‘Earth Is Now Our Only Shareholder’: Patagonia Owner Giving Away Company to Fight Climate Crisis
In a move that sets a new precedent for corporate leadership in the age of climate change, billionaire founder of sportswear brand Patagonia Yvon Chouinard has announced that he is giving away his entire company to fight the climate crisis and safeguard nature.
“Earth is now our only shareholder,” a message from Chouinard on the company’s website says, “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.”
Before founding Patagonia in 1973, Chouinard was a rock climber in California who slept in his vehicle and “ate damaged cans of cat food that he bought for five cents apiece,” according to The New York Times. He still doesn’t own a cellphone or a computer.
In his message on Patagonia’s website, Chouinard wrote that he began crafting climbing gear for himself and his friends before expanding to apparel. Eventually, in the face of planet warming and environmental devastation, the company began to shift their business model.
“We needed to find a way to put more money into fighting the crisis while keeping the company’s values intact,” Chouinard said on the website. “Truth be told, there were no good options available. So, we created our own… 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.”
All of Patagonia’s voting stock — which represents two percent of the total — as well as all of the decision-making power for the company, moves into a trust to preserve the company’s purpose and values. Chouinard has donated all of the remainder of the company’s nonvoting stock to nonprofit the Holdfast Collective, dedicated to protecting nature and combating the ecological crisis.
The Holdfast Collective “will use every dollar received to fight the environmental crisis, protect nature and biodiversity, and support thriving communities, as quickly as possible,” Chouinard said in a statement, as The Guardian reported.
Eighty-three-year-old Chouinard, along with his wife, children and lawyers for Patagonia, have come up with a way to organize the company so that it remains for-profit, with all of its earnings going toward endeavors to help the environment.
Another possible option would have been to sell the company and donate the proceeds, but that might have meant the loss of the values of the company and Patagonia’s employees potentially losing their jobs, Chouinard’s message said.
“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,” the message went on to say.
The company’s new structure is intended to show that the traditional belief that investors won’t understand any objectives of a corporation other than profits is not the only way, board chair of Patagonia Charles Conn wrote in Fortune.
“Instead of exploiting natural resources to make shareholder returns, we are turning shareholder capitalism on its head by making the Earth our only shareholder,” Conn wrote. “Investors already look to many company attributes when allocating capital. Over time, the market will continue to work and responsible purpose-led companies will attract more investment, better employees, and deeper customer loyalty. This is not ‘woke’ capitalism. It’s the future of business if we want to build a better world for our children and all other creatures.”
When Chouinard was listed by Forbes as a billionaire, it upset him.
“I was in Forbes magazine listed as a billionaire, which really, really pissed me off,” Chouinard said, according to The New York Times. “I don’t have $1 billion in the bank. I don’t drive Lexuses.”
Patagonia started giving one percent of its profits to environmental organizations in the 1980s, The Guardian said, and was one of the first B Corporations, which requires a company to “[d]emonstrate high social and environmental performance,” according to the website of nonprofit B Lab.
“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,” Chouinard told The New York Times. “We are going to give away the maximum amount of money to people who are actively working on saving this planet.”