Patagonia Founder Donates Company to Fight Climate Change

Facts

• On Wed., Yvon Chouinard, the billionaire founder of outdoor apparel brand Patagonia, said he will be giving his company away to a private trust to use its profits to fight climate change.
• Instead of taking the company public or selling the $3B brand, 83-year-old Chouinard and his wife and two kids will transfer all of their company voting power and shares to protecting and conserving nature.
• Since the shares were donated as a gift, the family had to pay a $17.5M tax on the transfer and Patagonia will no longer be distributing any profits to the them.
• Chouinard, who became famous for his alpine climbs in Yosemite National Park and has a net worth of $1.3B, wrote on the company website, “we’ll use the wealth Patagonia creates to protect the source of all wealth,” adding “Earth is now our only shareholder.”
• Patagonia will continue operating as a for-profit company, and will use profits as needed to reinvest in the company and compensate employees. All other wealth will go to Patagonia Purpose Trust and non-profit Holdfast Collective, who will own 2% voting shares and 98% non-voting stock, respectively.
• The philosophy behind this move has long been a part of the company’s business tactics, having imposed a 1% “earth tax” on itself in 1985 to support environmental non-profits around the world.

Sources: New York Post, Al Jazeera, Forbes, Daily Mail, and USA Today.

Narratives

• Narrative A, as provided by Yahoo News. While Chouinard’s decision to break away from the age-old shareholder motto is a bold move with noble motives to help the planet, it’s too soon to celebrate. Without a financial incentive to keep on track, it remains to be seen whether this strategy will succeed.
• Narrative B, as provided by Fortune. This is the clearest proof yet that Yvon Chouinard is a leader in the movement away from shareholder capitalism and toward stakeholder capitalism. In a world infected with inequality and environmental destruction, Patagonia has chosen to put the Earth and its inhabitants above profit.