Corporate Social Responsibility and Ethics in Patagonia: A Case Study

This report analyzes Patagonia's sustainable activities and profitability, how sustainable operation is integrated with company strategy, and how Patagonia balances corporate social responsibility with maximizing profits. It examines Patagonia's background, sustainability activities, and its initiatives to reduce environmental damage. The report also discusses Patagonia's stakeholder-driven shareholder theory and its impact on the company's growth.

Corporate Social
Responsibility and
Ethics
Individual assignment
Junlong Hu

Content
Introduction........................................................................................................2
Company background and sustainability activities............................................3
Asses 1...............................................................................................................4
Sustainability operation and strategy .........................................................4
Asses 2...............................................................................................................7
Sustainability activities on profitability........................................................7
Elaborate............................................................................................................8
Stakeholder initiative drives shareholder theory ........................................8
Conclusion..........................................................................................................8
References:.........................................................................................................9

Introduction
Consideration of both social responsibility and profit maximization has long been
a matter of discussion among corporations. This is a challenging task for many
companies, as not every firm can handle both. However, with the fast growth of the
economy, manufacturers and industrial enterprises have caused significant damage to
the environment and climate. However, not every corporation realizes the deteriorated
condition of the environment and the significance of sustainability for future business
growth. This report will use Patagonia as an example by analyzing the correlation
between its sustainable activities and profitability, how sustainable operation is
integrated with company strategy, and identifying whether Patagonia is
a greenwashing and how it balances corporate social responsibility with maximizing
profits.
Company background and sustainability activities
Patagonia is a company that specializes in outdoor apparel and environmental
protection. The firm was founded in 1973 by Yvonne Chouinard and has its
headquarters in Ventura, California, United States. It has between 1,000 and 5,000
employees, more than 70 locations in 16 countries, and a market value of one billion
dollars. In addition, Patagonia started "1% for the Planet" in 1985, a program that
donates 1% of annual sales to non-profit environmental groups to support and protect
the Earth's ecosystem. It is important to note that this action is not simply a publicity
marketing ploy; it is also put into the registration information and regulations, which
demonstrates Patagonia's determination to restore the ecological environment of the
planet. (Patagonia, n.d.). In addition, since 1996, the company has used only organic
and regenerative materials in its manufacture, including organic cotton, hemp,
recycled polyester, and recycled nylon, among others. These materials can be recycled
and reused to produce several products. Furthermore, all Patagonia-owned stores,
offices, and delivery centers are powered completely by renewable energy (Patagonia,
n.d.). Moreover, In 2012, Patagonia was the first firm in California to be certified as a

"Benefit Corporation" (1B Corp), a certification awarded by a third party to businesses
that successfully balance business objectives with corporate responsibility (B Lab
Global Site, n.d.). Additionally, since the founder places a high priority on
environmental protection it has closely cooperated with environmental, climatic, and
natural social organizations. In addition, it encourages and teaches staff to train
volunteers on various abilities.
Asses 1
Sustainability operation and strategy
In recent years, environmental protection in the apparel business does not seem to be
a new topic, but few companies employ a prominent page on their websites to
highlight the environmental harm produced by the sector. And the statistics published
on Patagonia's website are astounding: the apparel business is accountable for 10% of
global climate change pollution emissions. During the dying and washing of textiles, a
substantial quantity of wastewater and chemical waste will be created (Patagonia,
n.d.). The majority of the equipment used in the creation of clothes runs on fossil
fuels, and there are other issues, such as poor salaries for employees and excessive
production waste.
As a "benefits business," Patagonia's core goal is to design and produce products with
the lowest amount of damage to the environment and protect a natural balance based
on its actions. Based on the core value, it is proposed that consumers minimize
spending. 's advertising tagline is "Buy Less, Demand More."
To implement this concept and strategy, Patagonia starts with its products, services,
marketing, and other aspects, which have become its unique brand values.
1. Product: Looking for the most environmentally friendly “cotton”
Since the founding of the Patagonia brand, the apparel department has used
"natural cotton”, it was the most environmental friendly material available. In the
1 ? B Corp: Certified B Corporations are leaders in the global movement for an inclusive, equitable, and
regenerative economy. Unlike other certifications for businesses, B Lab is unique in our ability to measure a
company’s entire social and environmental impact

