Known for its quality apparel and sustainability efforts, Patagonia was founded by Yvon Chouinard back in the 1970s.
After half a decade of building the company, the Chouinard family has decided to give away its ownership $3 billion to two newly minted entities — the Patagonia Purpose Trust, which will control 2% of all voting stock, and the Holdfast Collective, which will take on the rest.
The former is “to create a permanent legal structure to enshrine the company’s purpose and values, so that there is never deviation from Chouinard’s intent — and to make sure the company continues to demonstrate that capitalism can work for the planet,” wrote Fast Company’s Jeff Beer.
Meanwhile, the Holdfast Collective will help fund environmental grassroots organizations, businesses and political leaders in efforts to fight climate change.
This move falls in line with Chouinard’s longstanding commitment to protecting the environment.
Dan Mosley, a partner at BDT & Co. which helped Patagonia create its new structure, said that the family is willing to bear the cost “to ensure that this company stays true to their principles,” as per The Times. “And they didn’t get a charitable deduction for it. There is no tax benefit here whatsoever.”
The report states that Patagonia will continue operating as a private, for-profit company but the Chouinards, including the founder’s wife and two adult children, will no longer own it.
“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,” Chouinard, 83, told The New York Times. “We are going to give away the maximum amount of money to people who are actively working on saving this planet.”
In a letter to his employees, Chouinard wrote that neither going public nor selling the business and donating the profits were good options as they didn’t guarantee that the company’s values would be intact.
“Instead of ‘going public,’ you could say we’re ‘going purpose,’” Chouinard wrote, per Fast Company. “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.”