My first document

For the exclusive use of J. Erlandsson, 2023.

B5953

Date: May 1, 2020

R ACHEL D ZOMBAK

C LAYTON C RITCHER

H ENRY C HESBROUGH

K ATE O'N EILL

S EREN P ENDLETON -K NOLL

C HRIS TINE R OSEN

R OBERT S TRAND

Waste not, want not: Eliminating Patagonia’s Pre- and Post-Consumer Textile Waste

“When you’re dealing with a dry topic like waste, you have to connect to the inherent values of the customer

Rather than making a science argument, tell a story in a way that they might care about.”

“Don’t buy this jacket.” On Black Friday 2011, this stark headline ran in a full-page print ad alongside an image of Patagonia’s R2 jacket. The decision to run an ad asking customers not to shop on a day dedicated to discount deals was emblematic of Patagonia’s longstanding desire to

Rachel Dzombak, Lecturer & Researcher, Blum Center for Developing Economies & UCB Haas; Clayton Critcher, Associate Professor of Marketing, Cognitive Science, and Psychology at UCB Haas; Henry Chesbrough, Adjunct Professor, Faculty Director, Garwood Center for Corporate Innovation; Kate O'Neill, Professor, Department of Environmental Science, Policy and Management at UC Berkeley; Seren Pendleton-Knoll, BerkeleyHaas Center for Responsible Business Associate Director; Chris Rosen, Associate Professor Business and Public Policy; and Robert Strand, Berkeley-Haas Center for Responsible Business Executive Director prepared this case study with assistance from Case Writer Susan Thomas Springer, as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

Copyright © 2020 by The Regents of the University of California. All rights reserved. No part of this publication may be reproduced, stored, or transmitted in any form or by any means without the express written permission of the Berkeley-Haas Case Series.

For the exclusive use of J. Erlandsson, 2023.

address consumer behavior. The apparel company blogged that day, “It would be hypocritical for us to work for environmental change without encouraging customers to think before they buy.”1

The apparel industry’s global supply chain, paired with consumers’ buying and disposing habits, is creating mountains of textile waste polluting the planet

Worldwide, consumers today buy five times the amount of new clothing than they did two decades ago. Consumers throw clothes away at a shocking pace too America alone generates over 11 million tons of textile waste each year.2 Often, textile waste ends up in landfills or is incinerated, effectively releasing emissions and pollutants into the air. It is also important to consider that more than 60% of fabric fibers are now synthetics, derived from fossil fuels, that are energy-intensive to produce and lead to the release of emissions that aren’t biodegradable.3 Accordingly, textile waste has become a major part of the environmental harm caused by the global apparel industry.

Smart solutions to textile waste are being developed by emerging, mainstream, and luxury brands throughout the apparel industry, with companies like Everlane, Stella McCartney, Levi’s, Allbirds, and Patagonia leading the way. An increasing number of brands are making clothing with a lighter environmental footprint by using raw materials, recycling scraps and reusing wasted textiles.

Consumer behaviors are shifting too with more consumers embracing pre-owned, refurbished, repaired, and rental business models. According to The State of Fashion 2019 report, changing consumer behaviors are driven both by a hunger for new styles and an interest in sustainability.4

Despite these changes, the apparel industry remains a huge polluter. In the last 15 years, clothing unit production has doubled.5 The apparel market is projected to grow from $1.3 trillion in 2015 to about $1.5 trillion in 2020.6 In America, the main source of textiles in municipal solid waste (MSW) is discarded clothing, with landfills receiving 10.5 million tons of MSW textiles in 2015.7

What would a sustainable model for the apparel industry look like? Will renting become a more popular model among retailers and consumers? What would encourage the thrifting trend to expand? Can the global apparel supply chain be transformed to a cradle-to-cradle model in which clothing is created to endure, and end-of-life clothing becomes useable waste for a truly circular economy? And how can Patagonia encourage shoppers to shift to a more “waste not, want not” mindset?

1 https://www.patagonia.com/blog/2011/11/dont-buy-this-jacket-black-friday-and-the-new-york-times/

2 https://truecostmovie.com/learn-more/environmental-impact/

3 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5766707/

4 https://cdn.businessoffashion.com/reports/The_State_of_Fashion_2019_v3.pdf

5 https://www.ellenmacarthurfoundation.org/assets/downloads/publications/A-New-Textiles-Economy_Summary-of-Findings_Updated_1-1217.pdf

6 https://www.statista.com/topics/5091/apparel-market-worldwide/

7 https://www.epa.gov/facts-and-figures-about-materials-waste-and-recycling/textiles-material-specific-data

Patagonia’s Waste Reduction Efforts

While fast-changing fashion trends have become a staple of modern consumer culture, the increasingly rapid production and disposal of clothing poses a threat to the environment.

Patagonia is quick to admit that, as part of the apparel industry, it is not an innocent participant The company acknowledges its own environmental impact, while remaining committed to using its business to fulfill its central mission: saving the home planet.

Based in Ventura, California, Patagonia’s planet-first philosophy has shaped the way it does business, from its founding in 1973 through its growth as an apparel, outdoor gear, and food products company today. To gain a greater understanding of the magnitude and complexity of its contribution to the textile waste crisis, the company is now evaluating its entire apparel supply chain. Improvements have been made at every stage of the apparel lifecycle -from sourcing recycled and novel raw materials, to optimizing designs and patterns to reduce waste in the production process, encouraging high environmental standards from its factories, creating durable long-lasting products, and developing new programs to ensure that products do not end up in landfills at the end-of-life.

At the same time, Patagonia believes that changing individual behavior will play a big part in this effort. Patagonia’s messaging encourages individuals to rethink their consumer values to buy less, buy better, buy used, and value durable products over disposable ones. It’s a tricky balance: the company must continue to sell goods to stay in business while working to combat the culture of excess within the apparel industry.

This case follows Patagonia apparel through the four main phases in its lifecycle: design and production, resale, repair, and end-of-life recycling. It describes sources of waste, examines the challenges of reducing waste, highlights industry leaders, and addresses shifting consumer awareness and behavior. Patagonia seeks answers to how the company can temper unconstrained consumption, reduce its own textile waste, and drive greater improvement throughout the apparel industry. (Exhibit 1)

The Vision for a Circular Apparel Industry

In the current linear model of consumption, the apparel industry extracts petroleum for synthetic materials like nylon and polyester, and uses land for natural materials like cotton, hemp, and wool to produce clothing with a short lifetime. A circular model, in which raw materials are used and reused in multiple applications, gives resources a longer life span and prevents still-useable materials from accumulating in landfills. While circularity is an apparel industry buzzword, the few examples of solutions are not yet scalable across the industry. (Exhibit 2)

One organization that is working to drive a more environmentally responsible model throughout the apparel industry is Fashion for Good. Its mission is to build a global collaboration to transform the linear “take, make, waste” model to a more circular and accountable model with “the promise of social, economic, and environmental prosperity.”8

For the exclusive use of J. Erlandsson, 2023.

