Environmental Sustainability in Business: Patagonia's Approach

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CORPORATE SOCIAL RESPONSIBILITY
ASSIGNMENT 2- CASE STUDY

Table of Contents
Introduction......................................................................................................................................3
1. Assess the impact of Patagonia’s CSR policy and evaluate its initiatives to achieve the
company’s goal of carbon neutrality by 2025.................................................................................3
2. Identify and examine the challenges faced by Patagonia in meeting its environmental and
sustainability ambitions...................................................................................................................4
4. Evaluate Patagonia’s Philanthropic activities and justify the effectiveness of philanthropy of
direct-action through community-based groups at the grassroots level..........................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8
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Introduction
For more than thirty years, corporate executives are found to struggle with the social
responsibility of the business and offer value to it. Thus, many businesses cease to exist on a
long-run. It has become exceedingly important for a corporation to understand the importance of
CSR in the present business context. In this assignment, a case study has been chosen that
specifically highlights the importance of CSR in business. The case study stated the progress of
the company, Patagonia to carbon neutrality by the end of 2025. Patagonia was established in
1973 by two rock climbers, Yvon Chouinard and Malinda Pennoyer who still own it. It is world-
famous as a certified B Corporation meeting “rigorous standards of social and environmental
performance, accountability, and transparency” (Patagonia.com, 2019). As a benefit corporation,
it considers the non-financial aspects for stakeholders, employees, suppliers and subsidiary
employees, global and local environment.
1. Assess the impact of Patagonia’s CSR policy and evaluate its initiatives to
achieve the company’s goal of carbon neutrality by 2025
Corporate Responsibility or CR is a broad movement in the line of business that encourages a
company to take on the responsibility for the impact of the activities on employees, customers,
environment and communities (Dolan and Rajak, 2016). Companies under this law also pledge
to abide by human rights and international labour standards. The products of Patagonia are so
called supposed to be manufactured as legal, safe, humane and fair practices throughout the
chain of supply.
One of the main practices are the company’s Benchmark document and Supplier Workplace
Code of Conduct. This code is based off of the International Labour Organisation (ILO) core
labour standards requiring compliance with all the laws in any of the countries where the
factories operate. The Fair Labour Organisation or FLA audits for Social and Environmental
Responsibility (SER) in the headquarters in Ventura, California. The Patagonia Four-fold
Approach includes the screening of new suppliers being able to meet the sourcing, quality, social
and environmental standards. The commitment towards the environment therefore is not what
the company does after working hours but within the same itself. The company‘s policies are
wildly out-of-the-box when it comes to sustainability. They want to limit product buying for
consumers and have put their own sustainability department out of order for the sake of
sustainability itself. They have always outstretched their hands towards charity by donating one
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percent of their annual turnover for grass-root organizations and environmental charities. The
Sustainable Apparel Coalition created by an alliance of thirty companies, measure the
environmental impact the company has throughout their own supply chain, keep track of
performances one against the other and publish results in an environmental and social
performance index. They take initiatives like $20 Million and Change which is a company
backed fund set up for assisting “like-minded, responsible start-up companies bring about
positive benefit to the environment” (Lin et al., 2015). According to the CEO of the company,
Rick Ridgeway, their intention while dissolving the sustainability department or board was in
integrating creative sustainability line of thoughts, goals and values inside each and every
employee. Getting all the employees onboard into thinking about social and environmental
changes regarding the reduction of footprints is sensationally radical. Patagonia’s seemingly
impulsive anti-consumerist messages like “Don’t Buy our Jackets” are clever and a subversive
encouraging buyer to buy only up to how much is necessary. Buyers are encouraged to buy only
till the point it is necessary from the environmental perspective also. When the advertisements
were criticized their response had been that their policies have always been environment oriented
so they will always make consumers pause before they spend on that extra shirt or jacket. Anti-
consumerist slogans have created more awareness about environmental issues like carbon
footprints and neutrality more than anything else in that category (Aro, 2017).
