Ethical Issues in Apparel: Patagonia

An Industry and Company Analysis

By: Stephanie Israel, Xiaojia Liu (Posh), Ruby Velasco

Business Ethics 346

Professor Vihtelic

April 13, 2016

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I. Industry Analysis

The fashion and apparel industry is a multi-billion dollar global industry devoted

to making and selling clothes. The process of making and selling clothes includes

designing, manufacturing, distributing, and marketing.

Predominant Ethical Issues

The fashion and apparel industry has historically been plagued by several ethical

issues, including but not limited to, promoting seemingly impossible body image

standards, inhumane treatment of animals for fur, leather, and wool, mindless

consumerism and waste, sweatshops, child labor, “blood diamonds,” social inequality,

counterfeits and forgeries, and environmental impact. These issues are discussed further:

Body Image – Female fashion models are usually extremely skinny, since agencies

require certain age, height, and measurement standards. Male fashion models are usually

buff, tan, and muscular. These models project unobtainable body images and beauty

ideals that lead others to unhealthy eating habits, like anorexia or bulimia. Some

companies and countries are fighting back to protect and promote healthy body images.

For instance, France passed a law in 2015 that bans excessively thin fashion models.

Spain, Italy, and Israel are also monitoring the health and weight of their models.

American Eagle, a U.S. clothing company, recently released a men’s underwear

advertisement that went viral. The ad showcased different male body types and the slogan

“the real you is sexy.” A representative for American Eagle has said the company is

committed to showing more diverse body types and will stop retouching men’s swim and

underwear images.

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Treatment of Animals – Numerous types of animals are commonly mistreated in the

name of fashion. Foxes and minks are hunted for their fur. Cows, pigs, goats, sheep,

alligators, ostriches, and kangaroos are killed to make leather. Sheep are frequently

harmed in the shearing process for wool. Feathers are brutally plucked from ducks and

geese in order to manufacture down clothing. Other clothing made from animals is silk,

cashmere, shearling, karakul lamb fur, vicuña, Angora, and shahtoosh. Some

organizations, like People for the Ethical Treatment of Animals, work to protect animals

and raise awareness for the mistreatment of animals. To combat the mistreatment of

animals for clothes, PETA has a “How To Wear Vegan” chart that includes a list of top

retailers and brands that offer a variety of vegan clothes. H&M, Forever 21, DSW, and

Dr. Martens are a few of the retailers and brands mentioned.

Consumerism and Waste – The fashion industry is known for having short product life

cycles. New clothing lines are revealed every season with “must have” items. What

comes next is unrestrained consumerism and people buying clothes and accessories they

do not need. Functional clothes are treated as disposable, creating unnecessary waste and

strain on the environment. Some companies are implementing recycling programs in an

attempt to reuse materials and reduce waste. Prominent examples include H&M, Nike,

and Patagonia.

Sweatshops – Some companies, in an effort to keep production costs down and expand

marginal profits, set up factories in foreign countries where safety and wage laws are not

as strict. Workers are employed in manual labor at very low wages for long hours and

under poor conditions. These conditions are not only exploitative, but can lead to tragic

consequences, such as a building collapse that killed over 1,000 workers in Bangladesh in

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2013. Sometimes the only answer to avoid clothes made in sweatshops is to buy

American made. One such American-made apparel store is Buck Mason.

Child Labor – The International Labor Organization estimates that 170 million children

from around the world are engaged in child labor. Many of these children work within the

fashion supply chain, making textiles and garments to satisfy the demands of consumers

in Europe and the US. The fashion industry is especially notorious for child labor because

of the vast, complex supply system. It is hard for companies to control every stage of

production, making it possible for suppliers to employ children, without the company or

consumers finding out. The Fair Wear Foundation works to improve labor conditions for

garment workers, including eliminating the use of children for labor. They have a list of

over 90 companies representing 120 brands based in seven European countries.

Blood Diamonds – “Blood diamonds” refer to gems mined by rebel groups who use the

funds to finance war and other violent activities. Most “blood diamonds” or “conflict

diamonds” come from Africa, which is home to about 65 percent of the world’s

diamonds. The diamond industry, which goes hand in hand with the fashion and apparel

industry, established the Kimberley Process in 2003, an international certification system

designed to reassure consumers that the diamonds they were buying were from conflict-

free zones. While not entirely perfect, the Kimberley Process has reduced the number of

illegally traded diamonds from 25 percent to 5-10 percent.

