Case Corporate Excellence Can a sports outfit producer successfully integrate environmental awareness into its business strategy? Is it possible to build a responsible organization based on the values of a different lifestyle and a specific community of customers? The values of Patagonia are clearly aligned with those of its clients: love of nature and adventure. Instead of turning these values into a tool of communicating its brand, the Company is looking for innovative ways to demonstrate that these values are at the centre of its strategy and are not just the result of the strategy. Patagonia became more than just another producer and seller of outfits for sports activities in open air, like its competitors. Rather, it positions itself as part of the economic system stressing the importance to be responsible and to take care of the environment. The level of integrating the mission, vision and values of the CSR into the business and the strategy are truly unique.

1. Cases
Strategy Documents
C03/2011
Public Affairs
La Patagonia: Integrating
CSR into business model
creation and strategic
management
What makes a firm that sells sportswear and outdoor gear so successful in its
environmental integration of business strategy? Can a socially responsible
organization be built from surfing - a life-style that is very different - and create its
own community?
When Yvon Chouinard, the American son of high segment of the market in terms of purchasing
French-Canadian parents, decided to create a power. Basically it sells its customers extremely high
sportswear manufacturing and sales business in quality, durable products that are constantly being
California in the early 70s, he was sure of one improved/updated, but something more as well: it
thing: he wanted to keep climbing mountains sells them a unique life-style, practically a religion,
and soaring over waves in his business life too. of which they become devotees.
That is why the firm is named after the mountain
region between Argentina and Chile and why it is At present, the firm has global earnings of almost
involved in the protection of the nature parks in $300m, and a workforce of 1,400 with a turnover
southern Patagonia, the Natural Austral Parks. of 4.5%, compared to 20% for the sector. Patagonia
owns 40 outlets and appears every year on Fortune
Although he began by selling sports clothes for rugby magazine’s list of the best and most admired
teams (the money to start the firm came from the companies in the world, with the highest reputation.
sale of rugby shirts bought in Scotland), the business It is also considered the “coolest”.
now sells every type of sportswear, for skiing, surfing,
rock climbing and alpine climbing, as well as the The ethos of the firm is based on integrity,
equipment necessary for these activities. authenticity, simplicity, community, social
conscience and openness. It conducts very few
Its customers are sportsmen and women with advertising campaigns because its outlets, public
an average age of 38 and a medium salary of relations and sponsoring (especially for its own
$160.000 gross a year, which situates it in a quite in-house projects in the environmental sector,
Document prepared by Corporate Excellence with reference to, among other sources, the intervention of Govert Room (Associate
Professor of the Strategic Management Department at IESE) during the sessions of the Executive Education Program “Making Social
Responsibility Work: The Cornerstone of Sustainable Business” organized by IESE Business School in Barcelona in July 2011.

2. La Patagonia: for example 1% For the Planet, the World Trout • For him, unremitting innovation is a religion.
Integrating CSR Initiative, Environmental Internships or The • He promotes creativity and experimentation.
into business model
creation and strategic Footprint Chronicles and projects by other bodies • He makes everyone feel involved
management such as the Conservation Alliance and the Organic and creates confidence.
Exchange), serve as the main window for its brand. • He implements ideas and brings them to fruition.
• He makes business and work fun.
But if there is a constant in the history of the company
it is to be found in its commitment to “green” issues, Model of inspirational leadership
the fact is that in essence and by definition it is “green”
through and through. Since the 80s 1% of sales or
10% of profits have been devoted to projects for the
care and recovery of nature, and the business uses only
Ap p
re
futu
lica
organic cotton in the clothes it manufactures. This is
syst
Plan s and
n
the
tion
issio
em
the main reason it opened its own cotton production
s, st proc
ing
he m
of i
factory in California in the 90s and is in line with the
at
ruct esse
dea
Cre
VALUES
re t
company’s mission statement: “Build the best product,
ures s
s
Sha
,
cause no unnecessary harm, use business to inspire and
implement solutions to the environmental crisis”. Managing
people
A special leader for a special business Involve other
‘We see None of this would have been possible without a
founder who was a very special person, different
here a from the general idea of an entrepreneur and very Source: MRJ Consulting, 2010.
type of different from run-of-the-mill businessmen. He
describes himself by saying: “I would never be happy
leadership following the routine rules of the market. I wanted There are a lot of ways to be
‘green’ but only one right way
centered on to get as far away as possible from those faces of
people in corset-like garments that I used to see in The reason for changing the way that organizations
responsible the business advertisements in airline magazines”. are managed is because their purpose has changed:
values as a Chouinard was an ‘outsider’ in the business world:
sustainability is now at the center of what we do.
Resources (especially natural ones) are getting scarcer and
means of his ideas were not aimed at earning a lot of money this situation will get worse (Patagonia has concentrated
building the but at making things that were good, because then
the profits would come of their own accord. He did
on the surfing sector rather than on skiing because
they know that snow is getting scarcer due to global
rest of the not want to flush toxins into Canada’s rivers, cause warming). This is why business companies are becoming
business nervous breakdowns in his workforce or go for crazy
growth all over the world.
more careful, and not least because, otherwise, the cost
of sourcing these materials will become prohibitive.
model and
The question is this: To what extent do companies
of taking As he said once, “everyone tells me that the company
is undervalued, that we could have exponential really contribute to the care of the environment by
coherent growth (which in fact it has, with an annual growth implementing programs that are truly ‘green’? Are
they prepared to see their profits reduced in the
decisions’. of 6%) and then expand and launch our company
on the stock exchange. But that would be the end of short-run in order to obtain long-run sustainability?
everything I have wanted to do, and would destroy Is going green a marketing ploy or is it really on the
everything I believe in”. company agenda, as in the case of Patagonia?
This shows we are in the presence of a real inspirational Because these questions are a very good description
leadership (as there is in other companies with a of a certain business environment, that of green
strong social conscience, such as Starbucks, The politics, and in this we can appreciate and see
Body Shop, Ben & Jerry’s, Honest Tea, Ethos Water the true dimension of how effective, and yet how
or Hallmark), centered on an ethos of responsibility unusual, Chouinard’s model is. Its success is based
underlying the construction of its business model and on the organization’s high level of commitment and
with coherent decision-making. That is one with its dedication to the environment. There are three
activity in its own sphere of action. different types of approach to this subject:
Chouinard’s profile fully coincides with an 1. Green ‘paint’: cooperating in only some
inspirational leader’s characteristics: campaigns and giving a few donations
so that it ‘looks like’ the company is
• He brings vision and inspiration really involved with this cause.
and sketches out the future. 2. Green activities: basically, initiatives that are
• He brings together his own goals in the right direction but which only affect
and those of the company. the business’s ethos in a superficial way.
Cases 2

