The 83-year-old visionary entrepreneur and deep nature lover Yvon Chouinard, founder of American outdoor apparel and gear brand Patagonia whose value is for an estimated three billion dollar value, is taking a revolutionary direction and has decided to transfer the about US$100 million of yearly profits to save the environment.
Therefore, he will transfer 100% of the company’s voting stock transfers to the Patagonia Purpose Trust, he created to protect the company’s values; and 100% of the nonvoting stock will be 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 the company will do after reinvesting in the business will be distributed as a dividend to help fight the crisis, explained Chouinard in a letter published by the brand’s website.
“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.”
And he continues: “I never wanted to be a businessman. I started as a craftsman, making climbing gear for my friends and me, 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.”
“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,” he continued. “Truth be told, there were no good options available. So, we created our own.”
One option could have been to sell Patagonia and donate all the money. But they couldn’t be sure a new owner would maintain its values or keep its team of people around the world employed.
Another path could have been to take the company public, but 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.
“Instead of ‘going public,’ you could say we’re ‘going purpose’. We can save our planet if we commit to it,” he said.
Therefore, now Patagonia’s new owners are the Holdfast Collective and the Patagonia Purpose Trust. The Holdfast Collective owns 98% of the company and all the nonvoting stock. The Patagonia Purpose Trust owns 2% of the company and all the voting stock. Nonvoting stock carries economic value, but not decision-making authority. Voting stock has both economic value and decision-making authority.
Funding for the Collective will come from Patagonia: each year, excess profits—money it makes after reinvesting in the business (including money it wants to save for unforeseen events, like a pandemic)—will be distributed as a dividend to the Collective to be used for its work.
The Patagonia Purpose Trust was created simply to protect the company’s own values and mission, or, in other words: “We’re in business to save our home planet. The Patagonia Purpose Trust ensures the company’s commitment to its purpose forever,” Chouinard explained.
Patagonia will continue to be a for-profit business, a certified B Corp and a California benefit corporation, making its products and honoring its obligation to preserve the financial health of the company while always considering the impact its business has on employees, customers, communities and on the natural world.
It will continue to donate 1% of sales each year to grassroots environmental nonprofits, as part of its business charter, which can’t be changed without the approval of the Patagonia Purpose Trust.
The Chouinard family will guide the Patagonia Purpose Trust, electing and overseeing its leadership. Family members will continue to sit on Patagonia’s board, along with Kris Tompkins, Dan Emmett, Ayana Elizabeth Johnson, Charles Conn (chair of the board), and Ryan Gellert, its CEO. The family will also guide the philanthropic work performed by the Holdfast Collective.
Speaking about employees, Chouinard explained: “We will keep doing all the great things that built Patagonia, and the company will keep doing its best to be a great employer.”