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Product, Service & Design Innovation
Can You Put a Price Tag on Purpose? How Patagonia Highlights Value Over Cost

In 2014, Patagonia dissolved its sustainability department – a move that the company’s VP of public engagement, Rick Ridgeway, remains proud of to this day. Overnight, the outdoor clothing brand deepened its commitment to environmental and social justice by decentralizing its sustainability team and moving them individually out into core areas of the business where they would have most influence.

Sustainability has since evolved to the point where it is now effectively the responsibility of every Patagonia employee. Earlier this month, speaking at an event on CSR-led purpose hosted by The Crowd in London, UK, Ridgeway kept referring back to Patagonia’s mission statement – “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis” – almost like a mantra.

“I visit a lot of companies - I’ve never run into a single company yet that manages its business to its mission statement like Patagonia does,” he said. Addressing the audience directly, he added: “It’s an interesting thing to consider in your own organizations; I suspect most of you have mission statements, but how many of you really use that to guide your daily weekly long-term and short-term decisions?”

Staying true to such values is not always an easy ride. Ridgeway recalled back in the mid-‘90s, when Patagonia looked to start sourcing 100 percent organically grown cotton for its products, there wasn’t enough organic cotton available to meet Patagonia’s requirements at the time. Despite this, the company bit the bullet and made that commitment.

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“Sure enough in the first year, sales really took a hit,” he admitted. “We had to go out and train farmers how to grow cotton, we had to learn how to farm organically. It took two or three years until finally we recovered, and every year after that we’ve been more profitable and it keeps getting better.

“What we took away from that was that a commitment to environmental responsibility, a commitment to business value, and we’ve never looked back. These commitments, every time we make one, we do better as a business. And we’re really healthy – we must have one of the strongest balance sheets in the apparel industry.”

Ridgeway spoke of how Patagonia’s sense of purpose is being driven by its own staff, especially around measurement. The company employs a range of tools to measure various metrics such as lifecycle impact categories in the supply chain – some of these tools have been co-created to provide industry standards (most notably through the work of the Sustainable Apparel Coalition) whilst others are what Ridgeway calls “homemade tools.”

“The designers have one called the Yvon Scorecard to measure certain attributes that products must achieve. If they don’t achieve acceptable scores, we drop them – even if it’s making money. It’s done through internal peer pressure as much as anything.”

The company is known for taking risks. The most famous of these was its 2011 ‘Don’t buy this jacket’ ad campaign. The jacket in question, known as R2, was one of the company’s best-selling lines. It was held up as an example due to its hefty embedded impacts, particular around water use and waste – the fact that it came with an environmental cost higher than its price tag was something that Patagonia wanted to highlight.

Acknowledging that there were tensions between business growth and resource stewardship, Ridgeway quoted conservationist David Brower in emphasizing that there was no business to be done on a dead planet. “We realize at end of the day, the KPIs for our business are around the health of our planet,” he said. “The best we’ve been able to do is try work out a business model that has the best solution to this dilemma we’re in.”

He added: “If we make the best product we can and we make it with no unnecessary harm to the environment and, at the same time, we encourage our customers to not buy the stuff unless they really need it, but to get the most they can out of the stuff they do buy from us, to help them repair it if it’s broken, to bring it back to us when it’s truly worn out … maybe we’re creating more solutions than problems.”

Despite Patagonia wanting to set an example for responsible consumption, particularly for other businesses, Ridgeway said the company was acutely aware that people were still buying more than they need, and that the nature of being in retail meant taking a degree of responsibility for this: “We’re not hypocrites, but we’re not guiltless in this by any means.”