Staff Editorial: Patagonia Leads the Way for Climate-Conscious Companies

Patagonia, the outdoor clothing brand founded by Yvon Chouinard, has captivated environmentally conscious consumers for decades. The company has centered the environment by funneling a portion of all sales to preserving and restoring the ecosystems and making an effort to manufacture products sustainably. In recent years, Patagonia levied their wealth to sue the Trump Administration in an effort to protect the Bears Ears National Monument in Southeast Utah. 

In a message on Sept. 16, Chouinard announced his decision to give Patagonia, valued at $3 billion, away to a specially designed non-profit. “Earth is now our only shareholder,” he said. “Instead of ‘going public,’ you could say we’re ‘going purpose.’ 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.” 

This gesture from Chouinard comes as global climate change becomes increasingly difficult to ignore. In August, flash floods submerged one third of Pakistan. Earlier this month, the Bay Area saw record temperatures during a heat wave. Last week, Hurricane Fiona landed in Puerto Rico and the Dominican Republic, causing mass flooding. 

Patagonia will be transferred to the non-profit organization “Holdfast Collective,” and the “Patagonia Purpose Trust” which will be overseen by the Chouinard family. The family’s transfer of their voting shares for Patagonia into the trust demanded that they pay $17.5 million in taxes allowing for the company’s profits to be funneled into combatting the climate crisis. 

By transferring his company, Chouinard was able to shake off his billionaire title, which he was always “reluctant” to have, and keep his family in control of the company’s ethics, making sure it still operates according to environmental goals. Because of Holdfast Collective’s 501(c)(4) status, Chouinard does not need to pay a capital gains tax, and neither does the collective.

While some might be suspicious of Chouinard’s motives, given the tax break and 501(c)(4)s lobbying power, his decision is a model for other companies, and wealthy individuals, to follow suit and redistribute their wealth back to the environment. In conversation with David Gelles of the New York Times, the Inside Philanthropy founder, David Callahan, highlighted how Chouinard is an anomaly amongst America’s richest. “This family is a way outlier when you consider that most billionaires give only a tiny fraction of their net worth away every year,” he said.

Patagonia is a brand that both existed in a capitalist system and spoke out against it. The company ran an ad in the New York Times titled “Don’t buy this jacket” around Black Friday to dissuade people from shopping mindlessly. In a statement on their website, the company explains how even though they aim for their products to be sustainable, producing their apparel still emits greenhouse gasses, uses water, and produces waste. Their initiative was meant to ask consumers to think twice about whether they really needed to buy something, and to consider the environmental cost of making the purchase.

The brand was accused of hypocrisy for running the ad, but would it have been better if it hadn’t? By acknowledging their contribution to climate change and dissuading people from buying their products, Patagonia accepted the idea of losing profit for the purpose of protecting something greater than itself. 

Patagonia has already donated $50 million to the Holdfast Collective, and they project to double that by the end of the year. Chouinard is a person who was successful under capitalism, acknowledged his discomfort with that success, acknowledged the shortcomings of his company, and demonstrated that he was able to put the health of the planet above himself. Capitalism is about endless growth, and Patagonia will continue to grow as it operates under the nonprofit. However, the future success of the company will be funneled back into initiatives that help the planet, and Chouinard has made the choice not to grow with the company.

To NYT’s David Geller, Chouinard said, “Now I could die tomorrow and the company is going to continue doing the right thing for the next 50 years, and I don’t have to be around.”