When you walk through the front door of Patagonia Inc.'s modest corporate headquarters, in Ventura, California (one hour north of Los Angeles) , the first thing you see is a whiteboard. Nothing unusual there -- except that this board's main purpose is to give employees a daily update on wave conditions at the beach just a few blocks away. If you're interested, by the way, you can find surfboards stored under a stairway just down the hall.
Everywhere you look, you see signs that Patagonia, a $182 million, 28-year-old maker of rugged, good-looking adventure clothes and equipment, is made up of people who feel slightly uncomfortable indoors. Wet suits are hung out to dry on cars in the parking lot in Ventura. At the company's four-year-old customer-service-and-distribution center near Reno, Nevada, kayaks ride on top of many of the vehicles -- just in case their owners decide to navigate some white water during their lunch hour.
So when a group of employees sat down four years ago to hammer out a corporate mission statement, what emerged was -- well, only natural: "Our purpose: To use business to inspire and implement solutions to the environmental crisis." Far from taking Patagonia outside of its core competency, the mission statement served as a mirror, one that revealed an important failing in the company's performance: Its own environment -- the various buildings where its employees worked each day -- was clearly flunking the newly crafted standard.
Not that the buildings were inhuman, unsightly, or poorly designed. Far from it. In fact, there have never been office cubes in any of Patagonia's buildings, and the company's environment has always featured lots of exposed wood and friendly ocean breezes.
But in a rare display of radical corporate honesty, Patagonia found itself wanting and posted "Louder than Words," a self-indictment, in each of its stores. The statement reads, in part: "In fact, we've come to understand that the [headquarters] building is a monument to superficial satisfaction over environmental priority. We used virgin materials everywhere -- new wood, new fixtures, new gypsum board, carpeting and paint. And the vertical grain fir [ used in the ceiling beams ]? It's made from the old growth forests that groups we now support are fighting to protect. Surrounded by these persistent reminders of our own naïveté, we are committed to a new approach."
That new approach began in Reno, Nevada with a 193,000-square-foot distribution facility and customer-service center that Patagonia opened in 1996. Dave Abeloe, a 22-year veteran of the company and an avid rock climber, oversaw the design-and-construction process. He hired Miller/Hull, a relatively small Seattle-based architecture firm, to help him put it all together. "They didn't have much experience doing anything of this size," says Abeloe, 40. "But they're well-known for quirky residences and small offices that use recycled materials and that employ other sustainable building techniques."
Patagonia was founded in 1973 by Yvon Chouinard as a company committed to the environment. What resulted from the partnership between that company and an architecture firm committed to sustainable building was a systemwide project that actively supports Patagonia's corporate mission statement.
Building With Natural Systems
Nature operates according to a set of interrelated systems. So do buildings. To make the new Patagonia facility more natural, the design team developed several unique systems. For instance, the building's heat comes from white rectangular panels that hang from the ceiling. The panels are connected to copper pipes that carry hot water, which radiates heat down from the panels to warm the area below. A gas-fired boiler pumps hundreds of gallons of water through the building's 15,000 feet of piping. Water leaves the boiler at 160 degrees and returns at a still-toasty 138 degrees, which means that the system uses very little energy to rewarm the water before flushing it through the building again. And, since the water never leaves the system, there is no waste.
By way of comparison, as part of the facility, Patagonia built 22,000 square feet of office space -- an area that has to be heated by conventional methods because of some late design changes. It requires the same amount of energy to heat that 22,000 square feet of office space as it does to heat the entire 171,000 square feet of warehouse space.
The same logic that suggested using water for heat dictated using sun for light. The building operates with 88 skylights in the roof, each with four mirrored panels that are rigged up to photo sensors. As the sun moves across the sky, the sensors order the panels to shift with it, reflecting the maximum amount of light down into the building.
The company also uses energy-saving systems that are a bit more conventional. Above the aisles of clothing and gear racks, for example, motion detectors automatically increase the intensity of dimmed lights whenever people walk by, while in other parts of the space, the lights go off altogether if no one is moving nearby.
As befits any global shipping center, there's always a lot of cardboard lying around at the Reno facility, and Patagonia is committed to recycling as much of it as possible. The company buys only board that is at least 35% recycled (much of the board is 100% recycled), and it takes steps to ensure that the material doesn't go to waste. When goods arrive in boxes from the company's network of contract manufacturers, workers break down the boxes, put them on pallets, and ship them back to the manufacturers to be used again.
The facility makes ingenious use of several other recycled goods. In the bathrooms, the countertops are a riot of color: They were built with a wide variety of recycled plastics, such as empty soda bottles. The building does have some drywall, which is made of recycled material. But many of the walls in the office's public spaces look nothing like everyday gypsum: They're made of compressed field straw. Anything from the building that can't be recycled ends up in the company's 956-cubic-foot trash compactor. One measure of Patagonia's commitment to recycling: It takes the company nine months to fill the compactor completely.
Earning With Natural Economics
The building makes an impressive environmental statement. But to succeed, Abeloe says, it must also make an impressive economic statement. "This is a business, and businesses need profits to survive," he says. "The less we make, the less we will have to give away, and the less other companies will think we have a mission that's worth imitating. So we didn't just do this for the sake of green marketing. We wanted to make sure that there would be a payback, and we didn't want to make any stupid mistakes."
Materials like the ones that Patagonia used can cost as much as 10% more than conventional materials, and they may take up to 20% longer to install. So, right from the start, Abeloe was hard-pressed to meet his building budget, which ended up exceeding $15 million -- the largest capital expenditure that the company has ever made.
But doing environmentally sensitive construction also means doing environmentally sound economic calculations. For Patagonia, that entails measuring the building's construction and operating costs over the course of the company's life cycle -- in much the same way that nature operates. To figure the return on investment of motion-sensitive lights, for example, Abeloe first establishes how much more money those lights cost than standard fluorescent lights. He then divides that number by the amount of energy saved by using the automatic lights. That ratio, applied against the cost of energy over time, gives him a measure of the payback period -- how long it will take for that feature to pay for itself and, ultimately, to produce savings.
Using these calculations, Abeloe figures that the environmentally friendly elements of the building will take two to eight years to pay for themselves -- just a fraction of the building's expected life span. The fact that there are no corporate or inventory taxes in Nevada doesn't hurt either: Patagonia saved at least $500,000 in 1997, its first full year in the facility, and the savings have only grown since then.
All of this has made Abeloe something of a guru in the logistics field. In the four years that the facility has been open, more than 1,000 people from more than 150 organizations, ranging from J.C. Penney to the Reno Fire Department, have visited for a tour. And most of those visitors tell him the same thing. "They say that their buildings need to show payback within 18 to 24 months," Abeloe says. "But a lot of these companies have been around for 100 years, and they all plan on being in business for at least 15 to 20 more. So, for a system that makes more sense ecologically, that pays for itself eventually, and that creates improvements for employees, why are they unwilling to accept a longer-term time horizon?"
Ron Lieber is a Fast Company senior writer. Contact Dave Abeloe by email (email@example.com), or visit Patagonia on the Web (www.patagonia.com).