Patagonia believes in an Earth Tax: 1% of its sales, each year, go to environmental charities. Is that enough, though?
This week, the Ventura-based outdoor gear company that’s long been known for it’s do-good activities released a booklet on all its environmental and social initiatives. During the 2015 fiscal year, the company gave to 741 grassroots environmental groups in 18 countries around the world. That added up to $6.2 million in small grants.
Patagonia's 2015 Booklet of Environmental and Social Initiatives was released this week. (Photo... [+]
The company wants to do more. That’s why CEO Rose Marcario created a new position at Patagonia: Vice President of Environmental Activism. Lisa Pike Sheehy, who has been at Patagonia for over a decade and managing the company’s environmental philanthropy, took the reins. The impact of the new position? According to Marcario, the restructuring is a sign that Patagonia will put activism into every part of the company, not just in philanthropy. Sheehy will now report to Marcario directly.
For me, “it’s important to look at how this position will help us fulfill our mission statement,” Sheehy says.
That mission statement reads: “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”
Patagonia has been conscious of the environment from the get-go but this move means that the hundreds of small organizations the company supports have a voice at the big table. As does environmental activism.
Referring to a recent meeting with executives at Patagonia, Sheehy says, “It’s critical to have someone in the room that’s connected to the grassroots environmental movement. To be in that room, not only from a business level, but what can we do to help environmental groups at the street level, making a ruckus?”
The organizations that Patagonia funds are noticeably small: about 5 paid employees with an annual budget of $500,000. Finding them requires a global network. Each year, the company throws out an open call for grant applications. If a retail store sits in the vicinity of a selected organization, that Patagonia store will work with the organization -- doing events, fundraisers, handing out pamphlets. Each year, Sheehy says, Patagonia gives out $1 million through its retail stores in America.
Patagonia gave out over $6 million in donations in FY2015. Photo Courtesy of Subject.
Yet, for the rest of the lot, their applications are assessed by ‘grant councils.’ These are Patagonia employees that have been selected by their peers for a two-year term. The company has set up grants councils globally: Europe, Australia, Japan, Canada, and in regions of the US where they don’t have stores.
The grants are small, only about $12,000 or less. But Sheehy says that these small grants help non-profits carry out campaigns, or fulfill a program.
According to the National Committee for Responsive Philanthropy, in 2009, the mega environmental organizations with budgets of $5 million or more took home half of all contributions and grants in the sector. Yet, they only make up 2 percent of environmental non-profits in the country.
Hence Patagonia opts for smaller organizations as opposed to the environmental giants. “Because they’re often underfunded, under-resourced, and up against tremendous challenges,” Sheehy says.
However, keeping track of 700 organizations around the world is challenging. To ensure that they actually fulfill programs, Patagonia asks the organizations to send in a grant report after 9 months.
While $10,000 may seem like a small sum to make impact, Sheehy argues otherwise.
“$10,000 to a local grassroots organization can do a lot. It can create postcards for them to send out. They can create a Change.org petition. They can update their website. They can send grassroots lobbyists to the state capitol to talk about an issue.”
And room for error? Are there circumstances when non-profits don’t follow through or misuse the funds?
“Rarely happens because we’re working at the local level,” Sheehy says.
The majority of the groups we fund are long-term relationships that we are able to track their history and past performance. Its an on-going relationship that goes beyond just a grant, she clarifies.
However, with over 700 organizations funded, the company cannot physically visit each of these organizations to see the work being done. So they rely on their local partners and staff.
Patagonia's grants program is working at the local level not only in the US, but in the many new markets that the company is expanding into, places such as Australia and South Korea. “We’re working hard to bring our values to light in those communities,” she says.
Patagonia advocates against over-consumption (an environment killer) and encourages customers to have their clothing repaired. Yet, at the same time, the company has been seeing growth, especially overseas in new markets like South Korea. Can it continue to fight for sustainability while opening more doors (and theoretically, be selling more stuff)?
“I see it as an opportunity,” Sheehy says, who’ll be traveling to South Korea later this year to determine how the company can support the local environmental moment.
“There are times that the company is tapping into natural resources,” she acknowledges. “And that’s why we have the Earth Tax.” The 1% is a consistent force at the company, dating back to 1985. Irrespective of the revenues, or sales each year, Patagonia throws 1% towards local environmental causes, somewhat as a means to undo its harm on the Earth.
The idea goes back to 1972 and an effort to save the Ventura River, near Patagonia’s headquarters. Friends of the Ventura River, led by Mark Capelli, argued against developers who wanted to build in the area, claiming that the river was already “dead.” Capelli made a presentation illustrating the wildlife that still existed in the river, and ultimately, was able to save the river. It’s those kind of local movements, Sheehy says, that have inspired the company to pump smaller amounts into local movements.
Despite Patagonia’s efforts to do good, one question remains: as the company expands into new territories, can these ‘good’ measures outweigh the harm done in the company’s manufacturing process and its overall global footprint?
