Patagonia has stared down nay-sayers to show that a ‘good’ company can thrive. Director of Philosophy Vincent Stanley came to USC Price to explain how it’s done.
Why would a sportswear company make painful sacrifices to be a force for environmental and social good? Why be a stickler for ethical business practices?
The short answer, in the case of Patagonia, is because it didn’t start out as a sportswear company.
“We came out of climbing,” said longtime company executive Vincent Stanley, who recently spoke at Verna Dauterive Hall as a guest of the USC Sol Price Center for Social Innovation.
With apparel, Stanley said, there’s some built-in ethical flexibility. From good, to better, to best quality, the range of acceptable products maps along known price points. But when customers’ lives depend on the ethical choices a company makes, there’s only room for a single standard: flawless.
The co-author of the 2012 book The Responsible Company with Patagonia founder Yvon Chouinard recalled his first job in 1973: inspecting ice axes for hairline fractures. Stanley was acutely aware that a moment’s inattention on his part could lead to a climber’s death.
Forty-six years later, Stanley is still with Patagonia. He moved from ice-ax inspector through key roles in sales and marketing to his current title of director of philosophy. He is also a published poet and executive fellow at the Yale Center for Business and the Environment.
Storytelling and philosophy are at the heart of Patagonia, a pioneer in the B Corp movement of businesses that seek profit consistent with purpose.
Three Turning Points
In his lunchtime talk to the USC community, Patagonia’s longest-serving employee highlighted three defining ethical challenges that have shaped the company.
The first came in the early 1970s, when Chouinard—who is Stanley’s uncle and a pioneering alpinist—realized the hardened-steel piton on which he’d built the reputation of his business actually was “destroying the very sport we loved and desecrating the rock,” in Stanley’s words.
Switching to light-weight aluminum chocks, used by British climbers, would stop the destruction. But it required the tiny company to make a huge investment in tools and dies—and a thoughtful essay—to bring American climbers on-board. In a move foreshadowing Patagonia’s fabled 2011 “Don’t Buy This Jacket” ad campaign, the company published its first catalogue in 1972. Included was a 12-page article—”part manifesto, part instruction manual”—explaining why climbers should switch from pitons to chocks, and how to use the new gear. Nine months later, 70 percent of the company’s sales had moved from pitons to chocks.
On environmental consciousness as competitive strategy:
“We try not to be competitive. When we developed Yulex, an alternative to neoprene for wet suits, we made it available to the whole surf industry because it’s better for the world. And it also reduces the cost of Yulex faster when more people adopt it.”
Stanley described the second pivotal moment, which came in 1989, after Patagonia had moved into sportswear. The downsides of using chemically-grown cotton came sharply to the company’s attention when employees started getting sick at a newly opened retail store in Boston. An HVAC health inspection traced the ventilation problem back to formaldehyde in the stockroom where the cotton merchandise was kept.
“We commissioned a study on the four major fibers we used: cotton, wool, nylon and polyester,” Stanley said. “And we found out cotton was by far the worst, because of the intensive use of chemicals, fertilizers and pesticides. It was the same dilemma as the pitons.”
Transitioning to all-organic cotton, however, was harder than the piton-to-chock change had been.
“We had a gentle internal revolt on our hands,” Stanley recalled. Patagonia’s designers and production managers balked at the extra work heaped on them. Switching to organic cotton meant they had to build a whole new manufacturing infrastructure from scratch while spiking raw material costs.
But the Chouinard family wouldn’t budge: rather than go back to chemically-grown cotton, they were prepared to walk away from sportswear, which represented a third of Patagonia’s business.
“This was a critical transition point,” Stanley said. “It became the basis for everything we’ve done ever since..”
So the Ventura, California-based company organized bus tours to cotton fields in the San Joaquin Valley. Every employee was invited. They could smell for themselves the factory chemicals in the air, dig their hands into the lifeless soil. The field trips ended with a stop at an organic cotton farm, where birds, earthworms and biodiverse vegetation thrived.
The rebellion evaporated, though the transition to organic cotton remained painful.
“We had to drop 100 products from the line,” Stanley said. “We lost margin for a year or two. We lost some sales. But eventually we were able to make up the business and convey to our customers what we were doing, on the basis of values, and to earn their loyalty.”
Saving the World with Beer
The third turning point came in the last five years, as the company moved into the food business. From a small maker of organic edibles for backpackers and hikers, Patagonia Provisions is evolving into a platform for launching experimental crops with earth-saving environmental potential.
In 2016, the company introduced Long Root Ale, a beer made from a perennial wheatgrass called kernza, developed by a Kansas-based Land Institute. Kernza’s 17-foot roots draw carbon deep into the soil, stirring up microbes and fungi and naturally reversing the damage done by commercial farming practices.
No grower could see a market for kernza until Patagonia stepped up. The company partnered with a Portland brewery to design a pale ale using the new crop, which resulted in the first planting of 200 acres. Whole Foods agreed to sell the beer in more than a hundred West Coast outlets.
Following Patagonia’s lead, a major cereal brand is now looking to plant many thousands of acres of kernza for use in its breakfast products.
Provisions is transforming Patagonia, according to Stanley.
“It provides us a new north star, to introduce products that help solve big problems and give back to the planet more than we take from her. If we can prove out new materials, processes, plants—and demonstrate that they work—then other businesses larger than we are can run with them,” he said.
Last December, Patagonia scrapped its 27-year-old mission statement.
The old statement’s highest aspiration had been to “cause no unnecessary harm.”
The new statement has loftier goals: “Patagonia is in business to save our home planet.”
“In clothing, we try to reduce the harm we do,” Stanley explained. “But when we get into food, we start to see potential to not just do less harm but to do positive good. This is something new for us. This has become our North Star.”
Next Big Thing
After Stanley’s talk, members of the audience—many wearing Patagonia fleece—followed up with questions about the company’s innovations in promoting vendor fair-labor practices and the troubling metrics of success for an environmentally-conscious business.
On social improvements coming soon to the apparel business:
“The Sustainable Apparel Commission, which we co-founded with Wal-Mart in 2011, makes a difference. Its 400 member companies now make 50 percent of all footwear and clothing sold worldwide. Part of that organization’s purpose is to build a consumer-facing index by next year. When you can put your cell phone up to a tag on a pair of jeans and get an environmental and social rating, that will do more to change practices than anything else.”
USC Price Center associate director Roberto Suro closed out the event with a question about Patagonia’s next big goal.
“We’re looking to get out of the oil business,” Stanley replied. “Though we use organic cotton, half our products still come out of an oil well. How do we make nylon and polyester out of completely recycled plastic or some biological feed stock?”
With its planet-saving will, Patagonia may well find a way.