Patagonia and Social Responsibility in the Supply Chain: A History
The Apparel Industry
The term sweatshop was first used in the nineteenth century to describe sewing factories where the conditions were hot, crowded and airless—and the workers were paid a pittance for 16-hour days. Public awareness of sweatshops is not new. New York’s Triangle Shirtwaist Factory Fire of 1911, which killed 146 workers, mostly young women, over half of them Jewish immigrants, sparked calls for reform. Exactly a century later, the Rana Plaza collapse in Bangladesh killed more than 1,100 workers—and raised new calls for reform.
Yet people still work long, underpaid hours in deplorable conditions in thousands of factories. Workers (predominantly women) in the global garment industry are often poor, young, uneducated and disenfranchised. They are sometimes taken advantage of, discriminated against, denied the right to unionize, harassed, threatened and cheated. Labor laws (and enforcement) can be lax, and working conditions can be unsafe and unhealthy.
This is not to say that sewing is universally difficult work or that all factories are sweatshops. For 200 years, garment sewing has been an entry-level occupation in industrializing countries, often providing local women their first independent income. Many factories produce clothing under safe, healthy and humane working conditions and pay legal, if low, wages, but they are the exception rather than the rule.
Patagonia’s Place in the Industry
Our own employees—the nearly two thousand people who work directly for us in our offices, stores and distribution center—are paid fairly and enjoy good benefits, including generous health care, subsidized child care (in Ventura and Reno), flexible work schedules and paid time off for environmental internships. Many employees share our values, care about quality and are active in environmental and community causes. Turnover is in the single digits, and on average, we receive a couple hundred résumés each month.
Like most clothing companies, we do not make our own products, nor do we own any of the factories that do. We design, test, market and sell Patagonia gear. These are our areas of strength. We pay other companies that have the technical expertise and equipment to produce the fabrics and do the actual cutting and sewing. This arrangement poses special challenges for us because we feel responsible for any work.
Patagonia’s Supply Chain
When considering new factories, or evaluating current ones, we take a fourfold vetting approach—one that considers social and environmental practices equally with quality standards and business requirements like financial stability, adequate capacity and fair pricing.
Our Social/Environmental Responsibility (SER) team can veto a decision to work with a new factory (as can, as always, our Quality team). This practice is rare in the apparel business and keeps us out of factories that don’t share our social and environmental values. We have also trained our Sourcing and Supply Planning teams in responsible purchasing practices to minimize any negative impact on the factory workers and the environment that could result from our business decisions. Our Sourcing and Quality staff work closely with our SER team and hold a joint weekly meeting to make supply chain decisions.
1973 to 1990:
We try to work with factories that share our values of quality and integrity. Our belief is that “you can’t make good products in a bad factory.” We work with clean, well-run factories that have skilled, experienced workers and a low turnover rate.
As we grow, we recognize the need to test these assumptions and begin to formalize our contractor review process. In 1990 we ask our contract managers and Quality team to begin reviewing the factories they visit, in terms of product quality and of working conditions. We make the decision not to work with any factory we can’t visit.
We unveil a “contractor relationship assessment” at our first supplier conference, to which we invite representatives from every factory in our supply chain. The assessment is a scorecard kept with each factory to rate its performance in different areas. We ask factory managers to do the same. If we give a factory a low mark in one area and the factory scores itself higher, the difference becomes the subject of conversation and focus. Our approach is informal, but our demands for high quality largely keep us on the responsible side of social compliance.
We begin contracting with third-party auditors to visit and assess potential new factories. Though audits are but a snapshot in time, they do give an idea of a factory’s working conditions and management systems. They’re also a good way to initiate discussions about change.
A human-rights organization reveals that Walmart sells Kathie Lee Gifford clothing made under license by a Honduran sweatshop employing 13- and 14-year-old girls who work 20-hour days for 31 cents an hour. The work originally had been contracted to a reputable US manufacturer. But to meet strong sales demand, that factory subcontracted the work to another business that in turn subcontracted to the Honduran factory.
After a public outcry, Kathie Lee Gifford, to her credit, joined the anti-sweatshop movement. Both Gifford and Patagonia were invited to take part in President Clinton’s “No Sweat Initiative.” As a result of what we learned, we created a more formal process for our company and became founding members of the Fair Labor Association® (FLA), an independent multi-stakeholder verification and training organization that audits our factories.