3. La Patagonia: Patagonia: Built the best product, cause no unnecessary harm, use business
Integrating CSR
into business model to inspire and implement solutions to the enviroment crisis
creation and strategic
management
Financial:
Improve Profiability Grow Revenue Increase Market Share
Customer:
Create Customer Value Enviromental Goodwill
Provide Extreme Fight to Save
Protect our Clients
Gear Community
Internal
Process: Improve Solve their Inspire Reduce Impact
Eficiency problem Innovation & Footprint
Understand
the customer
‘Patagonia Operational
Excellence
Customer
Intimacy
Product
Leadership
Environmet
Stewardship
has not
Learning
used its & Growth: Create Lifetime
Employees
Maintain Patagonia
Culture
Enable Technology
values as
a means of Source: Patagonia 2011.
making its
3. Green strategy: developing a green business into new polyester fiber is lower than making it
products model throughout the company, integrating straight from previously unused raw materials, with
more it into all the company’s activities, and savings of 76% in economic costs and of 72% in Co2
taking part in related projects. emissions. Patagonia has succeeded in reducing the
widely impact on the atmosphere by producing polyester
known but Obviously, Patagonia’s place is in the third wool from recycled soft-drink bottle ends. As of
category, and it goes even beyond this, because in now, it has salvaged 86 million units, which would
rather these its commitment to the environment it involves have otherwise ended up in waste disposal.
are at the both customers and staff in the management in its
commitment to the environment: for Patagonia both There is an initial cost and barrier for Patagonia
heart of these groups are an integral part of the environment, in environmental innovation, technology, but
its strategy and form part of its surroundings. From the company’s which has an important advantage not only for the
view, it cannot create high quality products without a company but also for the rest of society, fulfilling
and are not high quality working, social and natural environment. its promise to provide solutions from business for
just a result As Yvon Chouinard says: “If you miss out on one of environmental issues and climate crisis.
the pieces in this puzzle, it’s highly likely that you’ll
of it’. lose the lot”. Conclusions: total integration
of CSR and strategy
Responsible values as a Patagonia’s values are clearly aligned with what its
source of innovation customers expect of it: love of nature and adventure.
The way in which Patagonia approaches the production The company has not used these values as a means
of high quality products means that it has to make of making its product brand better known, but
clothes that do not involve processes that damage the instead it has sought to invent new ways of showing
environment. This, of course, makes its work harder. that these values are at the heart of its strategy and
The continual process of obtaining quality products, are not just a result of it.
and how they use and deal with raw materials implies
development and innovation in new technologies - as Unlike its closest rivals, Patagonia has succeeded in
in the case of the organic cotton mentioned above - becoming more than a mere manufacturer and seller of
and this, in turn, increases operational costs. clothes for sports and outdoor activities. The company
feels part of an economic system which must exercise
The company is carrying out a project called care and responsibility towards the environment and
‘Common Threats’ to allow the cover of its surrounding nature. The link between its mission, its
clothing products to be recycled. The impact on vision and its CSR values to its business activity and
the environment of converting worn coverings strategy is really exceptional.
Cases 3

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