Patagonia Transfers Ownership to Tackle Climate Issues
Outdoor apparel and equipment retailer Patagonia has announced a new ownership structure, and the company will be held by two trusts that will focus entirely on sustainability and climate initiatives.
The entities are the Patagonia Purpose Trust and the Holdfast Collective. Patagonia says every dollar not reinvested back into the company will be distributed as dividends to protect the planet. The new ownership setup is effective immediately.
Ventura, California-based Patagonia was started in 1973 by Yvon Chouinard, with what the company calls an “experiment” in responsible business. The company says the ownership adjustment is to facilitate its idea that a for-profit business can work for the environment.
“Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source,” the 83-year-old Chouinard says. “We’re making Earth our only shareholder. I am dead serious about saving this planet.”
The Patagonia Purpose Trust owns all the voting stock of the company (2% total) and creates a more permanent legal structure to protect Patagonia’s purpose and values, the company says. The Holdfast Collective owns all the nonvoting stock (98% of the stock) and will use every dollar earned to protect nature and biodiversity, support communities, and fight the environmental crisis.
Profits not reinvested back into the company will be distributed as a dividend to the Holdfast Collective to go toward climate initiatives. Patagonia projects that it will payout an annual dividend of approximately $100 million.
The New York Times reports that the company sells more than $1 billion of outdoor apparel and equipment a year. The report says the Chouinard family transferred all shares of the voting stock into the new trust in August. Chouinard tells the paper he believes this setup will better ensure the success of the climate goals than using potential funds raised if the company went public.
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Patagonia, which is worth an estimated $3 billion, has already donated $50 million to the Holdfast Collective.
The retailer has been a sustainability leader in the apparel industry. Among its efforts, the company has worked to make its materials more recyclable, has been labelled as one of the most transparent fashion brands, and has received top scores in terms of PFAS use.
Patagonia will remain a B Corporation. The leadership of the company is not changing, and Ryan Gellert will continue to serve as CEO. The Chouinard family will guide the Patagonia Purpose Trust, electing and overseeing Patagonia’s board of directors. The family will also guide the philanthropic work done by the Holdfast Collective.
“Two years ago, the Chouinard family challenged a few of us to develop a new structure with two central goals,” Gellert says. “They wanted us to both protect the purpose of the business and immediately and perpetually release more funding to fight the environmental crisis. We believe this new structure delivers on both, and we hope it will inspire a new way of doing business that puts people and the planet first.”
Source: Environmental Leader