A learning journey report from Claudia Wintersteiger
It was an unconventional visit to a company whose founder claims he never wanted to be an entrepreneur.
Those are the people he considered evil, the polluters and planet-wreckers. Perhaps it was precisely this attitude that made him an entrepreneur par excellence in terms of environmental responsibility.
FACTSHEET PATAGONIA
Patagonia is a privately-owned American outdoor brand headquartered in Ventura, California. Its annual sales amount to around USD 1 billion. Every year, the company donates 1% of its revenue to organisations that work to promote clean air, clean water and clean soil. According to its own figures, Patagonia had donated USD 89 million to a total of 1,539 environmental-protection organisations by mid-2020.1 In 2011, Patagonia became the first benefit corporation, which is a company that aims to improve the compatibility of the public good with commercial interests.2 Every item of cotton clothing they have produced since 1996 has been made of organic cotton. And 80% of the materials they use are recyclable and re-wearable.
With no advance notification of any kind, I drop in at Patagonia’s headquarters in Ventura on a Friday afternoon in August. At first, I look around the store and attempt to strike up conversations with the salespeople. I ask whether it’s really true that quite a few management maxims are turned upside down here. I am told that upselling is taboo. In other words, sales associates are urged not to offer anything other than what the customer requests. Seriously? “Yes, we offer our customers what they ask us for, but we don’t try to sell them anything extra!” they explain.
I wonder whether there is any chance of speaking with someone in management here at headquarters. Well, they reply, it is Friday afternoon, but I should try my luck at reception. No sooner said than done. I introduce myself as a consultant from Austria who would like to learn more about Patagonia’s real-life management practices. I’m surprised at my own audacity.
At the same time, I’m imagining how it would go at most global headquarters when somebody shows up at reception unannounced and asks to speak to a member of the management. Most likely, I would be turned away without a thought – if for no other reason than the fact that most receptionists would not have the authority to make that decision. Not the case here. The receptionist, an older man, treats me as if my request were nothing out of the ordinary. He asks me whether I have had lunch and invites me to get something to eat in the organic canteen. Not 20 minutes later, the global R&D manager appears before me. I stammer, because in my enthusiasm I had nearly forgotten to prepare for this eventuality. Over the course of a two-hour tour, I get an in-depth look at the company.
The ice is melting beneath him.
The founder, Yvon Chouinard, claims he never wanted to be an entrepreneur. For him, school was just a place where you had time to practice holding your breath so you could go free-diving longer at the weekend. He only started making equipment – at first, pitons – because he and his friends needed good equipment for their tours. For years, he made pitons during the winter and earned just enough money with them to spend the summer in the mountains of Wyoming and autumn in Yosemite National Park. Years ago, he said of himself: “I’ve been in business for nearly fifty years. It’s as difficult for me to say those words as it is for someone to admit to being an alcoholic. (…) It’s business that has to take the majority of the blame for being the enemy of nature, for destroying native cultures, for taking from the poor and giving to the rich and poisoning the earth with the effluent from its factories.
Yet business can provide food, cure disease, control population, employ people, and generally enrich the lives. And it can do these good things and make a profit without losing its soul.” 3
But how can you earn a profit without selling your soul? What makes Patagonia a pioneer and what can companies learn from them?
In 1995, Patagonia developed principles to guide its actions, referred to as philosophies. Even back then, they contained fundamentals like “All decisions of the company are made in the context of the environmental crisis. We must strive to do no harm.” This ecological responsibility seems even more pronounced to me than the company’s social responsibility. But let’s take a closer look.
“Social” management methods
“Let my people go surfing,” says entrepreneur Yvon Chouinard, and he even wrote a book about it. And, judging by the piles of surfboards stored under the stairs to the first floor, it seems as if he means it. I ask how this injunction from the company’s founder is reflected in day-to-day operations. The answer: it depends on the wind.
“Let my people go surfing.”
Yvon Chouinard, Gründer
When the wind is good, I’m told, quite a few people often head to the water. I have to laugh. It’s the same thing I remember experiencing at my former employer Nike. There, too, getting in some exercise during the day was absolutely legitimate. In fact, it was encouraged. In my view, that indicates a very strong culture of trust. This is how they explain it at Patagonia: “None of our best people would work for a company that didn’t trust them.”4 I agree.
