Patagonia is “going purpose” not “going public"

Outdoor fashion retailer Patagonia will now be owned by a charitable trust, with any profits directed at climate action

Under a new ownership structure, any profit not reinvested in running the business would go to fighting climate change – on the order of $100bn a year, depending on the performance of the company.

 

Yvon Chouinard founded the company in 1973 with a mission “to use business to inspire and implement solutions to the environmental crisis.” He has championed the message of Green Growth for over 50 years, with the intention of establishing the company as a role model to show that profitability and sustainability can be compatible with one another.

 

But has the experiment worked? In a word, “no”… or more accurately, “not yet”.

 

Rather than evaluate the sustainability scorecard, here we discuss the profitability metric. With revenues in excess of $1bn and a healthy balance sheet, surely this signals a resounding hit. But should there be more nuance to this ‘profitability’ metric – namely, profitability for whom or for what? 

 

To date, Patagonia’s sole shareholder has been the Chouinard family, enabling Mr Chouinard to amass an estimated net worth of $1.2bn. Arguably this follows the classic neoliberal playbook – extract value from nature and transform it into wealth. Happily, the story is not over. With Chouinard’s decision to transfer ownership to a charitable trust (that the family will still control), the circularity of the business is complete, whereby the wealth that Patagonia creates will be used to protect nature.

 

“Here’s how it works: 100% of the company’s voting stock transfers to the Patagonia Purpose Trust, created to protect the company’s values; and 100% of the nonvoting stock had been given to the Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature. The funding will come from Patagonia: Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis.” [Patagonia.com, retrieved 15/9/2022]

 

With this bold and generous move, Patagonia’s ownership structure is now fully aligned with its current mission statement: “We’re in business to save our home planet.” Now just to do the easy bit of saving the planet… 

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