Another industry thought leader, the Ellen MacArthur Foundation, published A New Textiles Economy: Redesigning fashion’s future to encourage the industry to adopt circular principles. The report states that less than 1% of material used to produce clothing is recycled into new clothing; transformation is urgent because every second, the equivalent of one garbage truck of textiles is landfilled or burned. The vision for a new textiles’ economy has four parts: (1) Phase out substances of concern and microfiber release (2) Transform the way clothes are designed, sold, and used to break free from their increasingly disposable nature. (3) Radically improve recycling by transforming clothing design, collection, and reprocessing. (4) Make effective use of resources and move to renewable inputs 9

Although a circular model should theoretically achieve the zero-waste goal, not all potentially circular business models are successful in practice. Instead, there can be unintended consequences or lack of consumer engagement. For example, glass is 100% recyclable it can be crushed or melted into new glass with no loss in quality offering the possibility of a closed-loop model. However, in America only about one-third of glass is recycled. This leakage occurs for many reasons. One major barrier is that Americans comingle recycling, resulting in contaminated recycling and a difficult sorting process. Another barrier is that glass is heavy, making it expensive to transport.10 Similarly, collection is a major challenge in the apparel industry Recycling options have existed for decades yet -while usage is growing -significant volumes of clothing still leak from the reuse cycle, ending up in landfills.

Contributors to Global Waste: Consumers, Companies, & Governments

The Consumer

Post-consumer waste is the biggest source of textile waste compared with what’s created through the production process, so shifting consumer behavior is a prime leverage point for eliminating waste. That shift won’t be easy. Psychology research has demonstrated that consumers base even the seemingly simple decision of buying a new T-shirt on a tradeoff between the potential pleasure of acquisition and the pain of paying; brain circuits activate when anticipating buying desirable clothing.11 The common practice of slashing prices leads to a range of consumer feelings, from pride in finding a good deal to regret if they miss out on a promotion.12 Fast fashion heightens the need for instant gratification, with runway replicas available in mall stores within weeks. This emotionally driven demand for clothing continues to rise with fast fashion further compressing time-to-market by utilizing cheaper production processes yet consumers wear each garment a smaller number of times.13 Today, people regularly wear only 20% of what’s in their closet.14 The current compressed timeline encourages more buying; new clothing enters stores each week making 50 or more fashion “seasons” each year.15 (Exhibit 3) Also,

9 https://www.ellenmacarthurfoundation.org/assets/downloads/publications/A-New-Textiles-Economy_Full-Report_Updated_1-12-17.pdf

10 https://cen.acs.org/materials/inorganic-chemistry/glass-recycling-US-broken/97/i6

11 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1876732/

12 https://link.springer.com/content/pdf/10.1186%2Fs40691-018-0128-2.pdf

13 https://www.mckinsey.com/industries/retail/our-insights/faster-fashion-how-to-shorten-the-apparel-calendar

14 https://www.wsj.com/articles/SB10001424127887324240804578415002232186418

15 https://truecostmovie.com/learn-more/buying-better/

For the exclusive use of J. Erlandsson, 2023.

conspicuous consumption is on display in the millions of “haul” genre YouTube videos in which social media influencers gush over their new purchases.16

Patagonia believes customers have a responsibility to think before they buy and assess the environmental consequences of their purchases.

In recent years, people have become more aware of environmental issues as the apparel industry shifts to newer models of consumption such as thrifting, renting clothing, and creating smaller capsule wardrobes. Marketing messages are changing too, with forward-thinking apparel companies increasing transparency in detailing the resources used to make their garments.

Younger generations millennials and Gen Z increasingly care about the earth they will inherit, with a 2019 Nielsen survey showing that 81% of consumers are changing their buying habits to benefit the environment. Some apparel companies have jumped on the green bandwagon to take advantage of the competitive benefit by using marketing messages they may not be able to support, a practice known as greenwashing That leaves consumers unsure of how to determine which garments were produced with a truly lighter environmental footprint. One industry advisor calls it the “Wild West” in which a lack of clearly defined terms provides both a benefit and a burden to apparel brands touting green messaging.17

The Company

Across the world, demand for clothing continues to rise with compressed time-to-market made possible through cheaper production processes, resulting in lower quality garments. In the U.S., the price of clothing (adjusted for inflation) has actually decreased significantly over the past 20 years, as shown by the Consumer Price Index.18 Companies play the discount game in an effort to drive higher sales, but that risks cheapening their brand image and leaving consumers feeling they never need to pay full price.19 Buying the newest style comes at a high environmental cost. The United Nation Climate Change News states that the fashion industry contributes 10% of global greenhouse gas emissions due to its long supply chains and energy intensive production For example, to make just one pair of denim jeans, 10,000 liters of water is required to grow the one kilo of cotton required.20 In contrast to this polluting buying frenzy, Patagonia releases new high-quality products in line with its values twice a year.

Patagonia’s fashion cycle has slowed down as the organization works to transform its supply chain to cause less environmental harm and pay fair wages for factory and farm employees.21 However, Patagonia is only beginning to understand the landscape of its waste. The company is in the process of identifying next steps for eliminating waste in a complex, global supply chain that lacks incentives to change. The logistics for next steps are challenging new processes need to be invented and their costs calculated. For example, the best recycler of polyester may be on

16 https://i-d.vice.com/en_us/article/xwm39w/heres-why-haul-videos-need-to-change

17 https://adage.com/article/cmo-strategy/sustainability-fashion-mainstream/316828

18 https://fred.stlouisfed.org/series/CPIAPPSL

19 https://www.mckinsey.com/industries/retail/our-insights/powerful-pricing-the-next-frontier-in-apparel-and-fashion-advanced-analytics

20 https://unfccc.int/news/un-helps-fashion-industry-shift-to-low-carbon

21 https://www.patagonia.com/working-with-factories.html

For the exclusive use of J. Erlandsson, 2023.

another continent from the garment factory where the waste is created, with no preexisting transportation relationship between the two. Or the factory may have no storage space for leftover textiles. Or packaging processes could be lacking to move the textile waste to the next link in the supply chain where it could be repurposed into something useable.

To find solutions to these challenges, Patagonia funds promising innovations through its venture capital fund Tin Shed Ventures.22 Patagonia invests in environmentally and socially responsible startups, partners with them to develop their technology, and creates products to highlight the new innovations

Outside of Tin Shed Ventures, Patagonia partners with businesses whose innovations have more environmentally friendly outcomes than current industry options. For example, in 2008

Patagonia worked with Yulex to develop the first Fair Trade Certified™ wetsuit, created from a renewable, neoprene-free, natural rubber rather than the typical neoprene used throughout the surf industry.23 Patagonia shared information about that R&D effort, as it has for other innovations, online at The Footprint Chronicles.24

The Government

In 1995, the North America Free Trade Agreement (NAFTA) -an agreement between the U.S., Canada, and Mexico -began eliminating most tariffs on products traded between the three countries. In response, the U.S apparel and textile industry fundamentally changed its supply chain processes and shifted towards manufacturing in regions where labor costs were cheaper. 25 That enabled the global success of fast fashion and “Made in the USA” became a rare clothing label. In the 1960s, more than 95% of apparel bought in the US was made in the US. Today, only 3% of clothes purchased by Americans are produced in the U.S.26

Globally, governments have had an impact on the disposal of textile waste. The U.S. was sending numerous kinds of waste including textiles and electronics to China. But in 2018, in response to escalating trade disputes, China stopped importing foreign garbage including 11 types of textile waste. However, clothing itself was exempt from the ban.27 One year later, India changed its rules too, banning solid plastic waste and scrap imports.28 The bans caused Western countries to stockpile recycled waste, divert it to landfills and incinerators, or ship it to countries that would still accept it.29

