IT'S EASY--AND PROFITABLE--BEING GREEN

Patagonia: The Greenest Company of Them All

By Bill Schneider, 12-10-09

	Yvon Chouinard, Patagonia founder, fishing the Snake River in Wyoming with a tenkara rod, a 1000-year-old Japanese fly fishing technique, and relaxing on the British Columbia coastline. Photos by Bill Klyn, Patagonia.

Mirror, mirror on the wall, what is the greenest company of them all?

Most people already know the answer, Patagonia, but I suspect most don’t realize how green.

For starters, check out the Patagonia-founded One Percent for the Planet Initiative. In 2008, Patagonia, which is based in Ventura, California, but has an outlet store in Dillon, Montana, had $380 million in sales. One percent of it, $3.8 million, went to 398 environmental groups. That’s one percent of gross sales, not of net revenue or net profit, but one percent of all receipts before any deductions--and not just last year, but every year. “Because profit figures can be so easily manipulated,” writes Patagonia owner and founder Yvon Chouinard on his company’s website, we donate one percent of sales “in lean years and fat, without regard for profit levels.”

Since 1985, when the One Percent program started, Patagonia, a relatively small company from a global perspective, has given $34 million to green causes. Chouinard calls it an “earth tax” and reminds other companies that, “Without a healthy planet there are no shareholders, no customers, no employees.”

“It’s actually a minimum of one percent,” notes Bill Klyn, Patagonia’s International Fishing Development Manager. (Now, there’s the job title of my dreams!)

Klyn told NewWest.Net that the $3.8 million doesn’t include what employees give and money going into green issues from various corporate grant programs, which is “a lot.”

Klyn added, “You can’t depend on government to do it. You have to do it yourself.”

I’ve always wondered if Patagonia considered it’s famous green giving program a challenge to other companies to do the same, and when I had a chance to ask Chouinard that question, he had a simple, direct answer that you don’t often receive from CEOs:  “Yes. That’s what we’re trying to do.”

In his phone interview with NewWest.Net, Chouinard took this opportunity to elaborate. “If we turn to a green economy, will it bankrupt the world? No. I’m saying to other companies that every time we did the right thing for the planet, we made money on it. I’m telling them that not only do we have to change, but also that it will be a good thing economically. Otherwise, they’ll end up like GM, part of a bankrupt economy.”

Since it works so well for Patagonia, a fact well known in corporate America, why don’t more businesses join or initiate green causes?

Chouinard and I spent most of our phone conversation speculating on the reasons, but we couldn’t nail it. It’s definitely frustrating to him. “I just don’t understand; they are so afraid of change.”

Check out the list of One Percent companies and you’ll see two major omissions--big companies and surprisingly, the outdoor industry.

“We have about 1,300 members now,” Chouinard said, “but very few are from the outdoor industry. You’d think that a company that’s livelihood depends on having a clean planet would feel more responsibility to protect it, but the outdoor industry is not stepping up.”

Which means Patagonia is still the biggest One Percent company.  New Belgium Brewing of Fort Collins, Colorado, brewer of Fat Tire Amber Ale, is probably the next biggest business after Patagonia.

But not one Fortune 500 company. That hurts, doesn’t it?

Let’s assume (dream?) for a second about even a few Fortune 500 companies accepting Patagonia’s challenge. How about Goldman Sachs, for example, with $48 billon annual revenue or Microsoft with $57 billion or the biggest company in the galaxy, ExxonMobil, which rakes in a staggering $305 billon annually.

Discounting the other 497 Fortune 500 companies, if these three companies took the challenge, $4 billon annually could go into green causes. That would make a mark!

And people would notice, according to Klyn, who calls One Percent giving “a great marketing expense.” Energy giants like ExxonMobil are constantly criticized for gouging us at the pump and catastrophic oil spills, so becoming a One Percent company might help people forget about the Valdez next time they’re looking for a gas station. Wall Street icons like Goldman Sachs are under fire for paying billions in bonuses barely a year after being bailed out by the taxpayers, so slicing off a tiny fraction of the bonus pool for green causes might cool our anger over excessive pay and bonuses i.e. the average compensation for all Goldman Sachs employees is $770,000/year.

The problem is, Chouinard and I speculated, these large companies are publicly traded. Executives prioritize keeping the stock price up over all other priorities except, perhaps, compensation, and they devote extra cash to dividends instead of donations.

“Publicly traded companies hardly give any money to environmental causes,” Chouinard pointed out, and clearly not happy about it.

Only small private companies mostly from non-outdoor industries have joined the One Percent program, which is a sad commentary, and “no company gives more than Patagonia,” Chouinard added

In addition to the One Percent for the Planet Initiative (Challenge?), here are a few more of Patagonia’s favorite programs:

Freedom to Roam: Currently Patagonia’s priority environmental campaign. Its goal is to create, restore and protect “wildways” or corridors between habitats so animals can survive. “The most important thing we’ve ever done is what we’re doing right now with the Freedom to Roam program,” Chouinard said, noting that as we spoke, one of his employees was at the UN Climate Change Conference in Copenhagen giving a presentation on it.

World Trout Initiative: A program to identify individuals and groups working to protect native fish, to tell their story, and to support their conservation efforts by placing money into their hands.

Conservacion Patagonica: A long-term effort by the company and its employees to create a new national park in (where else?) Patagonia, Chile, the company’s namesake.

The Conservation Alliance: An environmental grant program founded by Patagonia in 1989. Now, 155 outdoor companies contribute to a fund, and twice yearly, the Alliance donates 100 percent of those membership dues to grassroots groups working to protect threatened wildlands and biodiversity. In 2007, the Alliance granted $800,000 to 29 organizations. Grants since 1989 total over $6.5 million.

Common Threads: A garment recycling program where certain fabrics can be returned to the company for recycling because, as the company noted in its environmental initiatives brochure, “way too much of what is made these days ends up in the trash at the end of its useful life.” Patagonia turns worn out garments (6 tons of it since 2006) into new apparel, “which gets us closer to a long-standing company goal of taking full responsibility for every product we make.” Watch tags to see which fabrics qualify.

Organic Exchange: A non-profit organization committed to expanding organic agriculture, with a specific focus on increasing the production and use of organically grown fibers such as cotton.

Beaten to a Pulp: A special effort to use recycled materials to print company catalogs. Unbelievably, mail order companies send out 59 catalogs for every person in the United States, most of them made from100% virgin wood fiber taken from Canada’s boreal region or forests in the southeastern US. But Patagonia uses 40 or 50 percent post-consumer recycled paper in its catalogs.

And that’s only a sampling of how and why Patagonia became the greenest company of them all. Click here for a complete list.

I realize Patagonia isn’t the only company giving money to green causes. Many others do, too, like Orvis, for example, but none with the vigor Patagonia does, and none of the multi-national giants we really need on board. Even a few of the “large caps” deciding to give anywhere near the percentage Patagonia does would be a tectonic leap forward for our efforts to make our planet a healthier place for our grandchildren.

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