Social Inequality – The fashion and apparel industry can cause divisions among people.

Part of the appeal of expensive, fashionable clothing is that it is exclusive, available only

to some. The vast majority of people cannot afford to buy it, so it grants a level of status

and glamor to those who can. Some companies try to blur these class divisions. Ziker

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Cleaners in South Bend, for example, organizes an event every year called “Princess for a

Night.” The goal is to provide free dresses to high school girls so they can attend and

participate in their high school prom.

Counterfeits and Forgeries – Counterfeiting runs rampant in the fashion industry,

particularly with high-priced designer brands. A Gucci bag can be sold for many times

more than an identical bag made by a competitor. Forgers take advantage of consumers

by creating cheap knock-offs and illegally adding the names of famous and expensive

brands.

Environmental Impact – The production involved in the fashion industry has a hugely

negative environmental impact. Cotton, a common material in garments, requires heavy

pesticide use and is responsible for 2.6 percent of global water use. About 18 percent of

industrial water pollution comes from textile dyeing and treatment and an estimated

8,000 synthetic chemicals are used throughout the world to turn raw materials into

textiles, many of which are released into freshwater sources. Furthermore, the average

American discards about 70 pounds of clothes annually, and about 85 percent of that ends

up in landfills or incinerators. Dutch aWEARness, a company based in Netherlands,

creates clothes from 100 percent recyclable polyester. They are working to shift

production cycles from linear to circular.

Law and Regulations, Professional Codes and Standards, Licensures

The apparel industry is regulated by multiple government agencies including the

Consumer Product Safety Commission, the Department of Agriculture, the

Environmental Protection Agency, the Department of Labor, as well as national and state

legislatures, foreign governments and agencies, and international trade and governmental

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institutions. In the U.S., the apparel industry is required to provide accurate and

appropriate labeling, and follow labor and trademark laws.

By the time a garment is in stores it will labeled with the fiber content, country of

origin, identification of the manufacturer, importer or other dealer, and care instructions,

which must be permanently attached. The placement of the label is important and

depends on the type of packaging and item. If the company claims the item is “Made in

America,” or claims the item is made from organic material, or contains wool or leather,

it is subject to further regulation in labeling and marketing.

When a company claims that an item is “Made in America,” it must be able to

validate the claim. There are different degrees and qualifications that it can use to claim

that the country of origin is the United States. Expressed, “Made in America,” and

implied, “True American quality,” are both held to the same standard and must be

substantiated in both labeling and when used in marketing. Brand names and trademarks

cannot originate claim. Being a well-known U.S. brand cannot be the basis of a claim if

the item or a majority of the item is made abroad. There are qualifications that can be

used if the item is not manufactured within the 50 states or the U.S. territories. Examples

of qualifications are, “Made in USA,” “Made in USA of U.S. and imported parts,” “Made

in the U.S. from imported parts,” and “Assembled in the USA.” These denote how much

U.S. production and labor went into the item. If the portion of the item produced abroad

is negligible, which depends on the cost and proximity to finalize the item, it can claim

American production. If the portion of the product’s total manufacturing cost, including

materials, labor and overhead, and U.S. parts and processing is greater than that incurred

abroad, it passes the cost criterion. How far removed any foreign content is from the

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finished product is the other criterion, which is judged by the proximity of the imported

materials to the finished items. One-step-removed standard is used to ensure production

percentages by requiring the company to know what percentage of labor and cost went

into a product one step ahead of it in the supply chain and must be identified in labeling.

Organic claims must be certified through either the National Organic Program and

hold the USDA organic seal or though Global Organic Textile standards. Wool and

leather also have different standards in labeling. Reclaimed and recycled wool must be

identified and present in the labeling and marketing, along with the wool grade and

country of origin. Leather has similar standards with the leather grade and origin being

made public in the labeling and marketing process.