In response, some municipalities in the U.S. stopped picking up curbside recycling because there ceased to be a market for those materials. Other cities kept consumers in the habit of recycling even if the materials weren’t actually recycled. For example, in Memphis, Tennessee, cans and

22 http://tinshedventures.com/

23 https://www.patagonia.com/yulex.html

24 https://www.patagonia.com/footprint.html

25 https://fas.org/sgp/crs/row/R44998.pdf

26 https://www.uschamber.com/series/modernizing-nafta/how-keep-nafta-dressed-success

27 http://www.recyclingwasteworld.co.uk/in-depth-article/is-chinas-national-sword-programme-a-mixed-blessing-for-the-uks-wastemanagement-industry/174520/

28 https://www.independent.co.uk/environment/india-plastic-waste-ban-recycling-uk-china-a8811696.html

29 https://www.patagonia.com/blog/2019/08/recycling-is-broken-now-what/

For the exclusive use of J. Erlandsson, 2023.

bottles tossed into recycling bins in the international airport went to a landfill.30 The crisis around handling of waste highlighted that recycling is only a solution if processors exist who want to buy the cast-off materials.31 Also, the lack of recycling capabilities was a wake-up call that recycling should be the last choice as advocated in the 4Rs pledge: refuse, reduce, reuse, recycle.32

Globally, there are new government regulations aimed at reducing textile waste. In 2019, the French government announced the end of destroying unsold fashion items, a practice that had been common in the luxury retail sector. Before the ban, more than $730 million worth of returns and unsold inventory were routinely thrown away or destroyed.33 In other countries, there have been rulings to prevent brands from the common practice of burning or slashing unsold clothing in an effort to maintain brand value.34 Also, cities such as San Francisco have launched textile waste reduction programs by, for example, adding more drop-off locations for unwearable clothes and shoes.35

Patagonia’s Influence

As a private company, Patagonia can shift its own business toward more planet-friendly models and products. Yet its bigger goal is to exert greater influence on its customers, the industry, and the government. Through the years Patagonia has wielded its influence to promote conscious consumerism and its environmental goals in keeping with its mission: “We’re in business to save our home planet.”36

Ironically, some messaging aimed at discouraging consumption has boosted sales, such as Patagonia’s Black Friday “Don’t buy this jacket” ad. It appeared customers did want the jacket after all; the ad generated enormous attention and the company’s revenues went up 30% the next year, although it’s unclear whether that growth resulted directly from the ad.37 While some critics saw the ad as a marketing ploy, Patagonia argues that additional purchases during the ad campaign achieved its goals because buying durable gear is better for the environment than if those same consumers bought cheaper, fast fashion. On Black Friday 2016, the company said it would donate all its sales to environmental organizations. Sales went up then too; the company forecasted $2 million in sales but instead generated a record-breaking $10 million.38

Patagonia influences customers through multiple marketing channels. Its 2019 video “Why Recycled?” was watched 1.5 million times in the first two months of its launch, with most viewers watching the full 13-minute video to learn about global recycling challenges in the

30 https://www.nytimes.com/2019/03/16/business/local-recycling-costs.html

31 https://www.politico.com/story/2019/06/06/the-big-government-solution-to-the-recycling-crisis-1356577

32 https://www.plasticpollutioncoalition.org/pledge

33 https://www.forbes.com/sites/katematthams/2019/06/06/france-moves-to-ban-the-destruction-of-unsold-luxury-goods-in-favor-ofrecycling/#d1455e6334ee

34 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3289411

35 https://sfenvironment.org/news/press-release/san-francisco-launches-zero-waste-textile-initiative-to-keep-apparel-footwear-linens-out-of-thelandfill

36 https://www.patagonia.com/company-info.html

37 https://www.investopedia.com/articles/personal-finance/070715/success-patagonias-marketing-strategy.asp

38 https://www.patagonia.com/blog/2016/11/record-breaking-black-friday-sales-to-benefit-the-planet/

clothing industry.39 The shorter Instagram version had almost 213,000 viewers. The public relations team has noticed greater interest in the topic of clothing waste from mainstream media rather than only eco-related news outlets, and Patagonia’s Worn Wear program continues to gain media attention Also, Patagonia informs customers through its Footprint Chronicles in which the company explains its efforts to reduce its environmental impact and delves into production details such as the percentage of recycled materials, amount of water used, or how much CO2 is saved in production.

Patagonia exerts influence through politics too. In 2017, Patagonia fought a proclamation by U.S. President Donald Trump to reduce Utah’s million-acre Bears Ears National Monument by 85%. The company’s bold, black homepage screen with the headline “The President Stole Your Land” generated so much traffic the website struggled to avoid crashing.40 Having joined a coalition of Native American and grassroots groups, Patagonia is challenging the legality of this decision.41

Patagonia exerts additional influence on environmental causes through the 1% for the Planet program Established by Patagonia founder Yvon Chouinard and the owner of Blue Ribbon Flies Craig Mathews, this nonprofit encourages businesses to pledge 1% of sales to restore the natural environment. Through this effort, Patagonia itself has contributed more than $100 million in cash and in-kind donations to grassroots efforts working to preserve the planet.42

Building a Product

Creating clothing produces vast amounts of waste throughout the entire supply chain. The process leaves behind waste from cut-and-sew scraps, sales samples, designs with inefficient patterns, leftover fabrics, dye runs gone wrong, and waste in spinning yarn. In addition to contributing to textile waste, the fashion industry is a resource hog it is the second-biggest consumer of water (after agriculture).43 The supply chain’s collective goal has been profit, not reducing waste.

It is not lost on Patagonia that its very existence is based on producing clothing that in turn produces waste. So, from its iconic baggies and snap tees to parkas and wetsuits, the company continually strives for best-in-class materials and processes to lessen its impact on water, energy, and CO2 while still maintaining performance and bringing relevant and brand-authentic products to market In some cases, Patagonia has needed to use the best option available at the time while researching better alternatives such as its waterproof outwear with Durable Water Repellent (DWR). The fluorocarbon-based treatment is effective, but its by-products are toxic. In 2015, Patagonia communicated to customers that it had switched temporarily to a form of DWR with less toxicity while it invested in research to find better chemistry.44

39 https://www.youtube.com/watch?v=waUYdw9wVts

40 https://www.businessinsider.com/patagonias-anti-trump-message-almost-crashes -website-2017-12

41 https://www.patagonia.com/protect-public-lands.html

42 https://www.patagonia.com/one-percent-for-the-planet.html

43 https://www.unenvironment.org/news-and-stories/blogpost/why-fast-fashion-needs-slow-down

44 https://www.patagonia.com/blog/2015/09/our-dwr-problem-updated/

For the exclusive use of J. Erlandsson, 2023.

“We work to mitigate the threat of climate change in our business. It comes down to three things: reducing emissions in our supply chain, divesting from fossil fuels, and regenerative agriculture which produces crops like organic cotton while trapping CO2 in the soil,” said Helena Barbour, Vice President, Sportswear at Patagonia.45

Design

The more thought that goes into designing a collection, the better the environmental outcome. A key to reducing waste is starting with the goal to “design out” waste. That means using digital tools such as CAD (computer-aided design) programs to nest pattern pieces for optimum fabric usage Factories, which are incentivized to get the most from a bolt of fabric for their own bottom line, partner with Patagonia on ways to optimize pattern pieces. Patagonia redesigned its popular Better Sweater by focusing on where the seams lie on a person’s body to create patterning with the least amount of waste. In addition to less wasteful patterning, Patagonia redesigned the base fabric to be 100% post-consumer recycled and used 100% recycled inputs for all the trims (tapes, meshes, pocket linings, etc.)

