Two years ago, Patagonia became the first company in California to file for status as a benefit corporation, making social and environmental performance as important to its success as profits. The certification merely created a legal framework for what Patagonia had been doing since it was founded by Yvon Chouinard in 1973: effecting positive change through business. From using sustainable materials to donating money and human power to environmental causes, Patagonia has been proving to the world that corporate success (2013 revenues were around $600 million) and conservation can go hand in hand. That’s even written into its mission statement: Build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis. The last few years, Patagonia has made major changes to live up to that standard — and show other businesses that they can, too.
Supporting environmentally-focused nonprofits has been a part of Patagonia’s culture from the beginning. In the 1970s, the company gave Mark Capelli office space and financial support to start Friends of the Ventura River. The Surfrider Foundation, The Nature Conservancy and a long list of smaller organizations have all enjoyed some sort of relationship with Patagonia. This year, Patagonia employees chose Los Padres Forest Watch and Ventura Hillsides Conservancy as recipients for the 2014 grassroots grants program, which were among 770 groups in 16 countries that Patagonia donated $6.6 million to in 2014 alone. In 1985 the company formalized its penchant for giving by pledging 1 percent of sales to the preservation and restoration of the natural environment; over $40 million in cash and in-kind donations has been given to domestic and international grassroots environmental groups. Chouinard also co-founded One Percent for the Planet to encourage other companies and organizations to follow suit. Its 1,200-plus members around the world have collectively donated over $100 million to support environmental initiatives.
Driving to El Chalten, Argentinian Patagonia.
Photo by: Evelyn Proimos via Flickr
This long association with grassroots organizing has given Patagonia an insider’s view of pressing environmental issues. “We tend to give to groups working in their community directly,” said Director of Environmental Strategy Jill Dumain. “They keep us aware and informed.” One of the larger issues recently tackled by the company was the tar sands development in North America and the expansion of the Keystone XL and Northern Gateways Pipelines. Through advocacy on the company’s blog, The Cleanest Line, and support of activists, Patagonia lent some corporate muscle desperately needed whenever grassroots Davids confront oil-industry Goliaths. “We have a thicker skin,” said Dumain. “So we try to figure out how to bring awareness to some of the harder issues.”
Most recently, Patagonia put derelict dams in the spotlight when it helped finance and promote the documentary DamNation. “One of the things we try to do is look at what the pressing issues are, but more importantly, the issues that aren’t on the radar yet,” Dumain said. “Our freshwater campaign, in part, led to DamNation.” Directed by Travis Rummel and Ben Knight (Chouinard gets an executive producer credit), the film explores the social and environmental impacts of obsolete dams on the Snake, Columbia, Colorado and other major river systems. The Matilija Dam on the Ventura River is one of the film’s most iconic images. When DamNation hit the festival circuit this past spring, it garnered a slew of awards and brought attention to more than 75,000 dams that are no longer generating hydropower but remain in place, despite dire consequences to salmon runs, the lifestyles of Native peoples, and overall watershed health. Patagonia promoted the film heavily on its website, screened it in retail outlets across the country in June, and sells copies of the DVD and Blu-ray disk. If you want to get your message out, you could do a lot worse than the movie industry.
A green supply line
In the 1990s, the company took a critical look at every step in the supply chain for raw materials. The amount of waste and pollution the employees found — from unsustainable farming to pesticide use to inefficiencies in manufacturing and distribution — prompted over two decades of change and innovation that continue today. The use of recycled materials increased, more sustainable products (including hemp and organic cotton) were phased in, and the Footprint Chronicles were launched to provide full transparency of Patagonia’s factories.
This transparency resulted in Patagonia coming under fire in 2010 when the international animal welfare organization Four Paws found that the company’s down (sourced from Hungary) included birds that had been force-fed to produce foie gras. Rectifying the problem took four years, as the company investigated, worked with traceability experts and Four Paws, and ultimately found a new supplier in Poland. “We had to switch our entire supply chain to another country,” recalled Cara Chacon, director of social and environmental responsibility. “It was a huge project.” But starting with the fall 2014 line, Patagonia is proud to say that its down products will contain only 100 percent traceable down — traceable, that is, to birds that were never force-fed or live-plucked. To date, it is the only company that can make this claim, but Patagonia is currently participating in the formation of an Outdoor Industry Association and Textile Exchange Down Task Force to help establish down traceability standards that other garment manufacturers can use.
Something else Patagonia wants to share with other outdoor clothiers: Yulex. The plant-based neoprene alternative made from a weed called guayale was incorporated into select Patagonia wetsuits offered in late 2013. The newest Yulex wetsuits will be available in the fall. More importantly, the company announced that it would make this proprietary biorubber available to the rest of the surf industry. As Patagonia states in its July 31 press release, “When volume goes up, price goes down, and more surfers can choose to purchase less-harmful suits. It’s good, smart business.” And it is potentially an industry-wide game changer, moving wetsuit manufacturing away from a petroleum-derived material toward something more sustainable.
