Wednesday, March 1, 2000

Taking Care of the Environment Can Be Good Business Says Michael Crooke, CEO of Sportswear Giant Patagonia

STANFORD GRADUATE SCHOOL OF BUSINESS—Patagonia sportswear was prepared to lose some business to stand behind its environmental ideals.

One of the firm's ongoing environmental audits in the 1990s pointed out that the eye-catching packaging that attracted buyers to some products was wasteful, Michael Crooke, the firm's CEO told a Business School audience March 29. "We took our Capilene underwear out of the packages, put a nice hang tag on it, rolled it up and put rubber bands around it. We were prepared for sales to go down 25 or 30 percent because of this."

Without the package, consumers could feel what they were buying and they liked what they felt. "Sales went up 25 percent," Crooke recalled. "Whatever we've done as a company to follow our environmental beliefs, the bottom line has followed."

Another innovation in the early '90s was devising a new process to create fleece clothing from a fabric made from recycled soda bottles, a petroleum byproduct that otherwise ends up in landfills. Crooke estimated that Patagonia's jackets and sweaters made from recycled containers have had the effect of reusing the equivalent of 600,000 gallons of oil. "It's exciting to get so close to being a truly sustainable company."

He said the firm is currently working with Dow chemical to replace some of its waterproof fabrics, also made from petroleum products, with a fabric derived from corn.

Much of Patagonia's tradition of ecological sensitivity comes from its founder Yvon Chouinard who recruited Crooke a year ago to take over the company so he could retire. In the 1960s, Chouinard became concerned that the pitons used by rock climbers in Yosemite were destroying the very rock they loved. The metal spikes left behind expanded and contracted with weather changes, breaking down the rock itself. So Chouinard, an avid rock climber, set up a forge in the trunk of his car and began making pitons known as Lost Arrows that climbers could remove as the descended the rock faces.

Chouinard also created Patagonia's self-imposed "Earth Tax," that to date has seen the firm donate over $17 million to grass roots activists, said Crooke.

"Dirtbag is an endearing term at Patagonia," he said. "We design for dirtbags—" people who have a passion for what they do—like the surfer who sleeps out on the beech all night to be the first one in the water the next morning. "The grass roots dirtbags are the same, they're the ones who are out there getting things done." Cooke said Patagonia looks for projects that have local people involved and that can reasonably be expected to be completed in a year or two. "We don't want to fund things that just go on forever," he said.

Crooke's speech was part of the student-run View from the Top series that brings executives of major companies to campus.