On Wednesday, Sept. 14, 2022, Patagonia’s founder Yvon Chouinard gave away the company’s net worth of $3 billion to fight climate change, stating, “Earth is now our only shareholder” home. Patagonia created this new ownership strategy to prioritize its core values and tackle the environmental crisis as a private company.
With this new ownership strategy, Patagonia proved to customers that the company’s actions support its words. This is a step in the right direction towards a more sustainable economy and sets an example for other environmentally conscious companies that claim to prioritize fighting climate change.
Holdfast Collective now owns 98% of Patagonia. The nonprofit organization will use funding from Patagonia to “fight the environmental crisis, protect nature and biodiversity, and support thriving communities, as quickly as possible” (ownership). Holdfast Collective promotes political candidates that have similar values to the company and can invest in grants. They own 100% of Patagonia’s nonvoting stock.
The Patagonia Purpose Trust now owns 2% of Patagonia. This trust will preserve the values and mission of the company. The Patagonia Purpose Trust owns 100% of the company’s voting stocks. This will allow the Patagonia Purpose Trust to decide on significant issues, including board of director members and the company’s legal charter, such as B Corp standards.
Patagonia stated, “We’re in business to save our home planet. The Patagonia Purpose Trust ensures the company’s commitment to its purpose forever” ownership.
The bar has been raised for eco-friendly businesses. This new strategy has paved the way for other companies wanting to follow suit with plans that prioritize a healthy environment while simultaneously satisfying customers.
Chouinard’s decision to give away the $3 billion company exemplified Patagonia’s core values to “build the best product, cause no unnecessary harm, use business to protect nature, and not bound by conviction” core values.
Patagonia demonstrated to companies and consumers that prioritizing environmentally-focused efforts can lead to high profits, supportive customers and a successful business.
Chouinard, then 14, did not intend to own a $3 billion business when he began rock climbing in 1953. As a teenager, Chouinard made and sold recycled rock climbing gear and became known in the California climbing community for his innovative and handmade equipment.
Chouinard eventually partnered with fellow climber Tom Frost, and by 1970, Chouinard Equipment was the largest climbing hardware supplier in the US.
After some of Chouinard’s gear began to damage the environment, he started leading the way to sell more sustainable gear and apparel. In 1973, Chouinard founded Patagonia with environmental ideals in mind.
Throughout the decades, Patagonia has created numerous environmental campaigns and supported many organizations that share the same values. While the company has grown significantly, Patagonia’s passion for creating sustainable and reliable outdoor gear and apparel has remained the same (company’s history).
Patagonia has experienced much success through its emphasis on sustainability. However, with Chouinard and his family no longer profiting from Patagonia, The New York Times wrote that, “Some experts caution that without the Chouinard family having a financial stake in Patagonia, the company and the related entities could lose their focus” Patagonia-climate-philanthropy-chouinard.html.
Other experts are hopeful this new business strategy could inspire Patagonia’s competitors to follow suit. In an article for Just Style, Globaldata’s associate apparel analyst, Louise Deglise-Favre, stated she thinks Patagonia’s new ownership will inspire its closest competitors.
However, she adds, “it’s such a drastic move. I don’t think there’s many brands that would take it to the same extent” Just Style.
Patagonia’s new ownership will encourage people to buy sustainable apparel and gear while donating directly to the fight against climate change. This could increase sales, potentially taking away business from competitors.
The hope is that other companies feel pressured to create similar plans to increase sales from environmentally conscious consumers.
While the future is uncertain for Patagonia’s new business plan, it has opened opportunities for companies to prioritize fighting the climate crisis.
Patagonia has demonstrated to consumers that the company values efforts toward long-term environmental health over short-term profit. If Patagonia’s strategy works, this could change the way our society fights climate change.