Sustainable business practices, corporate transparency, authentic brand marketing, family-friendly and flexible employee policies—flip through the business pages of any paper or magazine, or conference panel discussions, and you'll find these are all de rigueur right now among progressive brands and companies looking for ways to connect with and retain both consumers and employees. They're also all things Patagonia founder Yvon Chouinard wrote extensively about more than a decade ago in his 2006 business memoir, Let My People Go Surfing.
The small iron works and climbing equipment shop Chouinard founded in 1957 has since expanded into a global brand, reaching more than $750 million in sales, and since current CEO Rose Marcario's arrival in 2008 as CFO, a compound annual growth rate of 14%, and profits have tripled. Perhaps confounding to some, the company has done this while maintaining a strict commitment to sustainablility in its products and supply chain—whether its using 100% organic cotton and creating neoprene-free surfing wetsuits, to a marketing campaign encouraging people to buy less of its products. Though the company's core philosophies remain the same, Chouinard has published a 10th anniversary update of his book to "share what we have done in the last decade and what we plan to do in the decade ahead to achieve our goals."
Chouinard is the founder and owner of Patagonia, and still very much involved in the company, but it's Marcario who is tasked with reconciling these core philosophies with the company's day-to-day business. She says one of the biggest challenges is scaling some of the company's goals, particularly in supply chain management and product development.
"The challenges with what we're doing, as a global, multichannel brand, are always in the supply chain and product design and development, and seeking out materials, processes, and infrastructure that does have less of an impact on the planet, whether that's around water, energy, toxicity, or waste," says Marcario. "What ends up being a major challenge is scaling and building out the infrastructure. I'm really proud of what we've done around e-fibers and recycled polyester, but I look at organic cotton and only 2% of the world's cotton is organic, and I wish we could move the needle more on that. It's what's destroying the pollinators, biodiversity, soil health, all these issues. So there are a lot of challenges with getting scale, and in the future we need to do a better job collaborating and helping get to scale for some of these innovations that we invest a lot of time in. But if we can get scale, then you really can change the world."
While many corporate leaders may see Chouinard's prescription for corporate responsibility as unrealistic, Marcario can relate. When she first joined the company as CFO in 2008, she too was skeptical of how much the company's brand image was part of its operations. "In that role you really get behind the scenes to see what's really going on," she says. "And I was skeptical, honestly, and what I found was that there was so much more going on than even I had heard as a consumer and someone aware of but outside the brand."
That Patagonia had its best year ever last year is perhaps the most significant counter argument to skeptics. "The fact we are a successful business, competing in our industry with much bigger and more capitalized players is really the proof that the values and mission of the company are a powerful and important tool, and a model for how business can and should be done in the 21st century, or we're not going to have a planet to live on, with clean air to breath, or clean water, or healthy soil," she says.
If it's not the moral compass that points other brands to think a bit harder about Chouinard's philosophies, perhaps consumer sentiment will prove more persuasive. Over the last decade, people around the world have become more aware of corporate sustainability and transparency issues, and using their wallets to show it. As Coca-Cola's environmental initiatives and Unilever's "Sustainable Living Plan" can attest, corporations have launched (and promoted) broader strategies to make their businesses better reflect this shift in attitudes. Nielsen’s Global Corporate Sustainability Report said earlier this year that sales of consumer goods from brands with a demonstrated commitment to sustainability have grown more than 4% globally, while those without grew less than 1%. In Hong Kong, for example, 49% of respondents said they're willing to pay more for sustainable goods, up from 42% in 2014.
Marcario says that consumer demand is changing, as evidenced in food and organics, with large chain grocery stores stocking shelves with organic goods at levels much higher than just a decade ago. And that change has been boosted by young people and technology.
"I also think there is a generational shift going on, which is impacting and putting pressure on the entrenched status quo," says Marcario. "We're seeing younger people pushing for accountability and change, and that's been a really important aspect of influencing corporations that have been really slow to act up until this point. Or they've just been acting in a very limited way, like producing a line of three shirts from organic cotton, yet 98% of what they do is conventional. I think corporations are also being held more accountable partly due to the changes in technology, transparency, the speed of media, and these things are very positive for the environmental movement."
In his chapter on Patagonia's marketing philosophy, Chouinard says that Patagonia's image stems from its complete lack of an advertising formula. "Without a formula, the only way to sustain an image is to live up to it," he writes. "Our image is a direct reflection of who we are and what we believe."
Increasingly, the company has turned to branded content and, specifically, documentary films, to convey its message while bolstering that image. Traditionally, the brand had done its storytelling through essays and articles published in its catalog, but now with films like Damnation, Jumbo Wild, The Fisherman's Son, and most recently Unbroken Ground, available online and some even on Netflix, the potential for impact and reach is much greater.
According to Marcario, these films have helped its level of engagement jump by triple digits, and the brand plans to continue using film as a creative way to spread the philosophies outlined in Chouinard's book.
"The films are also kind of models and activist tools, because there has to be some counterpoint to the hundreds of millions of dollars of lobbying and advertising paid for by giant corporations that are poisoning the earth," says Marcario. "If we can do that in even a small way, we're reaching more people. We've had our catalogs, books like this, and now these films, and we'll use every arrow in our quiver to help fight the environmental crisis. I see tremendous energy and urgency in the company to double down on these things, and we have to operate on a guerrilla marketing way because we don't have the budgets big companies do. But the foundation is all in the book. The company history is the same, but the new version has been updated and it's a great read for anyone interested in creating a responsible company."