The company will now be in the hands of a trust and non-profit organisation while remaining a for-profit entity.
Patagonia has made headlines with its recent announcement that its founder, Yvon Chouinard will give up the company’s ownership to a trust and non-profit organisation. This move, unheard in the fashion industry, makes the outdoor apparel maker one of the biggest donors in climate philanthropy. More than just paying lip service to sustainability, the company tackles the environmental issues head-on.
According to The New York Times, Patagonia is valued at US$3 billion with annual profits hitting about US$100 million. With such a sizable income, one could only imagine the potentiality for good it could have on the world if charitable organisations have access to it. And this is what the money earned is used for at Patagonia as it is redistributed to support efforts in combating climate change and protecting undeveloped lands across the globe. This is done through the Holdfast Collective, which offers monetary aid to grassroots committees and politicians that aligns with the company’s ethos.
The topic of sustainability and climate change are not foreign to our society, especially in the fashion industry. Scientists have repeatedly warned of the consequences that might occur if we do not heed their advice and the effects are being felt more prominently these days. For example, the UK saw its temperature soaring to 40 degrees celsius for the first time in 80 years this summer, not to mention the ever-rising sea levels.
While the urgency for action only became more apparent in recent years, Patagonia has given over US$100 million to its grantees through a self-imposed 1 per cent tax. In an interview with the Times, he said that the move to relinquish his ownership could hopefully “influence a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people.” Chouinard further added that the company will “give away the maximum amount of money to people who are actively working on saving this planet.”
For a brand founded nearly 50 years ago, Patagonia has recently grown in popularity among the younger generations. This comes along with the increased interest in the great outdoors after almost two years of being indoors due to the pandemic. Furthermore, Patagonia fits the bill with the younger generation paying more attention to how companies give back to the community. It has been helping with sustainability efforts for decades.
The company is famously known for its advertisement in The New York Times during Black Friday, the biggest sales event in the US. The copy read, “Don’t Buy This Jacket”. This is to take jabs at other companies who would go all out in promoting their products to customers, which encourages unhealthy consumption of goods.
Despite the change in ownership, Patagonia’s business model remains the same and will continue to be a for-profit company based in Ventura, California. Earlier in August, the family gave away all of its voting stock into a newly established entity called “Patagonia Purpose Trust”. Later on, the Chouinards donated the other 98 per cent of thier shares to Holdfast Collective.
“Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source,” Chouinard said in a statement. “We’re making Earth our only shareholder.” As one of the pioneers in the fashion industry to place the preservation of our planet as the company’s core mission, Patagonia has shown the world that a circular economy is possible to achieve.
Patagonia’s announcement is a clarion call for the fashion industry and businesses in general. It sets the blueprint for how companies can solve the conundrum of keeping profits while also doing good for the planet. Every player has a role to play in the fight against climate change, and Patagonia is a shining example as a case study.
With the bar set for what is possible, it would be a tall order for all businesses to move on the same trajectory as Patagonia. The company showed that it is possible and we should not give up hope on preserving our planet for generations to come.
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