early 1990s, investigators were shocked to discover that even utilizing natural
cotton would cause significant environmental damage due to the usage of
pesticides and herbicides during cotton production. So the researchers shifted their
focus to "organic cotton," which is produced without the use of pesticides.
However, during its growth period, cotton needs a significant amount of water,
which has an impact that adds to soil degradation. For this reason, Patagonia
wants to develop new cotton for the product called “Regenerative Organic
Cotton”. Patagonia piloted its first cotton harvest in India in 2018, working with
more than 150 farmers to apply Regenerative Organic, the highest organic
standard. Since then, almost 2,200 farmers have joined the cotton program. This
agricultural technique attempts to restore soil, protect animal welfare, and enhance
farmers' life (Regenerative Organic Certification Cotton - Patagonia, n.d.). Patagonia
produced its first Regenerative Organic CertifiedTM cotton goods in the spring of
2022. Patagonia hopes to produce more Regenerative Organic Certified apparel in
the next few years. These strategies do not only assist in soil repair and farmer
safety. In addition to reducing greenhouse gas emissions, repairing the health of
the earth, and working toward a better future. Besides, due to the diversity of
products, cotton is only one of them, and other materials also can be recycled,
such as recycled spandex, polyester, nylon, wool, natural rubber, etc (Environmental
Responsibility - Patagonia, n.d.).
Resources from: https://www.patagonia.com/our-footprint/regenerative-organic-certified-cotton.html
2. Service: Project for Recycling Used Clothes
In 2012, Patagonia introduced 2Worn Wear, a clothing recycling program that promoted the
concept of Better Than New. This project is currently a full closed loop of four services, to
2 ? Worn Wear: Trading the old clothes or share your story with Patagonia in the
community

maximize the product's lifecycle and reduce waste at the source (Repairs & DIY Tutorials -
Patagonia, n.d.).
2.1 Sewing and repairs
The products of Patagonia are covered by a lifetime warranty. To achieve this goal, Patagonia
has established many repair centers around the world and published videos on repairing and
maintaining apparel on main platforms, enabling the consumer to repair and maintain their
gear at home.
2.2 Buy and sell second-hand items
Under the name of the Worn Wear project, Patagonia has developed a website that sells used,
low-priced Patagonia clothes. Due to the outstanding quality and functionality of Patagonia's
clothes, they will not go out of style. The platform enables Patagonia apparel that is no longer
required but may still be worn by others to find a new owner,
2.3 Old clothes recycling
If a product cannot be fixed, Patagonia will provide recycling service,
2.4 Redesign and reproduction
For non-usable recycled products, Patagonia will redesign and develop new single products
for sale.
3. Marketing: Concept of “Buy Less, Demand More”
From Patagonia's core values, it can be understood that it wants to produce
products that customers like and have minimal impact on the environment,
climate, and nature. Patagonia believes that by analyzing the slogan "Buy less,
Demand more," people will contribute more to society and the environment.
Before the consumer purchasing could consider continuing to wear the products
that already have, and if the consumer must buy a product, whether to pick goods
with the least environmental impact. This can help consumers establish a rational,
standard consumption concept.
In 2011, on Black Friday, Patagonia placed a full-page advertisement in The New
York Times. Patagonia's full-page ad was printed in enormous letters on the day of
a major shopping festival: “Don't Buy This Jacket”
In addition to this line of text in the advertising, there is also a picture of a huge
jacket that is quite popular. Below the image is a list of the resources used to
create it, each of which contains actual data. This is how Patagonia attempts to
explain its "Buy Less" concept. This one-page advertisement not only enhanced
the brand's fame, broke through the limits of outdoor goods, and effectively
"broke out of the cycle," but it also raised its Black Friday sales by 30% (Open
Newsroom, 2020). In this way, Patagonia hopes to raise people's awareness of

environmental protection, but the company's sales have increased unexpectedly.
Nonetheless, it has effectively attracted notice, such that more individuals are
ready to pay attention to clothes pollution and minimize consumption. This could
expand its own corporate culture in an extremely effective way. However, to
prevent "misunderstandings," Patagonia announced in 2016 that it will contribute
its whole Black Friday revenue to various environmental organizations (Kavilanz,
2016).
Resources from the: https://open.prodir.com/en/2017/11/dont-buy-jacket-youve-already-got-one/
Asses 2
Sustainability activities on profitability
Patagonia's core value is the protection of the environment, and its products and sales
are based on this assumption; profit is not the company's primary goal. Because they
assume that if everything is done perfectly, the end will be profitable by default

