Patagonia boss gives company away to fight climate change
Yvon Chouinard, the billionaire founder of the outdoor fashion retailer Patagonia, announced on Wednesday that he has given away his company to a charitable trust.
Under the new ownership structure, any profit not reinvested in running the business – which is known for its hiking and outdoor clothing – will go to fighting climate change.
Chouinard claims that this will amount to around $100m (£87m) a year, depending on the health of the company.
In an open letter to customers, Chouinard – whose net worth is thought to be $1.2bn – said: “If we have any hope of a thriving planet, much less a business, it is going to take all of us doing what we can with the resources we have.”
Patagonia was founded in 1973 but as Chouinard, who started as a craftsman, acknowledges in his letter, he “never wanted to be a businessman”.
“As we began to witness the extent of global warming and ecological destruction, and our own contribution to it, Patagonia committed to using our company to change the way business was done,” he explained.
This included using materials in its products that caused less harm to the environment and giving away 1% of sales each year. In 2018, Patagonia changed the company’s purpose to: ‘We’re in business to save our home planet.’
Chouinard toyed with the idea of selling Patagonia and donating all the money to fight the environmental crisis. “But we couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed,” he wrote.
Taking the company public was also ruled out. “What a disaster that would have been. Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility.”
He added: “Instead of ‘going public,’ you could say we’re ‘going purpose’.”
The new model sees 100% of the company’s voting stock transfers to the Patagonia Purpose Trust, created to protect the company’s values; and 100% of the non-voting stock had been given to the Holdfast Collective, a non-profit dedicated to fighting the environmental crisis and defending nature.
“The funding will come from Patagonia: Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis,” Chouinard said.
Patagonia’s revenue last year was estimated to be $1.5bn.
Also on Wednesday, in an article for Fortune.com, Patagonia’s chair Charles Conn, wrote: “We are turning capitalism on its head by making the Earth our only shareholder.”
Conn said that as a tech entrepreneur, public company CEO, and investor, he has benefited from shareholder capitalism. He acknowledged that the system has “brought us reductions in absolute poverty, longer lives through medical innovation, and many other improvements, as well as great shareholder returns.
“But let’s be honest: it made its gains at an enormous cost, including increasing inequality and widescale uncompensated environmental damage. We have subsidized buoyant shareholder returns by fraying the fabric of our societies and using up the planet we live on. We all know this is happening — the world is literally on fire.”
He acknowledged that as a “closely held company”, this “huge change” was easier for Patagonia than others. “But the point is for companies to make transparent purpose commitments that make sense to their business, and to be held to account by their communities.”
He dismissed as “nonsense” the ideas that goals other than profit will confuse investors and predicted that responsible, purpose-led companies will attract more investment, better employees, and deeper customer loyalty.
“This is not ‘woke’ capitalism,” he said. “It’s the future of business.”