By Quinn Lauden
Yvon Chouinard, the founder of Patagonia, recently made a monumental contribution to the fight against climate change. Chouinard, the rock climber turned environmental entrepreneur, gave away 100 percent of Patagonia’s equity to the earth this past September. With 98% of the stock going to the Holdfast Collection, a non-profit, and the other 2% of stock and decision-making transferred to a trust, Chouinard has made the earth the only shareholder of the $3 billion company (McCormick, The Guardian).
This act does not come as a surprise to many. Patagonia, a clothing company specializing in outdoor apparel, has been recognized for supporting numerous causes, especially their support of the fight against climate change. Patagonia announced the transfer of ownership through a letter written by Chouinard on Sept. 14, 2022. This letter highlighted many of the driving reasons he made this change in ownership and the goals surrounding those shifts. He emphasizes the fact that he was never aiming to become a businessman and that the primary purpose of Patagonia was to “change the way business [was] done.” This is dissected further, explaining how he believes businesses should be very aware of their impact on the environment, and he hoped that Patagonia’s business plan would also impact other companies.
He writes in the letter, “Patagonia [is] committed to using [the] company to change the way business [is] 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.” (Chouinard, Patagonia). According to Choinard, one of Patagonia’s first actions to support the environment was donating one percent of its total sales each year (beginning in the 1980s), becoming certified B-corp (a certification for when a company meets high standards in regard to employee benefits and charitable contributions to supply chain practices) and aiming to make their products sustainable and long-lasting. These priorities led the company to shift to an entirely environmentally focused business model, making Patagonia’s mission to help save the planet. Now, all profits are going towards saving the earth, accomplishing Chouinard’s initial goal on a much larger scale.
The volume of positive responses to the announcement came as an astonishment to many, partially because the announcement shed light on a topic many companies were aware of but blatantly disregarded. The announcement prompted companies to halt and reconsider their stance on climate change and their response toward it (Beer, Fastcompany). Most companies in the fashion industry can expect customers to begin to question what businesses are doing and how they are making a difference to the climate. Patagonia’s shift made the general public question the agenda of other companies. The company continues to set the standard on how one should approach production and business.
Though there has been extensive positive reactions from major corporations, some critics questioned the move as a tax avoidance strategy. During a recent CNBC interview with Patagonia’s CEO Ryan Gellert, he was asked if tax avoidance was a motivation for modifying the company’s model. He responded to these claims by saying, “No… with the [Chouinard’s] family, it was very clear from the beginning that there were two goals that they were focused on: create a structure that can ensure the integrity and values of Patagonia and cashflow the environment in more meaningful ways now” (Gellert, CNBC). He went on to say that tax benefit was not lost on them when contemplating different structures for the company, but it was a mere byproduct, not something they aimed for.
Patagonia’s commitment to fight climate change has inspired thousands of people and will continue to influence future generations to come. Companies may not make an immediate decision on how they combat climate change, but Patagonia’s stance on the issue has raised the standard for what other companies should aim for. Although clothing and consumer-based brands make up the majority of many people’s purchasing footprint, the earth is each consumer’s habitat. All companies should try to create a more sustainable and environmentally forward business plan, so the world can become a more environmentally healthy place that sustains humanity for generations to come.
References
Beer, J. (2022, September 18). Patagonia’s ownership bombshell changes the game for American business. How Patagonia’s ownership bombshell changes the game for American business. Retrieved October 23, 2022, from https://www.fastcompany.com/90790418/patagonia-yvon-chouinard-ownership-trust-holdfast-woke-capitalism-climate-change-american-business
Chouinard, Y. (2022, September). Yvon Chouinard donates Patagonia to fight climate crisis. Patagonia Outdoor Clothing & Gear. Retrieved October 23, 2022, from https://www.patagonia.com/ownership/
Gelles, D. (2022, September 14). Billionaire no more: Patagonia founder gives away the company. The New York Times. Retrieved October 23, 2022, from https://www.nytimes.com/2022/09/14/climate/patagonia-climate-philanthropy-chouinard.html
McCormick, E. (2022, September 14). Patagonia’s billionaire owner gives away company to fight climate crisis. The Guardian. Retrieved October 23, 2022, from https://amp.theguardian.com/us-news/2022/sep/14/patagonias-billionaire-owner-gives-away-company-to-fight-climate-crisis-yvon-chouinard
Patagonia. (2022). Patagonia founder Yvon Chouinard announced Wednesday he is giving his entire company away to a trust and a nonprofit. NPR. NPR. Retrieved October 23, 2022, https://www.npr.org/2022/09/15/1123104499/patagonia-founder-climate-change. (Image)
YouTube. (2022). Patagonia Ceo Ryan Gellert breaks down the founder’s decision to give away the company. YouTube. Retrieved October 23, 2022, from https://www.youtube.com/watch?v=wln5nJWJhBY.
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