Many people will have encountered one or more of these bold statements by outdoor brand Patagonia. Some might have questioned the integrity of these proclamations because of how daring and unconventional they appear. Yet, these are statements that Patagonia attempts to be guided by.

In this case study, we describe how Patagonia was founded and developed as a unique approach to business. We will explain how the company puts its purpose into action through its products, relationships with supply chain partners, services, campaigns, and behind-the-scenes collaborations. We then describe how Patagonia deeply embedded its mission statement to drive strategic decisions in the long run.  

01 | Brief Summary and Key Facts

Patagonia is a globally operating outdoor brand founded in 1973 by Yvon Chouinard. 

• Location: HQ in Ventura, California, USA. Operating globally.
• Founded: 1973 (by Yvon Chouinard)
• Size: Revenues of about ~$1.5billion
• Sector: Outdoor apparel and equipment
• Legal form: In 2022, the founder and sole owner transferred all ownership to a unique structure consisting of a non-profit (the Holdfast Collective) holding 98% of shares without voting rights, and a Trust (the Patagonia Purpose Trust) with 2% of shares that holds 100% of the voting stock.
• Website: www.patagonia.com
• Main products/services: Outdoor apparel and accessories

Highlights of their unique approach

Patagonia offers its customers free repairs for life and has a take-back product aimed at keeping products alive as long as possible. Rather than running advertisement campaigns for products, the company runs campaigns to promote environmental and social causes. 

Highlights of their unique design

A unique mission statement “We’re in business to save our home planet” and an ownership structure that ensures that this mission statement drives decisions.

02 | Founding Story

While Patagonia was  founded in 1973 Yvon Chouinard’s story as an entrepreneur started some years earlier. In 1957, in California, the 19-year-old began by teaching himself to blacksmith so he could forge and sell pitons for rock climbing. As an avid climber and surfer, he made and sold these from the back of his car, allowing him to pursue his outdoor passions. Along with a partner, he soon went on to develop other climbing equipment. Yet, as “Chouinard Equipment” became known in the climbing world, Yvon also came to see that the pitons they were selling were damaging the rocks into which they were hammered, leaving visible damage as they were pulled out of cracks. They decided to scale down their piton business and develop alternative tools. 

A few years on, during a trip to Scotland, Yvon picked up a rugby sweater to wear while climbing in winter. Back in California, people started asking whether they could buy the same. He began to import and sell the rugby sweaters, and added more apparel and accessories, such as beanies and gloves, to the business. He realised he could help keep the company financially healthy through the higher margins of clothing. Soon, he opened a first store, increasingly focussing on identifying materials and developing clothing for outdoor activities while moving away from climbing equipment. In 1973, Patagonia was officially founded.

Since then, the company has expanded from selling outdoor clothing to selling bags, gear, books, and food. Throughout the years, Yvon continued researching and developing new products while aligning the business with his passion for the outdoors and his love for nature. As the company became financially healthy, he also started donating a percentage of profits to environmental causes and became increasingly vocal about the need to protect our natural world. 

In 2018, Yvon decided that more was needed and that the company should address environmental issues with even more urgency. He announced a new company mission: “We’re in business to save our home planet.” This mission now shapes every aspect of Patagonia’s business, from products, services, and campaigns, to its relationships with various stakeholders. 

02 | Industry Context

The apparel industry is one of the largest sectors, significantly impacting millions of workers and their communities worldwide. The global supply chains are associated with numerous labour issues, such as poor working conditions and meagre wages for garment workers, particularly in low-income countries. The production of fibres and clothing affects the environment (water, air, land, biodiversity)  through the use of water and pesticides in growing cotton, the use of vast amounts of fossil resources to make textiles, the toxic dyes and chemicals used for finishing, and more. It also generates substantial waste, with millions of tons of clothing discarded each year, ending in landfills around the world or being burnt. 

03 | Regenerative & Distributive Strategies and Actions 

Patagonia aims to develop functional and high-quality products, produced in the most environmentally friendly way the company can find. The items are sold in outdoor stores and directly to consumers through their own stores and online channels. The products have a premium price tag, which allows the company to invest into product quality and durability while delivering healthy margins. Throughout the years, the focus on performance has enabled the company to build a solid consumer base willing and able to prioritise product longevity and environmental concerns over low pricing. This model allows Patagonia to pursue a range of  strategies and actions, outlined below. 

Products

Product design is key to achieving Patagonia’s environmental goals. This shapes the work of the sourcing team, which focuses on finding and developing materials and finishing types to meet these needs. Where it is deemed viable, the company is moving away from oil and chemicals, instead opting for natural fibres grown through organic or regenerative agriculture practices. For those products where fossil fibres still provide unique advantages, such as waterproofing, Patagonia is focused on growing the use of recycled materials. 

