Outdoor apparel brand Patagonia has announced new ownership and structure, nearly 50 years since founder Yvon Chouinard began his experiment in responsible business. To Kick off the next 50, the company is ‘going purpose’ instead of ‘going public’
Effective immediately, the Chouinard family has transferred all ownership to two new entities: Patagonia Purpose Trust and the Holdfast Collective. Most significantly, every dollar that is not reinvested back into Patagonia will be distributed as dividends to protect the planet.
The Patagonia Purpose Trust – created to protect the company’s values – now owns all the voting stock of the company (2% of the total stock) and exists to create a more permanent legal structure to enshrine Patagonia’s purpose and values. It will help ensure that there is never deviation from the intent of the founder and to facilitate what the company continues to do best: demonstrate as a for-profit business that capitalism can work for the planet.
The Holdfast Collective – a nonprofit dedicated to fighting the environmental crisis and defending nature – owns all the nonvoting stock (98% of the total stock), and it will use every dollar received from Patagonia to protect nature and biodiversity, support thriving communities and fight the environmental crisis.
Each year, profits that are not reinvested back into the business will be distributed by Patagonia as a dividend to the Holdfast Collective to help fight the climate crisis.
The company projects that it will pay out an annual dividend of roughly $100 million, depending on the health of the business.
Options were to sell Patagonia and donate all the money. But new ownership doesn’t necessarily protect Patagonia values or keep the team around the world employed. Another was to take the company public; but even public companies with good intentions are under pressure to create short-term gain at the expense of long-term vitality and responsibility. With no ‘good options’ available, Patagonia created its own. In the words of founder and now former owner Yvon Chouinard:
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.
It’s been nearly 50 years since we began our experiment in responsible business, and we are just getting started. If we have any hope of a thriving planet—much less a thriving business—50 years from now, it is going to take all of us doing what we can with the resources we have. This is another way we’ve found to do our part.
Despite its immensity, the Earth’s resources are not infinite, and it’s clear we’ve exceeded its limits. But it’s also resilient. We can save our planet if we commit to it.
If we have any hope of a thriving planet – much less a business – it is going to take all of us doing what we can with the resources we have. This is what we can do... 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, Patagonia founder, former owner, and current board member
Patagonia will remain a B Corp and will continue to give one percent of sales each year to grassroots activists.
The Chouinard family will guide the company’s controlling shareholder, the Patagonia Purpose Trust, electing and overseeing Patagonia’s board of directors. They will also guide the philanthropic work performed by the Holdfast Collective. Acting together, Patagonia’s board and the Patagonia Purpose Trust will work for the company’s continued success over the long term while ensuring it stays true to its purpose and values.
Two years ago, the Chouinard family challenged a few of us to develop a new structure with two central goals. They wanted us to both protect the purpose of the business and immediately and perpetually release more funding to fight the environmental crisis. We believe this new structure delivers on both and we hope it will inspire a new way of doing business that puts people and planet first.Ryan Gellert, CEO of Patagonia
Visit the Patagonia website to read the public letter written by founder Yvon Chouinard.
The current system of capitalism has made its gains at an enormous cost, including increasing inequality and wide-scale uncompensated environmental damage. The world is literally on fire.
Patagonia has been breaking the mold for five decades. Chouinard, a rock climber, built the company’s reputation by using sustainable materials and encouraging customers to re-use and repair their outdoor gear. Patagonia is famous for its campaign telling consumers “Don’t buy this jacket”, asking people to buy only what they need.
And this new model by Patagonia goes beyond anything else that exists today. Which companies will be the next to step up?