Yvon Chouinard, billionaire founder of outdoor fashion brand Patagonia announces plans to give away his company to help fight the climate crisis.
The news was announced in an open letter on the company’s website on Wednesday. The letter explains how Mr Chouinard’s will transfer and split ownership between two new entities; a non-profit and a trust.
Patagonia’s voting stock, which makes up only 2% of its total stock and gives its holders the right to vote on matters raised during shareholder meetings, will be transferred to the Patagonia Purpose Trust. The trust will be overseen by the members of the Chouinard family and ensures that the “business to save our home planet” values of the company continue to be upheld.
The remaining 98% of non-voting stock, valued at around $3 billion, will be given to The Holdfast Collective, a US non-profit charity “dedicated to fighting the environmental crisis”.
Each year, any profits made by the business after reinvestment will be distributed as a dividend to The Holdfast Collective, who can use the funding to invest in solutions to fight the climate crisis. It’s estimated that donations could amount to around $100m (£87m) a year, depending on the health of the company.
“Hopefully this will influence a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people,” Yvon Chouinard, the founder of Patagonia, said in an interview with the New York Times on the day of the announcement.
The letter also explains that the company was considering selling the brand entirely and making a single, upfront donation to climate causes, but concerns were raised about how any new owner would maintain the companies values and staff.
Another option was to take the company public, allowing the general public to purchase shares, often seen as the best way to raise capital for growth. Concerns were raised again about a possible change in direction of the business due to financial pressures.
“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” said Mr Chouinard.
The company will continue to function as a private business, but will no longer be owned by the Chouinard family.
Mr Chouinard, who admitted he “never wanted to be a businessman” founded the company in 1973. The billionaire founder began as a craftsman, creating climbing spikes for his friends and himself, which he sold from the back of his car to maintain his lifestyle of surfing and climbing. He then moved into the apparel industry and grew the business into the successful brand it is today, with estimated sales of $1.5 billion this year.
After witnessing the extent of global warming and ecological destruction, Patagonia committed to change the way business was done. Hoping to influence customers and other businesses enough to change the system along the way.
This began with the use of materials that caused less harm to the environment, along with yearly donations of 1% of its sales. This was followed up by becoming a certified B Corp in 2011 and writing their values into their corporate charter to guarantee they would be preserved.
The letter ended with a look to the future, stating “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.”
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