2. Identify and examine the challenges faced by Patagonia in meeting its
environmental and sustainability ambitions
Despite the progress of the CR it has hit the crossroads (Ross, 2017). Corporate leaders are few
and far between in industries which is why they are struggling. The owners of Patagonia are
exceptions by their own right. Natural environment is constantly on the verge of change due to
human initiated disturbances. Regional economies are being threatened by the regular occurrence
of droughts, earthquakes and floods. Resources are getting even scarcer as we progress with the
risk of leaving nothing for posterity. Public attitudes have not always been favourable towards
the regulations of Government towards corporate sustainability (Tilt, 2016). Populist and so
called anti-regulatory leaders are on the increase and they do not consider climate change to be a
serious issue though it is. The coal industry in the United States are undergoing deregulation
showing signs for much concern for displacing China in being the world’s biggest emitter of
greenhouse gases including carbon dioxide. The company is far from being perfect as it uses a
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variety of materials like organic cotton containing petroleum derivatives. Despite every effort
made in reducing the number of company’s footprints every additional sale of product has a
marginal footprint in the negative that the planet cannot mitigate or modify into something
useful. The company is at the targets of many an institution along with the American and Asian
consumers for “green washing” which is a term that says that marketing has been excessively
used to promote the fact that the organisation and its products, core ideas and objectives are
socially and environmentally friendly. The impact investors are unable to locate, fruitfully trace
of quantify the amount of social and environmental outcome. There is no way to take an A/B test
to find out the same (Benefitcompanybar.org, 2019). It is more of a comfort to work with what is
numbers driven and quantifiable as data driven middle managers are looking into that. The
outcome is not easy to enumerate or compute and people feel at risk working with something too
large to be quantifiable. It does not exactly follow a philanthropic model too as they are there for
the profit. Passing on the knowledge about going carbon neutral is definitely a luxury as
consumers need all the prime information they can work with in fifteen seconds or less. This
makes the education and awareness part very tough as the price range of products under the
brand is that of premium. It is kind of a misconception on the part of the managers that the
consumers might pay for goods at such exorbitant prices for the sake of biospheric values but
maybe not. Other companies aligned to biospheric values can shine as well reducing their
product costs.
3. Evaluate Patagonia’s policy to identify and prevent potential impacts on human rights.
Comment on the processes to enable the remediation of any adverse human rights impacts
From the case study, a description of Fair Labour Practice in Patagonia have been identified. It
was found that the products of the company are designed in the U.S., outsourced for
manufacturing in the emerging market that offers cheap working staffs and final ships the final
products for sales in the developed market. The company utilises a 4-fold approach for screening
its suppliers that includes:
● Ethical sourcing
● Social responsibility
● Product quality
● Environmental compliance
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The business model has been found to critical adhere to the environmental and ethical business
practices and binds to the commitment in the operating model (De Grosbois, 2016). For this
company, social responsibility stands out and holds an important position than the quality of the
products. It is found that the products are produced in safe, legal, fair and humane conditions
within the entire supply chain. The labour commitment centre of this company participates in the
Fair Labour Association (FLA). This association is found to offer credible auditing and
assessment of the company and its suppliers. It was found that the company is engaged in a
number of industriousness activities that help in promotion and sustainability of practicing fair
labour, offering safe working and maintenance of environmental responsibility in the factories
that the finished product for the company (Issuu, 2019). The code of conduct is based on the
International Labour Organisation (ILO) that involves abiding by core standards and compliance
of the law of each nation of operations. The company also takes into account the industrial
aspects for prevention of human trafficking and issues related to immigrant workers present
within the supply chain. There is strict monitoring of forced employees and issues related to
slavery within the factories in different places in the world.
