CSR case study - Patagonia

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Patagonia

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Patagonia have found unambiguous ways to couple their products’ function and the brands environmental values. Their business model raises major sums for environmental causes and their technological innovation reduces the environmental impact of their products.

BUSINESS INSIGHTS

Turnover: US$240million
Core service: Manufacture of high quality outdoor and adventure sport clothing
Employees: 1,200
Mission: "Build the best product, cause no unnecessary harm and use business to inspire and implement solutions to the environmental crisis”

Inspired by adventures climbing in Yosemite and the Patagonian Fitz Roy mountains, Patagonia was founded by Yvon Chouinard in 1973. The company came to Europe in 1987 with a store in Chamonix, the birthplace of modern mountaineering. Patagonia makes clear links between their products and the environment that the products help people enjoy, and they say their company mission statement gives them purpose and urgency.

“Since we began making clothing, we have seen popular rock routes become irrevocably scarred by pitons; the fouling of local rivers and the decimation of native fish populations. We have seen the places we loved best ruined by unchecked and irresponsible development. We realised that we had to begin giving back to Mother Nature before the wilderness we loved so much was taken away altogether.”

The companies response to this has been to pledge at least 1% of sales (or 10% pretax profits, whichever is greater) to the protection and restoration of the natural environment. In 2005, this meant donations of US$2.1 million dollars, bringing the total since 1984 to over US$20 million.

Campaigns sit alongside sportswear

Patagonia has an ongoing campaign called “Big, Wild and Connected”, which profiles different topics with stories in their catalogues, fundraising events and public outreach. At the time of writing, the campaign profiled in the website is conservation of the arctic refuge. The current campaign changes regularly, but one ongoing commitment is to the wilderness region of Patagonia from which the company takes its name. It was Kris Tompkins, a former CEO of Patagonia, who approached the company with a plan to start a non-profit organisation dedicated to buying, protecting and restoring land in the Patagonia region. The company assisted with the NGO start-up efforts, using their ‘Creative Services’ department to create, design and print all of their materials: “everything they needed to quickly get on with their real work – protecting the wild places of Patagonia”.

In Europe, the company champions environmental causes relevant to Europe, such as:

reducing truck pollution in the Alps;
restoring salmon and other sea-run fish to the Loire and its tributaries; and
campaigning to overturn the current ban on the sale of traditional (non-GMO) vegetable seeds.

Using core values to find product service innovation – “We want your underwear”

Patagonia’s definition of quality includes a requirement to build products and use processes that cause the least harm to the environment. This means that raw materials are compared and assessed, innovative technologies are developed, and in manufacturing there is a keen eye on waste generated.

Patagonia promotes a programme called “common threads” to enable its base layer garments to be recycled. The environmental impact of recycling worn-out base layers into one new polyester fibre is significantly lower than making that same fibre from virgin materials. New polyester fibre from recycled garments make for energy savings of 76% and CO2 emission reductions of 71%, compared to creating fibre from virgin raw material. Patagonia uses a trademarked recycling system in collaboration with a Chinese manufacturer. Customers are asked to wash their old clothing and return it to Patagonia either by mail or via a retailer and, as the website says, you can do this “ideally, while you're running other errands, to reduce environmental impact”.

Technical innovation for multiple benefits

Other technical innovations which have reduced the environmental impact of Patagonia’s products developing a polyester fleece made of recycled soda bottles. The post-consumer recycled fleece has diverted over 86 million bottles from landfills to date. Patagonia switched to 100% organic cotton sportswear in 1995. The company states that “We believe in using business to inspire solutions to the environmental crisis.”

Creating real value

Since 1985, Patagonia has pledged 1% of sales to the preservation and restoration of the natural environment. Patagonia was one of the founders of “1% For The Planet”, a business alliance who believe that “profit and loss are directly linked to the health of our environment”. In addition, these businesses are concerned with the social and environmental impacts of industry.

The company also realised that if they could share profits, they could also supply time and muscle. The result was the Patagonia Employee Internship Program. Through the programme, employees can leave their jobs at Patagonia for up to two months to work full-time for the environmental group of their choice. Patagonia continues to pay employees’ salaries and benefits while they’re gone, and the environmental group gets them for free. More than 350 employees have worked as interns for groups world-wide since the program began in 1993.

People

Patagonia executives present an unusual route into thinking about workforce issues. David Olsen, President and CEO of Patagonia, said that his viewpoint on Work-Life begins with "quality." "Patagonia cannot build great quality products without a great quality work environment. If you overlook any piece in the puzzle, there is a good chance you'll miss it all."

Patagonia, which operates in a very competitive industry, and in the US where labour conditions are not protected to the degree they are in Europe, has a wide range of family friendly policies to support its people, including:

two months’ paid leave for both mother and father after the birth or adoption of a child;
on-site child care with adult : child ratios that exceed state requirements, plus a network of in-home providers developed by Patagonia;
company buses that transport children from local elementary schools to the company's Ventura offices;
child-care subsidies;
flexible release time for competitive athletes;
a school support program allows employees five days off to participate in their children's classroom activities; and
parent education seminars during lunch hours.

Industry-wide, employee turnover is 20% but at Patagonia turnover is 4.5%.

What can other businesses learn?

The values of Patagonia’s business are closely aligned with the values they expect in their customers – a love of the outdoors, an appreciation of the wild world. Patagonia has found innovative ways to demonstrate those values at the core of the business not just as a side effect. There is a direct link between buying a making, selling or buying a Patagonia product and some beneficial effect on the natural world, and this is strong motivator for employees and customers alike.

Marketing messages used throughout the company’s various communication challenges consistently show that Patagonia sees itself as more than an outdoor clothing manufacturer, it sees itself as part of an economic system that must take responsibility for the natural world. The degree of integration between CSR values and commercial activity, business strategy is exceptional, and instructive.

Links:

1. www.patagonia.com
2. www.onepercentfortheplanet.org/
3. Center for Ethical Business Cultures