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Friday, February 3, 2023

Patagonia’s Billionaire Owner Relinquishes Company to Battle Climate Crisis

Patagonia was one of the earliest companies to turn into a multibillion-dollar enterprise, adhering to strict environmental and social standards, recently changing its motto to: “We’re in business to save the planet”

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UNITED STATES: In a highly environmentally-conscious move to highlight the debilitating nature of the climate crisis and encourage corporate sensitivity towards the pertinent issue, the billionaire owner of Patagonia has decided to relinquish his entire company to fight the issue, he announced on Wednesday.

Patagonia owner, the billionaire boss of high-end sports shoes, is Yvon Chouinard, who turned his inherent passion for rock-climbing into a lucrative, multibillion-dollar business for the world’s most successful sportswear brands.

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He is giving the entire company to a uniquely structured trust and nonprofit organisation, which intends to pump all of the company’s profits into saving the planet. The company made an announcement which read, “As of now, Earth is our only shareholder.”

ALL profits, in perpetuity, will go to our mission to ‘save our home planet’.

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83-year-old Chouinard teamed up with his wife and two children, along with a board of company lawyers to create a structure that will allow Patagonia to continue to operate as a for-profit company whose proceeds will eventually go into green funding that will benefit environmental efforts.

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,” said Chouinard in a statement. “This is another way we’ve found to do our part.”

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While 2% of all the stock and decision-making authority will be assigned to a trustee who will oversee the company’s mission and values, the other 98% of the company stock will be entrusted to a nonprofit called the Holdfast Collective, which “will use every dollar received to fight the environmental crisis, protect nature and biodiversity, and support thriving communities, as quickly as possible,” according to the statement.

Patagonia’s annual profits, which are gained after reinvesting in the business, will be distributed to the nonprofit to battle the climate crisis.

The structure was designed cleverly to avoid selling the company or taking it public, which could have meant a change in its corporate values, eventually affecting the environmental footprint also.

“Instead of ‘going public, you could say we’re ‘going purpose’,” said Chouinard. “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.”

Patagonia’s new direction is designed to set an ethical example that dismisses the old shareholder capitalism axiom that corporate goals other than profit will just confuse investors, wrote Patagonia board chair Charles Conn in an opinion piece in Fortune magazine on Wednesday.

Yvon Chouinard; Photo Credit: Twitter

Instead of exploiting natural resources to make shareholder returns, we are turning shareholder capitalism on its head by making the Earth our only shareholder,” he wrote.

Chouinard and his brand have long been invested in the whole idea of environmental activism and employee benefits. In its nearly 50 years in operation, Ventura, a California-based company has been in the limelight for its extensive employee benefits, including the provision of essential office amenities like on-site nurseries and afternoons off on good surf days.

The historical trajectory of the company notes that it had begun donating 1% of its sales output to environmental groups, a program eventually formalised in 2001 called the “1% for the Planet Scheme”. The program has resulted in $140 m in donations for preservation, protection and restoration of the natural environment, according to the company.

The Patagonia family is the ultimate figurehead of environmental caregiving in the industry and specialises in philanthropy, and trust organizations, according to the New York Times.

“This family is a way outlier when you consider that most billionaires give only a tiny fraction of their net worth away every year,” David Callahan, founder of the website Inside Philanthropy, told the newspaper.

Patagonia was one of the earliest companies to turn into a multibillion-dollar enterprise, submitting to certification as meeting certain strict environmental and social standards, and recently it changed its mission to state: “We’re in business to save our planet.”

Chouinard, who started his business from literal scratch, is a famous eccentric inventor who began his business fashioning metal climbing pistons (or spikes to wedge into a crevice while rock climbing) and living out of his shabby van.

He recently told the New York Times that his humble beginnings have always been close to his heart and hence become the reason for his disapproval of the billionaire status.

“I was in Forbes magazine listed as a billionaire, which pissed me off,” he said. “I don’t have $1bn in the bank. I don’t drive Lexuses.”

Also Read: Joe Biden Enacts Legislation on the Environment, Taxes, and Health

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