Yvon Chouinard gives up Patagonia ownership stake for climate

Yvon Chouinard and his family have owned the company since it was founded. The company is transferring all ownership to two new entities in order to cement the company's values and fight against the climate crisis. The Holdfast Collective now controls 98% of the voting stock, which is 2% of the total.

In order to make sure the company continues to demonstrate that capitalism can work for the planet, the purpose trust was created to create a permanent legal structure to codify the company's purpose and values. According to the company, all annual profits that aren't reinvested back into the business will be distributed to the Holdfast Collective to fund grassroots environmental organizations.

“It’s been a half-century since we began our experiment in responsible business,” Chouinard said in a statement. “If we have any hope of a thriving planet 50 years from now, it demands all of us doing all we can with the resources we have. As the business leader I never wanted to be, I am doing my part. 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.”

There weren't any good existing options when it came to putting more money toward the climate crisis. Selling the company and donating all the profits wouldn't guarantee the survival of the values, but it would help. Wall Street investors never-ending pressures to create short-term gain at the expense of long-term responsibility made going public impossible.

So, as with so many other things Patagonia has done over the decades, the company decided to create its own option. “Instead of ‘going public,’ you could say we’re ‘going purpose,’ ” Chouinard wrote. “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.”

The most obvious way to pass the company on to his children would be. The elder Chouinard doesn't like the idea of being called a billionaire. In that sense, this move toward a new model completely wears its goals in a clear way that multigenerational family ownership just can't embody, and preemptively answers cynics or critics of the company's motives.

While, in some ways, the new ownership structure represents a radical change for Patagonia, in others it makes perfect sense as a natural evolution. This is a company that has always done business on its own terms. (The same can be said of the Chouinard family.) Patagonia cofounded 1% for the Planet, which has led thousands of companies to commit 1% of annual sales to environmental causes. It helped pioneer the very definitions of benefit corporations. Its embrace of organic cotton and recycled materials in apparel led to their widespread proliferation—and it has led the push for the certification for regenerative organic agriculture. Even in its workplace practices, Patagonia has been decades ahead of everyone, seeing as how it was founded on the idea of employee “flex time” (so they could go climbing and surfing) and started its company daycare program in 1984.

The mission statement was changed to "Patagonia is in business to save our home planet." After a year, Chouinard was working out how to fight the climate crisis beyond his lifetime. "We're a billion-dollar company, over a billion, and I don't want a billion-dollar company." I knew it was coming to this when they announced it to me. I want to make Patagonia act like a small company again.

The purpose trust and holdfast collective will be led by the company's board and the Chouinards. To prevent future abuse for, say, big salary raises for top brass, the structure needs to be sound enough to ward off unforeseen changes over the years and even decades.

If the company board doesn't remove the CEO, the Holdfast Collective will be able to do it. The company says that because there are no individual beneficiaries and the stock can never be sold, there is no structural opportunity for any drift in the purpose trust. An independent "Protector" is given the power to enforce the trust's purpose.

Whether it’s climbing mountains or finding a better way to make apparel, Chouinard—and by extension his company—has never been afraid of a challenge. Patagonia’s leadership is hoping that this move, like so many of its past ones, provides inspiration to other companies looking for a way to reconcile capitalism and the climate crisis. As Chouinard told me a few years ago, “It’s a never-ending summit. You’re just climbing forever. You’ll never get to the top, but it’s the journey.”

As the company prepares to mark the 50th year of its own journey, it is once again reaching the edge of the corporate map, and is moving towards a new path.