Patagonia, Inc.

A) Main facts:

Patagonia is a privately owned company based in Ventura, California. They design, develop and market outdoor clothing, outdoor gear, footwear and luggage, and bear a reputation as a champion of the environment. Their Mission Statement is to “Build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis”. To make its mission real, they use environmentally sensitive materials, participate in environmental organizations and both sponsor and promote them.

Like most clothing companies, they also pay other companies to do the actual cutting and sewing. But with every company they sign internal contract, something they call a “contractor relationship assessment”, which assures them to work with factories that share their values of integrity and environmentalism.

Because Patagonia makes high-quality clothing, which can also be quite expensive, sometimes people call them as the ’Gucci of the outdoors.’ In 2006 company made $270 million in revenue, which they accomplished due to management’s belief in their products, their mission to make products without polluting environment and because they design products in friendly relations with employees.

B) Ethical challenges:

“Patagonia’s effort toward corporate social responsibility is about this company’s relationship with the people who work in the factories, and what they have done, and are trying to do, to ensure that Patagonia products are produced under safe, fair, legal and humane working conditions.” (Patagonia; http://www.patagonia.com/web/eu/patagonia.go?assetid=37492)

Here follows what they do to prove their corporate social responsibility:

They are members (or co-founders) of many non-profit organizations, such as:
1% For The Planet® - founded in 1985 by Patagonia and Blue Ribbon Flies, with the sole purpose of encouraging businesses to donate 1% of their total revenue to one or more environmentally oriented organizations. Since the program was first started, Patagonia has donated over $31 million to over 1,000 organizations.
The Conservation Alliance - founded in 1989 by industry leaders REI, Patagonia, The North Face, and Kelty, with the goal to engage outdoor industry to support environmental organizations in their efforts to protect and conserve threatened wild places.
Conservación Patagonica - founded in 2000 is working towards the goal of creating Patagonia National Park, which would be sited in the Patagonia region of Chile and Argentina. Also some Patagonia employees are sent there to help create this national park.
The Organic Exchange - founded in 2002 “committed to expanding organic agriculture, with a specific focus on increasing the production and use of organically grown fibers such as cotton”. (Organic Exchange; http://www.organicexchange.org/intro.php)

Patagonia emphasizes the high level of trust and freedom employees are given. The founder of the company, Yvon Chouinard, wrote a book “Let my people go surfing”, which is actually Patagonia’s flex-time policy that lets workers make their own schedule that works for them and their interests. It allows them to go surfing if conditions are good or just coming to the work later if they want to do something else, as long as they perform well at their job. In order that workers are more connected with what they do for living and what they like in their free time, Patagonia hires people that take an interest in outdoor sports, like surfing, hiking, skiing and climbing.
A more formal way Patagonia encourages employees to live the values of the company is its Environmental Internship Program, created in 1993. This program allows employees to choose an environmental organization they would like to work for and Patagonia send them there while still continues to pay their salaries and benefits. To date, more than 750 employees have taken part in the program.
The company also has a lot of excursions where they climb, fish, ski or surf, which is rather a job requirement in Patagonia, because whenever employees play outdoors, they’re testing the newest gear or coming up with improvements.

As well as some other companies, also Patagonia took the next step toward greater transparency on corporate social and environmental impacts. The Footprint Chronicles is an interactive website that allows you to track the impact of specific Patagonia products from design through delivery. It is not yet done for all the products, but for those that is, you can check “The good” and “The bad” in supply chain, you can see what Patagonia thinks about “The bad” issue and you can write what do you think about that. There you can also cast an eye at distance traveled, how much carbon dioxide emissions is emitted, how much waste is generated and how much energy is consumed for every product produced. With that webpage Patagonia actually exposes the problems occurred during production in hopes of partnering with its customers to create solutions.

Patagonia every one to two years features their environmental campaigns in their catalogues and advertisements. Theirs current environmental campaign is »Freedom to Roam«. Its goal is to create, restore and protect wildways or corridors between habitats so animals can survive.

As we mentioned before, Patagonia is noted for its responsibility to the planet. Because of that it uses non harm products, like organic cotton, recycled polyester, hemp and chlorine-free wool. They use renewable power to save energy. Presently, wind power supplies 50% of their needs and they plan to buy more when they can. In 2005 they built their own solar electric array, which was expensive investment, but they know that in years it will all be paid out.
What is more, Patagonia buys a hybrid car for business use and offers their employees a $2,500 incentive to purchase a hybrid or bio-diesel vehicle.

C) Why do we trust Patagonia?

We believe the company is really ethical and trustworthy when we look at certificates Patagonia attained. The first certificate is the Forest Stewardship Council (FSC) Certificate. “FSC is an independent, non-governmental, non-profit organization established to promote the responsible management of the world’s forests. FSC’s standards are the highest social and environmental requirements in the forestry sector.” (Forest Stewardship Council; http://www.fsc.org/about-fsc.html)
All catalogue papers Patagonia issues are certified by the FSC.
The second certificate is Leadership in Energy and Environmental Design (LEED) Certificate. “LEED is an internationally recognized certification system that measures how well a building or community performs across all the metrics that matter most: energy savings, water efficiency, CO2 emissions reduction, improved indoor environmental quality, and stewardship of resources and sensitivity to their impacts.” (U.S. Green Building Council; http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1988).
LEED has four levels of certification to qualify the building: Certified (40-49 points), Silver (50-59 points), Gold (60-79 points) and Platinum (80 points and above). Patagonia was awarded with Gold certificate.

That the company is popular and its culture makes it a magnet for talented people, tells us the information that company receives an average of 900 résumés for every job opening. Because of that it can afford to be picky.

D) Possible challenges facing the company in the future and how the company may improve

In the next five to seven years company will try to widen their market share in surfing products from 10 to 50 percent of their total production.

The company is already very environmental and social oriented, so it is hard to say what else it can do to improve its operations. For the beginning we can say that it can try to achieve Platinum LEED Certificate, which means even more improved metrics. They should continue the search for more environmentally friendly fabrics. They should continue with innovations, try to cut costs, expand their premises and still remain social responsible corporation.