The creator of Patagonia, Yvon Chouinard, has donated his ownership in the clothing company he founded around 50 years ago along with his spouse and two adult children. He has also pledged to donate all company proceeds to initiatives and groups that will safeguard wild territory and biodiversity as well as work to address the climate issue.
According to the New York Times, the corporation has a $3 billion market value.
In a letter regarding the choice, Choiunard discussed “reimagining capitalism” and stated the following:
“While we’re doing our best to address the environmental crisis, it’s not enough. We needed to find a way to put more money into fighting the crisis while keeping the company’s values intact. One option was to sell Patagonia and donate all the money. But we couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed.
Another path 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 gain at the expense of long-term vitality and responsibility.
Truth be told, there were no good options available. So, we created our own.”
The privately held firm announced in a statement that a trust focused on addressing climate change and a collection of nonprofit organizations, known as the Patagonia Purpose Trust and the Holdfast Collective, will now hold its stock. The company added that “every dollar that is not reinvested back into Patagonia will be distributed as dividends to protect the planet.”
All of the voting shares, or 2% of the total, will be acquired by the trust, which will then use it to establish a “more permanent legal structure to enshrine Patagonia’s purpose and values.” Family members and trusted advisors will be in charge of directing it.
Patagonia’s non-voting stock, or 98% of the company, is owned by The Holdfast Collective.
Depending on how well the company does, Patagonia anticipates generating and donating roughly $100 million annually. The business now offers new and pre-owned outdoor clothing, equipment for outdoor pursuits including camping, fishing, and climbing, as well as foods and beverages derived from sustainable sources.
Patagonia already gave one percent of its annual sales to grassroots organizers because it is a recognized B-Corp and California Benefit Corporation, and it plans to continue doing so. Around the world, less than 6,000 businesses have received the B-Corp certification. For them to receive certification, they must adhere to rigid environmental, social, and governance requirements and benchmarks specified by B Labs.
After the clothing company’s increased charitable strategy, Ryan Gellert will continue to lead Patagonia as CEO, and the Chouinard family will stay on the board. The business informed its staff about this decision on Wednesday, and on Thursday it changed its website to reflect that “Earth is now our only shareholder.”