Innovation

Patagonia is a clothing retail company known for its upscale outdoor clothing and various environmental sustainability efforts. The innovation strategy at Patagonia is based on a two-pronged approach: minimizing the environmental impact of their clothing, and developing the circular economy. The team of Patagonia generally innovates incrementally on recycled materials in-house and screens their market for radical new materials that the team can employ. Since Patagonia’s founding in 1973, the latest and greatest fibers that the company has been using are called lyocell. This is made from wood from responsibly managed forests and recycled cotton. Lyocell not only minimizes the use of other harmful materials but also diverts waste from the waste system. Patagonia products are built to last, durability is a core priority in the design and manufacturing of every Patagonia product. This innovation emerged when founder Yvon Chouinard made their mission statement: “We’re in business to save our home planet.” It is said that the material innovation team works with a mindset of 10 to 15 years in the future. Many different divisions inside Patagonia focus on solutions to clothing sustainability. Patagonia’s product responsibility team is a group full of data scientists who measure the environmental impacts of Patagonia products and advises other teams on how to make improvements. Every product idea that is pitched to Patagonia is sent to product responsibility to validate any environmental claims.

From the beginning, Yvon Chouinard was an innovator and businessman, while still having a deep passion for the outdoors. He was a normal climber who taught himself how to become a blacksmith so he could start to make his climbing equipment. This eventually became extremely successful as many of his friends wanted his products. He supported himself and his lifestyle by selling gear from the back of his car. By 1970, Chouinard had a full-on business with a partner and had become the largest supplier of climbing hardware in the United States. As his climbing equipment company continued to grow, his small but mighty team felt that clothing was a way to help support the marginally profitable hardware business. This is how Patagonia was created. In 1996, Patagonia switched from using standard industrial cotton to 100 percent-organic kinds of cotton. The company devoted a year to educating its employees about the decision to get their buy-in.

Patagonia’s innovation of outdoor apparel relates to a sense of mission, purpose, and meaning. The company relates to all three of these aspects because its mission of “we’re in business to save our home planet” emphasizes the overall impact that its products and business model have on the world. Their innovation shows that it looks to have widespread benefits that go beyond the comfort their customers get from its outdoor clothing.

In the interview with Paul Carson, he shared that it is hard to say that any company or firm in this world is 100% sustainable. Although this is known, Patagonia is extremely aware of being environmentally friendly and sustainable. Mr. Carson also stated:

“Patagonia works hard to keep its products out of landfills. They collect and refurbish their old gear as part of their five waste-combating principles: Reduce, Reuse, Repair, Recycle, and Reimagine. Since 87% of our products are made with recycled materials, it’s pretty safe to say that we are one of the most sustainable outdoor apparel brands when it comes down to how our products are made. Our company makes customers feel that they are contributing to protecting the environment by extending its value proposition beyond the aspects of high-quality outdoor clothing and equipment. When a customer buys our product, they feel that they are contributing to the highest environmental standard.”

Inspiration

As a young boy, Yvon Chouinard had a passion for climbing but didn’t find many outlets to allow him to practice. He realized that if he joined a falconry club, he would have the opportunity to scale cliffsides in search of falcon nests. However, he found that the climbing equipment was harming the natural ecosystem in the rocks, so he designed new equipment that would be more environmentally conscious. These took off in the climbing community, and eventually, Yvon was able to sell this equipment to provide for himself and continue his rock climbing travels.

A trip to Scotland in 1970 was cited to have changed his life when he came across a rugby shop. Yvon quickly realized that rugby shirts were the perfect material for climbing, as the reinforced fabric wouldn’t rip on the rugged terrain, and the collar provided his neck protection from the ropes. As Yvon started wearing this shirt on all his climbs, it began to catch on among his friends. The Rugby jersey became not only a functional asset to climbers but a trendy fashion choice throughout the community. These functional outdoor pieces were suddenly in high demand, and this was the beginning of Yvon’s clothing company.

Within two years, Yvon had expanded his range to include rain cagoules, bivouac sacks, wool mittens, and hand-knit hats, sourced from all over the world. And in 1973, the company got its name, “Patagonia”.

The mission towards sustainability was partially sparked when several employees in Patagonia’s Boston branch complained about headaches. He closed the store down and hired a chemical engineer, who found that the headaches could be explained by insufficient ventilation and formaldehyde used to preserve the cotton. With his preexisting inclination towards sustainability, this was the push Yvon needed to change his approach to sourcing and manufacturing. Patagonia then became the first fashion company to use organically sourced cotton.

