Yvon Chouinard, founder of privately owned outdoor apparel and gear maker Patagonia, Inc., has announced that he is donating his company to fight climate change. "Earth is now our only shareholder," Chouinard writes in a letter about "Reimagining Capitalism" that he released on Sept. 14, 2022. In 2018, he changed Patagonia's mission statement to state, "We're in business to save our home planet."
Patagonia already was committed to using materials that caused less harm to the environment and to donating 1% of sales each year. Now the entire company is being donated to support efforts designed to combat climate change, including all profits generated in excess of the amounts necessary to reinvest in the business. Patagonia has an estimated valuation of about $3 billion, and it expects to donate about $100 million annually.
- Patagonia founder Yvon Chouinard is donating his company to fight climate change.
- Privately held Patagonia is valued at about $3 billion.
- About $100 million in annual profits are expected to go to this cause.
- Chouinard had an estimated net worth of $1.2 billion prior to the transaction.
Structure of the Deal
Chouinard has transferred 100% of Patagonia's voting stock to the Patagonia Purpose Trust, "created to protect the company's values." Meanwhile, 100% of its nonvoting stock has been moved to the Holdfast Collective, a nonprofit "dedicated to fighting the environmental crisis and defending nature."
Going Public vs. 'Going Purpose'
Chouinard observes that one option was to sell Patagonia and donate the proceeds. He rejected this alternative because he could not be sure that a new owner would maintain the company's values and keep its current employees.
Another option was going public, but he sees this as likely to become a "disaster." The reason, in his view: "Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility."
Instead, Chouinard says that, rather than going public, he has chosen "going purpose." That is, "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."
B Corp and California Benefit Corporation
Patagonia already was a certified B Corp and a California benefit corporation, "writing our values into our corporate charter so they would be preserved." Less than 6,000 companies worldwide are certified as B-Corp businesses. They must meet strict environmental, social, and governance standards (ESG) and benchmarks set by B Labs to gain certification.
About Yvon Chouinard
Chouinard states that he never wanted to be a businessman. Rather, he says that he started as a craftsman, making climbing gear for his friends and himself, then branched into apparel. His net worth was estimated to be $1.2 billion by Forbes prior to the donation.
Chouinard was born on Nov. 9, 1938, in Lewiston, Maine. The son of French Canadian immigrants, he grew up in a French-speaking environment and struggled with English when his family moved to Southern California in 1947. He developed an interest in falconry, which led to his learning how to rappel down cliffs. In addition to climbing, he became a surfer. In 1957, he taught himself blacksmithing to forge reusable climbing tools that would not harm the environment.
In 1971, he met and married Malinda Pennoyer. They began selling apparel after a trip to England and Scotland, scoring a major success with a rugby-style shirt. Their company's initial catalog in 1972 featured a leave-no-trace, responsible climbing manifesto. Sales of apparel soon surpassed climbing hardware, and Chouinard felt that he needed a recognizable brand name. In 1972, Patagonia was created in Ventura, California.