Figure 1.11

While it might be easy to see the negative effects on the
environment from car emissions or the waste we produce, fewer
people think about the effects of discarded clothes on the
environment. Many donate out-of-date garments to a thrift store for
resale, but few think about what happens to those things that can’t
be resold or the articles that are beyond use. However, the apparel
industry uses more water than any industry after agriculture. At
least 8,000 chemicals are used to turn raw materials into textiles,
and 25% of the world’s pesticides are used to grow nonorganic
cotton. To run a successful business, profits and revenue are a
necessary part of the equation, but in addition to fiscal
responsibility, what degree of social and environmental
responsibility are companies accountable for? These are questions
that a small outdoor and urban clothing company in Portland,
Oregon, contemplates every day. This company has committed itself
to doing good through its business practices.
A relatively young company, Nau (pronounced “now”) was founded
on the idea of using business as a vehicle for change, but its path
has not been easy. Nau was established in 2005 by a group of
like-minded individuals from Pacific Northwest clothing companies
such as Patagonia, Nike, and Marmot. Their goal was to create
outdoor urban apparel constructed from sustainable materials and
processes, with the entire life cycle of the product in mind. This
includes taking into account the cultivation of textiles all the
way through to end-of-life disposal. After 3 years of aggressive
growth and expansion, Nau declared bankruptcy in the spring of 2008
when they could not secure further funding. But only a few short
months later, Nau reopened as a subsidiary of outdoor clothing
company Horny Toad Inc., headquartered in Santa Barbara,
California. Although Nau is part of a larger company, it has been
able to create a balance between the ideals of a small,
independent, entrepreneurial business while being a successful part
of a larger company.
The power structure that Nau shares with Horny Toad is
decentralized; logistically, the companies share a human resources
department, IT, warehousing space, and finances, but Nau maintains
its product independence and business strategy. From the time of
its inception, Nau created a network of close relationships with
its overseas manufacturers, which allowed the company the power and
ability to closely control its production process. During the
transition, Nau desired to maintain these relationships and so had
to explain the arduous process of bankruptcy to its overseas
vendors and attempt to explain transferring debt and liabilities
from one company to another company. Although the people and faces
were the same, they were no longer connected with that debt. Nau’s
small size enables it to effectively control its supply chain and
to determine everything from which farm its raw materials come from
to how and where textiles are produced. For Nau, responsibility
does not end with the consumer’s purchase. Other changes include
the number of employees at Nau, which prior to the bankruptcy was
65. In 2010, this number is down to 15 employees. While several of
the individuals who took part in the founding of the company are
still there, change was not embraced by others who felt that
becoming part of a larger company would make it difficult to
maintain the original core values and beliefs.
So far, these changes have been good for the company and good
for business. Nau was acquired at the beginning of an economic
downturn, and for a company that is dependent on consumer
discretionary spending, this might have been a recipe for failure.
But business is picking up for Nau, and it has been able to
continue its Partners for Change program, in which Nau donates 2%
of each sale to one of its partner organizations, such as Mercy
Corps, Kiva, or Ecotrust, together working to create positive
economic and social change.
Based on information from an interview with Jamie Bainbridge,
director of textile development and sustainability at Nau.
Additional information from Nau Web site (http://www.nau.com) and
Future Fashion White Pages (www.earthpledge.org/ff).
Discussion Questions
- What benefits might result from becoming a part of a larger
organization?
- What are the benefits of maintaining the autonomy of a small
company?
- How does globalization affect Nau’s business strategy?
- What ethical dilemmas might employees at Nau and Horny Toad
face during their day-to-day experience?