit Ping Low, \u201cBusiness-not-as-usual: Tackling the impact of climate change on supply chain risk<\/em>.\u201d PwC: Resilience, <\/em>https:\/\/www.pwc.com\/gx\/en\/governance-risk-compliance-consulting-services\/resilience\/publications\/pdfs\/issue3\/business_not_as_usual.pdf<\/a>, <\/em>accessed November 2017.<\/p>\n

8<\/sup>Cooper Hewitt. \u201cInfographic: Environmental Impact of the Textiles Industry.\u201d https:\/\/www.cooperhewitt.org\/2016\/11\/08\/infographic-environmental-impacts-of-the-textile-industry\/<\/a>, accessed November 2017.<\/p>\n

9<\/sup>Patagonia. \u201cThe Footprint Chronicles.\u201d http:\/\/www.patagonia.com\/footprint.html<\/a>, accessed November 2017.<\/p>\n

10<\/sup>Subramanian Senthilkannan Muthu, Assessing the Environmental Impact of Textiles and the Clothing Supply Chain <\/em>(United Kingdom: Woodbridge Publishing Limited, 2014), PDF e-Book, [70-78] https:\/\/books.google.com\/books?id=QAujAgAAQBAJ&pg=PA75&lpg=PA75&dq=climate+change+clothing+supply+chain&source=bl&ots=hLP36zE1Wu&sig=3y-i9uv_DNF-kHbeYqf57XGthbE&hl=en&sa=X&ved=0ahUKEwj5y5bZmb3XAhXL5IMKHcZWC0kQ6AEIUDAJ#v=onepage&q=climate%20change%20clothing%20supply%20chain&f=false<\/a>, accessed November 2017.<\/p>\n

11<\/sup>United Nations Climate Change. \u201cDeveloping Countries Need Urgent Support to Adapt to Climate Change.\u201d http:\/\/newsroom.unfccc.int\/unfccc-newsroom\/developing-countries-need-urgent-support-to-adapt-to-climate-change\/<\/a>, accessed November 2017.<\/p>\n

12<\/sup>United Nations Global Impact. \u201cClimate Change and the Global Water Crisis: What Businesses Need to Know and Do.\u201d https:\/\/ceowatermandate.org\/files\/research\/UNGC-PI_climate-water_whitepaper_FINAL.pdf<\/a>, accessed November 2017.<\/p>\n

13<\/sup>Hiroki Tabuchi, \u201cRetailers Feel the Heat of Lost Winter Clothing Sales,\u201d New York Times, December 15, 2015, <\/em>https:\/\/www.nytimes.com\/2015\/12\/16\/business\/retailers-feel-the-heat-of-lost-winter-clothing-sales.html?_r=1<\/a>, accessed November 2017.<\/p>\n

14<\/sup>Arthur Zaczkieicz. \u201cIs Climate Change Killing the Seasonality Of Fashion Apparel Retailing?\u201d Women\u2019s Wear Daily,<\/em> December 2016, http:\/\/wwd.com\/business-news\/business-features\/climate-change-impact-fashion-apparel-10525390\/<\/a>, accessed November 2017.<\/p>\n

15,16<\/sup> Patagonia. \u201cPatagonia\u2019s Mission Statement.\u201d http:\/\/www.patagonia.com\/company-info.html<\/a>, accessed November 2017.<\/p>\n

17<\/sup>Geoffery Jones and Ben Gettinger, \u201cAlternative Paths of Green Entrepreneurship: The Environmental Legacies of the North Face\u2019s Doug Tompkins and Patagonia\u2019s Yvon Chouinard,\u201d HBS Working Paper No. 17-034, 2016.<\/p>\n

18<\/sup>Patagonia. \u201cEnvironmental and Social Initiatives: 2015.\u201d http:\/\/www.patagonia.com\/on\/demandware.static\/Sites-patagonia-us-Site\/Library-Sites-PatagoniaShared\/en_US\/PDF-US\/patagonia-enviro-initiatives-2015.pdf<\/a>, accessed November 2017.<\/p>\n

19<\/sup>Patagonia. \u201cOur Business and Climate Change.\u201d http:\/\/www.patagonia.com\/climate-change.html<\/a>, accessed November 2017.<\/p>\n

19<\/sup>Lou Wang and Bin Shen. \u201cA Product Line Analysis for Eco-Designed Fashion Products: Evidence from an Outdoor Sportswear Brand.\u201d Sustainability<\/em>, 9, (2017), http:\/\/www.mdpi.com\/2071-1050\/9\/7\/1136\/htm#B46-sustainability-09-01136<\/a>, accessed November 2017.<\/p>\n

20<\/sup>Patagonia. \u201cEnvironmental and Social Initiatives: 2015.\u201d http:\/\/www.patagonia.com\/on\/demandware.static\/Sites-patagonia-us-Site\/Library-Sites-PatagoniaShared\/en_US\/PDF-US\/patagonia-enviro-initiatives-2015.pdf<\/a>, accessed November 2017.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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