Responsible Economy: U-M students gain global perspective from Patagonia COO

By December 11, 2015Blog

Written by: Brian Rassel, Joanna Herrmann and Loretta So
Coordinated by: Kelsea Ballantyne

This blog was written in response to Doug Freeman’s visit at the University of Michigan’s Ross School of Business on December 8, 2015.  The university-wide event was sponsored by the President’s Advisory Committee on Labor Standards and Human Rights, the University of Michigan, and the Net Impact at Ross Club.  His visit was hosted by Professor Ravi Anupindi, Professor of Technology & Operations.

Patagonia-PresentationThis past Tuesday, the Ross community had the privilege of hosting Doug Freeman, Chief Operating Officer (COO) of the outdoor apparel company Patagonia. Doug has 25+ years of experience in the apparel industry, formerly working for Polo Ralph Lauren, The North Face, and Obermeyer. Doug presented at a university-wide presentation and held smaller-group sessions with students from the Erb Institute for Global Sustainable Enterprise, Net Impact, Tauber Institute’s Topics in Global Operations Class, and the Master of Supply Chain Management program.

The popularity of Patagonia’s products and corporate values continues to grow, resulting in topline sales exceeding $700M in FY15.  That said, Doug made sure to convey that despite their best efforts, Patagonia is fully aware that every time an order is inputted into its supply chain, it  creates additional social and environmental footprints. To address this and other supply chain issues, Patagonia has expanded it’s Environmental and Social Responsibility team from two to fifteen employees in 5 years, as they continually seek ways to make their supply chain more responsible through additional  transparency, oversight, and innovation.

Doug described Patagonia’s emphasis on creating an “examined existence,” whereby the company is fully aware of the impacts involved in their business operations and is continually trying to figure out how to produce products with the smallest amount of negative externalities. And yet, not only do expected impacts persist, but many unexpected impacts continue to emerge on various fronts including concerns of fair labor practices in Taiwan and inhumane methods of wool cultivation in Argentina. Despite being, perhaps, the apparel industry’s most progressive and dedicated company for environmental and social responsibility, Patagonia still faces many challenges. Doug admitted that Patagonia “hopes and expects for the best, but plans for the worst.”

Patagonia’s method of mitigating these risks is through its relationship with its suppliers. He stressed that Patagonia doesn’t easily abandon suppliers nor do they often welcome in new ones – they seek long-term, value-added relationships with vendors.  The “exclusive club” that is Patagonia’s supply chain is completely transparent about their business operations and meets Patagonia’s requirement for fair margins, which enables factories to provide fair wages and healthy working conditions. When considering the trade-offs inherent in product development, Patagonia assembles a cross-functional team to provide a score of 1 through 10; any product scoring below an 8 is dropped from the assortment.

Their participation in the Sustainable Apparel Coalition and and use of the Higg Index, self-assessment tool meant to create industry transparency through a holistic overview of sustainability performance, has also been transformative for their company and the industry at large.

Our interactions with Doug truly emphasized that this is not a game of achieving perfection, but rather the pursuit of, and journey towards, positive impact, and Patagonia is pursuing that ideal doggedly, fully aware of the broader challenges facing their company and the globe. Patagonia’s commitment to responsible consumption – seemingly at odds with any consumer goods company – speaks to their company-wide belief that a paradigm shift is critical if we have any chance of saving our planet. One of management’s key challenges, Doug remarked, was helping employees get over their fear that sharing “bad” information might hurt the company.  Instead, Doug encourages the sharing of all information – both good and bad – as it highlights the journey that Patagonia is on.

For a company that started with an avid mountain climber seeking a new type of piton, took its first environmental stance by dropping the rock-damaging bestseller in favor of aluminum chocks, sold 100% organic cotton products by 1996, and became the first B Corporation in California, Patagonia is certainly paving the way for a Responsible Economy.

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