Incidentally, as you walk through the halls at Patagonia, there is no trace of the hip “new work architecture” found at so many supposed showpiece enterprises here in Europe. No slides, no ultra-cool lounge furniture, no glass walls. The furnishings and building don’t look spectacular to me at all. The headquarters was built from 95% recycled materials. Solar panels are mounted on the roofs and over the parking lots.
It is also noteworthy that the day-care centre is right in the middle of the building, and you can even see into it. That way, people can keep an eye on their little ones during the workday. You can hear the children laughing. They also come by and pay a visit to their parents at their workstation or join them for lunch in the company’s own organic restaurant.
In-house day nurseries are commonplace in many large enterprises here in Austria as well. But I have never seen one situated right in the centre of the company like this one is. Patagonia’s facility has been here for over 40 years, and they have also been offering paid child-care leave for ages – not an option that is available everywhere in America by any means. A woman in sales tells me that she also attended day care here; her mother worked at Patagonia, too.
Patagonia cares about social issues. That is expressed in ways such as the Black Lives Matter campaign. In the runup to the US election, Patagonia sold trousers with a tag stating: “Vote the assholes out”. According to CEO Ryan Gellert, this campaign was the brainchild of two employees who felt that it was time to send a message against the climate change deniers.
Patagonia does not work out complicated loopholes to avoid taxes. The accountants are urged to use the methods that the CFO feels will produce a precise and consistent picture of the finances.5
But even Patagonia has room for improvement. This potential lies in structuring the supply chain in a socially compatible manner. Remember: in 2013, the world was horrified at the news of a textile factory in Bangladesh where a fire broke out and 1,138 people – most of them seamstresses – burned alive. This disaster triggered a change: finally, it was no longer possible to look away. Many NGOs had repeatedly yet unsuccessfully called attention to the terrible working conditions. The textile industry’s argument along the lines of “we don’t own these factories, we just outsource production there” could no longer hold water. They had to take responsibility. Patagonia is among the organisations that have since redoubled their efforts to ensure transparency in the supply chain.6 That is a first giant step. But they can do more. In some cases, even Patagonia apparently pays only minimum wage, which is not fair remuneration, i.e. enough to live on.
At least, there are no data this year. In 2021, Clean Clothes placed the focus on supply chain transparency. According to their data, at the moment people are happy when wages have returned to pre-Covid levels.7 It can only be hoped that Patagonia will also take a pioneering role here.
“Ecological responsibility”
“What we want is to find a new definition of success. For example, I want to eliminate any reference to growth in our sales figures.
Instead, we should take new aspects like environmental compatibility into account.”
Ryan Gellert, new CEO of Patagonia 8
Patagonia aims to become a climate-positive company, meaning one that not only does not produce emissions but removes some from the atmosphere.
The textile industry is the second largest polluter after the oil industry. While the outdoor segment is not as fast-moving as fast fashion, the special requirements it places on materials (water resistance, wind resistance, etc.) mean that it takes multiple chemicals along with a great deal of water and energy to manufacture the items. At the same time, there is probably no other segment with so many people who value nature and our planet so highly. So some tension arises between the employees’ values on the one hand, and the business activities necessary to manufacture the products that let people enjoy experiencing nature on the other. In light of this, it is no surprise that many outdoor brands – including VAUDE, for example – are keen to play a pioneering role in environmental responsibility.
Patagonia has been putting out new, sustainability-focused ideas in the outdoor segment for years. The advertisement placed in the New York Times on Black Friday in 2011 fits in with this picture. “Don’t buy this jacket”, it read. The ad was not published by an NGO, but by Patagonia.
Patagonia feels that it is time to turn a spotlight on overconsumption as a huge problem for the environment. With that, the company is admitting that all manufacturing, no matter how sustainable, damages the environment. To name just one example: every day, tonnes of used clothing land in Accra, the capital of Ghana.9 More than 2/3 of them are not resold. A certain amount gets dumped in the growing landfills. A very large amount lands in the oceans. This is likely among the reasons Patagonia ran this ad, to encourage people to think twice about whether they really need those coveted items after all.
