Patagonia Works, aka Patagonia, is a private benefit corporation in the apparel industry. Founded in 1973 and head-quartered in Ventura, California, Patagonia has expanded to have tens of owned-and-operated stores and various factories, farms, and mills in over 15 countries that span five different continents (Patagonia 2021b). Patagonia’s focus is on outdoor apparel and gear, and they have a strong focus on environmental activism in addition to a comprehensive set of environmental, social, and governance (ESG) goals.
Sustainability Mission and Objective
In 2018, Patagonia updated their mission statement to state “we’re in business to save our home planet” (Patagonia 2020a, 1). This bold mission statement showcases their intent to not only make high quality products but to also ensure their actions improve the world in other aspects too. Patagonia originally became a registered benefit corporation in 2012 and was the first California company to sign up for B certification. What makes a B Corp unique is that they must have an explicit social or environmental mission, and a legally binding fiduciary responsibility to include the interests of workers, the community, and the environment in addition to their shareholders. This legal status ensures that their ESG efforts are not only third-party certified, but also part of a legal framework that enables their mission and institutionalizes their values and standards within the corporation (Patagonia 2020b). Patagonia chooses to not explicitly use the term “sustainable” because they feel they are still part of the problem in creating emissions and waste and do not want to take part in greenwashing, however, their mission and actions indicate a sophisticated approach to understanding and improving how their business model and actions impact the environment and society (Thoren 2021).
Sustainability History and Approach
Patagonia has been focused on incorporating environmental and social elements into their actions that can be seen through a variety of milestone highlights over the years. In 1985, the founder Yvon Chouinard, committed 1% of total sales to environmental groups. He furthered that program by co-founding an international non-profit “One Percent for the Planet” in 2002 to get other businesses to also donate to domestic and international grassroots environmental groups (Patagonia 2021a). In 2012, Patagonia became a certified B Corporation, solidifying their commitment to the environment, social, and governance efforts. In 2017, they sued the United States Government after then President Donald Trump reduced protections on Bears Ear National Monument and Grand Staircase-Escalante National Monument, showcasing their focus on environmental protections (McCarthy 2017). Also, in 2017, they developed their “Worn Wear” website that allows customers to return merchandise in good condition for credit where they then clean, repair, and re-sell those items at much lower costs that create the opportunity for lower-income people to afford their products while reducing landfilling, virgin material use, and emissions (Schröder 2021). In 2020, they suspended Facebook advertising as they joined civil rights boycott movement in the Stop Hate for Profit campaign (Culliford 2020). In 2021, Patagonia pledged to donate $1 million dollars to groups working to support voting registration efforts in Georgia, furthering their social objectives as well (Choi 2021). Patagonia has been unafraid to make bold commitments, or get political, in their focus to improve human and environmental rights throughout their history and their actions showcase how they consider themselves an “activist” company (Semuels 2019).
With their updated mission to “save our home planet”, Patagonia continues to focus on taking an approach that highlights how they want their business activities to directly impact their ESG objectives. Patagonia’s dedication to making high-end products that last a long time, in combination with their repair program and used clothing collection and resale store, showcases their approach to more circular fashion and waste reductions as well. They not only focus on minimizing their impacts and business risks today, but also work on developing these transformative approaches that enable more people to afford their clothing in the future. Their certifications, actions, and investments in cleaner technologies and footprint reductions enable them to extract sustainable value from their efforts (Hart 2010, 88). This holistic approach to sustainable value ensures they live up to their founder’s goal of “trying to build a company that could last 100 years” (Patagonia 2020b).
Sustainability Program Objectives
Patagonia, and its subsidiaries, have adopted six specific benefit commitments into their operating framework. These six benefit purposes are 1% for the planet, build the best product with no unnecessary harm, conduct operations while causing no unnecessary harm, sharing best practices with other companies, transparency, and providing a supportive work environment. Each of these initiatives comes with their own specific definitions and metrics and provide structure for their ESG actions and goals.
Sustainability Reporting and Framework Alignment
As a B Corp, annual benefit corporation reports are required that include updates on specific metrics and actions. These reports must follow very specific requirements and reporting frameworks. B Corps also receive scoring in ESG categories that have the social elements broken out into more detailed topics with scored categories that include workers, community, and customers in addition to the standard environment and governance categories. While generally providing similar metrics to other global reporting standards, additional elements could help Patagonia align with more global frameworks. Specifically aligning with United Nations’ Sustainable Development Goals (SDGs) should be a key focus for improvements. Also, aligning with other frameworks like the Global Reporting Initiative (GRI) or Sustainable Accounting Standards Board (SASB) frameworks would allow their efforts to be more easily compared to others in the apparel industry. This could lead to better brand reputation and improvements in the apparel market’s practices.
