Patagonia’s pitch for the planet: CEO transfers ownership to combat climate change
Yvon Chouinard wanted to cultivate an outdoor brand that strived to do less harm to the environment than traditional brands
Long before you could buy your Patagonia apparel and gear at the Snowmass Village Mall, company founder Yvon Chouinard was an avid rock climber and mountain man living in California.
He made his start by crafting durable gear for he and his friend’s outdoor adventures.
Chouinard wanted to cultivate an outdoor brand that strived to do less harm to the environment than traditional brands.
“I never wanted to be a businessman,” he said in a release from Patagonia. “I started as a craftsman, making climbing gear for my friends and myself, then got into apparel.”
With the brand now valued at $3 billion, Chouinard and his family transferred ownership to a special trust and nonprofit organization dedicated to combating climate change, The New York Times first reported.
The newly established organization, Holdfast Collective, will now receive 98% of the companies profits, an estimated $100 million a year, according to The New York Times. The money from the organization will be funneled into nonprofit environmental groups and political organizations.
The other 2% — all of the company’s voting stock — will go to the newly established Patagonia Purpose Trust. The trust was created so the Chouinard family and advisers can oversee operations, making sure the brand continues its commitments to social and environmental welfare.
Shades of green
Prior to this initiative, Patagonia reportedly donated 1% of profits every year to climate change organizations.
According to a McKinsey Sustainability report from 2021, less than 1% of philanthropic donations in the United States goes to environmental nonprofits, making Patagonia’s recent initiative all the more groundbreaking.
Still, the fashion industry is said to be one of the most polluting industries in the world, trailing the oil and gas industry.
Patagonia may not fully claim they are a “fashion” business, but they still produce new apparel every year. While companies can do their best to mitigate the impacts they have on the environment, there’s no way to be fully sustainable when producing new items of anything.
The fashion industry is responsible for an estimated 3% of global carbon emissions, emitting more than 850 million tons of carbon per year, according to a 2017 study published in Semantic Scholar.
However, unlike many brands that tout their environmental efforts, Patagonia isn’t afraid to admit their business does have a negative impact on the planet.
In response to the ad, the brand said, “Each piece of Patagonia clothing, whether or not it’s organic or uses recycled materials, emits several times its weight in greenhouse gases, generates at least another half garment’s worth of scrap and draws down copious amounts of freshwater now growing scarce everywhere on the planet.”
Chouinard has bold intentions with giving away his company. He told The New York Times in an exclusive interview that he hopes his company will inspire “a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people.”
In typical succession fashion, the company could have been passed down to his children, but they reportedly didn’t want it.
Ryan Gellert, Patagonia’s chief executive officer, told The New York Times that the children “embody this notion that every billionaire is a policy failure.”
While Patagonia’s efforts have been applauded by many, the intention has been met with skepticism as well, with some saying they think this could be just a typical tax ploy.
According to Grist, the company paid $17.5 million in taxes on their donations, which was a small percentage of the money funneled in. The 501(c)(4) organization receiving Patagonia’s profits will be considered tax-exempt by the IRS. This is murky, considering the trust still allows the Chouinards to oversee all operations.
Others have noted that Patagonia’s recent move isn’t all that new. Prior to this, billionaire Barre Seid donated $1.6 billion to a conservative nonprofit organization, The New York Times reported in August.
Therefore, this “new form of capitalism” could be under the guise of good-hearted philanthropy but could further the trend of the ultra-wealthy buying more political power than before.
This news comes at a contentious time for income inequality.
Aspen and the Roaring Fork Valley have felt the effects of the ultra-wealthy, and roughly 100 billionaires can call the area home, or second home.
“Basalt has been Aspenized,” Denise Drake told Elizabeth Key in an opinion piece published by The Aspen Times in August. “The billionaires pushed the millionaires to Basalt.”
A question is how many may follow Chouinard’s new form of capitalism —and even whether that would be a good thing.
To reach Kristen Mohammadi, call 304-650-2404 or email email@example.com.