In the latest, perhaps last, and certainly most shocking decision amid a career of tradition-bucking moves, Yvon Chouinard is donating his ownership of Patagonia to fund environmental causes.
The decision to move his family’s estimated $3 billion in ownership value to the Patagonia Holding Trust and the Holdfast Collective was announced by the company to employees and in the New York Times today. The company itself will remain a for-profit entity, but each year’s dividends — estimated at $100 million annually — will further empower efforts to save the planet from climate change.
“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,” said Chouinard in a statement. “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.”
A self-described “dirtbag” rock climber, Chouinard started hand-forging climbing gear in the 1950s; got serious in the 1960s; added rugged, mountain-ready shirts and shorts by the 1970s; and founded Patagonia in 1973. His unorthodox business practices — such as managed growth, ethics-based decisions, and, above all, putting the environment first — were detailed in the 2006 book Let My People Go Surfing: The Education of a Reluctant Businessman.
A surfer who has long owned a property at Hollister Ranch on the Gaviota Coast, Chouinard spoke at length about that book to the Santa Barbara Independent for this cover story. “Every doomsday book says that if we just did this and that, we’d straighten things out,” he told me then during an interview at Patagonia’s Ventura headquarters. “That’s what we’re trying to implement. You can do it as an individual, but it doesn’t have much effect. But we have over 1,000 employees worldwide, and if we all work collectively, we might have an effect.”
Those employees were told the news today in a global town hall event. They learned that 2 percent of Patagonia’s shares — which are all of the voting shares — will be owned by the Patagonia Holding Trust. The Trust, said the press release, “exists to create a more permanent legal structure to enshrine Patagonia’s purpose and values” and intends to “demonstrate as a for-profit business that capitalism can work for the planet.”
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The other 98 percent of the shares are going to the Holdfast Collective, which “will use every dollar received from Patagonia to protect nature and biodiversity, support thriving communities, and fight the environmental crisis.” After some profits are reinvested into the company’s operations, the Collective can expect to work with about $100 million in dividends annually, “depending on the health of the business.”
On top of that, Patagonia will remain a B Corp, meaning that one percent of its annual profits will continue going to grassroots activism. There are no changes to the leadership structure at the company, and the Chouinard family will “guide” for both the Trust and the Collective.
“Two years ago, the Chouinard family challenged a few of us to develop a new structure with two central goals,” said Patagonia’s CEO Ryan Gellert. “They wanted us to both protect the purpose of the business and immediately and perpetually release more funding to fight the environmental crisis. We believe this new structure delivers on both, and we hope it will inspire a new way of doing business that puts people and planet first.”
The news is no surprise to longtime Chouinard friends like Kristine McDivitt Tompkins, who served as Patagonia’s CEO from the early days until retiring in 1993 to start her own conservation work. “I first met Yvon when he was around 24, and today, he is almost 84,” said Tompkins, who sits on the board of directors. “In all those years, his vision has never wavered. He wanted to do things his own way and on his own terms. And while he is in good health now, he wanted to have a plan in place for the future of the company and the future of the planet. I believe this plan that he and his family helped create is tectonic. It will make the company more competitive, and its employees around the world will forever be empowered by purpose.”
“There are very few businesses I respect, so we kinda do our own thing,” Chouinard told the Independent back in 2006. “We broke a lot of the rules.”
In this major announcement — which effectively erases what would have been considerable wealth for many generations of his family — Chouinard upends yet another tenet of capitalism, sacrificing his own resources for the benefit of everyone else.