In addition to the overall B Corp scoring that takes place with each annual report, Patagonia outlines and tracks each initiative’s progress and their specific key metrics in clear and simple ways. These initiatives have metrics that explicitly tie to their objectives and span the ESG categories while showcasing their industry leading practices. While impressive, there are additional elements that could be incorporated to tie to other reporting frameworks and provide even greater value.
One of Patagonia’s largest and most successful initiatives that has changed the marketplace is their “One Percent for the Planet” program. This program commits companies to donate 1% of net revenues to grassroots environmental non-profits. Since first started in 1985, they have generated over $116 million in environmental work support, with an additional $10 million in donations on top of that commitment, that have provided support to 929 different organizations (Patagonia 2020a, 4). The direct financial investments in protecting lands and waters, advancing renewable energy, and improving regenerative organic agriculture are impressive actions. However, Patagonia could improve this initiative by tying this funding to firm metrics that support SDG efforts in these areas. While supporting groups that are helping to protect lands and waters is important, utilizing metrics that only show the funding provided fails to show whether that funding is making a measurable difference on the issues. More robust metrics and reporting, like the number of trees planted or acres of forest or river protected for example, would help provide more transparency and transparency to the impact of their efforts.
Not only does Patagonia focus on financial investments for improving their actions, through their innovation initiatives called “build the best product with no unnecessary harm” and “conduct operations causing no unnecessary harm” they are working to improve quality at the same time as reducing issues and emissions from their sourcing practices. For example, in 2019, only 0.39% returns came back due to quality issues (Patagonia 2020a, 7). This helps Patagonia minimize waste and emissions while making cost and risk reductions (Hart 2010, 88). However, when looking at their apparel material source metrics, nearly half of their products are made from virgin petroleum-based products (polyester and nylon) and there has been a decrease in recycled material usage and an increase in wool and other animal products from 2018 to 2019 (Patagonia 2020a, 7). The success of their business has made efforts to clean up their material sourcing more difficult as sales continue to increase.
Patagonia currently uses renewable electricity, recyclable receipt paper and non-toxic ink for 100% of their U.S. facilities. They have pledged to be carbon neutral by 2025 as well but still have the need to remove over 5,000 metric tons of annual CO2e from their footprint. Greater efforts and investments need to be made in reducing the use of animal products and virgin-petroleum materials if Patagonia wants to have “no unnecessary harm” in their products. Investing in more innovative clean technologies, like bioplastics for their polyester and nylon and more solar and clean energy, can help them provide more impactful metrics and develop the sustainable competencies of the future to truly achieve their goals in these two initiatives (Hart 2010, 88).
In addition to the environmental and financial initiatives, Patagonia implements a three-pronged approach to social initiatives as well. These initiatives called “transparency”, “sharing best practices with other companies”, and “providing a supportive work environment” focus on their workers, shareholders, and a variety of other stakeholders. For the past 16 years Patagonia has posted a list of factories that they are working with worldwide, which is a leading practice in the apparel industry. They have also published over 40 different blog posts about climate activism, stopping offshore drilling, and their work on microplastics problems (Patagonia 2020a, 17). This information helps shareholders and consumers make informed decisions and helps drive improved actions in their supply chains.
Not only are they transparent with their actions, but they also utilize that information, learning, and investments to partner with other businesses to create larger industry changes. Patagonia has invested in over 14 businesses focused on renewable energy, regenerative organic agriculture, conserving water, diverting waste, and creating sustainable materials with nearly 8.4 million square feet of fishing net repurposed through an investment in a company called Bureo for example (Patagonia 2020a, 14).
Those external networks are supported by their internal focus on supportive working environments through tracked metrics. They provide fully paid health insurance premiums for full and part-time employees beginning first day, maternity/paternity leave, and on-site child-care and child-care stipends along with 401(k) plans, paid volunteer hours, and alternative work schedules. 47% of their executives are female as well (Patagonia 2020a, 20-21). However, they do not stop there and focus on ensuring that 49,200 factory apparel workers are earning Fair Trade premiums for their labor as well (Patagonia 2020a, 7). This allows them to serve unmet needs to global populations, allowing for poverty and inequity improvements. Combined with their actions that integrate stakeholder views into business processes, these actions create improved brand reputation and legitimacy while amplifying their sustainable efforts and reducing workplace and marketplace risks (Hart 2010, 88). While quite impressive on their own, by aligning these actions with SDGs, Patagonia could create an even more comprehensive social program that alleviates even more global social issues like providing educational opportunities for their factory workers in poverty-stricken countries.
