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OM in the News: Leading the Sustainability Charge at Patagonia

April 30, 2012

Yvon Chouinar, founder and sole owner of the $414 million outdoor-clothing brand Patagonia, has just published a new book, “The Responsible Company,” which  offers detailed checklists for making money without inflicting undue societal harm. And according to The Wall Street Journal Magazine (May, 2012), even megacorporations are paying attention to him these days.

Chouinard has partnered with Walmart—an odd couple if there ever was one, in terms of size (Walmart’s revenue exceeds Patagonia’s 800-fold) and customer base—to advise the retail giant on reducing packaging and water use in its supply chains. Together the two companies teamed up to create the Sustainable Apparel Coalition, inviting other major brands, such as Levi Strauss, Nike, Gap and Adidas to join them in crafting clear, quantifiable standards for environmentally responsible clothing production.

Chouinard looks at everything Patagonia makes, shipped or processed, and resolves to do it all more responsibly. He changes materials, switching  from conventional to organic cotton—despite the fact that it initially tripled his supply costs—because it was less harmful to the environment. He created fleece jackets made entirely from recycled soda bottles.  He also convinced Levi Strauss—with more than 10 times the annual revenue of Patagonia–to embrace efforts to set data-driven benchmarks for improving apparel makers’ environmental practices. Levi’s has spent the past 18 months redesigning processes to save 45 million gallons of water, along with the energy that would have heated that water.
In 1970, Milton Friedman wrote a legendary essay for the New York Times Magazine titled “The Social Responsibility of Business Is to Increase Its Profits.” Friedman pooh-poohed companies’ charitable efforts, arguing that it’s the sole duty of a business executive to maximize profits for shareholders. But Patagonia would disagree over the role of corporate social responsibility—since 1985 it has given 1 percent of revenue (sales, not profit), totaling $41.5 million, to grassroots environmental organizations. Over the years it has convinced 1,400 other companies worldwide to join this “1% for the Planet” initiative.
Discussion questions:
1. Do companies still follow Friedman’s philosophy?
2. How has Patagonia impacted the business world?
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