Overall impact

In a year, the fashion industry produces 1.2 billion tons of CO₂ emissions, equaling the amount produced by both international flights and maritime shipping. The emissions are primarily caused by coal-fueled power plants, which rapidly adds warming gases into the air we breathe and worsens the climate crisis. To help combat the climate crisis, Patagonia has been working to keep clothing out of landfills and significantly reduce the amount of virgin material they use. This season, 94% of Patagonia’s line utilizes recycled materials, allowing the company to avoid 4,300 metric tons of CO₂. Patagonia states that the amount of CO₂ they avoided is enough to power at least 500 homes for a year. To make this impact, the company has turned to recycling both pre-consumer and post-consumer materials. These forms of recycling give new purpose to fabric scraps and yarn waste and clothing that’s been destined for a landfill. Patagonia’s recycling initiative is truly innovative and impactful as less than 1% of used clothing is recycled into new products each year.

Through their immense impact on people and the planet, Patagonia has been able to build a loyal customer and employee base. With this support, Patagonia has revolutionized the clothing industry by showing that fast fashion is not the only way to be profitable and successful. In this way, Patagonia has served as an example of the various ways companies can be sustainable, while also being successful and profitable.

Business benefit

Patagonia is an excellent example of how focusing on sustainability can improve a company's bottom line. Since Patagonia is a private company, its financials are not disclosed. However, it was recently valued at $3 billion when the whole company was transferred from founder Yvon Chouinard to separate entities. 98% of the company's stock will go to the holdfast collective to fight climate change, and the other 2% to the Patagonia purpose trust to maintain the company structure. This innovative company structure is another example of how Patagonia is a leader in the business world for environmental sustainability. Customers are drawn to these values, and employees want to work for these values, which is why the company has a loyal following and continues to grow.

Along with the environment, Patagonia also places value on the fair treatment of its employees. Patagonia has a 9/80 work schedule where employees are given a three-day weekend every other week. The company culture emphasizes the outdoors, as Paul noted how employees have the flexibility to go surfing during work hours if the waves are good. These practices have led to strong employee retention, with a turnover rate of only 4% compared to the industry-wide average of 13%. Patagonia's relaxed business environment has, in turn, produced employees committed to their work. Patagonia shows how fighting climate change and treating employees well can help a business become profitable.

Social and environmental benefit

Patagonia's sustainability programs are aimed at limiting the company's impact on the environment. Patagonia has implemented recycling as an essential part of the company with the goal of reducing the amount of waste they generate. They are able to boast that 87% of their products are made through recycled materials. Patagonia does this by following five waste-combating principles of reduce, reuse, repair, recycle, and reimagine. The company's goal is to limit the number of its products that end up reaching landfills. Offering customers lifetime returns and repairs on all their products gives customers convenient options to use their products longer rather than throw out and replace damaged items. Patagonia also has a program called worn wear, where they offer used products and the ability to trade in Patagonia clothing for store credit. This encourages sustainable behavior on the consumer end and increases the chances that products will be used for their full life cycle before being recycled. The goal of Patagonia is to become carbon neutral by 2040, which will only be possible through their recycling programs continuing to improve. Patagonia is a company at the forefront of environmental sustainability, and it continues to set the industry standard.

In addition to environmental programs, Patagonia also has a variety of social initiatives to help its employees, local communities, and other stakeholders. In our interview, Paul stated that he was given $100,000 to invest in local shops of his choosing. This shows how Patagonia is motivated to improve the conditions of surrounding communities in their locations. That money could have easily been reinvested in the company or returned to shareholders but Patagonia is committed to being a force for good in the world. Within its manufacturing process, Patagonia acknowledges the negative stigma surrounding the apparel industry's treatment of its workers and wants to break those stereotypes. Patagonia is fair trade certified, which promotes safe working conditions for the people manufacturing their clothing items resulting in a more sustainable supply chain. Another social issue Patagonia is focusing on is improving the condition of migrant workers in its supply chain. Migrant workers in countries such as Taiwan are charged an upfront fee of thousands to get a job, and Patagonia started an initiative to eliminate that fee for the workers. Patagonia is committed to inspiring change through many social intivates that the company is involved in.

Interview

Paul Carson, Hawaii District Manager