After these several steps forward, we take a step back when we begin sourcing products in new factories that can produce them at a lower cost. The number of factories we work with balloons, and some of these subcontract work to other factories we know nothing about. We lose track of whom we do business with and what working conditions are like in many of our factories. For a while we drop out of the FLA.
We hire a manager of Social Responsibility to monitor social compliance throughout our supply chain and begin to work again with the FLA. We educate Patagonia employees about factory workplace issues to help them understand how their actions can unwittingly cause factory workers to suffer longer workweeks, hurry-up pressure and greater stress.
We expand our brand collaboration efforts in auditing, special engagements (with local third-party experts to help solve specific problems within a factory) and information sharing. Three of our cut-and-sew suppliers (with a total of eight factories) are now FLA members (and thus are held to the same high membership standards Patagonia must meet). We work more closely with our factories and become more familiar with their supply chain. To strengthen individual relationships and increase transparency within our supply chain, we reduce the number of primary factories we work with by 50 percent.
We launch The Footprint Chronicles®, which traces the social and environmental impact of our products.
We ask Verité, an international nonprofit social-auditing, training and capacity-building organization, to train the 75 employees who visit our suppliers’ factories to fully understand Patagonia’s Workplace Code of Conduct. We conduct internal refresher sessions annually for both new and seasoned employees.
We elevate the Social Responsibility Manager position to a high-level director of Social and Environmental Responsibility. This integrates social and environmental work at the factory level.
We identify all subcontractors and now audit close to 100 percent of our cut-and-sew factories, including subcontractor locations.
Patagonia helps gather the top leaders in the apparel industry, nongovernmental organizations, academia and the US Environmental Protection Agency for an inaugural meeting to determine the feasibility of working together to create an index of social and environmental performance. As of 2015, there will be more than 100 members of the Sustainable Apparel Coalition, which represents a third of all clothing and footwear sold on the planet. The coalition’s aim: “An apparel industry that produces no unnecessary environmental harm and has a positive impact on the people and communities associated with its activities.”
We begin auditing raw-materials suppliers in December. We implement a new, cutting-edge human-trafficking detection tool. We hold our first internal training on human trafficking in the supply chain to all our product supply-chain staff.
We launch our California Transparency in Supply Chains disclosure late in 2011.
We launch our formalized Responsible Purchasing Practices per the Fair Labor Association requirements of our Sourcing team.
Our audits of raw-materials suppliers reveal that labor brokers charge foreign migrant workers from Asian countries up to $7,000 to get a job in Taiwanese fabric mills that supply Patagonia. We deem this an unacceptable practice that can lead workers into debt bondage and forced labor. We make a commitment to working with our suppliers to eliminate this practice in our supply chain. We set out to hire experienced staff to oversee this work.
In an effort to understand the social and environmental impacts of our supply chain, we launch a revised and even more transparent Footprint Chronicles website.
As a founding member of the FLA, we participate in multi-stakeholder discussions on the living wage. Patagonia leadership sees living wage as a company priority and as a result we begin looking at Fair Trade as a first step to getting money to workers.
Early in the year, we publish our revised Code of Conduct, which is reviewed and approved by the FLA. This document outlines responsible practices for our supply chain, including a living-wage component. Additionally, we implement policies to consider the living-wage rate in our costing formulas. These efforts are part of short-, medium- and long-term strategies to address living wages in our supply chain, beginning with our apparel assembly factories.
Our partnership with Fair Trade USA® is one of our first steps on the journey toward living wages. We don’t own any apparel assembly factories that make our products, so we have limited control over how much workers receive. Through Fair Trade, we can supplement workers’ wages and provide them with tangible benefits that improve their lives. We pay a premium for every Patagonia item that carries the Fair Trade Certified™ label. That extra money goes directly to the workers at the factory, and they decide how to spend it. In each factory, a democratically elected Fair Trade worker committee decides how the funds will be used. We begin working with Fair Trade USA to certify our first factory this year.
In a proactive effort to encourage and strengthen our factories’ ability to manage fire safety, we join and provide seed funding for the FLA’s Fire Safety Initiative. This global program trains workers and factory management to actively promote fire safety and recognize hazards and eliminate them without delay or the need to seek management approval.