Designers continually work to improve marker efficiencies, or the yield from a roll of fabric, but even the most efficient patterns still generate around 15% waste. Patagonia designers strive to reduce waste even though they recognize the zero-waste goal from this part of production isn’t fully attainable. Patagonia values continuing education for design staff so they are trained to design with less waste.

“We are always problem-solving when we start a new project,” said Glen Morden, Head of Product Innovation, Materials and Development at Patagonia. “We ask ourselves, ‘What incremental or evolutionary design attributes would improve this product?’ We rate every product based on our corporate design principles so we can design for longevity.”

Production

In the clothing industry, companies can’t order the exact yardage they need; there are minimum order amounts that create waste, called fabric liabilities. For example, if Patagonia bought fabric for a small patch pocket on a jacket that came in 10 colors and the minimum order was 5,000 yards per color, that would result in thousands of yards of leftover fabric. If the style is expected to carry over into the next season, the factory may store the leftover fabric for future use. However, for fabric leftovers not designed into future styles, the factory sends a list for Patagonia to address. For significant quantities, Patagonia asks business unit directors if they’re willing to create a special markup (SMU) to consume the fabric. Also, they ask the Reno repair center if they could use these extras For unused fabrics and trims, Patagonia pays the factory to dispose of it with no control over how the factory deals with that waste. Usually, factories repurpose fabric liabilities to keep them out of landfills by selling them to third-party companies for rags, mops, and pillow stuffing.

Patagonia’s Material Innovation team is constantly searching for environmentally conscious textiles for its products. Scientific development in this area means the answer continues to

For the exclusive use of J. Erlandsson, 2023.

change yet the goal of best-in-class materials remains the same. Patagonia has pioneered recycled versions of popular materials including nylon, cashmere, wool, and down.

The value of production waste varies. Virgin cotton from cutting tables can be converted to useable fabric. However, mixed grades of waste that contain lots of thread or coated fabrics are of lesser value and called shoddy fiber. These scraps go to factories who remove the metal parts, grind the scraps in a hopper into fiber, and use the output for stuffing mattresses or for insulation in automobile interiors and acoustic tile.

Patagonia views collaboration as key to creating less production waste, so the company works with industry groups to “reduce the astonishing environmental cost of everything we make.”46 One advantage of collaboration is increased clout with factories that manufacture brands internationally. Compared with large, international clothing companies, Patagonia’s volume is relatively low in most factories so it’s a challenge to influence these partners to adopt less wasteful practices. But if brands came together to communicate the importance of finding better homes for scrap material, they would have more power to initiate waste management programs.

One industry collaboration is aimed at identifying and sharing best practices all the way from farming, through production, and finally to products’ end-of-life. The Textile Exchange, which Patagonia helped found in 2002,47 is a global nonprofit that gathers key stakeholders such as apparel brands, retailers, manufacturers, raw material suppliers, and farmers to promote organic cotton as well as other bio-based, organic and recycled fibers.48

Innovating Second-Gen Yarn

Back in 1993, as a recycling pioneer, Patagonia made recycled polyester fleece that was pale green because it came from Sprite bottles. Today, the company continues to look for new recycling innovations, recognizing that not all recyclables are created equal. It places priority on diverting waste from landfills whether the waste are “naturals,” such as down from Scandinavian bedding companies that Patagonia uses in its outerwear line, or synthetics, such as discarded fishing nets that will be used in hat brims.

One company Patagonia is collaborating with is Giotex, a company that makes “secondgeneration yarn” by taking cut-and-sew scraps from throughout North America, converting the scraps into fiber, and then to yarn. The recycled yarn then goes to companies that can weave it into fabric.49 The recycling process not only mitigates waste, but it also avoids the use of chemicals, dyes, or water. Instead, scraps move through the factory on cutting lines to reduce them to fiber. Patagonia has partnered with Giotex to produce its Responsibili-Tee and other garments created from this post-industrial cotton waste and post-consumer plastic bottle waste (or rPET for recycled polyethylene terephthalate). Patagonia engages its customer in this ingredient story by marketing the T-shirt as saving 63 gallons of water compared to producing a conventional cotton tee

46 https://www.patagonia.com/corporate-partnership.html

47 https://www.patagonia.com/textile-exchange.html

48 https://textileexchange.org/

49 http://www.giotexusa.com/

For the exclusive use of J. Erlandsson, 2023.

Currently, Patagonia and Giotex are conducting trials to take the already-recycled waste scraps from making the T-shirt and recycle them yet again to reach 100% utilization. A challenge they are working to overcome is that repeated processing shortens and weakens fibers, limiting the quality of future yarn.

Growing Awareness of Design & Production Waste

Waste during clothing production remains mostly hidden from consumers. Some light is being shed on the issue through news stories, documentaries such as The True Cost, 50 and clothing companies’ greater transparen cy surrounding their materials and processes.

For example, sustainable women’s clothing maker Reformation tracks the complete environmental footprint of its clothing including the pounds of carbon dioxide emitted, gallons of water used, and pounds of waste generated and shares those stats on every product page of its website. The goal is to show the environmental impact of producing garments so consumers can make empowered choices.51

Los Angeles-based Christy Dawn uses deadstock, the yardage left on the roll after a fashion house has completed its run, to create women’s clothing. Some items are one-of-a-kind due to the small amount of leftover fabric. Customers appreciate that beautiful dresses can be made from rescued fabric. As the company writes, “When deciding what to wear, we have an obligation to consider how it’s made and the impact of that process.”52

Assessing Choices

Clothing companies can use industry-standard tools to assess textile waste, weigh the environmental consequences of using various materials and analyze the expected lifecycle of garments. The Higg Index is a suite of tools developed by the Sustainable Apparel Coalition, used globally by apparel, footwear, and textile companies to accurately measure and score sustainable performance. The Higg Index “delivers a holistic overview that empowers businesses to make meaningful improvements that protect the well-being of factory workers, local communities, and the environment.”53 Specifically, the Higg Materials Sustainability Index is used to measure the environmental impact of materials.54

Bluesign drives responsible and sustainable manufacturing of consumer textile products by acting as an independent verifier to secure transparency at each step in a textile’s path. They encourage improvements at every stage—from factory floor to finished product—and place their label on products that meet their criteria for minimizing environmental impacts.55

50 https://truecostmovie.com/

51 https://www.thereformation.com/pages/sustainable-practices

52 https://christydawn.com/

53 https://apparelcoalition.org/the-higg-index/

54 https://apparelcoalition.org/higg-msi/

55 https://www.bluesign.com/en

For the exclusive use of J. Erlandsson, 2023.