The design and sourcing teams also work with partners to develop new materials that can reduce the environmental footprint. Over the past decade, for example, Patagonia partnered with Gore-tex and funded research to develop alternatives to harmful per or polyfluorinated chemicals (PFC and PFAS). These “forever chemicals” are used in coatings to make clothing water-repellent, yet have been found to accumulate in air, water, food, soil, and our bodies. Today, Patagonia has managed to make about 96% of the materials with water-repellent properties without using PFCs and PFAS. The objective is to bring this up to 100% by 2025. Today, competitor brands are also adopting this technology for their products. 

To achieve greater environmental impact outside of clothing, Yvon Chouinard also established  a new food venture in 2012, Patagonia Provisions. It sells healthy, organic foods that “help restore Earth instead of destroying it.”

Services: repair, resell, remanufacture

“Don’t buy this jacket,” read the Patagonia advertisement in the New York Times. The ad wasn’t an April Fool’s stunt but a PR campaign launched on Black Friday in 2011. It encouraged people to consider whether they needed to buy more clothes. Since then, Patagonia has been  encouraging people to keep their products as long as possible.

Most famously, Patagonia offers its customers free repair services for life. If a clothing or equipment item is broken, the customer can send the product in or drop it off at any shop that sells Patagonia. The item will be repaired free of charge or at a low cost. Additionally, Patagonia has repair trucks that it dispatches to different locations and events. The expert seamsters will repair outdoor products for free – whether they are Patagonia products or not. 

In the US, Patagonia has also started a programme for those who have products they don’t use anymore but are still in good shape. Through the Worn Wear platform, customers can register their clothing items, send them in, and receive a credit to buy other products. Patagonia then resells the products via the Worn Wear platform. If products are too damaged to be sold again, Patagonia has a recrafting programme whereby seamsters make a new product by combining reclaimed parts of different items.  

Rather than a benevolent activity, these services are part of the business model built around sustainability and long-term customer relationships rather than  short-term profits. Customers expect this from the brand and become more loyal to the brand because of these services. They also understand why the products have a higher premium price and are therefore willing to pay these premiums. At the same time, these activities and word-of-mouth communication improve the brand’s reputation, with new customers turning to Patagonia because of these services. 

To mitigate risks of unsustainably high costs, Patagonia has invested in efficient repair processes and infrastructure, ensuring that refurbished products can be resold. Education is also a part of the strategy. Customers can find guides, workshops, and other online resources to learn how to best care for products. This also helps to reduce the number of repair requests. 

Marketing = campaigns

Instead of a traditional marketing strategy with advertisements around products or brands, Patagonia runs campaigns about topics the company wants to call attention to. In 2024, the primary campaign is about ocean protection, while in 2025, the focus will be primarily on mountains. In the past years, Patagonia has run campaigns about topics such as salmon farming, regenerative agriculture, community energy, air quality, environmental justice, and protecting wild nature. 

For these campaigns, Patagonia produces and distributes documentaries, supports grassroots organisations, and funds people to lobby for these causes at governmental level. Patagonia country and regional representatives receive a budget to sponsor and participate in events around those topics. The Worn Wear repair trucks are regularly brought in to ski resorts, beaches, or festivals to repair clothes and further spread campaigns. 

Sales managers are expected to talk to distributors about product benefits, like in any other company, but they also must talk about the campaigns they run so that shop employees can relay the messages to customers. This is one of the reasons why Patagonia products cannot be found at big box retailers where there is little contact between sales staff and customers. 

The campaigns, events, and approach to sales again have dual objectives. They are aimed at promoting knowledge about environmental and social causes. At the same time, these campaigns reach the audience of outdoors-loving people who spend time doing activities in nature, who tend to care about these causes, and who, therefore, are potential customers. Patagonia is meeting its customers where they are. 

Action works and 1% for the Planet

Since 1985, Patagonia has pledged 1% of sales to preserve and restore the natural environment. This ‘Earth tax,’ as they describe it, is used to support grassroots organisations taking action on “the most pressing issues facing the world today.” More specifically, it is used to support organisations working to protect land, water, climate, communities, or biodiversity. 

Through the Patagonia Action Works website, grassroots organisations are invited to promote their work, connect with volunteers, and receive donations from individuals. At the same time, they receive funding to support their work through the 1% for the Planet fund. Since 1985, Patagonia has donated more than $140 Million in cash and in-kind donations to grassroots environmental organisations worldwide. In 2002, Yvon Chouinard thought other companies could follow suit and set up a nonprofit corporation to encourage other companies to also donate 1% of their sales to environmental causes.  

A continuous journey of improvement

Patagonia acknowledges the limitations of its business model. The company recognises that its products, production processes, and logistics streams still have a negative environmental footprint. Although they are transparent about where products are made and aim to pay a living wage to all the workers in the supply chains, this has not yet been achieved. Due to regulatory constraints in various countries and the fact that the factories work with many customers, Patagonia doesn’t always have the leverage to influence all pay decisions. The company is, therefore, on a continuous journey of learning and improvement.  

