Patagonia founder Yvon Chouinard and his family donated the $3 billion company to an environmental non-profit foundation.
The company will continue to be an active manufacturer of apparel, camping supplies and other goods – but all profits will go to organizations working to fight the climate crisis and pursue other environmental goals.
The move is a bold new move for a company that has been a leading activist for years, particularly on the environmental front.
“Rather than extracting value from nature and turning it into wealth for investors,” Mr. Chouinard wrote in a public letter, “we will use the wealth that Patagonia creates to protect the source of all wealth.”
The company’s voting shares go to the Patagonia Purpose Trust, which “protects the company’s assets.” The non-voting shares go to Holdfast Collective, a non-profit organization that uses the company’s profits to help protect the environment each year.
In deciding what to do with the company, Mr. Chouinard wrote that neither selling the company and donating the profits nor going public seem to be good ways to ensure the company continues its activist role.
“To be honest, there weren’t any good options,” he said. “So we created our own.”
In 2011, Patagonia ran what might be the most iconic sweater ad of all time. During the Black Friday season, a full page appeared in the New York Times urging customers, “Don’t buy this jacket.”
“We ask that you shop less and think before you spend a dime on this jacket or anything else,” the ad reads. “Don’t buy anything you don’t need,” it continued, noting that it took 135 liters of water and 20 pounds of CO2 to manufacture each unit.
The message was tantamount to heresy in the retail world, but nothing new for the Ventura, California-based retailer, which has always been at the forefront of sustainability, a place that embraces the competing tensions of social and financial well-being more than anywhere else otherwise experienced in the business world. The ad, despite its message, was a boon to the company’s sales.
Now, Patagonia is driving that mindset by giving 100 percent of the family’s shares to a foundation and nonprofit dedicated to tackling the climate crisis.
The move not only diverts the company’s roughly $100 million in annual profits toward environmental conservation, but also locks in an ownership structure that the family says is designed to ensure the company continues to operate in a sustainable manner, with commitments such as being carbon neutral and to use only renewable or recycled materials by 2025.
In August, the Chouinards gave their 2 percent of the company’s voting stock to an entity called the Patagonia Purpose Trust, which is overseen by family and close advisors, while the other 98 percent went to a 501(c)(4) non-profit organization called Patagonia Holdfast Collective dedicated to addressing climate issues. The corporate tax structure means the collective can spend money directly on political advocacy and lobbying to influence policy.
When Leslie Davis Burns, a professor emeritus at Oregon State University who taught global sourcing and corporate social responsibility, heard the news, she said she put on a big smile
“I just left, it’s so Patagonia,” she said. “As an activist company, they’ve always pushed for what we can do and how we can do it differently, and to make an authentic impact.”
Such activist companies are rare in the business world, let alone the fashion industry, which has a terrible track record on issues like labour, waste and pollution.
The company has always done things a little differently.
A self-proclaimed “reluctant businessman,” Yvon Chouinard got his start in the 1950s and 1960s as an itinerant rock climber and forge of climbing gear for use on the famous faces of California’s Yosemite Valley. In 1970, after a climbing trip to Scotland, he began importing the tough rugby shirts he found there and selling them to climbers. In 1972 Patagonia was born.
Even in those early days, the company was willing to change its approach and forego profits if it meant leaving less of a footprint on the planet.
In the early 1970s, Mr. Chouinard stopped selling peg-like climbing hooks because they damaged rock faces in climbing paradises around the world, even though they made up 70 percent of his hardware business at the time.
Later, as Patagonia continued to grow, it switched to more expensive organic cotton in the 1990s after an internal review found that intensively grown cotton was harmful to the environment.
It has also adopted other environmentally oriented solutions well ahead of the competition, such as: B. started making its fleece from recycled soda bottles in 1993, an initiative that resulted in 91 percent of the company’s fabrics being made from recycled plastic as of fall 2022.
The company also helps repair and resell customers’ used equipment and began donating 1 percent of its sales to environmental causes in 1985, an action that led directly to the 1% for the Planet pledge in 2002, which has since been embraced by a variety of companies.
But over time, Mr. Chouinard, who famously doesn’t own a computer or cell phone and disappeared upstate for months, began to chafe at his place in the world of corporate retail.
High performance outdoor gear was designed to be worn and pushed to the limit for years, but has become a mainstream fashion brand on trend. Patagonia has even earned the nickname “Pata-Gucci” for its coveted, high-priced goods.
“We grew out of our loyal customer base and increasingly sold to yuppies and show-offs and wannabes,” he told Inc in 1992. “These people don’t need that shit to get in their Jeep Cherokees and go to Connecticut for the weekend.”
https://www.independent.ie/business/world/patagonia-founder-gives-away-the-3bn-company-to-environmental-causes-earth-is-now-our-only-shareholder-41990812.html Patagonia Founder Yvon Chouinard Is Giving Away $3 Billion Company For Environmental Causes: “Earth Is Now Our Sole Shareholder”