Keeping Products in Circulation: Worn Wear & Ironclad Guarantee

Patagonia’s Worn Wear program for “keeping gear in play” includes several avenues aimed at preventing clothing from entering landfills whenever possible whether through repairing, reselling, recrafting, or recycling used gear. Through The Stories We Wear videos, customers share their love of old, battered clothing they’ve worn on outdoor adventures around the globe.56 Interestingly, one study shows that consumers who are more motivated to repair their belongings also have significantly higher emotional attachment to those items.57

Through Worn Wear, Patagonia removes a primary barrier to reuse and recycling by providing consumers with an easy process. Other industries have suffered when consumers lack a convenient way of returning old products. For example, compact fluorescent lightbulbs (CFLs) should be recycled to prevent mercury from being released into the environment, but the majority are tossed in household trash because people don’t know where to take old bulbs.58

On the Road

Since 2015, Worn Wear has been taking repair to the streets, stopping at universities, climbing festivals, mountain resorts, and other locations to repair gear even non-Patagonia brands. The repair team drives three original vehicles kitted out to provide on-site repairs. The first vehicle is named Delia, an old Dodge truck converted to biodiesel with a custom camper made from reclaimed redwood wine barrels that houses sewing machines, tools, zippers, and other materials enough to repair about 40 garments in one day. Later, Patagonia added a 22-foot-long trailer and a small cart for even more on-site repairs. Currently, nine Worn Wear repair vehicles and crews exist across the globe, in Europe, Japan, Korea, and Latin America, where conversations around clothing industry ethics naturally occur and consumers receive a little education along with repaired clothes. (Exhibits 4 and 5)

Worn Wear collaborates with Patagonia product teams to host specific events, such as a wetsuit repair tour that was requested by the surf team. So far, Worn Wear tours have repaired over 15,000 garments at around 135 events. In addition, Patagonia offers Quick Fix Guides online so customers themselves can extend the lives of their garments.

Recommerce

Customers who are done with their used gear can mail it to Worn Wear directly or drop it off at a retail location and, in return, receive a merchandise credit to purchase a new or used Patagonia item. These used, yet still functional, Patagonia clothes are washed and offered for sale online at wornwear.com or at dedicated locations. The online thrift store launched in 2017 and quickly sold out its initial inventory; in 2018, sales grew 40%. As of 2019, more than 130,000 used garments have been resold, giving them a second life. Reselling used gear became profitable

56 https://www.youtube.com/playlist?list=PLJQsrK_W2jniRbGH7964cgt7bboyJnoIg

57 http://www.jrconsumers.com/Academic_Articles/issue_26/Issue26-AcademicArticle-Scott1-31.pdf

58 https://www.consumerreports.org/cro/news/2011/04/despite-mercury-concerns-few-people-recycle-their-cfls/index.htm

For the exclusive use of J. Erlandsson, 2023.

quickly, providing an option for the consumer who prefers to buy pre-owned for both the lower price and environmental benefits. It also serves as a model for other brands to follow; by showing that buying back and selling used gear makes good business sense, Patagonia hopes other brands will launch their own recommerce programs.

Patagonia partnered with Yerdle, a Tin Shed Ventures-funded company, to launch its recommerce site. Yerdle creates and operates reuse e-commerce platforms for large apparel brands so they can manage their own resale market.59

Although a success story, the Worn Wear online platform is labor intensive. Garments must be transported, sorted, rated by quality, repaired, classified by season, posted online, and mailed to consumers. In addition to operations and logistics, storage is an issue. Materials and used gear that are not 100 percent functional are stored at Patagonia’s warehouse in Reno, Nevada. However, certain types of materials are easier to recycle or upcycle than others, causing some materials to pile up. Patagonia is actively seeking upcycling and recycling solutions for over 100,000 low-quality items stored in Reno that can’t be sold online.

Patagonia wants to scale recommerce to continue to prove to the outdoor and greater apparel industries that buying back and reselling used products is good for the planet and for business. Recently, other outdoor brands have adopted similar models: Arc’teryx purchases used clothing to refurbish and resell, The North Face buys back clothing to donate to people in need, and REI’s Used Gear program selects its best returned apparel and gear to resell on its website with messaging about reducing waste and conserving natural resources. Mammut has an in-house repair department that gave more than 15,000 items a new lease on life in 2018.60

Another way Patagonia has supported the reuse market is by investing in Tersus Solutions, a garment cleaning company that uses liquid carbon dioxide rather than water or dryers for its cleaning process, resulting in a much lower environmental footprint than traditional washing and drying Since 2014, Patagonia has worked with Tersus Solutions to launder Worn Wear clothing and some raw materials.61

Ironclad Guarantee

Repairing clothing and standing behind its durable garments have been part of Patagonia since its beginning. It formalized those values with Worn Wear and the Ironclad Guarantee, which promises to repair or replace any garment that doesn’t last the customer’s lifetime due to poor design. Customers who want their damaged clothing fixed can mail it or bring it to a store where Patagonia repair technicians can repair and return it. In total, Patagonia repaired more than 100,000 garments in 2018.

59 https://www.yerdlerecommerce.com/

60 https://www.mammut.com/us/en/stories/environmental-protection-made-easy-mending-instead-of-throwingaway/?newsletter=brand%2F190825_repair_service_story_US_en%2Fmain_cta_repair_service&utm_source=b2c_brand_newsletter&utm_m edium=email&utm_campaign=190825_repair_service_story_US_en

61 http://www.tersussolutions.com/

Patagonia products are becoming even more long-lasting thanks to feedback passed on from the repair teams to production on how to create garments that are easier to repair. For example, a center-front zipper is one of the most frequent fixes performed at Patagonia’s Reno repair center. So, design teams acted on that issue and designed a zipper that is easier to repair or replace.

Conversations Where Marketing and Education are Synonymous

Worn Wear provides educational opportunities around waste through marketing materials and in casual conversations at Worn Wear events. Customers tell stories of how they treasure their worn clothes scars and all such as the fleece pants that have kept a surfer warm for 16 years on his morning drive to the ocean, or the 30-year-old jacket an active woman values whether she’s mountain climbing, skiing, or cycling. Customers refer to stains and rips as badges of honor that prove they are living a full life while taking a light toll on the earth. Slogans such as Better Than New raise awareness and acceptance for used clothing.62

“The underlying message is that if you repair, you don’t have to consume,” said Alex Kremer, Head of Worn Wear. “On Worn Wear tours, we tell visitors that if they keep gear in action just nine months longer, that’s a 20-to-30 percent reduction in carbon, water, and waste compared with producing a new garment. They’re often shocked because they realize for the first time how energy and resource intensive it is to make something as simple as a T-shirt.”63

More Worn Wear conversations occurred in Patagonia’s pop-up store in the fall of 2019 in Boulder, Colorado, where customers could buy Worn Wear garments at a brick-and-mortar store. In addition to selling used Patagonia gear, the store contained stories about people who have repaired their favorite garments, statistics about Worn Wear’s repair tours, and information about why it’s important to maximize the life of clothing. (Exhibit 6)

Other Industry Reuse Efforts

Seeing fast fashion as a broken model that contributes to textile waste, some brands are making it easier for customers to repurpose used clothing. For example, H&M stores have collection boxes where customers can drop off a bag of clothing (or any textiles in any condition) and receive a coupon for 15% off their next purchase. At selected Zara stores, people can drop off clothes that the company pledges will reach their “best destiny” whether they are donated to those in need, upcycled, or transformed into new fiber. Madewell has a denim recycling program that accepts any brand of jeans in its stores, donates them to be made into housing insulation for organizations like Habitat for Humanity, and gives customers a $20 voucher for a new pair. The next step in clothing reuse could be curbside textile bins that would only be effective if consumers were educated about fabric types and willing to correctly sort their textiles.

