Patagonia founder and “reluctant billionaire” Yvon Chouinard has just raised the bar for corporate actions in the face of the planetary emergency caused by fossil fuels.
“Instead of ‘going public’, you could say we’re ‘going for a purpose’.”
The 83-year-old, his wife Malinda and their adult children, Fletcher and Claire, sold the business, valued at around $3 billion. The mountaineer turned businessman explained his decision in an interview published on Wednesday by The New York Timesas well as a letter on the outdoor clothing retailer’s website.
“Although we are doing our best to deal with the environmental crisis, it is not enough. We had to find a way to invest more money in the fight against the crisis while keeping the values of the environment intact. business,” Chouinard wrote. “One option was to sell Patagonia and give away all the money. But we couldn’t be sure that a new owner would maintain our values or keep our team of people around the world employed.”
“Another route was to take the company public. What a disaster that would have been. Even public companies with good intentions are under too much pressure to create short-term gains at the expense of long-term vitality and accountability” , he continued. “Truth be told, there were no good options available. So, we created our own.”
As the Time detailed:
In August, the family irrevocably transferred all of the company’s voting shares, or 2% of total shares, into a newly created entity known as the Patagonia Purpose Trust.
The trust, which will be overseen by family members and their closest advisors, aims to ensure that Patagonia lives up to its commitment to run a socially responsible business and donate its profits. Since the Chouinards donated their shares to a trust, the family will pay approximately $17.5 million in taxes on the donation.
The Chouinards then donated the remaining 98% of Patagonia, its common stock, to a new nonprofit called Holdfast Collective, which will now receive all of the company’s profits and use the funds to fight climate change. Since the Holdfast Collective is a 501(c)(4), which allows it to make unlimited political contributions, the family received no tax benefit for their donation.
The newspaper noted that “Patagonia has already donated $50 million to the Holdfast Collective and plans to donate another $100 million this year, making the new organization a major player in climate philanthropy.”
Chouinard told the Time that “I didn’t know what to do with the business because I never wanted a business”, and called the plan a “perfect fit” for his family.
“I don’t respect the scholarship at all,” he explained. “Once you go public, you’ve lost control of the company and you need to maximize profits for the shareholder, and then you become one of those irresponsible companies.”
As he put it in the letter: “Instead of ‘going public’, you could say we’re ‘moving forward’. Instead of extracting value from nature and turning it into wealth for investors, we will use the wealth created by Patagonia to protect the source of all wealth.”
It was important for Chouinard’s children “that they not be seen as financial beneficiaries,” he told the Time. “They really embody this notion that every billionaire is a political failure.”
“I was in Forbes magazine listed as a billionaire, which really, really pissed me off,” he recalled. “I don’t have $1 billion in the bank. I don’t drive a Lexus.”
The family’s move has been welcomed by climate action and conservation advocates.
“Wow,” tweeted Jamie Henn, director of Fossil Free Media. “Patagonia has long been an incredible ally in the fight for climate justice – they have offered their stores, funding and publicity for mobilizations and more – but this takes it to a whole new level. Congratulations to all the team.”
“The world really can be different friends.”
Marine biologist and policy expert Ayana Elizabeth Johnson said she “couldn’t be more proud to serve on the Board of Directors” of Patagonia, and celebrated that “for now, the Earth is our sole shareholder – ALL profits, in perpetuity, will go to our mission to ‘save our home planet “. ‘”
Chouinard suggested that the innovative approach could inspire action by others in the business world.
“I hope it influences a new form of capitalism that doesn’t end up with a few rich and a bunch of poor,” he said. “We’re going to donate as much money as possible to people who are actively working to save this planet.”
Supporters agreed. Congresswoman Marie Newman (D-Ill.) simply tweeted: “More please.”
As Poet Amanda Gorman underline Wednesday, “The world really can be different friends.”