The billionaire founder of the outdoor fashion brand Patagonia has sold his company to a charity fund.
Yvon Chouinard said any profits not reinvested in running the business would go to fight climate change.
The label has amassed a cult following thanks to sustainability moves like guaranteeing its clothes for life and offering repairs at reasonable prices.
He is famous for an advertisement titled “Don’t buy this jacket” which asks shoppers to consider the costs to the environment.
The brand’s website now states, “Earth is now our sole shareholder.”
Mr. Chouinard always claimed he “never wanted to be a businessman”.
A rock climbing fanatic, he started by making metal climbing spikes for himself and his friends to wedge into rocks, before moving on to clothing and ultimately creating a hugely successful sportswear brand with a cult following. .
Founded in 1973, Patagonia’s sales this year were around $ 1.5 billion, while Chouinard’s net worth is thought to be $ 1.2 billion.
But he always shunned his wealthy status, telling the New York Times that he was “horrified to be seen as a billionaire.”
He said the profits to be donated to climate causes will amount to around $ 100 million (£ 87 million) per year, depending on the health of the company.
“Despite its immensity, the resources of the Earth are not infinite, and it is clear that we have exceeded its limits,” said the entrepreneur of his decision to give up the property.
“Instead of extracting value from nature and turning it into wealth, we are using the wealth created by Patagonia to protect the source.”
The company’s marketing campaigns – focused on asking people to buy only what they need – haven’t dampened sales, and critics have said that increasing its prominence has encouraged more rather than less spending. Prices are relatively high with sweaters, for example, costing around £ 200 and T-shirts around £ 40, but the company claims the cost reflects the fact that its clothes are meant to last a lifetime.
The Californian company was already donating 1% of its annual sales to grassroots activists and committed to sustainable practices. But in an open letter to clients, the seemingly reluctant businessman said he wanted to do more.
He said he initially thought about selling Patagonia and donating the money to charity or making the company public.
But he said both options would mean giving up control of the business. “Even well-intentioned public companies are under too much pressure to create short-term gains at the expense of long-term vitality and responsibility,” she said.
People who have donated their wealth
Microsoft founder Bill Gates this year vowed to “drop” the world’s rich list by making a $ 20 billion donation to his philanthropic fund. The head of technology, thought to be worth $ 118 billion, pledged to donate his wealth to charity in 2010, but his net worth has more than doubled since then.
Last year the head of the Hut group, which owns a range of online beauty and nutrition brands, donated £ 100 million to a charitable foundation after becoming a billionaire when his company went public. Matthew Molding said of his newfound wealth that he “couldn’t even figure out the numbers” and was trying to make a difference.
In 2019, Julian Richer, who founded the Richer Sounds hi-fi chain, sold 60% of the business to staff
Instead, the Chouinard family transferred all ownership to two new entities. The family-led Patagonia Purpose Trust remains the company’s controlling shareholder but will only hold 2% of its total shares, Chouinard said.
He will lead the philanthropy of the Holdfast Collective, a US charity “dedicated to fighting the environmental crisis” that now owns all of the non-voting shares, about 98% of the company.
“Each year the money we earn after reinvesting in the company will be distributed as dividends to help fight the crisis,” said Chouinard.
Patagonia combines high-end outdoor fashion with its own brand of environmental and social activism. It’s a heady combination that certainly appeals to a loyal, albeit predominantly affluent, following.
Part of the attraction comes from the fact that its environmentally conscious position isn’t new. She was preaching eco-awareness years before sustainable fashion became fashionable.
But it’s still pretty hard to save the planet if your business depends on selling things, no matter how many recycled or renewable products you use.
By fencing off future profits for environmental causes, Patagonian founder Yvon Chouinard has done his best to square that circle.
But it’s also clearly trying to ensure that the Patagonia brand is future-proof and can never fall into the hands of the kind of companies it has accused of greenwashing in the past.
And if that doesn’t appeal to rich, open-air types with a social conscience, nothing will.