The billionaire founder of Patagonia is giving away the company to a trust that will use its profit to fight the climate crisis.
83-year-old Yvon Chouinard, who founded the outdoor apparel brand in 1973, is transferring his family’s ownership to trust and a non-profit organization.
Earth will be the sole shareholder, he announced yesterday, and any profit not reinvested back into Patagonia will be distributed as dividends to protect the planet.
“If we have any hope of a thriving planet 50 years from now, it demands all of us doing all we can with the resources we have,” said Chouinard, who has a net worth of $1.2 billion (€1.18bn), and became famous for alpine climbs in Yosemite National Park.
“Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source.
“We’re making Earth our only shareholder. I am dead serious about saving this planet.”
What is Patagonia’s ‘radical’ new ownership structure?
The California-based company is “going purpose” rather than “going public” for its next half-century.
Patagonia will continue to operate as a private, for-profit corporation but the Chouinard family, which controlled the company until last month, no longer owns it.
All the company’s voting stock (2 percent of the total stock) is being transferred to the newly created Patagonia Purpose Trust to give lasting ‘legal structure’ to the arrangement, and ensure there is no deviation from the founder’s purpose.
Meanwhile, the non-voting stock has been given to the Holdfast Collective, another new entity and non-profit which will use every dollar it receives to “protect nature and biodiversity, support thriving communities and fight the environmental crisis.”
Patagonia projects that it will pay out an annual dividend of roughly $100 million (€100 million), depending on the health of the business.
The trust will be overseen by members of the family, but they will get no financial benefit from the new structure. In fact, the Chouinards will face a tax bill from the donation.
Can capitalism work for the planet?
It’s a virtually unprecedented move from a company of Patagonia’s stature, but not out of keeping with its longstanding environmental ethos.
The B-corp – with subsidiaries in food, books, surfboards and upcycled clothes – was a founding member of 1% for the planet, a group of businesses that contribute at least one percent of their annual sales to environmental causes. It will continue to give this percentage to ‘grassroots activists’.
Employees were first to hear of the change at a global town hall event on 14 September. Soon after, the Patagonia website updated with the news that “Earth is now our only shareholder” and a signed letter from Chouinard.
“I believe this plan that he and his family helped create is tectonic. It will make the company more competitive and its employees around the world will forever be empowered by purpose,” says director Kristine McDivitt Tompkins.
Others from the board heralded the move as the “next model of capitalism”, echoing the company’s message as a for-profit business that capitalism can work for the planet.
“The current system of capitalism has made its gains at an enormous cost, including increasing inequality and widescale uncompensated environmental damage. The world is literally on fire,” said chair of the board Charles Conn.
“Patagonia has been breaking the mold for decades, and now they have shattered it. Now I want to know, which companies will be next to step up?,” adds fellow director, Dr. Ayana Elizabeth Johnson.
