Patagonia’s billionaire founder is handing the outdoor clothing company to a trust that will use future profits to battle the climate crisis.
Yvon Chouinard said in an open letter that the money the company makes after reinvesting in the business will be used to “help fight” climate change.
The 83-year-old, who has a net worth of $1.2bn, said he was transferring his family’s ownership to a trust and a non-profit organisation to channel profits to environmental causes. The company expects to give $100mn a year to the non-profit organisation.
“Earth is now our only shareholder,” Chouinard wrote in the letter.
“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,” he said. “Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis.”
The company will continue to operate as a private corporation run for profit. Its voting stock is being transferred to the Patagonia Purpose Trust, which will be overseen by the family. The non-voting stock has been given to the Holdfast Collective, a non-profit group.
Patagonia, founded in 1973 in California, has hundreds of stores across five continents. Though known for selling outdoor clothing, it has its roots in climbing equipment, with climbing enthusiast Chouinard identifying early on the need for tools that did not damage rocks.
Since 1985 the business has donated 1 per cent of sales to the preservation and restoration of the environment, awarding more than $89mn to environmental groups.
Chouinard said he had considered other options, including selling the business and donating all the money or listing Patagonia on the stock exchange.
However, he said he “couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed”.
He said taking the company public would have been a “disaster”, as listed businesses are “under too much pressure to create short-term gain at the expense of long-term vitality and responsibility”.
Patagonia’s move comes as more companies shift towards stakeholder capitalism, balancing the financial benefit of shareholders with the interests of employees, customers, and the environment, among others.
Other corporate chief executives have pledged to give away some of their wealth to philanthropic and environmental causes.
Microsoft co-founder Bill Gates in July said he was putting another $20bn into the charitable foundation run with his ex-wife.
He also pledged a 50 per cent increase in its annual distributions, warning of “huge global setbacks” to the fight against preventable disease, inequality and poverty.
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2022-09-15 10:36:44Z
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