Partnering with Verité, dedicated to ensuring people around the world work under safe, fair and legal conditions—we develop robust standards to protect migrant workers and new auditing protocol and tools to monitor their treatment, and we begin communicating our expectations to our supply chain starting in Taiwan.
Within the FLA, we engage in a multi-stakeholder consultation process along with Civil Society Organizations (CSOs), US universities and apparel and footwear brands to formulate the FLA’s Fair Compensation Workplan, the FLA’s vision for how to achieve living wages in apparel and footwear assembly factories. In anticipation of the workplan, we create an internal Fair Wage Taskforce, a cross-departmental team tasked with supporting the FLA and figuring out the company’s pathway to achieving living wages in our supply chain.
Building on the FLA’s Fire Safety Initiative, two of our team members and six of our apparel assembly factories begin an intensive training period to become master trainers, with the goal of cascading training throughout our apparel assembly factories over the next years.
Our first facility officially becomes Fair Trade Certified, and we begin selling Fair Trade Certified™ sewn apparel in the fall. We start small, with only ten women’s sportswear styles sewn by Pratibha Syntex in India, but begin working with several other factories in different countries to expand the program.
We commission Verité to conduct in-depth migrant-worker assessments of our suppliers in Taiwan. As we learn the extent of the problem, we begin working on key strategies over the next several years with the goal to bring system-wide change. This includes engaging with the Taiwanese government’s Ministry of Labor, raising awareness by going public with the issues we face and our approach to dealing with them and building collaborations with peer companies to start an industry movement.
We continue to grow the Fair Trade program outside India, certifying factories in Colombia, Mexico, Thailand, the US and Sri Lanka. We also release a short video about the program to educate consumers about the benefits of Fair Trade Certified clothing.
Since joining the FLA’s Fire Safety Initiative in 2013, we’ve invested considerable time and resources in preparing to roll it out to our apparel assembly factories. Two of our employees in the field and representatives from six of our apparel assembly factories complete a training course led by the FLA. With a solid foundation in place, we prepare to scale the training program in the next year.
The FLA’s Fair Compensation Workplan is released, and we adopt it as our road map for achieving living wages in our apparel assembly supply chain. Importantly, the FLA aligns with the Global Living Wage Coalition’s definition of a living wage, which is “the remuneration received for a standard workweek by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family. Elements of a decent standard of living include food, water, housing, education, health care, transportation, clothing, and other essential needs including provision for unexpected events.”
The workplan is divided into three phases that are meant to guide and organize FLA member companies so they move forward in unison. The first phase is called “Taking Stock” and is meant to gather detailed wage data from suppliers that demonstrates what apparel workers are earning. The second phase is called “Learning and Planning” and is dedicated to comparing worker wage data against living-wage benchmarks in order to prioritize efforts and compose strategies for improving wages. The third phase is called “Making Change” and focuses on implementing projects in collaboration with suppliers in order to raise wages over time.
The workplan is used by our CEO to set an internal living-wage goal for us to work toward: reach living wages by 2025 with our apparel assembly factories. We share this internal goal with the FLA, which, combined with what we write on our website about our living-wage aspirations, leads them to acknowledge us as a leading company in their Fair Compensation Workplan.
With our internal goal and the FLA workplan in effect, our Fair Wage Taskforce kicks into high gear by planning how we will generate the wage data, strategies, and avenues for industry collaboration needed to effect widespread sustainable wage improvements.
Toward the end of 2015, we start thinking about the connection between agriculture and apparel. We begin learning about a new concept called “regenerative agriculture,” which prioritizes soil health while encompassing high standards for animal welfare and worker fairness. Regenerative agricultural practices have been shown to enable soil to sequester carbon, so we begin to learn more about the connection between regenerative agriculture and climate change.
Now equipped with two master trainers, we train two other members of our team and begin rolling out the training throughout our apparel assembly factories, bringing the total number of trained factories to 18. Each factory is now able to cascade the training throughout the workforce, and in each subsequent year we plan for tens of thousands of workers to receive regular and easily digestible training on fire safety.
We begin our work with FLA members to devise the best method for gathering and analyzing wage data for our apparel assembly factories. A tool is released that is shared with a few FLA brands to test in the field. Over the course of the year, we pilot this tool with 10 of our apparel assembly factories.
At the same time, the FLA begins collecting living-wage benchmarks, which will allow us to gauge the gap between what workers earn and what is considered a living wage.
