Would you ever expect to find a Patagonia jacket at Walmart? Patagonia is a niche maker of sportswear with a crunchy granola feel. The firm donates 1% of sales to environmental causes. They even have a tool on their website that lets you see how product flow through their supply chain. Polo shirts are designed in California; the cotton is grown in Turkey, yarn is spun and shirts are sewn in Thailand and so on. Walmart, on the other hand, is the ultimate symbol of everything big and intimidating about corporations. But Forbes reports that the two are working together (Wal-Mart, Patagonia Team To Green Business, May 6).
Over the last two years Patagonia has shared its knowledge about greening its supply chain with Wal-Mart–for free. It is also working with Wal-Mart to develop a sustainability index for its products: Within a few years Wal-Mart wants to place a scorecard on its store goods, rating products on eco-friendliness and social impact. The first step Wal-Mart has taken is to evaluate its suppliers. It will give preference to those who best comply.
Patagonia has assisted Wal-Mart mainly on the clothing side, helping Wal-Mart buyers figure out things like how much water is consumed in the manufacture of garments and whether pesticides are used. The Patagonians helped Wal-Mart come up with questions regarding things like climate, energy and efficiency that the company will use to evaluate its suppliers.
(For more on Walmart’s sustainability index, go here.) The article notes that over the years, Patagonia has provided similar support to Nike and the Gap. So what’s in it for Patagonia?
“This is where altruism meets selfishness,” says Jill Dumain, Patagonia’s environmental-strategy director. “We’re not big enough to make this the industry standard on our own. We need them to do it, too.” Patagonia has recently met with executives from Ikea and the British retailer Marks & Spencer about sustainability.
This is an interesting take on things. Patagonia potentially has outsized power in swaying how the apparel industry evolves. Walmart is the 800 pound gorilla here. What it says should be expected to go — but it doesn’t know what to say. It seems to me that Walmart should be praised for reaching out to those who have some idea of what can be done. I think it would be easy for a firm of Walmart’s size to set out to create the world in their image — or at least that serves their interests. Instead they are willing to learn from a firm that has set a pretty high bar. I can’t imagine that everything that Patagonia does can be scaled to Walmart’s level, but some of it must be possible to port over.
There is also the question of what is proprietary here. The article mentions that other firms are working together pool ideas:
Other companies have jumped on the idea of open-sourcing green information. In January Nike announced the formation of GreenXchange, a consortium of ten companies (among them, Yahoo) that will trade eco-friendly intellectual property.
It makes me wonder whether there is no secret sauce in sustainability. Intel, for example, would never freely share process improvements that increased the productivity of their wafer fabs. So why is sustainability different? At least on some dimensions, sustainability has to increase immediate costs (even if there are long-term benefits). Why are firms willing to give any innovative ideas away?
My conjecture here is that many of these firms are dependent on an international web of suppliers. They are not Intel controlling its own factories. All of these firms will be better off with improved standards that are universally expected and widely available. Having your choice of a large number of qualified suppliers could yield more savings than getting one supplier to adopt a proprietary technique or method.