MARKET WIRE — 04/07/08

Patagonia is the first major apparel manufacturer to track and expose the social and environmental impact of specific garments through The Footprint Chronicles, an interactive website that reveals to consumers the good and the bad involved in manufacturing outdoor clothing such as Synchilla fleece vests and rain shells. In a bold move that might make most companies nervous, Patagonia is determined to be candid and forthright about its impact on the environment and created the site to encourage dialog with its customers who are concerned about the environment.

“We believe that to avoid complacency, we must constantly examine our internal processes to improve upon the positive and mitigate the negative,” said Casey Sheahan, president and CEO of Patagonia. “The Footprint Chronicles allows us to do this publicly — sort of learning out loud.” He points out that the idea behind the website is to encourage thought and discussion. Each season the site will examine new products, so that the more that is exposed, the more harmful practices the company can change. Five new products will be added on Earth Day, 2008.

“Our customers are scientists, activists, professors, doctors and more — they have the collective experience and knowledge we’re looking for,” said Sheahan. “We’re highlighting exactly what happens in the manufacturing process and asking customers for their suggestions and help in efforts to find solutions to our less sustainable practices. It’s a unique dialogue to engage in — but one that will ultimately allow us to cause less harm to the planet.”

According to Jill Dumain, Patagonia’s director of environmental programs, the research involved in developing the Chronicles has proved to actually drive major business decisions at Patagonia.

“The Chronicles revealed that transportation makes up only about 1 percent of our overall energy use,” said Dumain. “Had we listened to the current media buzz touting transportation as the largest factor in energy consumption, we might have greatly misplaced our efforts by making strides to geographically shorten our supply chain — which would have massively impacted our business financially, logistically and perhaps even effected product quality — and we would only have reduced our energy savings by 1 percent. Instead, we are focusing our energy on areas where we can truly make a difference — right in the heart of the manufacturing process.”

The launch of The Footprint Chronicles puts into practice a prototype that they hope will inspire other companies to increase their transparency, and at the very least, raise awareness.

“We’ve been in business long enough to know that if we can reduce or eliminate a harm, other businesses will be eager to follow suit,”
said Sheahan. “Many companies will be pleasantly surprised that when they delve into their manufacturing processes, they will be able to present a balanced expose of their practices. Customers will appreciate their honesty and reward them for it.”

The Footprint Chronicles includes more than 35 filmed interviews and slideshows of factory workers, farmers, owners, designers and third-party auditors to provide an unprecedented level of transparency both internally and externally — from the factories and manufacturing partners that create its products, to the end of the product’s lifespan.

About Patagonia
Patagonia, with sales last year of over $280M, is noted internationally for its commitment to product quality and environmental activism. Incorporating environmental responsibility in to product development, the company has, since 1996, used only organically grown cotton in its clothing line. With its most recent launch of synthetic fiber-to-fiber recycling — Patagonia is taking back worn-out polyester and nylon clothing and reincarnating it as new products, forever capturing the raw materials used in making virgin fiber.

www.greenerchoices.com

These days–and especially around Earth Day–companies want to be seen with an environmental halo.

But experts say many are guilty of “greenwashing” — claims that mislead consumers, by words or image, about the environmenal impact of their products. Consumers are catching on, however. And that could undermine the growing green movement in corporate America–and possibly invite government regulation. “The timeframe for companies to get away with greenwashing is shrinking because the consumers are getting…much more skeptical of these kinds of these green claims,” says Scot Case, vice president of US operations for TerraChoice, an independent environmental marketing.

One possible result, he says, is that the “green consumer movement is going to collapse because consumers will walk away from false claims.”  That would hurt many mature consumer products, such personal care and home improvement supplies, where green products are the fastest growing segment.

Rampant corporate dissembling has already led government regulation in Britain and Australia where officials now impose heavy fines for false claims.  In the U.S., the Federal Trade Commission has stepped up a review of its own| environmental marketing standards and is currently holding public hearings.

Six Sins of Greenwashing

In a study of 1,018 products from six “category-leading big box stores,” TerraChoice found that all but one made claims that were either “demonstrably false or that risk misleading intended audiences.”

The firm, which has identified six broad categories of greenwashing sins, declines to name sinners –or the singular saint–preferring to allow for a “genuine misunderstanding” on appropriate standards.

There is, for instance, the “sin of irrelevance.” Aerosol cans now commonly sport environment-friendly green dots because they have no ozone-depleting chlorofluorocarbons. But only a minority explain, in small print, that CFCs were outlawed in 1978.

Another example: paper products are widely labeled “recyclable” though they may not have been.

“Everyone has thrown their hat in the ring to be green, but now comes the time…for companies to not just say they are green, but to prove it,” says David Lockwood, director of research for Mintel, a market research firm.  The growth potential for the green market is huge because ”the great majority of respondents still believe their shopping decisions can make a difference in the world,” a recent Mintel survey noted.

Grassroots Internet Policing

But that requires confronting greenwashing.

A growing array of vetting services can help. Consumer Reports launched its greenerchoices.org screening service on Earth Day in 2005, while a recent Nielsen report noted that blogosphere criticism of dubious corporate claims doubled between 2006 and 2007.

In January, the advertising faculty at the University of Oregon launched greenwashingindex.com, an open forum for posting and commenting on company advertising.

“Dirty” industries like utilities and automobile companies are favorite targets for ridicule.

Among the most pilloried was a coal industry association ad, which used Kool & the Gang’s “Celebrate.”

Even those with an easier case to make, can overdo it. An ad by Toyota (NYSE:TM – News)– which makes the market-leading hybrid Prius – showed a car made of wood, which could later biodegrade, to burnish the ‘greenness’ of its vehicles.

“These ads just don’t cut any more,” says Deborah Morrison, an advertising professor at Oregon University. “I see how my teenagers watch these ads – they are quick to call the B.S. – they are looking for authenticity.”

“The issue of climate change is too important to be screwing around,” adds Kevin Tuerff, president of EnviroMedia Social Marketing, an environmental marketing firm in Austin, Texas. “The changes that are coming…are going to have big impacts so it is in companies best interest to get their house in order when comes to sustainability, and then go out and tell their message to consumers.”

Possible Third-Party Solutions

But for all the skepticism there also still appears a fair amount of gullibility.

Almost half of Americans erroneously believe products marketed as “environmentally friendly” actually have beneficial impacts, according to a survey conducted for Boston College’s Center for Corporate Citizenship. Ninety percent say companies making environmental claims need to prove it. Close to 60 percent favor government enforcement but even more support self-policing by industry.

The most popular option is third party certification–the route many leading companies are taking, especially if they have environmental baggage. That may have been the thinking of Clorox (NYSE:CLX – News), which launched of a line of natural cleaning products Monday.

Clorox won the endorsement of the venerable Sierra Club – which in exchange is getting an undosclosed percentage of sales. “It is literally unprecedented for us to put out logo on a product| – we are a 116 years old – so that’s a significant change for us,” said David Willet, the Sierra Club’s national press secretary.| The move led to a four-year suspension of the Florida chapter, which strongly protested the new alliance, because of Clorox’s past record.

Fortunately, most experts say, consumers don’t expect companies to turn a new green leaf overnight but say transparency becomes even more important.

“If the consumer does not understand exactly what that product has done to improve its environmental performance, the green washing flags go off,” says Case. “People are recognizing every single purchase has hidden human and environmental impacts and as a result people are trying to buy a green version of just about everything.”