What can we learn from Patagonia’s CEO on aligning success and social impact?

Patagonia founder and owner Yvon Chouinard recently made headlines giving away his $3 billion company so all proceeds could go towards fighting climate change. In a world where companies wait for a suitable time to go “public,” Patagonia adapted an out-of-the-box “going purpose” approach to its legacy, and joined the ranks of businesses that focus on ‘ purposeful profits.’

This is indeed a major turning point in how businesses are being operated, and there’s a lot that business owners and entrepreneurs can learn from this company’s alignment of success and social impact. The fashion industry is undoubtedly one of the most significant contributors to pollution, and Patagonia’s head-on acknowledgment of that issue just sets a new standard.

Chouinard is demonstrating that it’s not ‘do business or be good to the Earth.’ It’s ‘do business AND be good to the Earth.’

By establishing the idea that both business and the earth’s well-being can work together, Patagonia is teaching the various manufacturing entities to think of innovative ways to produce high-quality products with minimal utilization of natural resources.

A key extended benefit of this decision is attracting lifetime customer value and not just temporary profits. Companies can build a vast network of lifetime customers by manufacturing high-quality products and addressing one of the most pressing global issues.

With that being said, Patagonia is proving that aiming for sustainability not only helps improve the planet but also establishes a strong market standing for the company.

With many investors taking notice of opportunities to support sustainable ventures, a company’s definition of success is directly linked to its quantitative and qualitative progress assessment. An example of how the market is increasingly attuned to that aspect of businesses would be Yield Beyond Money (YBM, a concept developed by venture capitalist Ba Minuzzi and celebrity activist Adrian Grenier. While the Return on Investment (ROI) is a performance measure used to evaluate an investments’ efficiency, YBM is a qualitative and quantitative assessment protocol that assesses companies based on intangible statistics and the impact it leaves on society.

Assessing Patagonia as a company through a YBM lens, one could measure its valuable contributions to society and justify its reputation as one of the world’s most responsible companies. Going beyond being an outdoor designer gear maker, Patagonia has integrated its promise of sustainability into the company’s DNA. And that is something that companies will do well by paying close attention to and following suit. By understanding the challenges your industry faces, and the negative environmental consequences of your industry, you can actually build a better and more profitable business. A sustainable business not only works to improve the planet, but it lasts beyond a lifetime.

Where current billionaires are sitting on the mountain of profits their empires have produced, transforming them into conglomerates that will only increase their wealth, Yvon has truly set the bar in philanthropy and social-economic vigilance.

Assessing companies through their tangible accolades as well as the intangible contributions beyond our calculator’s reach seems to be an increasingly common phenomenon. Amidst the trends and vibes, Patagonia indeed passes the YBM check. The question now is: would your favorite brand pass the test as well?

Bia Carminati is the Co-Founder and Chief Operating Officer of Earth Speed Media - a sustainability-focused media company.