05 | How Deep Design Enables Strategies and Actions

When Yvon Chouinard founded Patagonia in 1973, he already had a passion for the outdoors and a love for nature. His past experiences, though, had also taught him the importance of having a financially sustainable business. To ensure healthy returns, Yvon chose to charge premium prices and gain additional margins through direct-to-consumer sales channels. In contrast to many retailers and brands, however, Yvon didn’t seek to extract maximum dividends from the business. Instead, he decided to take a long-term approach, reinvesting profits back into product development, improving supplier partnerships, offering services such as repair, building a buffer for potential setbacks, and supporting environmental causes. 

Because he was the sole owner, he could drive the company as he pleased. This meant he could continuously innovate and decide in which direction to take the company. Employees were aligned with his vision of protecting the environment, supporting grassroots organisations, and achieving certifications such as a Fair Trade USA, Forest Stewardship Council, and BCorp. He co-founded initiatives such as the Fair Labor Association and Regenerative Organic Certified to pursue living wage and regenerative agriculture goals. The independent ownership model has allowed him to drive many of these actions.

Purpose 

Still, even employees were stunned when, at the end of 2018, Yvon convened them all to share the company’s new purpose statement: “We’re in business to save our home planet.” It would not be enough for the company to focus only on minimising impact anymore; they had to actively seek to heal the Planet. After hearing this news, the employees were all sent home. This statement wasn’t to be taken lightly; they were expected to absorb it and consider what it would mean for them and their jobs.

The mission statement meant that they wouldn’t run their business as most other companies are run. It meant marketing employees would get budgets to run environmental campaigns instead of advertising campaigns. It meant that sales representatives had to learn about ecological causes and be able to speak to their dealers about products and causes. It meant that designers must know about different materials and their environmental footprint. It meant they would have to put return streams in place and develop new platforms. 

This mission statement helped employees align with company goals, encouraging them to take initiative in finding ways to help protect the environment.

Finance, ownership, and governance

In 2022, Yvon Chouinard took another step that surprised people worldwide. “Earth is now our only shareholder,” he wrote in an open letter. At almost 84 years old, Yvon, with the agreement of his children, decided to fully relinquish ownership of the company to safeguard its purpose even after his passing. 

Inspired by the concept of steward ownership, the family built a unique ownership structure. The Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature, holds 98% company ownership. This organisation funds projects and initiatives aimed at protecting or restoring the environment. The organisation’s funding comes entirely from Patagonia. At the end of every year, all excess profits, or what is left after having reinvested into the company, contributed to the 1% for the Planet fund, and paid taxes, are distributed as dividends to the Collective to be used for its work. 

The Holdfast Collective has no voting rights. Despite being the recipient of the company’s profits, it cannot pressure the company to generate higher profits. Instead, the Patagonia Purpose Trust, which owns just 2% of the company, owns 100% of the company’s voting stock. The trust was created solely to protect the company’s purpose: “We’re in business to save our home planet.” The Board of Directors of the trust – currently consisting of members of the Chouinard family, Patagonia CEO, and other people linked to the company – has the right to approve critical company decisions such as who is on the Board of Directors and what changes can be made to the company’s legal charter. 

Through this arrangement, Yvon and his family have been able to enshrine the company’s purpose more strongly into its ownership design and make it more likely that Patagonia will continue pursuing its environmental protection goals in the future. At the same time, the ownership structure provides a way to put the company's profits to work for nature through the projects of the Holdfast Collective. It also sends a clear message to everyone working in Patagonia to truly prioritise ecological goals, as whatever profits are left would be directed for that purpose anyway.

06 | Reflections and Lessons for other Businesses

Patagonia’s innovative business design, which is focused on long-term thinking and environmental protection, differs from most companies in the sector, which are driven primarily by short-term profit. The long-term vision, accompanied by a premium pricing model, allows the company to invest in research, develop innovative take-back and repair programs, and collaborate with suppliers along the supply chain. These investments pay off in the long term, allowing Patagonia to stand out to customers, build committed partnerships with suppliers, and raise norms on environmental practices for the whole category.

For new employees coming from other companies, it can sometimes feel overwhelming to join Patagonia, to keep track of all the campaigns and organisations the company supports, and to reassess their role. However, the company's mission statement provides both a clear direction of travel and a level of freedom. While products and campaigns are decided, crafted, and launched from headquarters, employees can pick up on and support local grassroots initiatives aimed at environmental protection. Employees who choose to work at Patagonia typically feel invested in both the company and the causes.

The mission statement also helps drive decisions and set KPIs (key performance indicators) for the business. Patagonia not only tracks and sets targets for sales but also carbon footprint, waste, product longevity, fair trade certification, and customer engagement in environmental campaigns, workshops, and community events. By taking a long-term approach, the company can decide to invest in certain projects that have low or no returns but that will help both the company and the environment in the long term. 

This case study was researched and written by Bryony Jansen van Tuyll in collaboration with DEAL.