Other clothing producers have initiated successful mechanical recycling programs. For example, San Francisco-based Marine Layer creates ultra-soft fabrics with low environmental impact for its tees and other garments from recycled beechwood pulp. In 2019, the company took the next step

62 https://www.youtube.com/playlist?list=PLJQsrK_W2jniRbGH7964cgt7bboyJnoIg

63 http://www.wrap.org.uk/sites/files/wrap/VoC%20FINAL%20online%202012%2007%2011.pdf

in sustainability by launching Re-Spun, a collection of shirts -made entirely from donated tees and recycled plastic bottles -that sported “This is my second life” on the label. The mechanical process of breaking down the textiles uses no water or chemicals; instead it uses technology such as UV sanitation to clean the old tees 64

New solutions could include the creation of regional hubs to sort, shred, compact, and process textile waste. Third parties could be created to regularly pick up scraps and transport them to recyclers. Also, new and better methods of incineration could turn this currently unsustainable activity into a viable option to dispose of waste that is truly at the end of its life. Additionally, new recycling solutions are emerging such as Reverse Resources, a company that develops software to map, measure, and create visibility for leftover fabrics and scrap. This allows textile waste to become traceable through its life cycle and ultimately returned into supply chains.65

Upcycling & Recycling

Recycling returns waste to a useable material. Upcycling turns lower-value waste into higher value materials or products. As its name suggests, downcycling converts a product or material into a product or material of lesser value, such as when polyester scraps leftover from sewing a backpack are melted into yarn that has lower value than the original fabric. Downcycling isn’t always an option due to poor quality of the original materials Any type of “cycling” is an effort to prolong the life of materials though all require a use of energy in the recycling process, resulting in various degrees of emissions. Although both recycling and textile reuse result in environmental benefits, textile reuse has greater benefits mostly due to the avoided production of new products.66 Some consumers understand and care about these distinctions while others are indifferent or confused by them.

Upcycling with ReCrafted

What solutions exist when clothing is damaged beyond repair? Patagonia’s ReCrafted line, which launched in November 2019, takes the next step in upcycling. Patagonia designers teamed with Suay, a production sew shop in Los Angeles, to re-purpose old clothes into one-of-a-kind garments that still retain the aesthetic of Patagonia. For example, the arms of two jackets may join the body of a third, with pockets and trims from other garments. (Exhibit 7) Although Patagonia has worked with small upcyclers in the past, the ReCrafted collection reflects the first time Patagonia has taken upcycling into its own hands, recreating thousands of upcycled goods. With ReCrafted, Worn Wear shows that there is value in waste even when clothing is beyond repair.

Also working in this space is The Renewal Workshop, an Oregon-based company that takes clothes that have usually never been worn, such as customer returns and damaged garments, and

64 https://www.marinelayer.com/pages/respunlaunch

65 https://reverseresources.net/en

66 https://www.sciencedirect.com/science/article/pii/S0959652618305985

turns them into Renewed Apparel, upcycled garments, or recycled feedstock. The goal is a zerowaste system that recovers the resources spent in making the original item.67

Sustainable products, such as ReCrafted products, are often more expensive due to the higher labor costs of creating a lasting garment and due to sourcing environmentally-friendly materials, whether virgin or recycled. Some producers in this space communicate an item’s “cost per wear” to explain the value of higher-priced clothing to consumers. While sustainable clothing appears to benefit the planet—it’s a challenge to prove the ability to scale and economic value.68

Recycling Challenges

There are recycling challenges for both post-consumer and post-industrial textile waste. Postconsumer waste is mixed, contains contaminants, and can have trims of different materials, so it is often harder to process Another challenge for recycling post-consumer clothes is sorting and separation. Fabrics may be mislabeled, or labels may be missing. Sorting through discarded items to get them into the categories required for recycling streams is costly and labor-intensive. Future technology, such as optical scanners, may help with the sorting problem. However, after garments are sorted, there is additional labor required to remove non-textile waste such as metal zippers and plastic buttons.

Both post-consumer and post-industrial textile waste comes in endless colors. So, recyclers face a “color in, color out” challenge. They can sort and process the same shade of blue waste into blue yarn or process a mix of colors and dye it all black. As the industry worked to improve color fastness, they made it harder to remove color which limits the options for recycled materials. Fabric blends and coatings result in even more recycling hurdles.

In addition, the globalized apparel industry makes it complicated and costly to ship waste around the world. For example, Patagonia could manufacture fabric in Taiwan then send it to Vietnam for cutting, resulting in a warehouse filled with scraps. Those scraps would then need to be transported to the best recycler who may be in China.

Solving the Blended-Fabric Challenge with Tyton BioSciences

Historically, textile recyclers have viewed separating blended fabrics, such as a cotton-poly blend, as the Holy Grail. Tyton BioSciences, which Tin Shed Ventures has funded, successfully reduced that common fabric to its building blocks a feat they accomplished almost by accident. The company invented a clean hydrothermal process, which operates something like a pressure cooker, initially intended to turn hybrid tobacco into biofuel. When someone wondered if the technology could recover anything of value from an old T-shirt, they were surprised to find that the Tyton tobacco solution could be tuned to effectively separate the cotton as a solid and the polyester as liquid both of which could be re-purposed into fiber that the next companies in the

67 https://renewalworkshop.com/

68 https://www.harpersbazaar.com/uk/fashion/fashion

-news/a28609044/sustainable-fashion-expensive-why/

supply chain could make into yarn, then into fabric, and finally into new clothing. Regardless of the fabric blend ratio, the process took end-of-life textiles and allowed the would-be waste to become new garments, a process sometimes called a closed loop because it reuses materials already harvested to make new clothing.69

Tyton’s clean recycling technology earned the company an award from Fashion Positive Plus.70 Although the company doesn’t share its economics publicly, Tyton estimates its process is cost competitive to garments created from virgin fiber yet with a better environmental footprint A further benefit is that Tyton’s process eliminates the need to extract fossil fuels to make polyester and does not require water and land to grow cotton.

Tin Shed Ventures has invested in this blended materials recycler to recover value from Worn Wear items that can’t be resold or repaired. Patagonia takes unusable garments from its Reno distribution center through Tyton’s process to keep the materials in play. Tin Shed and Tyton have performed pilot rounds with cotton-and polyester-blended garments and turned them back into raw materials. The partners hope to replicate the process with other blended fabrics, including nylon and Spandex, and an early phase of testing and R&D is underway. Additionally, they are working to scale up the process; Tyton’s goal is to be able to process on a full commercial scale by 2022.

“It is critical we invest in technologies that tap into the surplus of waste instead of nonrenewable resources,” said Liliana Bettolo, Innovation Engineer on the Tin Shed Ventures team at Patagonia. “While it’s great that we’ve been making fleece from single-use recycled plastic bottles for decades, it’s still a linear model. The Tyton technology takes what would have been end-of-life materials, breaks them down, and closes the loop on apparel circularity.”

Although Tyton is actively innovating solutions, the founder said more solutions would be initiated if brands made financial commitments to their supply chain partners for circular materials. Also, there is a severe lack of funding for innovation in fashion globally compared to the resources poured into other industries.

