Patagonia Founder gives away company to fight climate change.
Yesterday, it was announced that Patagonia founder, Yvon Chouinard gave away his shares of the company. His shares are an estimated value of about $3 billion dollars that are now under ownership if a specifically designed trust and nonprofit organization that are both dedicated to fighting climate change.
"Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source. We're making Earth our only shareholder. I am dead serious about saving this planet."
- Yvon Chouinard, Founder of Patagonia
This move to give up his shares of the company is not a complete surprise given the track record on Yvon Chouinard. Yvon, often described as an eccentric rock climber, is well known to have been reluctant to accept the amount of wealth he amassed from the company. Patagonia is known to many for being anything but quiet about their corporate activism. Yvon says in a post on the Patagonia website, that what they were doing such as donating 1% of sales each year simply wasn’t enough.
It goes on to to note that there were a few options such as donating all of the money or taking the company public. Worries of a new owner not retaining employees or not staying true to the core values of Patagonia quickly negated the idea of donation. The idea of going public was also negated due to concerns that ultimately the need for short-term gain would blur the vision Patagonia has created.
“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.”
- Yvon Chouinard, Founder of Patagonia
The new entity that now owns about 2% of the overall shares of the company is now called the Patagonia Purpose Trust. The trust will be overseen by members of the family and their closest advisers. Essentially this “council” or board group is intended to ensure that Patagonia continues its commitment to run a socially responsible business and give away its profits.
The other 98% of the Patagonia is going to a new nonprofit organization called the Holdfast Collective. This nonprofit will be the recipient of all of the company's profits and will use those profits to combat climate change. Being deeply connection to his mission on protecting the planet, it comes to no surprise that by gifting his shares to these organizations, Yvon will not gain any tax benefits, but instead is expected to pay nearly $17.5 million in taxes on this gift.
The company will continue to donate 1% of sales and sourcing ethical materials along with this massive commitment to the planet. It is being said, that Yvon Chouinard and his family are among the most charitable families in the country.
Sources:
https://www.patagonia.com/home/
https://www.npr.org/2022/09/15/1123104499/patagonia-founder-climate-change
https://www.nytimes.com/2022/09/14/climate/patagonia-climate-philanthropy-chouinard.html
https://time.com/6213780/patagonia-founder-chouinard-climate/
