ESG Report Analysis: Proving Profit Does Not Have to Mean Unsustainable

To communicate sustainability practices to the public, a company generally publishes an ESG report, or environmental, sustainability, and governance report, that lays out the standards amongst their practices.

These reports are ripe for companies to portray a more eco-friendly picture than reality. Greenwashing refers to a company making claims they are sustainable to please the public eye, but when one looks behind the curtains they see it was a facade. This could be through a lack of information presented on the organization’s practices, throwing out words like “green” and "responsible" with no backing behind them, or just general false claims.

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Patagonia goes above and beyond, and actually calls out greenwashing for what it is: “The world’s largest clothing brands hide dirty, irresponsible practices and misuse words like ‘sustainable,’ ‘green’ and ‘conscious’” (Patagonia, 2024). By immediately drawing attention to the problem, they are enabling the consumer to hold the company accountable. This company demonstrates no interest in hiding information, sugar-coating the sustainability issue, or tricking their consumer into believing something only half-true. Their marketing strategy is transparency which lies perfectly within the realm of true sustainability. While the general medium tends to be a long-winded document, Patagonia chooses to lay out their ESG report in a website format, where the user can interactively choose how much information they want to read in a series of subpages. By laying out all the information right on their website in a public facing format and not in a hard-to-find document hiding on the internet, they make their sustainability and social practices easy to access for the public. The candidness allows more people to hold them accountable.

The ESG report quickly addresses how bad the clothing industry is with full transparency. By acknowledging their inevitable part in this destructive whole, it quickly discloses that Patagonia’s main challenge towards sustainability is the clothing industry itself. Clothing production, especially fast fashion, is the second largest consumer of water, responsible for 10% of greenhouse gases, and perhaps worst of all, 85% of clothing ends up in the dump every year where it will pollute the lands, oceans, and air for years to come (Geneva Environment Network, 2024). Whether it’s the notorious unethical working conditions, or the overindulgence in consumer culture, clothing production will never be a fully sustainable business. However, that doesn’t mean Patagonia won’t still try to limit their damage.

Many companies simply say they “oversee” their partners across the globe without disclosing the details of what they are actually overseeing. Once again, Patagonia goes against the norm and addresses the issue, lists all the partners and details they use around the globe, and actively works against the irresponsible dissociative standard by stating, “Like most clothing companies, we don’t make our own products or own any of the factories that do. We partner with other companies across the globe and work closely with them to mitigate the harm we collectively create through the manufacturing of clothes,” (Patagonia, 2024). The intentional diction in this statement wrangles consumers into the “collective” guilt of the industry. Hopefully, this guilty conscience pushes the reader to look into more specifics, like the working environment in these abroad factories. In which case, they will be pleasantly surprised. To combat the infamous unjust working environment that so often exists in the clothing industry, their “... goal is to not only minimize harm, but also create a positive benefit for the lives that we touch through our business” (Patagonia, 2024). They take the extra step to go into what those standards are: fair trade, fair labor, regenerative certified organic programs, a migrant workers program, and many more. Quite a change from the usual unsafe air quality, frequent accidents, and fatal fires that plague textile production sites (Sustain Your Style, 2025).

In response to the waste that is skyrocketing alongside clothing industries, they have a mini film, “Why Recycled,” on recycled materials, the problem of waste as a whole, and how they take something from the waste stream. This 12 minute film reminds audiences that waste hasn’t always been a problem. The shift from organic waste which naturally decomposes to plastic only happened after World War II, and the modern waste management system is only 50 years old. Most of the consumers today are used to the “out of sight out of mind” mindset, associating the blue bin with a good conscience. The mini film then goes into how they take a single-use piece of plastic with very low value, and through either mechanical recycling or polymerization, give that piece of plastic a high value and an increased 50 year lifespan. Even so, they acknowledge that “nothing beats not buying anything,” which represents quite the irony in a business reliant on consumers buying their items. They aren’t pretending to be omniscient, and state that recycling “doesn’t make it green, but maybe less brown.”

