The billionaire founder of outdoor apparel brand Patagonia is giving away the company to a trust that will use its profit to fight the climate crisis.
Yvon Chouinard, 83, said on Wednesday, September 14, 2022, that instead of selling the company or taking it public, he would transfer his family’s ownership to the trust and a non-profit organization.
Chouinard became famous for alpine climbs in Yosemite National Park and has a net worth of $1.2 billion.
‘Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis,’ he wrote in an open letter on the company’s website, which bears the words ‘Earth is now our only shareholder.’
‘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.’
The Patagonia founder took a more direct tack in an interview with the New York Times, saying: ‘Hopefully this will influence a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people.
‘We are going to give away the maximum amount of money to people who are actively working on saving this planet.’
Founded in 1973, Chouinard’s company is headquartered in Ventura, California, and sells more than $1 billion worth of outdoor wear and equipment worldwide.
The company itself is worth around $3 billion, and its garments are popular with hobbyists, professionals, and celebrities worldwide, including Princes William and Harry.
Chouinard and Patagonia are no strangers to giving away huge sums of money to fight climate change and have a history of pioneering environmental activism in business.
But they have also been embroiled in controversy, particularly for marketing campaigns that have taken a staunch anti-Trump stance.
Patagonia will continue to operate as a private, for-profit corporation but the Chouinard family, which controlled the business until last month, will no longer own the company.
The company’s voting stock – roughly 2 percent of the overall shares – is being transferred to the Patagonia Purpose Trust, a newly established entity designed to ensure the company delivers on its commitment to give away its profits.
The trust will be overseen by members of the family which includes his spouse and two adult children.
While rich individuals often make financial contributions to causes, the New York Times said the structure of the Patagonia founder’s action meant he and his family would get no financial benefit – and in fact would face a tax bill from the donation.
Meanwhile Patagonia’s non-voting stock – the equivalent of roughly 98 percent of all shares – was given to the Holdfast Collective, a non-profit dedicated to fighting the environmental crisis and defending nature.
Because the Holdfast Collective is a social welfare, tax-exempt organization, the family received no tax benefit for its donation.
A spokesman for merchant bank BDT & Co. which helped Patagonia structure the transfer of shares told the New York Times: ‘There was a meaningful cost to them doing it, but it was a cost they were willing to bear to ensure that this company stays true to their principles.
‘They didn’t get a charitable deduction for it. There is no tax benefit here whatsoever.’
Speaking to the New York Times, Chouinard claimed he ‘never wanted’ a company and said the incredible move would ensure Patagonia would ‘do the right thing’ for years to come.
‘I didn’t know what to do with the company because I didn’t ever want a company. Now I could die tomorrow and the company is going to continue doing the right thing for the next 50 years,’ he said.
Commentators on Philanthropy now say the Chouinard family are one of America’s most charitable, and unlike many other billionaires who pledge huge sums of money to charitable causes, they do not stand to get richer.
The climber-cum-entrepreneur in 2002 founded the ‘1 percent for the planet’ initiative, and Patagonia became the first business to commit one percent of annual sales to the environment.
And in 2018, then Patagonia CEO Rose Marcario gave away $10 million the company saved from tax cuts that year to non-profit environmental groups in addition to the 1 percent of sales it gives to environmental groups every year.
Corporations received a windfall from the GOP’s sweeping overhaul of the U.S. tax code in 2017, which slashed corporate rates to 21 percent, from 35 percent.
Marcario at the time called the tax cut ‘irresponsible’ in a statement, adding: ‘Taxes protect the most vulnerable in our society, our public lands and other life-giving resources.
‘In spite of this, the Trump administration initiated a corporate tax cut, threatening these services at the expense of our planet.’
Back in 2011, the brand consolidated its sustainability-focused image when it ran a marketing campaign encouraging prospective customers not to buy clothes they don’t need.
The ‘Don’t Buy This Jacket’ campaign, which told customers to only buy Patagonia clothing if necessary and positioned the company as a producer of sustainable and high-quality outerwear struck a chord and won plaudits worldwide.
But it has endured its fair share of controversies too, most notably in 2020 when a string of Patagonia garments were sold with a label bearing the words ‘vote the a**holes out’.
Patagonia’s director of communications and PR Corley Kenna confirmed to Esquire that the tags were real and said that Chouinard had penned a letter to marketing departments authorizing the campaign and the use of the word ‘a**hole’.
The spokesperson claimed the tag’s call to action referred to ‘all those politicians who don’t believe we should do anything about climate change’, but it is widely believed the message was anti-Trump and the Republican party.
‘Hopefully, we don’t have to keep making a tags like this, because hopefully this November, we will elect some real climate leaders and fewer a**holes, and can do something about what’s going on with one of the crises facing our country and our world,’ Kenna said.
