Patagonia founder Yvon Chouinard believes less is more with products.

August 13, 2012, 4:12 PM UTC
Patagonia's Yvon Chouinard goes off the grid in Wyoming.
Photo: Tim Davis

An executive who tries to talk his customers out of buying his products? It sounds nuts, but that’s just what Yvon Chouinard loves to do. The outspoken, iconoclastic founder of Patagonia, maker of high-end outdoor clothing and equipment, believes that capitalism is on an unsustainable path. In the process of making and selling, we use too many resources and buy low-quality goods that we quickly throw away. In his new, provocative book, The Responsible Company, written with Patagonia executive Vincent Stanley, Chouinard contends that we must move toward a “post-consumerist economy” where goods are high quality, recyclable, and repairable. Today, as the mountain-climber entrepreneur puts it, “most of what we produce to sell each other is crap.”

His solution, for now, is simple: Have a Patagonia ski parka with a rip in the arm? Don’t throw it away and buy a new one. Send it back, and the company will sew it up. Is your tent beyond repair? Send it back, and Patagonia will recycle the material.

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You can almost hear Wal-Mart’s executives gasping all the way from Bentonville, Ark. But Patagonia may be onto something. The private company, with annual sales of $400 million, reports that it makes money even while encouraging its customers to consume less. And in at least one sense, it has won over Wal-Mart (WMT). In 2008, Patagonia joined with the big-box store to launch the Sustainable Apparel Coalition, whose members now produce more than 30% of all clothing sold globally. The goal is to develop the tools to measure, monitor, and reduce the impact the apparel industry has on the environment. It is no easy task. Tracing the origins of, say, a shirt’s raw materials can be devilish. You might know that a Chinese maker of the cloth is doing her best to uphold environmental standards, but what about the company that supplied the dye?

Chouinard’s critics point out that he can afford to go radically green because, as the owner of a small private company, he can think long-term without the pressure of public outrage at quarterly earnings. Reducing a corporation’s impact on the environment is good for shareholders, he counters. The next generation of consumers — including millions of millennials who eat and wear organic — do not take kindly to polluters. The consequences in this age of social media can be severe. Chouinard also says he believes that companies that make their products with fewer resources will lower their costs and be in a better competitive position as the prices of oil, steel, water, and other raw materials inevitably rise due to increased demand from growing populations.

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When one looks at the unbridled growth in China, India, and other parts of the developing world, where billions are vying for an American lifestyle, it’s hard to imagine that Chouinard’s utopian world of less consumption, less waste, and higher-quality goods will prevail. (How low-income consumers will afford high-quality products, he doesn’t say.) He does understand the challenge, pointing out that a Patagonia polo shirt, made of organic cotton, consumes in the making enough daily drinking water for 900 people and produces 30 times its weight in CO2 and three times its weight in waste. Sustainable? No economic activity is yet sustainable, but Chouinard is leading the charge to get us there.

This story is from the August 13, 2012 issue of Fortune.