In the fall, Patagonia drafts its first internal white paper on “regenerative agriculture” to determine what the term means to us. We also utilize our second annual case competition with the Haas School of Business at UC Berkeley to seek answers for the question, “How can Patagonia scale regenerative agricultural practices to combat climate change?”
Our suppliers in Taiwan make significant improvements to working conditions for migrant workers, however, we find that fully eliminating recruitment fees remains a challenge. To put the focus squarely on this issue, we develop a detailed “Road Map to No Fees by 2020,” which outlines key deliverables for our suppliers and Patagonia to complete over the next 28 months to ensure workers hired after January 2020 never pay for their jobs.
In 2017, we train an additional 11 factories in comprehensive fire safety, bringing the total number of trained factories to 29 and the total number of trained workers to more than 13,000.
We continue working with the FLA to take stock of wages earned in our supply chain by completing our pilot of gathering wages for 10 apparel assembly factories. We discover that collecting wage data is enormously difficult and the data that we have managed to collect has not given us enough of the information we need to determine which factories deserve immediate attention to narrow the gap between current and living wages.
To understand which of Patagonia’s apparel assembly factories deserve immediate attention to narrow the gap between current wages and a living wage, we ask MIT students in the Sustainable Business Lab—a course offered through the university’s business school—to help us find an easier way to gather wage data across a large supply chain, and they develop a model for streamlined collection.
The results are shared with the FLA, and it is decided that the FLA will form a Practitioners Working Group to improve the wage data collection tool. Patagonia joins this Working Group and over the course of the year an improved tool is created that we agree to test.
In late 2017, the FLA reaccredits Patagonia and publishes a report on its labor compliance program. Noted in the report are Patagonia’s strengths, including our commitment from top management to improve working conditions not only at facilities manufacturing for Patagonia, but also through deeper tiers of the supply chain; the company’s strong engagement with civil society to address issues facing migrant workers, pursue living wages and ensure workers have a voice in their workplaces; and our collaborative fourfold approach to purchasing, whereby the Sourcing, Quality, Environmental and Social Responsibility teams have an equal say in where and how to source products.
We continue to grow the Fair Trade program, expanding into China, El Salvador and Vietnam and exploring new product types outside sportswear—including wetsuits and technical clothing.
In 2017, we engage further with regenerative agriculture and form a group of experts to explore the possibility of creating a holistic farm-level certification program that would encompass regenerative organic agriculture as well as high bar standards for animal-welfare and social fairness. In the fall, we release a first draft of the framework for the “Regenerative Organic Certification (ROC)” for comment, along with key partners, including the Rodale Institute, Dr. Bronner’s, Compassion in World Farming, Textile Exchange, Demeter International, Fair World Project, Grain Place Foods and White Oak Pastures. ROC is a holistic agriculture certification encompassing pasture-based animal welfare, fairness for farmers and workers and robust requirements for soil health and land management. By the end of the year, we come together with our partner organizations to form a new nonprofit organization, called the “Regenerative Organic Alliance,” to own and manage the ROC.
Patagonia becomes a signatory to the Responsible Recruitment pledge drawn up by the Fair Labor Association and American Apparel and Footwear Association, which is a public commitment to ensure no workers pay for their jobs.
In 2018, we train an additional 15 factories in fire safety, bringing the total number of trained factories to 44. This year, these factories train an additional 65,000 workers, bringing the total number of trained workers in our apparel assembly supply chain to 80,000.
Early in the year we pilot the FLA’s improved wage data collection tool with 10 apparel assembly factories. The pilots go well, and after analyzing the results, we use them within the Practitioners Working Group to refine the tool to its final state.
Before rolling out the new and improved tool to our apparel assembly factories, we schedule interactive training webinars with our apparel suppliers and 100 percent of our apparel assembly factories attend. In this webinar we officially launch our living-wage program with our suppliers, define the living wage, show the importance of the living wage, communicate our strategy for achieving living wage, discuss next steps and our program timeline and answer questions and receive feedback.
After the official launch of our program with our suppliers, we then finish collecting wage data. With this data in tow, we once again enlist the help of the MIT Sustainable Business Lab to help us analyze the data. They create an incredible tool for us that incorporates the detailed wage data we’ve gathered from our apparel assembly factories as well as the living-wage benchmarks that the FLA has supplied.