Because of the degrading nature of extracting materials, Patagonia aims to minimize their need for the growing process. They “...set a goal to only use preferred materials—organic and Regenerative Organic cotton, recycled polyester and recycled nylon, among others—by 2025” (Patagonia, 2024). Looking even further into the website, they have laid out information on each of their materials, and why they selected those because of their environmental draw. And, instead of only saying "responsibly sourced,” the user can click on each to see further information on what sustainable responsibility actually means.

This represents just one example of the successful design the company uses. A fine line exists between overwhelming the reader with information so nothing gets read, or not including enough information in the first place. A lot of companies trying to mask their questionable sustainability practices do the latter. However, Patagonia employs a system where the basic information is on the screen, and the details are available on separate linked pages. Some extra pages even link to even more mini films, where they lay out the sustainability in a virtual format so the viewer can see for themselves where their fabric comes from. Furthermore, their visual aesthetics are simple, but not exclusive in terms of information. They don’t distract the reader with elaborate infographics or big numbers. Instead, there are straightforward sentences paired with real photographs, not just fictitious wind mills and smiling people holding a shovel. The overall design and interactive components are a pristine example of an anti-greenwashing strategy.

Perhaps the barrier in the way of sustainable corporations is that at the end of the day, they are companies that need to make money to survive. Maximum profit isn’t always compatible with environmentally friendly practices. However, in this case, not only has Patagonia’s revenue still been rising, but they have “...managed to maintain [their] focus on ethical sourcing and employee well-being” at the same time (Land, 2023). Patagonia walks the talk, and even donated 100% of its black friday sales in 2016 to environmental causes (Land, 2023). While some profit is unavoidably necessary, it is not the sole purpose. When the dilemma of what Yvone, the former owner and founder, wanted to do with the company, “...there were no good options available. So, [we] created our own” (Patagonia, 2024). Instead of selling the company and not knowing how the future will look, or going public with the company...

"100% of the company's voting stock transfers to the Patagonia Purpose Trust, created to protect the company's values; and 100% of the nonvoting stock has been given to the Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature...Each year the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis."

Furthermore, Patagonia isn’t satisfied and complacent with what they are doing now, even though it is already beyond the standard effort. In COP26, Patagonia denounced the title of a “sustainable brand” because they recognized there was still so much room to grow (Wolfe, 2024). In fact, they have always welcomed criticism as a path to growth. When PETA called Patagonia out for cruel practices for sheep for their wool in 2015, they immediately cut that partnership. They then set a new standard for wool production for all future partners (Demkes, 2020). By leaving their ESG report open for all to see, they don’t denounce their imperfections, and instead acknowledge the legitimacy of sustainability in the clothing industry, and continue to grow.

Even amongst leaders, there are areas to grow. In this case, accessibility is a major flaw in their plan. While a consumer can reduce guilt knowing their money is going towards an ethical brand, the price point leaves many consumers out of the equation. With a roughly $1 billion a year profit, the high profit margins are partially due to the hefty price tags accompanying their clothing. In order to have consumers make more sustainable choices, they have to be able to buy them in the first place. The trailblazing sustainability production Patagonia employs is imperative to the clothing industry, but equally as important as being able to reach the most amount of people possible.

It’s hard to function simultaneously as a consumer and an environmentalist, making Patagonia a breath of fresh air. The environmental and social report shows there is a path forward and a way for a major company, a clothing company no less, to do it and still be profitable. They don’t hide any information from the viewer, but rather present it in a digestible way. Furthermore, the information isn’t optimistically sugarcoated, or patronizing, instead it is a sincere conversation with a person who can educate themselves and make their own decision. This company and their ESG report rank the highest in terms of true, genuine sustainability practices, and it’s an extremely hopeful example in a world of bleak and false progress.