Already arguably the most environmentally sustainable company on the planet, Patagonia just went all-in. Faced with the choice of selling Patagonia or going public, founder Yvonne Chouinard and his family decided to do neither. Instead, they gave the company away. Yes, you read that right.
A long-time environmental advocate, Chouinard is an unlikely businessman. While living in his car eating damaged cans of cat food he bought for five cents apiece, Chouinard started making climbing equipment for friends in the early 70s before moving into apparel. He abhors his billionaire status electing to live modestly between Ventura, CA, and Jackson, Wyoming. He drives a beat-up Subaru and doesn’t own a computer or a cell phone. He’s long championed practices that most other CEOs would scoff at – a commitment to unparalleled customer service, a lifetime warranty on Patagonia products, and donating 1% of corporate revenues each year to sustainable causes. Patagonia was a leader in shifting its supply chain to organic cotton and implementing employee benefits such as on-site childcare long before such practices were in vogue. At one point, Patagonia famously ran a Black Friday ad on in the New York Times that read “Don’t Buy This Jacket.” They still discourage customers from buying a new jacket and would rather you send your old jacket back to be repaired or recycled through their Worn Wear program. Patagonia is a Certified B Corp and in 2018 officially changed its corporate mission statement to “We’re in business to save our home planet.”
That’s why Chouinard’s most recent decision to give the company away was both simultaneously shocking and incredibly predictable. In looking to create a viable succession plan, Chouinard vetted several different paths. His children weren’t interested in running it so he considered everything from turning Patagonia into a co-op where the employees would become the owners, becoming a non-profit, to even selling the company to a SPAC. Going public was a likely disaster as Patagonia would then be subject to maximizing profits to make good on their fiduciary responsibility to shareholders. Selling the company to a third party left no guarantees that Patagonia’s mission to save the planet would remain at the forefront of its corporate culture. Instead, Chouinard, his wife, and his adult children all unanimously decided that the only path forward was to give the company to two separate irrevocable trusts – the Patagonia Purpose Trust and the Holdfast Collective. Through this arrangement, Patagonia can continue forward as a private company with 100% of its profits going toward fighting climate change. While the Chouinard family will continue to oversee the management of the trusts, they will reap no financial benefit. And because the Holdfast Collective is allowed to make political contributions, they will receive no tax benefit for their gift.
Patagonia has already donated $50 million to the Holdfast Collective and expects to contribute another $100 million this year. Mr. Chouinard has said much of the focus of the Holdfast Collective will be on nature-based climate solutions such as preserving wild lands, funding grassroots activists, and supporting political campaigns. In his own words, Chouinard says that instead of “going public” Patagonia is “going purpose.” Instead of extracting value from nature and transforming it into wealth for investors, Patagonia is electing to use the wealth it creates to protect the source of ALL wealth.
While unorthodox, Mr. Chouinard’s decision to essentially give Patagonia back to the planet is the perfect conclusion to his remarkable career.
And he still doesn’t want you to buy the jacket.