The MIT project also provides a few new frameworks for data analysis, including comparing worker wages at the country level to show our geographic priorities, comparing wages per factory against our production percentage in order to show our business priorities and breaking down worker compensation into its component parts in order to help us understand what our factory partners can prioritize in order to increase wages.
This analysis gives us the first indication of where we are in relation to achieving living wages at our apparel suppliers. The good news is we’re in better shape than we thought, and we share the results of our initial analysis in the 2018 Environmental and Social Initiatives Booklet, where we state that on average our apparel assembly factories pay 81 percent of the living wage.
In 2018, we change our mission statement to “We’re in business to save our home planet” and shift our focus to solutions including doubling down on regenerative agriculture as a way to reverse climate change.
In February, Patagonia hosts its first Regenerative Organic Fiber Summit, moderated by LaRhea Pepper of Textile Exchange, an NGO focused on sustainable fibers. The summit brings together four of our key organic cotton suppliers from all over the world to discuss the barriers to growth of the organic cotton sector and to explore the possibilities of using regenerative organic practices in cotton production.
In March, the Regenerative Organic Alliance (ROA) officially launch the Regenerative Organic Certification (ROC) at Expo West (the largest natural products trade show). NSF International is selected to manage the ROC certification program and together with the ROA, they launch a global pilot to test and refine the ROC frameworks with 22 brands, farmers, ranches and vineyards. As part of that pilot, we launch projects with two of our key organic cotton suppliers in India to test out the regenerative practices with more than 150 smallholder organic cotton farmers in India.
Throughout 2019, we work side-by-side with each of our suppliers in Taiwan to help them build recruitment and employment systems that protect migrant workers from paying fees for their jobs. This is in support of our goal to eliminate all fees in our supply chain by 2020. In 2020 and beyond, we will be continuously monitoring our suppliers to ensure that their recruitment systems remain effective in ensuring workers are not paying to obtain or keep their jobs.
This year we train an additional 9 factories in fire safety, bringing the total number of trained factories to 54. These factories train an additional 70,000 workers, bringing the total number of trained workers in our apparel assembly supply chain to 150,000.
We also try out a new approach to gather qualitative information on the success of this training program by surveying workers in four factories in China that were among the first factories to receive training from us. The results are encouraging: 5,884 workers participated in the survey; 98 percent report that their knowledge of fire safety has improved; 99 percent report that their workplace’s fire safety culture has improved; 97 percent feel more confident to take the initiative to report fire safety hazards, and likewise report that they feel able to refuse to work without penalty if they perceive the workplace to be unsafe.
Overall, we feel that the survey is an effective means of gauging the impact of the fire safety training on workers in our apparel assembly factories and is something we’d like to continue in the years to come. As a tool for increasing worker involvement in workplace health and safety, the survey results show how the FLA’s Fire Safety Initiative has increased the engagement and confidence of workers in the fire safety culture of their workplaces.
In 2019, we update our analysis of living wages in our apparel assembly supply chain and can report that on average our suppliers pay 88 percent of the living wage. This analysis is helpful, but we want to engage in more public communication, and so we once again enlist the MIT Sustainable Business Lab to advise us on the most effective way to go about this. They conclude that we should focus first on our customers to harness their buying power for good, and second on industry peers to share what has worked for us so that we can move together in unison. This helps us plan for the content we aim to make public in 2020.
Additionally, this year we begin planning pilots for how to work in partnership with our apparel assembly suppliers to increase worker wages without jeopardizing the competitiveness of these factories. One or two pilots will take place each year, and the results will be shared with the FLA to create a helpful forum for participating brands to work together toward a common goal.
In 2019, we celebrate five years of our partnership with Fair Trade USA. As part of that celebration, we launch a Fair Trade product pop-up in NYC with other Fair Trade brands such as West Elm and Kroger. We work with Fair Trade certified factories in nine countries, impacting more than 66,000 workers. Approximately 70 percent of our products in Spring and Fall 2019 are made at Fair Trade certified factories—a huge increase since we started in 2014 with 10 styles at one factory in India.
In 2019, our organic cotton partners in India continue to scale the ROC pilots, expanding from more than 150 farmers to more than 550. They begin to see benefits from the regenerative organic practices on the ground and engage with the ROA to provide feedback on the ROC framework during the pilot period.