What Can Other Companies Learn from Patagonia’s Model?

Q: In 2012, you and Yvon Chouinard co-authored The Responsible Company: What We’ve Learned from Patagonia’s First 40 Years. Now, you have released The Future of the Responsible Company: What We’ve Learned from Patagonia’s First 50 Years. Why the new book?

We start the book with a quote from Gerald Amos, a leader of the Haisla Tribe in British Columbia, who says, “The most important right we have is the right to be responsible.” That capacity to act responsibly is something that every company shares, every human endeavor shares. Everybody can be responsible. Everybody can have agency. We can each say, “I’m part of a human community, we can respond to what we see and take action.”

So much of what is going on in the world is heartbreaking and scary. But there’s also so much learning going on. We now have the potential to deal with the environmental and social crises head on. We have the potential for real cooperation. We have the potential to create a better way to live. I think those possibilities grow out of lessons learned in the last 10 years.

The new edition of the book is a way to share what we’ve learned. And its focus on the future reflects the fact that the next 10-20 years will be critical.

Q: There’s a line in the book: “As we destroy nature, so we destroy our economy.” Would you expand on that?

Fundamentally, we’re living people on a living planet. The economies we’ve created depend on the underlying health of ecological systems. Every industrial system and every social system that we have depends on the health of nature. If we tear away radically at the web of life, the systems we depend on stop functioning. As we damage the living planet, we damage our own well-being.

Pope Francis put it eloquently in his 2015 encyclical Laudato si’: “We are faced not with two separate crises, one environmental and the other social, but rather with one complex crisis which is both social and environmental.”

Q: Climate change is the result of human activity shifting planetary systems. There are many aspects of the climate crisis that are complex, but you offer a straightforward call to action for business, “Harm done on an industrial scale needs to be reduced on an industrial scale.” What does that look like?

We’re in a crisis, so every business has to do its part. Every business should be looking at potential products and services that meet human needs and also help solve the problems that we’re facing.

We have a small food company, Patagonia Provisions. Its business model is that every product has to address some problem in the food system or in agriculture.

Patagonia came up with an alternative material for wetsuits that doesn’t have the environmental impacts associated with neoprene. It’s customary for an apparel company to take an exclusive on an innovative fabric for the first year. We made certain that it was offered to the industry as a whole immediately because we believe that, given the climate crisis, as companies learn how to solve environmental and social problems, the solutions need to be shared.

Similarly, when you face challenges, it’s important to share those. For example, when you wash clothing, it sheds microfibers. They’re not filtered out by the washing machine or by the municipal water system. Many of them, including microplastic fibers from Patagonia fleece, end up in the ocean, end up in the stomach of birds and marine mammals.

In 2019, when I spoke to a group from Samsung, I described our struggle to address the issue and the fact that we’d approached different washing machine companies without success. Then, without thinking, I blurted out, “Say, you make washing machines.” I thought I’d been rude but they took it to heart, and they’ve now created a filter that can be used on any washing machine that captures 98% of the waste.

Their engineers were skeptical at first, but now they’re very proud of what they’ve produced. Samsung’s competitors are also working on filters. I think within a few years they will be standard. This happened as the result of an inadvertent remark, but it’s entirely possible to intentionally work on solutions through open conversations about problems within or across industries.

Q: Thinking about those engineers, you’re describing a remarkable shift from lack of awareness to skepticism to pride and a sense of agency through developing a solution.

It’s extraordinary. And it has to be welcomed at every scale.

A company of any size is made up of human beings. Human beings have values even when those values are below the surface. If you work for a plastics company, you probably don’t talk much about the vast garbage patches of plastics floating in our oceans. But there’s a good chance your daughter will come home from school one day and ask you about it at the dinner table.

I don’t think anybody is exempt from understanding what’s going on in the world. There are a lot of good people in a lot of companies that we may not regard highly for their environmental or social performance.

Q: Quite often CEOs say that their only responsibility is to deliver returns to shareholders. They probably wouldn’t phrase it this way, but the suggestion is that it’s a luxury to do business in a responsible way.

A luxury for whom?

It could be a luxury for shareholders’ immediate returns. If you’re looking at what’s happening next quarter, or if you’re looking at selling your company, social and environmental health doesn’t matter as much. If you want to be in business 100 years from now, you care about the long-term success of all of your stakeholders. On a long scale, the health of the business pretty much coincides with environmental and social health.

I think everybody’s got a lot more wiggle room than that statement implies. Companies have choices they can make.

For instance, Davines is a hair and skincare company in Parma, Italy. Asked how they can afford to prioritize sustainability, the head of the company said, “I don’t hire supermodels to promote the line. I can spend the money on supermodels, or I can spend the money on sustainability.”

