Patagonia, Inc.

Patagonia, Inc.

Company type	Private benefit corporation
Industry	Apparel
Founded	May 9, 1973; 50 years ago (1973-05-09)
Founder	Yvon Chouinard
Headquarters	Ventura, California, U.S.
Key people	Ryan Gellert, CEO^[1]
Products	Outdoor clothing
Revenue	$1.5 billion (2022 estimate)
Number of employees	1,000 (2017)
Website	patagonia.com

Patagonia, Inc. is an American retailer of outdoor recreation clothing. It was founded by Yvon Chouinard in 1973 and is based in Ventura, California.^[2] Patagonia operates stores in more than 10 countries globally,^[3]^[4] as well as factories in 16 countries.^[5]

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History

Yvon Chouinard, an accomplished rock climber,^[6] began selling hand-forged mountain climbing gear in 1957 through his company Chouinard Equipment.^[7] He worked alone selling his gear until 1965, when he partnered with Tom Frost in order to improve his products and address the growing supply and demand issue he faced.^[8]

In 1970, Chouinard obtained rugby shirts from Scotland that he wore while climbing because the collar kept the climbing sling from hurting his neck.^[8]^[9]

Great Pacific Iron Works,^[10] Patagonia's first store, opened in 1973 in the former Hobson meat-packing plant at Santa Clara St. in Ventura, near Chouinard's blacksmith shop.^[11] In 1981, Patagonia and Chouinard Equipment were incorporated within Great Pacific Iron Works.^[12] In 1984, Chouinard changed the name of Great Pacific Iron Works to Lost Arrow Corporation.^[13]

Patagonia has expanded its product line to include apparel targeted towards other sports, such as surfing.^[14] In addition to clothing, they offer other related products, including camping food.^[15] Its profits grew to $750m by 2015.^[16] By the late 2010s, branded Patagonia fleece vests became known for their use by financial executives, and in 2019, Patagonia announced that its distribution of branded products would focus on firms committed to environmental, social, and corporate governance initiatives.^[17]

In September 2020, Patagonia announced that Rose Marcario would step down as its chief executive officer and be succeeded by Ryan Gellert.^[1]

In September 2022, Chouinard transferred ownership of Patagonia (all of its voting stock, about 2% of total stock) to the Patagonia Purpose Trust, a trust overseen by the Chouinard family and advisors. Chouinard's stated goal was for profits to be used to address climate change and protect land.^[18]^[19]^[20] All nonvoting stock was transferred to Holdfast Collective, a 501(c)(4) organization, which is a path different from two other alternatives available to the Chouinard family, that is, selling the company to donate the proceeds and taking the company public (i.e., selling shares in a stock exchange).^[21] The move allows Chouinard to avoid taxation on the gift of the nonvoting shares since it was to a nonprofit holding company, while effectively maintaining control of the company via the affiliated trust's ownership of the voting stock. A gift tax of $17 million was assessed on the transfer of the voting stock.^[22]

Manufacturing

In 2007 and 2011, internal audits revealed that factories in Patagonia's production supply chain in Taiwan were involved in human trafficking, leading to company efforts to address the labor abuses.^[23]

In December 2021, the European Center for Constitutional and Human Rights filed a criminal complaint in a Dutch court against Patagonia and other brands, alleging that they benefited from the use of forced Uyghur labor in Xinjiang, China.^[24]

In June 2016, Patagonia released a set of principles for the treatment of animals used to manufacture wool garments, as well as land-use practices and sustainability.^[25]^[26]

In April 2017, Patagonia announced that merchandise in good condition can be returned for new merchandise credits. The used merchandise is cleaned, repaired and sold on its "Worn Wear" website.^[27] In 2019, it launched a program named ReCrafted that creates and sells clothing made from scraps of fabric coming from used Patagonia gear.^[28]

As of 2019, the firm aims to become carbon neutral by 2025.^[29] Patagonia provides lifetime product guarantees and offers repairs.^[16] It also uses a circular economy strategy in their product design^[how?].^[30] In 2021, Patagonia announced that it would no longer produce its clothing with added corporate logos to improve garment life-spans.^[31]

On 10 June 2023, a Dutch investigative journalism platform, Follow the Money, published an article about Patagonia's use of the same factories that fast-fashion brands use such as Decathlon and Primark.^[32] Workers in these factories work in far worse conditions than the standard that Patagonia publicly set. In the MAS Holdings factories in Sri Lanka, it is not uncommon for them to work shifts of 14 hours. Patagonia uses a method developed by the Anker Research Institute to determine the height of a livable wage. In these factories in Sri Lanka, the workers get paid less than half of this wage. According to Patagonia, they have no control over the wages and conditions in the factories, as they do not own them.^[33]

Activism

Patagonia commits 1% of its total sales to environmental groups, since 1985 through One Percent for the Planet, an organization of which Yvon Chouinard was a founding member.^[34] It has also used advertising campaigns to draw attention to the environmental impact of fashion, offers repairs on old products, and offers recycling or swapping.^[16] In 2015, the firm launched Common Threads Partnership, an online auction-style platform that facilitated direct sales of used Patagonia clothing.^[35]^[36] In 2016, Patagonia pledged to contribute 100% of sales from Black Friday to environmental organizations, totaling $10 million.^[37] In June 2018, the company announced that it would donate the $10 million it received from President Trump's 2017 tax cuts to "groups committed to protecting air, land and water and finding solutions to the climate crisis."^[34]

In February 2017, Patagonia led a boycott of the Outdoor Retailer trade show, which traditionally took place in Salt Lake City, Utah, because of the Utah state legislature's introduction of legislation that would transfer federal lands to the state. Patagonia also opposed Utah Governor Gary Herbert's request that the Trump administration revoke the recently designated Bears Ears National Monument in southern Utah. After several companies joined the Patagonia-led boycott, event organizer Emerald Expositions said it would not accept a proposal from Utah to continue hosting the Outdoor Retailer trade show and would instead move the event to another state.^[38]

On December 6, 2017, Patagonia sued the United States Government and President Donald Trump for his proclamations of reducing the protected land of Bears Ears National Monument by 85% and the Grand Staircase–Escalante National Monument by almost 50%.^[39] Patagonia sued over the interpretation of the Property Clause of the U.S. Constitution in which the country vests Congress with the power to manage federal lands. The company's then-CEO, Rose Marcario, contends that when Congress passed the Antiquities Act of 1906, it did not give any president the power to reverse a prior president's monument designations.^[40]^[41]

In July 2020, Patagonia suspended its advertising on Facebook and Facebook's photo-sharing app, Instagram, as part of the "Stop Hate for Profit" campaign, which some U.S. civil rights organizations launched because they believed the social networking company was doing too little to curb hate speech on its sites.^[42]

In the lead-up to the 2020 United States elections, Patagonia began including labels in clothing with the message "Vote the Assholes Out", targeting politicians who endorse climate change denial.^[43]^[44] On April 5, 2021, Patagonia pledged $1 million to the activist groups Black Voters Matter and the New Georgia Project, regarding voter registration laws in Georgia.^[45]