Corporate Social Responsibility

Dedicated to promoting Fair Labor and Environmental protection where Patagonia products are made.

At its core, Patagonia’s effort toward corporate social responsibility is about this company’s relationship with the people who work in the factories that make our clothing and gear, and what we have done, and are trying to do, to ensure that Patagonia products are produced under safe, fair, legal and humane working conditions.

What Is Corporate Social Responsibility?
Corporate Social Responsibility (CSR) is a broad-based movement in business that encourages companies to take responsibility for the impact their activities have on customers, employees, communities and the environment. It’s an obligation to include international labor and human rights standards. CSR means different things to different people. At Patagonia, it’s guided by our Mission Statement, our Core Values, our Operational Values and our Code of Conduct. To us, CSR means taking steps to improve the quality of life for our employees and their families as well as for the community and society at large.

History of CSR and Patagonia

The Apparel Industry
Most people these days are familiar with the term “sweatshop.” Its use became widespread when a human rights group reported in 1996 that some of the clothing carrying the Kathie Lee label was being made in sweatshops and sold at Wal-Mart. The Kathie Lee brand, we came to find out, was not alone in its use of sweatshop labor. We’ve since heard tales of similar conditions in garment factories from Asia to the Americas – factories with interminable workweeks, sub-minimum wages, no overtime pay, unsafe work conditions and even child labor. We’ve seen the names of some of the biggest apparel and footwear brands in the world associated with some of the most disheartening examples of these kinds of abuses.

This is the marketplace in which Patagonia also develops its products.

In truth, not all factories are terrible. Some are actually quite good. These are well managed and produce clothing under safe, healthy and humane working conditions. But as evidenced by the steady stream of negative press and other anecdotal evidence, there is definitely widespread abuse. People who work in the global garment industry are often poor, young, uneducated and disenfranchised. Labor laws in their countries can be lax. Workers are sometimes taken advantage of, discriminated against, denied the right to unionize, harassed, threatened and cheated. Working conditions can be neither safe nor healthy.

Mistreatment of garment workers is not just the result of global competition for low-price products, factory greed or malfeasance. It can also be the result of inefficiency, not only at the factory but also on the part of the company buying the goods. Last-minute changes to orders, unreasonable price demands and hurry-up delivery times can exacerbate already difficult conditions on the factory floor.

Patagonia’s Place in the Apparel Industry
Patagonia is a $316 million a year, privately owned company based in Ventura, California. We design, develop and market clothing and gear for a wide range of outdoor sports, travel and everyday wear, and are best known for our innovative designs, quality products and strong environmental conscience. Our Mission Statement goes like this: “Build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis.” To that end, we use environmentally sensitive materials (organic cotton, recycled and recyclable polyester, and hemp among them) and both sponsor and participate in a host of environmental initiatives that range from promoting wildlife corridors to combating genetic engineering. To date, we have given some $34 million in grants to grassroots environmental organizations.

Our own employees – the thousand or so people who work directly for us in our offices, stores and distribution center – are paid fairly and enjoy good benefits. Many of them share our values, care about quality and are active in environmental and community causes. Employee turnover is in the single digits, and on average, we receive a couple hundred résumés each month. We also receive considerable press both for our innovative products and progressive work environment, which includes generous health care, subsidized day care, flexible work schedules and paid time off for environmental internships.

Like most clothing companies, we do not make our own products, nor do we own any of the more than 80 factories that do. We design, test, market and sell Patagonia gear. These are our areas of strength. We pay other companies to produce the fabrics and do the actual cutting and sewing. They have the technical expertise and equipment.

We try to work with factories that share our values of integrity and environmentalism. In the past, we found we didn’t have to make a lot of extra effort to achieve this. Our demand for high quality and our close relationships with the small number of factories we did business with pretty much assured it. It really is true that you can’t make good products in a bad factory, and we did business with some of the world’s best. They were, for the most part, efficient and well run. The people who worked in them tended to have a lot of experience. Despite high employee turnover elsewhere in the garment industry, these factories were able to retain employees because they paid them fairly and treated them humanely.

Patagonia’s Road to Responsibility
We were pretty confident of these facts when our business was still small. However, eventually we recognized we needed to test these assumptions and begin to formalize our contractor review process. In 1990 we started asking our contract managers and quality assurance staff to begin reviewing the factories they visited, both for product quality and working conditions. We made the decision not to work with any factory we couldn’t visit.

The following year we unveiled something we called a “contractor relationship assessment.” We did so at our first supplier conference, to which we invited representatives from every factory we worked with. The assessment was a scorecard we kept with each factory. We used it to rate a factory’s performance in different areas and asked factory managers to do the same. If we gave a factory a low mark in one area and the factory scored itself high, it became the subject of conversation and focus. Our approach was informal, but our demands for high quality largely kept us on the responsible side of social compliance.

Third-Party Audits
We didn’t begin contracting with third-party auditors until around 1994, when we started employing people from outside the company to visit and assess new factories with which we were interested in working. Though audits are but a snapshot in time, they do give an idea of a factory’s work conditions and management systems. They’re also a good way of initiating discussions about change. Our social auditing was informal until two former Patagonia employees were invited to take part in President Clinton’s “No Sweat Initiative” in 1996.

A Step Backward
After these several steps forward, we took a step back. It happened when we began sourcing products in new factories that could produce them at a lower cost. The number of factories we came to work with ballooned, and some of these subcontracted work to other factories we knew nothing about. We lost track of who we were doing business with and what working conditions were like in many of our factories.

In 2002 we hired a manager of social responsibility to monitor social compliance throughout our supply chain and to collaborate with the FLA to improve working conditions in every link. That role has since expanded to include educating Patagonia employees about factory workplace issues and helping them understand how their own actions can unwittingly cause factory workers to suffer longer workweeks, hurry-up pressure and greater stress.

Internal Development
We now train Patagonia staff in social responsibility issues. In 2007 we asked Verité, an international nonprofit social auditing, training and capacity-building organization, to train the 75 employees who visit our suppliers’ factories to fully understand Patagonia’s Workplace Code of Conduct. We do a refresher session annually for both new and seasoned employees.

In an effort to understand the social and environmental impacts of our supply chain, Patagonia has launched the Footprint Chronicles, in which we trace the development – and environmental impact – of products from design through fiber creation to construction to shipment to our Reno warehouse.

The Road Ahead
Third-party supplier audits for compliance with local laws is an important – but first – step. Next, we need to work more closely with our factories and more familiar with their supply chain. To that end we’ve reduced the number of factories we deal with from 100 to 65. When considering new factories we take a fourfold approach – one that includes quality assurance, business requirements, social responsibility and environmental footprint. We are also putting together an information package to communicate our social responsibility program to all of our factories.