In September 2022, Yvon Chouinard, the founder, and owner of the popular outdoor clothing brand, Patagonia, announced in a letter that one hundred percent of his family’s $3 billion company ownership would be donated to a trust dedicated to environmental protection. About $100 million a year in stock will collectively be put into a trust and a nonprofit. 2% of the voting stock will go to the Patagonia Purpose Trust, which aims to maintain Patagonia’s sustainable values. The other 98% of the non-voting stock will be directed into the Holdfast Collective, a nonprofit organization created by Chouinard that focuses on defending undeveloped land and mitigating climate change.
Patagonia has historically emphasized environmental responsibility as one of its core principles. It has displayed this through sourcing sustainable materials, operating primarily on renewable energy, striving towards zero waste, and consistently donating a percentage of its sales towards climate activism. Their famous campaign slogans, such as “Don’t Buy This Jacket” and “Think Twice,” have also gained attention for actively advocating anti-consumerism. They have become representative of the brand’s mission to steer the world towards a circular economy (a model of production/consumption that focuses on recycling and reusing existing materials).
Patagonia’s self-awareness and transparency as a corporation has been widely recognized and praised, but Chouinard claims in last month’s statement that these actions are simply not enough. “Earth is now our only shareholder,” the founder declares, describing his new goal to direct Patagonia’s wealth toward saving the planet’s resources. He explains his discomfort with obtaining excessive wealth and being in an industry in which billionaires are reluctant to give more than a fraction of their fortune and instead hyperfocus on increasing net worth. In contrast, his particular decision to transfer ownership to a trust intends to avoid tax benefits and potential corruption of values from the public or different owners, reinforcing his self-proclaimed endeavor to “reimagine capitalism."
The Chouinard family stands out from many billionaires by prioritizing the world's well-being over their own wealth and status. Thus, there is debate about if companies like Patagonia could serve as an example of a new wave of philanthropy that could potentially spearhead innovations in sustainable development. Some activists have questioned whether the lack of systemic change in a for-profit corporation could be enough. They have also voiced concerns that this model of charity could be applied to immoral purposes. However, others have noted that Patagonia’s efforts to address global inequality could alleviate climate change impacts in developing countries and inspire other businesses to reassess their focus on profit versus sustainability. This could form a new sustainable space for economic opportunities in developing countries, one that functions on a foundation of a regenerative rather than an extractive economy.
Citations
1) Auld, G., & Grabs, J. (2022, October 5). Has Patagonia defined a new gold standard for business responsibility? The Conversation. Retrieved October 9, 2022, from https://theconversation.com/has-patagonia-defined-a-new-gold-standard-for-business-responsibility-191250
2) Chouinard, Y. (2022, September 14). Earth is now our only shareholder. Patagonia Outdoor Clothing & Gear. Retrieved October 6, 2022, from https://www.patagonia.com/ownership/
3) CK Staff. (2022, September 26). Patagonia made Earth its sole shareholder. will other companies follow suit? Corporate Knights. Retrieved October 9, 2022, from https://www.corporateknights.com/leadership/patagonia-made-earth-its-sole-shareholder-will-other-companies-follow-suit/
4) Gelles, D. (2022, September 14). Billionaire no more: Patagonia founder gives away the company. The New York Times. Retrieved October 6, 2022, from https://www.nytimes.com/2022/09/14/climate/patagonia-climate-philanthropy-chouinard.html
5) Kolodny, L. (2022, September 16). Patagonia founder just donated the entire company, worth $3 billion, to fight climate change. CNBC. Retrieved October 6, 2022, from https://www.cnbc.com/2022/09/14/patagonia-founder-donates-entire-company-to-fight-climate-change.html
6) Swallow, T. (2021, December 12). Patagonia: A Pioneer in the sustainable sourcing of Apparel. Sustainability Magazine. Retrieved October 9, 2022, from https://sustainabilitymag.com/esg/patagonia-pioneer-sustainable-sourcing-apparel
7) Thomas, D., & Nanji, N. (2022, September 15). Patagonia: Billionaire boss gives fashion firm away to fight climate change. BBC News. Retrieved October 6, 2022, from https://www.bbc.com/news/business-62906853