The founder of Patagonia, Yvon Chouinard, and his family, have given away the company to an environmental trust and non-profit.
The company will still be an active producer of apparel, camping supplies and other goods — but all profits will go to the organizations to fight the climate crisis and pursue other environmental goals.
The move is a bold new step for a company that has taken a leading activist role for years, especially on environmental causes.
“Instead of extracting value from nature and transforming it into wealth for investors,” Mr Chouinard wrote in a public letter, “we’ll use the wealth Patagonia creates to protect the source of all wealth.”
The company’s voting stock will go to the Patagonia Purpose Trust, which will “protect the company’s values”. The non-voting stock will go to Holdfast Collective, a non-profit that will use the company’s profits each year for environmental action.
When deciding what to do with the company, Mr Chouinard wrote that neither selling the company and donating the profits nor going public seemed like good ways of ensuring that the company would continue its activist role.
“Truth be told, there were no good options available,” he said. “So, we created ourâ¯own.”
Mr Chouinard, now 83 years old, is a former rock climber and founded Patagonia nearly 50 years ago. Since then, the Ventura, California- based company has grown into a multi-billion-dollar corporation selling supplies marketed to outdoor enthusiasts.
“I never wanted to be a businessman,” he wrote. “I started as a craftsman, making climbing gear for my friends and myself, then got into apparel.”
In recent years, especially during the Trump administration, the company’s activist role has become much more prominent.
In 2018, the company said it would donate all the money it gained from tax cuts signed by then-President Trump to environmental causes. And in 2017, Patagonia joined a lawsuit trying to stop the federal government from shrinking the Bears Ears and Grand Staircase-Escalante national monuments in Utah.
The Holdfast Collective, the new non-profit which will use the company’s earnings, is a 501( c )( 4 ), a type of non-profit that can make political donations. As a result, the Chouinard family did not receive any tax break for its donation to the group, reports The New York Times.
The family also paid millions in taxes for their donation to the trust that will control voting shares, the paper adds.
In 2002, Chouinard and Patagonia were one of the co-founders of “1% for the Planet”, a collective of corporations that donate 1 per cent of their sales to environmental causes.
“The current system of capitalism has made its gains at an enormous cost, including increasing inequality and widescale uncompensated environmental damage. The world is literally on fire,” Charles Conn, chair of the Patagonia board, said in a statement.
“Companies that create the next model of capitalism through deep commitment to purpose will attract more investment, better employees, and deeper customer loyalty. They are the future of business if we want to build a better world, and that future starts with what Yvon is doing now.”