Markkula Center of Applied Ethics

From Synchilla to School Support

Outdoor Clothing Maufacturer Patagonia Recognized for Corporate Responsibility

By Lisa Gardiner

More than 20 years ago, Yvon Chouinard, founder of outdoor clothing company Patagonia, began realizing that pitons, the metal spikes used by mountain climbers, were damaging Yosemite National Park's El Capitan peak. In 1972, his company's catalog became a soapbox for "clean" climbing gear.

Twenty-four years later, Patagonia is still making the preservation of resources — natural and human — a priority. The company was recently praised by President Clinton as an "impressive" example of corporate responsibility, both for its family benefits program and its policy of donating 10 percent of pretax profits to environmental organizations — more than $1.1 million in 1995.

In addition to its corporate tithing, Patagonia protects the environment through its clothing designs, which are simple, versatile, and designed to last a long time. Many garments are made from Synchilla, a fabric woven from recycled soda bottles. This spring, the company converted to organic cotton.

"We're concerned about the quality of the product," says Chief Operating Officer Ed Schmults. "Environmental aspects are part of that."

In the same vein, the company has reduced packaging. And in the competitive catalog business where everyone ships by air, Patagonia will do so only on request. As the company reminds customers, air transportation uses a lot more fuel and energy than surface transportation.

Human resources also get attention at Patagonia, which has been recognized as being particularly family friendly. New mothers and fathers get two months of paid child-care leave, and an on-site child-care program lets employees slip in to see their children during the day.

Child-care subsidies are provided, company buses transport children from local elementary schools to the company's Ventura offices, and a school support program allows employees five days off to participate in their children's classroom activities. Parent education seminars are often given during lunch.

"Many companies have programs [like these] in place, but most people think it will impact them negatively if they take advantage of them," says Terri Wolfe, director of human resources. But, at Patagonia, taking care of children is a welcomed part of the corporate culture, she adds.

Patagonia's family benefits and environmental concerns reflect a willingness to take financial risks, although the company — which grossed $154 million in 1995 — is consistently profitable. "It's a balancing act," says Schmults.

To fulfill its environmental commitments, for example, Patagonia may invest in a small dye house in Portugal that is unable to afford less toxic dyes without the added capital or switch to organic cotton despite possible problems.

"In order to make this conversion [to organic cotton], we had to lower our profit margin," says company spokesperson Lu Setnicka.

"There are significant new risks of supply and performance with organic cotton. All the chemicals — there's a purpose why they're there. We're still moving through that," adds COO Schmults.

The company can take these risks because it does not strive to grow as fast as it can. "We sort of look at growth in this company the way we look at a life cycle. If any one component grows too much or too fast, it throws the system out of balance," says Setnicka.

Sometimes the risks produce failures. Replacing plastic buttons with rain forest tagua nut buttons, as Patagonia once tried, supported an indigenous industry, but the nuts could not survive washers and dryers. The company was swamped with returns.

But in other cases, the responsible path also turns out to be cost effective. So far, the move to organic cotton looks like a good business decision. "Consumer response has been wonderful," according to Setnicka. "Some don't even know we use organic cotton. They're buying it because it's a great product."

Family-friendly policies have also benefited Patagonia, reducing absenteeism and helping the company keep workers, especially women. A cost-benefit analysis found it was more expensive to recruit new employees than to pay for the on-site child-care center — a significant factor in retaining women in the workplace.

Women now comprise 65 percent of the corporate staff and 55 percent of the company, and the turnover rate is only 3 percent.

Many benefits of the family policies are intangible. Company employees know one another's children, employee morale is higher, and children have a good idea of what their parents do at work, Setnicka says.

"The children are a visual, verbal, and vocal reminder to balance our lives," Wolfe observes.

Says Setnicka, "Basically, our mission is to make the best-quality product with the least amount of harm. It's very hard to produce a high-quality product without high-quality employees."

Lisa Gardiner is a freelance writer on religious and ethical issues.