Business

Patagonia’s ‘reluctant billionaire’ owner gives away company to fight climate crisis

Yvon Chouinard and his family transfer all stock in outdoor clothing brand to specially designed trust and a non-profit organisation

Yvon Chouinard, the founder of the outdoor apparel maker Patagonia, who has forfeited ownership of the company he founded 49 years ago with future profits to be used to fight climate change. Photograph: Natalie Behring/The New York Times

Thu Sep 15 2022 - 09:34

A half-century after founding outdoor apparel maker Patagonia, Yvon Chouinard, the eccentric rock climber who became a reluctant billionaire, has given the company away.

Rather than selling the company or taking it public, Mr Chouinard, his wife and two adult children have transferred their ownership of Patagonia, valued at about $3 billion (€3bn), to a specially designed trust and a non-profit organisation. They were created to preserve the company’s independence and ensure that all of its profits — $100 million a year — are used to combat climate change and protect undeveloped land around the globe.

“Hopefully this will influence a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people,” Mr Chouinard (83) said in an exclusive interview.

“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,” he said. “This is another way we’ve found to do our part.”

READ MORE

Patagonia will continue to operate as a private, for-profit corporation based in Ventura, California, selling more than $1 billion worth of jackets, hats and ski pants each year. But the Chouinards, who controlled Patagonia until last month, no longer own the company.

In August, the family irrevocably transferred all the company’s voting stock, equivalent to 2 per cent of the overall shares, into a newly established entity known as the Patagonia Purpose Trust. The trust, which will be overseen by members of the family and their closest advisers, is intended to ensure that Patagonia makes good on its commitment to run a socially responsible business and give away its profits.

The Chouinards then donated the other 98 per cent of Patagonia, its common shares, to a newly established non-profit organisation called the Holdfast Collective, which will now be the recipient of all the company’s profits and use the funds to combat climate change.

By giving away the bulk of their assets during their lifetime, the Chouinards — Yvon, his wife Malinda, and their two children, Fletcher and Claire, who in their 40s — have established themselves as among the most charitable families in the US.

For Mr Chouinard, it provided a satisfactory resolution to the matter of succession planning.

“I didn’t know what to do with the company because I didn’t ever want a company,” he said from his home in Jackson, Wyoming. “I didn’t want to be a businessman.

“Now I could die tomorrow and the company is going to continue doing the right thing for the next 50 years, and I don’t have to be around.”

The structure, the company statement said, was designed to avoid selling the company or taking it public, which could have meant a change in its values.

“Instead of ‘going public’, you could say we’re ‘going purpose’,” said Mr Chouinard. “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. Mr Chouinard and Patagonia have long been groundbreakers in environmental activism and employee benefits. In its nearly 50 years in operation, the Ventura, California-based company has been known for extensive benefits for employees, including on-site nurseries and afternoons off on good surf days.

In the 1980s, the company began donating 1 per cent of its sales to environmental groups, a programme formalised in 2001 as the “1% for the Planet Scheme”. The programme has resulted in $140 million in donations for preservation and restoration of the natural environment, according to the company.

Patagonia was one of the earliest companies to become a b-Corp, submitting to certification as meeting certain environmental and social standards, and recently it changed its mission to state: “We’re in business to save our home planet.”

Mr Chouinard, the famously eccentric entrepreneur who started his business fashioning metal climbing pitons (or spikes to wedge into cracks while rock climbing) and lived out of his van at climbing destinations for many years, was horrified to be seen as a billionaire, he told the New York Times.

“I was in Forbes magazine listed as a billionaire, which really, really pissed me off,” he said. “I don’t have $1 billion in the bank. I don’t drive Lexuses.”

The Chouinard family are at the forefront of charitable giving, philanthropy and trust experts told the New York Times.

“This family is a way outlier when you consider that most billionaires give only a tiny fraction of their net worth away every year,” David Callahan, founder of the website Inside Philanthropy, told the newspaper. — The New York Times / Guardian

LATEST STORIES