Yvon Chouinard, founder and owner of Patagonia.
Courtesy of Jeff Johnson and Patagonia
Patagonia founder Yvon Chouinard, his wife and two adult children are divesting their ownership of the clothing manufacturer he founded about 50 years ago, dedicating all company profits to projects and organizations that will protect wild lands and biodiversity and tackle the climate crisis.
The company is worth about $3 billion, according to the New York Times.
In a letter about the decision, posted Wednesday on Patagonia’s website, Choiunard spoke of “reimagining capitalism” and said:
“Although we are doing our best to deal with the environmental crisis, it is not enough. We had to find a way to invest more money in the fight against the crisis while preserving the values of the company One option was to sell Patagonia and give away all the money But we couldn’t be sure that a new owner would maintain our values or maintain our team of people around the world.
Another route 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 gains at the expense of long-term vitality and accountability.
Truth be told, there were no good options available. So we made our own.”
Shares in the private company will now be held by a climate-focused trust and group of nonprofits called the Patagonia Purpose Trust and Holdfast Collective, respectively, the company said in a statement, noting that “every dollar that is not reinvested in Patagonia will be distributed as dividends to protect the planet.”
The trust will get all the voting shares, or 2% of the total, and use them to create a “more permanent legal structure to enshrine Patagonia’s purpose and values.” He will be supervised by family members and close advisers.
The Holdfast Collective owns all of Patagonia’s non-voting shares, which amount to 98%.
Patagonia expects to generate and give away around $100 million per year depending on the health of the business. The company now sells new and used outdoor clothing, equipment for outdoor activities like camping, fishing and climbing, and food and beverages made from sustainable sources.
As a certified B-Corp and California Benefit Corporation, Patagonia already donates one percent of its sales each year to grassroots activists, and it intends to continue to do so. Less than 6,000 companies worldwide are certified B-Corp Companies. They must meet strict environmental, social and governance standards and criteria established by B Labs to achieve certification.
Ryan Gellert will continue as Patagonia’s CEO, and the Chouinard family will remain on Patagonia’s board of directors following the apparel maker’s expanded philanthropic strategy. After informing its employees of the decision on Wednesday, the company updated its website to state that “the Earth is now our sole shareholder.”