Patagonia founder Yvon Chouinard, the businessman who ‘never wanted to be’, is giving away ownership of the US$3 billion ($4.45 billion) outdoor apparel company to create an enduring legacy from his lifelong mission to save the planet.
The move by the eccentric billionaire, who founded Patagonia 49 years ago with a mission to prove that capitalism can work for the planet, could see $100 million in dividends a year being poured into environmental causes including the battle against climate change.
The Chouinard family has transferred its entire shareholding in Patagonia to the newly formed Patagonia Purpose Trust and the Holdfast Collective, with the promise that every dollar in dividends that is not reinvested in Patagonia will be distributed to causes devoted to protecting the planet.
Patagonia Purpose Trust holds all the voting stock of the company, or 2 per cent of total shares, while Holdfast Collective will hold the balance of 98 per cent which comprises the company’s non-voting shareholding.
Holdfast is a non-profit organisation dedicated to fighting the environmental crisis and defending nature and will be funded by profits from Patagonia. The Chouinard family will have ultimate control of Patagonia Purpose Trust, and subsequently the company’s ongoing direction.
Chouinard, who is estimated to be worth US$1.2 billion ($1.8 billion), says the ownership transition which is already in effect was preferable to selling the company outright to a third party and then diverting the proceeds to environmental causes.
In a letter published on the company’s website, Chouinard says that while Patagonia was doing its best to address the environmental crisis, he felt it was not enough.
“We need to find a way to put more money into fighting the crisis while keeping the company’s values intact,” says Chouinard, who now considers planet Earth as the company’s new shareholder.
The 83-year-old Chouinard had considered selling Patagonia, a company that has been a beacon for the B Corp movement with a focus on driving positive social change, but he wasn’t sure a new owner would adhere to the company’s founding values.
“Another path was to take the company public,” he says. “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 viability and responsibility.”
Under the new ownership structure, Patagonia’s leadership will not change and the company will continue to give 1 per cent of sales each year to grassroots activists.
Ryan Gellert remains as CEO and the Chouinard family will hold their existing Patagonia board positions. The board also includes Kris Tompkins, a former long-time CEO of Patagonia who, alongside her late husband, North Face co-founder Doug Tompkins, established the Tompkins Conservation in 1993 which has undertaken immense rewilding efforts in South America that have led to the preservation of millions of acres of land for national parks in Chile.
Chouinard, an avid climber who says he only started the Patagonia business to make climbing gear for himself and his friends before branching into apparel, says 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 says.
“It’s been a half-century since we began our experiment in responsible business. 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.
“As the business leader I never wanted to be, I am doing my part. 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.”
Gellert says the Chouinard family had challenged the Patagonia board two years ago to develop a new structure for the business 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,” he says. “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.”
Patagonia chairman Charles Conn says the existing system of capitalism has set the world ‘literally on fire’.
“Companies that create the next model of capitalism through deep commitment to purpose will attract more investment, better employees, and deeper customer loyalty,” he says.
“They are the future of business if we want to build a better world, and that future starts with what Yvon is doing now.”
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