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Patagonia’s Circular Economy Strategy

Patagonia CEO Rose Marcario explains the company's environmentally-responsible business model as it wins an award at the World Economic Forum in Davos.
Patagonia Worn Wear | Source: Courtesy
By
  • Limei Hoang

LONDON, United Kingdom — In recent days, Patagonia has been making headlines for its effort to protect Bears Ears National Monument in Utah from being developed for oil and gas. In an open letter, the outdoor apparel brand's founder, Yvon Chouinard, voiced his opposition to Utah governor Gary Herbert's plan to reverse recent protections brought in by outgoing US President Barack Obama.

Patagonia’s position on such issues is a reflection of the deeply-held philosophy of environmental responsibility embodied by Chouinard, who famously wrote "Let My People Go Surfing" — a manifesto that encapsulates his laid-back approach to life and has helped him build a multimillion dollar business.

The concept at the very heart of Patagonia’s business is to manufacture, repair and recycle products in order that they last a lifetime, and the reason why the company is to be presented with the Accenture Strategy Award for Circular Economy Multinational at the World Economic Forum in Davos, Switzerland, this week. To coincide with the award, the company is announcing the launch of an e-commerce platform for its Worn Wear initiative, which will sell used Patagonia clothing and equipment online, sourced from its customers.

The so-called circular economy, when applied to fashion, is a system whereby everything in the process of making garments — including the garments themselves — is re-used or recycled, a rejection of the more traditional “take, make and dispose” model, in which products are cheaply made, consumed voraciously, then disposed.

"The whole idea of [the circular economy] is creating no waste," says Julie Gilhart, a creative business consultant who counts Amazon and LVMH among her clients and has worked with the CFDA to establish a sustainability initiative. "There should be no end of life of anything. Nothing should just sit in landfill."

Patagonia applies these principles by carefully thinking through each step of the process, says Rose Marcario, chief executive of Patagonia. “It’s really taking end to end responsibility for the product.”

There should be no end of life of anything. Nothing should just sit in landfill.

By designing durable products that can be repaired, Patagonia ensures that garments stay in use for as long as possible, something the brand encourages by providing a lifetime guarantee for all of its wares. If a product can no longer be repaired, Patagonia will recycle it and reimburse the customer with gift vouchers for the value of the item.

Patagonia has also reduced its environmental impact in its sourcing. In 1993, the company devised a fleece material made from plastic bottles — then shared its knowledge with other companies in a bid to encourage use of the recycled textile.

“We are living in a world where there are going to be fewer resources, and there won’t always be a wealth of virgin materials. So you have to start working now to figure out how you are going to address those issues as a brand,” says Marcario.

“If a product is totally worn out, we are going to take it and recycle it. If it needs to be repaired, we are going to have a mechanism to repair it. If it can be resold but they don’t want it any more, there’s a mechanism to do that,” she adds.

While Patagonia declined to share the cost of the company’s investment into sustainable, circular practices, Marcario says developing the company’s current business model has been a decades-long process and one that relies on communicating its message effectively with its consumers.

“For us, we engage with our customers because it’s a relationship. They need to understand that, as a brand, we are invested in this responsibility for the product from end to end and we are going to help them in each stage of the process.”

Brands that don't face these realities of the true cost of apparel and fast fashion, I think they will be left behind.

Patagonia’s circular business model is one that many fashion companies can learn from. Indeed, if they don’t, it could cost them. “I think the real cost to business is possibly your customer, because if [a company is] not addressing it, they are not innovating,” Gilhart says. “For big companies to change the way they speak and to change some of the ways they do things, there is risk involved … but the greatest risk is not being relevant.”

As a privately-held company, Patagonia has been able to implement circular practices to its business model without the pressure to report quarterly sales increases to appease shareholders, an expectation faced by many publicly-traded companies. However, that hasn’t stopped Patagonia from achieving an estimated $710 million in sales, 1 percent of which it donates to hundreds of environmental organisations each year. Since 1985, the company has donated $78 million to environmental causes as a way to compensate for its impact on the environment.

As more consumers question brands’ environmental policies, many companies are being forced to consider a more sustainable operating model.

In 2013, for instance, H&M launched a global garment collection initiative, which aims to address the issue of used clothing waste by re-purposing garments for re-wear, re-use or recycling. It has gathered more than 32,000 tonnes of garments since its launch. It is also working on new technologies to recycle clothes from different textile blends into new clothes.

Likewise, Kering, which owns Gucci, Bottega Veneta and Puma, recently published the results of its sustainability report addressing how it has tackled its own targets, with an emphasis on investing in new materials.

“There is a lot of innovation in this space,” says Marcario. “We don’t have to all reinvent the wheel, but brands that don’t face these realities of the true cost of apparel and fast fashion, I think they will be left behind.”

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