(Patagonia Case Study: How to Drive Profit With Purpose - Miso, 2021).
On the other hand, Patagonia is also actively establishing a community surrounding
outdoor activities and has collaborated with several well-known industry experts.
These star impacts can also cause Patagonia's influence to expand, and the company
has a voice in the industry which will have more people to have to access
the excellent products from Patagonia. Additionally, Patagonia helps create recycled
cotton alongside local farmers, extends the product's lifecycle with recyclable
materials, and teaches consumers how to repair the product. Every aspect of this
effectively reduces the total cost. As mentioned at the beginning of the report that the
program of "1% for the Planet", Patagonia hasn't just donated their profits; they have
built an entire company focused on sustainability. After decades of continuous efforts,
Patagonia has accumulated an enormous number of consumers and customers who
understand its brand value and product quality and has also helped more and more
consumers recognize the significance of sustainable development. Patagonia achieves
final profit conversion through sustainable activities.
Elaborate
Stakeholder initiative drives shareholder theory
Patagonia is a private firm with an environmentalist principle at its foundation.
However, if environmental protection is the only source of income, the company will
not be able to operate normally. The founder of Patagonia believes that the company's
aim is not only to maximize profits; the mission is: Build the best product, cause no
unnecessary harm, and use business to inspire and implement solutions to the
environmental crisis(Patagonia, n.d.).Combining an environmentally responsible and
profitable business model is challenging, but Patagonia has achieved this after many
years of research and development. Patagonia has successfully found a balance
between maximum profits with environmental protection and became an outdoor
product company with annual sales of 4 billion US dollars (Rosenblum, 2012),
successfully applying the stakeholder-driven shareholder theory.

Conclusion
In conclusion, Patagonia is not a greenwashing corporation, since its core values
have always been protecting nature, and the environment, and reducing carbon
emissions, followed by profit. Whether it is from the procurement requirements of its
raw materials or its promotion and after-sales strategies, the least amount of
environmental damage is taken into consideration. Since Patagonia is prepared to
invest more in the research and development of new materials, it has also earned a
positive reputation, which naturally leads to increased product demand and profit. As
Patagonia is one of the early companies with environmental protection as the
enterprise's fundamental purpose, has also recognized the trend that consumers are
paying more attention to corporate social responsibility, and values that fit of
company culture. In addition to influencing the brand, this gives consumers a sense of
belonging. Initially, Patagonia's aggressive expansion almost destroyed the capital
chain, and this experience has led to a more careful approach to growth in the future.
It is clear from Patagonia's annual reports over the previous several years that the
company's growth speed is slower than its sales growth. However, Patagonia is
adapting to the market in its way and improving itself constantly.

References:
Kavilanz, P. (2016, November 29). Patagonia brought in $10 million on Black Friday
-- and will donate it all. CNNMoney. Retrieved September 11, 2022, from
https://money.cnn.com/2016/11/29/technology/patagonia-black-friday-
donation-10-million/index.html
Open Newsroom. (2020, January 21). Don’t buy this jacket! You’ve already got one.
Open. Retrieved September 11, 2022, from
https://open.prodir.com/en/2017/11/dont-buy-jacket-youve-already-got-one/
Patagonia Case Study: How to drive profit with purpose - Misio. (2021, November
21). Misio - for the World. Retrieved September 12, 2022, from
https://misio.com.au/patagonia-case-study-how-to-drive-profit-with-purpose/
Online
B Lab Global Site. (n.d.). Retrieved September 11, 2022, from
https://www.bcorporation.net/en-us/
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https://www.patagonia.com/environmental-responsibility-materials/
Patagonia. (n.d.). Patagonia Outdoor Clothing & Gear. Retrieved September 11,
2022, from https://www.patagonia.com/home/
Patagonia. (n.d.). Patagonia Outdoor Clothing & Gear. Retrieved September 11,
2022, from https://www.patagonia.com/home/
Regenerative Organic Certification Cotton - Patagonia. (n.d.). Retrieved September
11, 2022, from https://www.patagonia.com/our-footprint/regenerative-organic-
certified-cotton.html
Repairs & DIY Tutorials - Patagonia. (n.d.). Retrieved September 11, 2022, from
https://www.patagonia.com/repairs/
Rosenblum, J. (2012, December 6). How Patagonia Makes More Money By Trying To
Make Less. Fast Company. Retrieved September 12, 2022, from
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by-trying-to-make-less