Patagoniacs, as devotees of outdoor-gear maker Patagonia call themselves, don't love the company just for its products. When they buy from its catalog, store, and wholesale lines, they're buying into an uncompromising "green" commitment. As CEO Dave Olsen puts it, "Products like Patagonia's, which strive to raise environmental standards, give people a chance to make a difference."

What surprises many people is that the Ventura, Calif., based company has ridden this model to success. While making clothing from recycled bottles and organic cotton, and donating 1% of its sales to environmental causes, Patagonia has posted consistent profits. It has proved that founder Yvon Chouinard's environmental correctness is no mistake.

Olsen and Patagonia's next generation of executives are following the lead of Chouinard, who brainstorms ideas from his outdoors "office." An avid ice and rock climber, kayaker, and fisherman, Chouinard began the business that would become Patagonia in the 1960s by developing reusable climbing pitons. Selling them out of his car trunk, he attracted a corps of fellow climbers who demanded field-tested products as tough as themselves.

Chouinard's colleagues fueled double-digit growth until the late '80s, when Patagonia faced a crisis of confidence. It had opened too many stores and produced too much "outdoorlike" clothes for wannabes. Chouinard responded by announcing Patagonia would curtail its growth and reduce its customers' choices. It was the only way he could reconcile his values with the business's needs.

Today Chouinard's sense of responsibility is evident in Patagonia's every activity. The company interviews prospective employees several times about their passion for the environment. It engages its suppliers to improve every step of production. Its distribution center uses renewable energy sources and environmental controls.

Everyone in the company shares this sense of responsibility, from CEO Olsen to the shipping clerks. Managers encourage their staff to speak up at meetings rather than tuck suggestions in boxes. Workers learn to handle every job in their department. In return, Patagonia gives them day-care centers, surfing breaks, and paid sabbaticals for environmental projects.

As Chouinard moves toward retirement, Olsen must remain true to Chouinard's vision while changing with the times. It's a tricky balancing act with no end of challenges. For example, Patagonia's bright dyes are based on strip-mined metals, and its waterproof coatings contain chemical toxins, with no workable alternatives in sight.

Olsen has faith in Chouinard's self-described mission: "to use the company as a tool for social change." But even if Patagonia improves its processes, it must get other manufacturers to buy into its methods. The problem is compounded overseas, where traditional cultures are despoiling the environment while playing catch-up.

If you were Dave Olsen, how would you reconcile your company's financial goals with its quest for social responsibility? How would you maintain your core values of quality, integrity, environmentalism, and not being bound by convention? What effect would increasing competition, new technologies, and the global economy have on your decisions?