Product safety standards require flammability testing of clothing textiles. There

are three classes in flammability based on their rate of burning, only textiles in the lower

two classes are allowed to be used in clothing. Children’s sleepwear has higher standards

and requires specific flammability labeling requirements.

Legal Requirements Concerning Ethical Issues

Depictions on the runway and media - Legal requirements regarding the negative body

image aspect of the apparel industry vary by country. Israel, Italy, France, and Spain have

the strictest legal requirements. They require models to have health records present and to

show their BMI does not fall under 18 to walk in catwalks. Denmark on the other hand

has teamed with industry actors to form The Danish Fashion Ethics Charter in an attempt

to change the industry’s culture from within. The charter does not require a minimum

BMI but a yearly check up, food pledges, compulsory wages and further

recommendations. While it is a voluntary association, it is required if the fashion house

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wants to participate in Denmark’s fashion week and any fashion house not involved also

gets blacklisted making the penalties very real. Through their code of non-broadcast

advertising, sales promotion and direct marketing, the UK requires that “Marketing

communications must be prepared with a sense of responsibility to consumers and to

society.” They uphold the right to band print and media advertisements featuring models

that are “unhealthily thin” and are deemed “irresponsible.”

Animal welfare - Legal regulations and requirements and their enforcement regarding

animal welfare for animals farmed for fiber vary by state and country. The American

Veterinary Medical Association states that the following methods are unacceptable for

euthanasia of cattle, goats, and sheep, "manually applied blunt trauma to the head;

injection of chemical agents into conscious animals…drowning, or air embolism, and

electrocution with a 120-V electrical cord, and exsanguination in conscious animals.”

The Animal Welfare Act does not cover farm animals used for fiber and so this sector is

not subject to regulation though the U.S. Department of Agriculture. In this situation,

activist groups play an important part and bring ethical issues and mistreatment of

animals into light.

Trademark and Copyright Laws - A brand is an important aspect in the apparel

industry as it is often what differentiates companies within the same sector. A brand is

established through the use of a company name, logo and slogan, all of which can be

protected by trademarking them. Trademarking is done in order to protect the goodwill or

reputation of a company. The brand in this sense becomes an asset to the company as it

“is the promise and delivery of an experience; from a business perspective, it is the

security of future earnings; from a legal perspective, it is a separate piece of intellectual

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property,” according to David M. Adler and his book entitled, “Fashion Law: Protecting

Brands and Designs.” A company can register their trademark though the United States

Patent and Trademark Office, which shifts the burden onto the defendant company to

prove that it is not infringing during a lawsuit. The trademark must be renewed every ten

years indefinitely. Trademark infringement occurs when there exists a "likelihood of

confusion,” which is to say that consumers seeing similar branding on similar or identical

items would assume that they originated from the same company.

Copyright law protects the designs of a company. It can be difficult to receive

copyright protection because “originality” is required. Another way to receive protection

is to have copyright not a design for a garment but instead a two or three dimensional

work of fine, graphic or applied at is can be identified independently. Unlike trademarks,

copyright does not give the company exclusive right to the design. The Design

Innovation Act was passed in 2012, though not in effect yet, it would give designers the

right to copyright a whole garment design for three years and has a more defined standard

for infringement.

Industry Sector and Participants

One sector of the fashion industry is outdoor and sportswear apparel. This sector

includes companies involved with the production and sales of footwear, apparel, and gear

associated with competitive and recreational sports and activities like bicycling, running,

hiking, climbing, camping, surfing, kayaking, and many others. Approximately 140

million Americans prioritize outdoor recreation in their daily lives and spend an average

646 billion dollars annually on outdoor recreation. From this, about 120.7 billion dollars

is spent on apparel, footwear, equipment, vehicles, accessories, and service. The other

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524.8 billion dollars is spent on transportation, lodging, food, drink, and other travel-

related spending. In regards to outdoor and sportswear apparel, there are several industry

participants, including Nike, The North Face, Marmot, and Patagonia.

Nike – Nike, Inc. was founded in 1964 by Bill Bowerman and Philip Knight. The

company sells athletic footwear and apparel, sports equipment, and other athletic and

recreational products. There are over 62,000 employees for Nike. It is headquartered in

Oregon. In 2015, the company earned 30.6 billion dollars in revenue.

