Why is Patagonia in business?
Let me address the elephant in the room.
Everyone references Patagonia when they talk about purpose. It’s not a new case study, so why share its story yet again? The truth is, it’s impossible to talk about love in business without talking about Patagonia – because the love that drives this business is as close as it gets to its purest form. I will strive to show you a reasonably full picture of how love is manifested through this incredible organisation.
Simply put, Patagonia shows us what business can be at its best. Patagonia is fulfilling its true potential as a business.
Its purpose is simple and as ambitious as a purpose gets:
We’re in business to save our home planet. We aim to use the resources we have – our voice, our business and our community – to do something about our climate crisis.
Here are some of the initiatives Patagonia has pursued in hopes to save our home planet...
1% for the Planet
Since 1985, Patagonia has pledged 1 per cent of sales to grassroots organ- isations committed to the preservation and restoration of the natural environment. It calls it a self-imposed tax. To date, mid 2021, it’s contributed US$89 million in cash and in-kind donations to these non-profit organisations globally.
In 2002, Yvon Chouinard and Craig Mathews, owner of Blue Ribbon Flies, established a non-profit organisation called 1% for the Planet. They invited other businesses who shared their love for our planet to join and commit to contributing 1 per cent of their total annual sales (business or brand) to grassroots environmental groups.
Today, the organisation has brought together more than 6000 like- minded member organisations across ninety-one countries that have given more than US$295 million to environmental non-profits to date. It continues to attract new business members.
Let My People Go Surfing
Some of you may recognise this as the name of a bestselling book written by Yvon Chouinard in 2005. What you may not know is that it’s also the title of Patagonia’s employee handbook.
Before I write anything more about Patagonia, its culture and its employees, that handbook title must surely give you a clear indication that Patagonia’s unusual approach to business isn’t limited to how it markets itself.
Here are just some of the things that Patagonia employees experience that my research has uncovered:
Work flexibility, three-day weekends every fortnight, paid volunteer leave, posting bail (Yep. You read right. If you’re a Patagonia employee and you get busted for peacefully protesting in support of the environment, Patagonia will bail you out at the company’s expense), parental support, their Drive-Less Program and health insurance.
It’s no surprise then to learn that Patagonia has a high employee retention rate. Only about 4 per cent of its people turnover each year, compared to the retail industry average of 13 per cent.
Let’s face it. Why would anyone want to leave a company that has such high and noble aspirations and treats its people with humanity and respect?
‘Don’t Buy This Jacket’
In 2011 Patagonia famously ran an ad on Black Friday, the biggest retail sales day of the year in the USA.
Their ad, ‘Don’t Buy This Jacket’, featured their bestselling R2® Jacket. The ad stated:
Because Patagonia wants to be in business for a good long time – and leave a world inhabitable for our kids – we want to do the opposite of every other business today. We ask you to buy less and to reflect before you spend a dime on this jacket or anything else.
It went on to provide detailed information on what goes into making and distributing the jacket:
To make it required 135 litres of water, enough to meet the daily needs (three glasses a day) of 45 people. Its journey from its origin as 60 per cent recycled polyester to our warehouse generated nearly 20 pounds of carbon dioxide, 24 times the weight of the finished product. This jacket left behind, on its way to [the warehouse], two-thirds its weight in waste. And this is a 60 per cent recycled polyester jacket, knit and sewn to a high standard; it is exceptionally durable, so you won’t have to replace it as often. And when it comes to the end of its useful life we’ll take it back to recycle into a product of equal value. But, as is true of all the things we can make and you can buy, this jacket comes with an environmental cost higher than its price.
There is much to be done and plenty for us all to do. Don’t buy what you don’t need. Think twice before you buy anything.
The ad goes on to invite people to take the Common Threads Initiative Pledge: to Reduce, Repair, Reuse and Recycle. And then to take the fifth ‘R’, to Reimagine a world where we take only what nature can replace.
How many other brands do you know that ask people to think twice before buying its product?
And yet, Patagonia attracts fierce loyalty from its customers.
A tax cut for the planet
For many people, paying taxes is something they do grudgingly, but ultimately most people recognise it as a necessary part of living in a society. In the words of Patagonia’s then CEO, Rose Marcario, back in late 2018, ’Taxes protect the most vulnerable in our society, our public lands and other life-giving resources.’
So when the Trump administration orchestrated a corporate tax cut, reducing the tax businesses pay by an amount considered to be the largest cut in USA history, it didn’t sit well with the community-minded people at Patagonia.
That tax cut saved the company a whopping US$10 million! But rather than pocketing this saving – recognising that the planet is in more need of help than its business – Patagonia announced that the full amount was to be committed to non-profit environmental groups, protecting air, land and water and finding solutions to the climate crisis. In other words, Patagonia used its tax cut in exactly the way it believed it should have been used in the first place.
Activism: taking the bear by the ears
The previous year, in 2017, Patagonia countered President Trump’s attempt to slash the Bears Ears National Monument, a protected national park, by 85 per cent. Patagonia pledged to sue the president, arguing that although the Antiquities Act 1906 gave presidents the power to create national monuments, it certainly did not grant them the power to reduce them.
Under a headline of ‘The President Stole Your Land’, Patagonia also mounted a public campaign to ensure Americans knew what President Trump’s administration was trying to do.
What does all of this tell you about this organisation?
Here’s what I believe.
Patagonia is driven by its love of our natural home planet. It is this love that has driven it to use its business – its people, products, skills and influence – to model a different way for business.
This is what great leadership is supposed to be about. Inspiring us to be the best versions of ourselves. Encouraging us to strive for better.
In doing this, Patagonia has created a movement of people who love what they do and more importantly why they do it. It has raised the bar, and people willingly reach higher towards that bar. Patagonia’s prices are not low, but its customers are prepared to pay more because of why it costs more. They know it’s not to create bulging coffers for investors. Rather, the premium prices are in service of the company’s purpose.
In doing the right thing and challenging business as usual, Patagonia has generated its own success. It has annual sales of approximately $1 billion, around 3000 employees and more than fifty stores around the world.
Surely, this is a model we can learn from, and a beacon to inspire all of us to level up our own game.
Lead with love and the money will follow.
You can have a listen to my interview with Dane O’Shanassy on the For Love & Money Podcast here...