Wealthy founder Yvon Chouinard of the outdoor clothing retailer Patagonia says he has passed on his company to a charity trust.
According to Yvon Chouinard, a new ownership structure would direct any earnings that weren’t put back into running the company toward combating climate change.
Depending on the state of the business, he asserted that this would amount to about $100 million ($86 million) annually.
Over ten nations sell Patagonia’s hiking and outdoor apparel. Founded in 1973, its expected revenue for this year was $1.5 billion, and Mr. Chouinard’s net worth is believed to be $1.2 billion.
The entrepreneur explained his choice to relinquish ownership, maintaing that “despite its immensity, the Earth’s resources are not infinite, and it’s clear we’ve exceeded its limits. Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source.”
Already committed to sustainable business practices, the California company gave one percent of its annual profits to community organizers. In an open letter to clients, however, the businessman claimed that he wished to do more.
He claimed that he had initially thought of either selling Patagonia and giving the proceeds to a good cause or going public with the business.
However, according to Chouinard, both possibilities would have required giving up management of the company. “Even public companies with good intentions,” he said, “are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility.”
Two Fresh Organizations Take Over Patagonia
Instead, the Chouinard family has passed on control of the property to two fresh organizations. The family-run Patagonia Purpose Trust will continue to have a majority stake in the business but will only hold two percent of the company’s equity, according to Mr. Chouinard.
It will direct the charitable endeavors of the Hold Fast Collective, a US organization that currently holds ninety-eight percent of the company’s non-voting stock. The Hold Fast Collective is also “dedicated to fighting the environmental crisis.”
Mr. Chouinard said, “Each year the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis.”
The entrepreneurial practice of donating wealth is not exclusive to Mr. Chouinard. Last year, a philanthropic organization received one hundred million pounds from the Hut Group’s CEO, who runs a number of online nutrition and beauty companies.