Patagonia Founder Is Giving His Company Away in Pledge to Fight Climate Change

Patagonia founder Yvon Chouinard is giving away the multibillion-dollar outdoor apparel business he founded nearly 50 years ago, with a goal of helping to tackle climate change.

Mr. Chouinard and his family have transferred their ownership of Patagonia to a trust and a nonprofit organisation as opposed to taking the privately held company public or selling it, the 83-year-old founder said in a letter Wednesday, titled “Earth is now our only shareholder.”

“It’s been nearly 50 years since we began our experiment in responsible business, and we are just getting started,” said Mr. Chouinard, a world-class mountain climber who started importing rugby shirts and other apparel in the 1970s for his friends to wear. “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.”

Patagonia, based in Ventura, Calif., didn’t immediately respond to a request for comment.

The company made a name for itself selling fleece jackets, board shorts and plaid shirts. The fleece vests in particular have developed a cult following from people who work in finance, while the company’s environmental- and social-conscious practices have earned dedicated buyers in other consumer spheres. Patagonia had annual revenue of $1 billion from 2017 to 2020.

Patagonia will remain a for-profit business under the new arrangement and will continue to be run by chief executive Ryan Gellert, Mr. Chouinard said. The company will also continue donating 1% of its sales to environmental nonprofit groups, he said.

The trust, called the Patagonia Purpose Trust, owns 2% of the company and all of the voting stock. It will be tasked with protecting Patagonia’s existing values and independence, Mr. Chouinard said. The nonprofit organisation, called the Holdfast Collective, owns 98% of the company and all the nonvoting stock, which doesn’t give it decision-making authority. It will be charged with taking the profits generated by Patagonia and using those funds to address climate change.

Patagonia said in a statement that it expects to pay out roughly $100 million a year to Holdfast Collective, depending on the health of the business.

Stacy Palmer, who has been editor of the Chronicle of Philanthropy since it was founded in 1988, said it was the first she has heard of an arrangement such as this.

“As far as I know, this is extraordinarily different than what others have done because of Patagonia’s size and profitability,” Ms. Palmer said.

She noted that Holdfast Collective is a 501(c)(4) not-for-profit organisation, which allows it to use the money to advocate for causes and political candidates, not just to give to charities.

“This means that the money is intended to shape policy and politics, more than, say, supporting a charity that does river cleanup,” Ms. Palmer said. “That’s a lot of money pouring into advocacy and could be very powerful.”

Mr. Chouinard has said that he approaches leading his company as a sort of a road map for aspiring business owners.

“I never even wanted to be in business,” he said in a 2012 interview with The Wall Street Journal. “But I hang onto Patagonia because it’s my resource to do something good. It’s a way to demonstrate that corporations can lead examined lives.”

The Chouinard family will oversee leadership of the Patagonia Purpose Trust and will spearhead the philanthropic work of the Holdfast Collective. The family will also remain member of Patagonia’s board of directors.

Requiring more than 30 percent of household income to service a home loan has long been considered the benchmark for ‘housing stress’. Yet research shows it is becoming the new normal. The 2024 ANZ CoreLogic Housing Affordability Report reveals home loans on only 17 percent of homes are ‘serviceable’ if serviceability is limited to 30 percent of the median national household income.

Based on 40 percent of household income, just 37 percent of properties would be serviceable on a mortgage covering 80 percent of the purchase price. ANZ CoreLogic suggest 40 may be the new 30 when it comes to home loan serviceability. “Looking ahead, there is little prospect for the mortgage serviceability indicator to move back into the 30 percent range any time soon,” says the report.

“This is because the cash rate is not expected to be cut until late 2024, and home values have continued to rise, even amid relatively high interest rate settings.” ANZ CoreLogic estimate that home loan rates would have to fall to about 4.7 percent to bring serviceability under 40 percent.

CoreLogic has broken down the actual household income required to service a home loan on a 6.27 percent interest rate for an 80 percent loan based on current median house and unit values in each capital city. As expected, affordability is worst in the most expensive property market, Sydney.

Sydney

Sydney’s median house price is $1,414,229 and the median unit price is $839,344.

Based on 40 percent serviceability, households need a total income of $211,456 to afford a home loan for a house and $125,499 for a unit. The city’s actual median household income is $120,554.

Melbourne

Melbourne’s median house price is $935,049 and the median apartment price is $612,906.

Based on 40 percent serviceability, households need a total income of $139,809 to afford a home loan for a house and $91,642 for a unit. The city’s actual median household income is $110,324.

Brisbane

Brisbane’s median house price is $909,988 and the median unit price is $587,793.

Based on 40 percent serviceability, households need a total income of $136,062 to afford a home loan for a house and $87,887 for a unit. The city’s actual median household income is $107,243.

Adelaide

Adelaide’s median house price is $785,971 and the median apartment price is $504,799.

Based on 40 percent serviceability, households need a total income of $117,519 to afford a home loan for a house and $75,478 for a unit. The city’s actual median household income is $89,806.

Perth

Perth’s median house price is $735,276 and the median unit price is $495,360.

Based on 40 percent serviceability, households need a total income of $109,939 to afford a home loan for a house and $74,066 for a unit. The city’s actual median household income is $108,057.

Hobart

Hobart’s median house price is $692,951 and the median apartment price is $522,258.

Based on 40 percent serviceability, households need a total income of $103,610 to afford a home loan for a house and $78,088 for a unit. The city’s actual median household income is $89,515.

Darwin

Darwin’s median house price is $573,498 and the median unit price is $367,716.

Based on 40 percent serviceability, households need a total income of $85,750 to afford a home loan for a house and $54,981 for a unit. The city’s actual median household income is $126,193.

Canberra

Canberra’s median house price is $964,136 and the median apartment price is $585,057.

Based on 40 percent serviceability, households need a total income of $144,158 to afford a home loan for a house and $87,478 for a unit. The city’s actual median household income is $137,760.

Patagonia Founder Is Giving His Company Away in Pledge to Fight Climate Change

Yvon Chouinard says nearly 50-year-old outdoor clothing brand will be owned by trust and nonprofit, rather than sell or go public

New research suggests spending 40 percent of household income on loan repayments is the new normal