Yvon Chouinard, the billionaire founder of Patagonia, has recently changed the game in terms of corporate entities financing climate change. He’s given his entire brand company over to a charitable trust.
Yvon has always been a unique individual in the world of business. Never chasing after economic success, he nevertheless founded Chouinard Equipment in 1957, working to bring hand-forged climbing gear to the market. He later opened Patagonia in 1973 as a way to broaden his offering and reposition it into a lifestyle and survival gear company. His first success was with rugby shirts, sold to rock climbers for their loose fitting and comfortable ease of use. Today, Patagonia stocks hundreds of items in keeping with the original quality mission of the brand.
But, as an avid rock climber and environmentalist, Yvon’s business success was (supposedly) never been more than a vocation. Certainly, the company has committed to several enterprising environmental movements over the years since its founding. Yvon helped create the One Percent for the Planet movement, pledging 1% of total sales revenue to environmental groups. Unlike other clothing companies, such as Abercrombie and Fitch, Yvon and Patagonia have also directly tried to sell its used clothing to reduce waste under the Common Threads Partnership. They’ve also donated their tax cuts and Black Friday sales to further environmental causes.
However, despite the company’s actions and Yvon’s own dislike of corporate entities, in 2017, he found his name appearing in Forbes Magazine as one of the richest men in the world, with a net worth of around $1.2 billion. A small amount compared to the likes of Bill Gates, another environmentalist campaigner, but still far too much for Yvon, who found himself using very little of his supposed billions.
However, the article got him thinking about his legacy and the idea of corporate ownership. Could Patagonia run as it had been for the last fifty years, continuing at a profit, without the direct ownership of Yvon? This became a discussion with Yvon’s family and two children, who had considerable shares in the business. From them, he found nothing but support, as neither were particularly interested in inheriting the business. He also found support from the company’s two trust funds, both set up for the purpose of fighting against environmental crises.
This left the 83-year-old founder in a bit of a pickle. He’d become much more successful than he intended or really needed to. In his own view, the company would be fine without his control and better situated to do the most ethical, eco-friendly thing. So the most logical thing was to sign his company over to environmental charities, who would continue to run the company at a profit, but direct more towards protecting the environment Yvon loved.
But in doing so, Yvon had no desire to seek the limelight. As he himself worded it: “Instead of ‘going public’, you could say we’re ‘going purpose'. 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.”*
Aka, the environment.
However, the company has come under some flack for a movement that, on paper, appears to be a giant tax dodge. Given their previous history of tax payments and reinvestments into environmental courses, the extra tax exemptions hardly seem like a motivating factor. And, as the current CEO and board insist, it never was. Patagonia has actively continued to lobby for higher taxes in support of climate legislation, reinvesting its own tax cuts into climate initiatives.
The scepticism may have to do with the novelty of Yvon’s decision, although outside of America, it has been tried many times before. Companies as big as Ikea, Heineken, Rolex and Carlsberg have similar arrangements, with their holdings owned by foundations with an independent board running the company.
Patagonia, too, will continue to be run by the board and as a for-profit organisation, much as it always has. Without the holdings of Yvon and the board, however, much more of the company’s profits can be channelled toward environmental causes, leveraging the company’s success to continue to fund various climate projects. We at Eartha can really get behind this model of sustainable business for both profit and change, using business growth as a way of doing ultimately more good. We put money towards ocean clean-up and reforestation projects with every yoga mat we sell and use natural cork and rubber harvested from sustainably grown forests. So everything we take from the earth, we return.
While we’re still growing our little business currently, we support the actions of Yvon and Patagonia. While so many owners continue to hold on to legacies of wealth, Yvon has given the U.S. another model of capitalism that channels extreme wealth into worthwhile projects, creating a new legacy that everyone can (and should) get behind.
Sources: *Kepes, Ben. “Patagonia - the business that measures success through impacts rather than profits” on Stuff. Date Published: 20th September, 2022. Site Link: https://bit.ly/Stuffarticlepatagonia.
About the author - meet Earthan James McCulloch
James is a literary student and environmental enthusiast who likes thinking about the better futures we could have (and those we best avoid). When not playing with other people’s dogs or taking long, mindful walks, he’s usually found reading and writing, often at the local library. You can check him out on his blog for something a little different, where he talks about all things literary or otherwise.