The billionaire founder of the outdoor fashion brand Patagonia has given away his company to a charitable trust. Yvon Chouinard said any profit not reinvested in running the business would go to fighting climate change.
The label has amassed a cult following due to sustainability moves like guaranteeing its clothes for life and offering reasonably priced repairs.
It is famous for an advert titled “Don’t buy this jacket” asking shoppers to consider costs to the environment.
The brand’s website now states: “Earth is now our only shareholder.”
Founded in 1973, Patagonia’s estimated revenue was $1.5bn this year, while Mr Chouinard’s net worth is thought to be $1.2bn.
He claimed that profits to be donated to climate caused will amount to around $100m (£87m) a year, depending on the health of the company.
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“Despite its immensity, the Earth’s resources are not infinite, and it’s clear we’ve exceeded its limits,” the entrepreneur said of his decision to give up ownership.
“Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source.”
Patagonia is popular with wealthy environmentally conscious shoppers. Its coats, which cost around £200 have been seen on Prince William and Harry.
Its marketing campaigns – asking people to buy only what they need – are thought to spur its customers to buy more as sales have kept rising.
The Californian firm was already donating 1% of its annual profits to grassroots activists and committed to sustainable practices. But in an open letter to customers, the apparently reluctant businessman said he wanted to do more.
He said he had initially considered selling Patagonia and donating the money to charity, or taking the company public.
But he said both options would have meant giving up control of the business. “Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility,” he said.
Instead, the Chouinard family has transferred all ownership to two new entities. The Patagonia Purpose Trust, led by the family, remains the company’s controlling shareholder but will only own 2% of its total stock, Mr Chouinard said.
It will guide the philanthropy of the Holdfast Collective, a US charity “dedicated to fighting the environmental crisis” which now owns all of the non-voting stock – some 98% of the company.
“Each year the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis,” Mr Chouinard said.