Davines is a B Corp. The B Corp movement is an important association of companies that have committed to incorporating values into their business models.

Q: Why does the B Corp movement matter?

First of all, it provides rating systems for companies environmental and social practices. A company can become a B Corp with a score of 80. But companies continue to improve through periodic evaluations and by looking at what other B Corps are doing. Patagonia has a score of 153 out of 200. We look at Dr. Bronner’s, which has a score of 207—there are bonus points—and we say, “How can we learn from them? What do they know that we don’t? What do we need to look at?”

Ongoing improvement is important, but fundamentally the reason I’m so strong on the B Corp movement is that to participate a company’s values have to be raised to above the subsurface level. When an organization’s values are articulated, agreed upon, and actually integrated into the business, that creates tremendous potential not just to reduce harm but to do good.

Q: The last time we talked, you described how Patagonia inadvertently discovered the health and environmental impacts of conventional cotton which led the company to using organic cotton. In this conversation, you’ve said acting responsible is not a luxury when taking a long-term perspective. How does acting responsibly make for a more productive and profitable company?

At one point Yvon said, “Every time I do the right thing, I make money.” He said it whimsically, but here’s how I understand the process. If I’m a designer for a fashion company in New York, I can go to the FIT Library and choose from thousands of fabrics to create my spring line. If I’m a designer at Patagonia, well, we want to know the social and environmental practices that went into creating each fabric. It’s a limit we place on ourselves. It’s an approach that makes sense because we aren’t focused on the short term. It makes sense because we aren’t choosing the easiest path. It’s easy to be 3% more efficient than last year by squeezing suppliers to reduce their prices by 3%, but it’s lazy.

You want people to think about what they’re doing and to speak openly when they see a problem. And you want people to look at that problem and say, “That’s not fatal. I can figure out a way to achieve what we want to achieve while dealing with that constraint.”

With constraints, you force yourself to say, “I can’t buy the fabric that’s 19 cents a yard that everybody else is using. How can I do this differently? How do I make a competitive, attractive product?” You force yourself to find a way to do it better. In that process you create more innovative products. And you learn how to innovate.

That approach has driven the evolution of our business over the past 20 years. We push to reduce our environmental and social impacts. What we learn as a result of each new constraint creates the next generation of products. And it has created an immense amount of loyalty from customers. They’re looking for that from us.

In the last 50 or 75 years, the economy has come to rely heavily on creating disposable products. A relationship to customers that encourages a feeding frenzy of consumption is a cheap way for companies to expand their business and to build their name, but it’s not good for the environment and it’s not necessarily good for people.

If you engage customers as partners and develop an understanding that buying our products can be more of a reflective act, that’s the basis for an ongoing relationship.

Q: What does that ethos look like within a company?

Having worked at Patagonia through the decades, one of the things that amazes me most is that what we’re capable of doing now would’ve been unimaginable to me in the 1990s. We haven’t transformed the workforce so much as we’ve created a culture that gives permission to people to have agency and to bring their values to work.

When you start to look at your employees not as contract workers that you pay as little as possible and get as much out of, you create a safe environment. When you also give them to opportunity to honor their own deepest values and aspirations, a higher level of work becomes possible. You can’t do that in a company where people feel they must keep their head down and watch their back.

Treating your employees as whole people able to operate on a level of common purpose is just a different model of doing business. In 2018, we changed our mission statement to “Patagonia is in business to save our home planet.” I remember feeling skeptical. We’re in business to make clothes and to sell them. I thought it was too grandiose and too aspirational.

What happened was the employees adopted it very quickly. They started to ask: How can our business save our home planet? What does this mean for my team? How do I change my practices to align with that aspiration?

Q: One way of describing the aspiration is regenerative business. Could you explain the term?

For context, sustainable is the popular term for companies that have environmental and social ambitions. We don’t think there’s very much that we do at Patagonia that’s truly sustainable. That’s why we use the phrase “responsible company.” We’re honing our practices so that we’re creating the least amount of pollution and using the least amount of resources to create a product. That’s reducing harm. That’s not the same as practices that could be sustained indefinitely. Restorative would be a step beyond sustainable.

A regenerative business is fundamentally non-extractive. It gives back to the earth and to people as much or more than it is taking away. That type of generosity toward communities and the environment as part of a business model is something we hope to create and we hope to see more of in the world.

Q: Are there any companies that you would describe as regenerative businesses?

I think Dr. Bronner’s comes close. They prioritize doing the right thing. They pay really close attention to their supply chain. They have a limited product line and are pretty much able to use natural ingredients.

The closer you get to agriculture, the more potential you have to create a regenerative business. Patagonia Provisions, I think, is on the way to becoming a regenerative business. I don’t think Patagonia is as a company yet. Ask me that question again in 10 years, and I might have a different answer.