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
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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.
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Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
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China’s economic recovery isn’t gaining the momentum money managers are awaiting.
Data from China Beige Book show that the economic green shoots glimpsed in August didn’t sprout further in September. Job growth and consumer spending faltered, while orders for exports came in at the lowest level since March, according to a monthly flash survey of more than 1,300 companies the independent research firm released Thursday evening.
Consumers’ initial revenge spending after Covid restrictions eased could be waning, the results indicate, with the biggest pullbacks in food and luxury items. While travel remains a bright spot ahead of the country’s Mid-Autumn Festival, hospitality firms and chain restaurants saw a sharp decline in sales, according to the survey.
And although policy makers have shown their willingness to stabilise the property market, the data showed another month of slower sales and lower prices in both the residential and commercial sectors.
Even more troubling are the continued problems at Evergrande Group, which has scuttled a plan to restructure itself, raising the risk of a liquidation that could further destabilise the property market and hit confidence about the economy. The embattled developer said it was notified that the company’s chairman Hui Ka Yan, who is under police watch, is suspected of committing criminal offences.
Nicole Kornitzer, who manages the $750 million Buffalo International Fund (ticker: BUIIX), worries about a “recession of expectations” as confidence continues to take a hit, discouraging people and businesses from spending. Kornitzer has only a fraction of the fund’s assets in China at the moment.
Before allocating more to China, Kornitzer said, she needs to see at least a couple quarters of improvement in spending, with consumption broadening beyond travel and dining out. Signs of stabilisation in the housing market would be encouraging as well, she said.
She isn’t alone in her concern about spending. Vivian Lin Thurston, manager for William Blair’s emerging markets and China strategies, said confidence among both consumers and small- and medium-enterprises is still suffering.
“Everyone is still out and about but they don’t buy as much or buy lower-priced goods so retail sales aren’t recovering as strongly and lower-income consumers are still under pressure because their employment and income aren’t back to pre-COVID levels,” said Thurston, who just returned from a visit to China.
“A lot of small- and medium- enterprises are struggling to stay afloat and are definitely taking a wait-and-see approach on whether they can expand. A lot went out of business during Covid and aren’t back yet. So far the stimulus measures have been anemic.”
Beijing needs to do more, especially to stabilise the property sector, Thurston said. The view on the ground is that more help could come in the fourth quarter—or once the Federal Reserve is done raising rates.
The fact that the Fed is raising rates while Beijing is cutting them is already putting pressure on the renminbi. If policy makers in China wait until the Fed is done, that would alleviate one source of pressure before their fiscal stimulus adds its own.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
