Patagonia Raises the Bar in Sourcing Transparency

The electronics industry could take a few lessons from Patagonia as pressure mounts on the industry to make its supply chain transparent. (See: The Information Squeeze.)

Patagonia, a company long known for its environmentally friendly and philanthropic policies, has recently taken steps to open a window on its use of materials, its environmental practices, and the working conditions of its suppliers worldwide. The company recently launched the Footprint Chronicles, an interactive map that gives a snapshot of each link in its extensive supply chain. From the home page, you can hit the environmentalism tab at the top and then go to Footprint Chronicles.

When you click on a location, information pops up on that part of the supply chain. In Jordan, for example, there is a sewing factory that has been a Patagonia supplier since 2009. The factory has 408 workers (85 percent of them female) and produces base layers and sportswear. That seems to be the minimum amount of information listed for the factories. Others have more extensive details. An entry for a sewing factory in Colombia includes the following facts:

• Patagonia taught the factory how to bond seams using heat (which is required in some products), rather than threads.
• The workers earn "slightly more than minimum wage."
• A recent audit found a few problems at the factory, including the fact that workers were given only one 15-minute work break. These problems did not violate Colombian labor laws but "are not up to our standards."

Imagine if Apple Inc. (Nasdaq: AAPL) did this. Its supply chain reputation (assuming it had nothing to hide) could match the cool factor of its design and brand marketing. Consumers and others would have immediate information on what's going on at its main contract manufacturer, Foxconn Electronics Inc. , and other facilities, including whether they passed recent audits. It would go a long way toward improving Apple's record on human rights and environmental compliance at its factories -- something the company has said it is trying to do. And it could disarm the company's critics.

But Patagonia goes even further. From the Footprint Chronicles, you can click a link to the Reference Library, which describes the company's best-practices, including why it uses (or does not use) various materials in its clothing. For instance, there is a full page of information on wool and chlorine. Patagonia says it does not use chlorine-treated wool, because it results in waste water with unacceptably high levels of toxins. The explanation includes links to further resources, such as the Chlorine Institute and the nonprofit Environmental Working Group.

The library also has details on the company's green business practices; environmental, health, and safety management programs; social responsibility benchmarks; and workplace code of conduct. Imagine if semiconductor suppliers included a reference library on the materials that go into their chips, including where the minerals came from and how they were mined. This could be required soon under new proposed regulations from the US Securities & Exchange Commission. (See: Resolving the Conflict Over 'Conflict Minerals'.)

Think it's unrealistic to expect this of technology companies? You might need to reconsider. A recent article about the clothing industry in TriplePundit, a Website on sustainable business practices, seems to foreshadow what's coming in the electronics supply chain. The article said:

Not long ago it was enough for a company to say they were "doing better" and were "exploring alternatives" to current business practices. Then came the demands for increased disclosures about its supply chain. Now lists of factories and percentages of successful ethical audits will be insufficient.

Are any electronics manufacturers doing anything close to Patagonia's level of supply chain transparency? If so, I'd like to hear about it in a comment.