On Wednesday, September 14th, the Chouinard family announced new ownership of outdoor apparel giant, Patagonia.
Instead of selling the iconic brand, or going public with it, Yvon Chouinard cemented his legacy as an activist — one fiercely committed to environmental causes and the fight against climate change — by choosing an unconventional path.
The Chouinard family transferred ownership of Patagonia to two new entities: the Patagonia Purpose Trust and the Holdfast Collective.
The Patagonia Purpose Trust — guided by the Chouinard family — now owns all voting stock of Patagonia (2 percent of the total stock), and elects and oversees Patagonia’s board of directors.
Meanwhile, the Holdfast Collective owns Patagonia’s nonvoting stock and “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 to the Holdfast Collective to help fight the climate crisis, said a Patagonia press release, projecting that it will pay out roughly $100 million annually.
Nearly 50 years ago Yvon Chouinard began making climbing gear for friends, crafting his equipment in a tin shed. He never wanted to be a businessman, as he explained in the opening paragraph of a letter posted Wednesday on Patagonia’s website under the headline, “Earth is now our only shareholder.”
I never wanted to be a businessman. I started as a craftsman, making climbing gear for my friends and myself, then got into apparel. As we began to witness the extent of global warming and ecological destruction, and our own contribution to it, Patagonia committed to using our company to change the way business was done. If we could do the right thing while making enough to pay the bills, we could influence customers and other businesses, and maybe change the system along the way.
We started with our products, using materials that caused less harm to the environment. We gave away 1% of sales each year. We became a certified B Corp and a California benefit corporation, writing our values into our corporate charter so they would be preserved. More recently, in 2018, we changed the company’s purpose to: We’re in business to save our home planet.
While we’re doing our best to address the environmental crisis, it’s not enough. We needed to find a way to put more money into fighting the crisis while keeping the company’s values intact.
Truth be told, there were no good options available. So, we created our own.
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.
Even with Patagonia’s reputation well established as a maverick, Wednesday’s announcement was unprecedented. Board member Dr. Ayana Elizabeth Johnson said it well, “Patagonia has been breaking the mold for decades, and now they have shattered it.”
“Every time you read a new scientific report, it's clear the climate crisis is happening faster than we thought and it's worse than we thought. The stakes could not be higher,” Johnson added
An intriguing detail of the structure, as reported by the New York Times, is that the Holdfast Collective is a 501(c)(4), which allows it to make unlimited political contributions.
Therefore, the Chouinard family received no tax benefit for its donation of shares to the Holdfast Collective.
Additionally, the donation of shares to the Patagonia Purpose Trust — because it’s a trust — means the family will pay about $17.5 million in taxes on the gift.
However, as noted in a Bloomberg article, this structure also allows the Chouinard family to skirt a $700 million tax hit (Patagonia is valued at $3 billion), while keeping control. "Chouinard is at the fore of a small-but-growing movement among the ultra-wealthy to use nonprofits to exert political influence long past their lifetimes," the Bloomberg article states.
“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,” Yvon Chouinard said.
Amy Hatch is the co-founder of GGG. One of her all time favorite books ever is Let My People Go Surfing by Yvon Chouinard. She read it while backpacking in the Andes Mountains in Argentina, and it inspired the course of much of her life.