The North Face – The North Face was founded in 1968 by Douglas Tompkins. The

company sells outdoor clothing and gear. It is headquartered in California, and owned by

its parent company, VF Corporation. VF Corporation employs 58,000 people and earned

12.4 billion dollars in revenue in 2014.

Marmot – Marmot was founded in 1974 by Tom Boyce, David Huntley, and Eric

Reynolds. The company is headquartered in California and is a subsidiary of Jarden.

Jarden Corporation employs over 30,000 employees and earned 8.3 billion dollars in

revenue in 2014. Marmot sells outdoor apparel and equipment.

Patagonia – Patagonia, Inc. was founded in 1973 by Yvon Chouinard. The company is

headquartered in California and sells outdoor apparel and gear. The company employs

about 2,000 people and earned 600 million dollars in revenue in 2013.

II. Company Analysis

Patagonia, Inc. is an American high-end outdoor clothing company based in

Ventura, California. Yvon Chouinard founded the company in 1973, after seeing a need

to re-design climbing tools. Patagonia now has 93 Patagonia-owned stores worldwide.

Thirty stores are in the United States, 21 are in Japan, nine in China, six in Chile, six in

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Hong Kong, five in Australia, five in Korea, two in Canada, two in Germany, two in

Italy, one in Argentina, one in The Czech Republic, one in Spain, one in France, and one

in Ireland. Patagonia’s mission is to “build the best product, cause no unnecessary harm,

use business to inspire and implement solutions to the environmental crisis.”

Formal and Informal Cultural Systems

According to Linda K. Trevino and Katherine A. Nelson in their book Managing

Business Ethics, an organization’s ethical culture is important and has huge influence on

“individual’s ethical awareness, judgement and action.” It gives employees guidance on

identifying the ethical issues, making good decisions, and doing the right thing.

Therefore, it is important to have a more comprehensive understanding towards ethical

culture. Ethical culture can be divided into two types: formal culture and informal

culture. Formal culture systems include factors such as executive leadership, selection

system, policies or codes, orientation or training, performance management, and decision

processes. Informal culture system focuses on company’s role models, norms, rituals,

myth or stories, and language. Both formal and informal systems are important and

cannot be neglected.

Formally, organizational leaders of Patagonia address clear messages of being

ethical. Holding the mission of “ build the best product and cause no unnecessary harm,”

Patagonia focuses mainly on the quality of the product, with a secondary consideration on

competing with other organizations. In the employee training process, Patagonia

specifically addresses how its leadership impacts the environment. With an extremely

high standard on factory quality, the social and environment team of Patagonia ensures

that the factories run nicely, the factory workers are treated fairly, and the materials used

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for production are environmentally responsible. The Fair Trade Labor program offered by

Patagonia allows a pool of payment to be accessed by the factory labors only, giving

them a free distribution of this money. Patagonia is a very non-hierarchical environment,

and employees are encouraged to express their thoughts and report problems freely.

Informally, Patagonia values sports as part of its informal culture system. Doug

Tompkins, a friend of the founder of Patagonia, represents an important role model for

Patagonia. The legendary life stories of Tompkins has inspired many Patagonia

employees. He is not only the founder of The North Face and Esprit, but also an

accomplished outdoor athlete. Later in his career, he sold Esprit and bought a large piece

of land in Chile, and gave it back to the government so it could not be used for

development. More information on formal and informal cultural systems can be found

below in the interview section of this paper.

Executive Leadership

Patagonia, Inc. is a private corporation. Below is information on various

executives and people within Patagonia.

Yvon Chouinard – Yvon Chouinard founded Patagonia in 1973. He started climbing at

the age of 14 in 1953. In 1957, he decided to make his own, reusable climbing gear.

Word spread and soon he was selling pitons out of the back of his truck for a 1.50 each.

In 1965, Chouinard partnered with aeronautical engineer and climber Tom Frost.

Together, the two redesigned and improved virtually every climbing tool, making them

lighter, stronger, simpler, and more functional. Chouinard began selling rugby shirts after

a trip to Scotland in 1970. The name “Patagonia” was picked because of the way it

alludes to some far-off, distant land, unknown and waiting to be explored. The company

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has since evolved from its humble beginnings to sell rugged, tactical clothing and gear.