Repair and re-use is a concept that aims to help reduce the trash problem. Back when I visited in 2015, they were already telling me that Patagonia vans were touring the US, offering to repair customers’ outdoor products for free. I had already seen how I could take my Patagonia products in for free repairs in Europe as well, even years after buying them. But taking the repair shop to the customers? I thought that was a brilliant idea, and really just the logical extension of the concept.
In 2020, Patagonia chose Black Friday, the day of collective shopping hysteria, to launch another campaign in which it encouraged customers to buy their items used rather than new. The used items are part of the Worn Wear programme Patagonia has been operating for years. The next step is to add a “buy used” button next to many of the products available online. As a consumer, I can then decide whether I need the product new or want to make the conscious choice to get one with a history. This reduces the ecological footprint by 73% per purchase. You can also find plenty of videos on the website that explain how to treat the material gently. DIY guides are also available there.
Against this backdrop, it seems only fitting that Patagonia has no plans for further growth, as the new CEO Ryan Gellert explained at the beginning of 2021. In an interview with the Neue Zürcher Zeitung, he talked about an internal process of reinvention in 2020. “What we want is to find a new definition of success. For example, I want to eliminate all references to growth from our sales figures. Instead, new aspects such as environmental friendliness should be taken into account,” says Ryan Gellert in the NZZ interview.10 If the mission “We’re in business to save our home planet” is really to guide their actions, Patagonia will focus on aligning production and sales with it in the coming years. That is the yardstick Patagonia will now be measured against.
What are the takeaways?
One thing is for sure: the climate and environmental catastrophe is real and poses an existential threat to our planet and thus to our own survival. We have less than ten years to prevent irreversible damage and catastrophe. Politics alone, with its national (or at a maximum, continental) focus, will not be able to provide all the answers. It will also take more engagement on the part of companies.
Currently, there is quite a lot of wind in the sails of sustainability, for reasons including Covid and of course the Fridays for Future initiative. However, in some cases, you can’t escape the feeling that companies are jumping on the sustainability bandwagon as a way to keep their business going strong. That is legitimate and, given the logic of our economy, understandable. But it will continue to cause overconsumption. We need a different definition of success. Considering that, it’s worth watching companies like Patagonia that have long been working for the cause but are now examining how to redefine success.
An eco-social market economy has to put a price tag on things like clean air, potable water and good soil quality. In future, companies need to take more responsibility than ever before for their entire value chain. Costs that are created in the production process can no longer be externalised. That will automatically make products more expensive and people will consume less.
At trainconsulting, we have put a great deal of work over the past year into considering how we can help change minds. Our new mission, “We design transformation processes for companies that enable them to succeed financially AND contribute to a better world”, guides our actions. We have already been able to work with many of our clients on plans of this nature.
I want to do my part to help companies realign and transform themselves. At the same time, I understand how hard the balancing act is for many companies; plus, I always see myself as a learner as well. So I’m always looking for companies that are forging new paths. I looked at the Gore company several years ago. They were focusing on the topic of innovation and principles (read the article here).
You see, I can’t hide my passion for the sports equipment industry. Over the past year, I have done a lot of research on VAUDE, which won the German Sustainability Award.11 I suspect that my next learning journey in spring 2022 will take me to the VAUDE headquarters in Tettnang. That will certainly be easy to combine with another holiday. This time, I’ll only have to travel as far as Lake Constance.
- Wikipedia: Patagonia
- https://en.wikipedia.org/wiki/Benefit_corporation
- Yvon Chouinard: Let My People Go Surfing
- ibid.
- Yvon Chouinard: Let My People Go Surfing
- Clean Clothes: The need for supply chain transparency in the garment and footwear industry
- Fashionchecker.org: Brand Profile
- NZZ am Sonntag: Die Outdoormarke Patagonia will nicht mehr wachsen. Moritz Kaufmann interviews CEO Ryan Gellert, 16/1/2021
- Weltjournal, 13 October 2021
- NZZ am Sonntag: Die Outdoormarke Patagonia will nicht mehr wachsen. Moritz Kaufmann interviews CEO Ryan Gellert, 16/1/2021
- Nachhaltigkeitspreis.de: The winners
