Patagonia garments, a family owned company started half a century ago, has decided that instead of going public it will be “going purpose”, this means dedicating all profits from the company to projects and organizations that will protect wild land and biodiversity and fight the climate crisis.
So it was announced by founder Ivon Chouinard of the company, with an estimated value of US$ 3 billion in a letter published in Patagonia's website, under the heading of 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.”
One option was to sell Patagonia and donate all the money. But we couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed.
”Another path was to take the company public. What a disaster that would have been. Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility.
”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.
Here’s how it works: 100% of the company’s voting stock transfers to the Patagonia Purpose Trust, created to protect the company’s values; and 100% of the nonvoting stock had been given to the Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature. The funding will come from Patagonia: Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis.
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,”. Signed Yvon Chouinard.
The privately held company’s stock will now be owned by a climate-focused trust and group of nonprofit organizations, called the Patagonia Purpose Trust and the Holdfast Collective respectively.
The trust will get all the voting stock, which is 2% of the total, and will use it to create a “more permanent legal structure to enshrine Patagonia’s purpose and values.” It will be overseen by members of the family and close advisors.
The Holdfast Collective owns all the non-voting stock of Patagonia, which amounts to 98%.
Patagonia expects to generate and donate about US$ 100 million annually depending on the health of the business. The company now sells new and used outdoor apparel, gear for outdoor activities like camping, fishing and climbing, and food and beverages made from sustainable sources.
Ryan Gellert will continue to serve as Patagonia’s CEO, and the Chouinard family will remain on Patagonia’s board following the apparel maker’s expanded philanthropic strategy. After informing its employees on Wednesday about this move, the company updated its website to state that “Earth is now our only shareholder.”