Billionaire gives away entire company for worthy cause
The owner of outdoor apparel brand Patagonia has announced he will be giving away his company to support the fight against the climate crisis.
Yvon Chouinard, who has a net worth of $US 1.2 billion ($AU 1.7 billion or $NZ 2 billion), revealed he will be transferring the ownership of the company to a trust and a not-for-profit that fights climate change.
“Each year, the money we make after reinvesting the business will be distributed as a dividend to help fight the crisis,” he wrote in an open letter titled ‘Earth is now our only shareholder’ on the Patagonia website on Wednesday.
Mr Chouinard wrote that he considered multiple paths for the company, including selling it or taking it public, which involves selling the company’s shares on a stock exchange.
“Instead of ‘going public’, you could say we’re ‘going purpose’,” he said.
“Instead of extracting value from nature and transforming it into wealth for investors, we’ll use the wealth Patagonia creates to protect the source of all wealth.”
According to the New York Times, Patagonia is valued at about $US 3 billion ($AU 4.4 billion or $NZ 5 billion).
The Chouinard family, which controlled Patagonia until last month, no longer owns it, though it will continue to operate as a private, for-profit corporation.
Its new owner, an environmental nonprofit called the Holdfast Collective, now owns 98 percent of the company and all the non-voting stock, while the newly-formed Patagonia Purpose Trust owns two percent of the company and all the voting stock.
The trust will approve key decisions such as who sits on the board of directors, while the Chouinard family says they will guide the trust and continue to sit on the board.
Mr Chouinard founded Patagonia after years of prolific rock climbing and quickly became known for supporting environmental causes.
Since 1985, one percent of Patagonia’s total sales have been committed to fighting climate change through One Percent for the Planet, an organisation of which Mr Chouinard is a founding member, and in 2019 the company announced it aimed to be carbon neutral by 2025.
Last year, it was announced that Patagonia’s trademark branding would no longer appear on products because “adding an additional non-removable logo reduces the life span of a garment, often by a lot, for trivial reasons”.
Though it’s common for wealthy individuals to contribute to various causes, the New York Times reported that the structure of Mr Chouinard’s changes to the company actually means he and his family don’t receive a financial benefit and that he will face a tax bill from the donation.
Here is the full text of the Mr Chouinard's extraordinary statement:
"Earth is now our only shareholder.
If we have any hope of a thriving planet—much less a business—it is going to take all of us doing what we can with the resources we have.
This is what we can do.
By Yvon Chouinard
I never wanted to be a businessman. I started as a craftsman, making climbing gear for my friends and myself, then got into apparel. 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. If we could do the right thing while making enough to pay the bills, we could influence customers and other businesses, and maybe change the system along the way.
We started with our products, using materials that caused less harm to the environment. We gave away 1% of sales each year. We became a certified B Corp and a California benefit corporation, writing our values into our corporate charter so they would be preserved. More recently, in 2018, we changed the company’s purpose to: We’re in business to save our home planet.
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.
Instead of “going public,” you could say we’re “going purpose.” Instead of extracting value from nature and transforming it into wealth for investors, we’ll use the wealth Patagonia creates to protect the source of all wealth.
Here’s how it works: 100% of the company’s voting stock transfers to the Patagonia Purpose Trust, created to protect the company’s values; and 100% of the nonvoting stock had been given to the Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature. The funding will come from Patagonia: Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis.
It’s been nearly 50 years since we began our experiment in responsible business, and we are just getting started. If we have any hope of a thriving planet—much less a thriving business—50 years from now, it is going to take all of us doing what we can with the resources we have. This is another way we’ve found to do our part.
Despite its immensity, the Earth’s resources are not infinite, and it’s clear we’ve exceeded its limits. But it’s also resilient. We can save our planet if we commit to it."
Image: Getty Images