The company was born out of finding a “cleaner” way to climb and still continues to have

a focus on the environment.

Rose Marcario – Rose Marcario is President and CEO of Patagonia. She has been

President and CEO since January 2014. Prior to this, she served as Patagonia’s COO and

CFO. She has been with the company since 2008. For her, one of the most rewarding

aspects of working for Patagonia is the opportunity to face environmental issues. For

example, in response to the 2010 Gulf of Mexico oil spill, she spearheaded an initiative to

send Patagonia employees to join in relief efforts for the Gulf region. Her environmental

activism also includes preservation-focused work with organizations like the Joshua Tree

National Park Association and the Mojave Desert Land Trust.

Michael Crooke – Michael Crooke serves as a Board Member for Patagonia

International, Inc. He served as the President and CEO of Patagonia, Inc. from 1999 to

December 2005. While at Patagonia, he and his team oversaw efforts to simultaneously

reinvigorate the brand and renew employee satisfaction. He returned the company to

growth and profitability levels that allowed the founders to take the company off the

market and remain a private company. While this revitalization was in process, the

company consistently moved up the ranking in Fortune’s 100 Best Places to Work

survey.

Rick Ridgeway – Rick Ridgeway is the Vice President of Environmental Affairs. He has

held this position since 2004. He oversees environmental and sustainability initiatives,

including Freedom to Roam, Common Threads and the Footprint Chronicles. He also co-

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founded the Sustainable Apparel Coalition. He is a mountaineer and adventurer, making

the first American ascent of K2, the second highest mountain in the world.

John Collins – John Collins is the Vice President of Global Sales and has been since

2013. He directs Patagonia's sales strategies both domestically and abroad through the

company's wholesale, retail and e-commerce channels in Europe, Japan, Asia Pacific,

Latin America and North America.

Stefan Wahlén – Stefan Wahlén is the Managing Director of Patagonia Europe. He has

held this position since July 2012. After being appointed to the position Wahlén said,

“I’m very proud of being part of the Patagonia team, representing one of the greatest

companies in the world. Patagonia stands for quality and innovation not only in products

and fabrics but also when it comes to environmental responsibility.”

Other people include:

Yvonne Besvold – Vice President of Finance since March 2014

Rob BonDurant – Vice President of Marketing and Communications

Mike Busch – Vice President of Information Technology since March 2014

Marty Chapman – Vice President of Quality Assurance.

Robert Cohen – Vice President of North American Retail Stores

Doug Freeman – Vice President of Operations

Dmitri Siegel – Vice President of Global Ecommerce

Cara Chacon – Director of Social and Environmental Responsibility

Kim Gould – Director of Fabric Development and Quality

Mike Mesko – Director of the Supply Chain

Ray Netzley – Director of Tax and Corporate Planning

Elizabeth Pike – Director of Environmental Programs

Mark Shimahara – Director of Emedia.

Ben Stefanski – Director of Catalog and Online Sales

Shannon Ellis – Director of Human Resources since 2007

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Company Standards

Patagonia is a member of the Fair Labor Association. The FLA accreditation is

based on a compliance program that establishes systems and procedures required for

upholding fair labor standards though a brand’s supply chain. The criteria for a company

to be accredited includes employment relationship, nondiscrimination, lack of harassment

or abuse, forced labor, child labor, freedom of association and collective bargaining,

health, safety and environment, hours of work, and compensation. The FLA helps ensure

employees in less developed countries are respected under national and international

labor laws and regulations. Patagonia became a fully accredited member of the FLA in

2008. Membership is re-assessed every three years.

Patagonia is also a partner with bluesign® technologies. Bluesign® technologies

work to improve chemicals, processes, materials, and products at each step in the textile

supply chain, ensuring they are safe for the environment, workers, and consumers.

Patagonia joined the network of bluesign® partners in 2007, becoming the first brand to

do so. Now, there are over 400 brands, manufacturers, and chemical suppliers partnering

with bluesign®.