“There is maybe $10 million a year invested in companies like ours across the planet,” said Peter Majeranowski, President, Tyton BioSciences. “The supply chain has had to squeeze every penny out of the process, so there is little appetite for the risk of innovation. When Patagonia funded us, it unlocked other funding and made would-be investors see there is a sustainability champion standing behind Tyton and this is a problem the industry wants solved.”

Recycling Fishnets with Bureo

Tin Shed funds Bureo, a company that makes products such as skateboards and sunglasses from 100% recycled fishing nets. In addition to turning waste into useable products, the process keeps discarded nets out of the oceans where they can harm marine life. Bureo estimates that since it was founded in 2013, the company has collected about 805,000 pounds of netting from 50

69 https://www.tytonbio.com/

70 https://www.just-style.com/news/tyton-biosciences-awarded-for-clean-recycling-technology_id135179.aspx

participating fisheries in South America. Patagonia has partnered with Bureo to begin using high-density polyethylene plastic from fishnets in all its hat brims beginning in Spring 2020, and is seeking more products that can use recycled, discarded fishnets to replace materials within its product line. Patagonia’s marketing plans include messaging that describe the origins of the products’ material: 100% traceable fishing nets.71

After Tin Shed invests in startups (such as Bureo) and helps them develop and scale their technology, Patagonia open-sources it to competitors so the broader apparel industry and the environment can benefit from the innovation.72

Goodwill’s Sustainable Activities

Goodwill® is a steward of used and end-of-life consumer goods maximizing social, economic and environmental benefit along the supply chain. Goodwill believes that responsible diversion of goods within a circular economy is both critical and becoming more acute given the changing dynamic of climate and the environment, precariousness of textile recycling markets, and shifting consumer attitudes. Across its global operations, the nonprofit holds itself accountable to the triple bottom line goals of people, planet, and prosperity. The network of 157 organizations in the U.S. and Canada collectively processes several billion pounds of donations each year. Goodwill’s sustainability goals date back to a time before that became a popular concept; the organization was founded in 1902 on the principle of creating less waste. Today, its sustainability program includes a variety of activities aimed at preventing un-purchased donations from going to landfills. It has branded its environmental goals with Earth Day and spring-cleaning campaigns, a popular series of YouTube videos showing DIY craft projects from common thrift finds, and an initiative to collect the clothing that college students often toss when they move out of dorms.

(EXHIBIT 8) Goodwill is working on a feasibility study, still in the discovery phase, to close the loop on processing textile donations while creating jobs at the same time. Patagonia is keenly interested in finding partners such as Goodwill to help scale recycling for its post-consumer garments. If Goodwill finds an economical way to recycle its large volumes of textiles, it will share those solutions with Patagonia to benefit the company’s efforts in reducing textile waste.

“There’s a gluttony of apparel being produced. The amount of trees, petroleum and greenhouse gasses it takes is staggering,” said Susanne Fredericks, Sustainability Program Manager for Goodwill Industries International. “We’re overusing our natural resources right now—so we hope to help create a circular global economy through our focus on reuse.”

Goodwill finds a home for the majority of donations: it sells clothing in stores, online, in its higher-end boutiques, and even by the pound in its outlets. As a last resort, Goodwill sells unused clothing in large bales to textile recyclers who in turn sell them on the secondary market for rags, insulation, and other non-clothing purposes. Goodwill is re-envisioning its position in the supply chain to developing countries, to advance toward more sustainable practices that accrue greater and more direct value to the economic prosperity of individuals and communities.

For the exclusive use of J. Erlandsson, 2023.

Other recent developments on the consumer side could have implications for textile waste from thrifting. Organizing guru Marie Kondo and her book, The Life-Changing Magic of Tidying Up, inspired a minimalist movement as people discarded things that didn’t “spark joy.” Goodwill noticed “the Kondo effect” cultural phenomenon when the book became a New York Times bestseller in 2014.73 In 2019, when the Netflix show Tidying Up with Marie Kondo debuted, Goodwills saw a surge in donations with some markets as high as a 30-percent increase yearover-year.74 Today, Fredericks said, a large demographic of Goodwill donors are empty-nesters who are downsizing, while a large group of its shoppers are millennials and Gen Zs because they value reuse and want their buying to align with a purpose. Also, they increasingly think that thrifting is hip.

In the greater thrifting space, unsold clothes have been shipped to Rwanda75 and other developing countries, a practice these countries are trying to stop because the cheap American clothes hurt their efforts to create their own apparel industries.76

Waste to Energy/Oil

If there’s no good secondary use of textiles, is treating waste by burning (incineration) a viable waste management option? Incineration can recover some energy from the waste but, if not managed properly, it also emits pollutants into the air, causing environmental harm and public health risks. For example, incineration of clothes made from synthetic fibers may release plastic microfibers into the atmosphere.77 Also, there are the options of pyrolysis, thermal processing in the absence of oxygen, or gasification, thermal processing with limited oxygen to produce heavy oils.78

In America, the number of textiles being put through the combustion with energy recovery process has increased; in the overall composition of these materials, synthetic materials have increased while compostable ones have decreased In 2017, the total amount of textiles in MSW combusted was 3.2 million tons. This was 9.3% of the overall MSW combusted with energy recovery. 79 Also, incinerator plants in America are aging, leading to further degradation of their environmental performance. For these reasons, many consider existing incineration methods to be a last resort.80

Currently, Patagonia stores all end-of-life garments it receives. However, without the right recycling options, Patagonia’s warehouse will continue to fill with waste and become a glorified landfill. So, converting waste to energy or oil could become viable options. Patagonia is evaluating if certain types of thermal processing may be better environmental solutions.

73 https://www.wsj.com/articles/marie-kondo-and-the-tidying-up-trend-1424970535

74 https://www.wsj.com/articles/marie-kondo-persuaded-you-to-jettison-your-junk-thrift-stores-sayenough-11551889124

75 https://www.un.org/africarenewal/magazine/december-2017-march-2018/protectionist-ban-imported-used-clothing

76 https://www.reuters.com/article/us-rwanda-usa-trade-insight/trump-versus-rwanda-in-trade-battle-over-used-clothes-idUSKCN1IP0WB

77 https://publications.parliament.uk/pa/cm201719/cmselect/cmenvaud/1952/report-files/195207.htm

78 https://www.sciencedirect.com/science/article/pii/0304396780900256

79 https://www.epa.gov/facts-and-figures-about-materials-waste-and-recycling/textiles-material-specific-data

80 https://www.pbs.org/newshour/science/is-burning-trash-a-good-way-to-dispose-of-it-waste-incineration-in-charts

For the exclusive use of J. Erlandsson, 2023.

Consumer Trends & Broader Apparel Industry Waste

Patagonia evaluates which marketing messages will resonate with customers through its in-house Consumer Insights Group that gathers information from the company’s own activities— evaluating its product launches, online presence, and retail environments. Also, the group tracks industry data on the psychology of consumer behavior. One of the biggest takeaways over the past few years is that customers are more receptive to environmental messaging in the early stages of marketing communication than they are at point-of-purchase. In testing messaging to activate conscious consumers, Patagonia has found income level to be a poor predictor of buying habits, while education level and concern for the environment are strong predictors. Also, Patagonia’s data shows that while its value-aligned customer truly cares about the environment, they may buy its brand simply because they expect the company is doing the right thing rather than because a fabric has a higher percentage of recycled content.

