Patagonia founder Yvon Chouinard is giving away ownership of the brand, estimated to be worth $3bn (£2.6bn), to a collective that will use any profits not reinvested into the business to fight the climate crisis.
The new model means 100% of the voting stock transfers to the Patagonia Purpose Trust, created to protect the company’s values. Meanwhile 100% of non-voting stock (which is 98% of the total stock) will be given to the Holdfast Collective, a non-profit dedicated to fighting the environmental crisis and defending nature. Any profit not reinvested into the brand will be distributed as a dividend to fight climate change, an amount estimated to be around $100m (£87m) a year.
Explaining he “never wanted to be a businessman”, the Patagonia founder says the company has endeavoured to slow ecological destruction by using less harmful materials in its products, giving away 1% of sales each year to grassroots environmental non-profits and becoming a certified B Corp. In 2018, the business changed its purpose to ‘We’re in business to save our home planet’.
However, believing such actions were not enough to address the environmental crisis, Patagonia started to explore different options. One idea was to sell the company and donate all the money, but the team couldn’t be sure a new owner would maintain the brand’s values. The Patagonia founder describes the idea of taking the company public a “disaster”, that would have seen the dial swing towards creating short-term gains at the expense of long-term responsibility.
“Instead of ‘going public,’ you could say we’re ‘going purpose’,” says Chouinard.
“Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source.”
Adding that it is almost 50 years since Patagonia began its “experiment in responsible business”, Chouinard says the Earth is now the company’s “only shareholder”.
The business closed yesterday to “celebrate the plan”. The intention is for CEO Ryan Gellert and the leadership team to continue to run the company under the direction of the board of directors, with additional stewardship from the Patagonia Purpose Trust. Yvon Chouinard and his family will “guide the Patagonia Purpose Trust”, electing and overseeing its leadership, as well as continuing to sit on the board and informing the philanthropic work of the Holdfast Collective.
Gellert says: “Two years ago, the Chouinard family challenged a few of us to develop a new structure with two central goals. They wanted us to both protect the purpose of the business and immediately and perpetually release more funding to fight the environmental crisis.
“We believe this new structure delivers on both and we hope it will inspire a new way of doing business that puts people and planet first.”