Want to Build a Philanthropic Business? Tips from Patagonia’s Roaring Success Story

Corporate consciousness is in. Name an industry — any industry — and you’ll find businesses incorporating recycled plastics, from food and beauty to clothing and electronics. Many give back to charity, support employee unions, or commit to fair pay across supply chains. 

According to a 2023 report by Oxford University’s Net Zero Tracker, only half of the world’s biggest companies have set a target to hit net-zero emissions by 2050. But, only 4% meet the criteria laid out by the United Nations Race to Zero campaign.

But, many companies are failing to meet their targets, a recent S&P Global report found. For businesses that want to do good, the American outdoor apparel brand Patagonia stands out. Its estimated annual revenue of $1.5 billion pooh-poohs the idea that business and philanthropy can’t coexist. 

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The Secret to Success

In September 2022, Patagonia founder Yvon Chouinard transferred ownership of the company over to two entities that help fight climate change.

“While we’re doing our best to address the environmental crisis, it’s not enough,” he wrote in a post on Patagonia’s website. “We needed to find a way to put more money into fighting the crisis while keeping the company’s values intact.”

His statement underlines Patagonia’s strength: it’s always been on a journey of self-improvement. Chouinard founded Patagonia in 1973, and the company has committed 1% of its profit to charity through One Percent for the Planet – which Chouinard co-founded – since 1985. It began using recycled polyester in its products in 1993 and its program, Worn Wear, helps keep its products in circulation, chipping away at the massive amounts of clothing that are trashed each year. 

When it discovered human slavery in its supply chains in 2015, the company publicly acknowledged it and has since committed to improving conditions for those workers, and any other human rights violations it finds.

But, the company admits that there’s still much work to do. Thirteen percent of its polyester is virgin — never been used before — and it still has supply chain issues that need solving. 

“There are challenges in our supply chain that we have that we want to solve. That's been that way throughout our history. And as we solve some, we figure out there are others. It's just a never-ending process,” CEO Ryan Gellert told Reuters. 

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The Right Way to Make a Philanthropic Business

Simply put, Patagonia’s ethos can be traced to Chouinard's sincerity. A longtime lover of rock climbing, the company was initially his personal quest for sustainable, high-quality climbing gear.

Discontent with the damage caused by pitons to rock faces, he began crafting reusable gear, setting a precedent for ethical design and manufacturing practices. Ultimately, this pursuit of innovation fostered a culture steeped in respect for the natural world. 

“Patagonia has time and again broken the rules of traditional business and proven we still can be successful. The average lifespan of a corporation currently is a little over 20 years, but we’re still here after five decades of doing things on our own terms,” Chouinard said in an interview with McKinsey & Company.

That’s not to say that the company doesn’t shy away from acknowledging its quest for profit. “We’re unapologetically a for-profit business,” Gellert told Reuters. But, its ability to do good for the planet and the business comes from a place of sincerity.

Embedded within Patagonia's ethical fabric is a profound sense of integrity. From supply chain decisions to advocating for environmental causes, the company maintains a consistent moral compass. Their dedication isn't confined to corporate walls; it extends to transparency in their processes and accountability in their actions.

This integrity manifests in their organic cotton initiatives, where a conscientious shift from conventional to organic cotton stemmed from a rigorous internal analysis of its environmental impact. 

It’s also mindful of not growing too big, which may bring in more profits, but make it challenging to uphold Patagonia’s ethos.

“A company doesn’t last 100 years by chasing endless growth. There’s an ideal size for every business and, when companies outgrow that, they die. We know we have to be intentional in our growth to be around for another 50 years, so we’re focused on longevity, not expansion,” Chouinard said in the interview.

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Conclusion

It’s good for the planet when business wants to do good. In fact, it’s imperative that more companies prioritize the Earth. Chouinard especially emphasizes the need to align business motives with saving the planet. The company's collaboration and financial support for environmental activism further demonstrate its commitment.

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Patagonia's journey exemplifies the metamorphosis from a profit-driven entity to an environmentally conscious business. While challenges persist in the supply chain and sustainability efforts, Patagonia stands as a beacon, encouraging a broader dialogue within the business landscape on responsible practices. The brand's impactful actions underscore the necessity for businesses to intertwine profit with planet preservation, ensuring a sustainable future.

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Sources

Entrepreneur

McKinsey

Reuters

Esquire

Patagonia

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This article was originally published in Certainty News [link to article page]