May 25, 2024
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Editorial: Patagonia sets high mark with designation


One of the very cool things about business on the Central Coast is that cutting-edge companies tend to make it their home. One of them is Patagonia, a retailer that makes wonderful outdoor gear and apparel and that successfully has resisted the pricing race to the bottom that has been the hallmark of the Great Recession.

What has become embedded in the corporate DNA at Patagonia is the ability to stretch the limits of corporate thinking about green practices and social responsibility. The Ventura-based company’s environmental stewardship, especially when it comes to  packaging and supply chain practice, is the envy of the industry — even Wal-Mart has taken lessons from how Patagonia does business.

On Jan. 3, Patagonia took another step forward when founder and owner Yvon Chouinard announced that his company had become among the first in California to register with the Secretary of State under a new structure known as the “benefit corporation.” This is a legal designation for companies that:

• Establish a corporate purpose to create a positive impact on society and the environment.

• Consider the interests of employees, communities and the environment as part of their fiduciary responsibility.

• Include a commitment to publicly report on environmental and social performance annually using a credible third-party standard.

“We are trying to build a company that could last 100 years,” Chouinard said in a statement announcing the filing. He added that having benefit corporation status will help Patagonia and others sustain their responsible business practices through “succession, capital raises, and even changes in ownership by institutionalizing the values, culture, processes, and high standards put in place by founding entrepreneurs.”

We know that registering as a benefit corporation is not something for every business in California or the Tri-Counties. And it could prove to be a fad that doesn’t take root or a trend that’s either diluted so much that it loses its value or one that is surpassed by other emerging cultural values.

But in  the world as it exists in 2012, benefit corporate status does provide a path for exemplary companies and non-profits to publicly declare their socially responsible mission in a transparent way.

That’s a big step forward, and Patagonia is to be applauded for leading the way toward institutionalizing the practice of corporate social responsibility. It only takes a few pioneers like Patagonia to reshape global values and lead the way in sound environmental practices.