Sustainability Program Efficacy
B Corp certifications require strict reporting and fiduciary and legal responsibilities that ensure strong program efficacy. Patagonia’s sustainability program is truly driving sustainable progress in their activities and their supply chains’. Patagonia’s B Corp impact scoring has led them to receiving various awards like Best for Environment and Best for Community in 2021, in addition to various other best in the world scoring in historic years (B Corporation 2021). As has been discussed, there are certain areas where Patagonia can improve their progress or add additional metrics and goals. Patagonia is currently pressing policymakers to set global standards for carbon accounting and offsetting, so the more efforts they can make in aligning with global frameworks, like the United Nations’ SDGs, the more they can ensure their program is efficacious and part of achieving global solutions.
Patagonia is walking the sustainability talk. While they are performing very well in ESG metrics, there is further actions they can take to align to global frameworks, like the SDGs, in addition to their B Corp certification to increase their efforts. Some of their weaknesses in emissions and resource use will require more determined efforts within their supply chain to ensure they continue to move towards their stated goals. Overall, Patagonia is a leading apparel company when it comes to incorporating sustainability into their business practices. While still a fairly small company when compared to other apparel giants, Patagonia is innovating and pushing the sustainable fashion industry forward in a way that, if adopted by larger apparel firms, will lessen the impacts of fashion on people and the planet.
B Corporation. 2021. “B Impact Report: Patagonia.” B Corporation. Accessed October 17, 2021. https://bcorporation.net/directory/patagonia-inc.
Choi, Joseph. 2021. “Patagonia to Donate $1 Million to Georgia Voting Rights Groups.” The Hill. Accessed October 17, 2021. https://thehill.com/business-a-lobbying/business-a-lobbying/546679-patagonia-to-donate-1-million-to-georgia-voting.
Culliford, Elizabeth. 2020. “Patagonia Joins The North Face in Facebook Ad Boycott.” Reuters. Accessed October 17, 2021. https://www.reuters.com/article/us-facebook-ads-patagonia/patagonia-joins-the-north-face-in-facebook-ad-boycott-idUSKBN23T2JG.
Hart, Stuart L. 2010. Capitalism at the Crossroads. 3rd ed. Upper Saddle River, New Jersey: Prentice Hall.
McCarthy, Tom. 2017. “Patagonia Joins Forces with Activists to Protect Public Lands from Trump.” The Guardian. Accessed October 17, 2021. https://www.theguardian.com/environment/2017/aug/26/public-lands-trump-patagonia-native-americans.
Patagonia. 2020a. “Annual Benefit Corporation Report.” Patagonia. Accessed October 17, 2021. https://www.patagonia.com/on/demandware.static/-/Library-Sites-PatagoniaShared/default/dwf14ad70c/PDF-US/PAT_2019_BCorp_Report.pdf.
—. 2020b. “B-Lab & Patagonia.” Patagonia. Accessed October 17, 2021. https://www.patagonia.com/b-lab.html.
—. 2021a. “One Percent for the Planet.” Patagonia. Accessed October 17, 2021. https://www.patagonia.com/one-percent-for-the-planet.html.
—. 2021b. “Where We Do Business.” Patagonia. Accessed October 17, 2021. https://www.patagonia.com/where-we-do-business/.
Schröder, Cory. 2021. “How Patagonia Created the Blueprint for Sustainable Brands.” Latana. September 30. Accessed November 2, 2021. https://latana.com/post/patagonia-deep-dive/.
Semuels, Alana. 2019. “‘Rampant Consumerism Is Not Attractive.’ Patagonia Is Climbing to the Top — and Reimagining Capitalism Along the Way.” Time. September 23. Accessed November 2, 2021. https://time.com/5684011/patagonia/.
Thoren, Beth. 2021. “Patagonia Doesn’t Use the Word ‘Sustainable.’ Here’s Why.” Fortune. November 2. Accessed November 2, 2021. https://fortune.com/2021/11/02/patagonia-doesnt-use-the-word-sustainable-cop26/amp/.