The case of Patagonia had highlighted one of the remedy or process that it follows in case there
is identification of issue related to human rights. The company has an FLA-approved strategy,
responsible factory exit policy that involves having a minimalistic impact on the staffs that are
working in the factory before termination of the business. This involves offering a notice that
does not have any negative impact on the workforce of the organisation. The company can
involve itself in the establishment of strict policies of monitoring the factories in relation to
issues related to human rights such as poor working condition, low wages and other challenges
before entering into business. This will be addressing the issue as well as elimination of hassle
that involves in exit procedure at a later period.
4. Evaluate Patagonia’s Philanthropic activities and justify the effectiveness of
philanthropy of direct-action through community-based groups at the
grassroots level
The company, Patagonia has a philanthropic approach at the initial period of its operations. In
1986, it was found to have donated 10% of profits on an annual basis for supporting
environmental firms at the grassroots level in different countries where the company exist. Later,
this was increased to 1% of sales to the members. It was found that it donated $89 million to
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numerous community-based organisations that are dedicated to being a positive change in
society. That include breaking dams, restoration of rivers, forestation, addressing the issue of
climate change, protection of endangered land such as marine and coastal areas, protection of
endangered species and sustainability in agricultural practices. The grants given by Patagonia
ranges from between $2500 to $15000 to number of such groups on an annual basis for whom
the sum of amount would have significant importance (Kammen et al., 2018). The importance of
direct philanthropic action through community-based groups at the grassroots level was found to
be effective in nature (Patagonia.com, 2019). This is because there are many issues that cannot
be addressed by the company itself as a result, the monetary contribution of the group support in
making changes and addressing the environmental issues that are underpinning and are of serious
concerns to the Earth. As per the company, it utilises natural resources and generates waste from
the community, thus, it recognised the donation as a cost of conducting business which is
referred to as Earth Tax rather than philanthropic or traditional approach. In the financial year of
2016-2017, there were 954 environmental groups that had received grants from the company. As
per the Employee Charity Match program, $150000 were given to non-profitable organisations
and $120000 worth old and new clothes made by the company was donated as a clothing-
donation program of the company (Patagonia.com, 2019). From the above-mentioned donations
and initiatives, it can be stated that the company is highly responsible toward the community and
offers to support it from all possible aspect. Even though on a worldwide basis, this contribution
is small, however, this is an example that would help in motivating others to contribute.
Conclusion
From the analysis of different aspects of the case study, it can be concluded by stating that
Patagonia is one of the responsible company in the apparel sector in the U.S. It had recognised
that fact that it is critical to be responsible to society and work in close collaboration with the
community as the resources are rapidly depleting and in case, the business sector does not
become aware of their responsibility, at a later stage, the existence of business will be threatened.
Thus, it is important to understand the human right and philanthropic and assess the impact of
CSR policies on environment and sustainable development.
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References
Aro, R., 2017. Living standards and changing expectations: investigating domestic necessity and
environmental sustainability in an affluent society. Jyväskylä studies in education, psychology
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Dolan, C. and Rajak, D. 2016. The anthropology of corporate social responsibility. Oxford:
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[Accessed 5 Jun. 2019].
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Patagonia.com. (2019). California Transparency in Supply Chains Act of 2010 (SB 657). [online]
Available at: https://www.patagonia.com/california-transparency-in-supply-chains-act-sb-
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Patagonia.com. (2019). Environmental Grants & Funding - Patagonia. [online] Available at:
https://www.patagonia.com/environmental-grants.html [Accessed 5 Jun. 2019].
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Patagonia.com. 2019. Patagonia Customer Service - FAQ. Available at:
https://www.patagonia.com/customer-service-faqs.html [Accessed 5 Jun. 2019].
Ross, D. 2017. A research-informed model for corporate social responsibility: towards
accountability to impacted stakeholders. International Journal of Corporate Social
Responsibility, 2(1).
Tilt, C. 2016. Corporate social responsibility research: the importance of context. International
Journal of Corporate Social Responsibility, 1(1).
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