Ethics Programs and Results

Patagonia prides itself on their Corporate Social Responsibility efforts and being

environmentally conscious. They work to ensure their products are produced under safe,

fair, legal and humane working conditions. Below are several of Patagonia’s programs

and initiatives to being environmentally and socially responsible.

The Footprint Chronicles – The goal of The Footprint Chronicles is to provide

transparent information about Patagonia’s supply chain. Whether it is a cotton farm in the

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United States, a sewing factory in India, or a textile mill in Belgium, the interactive map

on Patagonia’s website offers information on their suppliers.

Worn Wear: Better Than New – The Worn Wear program encourages those with

Patagonia gear to have their gear repaired, rather than replaced. Helping extend the life of

a garment can help ease pressure off the environment. If a garment is past the point of

repair, then Patagonia urges the owner to return it to Patagonia to be recycled.

Vote the Environment – Patagonia supports political candidates who work hard to

support and protect the environment. This includes pushing for clean, renewable energy,

clean water and air, and avoiding carbon-intensive fuels. Patagonia calls for others to

follow their support of candidates who will work to diminish the negative impact humans

have on the planet.

1% for the Planet – Founded by Yvon Chouinard and Craig Mathews in 2002, 1% for

the Planet was created to encourage businesses to donate one percent of sales to

environmental groups. Patagonia has pledged one percent of sales to the preservation and

restoration of the natural environment since 1985 and has awarded over 70 million

dollars in cash and donations to domestic and international environmental groups.

According to 1% for the Planet’s website directory, 1197 companies are members.

Environmental Grants and Support – Patagonia acknowledges it produces waste and

feels responsible to give to groups whose work is environmentally focused. Patagonia has

awarded over 70 million dollars in grants and donations since their tithing program began

in 1985. Some of these efforts include taking down dams, restoring forests and rivers,

protecting threatened and endangered plants and animals, and supporting local, organic,

and sustainable agriculture, as well as others.

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III. Interviews

Our group was fortunate enough to receive an interview from Sean Philbin, a

Supply Planner at Patagonia. Below are the questions and answers.

Sean Philbin

Sean Philbin is a Notre Dame graduate. He works as a Global Supply Planner at

Patagonia Headquarters in Ventura, California. He manages factories across the globe as

they build styles for the company. He manages inventories for the sportswear business

including men and women’s sportswear, from fleece to bottom down shirts to denim. He

sends out what the company wants to produce to factories overseas, wait for the total

quantities to be built up, and then distributes the inventory based on the global demand.

He says Patagonia has a big sales footprint in Japan and Europe, but the biggest sales

channel is in the U.S., on the wholesale.com, and their own retail business.

Do organizational leaders send a clear ethics message? Is ethics part of their

“leadership” agenda? Are managers trained to be ethical leaders?

Sure. So, our company was founded by a guy named Yvon Chouinard. He

formally founded our company in 1973. He has since relinquished his formal leadership

role in the company. He’s not our CEO, our CEO is actually a woman named Rose

Marcario. But all of what we do is basically centered on Yvon’s leadership and legacy of

the company. He wrote a book called Let my people go surfing, which outlines his

philosophy about business, ethics, and environmental responsibility. There’s also a book

that Yvon co-wrote called The Responsible Company, which really closely aligns with

the research you guys are doing, and would be really helpful. The ethics messages are

pretty clear and codified in those two books. I think that translates from the top on down,

so definitely a part of Yvon’s leadership agenda, as well as Rose’s our CEO. And then,

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are managers trained to be ethical leaders? I would say yes, for sure, but I think it’s a lot

less formal than maybe what the question is asking. Like in any corporation, there’s new

manager training and manager training in general. I don’t think that the training we have

at Patagonia is much different than the ethical training that you would have at another

corporation. For example, I used to work at Target’s headquarters. I don’t think the

manager training would be any different, or much different. The only difference that I

would say is that it would probably be supplemented by notes or thoughts on how our

leadership impacts the environment and our mission statement.

Does the company value ethical behaviors? Are there certain programs and code of

ethics?

