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Conscious capitalism pays off for Patagonia

'Conscious capitalism' is a term frequently bandied about these days, but it seems outdoor apparel brand Patagonia really is walking the walk.

Founded by keen climber Yvon Chouinard, who began making his own aluminum chocks once he realised the pitons he used were damaging the rock every time they were hammered in and removed, Patagonia's motto today is to "build the best product, cause no unnecessary harm, and inspire and implement solutions to the environmental crisis".

As Casey Sheahan, the company's chief executive, said at the Better by Design conference, that mission underpins all of its operations.

"There isn’t a person in our company who doesn't understand and know this mission statement by heart."

Sheahan says Patagonia attracts all kinds.

"We get 1000 job applications for every single job. We’re seeing a lot of MBAs realise they cannot go down that path with a company that was not a fit for their values ...  We do get dirtbag surfers and climbers and fly fishermen, and rabid environmentalists too – a whole mix. The company is very diverse in that way."

 He adds: "Millennials right now are our greatest hope. They are so fired up about what has happened to the environment and they feel like Gen X doesn’t give a shit. Their tools will be around communication and they will be able to really ignite a revolution around that."

A green state of mind

For Patagonia, it became increasingly difficult to separate sustainability and social issues from matters relating to product.

Businesses by nature are going to pollute, he says, and that's particularly true the larger they get (Patagonia is now in 20 countries with 88 stores and nearly 2000 staff). But that's no excuse to not make every effort to minimise that footprint.

"It’s a state of mind. Look at everything you do to try to minimise your impact on the planet – every single decision, every single day. It can be a bit of a game."

For starters, there are small things like choosing LED lights and CFL bulbs. If you have the money, Sheahan says, go with as much renewable energy as you can. Patagonia looks at all its decisions "in a very local way". Certain kinds of renewable power are better suited to certain areas of the US. Beyond that, real impact can be made in the realms of corporate travel and other big-ticket business conduct.

Patagonia tends not to build new stores, preferring instead to adapt existing spaces. Sheahan says if a building has already been constructed, there's little point in tearing it down; why not simply beautify it? 

Breaking the mould

His view on business growth may be slightly unorthodox – there's no urgent focus on increasing the bottom line every single year. "Think about growth in organic terms," he says. "A tree takes only what it needs and has good years and bad years. It still survives."

Their marketing efforts also often push the boundaries. Last year Patagonia took out a full-page ad in the New York Times and other papers with the bold headline DON’T BUY THIS JACKET. That was for Black Friday and Cyber Monday, the days after Thanksgiving which are the biggest of the year for US retailers.

“As is true of all the things we can make and you can buy, this jacket comes with an environmental cost higher than its price. There is much to be done and plenty for us all to do. Don’t buy what you don’t need. Think twice before you buy anything.”

Despite the environmental warning outlined by the ad, which urged consumers to buy only after making a considered choice, sales were up 28 percent on Cyber Monday – a bold move that paid off.

As Sheahan says, Patagonia has fun with its advertising – take its ‘morning stiffie’ ad, which purportedly shows what happens when underwear made from plastics hangs on the line too long (it devolves into phallic shapes, apparently).

For Patagonia, communication is everything.

“Storytelling is our marketing. We have such a fertile repertoire to pull from. Our storytelling almost humanises us.” In fact, he reckons he has 50-100 stories or “episodes” he can pull out of his hat when called upon to illustrate various concepts about the company.

There’s also the Footprint Chronicles, a website where users can go to track the impact of a specific Patagonia product from design through delivery. It launched in 2007, back before the GFC and before “transparency” really caught on as a business buzzword/concept. Patagonia’s head of environmental strategy Jill Dumain says they struggled to figure out just how transparent they should be, and decided that as long as they were starting to “squirm a little in their chairs”, it was probably about the right level.

According to Sheahan: "You have to show the successes and the failures to make it real for people who might be looking to do some of the things you pioneered."

He's also pretty proud of the Common Threads initiative, in which consumers pledge not to send Patagonia threads to landfills, and the company takes back worn-out gear for recycling into new fibres or fabric, or repurposing, and sells used items via eBay, among other things. Patagonia turns them into something of equal or greater value, because, Sheahan says, it's conscious of the end life of each of its products. "We don’t ever want them to end up in landfills."

From brand to culture

What Patagonia is trying to do is create a culture around its brand – one of healthy living, mindful manufacturing and consumption, and with a local focus – with an overarching theme of transparency and responsibility. And the customer is intrinsic to that, he says.

An unorthodox move for a consumer goods company,  asking consumers to think about consuming less. Reverse psychology? Sheahan says not. Rather, Patagonia is tapping into consumers’ consciences – encouraging them to be fully aware of their purchasing decisions and rethink whether they need to be consuming at such a high level.

“Fundamentally we want you to buy less stuff and that’s a big message. Our customers are signing up to the pledge to live their lives in a simpler fashion.”

 While he has been known to joke, "We’re not in the business of selling stuff – we’re in the business of solving problems", Patagonia needs to sell in order to survive. However, he says it gives away one percent of its revenue, so "the more we sell, the more happy our environmental groups".

Says Sheahan: "It’s about being happy as a CEO, as a leader. When you’re happy, your customers are happy, your employees, your vendors, your suppliers ... That’s conscious capitalism. There no ‘woo' here. We're not suggesting you run away with a religious group and wear a robe and start chanting..."

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