Patagonia reaches new highs. The company with just one shareholder: “Earth”

Patagonia, the $1bn company that began life as a purveyor of rock-climbing equipment, reached new heights last week. The founder, 83-year-old Yvon Chouinard, announced that he was donating the ownership of Patagonia to a trust that would ensure the profits of the company were used to address climate change. From now on, some $100m in annual profits will be directed towards “protecting the company’s values”; fighting the environmental crisis and defending nature. This will make Patagonia one of the largest funders of environmentalism on the planet. 

Yvon, rather than choosing to “go public” and sell Patagonia, has said he would rather “go purpose”; no longer seeking shareholder returns, but returns for the planet. The profits made by the company will now be given to a non-profit body called the Holdfast Collective, which now owns 98% of Patagonia in non-voting stock. To oversee the company’s strategy, the Patagonia Purpose Trust has been set up, holding the remaining 2% stock. This is a new form of company structure, which Yvon has said makes “Earth the only shareholder”. 

This move, which has the backing of the whole Chouinard family, is unprecedented. The company has made the family Californian billionaires as well as a household name. But this was never the intention of Yvon, who has always described himself as a “reluctant capitalist”. Recent profiles have suggested that the family never lived a life of luxury and that Yvon famously said he was “really pissed off” seeing his name listed in Forbes’ rich list.

The fashion industry is not accustomed to receiving “good press” in regard to the environmental agenda. The industry contributes to circa 10% of global carbon emissions and 20% of wastewater, and is on a trajectory that would make its share of the carbon budget as high as 26% by 2050. By almost all metrics and indexes, the sector is comparable to that of mining and transport sectors as amongst the least trusted by the public on the environment. 

Patagonia has always been seen to be a bit different, seeking to provide good quality, long-lasting clothing. The company accepts returned clothes that it will then clean, repair and then re-sell on its “Worn Wear” website. Its raison d’être was after Yvon, disillusioned with rock climbing equipment that damaged mountains, began making his own, more sustainable equipment; first by himself, for himself and later for others, before building the company into the over 3,000-employee firm it is today. The company has committed to being carbon neutral by 2025.

The company isn’t simply folding, or ceasing to be profit-seeking. Charles Conn, the Chairman, says that “this isn’t some kind of hippie-tie-dye-running-through-the-flowers thing. It is a serious way of thinking differently about the role of companies in society.” The company has long been committed to ethical business practices, having in 1986 been an early adopter of committing 10% of its profits to environmental causes. 

Many are lauding Patagonia as a company acting upon its corporate purpose, calling for others to follow its lead. Of course, only some companies can follow this path, for either financial or structural reasons, and some do not have the disposition to act on causes beyond their sole purpose. Some observers have called on the government to have a part to play in all this, and demand companies “do the right thing”, wherever possible. Patagonia shows that, at least in some cases, shareholders or owners, often will act on their own accord. But will that empathy and generosity alone be enough to reverse the climate crisis? Is there a role to be played to force the hand of corporates?  

In the case of Patagonia, this is a company in an industry that has struggled with its environmental image, but has managed to find a way to balance the interests of its consumers, employees, and owners, as well as the perilous state of the world.  But whilst this is sadly likely to be just an isolated case, it has set the peak for what a company could do to devote itself to its corporate purpose. And wow, the view looks good from up there!