Yes, so I think one really concrete example of how we demonstrate our code of

ethics are the factories on which we do business. So, factories overseas that make up our

garments. So we have really, really high standards for the factories that we do business

with. We have a full social and environmental team, which really do an amazing job of

setting the factories and also ensuring that all of our factories are run really well and that

the employees in the factory are treated in the best way and that the materials that the

factories are using are environmentally responsible. One thing, we as a company have

been making a big push for is Fair Trade Labor. I know for the styles that I manage, that

about 100 of my styles are all Fair Trade and made in Fair Trade factories. What that

means, and how that translates into real world results, is that basically the payment

structure is different. So instead of the payment being directly sent to the factory owner

or manager and then distributed out to the employees, there’s payment made specifically

to, you can think of it as a pool of money, that the factory workers only have access to,

which is a really interesting way of doing business and it’s really empowering for the

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factory workers because they can use that money however they want. Anecdotally, I’ve

heard about factory workers splitting it up and giving everyone some sort of a bonus, or

you can use that to build or buy tools that will make you more efficient.

Are employees of the company encouraged to report problems?

Yes. I think that Patagonia is a very non-hierarchical environment, where people

are encouraged to express their thoughts and ideas. If, God forbid, something bad were to

happen, that someone would be very much so encouraged to speak out about and seek

whatever help that they need. A lot of that is driven by it being a nonhierarchical, open,

and feedback driven environment.

Going off that, if someone wanted to report a problem, how would they go about

doing so? Is there a hotline or a form of confidentiality?

Yea, so like with most organizations, that would be something handled with

Human Resources. Say I were having a problem and needed to speak out, or speak up to

someone about it, I know whom to contact in Human Resources, and that person would

be my go to that I can spring my problems to and he or she would figure out what the best

strategy is to get the problem solved.

Who are the company’s role models and heroes? I know we talked about Yvon

earlier, are there any other prominent heroes or role models within the company?

Yea, for sure. Obviously there’s Yvon, but one that’s really prominent is Doug

Tompkins. So, have you guys ever seen the movie or documentary 180 Degrees South?

I’m not familiar, but I’ve heard the name through my research.

Yea, you guys should watch that movie. It’s really good; it’s on Netflix. In summary, it’s

about this guy from California who sails down to Chile and he’s following in the path

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that the founder of Patagonia, Yvon Chouinard, and a couple of his friends, one of whom

was this guy Doug Tompkins. As they made their trip in the late 60s, they took a van

from California all the way down to Chile to go surfing, climbing, and skiing and doing

all this really cool stuff. So that’s part of, I would say, the heroes of our company. I

would say that Doug Tompkins is for sure one of those. So, to give you some background

on him, he was actually the founder of The North Face. He had also founded another

clothing company called Esprit. He sold that company and made a ton, ton of money

from doing that. What he did with that money, is he actually bought an enormous tract of

land down in Chile and essentially gave it back to the Chilean government so that it

would be protected, forever basically and not developed. He was also an amazing outdoor

athlete, who just died this past year. He is certainly one, even though he founded The

North Face, he was one of Yvon’s closest friends and someone whose life and values

definitely informed the way that people think and act at Patagonia. I think he’s a

company hero.

What values do they represent?

I would say environmental activism is probably the biggest one. Environmental

stewardship is another big one. Our company’s mission statement is “build the best

product, cause no unnecessary harm and use business to implement solutions to the

environmental crisis.” I think that shows with someone who lives that out, especially the

part about using business to implement solutions to the environmental crisis, you’d be

hard pressed to find a better example than a guy who basically sold his business in order

to buy land in order to save it form being developed – that’s right in our wheelhouse.

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I have a question on the stories and myths. It seems like you guys really embody the

environmental stewardship and action and the company motto you just listed,

“build the best product, cause no unnecessary harm,” it seems like that is really at

the core of Patagonia. Could you share a more company-based story, you did share

the bit about Doug Tompkins and it seems like, while Patagonia is a business, you’re

not necessarily competing with anybody, you’re competing to make yourselves

better, more than to compete against a competitor. Is that right?

Yea, I think you nailed it. We don’t necessarily, I mean I’m not in product line

management, but I don’t think that we introduce a certain garment in order to “one-up”

our competition. I think that we’re aware of our competition, but we really just focus on

building the best product for our customers. You don’t hear a lot about rivalries with

other companies, for instance, we have a lot of ex-Nike people here who talk about the

Nike, Adidas, Under Armour rivalry. You don’t really hear about that here. I think the

focus is on building the best product, making what we call “perfect tens,” which is

essentially a product that is durable, can be used for all different sports and climates, and

it’s just an amazing product. So we focus more on our own products than what our

competition is doing.