These insights influenced the sequential plan Patagonia created for its 2019 hemp campaign. They launched with an educational approach in video, Facebook, Instagram and a TED Talk to explain why hemp is a useful crop. In doing so, they sought to remove misconceptions, explaining that hemp is a resilient and fast-growing crop that uses less water and requires fewer pesticides than do other fiber crops such as cotton.81 Later messaging focused on the product benefits of hemp apparel by highlighting its soft and light feel

Used & Sustainable is In

A variety of recent business trends prove growing interest in both buying used and renting clothes. ThredUp, an online marketplace for used clothes at discounted prices, sees adoption of secondhand growing 2.5 times faster with millennials and Gen Z than other age groups.82 The company predicts the secondhand market will double in five years, reaching $51B in 2023. One factor driving this growth is the rise of the conscious consumer; the number of consumers who prefer to buy from environmentally friendly brands has growth to 72% in 2018.

Even some of the biggest brick-and-mortar brands have joined the cult of thrift. In 2019, Macy’s and J.C. Penney announced they would offer used clothing and accessories in some of their stores in partnership with ThredUp.83 Eileen Fisher started a take-back program in which they asked customers to return unwanted pieces for a gift card. The offer became so popular that the company ran out of storage space.84

The market for pre-owned designer apparel is also strong as shown by the success of The RealReal, an online retailer of authenticated luxury goods. The company is planning an IPO in 2020 with a share price that would place its valuation at $1B.85

81 https://cfda.com/resources/materials/detail/hemp

82 https://www.thredup.com/resale

83 https://www.wsj.com/articles/on-second-thought-traditional-retailers-make-room -for-used-clothes-11565947803

84 https://www.voguebusiness.com/companies/fashion-brands-recycling-upcycling-resale-takeback-sustainability

85 https://techcrunch.com/2019/04/23/luxury-consignment-e-tailer-the-realreal-to-enter-the-unicorn-club-with-new-funding/

Rent the Runway launched online in 2009 renting designer dresses for special occasions and has expanded to everyday fashion that women can wear and return for a monthly fee. As the company’s messaging touts, “The renting revolution is here.”86 Banana Republic joined the trend in 2019 by offering women an online rental service through which they can choose three pieces a month for $85.87 American Eagle, Ann Taylor, and Bloomingdale’s have also launched rental options. In 2018, the fashion rental market was valued at $1 billion and is expected to hit $2.5 billion by 2023.88

Another anti-fast-fashion model is the capsule wardrobe concept which encourages people to limit their closet to around 30 essential clothing items that they can supplement with seasonal needs. Consumers can glean advice on YouTube to curate their own capsule wardrobes or buy core pieces from a company like Cuyana that promotes buying fewer, higher-quality items.89

Also, awareness has grown in Hollywood. Instead of walking the Red Carpet, celebrities are taking the Green Carpet Challenge and wearing environmentally friendly clothing to events like the Cannes Film Festival. The Green Carpet mission aims to promote sustainable brands along with the idea that glamour and eco-manufacturing can co-exist beautifully. In the UK, Oxfam, a nonprofit focused on ending poverty, initiated Second Hand September to raise awareness about the ugly side of fashion by asking consumers to abstain from buying any new clothes for 30 days and instead only buy at charity stores.90

Next Season

In 2019, Patagonia changed its mission statement from “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” to “We’re in business to save our home planet.” The change was intended to better communicate a sense of urgency as the climate crisis deepens. The company is seeking broad solutions not simply for better recycling of textile waste but rather solutions that leverage its marketing credibility to encourage a “waste not, want not” attitude from consumers and to challenge the current apparel industry to adopt a slower, circular model. Patagonia is committed to using all its resources to solve this global crisis because “all life on earth is under threat of extinction.”

“The impact this aspirational language has had inside the company has been profound,” said Nora Gallagher, long-time Patagonia environmental editor and mentor. “Our employees are aligned with our purpose and that drives innovation.”

As inspired as Patagonia is in its pursuit of innovative solutions, the billion-dollar company plays only a small role in the apparel industry at large Worldwide, the industry is forecasted to generate approximately $1.65 trillion by 2020.91 It’s hard to imagine much less measure the magnitude of waste an industry of that size generates. The company feels an urgency to avoid a doomsday scenario So, Patagonia asks, what can we all do to reduce textile waste?

86 https://www.renttherunway.com/

87 https://www.brstylepassport.com/

88 https://insights.digitalmediasolutions.com/articles/clothing-rentals-popularity

89 https://www.cuyana.com/

90 https://www.ft.com/content/ffa24ee0-c32a-11e9-a8e9-296ca66511c9

91 https://www.statista.com/statistics/551775/size-of-the-global-apparel-and-footwear-market/

Case Discussion Questions

1. Based on this case, do you think Patagonia is greenwashing, or is its commitment to reducing waste sincere?

2. Where are the key leverage points to reduce waste in the apparel industry?

3. What do you see as the strengths and weaknesses of Patagonia’s approach to reducing apparel waste?

4. Is circular economy a realistic goal for the apparel industry? Why or why not?

5. What are barriers to creating closed-loop systems within the apparel industry?

For the exclusive use of J. Erlandsson, 2023.

Exhibit 1 Five main phases of the apparel industry lifecycle

Source: Rachel Dzombak (UC Berkeley) & Heather Dillon (University of Portland).92

Exhibit 2 Model for new circular apparel industry

Exhibit 3 Clothing purchases grow as utilization falls

Exhibit 4: Worn Wear Infographic

For the exclusive use of J. Erlandsson, 2023.

-the original Worn Wear vehicle travels around North America advocating for

Exhibit 6 Worn Wear -Boulder, Colorado Pop-Up Store in Winter 2019

Exhibit 7 ReCrafted Collection within the Worn Wear Boulder, Colorado Pop-Up Store

Exhibit 8 Goodwill Students for Zero Waste graphic

Exhibit 9 Apparel industry waste sources and current solution options

Pre Consumer Waste

Who controls waste? Source Current solution options

Liability Fabric Factory and Patagonia

Excess fabric at finished goods and raw material factory

Factory Scraps Factory Scraps leftover from production of final products

Factory Seconds Patagonia

Post Consumer Waste

Products made with some sort of defect at the finished goods factory that arrives at Patagonia’s warehouse

• Use excess to create new products

• Sell excess to other brands

• Recycling into new fiber

• Incineration / Landfill

• Use excess to create new products

• Recycling into new fiber

• Incineration / Landfill

• Sell defected products at a discount to new

• Donate products

• Recycle, upcycle, or downcycle

• Incineration / Landfill

Who controls waste? Source Current solution options

Trade-Ins Patagonia Bought back from consumers at retail stores and via mail for merchandise credit

Patagonia Returns Patagonia Items returned from customers for various reasons

Patagonia Repairs Patagonia Items sent in for repair by customers using Patagonia’s IronClad Guarantee

Patagonia Recycling Patagonia Items sent in by customers that have no or little useful life left

• Functional items are sold through Worn Wear online and in stores

• Broken items can be repaired, upcycled or downcycled

• Storage until future solutions

Customer @ Home Customer Items in customer closets that go unused

• Send back to brands for repair or disposal

• Sell back to brands with recommerce programs

• Sell/Consign

• Donate to Goodwill or other org.

• Hand down to friend or family member

• Throw away / Landfill