How does Patagonia?s commitment to the environment give it a
competitive advantage? Patagonia is the firm competed with The NORTH
FACE, MARMOT MOUNTAIN, MOUNTAIN HARDWARE, AND ARC'TERYX EQUIPMENT in
the high end of the mountain apparel segment of the outdoor apparel
industry.

Competitive Advantage: "Condition which enables a company to operate
in a more efficient or otherwise higher-quality manner than the
companies it competes with, and which results in benefits accruing to
that company."

--http://www.advfn.com/money-words_term_998_competitive_advantage.html

Many outdoor apparel customers care about the environment (since they
obviously enjoy the outdoors).  If it is known by a customer that
Patagonia is commited to the environment then (assuming the customer
cares about the environment as well) the customer will be willing to
pay a little more for a Patagonia product rather than another brand of
the same quality.
In essence, Patagonia has a higher value (or quality) than its
competition simply because they care for the environment.