So under pressure, would you say Patagonia would choose to do what’s right? By

their core values, rather than to “sell out?”

Yea, for sure, and I can give you a really concrete example of that. So we are a

fairly small company. We could’ve grown this company a lot more quickly and sold out

by just cranking out crappy products and selling more just in order to grow our total

sales. When push comes to shove, that just hasn’t happened in the last 30-40 years. Also,

-21-

another thing is that small, privately held companies like this, especially one with such an

upward sales trajectory and recognition within the marketplace, companies would like to

buy us. The fact that we haven’t actually sold out, I think is another concrete piece of

evidence to support that claim.

I’m curious about the language you hear around the office. What are some phrases

at Patagonia that you hear that you wouldn’t hear at Nike or Adidas?

*laughs* Or any other corporate environment? Let’s see. Also, I’m not from

California so you hear a lot of surf terms or Hawaiian sayings. But in terms of business

jargon, no, I think that in general we have the same business buzzwords that other

companies use. Was there something that you were looking for?

No, we were just curious. We talked to another person in a different

company and they said they had slogans they use to motivate themselves, we were

wondering if Patagonia had anything?

Oh ok. I get what you’re saying. I think Patagonia is a little bit “too cool for

school” when it comes to that stuff. I feel like if there were company jargon, it would be

met with resistance because it’s a very unique organization. It’s a lot of unique

personalities and people who are attached and unified by Patagonia as a company. I think

that everyone brings their own individuality, so there’s less of the jargon. People are

constantly trying to not become like a major corporation. That would’ve been different if

you had called me two years ago while I was at Target, because Target is a very different

company than Patagonia.

That’s all we got, thank you so much for your time!

Thank you.

-22-

IV. Personal Reflections

Stephanie Israel – Through my research, what really stood out to me and impacted me

the most is the treatment, and really mistreatment, of animals for clothes. While I wasn’t

completely blind and ignorant of this information, seeing images of birds after they’ve

been plucked alive really made me sad and in pain for them. I was appreciative of

companies, like PETA, who have tried to research and make readily publicly available

other, “vegan” alternatives. I was also appreciative of the article I found on blood

diamonds and how Botswana and Namibia can be trusted as sources of “clean” diamonds.

I enjoyed researching and learning more about Patagonia. I like that they give their

employees flexibility in taking time off to adventure and explore, or spend time with

family, or do whatever they like to do outside of work. I respect the fact that they closed

their New York City stores in 2014 to participate and support the People’s Climate

March. I like the work they are doing and hope to one day work for a company as

passionate as they are on an issue.

Xiaojia Liu (Posh) – In the process of observing the apparel industry, I have had a

better comprehension towards this industry. The industrial investigation also gives me a

better understanding on where Patagonia stands among this area, in comparison with its

competitors such as Columbia, Under Armor, and Nike. By understanding Patagonia’s

company culture, especially its high consideration on the ethical programs offered by the

company, I have sensed a high appreciation on the ethical culture of Patagonia.

Patagonia’s high awareness of ethics and social responsibility enables me to have an

extensive recognition of the importance of being ethical not only as an individual, but

also as an organization.

-23-

Ruby Velasco – While researching the legal requirement in the industry, I was

surprised at how unregulated it was. Besides consumer safety standards, it is mostly

unregulated which helps bring more choices to customers, but it also leads to companies

facing many ethical issues. It's fragmented nature also complicates the ethics because the

process of growing/producing fiber to the final sale of a garment operates on a global

level. It was interesting to see how the industry also drives development in many

exporting and manufacturing companies as well as contributes to the rise in consumer

spending in many emerging markets. I enjoyed having a chance to interview Molly and

Sean especially because Under Amour and Patagonia have such different cultures. In the

end, I think that I would enjoy working in a company like Patagonia because of how

committed it is to its values and also because it has a casual work environment where

individuality and flexibility are valued.

-24-

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