Patagonia’s Business Model: A Company that is Financially & Sustainably Successful

In business, smart decision-making is imperative to the success of a company. Most would agree that it would be a poor decision to advertise a product that would discourage customers from buying it, yet Patagonia did just that. The company ran a public relations campaign telling customers to not purchase their jackets as an anti-consumerist message advocating for sustainable clothing. Although this approach was risky, it established Patagonia’s core principles and helped create a community of like-minded individuals who appreciate the brand’s values and products. Patagonia’s sustainability efforts and high-quality clothing gives the brand a competitive edge against other retailers. As marketing director Jonathan Petty says,“customers expect very high quality and that’s why they always come back to us.” 

As the public becomes more environmentally conscious and aware of its carbon footprint, the demand for sustainable companies is increasing, especially in the fashion industry. Many companies rely on a “fast fashion” model, which involves producing cheap and low-quality textiles to meet the latest and most popular trends. Originally coined by The New York Times in the early 1990s, this term describes Zara’s mission to take only fifteen days for an item of clothing to go from the design stage to the selling rack. Today, fast fashion companies such as H&M, Forever 21, and UNIQLO dominate the industry. The fast fashion business model enables companies to maintain product variety at a low price, encouraging overconsumption with its competitive prices and trendy styles. Consequently, this cycle of rapid production and continuous purchasing of disposable clothing lends itself to environmental concerns. 

The production of clothing depletes non-renewable sources, emits more greenhouse gasses than the aviation and shipping industries combined, and pollutes the ocean with microplastics derived from synthetic fibers. To buy fast fashion is to exploit natural resources and destroy ecosystems. 

To avoid production-related pollution, many companies are beginning to focus on sustainable approaches to product development. For example, Zara committed that 50% of items it sells in 2022 will be made with recycled materials and “ecologically grown cotton,” while H&M released a sustainability report promising to use more organic and recycled materials. Many of these efforts are direct responses to growing public concern for the environment. Meanwhile, Patagonia has been environmentally conscious since its founding in the late 1970s. 

In the past decade, a rise in social consciousness has caused some consumers to care about a brand’s social impact as much as its actual products, pressuring the fashion industry to change. Patagonia, founded in 1973 by Yvon Chouinard, reflects the new social consciousness by emphasizing high-quality and high-performance products while advocating for environmental activism. At its core, Patagonia’s values and beliefs originate from respect and appreciation for the environment. It encompasses the ideals of rock climbers and surfers while promoting a minimalist design and lifestyle. It strives to produce long-lasting and durable products, minimize environmental impacts, and advocate and fund conservation projects. Patagonia has established an environmentally conscious approach in all sectors of business. 

Since its founding, Patagonia has developed into an environmentally conscious empire valued at three billion dollars. Founder Yvon Chouinard recently transferred the company’s ownership to the Patagonia Purpose Trust and the Holdfast Collective. To ensure the protection of the environment and its values, Patagonia now focuses on a more purpose-driven strategy. In a letter written by Chouinard, he describes Patagonia’s future: “Instead of extracting value from nature and transforming it into wealth for inventors, we’ll use the wealth Patagonia creates to protect the source of all wealth.” Earth is the source of all wealth, and Patagonia has pledged to adhere to its core values by rejecting consumerism and searching for more sustainable methods. 

Patagonia’s vision and values are incorporated into all aspects of the company, including its marketing and innovation approaches. Patagonia overtly opposes consumerism––during Black Friday in 2011, the company ran a famous ad that encouraged its customers to not buy their products, but instead repair their old garments. Emphasizing and reflecting its anti-consumerist feelings in its marketing campaign builds the brand’s image and the relationship between Patagonia and its customers, differentiating it from most fashion brands. As consumers become more socially conscious, they want to buy from a company that aligns with their values and principles; “62% of consumers want companies to stand up for the issues they are passionate about and 66% of consumers think transparency is one of a brand’s most attractive qualities.” Aligning the company’s values with its target audience enables Patagonia to financially surpass its competitors while upholding its promise to the environment. 

Alongside its marketing strategies, Patagonia has “built robust environmental responsibility and animal welfare programs to guide how they make their materials and products.” By sustainably sourcing materials, Patagonia adheres to its plan to be carbon-neutral by 2025 as it reduces its ecological footprint. Most clothing today is made out of polyester and other plastic-based materials derived from petroleum; in fact, polyester has overtaken cotton as the number one source of fibers. The yearly production of polyester is “projected to exceed 92 million tons in the next ten years––an increase of 47%.” Studies have supported this prediction as garments from popular fast fashion brands have shown a high percentage of new plastics in their clothing. But the production of textiles isn’t the only process that threatens the environment––with every wash, these fibers shed tiny pieces of plastic, called microplastics, that pollute the oceans and freshwater. These numbers are rising; the U.S. Geological Survey found that 71% of microplastics found in samples of river water came from fibers, and scientists estimate that 35% of microplastics in oceans can be traced back to textiles.

In contrast, Patagonia isn’t contributing to this growing plastic problem; instead, it sources its materials from recycled products, funds projects to mitigate plastic pollution, and commissions multiple research studies to aid their innovative solutions. In 1993, Patagonia was the first outdoor clothing manufacturer to transform trash into fleece. Today, 69% of all its materials are derived from recycled materials. From soda bottles to unusable manufacturing waste to discarded fishing nets, Patagonia has many recycling initiatives to reduce their plastic pollution. On microplastic pollution, Patagonia has funded five projects that identify harmful fiber types and research possible solutions for construction techniques to minimize shedding. One of these projects that Patagonia has commissioned was in collaboration with Ocean Wise and Recreational Equipment, Inc, Mountain Equipment Co-op, and Arc’teryx. It is a multi-phase research program that investigates the sources of synthetic microfiber pollution and seeks science-based solutions to the problem. In phase one, the team used washing machines and a filtration system to collect the released microfibers to determine which characteristics of fibers affect the shedding rate. They also tested the environmental processes of weathering and decomposition and their effects on microfibers to measure the physical and chemical changes in materials. These research projects help Patagonia better understand environmental issues and provide scientific and relevant solutions. 

Patagonia’s financial and sustainable success can be attributed to its unique approach of a purpose-driven model which is integrated across all its business decisions. While many of its initiatives cater to its sustainable clothing goals, Patagonia also encourages its customers to take action and join the fight against climate change. Patagonia Action Works has supported activists across the globe by connecting individuals to community organizations working on environmental issues. Patagonia makes it easier for customers to find out about events, sign petitions, volunteer, and donate to their local community. Additionally, Patagonia’s Tin Shed Ventures fund aims to help innovative startups that will drive positive change through their business and solutions to environmental issues. Specifically focused on the food, apparel, and conservation sectors, Tin Shed Ventures invests in companies that will yield returns allowing Patagonia to give back to its sole stakeholder––the planet. 


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