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Regenerative Capitalism in Action: A Case Study

A regenerative business is a business that makes the business of regeneration its business

Daniel Christian Whal, author of “Designing Regenerative Economies

Patagonia, an activist company “In business to save the planet”

Patagonia’s products are well-known and respected in the industry as they are high-quality, long-lasting, and they offer a free repair service for any items which have suffered from wear and tear.

Founded by Yvon Chouinard in his parent’s back garden in 1972, when environmental concerns were far from ubiquitous, Patagonia has since been a pioneer of the socially and environmentally responsible business. Which is not a small achievement, for a company that operates within the clothing sector, where loose policies abound. But Patagonia is hardly a small player; in 2017, their annual revenue amounted to 1 billion dollars

Vincent Stanley, one of Patagonia’s veterans, explains that, initially, he wasn’t very fond of their original mission statement “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis”. Back then, he considered mission statements to be superficial, “whitewashing” facades.
Nonetheless, those values seeped into the company’s culture very quickly.

When Patagonia opened their first store in Boston in 1989, they had an episode where, 3 days after opening, workers were calling in sick due to an issue related to the ventilation of their premises. The technician who resolved the issue notified the managers that their workforce had been poisoned by the formaldehyde used to treat the cotton they had stored in their basement. Stanley recounts that they immediately took action and commissioned a study on the most ecological fiber, and the answer was very clear: they had to switch to organic cotton.

That was a critical transition point for the company, to switch to using materials sourced from organic agriculture at a time when no customer was asking for it. They had to drop 100 products from their line and initially lost sales, yet the business survived the process and eventually thrived, thanks to a mix of endurance, harnessing customer loyalty, “we speak to our customers like we speak to our friends, we appeal to them on the basis of values, and that’s how we earn their loyalty”, but especially thanks to their foresight.

One of the main questions they ask themselves when conducting product research and strategy is “How do we move towards tending to support the stability of the whole?”. This ethos is what has allowed Patagonia to develop strong customer retention and ongoing business growth. 

In the last few years, Patagonia have cranked up their social and environmental impact and have become an activist company. Their new mission statement is, “In business to save the world”, and they have decided to put this into practice by investing in the three areas they can maximise their positive impact in: politics, tax cuts and regenerative agriculture.

  1. Political activism: In 2017, after the Bears Ears National Monument in Utah failed to be protected, they joined the native tribes in the lawsuit against the US government
  2. Donating funds to the environment: A few years ago Patagonia calculated the “irresponsible tax cut” awarded to the super-rich by the Trump administration, which amounted to 10 million dollars. They decided to donate it to environmental organisations (this is on top of their yearly 1%). In 2018, they invested $185,000 into Tompkins Conservation’s plan to create a new park at the very end tip of South America, which has the potential to capture a huge amount of carbon emissions.
  3. Regenerative Agriculture: Patagonia has invested in regenerative agriculture since their early days, but they now see it as an additional way to fight carbon pollution. Their cotton is grown organically in the US, Turkey and India. They don’t use chemicals and pesticides, which means that “you need to replace chemicals with knowledge and labour”. In an interview last year, founder Chouinard said they have plans to use crops that are very effective at capturing carbon dioxide, with the aim of making their products  “from a crop that actually captures carbon. That’s a win-win for everybody.
Patagonia’s mobile repair hut in Newquay. They offer free repairs to wetsuits and items of clothing from any brand.

Although the company stands out as an example of how to conduct a socially-responsible business, it is still worth noting that when operating within the traditional business world framework, not one model can be 100% fault-proof. In 2015, for instance, Patagonia discovered animal cruelty practices in their wool supply chain, which made them first drop their supplier and then introduce their strictest policy yet, the “Patagonia Wool Standard”, which all their suppliers must adhere to.

Furthermore, there is the moral issue of producing clothing in less affluent countries that don’t have a great track record in terms of paying fair wages. Stanley admits that, “the global supply chain is very dark, the apparel industry tends to be very low paid.”

In 2016, they teamed up with the Fair Labour Association in order to ensure that all workers employed by the factories they partnered up with are at least earning the “Living Wage”. However, on their website, Patagonia admit they don’t have a very clear idea of what a real Living Wage should be in any of the countries most of their production chain is based in.

Although we commend them for their honesty, there is still much work to do in terms of satisfying Article 23 of the UN’s Universal Declaration of Human Rights:Everyone who works has the right to just and favourable remuneration ensuring for himself and for his family an existence worthy of human dignity. . . .

A thing is right when it tends to support the integrity and stability of all living beings says Stanley.

Although this might be instinctually true, our traditional business world still operates on a model that benefits only a few parts of the whole. But with the climate crisis looming over everyone’s head, the time has come to reconsider the way we think, act and live. After all, we are a resilient species, and like Stanley himself admits, we could find our creative advantage in “what we discover when operating under certain constraints”.
That is, before it’s too late.

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