Patagonia’s KPIs and Sustainable Goals

Patagonia’s KPIs and Sustainable Goals
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December 5, 2022
Understanding the various critical goals of an organization is essential for any business leader. It allows him to understand better how to make strategic decisions relative to the company's strengths, risks, and opportunities. In this article, the author would like to discuss Patagonia and their various CSR initiatives. Notably, the following sections would aim to determine one standard financial Key Performance Index (KPI), the importance of CSR activism, and how to bridge these two to help meet the company's goals and aims. The author believes that when done strategically, CSR activism could even help increase the company's profitability and dominance in the market.
Patagonia's Operating Margin
One KPI that Patagonia may use in order to drive its CSR campaign while also benefiting the company is its operating margin. Generally, a company's operating margin is defined as "how much profit a company makes on a dollar of sales after paying for variable costs of production, such as wages and raw materials, but before paying interest or tax" (Hayes, 2022). In other words, the operating margin is one good measure of efficiency (or cost efficiency) in the company's operations.
Accordingly, since the primary goal of CSR is improving sustainability and efficiency to reduce waste, then using new materials that would reduce wasted and damage to the environment could also lead to higher operating margins. In fact, in one study done by Braccini and Margherita (2018), the authors found that companies can leverage the use of sustainable materials and other cost-reducing technologies (i.e., Artificial Intelligence) to reduce production and supply costs while also driving revenues and operating margins. All in all, this should be in line with the company's mission and values, which are focused on developing environmentally friendly products.
CSR Activism
Aside from driving up revenues and increasing operating margins, Patagonia's recent move may also help build a better brand image and financial result by increasing customer awareness. Customer awareness refers to b...