CEO Rose Marcario
A fair line, too
The company also has turned its eye toward the social impact of clothing manufacturing. This fall, Patagonia will introduce Fair Trade Certified apparel. “We’re famous for our e-fabrics,” said Chacon. “This is the first time that a social responsibility story has been attached to our apparel as well.” Fair Trade USA certifies factories and organizations that comply with strict environmental, social and economic criteria — one of which includes being made under safe working conditions, where workers have a voice and earn a fair wage. Ten styles with factory-level certification will be offered in the fall; farm-level certified products are slated for spring 2015.
In addition, for every Fair Trade Certified garment sold, Patagonia will pay a premium directly into a special factory fund. The workers themselves will have full control of the account and will collectively choose how to spend it — on education, medical care or disaster relief for their community, or even as cash bonuses for the workers themselves. “It’s their money,” Chacon says. “They get to decide.” For farmers, Patagonia pays a preset premium to its fabric supplier, who then pays the organic cotton/Fair Trade Certified farmers the extra money. The transfer of money is all traceable through Fair Trade USA’s program.
As a founding member of the Sustainable Apparel Coalition, Patagonia has long sought to encourage the apparel industry to practice environmental responsibility. Since it was founded around 2009, Patagonia and the other 100-plus members of the Coalition (which includes Adidas, Columbia, Ikea, Macy’s and Walmart — another founding member) have helped develop a rating system called the Higg Index that measures the environmental impacts of a garment across the brand, product and facility levels. Higg Index modules are open-source and available free to the public. Patagonia has been using the Higg Index internally, and aims to make its ratings public in the next few years. “That really gives us the measurements we need from our supply chain to see where changes need to be made,” says Dumain. The idea is to lead by example: Patagonia hopes other companies will start using the tools and identifying areas that need to become more efficient, more humane, less polluting — in short, more responsible. “Eventually, the SAC would like to roll these scores into a hang tag so consumers can compare Higg scores,” Chacon says. “This will drive a race to sustainability; no company will want a poor Higg score.”
Tackling the food supply
Patagonia Provisions, the company’s first foray into consumables, stems from an unflinching look at the nation’s food supply chain. “Right now, it’s broken,” CEO Rose Marcario says flatly. “We wanted to model a sustainable food supply chain.” In Marcario’s eyes, tackling the issues of food and how we obtain it is fulfilling Patagonia’s overall mission. “There’s a tradition and culture of food coupled with outdoor adventure that’s always been important to Patagonia. We believe this is a great opportunity to make a change in the food industry.” The debut product, Wild Salmon Jerky, is sourced from sustainable river fisheries in Alaska; salmon are selectively harvested to avoid harming less abundant species. It addresses innovation, responsible business, watershed conservation (an issue near and dear to the heart of Chouinard, an avid fly fisherman) and a tangible consumer need — food — in one fell swoop. There are plans to offer bison jerky down the road as well. “That’s a really beautiful story about restoring the South Dakota grasslands to their natural state by putting a keystone species — the bison — back in the plains,” Marcario said. “As we roll out different products, we’ll try to roll out other issues that affect them. And hopefully that’s going to spur change.”
Korina Kempf, Patagonia’s Colorist and Operations Manager, buys some produce from local farmers at the Thursday evening Patagonia campus farmers market. Photo by: Jeff Johnson
Luckily for the world at large, Patagonia isn’t the only corporation looking for solutions to the environmental crisis — just one of the larger and more successful ones. The company is now using its profits to invest in start-up companies trying to make a difference. The fund is called “$20 Million and Change” and it’s the next step in showing what it means to be a responsible economic player. Marcario, who joined the company in 2008 and was named CEO in early 2014, was instrumental in getting the fund off the ground. “Yvon and I had a conversation about the idea of a conservation fund,” Marcario said. “With my background in private equity, it seemed like something we could try to pull off. We wanted to continue to inspire entrepreneurs to find solutions to the environmental crisis.” Water has always been of concern to Patagonia; it’s taken on even greater urgency with a drought that seems to have no end in sight. Post-production waste and renewable energy are also areas where sustainable options are desperately needed. CO2Nexus, the first company to receive funding, addresses all three of these hot-button issues: the Colorado start-up utilizes liquid carbon dioxide to clean textiles and fabrics using no water, consuming less energy and producing very little waste.
Other companies chosen for investment will be announced later in the year, as Patagonia reviews and evaluates the applicants who have applied for funding. “We had close to 400 inquiries that came in,” Dumain says. “We’ve been trying to get the number of companies for consideration down to a manageable size.”
“So much of what we do at Patagonia is about living an examined life,” Marcario said, “being curious and asking deep questions.” Many of those questions — about supply and demand, the impacts of manufacturing, the people affected when a company does business on a large scale, what all of this means for the planet — are uncomfortable to ask, and the answers are often messy, complicated and expensive. But without taking people and the environment into account, corporations will only keep moving further away from sustainability, bringing the world closer to the brink of destruction. Patagonia hopes to prevent that. “If we can influence business in the public and private equity markets, maybe the planet can be saved,” Marcario says. “I’m optimistic that change is possible. And business can be a powerful agent for change.”