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A path for Patagonia

patagonia store on king st
One of Patagonia's stores in Canada, located on Toronto's King St.

Few companies would consider contributing thousands of dollars to a group of environmental activists for a campaign against other businesses. Yet that is precisely what Patagonia, the outdoor gear retailer, has done to support the Adirondack Mountain Club’s battle against the oil and gas industry.

The Conservation Alliance, a foundation set up by Patagonia and other like-minded retailers, has donated a total of $125,000 to the mountain club since 2007, including a $50,000 grant this year. Most of the money will fund a campaign against plans to extract natural gas under two lakes near Rochester, New York, using the controversial technology known as hydraulic fracturing, or “fracking.”

“I have a good deal of respect for Patagonia,” says Neil Woodworth, the mountain club’s executive director and counsel. As Woodworth sees it, “you’ve got to fight fracking with science, rhetoric doesn’t cut it.” The Conservation Alliance’s support gives his club “a little more ability to deter fracking than some other folks.”

Since its creation in the early 1970s, California-based Patagonia has not only carved out a reputation for high-quality adventure sports gear, but also captured attention for its unrelenting support of environmental and other social causes. “I don’t like to think of myself as a businessman,” Yvon Chouinard, Patagonia’s founder and driving force, wrote recently. “I’ve made no secret that I hold a fairly skeptical view of the business world.”

Teresa Nersesyan, a Los Angeles-based clothing industry consultant, describes the company as “the standard-bearer for sustainability.” She adds that “I would be hard-pressed to find something they’re not doing right.”

A recent survey by the Amsterdam-based Clean Clothes Campaign, a labour-rights advocacy group, identified Patagonia as one of only four retailers worldwide that involved all interested parties, including workers, in implementing their codes of conduct for working conditions and sourcing of raw materials. (The other three were Helly Hansen of Norway and Switzerland’s Mammut Sports Group and Odlo International.) Patagonia also made the short-list of six companies nominated for the Financial Times’ annual Boldness in Business award this year.

Chouinard, 74, handed over the CEO reins at Patagonia in the late 1980s, but the company remains very much his creature. He and his wife Malinda are the sole shareholders. Their son Fletcher heads a surfing-equipment subsidiary and daughter Claire, a designer, has been on payroll since 2006.

Patagonia donates 1 per cent of annual sales, which in 2012 totalled $575 million, to grassroots environmental groups. It helped spearhead the Sustainable Apparel Coalition, a group of clothing and footwear companies whose initiatives have included an index of social and environmental performance.

It was also the first California company certified as a “benefit corporation,” known as a B Corp. Begun in 2010, the designation is provided by B Lab, a non-profit group, to companies meeting minimum standards of social and environmental performance, accountability and transparency. More than 800 companies from 27 countries have so far been certified, including Corporate Knights.

Nersesyan says that the formula for Patagonia’s business success includes restricting its supplier base to no more than 200 factories. Suppliers are required to attend regular training seminars, and to share their most successful ideas with other Patagonia suppliers.

According to company spokeswoman Jess Clayton, “Transparency is the primary contemporary virtue for all responsible business. And every time Patagonia has made a decision based on the environment over financial gains, we have made money.”

Patagonia has so far declined to join an agreement on fire and building safety in Bangladesh that was drawn up in May 2013 by textile-industry labour groups, NGOs and retailers to prevent a repetition of the building collapse earlier in the year that killed over 1,100 people. The company’s explanation is that it does business with only one South Korean-owned sewing factory in Bangladesh. It takes the view that “the quality of the standards and practices of this factory exceed those called for in the proposed accord.”

On the other hand, Patagonia has underlined its opposition to fracking by telling customers in a mid-summer e-mail that because of fracking’s wide-ranging risks and impacts, “we support each community’s right to educate itself and regulate and/or ban fracking to protect its water, air, soil, and local ecosystems.”

The Conservation Alliance claims, among other “successes,” to have blocked 77 oil and gas leases in Utah, put 55,000 acres of land in Colorado off-limits to the energy industry, and persuaded the Obama administration to protect a vast tract of land in Alaska previously earmarked for oil and gas.

Elise Annes, vice-president for community relations at the Vermont Land Trust, another Conservation Alliance beneficiary, says that she and her colleagues often question the potential for a conflict of interest if they accept money from big business. However, she describes Patagonia as a model that other companies would do well to follow. “They enthusiastically care about the issues,” she says. “It’s not what I would call ‘green-washing.’”

Chouinard is now seeking to broaden Patagonia’s horizons. He announced in May the creation of a $20 million in-house venture capital fund that will invest in start-ups “working to bring about positive change” in five areas: clothing, food, water, energy and waste.

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